Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File No. 001-36876

 

 

BABCOCK & WILCOX ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

DELAWARE   47-2783641
(State of Incorporation   (I.R.S. Employer
or Organization)   Identification No.)
THE HARRIS BUILDING  
13024 BALLANTYNE CORPORATE PLACE  
SUITE 700  
CHARLOTTE, NORTH CAROLINA   28277
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s Telephone Number, Including Area Code: (704) 625-4900

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   ¨     No   x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   x     No   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   ¨    Accelerated filer   ¨
Non-accelerated filer   x   (Do not check if a smaller reporting company)    Smaller reporting company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   x

The number of shares of the registrant’s common stock outstanding at July 30, 2015 was 53,773,190.

 

 

 


Table of Contents

BABCOCK & WILCOX ENTERPRISES, INC.

INDEX - FORM 10-Q

 

     PAGE  

PART I - FINANCIAL INFORMATION

  

Item 1 – Condensed Consolidated and Combined Financial Statements

     3   

Condensed Consolidated and Combined Statements of Operations Three and Six Months Ended June  30, 2015 and 2014 (Unaudited)

     4   

Condensed Consolidated and Combined Statements of Comprehensive Income Three and Six Months Ended June  30, 2015 and 2014 (Unaudited)

     5   

Condensed Consolidated and Combined Balance Sheets June 30, 2015 and December 31, 2014 (Unaudited)

     6   

Condensed Consolidated and Combined Statements of Stockholders’ Equity Six Months Ended June  30, 2015 and 2014 (Unaudited)

     8   

Condensed Consolidated and Combined Statements of Cash Flows Six Months Ended June  30, 2015 and 2014 (Unaudited)

     9   

Notes to Condensed Consolidated and Combined Financial Statements

     10   

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

     28   

Item 3 – Quantitative and Qualitative Disclosures About Market Risk

     38   

Item 4 – Controls and Procedures

     38   

PART II - OTHER INFORMATION

  

Item 1 – Legal Proceedings

     39   

Item 1A – Risk Factors

     39   

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

     39   

Item 4 – Mine Safety Disclosures

     39   

Item 6 – Exhibits

     39   

SIGNATURES

     41   

 

 

2


Table of Contents

PART I

BABCOCK & WILCOX ENTERPRISES, INC.

FINANCIAL INFORMATION

Item 1. Condensed Consolidated and Combined Financial Statements

 

3


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BABCOCK & WILCOX ENTERPRISES, INC.

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS

 

     Three Months Ended     Six Months Ended  
     June 30,     June 30,  
     2015     2014     2015     2014  
     (Unaudited)  
     (In thousands, except per share amounts)  

Revenues

   $ 437,485      $ 327,379      $ 834,640      $ 639,457   

Costs and expenses:

        

Cost of operations

     355,601        258,351        669,359        513,578   

Research and development costs

     3,962        4,281        8,480        8,293   

Losses on asset disposals and impairments, net

     9,009        1,457        9,027        1,457   

Selling, general and administrative expenses

     59,709        53,040        116,802        102,252   

Special charges for restructuring activities

     5,312        7,513        7,666        8,991   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     433,593        324,642        811,334        634,571   

Equity in income of investees

     967        433        (1,104     2,799   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     4,859        3,170        22,202        7,685   

Other income (expense):

        

Interest income

     126        48        282        677   

Interest expense

     (144     (84     (284     (204

Other – net

     201        323        (110     1,554   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income (expense)

     183        287        (112     2,027   

Income from continuing operations before provision for income taxes

     5,042        3,457        22,090        9,712   

Provision for income taxes

     919        1,841        6,611        833   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

     4,123        1,616        15,479        8,879   

Income from discontinued operations, net of tax

     1,418        3,397        2,803        7,339   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     5,541        5,013        18,282        16,218   

Net income attributable to noncontrolling interest

     (54     (77     (106     (193
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income attributable to Babcock & Wilcox Enterprises, Inc.

   $ 5,487      $ 4,936      $ 18,176      $ 16,025   
  

 

 

   

 

 

   

 

 

   

 

 

 

Amounts attributable to Babcock & Wilcox Enterprises, Inc.

        

Income from continuing operations

   $ 4,069      $ 1,539      $ 15,373      $ 8,686   

Income from discontinued operations, net of tax

     1,418        3,397        2,803        7,339   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Babcock & Wilcox Enterprises, Inc.

   $ 5,487      $ 4,936      $ 18,176      $ 16,025   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings per common share:

        

Continuing operations

   $ 0.08      $ 0.03      $ 0.29        0.16   

Discontinued operations

     0.02        0.06        0.05        0.13   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings per common share

   $ 0.10      $ 0.09      $ 0.34      $ 0.29   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per common share:

        

Continuing operations

   $ 0.08        0.03      $ 0.29        0.16   

Discontinued operations

     0.02        0.06        0.05        0.13   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per common share

   $ 0.10      $ 0.09      $ 0.34      $ 0.29   
  

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in the computation of earnings per common share:

        

Basic

     53,560        54,883        53,474        55,051   

Diluted

     53,787        55,058        53,680        55,251   
  

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to condensed consolidated and combined financial statements.

 

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BABCOCK & WILCOX ENTERPRISES, INC.

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME

 

     Three Months Ended     Six Months Ended  
     June 30,     June 30,  
     2015     2014     2015     2014  
     (Unaudited)  
     (In thousands)  

Net income

   $ 5,541      $ 5,013      $ 18,282      $ 16,218   

Other comprehensive income (loss):

        

Currency translation adjustments

     2,214        (531     (8,709     (7,141

Derivative financial instruments:

        

Unrealized gains (losses) arising during the period, net of tax (provision) benefit of $604, $(289), $778 and $50, respectively

     (2,004     833        (2,219     (142

Reclassification adjustment for (gains) losses included in net income, net of tax provision (benefit) of $115, $234, $(568) and $13, respectively

     (338     (679     1,578        (47

Benefit obligations:

        

Amortization of benefit plan costs, net of tax benefit of $(49), $(89), $(92) and $(177), respectively

     66        186        137        372   

Investments:

        

Unrealized gains arising during the period, net of tax provision of $(5), $0, $(5) and $(4), respectively

     11        1        10        9   

Reclassification adjustment for (gains) losses included in net income, net of tax provision (benefit) of $(1), $0, $(1) and $5, respectively

     1        —          2        (10
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive loss

     (50     (190     (9,201     (6,959
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     5,491        4,823        9,081        9,259   

Comprehensive loss attributable to noncontrolling interest

     (61     (79     (131     (189
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income attributable to Babcock & Wilcox Enterprises, Inc.

   $ 5,430      $ 4,744      $ 8,950      $ 9,070   
  

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to condensed consolidated and combined financial statements.

 

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BABCOCK & WILCOX ENTERPRISES, INC.

CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS

ASSETS

 

     June 30,     December 31,  
     2015     2014  
     (Unaudited)  
     (In thousands)  

Current assets:

    

Cash and cash equivalents

   $ 307,562      $ 218,659   

Restricted cash and cash equivalents

     35,538        26,311   

Investments

     5,098        1,607   

Accounts receivable – trade, net

     233,836        265,456   

Accounts receivable – other

     40,385        36,147   

Contracts in progress

     125,160        107,751   

Inventories

     97,113        98,711   

Deferred income taxes

     36,568        36,601   

Other current assets

     16,391        11,347   

Current assets of discontinued operations

     —          46,177   
  

 

 

   

 

 

 

Total current assets

     897,651        848,767   

Property, plant and equipment

     324,165        335,761   

Less accumulated depreciation

     (179,916     (200,525
  

 

 

   

 

 

 

Net property, plant and equipment

     144,249        135,236   

Investments

     1,111        214   

Goodwill

     202,398        209,277   

Deferred income taxes

     123,576        115,111   

Investments in unconsolidated affiliates

     100,804        109,248   

Intangible assets

     40,915        50,646   

Other assets

     26,695        9,227   

Non-current assets of discontinued operations

     —          38,828   
  

 

 

   

 

 

 

TOTAL ASSETS

   $ 1,537,399      $ 1,516,554   
  

 

 

   

 

 

 

See accompanying notes to condensed consolidated and combined financial statements.

 

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BABCOCK & WILCOX ENTERPRISES, INC.

CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

     June 30,     December 31,  
     2015     2014  
     (Unaudited)  
     (In thousands, except share
and per share amounts)
 

Current liabilities:

    

Notes payable and current maturities of long-term debt

   $ 3,222      $ 3,215   

Accounts payable

     147,885        160,606   

Accrued employee benefits

     41,627        39,464   

Advance billings on contracts

     168,946        148,098   

Accrued warranty expense

     36,995        37,735   

Accrued liabilities – other

     49,216        54,827   

Current liabilities of discontinued operations

     —          44,145   
  

 

 

   

 

 

 

Total current liabilities

     447,891        488,090   

Accumulated postretirement benefit obligation

     29,103        28,347   

Pension liability

     246,366        253,763   

Other liabilities

     40,097        42,929   

Non-current liabilities of discontinued operations

     —          15,988   
  

 

 

   

 

 

 

Total liabilities

     763,457        829,117   

Commitments and contingencies (Note 7)

    

Stockholders’ Equity:

    

Common stock, par value $0.01 per share, authorized 200,000,000 shares;
issued 53,719,878 and 0 shares at June 30, 2015 and December 31, 2014, respectively

     537        —     

Preferred stock, par value $0.01 per share, authorized 20,000,000 shares;
No shares issued

     —          —     

Capital in excess of par value

     782,692        —     

Retained earnings

     —          —     

Accumulated other comprehensive income

     (10,407     10,374   

Former net parent investment

     —          676,036   
  

 

 

   

 

 

 

Stockholders’ equity – Babcock & Wilcox Enterprises, Inc.

     772,822        686,410   

Noncontrolling interest

     1,120        1,027   
  

 

 

   

 

 

 

Total Stockholders’ equity

     773,942        687,437   
  

 

 

   

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 1,537,399      $ 1,516,554   
  

 

 

   

 

 

 

See accompanying notes to condensed consolidated and combined financial statements.

 

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BABCOCK & WILCOX ENTERPRISES, INC.

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF STOCKHOLDERS’ EQUITY

 

                   Accumulated                    
            Capital In             Other     Former           Total  
     Common Stock      Excess of      Retained      Comprehensive     Parent     Noncontrolling     Stockholders’  
     Shares      Par      Par Value      Earnings      Income (Loss)     Investment     Interest     Equity  
     (In thousands)  

Balance December 31, 2014

     —         $ —         $ —         $ —         $ 10,374      $ 676,036      $ 1,027      $ 687,437   

Net income

     —           —           —           —           —          18,176        106        18,282   

Defined benefit obligations

     —           —           —           —           137        —          —          137   

Available-for-sale investments

     —           —           —           —           12        —          —          12   

Currency translation adjustments

     —           —           —           —           (8,734     —          25        (8,709

Derivative financial instruments

     —           —           —           —           (641     —          —          (641

Stock-based compensation

     —           —           —           —           —          6        —          6   

Dividends to noncontrolling interests

     —           —           —           —           —          —          (38     (38

Net transfer (to) from former Parent

     —           —           —           —           —          125,295        —          125,295   

Distribution of Nuclear Energy segment to former Parent

     —           —           —           —           (11,555     (36,284     —          (47,839

Reclassification of former Parent investment to capital in excess of par value and common stock

     53,720         537         782,692         —           —          (783,229     —          —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance June 30, 2015 (unaudited)

     53,720       $ 537       $ 782,692       $ —         $ (10,407   $ —        $ 1,120      $ 773,942   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance December 31, 2013

     —         $ —         $ —         $ —         $ 35,339      $ 489,381      $ 924      $ 525,644   

Net income

     —           —           —           —           —          16,025        193        16,218   

Defined benefit obligations

     —           —           —           —           372        —          —          372   

Available-for-sale investments

     —           —           —           —           (1     —          —          (1

Currency translation adjustments

     —           —           —           —           (7,137     —          (4     (7,141

Derivative financial instruments

     —           —           —           —           (189     —          —          (189

Net transfer (to) from Parent

     —           —           —           —           —          215,262        —          215,262   

Stock-based compensation

     —           —           —           —           —          148        —          148   

Dividends to noncontrolling interests

     —           —           —           —           —          —          (223     (223
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

Balance June 30, 2014 (unaudited)

     —         $ —         $ —         $ —         $ 28,384      $ 720,816      $ 890      $ 750,090   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to condensed consolidated and combined financial statements.

 

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BABCOCK & WILCOX ENTERPRISES, INC.

CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

 

     Six Months Ended  
     June 30,  
     2015     2014  
     (Unaudited)  
     (In thousands)  

CASH FLOWS FROM OPERATING ACTIVITIES:

  

Net Income

   $ 18,282      $ 16,218   

Non-cash items included in net income:

    

Depreciation and amortization

     21,458        11,307   

Income of equity method investees, net of dividends

     2,292        (240

Losses on asset disposals and impairments

     10,607        1,457   

Recognition of losses for pension and postretirement plans

     200        250   

Excess tax benefits from stock-based compensation

     —          (12

Changes in assets and liabilities, net of effects of acquisitions:

    

Accounts receivable

     31,332        30,400   

Accounts payable

     (11,369     (50,150

Contracts in progress and advance billings on contracts

     5,170        (69,580

Inventories

     663        4,503   

Income taxes

     (2,075     5,911   

Accrued and other current liabilities

     (7,735     4,360   

Pension liability, accrued postretirement benefit obligation and employee benefits

     (7,237     (14,745

Other, net

     (5,958     2,390   
  

 

 

   

 

 

 

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

     55,630        (57,931
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Decrease in restricted cash and cash equivalents

     1,307        4,420   

Purchases of property, plant and equipment

     (15,215     (5,499

Acquisition of business, net of cash acquired

     —          (127,098

Purchase of intangible assets

     —          (722

Purchases of available-for-sale securities

     (4,919     (2,844

Sales and maturities of available-for-sale securities

     1,647        7,247   

Proceeds from asset disposals

     —          (6

Investment in equity method investees

     —          (4,900
  

 

 

   

 

 

 

NET CASH USED IN INVESTING ACTIVITIES

     (17,180     (129,402
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Payment of short-term borrowing and long-term debt

     —          (1,815

Increase in short-term borrowing

     —          733   

Net transfers (to) from parent

     80,589        215,262   

Excess tax benefits from stock-based compensation

     —          12   

Other

     (38     (223
  

 

 

   

 

 

 

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

     80,551        213,969   
  

 

 

   

 

 

 

EFFECTS OF EXCHANGE RATE CHANGES ON CASH

     (4,881     (4,123
  

 

 

   

 

 

 

CASH FLOWS FROM CONTINUING OPERATIONS

     114,120        22,513   
  

 

 

   

 

 

 

CASH FLOWS FROM DISCONTINUED OPERATIONS:

    

Operating cash flows from discontinued operations, net

     (25,194     (10,302

Investing cash flows from discontinued operations, net

     (23     (115
  

 

 

   

 

 

 

NET CASH FLOWS PROVIDED BY (USED IN) DISCONTINUED OPERATIONS

     (25,217     (10,417
  

 

 

   

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

     88,903        12,096   

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

     218,659        191,318   
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

   $ 307,562      $ 203,414   
  

 

 

   

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

    

Cash paid during the period for:

    

Income taxes (net of refunds)

   $ 4,038      $ 8,200   

SCHEDULE OF NON-CASH INVESTING ACTIVITY:

    

Accrued capital expenditures included in accounts payable

   $ 658      $ 1,473   

See accompanying notes to condensed consolidated and combined financial statements.

 

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BABCOCK & WILCOX ENTERPRISES, INC.

NOTES TO CONDENSED CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

JUNE 30, 2015

(UNAUDITED)

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Babcock & Wilcox Enterprises, Inc. (“BW”, “we”, “us” or “our”) operates in three business segments as described below and was wholly owned by The Babcock & Wilcox Company (“BWC” or the “former Parent”) until June 30, 2015 when BWC distributed 100% of our outstanding common stock to the BWC shareholders through a tax-free spin-off transaction (the “spin-off”). BWC is now known as BWX Technologies, Inc. On and prior to June 30, 2015, our financial position, operating results and cash flows consisted of The Power Generation Operations of BWC (“BW PGG”), which represented a combined reporting entity comprised of the assets and liabilities in managing and operating the Power Generation segment of BWC, combined with related captive insurance operations that were contributed by BWC to BW. In addition, BW PGG also includes certain assets and liabilities of BWC’s Nuclear Energy (“NE”) segment that were transferred to BWC. We have treated the assets and liabilities and results of operations of NE as a discontinued operation in our condensed consolidated and combined financial statements. See Note 3 for further information.

Our condensed consolidated and combined balance sheet as of June 30, 2015 consists of the consolidated balances of BW, while our condensed consolidated and combined balance sheet as of December 31, 2014 consists of the combined results of BW PGG. Our condensed consolidated and combined statements of operations and our condensed consolidated and combined cash flows consist entirely of the combined results of BW PGG.

On June 8, 2015, BWC’s Board of Directors approved the spin-off of BW through the distribution of shares of BW common stock to holders of BWC common stock. The distribution of BW common stock was made on June 30, 2015 and consisted of one share of BW common stock for every two shares of BWC common stock to holders of BWC common stock as of 5:00 p.m. New York City time on the record date, June 18, 2015. Cash was paid in lieu of any fractional shares of BW common stock. On June 30, 2015, BW became a separate publicly-traded company, and BWC did not retain any ownership interest in BW. A registration statement on Form 10 describing the spin-off was filed by BW with the Securities and Exchange Commission and was declared effective on June 16, 2015 (as amended through the time of such effectiveness, the “Form 10”).

We have presented our condensed consolidated and combined financial statements in U.S. Dollars in accordance with the interim reporting requirements of Rule 10-01 of Regulation S-X and accounting principles generally accepted in the United States (“GAAP”). Certain financial information and disclosures normally included in our financial statements prepared annually have been condensed or omitted. Readers of these financial statements should, therefore, refer to the consolidated financial statements and notes in our Form 10. We have included all adjustments, in the opinion of management, consisting only of normal recurring adjustments, necessary for a fair presentation. We use the equity method to account for investments in entities that we do not control, but over which we have the ability to exercise significant influence. We generally refer to these entities as “joint ventures.” We have eliminated all intercompany transactions and accounts. We present the notes to our condensed consolidated and combined financial statements on the basis of continuing operations, unless otherwise stated.

Certain corporate and general and administrative expenses, including those related to executive management, tax, accounting, legal, information technology, treasury services, and certain employee benefits, have been allocated by BWC to us to reflect all costs of doing business related to these operations in the financial statements, including expenses incurred by related entities on our behalf. The majority of these allocations of management and support services costs are based on specific identification methods such as direct usage and level of effort. The remainder is allocated on the basis of a three-factor formula that considered proportional revenue generated, payroll and fixed assets. Management believes such allocations are reasonable. However, the associated expenses reflected in the accompanying condensed consolidated and combined statements of operations may not be indicative of the actual expenses that would have been incurred had we been operating as an independent public company for the periods presented. Following the separation and distribution from BWC, we have been performing these functions using internal resources or purchased services, certain of which may be provided by BWC during a transitional period pursuant to a transition services agreement. Refer to Note 13 for a detailed description of transactions with other affiliates of BWC.

 

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We have reclassified amounts previously reported to conform to the presentation as of and for the three and six month periods ended June 30, 2015 and 2014, attributable to the treatment of NE as a discontinued operation. We have also retrospectively adjusted amounts previously reported in the December 31, 2014 combined balance sheet related to the initial capitalization of our new, wholly-owned captive insurance subsidiary, which occurred in the second quarter of 2014. The retrospective adjustment reduced restricted cash, investments and other assets by $5.5 million, $0.5 million and $0.3 million, respectively.

Reporting Segments

We operate in three reportable segments: Global Power, Global Services and Industrial Environmental. Our reportable segments are further described as follows:

 

    Our Global Power segment represents our worldwide new build boiler and environmental products operations. Through this segment, we engineer, manufacture, procure, construct and commission steam generating and environmental systems and other related equipment. Our boilers are designed for utility and industrial applications, fired with fossil and renewable fuels and include advanced supercritical boilers, subcritical boilers, fluidized bed boilers, biomass-fired boilers, waste-to-energy boilers, chemical recovery boilers, industrial power boilers, package boilers, heat recovery steam generators, waste heat boilers and solar thermal power systems. Our environmental systems offer air pollution control systems and related equipment for the treatment of nitrogen oxides, sulfur dioxide, fine particulate, mercury, acid gases and other hazardous air emissions and include wet and dry flue gas desulfurization systems, catalytic and non-catalytic nitrogen oxides reduction systems, low nitrogen oxides burners and overfire air systems, fabric filter baghouses, wet and dry electrostatic precipitators, mercury control systems and dry sorbent injection for acid gas mitigation. Our customers consist of a wide range of utilities, independent power producers and industrial companies globally.

 

    Our Global Services segment provides a comprehensive mix of aftermarket products and services to support peak efficiency and availability of steam generating and associated environmental and auxiliary equipment for power generation. Our products and services include replacement parts, field technical services, retrofit and upgrade projects, fuel switching and repowering projects, construction and maintenance services, start-up and commissioning, training programs and plant operations and maintenance for our full complement of boiler, environmental and auxiliary equipment. We deliver these aftermarket products and services to a large installed base for our and our competitors’ power generation and industrial plants globally through our extensive network of regionally located service centers, technical support personnel, and global sourcing capabilities. Our customers consist of a wide range of utilities, independent power producers and industrial companies globally.

 

    Our Industrial Environmental segment provides environmental products and services to numerous industrial end markets through Babcock & Wilcox MEGTEC Holdings, Inc. (“MEGTEC”), which we acquired on June 20, 2014. Through this segment, we design, engineer and manufacture products including oxidizers, solvent and distillation systems, wet and dry electrostatic precipitators, fabric filter baghouses, scrubbers and heat recovery systems. The segment also provides specialized industrial process systems, coating lines and equipment. Our suite of technologies for pollution abatement include systems that control volatile organic compounds and air toxins, particulate, nitrogen oxides and acid gas air emissions from industrial processes. We serve a diverse set of industrial end markets with a current emphasis on the chemical, pharmaceutical, energy storage, packaging and automotive markets.

See Note 11 for further information regarding our segments.

Operating results for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. For further information, refer to the combined financial statements and the related footnotes included in the Form 10.

Contracts and Revenue Recognition

We generally recognize contract revenues and related costs on a percentage-of-completion method for individual contracts or combinations of contracts based on work performed, man hours or a cost-to-cost method, as applicable to the product or activity involved. We recognize estimated contract revenue and resulting income based on the

 

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measurement of the extent of progress completion as a percentage of the total project. Certain costs may be excluded from the cost-to-cost method of measuring progress, such as significant costs for materials and major third-party subcontractors, if it appears that such exclusion would result in a more meaningful measurement of actual contract progress and resulting periodic allocation of income. We include revenues and related costs so recorded, plus accumulated contract costs that exceed amounts invoiced to customers under the terms of the contracts, in contracts in progress. We include in advance billings on contracts billings that exceed accumulated contract costs and revenues and costs recognized under the percentage-of-completion method. Most long-term contracts contain provisions for progress payments. Our unbilled receivables do not contain an allowance for credit losses as we expect to invoice customers and collect all amounts for unbilled revenues. We review contract price and cost estimates periodically as the work progresses and reflect adjustments proportionate to the percentage-of-completion in income in the period when those estimates are revised. For all contracts, if a current estimate of total contract cost indicates a loss on a contract, the projected loss is recognized in full when determined.

For contracts as to which we are unable to estimate the final profitability except to assure that no loss will ultimately be incurred, we recognize equal amounts of revenue and cost until the final results can be estimated more precisely. For these deferred profit recognition contracts, we recognize revenue and cost equally and only recognize gross margin when probable and reasonably estimable, which we generally determine to be when the contract is approximately 70% complete. We treat long-term construction contracts that contain such a level of risk and uncertainty that estimation of the final outcome is impractical, except to assure that no loss will be incurred, as deferred profit recognition contracts.

Our policy is to account for fixed-price contracts under the completed-contract method if we believe that we are unable to reasonably forecast cost to complete at start-up. Under the completed-contract method, income is recognized only when a contract is completed or substantially complete. For parts orders and certain aftermarket services activities, we recognize revenues as goods are delivered and work is performed.

Variations from estimated contract performance could result in material adjustments to operating results for any fiscal quarter or year. We include claims for extra work or changes in scope of work to the extent of costs incurred in contract revenues when we believe collection is probable. At June 30, 2015 and December 31, 2014, we recognized accrued claims totaling $10.1 million and $8.2 million, respectively.

In the three and six months ended June 30, 2014, we recorded a contract loss totaling approximately $4.0 million and $11.6 million, respectively, based on our estimated costs to complete our Global Power segment’s Berlin Station project. We previously asserted that substantial completion had been achieved on this project in early 2014 and that any further delays to complete this project were the result of the customer’s failure to supply fuel complying with the contract specifications. The customer certified that we achieved substantial completion on this project effective July 19, 2014, following which the customer has no further claims for liquidated damages associated with delays. See Note 7 for legal proceedings associated with this matter.

Comprehensive Income

The components of accumulated other comprehensive income included in stockholders’ equity are as follows:

 

     June 30,      December 31,  
     2015      2014  
     (In thousands)  

Currency translation adjustments

   $ (8,781    $ 11,551   

Net unrealized gain on investments

     (10      (22

Net unrealized gain on derivative financial instruments

     (327      (123

Unrecognized prior service cost on benefit obligations

     (1,289      (1,032
  

 

 

    

 

 

 

Accumulated other comprehensive income (loss)

   $ (10,407    $ 10,374   
  

 

 

    

 

 

 

 

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The amounts reclassified out of accumulated other comprehensive income by component and the affected condensed consolidated and combined statements of operations line items are as follows:

 

    

Three Months Ended

June 30,

   

Six Months Ended

June 30,

     
     2015     2014     2015     2014      

Accumulated Other Comprehensive Income

Component Recognized

   (In thousands)    

Line Item Presented

Realized (losses) gains on derivative financial instruments

   $ (40   $ 13      $ 22      $ 23      Revenues
     (2     (5     98        (5   Cost of operations
     (33     —          (32     —        Other-net
  

 

 

   

 

 

   

 

 

   

 

 

   
     (75     8        88        18      Total before tax
     23        (2     (5     (4   Provision for Income Taxes
  

 

 

   

 

 

   

 

 

   

 

 

   
     (52     6        83        14      Net Income

Amortization of prior service cost on benefit obligations

     (100     (125     (200     (250   Cost of operations
     37        50        80        100      Provision for Income Taxes
  

 

 

   

 

 

   

 

 

   

 

 

   
     (63     (75     (120     (150   Net Income

Realized gain on investments

     (2     —          (3     15      Other-net
     1        —          1        (5   Provision for Income Taxes
  

 

 

   

 

 

   

 

 

   

 

 

   
     (1     —          (2     10      Net Income
  

 

 

   

 

 

   

 

 

   

 

 

   

Total reclassifications for the period

   $ (116   $ (69   $ (39   $ (126  
  

 

 

   

 

 

   

 

 

   

 

 

   

Inventories

The components of inventories are as follows:

 

     June 30,      December 31,  
     2015      2014  
     (In thousands)  

Raw materials and supplies

   $ 69,680       $ 71,604   

Work in progress

     8,381         9,831   

Finished goods

     19,052         17,276   
  

 

 

    

 

 

 

Total inventories

   $ 97,113       $ 98,711   
  

 

 

    

 

 

 

Restricted Cash and Cash Equivalents

At June 30, 2015, we had restricted cash and cash equivalents totaling $35.5 million, $4.1 million of which was held in restricted foreign cash accounts and $31.4 million of which was held to meet reinsurance reserve requirements of our captive insurer in lieu of long-term investments.

Goodwill

The following summarizes the changes in the carrying amount of goodwill:

 

     Global
Power
     Global
Services
     Industrial
Environmental
     Total  
     (In thousands)  

Balance at December 31, 2014

   $ 37,991       $ 62,486       $ 108,800       $ 209,277   

Final purchase price allocation for MEGTEC

     —           —           (4,492      (4,492

Foreign currency translation adjustments and other

     (902      (1,485      —           (2,387
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance at June 30, 2015

   $ 37,089       $ 61,001       $ 104,308       $ 202,398   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Warranty Expense

We accrue estimated expense included in cost of operations on our condensed consolidated and combined statements of operations to satisfy contractual warranty requirements when we recognize the associated revenue on the related contracts. In addition, we record specific provisions or reductions where we expect the actual warranty costs to significantly differ from the accrued estimates. Such changes could have a material effect on our consolidated financial condition, results of operations and cash flows.

The following summarizes the changes in the carrying amount of our accrued warranty expense:

 

    

Six Months Ended

June 30,

 
     2015      2014  
     (In thousands)  

Balance at beginning of period

   $ 37,735       $ 38,968   

Additions

     8,432         4,774   

Acquisition of MEGTEC

     —           4,692   

Expirations and other changes

     (202      (2,234

Payments

     (8,535      (4,549

Translation and other

     (435      —     
  

 

 

    

 

 

 

Balance at end of period

   $ 36,995       $ 41,651   
  

 

 

    

 

 

 

Research and Development

Our research and development activities are related to the development and improvement of new and existing products and equipment, as well as conceptual and engineering evaluation for translation into practical applications. We charge research and development costs unrelated to specific contracts as they are incurred. Research and development activities totaled $4.0 million and $4.3 million in the three months ended June 30, 2015 and 2014, respectively, and $8.5 million and $8.3 million in the six months ended June 30, 2015 and 2014, respectively.

In the three months ended June 30, 2015, we recognized a $9.0 million impairment charge primarily related to research and development facilities and equipment dedicated to a carbon capture process that was determined during the quarter ended June 30, 2015 to not be commercially viable. The impairment is included in losses on asset disposals and impairments, net.

Provision for Income Taxes

We are subject to U.S. federal income tax and income tax of multiple state and international jurisdictions. We provide for income taxes based on the enacted tax laws and rates in the jurisdictions in which we conduct our operations. These jurisdictions may have regimes of taxation that vary with respect to nominal rates and with respect to the basis on which these rates are applied. This variation, along with changes in our mix of income within these jurisdictions, can contribute to changes in our effective tax rate from period to period. We classify interest and penalties related to taxes (net of any applicable tax benefit) as a component of provision for income taxes on our condensed consolidated and combined statements of operations.

Our effective tax rate for the three months ended June 30, 2015 was approximately 18.2% as compared to 53.3% for the three months ended June 30, 2014. Our effective tax rate for the three months ended June 30, 2015 was lower than our statutory rate primarily due to the jurisdictional mix of our income. Our effective tax rate for the three months ended June 30, 2014 was higher than our statutory rate primarily due to the jurisdictional mix of income as well as the favorable impact of an increase in benefits for amended federal manufacturing deductions and certain amended state return filings, offset by an increase to a valuation allowance against certain state deferred tax assets.

Our effective tax rate for the six months ended June 30, 2015 was approximately 29.9% as compared to 8.6% for the six months ended June 30, 2014. Our effective tax rate for the six months ended June 30, 2015 was lower than our statutory rate primarily due to the jurisdictional mix of our income. Our effective tax rate for the six months ended June 30, 2014 was lower than our statutory rate primarily due to the receipt of a favorable ruling from the Internal Revenue Service that allowed us to amend prior year U.S. income tax returns to exclude distributions of certain of our foreign joint ventures from domestic taxable income.

 

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As of June 30, 2015, we have gross unrecognized tax benefits of $2.4 million, which, if recognized, would lower our effective tax rate from continuing operations.

New Accounting Standards

In April 2015, the FASB issued Accounting Standards Update (“ASU”) No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. This ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This revised guidance is effective retrospectively for annual reporting periods beginning after December 15, 2015, and related interim periods with early adoption permitted. We are currently evaluating the impact of this standard.

In April 2015, the FASB issued ASU 2015-05 – Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The objective of this ASU is to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement by providing guidance as to whether an arrangement includes the sale or license of software. This update is effective prospectively for annual periods, including interim periods within those annual periods, beginning after December 15, 2015 with early adoption permitted. We are currently evaluating the impact of this standard.

In May 2015, the FASB issued ASU No. 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). This ASU permits a reporting entity to measure the fair value of certain investments using the net asset value per share of the investment. This update is effective retrospectively for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. We are currently evaluating the impact of this standard.

NOTE 2 – ACQUISITIONS AND DISPOSITIONS

MEGTEC Acquisition

On June 20, 2014, we acquired the outstanding stock of industrial processes solutions provider MEGTEC for $142.8 million, net of cash acquired. MEGTEC designs, engineers, manufactures and services air pollution control systems and coating/drying equipment for a variety of industrial applications.

 

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The purchase price of the acquisition has been allocated among assets acquired and liabilities assumed at estimates of fair value with the excess purchase price recorded as goodwill. Our purchase price allocation, finalized in the second quarter of 2015, is as follows:

 

     MEGTEC  
     (in thousands)  

Unrestricted cash

   $ 14,232   

Accounts receivable

     23,054   

Inventories

     5,395   

Other current assets

     6,326   

Property, plant and equipment

     13,348   

Goodwill

     104,308   

Intangible assets

     43,150   
  

 

 

 

Total assets acquired

     209,813   
  

 

 

 

Accounts payable

     13,402   

Advance billings on contracts

     11,144   

Other current liabilities

     18,089   

Pension liability

     5,041   

Deferred income taxes

     4,994   

Other liabilities

     130   
  

 

 

 

Total liabilities assumed

     52,800   
  

 

 

 

Net assets acquired

     157,013   

Unrestricted cash acquired

     14,232   
  

 

 

 

Net assets acquired, net of unrestricted cash acquired

   $ 142,781   
  

 

 

 

Amount of tax deductible goodwill

   $ 34,583   
  

 

 

 

The intangible assets included above consist of the following (dollar amounts in thousands):

 

     Amount      Amortization Period

Customer relationships

   $ 23,500       8 years

Backlog

     10,400       1 year

Trade names / trademarks

     6,000       11 years

Developed technology

     3,250       5 years

Our Industrial Environmental segment is comprised of MEGTEC, and its results of operations since acquisition can be found in Note 11. Additionally, the following unaudited pro forma financial information presents our results of operations for the three and six months ended June 30, 2014 had the acquisition of MEGTEC occurred on January 1, 2013. The unaudited pro forma financial information below is not intended to represent or be indicative of our actual consolidated results had we completed the acquisition at January 1, 2013. This information should not be taken as representative of our future consolidated results of operations.

 

    

Three Months Ended

June 30,

    

Six Months Ended

June 30,

 
     2014      2014  

Revenues

   $ 364,346       $ 719,789   

Net Income Attributable to

Babcock & Wilcox Enterprises, Inc.

   $ 7,014       $ 19,213   

Basic Earnings per Common Share

   $ 0.13       $ 0.34   

Diluted Earnings per Common Share

   $ 0.13       $ 0.34   

 

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The unaudited pro forma results include the following pre-tax adjustments to the historical results presented above:

 

    Additional amortization expense related to the timing of amortization of the fair value of identifiable intangible assets acquired of approximately $0.8 million and $1.3 million for the three and six months ended June 30, 2014, respectively.

 

    Elimination of historical interest expense of approximately $0.6 million and $0.9 million for the three and six months ended June 30, 2014, respectively.

 

    Elimination of $12.5 million in acquisition related costs recognized in the three and six months ended June 30, 2014 that are not expected to be recurring.

NOTE 3 – DISCONTINUED OPERATIONS

As discussed in Note 1, we distributed assets and liabilities totaling $47.8 million associated with our NE segment to BWC in conjunction with the spin-off. We received corporate allocations from the former Parent as described in Note 1, which included $1.3 million and $1.3 million for the three months ended June 30, 2015 and 2014, respectively, and $2.7 million and $2.7 million for the six months ended June 30, 2015 and 2014, respectively. Though these allocations relate to our discontinued NE segment, they are included as part of continuing operations because allocations are not eligible for inclusion in discontinued operations.

The following table presents selected financial information regarding the results of operations of our former NE segment:

 

    

Three Months Ended

June 30,

    

Six Months Ended

June 30,

 
     2015      2014      2015      2014  
     (In thousands)  

Revenues

   $ 30,377       $ 32,335       $ 53,064       $ 68,149   

Income before provision for income taxes

     1,743         4,063         3,358         10,218   

Provision for income taxes

     325         666         555         2,879   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income from discontinued operations, net of tax

   $ 1,418       $ 3,397       $ 2,803       $ 7,339   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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The following table presents the carrying values of the major accounts of discontinued operations that are included in our December 31, 2014 condensed consolidated and combined balance sheet:

 

     December 31,  
     2014  
     (in thousands)  

Current Assets:

  

Cash and cash equivalents

   $ 426   

Accounts receivable – trade, net

     14,041   

Accounts receivable – other

     1,411   

Contracts in progress

     22,953   

Inventories

     1,306   

Deferred income taxes

     48   

Other current assets

     5,992   
  

 

 

 

Total current assets of discontinued operations

     46,177   
  

 

 

 

Net property, plant and equipment

     23,721   

Goodwill

     10,055   

Deferred income taxes

     2,375   

Intangible assets

     980   

Other assets

     1,697   
  

 

 

 

Total assets of discontinued operations

   $ 85,005   
  

 

 

 

Current Liabilities:

  

Accounts payable

   $ 7,954   

Accrued employee benefits

     7,895   

Advance billings on contracts

     5,475   

Accrued warranty expense

     5,469   

Accrued liabilities – other

     17,352   
  

 

 

 

Total current liabilities of discontinued operations

     44,145   
  

 

 

 

Accumulated postretirement benefit obligation

     7,835   

Pension liability

     7,082   

Other liabilities

     1,071   
  

 

 

 

Total liabilities of discontinued operations

   $ 60,133   
  

 

 

 

NOTE 4 – CREDIT FACILITY

On June 30, 2015, the new credit agreement (“New Credit Agreement”) that we entered into on May 11, 2015 closed in connection with the spin-off. The New Credit Agreement provides for senior secured revolving credit facility in an aggregate amount of up to $600 million, which is scheduled to mature on June 30, 2020. The proceeds of loans under the New Credit Agreement are available for working capital needs and other general corporate purposes, and the full amount is available for the issuance of letters of credit.

The New Credit Agreement contains an accordion feature that allows us, subject to the satisfaction of certain conditions, including the receipt of increased commitments from existing lenders or new commitments from new lenders, to increase the amount of the commitments under the revolving credit facility in an aggregate amount not to exceed the sum of (i) $200 million plus (ii) an unlimited amount, so long as for any commitment increase under this subclause (ii) our senior secured leverage ratio (assuming the full amount of any commitment increase under this subclause (ii) is drawn) is equal to or less than 2.0 to 1.0 after giving pro forma effect thereto.

The New Credit Agreement and our obligations under certain hedging agreements and cash management agreements with our lenders and their affiliates are (i) guaranteed by substantially all of our wholly owned domestic subsidiaries, but excluding our captive insurance subsidiary, and (ii) secured by first-priority liens on certain assets owned by us and the guarantors. The New Credit Agreement requires interest payments on revolving loans on a periodic basis until maturity. We may prepay all loans at any time without premium or penalty (other than customary LIBOR breakage costs), subject to notice requirements. The New Credit Agreement requires us to make certain prepayments on any outstanding revolving loans after receipt of cash proceeds from certain asset sales or other events, subject to certain exceptions and a right to reinvest such proceeds in certain circumstances, but such prepayments will not require us to reduce the commitments under the New Credit Agreement.

 

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Loans outstanding under the New Credit Agreement bear interest at our option at either the LIBOR rate plus a margin ranging from 1.375% to 1.875% per year or the base rate (the highest of the Federal Funds rate plus 0.50%, the one month LIBOR rate plus 1.0%, or the administrative agent’s prime rate) plus a margin ranging from 0.375% to 0.875% per year. A commitment fee is charged on the unused portions of the revolving credit facility, and that fee varies between 0.250% and 0.350% per year. Additionally, a letter of credit fee of between 1.375% and 1.875% per year is charged with respect to the amount of each financial letter of credit issued, and a letter of credit fee of between 0.825% and 1.125% per year is charged with respect to the amount of each performance letter of credit issued. The applicable margin for loans, the commitment fee and the letter of credit fees set forth above vary quarterly based on our leverage ratio.

The New Credit Agreement includes financial covenants that are tested on a quarterly basis, based on the rolling four-quarter period that ends on the last day of each fiscal quarter. The maximum permitted leverage ratio is 3.00 to 1.00, which ratio may be increased to 3.25 to 1.00 for up to four consecutive fiscal quarters after a material acquisition. The minimum consolidated interest coverage ratio is 4.00 to 1.00. In addition, the New Credit Agreement contains various restrictive covenants, including with respect to debt, liens, investments, mergers, acquisitions, dividends, equity repurchases and asset sales. At June 30, 2015, we had no borrowings outstanding under the revolving credit facility, and after giving effect to the leverage ratio and $109.1 million of letters of credit issued under the New Credit Agreement, we had approximately $383.9 million available for borrowings or to meet letter of credit requirements.

The New Credit Agreement generally includes customary events of default for a secured credit facility. If an event of default relating to bankruptcy or other insolvency events with respect to us occurs under the New Credit Agreement, all obligations will immediately become due and payable. If any other event of default exists, the lenders will be permitted to accelerate the maturity of the obligations outstanding. If any event of default occurs, the lenders are permitted to terminate their commitments thereunder and exercise other rights and remedies, including the commencement of foreclosure or other actions against the collateral. Additionally, if we are unable to make any of the representations and warranties in the New Credit Agreement, we will be unable to borrow funds or have letters of credit issued. At June 30, 2015, we were in compliance with all of the covenants set forth in the New Credit Agreement.

NOTE 5 – SPECIAL CHARGES FOR RESTRUCTURING ACTIVITIES AND SPIN-OFF COSTS

Global Competitiveness Initiative

In the year ended December 31, 2013, we announced the Global Competitiveness Initiative (“GCI”) to enhance competitiveness, better position us for growth and improve profitability. In conjunction with GCI, during the six months ended June 30, 2014, we incurred $2.2 million of expenses related to facility consolidation.

Other Restructuring Actions

In the six months ended June 30, 2015, we incurred $6.5 million of accelerated depreciation and impairment charges related to facility consolidation, $1.1 million of consulting fees and other administrative costs and $0.1 million of expenses related to employee termination benefits in conjunction with the margin improvement program that BWC announced in 2014. In the six months ended June 30, 2014, we incurred $6.0 million of expenses related to employee termination benefits and $0.8 million of consulting and other administrative costs related to the margin improvement program.

 

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An analysis of our restructuring liabilities for the six months ended June 30, 2015 and 2014 follows:

 

     Six months ended  
     June 30,      June 30,  
     2015      2014  
     (In thousands)  

Balance at the beginning of the period

   $ 5,086       $ 5,213   

Special charges for restructuring activities (1)

     1,199         7,124   

Payments

     (4,102      (5,727
  

 

 

    

 

 

 

Balance at the end of the period

   $ 2,183       $ 6,610   
  

 

 

    

 

 

 

 

(1) Excludes non-cash charges of $6.5 million and $1.9 million for the six months ended June 30, 2015 and 2014, respectively, which did not impact the restructuring liability.

At June 30, 2015, unpaid restructuring charges totaled $1.7 million for employee termination benefits and $0.5 million for consulting and administrative costs. At June 30, 2014, unpaid restructuring charges totaled $6.6 million for employee termination benefits.

Spin-off transaction costs

In the three and six months ended June 30, 2015, we incurred $0.9 million of costs directly related to the spin-off of BW from BWC, included in selling, general and administrative expenses.

NOTE 6 – PENSION PLANS AND POSTRETIREMENT BENEFITS

Components of net periodic benefit cost included in net income are as follows:

 

     Pension Benefits     Other Benefits  
     Three Months Ended     Six Months Ended     Three Months Ended      Six Months Ended  
     June 30,     June 30,     June 30,      June 30,  
     2015     2014     2015     2014     2015      2014      2015      2014  
     (In thousands)  

Service cost

   $ 3,384      $ 3,242      $ 6,774      $ 6,481      $ —         $ —         $ —         $ —     

Interest cost

     11,911        12,818        23,764        25,604        249         255         499         503   

Expected return on plan assets

     (16,677     (15,857     (33,355     (31,710     —           —           —           —     

Amortization of prior service cost (credit)

     100        125        200        250        —           —           —           —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net periodic benefit cost

   $ (1,282   $ 328      $ (2,617   $ 625      $ 249       $ 255       $ 499       $ 503   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

We made contributions to our pension and postretirement benefit plans totaling $4.5 million and $6.6 million during the three and six months ended June 30, 2015, respectively, as compared to $2.0 million and $4.1 million in the three and six months ended June 30, 2014, respectively.

NOTE 7 – COMMITMENTS AND CONTINGENCIES

Investigations and Litigation

Berlin Station

Our subsidiary, Babcock & Wilcox Construction Co., Inc. (“BWCC”), is currently in a dispute with a customer in connection with a 75MW biomass-energy power plant that BWCC designed and built in Berlin, New Hampshire. The dispute primarily concerns material claims by BWCC against its customer for contract changes relating to schedule delays, delay costs, extra work, withheld payments, improper draws on letters of credit, withheld contract-retention amounts, as well as fraud and misrepresentation. The customer has made nine partial draws totaling approximately $11.0 million under letters of credit that were outstanding in connection with the project. These draws correspond to a total of approximately $11.9 million in alleged liquidated damages for delay (“Delay LDs”) on the project.

 

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Following the customer’s denial of BWCC’s change order request relating to schedule delays, delay costs and extra work incurred up to that time, on January 16, 2014, BWCC filed suit against the customer in the Court of Common Pleas, Summit County, Ohio, Case No. 2014 01 0208, seeking damages in excess of $37 million (the “Ohio suit”). On or about January 30, 2014, BWCC’s customer filed suit against BWCC in the Superior Court of Coos County, New Hampshire, Case No. 214-2014-CV-14 alleging breach of contract and seeking unspecified amounts (the “New Hampshire suit”) which was subsequently transferred to the New Hampshire business/commercial court division. On June 26, 2014, the Ohio suit was dismissed on jurisdictional and forum non conveniens grounds. On August 29, 2014, BWCC filed its Answer, Affirmative Defenses and Counterclaim in the New Hampshire suit seeking recovery of damages. Damages claimed and incurred to date are at least $70 million in connection with all matters currently in dispute.

Given the customer’s prior wrongful acts, there is a risk that the customer will attempt to call all or part of the remaining $21.9 million of letters of credit during the pendency of this matter. We believe any such call would be wrongful and entitle us to a return of the funds drawn and other damages. We have made provisions in our financial statements as disclosed in Note 1 for Delay LDs called to date against the letters of credit and have not recorded offsetting claims revenue related to these calls in our financial statements.

We believe BWCC has sound legal and factual bases for its claims. BWCC intends to aggressively pursue recovery on its claims, including recovery of the wrongful calls against BWCC’s letters of credit. However, it is premature to predict the outcome of this matter. The litigation could be lengthy, and if BWCC’s customer were to prevail completely or substantially in this matter, the outcome could have a material adverse effect on our financial statements.

ARPA

On February 28, 2014, Arkansas River Power Authority (“ARPA”) filed suit against Babcock & Wilcox Power Generation Group, Inc. (“PGG OpCo”) in the United States District Court for the District of Colorado (Case No. 14-cv-00638-CMA-NYW) alleging breach of contract, negligence, fraud and other claims arising out of PGG OpCo’s delivery of a circulating fluidized bed (“CFB”) boiler and related equipment used in the Lamar Repowering Project pursuant to a 2005 contract.

In 2009, PGG OpCo informed ARPA that the boiler would require a selective non-catalytic reduction system in order to achieve contractual emissions guarantees, which PGG OpCo supplied in 2010. PGG OpCo recommended additional modifications in 2011 and 2012 to ensure the boiler would meet contractual emissions guarantees; however, ARPA has not installed all of the recommended modifications. ARPA has not confirmed whether it intends to complete and commission the Lamar plant.

On April 16, 2014, PGG OpCo filed an Answer asserting numerous defenses, including waiver, prevention of performance and failure to mitigate damages and Counterclaims alleging bad faith, breach of contract and unjust enrichment. ARPA filed an Answer to the Counterclaims on May 7, 2014. The District Court granted leave for ARPA to amend its Complaint, and ARPA’s First Amended Complaint was accepted on March 20, 2015. PGG OpCo filed its Answer to the First Amended Complaint on April 1, 2015. Discovery is ongoing and a trial date has not been set.

We believe that ARPA has asserted damages theories that are highly speculative and without legal or economic support as a litigation tactic. We also believe most of the alleged damages are expressly waived and/or capped in enforceable provisions of the 2005 contract. We cannot estimate the possible loss at this time. However, in addition to establishing other relevant sub-caps and including an explicit waiver of a broad range of damages, including consequential damages, the 2005 contract provides an overall cap of liability at the original contract price of approximately $20.5 million. ARPA has alleged various theories of possible liability and damages that would lead to vastly different measures of damages, making it impracticable to estimate a range of possible outcomes; however, ARPA’s damage claims total approximately $170 million. PGG OpCo does not believe it is probable that ARPA will be successful in any of its claims. PGG OpCo believes it has strong defenses and intends to aggressively defend this matter and pursue its counterclaims. However, if ARPA were to prevail on all or any significant portion of its claims in this matter, the outcome could have a material adverse effect on our financial condition.

Other Litigation and Settlements

On December 17, 2014, an unfavorable jury verdict was delivered against BWC, PGG OpCo, Babcock & Wilcox Nuclear Energy, Inc. (a subsidiary of BWC that is not part of BW), and Babcock & Wilcox Canada Ltd (a BWC subsidiary that is not part of BW) (collectively, the “BWC Parties”) in a case entitled AREVA NP, INC. f/k/a Framatome ANP, Inc. v. The Babcock & Wilcox Company, et. al.

 

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in the amount of approximately $16 million. The BWC Parties strongly disagree with the verdict and believe the plaintiff’s claims are without merit. The BWC Parties have filed a post-trial motion requesting that the verdict be set aside or a new trial granted. On March 5, 2015, the trial court denied a post-trial motion requesting that the verdict be set aside or a new trial granted. The BWC Parties have filed a notice of appeal with the Virginia Supreme Court. The case was filed August 26, 2011 in the Circuit Court for the City of Lynchburg, Commonwealth of Virginia and alleged that the BWC Parties to the suit owed royalties on certain commercial nuclear contracts performed by BWC and certain of its subsidiaries since 2004. Under the terms of the spin-off, the former Parent has agreed to indemnify BW in full from any losses in this matter.

NOTE 8 – DERIVATIVE FINANCIAL INSTRUMENTS

Our global operations give rise to exposure to market risks from changes in foreign currency exchange (“FX”) rates. We use derivative financial instruments, primarily FX forward contracts, to reduce the impact of changes in FX rates on our operating results. We use these instruments primarily to hedge our exposure associated with revenues or costs on our long-term contracts that are denominated in currencies other than our operating entities’ functional currencies. We do not hold or issue derivative financial instruments for trading or other speculative purposes.

We enter into derivative financial instruments primarily as hedges of certain firm purchase and sale commitments denominated in foreign currencies. We record these contracts at fair value on our condensed consolidated and combined balance sheets. Depending on the hedge designation at the inception of the contract, the related gains and losses on these contracts are either deferred in stockholders’ equity as a component of accumulated other comprehensive income until the hedged item is recognized in earnings, or offset against the change in fair value of the hedged firm commitment through earnings. Any ineffective portion of a derivative’s change in fair value and any portion excluded from the assessment of effectiveness are immediately recognized in other – net on our condensed consolidated and combined statements of operations. The gain or loss on a derivative instrument not designated as a hedging instrument is also immediately recognized in earnings as a component of other– net in our condensed consolidated and combined statements of operations.

We have designated all of our FX forward contracts that qualify for hedge accounting as cash flow hedges. The hedged risk is the risk of changes in functional-currency-equivalent cash flows attributable to changes in FX spot rates of forecasted transactions related to long-term contracts. We exclude from our assessment of effectiveness the portion of the fair value of the forward contracts attributable to the difference between FX spot rates and FX forward rates. At June 30, 2015, we had deferred approximately $0.3 million of net losses on these derivative financial instruments in accumulated other comprehensive income. Assuming market conditions continue, we expect to recognize substantially all of this amount in the next twelve months.

At June 30, 2015, our derivative financial instruments consisted of FX forward contracts. The notional value of our FX forward contracts totaled $114.3 million at June 30, 2015, with maturities extending to August 30, 2017. These instruments consist primarily of contracts to purchase or sell euros. We are exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments. We attempt to mitigate this risk by using major financial institutions with high credit ratings. The counterparties to all of our FX forward contracts are financial institutions included in our credit facility. Our hedge counterparties have the benefit of the same collateral arrangements and covenants as described under our credit facility. The effect of counterparty non-performance on the fair value of derivative financial instruments included in our financial statements is not material.

 

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The following tables summarize our derivative financial instruments at June 30, 2015 and December 31, 2014:

 

     Asset and Liability Derivatives  
     June 30,      December 31,  
     2015      2014  
     (In thousands)  

Derivatives Designated as Hedges:

     

FX Forward Contracts:

     
Location      

Accounts receivable-other

   $ 132       $ 88   

Other assets

     6         —     

Accounts payable

     8         89   

Other liabilities

     7         —     

Derivatives Not Designated as Hedges:

     

FX Forward Contracts:

     
Location      

Accounts receivable-other

   $ 374       $ 175   

Other assets

     8         —     

Accounts payable

     —           284   

The effects of derivatives on our financial statements are outlined below:

 

     The Effects of Derivative Instruments on our Financial Statements  
     Three Months Ended      Six Months Ended  
     June 30,      June 30,  
     2015      2014      2015      2014  
     (In thousands)  

Derivatives Designated as Hedges:

           

Cash Flow Hedges:

           

FX Forward Contracts:

           

Amount of gain (loss) recognized in other comprehensive income

   $ (3,382    $ (61    $ (455    $ (52

Gain (loss) reclassified from accumulated other comprehensive income into earnings: effective portion

           
Location            

Revenues

   $ (40    $ 13       $ 22       $ 23   

Cost of operations

     (2      (5      98         (5

Other-net

     (33      —           (32      —     

Gain (loss) recognized in income: portion excluded from effectiveness testing

           
Location            

Other-net

   $ (136    $ (462    $ 1,009       $ (174

Derivatives Not Designated as Hedges:

           

FX Forward Contracts:

           

Gain (loss) recognized in income

           
Location            

Other-net

   $ 181       $ 211       $ 398       $ 278   

 

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NOTE 9 – FAIR VALUE MEASUREMENTS

Investments

The following is a summary of our available-for-sale securities measured at fair value at June 30, 2015 (in thousands):

 

     6/30/15      Level 1      Level 2      Level 3  

Commercial paper

   $ 3,598       $ —         $ 3,598       $ —     

Certificates of deposit

     1,500         —           1,500         —     

Mutual funds

     1,111         —           1,111         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 6,209       $ —         $ 6,209       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

The following is a summary of our available-for-sale securities measured at fair value at December 31, 2014 (in thousands):

 

     12/31/14      Level 1      Level 2      Level 3  

Commercial paper

   $ 1,607       $ —         $ 1,607       $ —     

Asset-backed securities and collateralized mortgage obligations

     214         —           214         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 1,821       $ —         $ 1,821       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

We estimate the fair value of investments based on quoted market prices. For investments for which there are no quoted market prices, we derive fair values from available yield curves for investments of similar quality and terms.

Derivatives

Level 2 derivative assets and liabilities currently consist of FX forward contracts. Where applicable, the value of these derivative assets and liabilities is computed by discounting the projected future cash flow amounts to present value using market-based observable inputs, including FX forward and spot rates, interest rates and counterparty performance risk adjustments. At June 30, 2015 and December 31, 2014, we had forward contracts outstanding to purchase or sell foreign currencies, primarily euros, with a total fair value of $0.5 million and $(0.1) million, respectively.

Other Financial Instruments

We used the following methods and assumptions in estimating our fair value disclosures for our other financial instruments, as follows:

Cash and cash equivalents and restricted cash and cash equivalents . The carrying amounts that we have reported in the accompanying condensed consolidated and combined balance sheets for cash and cash equivalents and restricted cash and cash equivalents approximate their fair values due to their highly liquid nature.

Long-term and short-term debt . We base the fair values of debt instruments on quoted market prices. Where quoted prices are not available, we base the fair values on the present value of future cash flows discounted at estimated borrowing rates for similar debt instruments or on estimated prices based on current yields for debt issues of similar quality and terms. The fair value of our debt instruments approximated their carrying value at June 30, 2015 and December 31, 2014.

NOTE 10 – STOCK-BASED COMPENSATION

Prior to the spin-off, executive officers, key employees, members of the board of directors and consultants of BW were eligible to participate in the 2010 Long-Term Incentive Plan of The Babcock & Wilcox Company (the “BWC Plan”). Effective June 30, 2015, executive officers, key employees, members of the board of directors and consultants of BW will be eligible to participate in the 2015 Long-Term Incentive Plan of Babcock & Wilcox Enterprises, Inc. (the “Plan”). The Plan permits grants of nonqualifed stock options, incentive stock options, appreciation rights, restricted stock, restricted stock units, performance shares, performance units, and cash incentive awards. The number of shares available for award grants under the Plan totals 5,800,000.

 

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In connection with the spin-off, outstanding stock options and restricted stock units granted under the BWC Plan prior to 2015 will be replaced with both an adjusted BWC award and a new BW stock award. These awards, when combined, will have terms that were intended to preserve the values of the original awards. Outstanding performance share awards originally issued under the BWC Plan granted prior to 2015 will generally be converted into unvested rights to receive the value of deemed target performance in unrestricted shares of a combination of BWC common stock and BW common stock, determined by reference to the ratio of one share of BW common stock being distributed for every two shares of BWC common stock in the spin-off, in each case with the same vesting terms as the original awards.

Total stock-based compensation expense for all of our plans recognized for the three and six months ended June 30, 2015 totaled $1.2 million and $2.0 million, respectively, with associated tax benefit recognized for the three and six months ended June 30, 2015 totaling $0.4 million and $0.7 million, respectively.

Total stock-based compensation expense for all of our plans recognized for the three and six months ended June 30, 2014 totaled $0.7 million and $0.8 million, respectively, with associated tax benefit recognized for the three and six months ended June 30, 2014 totaling $0.3 million.

NOTE 11 – SEGMENT REPORTING

As described in Note 1, our operations are assessed based on three reportable segments. An analysis of our operations by reportable segment is as follows:

 

     Three Months Ended      Six Months Ended  
     June 30,      June 30,  
     2015      2014      2015      2014  
     (In thousands)  

REVENUES:

           

Global Power

   $ 157,373       $ 109,693       $ 281,259       $ 219,985   

Global Services

     236,720         214,086         468,894         415,872   

Industrial Environmental

     43,392         3,600         84,487         3,600   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 437,485       $ 327,379       $ 834,640       $ 639,457   
  

 

 

    

 

 

    

 

 

    

 

 

 

GROSS PROFIT:

           

Global Power

   $ 26,676       $ 19,472       $ 47,104       $ 34,719   

Global Services

     46,308         48,356         99,595         89,960   

Industrial Environmental

     8,900         1,200         18,582         1,200   
  

 

 

    

 

 

    

 

 

    

 

 

 
     81,884         69,028         165,281         125,879   

Research and development costs

     (3,962      (4,281      (8,480      (8,293

Losses on asset disposals and impairments, net

     (9,009      (1,457      (9,027      (1,457

Selling, general and administrative expenses

     (59,709      (53,040      (116,802      (102,252

Special charges for restructuring activities

     (5,312      (7,513      (7,666      (8,991

Equity in income of investees

     967         433         (1,104      2,799   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Operating Income

   $ 4,859       $ 3,170       $ 22,202       $ 7,685   
  

 

 

    

 

 

    

 

 

    

 

 

 

NOTE 12 – EARNINGS PER SHARE

On June 30, 2015, 53,719,878 shares of our common stock were distributed to BWC shareholders to complete our spin-off transaction. The basic and diluted weighted average shares outstanding were based on the weighted average number of BWC common shares outstanding for the three and six months ended June 30, 2015 and the three and six months ended June 30, 2014 adjusted for a distribution ratio of one share of BW common stock for every two shares of BWC common stock.

 

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The following table sets forth the computation of basic and diluted earnings per share:

 

     Three Months Ended      Six Months Ended  
     June 30,      June 30,  
     2015      2014      2015      2014  
     (Unaudited)  
     (In thousands, except per share amounts)  

Amounts attributable to Babcock & Wilcox Enterprises, Inc.

           

Income from continuing operations

   $ 4,069       $ 1,539       $ 15,373       $ 8,686   

Income from discontinued operations, net of tax

     1,418         3,397         2,803         7,339   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income attributable to Babcock & Wilcox Enterprises, Inc.

   $ 5,487       $ 4,936       $ 18,176       $ 16,025   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average common shares used to calculate basic earnings per common share

     53,560         54,883         53,474         55,051   

Effect of dilutive securities:

           

Stock options, restricted stock and performance shares (1)

     227         175         206         200   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average common shares used to calculate diluted earnings per common share

     53,787         55,058         53,680         55,251   
  

 

 

    

 

 

    

 

 

    

 

 

 

Basic earnings per common share:

           

Continuing operations

   $ 0.08       $ 0.03       $ 0.29       $ 0.16   

Discontinued operations

     0.02         0.06         0.05         0.13   
  

 

 

    

 

 

    

 

 

    

 

 

 

Basic earnings per common share

   $ 0.10       $ 0.09       $ 0.34       $ 0.29   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted earnings per common share:

           

Continuing operations

   $ 0.07         0.03       $ 0.29         0.16   

Discontinued operations

     0.03         0.06         0.05         0.13   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted earnings per common share

   $ 0.10       $ 0.09       $ 0.34       $ 0.29   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) At June 30, 2015 and 2014, we have excluded from our diluted share calculation 1,204,003 and 686,544 shares respectively, related to stock options, as their effect would have been antidilutive.

NOTE 13 – RELATED PARTY TRANSACTIONS

In connection with the spin-off, BWC changed its name to BWX Technologies, Inc. We are a party to transactions with our former Parent and its subsidiaries in the normal course of operations. These transactions include the following:

 

     Three Months Ended      Six Months Ended  
     June 30,      June 30,  
     2015      2014      2015      2014  
     (In thousands)  

Sales to our former Parent

   $ (286    $ (1,312    $ (911    $ (4,220

Corporate administrative expense

   $ 17,332       $ 18,332       $ 35,343       $ 36,664   

Guarantees

As of June 30, 2015, our former Parent has outstanding performance guarantees for various projects executed by us. These projects are all in the normal course of business. These guarantees, based on original contract value, total $1,670.3 million and range in expiration dates from 2015 to 2035. We are contractually obligated to use our commercially reasonable efforts to terminate all existing guarantees by one party of obligations relating to the business of the other party, including financial performance and other guarantee obligations.

 

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Net transfers (to) from former Parent

Net transfers (to) from former Parent represent the change in our former Parent’s historical investment in us. It primarily includes the net effect of cost allocations from transactions with our former Parent, sales to our former Parent, and the net transfers of cash and assets to our former Parent.

 

     Three Months Ended      Six Months Ended  
     June 30,      June 30,  
     2015      2014      2015      2014  
     (In thousands)  

Sales to former Parent

   $ (286    $ (1,312    $ (911    $ (4,220

Corporate administrative expenses

     17,332         18,332         35,343         36,664   

Income tax allocation

     7,441         (2,439      11,872         (6,484

Acquisition of business, net of cash acquired

     —           127,704         —           127,704   

Cash pooling and general financing activities

     (44,129      16,584         (91,015      61,598   

Cash contribution received at spin-off

     125,300         —           125,300         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Net transfer from former Parent per statement of cash flows

   $ 105,658       $ 158,869       $ 80,589       $ 215,262   

Non-cash items:

           

Net transfer of assets and liabilities

     44,706         —           44,706         —     

Distribution of Nuclear Energy segment

     (47,839      —           (47,839      —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Net transfer from former Parent per statement of shareholders’ equity

   $ 102,525       $ 158,869       $ 77,456       $ 215,262   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934. You should not place undue reliance on these statements. These forward-looking statements include statements that reflect the current views of our senior management with respect to our financial performance and future events with respect to our business and industry in general. Statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,” “should,” “anticipate” and similar statements of a future or forward-looking nature identify forward-looking statements. Forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. These factors include the cautionary statements included in this report and the factors set forth under “Risk Factors” in our registration statement on Form 10 (as amended, the “Form 10”) filed with the Securities and Exchange Commission. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. We assume no obligation to revise or update any forward-looking statement included in this report for any reason, except as required by law.

OVERVIEW

In this quarterly report on Form 10-Q, unless the context otherwise indicates, “BW,” “we,” “us” and “our” mean Babcock & Wilcox Enterprises, Inc. and its consolidated subsidiaries.

On June 8, 2015, the board of directors of The Babcock & Wilcox Company (now known as BWX Technologies, Inc.) (“BWC” or the “former Parent”) approved the spin-off of BW through the distribution of shares of BW common stock to holders of common stock. The distribution of BW common stock was made on June 30, 2015, and consisted of one share of BW common stock for every two shares of BWC common stock to holders of BWC common stock as of 5:00 p.m. New York City time on the record date, June 18, 2015. Cash was paid in lieu of any fractional shares of BW common stock. On June 30, 2015, BW became a separate publicly traded company, and BWC did not retain any ownership interest in BW. We filed our Form 10 describing the spin-off with the Securities and Exchange Commission, which was declared effective on June 16, 2015. The spin-off is further described in Note 1 to the condensed consolidated and combined financial statements.

As a new and independent company, BW continues to be a leading technology-based provider of advanced fossil and renewable power generation equipment with a broad suite of new build boiler and environmental products, and continues to provide a comprehensive platform of aftermarket services to a large global installed base of power generation facilities. In addition, BW is a leading provider of technology and services in the growing market for industrial environmental systems. Across all of our capabilities, we continue to specialize in engineering, manufacturing, procurement and erection of equipment and technology for a large and global customer base. We operate in three segments: Global Power, Global Services and Industrial Environmental. In general, we operate in capital-intensive industries and rely on large contracts for a substantial amount of our revenues.

Our strategy as an independent company focuses on four important areas:

 

    enhancing our operating model and asset base to optimize our approach to profitable organic growth and enhanced free cash flow across our range of global markets;

 

    pursuing growth opportunities in the international power generation market by expanding our market and operation presences in regions around the world where we expect continued demand growth for both our traditional and new, renewable technology and services;

 

    seeking and executing additional strategic acquisitions that focus on expanding our existing capabilities as well as entering adjacent markets; and

 

    maintaining our commitment to safety and exceeding our customer expectations.

 

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Global Power Segment

Our Global Power segment consists of our worldwide new build boiler and environmental products businesses. Through this segment, we engineer, manufacture, procure, construct and commission steam generating and environmental systems and other related equipment. Our boilers are designed for utility and industrial applications, fired with fossil and renewable fuels and include advanced supercritical boilers, subcritical boilers, fluidized bed boilers, biomass-fired boilers, waste-to-energy boilers, chemical recovery boilers, industrial power boilers, package boilers, heat recovery steam generators, waste heat boilers and solar thermal power systems. Our environmental systems offer air pollution control products and related equipment for the treatment of nitrogen oxides, sulfur dioxide, fine particulate, mercury, acid gases and other hazardous air emissions and include wet and dry flue gas desulfurization systems, catalytic and non-catalytic nitrogen oxides reduction systems, low nitrogen oxides burners and overfire air systems, fabric filter baghouses, wet and dry electrostatic precipitators, mercury control systems and dry sorbent injection for acid gas mitigation. Our customers consist of a wide range of utilities, independent power producers and industrial companies globally. This segment’s activity is dependent on the capital expenditures and operations and maintenance expenditures of global electric power generating companies and other steam-using industries with environmental compliance needs.

We see opportunities for growth in revenues in this segment relating to a variety of factors including the following:

 

    emerging international markets needing state-of-the-art technology for fossil power generation and environmental systems;

 

    a global need for renewable and carbon neutral power applications requiring steam generation and environmental control technologies to enable beneficial use of municipal waste and biomass;

 

    industrial products such as heat recovery and steam generators, and natural gas- and oilfired package boilers due to lower fuel prices; and

 

    increasing environmental regulation.

Globally, efforts to reduce the environmental impact of burning fossil fuels may create opportunities for us as existing generating capacity is replaced with cleaner technologies. We are actively researching, developing and deploying a range of products to serve this opportunity, including lower-carbon technologies that enable clean use of fossil fuels, such as ultra-supercritical boilers; carbon-neutral technologies, such as biomass-fueled boilers and gasifiers; and gas-fired package boiler technologies.

We expect the recent growth in backlog, which relates primarily to recent international coal boiler and renewable bookings, will provide revenue growth in this segment, although the rate of backlog growth is dependent on many external factors described above and may vary from period to period.

Global Services Segment

Our Global Services segment provides a comprehensive mix of aftermarket products and services to support peak efficiency and availability of steam generating and associated environmental and auxiliary equipment for power generation. Our products and services include replacement parts, field technical services, retrofit and upgrade projects, fuel switching and repowering projects, construction and maintenance services, start-up and commissioning, training programs and plant operations and maintenance for our full complement of boiler, environmental and auxiliary equipment. We deliver these aftermarket products and services to a large installed base for our and our competitors’ power generation and industrial plants globally through our extensive network of regionally located service centers, technical support personnel, and global sourcing capabilities. Our customers consist of a wide range of utilities, independent power producers and industrial companies globally. This segment’s activity is dependent on the demand for electricity and ultimately the capacity utilization and associated operations and maintenance expenditures of power generating companies and other steam-using industries.

While there is overall industry pressure on sales associated with the U.S. coal utility market, we continue to see opportunities for growth and margin expansion in this segment relating to a variety of factors including the following:

 

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    consolidating and repositioning our infrastructure to meet the substantial recurring aftermarket products and services opportunity with a strategically efficient and cost competitive operating model;

 

    continued customer investment in existing power plants, particularly in North America, to enhance utilization and operating efficiency levels, improve reliability and extend the useful life of existing plants;

 

    leveraging our relationship network of strategic partners, particularly in North America, to expand our market opportunity to supply aftermarket parts and services to installed units delivered by other original equipment suppliers; and

 

    targeted repositioning of our global sales network in strategic countries to serve the aftermarket refurbishment and maintenance of existing facilities outside North America.

We expect that our large installed base of power generation equipment will provide a solid foundation for a recurring revenue stream.

Industrial Environmental Segment

Our Industrial Environmental segment provides environmental products and services to numerous industrial end markets through MEGTEC, which we acquired on June 20, 2014. Through this segment, we design, engineer and manufacture products including oxidizers, solvent and distillation systems, wet electrostatic precipitators, fabric filter baghouses, scrubbers and heat recovery systems. The segment also provides specialized industrial process systems, coating lines and equipment. Our suite of technologies for pollution abatement include systems that control volatile organic compounds and air toxins, particulate, nitrogen oxides and acid gas air emissions from industrial processes. We serve a diverse set of industrial end markets with a current emphasis on the chemical, pharmaceutical, energy storage, packaging, and automotive markets. This segment’s activity is dependent primarily on the capacity utilization of operating industrial plants and an increased emphasis on environmental emissions globally across a broad range of industries and markets.

We see opportunities for growth in revenues in this segment relating to a variety of factors. Our new equipment customers purchase equipment as part of major capacity expansions, to replace existing equipment, or in response to regulatory initiatives. Additionally, our significant installed base provides a consistent and recurring aftermarket stream of parts, retrofits and services. Economic recovery, particularly in the United States, as well as major investments in global chemical markets have strengthened demand for MEGTEC equipment, while tightening environmental regulations in China, India and developing countries are creating new opportunities. Long-term trends toward increased environmental controls for industrial manufacturers around the world are expected to provide revenue growth in this segment. We will continue to seek acquisitions to expand our market presence and technology offerings. Additionally, the results of the segment will benefit from the end of the one-year amortization period as of June 30, 2015 of the $10.4 million backlog intangible asset that was established in purchase accounting.

 

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RESULTS OF OPERATIONS – THREE AND SIX MONTHS ENDED JUNE 30, 2015 VS. THREE AND SIX MONTHS ENDED JUNE 30, 2014

Selected financial highlights are presented in the table below:

 

    

Three months ended

June 30,

   

Six months ended

June 30,

 
     2015     2014     $ Change     2015     2014     $ Change  
     (In thousands)  

REVENUES:

            

Global Power

   $ 157,373      $ 109,693      $ 47,680      $ 281,259      $ 219,985      $ 61,274   

Global Services

     236,720        214,086        22,634        468,894        415,872        53,022   

Industrial Environmental

     43,392        3,600        39,792        84,487        3,600        80,887   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 437,485      $ 327,379      $ 110,106      $ 834,640      $ 639,457      $ 195,183   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GROSS PROFIT:

            

Global Power

   $ 26,676      $ 19,472      $ 7,204      $ 47,104      $ 34,719      $ 12,385   

Global Services

     46,308        48,356        (2,048     99,595        89,960        9,635   

Industrial Environmental

     8,900        1,200        7,700        18,582        1,200        17,382   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     81,884        69,028        12,856        165,281        125,879        39,402   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Research and development costs

     (3,962     (4,281     319        (8,480     (8,293     (187

Losses on asset disposals and impairments, net

     (9,009     (1,457     (7,552     (9,027     (1,457     (7,570

Selling, general and administrative expenses

     (59,709     (53,040     (6,669     (116,802     (102,252     (14,550

Special charges for restructuring activities

     (5,312     (7,513     2,201        (7,666     (8,991     1,325   

Equity in income (loss) of investees

     967        433        534        (1,104     2,799        (3,903
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   $ 4,859      $ 3,170      $ 1,689      $ 22,202      $ 7,685      $ 14,517   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated and Combined Results of Operations

Three Months Ended June 30, 2015 vs. 2014

Consolidated and combined revenues increased by 33.6%, or $110.1 million, to $437.5 million in the three months ended June 30, 2015 as compared to $327.4 million for the corresponding period in 2014, due primarily to increased revenues from our Global Power and Global Services segments of $47.7 million and $22.6 million, respectively. The MEGTEC acquisition, which was completed on June 20, 2014 and comprises the Industrial Environmental segment, contributed an additional $39.8 million of revenues over the 2014 period.

Gross profit increased by 18.6%, or $12.9 million, to $81.9 million in the three months ended June 30, 2015 as compared to $69.0 million for the corresponding period in 2014, primarily due to increases in revenues from the Global Power segment and the MEGTEC acquisition.

The performance drivers of each segment as well as other operating costs are discussed in more detail below.

Six Months Ended June 30, 2015 vs. 2014

Consolidated revenues and combined revenues increased by 30.5%, or $195.2 million, to $834.6 million in the six months ended June 30, 2015 as compared to $639.5 million for the corresponding period in 2014, due primarily to increased revenues from our Global Power and Global Services segments of $61.3 million and $53.0 million, respectively. The MEGTEC acquisition, which was completed on June 20, 2014 and comprises the Industrial Environmental segment, contributed an additional $80.9 million of revenues over the 2014 period.

Gross profit increased by 31.3%, or $39.4 million, to $165.3 million in the six months ended June 30, 2015 as compared to $125.9 million for the corresponding period in 2014, primarily due to increases in revenues from the Global Power and Global Services segments and the MEGTEC acquisition.

The performance drivers of each segment as well as other operating costs are discussed in more detail below.

 

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Global Power

 

    

Three months ended

June 30,

    

Six months ended

June 30,

 
     2015     2014     $ Change      2015     2014     $ Change  
     (In thousands)  

Revenues

   $ 157,373      $ 109,693      $ 47,680       $ 281,259      $ 219,985      $ 61,274   

Gross profit

     26,676        19,472        7,204         47,104        34,719        12,385   

% of revenues

     17.0     17.8        16.7     15.8  

Three Months Ended June 30, 2015 vs. 2014

Revenues increased 43.5%, or $47.7 million, to $157.4 million in the three months ended June 30, 2015, compared to $109.7 million in the corresponding 2014 period. This increase was due to higher new build steam generation systems revenues of $43.4 million primarily related to recently awarded utility and renewable energy boiler projects. In addition, we experienced an increase in new build environmental revenues of $4.3 million primarily due to the level of activities on various projects.

Gross profit increased $7.2 million to $26.7 million in the three months ended June 30, 2015, compared to $19.5 million in the corresponding 2014 period, primarily due to the increase in revenues discussed above. In addition, the prior year period contained an additional loss provision recorded on the Berlin Station project of $4.0 million which had a favorable comparison impact on gross profit as a percentage of revenues of 3.7% for the three months ended June 30, 2015 when compared to the corresponding 2014 period. This increase was offset by a lower level of net project improvements as compared to the prior year period.

Six Months Ended June 30, 2015 vs. 2014

Revenues increased 27.9%, or $61.3 million, to $281.3 million in the six months ended June 30, 2015, compared to $220.0 million in the corresponding 2014 period. This increase was due to higher new build steam generation systems revenues of $65.0 million primarily related to recently awarded utility and renewable energy boiler projects. This increase was partially offset by a decline in new build environmental revenues of $3.7 million as projects related to the previously enacted environmental rules and regulations near completion.

Gross profit increased $12.4 million to $47.1 million in the six months ended June 30, 2015, compared to $34.7 million in the corresponding 2014 period, primarily due to the increase in revenues discussed above. In addition, the prior year period contained an additional loss provision recorded on the Berlin Station project of $11.6 million which had a favorable comparison impact on gross profit as a percentage of revenues of 5.3% for the six months ended June 30, 2015 when compared to the corresponding 2014 period. This increase was offset by a lower level of net project improvements as compared to the prior year period.

Global Services

 

    

Three months ended

June 30,

   

Six months ended

June 30,

 
     2015     2014     $ Change     2015     2014     $ Change  
     (In thousands)  

Revenues

   $ 236,720      $ 214,086      $ 22,634      $ 468,894      $ 415,872      $ 53,022   

Gross profit

     46,308        48,356        (2,048     99,595        89,960        9,635   

% of revenues

     19.6     22.6       21.2     21.6  

Three Months Ended June 30, 2015 vs. 2014

Revenues increased 10.6%, or $22.6 million, to $236.7 million in the three months ended June 30, 2015, compared to $214.1 million in the corresponding 2014 period. This increase was primarily attributable to increased activity in projects and construction services from a couple of larger service projects.

Gross profit decreased $2.0 million to $46.3 million in the three months ended June 30, 2015, compared to $48.4 million in the corresponding 2014 period. The gross profit related to the increased revenues discussed above was more than offset by lower gross profit from our operations and maintenance activities. The 2015 period gross profit was affected by a planned maintenance outage at one of the facilities we operate and the prior year period was favorably impacted by settlements on contracts for facilities that we no longer operate.

 

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Six Months Ended June 30, 2015 vs. 2014

Revenues increased 12.7%, or $53.0 million, to $468.9 million in the six months ended June 30, 2015, compared to $415.9 million in the corresponding 2014 period. This increase was primarily attributable to increased activity in projects and construction services from various service projects.

Gross profit increased $9.6 million to $99.6 million in the six months ended June 30, 2015, compared to $90.0 million in the corresponding 2014 period, primarily related to the increase in revenues above. The increase in gross profit was negatively affected by the operations and maintenance items discussed above in the three month period, but with partial offsets from project improvements and cost savings from our margin improvement initiatives.

Industrial Environmental

 

    

Three months ended

June 30,

    

Six months ended

June 30,

 
     2015     2014     $ Change      2015     2014     $ Change  
     (In thousands)  

Revenues

   $ 43,392      $ 3,600      $ 39,792       $ 84,487      $ 3,600      $ 80,887   

Gross profit

     8,900        1,200        7,700         18,582        1,200        17,382   

% of revenues

     20.5     33.3        22.0     33.3  

Three Months Ended June 30, 2015 vs. 2014

This segment contains the operating results of MEGTEC, which was acquired on June 20, 2014. Revenues and gross profit contributed by this segment totaled $43.4 million and $8.9 million, respectively, for the three months ended June 30, 2015 as compared to revenues and gross profit of $3.6 million and $1.2 million, respectively, in the corresponding 2014 period. The 2015 period includes amortization of intangible assets which had a $3.1 million unfavorable impact on gross profit for the three months ended June 30, 2015, primarily related to a $10.4 million backlog intangible asset that completed its one-year amortization period as of June 30, 2015.

Six Months Ended June 30, 2015 vs. 2014

Revenues and gross profit contributed by this segment totaled $84.5 million and $18.6 million, respectively, for the six months ended June 30, 2015 as compared to revenues and gross profit of $3.6 million and $1.2 million, respectively, in the corresponding 2014 period. The 2015 period includes amortization of intangible assets which had a $5.8 million unfavorable impact on gross profit for the six months ended June 30, 2015, primarily related to a $10.4 million backlog intangible asset that completed its one-year amortization period as of June 30, 2015.

Backlog

Backlog is not a measure recognized by generally accepted accounting principles. It is possible that our methodology for determining backlog may not be comparable to methods used by other companies. We generally include expected revenue in our backlog when we receive written confirmation from our customers. Backlog may not be indicative of future operating results and projects in our backlog may be cancelled, modified or otherwise altered by customers. We do not include orders of our unconsolidated joint ventures in backlog. These unconsolidated joint ventures are primarily included in our Global Power segment.

 

     June 30,      December 31,  
     2015      2014  
     (Unaudited)  
     (In millions)  

Global Power

   $ 1,185       $ 946   

Global Services

     1,162         1,229   

Industrial Environmental

     96         72   
  

 

 

    

 

 

 

Backlog

   $ 2,443       $ 2,247   
  

 

 

    

 

 

 

 

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Of the June 30, 2015 backlog, we expect to recognize revenues as follows:

 

     2015      2016      Thereafter      Total  
     (Unaudited)  
     (In approximate millions)  

Global Power

   $ 322       $ 448       $ 415       $ 1,185   

Global Services

     297         236         629         1,162   

Industrial Environmental

     67         29         —           96   
  

 

 

    

 

 

    

 

 

    

 

 

 

Backlog

   $ 686       $ 713       $ 1,044       $ 2,443   
  

 

 

    

 

 

    

 

 

    

 

 

 

Research and development:

Research and development expenses relate to the development and improvement of new and existing products and equipment, as well as conceptual and engineering evaluation for translation into practical applications. These expenses were relatively unchanged at $4.0 million and $4.3 million for the three months ended June 30, 2015 and 2014, respectively, and $8.5 million and $8.3 million for the six months ended June 30, 2015 and 2014, respectively.

Gain (loss) on asset disposal and impairment-net:

Gain (loss) on asset disposal and impairment-net increased to $9.0 million and for the three and six months ended June 30, 2015, as compared to $1.5 million for the three and six months ended June 30, 2014. In the three months ended June 30, 2015, the company recognized a $9.0 million impairment charge primarily related to research and development facilities and equipment dedicated to a carbon capture process that was determined during the quarter ended June 30, 2015 to not be commercially viable.

Selling, general and administrative:

Selling, general and administrative expenses increased by $6.7 million to $59.7 million for the three months ended June 30, 2015, as compared to $53.0 million for the corresponding period in 2014. Selling, general and administrative expenses increased by $14.6 million to $116.8 million for the six months ended June 30, 2015, as compared to $102.3 million for the corresponding period in 2014. Cost savings from restructuring activities were offset by an increase in selling, general and administrative expenses of $8.6 million and $16.9 million in the three and six months ended June 30, 2015 associated with the MEGTEC business that was acquired on June 20, 2014.

The costs to operate our business as an independent public entity may exceed the historical allocations of expenses from BWC to us related to areas that include, but are not limited to, litigation and other legal matters, compliance with the Sarbanes-Oxley Act and other corporate governance matters, insurance and claims management and the related cost of insurance. We estimate that we will incur annual incremental costs that will range from $14 million to $16 million to replace both the services previously provided by BWC as well as other stand-alone costs, such as costs to create separate accounting, legal, senior management and tax teams. Due to the scope and complexity of these activities, the amount and timing of these incremental costs could vary and initial run rates could be slightly higher than the expected annual increase.

Special charges for restructuring activities and spin-off costs:

Global Competitiveness Initiative and Other Restructuring Activities

Prior to contemplating the spin-off, we launched the Global Competitiveness Initiative (“GCI”) in the third quarter of 2012 to enhance competitiveness, better position us for growth, and improve profitability. A wide range of cost reduction activities were identified, including operational and functional efficiency improvements, organizational design changes and manufacturing optimization. Savings from these initiatives have been phased in since 2012, and once fully executed we expect annual savings to total approximately $50 million. The majority of the expected annual savings are from efficiency improvements that were completed in 2013 and 2014. The balance of the cost savings relates to manufacturing initiatives that are expected to be completed in 2015. We have incurred $21.5 million of costs associated with the GCI program through June 30, 2015. This includes $0.8 million and $2.3 million of costs associated with GCI incurred in the three and six months ended June 30, 2014, respectively. We have not recognized significant costs related to GCI in the three and six months ended June 30, 2015 as this initiative is nearing completion.

 

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We are also targeting additional structural change initiatives that we expect, in conjunction with our GCI initiatives, to drive further margin improvement in our Global Power and Global Services segments. We expect to incur total restructuring charges (cash and non-cash), as well as produce annual savings once these additional initiatives are fully implemented, in the range of $35 million to $50 million. We have incurred $24.6 million of costs associated with the margin improvement program through June 30, 2015. This includes $5.3 million of costs associated with these additional initiatives incurred in the three months ended June 30, 2015. In addition, for the six months ended June 30, 2015 and 2014, we incurred costs totaling $7.7 million and $6.8 million, respectively, associated with these margin improvement initiatives. The costs incurred in the three and six months ended June 30, 2015 were primarily related to non-cash accelerated depreciation and impairments for facility consolidation and consulting fees.

In addition, cost savings from these programs are expected to make our offerings more cost-competitive through both direct and overhead cost reductions, allowing us to more aggressively pursue new business opportunities and other initiatives to increase stockholder value.

Spin-off Transaction Costs

In the three and six months ended June 30, 2015, we incurred $0.9 million of costs directly related to the spin-off of BW from BWC, retention stock awards were granted and have a remaining fair value of $3.1 million with a one-year vesting period. Expense related to these awards will be presented as a spin-off cost.

Equity in income (loss) of investees:

Equity in income (loss) of investees increased by $0.5 million to income of $1.0 million for the three months ended June 30, 2015, as compared to $0.4 million for the corresponding period in 2014, primarily attributable to favorable project performance in China causing an increase of $1.8 million in the three months ended June 30, 2015 over the corresponding 2014 period. This increase was partially offset by the near completion of a U.S. environmental project joint venture that generated $1.6 million less operating income in the three months ended June 30, 2015 as compared to 2014.

Equity in income (loss) of investees decreased $3.9 million to a loss of $1.1 million for the six months ended June 30, 2015, as compared to income of $2.8 million for the corresponding period in 2014. This was primarily attributable to the near completion of a U.S. environmental project joint venture that generated $2.9 million less operating income in the six months ended June 30, 2015 as compared to 2014. Also, in the six months ended June 30, 2014, equity in income (loss) of investees included income from our interest in Ebensburg Power Company, in which we purchased the remaining outstanding equity in May 2014 and now consolidate into the Global Services segment.

Provision for Income Taxes

 

    

Three months ended

June 30,

   

Six months ended

June 30,

 
     2015     2014     $ Change     2015     2014     $ Change  
     (In thousands)  

Income from continuing operations before provision for income taxes

   $ 5,042      $ 3,457      $ 1,585      $ 22,090      $ 9,712      $ 12,378   

Income tax provision

     919        1,841        (922     6,611        833        5,778   

Effective tax rate

     18.2     53.3       29.9     8.6  

We operate in numerous countries that have statutory tax rates below that of the United States federal statutory rate of 35%. The most significant of these foreign operations are located in Canada, Denmark and the United Kingdom with effective tax rates of approximately 26%, 24% and 20%, respectively. Income from continuing operations before provision for income taxes generated in the United States and foreign locations for the three and six months ended June 30, 2015 and 2014 is presented in the table below.

 

    

Three months ended

June 30,

   

Six months ended

June 30,

 
     2015     2014     2015      2014  
     (In thousands)  

U.S.

   $ (3,275   $ (106   $ 10,328       $ 8,373   

Other than U.S.

     8,317        3,563        11,762         1,339   
  

 

 

   

 

 

   

 

 

    

 

 

 

Income from continuing operations before provision for income taxes

   $ 5,042      $ 3,457      $ 22,090       $ 9,712   
  

 

 

   

 

 

   

 

 

    

 

 

 

Our effective tax rate for the three months ended June 30, 2015 was approximately 18.2% as compared to 53.3% for the three months ended June 30, 2014. Our effective tax rate for the three months ended June 30, 2015 was lower than our statutory rate primarily due to the jurisdictional mix of our income. Our effective tax rate for the three months ended June 30, 2014 was higher than our statutory rate primarily due to the jurisdictional mix of income as well as the favorable impact of an increase in benefits for amended federal manufacturing deductions and certain amended state return filings, offset by an increase to a valuation allowance against certain state deferred tax assets.

 

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Our effective tax rate for the six months ended June 30, 2015 was approximately 29.9% as compared to 8.6% for the six months ended June 30, 2014. Our effective tax rate for the six months ended June 30, 2015 was lower than our statutory rate primarily due to the jurisdictional mix of our income. Our effective tax rate for the six months ended June 30, 2014 was lower than our statutory rate primarily due to the receipt of a favorable ruling from the Internal Revenue Service that allowed us to amend prior year U.S. income tax returns to exclude distributions of certain of our foreign joint ventures from domestic taxable income.

Liquidity and Capital Resources

At June 30, 2015, we had: cash and cash equivalents of $307.6 million, including $125.3 million received from the former Parent at the time of the spin-off; investments with a fair value of $6.2 million, primarily held by our captive insurer; and restricted cash and cash equivalents of $35.5 million, of which $4.1 million was held in restricted foreign cash accounts and $31.4 million was held to meet reinsurance reserve requirements of our captive insurer in lieu of long-term investments.

Approximately $175.7 million, or 57% of our total unrestricted cash and cash equivalents at June 30, 2015, is related to foreign operations. In general, these resources are not available to fund our U.S. operations unless the funds are repatriated to the U.S., which would expose us to taxes we presently have not accrued in our results of operations. We presently have no plans to repatriate these funds to the U.S. as the liquidity generated by our U.S. operations is sufficient to meet the cash requirements of our U.S. operations.

Our investment portfolio consists primarily of investments in highly liquid money market instruments. Our investments are classified as available-for-sale and are carried at fair value with unrealized gains and losses, net of tax, reported as a component of other comprehensive income.

We are currently exploring growth strategies across our segments through acquisitions to expand and complement our existing businesses. We would expect to fund these opportunities by cash on hand, external financing (including debt), equity or some combination thereof. We expect cash and cash equivalents, cash flows from operations, and our borrowing capacity to be sufficient to meet our liquidity needs for at least twelve months from the date of this filing.

Our net cash provided by operations was $55.6 million in the six months ended June 30, 2015, compared to cash used in operations of $57.9 million for the six months ended June 30, 2014. This increase in cash provided by operations was primarily attributable to improved contract in progress and advance billings positions due to the recent award of several large new build projects.

Our net cash used in investing activities decreased by $112.2 million to $17.2 million in the six months ended June 30, 2015 from $129.4 million in the six months ended June 30, 2014. This decrease in net cash used in investing activities was primarily attributable to the 2014 acquisition of MEGTEC. We expect capital expenditures to be higher than historical spend at approximately $40 million in the full year 2015 related to the completion of a manufacturing facility in Mexico as part of our Global Competitiveness Initiative and investment in our information technology systems in order to fully operate as a separate company.

Our net cash provided by financing activities was $80.6 million in the six months ended June 30, 2015, compared to cash provided by in financing activities of $214.0 million for the six months ended June 30, 2014. This net cash provided by financing activities in the six months ended June 30, 2015 includes $125.3 million of cash received from the former parent in the spin-off transaction, partially offset by cash transferred to the former Parent during the period. Net cash provided by financing activities in the six months ended June 30, 2014 includes $142.8 million of net cash transferred from the former Parent inclusive of the purchase price of MEGTEC. The remainder of the difference primarily relates to net transfers to the former Parent in the normal course of business.

Credit Facility

On June 30, 2015, the new credit agreement (“New Credit Agreement”) that we entered into on May 11, 2015 closed in connection with the spin-off. The New Credit Agreement provides for senior secured revolving credit facility in an aggregate amount of up to $600 million, which is scheduled to mature on June 30, 2020. The proceeds of loans under the New Credit Agreement are available for working capital needs and other general corporate purposes, and the full amount is available for the issuance of letters of credit.

The New Credit Agreement contains an accordion feature that allows us, subject to the satisfaction of certain conditions, including the receipt of increased commitments from existing lenders or new commitments from new lenders, to increase the amount of the commitments under the revolving credit facility in an aggregate amount not to exceed the sum of (i) $200 million plus (ii) an unlimited amount, so long as for any commitment increase under this subclause (ii) our senior secured leverage ratio (assuming the full amount of any commitment increase under this subclause (ii) is drawn) is equal to or less than 2.0 to 1.0 after giving pro forma effect thereto.

 

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Table of Contents

The New Credit Agreement and our obligations under certain hedging agreements and cash management agreements with our lenders and their affiliates are (i) guaranteed by substantially all of our wholly owned domestic subsidiaries, but excluding our captive insurance subsidiary, and (ii) secured by first-priority liens on certain assets owned by us and the guarantors. The New Credit Agreement requires interest payments on revolving loans on a periodic basis until maturity. We may prepay all loans at any time without premium or penalty (other than customary LIBOR breakage costs), subject to notice requirements. The New Credit Agreement requires us to make certain prepayments on any outstanding revolving loans after receipt of cash proceeds from certain asset sales or other events, subject to certain exceptions and a right to reinvest such proceeds in certain circumstances, but such prepayments will not require us to reduce the commitments under the New Credit Agreement.

Loans outstanding under the New Credit Agreement bear interest at our option at either the LIBOR rate plus a margin ranging from 1.375% to 1.875% per year or the base rate (the highest of the Federal Funds rate plus 0.50%, the one month LIBOR rate plus 1.0%, or the administrative agent’s prime rate) plus a margin ranging from 0.375% to 0.875% per year. A commitment fee is charged on the unused portions of the revolving credit facility, and that fee varies between 0.250% and 0.350% per year. Additionally, a letter of credit fee of between 1.375% and 1.875% per year is charged with respect to the amount of each financial letter of credit issued, and a letter of credit fee of between 0.825% and 1.125% per year is charged with respect to the amount of each performance letter of credit issued. The applicable margin for loans, the commitment fee and the letter of credit fees set forth above vary quarterly based on our leverage ratio.

The New Credit Agreement includes financial covenants that are tested on a quarterly basis, based on the rolling four-quarter period that ends on the last day of each fiscal quarter. The maximum permitted leverage ratio is 3.00 to 1.00, which ratio may be increased to 3.25 to 1.00 for up to four consecutive fiscal quarters after a material acquisition. The minimum consolidated interest coverage ratio is 4.00 to 1.00. In addition, the New Credit Agreement contains various restrictive covenants, including with respect to debt, liens, investments, mergers, acquisitions, dividends, equity repurchases and asset sales. At June 30, 2015, we had no borrowings outstanding under the revolving credit facility, and after giving effect to the leverage ratio and $109.1 million of letters of credit issued under the New Credit Agreement, we had approximately $383.9 million available for borrowings or to meet letter of credit requirements.

The New Credit Agreement generally includes customary events of default for a secured credit facility. If an event of default relating to bankruptcy or other insolvency events with respect to us occurs under the New Credit Agreement, all obligations will immediately become due and payable. If any other event of default exists, the lenders will be permitted to accelerate the maturity of the obligations outstanding. If any event of default occurs, the lenders are permitted to terminate their commitments thereunder and exercise other rights and remedies, including the commencement of foreclosure or other actions against the collateral. Additionally, if we are unable to make any of the representations and warranties in the New Credit Agreement, we will be unable to borrow funds or have letters of credit issued. At June 30, 2015, we were in compliance with all of the covenants set forth in the New Credit Agreement.

Other Credit Arrangements

Certain subsidiaries have credit arrangements with various commercial banks and other financial institutions for the issuance of letters of credit and bank guarantees in association with contracting activity. The aggregate value of all such letters of credit and bank guarantees as of June 30, 2015 was $160.9 million.

We have posted surety bonds to support contractual obligations to customers relating to certain projects. We utilize bonding facilities to support such obligations, but the issuance of bonds under those facilities is typically at the surety’s discretion. Although there can be no assurance that we will maintain our surety bonding capacity, we believe our current capacity is more than adequate to support our existing project requirements for the next twelve months. In addition, these bonds generally indemnify customers should we fail to perform our obligations under the applicable contracts. We, and certain of our subsidiaries, have jointly executed general agreements of indemnity in favor of surety underwriters relating to surety bonds those underwriters issue in support of some of our contracting activity. As of June 30, 2015, bonds issued and outstanding under these arrangements in support of contracts totaled approximately $514.0 million.

 

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Table of Contents

Long-term Benefit Obligations

Our unfunded pension and postretirement benefit obligations totaled $281.3 million at June 30, 2015. These long-term liabilities are expected to require use of Company resources to satisfy our future funding obligations. For the six months ended June 30, 2015, we made contributions to our pension and postretirement benefit plans totaling $3.9 million. We expect to make contributions to these plans totaling $1.5 million for the remainder of 2015.

CRITICAL ACCOUNTING POLICIES

For a summary of the critical accounting policies and estimates that we use in the preparation of our unaudited condensed consolidated and combined financial statements, see “Critical Accounting Policies” in the Form 10. There have been no material changes to our policies during the six months ended June 30, 2015, except as disclosed in Note 1 to our unaudited condensed consolidated and combined financial statements included in this report.

Accounting for Contracts

As of June 30, 2015, in accordance with the percentage-of-completion method of accounting, we have provided for our estimated costs to complete all of our ongoing contracts. However, it is possible that current estimates could change due to unforeseen events, which could result in adjustments to overall contract costs. A principal risk on fixed-priced contracts is that revenue from the customer is insufficient to cover increases in our costs. It is possible that current estimates could materially change for various reasons, including, but not limited to, fluctuations in forecasted labor productivity or steel and other raw material prices. In some instances, we guarantee completion dates related to our projects or provide performance guarantees. Increases in costs on our fixed-price contracts could have a material adverse impact on our consolidated results of operations, financial condition and cash flows. Alternatively, reductions in overall contract costs at completion could materially improve our consolidated results of operations, financial condition and cash flows. In the six months ended June 30, 2015 and 2014, we recognized net changes in estimate related to long-term contracts accounted for on the percentage-of-completion basis, which increased operating income by approximately $9.4 million and $15.7 million, respectively.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our exposures to market risks have not changed materially from those disclosed under “Quantitative and Qualitative Disclosures About Market Risk” in the Form 10 filed with the Securities and Exchange Commission.

Item 4. Controls and Procedures

As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Our disclosure controls and procedures were developed through a process in which our management applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding the control objectives. You should note that the design of any system of disclosure controls and procedures is based in part upon various assumptions about the likelihood of future events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Based on the evaluation referred to above, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures are effective as of June 30, 2015 to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and such information is accumulated and communicated to management as appropriate to allow timely decisions regarding disclosure. There has been no change in our internal control over financial reporting during the quarter ended June 30, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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Table of Contents

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

For information regarding ongoing investigations and litigation, see Note 7 to the unaudited condensed consolidated and combined financial statements in Part I of this report, which we incorporate by reference into this Item.

Item 1A. Risk Factors

We are subject to various risks and uncertainties in the course of our business. The discussion of such risks and uncertainties may be found under “Risk Factors” in the Form 10. There have been no material changes to such risk factors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 4. Mine Safety Disclosures

We own, manage and operate Ebensburg Power Company, an independent power company that produces alternative electrical energy. Through one of our subsidiaries, Revloc Reclamation Service, Inc., Ebensburg Power Company operates multiple coal refuse sites in Western Pennsylvania (collectively, the “Revloc Sites”). At the Revloc Sites, Ebensburg Power Company utilizes coal refuse from abandoned surface mine lands to produce energy. Beyond converting the coal refuse to energy, Ebensburg Power Company is also taking steps to reclaim the former surface mine lands to make the land and streams more attractive for wildlife and human uses.

The Revloc Sites are subject to regulation by the federal Mine Safety and Health Administration under the Federal Mine Safety and Health Act of 1977. Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and this Item is included in Exhibit 95 to this quarterly report on
Form 10-Q.

Item 6. Exhibits

 

    2.1*    Master Separation Agreement, dated as of June 8, 2015, between The Babcock & Wilcox Company and Babcock & Wilcox Enterprises, Inc.
    3.1    Amended and Restated Certificate of Incorporation
    3.2    Amended and Restated Bylaws
  10.1    Tax Sharing Agreement, dated as of June 8, 2015, by and between The Babcock & Wilcox Company and Babcock & Wilcox Enterprises, Inc.
  10.2    Employee Matters Agreement, dated as of June 8, 2015, by and between The Babcock & Wilcox Company and Babcock & Wilcox Enterprises, Inc.
  10.3    Transition Services Agreement, dated as of June 8, 2015, between The Babcock & Wilcox Company, as service provider, and Babcock & Wilcox Enterprises, Inc., as service receiver
  10.4    Transition Services Agreement, dated as of June 8, 2015, between Babcock & Wilcox Enterprises, Inc., as service provider, and The Babcock & Wilcox Company, as service receiver
  10.5    Assumption and Loss Allocation Agreement, dated as of June 19, 2015, by and among ACE American Insurance Company and the Ace Affiliates (as defined therein), Babcock & Wilcox Enterprises, Inc. and The Babcock & Wilcox Company
  10.6    Reinsurance Novation and Assumption Agreement, dated as of June 19, 2015, by and among ACE American Insurance Company and the Ace Affiliates (as defined therein), Creole Insurance Company and Dampkraft Insurance Company

 

39


Table of Contents
  10.7    Novation and Assumption Agreement, dated as of June 19, 2015, by and among The Babcock & Wilcox Company, Babcock & Wilcox Enterprises, Inc., Dampkraft Insurance Company and Creole Insurance Company
  10.8    2015 Long-Term Incentive Plan of Babcock & Wilcox Enterprises, Inc.
  10.9    Babcock & Wilcox Enterprises, Inc. Executive Incentive Compensation Plan
  10.10    Babcock & Wilcox Enterprises, Inc. Management Incentive Compensation Plan
  10.11    Supplemental Executive Retirement Plan of Babcock & Wilcox Enterprises, Inc.
  10.12    Babcock & Wilcox Enterprises, Inc. Defined Contribution Restoration Plan
  10.13    Intellectual Property Agreement, dated as of June 26, 2015, between Babcock & Wilcox Power Generation Group, Inc. and BWXT Foreign Holdings, LLC
  10.14    Intellectual Property Agreement, dated as of June 27, 2015, between Babcock & Wilcox Technology, Inc. and Babcock & Wilcox Investment Company
  10.15    Intellectual Property Agreement, dated as of May 29, 2015, between Babcock & Wilcox Canada Ltd. and B&W PGG Canada Corp.
  10.16    Intellectual Property Agreement, dated as of May 29, 2015, between Babcock & Wilcox mPower, Inc. and Babcock & Wilcox Power Generation Group, Inc.
  10.17    Intellectual Property Agreement, dated as of June 26, 2015, between The Babcock & Wilcox Company and Babcock & Wilcox Enterprises, Inc.
  10.18    Credit Agreement, dated as of May 11, 2015, among Babcock & Wilcox Enterprises, Inc., as the borrower, Bank of America, N.A., as Administrative Agent, and the Other Lenders Party Thereto
  10.19    Form of Change-in-Control Agreement, by and between Babcock & Wilcox Enterprises, Inc. and certain officers
  31.1    Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer
  31.2    Rule 13a-14(a)/15d-14(a) certification of Chief Financial Officer
  32.1    Section 1350 certification of Chief Executive Officer
  32.2    Section 1350 certification of Chief Financial Officer
  95    Mine Safety Disclosure
101.INS    XBRL Instance Document
101.SCH    XBRL Taxonomy Extension Schema Document
101.CAL    XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB    XBRL Taxonomy Extension Label Linkbase Document
101.PRE    XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF    XBRL Taxonomy Extension Definition Linkbase Document

 

* Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.

 

40


Table of Contents

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.

 

      BABCOCK & WILCOX ENTERPRISES, INC.
    By:  

/s/ Daniel W. Hoehn

      Daniel W. Hoehn
      Vice President, Controller & Chief Accounting Officer
      (Principal Accounting Officer and Duly Authorized
      Representative)

August 4, 2015

     

 

41


Table of Contents

Exhibit Index

 

Exhibit Number

 

Exhibit Description

    2.1*   Master Separation Agreement, dated as of June 8, 2015, between The Babcock & Wilcox Company and Babcock & Wilcox Enterprises, Inc.
    3.1   Amended and Restated Certificate of Incorporation
    3.2   Amended and Restated Bylaws
  10.1   Tax Sharing Agreement, dated as of June 8, 2015, by and between The Babcock & Wilcox Company and Babcock & Wilcox Enterprises, Inc.
  10.2   Employee Matters Agreement, dated as of June 8, 2015, by and between The Babcock & Wilcox Company and Babcock & Wilcox Enterprises, Inc.
  10.3   Transition Services Agreement, dated as of June 8, 2015, between The Babcock & Wilcox Company, as service provider, and Babcock & Wilcox Enterprises, Inc., as service receiver
  10.4   Transition Services Agreement, dated as of June 8, 2015, between Babcock & Wilcox Enterprises, Inc., as service provider, and The Babcock & Wilcox Company, as service receiver
  10.5   Assumption and Loss Allocation Agreement, dated as of June 19, 2015, by and among ACE American Insurance Company and the Ace Affiliates (as defined therein), Babcock & Wilcox Enterprises, Inc. and The Babcock & Wilcox Company
  10.6   Reinsurance Novation and Assumption Agreement, dated as of June 19, 2015, by and among ACE American Insurance Company and the Ace Affiliates (as defined therein), Creole Insurance Company and Dampkraft Insurance Company
  10.7   Novation and Assumption Agreement, dated as of June 19, 2015, by and among The Babcock & Wilcox Company, Babcock & Wilcox Enterprises, Inc., Dampkraft Insurance Company and Creole Insurance Company
  10.8   2015 Long-Term Incentive Plan of Babcock & Wilcox Enterprises, Inc.
  10.9   Babcock & Wilcox Enterprises, Inc. Executive Incentive Compensation Plan
  10.10   Babcock & Wilcox Enterprises, Inc. Management Incentive Compensation Plan
  10.11   Supplemental Executive Retirement Plan of Babcock & Wilcox Enterprises, Inc.
  10.12   Babcock & Wilcox Enterprises, Inc. Defined Contribution Restoration Plan
  10.13   Intellectual Property Agreement, dated as of June 26, 2015, between Babcock & Wilcox Power Generation Group, Inc. and BWXT Foreign Holdings, LLC
  10.14   Intellectual Property Agreement, dated as of June 27, 2015, between Babcock & Wilcox Technology, Inc. and Babcock & Wilcox Investment Company
  10.15   Intellectual Property Agreement, dated as of May 29, 2015, between Babcock & Wilcox Canada Ltd. and B&W PGG Canada Corp.
  10.16   Intellectual Property Agreement, dated as of May 29, 2015, between Babcock & Wilcox mPower, Inc. and Babcock & Wilcox Power Generation Group, Inc.
  10.17   Intellectual Property Agreement, dated as of June 26, 2015, between The Babcock & Wilcox Company and Babcock & Wilcox Enterprises, Inc.
  10.18   Credit Agreement, dated as of May 11, 2015, among Babcock & Wilcox Enterprises, Inc., as the borrower, Bank of America, N.A., as Administrative Agent, and the Other Lenders Party Thereto
  10.19   Form of Change-in-Control Agreement, by and between Babcock & Wilcox Enterprises, Inc. and certain officers


Table of Contents
  31.1   Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer
  31.2   Rule 13a-14(a)/15d-14(a) certification of Chief Financial Officer
  32.1   Section 1350 certification of Chief Executive Officer
  32.2   Section 1350 certification of Chief Financial Officer
  95   Mine Safety Disclosure
101.INS   XBRL Instance Document
101.SCH   XBRL Taxonomy Extension Schema Document
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document

 

* Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.

Exhibit 2.1

Execution Version

MASTER SEPARATION AGREEMENT

between

THE BABCOCK & WILCOX COMPANY

and

BABCOCK & WILCOX ENTERPRISES, INC.

dated as of

June 8, 2015


TABLE OF CONTENTS

 

          Page  

ARTICLE I

   DEFINITIONS      1   

Section 1.1

  

Definitions

     1   

Section 1.2

  

Interpretation

     19   

ARTICLE II

   SEPARATION AND RELATED TRANSACTIONS      21   

Section 2.1

  

The Separation

     21   

Section 2.2

  

Charter and Bylaws

     22   

Section 2.3

  

Instruments of Transfer and Assumption

     22   

Section 2.4

  

No Representations or Warranties

     22   

Section 2.5

  

Agreements

     23   

Section 2.6

  

Transfers Not Effected Prior to the Distribution Time

     24   

ARTICLE III

   MUTUAL RELEASES; INDEMNIFICATION      24   

Section 3.1

  

Release of Pre-Closing Claims

     24   

Section 3.2

  

Termination of Intercompany Agreements

     26   

Section 3.3

  

Indemnification by SpinCo

     27   

Section 3.4

  

Indemnification by RemainCo

     28   

Section 3.5

  

Indemnification Obligations Net of Insurance Proceeds; Duty of Cooperation

     29   

Section 3.6

  

Tax Benefits

     30   

Section 3.7

  

Procedures for Defense and Indemnification of Third Party Claims

     31   

Section 3.8

  

Additional Matters

     34   

Section 3.9

  

Contribution

     35   

Section 3.10

  

Remedies Cumulative

     35   

Section 3.11

  

Specific Performance

     35   

Section 3.12

  

Survival of Indemnities

     35   

Section 3.13

  

Limitation of Liability

     36   

ARTICLE IV

   THE DISTRIBUTION      36   

Section 4.1

  

Delivery to Distribution Agent

     36   

Section 4.2

  

Mechanics of the Distribution

     36   

Section 4.3

  

Conditions Precedent to Consummation of the Separation and the Distribution

     37   


TABLE OF CONTENTS

(continued)

 

          Page  
ARTICLE V    ARBITRATION; DISPUTE RESOLUTION      38   

Section 5.1

  

General

     38   

Section 5.2

  

Negotiation

     39   

Section 5.3

  

Demand for Arbitration

     39   

Section 5.4

  

Arbitrators

     40   

Section 5.5

  

Hearings

     41   

Section 5.6

  

Discovery and Certain Other Matters

     41   

Section 5.7

  

Certain Additional Matters

     42   

Section 5.8

  

Continuity of Service and Performance

     43   

Section 5.9

  

Law Governing Arbitration Procedures

     43   
ARTICLE VI    COVENANTS AND OTHER MATTERS      43   

Section 6.1

  

Other Agreements

     43   

Section 6.2

  

Further Instruments

     43   

Section 6.3

  

Provision of Books and Records

     44   

Section 6.4

  

Agreement For Exchange of Information

     45   

Section 6.5

  

Preservation of Legal Privileges; Attorney Representation

     47   

Section 6.6

  

Payment of Expenses

     49   

Section 6.7

  

Surety Instruments

     50   

Section 6.8

  

Guarantee Obligations

     52   

Section 6.9

  

Confidentiality

     55   

Section 6.10

  

Insurance

     57   

Section 6.11

  

Noncompetition

     60   
ARTICLE VII    MISCELLANEOUS      61   

Section 7.1

  

Authority

     61   

Section 7.2

  

Termination

     62   

Section 7.3

  

Entire Agreement

     62   

Section 7.4

  

Binding Effect; No Third-Party Beneficiaries; Assignment

     62   

Section 7.5

  

Amendment

     62   

Section 7.6

  

Failure or Indulgence Not Waiver; Remedies Cumulative

     62   

Section 7.7

  

Notices

     62   


TABLE OF CONTENTS

(continued)

 

          Page  

Section 7.8

  

Counterparts

     62   

Section 7.9

  

Severability

     63   

Section 7.10

  

Governing Law

     63   

Section 7.11

  

Construction

     63   

Section 7.12

  

Performance

     63   

Section 7.13

  

Limited Liability

     63   

 

SCHEDULES   
Schedule 1.1(a)    Excluded Assets
Schedule 1.1(b)    Designated RemainCo Entities
Schedule 1.1(c)    Entities for Which Liabilities for Any Future Claims Shall Be Shared
Schedule 1.1(c)(i)    Designated RemainCo Liabilities
Schedule 1.1(d)    Designated SpinCo Entities
Schedule 1.1(e)    RemainCo Subsidiaries
Schedule 1.1(f)    RemainCo Guarantees for the SpinCo Business
Schedule 1.1(g)    Non-Subsidiary Joint Ventures
Schedule 1.1(h)    Divided Liabilities
Schedule 1.1(i)    RemainCo Specified Liabilities
Schedule 1.1(j)    RemainCo Surety Obligations for the SpinCo Business
Schedule 1.1(k)    Additional SpinCo Assets
Schedule 1.1(l)    SpinCo Subsidiaries
Schedule 1.1(m)    SpinCo Guarantees for the RemainCo Business
Schedule 1.1(n)    Certain Litigation and Environmental Matters
Schedule 1.1(o)    SpinCo Specified Liabilities
Schedule 1.1(p)    SpinCo Surety Obligations for the RemainCo Business
Schedule 2.2(a)    Restated Certificate of Incorporation of SpinCo
Schedule 2.2(b)    Amended and Restated Bylaws of SpinCo
Schedule 6.3    Certain Books and Records and Related Provisions
Schedule 6.10    Tail Coverage
Schedule 6.11    Additional Definitions


MASTER SEPARATION AGREEMENT

This MASTER SEPARATION AGREEMENT (this “Agreement”) is entered into as of June 8, 2015, between The Babcock & Wilcox Company, a Delaware corporation, (“RemainCo”) and Babcock & Wilcox Enterprises, Inc., a Delaware corporation (“SpinCo”). RemainCo and SpinCo are sometimes referred to herein individually as a “Party,” and collectively as the “Parties.” Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in Article I hereof.

RECITALS

WHEREAS, SpinCo is a wholly owned Subsidiary of RemainCo;

WHEREAS, the Board of Directors of RemainCo has determined that it would be appropriate and in the best interests of RemainCo and its stockholders for RemainCo to separate the SpinCo Business from the RemainCo Business;

WHEREAS, in furtherance thereof, the Board of Directors of RemainCo has determined that, following the Separation, it would be appropriate and in the best interests of RemainCo and its stockholders for RemainCo to distribute (the “Distribution”) on a pro rata basis to the holders of outstanding shares of common stock, par value $0.01 per share, of RemainCo (“RemainCo Common Stock”) all of the outstanding shares of common stock, par value $0.01 per share, of SpinCo (“SpinCo Common Stock”) owned by RemainCo as of the Distribution Date immediately before the Distribution Time;

WHEREAS, for U.S. federal income tax purposes, (i) certain transactions to be effected in connection with the Separation are intended to qualify as tax-free transactions under the U.S. Internal Revenue Code of 1986 (the “Code”) and (ii) the Distribution is intended to qualify as a tax-free transaction under Section 355 of the Code; and

WHEREAS, the Parties intend in this Agreement, including the Schedules hereto, to set forth the principal arrangements between them regarding the Separation and the Distribution.

NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions . As used in this Agreement, the following terms shall have the meanings set forth in this Section 1.1:

“AAA” has the meaning set forth in Section 5.3(a).

“AAA Rules” has the meaning set forth in Section 5.3(a).

 

1


“ACE” has the meaning set forth in Section 6.10(j).

“Action” means any demand, claim, action, suit, countersuit, arbitration, litigation, inquiry, proceeding or investigation by or before any Governmental Authority or any arbitration or mediation tribunal or authority.

“Actually Realized” has the meaning set forth in the Tax Sharing Agreement.

“Affiliate” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the specified Person. For this purpose “control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through ownership of voting securities, by contract or otherwise.

“Agreement” has the meaning set forth in the preamble to this Agreement and includes all Schedules attached hereto or delivered pursuant hereto.

“Ancillary Agreements” has the meaning set forth in Section 2.5.

“Apollo/Parks/SLDA Litigation” has the meaning set forth in Schedule 1.1(i).

“Apollo/Parks/SLDA Sites” has the meaning set forth in Schedule 1.1(i).

“Applicable Deadline” has the meaning set forth in Section 5.3(b).

“Applicable Response Period” means the shorter of (a) 30 days after the receipt of notice from an Indemnitee in accordance with Section 3.7(a) or Section 3.8(a), as applicable, or (b) the greater of (i) 5 Business Days prior to any deadline that the Indemnitee must comply with to meet the Indemnitee’s own contractual obligations or to exercise the Indemnitee’s contractual rights against a Third Party (provided that the Indemnitee has set forth such deadline in its notice given in accordance with Section 3.7(a) or Section 3.8(a), as applicable) and (ii) 5 Business Days following the receipt of the notice from an Indemnitee in accordance with Section 3.7(a) or Section 3.8(a), as applicable.

“Applicable Security Instruments for Guarantees” means, with respect to any Scheduled RemainCo Guarantee for the SpinCo Business or Scheduled SpinCo Guarantee for the RemainCo Business, (i) indemnity bonds issued by one or more financial institutions or other issuers, and on terms and conditions, reasonably acceptable, with respect to a Scheduled RemainCo Guarantee for the SpinCo Business, to RemainCo and, with respect to a Scheduled SpinCo Guarantee for the RemainCo Business, to SpinCo, with (A) the expiration date of such bonds being a date on or after the PCG End Date for such Scheduled RemainCo Guarantee for the SpinCo Business or Scheduled SpinCo Guarantee for the RemainCo Business and (B) the amounts of such bonds being, in the aggregate, not less than the Net Exposure for such Scheduled RemainCo Guarantee for the SpinCo Business or Scheduled SpinCo Guarantee for the RemainCo Business, or (ii) if the PCG End Date for such Scheduled RemainCo Guarantee for the SpinCo Business or Scheduled SpinCo Guarantee for the RemainCo Business is after the expiration date for any indemnity bonds contemplated by clause (i)(A), (A) irrevocable standby letters of credit issued by one or more financial institutions reasonably acceptable, with respect

 

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to a Scheduled RemainCo Guarantee for the SpinCo Business, to RemainCo and, with respect to a Scheduled SpinCo Guarantee for the RemainCo Business, to SpinCo, with the amounts of such letters of credit being, in the aggregate, not less than 25% of the Net Exposure for such Scheduled RemainCo Guarantee for the SpinCo Business or Scheduled SpinCo Guarantee for the RemainCo Business and with such letters of credit providing that they will remain in effect through the applicable PCG End Date (or, if they will not remain in effect through such date, that they may be drawn in full by the beneficiary thereof if such letters of credit have an expiration or termination date on or prior to the applicable PCG Date and such letters of credit are not, prior to 15 days before such expiration or termination, replaced with other letters of credit meeting the qualifications of this clause (ii)(A) or extended) and (B) indemnity bonds issued by one or more financial institutions or other issuers, and on terms and conditions, reasonably acceptable, with respect to a Scheduled RemainCo Guarantee for the SpinCo Business, to RemainCo and, with respect to a Scheduled SpinCo Guarantee for the RemainCo Business, to SpinCo, with (1) the expiration date of such bonds being no earlier than the earlier of (x) three years after the date such bonds are issued and, if the expiration date is before the PCG End Date, providing for annual rolling one-year extensions and (y) the PCG End Date and (2) the amounts of such bonds being, in the aggregate, not less than the difference between (a) the Net Exposure for such Scheduled RemainCo Guarantee for the SpinCo Business or Scheduled SpinCo Guarantee for the RemainCo Business and (b) the amount of the letters of credit referenced in the immediately preceding clause (ii)(A).

“Applicable Security Instruments for Surety Obligations” means, with respect to any Scheduled RemainCo Surety Obligation for the SpinCo Business or Scheduled SpinCo Surety Obligation for the RemainCo Business, (i) indemnity bonds issued by one or more financial institutions or other issuers, and on terms and conditions, reasonably acceptable, with respect to a Scheduled RemainCo Surety Obligation for the SpinCo Business, to RemainCo and, with respect to a Scheduled SpinCo Surety Obligation for the RemainCo Business, to SpinCo, with (A) the expiration date of such bonds being a date on or after the Surety Obligation End Date for such Scheduled RemainCo Surety Obligation for the SpinCo Business or Scheduled SpinCo Surety Obligation for the RemainCo Business and (B) the amounts of such bonds being, in the aggregate, not less than the Surety Obligation Net Exposure for such Scheduled RemainCo Surety Obligation for the SpinCo Business or Scheduled SpinCo Surety Obligation for the RemainCo Business, or (ii) if the Surety Obligation End Date for such Scheduled RemainCo Surety Obligation for the SpinCo Business or Scheduled SpinCo Surety Obligation for the RemainCo Business is after the expiration date for any indemnity bonds contemplated by clause (i)(A), (A) irrevocable standby letters of credit issued by one or more financial institutions reasonably acceptable, with respect to a Scheduled RemainCo Surety Obligation for the SpinCo Business, to RemainCo and, with respect to a Scheduled SpinCo Surety Obligation for the RemainCo Business, to SpinCo, with the amounts of such letters of credit being, in the aggregate, not less than 25% of the Surety Obligation Net Exposure for such Scheduled RemainCo Surety Obligation for the SpinCo Business or Scheduled SpinCo Surety Obligation for the RemainCo Business and with such letters of credit providing that they will remain in effect through the applicable Surety Obligation End Date (or, if they will not remain in effect through such date, that they may be drawn in full by the beneficiary thereof if such letters of credit have an expiration or termination date on or prior to the applicable Surety Obligation Date and such letters of credit are not, prior to 15 days before such expiration or termination, replaced with other letters of credit meeting the qualifications of this clause (ii)(A) or extended) and (B)

 

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indemnity bonds issued by one or more financial institutions or other issuers, and on terms and conditions, reasonably acceptable, with respect to a Scheduled RemainCo Surety Obligation for the SpinCo Business, to RemainCo and, with respect to a Scheduled SpinCo Surety Obligation for the RemainCo Business, to SpinCo, with (1) the expiration date of such bonds being no earlier than the earlier of (x) three years after the date such bonds are issued and, if the expiration date is before the Surety Obligation End Date, providing for annual rolling one-year extensions and (y) the Surety Obligation End Date and (2) the amounts of such bonds being, in the aggregate, not less than the difference between (a) the Surety Obligation Net Exposure for such Scheduled RemainCo Surety Obligation for the SpinCo Business or Scheduled SpinCo Surety Obligation for the RemainCo Business and (b) the amount of the letters of credit referenced in the immediately preceding clause (ii)(A).

“Appropriate Member of the RemainCo Group” has the meaning set forth in Section 3.4.

“Appropriate Member of the SpinCo Group” has the meaning set forth in Section 3.3.

“Arbitration Act” means the United States Arbitration Act, 9 U.S.C. §§ 1 et seq .

“Arbitration Demand Notice” has the meaning set forth in Section 5.3(a).

“Asset” means all rights, properties or assets, whether real, personal or mixed, tangible or intangible, of any kind, nature and description, whether accrued, contingent or otherwise, and wheresoever situated and whether or not carried or reflected, or required to be carried or reflected, on the books of any Person.

“Assumption and Loss Allocation Agreement” means the Assumption and Loss Allocation Agreement to be entered into to which ACE American Insurance Company, RemainCo and SpinCo are parties.

“Barberton Documentation” means (i) the License Agreement to be entered into by and between Babcock & Wilcox Power Generation Group, Inc. and Babcock & Wilcox Nuclear Operations Group, Inc., (ii) the Cross-Easement to be entered into by and between Babcock & Wilcox Power Generation Group, Inc. and Babcock & Wilcox Nuclear Operations Group, Inc., (iii) the Right of First Offer to be entered into by and between Babcock & Wilcox Power Generation Group, Inc. and Babcock & Wilcox Nuclear Operations Group, Inc. and (iv) the Limited Warranty Deed to be executed by Babcock & Wilcox Power Generation Group, Inc. in favor of Babcock & Wilcox Nuclear Operations Group, Inc., in each case related to real property in or near Barberton, Ohio.

“Business Day” means a day other than a Saturday, a Sunday or a day on which the Federal Reserve Bank of New York is closed.

“Captive Insurance Novation and Assumption Agreements” means (a) the Novation and Assumption Agreement to be entered into by and among RemainCo, SpinCo, Dampkraft and Creole and (b) the Reinsurance Novation and Assumption Agreement to be entered into by and among ACE American Insurance Company and the Ace Affiliates (as defined therein), Dampkraft and Creole.

 

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“Change of Control” shall mean, with respect to a specified Person, the occurrence of any of the following after the Distribution Date:

(i) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes a beneficial owner, directly or indirectly, of securities of such Person representing 30% or more of the combined voting power of such Person’s then-outstanding securities;

(ii) during any period of 12 consecutive months, individuals who, as of the Distribution Date, constitute the members of such Person’s Board of Directors (the “Incumbent Directors”) cease for any reason other than due to death or disability to constitute at least a majority of the members of such Person’s Board of Directors, provided that any director who was nominated for election by, or was elected with the approval of, at least a majority of the members of such Person’s Board of Directors who are at the time Incumbent Directors shall be considered an Incumbent Director;

(iii) the consummation of any transaction (including any merger, amalgamation or consolidation), a result of which is that less than 50% of the total voting power of the surviving entity is held by the stockholders of such Person prior to such transaction; or

(iv) such Person shall have sold, transferred or exchanged all, or substantially all, of its assets to another Person.

“Claims Administration” has the meaning set forth in Section 6.10(i).

“Code” has the meaning set forth in the recitals to this Agreement.

“Compete” means, with respect to a specified type of business, to conduct or participate or engage in, or bid for or otherwise pursue, any such business, whether as a principal or as a partner, joint venturer, or owner of any debt or equity interest in any Person or business that conducts, participates or engages in, or bids for or otherwise pursues, any such business.

“Confidential Information” has the meaning set forth in Section 6.9(a).

“Consent” means any consents, waivers or approvals from, or notification requirements to, any third parties, including any notices or reports to be submitted to, filings to be made with, or consents, registrations, approvals, permits or authorizations to be obtained from, any Governmental Authority.

“Continuing Agreements” means (a) that certain Contribution Agreement dated June 30, 1997, by and among Babcock & Wilcox Power Generation Group, Inc. (formerly known as, “The Babcock & Wilcox Company”), Babcock & Wilcox Government and Nuclear Operations, Inc. (formerly known as, “BWX Technologies, Inc.”), Diamond Power International, Inc. and Babcock & Wilcox Technology, Inc. (formerly known as, “McDermott Technology, Inc.”); (b) any agreement (including any Consent Decree) relating to any of RemainCo Specified Liabilities, the Apollo/Parks/SLDA Sites, or the Apollo/Parks/SLDA Litigation to which Atlantic Richfield Company is a party; (c) any agreement, document or instrument (other than any Ancillary Agreement or other agreement referenced in sections (a), (b), (d), or (e) of this definition of

 

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Continuing Agreements) that is entered by both a member or members of the SpinCo Group and a member or members of the RemainCo Group, in anticipation of, in connection with or in furtherance of the aims of the Separation or the Distribution (including agreements to transfer assets or assign contracts) other than any provisions thereof that provide for indemnification or allocation of liabilities to the extent such provisions are inconsistent with the indemnification provisions of this Agreement or the intent that members of the SpinCo Group (and not members of the RemainCo Group) will be responsible for the SpinCo Liabilities and members of the RemainCo Group (and not members of the SpinCo Group) will be responsible for the RemainCo Liabilities; (d) the Non-Debtor Affiliate Settlement Agreement, dated as of February 21, 2006, to which Babcock & Wilcox Power Generation Group, Inc. (formerly known as, “The Babcock & Wilcox Company”) and various of its Affiliates are parties; and (e) the Barberton Documentation.

“Contract” means any written, oral, implied or other contract, agreement, covenant, lease, license, guaranty, indemnity, representation, warranty, assignment, sales order, purchase order, power of attorney, instrument or other commitment, assurance, undertaking or arrangement that is binding on any Person or entity or any part of its property under applicable Law.

“Covered Matter” has the meaning set forth in Section 6.10(i).

“Credit Quality” means, with respect to any Person, the capacity of such Person to meet its financial commitments.

“Creole” means Creole Insurance Company, Ltd., a South Carolina corporation.

“Dampkraft” means Dampkraft Insurance Company, a South Carolina corporation.

“Dispute” has the meaning set forth in Section 5.1.

“Distribution” has the meaning set forth in the recitals to this Agreement.

“Distribution Agent” has the meaning set forth in Section 4.1.

“Distribution Date” means the date on which the Distribution occurs, such date to be determined by, or under the authority of, the Board of Directors of RemainCo in its sole and absolute discretion.

“Distribution Multiple” means 1/2, the number determined by the RemainCo Board of Directors in its sole discretion at the time of its approval of the Distribution as the number of shares of SpinCo Common Stock to be distributed in respect of each share of RemainCo Common Stock, which number will be multiplied by the number of shares of RemainCo Common Stock outstanding on the Record Date to determine the number of shares of SpinCo Common Stock to be issued and outstanding immediately before the Distribution Time.

“Distribution Time” means the time at which the Distribution is effective on the Distribution Date.

“Employee Matters Agreement” means the Employee Matters Agreement dated the date hereof between RemainCo and SpinCo.

 

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“Escalation Notice” has the meaning set forth in Section 5.2(a).

“Exchange Act” means the Securities Exchange Act of 1934.

“Excluded Assets” means any Assets that are contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto, including Assets described in Schedule 1.1(a)) as Assets to be retained by RemainCo or any member of the RemainCo Group.

“Future SpinCo Disclosure Claim” means any Third Party Claim that is first asserted after the Distribution Time and arises out of any disclosure or omission with respect to RemainCo’s Power Generation segment in any of RemainCo’s reports filed pursuant to the Securities Exchange Act of 1934, including in any such report under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” or in the financial statements (or any notes thereto) contained therein.

“Good Faith Judgment” shall mean (a) the good faith judgment of the General Counsel of RemainCo or SpinCo, as the case may be, in office immediately after the Distribution Time, or (b) the good faith judgment of a successor General Counsel who is appointed by the Chief Executive Officer of RemainCo or SpinCo in office immediately after the Distribution Time, as the case may be; provided, however, that if both the individual appointed as General Counsel as of the Distribution Time or his or her designated successor meeting the requirements of clause (b) is no longer serving in such office, then “Good Faith Judgment” shall mean the good faith judgment of a reasonable person under the same or similar circumstances.

“Governmental Authority” shall mean any U.S. federal, state, local or non-U.S. court, government, department, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority.

“Group” means either of the RemainCo Group or the SpinCo Group, as the context requires.

“Hazardous Materials” means any (a) toxic substance, hazardous waste, hazardous material, or hazardous substance as defined by any Law; and (b) any radiological material, pollutant, contaminant, leaded paints, toxic mold or other harmful biological agents, or polychlorinated biphenyls, in each case as defined in, subject to, or that could give rise to liability under, any applicable Law.

“Indebtedness” of any specified Person means (a) all obligations of such specified Person for borrowed money or arising out of any extension of credit to or for the account of such specified Person (including reimbursement or payment obligations with respect to surety bonds, letters of credit, bankers’ acceptances and similar instruments), (b) all obligations of such specified Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such specified Person upon which interest charges are customarily paid, (d) all obligations of such specified Person under conditional sale or other title retention agreements relating to Assets purchased by such specified Person, (e) all obligations of such specified Person issued or assumed as the deferred purchase price of property or services, (f) all liabilities secured by (or for which any Person to which any such liability is owed has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge or other encumbrance on property owned

 

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or acquired by such specified Person (or upon any revenues, income or profits of such specified Person therefrom), whether or not the obligations secured thereby have been assumed by the specified Person or otherwise become liabilities of the specified Person, (g) all capital lease obligations of such specified Person, (h) all securities or other similar instruments convertible or exchangeable into any of the foregoing, but excluding daily cash overdrafts associated with routine cash operations, and (i) any liability of others of a type described in any of the preceding clauses (a) through (g) in respect of which the specified Person has incurred, assumed or acquired a liability by means of a guaranty.

“Indemnifiable Loss” has the meaning set forth in Section 3.5(a).

“Indemnifying Party” has the meaning set forth in Section 3.5(a).

“Indemnitee” has the meaning set forth in Section 3.5(a).

“Information” means information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data.

“Information Statement” means the information statement and any related documentation to be provided to holders of RemainCo Common Stock in connection with the Distribution, including any amendments or supplements thereto.

“Insurance Proceeds” means those monies:

(a) received by an insured Person from any insurer, insurance underwriter, mutual protection and indemnity club or other risk collective, excluding any proceeds received directly or indirectly (such as through reinsurance arrangements) from any captive insurance Subsidiary of the insured Person; or

(b) paid on behalf of an insured Person by any insurer, insurance underwriter, mutual protection and indemnity club or other risk collective, excluding any such payment made directly or indirectly (such as through reinsurance arrangements) from any captive insurance Subsidiary of the insured Person, on behalf of the insured; in any such case net of any out-of-pocket costs or expenses incurred in the collection thereof.

“Intellectual Property Agreements” means (a) that certain Intellectual Property Agreement to be entered into prior to the Distribution between Babcock & Wilcox Power Generation Group, Inc. and BWXT Foreign Holdings, LLC; (b) that certain Intellectual Property Agreement to be entered into prior to the Distribution between Babcock & Wilcox Technology, Inc. and Babcock & Wilcox Investment Company; (c) that certain Intellectual Property Agreement dated May 29, 2015 between Babcock & Wilcox Canada Ltd. and B&W PGG

 

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Canada Corp.; (d) that certain Intellectual Property Agreement dated May 29, 2015 between Babcock & Wilcox mPower, Inc. and Babcock & Wilcox Power Generation Group, Inc.; and (e) that certain Intellectual Property to be entered into prior to the Distribution between The Babcock & Wilcox Company and Babcock & Wilcox Enterprises, Inc., in each case as may be amended, modified or supplemented from time to time.

“Intercompany Agreement” means any Contract between any entities included within the SpinCo Group, on the one hand, and any entities within the RemainCo Group, on the other hand, entered into prior to the Distribution Time, excluding any Contract to which a Person other than RemainCo, SpinCo or one of their Subsidiaries is a party.

“Intergroup Payables Agreement” means that certain Intergroup Payables and Receivables Agreement dated as April 30, 2015 by and among RemainCo, each of the other entities named on Schedule A thereto, SpinCo, PGG, and each of the entities named on Schedule B thereto, as amended from time to time.

“Law” means any law, statute, ordinance, code, rule, regulation, order, writ, proclamation, judgment, injunction or decree of any Governmental Authority.

“Liabilities” shall mean any and all Indebtedness, liabilities and obligations, whether accrued, fixed or contingent, mature or inchoate, known or unknown, reflected on a balance sheet or otherwise, including those arising under any Law, Action or any judgment of any court of any kind or any award of any arbitrator of any kind, and those arising under any Contract.

“Losses” shall mean any and all damages, losses, deficiencies, Liabilities, obligations, penalties, judgments, settlements, claims, payments, interest costs, Taxes, fines and expenses (including the costs and expenses of any and all Actions and demands, assessments, judgments, settlements and compromises relating thereto and attorneys’, accountants’, consultants’ and other professionals’ fees and expenses incurred in the investigation or defense thereof or the enforcement of rights hereunder).

“McDermott MSA” means that certain Master Separation Agreement dated as of July 2, 2010, by and between McDermott International Inc., a Panamanian corporation, and RemainCo.

“Net Exposure” means, for any Scheduled RemainCo Guarantee for the SpinCo Business or Scheduled SpinCo Guarantee for the RemainCo Business, the amount set forth for such Scheduled RemainCo Guarantee for the SpinCo Business or Scheduled SpinCo Guarantee for the RemainCo Business on Schedules 1.1(f) or 1.1(m), as applicable, as the “Net Exposure.”

“Noncompete Term” means that period of time commencing on the Distribution Date and ending on the 5 year anniversary of the Distribution Date.

“NYSE” means the New York Stock Exchange, Inc.

“Omnibus Restructuring Agreement” means the Omnibus Restructuring Agreement to be entered into by and among the members of the RemainCo Group and the members of the SpinCo Group that are parties thereto.

 

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“Party” has the meaning set forth in the preamble to this Agreement.

“PCG End Date” means, for any Scheduled RemainCo Guarantee for the SpinCo Business or Scheduled SpinCo Guarantee for the RemainCo Business, the last day of the month set forth for such Scheduled RemainCo Guarantee for the SpinCo Business or Scheduled SpinCo Guarantee for the RemainCo Business on Schedules 1.1(f) or 1.1(m), as applicable, as the “PCG End Date;” provided, however, that if the beneficiary of the Scheduled RemainCo Guarantee for the SpinCo Business or Scheduled SpinCo Guarantee for the RemainCo Business refuses, because of a bona fide dispute, to return or cancel such Scheduled RemainCo Guarantee for the SpinCo Business or Scheduled SpinCo Guarantee for the RemainCo Business by the applicable “PCG End Date” set forth on Schedules 1.1(f) or 1.1(m), as applicable, then such “PCG End Date” shall be extended until the resolution of such dispute.

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, a union, an unincorporated organization or a Governmental Authority or any department, agency or political subdivision thereof.

“Prime Rate” means the fluctuating commercial loan rate announced by JPMorgan Chase Bank, National Association from time to time at its New York, NY office as its prime rate or base rate for U.S. Dollar loans in the United States of America in effect on the date of determination.

“Prior Transfer” means (a) a transfer prior to the date of this Agreement of any SpinCo Asset from RemainCo or any its Subsidiaries included in the RemainCo Group to SpinCo or any other entity included in the SpinCo Group, (b) an assumption prior to the date of this Agreement by SpinCo or any other entity included in the SpinCo Group of any of the SpinCo Liabilities from RemainCo or any of its Subsidiaries included in the RemainCo Group, (c) a transfer prior to the date of this Agreement of any RemainCo Asset from SpinCo or any other entity included in the SpinCo Group to RemainCo or any of its Subsidiaries included in the RemainCo Group, or (d) an assumption prior to the date of this Agreement by RemainCo or any of its Subsidiaries included in the RemainCo Group of any of the RemainCo Liabilities from SpinCo or any other entity included in the SpinCo Group.

“Privilege” has the meaning set forth in Section 6.5(a).

“Privileged Information” has the meaning set forth in Section 6.5(a).

“Record Date” means the close of business on the date to be determined by the Board of Directors of RemainCo as the record date for determining stockholders of RemainCo entitled to receive shares of SpinCo Common Stock on the Distribution Date pursuant to Section 4.2.

“Record Holders” has the meaning set forth in Section 4.1.

“Registration Statement” means the registration statement on Form 10 of SpinCo with respect to the registration under the Exchange Act of the SpinCo Common Stock, including any amendments or supplements thereto.

 

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“RemainCo” has the meaning set forth in the preamble to this Agreement.

“RemainCo Assets” means all Assets of RemainCo, SpinCo and their respective Subsidiaries, including the Excluded Assets but excluding the SpinCo Assets.

“RemainCo Books and Records” means the corporate books and records (whether in hard copy or electronic format and including all minute books, corporate charters and bylaws or comparable constitutive documents, records of share issuances and related corporate records) of the RemainCo Group and such other books and records, including operating, accounting, engineering, corporate department and any other written record, whether in hard copy or electronic format, to the extent they relate to the RemainCo Business, the RemainCo Assets, or the RemainCo Liabilities, excluding the SpinCo Books and Records. Notwithstanding the foregoing, “RemainCo Books and Records” shall not include any Tax Returns or other information, documents or materials relating to Taxes, which Tax Returns and other information, documents and materials are treated in accordance with the provisions of the Tax Sharing Agreement. For the avoidance of doubt, no Information meeting the definition of “RemainCo Books and Records” shall be deemed not to be RemainCo Books and Records because it is provided (or made available) by any member of the RemainCo Group to any member of the SpinCo Group after the Distribution Time in connection with the provision of services by any member of the SpinCo Group pursuant to the RemainCo Transition Services Agreement, or because it is generated, maintained or held in connection with the provision of services by any member of the SpinCo Group pursuant to the RemainCo Transition Services Agreement after the Distribution Time. Furthermore, SpinCo and RemainCo each acknowledge and agree that the RemainCo Books and Records described in the immediately preceding sentence shall belong solely to RemainCo and shall not, as between the Parties, be considered Privileged Information of SpinCo.

“RemainCo Business” means any business of RemainCo and its Subsidiaries other than the SpinCo Business.

“RemainCo Common Stock” has the meaning set forth in the recitals to this Agreement.

“RemainCo Core Business” has the meaning set forth in Schedule 6.11.

“RemainCo Covered Matter” has the meaning set forth in Section 6.10(i).

“RemainCo Entity” means any member of the RemainCo Group, but also includes: (a) any entity which was sold or otherwise disposed of or the business of which was discontinued at such time as such entity’s assets, liabilities or results of operations were accounted for within the Nuclear Operations, Technical Services, Nuclear Energy or mPower segments of RemainCo and its Subsidiaries (or any predecessor to such segment); and (b) each of the entities listed on Schedule 1.1(b). For the avoidance of doubt, none of the SpinCo Entities and none of the entities listed on Schedule 1.1(c) or Schedule 1.1(d) shall be deemed to be a RemainCo Entity.

“RemainCo Group” means RemainCo and its Subsidiaries, other than the SpinCo Group. For the avoidance of doubt and for the purposes of this Agreement, each entity listed on Schedule 1.1(e) shall be deemed a Subsidiary of RemainCo (and not a member of the SpinCo Group).

 

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“RemainCo Guarantees for the SpinCo Business” means all direct and indirect Liabilities (including the obligations described on Schedule 1.1(f)) of RemainCo or any of its Subsidiaries and any direct or indirect encumbrances or restrictions on Assets of RemainCo or any of its Subsidiaries, under any loan, financing, lease, Contract or other obligation (other than RemainCo Surety Obligations for the SpinCo Business) in existence as of the Distribution Time pertaining to the SpinCo Business for which RemainCo or any of its Subsidiaries is or may be liable as guarantor. Notwithstanding the foregoing, the RemainCo Ohio Guarantees are expressly excluded from this definition and are not to be treated as RemainCo Guarantees for the SpinCo Business.

“RemainCo Indemnitees” has the meaning set forth in Section 3.3.

“RemainCo Liabilities” means, whether arising prior to, on or after the Distribution Date:

(i) all Liabilities of (A) any of the RemainCo Entities (or any of their respective predecessors) other than RemainCo, Babcock & Wilcox Canada, Ltd., an entity formed in Ontario, Canada, or Babcock & Wilcox Investment Company, a Delaware corporation, or (B) any of the entities listed on Schedule 1.1(g) under the caption “RemainCo Joint Ventures” (and the respective predecessors and Subsidiaries of such entities), other than, in the case of this clause (i), any Liability described in any of clauses (ii) - (x) of the definition of SpinCo Liabilities;

(ii) all of the RemainCo Specified Liabilities;

(iii) all Liabilities delegated or allocated to, or assumed by, RemainCo or any member of the RemainCo Group under this Agreement or any Ancillary Agreement;

(iv) 60% of all Liabilities (other than the Liabilities described in any of clauses (i) - (iii) or (v) - (vi) of this definition of RemainCo Liabilities or in any of clauses (i) - (vii) or (ix) - (x) of the definition of SpinCo Liabilities) arising out of, resulting from or relating to the former ownership of or investment in the entities listed on Schedule 1.1(c) (or any of their respective predecessors) by any member of the SpinCo Group or the RemainCo Group (or any of their respective predecessors); provided, however, that 100% of the Liabilities described on Schedule 1.1(c)(i) shall be deemed to be RemainCo Liabilities;

(v) 60% of all Liabilities described in, or arising from or relating to the Liabilities described in, (A) clause (vii) or clause (viii) of the definition of “B&W Liabilities” as set forth in the McDermott MSA or (B) Schedule 1.1(h);

(vi) except for the Liabilities described in any of clauses (i) - (ix) of the definition of SpinCo Liabilities, all Liabilities arising primarily out of the RemainCo Assets or the operation of the RemainCo Business; and

(vii) 50% of all Liabilities of SpinCo, RemainCo or any Person that is a Subsidiary of SpinCo or RemainCo immediately after the Distribution Time not otherwise within the scope of any of clauses (i) - (vi) of this definition of RemainCo Liabilities or clauses (i) - (x) of the definition of SpinCo Liabilities.

 

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For the avoidance of doubt: (A) Liabilities that are RemainCo Liabilities pursuant to the definition set forth in clause (vi) of the immediately preceding sentence shall not be excluded from the definition of RemainCo Liabilities simply because such RemainCo Liabilities are attributable to, relate to, arose out of or resulted from operations or Assets no longer owned by RemainCo, SpinCo or their respective Subsidiaries as of the Distribution Time (e.g., previously sold, disposed or lost operations or Assets); (B) the designation in this Agreement of any Liability as a RemainCo Liability shall be binding on the RemainCo Group, notwithstanding that such Liability may arise out of, directly or indirectly, the negligence, strict liability or other legal fault of any one or more members of the SpinCo Group; and (C) except as expressly set forth in this Agreement or an Ancillary Agreement, the designation in this Agreement of Liabilities as SpinCo Liabilities or RemainCo Liabilities is only for purposes of allocating responsibility for such Liabilities as between the Parties and their respective Subsidiaries and shall not affect any obligations to, or give rise to any rights of, any third parties.

“RemainCo Ohio Guarantees” means any guarantee provided to the State of Ohio Bureau of Workers’ Compensation Program by RemainCo or any member of the RemainCo Group.

“RemainCo Protected Territory” has the meaning set forth in Schedule 6.11.

“RemainCo Specified Liabilities” means all Liabilities arising out of, resulting from or relating to any of the items described on Schedule 1.1(i).

“RemainCo Surety Obligations for the SpinCo Business” means any direct or indirect Liabilities (including under a reimbursement agreement) of RemainCo or any of its Subsidiaries (or direct or indirect encumbrances or restrictions on Assets of RemainCo or any of its Subsidiaries) relating to any Surety Instruments (including the items described on Schedule 1.1(j)) pertaining to the SpinCo Business.

“RemainCo Transition Services Agreement” means the Transition Services Agreement dated the date hereof between SpinCo, as service provider, and RemainCo, as service receiver.

“Scheduled RemainCo Guarantees for the SpinCo Business” means the guarantees of RemainCo set forth on Schedule 1.1(f).

“Scheduled RemainCo Surety Obligations for the SpinCo Business” means the Surety Instruments of RemainCo set forth on Schedule 1.1(j).

“Scheduled SpinCo Guarantees for the RemainCo Business” means the guarantees of SpinCo set forth on Schedule 1.1(m).

“Scheduled SpinCo Surety Obligations for the RemainCo Business” means the Surety Instruments of SpinCo set forth on Schedule 1.1(p).

“SEC” means the United States Securities and Exchange Commission.

 

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“Separation” means:

(i) the transfer to SpinCo or any other entity included in the SpinCo Group of all rights, titles and interests of RemainCo or any of its Subsidiaries included in the RemainCo Group in any SpinCo Assets that are held by RemainCo or any of its Subsidiaries included in the RemainCo Group and the assumption by SpinCo or any other entity included in the SpinCo Group of any SpinCo Liabilities (other than the SpinCo Specified Liabilities) that were incurred by, or as to which there exists any obligation of, RemainCo or any of its Subsidiaries included in the RemainCo Group;

(ii) the transfer to RemainCo or any of its Subsidiaries included in the RemainCo Group of all rights, titles and interests of SpinCo or any other entity included in the SpinCo Group in any RemainCo Assets that are held by SpinCo or any other entity included in the SpinCo Group and the assumption by RemainCo or any of its Subsidiaries included in the RemainCo Group of any RemainCo Liabilities (other than the RemainCo Specified Liabilities) that were incurred by, or as to which there exists any obligation of, SpinCo or any other entity included in the SpinCo Group; and

(iii) the issuance by SpinCo to RemainCo of a number of shares of SpinCo Common Stock such that the number of shares of SpinCo Common Stock issued and outstanding immediately before the Distribution Time will equal the product of (i) the Distribution Multiple and (ii) the number of shares of RemainCo Common Stock outstanding as of the Record Date, which SpinCo Common Stock owned by RemainCo will constitute all of the issued and outstanding common stock of SpinCo.

The transactions contemplated by the Separation will be accomplished in part as provided herein.

“Side Letter” means that certain “Side Letter Regarding Expenses” dated the date hereof between RemainCo and SpinCo.

“SpinCo” has the meaning set forth in the preamble to this Agreement.

“SpinCo Assets” means only the following Assets of RemainCo, SpinCo and their respective Subsidiaries, in each case not including any Excluded Assets:

(i) all of the outstanding equity interests of the members of the SpinCo Group that are owned by RemainCo, SpinCo or any of their respective Subsidiaries as of the Distribution Time (other than the SpinCo Common Stock);

(ii) all Assets reflected on the SpinCo Pro Forma Balance Sheet or any subledger thereto that are owned by RemainCo, SpinCo or any of their respective Subsidiaries as of the Distribution Time;

(iii) all Assets owned by RemainCo, SpinCo or any of their respective Subsidiaries as of the Distribution Time that were acquired or created after the date of the SpinCo Pro Forma Balance Sheet and that are of a nature or type that would have resulted in them being reflected on a pro forma, as adjusted consolidated balance sheet of SpinCo and its

 

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Subsidiaries and the notes or subledgers thereto as of the Distribution Time (were the balance sheet, notes and subledgers to be prepared as of that time) on a basis consistent with the determination of the Assets reflected on the SpinCo Pro Forma Balance Sheet or any subledger thereto, including Assets allocated to SpinCo in accordance with the definition of “Separation” herein;

(iv) the Assets described on Schedule 1.1(k);

(v) all assets, property and rights that, in accordance with the Intellectual Property Agreements, are contemplated to be owned by SpinCo or any of its Subsidiaries immediately after the Distribution Time); and

(vi) except as otherwise provided in this Agreement or one or more Ancillary Agreements, all other Assets held by a member of the RemainCo Group or the SpinCo Group as of the Distribution Time and used primarily in or that primarily relate to the SpinCo Business as of the Distribution Time.

“SpinCo Books and Records” means the corporate books and records (whether in hard copy or electronic format and including all minute books, corporate charters and bylaws or comparable constitutive documents, records of share issuances and related corporate records) of any member of the SpinCo Group and such other books and records, including operating, accounting, engineering, corporate department and any other written record, whether in hard copy or electronic format, to the extent they primarily relate to the SpinCo Business, the SpinCo Assets or the SpinCo Liabilities, including, without limitation, all such books and records primarily relating to Persons who are employees of the SpinCo Group as of the Distribution Time, the purchase of materials, supplies and services with respect to the SpinCo Business, and dealings with customers of the SpinCo Business, and all files relating to any Action the liability with respect to which is a SpinCo Liability, except that no portion of the books and records of the RemainCo Group containing minutes of meetings of any board of directors of any of them shall be included. Notwithstanding the foregoing, “SpinCo Books and Records” shall not include any Tax Returns or other information, documents or materials relating to Taxes, which Tax Returns and other information, documents and materials are treated in accordance with the provisions of the Tax Sharing Agreement. For the avoidance of doubt, no Information meeting the definition of “SpinCo Books and Records” shall be deemed not to be SpinCo Books and Records because it is provided (or made available) by any member of the SpinCo Group to any member of the RemainCo Group after the Distribution Date in connection with the provision of services by any member of the RemainCo Group pursuant to the SpinCo Transition Services Agreement, or because it is generated, maintained or held in connection with the provision of services by any member of the RemainCo Group pursuant to the SpinCo Transition Services Agreement after the Distribution Date. Furthermore, SpinCo and RemainCo each acknowledge and agree that the SpinCo Books and Records described in the immediately preceding sentence shall belong solely to SpinCo and shall not, as between the Parties, be considered Privileged Information of RemainCo.

“SpinCo Business” means the business and operations conducted by the SpinCo Group as of the Distribution Date, as such business and operations are described in the Information Statement.

 

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“SpinCo Common Stock” has the meaning set forth in the recitals to this Agreement.

“SpinCo Core Business” has the meaning set forth in Schedule 6.11.

“SpinCo Covered Matter” has the meaning set forth in Section 6.10(i).

“SpinCo Entity” means any member of the SpinCo Group (together with each current and former, direct or indirect, subsidiary of any such member (and of any such former subsidiary)), but also includes any entity which was sold or otherwise disposed of or the business of which was discontinued at such time as such entity’s assets, liabilities or results of operations were accounted for within the Power Generation segment of RemainCo and its Subsidiaries (or any predecessor to any such segment). For the avoidance of doubt and in addition to the foregoing, each entity listed on Schedule 1.1(d) is a SpinCo Entity. Notwithstanding the foregoing, none of the entities listed on Schedule 1.1(b) or Schedule 1.1(c) shall be deemed to be a SpinCo Entity.

“SpinCo Group” means SpinCo and each Person that is a Subsidiary of SpinCo immediately after the Distribution Time or becomes a Subsidiary of SpinCo after the Distribution Time. For the avoidance of doubt and for the purposes of this Agreement, each entity listed on Schedule 1.1(l) will be a Subsidiary of SpinCo immediately after the Distribution Time.

“SpinCo Guarantees for the RemainCo Business” means all direct and indirect Liabilities (including the obligations described on Schedule 1.1(m)), of SpinCo or any of its Subsidiaries, and any direct or indirect encumbrances or restrictions on Assets of SpinCo or any of its Subsidiaries, under or in respect of any loan, financing, lease, Contract or other obligation (other than SpinCo Surety Obligations for the RemainCo Business) in existence as of the Distribution Time pertaining to the RemainCo Business for which SpinCo or any of its Subsidiaries is or may be liable as guarantor. Notwithstanding the foregoing, the SpinCo Ohio Guarantees are expressly excluded from this definition and are not to be treated as SpinCo Guarantees for the RemainCo Business.

“SpinCo Indemnitees” has the meaning set forth in Section 3.4.

“SpinCo Liabilities” means, whether arising prior to, on or after the Distribution Date:

(i) all Liabilities of (A) any of the SpinCo Entities (or any of their respective predecessors) or (B) any of the entities listed on Schedule 1.1(g) under the caption “SpinCo Joint Ventures” (and the respective predecessors and Subsidiaries of such entities), other than, in the case of this clause (i), any Liability described in any of clauses (ii) - (vi) of the definition of RemainCo Liabilities;

(ii) all Liabilities reflected on the SpinCo Pro Forma Balance Sheet or any subledger thereto that remain outstanding as of the Distribution Time;

(iii) all other Liabilities that are incurred or accrued by RemainCo, SpinCo or any of their respective Subsidiaries after the date of the SpinCo Pro Forma Balance Sheet and that remain outstanding as of the Distribution Time that are of a nature or type that would have resulted in the Liabilities being reflected on a pro forma, as adjusted consolidated balance sheet

 

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of SpinCo and its Subsidiaries and the notes or subledgers thereto as of the Distribution Time (were the balance sheet, notes or subledgers to be prepared as of that time) on a basis consistent with the determination of the Liabilities reflected on the SpinCo Pro Forma Balance Sheet or any subledger thereto;

(iv) all Liabilities delegated or allocated to, or assumed by, SpinCo or any member of the SpinCo Group under this Agreement or any Ancillary Agreement;

(v) all Liabilities arising out of, resulting from or relating to any Future SpinCo Disclosure Claim;

(vi) all Liabilities arising out of, resulting from or relating to any of the matters (A) described under the headings “Berlin Station” or “ARPA” in the Commitments and Contingencies note to the condensed combined financial statements for The Power Generation Operations of The Babcock & Wilcox Company for the three months ended March 31, 2015 included in the Registration Statement or (B) listed on Schedule 1.1(n);

(vii) all of the SpinCo Specified Liabilities;

(viii) 40% of all Liabilities (other than the Liabilities described in any of clauses (i) - (iii) or (v) - (vi) of the definition of RemainCo Liabilities or in any of clauses (i) - (vii) or (ix) - (x) of this definition of SpinCo Liabilities) arising out of, resulting from or relating to the former ownership of or investment in the entities listed on Schedule 1.1(c) (or any of their respective predecessors) by any member of the SpinCo Group or the RemainCo Group (or any of their respective predecessors); provided, however, that 100% of the Liabilities described on Schedule 1.1(c)(i) shall be deemed to be RemainCo Liabilities;

(ix) 40% of all Liabilities described in, or arising from or relating to the Liabilities described in (A) clause (vii) or clause (viii) of the definition of “B&W Liabilities” as set forth in the McDermott MSA or (B) Schedule 1.1(h);

(x) except for the Liabilities described in any of clauses (i) - (v) of the definition of RemainCo Liabilities, all Liabilities arising primarily out of the SpinCo Assets or the operation of the SpinCo Business; and

(xi) 50% of all Liabilities of SpinCo, RemainCo or any Person that is a Subsidiary of SpinCo or RemainCo immediately after the Distribution Time not otherwise within the scope of any of clauses (i) - (x) of this definition of SpinCo Liabilities or clauses (i) - (vi) of the definition of RemainCo Liabilities.

For the avoidance of doubt: (A) Liabilities that are SpinCo Liabilities pursuant to the definition set forth in clause (x) of the immediately preceding sentence shall not be excluded from the definition of SpinCo Liabilities simply because such SpinCo Liabilities are attributable to, relate to, arose out of or resulted from operations or Assets no longer owned by RemainCo, SpinCo or their respective Subsidiaries as of the Distribution Time (e.g., previously sold, disposed or lost operations or Assets); (B) the designation in this Agreement of any Liability as a SpinCo Liability shall be binding on the SpinCo Group, notwithstanding that such Liability may arise out of, directly or indirectly, the negligence, strict liability or other legal fault of any one or more

 

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members of the RemainCo Group; and (C) except as expressly set forth in this Agreement or an Ancillary Agreement, the designation in this Agreement of Liabilities as SpinCo Liabilities or RemainCo Liabilities is only for purposes of allocating responsibility for such Liabilities as between the Parties and their respective Subsidiaries and shall not affect any obligations to, or give rise to any rights of, any third parties.

“SpinCo Ohio Guarantees” means any guarantee provided to the State of Ohio Bureau of Workers’ Compensation Program by SpinCo or any member of the SpinCo Group.

“SpinCo Pro Forma Balance Sheet” means the unaudited consolidated pro forma, as adjusted balance sheet of the SpinCo Group as of March 31, 2015 included in the Information Statement.

“SpinCo Protected Territory” has the meaning set forth in Schedule 6.11.

“SpinCo Specified Liabilities” means all Liabilities arising out of, resulting from or relating to any of the items described on Schedule 1.1(o).

“SpinCo Surety Obligations for the RemainCo Business” means any direct or indirect Liabilities (including under a reimbursement agreement) of SpinCo or any of its Subsidiaries (or direct or indirect encumbrances or restrictions on Assets of SpinCo or any of its Subsidiaries) relating to any Surety Instruments (including the items described on Schedule 1.1(p)) pertaining to the RemainCo Business.

“SpinCo Transition Services Agreement” means the Transition Services Agreement dated the date hereof between RemainCo, as service provider, and SpinCo, as service receiver.

“Subsidiary” means, with respect to any specified Person, any corporation, partnership, limited liability company, joint venture or other organization, whether incorporated or unincorporated, of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such specified Person or by any one or more of its Subsidiaries, or by such specified Person and one or more of its Subsidiaries. For the avoidance of doubt and for the purposes of this Agreement, none of the joint venture entities listed on Schedule 1.1(g) shall be deemed to be Subsidiaries of either RemainCo or SpinCo.

“Surety Instruments” means any letters of credit, financial or surety bonds or other similar financial instruments issued by third parties.

“Surety Obligation End Date” means, for any Scheduled RemainCo Surety Obligation for the SpinCo Business or Scheduled SpinCo Surety Obligation for the RemainCo Business, the last day of the month set forth for such Scheduled RemainCo Surety Obligation for the SpinCo Business or Scheduled SpinCo Surety Obligation for the RemainCo Business on Schedules 1.1(j) or 1.1(p), as applicable, as the “Surety Obligation End Date;” provided, however, that if the beneficiary of the Scheduled RemainCo Surety Obligation for the SpinCo Business or Scheduled SpinCo Surety Obligation for the RemainCo Business refuses, because of a bona fide dispute, to return or cancel such Scheduled RemainCo Surety Obligation for the SpinCo Business or

 

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Scheduled SpinCo Surety Obligation for the RemainCo Business by the applicable “Surety Obligation End Date” set forth on Schedules 1.1(j) or 1.1(p), as applicable, then such “Surety Obligation End Date” shall be extended until the resolution of such dispute.

“Surety Obligation Net Exposure” means, for any Scheduled RemainCo Surety Obligation for the SpinCo Business or Scheduled SpinCo Surety Obligation for the RemainCo Business, the amount set forth for such Scheduled RemainCo Surety Obligation for the SpinCo Business or Scheduled SpinCo Surety Obligation for the RemainCo Business on Schedules 1.1(j) or 1.1(p), as applicable, as the “Surety Obligation Net Exposure.”

“Tax Benefits” has the meaning set forth in Section 3.6.

“Tax Returns” has the meaning set forth in the Tax Sharing Agreement.

“Tax Sharing Agreement” means the Tax Sharing Agreement dated the date hereof by and between RemainCo and SpinCo.

“Taxes” has the meaning set forth in the Tax Sharing Agreement.

“Third Party” has the meaning set forth in Section 3.7(a).

“Third Party Claim” has the meaning set forth in Section 3.7(a).

“Third Party Indemnity Proceeds” means those monies:

(a) received by a RemainCo Entity or a SpinCo Entity, from any Person that is not a RemainCo Entity or a SpinCo Entity, as a result of an indemnity or hold harmless obligation of such Person that is not a RemainCo Entity or a SpinCo Entity that is owed to a RemainCo Entity or a SpinCo Entity; or

(b) paid on behalf of a RemainCo Entity or a SpinCo Entity, by Person that is not a RemainCo Entity or a SpinCo Entity, as a result of an indemnity or hold harmless obligation of such Person that is not a RemainCo Entity or a SpinCo Entity that is owed to a RemainCo Entity or a SpinCo Entity; in any such case net of any out-of-pocket costs or expenses incurred in the collection thereof.

Section 1.2 Interpretation. In this Agreement, unless the context clearly indicates otherwise:

(a) words used in the singular include the plural and words used in the plural include the singular;

(b) if a word or phrase is defined in this Agreement, its other grammatical forms, as used in this Agreement, shall have a corresponding meaning;

(c) reference to any gender includes the other gender and the neuter;

 

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(d) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”;

(e) the words “shall” and “will” are used interchangeably and have the same meaning;

(f) the word “or” shall have the inclusive meaning represented by the phrase “and/or”;

(g) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;

(h) all references to a specific time of day in this Agreement shall be based upon Eastern Standard Time or Eastern Daylight Savings Time, as applicable, on the date in question;

(i) whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified;

(j) accounting terms used herein shall have the meanings historically ascribed to them by RemainCo and its Subsidiaries, including SpinCo, in its and their internal accounting and financial policies and procedures in effect immediately prior to the date of this Agreement;

(k) reference to any Article, Section or Schedule means such Article or Section of, or such Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;

(l) the words “this Agreement,” “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision of this Agreement;

(m) the term “commercially reasonable efforts” means efforts which are commercially reasonable to enable a Party, directly or indirectly, to satisfy a condition to or otherwise assist in the consummation of a desired result and which do not require the performing Party to expend funds or assume Liabilities other than expenditures and Liabilities which are customary and reasonable in nature and amount in the context of a series of related transactions similar to the Separation;

(n) reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;

(o) reference to any Law (including statutes and ordinances) means such Law (including any and all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;

(p) references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement; a reference to such Person’s “Affiliates” shall be deemed to mean such Person’s Affiliates following the Distribution;

 

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(q) if there is any conflict between the provisions of the main body of this Agreement and the Schedules hereto, the provisions of the main body of this Agreement shall control unless explicitly stated otherwise in such Schedule;

(r) if there is any conflict between the provisions of this Agreement and any Ancillary Agreement, the provisions of such Ancillary Agreement shall control (but only with respect to the subject matter thereof) unless explicitly stated otherwise therein;

(s) the titles to Articles and headings of Sections contained in this Agreement, in any Schedule and in the table of contents to this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement; and

(t) any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Subsidiaries to take such action or refrain from taking such action, as the case may be.

ARTICLE II

SEPARATION AND RELATED TRANSACTIONS

Section 2.1 The Separation. Subject to the satisfaction or waiver (in accordance with the provisions of Section 4.3) of the conditions set forth in Section 4.3, each of RemainCo and SpinCo will use commercially reasonable efforts to take, or cause to be taken, any actions, including the transfer of Assets and the assumption of Liabilities, necessary to effect the Separation on or prior to the Distribution Date. As of and after the Distribution Time, SpinCo and its Subsidiaries shall, as between the SpinCo Group and the RemainCo Group, be responsible for all SpinCo Liabilities, regardless of when or where such SpinCo Liabilities arose or arise, or whether the facts on which they are based occurred prior to or subsequent to the date hereof, regardless of where or against whom such SpinCo Liabilities are asserted or determined or whether asserted or determined prior to, at or after the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of statute or Law, fraud or misrepresentation, breach of contract or other theory, by any member of the RemainCo Group or the SpinCo Group or any of their respective directors, officers, employees, agents, Subsidiaries or Affiliates. As of and after the Distribution Time, RemainCo and its Subsidiaries shall, as between the RemainCo Group and the SpinCo Group, be responsible for all RemainCo Liabilities, regardless of when or where such RemainCo Liabilities arose or arise, or whether the facts on which they are based occurred prior to or subsequent to the date hereof, regardless of where or against whom such RemainCo Liabilities are asserted or determined or whether asserted or determined prior to, at or after the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of statute or Law, fraud or misrepresentation, breach of contract or other theory, by any member of the RemainCo Group or the SpinCo Group or any of their respective directors, officers, employees, agents, Subsidiaries

 

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or Affiliates. Each of RemainCo and SpinCo agrees on behalf of itself and each of its Subsidiaries as of the Distribution Time that the provisions of the Tax Sharing Agreement shall exclusively govern the allocation of Assets and Liabilities related to Taxes.

Section 2.2 Charter and Bylaws. Effective as of the Distribution Time, the Parties shall cause the Restated Certificate of Incorporation and the Amended and Restated Bylaws of SpinCo to be substantially in the forms of Schedule 2.2(a) and Schedule 2.2(b), respectively, with such changes therein as may be agreed to in writing by RemainCo.

Section 2.3 Instruments of Transfer and Assumption . RemainCo and SpinCo agree that (a) transfers of Assets required to be transferred by this Agreement shall be effected by delivery by the transferring entity to the transferee of (i) with respect to those Assets that constitute stock, certificates endorsed in blank or evidenced or accompanied by stock powers or other instruments of transfer endorsed in blank, against receipt, (ii) with respect to any real property interest or any improvements thereon, a general warranty deed with general warranty of limited application limiting recourse and remedies to title insurance and warranties by predecessors in title and (iii) with respect to all other Assets, such good and sufficient instruments of contribution, conveyance, assignment and transfer, in form and substance reasonably satisfactory to RemainCo and SpinCo, as shall be necessary, in each case, to vest in the designated transferee all of the title and ownership interest of the transferor in and to any such Asset, and (b) to the extent necessary, the assumption of the Liabilities contemplated pursuant to Section 2.1 shall be effected by delivery by the transferee to the transferor of such good and sufficient instruments of assumption, in form and substance reasonably satisfactory to RemainCo and SpinCo, as shall be necessary for the assumption by the transferee of such Liabilities. RemainCo and SpinCo agree that, to the extent that the documents described in clause (a)(i), (ii) and (iii) and clause (b) of the immediately preceding sentence have not previously been delivered in connection with any Prior Transfers, the documents relating to such Prior Transfers shall be delivered by the appropriate Party or Subsidiary thereof. Each Party also agrees to deliver to the other Party such other documents, instruments and writings as may be reasonably requested by the other Party in connection with the transactions contemplated hereby or by Prior Transfers.

Section 2.4 No Representations or Warranties . Except as expressly set forth in this Agreement or in an Ancillary Agreement, SpinCo and RemainCo understand and agree that no member of the RemainCo Group is making any representation or warranty of any kind whatsoever, express or implied, to SpinCo or any member of the SpinCo Group in any way as to the SpinCo Business, the SpinCo Assets or the SpinCo Liabilities; and, no member of the SpinCo Group is making any representation or warranty of any kind whatsoever, express or implied, to RemainCo or any member of the RemainCo Group in any way as to the RemainCo Business, the RemainCo Assets or the RemainCo Liabilities. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING (x) THE TRANSFERS, LICENSES AND ASSUMPTIONS REFERRED TO IN THIS ARTICLE II (INCLUDING PRIOR TRANSFERS) HAVE BEEN, OR WILL BE, MADE WITHOUT ANY REPRESENTATION OR WARRANTY OF ANY NATURE, EXPRESS OR IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE, RELATING TO (A) THE VALUE OR FREEDOM FROM ENCUMBRANCE OF, ANY ASSETS, (B) THE CONDITION OR SUFFICIENCY OF ANY ASSETS (INCLUDING ANY IMPLIED OR EXPRESS WARRANTY OF

 

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MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, MARKETABILITY, TITLE, VALUE, FREEDOM FROM ENCUMBRANCE OR OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR THE PRESENCE OR ABSENCE OF ANY HAZARDOUS MATERIALS IN OR ON, OR DISPOSED OR DISCHARGED FROM, SUCH ASSETS), (C) THE NON-INFRINGEMENT OF ANY PATENT OR OTHER INTELLECTUAL PROPERTY RIGHT OF ANY THIRD PARTY, (D) ANY OTHER MATTER CONCERNING ANY ASSETS OR (E) AS TO THE LEGAL SUFFICIENCY TO CONVEY TITLE TO ANY ASSETS, and (y) the instruments of transfer or assumption referred to in this Article II shall not include any representations and warranties other than as specifically provided herein. RemainCo and SpinCo hereby acknowledge and agree that ALL ASSETS TRANSFERRED OR LICENSED PURSUANT TO THIS ARTICLE II AND ALL ASSETS INCLUDED IN PRIOR TRANSFERS ARE BEING OR WERE TRANSFERRED “AS IS, WHERE IS.” To the extent that the instruments of transfer and assumption with respect to any Prior Transfers are inconsistent with this Section 2.4, SpinCo, on its own behalf and on behalf of the other members of the SpinCo Group, and RemainCo, on its own behalf and on behalf of the other members of the RemainCo Group, agree that the inconsistent provisions of such instruments are hereby amended and superseded by the provisions of this Section 2.4. To the extent reasonably requested by a member of either Group, each Party will, or will cause its Subsidiaries to, execute any documents necessary to evidence such amendment.

Section 2.5 Agreements . Prior to the Distribution Time, RemainCo and SpinCo shall execute and deliver (or shall cause their appropriate Subsidiaries to execute and deliver, as applicable) the agreements between them designated as follows:

(i) the Omnibus Restructuring Agreement,

(ii) the RemainCo Transition Services Agreement,

(iii) the SpinCo Transition Services Agreement,

(iv) the Employee Matters Agreement,

(v) the Tax Sharing Agreement,

(vi) the Assumption and Loss Allocation Agreement,

(vii) the Captive Insurance Novation and Assumption Agreements,

(viii) the Intellectual Property Agreements,

(ix) the Intergroup Payables Agreement,

(x) the Barberton Documentation, and

(xi) such other written agreements, documents or instruments as the Parties may agree are necessary or desirable and which specifically state that they are Ancillary Agreements within the meaning of this Agreement (collectively, the “Ancillary Agreements”).

 

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Section 2.6 Transfers Not Effected Prior to the Distribution Time . To the extent that any transfers or agreements contemplated by this Article II shall not have been consummated or executed as of the Distribution Time, the Parties shall cooperate to effect such transfers or enter into such agreements as promptly following the Distribution Time as shall be practicable. Nothing herein shall be deemed to require the transfer of any Assets or the assumption of any Liabilities that by their terms or operation of Law cannot be transferred or assumed; provided, that the SpinCo Group and the RemainCo Group shall cooperate and use their respective commercially reasonable efforts to obtain any necessary consents or approvals for the transfer of all Assets and the assumption of all Liabilities contemplated to be transferred or assumed pursuant to this Article II and shall, even in the absence of necessary consents or approvals, transfer the equitable ownership of Assets when such a transfer is permitted. In the event that any such transfer of Assets or assumption of Liabilities has not been consummated effective as of the Distribution Time (or such earlier time as any such Asset may have been acquired or Liability assumed), the Party retaining such Asset or Liability shall thereafter hold such Asset in trust for the use and benefit of the Party entitled thereto (at the expense of the Party entitled thereto) and retain such Liability for the account of the Party by whom such Liability is to be assumed pursuant hereto, and take such other action as may be reasonably requested by the Party to which such Asset is to be transferred, or by whom such Liability is to be assumed, as the case may be, in order to place such Party, insofar as reasonably possible, in the same position as would have existed had such Asset or Liability been transferred or assumed as contemplated hereby. Without limiting any other duty of a Party holding any Asset in trust for the use and benefit of the Party entitled thereto, such Party shall take all reasonable actions that it deems necessary to preserve the value of that Asset. As and when any such Asset becomes transferable or such Liability can be assumed, such transfer or assumption shall be effected forthwith, without the payment of any further consideration therefor. Subject to the foregoing, the Parties agree that, as of the Distribution Time (or such earlier time as any such Asset may have been acquired or Liability assumed), each Party shall be deemed to have acquired complete and sole beneficial ownership over all of the Assets, together with all rights, powers and privileges incident thereto, and shall be deemed to have assumed in accordance with the terms of this Agreement all of the Liabilities, and all duties, obligations and responsibilities incident thereto, which such Party is entitled to acquire or required to assume pursuant to the terms of this Agreement.

ARTICLE III

MUTUAL RELEASES; INDEMNIFICATION

Section 3.1 Release of Pre-Closing Claims .

(a) Except as provided in Section 3.1(c), effective as of the Distribution Time, SpinCo does hereby, for itself and each other member of the SpinCo Group, their respective Affiliates, successors and assigns, and all Persons who at any time prior to the Distribution Time have been stockholders, directors, officers, agents or employees of any member of the SpinCo Group (in each case, in their respective capacities as such), remise, release and forever discharge RemainCo, each member of the RemainCo Group and their respective Affiliates, successors and assigns, and all stockholders (other than stockholders of any publicly traded member of the RemainCo Group), directors, officers, agents or employees of any member of the RemainCo Group (in each case, in their respective capacities as such), and their respective heirs, executors,

 

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administrators, successors and assigns, from any and all Liabilities whatsoever to SpinCo and each other member of the SpinCo Group, 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 at or before the Distribution Time, including in connection with the transactions and all other activities to implement any Prior Transfers, the Separation and the Distribution.

(b) Except as provided in Section 3.1(c), effective as of the Distribution Time, RemainCo does hereby, for itself and each other member of the RemainCo Group, their respective Affiliates, successors and assigns, and all Persons who at any time prior to the Distribution Time have been stockholders, directors, officers, agents or employees of any member of the RemainCo Group (in each case, in their respective capacities as such), remise, release and forever discharge SpinCo, each member of the SpinCo Group and their respective Affiliates, successors and assigns, and all stockholders (other than stockholders of any publicly traded member of the SpinCo Group), directors, officers, agents or employees of any member of the SpinCo Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever to RemainCo and each other member of the RemainCo Group, 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 at or before the Distribution Time, including in connection with the transactions and all other activities to implement any Prior Transfers, the Separation and the Distribution.

(c) Nothing contained in this Agreement, including in Section 3.1(a) and Section 3.1(b), shall impair any right of any Person to enforce this Agreement, any Ancillary Agreement, any of the Continuing Agreements or any agreements, arrangements, commitments or understandings that are specified in, or contemplated to continue pursuant to, this Agreement, any Ancillary Agreement or any of the Continuing Agreements. Nothing contained in this Agreement, including in Section 3.1(a) and Section 3.1(b), shall release any Person from:

(i) any Liability, contingent or otherwise, assumed, transferred, assigned or allocated (by an agreement to provide indemnification or otherwise) to the Group of which such Person is a member in accordance with, or any other Liability of any member of that Group under, this Agreement or any Ancillary Agreement;

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

(iii) any unpaid accounts payable arising from or relating to the sale, provision, or receipt of goods, property or services purchased, obtained or used in the ordinary course of business (A) by any member of the RemainCo Group that is not a party to the Intergroup Payables Agreement from any member of the SpinCo Group, or (B) by any member of the SpinCo Group that is not a party to the Intergroup Payables Agreement from any member of the RemainCo Group, in each case pursuant to any agreement entered into in the ordinary course of business on arms-length terms prior to the Distribution Date;

 

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(iv) any Liability that such Person may have pursuant to any of the Continuing Agreements, it being agreed that all obligations, under each of the Continuing Agreements, of each member of the RemainCo Group and of the SpinCo Group, are hereby reaffirmed by RemainCo on its own behalf and on behalf of each member of the RemainCo Group and by SpinCo on its own behalf and on behalf of each member of the SpinCo Group;

(v) any Liability the release of which would result in the release of any Person other than (A) RemainCo, each member of the RemainCo Group and their respective Affiliates, successors and assigns, and all stockholders (other than stockholders of any publicly traded member of the RemainCo Group), directors, officers, agents or employees of any member of the RemainCo Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns or (B) SpinCo, each member of the SpinCo Group and their respective Affiliates, successors and assigns, and all stockholders (other than stockholders of any publicly traded member of the SpinCo Group), directors, officers, agents or employees of any member of the SpinCo Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns; provided that the Parties agree not to bring suit or permit any of their Subsidiaries to bring suit against any Indemnitee with respect to such Liability.

(d) SpinCo shall not make, and shall not permit any member of the SpinCo Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or indemnification, against RemainCo or any member of the RemainCo Group, or any other Person released pursuant to Section 3.1(a), with respect to any Liabilities released pursuant to Section 3.1(a). RemainCo shall not make, and shall not permit any member of the RemainCo Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against SpinCo or any member of the SpinCo Group, or any other Person released pursuant to Section 3.1(b), with respect to any Liabilities released pursuant to Section 3.1(b).

(e) It is the intent of each of RemainCo and SpinCo by virtue of the provisions of this Section 3.1 to provide for a full and complete release and discharge of all Liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed at or before the Distribution Time, between or among SpinCo or any member of the SpinCo Group, on the one hand, and RemainCo or any member of the RemainCo Group, on the other hand (including any contractual agreements or arrangements existing or alleged to exist between or among any such members at or before the Distribution Time), except as expressly set forth in Section 3.1(c). At any time, at the reasonable request of the other Party, each Party shall cause each member of its respective Group to execute and deliver releases reflecting the provisions hereof.

Section 3.2 Termination of Intercompany Agreements . Without limiting the generality of Section 3.1(e), but subject to the provisions of Section 3.1(c), each of the Parties agrees that, except for this Agreement, the Ancillary Agreements and the Continuing Agreements (including any amounts owed with respect to such agreements), all Intercompany Agreements and all other

 

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intercompany arrangements and course of dealings, whether or not in writing and whether or not binding or in effect immediately prior to the Distribution Time, shall terminate immediately prior to the Distribution Time unless the Parties thereto otherwise agree in writing after the date of this Agreement. Without limiting the generality of the foregoing, each of the Parties agree, for themselves and on behalf of their respective subsidiaries that the letter agreement dated January 30, 1998 from Babcock & Wilcox Government and Nuclear Operations, Inc. (formerly known as, “BWX Technologies, Inc.”) to Babcock & Wilcox Power Generation Group, Inc. (formerly known as, “The Babcock & Wilcox Company”) (including the document attached thereto denoted “Letter Agreement - Environmental Provisions” with a footer stating “TC87007.doc”), as amended by Amendment No. 1 Letter Agreement — Environmental Conditions dated as of November 19, 1999 by and between Babcock & Wilcox Power Generation Group, Inc. (formerly known as, “The Babcock & Wilcox Company”) and Babcock & Wilcox Government and Nuclear Operations, Inc. (formerly known as, “BWX Technologies, Inc.”) shall terminate immediately prior to the Distribution Time.

Section 3.3 Indemnification by SpinCo . Except as provided in Sections 3.5 and 3.6, SpinCo shall, and in the case of clauses (a), (b) and (c) below shall in addition cause the Appropriate Member of the SpinCo Group to, indemnify, defend and hold harmless RemainCo, each member of the RemainCo Group and their respective Affiliates, successors and assigns, and all stockholders (other than stockholders of any publicly traded member of the RemainCo Group), directors, officers, agents or employees of any member of the RemainCo Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns (collectively, the “RemainCo Indemnitees”) from and against any and all Losses of the RemainCo Indemnitees relating to, arising out of or resulting from any of the following (without duplication):

(a) the failure of SpinCo or any other member of the SpinCo Group or any other Person to pay, perform or otherwise promptly discharge any SpinCo Liabilities in accordance with their respective terms, whether prior to, at or after the Distribution Time;

(b) any SpinCo Liability (including any SpinCo Specified Liability);

(c) any breach by SpinCo or any member of the SpinCo Group of any provision of this Agreement or of any of the Ancillary Agreements, subject (in the case of each of the Ancillary Agreements) to any limitations of liability provisions and other provisions applicable to any such breach set forth therein; and

(d) any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all Information contained in the Registration Statement or the Information Statement (other than Information regarding RemainCo provided by RemainCo in writing to SpinCo expressly for inclusion in the Registration Statement or the Information Statement);

in each case, regardless of when or where the loss, claim, accident, occurrence, event or happening giving rise to the Loss took place, or whether any such loss, claim, accident, occurrence, event or happening is known or unknown, or reported or unreported and regardless

 

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of whether such loss, claim, accident, occurrence, event or happening giving rise to the Loss existed prior to, on or after the Distribution Date or relates to, arises out of or results from actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to, on or after the Distribution Date. For the avoidance of doubt, for purposes of clause (d) of the first sentence of this Section 3.3 and clause (d) of the first sentence of Section 3.4, the only information provided by RemainCo in writing to SpinCo expressly for inclusion in the Registration Statement or the Information Statement is the information appearing under the caption “The Spin-Off—Reasons for the Spin-Off” in the Information Statement included in the Registration Statement, as amended through the date of this Agreement. As used in this Section 3.3, “Appropriate Member of the SpinCo Group” means the member or members of the SpinCo Group, if any, whose acts, conduct or omissions or failures to act caused, gave rise to or resulted in the Loss from and against which indemnity is provided. In support of its indemnification obligations related to third-party casualty claims, SpinCo shall maintain throughout the existence of its indemnity obligations hereunder commercial general liability insurance in a commercially reasonable amount with responsible and reputable insurers and shall cause the RemainCo Indemnities to be named thereon as additional insureds to the extent of the insured contractual indemnity obligations expressly assumed or undertaken by SpinCo under this Agreement.

Section 3.4 Indemnification by RemainCo . Except as provided in Sections 3.5 and 3.6, RemainCo shall, and in case of clauses (a), (b) and (c) below shall in addition cause the Appropriate Member of the RemainCo Group to, indemnify, defend and hold harmless SpinCo, each member of the SpinCo Group and their respective Affiliates, successors and assigns, and all stockholders (other than stockholders of any publicly traded member of the SpinCo Group), directors, officers, agents or employees of any member of the SpinCo Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns (collectively, the “SpinCo Indemnitees”) from and against any and all Losses of the SpinCo Indemnitees relating to, arising out of or resulting from any of the following (without duplication):

(a) the failure of RemainCo or any other member of the RemainCo Group or any other Person to pay, perform or otherwise promptly discharge any RemainCo Liabilities in accordance with their respective terms, whether prior to, at or after the Distribution Time;

(b) any RemainCo Liability (including any RemainCo Specified Liability);

(c) any breach by RemainCo or any member of the RemainCo Group of any provision of this Agreement or of any of the Ancillary Agreements, subject (in the case of each of the Ancillary Agreements) to any limitations of liability provisions and other provisions applicable to any such breach set forth therein;

(d) any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, solely with respect to information regarding RemainCo provided by RemainCo in writing to SpinCo expressly for inclusion in the Registration Statement or the Information Statement; and

(e) Third Party Claims relating to, arising out of or resulting from the use of the name “Babcock,” “Wilcox,” “Babcock and Wilcox,” “Babcock & Wilcox,” “B&W,” “PGG” or any similar name by any member of the RemainCo Group in any corporate name or in any of their respective businesses or operations, whether prior to, on or after the Distribution Date.

 

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in each case, regardless of when or where the loss, claim, accident, occurrence, event or happening giving rise to the Loss took place, or whether any such loss, claim, accident, occurrence, event or happening is known or unknown, or reported or unreported and regardless of whether such loss, claim, accident, occurrence, event or happening giving rise to the Loss existed prior to, on or after the Distribution Date or relates to, arises out of or results from actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to, on or after the Distribution Date. As used in this Section 3.4, “Appropriate Member of the RemainCo Group” means the member or members of the RemainCo Group, if any, whose acts, conduct or omissions or failures to act caused, gave rise to or resulted in the Loss from and against which indemnity is provided. In support of its indemnification obligations related to third-party casualty claims, RemainCo shall maintain throughout the existence of its indemnity obligations hereunder commercial general liability insurance in a commercially reasonable amount with responsible and reputable insurers and shall cause the SpinCo Indemnities to be named thereon as additional insureds to the extent of the insured contractual indemnity obligations expressly assumed or undertaken by RemainCo under this Agreement.

Section 3.5 Indemnification Obligations Net of Insurance Proceeds; Duty of Cooperation .

(a) The Parties intend that any Loss subject to indemnification or reimbursement pursuant to this Article III (an “Indemnifiable Loss”) will be net of Insurance Proceeds and Third Party Indemnity Proceeds that actually reduce the amount of such Loss (and the out-of-pocket costs and expenses incurred by any Indemnitee to collect any such Insurance Proceeds and Third Party Indemnity Proceeds shall increase the amount of such Loss). Accordingly, the amount which a Party (an “Indemnifying Party”) is required to pay to any Person entitled to indemnification hereunder (an “Indemnitee”) will be reduced by any Insurance Proceeds and any Third Party Indemnity Proceeds theretofore actually recovered by or on behalf of the Indemnitee in respect of the related Loss. The Indemnitee shall use, and shall use commercially reasonable efforts to cause its Affiliates to use, commercially reasonable efforts at the cost of the Indemnifying Party, to recover any Insurance Proceeds and any Third Party Indemnity Proceeds to which the Indemnitee is entitled with respect to any Indemnifiable Loss, including at the Indemnifying Party’s option and expense, alternative dispute resolution or litigation through to a final and non-appealable adjudication, except that, with respect to any of the RemainCo Specified Liabilities and SpinCo Specified Liabilities, the Indemnitee shall be required to undertake, and use commercially reasonable efforts to cause its Affiliates to undertake, such commercially reasonable efforts only to the extent (i) the Indemnifying Party has, in writing, expressly requested the Indemnitee or such Affiliate of the Indemnitee to do so (which writing shall contain detailed written instructions setting forth the specific actions to be taken by the Indemnitee and such Affiliate), (ii) the Indemnifying Party promptly reimburses to the Indemnitee or such Affiliate of the Indemnitee all out-of-pocket costs and expenses incurred by the Indemnitee or such Affiliate of the Indemnitee in connection with such commercially reasonable efforts, (iii) the Indemnifying Party, at the request of the Indemnitee or such Affiliate

 

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of the Indemnitee, prepares all documentation (including (x) pleadings and other filings in connection with any legal proceedings and (y) notices to insurers or indemnitors) required in connection with such commercially reasonable efforts and (iv) such efforts are commercially reasonable. The Indemnitee shall make available to the Indemnifying Party and its counsel, at the cost of the Indemnifying Party, all employees, books and records, communications, documents, items or matters within its knowledge, possession or control that are necessary, appropriate or reasonably deemed relevant by the Indemnifying Party with respect to the recovery of such Insurance Proceeds or Third Party Indemnity Proceeds; provided, however, that subject to Section 6.5 hereof, nothing in this sentence shall be deemed to require a Party to make available books and records, communications, documents or items which (i) in such Party’s Good Faith Judgment could reasonably be expected to result in a waiver of any Privilege with respect to a Third Party even if SpinCo and RemainCo cooperated to protect such Privilege as contemplated by this Agreement, or (ii) such Party is not permitted to make available because of any Law or any confidentiality obligation to a Third Party, in which case such Party shall use commercially reasonable efforts, at the cost of the Indemnifying Party, to seek a waiver of or other relief from such confidentiality restriction. Unless the Indemnifying Party has made payment in full of any Indemnifiable Loss, such Indemnifying Party shall use and cause its Affiliates to use commercially reasonable efforts to recover any Insurance Proceeds or Third Party Indemnity Proceeds to which it or such Affiliate is entitled with respect to any Indemnifiable Loss.

(b) An insurer or other Third Party who would otherwise be obligated to pay any claims shall not be relieved of the responsibility with respect thereto or, solely by virtue of the indemnification provisions hereof, have any subrogation rights with respect thereto.

Section 3.6 Tax Benefits . The Parties intend that any Loss subject to indemnification or reimbursement pursuant to this Article III will be net of Taxes. Accordingly, (i) if the Person receiving the indemnification or reimbursement is a RemainCo Indemnitee and if any such Loss, after taking into account the related indemnification and reimbursement under this Article III, results in (a) increased deductions, losses, or credits, or (b) decreases in income, gains or recapture of Tax credits (“Tax Benefits”) to the Person receiving the indemnification or reimbursement (or to a member of the RemainCo Group), that would not, but for the Loss, after taking into account the related indemnification and reimbursement under this Article III, be allowable, then, RemainCo shall pay SpinCo the amount by which such Tax Benefit actually reduces, in cash, the amount of Tax that the Person receiving the indemnification or reimbursement (or a member of the RemainCo Group) would have been required to pay or bear (or increases, in cash, the amount of a Refund to which the Person receiving the indemnification or reimbursement (or a member of the RemainCo Group) would have been entitled) but for such indemnification and reimbursement (and the related indemnification and reimbursement under this Article III), and (ii) if the Person receiving the indemnification or reimbursement is a SpinCo Indemnitee and if any such Loss, after taking into account the related indemnification and reimbursement under this Article III, results in Tax Benefits to the Person receiving the indemnification or reimbursement (or to a member of the SpinCo Group), that would not, but for the Loss, after taking into account the related indemnification and reimbursement under this Article III, be allowable, then, SpinCo shall pay RemainCo the amount by which such Tax Benefit actually reduces, in cash, the amount of Tax that the Person receiving the indemnification or reimbursement (or a member of the SpinCo Group) would have been required

 

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to pay or bear (or increases, in cash, the amount of a Refund to which the Person receiving the indemnification or reimbursement (or a member of the SpinCo Group) would have been entitled) but for such indemnification and reimbursement (and the related indemnification and reimbursement under this Article III). The Party obligated under the prior sentence is to make a payment in respect of such Tax Benefit no later than five Business Days after such Tax Benefit is Actually Realized. Except with respect to any indemnity payment for Losses relating to a breach of the Tax Sharing Agreement, which indemnity payments shall be treated in accordance with Section 4 of the Tax Sharing Agreement, and to the extent permitted by Law, the Parties will treat any indemnity payment as a capital contribution made by RemainCo to SpinCo or as a distribution made by SpinCo to RemainCo, as the case may be, on the date of this Agreement.

Section 3.7 Procedures for Defense and Indemnification of Third Party Claims .

(a) If an Indemnitee shall receive notice or otherwise learn of the assertion by a Person (including any Governmental Authority) who is not a member of the RemainCo Group or the SpinCo Group of any claims or of the commencement by any such Person of any Action (each such Person being a “Third Party” and each such claim or Action being a “Third Party Claim”) with respect to which an Indemnifying Party may be obligated to provide indemnification to such Indemnitee pursuant to Section 3.3 or 3.4, or any other Section of this Agreement or any Ancillary Agreement, such Indemnitee shall promptly give such Indemnifying Party written notice thereof. Any such notice shall describe the Third Party Claim in reasonable detail and set forth the Applicable Response Period. Notwithstanding the foregoing, the failure of any Indemnitee or other Person to give notice as provided in this Section 3.7(a) shall not relieve the applicable Indemnifying Party of its obligations under this Article III, except to the extent that such Indemnifying Party is actually prejudiced by such failure to give notice.

(b) If the Indemnifying Party does not, in its Good Faith Judgment, dispute its potential liability to the Indemnitee with respect to a Third Party Claim relating to a RemainCo Specified Liability or a SpinCo Specified Liability, the Indemnifying Party shall defend (and may settle or compromise in accordance with the applicable provisions of this Section 3.7) such Third Party Claim, at such Indemnifying Party’s own expense and by such Indemnifying Party’s own counsel. If the Indemnifying Party does not, in its Good Faith Judgment, dispute its potential liability to the Indemnitee with respect to a Third Party Claim not relating to a RemainCo Specified Liability or a SpinCo Specified Liability, the Indemnifying Party may elect to defend (and to settle or compromise in accordance with the applicable provisions of this Section 3.7) such Third Party Claim, at such Indemnifying Party’s own expense and by such Indemnifying Party’s own counsel. Within the Applicable Response Period, the Indemnifying Party shall notify the Indemnitee as to whether the Indemnifying Party will defend such Third Party Claim. The failure to give such notice of election within the Applicable Response Period shall be deemed a determination not to defend such Third Party Claim. After notice from an Indemnifying Party to an Indemnitee to assume the 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, but the fees and expenses of such counsel shall be at the expense of such non-defending Person, except that the Indemnifying Party shall be liable for the fees and expenses of counsel employed by the Indemnitee (i) for any period during which the Indemnifying Party has not assumed the defense of such Third Party Claim (other than during any period in which the Indemnitee shall have failed to give notice of the Third Party

 

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Claim in accordance with Section 3.7(a)) or (ii) to the extent that such engagement of counsel is as a result of a conflict of interest, as reasonably determined in the Good Faith Judgment of the Indemnitee. The Party that has assumed the defense of a Third Party Claim shall use commercially reasonable efforts to keep the other Party reasonably informed and shall consult with such other Party except to the extent, in the Good Faith Judgment of the Party defending such Third Party Claim, (i) providing such information or making such consultation could reasonably be expected to result in a waiver of any Privilege or adversely affect the outcome of the Third Party Claim or (ii) such Party is not permitted to provide such information or make such consultation because of any Law or any confidentiality obligation to a Third Party, in which case such Party shall use commercially reasonable efforts to seek a waiver of or other relief from such confidentiality restriction.

(c) Notwithstanding anything to the contrary in this Section 3.7: (i) RemainCo will have the right to defend or assume the defense of, and/or settle or compromise (or seek to settle or compromise or to reject any proposed settlement or compromise), any Future SpinCo Disclosure Claim asserted in whole or in part against any member of the RemainCo Group or any of their respective current or former officers, directors, employees or Affiliates and any claim asserted by a Third Party which may give rise to any Liability described in clauses (viii), (ix) or (xi) of the definition of SpinCo Liabilities herein (or in clauses (iv), (v) or (vii) of the definition of RemainCo Liabilities herein); and (ii) RemainCo may settle or compromise such Action or claim without the consent of SpinCo, if such settlement or compromise provides for a release of the applicable member of the SpinCo Group to at least the same extent as RemainCo and does not involve any monetary damages (including monetary fines or penalties) to be imposed on SpinCo or any other member of the SpinCo Group or injunctive relief to be imposed on SpinCo or any other member of the SpinCo Group.

(d) A Party’s defense of any Third Party Claim pursuant to Section 3.7(b) or (c) includes the right (after consultation with the other Party following at least ten Business Days’ written notice thereof) to compromise, settle or consent to the entry of any judgment or determination of liability concerning such Third Party Claim; provided, however, that, except as provided in Section 3.7(c), the Party defending the Third Party Claim shall not compromise, settle or consent to the entry of judgment or determination of liability concerning any Third Party Claim without prior written approval by the other Party (which may not be unreasonably withheld, conditioned or delayed) if the terms or conditions of such compromise, settlement or consent would, (i) impose injunctive or other non-monetary relief on the other Party or any of its Affiliates or (ii) in the reasonable judgment of the other Party (as reflected in a written objection delivered by the other Party to the defending Party within the period of ten Business Days following receipt of the written notice described above in this Section 3.7(d)), have a material adverse financial impact or a material adverse effect upon the ongoing operations of such other Party (taken together with its Subsidiaries).

(e) If the Party having the obligation to defend a particular Third Party Claim pursuant to Section 3.7(b) fails to, or if the Party having the right to elect to defend a particular Third Party Claim pursuant to Section 3.7(b) elects, or is deemed to have elected, not to defend a particular Third Party Claim, the other Party may defend such Third Party Claim without any prejudice to its rights to indemnification from the Indemnifying Party pursuant to this Article III. In such case, such other Party shall have the right to compromise, settle or consent to the entry of any judgment with respect to such Third Party Claim as provided in Section 3.7(d).

 

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(f) The Indemnifying Party shall bear all costs and expenses of defending any Third Party Claim, including the reasonable costs and expenses of an Indemnitee in complying with requests for cooperation pursuant to Section 3.7(g); provided, however, that (A) if both Parties may be Indemnifying Parties with respect to such Third Party Claim but only one Party is defending such Third Party Claim, the non-defending Party shall reimburse the defending Party promptly upon demand by the defending Party for the non-defending Party’s proportionate share, allocated based on each Party’s proportionate responsibility for the Indemnifiable Loss pursuant to this Agreement, of all out-of-pocket costs and expenses reasonably incurred in connection with the defending Party’s defense of such Third Party Claim, and (B) if both Parties may be Indemnifying Parties with respect to such Third Party Claim and both Parties are defending such Third Party Claim, the Parties shall effect such reimbursements necessary so that each Party bears its proportionate share, allocated based on each Party’s proportionate responsibility for the Indemnifiable Loss pursuant to this Agreement, of all out-of-pocket costs and expenses reasonably incurred in connection with the defense of such Third Party Claim.

(g) The non-defending or co-defending Party shall cooperate with the defending Party with respect to such defense, including by: (i) making available to the other Party and its counsel all employees, books and records, communications, documents, items or matters within its knowledge, possession or control that are necessary, appropriate or reasonably deemed relevant by the other Party; (ii) reasonably refraining from taking any action to prejudice the position of the other Party with respect to such defense; and (iii) taking all actions in connection with such defense as reasonably requested by the other Party, including executing and submitting necessary and appropriate instruments in the name of the non-defending or co-defending Party, as reasonably directed by the defending party, in connection with proceedings before courts, agencies, arbitration tribunals, or other adjudicatory or mediatory bodies; provided, however, that with respect to the defense of a Third Party Claim relating to a RemainCo Specified Liability or a SpinCo Specified Liability, the Indemnitee shall be required to undertake, and use commercially reasonable efforts to cause its Affiliates to undertake, such commercially reasonable efforts only to the extent (i) the Indemnifying Party has, in writing, expressly requested the Indemnitee or such Affiliate of the Indemnitee to do so (which writing shall contain detailed written instructions setting forth the specific actions to be taken by the Indemnitee and such Affiliate), (ii) the Indemnifying Party promptly reimburses to the Indemnitee or such Affiliate of the Indemnitee all out-of-pocket costs and expenses incurred by the Indemnitee or such Affiliate of the Indemnitee in connection with such commercially reasonable efforts, (iii) the Indemnifying Party, at the request of the Indemnitee or such Affiliate of the Indemnitee, prepares all documentation (including (x) pleadings and other filings in connection with any legal proceedings and (y) notices to insurers or indemnitors) required in connection with such commercially reasonable efforts and (iv) such efforts are commercially reasonable; and further provided that, subject to Section 6.5 hereof, nothing in this Section 3.7(g) shall be deemed to require a Party to make available books and records, communications, documents or items which in such Party’s Good Faith Judgment (i) could reasonably be expected to result in a waiver of any Privilege with respect to a Third Party even if SpinCo and RemainCo cooperated to protect such Privilege as contemplated by this Agreement, or (ii) such Party is not permitted to make available because of any Law or any confidentiality obligation to a Third

 

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Party, in which case such Party shall use commercially reasonable efforts to seek a waiver of or other relief from such confidentiality restriction. With respect to any Third Party Claim in which both Parties are, or reasonably may be expected to be, named as parties, or that otherwise implicates both Parties to a material degree, the Parties shall reasonably cooperate with respect to such Third Party Claim and maintain a joint defense in a manner that will preserve applicable Privileges.

(h) Upon final judgment, determination, settlement or compromise of any Third Party Claim, and unless otherwise agreed by the Parties in writing, the Indemnifying Party shall pay promptly on behalf of the Indemnitee, or to the Indemnitee in reimbursement of any amount theretofore required to be paid by it, all amounts required to be paid by the Indemnifying Party pursuant to this Article III with respect to such claim as determined by such final judgment, determination, settlement or compromise.

Section 3.8 Additional Matters .

(a) Any claim on account of a Loss which does not result from a Third Party Claim shall be asserted by prompt written notice given by the Indemnitee to the Indemnifying Party. Any such notice shall describe the claim in reasonable detail and set forth the Applicable Response Period. Such Indemnifying Party shall respond to such notice within the Applicable Response Period. If such Indemnifying Party does not respond within the Applicable Response Period, such Indemnifying Party shall be deemed to have refused to accept responsibility to make payment. If such Indemnifying Party does not respond within the Applicable Response Period or rejects such claim in whole or in part, such Indemnitee shall be free to pursue such remedies as may be available to such Party as contemplated by this Agreement and the Ancillary Agreements.

(b) In the event of payment by or on behalf of any Indemnifying Party to any Indemnitee in connection with any Third Party Claim not relating to a RemainCo Specified Liability or a SpinCo Specified Liability, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnitee in respect of any rights, defenses or claims of such Indemnitee against Third Parties relating to such Third Party Claim. Such Indemnitee shall cooperate with such Indemnifying Party as may reasonably be required in connection with the prosecution of any subrogated right, defense or claim, and its reasonable out-of-pocket costs and expenses in connection therewith shall be reimbursed by the Indemnifying Party.

(c) In the event of an Action involving a Third Party Claim in which the Indemnitee is a named defendant, if either the Indemnitee or Indemnifying Party shall so request, the Parties shall endeavor to substitute the Indemnifying Party as the named defendant in place of the Indemnitee, so that the Indemnitee does not remain a named defendant, if reasonably practicable.

(d) Except as expressly provided herein, the indemnity obligations under this Article III shall apply notwithstanding any investigation made by or on behalf of any Indemnitee and shall apply without regard to whether the Loss for which indemnity is claimed hereunder is based on strict liability, absolute liability or any other theory of liability or arises as an obligation for contribution.

(e) THE PARTIES UNDERSTAND AND AGREE THAT THE RELEASE FROM LIABILITIES AND INDEMNIFICATION OBLIGATIONS HEREUNDER AND UNDER THE ANCILLARY AGREEMENTS MAY INCLUDE RELEASE FROM LIABILITIES AND INDEMNIFICATION FOR LOSSES RESULTING FROM, OR ARISING OUT OF, DIRECTLY OR INDIRECTLY AND IN WHOLE OR IN PART, AN INDEMNITEE’S OWN NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL FAULT.

 

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Section 3.9 Contribution . If the indemnification provided for in this Article III is unavailable to an Indemnitee in respect of any Losses for which indemnification is provided for herein, then the Indemnifying Party, in lieu of indemnifying such Indemnitee, shall contribute to the Losses paid or payable by such Indemnitee as a result of such Indemnifiable Loss in such proportion as is appropriate to reflect the relative fault of SpinCo and each other member of the SpinCo Group, on the one hand, and RemainCo and each other member of the RemainCo Group, on the other hand, in connection with the circumstances which resulted in such Indemnifiable Loss. For purposes of this Section 3.9, with respect to any Indemnifiable Loss relating to matters covered by Section 3.3(d) or 3.4(d) or otherwise relating to misstatements or omissions under securities or antifraud Laws, the relative fault of a member of the SpinCo Group, on the one hand, and of a member of the RemainCo Group, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact (i) relates to a member of the SpinCo Group or a member of the RemainCo Group and (ii) relates to information that was supplied by a member of the SpinCo Group or a member of the RemainCo Group.

Section 3.10 Remedies Cumulative . The remedies provided in this Article III shall be cumulative and, subject to the provisions of Article V, shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party.

Section 3.11 Specific Performance . The Parties stipulate that any Party’s breach of the obligation set forth in Section 3.7(b) to defend a Third Party Claim relating to a RemainCo Specified Liability or a SpinCo Specified Liability will cause irreparable injury to the Indemnitee, and that any damages available at law for such a breach would not be an adequate remedy. Therefore, the obligation set forth in Section 3.7(b) of this Agreement to defend a Third Party Claim relating to a RemainCo Specified Liability or a SpinCo Specified Liability shall be enforceable in appropriate circumstances in accordance with Article V of this Agreement by an order of specific performance, and appropriate preliminary or permanent injunctive relief may be applied for and granted in connection therewith, in each case without the posting of any bond or other security. This stipulation shall not limit or impair a Party’s right to obtain specific performance and preliminary or permanent injunctive relief in other appropriate circumstances in accordance with Article V of this Agreement.

Section 3.12 Survival of Indemnities . The rights and obligations of each of RemainCo and SpinCo and their respective Indemnitees under this Article III shall survive the Distribution Date indefinitely, unless a specific survival or other applicable period is expressly set forth herein, and shall survive the sale or other transfer by any Party or any of its Subsidiaries of any Assets or businesses or the assignment by it of any Liabilities.

 

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Section 3.13 Limitation of Liability . EXCEPT TO THE EXTENT SPECIFICALLY PROVIDED IN ANY ANCILLARY AGREEMENT, IN NO EVENT SHALL ANY MEMBER OF THE REMAINCO GROUP OR THE SPINCO GROUP OR THEIR RESPECTIVE DIRECTORS, OFFICERS AND EMPLOYEES BE LIABLE TO ANY OTHER MEMBER OF THE REMAINCO GROUP OR THE SPINCO GROUP FOR ANY EXEMPLARY, PUNITIVE, SPECIAL, INDIRECT, CONSEQUENTIAL, REMOTE OR SPECULATIVE DAMAGES (INCLUDING IN RESPECT OF LOST PROFITS OR REVENUES), HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF ANY PROVISION OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATIONS SHALL NOT LIMIT EACH PARTY’S INDEMNIFICATION OBLIGATIONS FOR LIABILITIES TO THIRD PARTIES AS SET FORTH IN THIS ARTICLE III OR ANY ANCILLARY AGREEMENT.

ARTICLE IV

THE DISTRIBUTION

Section 4.1 Delivery to Distribution Agent . Subject to Section 4.3, on or prior to the Distribution Date RemainCo will authorize Computershare Trust Company, N.A., as distribution agent (the “Distribution Agent”), for the benefit of holders of record of RemainCo Common Stock at the close of business on the Record Date (the “Record Holders”) to effect the book-entry transfer of all outstanding shares of SpinCo Common Stock and will order the Distribution Agent to effect the Distribution at the Distribution Time in the manner set forth in Section 4.2.

Section 4.2 Mechanics of the Distribution .

(a) On the Distribution Date, RemainCo will direct the Distribution Agent to distribute, effective as of the Distribution Time, to each Record Holder a number of shares of SpinCo Common Stock equal to the number of shares of RemainCo Common Stock held by such Record Holder multiplied by the Distribution Multiple, except that the Distribution Agent will not issue any fractional shares of SpinCo Common Stock and will distribute cash in lieu of fractional shares as provided in Section 4.2(b). All such shares of SpinCo Common Stock to be so distributed shall be distributed as uncertificated shares registered in book-entry form through the direct registration system. No certificates therefor shall be distributed. RemainCo shall cause the Distribution Agent to deliver an account statement to each holder of SpinCo Common Stock reflecting such holder’s ownership thereof. All of the shares of SpinCo Common Stock distributed in the Distribution will be validly issued, fully paid and non-assessable.

(b) RemainCo will direct the Distribution Agent to determine, as soon as is practicable after the Distribution Date, the number of fractional shares, if any, of SpinCo Common Stock allocable to each Record Holder entitled to receive SpinCo Common Stock in the Distribution and to promptly aggregate all the fractional shares and sell the whole shares obtained thereby, in open market transactions or otherwise, at the then-prevailing trading prices, and to cause to be distributed to each Record Holder, in lieu of any fractional share, each Record Holder’s ratable share of the proceeds of the sale, after making appropriate deductions of the amounts required to be withheld for federal income tax purposes and after deducting an amount equal to all brokerage charges, commissions and transfer taxes attributed to the sale.

 

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(c) Any SpinCo Common Stock or cash in lieu of fractional shares with respect to SpinCo Common Stock that remains unclaimed by any Record Holder on the first anniversary of the Distribution Date will be delivered to SpinCo. SpinCo will hold the SpinCo Common Stock or cash for the account of the Record Holder and any Record Holder will look only to SpinCo for the SpinCo Common Stock or cash, if any, in lieu of fractional shares, subject in each case to applicable escheat or other abandoned property Laws.

(d) SpinCo shall mail or cause to be mailed to the Record Holders, on or prior to the Distribution Date, the Information Statement.

Section 4.3 Conditions Precedent to Consummation of the Separation and the Distribution . None of the Separation (other than subsections (i) and (ii) of the definition of Separation), the Distribution nor the related transactions set forth in this Agreement or in any of the Ancillary Agreements will take place unless the following conditions have been satisfied or waived by RemainCo, in its sole and absolute discretion, at or before the Distribution Time:

(a) RemainCo will have received an opinion from Jones Day, dated the Distribution Date, in form and substance acceptable to RemainCo substantially to the effect that, for U.S. federal income tax purposes, (i) certain transactions to be effected in connection with the Separation qualify as reorganizations or other tax-free transactions under Sections 332, 351, 355 and/or 368 of the Code, and (ii) the Distribution will qualify for tax-free treatment to RemainCo and to SpinCo as a transaction described in Section 355 of the Code;

(b) the Separation and the Distribution will not violate or result in a breach of any Law or any material agreement;

(c) the Registration Statement will have become effective, and no stop order suspending the effectiveness of the Registration Statement shall be in effect or, to the knowledge of either RemainCo or SpinCo, threatened by the SEC;

(d) the actions and filings necessary or appropriate under applicable federal or state securities Laws and state blue sky Laws in connection with the Distribution will have been taken;

(e) the NYSE will have approved SpinCo’s Common Stock for listing, subject to official notice of issuance;

(f) the Ancillary Agreements will have been executed and delivered by each of the parties thereto and no party to any of the Ancillary Agreements will be in material breach of any Ancillary Agreement;

(g) all Consents required to be received or made before the Distribution may take place will have been received or made and be in full force and effect, and this Agreement and the Ancillary Agreements will not have been terminated and will not violate, conflict with or result in a breach (with or without the passage of time) of any Law or any material agreements of RemainCo;

 

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(h) (1) RemainCo will have executed a credit facility on terms and conditions and with lenders acceptable to RemainCo, and (2) SpinCo will have executed a credit facility on terms and conditions and with lenders acceptable to SpinCo, and neither RemainCo nor SpinCo shall have received notice that any lender thereunder has determined not to consummate the transactions contemplated thereby;

(i) no RemainCo Surety Obligations for the SpinCo Business or SpinCo Surety Obligations for the RemainCo Business will remain outstanding; and

(j) no preliminary or permanent injunction or other order, decree, or ruling issued by a Governmental Authority, and no statute (as interpreted through orders or rules of any Governmental Authority duly authorized to effectuate the statute), rule, regulation or executive order promulgated or enacted by any Governmental Authority will be in effect preventing, or materially limiting the benefits of, the Separation or the Distribution.

Each of the conditions set forth in this Section 4.3 is for the benefit of RemainCo, and RemainCo may, in its sole and absolute discretion, determine whether to waive any condition, in whole or in part. Any determination made by RemainCo concerning the satisfaction or waiver of any or all of the conditions in this Section 4.3 will be conclusive and binding on the Parties. The satisfaction of those conditions will not create any obligation on the part of RemainCo to SpinCo or any other Person to effect the Separation or the Distribution or in any way limit RemainCo’s right to terminate as set forth in Section 7.2 or alter the consequences of any termination from those specified in Section 7.2.

ARTICLE V

ARBITRATION; DISPUTE RESOLUTION

Section 5.1 General . Except as otherwise specifically provided in any Ancillary Agreement, the procedures for negotiation and binding arbitration set forth in this Article V shall apply to any dispute, controversy or claim (whether sounding in contract, tort or otherwise) that arises out of or relates to this Agreement or any Ancillary Agreement, any breach or alleged breach hereof or thereof, the transactions contemplated hereby or thereby (including all actions taken in furtherance of the transactions contemplated hereby or thereby on or prior to the date hereof), or the construction, interpretation, enforceability or validity hereof or thereof (a “Dispute”). Each Party agrees on behalf of itself and each member of its respective Group that the procedures set forth in this Article V shall be the sole and exclusive remedy in connection with any Dispute and irrevocably waives any right to commence any Action in or before any Governmental Authority, except (i) as expressly provided in Section 5.7(b), (ii) as provided for under the Arbitration Act, (iii) as required by applicable Law, and (iv) as otherwise specifically provided in any Ancillary Agreement. Each Party on behalf of itself and each member of its respective Group irrevocably waives any right to any trial by jury and any right to any trial in a court with respect to any Dispute to which this Section 5.1 applies. As used in the following provisions of this Article V, any reference to “party” or “parties” shall mean and refer to a party or parties involved in a Dispute.

 

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Section 5.2 Negotiation .

(a) It is the intent of the Parties to use their respective commercially reasonable efforts to resolve expeditiously any Dispute that may arise on a mutually acceptable negotiated basis. In furtherance of the foregoing, any party involved in a Dispute may deliver a notice (an “Escalation Notice”) demanding an in-person meeting involving representatives of the parties at a senior level of management of the parties (or if the parties agree, of the appropriate strategic business unit or division within such entity). A copy of any such Escalation Notice shall be given to the General Counsel, or, if one does not exist, the President or Chief Executive Officer, of each party involved in the Dispute (which copy shall state that it is an Escalation Notice pursuant to this Agreement). Any agenda, location or procedures for such discussions or negotiations between the parties may be established by the parties from time to time; provided, however, that the parties shall use their commercially reasonable efforts to meet within 20 days of the Escalation Notice. Notwithstanding the provisions of Section 5.3(a), during the period from the date hereof through the first anniversary of the Distribution Date, in the event the parties involved in a Dispute do not resolve the Dispute in accordance with the foregoing provisions of this Section 5.2(a) within 60 days after the delivery of the Escalation Notice with respect to such Dispute, the Dispute shall be referred to the Board of Directors of each of RemainCo and SpinCo, which shall each be requested to select a subcommittee thereof to meet to resolve the Dispute within 45 days of such referral, and no party involved in a Dispute may deliver an Arbitration Demand Notice pursuant to Section 5.3(a) until after such 45-day period has elapsed. Any resolution of a Dispute pursuant to this Section 5.2 shall be memorialized in a writing signed by both parties.

(b) The parties may, by mutual consent, select a mediator to aid the parties in their discussions and negotiations. Any opinion expressed by the mediator shall be strictly advisory and shall not be binding on the parties, nor shall any opinion expressed by the mediator be admissible in any arbitration proceedings. Costs of any mediation shall be borne equally by the parties involved in the Dispute, except that each Party shall be responsible for its own expenses. Mediation is not a prerequisite to a demand for arbitration under Section 5.3.

Section 5.3 Demand for Arbitration .

(a) Any Dispute that has not been resolved after the delivery of the related Escalation Notice shall, except as otherwise specifically provided in any Ancillary Agreement, be resolved by final and binding arbitration pursuant to the then current Commercial Arbitration Rules (the “AAA Rules”) of the American Arbitration Association (“AAA”), except as modified by the provisions of this Article V. To initiate such an arbitration, a party involved in the related Dispute (regardless of whether such party delivered the Escalation Notice) shall, except as otherwise specifically provided in any Ancillary Agreement, at any time after 30 days from the delivery of an Escalation Notice, deliver a notice demanding arbitration of such Dispute (an “Arbitration Demand Notice”). In the event that any party shall deliver an Arbitration Demand Notice to another party, such other party may itself deliver an Arbitration Demand Notice to such first party with respect to any related Dispute with respect to which the Applicable Deadline has

 

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not passed without the requirement of delivering an Escalation Notice. No party may assert that the failure to resolve any matter during any discussions or negotiations, the course of conduct during the discussions or negotiations or the failure to agree on a mutually acceptable time, agenda, location or procedures for the meeting, in each case, as contemplated by Section 5.2, is a prerequisite to a demand for arbitration under this Section 5.3. In the event that any party delivers an Arbitration Demand Notice with respect to any Dispute that is the subject of any then pending arbitration proceeding or of a previously delivered Arbitration Demand Notice, all such Disputes shall be resolved in the arbitration proceeding for which an Arbitration Demand Notice was first delivered unless the arbitrators in their sole discretion determine that it is impracticable or otherwise inadvisable to do so.

(b) Except as may be expressly provided in any Ancillary Agreement, any Arbitration Demand Notice with respect to a Dispute, other than a Dispute related to a Third Party Claim, may be given until one year after the date on which the party desiring to give such Arbitration Demand Notice first determined, or, in the exercise of reasonable prudence, should have determined, that the there was a Dispute (as applicable and as it may in a particular case be specifically extended by the parties in writing, the “Applicable Deadline”). In the case of a Dispute related to a Third Party Claim, the Applicable Deadline shall be one year after the date on which, as the case may be, (i) RemainCo receives notice or otherwise learns of the assertion of the Third Party Claim against it or any of the RemainCo Indemnitees or (ii) SpinCo receives notice or otherwise learns of the assertion of the Third Party Claim against it or any of the SpinCo Indemnitees. Any discussions, negotiations or mediations between the Parties pursuant to this Agreement or otherwise will not toll the Applicable Deadline unless expressly agreed in writing by the Parties. Each of the Parties agrees on behalf of itself and each member of its Group that if an Arbitration Demand Notice with respect to a Dispute is not given prior to the expiration of the Applicable Deadline, as between or among the Parties and the members of their Groups, such Dispute will be barred, and any right to bring any Action with respect to, or otherwise to pursue, any such barred Dispute is hereby irrevocably waived. Subject to Section 5.9, upon delivery of an Arbitration Demand Notice pursuant to Section 5.3(a) prior to the Applicable Deadline, the Dispute shall be decided by arbitrators in accordance with the rules set forth in this Article V. This Section 5.3(b) shall not be deemed to extend any notice period set forth in Section 3.7.

Section 5.4 Arbitrators .

(a) The party delivering the Arbitration Demand Notice shall, within five days of the date of such notice, notify the AAA and the other parties in writing describing in reasonable detail the nature of the Dispute. The arbitration shall be conducted before three neutral arbitrators. Each party shall, within 20 days of the date of the Arbitration Demand Notice, select one arbitrator. The parties shall mutually agree upon a third arbitrator. If the third arbitrator is not selected within 50 days of the date of the Arbitration Demand Notice, the two arbitrators already selected shall select the third arbitrator. In the event that any arbitrator is or becomes unable to serve, his or her replacement will be selected in the same manner described above. The vote of two of the three arbitrators shall be required for any decision under this Article V.

(b) The arbitrators will set a time for the hearing of the matter, which will commence no later than 180 days (or the soonest Business Day thereafter) after the constitution of the panel

 

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of three arbitrators pursuant to Section 5.4(a), and which hearing will be no longer than 15 days (unless in the judgment of the arbitrators the matter is unusually complex and sophisticated and thereby requires a longer time, in which event such hearing shall be no longer than 20 days). The arbitrators shall use their best efforts to reach a final decision and render the same in writing to the parties not later than 60 days after the last hearing date, unless otherwise agreed by the parties in writing. Failure of the arbitrators to do so, however, shall not be a basis for challenging the decision. An arbitrator dissenting from a decision or portion thereof may issue a dissent from the decision or portion thereof in writing, stating the reasons therefor.

(c) The place of any arbitration hereunder will be Charlotte, North Carolina, unless otherwise agreed by the Parties.

Section 5.5 Hearings . Within the time period specified in Section 5.4(b), the matter shall be presented to the arbitrators at a hearing by means of written submissions of memoranda and verified witness statements, filed simultaneously, and responses, if necessary in the judgment of the arbitrators or both the Parties. Live direct and cross-examination will be permitted upon request of any party. The arbitrators shall actively manage the arbitration with a view to achieving a just, speedy and cost-effective resolution of the Dispute. The arbitrators may, in their discretion, set time and other limits on the presentation of each party’s case, its memoranda or other submissions, and refuse to receive any proffered evidence, which the arbitrators, in their discretion, find to be cumulative, unnecessary, irrelevant or of low probative nature. The decision of the arbitrators will be final and binding on the parties, and judgment thereon may be had and will be enforceable in any court having jurisdiction over the parties. Arbitration awards will bear interest at an annual rate of the Prime Rate plus 2% per annum, subject to any maximum amount permitted by applicable Law. To the extent that the provisions of this Agreement and the AAA Rules conflict, the provisions of this Agreement shall govern.

Section 5.6 Discovery and Certain Other Matters .

(a) Any party involved in a Dispute subject to this Article V may request limited document production from the other party or parties of specific and expressly relevant documents. Any such discovery shall be conducted expeditiously and shall not cause the hearing provided for in Section 5.5 to be postponed or adjourned except upon consent of all parties involved in the applicable Dispute or upon an extraordinary showing of cause demonstrating that such postponement or adjournment is necessary to permit discovery essential to a party to the proceeding. Interrogatories, depositions or other forms of discovery (other than the document production set forth above) shall not occur except by consent of the parties involved in the applicable Dispute. Disputes concerning the scope of document production or enforcement of the document production will be determined by written agreement of the parties involved in the applicable Dispute or, failing such agreement, will be referred to the arbitrators for resolution. All discovery requests will be subject to the parties’ rights (and the rights of any witness) to claim any applicable Privilege. The arbitrators will adopt procedures to protect the proprietary rights of the parties and to maintain the confidential treatment of the arbitration proceedings (except as may be required by Law).

(b) The arbitrators shall have full power and authority to determine issues of arbitrability but shall otherwise be limited to interpreting or construing the applicable provisions

 

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of this Agreement or any Ancillary Agreement, and will have no authority or power to limit, expand, alter, amend, modify, revoke or suspend any condition or provision of this Agreement or any Ancillary Agreement; it being understood, however, that the arbitrators will have full authority to implement the provisions of this Agreement or any Ancillary Agreement, and to fashion appropriate remedies for breaches of this Agreement; provided that the arbitrators shall not have (i) any authority in excess of the authority a court having jurisdiction over the parties and the Dispute would have absent these arbitration provisions or (ii) any right or power to award exemplary, punitive, special, indirect, consequential, remote or speculative damages (including in respect of lost profits or revenues) or treble damages (provided that this clause (ii) shall not limit the award of any such damages to the extent they are included in any Liabilities to third parties as to which the provisions of this Article V are applicable). It is the intention of the Parties that in rendering a decision the arbitrators should give effect to the applicable provisions of this Agreement and the Ancillary Agreements and follow applicable Law (it being understood and agreed that this sentence shall not give rise to a right of judicial review of the arbitrators’ award).

(c) If a party fails or refuses to appear at and participate in an arbitration hearing after due notice, the arbitrators may hear and determine the controversy upon evidence produced by the appearing party. Any decision rendered under such circumstances shall be as valid and enforceable as if the parties had appeared and participated fully at all stages.

(d) Notwithstanding Section 6.6, the arbitrators are authorized but not required to award attorneys’ fees, expenses, and other costs of arbitration to the prevailing party as part of any arbitration award under this Article V.

Section 5.7 Certain Additional Matters .

(a) Any arbitration award shall be an award with a holding in favor of or against a party and shall include findings as to facts, issues or conclusions of law (including with respect to any matters relating to the validity or infringement of patents or patent applications) and shall include a statement of the reasoning on which the award rests. The arbitrators are specifically authorized to award, in addition to damages, preliminary and permanent injunctive relief and an order of specific performance, in appropriate circumstances (including for breaches of Section 6.11). The award must also be in adequate form so that a judgment of a court may be entered thereupon. Judgment upon any arbitration award hereunder may be entered in any court having jurisdiction thereof. Any award shall not be vacated or appealed except on the bases of (i) the award being procured by fraud or corruption, (ii) an arbitrator being partial or corrupt, (iii) the arbitrators wrongfully refusing to postpone a hearing or hear evidence, or (iv) the arbitrators exceeding the scope of the power granted to them in this Agreement.

(b) Regardless of whether an Escalation Notice has been delivered, at any time prior to the time at which arbitrators are appointed pursuant to Section 5.4, any party may seek one or more temporary restraining orders or other injunctive relief in a court of competent jurisdiction if necessary in order to preserve and protect the status quo (including as a result of an actual or threatened breach of Section 6.11). Neither the request for, nor the grant or denial of, any such temporary restraining order or other injunctive relief shall be deemed a waiver of the right or obligation to arbitrate as set forth herein, and the arbitrators may dissolve, continue or modify

 

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any such order after their appointment. Any such temporary restraining order or other injunctive relief shall remain in effect until the first to occur of the expiration of the order in accordance with its terms or the dissolution thereof by the arbitrators.

(c) Except as required by applicable Law, the parties shall hold, and shall cause their respective officers, directors, employees, agents and other representatives to hold, the existence, content and result of discussions, negotiations, mediation or arbitration under this Article V in confidence in accordance with the provisions of Section 6.9 and except as may be required in order to enforce any award. Each of the parties shall request that any mediator or arbitrator comply with such confidentiality requirement.

Section 5.8 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 V with respect to all matters not subject to such Dispute.

Section 5.9 Law Governing Arbitration Procedures . The interpretation of the provisions of this Article V, only insofar as they relate to the agreement to arbitrate and any procedures pursuant thereto, shall be governed by the Arbitration Act and other applicable U.S. federal Law. In all other respects, the interpretation of this Agreement shall be governed as set forth in Section 7.10.

ARTICLE VI

COVENANTS AND OTHER MATTERS

Section 6.1 Other Agreements . In addition to the specific agreements, documents and instruments annexed to this Agreement, RemainCo and SpinCo agree to execute or cause to be executed by the appropriate parties and deliver, as appropriate, such other agreements, instruments and other documents as may be reasonably requested by either Party and necessary or desirable in order to effect the purposes of this Agreement and the Ancillary Agreements.

Section 6.2 Further Instruments . Subject to Section 2.4, at the request of SpinCo or RemainCo and without payment of any further consideration, the other Party will execute and deliver, and will cause its applicable Subsidiaries to execute and deliver, to the requesting Party and its Subsidiaries such other instruments of transfer, conveyance, assignment, substitution and confirmation and take such action as the requesting Party may reasonably deem necessary or desirable in order more effectively to transfer, convey and assign to the requesting Party and its Subsidiaries and confirm the requesting Party’s and its Subsidiaries’ title to all of the Assets, rights and other things of value contemplated to be transferred to the requesting Party and its Subsidiaries pursuant to this Agreement, the Ancillary Agreements, any documents referred to therein and any Prior Transfers, to put the requesting Party and its Subsidiaries in actual possession and operating control thereof and to permit the requesting Party and its Subsidiaries to exercise all rights with respect thereto (including rights under Contracts and other arrangements as to which the consent of any Third Party to the transfer thereof shall not have previously been obtained). At the request of SpinCo or RemainCo and without payment of any further consideration, the other Party will execute and deliver, and will cause its applicable

 

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Subsidiaries to execute and deliver, to the requesting Party and its Subsidiaries all instruments, assumptions, novations, undertakings, substitutions or other documents and take such other action as the requesting Party may reasonably deem necessary or desirable in order to have the other Party fully and unconditionally assume and discharge the Liabilities contemplated to be assumed by such Party under this Agreement, any Ancillary Agreement, any document in connection herewith or the Prior Transfers and to relieve the SpinCo Group or the RemainCo Group, as applicable, of any Liability or obligation with respect thereto and evidence the same to third parties. Neither RemainCo nor SpinCo shall be obligated, in connection with the foregoing, to expend money other than reasonable out-of-pocket expenses, attorneys’ fees and recording or similar fees. Furthermore, each Party, at the request of another Party, shall execute and deliver such other instruments and do and perform such other acts and things as may be necessary or desirable for effecting completely the consummation of the transactions contemplated hereby or by the Prior Transfers.

Section 6.3 Provision of Books and Records . Subject to the provisions of this Section 6.3, RemainCo shall use commercially reasonable efforts to deliver or make available or cause to be delivered or made available to SpinCo all SpinCo Books and Records in the possession of the RemainCo Group, and SpinCo shall use commercially reasonable efforts to deliver or make available or cause to be delivered or made available to RemainCo all RemainCo Books and Records in the possession of the SpinCo Group. The foregoing shall be limited by, or subject to, the following:

(a) To the extent any document can be subdivided without unreasonable effort or cost into two portions, one of which constitutes a SpinCo Book and Record and the other of which constitutes a RemainCo Book and Record, such document shall be so subdivided and the appropriate portions shall be delivered or made available to the Parties.

(b) Each Party may retain copies of books and records delivered or made available to the other, subject to holding in confidence in accordance with Section 6.9 Information contained in such books and records.

(c) Without limiting the generality of the first sentence of this Section 6.3, for a period beginning on the Distribution Date and continuing in perpetuity, if either RemainCo or SpinCo identifies any RemainCo Books and Records then in the possession of a member of the SpinCo Group or any SpinCo Books and Records then in the possession of a member of the RemainCo Group, as applicable, RemainCo or SpinCo, as the case may be, shall or shall cause any such RemainCo Books and Records or SpinCo Books and Records to be conveyed, assigned, transferred and delivered, or otherwise made available, to the entity identified by SpinCo or RemainCo, as the case may be, as the appropriate transferee.

(d) Each Party may refuse to furnish any Information if so doing, in such Party’s Good Faith Judgment, could reasonably be expected to result in a waiver of any Privilege with respect to a Third Party even if SpinCo and RemainCo cooperated to protect such Privilege as contemplated by this Agreement.

(e) Neither Party shall be required to deliver or make available to the other books and records or portions thereof which are subject to any applicable Law or confidentiality agreements

 

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which would by their terms prohibit such delivery; provided, however, if requested by the other Party, such Party shall use commercially reasonable efforts to seek a waiver of or other relief from such confidentiality restriction.

(f) To the extent any SpinCo Books and Records or RemainCo Books and Records are subject to restrictions or limitations set forth the Employee Matters Agreement, Tax Sharing Agreement, the Assumption and Loss Allocation Agreement, the Captive Insurance Novation and Assumption Agreements or the Intellectual Property Agreements, such restrictions and limitations shall apply to such SpinCo Books and Records or RemainCo Books and Records, notwithstanding any provisions of this Agreement.

Notwithstanding the foregoing, the documents described on Schedule 6.3 shall be subject to the specific provisions set forth on Schedule 6.3.

Section 6.4 Agreement For Exchange of Information .

(a) Subject to any limitations or restrictions pursuant to any applicable Law (including privacy and data security Laws) or pursuant to the provisions set forth on Schedule 6.3, from and after the Distribution Date for a period of ten years (and, with respect to Information that relates to any Third Party Claims, for a time period without any limit), each of RemainCo and SpinCo agrees to provide or make available, or cause to be provided or made available, to each other as soon as reasonably practicable after written request therefor, any Information in the possession or under the control of such Party that the requesting Party reasonably needs (i) to comply with reporting, disclosure, filing or other requirements, requests or Laws imposed on the requesting Party (including under applicable securities Laws) by a Governmental Authority having jurisdiction over the requesting Party, (ii) for use in any pending or threatened judicial, regulatory, arbitration, mediation or other proceeding or investigation or in order to satisfy audit requirements (whether in connection with audits conducted by independent accounting firms, internal audits, or audits conducted by third parties entitled to do so by Contract, including customers and vendors), or in connection with accounting, claims, regulatory, litigation or other similar requirements, except in the case of a Dispute subject to Article V brought by one Party against the other Party (which shall be governed by such discovery rules as may be applicable under Article V), (iii) to comply with its obligations under this Agreement, any Ancillary Agreement or any Contract with a Third Party that is not an Affiliate, employee or agent of the requesting Party, or (iv) for any other significant business need as mutually determined in good faith by the Parties; provided, however, that in the event that either Party determines that any such provision (or making available) of Information is reasonably likely to be commercially detrimental or violate any Law, agreement or privacy policy or guidelines, the Parties shall take reasonable measures to permit the compliance with such obligations in a manner that avoids any such harm or consequence; provided, that this Section 6.4(a) shall not limit any Party’s ability to implement such Party’s records retention policies (including the record destruction provisions thereof) and privacy policies and guidelines. Without limiting the generality of the foregoing, for so long as RemainCo (or any successor thereto) is required to reflect any financial information with respect to the SpinCo Entities in any of RemainCo’s reports filed with the SEC under the Exchange Act, SpinCo shall: (i) upon request, provide certifications of its chief executive officer and its chief financial officer substantially similar in form and substance to the certifications provided by RemainCo’s

 

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executive officers in the last 12 months preceding the Distribution Date with respect to periodic reporting of assets, liabilities and financial results of the operations conducted by the RemainCo Entities; (ii) provide reasonable access to the books and records of the SpinCo Entities to permit RemainCo’s independent auditors to audit or review, as applicable, any such financial information to be reflected in any such reports filed with the SEC; (iii) consent to the inclusion (or incorporation by reference) of any financial statements reflecting any such financial information in any of RemainCo’s reports filed with the SEC under the Exchange Act or in any registration statements filed by RemainCo with the SEC under the Securities Act of 1933; and (iv) use reasonable efforts to cause SpinCo’s independent accountants to consent to the inclusion of their audit reports in any registration statements filed by RemainCo with the SEC under the Securities Act of 1933. Without limiting the generality of the foregoing, for so long as SpinCo (or any successor thereto) is required to reflect any financial information with respect to the RemainCo Entities in any of SpinCo’s reports filed with the SEC under the Exchange Act, RemainCo shall: (i) upon request, provide certifications of its chief executive officer and its chief financial officer substantially similar in form and substance to the certifications provided by RemainCo’s executive officers in the last 12 months preceding the Distribution Date with respect to periodic reporting of assets, liabilities and financial results of the operations conducted by the RemainCo Entities; (ii) provide reasonable access to the books and records of the RemainCo Entities to permit SpinCo’s independent auditors to audit or review, as applicable, any such financial information to be reflected in any such reports filed with the SEC; (iii) consent to the inclusion (or incorporation by reference) of any financial statements reflecting any such financial information in any of SpinCo’s reports filed with the SEC under the Exchange Act or in any registration statements filed by SpinCo with the SEC under the Securities Act of 1933; and (iv) use reasonable efforts to cause RemainCo’s independent accountants to consent to the inclusion of their audit reports, if required, in any registration statements filed by SpinCo with the SEC under the Securities Act of 1933.

(b) Any Information owned by a Party that is provided or made available to a requesting Party pursuant to this Section 6.4 shall be deemed to remain the property of the Party providing or making available such Information. 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.

(c) The Party requesting the Information under this Section 6.4 will reimburse the other Party for the reasonable out-of-pocket costs of gathering, compiling and copying the Information.

(d) Except as otherwise agreed in writing, or as otherwise provided in any Ancillary Agreement, each Party will use commercially reasonable efforts to retain in accordance with such Party’s record retention policies in effect from time to time (which will comply with all applicable Laws) all significant Information in the Party’s possession or under its control relating to the business, Assets or Liabilities of the other Party’s Group, and, before destroying or disposing of any Information relating to the business, Assets or Liabilities of the other Party’s Group, (i) the Party proposing to dispose of or destroy the Information will use commercially reasonable efforts to provide no less than 90 days’ prior written notice to the other Party, specifying the Information proposed to be destroyed or disposed of and (ii) if, before the scheduled date for the destruction or disposal, the other Party requests in writing that any of the

 

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Information proposed to be destroyed or disposed of be delivered or made available to the other Party, the Party proposing to dispose of or destroy the Information will promptly arrange for the delivery or making available of the requested Information to or at a location specified by, and at the expense of, the requesting Party; provided, that each Party may destroy or dispose of any Information that the other Party has previously copied.

(e) Except as otherwise provided for herein or in any Ancillary Agreement, neither Party shall have any liability to the other Party or any of its Subsidiaries or other Affiliates in the event that any Information exchanged or provided pursuant to this Section 6.4 is found to be inaccurate or incomplete (including by misstatement or omission), in the absence of willful misconduct or fraud by the Party providing such Information.

(f) The rights and obligations granted under this Section 6.4 are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange or confidential treatment of Information set forth in this Agreement and any Ancillary Agreement.

(g) Each Party shall, except in the case of a dispute subject to Article V brought by one Party against another Party (which shall be governed by such discovery rules as may be applicable under Article V or otherwise), use commercially reasonable efforts to make available to the other Party, upon written request, (i) the former, current and future directors, officers, employees, other personnel and agents of such Party’s Group for fact finding, consultation and interviews and as witnesses to the extent such Persons may reasonably be required in connection with any Actions (other than Actions in which both RemainCo or any of its Subsidiaries, on the one hand, and SpinCo or any of its Subsidiaries, on the other hand, as the case may be, are parties and may be adverse to one another in such Action) in which the requesting Party may from time to time be involved relating to the conduct of the SpinCo Business or the RemainCo Business and (ii) any books, records or other documents within its control or which it otherwise has the ability to make available, to the extent that any such person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents may reasonably be required in connection with any judicial proceeding or other proceeding in which the requesting Party may from time to time be involved, regardless of whether such judicial proceeding or other proceeding is a matter with respect to which indemnification may be sought hereunder. The requesting Party shall bear all costs and expenses in connection therewith.

Section 6.5 Preservation of Legal Privileges; Attorney Representation .

(a) RemainCo and SpinCo recognize that the members of their respective Groups possess and will possess information and advice that has been previously developed but is legally protected from disclosure under legal privileges, such as the attorney-client privilege or work product exemption and other concepts of legal privilege (“Privilege”). Each Party recognizes that it shall be jointly entitled to the Privilege with respect to such privileged information and that each shall be entitled to maintain and use for its own benefit all such information and advice, but both Parties shall ensure that such information is maintained so as to protect the Privileges with respect to the other Party’s interest. RemainCo and SpinCo agree that their respective rights and obligations to maintain, preserve, assert or waive any or all Privileges belonging to either Party with respect to the SpinCo Business or the RemainCo Business shall be governed by the

 

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provisions of this Section 6.5. With respect to matters relating to the RemainCo Business, RemainCo shall have sole authority in perpetuity to determine whether to assert or waive any or all Privileges, and SpinCo shall take no action (or permit any of its Subsidiaries to take action) without the prior written consent of RemainCo that could, in RemainCo’s Good Faith Judgment, reasonably be expected to result in any waiver of any Privilege that could be asserted by RemainCo or any of its Subsidiaries under applicable Law and this Agreement. With respect to matters relating to the SpinCo Business, SpinCo shall have sole authority in perpetuity to determine whether to assert or waive any or all Privileges, and RemainCo shall take no action (or permit any of its Subsidiaries to take action) without the prior written consent of SpinCo that could, in SpinCo’s Good Faith Judgment, reasonably be expected to result in any waiver of any Privilege that could be asserted by SpinCo or any of its Subsidiaries under applicable Law and this Agreement. The rights and obligations created by this Section 6.5 shall apply to all Information as to which RemainCo or SpinCo or their respective Subsidiaries would be entitled to assert or has asserted a Privilege without regard to the effect, if any, of the Separation and Distribution (“Privileged Information”). Privileged Information of RemainCo includes (i) any and all Privileged Information existing prior to the Distribution regarding the RemainCo Business but which after the Distribution is in the possession of SpinCo or any of its Subsidiaries; (ii) all communications subject to a Privilege occurring prior to the Distribution between counsel for RemainCo or any of its Subsidiaries (including in-house counsel and former in-house counsel who are employees of SpinCo or its Subsidiaries) and any person who, at the time of the communication, was an employee of RemainCo or any of its Subsidiaries, regardless of whether such employee is or becomes an employee of SpinCo or any of its Subsidiaries; and (iii) all Privileged Information generated, received or arising after the Distribution that refers or relates to Privileged Information generated, received or arising prior to the Distribution. Privileged Information of SpinCo includes (i) any and all Privileged Information existing prior to the Distribution regarding the SpinCo Business but which after the Distribution is in the possession of RemainCo or any of its Subsidiaries; (ii) all communications subject to a Privilege occurring prior to the Distribution between counsel for SpinCo or any of its Subsidiaries (including in-house counsel and former in-house counsel who are employees of RemainCo or its Subsidiaries) and any person who, at the time of the communication, was an employee of SpinCo or any of its Subsidiaries, regardless of whether such employee is or becomes an employee of RemainCo or any of its Subsidiaries; and (iii) all Privileged Information generated, received or arising after the Distribution that refers or relates to Privileged Information generated, received or arising prior to the Distribution.

(b) Upon receipt by RemainCo or SpinCo, as the case may be, of any subpoena, discovery or other request from any Third Party that actually or arguably calls for the production or disclosure of Privileged Information of the other or if RemainCo or SpinCo, as the case may be, obtains knowledge that any current or former employee of RemainCo or SpinCo, as the case may be, has received any subpoena, discovery or other request from any Third Party that actually or arguably calls for the production or disclosure of Privileged Information of the other, RemainCo or SpinCo, as the case may be, shall promptly notify the other of the existence of the request and shall provide the other a reasonable opportunity to review the Privileged Information and to assert any rights it may have under this Section 6.5 or otherwise to prevent the production or disclosure of Privileged Information. RemainCo or SpinCo, as the case may be, will not produce or disclose to any Third Party any of the other’s Privileged Information under this Section 6.5 unless (A) the other has provided its express written consent to such production or

 

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disclosure, or (B) a court of competent jurisdiction has entered an order not subject to interlocutory appeal or review finding that the Information is not entitled to protection from disclosure under any applicable Privilege, doctrine or rule.

(c) RemainCo’s transfer of SpinCo Books and Records and other Information to SpinCo, RemainCo’s agreement to permit SpinCo to obtain Information existing prior to the Distribution, SpinCo’s transfer of RemainCo Books and Records and other Information to RemainCo, and SpinCo’s agreement to permit RemainCo to obtain Information existing prior to the Distribution are made in reliance on RemainCo’s and SpinCo’s respective agreements, as set forth in Section 6.9 and this Section 6.5, to maintain the confidentiality of such Privileged Information and to take the steps provided herein for the preservation of all Privileges that may belong to or be asserted by RemainCo or SpinCo, as the case may be. The access to Privileged Information being granted pursuant to Section 6.3 hereof, the agreement to provide witnesses and individuals pursuant to Section 6.4(g) hereof and the disclosure to SpinCo and RemainCo of Privileged Information relating to the SpinCo Business or the RemainCo Business pursuant to this Agreement in connection with the Separation and Distribution shall not be asserted by RemainCo or SpinCo to constitute, or otherwise be deemed, a waiver of any Privilege that has been or may be asserted under this Section 6.5 or otherwise. Nothing in this Agreement shall operate to reduce, minimize or condition the rights granted to RemainCo and SpinCo in, or the obligations imposed upon RemainCo and SpinCo by, this Section 6.5.

(d) RemainCo, on behalf of itself and on behalf of each other member of the RemainCo Group, hereby waives any conflict of interest with respect to any attorney who is or becomes an officer or employee of SpinCo or any of its Subsidiaries resulting from such person being an officer or employee of RemainCo or any of its Subsidiaries (including SpinCo and its Subsidiaries) at any time prior to the Distribution and agrees to allow such attorney to represent SpinCo and its Subsidiaries in any transaction or dispute with respect to this Agreement, the Ancillary Agreements, the transactions contemplated hereby and thereby and transactions between the Parties and their Subsidiaries and other Affiliates which commence following the Distribution Date. SpinCo, on behalf of itself and on behalf of its Subsidiaries, hereby waives any conflict of interest with respect to any attorney who is or becomes an officer or employee of RemainCo or any other member of the RemainCo Group resulting from such person being an officer or employee of SpinCo or any of its Subsidiaries at any time prior to the Distribution and agrees to allow such attorney to represent RemainCo or any other member of the RemainCo Group in any transaction or dispute with respect to this Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby and transactions between the Parties and their Subsidiaries and other Affiliates which commence following the Distribution Date. In furtherance of the foregoing, each member of the RemainCo Group and each member of the SpinCo Group will, upon request, execute and deliver a specific waiver as may be appropriate in connection with a particular transaction or dispute under the applicable rules of professional conduct in order to effectuate the general waiver set forth above.

Section 6.6 Payment of Expenses . Except as otherwise provided in this Agreement or in any Ancillary Agreement, each Party will bear its own expenses incurred after the Distribution Date in connection with the Separation, the Distribution and the other transactions contemplated by this Agreement. Any expenses in connection with the Separation, the Distribution and the other transactions contemplated by this Agreement that are incurred, but not paid, on or prior to the Distribution Date will be paid in accordance with the Side Letter.

 

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Section 6.7 Surety Instruments .

(a) On or after the Distribution Date, if any Scheduled RemainCo Surety Obligations for the SpinCo Business are outstanding, SpinCo shall, and shall cause its Subsidiaries to, use commercially reasonable efforts to replace the Scheduled RemainCo Surety Obligations for the SpinCo Business as promptly as practicable with Surety Instruments that (x) are issued for SpinCo’s own account or the account of any of its Subsidiaries (or any combination thereof), (y) are acceptable to the beneficiary or beneficiaries thereof and (z) neither impose any Liabilities, directly or indirectly, on RemainCo or any of its Subsidiaries nor encumber or otherwise restrict, directly or indirectly, any Assets of RemainCo or any of its Subsidiaries. From and after the Distribution Time: SpinCo shall indemnify and hold harmless RemainCo and each of its Subsidiaries from and against any other Losses arising from or relating to any Surety Instruments relating to the RemainCo Surety Obligations for the SpinCo Business. Without the prior written consent of RemainCo, SpinCo shall not, and shall not permit any of its Subsidiaries to, enter into, renew or extend the term of, increase its obligations under, or transfer to a Third Party, any loan, lease, Contract or other obligation in connection with which RemainCo or any of its Subsidiaries has issued, or caused to be issued, any Surety Instruments relating to any RemainCo Surety Obligations for the SpinCo Business. The Parties agree that neither RemainCo nor any of its Subsidiaries will have any obligation to renew any Surety Instruments relating to the RemainCo Surety Obligations for the SpinCo Business, after the expiration of any such Surety Instruments, provided that nothing in this Section 6.7(a) shall prevent RemainCo or any of its Subsidiaries from renewing any Surety Instrument. If SpinCo theretofore has been unable to replace any of the Scheduled RemainCo Surety Obligations for the SpinCo Business, then, within ten days after a Change of Control of SpinCo (or, if later, on the 24 month anniversary of the Distribution Time if, within ten days after such Change of Control, SpinCo provides to RemainCo a valid, binding and enforceable guarantee, in favor of RemainCo, of SpinCo’s obligations under this Section 6.7(a) from the ultimate parent entity with control over SpinCo (provided that the Credit Quality of such ultimate parent entity, after providing the guarantee contemplated by this parenthetical, is, in the written opinion of a nationally recognized investment banking firm or a nationally recognized credit rating agency reasonably acceptable to RemainCo, not lower than the Credit Quality of SpinCo immediately prior to such Change of Control)), SpinCo will cause Applicable Security Instruments for Surety Obligations to be issued to RemainCo (or, as applicable, the Subsidiaries of RemainCo that are directly or contingently liable with respect thereto) to provide, in each case, RemainCo (or, as applicable, its Subsidiaries) with prompt cash reimbursement, in full, in the event of any draw, cash call or other event giving rise to any payment obligation on the part of RemainCo or any of its Subsidiaries with respect to any such Scheduled RemainCo Surety Obligations for the SpinCo Business. If, as contemplated by clause (ii)(B) of the definition of “Applicable Security Instruments for Surety Obligations,” any Applicable Security Instrument for Surety Obligations issued as contemplated by the immediately preceding sentence (or by this sentence) includes one or more indemnity bonds with an expiration date before the Surety Obligation End Date for the applicable Scheduled RemainCo Surety Obligation for the SpinCo Business and the issuer of such indemnity bond fails for any reason to grant any annual rolling one-year extension through the Surety Obligation End Date, then SpinCo shall promptly, and before the expiration of any

 

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such indemnity bonds, cause to be issued in the place of each such indemnity bonds (i) new irrevocable standby letters of credit issued by one or more financial institutions reasonably acceptable to RemainCo, with the amounts of such letters of credit being, in the aggregate, not less than the amount of the indemnity bonds being replaced and with such letters of credit providing that they will remain in effect through the applicable Surety Obligation End Date (or, if they will not remain in effect through such date, that they may be drawn in full by the beneficiaries thereof if such letters of credit are not, prior to 15 days before such expiration or termination, replaced with other letters of credit meeting the qualifications of this clause (i) or extended) or (ii) indemnity bonds issued by one or more financial institutions or other issuers, and on terms and conditions, reasonably acceptable to RemainCo with (A) the expiration date of such bonds being no earlier than the earlier of (1) three years after the date such bonds are issued and, if the expiration date is before the Surety Obligation End Date, providing for annual one-year extensions and (2) the Surety Obligation End Date and (B) the amounts of such bonds being not less than the amount of the indemnity bonds being replaced. For the avoidance of doubt, it is understood and acknowledged that the performance obligations of the Parties under this Section 6.7(a) are subject to the limitations on liability set forth in Section 3.13.

(b) On or after the Distribution Date, if any Scheduled SpinCo Surety Obligations for the RemainCo Business are outstanding, RemainCo shall, and shall cause its Subsidiaries to, use commercially reasonable efforts to replace the Scheduled SpinCo Surety Obligations for the RemainCo Business as promptly as practicable with Surety Instruments that (x) are issued for RemainCo’s own account or the account of any of its Subsidiaries (or any combination thereof), (y) are acceptable to the beneficiary or beneficiaries thereof and (z) neither impose any Liabilities, directly or indirectly, on SpinCo or any of its Subsidiaries nor encumber or otherwise restrict, directly or indirectly, any Assets of SpinCo or any of its Subsidiaries. From and after the Distribution Time: RemainCo shall indemnify and hold harmless SpinCo and each of its Subsidiaries from and against any other Losses arising from or relating to any Surety Instruments relating to the SpinCo Surety Obligations for the RemainCo Business. Without the prior written consent of SpinCo, RemainCo shall not, and shall not permit any of its Subsidiaries to, enter into, renew or extend the term of, increase its obligations under, or transfer to a Third Party, any loan, lease, Contract or other obligation in connection with which SpinCo or any of its Subsidiaries has issued, or caused to be issued, any Surety Instruments relating to any SpinCo Surety Obligations for the RemainCo Business. The Parties agree that neither SpinCo nor any of its Subsidiaries will have any obligation to renew any Surety Instruments relating to the SpinCo Surety Obligations for the RemainCo Business, after the expiration of any such Surety Instruments, provided that nothing in this Section 6.7(b) shall prevent SpinCo or any of its Subsidiaries from renewing any Surety Instrument. If RemainCo theretofore has been unable to replace any of the Scheduled SpinCo Surety Obligations for the RemainCo Business, then, within ten days after a Change of Control of RemainCo (or, if later, on the 24 month anniversary of the Distribution Time if, within ten days after such Change of Control, RemainCo provides to SpinCo a valid, binding and enforceable guarantee, in favor of SpinCo, of RemainCo’s obligations under this Section 6.7(b) from the ultimate parent entity with control over RemainCo (provided that the Credit Quality of such ultimate parent entity, after providing the guarantee contemplated by this parenthetical, is, in the written opinion of a nationally recognized investment banking firm or a nationally recognized credit rating agency reasonably acceptable to SpinCo, not lower than the Credit Quality of RemainCo immediately prior to such Change of Control)), RemainCo will cause Applicable Security Instruments for Surety Obligations to be

 

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issued to SpinCo (or, as applicable, the Subsidiaries of SpinCo that are directly or contingently liable with respect thereto) to provide, in each case, SpinCo (or, as applicable, its Subsidiaries) with prompt cash reimbursement, in full, in the event of any draw, cash call or other event giving rise to any payment obligation on the part of SpinCo or any of its Subsidiaries with respect to any such Scheduled SpinCo Surety Obligations for the RemainCo Business. If, as contemplated by clause (ii)(B) of the definition of “Applicable Security Instruments for Surety Obligations,” any Applicable Security Instrument for Surety Obligations issued as contemplated by the immediately preceding sentence (or by this sentence) includes one or more indemnity bonds with an expiration date before the Surety Obligation End Date for the applicable Scheduled SpinCo Surety Obligation for the RemainCo Business and the issuer of such indemnity bond fails for any reason to grant any annual rolling one-year extension through the Surety Obligation End Date, then RemainCo shall promptly, and before the expiration of any such indemnity bonds, cause to be issued in the place of each such indemnity bonds (i) new irrevocable standby letters of credit issued by one or more financial institutions reasonably acceptable to SpinCo, with the amounts of such letters of credit being, in the aggregate, not less than the amount of the indemnity bonds being replaced and with such letters of credit providing that they will remain in effect through the applicable Surety Obligation End Date (or, if they will not remain in effect through such date, that they may be drawn in full by the beneficiaries thereof if such letters of credit are not, prior to 15 days before such expiration or termination, replaced with other letters of credit meeting the qualifications of this clause (i) or extended) or (ii) indemnity bonds issued by one or more financial institutions or other issuers, and on terms and conditions, reasonably acceptable to SpinCo with (A) the expiration date of such bonds being no earlier than the earlier of (1) three years after the date such bonds are issued and, if the expiration date is before the Surety Obligation End Date, providing for annual one-year extensions and (2) the Surety Obligation End Date and (B) the amounts of such bonds being not less than the amount of the indemnity bonds being replaced. For the avoidance of doubt, it is understood and acknowledged that the performance obligations of the Parties under this Section 6.7(b) are subject to the limitations on liability set forth in Section 3.13.

Section 6.8 Guarantee Obligations .

(a) RemainCo and SpinCo shall cooperate and SpinCo shall use its commercially reasonable efforts to, as promptly as is reasonably practicable, terminate, or to cause SpinCo or its Subsidiaries (or Assets of SpinCo or its Subsidiaries) to be substituted in all respects for RemainCo and its Subsidiaries (and any Assets of RemainCo or any of its Subsidiaries) in respect of, all obligations of RemainCo or any of its Subsidiaries (or encumbrances or restrictions on Assets of RemainCo or any of its Subsidiaries) under or in respect of the Scheduled RemainCo Guarantees for the SpinCo Business that are in existence as of the Distribution Time. SpinCo shall indemnify and hold harmless the RemainCo Group from and against any Losses arising from or relating to RemainCo Guarantees for the SpinCo Business and neither RemainCo nor any of its Subsidiaries will have any obligation to renew any RemainCo Guarantees for the SpinCo Business after the expiration of such RemainCo Guarantees for the SpinCo Business. Without the prior written consent of RemainCo, SpinCo shall not, and shall not permit any of its Subsidiaries to, enter into, renew or extend the term of, increase its obligations under, or transfer to a Third Party, any loan, lease, Contract or other obligation in connection with which RemainCo or any of its Subsidiaries has given or issued any RemainCo Guarantees for the SpinCo Business. If the above-described termination or substitution of all of

 

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the Scheduled RemainCo Guarantees for the SpinCo Business is not effected by the 24 month anniversary of the Distribution Time, then, for each of the Scheduled RemainCo Guarantees for the SpinCo Business for which such a termination or substitution has not been effected, SpinCo shall pay RemainCo a per annum fee, to compensate RemainCo and its Subsidiaries for continuing to provide, from and after the 24 month anniversary of the Distribution Time, Scheduled RemainCo Guarantees for the SpinCo Business, in an amount equal to 0.225% of the Net Exposure for such Scheduled RemainCo Guarantee for the SpinCo Business (such fee to be paid quarterly in advance and to continue until the earlier of (i) the PCG End Date for such Scheduled RemainCo Guarantee for the SpinCo Business and (ii) the date on which such a termination or substitution has been effected for such Scheduled RemainCo Guarantee for the SpinCo Business). To the extent that RemainCo or any of its Subsidiaries have obligations under any RemainCo Guarantees for the SpinCo Business, SpinCo will use its commercially reasonable efforts to (i) perform such obligations on behalf of RemainCo and its Subsidiaries or (ii) otherwise take such action as reasonably requested by RemainCo so as to put RemainCo and its Subsidiaries in the same position as if SpinCo, and not RemainCo and its Subsidiaries, had performed or were performing such obligations. If the above-described termination or substitution of all of the Scheduled RemainCo Guarantees for the SpinCo Business has not theretofore occurred, then, within ten days after a Change of Control of SpinCo (or, if later, on the 24 month anniversary of the Distribution Time if, within ten days after such Change of Control, SpinCo provides to RemainCo a valid, binding and enforceable guarantee, in favor of RemainCo, of SpinCo’s obligations under this Section 6.8(a) from the ultimate parent entity with control over SpinCo (provided that the Credit Quality of such ultimate parent entity, after providing the guarantee contemplated by this parenthetical, is, in the written opinion of a nationally recognized investment banking firm or a nationally recognized credit rating agency reasonably acceptable to RemainCo, not lower than the Credit Quality of SpinCo immediately prior to such Change of Control)), SpinCo will cause Applicable Security Instruments for Guarantees to be issued to RemainCo (or, as applicable, the Subsidiaries of RemainCo that are directly or contingently liable with respect thereto) to provide, in each case, RemainCo (or, as applicable, its Subsidiaries) with prompt cash reimbursement in the event of any event giving rise to any payment obligation on the part of RemainCo or any of its Subsidiaries with respect to any such Scheduled RemainCo Guarantees for the SpinCo Business. If, as contemplated by clause (ii)(B) of the definition of “Applicable Security Instruments for Guarantees,” any Applicable Security Instrument for Guarantees issued as contemplated by the immediately preceding sentence (or by this sentence) includes one or more indemnity bonds with an expiration date before the PCG End Date for the applicable Scheduled RemainCo Guarantee for the SpinCo Business and the issuer of such indemnity bond fails for any reason to grant any annual rolling one-year extension through the PCG End Date, then SpinCo shall promptly, and before the expiration of any such indemnity bonds, cause to be issued in the place of each such indemnity bonds (i) new irrevocable standby letters of credit issued by one or more financial institutions reasonably acceptable to RemainCo, with the amounts of such letters of credit being, in the aggregate, not less than the amount of the indemnity bonds being replaced and with such letters of credit providing that they will remain in effect through the applicable PCG End Date (or, if they will not remain in effect through such date, that they may be drawn in full by the beneficiaries thereof if such letters of credit are not, prior to 15 days before such expiration or termination, replaced with other letters of credit meeting the qualifications of this clause (i) or extended) or (ii) indemnity bonds issued by one or more financial institutions or other issuers,

 

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and on terms and conditions, reasonably acceptable to RemainCo with (A) the expiration date of such bonds being no earlier than the earlier of (1) three years after the date such bonds are issued and, if the expiration date is before the PCG End Date, providing for annual one-year extensions and (2) the PCG End Date and (B) the amounts of such bonds being not less than the amount of the indemnity bonds being replaced.

(b) SpinCo and RemainCo shall cooperate and RemainCo shall use its commercially reasonable efforts to, as promptly as is reasonably practicable, terminate, or to cause RemainCo or its Subsidiaries (or Assets of RemainCo or its Subsidiaries) to be substituted in all respects for SpinCo and its Subsidiaries (and any Assets of SpinCo or any of its Subsidiaries) in respect of, all obligations of SpinCo or any of its Subsidiaries (or encumbrances or restrictions on Assets of SpinCo or any of its Subsidiaries) under or in respect of the Scheduled SpinCo Guarantees for the RemainCo Business that are in existence as of the Distribution Time. RemainCo shall indemnify and hold harmless the SpinCo Group from and against any Losses arising from or relating to SpinCo Guarantees for the RemainCo Business and neither SpinCo nor any of its Subsidiaries will have any obligation to renew any SpinCo Guarantees for the RemainCo Business after the expiration of such SpinCo Guarantees for the RemainCo Business. Without the prior written consent of SpinCo, RemainCo shall not, and shall not permit any of its Subsidiaries to, enter into, renew or extend the term of, increase its obligations under, or transfer to a Third Party, any loan, lease, Contract or other obligation in connection with which SpinCo or any of its Subsidiaries has given or issued any SpinCo Guarantees for the RemainCo Business. If the above-described termination or substitution of all of the Scheduled SpinCo Guarantees for the RemainCo Business is not effected by the 24 month anniversary of the Distribution Time, then, for each of the Scheduled SpinCo Guarantees for the RemainCo Business for which such a termination or substitution has not been effected, RemainCo shall pay SpinCo a per annum fee, to compensate SpinCo and its Subsidiaries for continuing to provide, from and after the 24 month anniversary of the Distribution Time, Scheduled SpinCo Guarantees for the RemainCo Business, in an amount equal to 0.225% of the Net Exposure for such Scheduled SpinCo Guarantee for the RemainCo Business (such fee to be paid quarterly in advance and to continue until the earlier of (i) the PCG End Date for such Scheduled SpinCo Guarantee for the RemainCo Business and (ii) the date on which such a termination or substitution has been effected for such Scheduled SpinCo Guarantee for the RemainCo Business). To the extent that SpinCo or any of its Subsidiaries have obligations under any SpinCo Guarantees for the RemainCo Business, RemainCo will use its commercially reasonable efforts to (i) perform such obligations on behalf of SpinCo and its Subsidiaries or (ii) otherwise take such action as reasonably requested by SpinCo so as to put SpinCo and its Subsidiaries in the same position as if RemainCo, and not SpinCo and its Subsidiaries, had performed or were performing such obligations. If the above-described termination or substitution of all of the Schedule SpinCo Guarantees for the RemainCo Business has not theretofore occurred, then, within ten days after a Change of Control of RemainCo (or, if later, on the 24 month anniversary of the Distribution Time if, within ten days after such Change of Control, RemainCo provides to SpinCo a valid, binding and enforceable guarantee, in favor of SpinCo, of RemainCo’s obligations under this Section 6.8(b) from the ultimate parent entity with control over RemainCo (provided that the Credit Quality of such ultimate parent entity, after providing the guarantee contemplated by this parenthetical, is, in the written opinion of a nationally recognized investment banking firm or a nationally recognized credit rating agency reasonably acceptable to SpinCo, not lower than the Credit Quality of RemainCo immediately prior to such Change of Control)), RemainCo will cause Applicable

 

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Security Instruments for Guarantees to be issued to SpinCo (or, as applicable, the Subsidiaries of SpinCo that are directly or contingently liable with respect thereto) to provide, in each case, SpinCo (or, as applicable, its Subsidiaries) with prompt cash reimbursement in the event of any event giving rise to any payment obligation on the part of SpinCo or any of its Subsidiaries with respect to any such Scheduled SpinCo Guarantees for the RemainCo Business. If, as contemplated by clause (ii)(B) of the definition of “Applicable Security Instruments for Guarantees,” any Applicable Security Instrument for Guarantees issued as contemplated by the immediately preceding sentence (or by this sentence) includes one or more indemnity bonds with an expiration date before the PCG End Date for the applicable Scheduled SpinCo Guarantee for the RemainCo Business and the issuer of such indemnity bond fails for any reason to grant any annual rolling one-year extensions through the PCG End Date, then RemainCo shall promptly, and before the expiration of any such indemnity bonds, cause to be issued in the place of each such indemnity bonds (i) new irrevocable standby letters of credit issued by one or more financial institutions reasonably acceptable to SpinCo, with the amounts of such letters of credit being, in the aggregate, not less than the amount of the indemnity bonds being replaced and with such letters of credit providing that they will remain in effect through the applicable PCG End Date (or, if they will not remain in effect through such date, that they may be drawn in full by the beneficiaries thereof if such letters of credit are not, prior to 15 days before such expiration or termination, replaced with other letters of credit meeting the qualifications of this clause (i) or extended) or (ii) indemnity bonds issued by one or more financial institutions or other issuers, and on terms and conditions, reasonably acceptable to SpinCo with (A) the expiration date of such bonds being no earlier than the earlier of (1) three years after the date such bonds are issued and, if the expiration date is before the PCG End Date, providing for annual one-year extensions and (2) the PCG End Date and (B) the amounts of such bonds being not less than the amount of the indemnity bonds being replaced.

Section 6.9 Confidentiality .

(a) RemainCo and SpinCo shall hold and shall cause the members of the RemainCo Group and the SpinCo Group, respectively, to hold, and shall each cause their respective officers, employees, agents, consultants and advisors to hold, in strict confidence and not to disclose or release without the prior written consent of the other Party, any and all Confidential Information (as defined herein) of such other Party or the members of its Group; provided, that the Parties may disclose, or may permit disclosure of, such Confidential Information (i) to their respective auditors, attorneys, financial advisors, bankers and other appropriate consultants and advisors who have a need to know such information and are informed of their obligation to hold such information confidential to the same extent as is applicable to the Parties and in respect of whose failure to comply with such obligations, RemainCo or SpinCo, as the case may be, will be responsible or (ii) to the extent any member of the RemainCo Group or the SpinCo Group is compelled to disclose any such Confidential Information by judicial or administrative process or, in the opinion of legal counsel, by other requirements of Law. Notwithstanding the foregoing, in the event that any demand or request for disclosure of Confidential Information is made pursuant to clause (ii) above, RemainCo or SpinCo, as the case may be, shall promptly notify the other of the existence of such request or demand and shall provide the other a reasonable opportunity to seek an appropriate protective order or other remedy, which both Parties will cooperate in seeking to obtain. In the event that such appropriate protective order or other remedy is not obtained, the Party who is being compelled to disclose (or whose Group member is being

 

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compelled to disclose) shall, and shall cause the applicable members at its Group to, furnish, or cause to be furnished, only that portion of such Confidential Information that is legally required to be disclosed. As used in this Section 6.9, “Confidential Information” shall mean all proprietary, technical or proprietary, operational Information (including Trade Secrets and proprietary Information relating to the ages, birth dates, social security numbers, health-related matters or other confidential matters concerning employees or former employees) of one Party or members of its Group which, prior to or following the Distribution Time, has been disclosed by RemainCo or members of the RemainCo Group, on the one hand, or SpinCo or members of the SpinCo Group, on the other hand, to, or otherwise has come into the possession of, the other Group, including pursuant to the access provisions of Section 6.4 hereof or any other provision of this Agreement or by virtue of employees of the RemainCo Group becoming employees of the SpinCo Group or employees of the SpinCo Group becoming employees of the RemainCo Group as a result of the transactions contemplated hereby (except to the extent that such Information can be shown to have been (a) in the public domain through no fault of such Party (or, in the case of RemainCo, any other member of the RemainCo Group or, in the case of SpinCo, any other member of the SpinCo Group) or (b) later lawfully acquired from other sources by the Party (or, in the case of RemainCo, such member of the RemainCo Group or, in the case of SpinCo, such member of the SpinCo Group) to which it was furnished; provided, however, in the case of (b) that such sources did not provide such Information in breach of any confidentiality obligations).

(b) Notwithstanding anything to the contrary set forth herein, (i) RemainCo and the other members of the RemainCo Group, on the one hand, and SpinCo and the other members of the SpinCo Group, on the other hand, shall be deemed to have satisfied their obligations hereunder with respect to Confidential Information if they exercise the same degree of care (but no less than a reasonable degree of care) as they take to preserve confidentiality for their own similar Information and (ii) confidentiality obligations provided for in any agreement between RemainCo or any other member of the RemainCo Group, or SpinCo or any other member of the SpinCo Group, on the one hand, and any employee of RemainCo or any other member of the RemainCo Group, or SpinCo or any other member of the SpinCo Group, on the other hand, shall remain in full force and effect. Confidential Information of RemainCo or any other member of the RemainCo Group, on the one hand, or SpinCo or any other member of the SpinCo Group, on the other hand, in the possession of and used by the other as of the Distribution Time may continue to be used by such Person in possession of the Confidential Information in and only in the operation of the RemainCo Business or the SpinCo Business, as the case may be, and may be used only so long as the Confidential Information is maintained in confidence and not disclosed in violation of Section 6.9(a). Such continued right to use may not be transferred to any Third Party unless the Third Party purchases all or substantially all of the business and Assets of RemainCo or SpinCo, or any Asset of RemainCo or SpinCo in which the relevant Confidential Information is used or employed, in one transaction or in a series of related transactions, and such prospective purchaser executes a written agreement with SpinCo or RemainCo, as the case may be (which agreement shall be fully and directly enforceable by SpinCo or RemainCo, respectively), in which such Party agrees to be bound in perpetuity by the terms of this Section 6.9.

 

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Section 6.10 Insurance .

(a) The Parties intend by this Agreement that, to the extent permitted under the terms of any applicable insurance policy, SpinCo, each other member of the SpinCo Group and each of their respective directors, officers and employees, on the one hand, and RemainCo, each other member of the RemainCo Group and each of their respective directors, officers and employees, on the other hand, will be successors in interest and will have and be fully entitled to continue to exercise all rights that any of them may have as of the Distribution Time (with respect to events occurring before the Distribution Time) as a Subsidiary, Affiliate, division, director, officer or employee of RemainCo, or SpinCo (as the case may be), before the Distribution Time under any policy of insurance issued to RemainCo or any member of the RemainCo Group, or SpinCo or any member of the SpinCo Group, as the case may be, by any third-party insurance carrier not affiliated with RemainCo or SpinCo (as applicable) or under any agreements related to such policies executed and delivered before the Distribution Time, including any rights that SpinCo, any other member of the SpinCo Group, on the one hand, or RemainCo or any member of the RemainCo Group, on the other hand, or any of their or their respective directors, officers, or employees (as the case may be) may have as an insured or additional named insured, Subsidiary, Affiliate, division, director, officer or employee to avail itself, himself or herself of any policy of insurance or any agreements related to the policies in effect before the Distribution Time, with respect to events occurring before the Distribution Time. In addition, for a period of six years from and after the Distribution Date, RemainCo shall use commercially reasonable efforts to maintain the “tail coverage” described in Schedule 6.10, provided that each of RemainCo and SpinCo shall (i) pay the premiums with respect to such coverage in accordance with the Side Letter and (ii) bear one-half of the amounts actually incurred as retention amounts under such coverage.

(b) After the Distribution Time, RemainCo shall not, and shall not permit any other member of the RemainCo Group to, and SpinCo shall not, and shall not permit any other member of the SpinCo Group to, without the consent of SpinCo or RemainCo, respectively (such consent not to be unreasonably withheld, conditioned or delayed), provide any insurance carrier with a release or amend, modify or waive any rights under any insurance policy or agreement if such release, amendment, modification or waiver thereunder would materially adversely affect any rights of any member of the Group of the other Party with respect to insurance coverage otherwise afforded to such other Party or any member of its Group for pre-Distribution claims; provided, however, that the foregoing shall not (A) preclude any member of any Group from presenting any claim or from exhausting any policy limit, (B) except to the extent expressly required by another covenant in this Agreement or by a covenant in any Ancillary Agreement, require any member of any Group to pay any premium or other amount or to incur any Liability or (C) except to the extent expressly required by another covenant in this Agreement or by a covenant in any Ancillary Agreement, require any member of any Group to renew, extend or continue any policy in force. Subject to Section 6.5, each of RemainCo and SpinCo will share such Information as is reasonably necessary in order to permit the other to manage and conduct its insurance matters in an orderly fashion.

(c) The provisions of this Agreement are not intended to relieve any insurer of any Liability under any policy.

 

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(d) No member of the RemainCo Group or any RemainCo Indemnitee will have any Liabilities whatsoever as a result of the insurance policies and practices of RemainCo or any other member of the RemainCo Group as in effect at any time before the Distribution Time, including as a result of (i) the level or scope of any insurance, (ii) the creditworthiness of any insurance carrier, (iii) the terms and conditions of any policy, or (iv) the adequacy or timeliness of any notice to any insurance carrier with respect to any claim or potential claim. No member of the SpinCo Group or any SpinCo Indemnitee will have any Liabilities whatsoever as a result of the insurance policies and practices of SpinCo or any other member of the SpinCo Group as in effect at any time before the Distribution Time, including as a result of (i) the level or scope of any insurance, (ii) the creditworthiness of any insurance carrier, (iii) the terms and conditions of any policy, or (iv) the adequacy or timeliness of any notice to any insurance carrier with respect to any claim or potential claim.

(e) Except to the extent otherwise provided in Section 6.10(b), in no event will RemainCo, any other member of the RemainCo Group or any RemainCo Indemnitee have any Liability or obligation whatsoever to any member of the SpinCo Group if any insurance policy or other contract of insurance is (i) terminated (other than as a result of a breach or violation of a contract, legal duty or Law by RemainCo, any other member of the RemainCo Group, or a RemainCo Indemnitee) by the insurer or otherwise ceases to be in effect for any reason (other than as a result of a breach or violation of a contract, legal duty or Law by RemainCo, any other member of the RemainCo Group, or a RemainCo Indemnitee), (ii) unavailable (other than as a result of a breach or violation of a contract, legal duty or Law by RemainCo, any other member of the RemainCo Group, or a RemainCo Indemnitee) or inadequate to cover any Liability of any member of the SpinCo Group (other than as a result of a breach or violation of a contract, legal duty or Law by RemainCo, any other member of the RemainCo Group, or a RemainCo Indemnitee) or (iii) not renewed or extended beyond the current expiration date (other than as a result of a breach or violation of a contract, legal duty or Law by RemainCo, any other member of the RemainCo Group, or a RemainCo Indemnitee). Except to the extent otherwise provided in Section 6.10(b), in no event will SpinCo, any other member of the SpinCo Group or any SpinCo Indemnitee have any Liability or obligation whatsoever to any member of the RemainCo Group if any insurance policy or other contract of insurance is (i) terminated (other than as a result of a breach or violation of a contract, legal duty or Law by SpinCo, any other member of the SpinCo Group, or a SpinCo Indemnitee) by the insurer or otherwise ceases to be in effect for any reason (other than as a result of a breach or violation of a contract, legal duty or Law by SpinCo, any other member of the SpinCo Group, or a SpinCo Indemnitee), (ii) unavailable (other than as a result of a breach or violation of a contract, legal duty or Law by SpinCo, any other member of the SpinCo Group, or a SpinCo Indemnitee), or inadequate to cover any Liability of any member of the RemainCo Group (other than as a result of a breach or violation of a contract, legal duty or Law by SpinCo, any other member of the SpinCo Group, or a SpinCo Indemnitee) or (iii) not renewed or extended beyond the current expiration date (other than as a result of a breach or violation of a contract, legal duty or Law by SpinCo, any other member of the SpinCo Group, or a SpinCo Indemnitee).

(f) This Agreement is not intended as an attempted assignment of any policy of insurance or as a contract of insurance and will not be construed to waive any right or remedy of any members of the RemainCo Group or SpinCo Group in respect of any insurance policy or any other contract or policy of insurance.

 

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(g) Nothing in this Agreement will be deemed to restrict any member of the SpinCo Group or RemainCo Group from acquiring at its own expense any other insurance policy in respect of any Liabilities or covering any period.

(h) To the extent that any insurance policy provided for the reinstatement of policy limits, and both RemainCo and SpinCo desire to reinstate such limits, the cost of reinstatement will be shared by RemainCo and SpinCo as the Parties may agree. If either Party, in its sole discretion, determines that such reinstatement would not be beneficial, that Party shall not contribute to the cost of such reinstatement and will not make any claim thereunder nor otherwise seek to benefit from the reinstated policy limits.

(i) For purposes of this Agreement, “Covered Matter” shall mean any matter (other than matters related to claims for workers’ compensation) with respect to which any member of (i) the SpinCo Group or any of their respective directors, officers or employees may seek to exercise any right under any policy of insurance or related agreement of RemainCo or any other member of the RemainCo Group pursuant to this Section 6.10 (a “SpinCo Covered Matter”) or (ii) the RemainCo Group or any of their respective directors, officers or employees may seek to exercise any right under any policy of insurance or related agreement of SpinCo or any other member of the SpinCo Group pursuant to this Section 6.10 (a “RemainCo Covered Matter”). If either RemainCo or SpinCo receives notice or otherwise learns of any Covered Matter, such Party shall promptly give written notice thereof to the other Party. Any such notice shall describe the Covered Matter in reasonable detail. With respect to each SpinCo Covered Matter (other than a SpinCo Covered Matter with respect to which any member of the RemainCo Group or any of their respective directors, officers or employees may seek to exercise any right under any policy of insurance or related agreement of RemainCo or any other member of the RemainCo Group), SpinCo shall have sole responsibility for reporting the claim to the insurance carrier and managing and defending the claim (collectively, “Claims Administration”); provided that SpinCo shall provide RemainCo with at least ten days’ prior written notice before settling or seeking settlement authority from any applicable insurance underwriter for an amount equal to or exceeding $5 million with respect to any such SpinCo Covered Matter. With respect to each RemainCo Covered Matter (other than a RemainCo Covered Matter with respect to which any member of the SpinCo Group or any of their respective directors, officers or employees may seek to exercise any right under any policy of insurance or related agreement of SpinCo or any other member of the SpinCo Group), RemainCo shall have sole responsibility for Claims Administration; provided that RemainCo shall provide SpinCo with at least ten days’ prior written notice before settling or seeking settlement authority from any applicable insurance underwriter for an amount equal to or exceeding $5 million with respect to any such RemainCo Covered Matter.

(j) SpinCo agrees that, from and after the Distribution Time: (i) SpinCo will be responsible for submitting (or causing another member of the SpinCo Group to submit) to ACE American Insurance Company or its applicable affiliates (collectively, “ACE”) any insurance claims under any of the Existing Policies (as defined in the Assumption and Loss Allocation Agreement) with respect to any SpinCo Liabilities for which insurance coverage is available under any of the Existing Policies; (ii) SpinCo will (or will cause another member of the SpinCo Group to) duly and timely submit each insurance claim referred to in the immediately preceding clause (i) to ACE; and (iii) in the event SpinCo or another member of the SpinCo Group fails to

 

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duly and timely submit any such insurance claim, SpinCo hereby authorizes RemainCo to submit (on behalf of each applicable member of the SpinCo Group) such insurance claim, if the underlying liability relates to a SpinCo Liability as to which SpinCo has agreed to indemnify the members of the RemainCo Group pursuant to this Agreement. RemainCo agrees that, from and after the Distribution Time: (i) RemainCo will be responsible for submitting (or causing another member of the RemainCo Group to submit) to ACE any insurance claims under any of the Existing Policies (as defined in the Assumption and Loss Allocation Agreement) with respect to any RemainCo Liabilities for which insurance coverage is available under any of the Existing Policies; (ii) RemainCo will (or will cause another member of the RemainCo Group to) duly and timely submit each insurance claim referred to in the immediately preceding clause (i) to ACE; and (iii) in the event RemainCo or another member of the RemainCo Group fails to duly and timely submit any such insurance claim, RemainCo hereby authorizes SpinCo to submit (on behalf of each applicable member of the RemainCo Group) such insurance claim, if the underlying liability relates to a RemainCo Liability as to which RemainCo has agreed to indemnify the members of the SpinCo Group pursuant to this Agreement. For purposes of this Section 6.10(j), submitting an insurance claim includes tendering notice of a third-party claim and such other acts as are necessary to comply with the policyholder’s responsibilities under the Existing Policy with respect to the applicable Loss.

Section 6.11 Noncompetition .

(a) RemainCo and SpinCo hereby acknowledge and agree that in connection with the operation of the businesses of RemainCo and its Subsidiaries and SpinCo and its Subsidiaries prior to the Distribution Date, (i) employees of SpinCo and its Subsidiaries, because of the synergies and interactions between the two aspects of the business of RemainCo and its Subsidiaries before the Distribution, maintain in their minds and memories proprietary information and trade secrets to be owned by RemainCo or its Subsidiaries after the Distribution, (ii) employees remaining with RemainCo or its Subsidiaries, because of the synergies and interactions between the two aspects of the business of RemainCo and its Subsidiaries before the Distribution, maintain in their minds and memories proprietary information and trade secrets to be owned by SpinCo or its Subsidiaries after the Distribution, (iii) members of the RemainCo Group were directly or indirectly brought into contact with existing and prospective customers of the SpinCo Group and members of the SpinCo Group were directly or indirectly brought into contact with existing and prospective customers of the RemainCo Group, and (iv) in connection with the Distribution and in furtherance of the aims of the Separation, to permit RemainCo and SpinCo each to tailor their, and their respective Subsidiaries’, respective business strategies to best address market opportunities in their respective industries and to permit the shareholders of RemainCo and SpinCo to enjoy the anticipated benefits of the separation of RemainCo into two separate entities and maintain each Party’s value and goodwill, it is necessary for each Party to temporarily limit its and its subsidiaries’ activities in the business of the other Party and its Subsidiaries as set forth in this Section 6.11.

(b) During the Noncompete Term and subject to the exclusions, exceptions and limitations expressly set forth in this Section 6.11, (i) RemainCo will not, and will not permit any of its Subsidiaries to, Compete, directly or indirectly, in the SpinCo Core Business, anywhere in the SpinCo Protected Territory and (ii) SpinCo will not, and will not permit any of its Subsidiaries to, Compete, directly or indirectly, in the RemainCo Core Business, anywhere in the RemainCo Protected Territory.

 

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(c) Notwithstanding Section 6.11(b), nothing in this Agreement will restrict any member of the RemainCo Group or the SpinCo Group from owning less than 3% of the outstanding stock of any publicly traded corporation.

(d) Notwithstanding Section 6.11(b), nothing in this Agreement will restrict (i) RemainCo or any of RemainCo’s Subsidiaries from acquiring a business enterprise or an entity, a portion of which Competes in the SpinCo Core Business if: (A) both (1) the annual revenues (for the twelve month period immediately preceding such acquisition) of the portion of the acquired business enterprise or entity that Competes in the SpinCo Core Business are less than 25% of the annual revenues (for the twelve month period immediately preceding such acquisition) of the acquired business enterprise or entity, and (2) the annual revenues (for the twelve month period immediately preceding such acquisition) of the portion of the acquired business enterprise or entity that Competes in the SpinCo Core Business represent sales of less than $100 million or (B) RemainCo and its Subsidiaries divest or terminate the operations of the portion of the acquired business enterprise or entity that Competes in the SpinCo Core Business within one year of the acquisition and, within 30 days of the acquisition, RemainCo notifies SpinCo of the intent to do so or (ii) SpinCo or any of SpinCo’s Subsidiaries from acquiring a business enterprise or an entity, a portion of which Competes in the RemainCo Core Business if: (A) both (1) the annual revenues (for the twelve month period immediately preceding such acquisition) of the portion of the acquired business enterprise or entity that Competes in the RemainCo Core Business are less than 25% of the annual revenues (for the twelve month period immediately preceding such acquisition) of the acquired business enterprise or entity, and (2) the annual revenues (for the twelve month period immediately preceding such acquisition) of the portion of the acquired business enterprise or entity that Competes in the RemainCo Core Business represent sales of less than $100 million or (B) SpinCo and its Subsidiaries divest or terminate the operations of the portion of the acquired business enterprise or entity that Competes in the RemainCo Core Business within one year of the acquisition and, within 30 days of the acquisition, SpinCo notifies RemainCo of the intent to do so.

ARTICLE VII

MISCELLANEOUS

Section 7.1 Authority . Each of the Parties represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement and the Ancillary Agreements, (b) the execution, delivery and performance of this Agreement and the Ancillary Agreements by it have been duly authorized by all necessary corporate or other actions, (c) it has duly and validly executed and delivered this Agreement and the Ancillary Agreements to be executed and delivered on or prior to the Distribution Time, and (d) this Agreement and such Ancillary Agreements are legal, valid and binding obligations, enforceable against it in accordance with their respective terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally and general equity principles.

 

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Section 7.2 Termination . This Agreement and each of the Ancillary Agreements may be terminated at any time prior to the Distribution Time by and in the sole discretion of RemainCo without the approval of SpinCo. In the event of termination pursuant to this Section 7.2, neither Party shall have any Liability of any kind to the other Party.

Section 7.3 Entire Agreement . This Agreement, the Ancillary Agreements and the Schedules referenced herein or therein or attached hereto or thereto, constitute the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersedes all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof.

Section 7.4 Binding Effect; No Third-Party Beneficiaries; Assignment . This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns; and, except as provided in Article III and Section 6.5(d) and Section 6.10, nothing in this Agreement, express or implied, is intended to confer upon any Person except the Parties and their respective Subsidiaries any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. This Agreement may not be assigned by either Party, except with the prior written consent of the other Party.

Section 7.5 Amendment . No change or amendment may be made to this Agreement except by an instrument in writing signed on behalf of both of the Parties.

Section 7.6 Failure or Indulgence Not Waiver; Remedies Cumulative . No failure or delay on the part of either Party in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant or agreement contained herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. Subject to the provisions of Article V, all rights and remedies existing under this Agreement or the Schedules attached hereto are cumulative to, and not exclusive of, any rights or remedies otherwise available.

Section 7.7 Notices . Unless otherwise expressly provided herein, all notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to be duly given (i) when personally delivered or (ii) if mailed by registered or certified mail, postage prepaid, return receipt requested, on the date the return receipt is executed or the letter is refused by the addressee or its agent or (iii) if sent by overnight courier which delivers only upon the signed receipt of the addressee, on the date the receipt acknowledgment is executed or refused by the addressee or its agent or (iv) if sent by facsimile or electronic mail, on the date confirmation of transmission is received (provided that a copy of any notice delivered pursuant to this clause (iv) shall also be sent pursuant to clause (i), (ii) or (iii)), addressed to the attention of the addressee’s General Counsel at the address of its principal executive office or to such other address or facsimile number for a Party as it shall have specified by like notice.

Section 7.8 Counterparts . This Agreement, including the Schedules hereto and the other documents referred to herein, may be executed in multiple counterparts, each of which when executed shall be deemed to be an original but all of which together shall constitute one and the same agreement.

 

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Section 7.9 Severability. If any term or other provision of this Agreement or the Schedules attached hereto is determined by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the court, administrative agency or arbitrator shall interpret this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

Section 7.10 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of Delaware, without regard to any conflicts of law provisions thereof that would result in the application of the laws of any other jurisdiction.

Section 7.11 Construction. This Agreement and the Ancillary Agreements shall be construed as if jointly drafted by SpinCo and RemainCo and no rule of construction or strict interpretation shall be applied against either Party. The Parties represent that this Agreement is entered into with full consideration of any and all rights which the Parties may have. The Parties have relied upon their own knowledge and judgment and upon the advice of the attorneys of their choosing. The Parties have had access to independent legal advice, have conducted such investigations they and their counsel thought appropriate, and have consulted with such other independent advisors as they and their counsel deemed appropriate regarding this Agreement and their rights and asserted rights in connection therewith. The Parties are not relying upon any representations or statements made by any other Party, or such other Party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are expressly set forth or incorporated in this Agreement. The Parties are not relying upon a legal duty, if one exists, on the part of the other Party (or such other Party’s employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or its preparation, it being expressly understood that neither Party shall ever assert any failure to disclose information on the part of the other Party as a ground for challenging this Agreement.

Section 7.12 Performance . Each Party 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 or Affiliate of such Party.

Section 7.13 Limited Liability. Notwithstanding any other provision of this Agreement, no individual who is a stockholder, director, employee, officer, agent or representative of RemainCo or SpinCo, in such individual’s capacity as such, shall have any liability in respect of or relating to the covenants or obligations of RemainCo or SpinCo, as applicable, under this Agreement or any Ancillary Agreement or in respect of any certificate delivered with respect hereto or thereto and, to the fullest extent legally permissible, each of RemainCo and SpinCo, for itself and its respective stockholders, directors, employees, officers and Affiliates, waives and agrees not to seek to assert or enforce any such liability that any such Person otherwise might have pursuant to applicable Law.

 

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[INTENTIONALLY LEFT BLANK]

 

64


WHEREFORE, the Parties have signed this Master Separation Agreement effective as of the date first set forth above.

 

THE BABCOCK & WILCOX COMPANY
By:  

/s/ James D. Canafax

Name:   James D. Canafax
Title:   Senior Vice President, General Counsel and Chief Compliance Officer
BABCOCK & WILCOX ENTERPRISES, INC.
By:  

/s/ E. James Ferland

Name:   E. James Ferland
Title:   Chairman and Chief Executive Officer

[SIGNATURE PAGE TO MASTER SEPARATION AGREEMENT]


The company agrees to furnish supplementally a copy of any omitted exhibit or schedule to the Commission upon request.

Exhibit 3.1

RESTATED CERTIFICATE OF INCORPORATION

of

BABCOCK & WILCOX ENTERPRISES, INC.

Babcock & Wilcox Enterprises, Inc. (the “ Corporation ”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “ DGCL ”), hereby adopts this Restated Certificate of Incorporation, which accurately restates and integrates the provisions of the existing Certificate of Incorporation of the Corporation (the “ Certificate of Incorporation ”) and further amends the Certificate of Incorporation as provided herein, and does hereby further certify that:

1. The name of the Corporation is Babcock & Wilcox Enterprises, Inc. The original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on January 13, 2015.

2. The Board of Directors of the Corporation and the sole stockholder of the Corporation have duly adopted this Restated Certificate of Incorporation in accordance with the provisions of Sections 242 and 245 of the DGCL.

3. The Certificate of Incorporation is hereby amended and restated to read in its entirety as follows:

RESTATED CERTIFICATE OF INCORPORATION

FIRST: The name of the Corporation is Babcock & Wilcox Enterprises, Inc.

SECOND: The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle, 19801. The name of the Corporation’s registered agent at that address is The Corporation Trust Company.

THIRD: The purpose of the Corporation is to engage in any lawful business, act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware or any successor statute (the “ DGCL ”).

FOURTH: The aggregate number of shares of capital stock which the Corporation will have authority to issue is 200,000,000 shares of common stock, par value $0.01 per share (“ Common Stock ”), and 20,000,000 shares of preferred stock, par value $0.01 per share (“ Preferred Stock ”). The Corporation may issue shares of any class of its capital stock for such consideration and for such corporate purposes as the Board of Directors of the Corporation (the “ Board of Directors ”) may from time to time determine. Each share of Common Stock shall be entitled to one vote.

The Preferred Stock may be divided into and issued from time to time in one or more series as may be fixed and determined by the Board of Directors. The relative rights and preferences of the Preferred Stock of each series will be such as are stated in any resolution or resolutions adopted by the Board of Directors setting forth the designation of that series and fixing and determining the relative rights and preferences thereof, any such resolution or resolutions being herein called a “ Directors’ Resolution. ” The Board of Directors hereby is


authorized to fix and determine the powers, designations, preferences, and relative, participating, optional or other rights (including, without limitation, voting powers, full or limited, preferential rights to receive dividends or assets on liquidation, rights of conversion or exchange into Common Stock, Preferred Stock of any series or other securities, any right of the Corporation to exchange or convert shares into Common Stock, Preferred Stock of any series or other securities, or redemption provisions or sinking fund provisions) as between series and as between or among series of Preferred Stock and as between the Preferred Stock or any series thereof and the Common Stock, and the qualifications, limitations or restrictions thereof, if any, all as shall be stated in a Directors’ Resolution, and the shares of Preferred Stock or any series thereof may have full or limited voting powers, or be without voting powers, all as shall be stated in a Directors’ Resolution.

Consistent with this Article FOURTH and applicable law, any of the voting powers, designations, preferences, rights and qualifications, limitations or restrictions of any series of Preferred Stock may be dependent on facts ascertainable outside this Certificate of Incorporation (this “ Certificate of Incorporation ”) or any amendment hereto, or outside resolutions of the Board of Directors pursuant to authority expressly vested in it by this Certificate of Incorporation. Except as applicable law or this Certificate of Incorporation otherwise may require, the terms of any series of Preferred Stock may be amended without consent of the holders of any other series of Preferred Stock or of any class of capital stock of the Corporation.

No stockholder will, by reason of the holding of shares of any class or series of capital stock of the Corporation, have a preemptive or preferential right to acquire or subscribe for any shares or securities of any class, whether now or hereafter authorized, which may at any time be issued, sold or offered for sale by the Corporation, unless a Directors’ Resolution specifically so provides with respect to a series of Preferred Stock.

Cumulative voting of shares of any class or series of capital stock having voting rights is prohibited unless specifically provided for in a Directors’ Resolution with respect to a series of Preferred Stock. Furthermore, the Common Stock is not convertible, redeemable or assessable, or entitled to the benefits of any sinking fund.

FIFTH: (a)  Directors . The business and affairs of the Corporation will be managed by or under the direction of the Board of Directors. In addition to the authority and powers conferred on the Board of Directors by the DGCL or by the other provisions of this Certificate of Incorporation, the Board of Directors hereby is authorized and empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject to the provisions of the DGCL, this Certificate of Incorporation and any Bylaws of the Corporation; provided , however , that no Bylaws hereafter adopted, or any amendments thereto, will invalidate any prior act of the Board of Directors that would have been valid if such Bylaws or amendment had not been adopted.

(b) Number, Election, Classification and Terms of Directors . The number of directors which will constitute the whole Board of Directors shall be fixed from time to time exclusively by, and may be increased or decreased from time to time exclusively by, the affirmative vote of at least a majority of the directors then in office (subject to such rights of holders of a series of shares of Preferred Stock to elect one or more directors pursuant to any provisions contained in a

 

2


Directors’ Resolution with respect to such series), but in any event will not be less than three. The directors, other than those who may be elected by the holders of any series of Preferred Stock, will be divided into three classes: Class I, Class II and Class III. Each director will serve for a term ending on the third annual meeting of stockholders of the Corporation following the annual meeting of stockholders at which that director was elected; provided , however , that the directors first designated as Class I directors will serve for a term expiring at the annual meeting of stockholders next following the end of the calendar year 2015, the directors first designated as Class II directors will serve for a term expiring at the annual meeting of stockholders next following the end of the calendar year 2016, and the directors first designated as Class III directors will serve for a term expiring at the annual meeting of stockholders next following the end of the calendar year 2017. Each director will hold office until the annual meeting of stockholders at which that director’s term expires and, the foregoing notwithstanding, each director will serve until his or her successor shall have been duly elected and qualified or until his or her earlier death, resignation or removal.

At each annual election, the directors chosen to succeed those whose terms then expire will be of the same class as the directors they succeed, unless, by reason of any intervening changes in the authorized number of directors, the Board of Directors shall have designated one or more directorships whose term then expires as directorships of another class in order more nearly to achieve equality of number of directors among the classes.

In the event of any change in the authorized number of directors, each director then continuing to serve as such will nevertheless continue as a director of the class of which he or she is a member until the expiration of his or her current term, or his or her prior death, resignation or removal. The Board of Directors will specify the class to which a newly created directorship will be allocated.

Election of directors need not be by written ballot unless the Bylaws of the Corporation so provide.

(c) Removal of Directors . No director of the Corporation may be removed from office as a director by vote or other action of the stockholders or otherwise, except for cause or a Board Determination (as defined below), and then only by the affirmative vote of the holders of at least eighty percent (80%) of the voting power of all then outstanding shares of capital stock of the Corporation generally entitled to vote in the election of directors, voting together as a single class. Except as applicable law otherwise provides and unless the Board of Directors has made a determination that removal is in the best interests of the Corporation (in which case a finding of cause is not required for removal), which determination shall require the affirmative vote of at least eighty percent (80%) of the directors then in office at any meeting of the Board of Directors called for that purpose (a “ Board Determination ”), “cause” for the removal of a director will be deemed to exist only if the director whose removal is proposed: (i) has been convicted, or has been granted immunity to testify in any proceeding in which another has been convicted, of a felony by a court of competent jurisdiction and that conviction is no longer subject to direct appeal; (ii) has been found to have been grossly negligent or guilty of misconduct in the performance of his duties to the Corporation in any matter of substantial importance to the Corporation by (A) the affirmative vote of at least eighty percent (80%) of the directors then in office at any meeting of the Board of Directors called for that purpose or (B) a court of

 

3


competent jurisdiction; or (iii) has been adjudicated by a court of competent jurisdiction to be mentally incompetent, which mental incompetency directly affects his ability to serve as a director of the Corporation. Notwithstanding the foregoing, whenever holders of outstanding shares of one or more series of Preferred Stock are entitled to elect members of the Board of Directors voting separately as a class pursuant to the provisions applicable in the case of arrearages in the payment of dividends or other defaults contained in the Directors’ Resolution providing for the establishment of any series of Preferred Stock, any such director of the Corporation so elected may be removed in accordance with the provisions of that Directors’ Resolution. The foregoing provisions of this Article FIFTH are subject to the terms of any series of Preferred Stock with respect to the directors to be elected solely by the holders of such series of Preferred Stock.

(d) Vacancies . Except as a Directors’ Resolution providing for the establishment of any series of Preferred Stock may provide otherwise, newly created directorships resulting from any increase in the number of directors and any vacancies on the Board of Directors resulting from death, resignation, removal or other cause will be filled by the affirmative vote of at least a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors, or by the sole remaining director. Any director elected in accordance with the preceding sentence will hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until that director’s successor shall have been elected and qualified or until his or her earlier death, resignation or removal. Except as a Directors’ Resolution providing for the establishment of any series of Preferred Stock may provide otherwise with respect to directors elected pursuant to any provisions contained in a Directors’ Resolution with respect to such series, no decrease in the number of directors constituting the Board of Directors will shorten the term of any incumbent director.

(e) Amendment of Bylaws . The Board of Directors shall have the power to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of the Bylaws of the Corporation by the Board of Directors shall require the approval of at least a majority of the directors then in office. The stockholders shall also have the power to adopt, amend or repeal the Bylaws of the Corporation at any annual meeting before which such matter has been properly brought in accordance with the Bylaws of the Corporation, or at any special meeting if notice of the proposed amendment is contained in the notice of said special meeting; provided , however , that, in addition to any vote of the holders of any class or series of capital stock of the Corporation required by law or by this Certificate of Incorporation, the affirmative vote of the holders of at least eighty percent (80%) of the voting power of all then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to adopt, amend or repeal any provision of the Bylaws of the Corporation.

(f) Certain Amendments . Notwithstanding anything in this Certificate of Incorporation or the Bylaws of the Corporation to the contrary, the affirmative vote of the holders of at least 80% of the voting power of all then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or adopt any provision inconsistent with, or to repeal, this Article FIFTH or Article SIXTH.

 

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SIXTH: From and after the first date as of which the Corporation has a class or series of capital stock registered under the Securities Exchange Act of 1934, as amended, except as a Directors’ Resolution may establish with respect to any series of Preferred Stock, any action required or permitted to be taken by the stockholders of the Corporation must be effected at an annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by those stockholders. Except as applicable law requires, or as a Directors’ Resolution may prescribe, special meetings of stockholders of the Corporation may be called only by (i) the Chairman of the Board of Directors or (ii) the Board of Directors pursuant to a resolution at least a majority of the entire Board of Directors approves by an affirmative vote, and no such special meeting may be called by any other person or persons.

SEVENTH: No director of the Corporation shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director; provided , however , that the foregoing provisions will not eliminate or limit the liability of a director (a) for any breach of that director’s duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) under Section 174 of the DGCL, as the same exists or as that provision hereafter may be amended, supplemented or replaced, or (d) for any transactions from which that director derived an improper personal benefit. If the DGCL is amended after the filing of this Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation, in addition to the limitation on personal liability provided herein, will be limited to the fullest extent permitted by that law, as so amended. Any repeal or modification of this Article SEVENTH by the stockholders of the Corporation will be prospective only and will not have any effect on the liability or alleged liability of a director of the Corporation arising out of or related to any event, act or omission that occurred prior to such repeal or modification.

EIGHTH: Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof, or on the application of any receiver or receivers appointed for the Corporation under Section 291 of the DGCL, or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under Section 279 of the DGCL, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as the said court directs. If the majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders, of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as a consequence of that compromise or arrangement, the said compromise or arrangement and the said reorganization will, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation.

NINTH: Unless the Corporation consents in writing (following authorization by the Board of Directors) to the selection of an alternative forum, the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action

 

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asserting a claim of breach of a fiduciary duty owed by any director or officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (c) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation arising pursuant to any provision of the DGCL or this Restated Certificate of Incorporation or Bylaws (as either may be amended from time to time), or (d) any action asserting a claim against the Corporation or any director or officer or other employee of the Corporation governed by the internal affairs doctrine shall be, in the case of each of (a) through (d), a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware). Any person or entity purchasing or otherwise acquiring any interests in shares of capital stock of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article NINTH.

4. This Restated Certificate of Incorporation shall become effective upon filing with the Secretary of State of the State of Delaware.

 

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IN WITNESS WHEREOF, the Corporation has caused this certificate to be executed on June 30, 2015.

 

BABCOCK & WILCOX ENTERPRISES, INC.
By:  

/s/ J. André Hall

  Name:   J. André Hall
  Title:   Senior Vice President, General Counsel
    and Corporate Secretary

 

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Exhibit 3.2

AMENDED AND RESTATED BYLAWS

OF

BABCOCK & WILCOX ENTERPRISES, INC.


TABLE OF CONTENTS

 

         Page  

Article I            STOCKHOLDERS

     1   

Section 1.1

 

Annual Meetings

     1   

Section 1.2

 

Special Meetings

     1   

Section 1.3

 

Notice of Meetings

     1   

Section 1.4

 

Fixing Date for Determination of Stockholders of Record

     2   

Section 1.5

 

List of Stockholders Entitled To Vote

     3   

Section 1.6

 

Adjournments

     3   

Section 1.7

 

Quorum

     3   

Section 1.8

 

Organization

     3   

Section 1.9

 

Voting by Stockholders

     4   

Section 1.10

 

Stockholder Proposals

     4   

Section 1.11

 

Proxies

     7   

Section 1.12

 

Conduct of Meetings

     7   

Article II          BOARD OF DIRECTORS

     8   

Section 2.1

 

Powers, Number, Classification and Vacancies

     8   

Section 2.2

 

Regular Meetings

     9   

Section 2.3

 

Special Meetings

     9   

Section 2.4

 

Telephonic Meetings

     9   

Section 2.5

 

Organization

     9   

Section 2.6

 

Order of Business

     9   

Section 2.7

 

Notice of Meetings

     9   

Section 2.8

 

Quorum; Vote Required for Action

     10   

Section 2.9

 

Board Action by Unanimous Written Consent in Lieu of Meeting

     10   

Section 2.10

 

Nomination of Directors; Qualifications

     10   

Section 2.11

 

Compensation

     13   

Article III        BOARD COMMITTEES

     14   

Section 3.1

 

Board Committees

     14   

Section 3.2

 

Board Committee Rules

     14   

Article IV        OFFICERS

     14   

Section 4.1

 

Designation

     14   

Section 4.2

 

CEO

     15   

Section 4.3

 

Powers and Duties of Other Officers

     15   

Section 4.4

 

Vacancies

     15   

Section 4.5

 

Removal

     15   

Section 4.6

 

Action with Respect to Securities of Other Corporations

     15   

Article V          CAPITAL STOCK

     15   

Section 5.1

 

Uncertificated Shares

     15   

Section 5.2

 

Transfer of Shares

     15   

Section 5.3

 

Ownership of Shares

     16   

Section 5.4

 

Regulations Regarding Shares

     16   

 

-i-


TABLE OF CONTENTS

(continued)

 

         Page  

Article VI        INDEMNIFICATION

     16   

Section 6.1

 

General

     16   

Section 6.2

 

Expenses

     16   

Section 6.3

 

Advances

     16   

Section 6.4

 

Request for Indemnification

     16   

Section 6.5

 

Determination of Entitlement; No Change of Control

     17   

Section 6.6

 

Determination of Entitlement; Change of Control

     17   

Section 6.7

 

Procedures of Independent Counsel

     17   

Section 6.8

 

Independent Counsel Expenses

     18   

Section 6.9

 

Adjudication

     19   

Section 6.10

 

Participation by the Corporation

     19   

Section 6.11

 

Nonexclusivity of Rights

     20   

Section 6.12

 

Insurance and Subrogation

     20   

Section 6.13

 

Severability

     20   

Section 6.14

 

Certain Actions Where Indemnification Is Not Provided

     21   

Section 6.15

 

Definitions

     21   

Section 6.16

 

Notices

     22   

Section 6.17

 

Contractual Rights

     22   

Section 6.18

 

Indemnification of Employees, Agents and Fiduciaries

     22   

Article VII      MISCELLANEOUS

     23   

Section 7.1

 

Fiscal Year

     23   

Section 7.2

 

Seal

     23   

Section 7.3

 

Interested Directors; Quorum

     23   

Section 7.4

 

Form of Records

     23   

Section 7.5

 

Bylaw Amendments

     23   

Section 7.6

 

Notices; Waiver of Notice

     24   

Section 7.7

 

Resignations

     24   

Section 7.8

 

Books, Reports and Records

     24   

Section 7.9

 

Facsimile Signatures

     24   

Section 7.10

 

Certain Definitional Provisions

     25   

Section 7.11

 

Captions

     25   

 

-ii-


AMENDED AND RESTATED

BYLAWS

OF

BABCOCK & WILCOX ENTERPRISES, INC.

EFFECTIVE AS OF JUNE 8, 2015

The Board of Directors of Babcock & Wilcox Enterprises, Inc. (the “ Corporation ”) by resolution has duly adopted these Amended and Restated Bylaws (these “ Bylaws ”) to govern the Corporation’s internal affairs.

ARTICLE I

STOCKHOLDERS

Section 1.1 Annual Meetings . If required by applicable law, the Corporation will hold an annual meeting of the holders of its capital stock (each, a “ Stockholder ”) for the election of directors of the Corporation (each, a “ Director ”) at such date, time and place as the Board of Directors of the Corporation (the “ Board ”) by resolution may designate from time to time. The Corporation may transact any other business, or act on any proposal, at an annual meeting which has properly come before that meeting in accordance with Sections 1.10 or 2.10.

Section 1.2 Special Meetings . Any of the following may call special meetings of Stockholders for any purpose or purposes at any time and designate the date, time and place of any such meeting: (i) the Chairman of the Board (the “ Chairman ”); and (ii) the Board pursuant to a resolution that at least a majority of the total number of Directors approves by an affirmative vote. Except as the restated certificate of incorporation of the Corporation (as amended from time to time and including each certificate of designation, if any, respecting any class or series of preferred stock of the Corporation which has been executed, acknowledged and filed in accordance with applicable law, the “ Certificate of Incorporation ”) or applicable law otherwise provides, no other Person or Persons may call a special meeting of Stockholders. Business transacted at any special meeting of Stockholders shall be limited to the purposes stated in the notice.

Section 1.3 Notice of Meetings . By or at the direction of the Chairman, the chief executive officer of the Corporation (the “ CEO ”) or the secretary of the Corporation (the “ Secretary ”) whenever Stockholders are to take any action at a meeting, the Corporation will give a notice of that meeting to the Stockholders entitled to vote at that meeting which states the place, date, the means of remote communications, if any, by which Stockholders and proxy holders may be deemed to be present in person and vote at the meeting, and hour of that meeting and, in the case of a special meeting, the purpose or purposes for which that meeting is called. Unless the Certificate of Incorporation, these Bylaws or applicable law otherwise provides, the Corporation will give the notice of any meeting of Stockholders not less than ten nor more than 60 days before the date of that meeting. Written notice may be given personally, by mail or by a form of electronic transmission consented to by the Stockholder to whom the notice is given, to the fullest extent allowed under the General Corporation Law of the State of Delaware or any successor statute (the “ DGCL ”). Notice of any meeting of Stockholders need not be given to any Stockholder (a) if waived by such Stockholder in writing in accordance with Section 7.6 or (b) to


whom (i) notice of two consecutive annual meetings, and all notices of meetings or of the taking of action by written consent without a meeting to such person during the period between such two consecutive annual meetings, or (ii) all, and at least two, payments (if sent by first-class mail) of dividends or interest on securities during a 12-month period, in either case (i) or (ii) above, have been mailed addressed to such person at such person’s address as shown on the records of the Corporation and have been returned undeliverable; provided, however, that the exception in (b)(i) shall not be applicable to any notice returned as undeliverable if the notice was given by electronic transmission. If any person to whom notice need not be given in accordance with clause (b) of the immediately preceding sentence shall deliver to the Corporation a written notice setting forth such person’s then current address, the requirement that notice be given to such person shall be reinstated. Attendance at a meeting of the Stockholders shall constitute a waiver of notice of such meeting, except when a Stockholder attends a meeting for the express purpose of objecting (and so expresses such objection at the beginning of the meeting) to the transaction of any business on the ground that the meeting has not been called or convened in accordance with applicable law, the Certificate of Incorporation or these Bylaws.

Section 1.4 Fixing Date for Determination of Stockholders of Record .

(a) Registered Holders as Owners. Unless otherwise provided under Delaware law, the Corporation may regard the person in whose name any shares issued by the Corporation are registered in the stock transfer records of the Corporation at any particular time (including, without limitation, as of a record date fixed pursuant to paragraph (b) of this Section 1.4) as the owner of those shares at that time for purposes of voting those shares, receiving distributions thereon or notices in respect thereof, transferring those shares, exercising rights of dissent with respect to those shares, entering into agreements with respect to those shares, or giving proxies with respect to those shares; and neither the Corporation nor any of its officers, Directors, employees or agents shall be liable for regarding that person as the owner of those shares at that time for any of those purposes.

(b) Record Date. In order that the Corporation may determine the Stockholders entitled to notice of or to vote at any meeting of Stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board by resolution may fix a record date, which record date: (i) must not precede the date on which the Board adopts that resolution; (ii) in the case of a determination of Stockholders entitled to vote at any meeting of Stockholders or adjournment thereof, will, unless applicable law otherwise requires, not be more than 60 nor less than ten days before the date of that meeting; and (iii) in the case of any other action, will not be more than 60 days prior to that other action. If the Board does not fix a record date: (i) the record date for determining Stockholders entitled to notice of or to vote at a meeting of Stockholders will be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived in accordance with Section 7.6 of these Bylaws, at the close of business on the day next preceding the day on which the meeting is held; and (ii) the record date for determining Stockholders for any other purpose will be at the close of business on the day on which the Board adopts the resolution relating thereto. A determination of Stockholders of record entitled to notice of or to vote at a meeting of Stockholders will apply to any adjournment of that meeting; provided, however, that the Board may fix a new record date for the adjourned meeting.

 

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Section 1.5 List of Stockholders Entitled To Vote . The Secretary will prepare and make, at least ten days before each meeting of Stockholders, a list of the Stockholders entitled to vote at that meeting which complies with the requirements of Section 219 of the DGCL as in effect at that time.

Section 1.6 Adjournments . Any meeting of Stockholders, annual or special, may be adjourned from time to time by the Chairman or presiding officer of the meeting or by the Stockholders or their proxies in attendance to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business it might have transacted at the original meeting. If the adjournment is for more than 30 days, or if after the adjournment the Board fixes a new record date for the adjourned meeting, the Corporation will give, in accordance with Section 1.3, notice of the adjourned meeting to each Stockholder of record and entitled to vote at the adjourned meeting.

Section 1.7 Quorum . Except as the Certificate of Incorporation, these Bylaws or applicable law otherwise provides: (i) at each meeting of Stockholders the presence in person or by proxy of the holders of shares of stock having a majority of the votes the holders of all outstanding shares of capital stock of the Corporation entitled to vote at the meeting could cast will be necessary and sufficient to constitute a quorum; and (ii) the holders of capital stock of the Corporation so present and entitled to vote at any duly convened meeting at which the necessary quorum has been ascertained may continue to transact business until that meeting adjourns notwithstanding any withdrawal from that meeting of shares of capital stock counted in determining the existence of that quorum. Any shares subject to “broker non-votes” shall be considered present at the meeting with respect to the determination of a quorum but shall not be considered as votes cast with respect to matters as to which no authority is granted. In the absence of a quorum, the Chairman or presiding officer of the meeting or the Stockholders so present may, by majority vote, adjourn the meeting from time to time in the manner Section 1.6 provides until a quorum attends. Shares of its own capital stock belonging to the Corporation or to another corporation, limited liability company, partnership or other entity (each, an “ Entity ”), if the Corporation, directly or indirectly, holds a majority of the shares entitled to vote in the election of directors (or the equivalent) of that other Entity, will be neither entitled to vote nor counted for quorum purposes; provided, however, that the foregoing will not limit the right of the Corporation to vote shares of capital stock, including but not limited to its own capital stock, it holds in a fiduciary capacity.

Section 1.8 Organization . The Chairman will chair and preside over any meeting of Stockholders at which he or she is present. The Board will designate the chairman and presiding officer over any meeting of Stockholders from which the Chairman is absent. In the absence of such designation by the Board, the chairman of the meeting will be chosen at the meeting. The Secretary will act as secretary of meetings of Stockholders, but in his or her absence from any such meeting the chairman of that meeting may appoint any person to act as secretary of that meeting. The chairman of any meeting of Stockholders will announce at that meeting the date and time of the opening and the closing of the polls for each matter on which the Stockholders will vote at that meeting.

 

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Section 1.9 Voting by Stockholders .

(a) Voting on Matters Other than the Election of Directors. With respect to any matters as to which no other voting requirement is specified by the DGCL, the Certificate of Incorporation or these Bylaws, the affirmative vote required for Stockholder action shall be that of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the matter. Any shares subject to broker non-votes shall not be considered as shares entitled to vote as to matters with respect to which no authority has been granted. In the case of a matter submitted for a vote of the Stockholders as to which a Stockholder approval requirement is applicable under the Stockholder approval policy of any stock exchange or quotation system on which the capital stock of the Corporation is traded or quoted, the requirements (to the extent applicable to the Corporation) of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or any provision of the Internal Revenue Code, in each case for which no higher voting requirement is specified by the DGCL, the Certificate of Incorporation or these Bylaws, the vote required for approval shall be the requisite vote specified in such Stockholder approval policy, Rule 16b-3 or Internal Revenue Code provision, as the case may be (or the highest such requirement if more than one is applicable). For the approval or ratification of the appointment of independent public accountants (if submitted for a vote of the Stockholders), the vote required for approval shall be a majority of the votes cast on the matter. For this purpose, abstentions shall not be considered as votes cast.

(b) Voting in the Election of Directors. Unless otherwise provided in the Certificate of Incorporation, Directors shall be elected by a plurality of the votes cast by the holders of outstanding shares of capital stock of the Corporation entitled to vote in the election of Directors at a meeting of Stockholders at which a quorum is present.

Section 1.10 Stockholder Proposals . (a) At an annual meeting of Stockholders, only such business shall be conducted, and only such proposals shall be acted upon, as shall have been properly brought before such annual meeting. To be properly brought before an annual meeting, business or proposals (other than any nomination of Directors, which is governed by Section 2.10 hereof) must (i) be specified in the notice relating to the meeting (or any supplement thereto) given by or at the direction of the Board in accordance with Section 1.3 hereof or (ii) be properly brought before the meeting by a Stockholder who (A) is a Stockholder of record at the time of the giving of such Stockholder’s notice provided for in this Section 1.10 and on the record date for the determination of Stockholders entitled to vote at such annual meeting, (B) is entitled to vote at the annual meeting and (C) complies with the requirements of this Section 1.10, and must otherwise be proper subjects for Stockholder action and be properly introduced at the annual meeting. Clause (ii) of the immediately preceding sentence shall be the exclusive means for a Stockholder to submit business or proposals (other than matters properly brought under Rule 14a-8 under the Exchange Act, to the extent such rule is applicable to the Corporation, and included in the notice relating to the meeting (or any supplement thereto) given by or at the direction of the Board in accordance with Section 1.3 hereof) before an annual meeting of Stockholders. For a proposal to be properly brought before an annual meeting by a Stockholder pursuant to these provisions, in addition to any other applicable requirements, such

 

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Stockholder must have given timely advance notice thereof in writing to the Secretary. To be timely, such Stockholder’s notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not later than the close of business on the 90th day and not earlier than the close of business on the 120 th day prior to the first anniversary of the annual meeting date of the next preceding annual meeting ; provided, however , that if the scheduled annual meeting date differs from such anniversary date by more than 30 days, notice by such Stockholder, to be timely, must be so delivered or received not earlier than the close of business on the 75th day and not later than the close of business on the later of the 45th day prior to the date of such annual meeting or, if less than 100 days’ prior notice or public disclosure of the scheduled meeting date is given or made, the tenth day following the earlier of the day on which the notice of such meeting was mailed to Stockholders or the day on which such public disclosure was made. In no event shall any adjournment, postponement or deferral of an annual meeting or the announcement thereof commence a new time period for the giving of a Stockholder’s notice as described above.

(a) Any such Stockholder’s notice to the Secretary shall set forth as to each matter such Stockholder proposes to bring before the annual meeting: (i) a description of the proposal desired to be brought before the meeting and the reasons for conducting such business at the meeting, together with the text of the proposal or business (including the text of any resolutions proposed for consideration); (ii) as to such Stockholder proposing such business and the beneficial owner, if any, on whose behalf the proposal is made, (A) the name and address of such Stockholder, as they appear on the Corporation’s books, and of such beneficial owner, if any, and the name and address of any other Stockholders known by such Stockholder to be supporting such business or proposal, (B) (1) the class or series and number of shares of capital stock of the Corporation which are, directly or indirectly, owned beneficially and of record by such Stockholder and such beneficial owner, (2) any option, warrant, convertible security, stock appreciation right or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of capital stock of the Corporation or with a value derived in whole or in part from the price, value or volatility of any class or series of shares of capital stock of the Corporation or any derivative or synthetic arrangement having characteristics of a long position in any class or series of shares of capital stock of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the Corporation or otherwise (a “ Derivative Instrument ”) directly or indirectly owned beneficially by such Stockholder and by such beneficial owner and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of capital stock of the Corporation, (3) any proxy, contract, arrangement, understanding or relationship the effect or intent of which is to increase or decrease the voting power of such Stockholder or beneficial owner with respect to any shares of any security of the Corporation, (4) any pledge by such Stockholder or beneficial owner of any security of the Corporation or any short interest of such Stockholder or beneficial owner in any security of the Corporation (for purposes of this Section 1.10 and Section 2.10, a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (5) any rights to dividends on the shares of capital stock of the Corporation owned beneficially by such Stockholder and by such beneficial owner that are separated or separable from the underlying shares of capital stock of the Corporation, (6) any

 

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proportionate interest in shares of capital stock of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such Stockholder or beneficial owner is a general partner or, directly or indirectly, beneficially owns an interest in a general partner and (7) any performance-related fees (other than an asset-based fee) that such Stockholder or beneficial owner is entitled to based on any increase or decrease in the value of shares of capital stock of the Corporation or Derivative Instruments, if any, as of the date of such notice, including, without limitation, for purposes of clauses (B)(1) through (B)(7) above, any of the foregoing held by members of such Stockholder’s or beneficial owner’s immediate family sharing the same household (which information shall be supplemented by such Stockholder and beneficial owner, if any, not later than ten days after the record date for the meeting to disclose such ownership as of the record date), and (C) any other information relating to such Stockholder and beneficial owner, if any, that would be required to be disclosed in solicitations of proxies for the proposal, or would otherwise be required, in each case pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; (iii) any material interest of such Stockholder and beneficial owner, if any, in such business or proposal; and (iv) a description of all agreements, arrangements and understandings between such Stockholder and beneficial owner, if any, and any other person or persons (including their names) in connection with such business or proposal by such Stockholder.

(b) A Stockholder providing notice of business proposed to be brought before an annual meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 1.10 shall be true and correct as of the record date for the meeting and as of the date that is ten business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received at, the principal executive offices of the Corporation not later than five business days after the record date for the meeting (in the case of the update and supplement required to be made as of the record date), and not later than eight business days prior to the date for the meeting and, if practicable (or, if not practicable, on the first practicable date prior to), any adjournment or postponement thereof (in the case of the update and supplement required to be made as of ten business days prior to the meeting or any adjournment or postponement thereof). In addition, a Stockholder providing notice of business proposed to be brought before an annual meeting shall update and supplement such notice, and deliver such update and supplement to the principal executive offices of the Corporation, promptly following the occurrence of any event that materially changes the information provided or required to be provided in such notice pursuant to this Section 1.10.

(c) The Chairman or, if the Chairman is not presiding, the presiding officer of the meeting of Stockholders shall determine whether the requirements of this Section 1.10 have been met with respect to any Stockholder proposal. If the Chairman or the presiding officer determines that any Stockholder proposal was not made in accordance with the terms of this Section 1.10, he or she shall so declare at the meeting and any such proposal shall not be acted upon at the meeting.

(d) At a special meeting of Stockholders, only such business shall be conducted, and only such proposals shall be acted upon, as shall have been properly brought before such special meeting. To be properly brought before such a special meeting, business or proposals (other than any nomination of Directors, which is governed by Section 2.10 hereof)

 

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must (i) be specified in the notice relating to the meeting (or any supplement thereto) given by or at the direction of the Board of Directors in accordance with Section 1.3 hereof or (ii) constitute matters incident to the conduct of the meeting as the Chairman or the presiding officer of the meeting shall determine to be appropriate.

(e) In addition to the foregoing provisions of this Section 1.10, a Stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder, to the extent such requirements apply to the Corporation, with respect to the matters set forth in this Section 1.10. Nothing in this Section 1.10 shall be deemed to affect any rights of Stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act, to the extent such rule applies to the Corporation.

Section 1.11 Proxies . Each Stockholder entitled to vote at a meeting of Stockholders may authorize another person or persons to act for such Stockholder by proxy. Proxies for use at any meeting of Stockholders shall be filed with the Secretary, or such other officer as the Board may from time to time determine by resolution to act as secretary of the meeting, before or at the time of the meeting. All proxies shall be received and taken charge of and all ballots shall be received and canvassed by the secretary of the meeting, who shall decide all questions relating to the qualification of voters, the validity of the proxies and the acceptance or rejection of votes, unless an inspector or inspectors shall have been appointed by the Chairman or presiding officer of the meeting, in which event such inspector or inspectors shall decide all such questions.

Section 1.12 Conduct of Meetings . The Board may adopt by resolution such rules and regulations for the conduct of meetings of Stockholders as it deems appropriate. Except to the extent inconsistent with those rules and regulations, if any, the Chairman or presiding officer of any meeting of Stockholders will have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of the Chairman or presiding officer, are appropriate for the proper conduct of that meeting. Such rules, regulations or procedures whether adopted by the Board or prescribed by the Chairman or presiding officer of the meeting may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) the determination of when the polls shall open and close for any given matter to be voted on at the meeting; (iii) rules and procedures for maintaining order at the meeting and the safety of those present; (iv) limitations on attendance at or participation in the meeting to Stockholders of record, their duly authorized and constituted proxies or such other persons as the Chairman or presiding officer of the meeting may determine; (v) restrictions on entry to the meeting after the time fixed for the commencement thereof; (vi) limitations on the time allotted to questions or comments by participants; and (vii) policies and procedures with respect to the adjournment of such meetings. Except to the extent the Board or the Chairman or presiding officer of any meeting otherwise prescribes, no rules or parliamentary procedure will govern any meeting of Stockholders.

 

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ARTICLE II

BOARD OF DIRECTORS

Section 2.1 Powers, Number, Classification and Vacancies .

(a) Powers of the Board of Directors. The powers of the Corporation shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed by or under the direction of, the Board. In addition to the authority and powers conferred upon the Board by the DGCL, the Certificate of Incorporation or these Bylaws, the Board is hereby authorized and empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject to the provisions of the DGCL, the Certificate of Incorporation and these Bylaws; provided, however, that no Bylaw of the Corporation hereafter adopted, nor any amendment thereto, shall invalidate any prior act of the Board that would have been valid if such Bylaw or amendment thereto had not been adopted.

(b) Management. Except as otherwise provided by the Certificate of Incorporation or these Bylaws or to the extent prohibited by Delaware law, the Board shall have the right (which, to the extent exercised, shall be exclusive) to establish the rights, powers, duties, rules and procedures that (i) from time to time shall govern the Board, including, without limiting the generality of the foregoing, the vote required for any action by the Board and (ii) from time to time shall affect the directors’ power to manage the business and affairs of the Corporation. No Bylaw of the Corporation shall be adopted by the Stockholders that shall impair or impede the implementation of this Section 2.1(b).

(c) Number of Directors. Within the limits specified in the Certificate of Incorporation, and subject to such rights of holders of shares of one or more outstanding series of preferred stock of the Corporation to elect one or more Directors under circumstances as shall be provided by or pursuant to the Certificate of Incorporation, the number of Directors that shall constitute the whole Board shall be fixed from time to time exclusively by, and may be increased or decreased from time to time exclusively by, the affirmative vote of at least a majority of the Directors then in office.

(d) Classification. As provided in the Certificate of Incorporation, the directors, other than those who may be elected by the holders of any outstanding series of preferred stock of the Corporation, shall be divided into three classes as nearly equal in size as is practicable: Class I, Class II and Class III. At each annual election, the directors chosen to succeed those whose terms then expire shall be of the same class as the directors they succeed, unless, by reason of any intervening changes in the authorized number of directors, the Board shall have designated one or more directorships whose term then expires as directorships of another class in order more nearly to achieve equality of number of directors among the classes. In the event of any change in the authorized number of directors, each director then continuing to serve as such shall nevertheless continue as a director of the class of which he or she is a member until the expiration of his or her current term, or his or her prior death, resignation or removal in accordance with the Certificate of Incorporation and these Bylaws.

(e) Vacancies. Unless otherwise provided by or pursuant to the Certificate of Incorporation, newly created directorships resulting from any increase in the number of Directors

 

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and any vacancies on the Board resulting from death, resignation, removal or other cause in accordance with the Certificate of Incorporation and these Bylaws may be filled only by the affirmative vote of at least a majority of the remaining Directors then in office, even if such remaining Directors constitute less than a quorum of the Board, or by a sole remaining Director. Any person who becomes a Director in accordance with the preceding sentence shall hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until such Director’s successor shall have been duly elected and qualified or until his or her earlier death, resignation or removal. Unless otherwise provided by or pursuant to the Certificate of Incorporation, no decrease in the number of Directors constituting the Board shall shorten the term of any incumbent Director.

Section 2.2 Regular Meetings . The Board will hold its regular meetings at such places within or without the State of Delaware, on such dates and at such times as the Board by resolution may determine from time to time, and any such resolution will constitute due notice to all Directors of the regular meeting or meetings to which it relates. By notice pursuant to Section 2.7, the Chairman or a majority of the Board may change the place, date or time of any regular meeting of the Board.

Section 2.3 Special Meetings . The Board will hold a special meeting at any place within or without the State of Delaware or time whenever the Chairman or a majority of the Board by resolution calls that meeting by notice pursuant to Section 2.7.

Section 2.4 Telephonic Meetings . Members of the Board may hold and participate in any Board meeting by means of conference telephone or other communications equipment that permits all persons participating in the meeting to hear each other, and participation of any Director in a meeting pursuant to this Section 2.4 will constitute the presence in person of that Director at that meeting for purposes of these Bylaws, except in the case of a Director who so participates only for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting has not been called or convened in accordance with applicable law or these Bylaws.

Section 2.5 Organization . The Chairman will chair and preside over meetings of the Board at which he or she is present. A majority of the Directors present at any meeting of the Board from which the Chairman is absent will designate one of their number as chairman over that meeting. The Secretary will act as secretary of meetings of the Board, but in his or her absence from any such meeting the chairman of that meeting may appoint any person to act as secretary of that meeting.

Section 2.6 Order of Business . The Board will transact business at its meetings in such order as the Chairman or the Board by resolution will determine.

Section 2.7 Notice of Meetings . To call a special meeting of the Board, the Chairman or a majority of the Board must give a timely notice to each Director of the time and place of, and the general nature of the business the Board will transact at, all special meetings of the Board. To change the time or place of any regular meeting of the Board, the Chairman or a majority of the Board must give a timely notice to each Director of that change. To be timely, any notice this Section 2.7 requires must be delivered to each Director personally or by mail,

 

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facsimile, e-mail or other communication at least one day before the meeting to which it relates; provided, however, that notice of any meeting of the Board need not be given to any Director who waives the requirement of that notice (whether after that meeting or otherwise) or is present at that meeting.

Section 2.8 Quorum; Vote Required for Action . At all meetings of the Board, the presence in person of a majority of the total number of Directors then in office will constitute a quorum for the transaction of business, and the participation by a Director in any meeting of the Board will constitute that Director’s presence in person at that meeting unless that Director expressly limits that participation to objecting, at the beginning of the meeting, to the transaction of any business at that meeting on the ground that the meeting has not been called or convened in accordance with applicable law or these Bylaws. Except in cases in which the Certificate of Incorporation or these Bylaws otherwise provide, the vote of a majority of the Directors present at a meeting at which a quorum is present will be the act of the Board.

Section 2.9 Board Action by Unanimous Written Consent in Lieu of Meeting . Unless the Certificate of Incorporation or these Bylaws otherwise provides, the Board may, without a meeting, prior notice or a vote, take any action it must or may take at any meeting, if all members of the Board consent thereto in writing or electronic transmission, and the written consents or electronic transmissions are filed with the minutes of proceedings of the Board that the Secretary is to keep.

Section 2.10 Nomination of Directors; Qualifications .

(a) Subject to such rights of holders of shares of one or more outstanding series of preferred stock of the Corporation to elect one or more Directors under circumstances as shall be provided by or pursuant to the Certificate of Incorporation, only persons who are nominated in accordance with the procedures set forth in this Section 2.10 shall be eligible for election as, and to serve as, Directors. Nominations of persons for election to the Board may be made only at a meeting of the Stockholders at which Directors are to be elected, and only (i) by or at the direction of the Board or (ii) (if but only if the Board has determined that directors shall be elected at such meeting) by any Stockholder who is a Stockholder of record at the time of the giving of such Stockholder’s notice provided for in this Section 2.10 and on the record date for the determination of Stockholders entitled to vote at such meeting, who is entitled to vote at such meeting in the election of Directors and who complies with the requirements of this Section 2.10. Clause (ii) of the immediately preceding sentence shall be the exclusive means for a Stockholder to make any nomination of a person or persons for election as a Director at an annual meeting or special meeting. Any such nomination by a Stockholder shall be preceded by timely advance notice in writing to the Secretary pursuant to this Section 2.10.

To be timely with respect to an annual meeting, such Stockholder’s notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not earlier than the close of business on the 120 th day and not later than the close of business on the 90 th day prior to the first anniversary of the annual meeting date of the next preceding annual meeting; provided, however , that (1) if the scheduled annual meeting date differs from such anniversary date by more than 30 days, notice by such Stockholder, to be timely, must be so delivered or received not earlier than the close of business on the 75th day and not later than the

 

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close of business on the later of the 45th day prior to the date of such annual meeting or, if less than 100 days’ prior notice or public disclosure of the scheduled meeting date is given or made, the tenth day following the earlier of the day on which the notice of such meeting was mailed to Stockholders or the day on which such public disclosure was made; and (2) if the number of directors to be elected to the Board at such annual meeting is increased and there is no prior notice or public disclosure by the Corporation naming all of the nominees for director or specifying the size of the increased Board at least 100 days prior to such anniversary date, a Stockholder’s notice required by this Section 2.10 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the principal executive offices of the Corporation not later than the close of business on the tenth day following the earlier of the day on which the notice of such meeting was mailed to Stockholders or the day on which such public disclosure was made. To be timely with respect to a special meeting, such Stockholder’s notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not earlier than the close of business on the 75th day and not later than the close of business on the 45th day prior to the scheduled special meeting date; provided, however , that if less than 100 days’ prior notice or public disclosure of the scheduled meeting date is given or made, notice by such Stockholder, to be timely, must be so delivered or received not later than the close of business on the tenth day following the earlier of the day on which the notice of such meeting was mailed to Stockholders or the day on which such public disclosure was made. In no event shall any adjournment, postponement or deferral of an annual meeting or special meeting or the announcement thereof commence a new time period for the giving of a Stockholder’s notice as described above.

Any such Stockholder’s notice to the Secretary shall set forth (i) as to each person whom such Stockholder proposes to nominate for election or re-election as a Director, (A) the name, age, business address and residence address of such person, (B) the principal occupation or employment of such person, (C) any other information relating to such person that would be required to be disclosed in solicitations of proxies for election of Directors in a contested election, or would otherwise be required, in each case pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder (including, without limitation, the written consent of such person to having such person’s name placed in nomination at the meeting and to serve as a Director if elected), and (D) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such Stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if such Stockholder and such beneficial owner, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant; and (ii) as to such Stockholder giving the notice, the beneficial owner, if any, on whose behalf the nomination is made and the proposed nominee, (A) the name and address of such Stockholder, as they appear on the Corporation’s books, and of such beneficial owner, if any, and the name and address of any other Stockholders known by such Stockholder to be supporting such nomination, (B) (1) the class or series and number of shares of capital stock of the Corporation which are, directly or indirectly, owned beneficially

 

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and of record by such Stockholder, such beneficial owner and such nominee, (2) any Derivative Instrument directly or indirectly owned beneficially by such Stockholder, such beneficial owner and such nominee and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of capital stock of the Corporation, (3) any proxy, contract, arrangement, understanding or relationship the effect or intent of which is to increase or decrease the voting power of such Stockholder, beneficial owner or nominee with respect to any shares of any security of the Corporation, (4) any pledge by such Stockholder, beneficial owner or nominee of any security of the Corporation or any short interest of such Stockholder, beneficial owner or nominee in any security of the Corporation, (5) any rights to dividends on the shares of capital stock of the Corporation owned beneficially by such Stockholder, beneficial owner and nominee that are separated or separable from the underlying shares of capital stock of the Corporation, (6) any proportionate interest in shares of capital stock of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such Stockholder, beneficial owner or nominee is a general partner or, directly or indirectly, beneficially owns an interest in a general partner and (7) any performance-related fees (other than an asset-based fee) that such Stockholder, beneficial owner or nominee is entitled to based on any increase or decrease in the value of shares of capital stock of the Corporation or Derivative Instruments, if any, as of the date of such notice, including, without limitation, for purposes of clauses (B)(1) through (B)(7) above, any of the foregoing held by members of such Stockholder’s, beneficial owner’s or nominee’s immediate family sharing the same household (which information shall be supplemented by such Stockholder, beneficial owner, if any, and nominee not later than ten days after the record date for the meeting to disclose such ownership as of the record date), and (C) any other information relating to such Stockholder, beneficial owner, if any, and nominee that would be required to be disclosed in solicitations of proxies for election of Directors in a contested election, or would otherwise be required, in each case pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Any such Stockholder’s notice to the Secretary shall also include or be accompanied by, with respect to each nominee for election or reelection to the Board, a completed and signed questionnaire, representation and agreement required by Section 2.10(c). The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent Director or that could be material to a reasonable Stockholder’s understanding of the independence, or lack thereof, of such nominee.

(b) A Stockholder providing notice of any nomination proposed to be made at a meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to Section 2.10(a) shall be true and correct as of the record date for the meeting and as of the date that is ten business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received at, the principal executive offices of the Corporation not later than five business days after the record date for the meeting (in the case of the update and supplement required to be made as of the record date), and not later than eight business days prior to the date for the meeting and, if practicable (or, if not practicable, on the first practicable date prior to), any adjournment or postponement thereof (in the case of the update and supplement required to be made as of ten business days prior to the meeting or any adjournment or postponement thereof). In addition, a Stockholder providing notice of any nomination proposed to be made at a meeting shall update and supplement such notice, and deliver such

 

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update and supplement to the principal executive offices of the Corporation promptly following the occurrence of any event that materially changes the information provided or required to be provided in such notice pursuant to this Section 2.10.

(c) To be eligible to be a nominee for election or reelection as a Director, a person must deliver (in accordance with the time periods prescribed for delivery of notice under Section 2.10(a)) to the Secretary at the principal executive offices of the Corporation a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be in the form provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that such person (A) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a Director, will act or vote on any issue or question (a “ Voting Commitment ”) that has not been disclosed to the Corporation or (2) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a Director, with such person’s fiduciary duties under applicable law, (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a Director that has not been disclosed therein, and (C) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a Director, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.

(d) The Chairman or, if he or she is not presiding, the presiding officer of the meeting of Stockholders shall determine whether the requirements of this Section 2.10 have been met with respect to any nomination or purported nomination. If the Chairman or the presiding officer determines that any purported nomination was not made in accordance with the requirements of this Section 2.10, he or she shall so declare at the meeting and the defective nomination shall be disregarded. In addition to the foregoing provisions of this Section 2.10, a Stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder, to the extent such requirements apply to the Corporation, with respect to the matters set forth in this Section 2.10.

(e) No person shall be nominated to stand for election or re-election to the Company’s Board of Directors if such person will have attained the age of 75 prior to the date of election or re-election. Any Director elected or re-elected who attains the age of 75 during a term to which he or she was elected or re-elected shall continue to serve as a Director until the first annual meeting of stockholders immediately following his or her attainment of the age of 75, at which time said Director shall be deemed to have resigned and retired from the Board of Directors.

(f) Directors need not be residents of the State of Delaware or Stockholders.

Section 2.11 Compensation . Unless otherwise restricted by law, the Board shall have the authority to fix the compensation of the Directors. The Directors may be paid their

 

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expenses, if any, of attendance at each meeting of the Board and may be paid a fixed sum for attendance at each meeting of the Board or paid a stated salary or paid other compensation as Director. No such payment shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may also be paid their expenses, if any, of and allowed compensation for attending committee meetings.

ARTICLE III

BOARD COMMITTEES

Section 3.1 Board Committees . (a) The Board may designate one or more Board committees consisting of one or more of the Directors. The Board may designate one or more Directors as alternate members of any Board committee, who may replace any absent or disqualified member at any meeting of that committee. The member or members present at any meeting of any Board committee and not disqualified from voting at that meeting may, whether or not constituting a quorum, unanimously appoint another Director to act at that meeting in the place of any member of that committee who is absent from or disqualified to vote at that meeting.

(b) The Board by resolution may change the membership of any Board committee at any time and fill vacancies on any of those committees. A majority of the members of any Board committee will constitute a quorum for the transaction of business by that committee unless the Board by resolution requires a greater number for that purpose. The Board by resolution may elect a chairman of any Board committee. The election or appointment of any Director to a Board committee will not create any contract rights of that Director, and the Board’s removal of any member of any Board committee will not prejudice any contract rights that member otherwise may have.

(c) Each other Board committee the Board may designate pursuant to Section 3.1(a) will, subject to applicable provisions of law, have and may exercise all the powers and authorities of the Board to the extent the Board resolution designating that committee so provides.

Section 3.2 Board Committee Rules . Unless the Board otherwise provides, each Board committee may make, alter and repeal rules for the conduct of its business. In the absence of those rules, each Board committee will conduct its business in the same manner as the Board conducts its business pursuant to Article II.

ARTICLE IV

OFFICERS

Section 4.1 Designation . The officers of the Corporation will consist of a CEO, president, Secretary, treasurer and such senior or other vice presidents, assistant secretaries, assistant treasurers and other officers as the Board may elect or appoint from time to time. Any number of offices of the Corporation may be held by the same person. The Board shall also elect or appoint from among the directors a person to act as Chairman who shall not be deemed to be an officer of the Corporation unless he or she has otherwise been elected or appointed as such.

 

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Section 4.2 CEO . The CEO will, subject to the control of the Board: (i) have general supervision and control of the affairs, business, operations and properties of the Corporation; (ii) see that all orders and resolutions of the Board are carried into effect; and (iii) have the power to appoint and remove all subordinate officers, employees and agents of the Corporation, except for those the Board elects or appoints. The CEO also will perform such other duties and may exercise such other powers as generally pertain to his or her office or these Bylaws or the Board by resolution assigns to him or her from time to time.

Section 4.3 Powers and Duties of Other Officers . The other officers of the Corporation will have such powers and duties in the management of the Corporation as the Board by resolution may prescribe and, except to the extent so prescribed, as generally pertain to their respective offices, subject to the control of the Board. The Board may require any officer, agent or employee to give security for the faithful performance of his or her duties.

Section 4.4 Vacancies . Whenever any vacancies shall occur in any office by death, resignation, increase in the number of offices of the Corporation, or otherwise, the same shall be filled by the Board, and the officer so elected shall hold office until such officer’s successor is elected or appointed or until his or her earlier death, resignation or removal.

Section 4.5 Removal . Any officer or agent elected or appointed by the Board may be removed by the Board whenever in its judgment the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contract, common law and statutory rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights.

Section 4.6 Action with Respect to Securities of Other Corporations . Unless otherwise directed by the Board, the Chairman, the CEO, the president, any vice president and the treasurer of the Corporation shall each have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of security holders of or with respect to any action of security holders of any other corporation in which the Corporation may hold securities and otherwise to exercise any and all rights and powers which the Corporation may possess by reason of its ownership of securities in such other corporation.

ARTICLE V

CAPITAL STOCK

Section 5.1 Uncertificated Shares . Shares of capital stock of the Corporation will be uncertificated. Ownership of such shares shall be evidenced by book entry notation on the stock transfer records of the Corporation.

Section 5.2 Transfer of Shares . The Corporation may act as its own transfer agent and registrar for shares of its capital stock or use the services of one or more transfer agents and registrars as the Board by resolution may appoint from time to time. Shares shall be transferred on the stock transfer records of the Corporation only upon the written instructions originated by the holders thereof or by their duly authorized attorneys or legal representatives.

 

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Section 5.3 Ownership of Shares . The Corporation will be entitled to treat the holder of record of any share or shares of its capital stock as the holder in fact thereof and, accordingly, will not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it has express or other notice thereof, except as the applicable laws of the State of Delaware otherwise provide.

Section 5.4 Regulations Regarding Shares . The Board will have the power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer and registration or the replacement of shares of capital stock of the Corporation.

ARTICLE VI

INDEMNIFICATION

Section 6.1 General . The Corporation shall, to the fullest extent permitted by applicable law in effect on the date of effectiveness of these Bylaws, and to such greater extent as applicable law may thereafter permit, indemnify and hold each Indemnitee (as this and all other capitalized words used in this Article VI not previously defined in these Bylaws are defined in Section 6.15 hereof) harmless from and against any and all losses, liabilities, costs, claims, damages and, subject to Section 6.2, Expenses arising out of any event or occurrence related to the fact that Indemnitee is or was a Director or an officer of the Corporation or is or was serving in another Corporate Status.

Section 6.2 Expenses . If Indemnitee is, by reason of his or her Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he or she shall be indemnified against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to any Matter in such Proceeding, the Corporation shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or her or on his or her behalf relating to such Matter. The termination of any Matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such Matter. To the extent that the Indemnitee is, by reason of his or her Corporate Status, a witness in any Proceeding, he or she shall be indemnified against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection therewith.

Section 6.3 Advances . In the event of any threatened or pending Proceeding in which Indemnitee is a party or is involved and that may give rise to a right of indemnification under this Article VI, following written request to the Corporation by Indemnitee, the Corporation shall promptly pay to Indemnitee amounts to cover Expenses reasonably incurred by Indemnitee in such Proceeding in advance of its final disposition upon the receipt by the Corporation of (i) a written undertaking executed by or on behalf of Indemnitee providing that Indemnitee will repay the advance if it shall ultimately be determined that Indemnitee is not entitled to be indemnified by the Corporation as provided in this Article VI and (ii) satisfactory evidence as to the amount of such Expenses.

Section 6.4 Request for Indemnification . To obtain indemnification, Indemnitee shall submit to the Secretary a written claim or request. Such written claim or request shall contain sufficient information to reasonably inform the Corporation about the nature and extent of the indemnification or advance sought by Indemnitee. The Secretary shall promptly advise the Board of such request.

 

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Section 6.5 Determination of Entitlement; No Change of Control . If there has been no Change of Control at or before the time the request for indemnification is submitted, Indemnitee’s entitlement to indemnification shall be determined in accordance with Section 145(d) of the DGCL. If entitlement to indemnification is to be determined by Independent Counsel, the Corporation shall furnish notice to Indemnitee, within ten days after receipt of the request for indemnification, specifying the identity and address of Independent Counsel. The Indemnitee may, within 14 days after receipt of such written notice, deliver to the Corporation a written objection to such selection. Such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of Independent Counsel and the objection shall set forth with particularity the factual basis for such assertion. If there is an objection to the selection of Independent Counsel, either the Corporation or Indemnitee may petition the Court for a determination that the objection is without a reasonable basis or for the appointment of Independent Counsel selected by the Court.

Section 6.6 Determination of Entitlement; Change of Control . If there has been a Change of Control at or before the time the request for indemnification is submitted, Indemnitee’s entitlement to indemnification shall be determined in a written opinion by Independent Counsel selected by Indemnitee. Indemnitee shall give the Corporation written notice advising of the identity and address of the Independent Counsel so selected. The Corporation may, within 14 days after receipt of such written notice of selection, deliver to the Indemnitee a written objection to such selection. Indemnitee may, within 14 days after the receipt of such objection from the Corporation, submit the name of another Independent Counsel and the Corporation may, within seven days after receipt of such written notice, deliver to the Indemnitee a written objection to such selection. Any objections referred to in this Section 6.6 may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of Independent Counsel and such objection shall set forth with particularity the factual basis for such assertion. Indemnitee may petition the Court for a determination that the Corporation’s objection to the first or second selection of Independent Counsel is without a reasonable basis or for the appointment of Independent Counsel of a person selected by the Court.

Section 6.7 Procedures of Independent Counsel . If a Change of Control shall have occurred before the request for indemnification is sent by Indemnitee, Indemnitee shall be presumed (except as otherwise expressly provided in this Article VI) to be entitled to indemnification upon submission of a request for indemnification in accordance with Section 6.4 hereof, and thereafter the Corporation shall have the burden of proof to overcome the presumption in reaching a determination contrary to the presumption. The presumption shall be used by Independent Counsel as a basis for a determination of entitlement to indemnification unless the Corporation provides information sufficient to overcome such presumption by clear and convincing evidence or the investigation, review and analysis of Independent Counsel convinces him or her by clear and convincing evidence that the presumption should not apply.

Except in the event that the determination of entitlement to indemnification is to be made by Independent Counsel, if the person or persons empowered under Section 6.5 or 6.6

 

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hereof to determine entitlement to indemnification shall not have made and furnished to Indemnitee in writing a determination within 60 days after receipt by the Corporation of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification unless Indemnitee knowingly misrepresented a material fact in connection with the request for indemnification or such indemnification is prohibited by applicable law. The termination of any Proceeding or of any Matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Article VI) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner that he or she reasonably believed to be in or not opposed to the best interests of the Corporation, or with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his or her conduct was unlawful. A person who acted in good faith and in a manner he or she reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan of the Corporation shall be deemed to have acted in a manner not opposed to the best interests of the Corporation.

For purposes of any determination hereunder, a person shall be deemed to have acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal Proceeding, to have had no reasonable cause to believe his or her conduct was unlawful, if his or her action is based on the records or books of account or other records of the Corporation or another enterprise or on information, opinions, reports or statements presented to him or her or to the Corporation by any of the Corporation’s officers, employees or Directors, or committees of the Board, or by any other person as to matters the person reasonably believes are in such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation or another enterprise in the course of their duties or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The term “another enterprise” as used in this Section 6.7 shall mean any other corporation or any partnership, limited liability company, association, joint venture, trust, employee benefit plan or other enterprise for which such person is or was serving at the request of the Corporation as a director, officer, employee or agent. The provisions of this paragraph shall not be deemed to be exclusive or to limit in any way the circumstances in which an Indemnitee may be deemed to have met the applicable standards of conduct for determining entitlement to rights under this Article.

Section 6.8 Independent Counsel Expenses . The Corporation shall pay any and all reasonable fees and expenses of Independent Counsel incurred acting pursuant to this Article VI and in any Proceeding to which it is a party or witness in respect of its investigation and written report and shall pay all reasonable fees and expenses incident to the procedures in which such Independent Counsel was selected or appointed. No Independent Counsel may serve if a timely objection has been made to his or her selection until a court has determined that such objection is without a reasonable basis.

 

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Section 6.9 Adjudication . In the event that (i) a determination is made pursuant to Section 6.5 or 6.6 hereof that Indemnitee is not entitled to indemnification under this Article VI; (ii) advancement of Expenses is not timely made pursuant to Section 6.3 hereof; (iii) Independent Counsel has not made and delivered a written opinion determining the request for indemnification (a) within 90 days after being appointed by the Court, (b) within 90 days after objections to his or her selection have been overruled by the Court or (c) within 90 days after the time for the Corporation or Indemnitee to object to his or her selection; or (iv) payment of indemnification is not made within five days after a determination of entitlement to indemnification has been made or is deemed to have been made pursuant to Section 6.5, 6.6 or 6.7 hereof, Indemnitee shall be entitled to an adjudication by the Court of his or her entitlement to such indemnification or advancement of Expenses. In the event that a determination shall have been made that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 6.9 shall be conducted in all respects as a de novo trial on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. If a Change of Control shall have occurred, in any judicial proceeding commenced pursuant to this Section 6.9, the Corporation shall have the burden of proving that Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be. If a determination shall have been made or is deemed to have been made that Indemnitee is entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 6.9, or otherwise, unless Indemnitee knowingly misrepresented a material fact in connection with the request for indemnification, or such indemnification is prohibited by law.

The Corporation shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 6.9 that the procedures and presumptions of this Article VI are not valid, binding and enforceable. If the Indemnitee, pursuant to this Section 6.9, seeks a judicial adjudication to enforce his or her rights under, or to recover damages for breach of, this Article VI, and if he or she prevails therein, then Indemnitee shall be entitled to recover from the Corporation, and shall be indemnified by the Corporation against, any and all Expenses actually and reasonably incurred by him or her in such judicial adjudication. If it shall be determined in such judicial adjudication that Indemnitee is entitled to receive part but not all of the indemnification or advancement of Expenses sought, then the Expenses incurred by Indemnitee in connection with such judicial adjudication or arbitration shall be prorated.

Section 6.10 Participation by the Corporation . With respect to any Proceeding: (a) the Corporation will be entitled to participate therein at its own expense; (b) except as otherwise provided below, to the extent that it may wish, the Corporation (jointly with any other indemnifying party similarly notified) will be entitled to assume the defense thereof, with counsel reasonably satisfactory to Indemnitee; and (c) the Corporation shall not be liable to indemnify Indemnitee under this Article VI for any amounts paid in settlement of any action or claim effected without its written consent, which consent shall not be unreasonably withheld. After receipt of notice from the Corporation to Indemnitee of the Corporation’s election to assume the defense thereof, the Corporation will not be liable to Indemnitee under this Article VI for any legal or other expenses subsequently incurred by Indemnitee in connection with the defense thereof other than as otherwise provided below. Indemnitee shall have the right to employ his or her own counsel in such action, suit, proceeding or investigation but the fees and expenses of such counsel incurred after notice from the Corporation of its assumption of the

 

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defense thereof shall be at the expense of Indemnitee unless the employment of counsel by Indemnitee has been authorized by the Corporation, or Indemnitee shall have reasonably concluded that there is a conflict of interest between the Corporation and Indemnitee in the conduct of the defense of such action, or the Corporation shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel employed by Indemnitee shall be subject to indemnification pursuant to the terms of this Article VI. The Corporation shall not be entitled to assume the defense of any Proceeding brought in the name of or on behalf of the Corporation or as to which Indemnitee shall have reasonably concluded that there is a conflict of interest between the Corporation and Indemnitee in the conduct of the defense of such action. The Corporation shall not settle any action or claim in any manner which would impose any limitation or unindemnified penalty on Indemnitee without Indemnitee’s written consent, which consent shall not be unreasonably withheld.

Section 6.11 Nonexclusivity of Rights . The rights of indemnification and advancement of Expenses as provided by this Article VI shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled to under applicable law, the Certificate of Incorporation, these Bylaws, any agreement, a vote of Stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Article VI or any provision hereof shall be effective as to any Indemnitee for acts, events and circumstances that occurred, in whole or in part, before such amendment, alteration or repeal. The provisions of this Article VI shall be binding upon the Corporation, its successors and assigns and shall continue as to an Indemnitee whose Corporate Status has ceased for any reason and shall inure to the benefit of his or her heirs, executors, administrators or personal representatives. Neither the provisions of this Article VI nor those of any agreement to which the Corporation is a party shall be deemed to preclude the indemnification of any person who is not specified in this Article VI as having the right to receive indemnification or is not a party to any such agreement, but whom the Corporation has the power or obligation to indemnify under the provisions of the DGCL.

Section 6.12 Insurance and Subrogation . The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under applicable law.

The Corporation shall not be liable under this Article VI to make any payment of amounts otherwise indemnifiable hereunder if, but only to the extent that, Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

In the event of any payment hereunder, the Corporation shall be subrogated to the extent of such payment to all the rights of recovery of Indemnitee, who shall execute all papers required and take all action reasonably requested by the Corporation to secure such rights, including execution of such documents as are necessary to enable the Corporation to bring suit to enforce such rights.

Section 6.13 Severability . If any provision or provisions of this Article VI shall be held to be invalid, illegal or unenforceable for any reason whatsoever, the validity, legality

 

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and enforceability of the remaining provisions shall not in any way be affected or impaired thereby; and, to the fullest extent possible, the provisions of this Article VI shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

Section 6.14 Certain Actions Where Indemnification Is Not Provided . Notwithstanding any other provision of this Article VI, no person shall be entitled to indemnification or advancement of Expenses under this Article VI with respect to any Proceeding, or any Matter therein, brought or made by such person against the Corporation.

Section 6.15 Definitions . For purposes of this Article VI:

“Change of Control” means a change in control of the Corporation after the date Indemnitee acquired his or her Corporate Status, which shall be deemed to have occurred in any one of the following circumstances occurring after such date: (i) there shall have occurred an event that is or would be required to be reported with respect to the Corporation in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Exchange Act, if the Corporation is or were subject to such reporting requirement; (ii) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) shall have become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing 40% or more of the combined voting power of the Corporation’s then outstanding voting securities without prior approval of at least two-thirds of the members of the Board in office immediately prior to such person’s attaining such percentage interest; (iii) the Corporation is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which members of the Board in office immediately prior to such transaction or event constitute less than a majority of the Board thereafter; or (iv) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board (including, for this purpose, any new director whose election or nomination for election by the Stockholders was approved by a vote of at least two-thirds of the Directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board.

“Corporate Status” describes the status of an individual as a director, officer or other designated legal representative of the Corporation or of any predecessor of the Corporation, or as a director, officer or other designated legal representative of any other corporation, partnership, limited liability company, association, joint venture, trust, employee benefit plan or other enterprise for which an individual is or was serving as a director, officer or other designated legal representative at the request of the Corporation.

“Court” means the Court of Chancery of the State of Delaware or any other court of competent jurisdiction.

“Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding.

 

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“Indemnitee” includes any person who is, or is threatened to be made, a witness in or a party to any Proceeding by reason of his or her Corporate Status.

“Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporate law and neither presently is, nor in the five years previous to his, her or its selection or appointment has been, retained to represent: (i) the Corporation or Indemnitee in any matter material to either such party or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.

“Matter” is a claim, a material issue or a substantial request for relief.

“Proceeding” includes any action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative, except one initiated by an Indemnitee pursuant to Section 6.9 hereof to enforce his or her rights under this Article VI.

Section 6.16 Notices . Promptly after receipt by Indemnitee of notice of the commencement of any Proceeding, Indemnitee shall, if he or she anticipates or contemplates making a claim for Expenses or an advance pursuant to the terms of this Article VI, notify the Corporation of the commencement of such Proceeding; provided, however , that any delay in so notifying the Corporation shall not constitute a waiver or release by Indemnitee of rights hereunder and that any omission by Indemnitee to so notify the Corporation shall not relieve the Corporation from any liability that it may have to Indemnitee otherwise than under this Article VI. Any communication required or permitted to the Corporation shall be addressed to the Secretary and any such communication to Indemnitee shall be addressed to Indemnitee’s address as shown on the Corporation’s records unless he or she specifies otherwise and shall be personally delivered, delivered by U.S. Mail, or delivered by commercial express overnight delivery service. Any such notice shall be effective upon receipt.

Section 6.17 Contractual Rights . The right to be indemnified or to the advancement or reimbursement of Expenses (i) is a contract right based upon good and valuable consideration, pursuant to which Indemnitee may sue as if these provisions were set forth in a separate written contract between Indemnitee and the Corporation, (ii) is and is intended to be retroactive and shall be available as to events occurring prior to the adoption of these provisions and (iii) shall continue after any rescission or restrictive modification of such provisions as to events occurring prior thereto.

Section 6.18 Indemnification of Employees, Agents and Fiduciaries . The Corporation, by adoption of a resolution of the Board of Directors, may indemnify and advance expenses to a person who is an employee, agent or fiduciary of the Corporation including any such person who is or was serving at the request of the Corporation as a director, officer, employee, agent or fiduciary of any other corporation, partnership, joint venture, limited liability company, trust, employee benefit plan or other enterprise to the same extent and subject to the same conditions (or to such lesser extent and/or with such other conditions as the Board of Directors may determine) under which it may indemnify and advance expenses to an Indemnitee under this Article VI.

 

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ARTICLE VII

MISCELLANEOUS

Section 7.1 Fiscal Year . The fiscal year of the Corporation shall end on the 31st day of December of each year or as otherwise provided by a resolution adopted by the Board.

Section 7.2 Seal . The corporate seal will have the name of the Corporation inscribed thereon and will be in such form as the Board by resolution may approve from time to time.

Section 7.3 Interested Directors; Quorum . No contract or transaction between the Corporation and one or more of its Directors or officers, or between the Corporation and any other Entity in which one or more of its Directors or officers are Directors or officers (or hold equivalent offices or positions), or have a financial interest, will be void or voidable solely for this reason, or solely because the Director or officer is present at or participates in the meeting of the Board or Board committee which authorizes the contract or transaction, or solely because his, her or their votes are counted for that purpose, if: (i) the material facts as to his or her relationship or interest and as to the contract or transaction are disclosed or are known to the Board or the Board committee, and the Board or Board committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested Directors, even though the disinterested Directors be less than a quorum; or (ii) the material facts as to the Director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the Stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of those Stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board, a Board committee or the Stockholders. Common or interested Directors may be counted in determining the presence of a quorum at a meeting of the Board or of a Board committee which authorizes the contract or transaction.

Section 7.4 Form of Records . Any records the Corporation maintains in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs or any other information storage device, provided that the records so kept can be converted into clearly legible form within a reasonable time.

Section 7.5 Bylaw Amendments . The Board has the power to adopt, amend and repeal from time to time the Bylaws of the Corporation. Any adoption, amendment or repeal of the Bylaws of the Corporation by the Board shall require the approval of at least a majority of the Directors then in office. The Stockholders shall also have the power to adopt, amend or repeal the Bylaws of the Corporation at any annual meeting before which such matter has been properly brought in accordance with Sections 1.1 and 1.10 hereof, or at any special meeting if notice of the proposed amendment is contained in the notice of said special meeting; provided, however, that, in addition to any vote of the holders of any class or series of capital stock of the Corporation required by law or by the Certificate of Incorporation, the affirmative vote of the holders of at least eighty percent (80%) of the voting power of the then issued and outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to adopt, amend or repeal any provision of the Bylaws of the Corporation.

 

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Section 7.6 Notices; Waiver of Notice . Whenever any notice is required to be given to any Stockholder, Director or member of any Board committee under the provisions of the DGCL, the Certificate of Incorporation or these Bylaws, that notice will be deemed to be sufficient if given (i) by telegraphic, facsimile, electronic mail, cable, wireless transmission or other electronic transmission or (ii) by deposit of the same in the United States mail, with postage paid thereon, addressed to the person entitled thereto at his or her address as it appears in the records of the Corporation, and that notice shall be deemed to have been given on the day of such transmission or mailing, as the case may be.

Whenever any notice is required to be given to any Stockholder or Director under the provisions of the DGCL, the Certificate of Incorporation or these Bylaws, a waiver thereof in writing signed by the person or persons entitled to that notice or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, will be equivalent to the giving of that notice. Attendance of a person at a meeting will constitute a waiver of notice of that meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Stockholders, the Board or any Board committee need be specified in any written waiver of notice or any waiver by electronic transmission unless the Certificate of Incorporation or these Bylaws so require.

Section 7.7 Resignations . Any Director or officer of the Corporation may resign at any time. Any such resignation shall be made in writing and shall take effect at the time specified in that resignation, or, if that resignation does not specify any time, at the time of its receipt by the Chairman, the CEO or the Secretary. The acceptance of a resignation will not be necessary to make it effective, unless that resignation expressly so provides.

Section 7.8 Books, Reports and Records . The Corporation shall keep books and records of account and shall keep minutes of the proceedings of the Stockholders, the Board and each committee of the Board. Each Director and each member of any committee designated by the Board shall, in the performance of his or her duties, be fully protected in relying in good faith on the books of account or other records of the Corporation and on information, opinions, reports or statements presented to him or her or to the Corporation by any of the Corporation’s officers, employees or other Directors, or committees of the Board, or by any other person as to matters the Director or member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or behalf of the Corporation.

Section 7.9 Facsimile Signatures . In addition to the provisions for the use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of the Chairman, any other Director, or any officer or officers of the Corporation may be used whenever and as authorized by the Board.

 

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Section 7.10 Certain Definitional Provisions . (a) When used in these Bylaws, the words “herein,” “hereof” and “hereunder” and words of similar import refer to these Bylaws as a whole and not to any provision of these Bylaws, and the words “Article” and “Section” refer to Articles and Sections of these Bylaws unless otherwise specified.

(b) Whenever the context so requires, the singular number includes the plural and vice versa, and a reference to one gender includes the other gender and the neuter.

(c) The word “including” (and, with correlative meaning, the word “include”) means including, without limiting the generality of any description preceding that word, and the words “shall” and “will” are used interchangeably and have the same meaning.

Section 7.11 Captions . Captions to Articles and Sections of these Bylaws are included for convenience of reference only, and these captions do not constitute a part hereof for any other purpose or in any way affect the meaning or construction of any provision hereof.

 

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Exhibit 10.1

EXECUTION VERSION

TAX SHARING AGREEMENT

by and between

Remainco

and

Spinco

Dated as of

June 8, 2015


TABLE OF CONTENTS

 

     PAGE  

Tax Sharing Agreement

     3   

Recitals

     3   

1. Definitional provisions

     3   

2. Sole tax sharing agreement

     12   

3. Preparation and filing of tax returns; payment of taxes

     13   

4. Indemnification for income taxes and other taxes

     17   

5. Spin-off related matters

     19   

6. Tax contests

     23   

7. Apportionment of tax attributes; carrybacks

     26   

8. Cooperation and exchange of information

     27   

9. Resolution of disputes

     28   

10. Payments

     28   

11. Notices

     29   

12. Designation of affiliate

     29   

13. Miscellaneous

     30   

Appendix A

     33   


TAX SHARING AGREEMENT

This TAX SHARING AGREEMENT (this “ Agreement ”), dated as of June 8, 2015, is made by and between Babcock & Wilcox Company, a Delaware corporation (“ Remainco ”), and Babcock & Wilcox Enterprises, Inc., a Delaware corporation (“Spinco”), a wholly owned subsidiary of Remainco. Remainco and Spinco are sometimes referred to herein individually as a “Party”, and collectively as the “Parties.”

RECITALS

WHEREAS, the Board of Directors of Remainco has determined that it is appropriate and in the best interest of Remainco and its shareholders to effect a reorganization and spin-off (the “Separation”) to separate the Spinco Group (as defined below);

WHEREAS, Remainco and Spinco have entered into a Master Separation Agreement (the “ Separation Agreement ”) providing for the separation of the Spinco Group from the Remainco Group;

WHEREAS, pursuant to the terms of the Separation Agreement, the Parties will take, or cause to be taken, actions (including the transfer of Assets and the assumption of Liabilities) necessary to effect the Separation;

WHEREAS, for U.S. federal income tax purposes, it is intended that the transactions necessary to effect the Separation shall qualify as tax-free transactions under Sections 355(a), 368(a)(1)(D) and/or 351 of the Code (as defined below);

WHEREAS, pursuant to the tax laws of various jurisdictions, the Affiliated Group (as defined below) of which Remainco is the common parent files certain tax returns on a consolidated, combined, unitary or other group basis;

WHEREAS, the Parties hereto wish to provide for the payment of Income Taxes (as defined below) and Other Taxes (as defined below) and entitlement to refunds thereof, allocate responsibility and provide for cooperation in connection with the filing of returns in respect of Income Taxes and Other Taxes, and provide for certain other matters relating to Income Taxes and Other Taxes.

NOW, THEREFORE, in consideration of the premises and the representations, covenants and agreements herein contained and intending to be legally bound hereby, Remainco and Spinco hereby agree as follows:

1. Definitional Provisions.

(a) Definitions . Capitalized terms used but not otherwise defined herein shall have the respective meanings assigned to them in the Separation Agreement. For purposes of this Agreement, the following terms shall have the meanings set forth below:

Actually Realized ” or “ Actually Realizes ” shall mean, for purposes of determining the timing of the incurrence of or reduction in any Spin-Off Tax Liability, Income Tax Liability or Other Tax Liability or the realization of a Refund (or any related Income Tax or Other Tax cost or benefit), whether by receipt or as a credit or other offset to Taxes payable, by a Person in respect of any payment, transaction, occurrence or event, the time at which the amount of Income Taxes or Other Taxes paid by such Person is increased above (or reduced below) the amount of Income Taxes or Other Taxes that such Person would have been required to pay but for such payment, transaction, occurrence or event, or in the case of a Refund the time at which the Refund is actually received.

 

3


Affiliated Group ” shall mean an affiliated group of corporations within the meaning of Code Section 1504(a).

Business Day ” shall mean any day other than a Saturday, a Sunday or a day on which banking institutions located in the state of New York are authorized or obligated by law or executive order to close.

Carryback ” shall mean the carryback of a Tax Attribute (including a net operating loss, a net capital loss or a tax credit) from a Post-Distribution Taxable Period to a Pre-Distribution Taxable Period.

Code ” shall mean the Internal Revenue Code of 1986.

Combined Return ” shall mean a consolidated, combined or unitary Income Tax Return or Other Tax Return that actually includes, by election or otherwise, one or more members of the Remainco Group and one or more members of the Spinco Group.

Distribution Date ” shall mean the date on which the External Spin-Off is completed.

Distribution-Related Proceeding ” shall mean any Proceeding in which the IRS, another Tax Authority or any other party asserts a position that could reasonably be expected to adversely affect the Tax-Free Status of any of the Spin-Off-Related Transactions.

Equity Securities ” shall mean any stock or other securities treated as equity for tax purposes, options, warrants, rights, convertible debt, or any other instrument or security that affords any Person the right, whether conditional or otherwise, to acquire stock or to be paid an amount determined by reference to the value of stock.

External Spin-Off ” shall mean the distribution of Spinco stock by Remainco to its shareholders.

Fifty-Percent or Greater Interest ” shall have the meaning ascribed to such term for purposes of Sections 355(d) and (e) of the Code.

 

4


Final Determination ” (and the correlative term, “ Finally Determined ”) shall mean the final resolution of liability for any Income Tax or Other Tax, which resolution may be for a specific issue or adjustment or for a taxable period, (a) by IRS Form 870, 870-PT or 870-AD (or any successor forms thereto), on the date of acceptance by or on behalf of the taxpayer, or by a comparable form under the laws of a state, local, or foreign taxing jurisdiction, except that a Form 870, 870-PT or 870-AD or comparable form shall not constitute a Final Determination to the extent that it reserves (whether by its terms or by operation of law) the right of the taxpayer to file a claim for Refund or the right of the Tax Authority to assert a further deficiency in respect of such issue or adjustment or for such taxable period (as the case may be); (b) by a decision, judgment, decree, or other order by a court of competent jurisdiction, which has become final and nonappealable; (c) by a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the laws of a state, local, or foreign taxing jurisdiction; (d) by any allowance of a Refund or credit in respect of an overpayment of Income Tax or Other Tax, but only after the expiration of all periods during which such Refund may be recovered (including by way of offset) by the jurisdiction imposing such Income Tax or Other Tax; or (e) by any other final disposition, including by reason of the expiration of the applicable statute of limitations or by mutual agreement of the parties.

Identifiable Cause” shall mean a breach of the representations in Section 5(a) or occurrence of any of the events or actions described in the covenants in Section 5(b), in each case read as applying to both Remainco and Spinco, that results in the Spin-Off-Related Transactions failing to qualify for Tax-Free Status; or similar actions that resulted in the incurrence of Prior Spin-Off Tax Liabilities.

I ncome Tax ” (a) shall mean (i) any federal, state, local or foreign tax, charge, fee, impost, levy or other assessment that is based upon, measured by, or calculated with respect to (A) net income or profits (including, but not limited to, any capital gains, gross receipts, or minimum tax, and any tax on items of tax preference, but not including sales, use, value added, real property gains, real or personal property, transfer or similar taxes), (B) multiple bases (including, but not limited to, corporate franchise, doing business or occupation taxes), if one or more of the bases upon which such tax may be based, by which it may be measured, or with respect to which it may be calculated is described in clause (a)(i)(A) of this definition, or (C) any net worth, franchise or similar tax, in each case together with (ii) any interest and any penalties, fines, additions to tax or additional amounts imposed by any Tax Authority with respect thereto and (b) shall include any transferee, successor or joint or several liability imposed by law or contract in respect of any amount described in clause (a) of this definition.

 

5


Income Tax Benefit ” shall mean, with respect to the effect of any Carryback on the Income Tax Liability of a Filing Party or the Filing Party’s Group for any taxable period, the excess of (a) the hypothetical Income Tax Liability of Filing Party or the Filing Party’s Group for such taxable period, calculated as if such Carryback had not been utilized but with all other facts unchanged over (b) the actual Income Tax Liability of the Filing Party or the Filing Party’s Group for such taxable period, calculated taking into account such Carryback (and treating a Refund as a negative Income Tax Liability, for purposes of such calculation).

Income Tax Liabilities ” shall mean all liabilities for Income Taxes.

Income Tax Return ” shall mean any return, report, filing, statement, questionnaire, declaration or other document required to be filed with a Tax Authority in respect of Income Taxes.

Indemnified Party ” shall mean any Person seeking indemnification pursuant to the provisions of this Agreement.

Indemnifying Party ” shall mean any party hereto from which any Indemnified Party is seeking indemnification pursuant to the provisions of this Agreement.

Internal Spin-Off ” shall mean a distribution of the stock of one member of the Remainco Group (including, for this purpose, the Spinco Group) by another member prior to the External Distribution in order to effect the Separation.

IRS ” shall mean the Internal Revenue Service of the United States.

Losses ” shall mean any and all losses, liabilities, claims, damages, obligations, payments, costs and expenses, matured or unmatured, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, known or unknown (including the costs and expenses of any and all actions, threatened actions, demands, assessments, judgments, settlements and compromises relating thereto and attorneys’ fees and any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any such actions or threatened actions).

Other Tax Liabilities ” shall mean all liabilities for Other Taxes.

Other Tax Return ” shall mean any return, report, filing, statement, questionnaire, declaration or other document required to be filed with a Tax Authority in respect of Other Taxes.

Other Taxes ” shall mean all Taxes other than Income Taxes, whenever created or imposed, and whether of the United States of America or elsewhere, and whether imposed by a local, municipal, governmental, state, federation or other body, and without limiting

 

6


the generality of the foregoing, shall include superfund, sales, use, ad valorem, value added, occupancy, transfer, recording, withholding, payroll, employment, excise, occupation, premium or property taxes (in each case, together with any related interest, penalties and additions to tax, or additional amounts imposed by any Tax Authority thereon).

Payroll Taxes ” shall mean any Taxes imposed by any Tax Authority on an employer in connection with the payment or provision of salaries or benefits and other remuneration to employees or directors, including income tax withholding, social security, unemployment taxes, and premiums for workers’ compensation.

Permitted Transaction ” shall mean any transaction that satisfies the requirements of Section 5(c).

Person ” shall mean any individual, partnership, joint venture, limited liability company, corporation, association, joint stock company, trust, unincorporated organization or similar entity or a governmental authority or any department or agency or other unit thereof.

Post-Distribution Taxable Period ” shall mean a taxable period that begins after the Distribution Date.

Pre-Distribution Taxable Period ” shall mean a taxable period that ends on or before or that includes the Distribution Date. For the avoidance of doubt, a Pre-Distribution Taxable Period includes a Straddle Period.

Prior Spin-Off Tax Liabilities ” shall mean any Income Tax Liabilities of Remainco or its affiliates attributable to the failure of the spin-off of The Babcock & Wilcox Company by McDermott International, Inc. in 2010, and the related transactions undertaken in connection therewith, to quality as tax-free transactions.

Proceeding ” shall mean any audit or other examination, or judicial or administrative proceeding relating to liability for, or Refunds or adjustments with respect to, Income Taxes or Other Taxes.

Refund ” shall mean any refund of Income Taxes or Other Taxes, including any reduction in Income Tax Liabilities or Other Tax Liabilities by means of a credit, offset or otherwise.

Remainco ” shall have the meaning set forth in the first paragraph of this Agreement.

Remainco Adjustment ” shall mean an adjustment of any item of income, gain, loss, deduction, credit or other Tax item attributable to any member of the Remainco Group (including, in the case of any state or local consolidated, combined or unitary income or franchise taxes, a change in one or more apportionment factors of members of the Remainco Group) pursuant to a Final Determination for a Pre-Distribution Taxable Period.

 

7


Remainco Business ” shall mean each trade or business that is actively conducted (within the meaning of Section 355(b) of the Code) by Remainco or any other member of the Remainco Group immediately after the Spin-Off and that is relied upon in the Tax Opinion Documents to satisfy the requirements of Section 355(b) with respect to the Spin-Offs.

Remainco Consolidated Group ” shall mean the affiliated group of corporations (within the meaning of Section 1504(a) of the Code) of which Remainco is the common parent (and any predecessor or successor to such affiliated group).

Remainco Employee ” shall mean, with respect to any particular Payroll Tax Return of any member of the Remainco Group and the Payroll Taxes required to be withheld or paid in connection with such Return, an employee who is required to be included in such Payroll Tax Return.

Remainco Group ” shall mean (a) Remainco and each Person that is a direct or indirect Subsidiary of Remainco (including any Subsidiary of Remainco that is disregarded for U.S. federal Income Tax purposes (or for purposes of any state, local, or foreign tax law)) immediately after the External Spin-Off, (b) any corporation (or other Person) that shall have merged or liquidated into Remainco or any such Subsidiary and (c) any predecessor or successor to any Person otherwise described in this definition.

Remainco Separate Return ” shall mean any Income Tax Return or Other Tax Return required to be filed by any member of the Remainco Group (including any consolidated, combined or unitary return) that does not include any member of the Spinco Group.

Representative ” shall mean with respect to a Person, such Person’s officers, directors, employees and other authorized agents.

Restriction Period ” shall mean the period beginning on the Distribution Date and ending on the day after the second anniversary of the Distribution Date.

Separation Agreement ” shall have the meaning set forth in the recitals to this Agreement.

Spinco ” shall have the meaning set forth in the recitals to this Agreement.

Spinco Adjustment ” shall mean an adjustment of any item of income, gain, loss, deduction, credit or other Tax item attributable to any member of the Spinco Group (including, in the case of any state or local consolidated, combined or unitary income or franchise taxes, a change in one or more apportionment factors of members of the Spinco Group) pursuant to a Final Determination for a Pre-Distribution Taxable Period.

 

8


Spinco Business ” shall mean each trade or business that is actively conducted (within the meaning of Section 355(b) of the Code) by Spinco or any other member of the Spinco Group immediately after the Spin-Off and that is relied upon in the Tax Opinion Documents to satisfy the requirements of Section 355(b) with respect to the Spin-offs.

Spinco Consolidated Group ” shall mean the affiliated group of corporations (within the meaning of Section 1504(a) of the Code) of which Spinco is the common parent, determined immediately after the Spin-Off (and any predecessor or successor to such affiliated group other than the Remainco Consolidated Group).

Spinco Employee ” shall mean, with respect to any particular Payroll Tax Return of any member of the Spinco Group and the Payroll Taxes required to be withheld or paid in connection with such Return, an employee who is required to be included in such Payroll Tax Return.

Spinco Group ” shall mean (a) Spinco and each Person that is a direct or indirect Subsidiary of Spinco (including any subsidiary that is disregarded for U.S. federal Income Tax purposes (or for purposes of any state, local, or foreign tax law)) immediately after the Spin-Offs, (b) any corporation (or other Person) that shall have merged or liquidated into Spinco or any such Subsidiary and (c) any predecessor or successor to any Person otherwise described in this definition.

Spinco Separate Return ” shall mean any Income Tax Return or Other Tax Return required to be filed by any member of the Spinco Group (including any consolidated, combined or unitary return) that does not include any member of the Remainco Group, including any U.S. consolidated federal Income Tax Returns of the Spinco Consolidated Group required to be filed with respect to a Post-Distribution Taxable Period.

Spin-Offs ” shall mean the External and Internal Spin-offs.

Spin-Off-Related Losses ” shall mean:

(a) the Spin-Off Tax Liabilities,

(b) all accounting, legal and other professional fees, and court costs incurred in connection with such Spin-Off Tax Liabilities, and

(c) all costs, expenses, damages and other Losses associated with stockholder litigation or controversies and any amount payable by Remainco or Spinco or their respective Affiliates in respect of the liability of shareholders, whether paid to shareholders or to the IRS or any other Tax Authority in each case, resulting from the failure of any of the Spin-Off-Related Transactions to qualify for Tax-Free Status.

 

9


Spin-Off-Related Transactions ” shall mean the Spin-Offs and other transactions carried out to effect the Separation that are intended to have Tax Free status.

Spin-Off Tax Liabilities ” shall mean, with respect to any Taxing Jurisdiction, the sum of (a) any increase in Income Tax Liability or Other Tax Liability (or reduction in a Refund) incurred as a result of any corporate-level gain or income recognized with respect to the failure of any of the Spin-Off-Related Transactions to qualify for Tax-Free Status under the Income Tax laws of such Taxing Jurisdiction pursuant to any Final Determination, (b) interest on such amounts imposed with respect to such Tax Liability, and (c) any penalties actually paid to such Taxing Jurisdiction that would not have been paid but for the failure of any of the Spin-Off-Related Transactions to qualify for Tax-Free Status in such Taxing Jurisdiction.

Straddle Period ” shall mean any taxable period that begins on or before and ends after the Distribution Date.

Tax ” shall mean all Income Taxes and Other Taxes.

Tax Attribute ” shall mean a net operating loss, net capital loss, overall domestic loss, overall foreign loss, investment credit, minimum tax credit, general business credit, foreign tax credit, excess charitable contribution or other similar item under U.S. federal Income Tax laws or comparable provisions of foreign, state or local tax law.

Tax Authority ” shall mean a governmental authority (foreign or domestic) 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).

Tax Benefit ” shall have the meaning set forth in Section 4(d) of this Agreement.

Tax Counsel ” shall mean tax counsel of recognized national standing that is acceptable to Remainco.

Tax Dispute ” shall have the meaning set forth in Section 10 of this Agreement.

Tax Dispute Arbitrator ” shall have the meaning set forth in Section 10 of this Agreement.

 

10


Tax-Free Status ” shall mean the qualification of each of the Spin-Off-Related Transactions as a transaction in which Remainco, the other members of the Remainco Group, Spinco, and the other members of the Spinco Group recognize no income or gain other than intercompany items taken into account pursuant to the Treasury Regulations promulgated pursuant to Section 1502 of the Code.

Tax Opinion ” shall mean the tax opinion issued by Tax Counsel in connection with the Spin-Off-Related Transactions.

Tax Opinion Documents ” shall mean the Tax Opinion and the information and representations provided by, or on behalf of, Remainco or Spinco to Tax Counsel in connection therewith.

Tax Returns ” shall mean all Income Tax Returns and Other Tax Returns.

Taxing Jurisdiction ” shall mean the United States and every other government or governmental unit having jurisdiction to tax Remainco or Spinco or any of their respective Affiliates.

Underpayment Rate ” shall mean the annual rate of interest described in Section 6621(c) of the Code for large corporate underpayments of Income Tax (or similar provision of state, local or foreign Income Tax law, as applicable), as determined from time to time.

Unqualified Tax Opinion ” shall mean an unqualified opinion of Tax Counsel on which Remainco may rely to the effect that a transaction will not disqualify any of the Spin-Off-Related Transactions from Tax-Free Status, assuming that the Spin-Off-Related Transactions would have qualified for Tax-Free Status if such transaction did not occur.

(b) Interpretation . In this Agreement, unless the context clearly indicates otherwise:

(i) words used in the singular include the plural and words used in the plural include the singular;

(ii) references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and a reference to such Person’s “Affiliates” or “Subsidiaries” shall be deemed to mean such Person’s Subsidiaries following the Distribution;

(iii) any reference to any gender includes the other gender and the neuter;

(iv) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”;

(v) the words “shall” and “will” are used interchangeably and have the same meaning;

(vi) the word “or” shall have the inclusive meaning represented by the phrase “and/or”;

 

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(vii) any reference to any Section means such Section of this Agreement, and references in any Section or definition to any clause mean such clause of such Section or definition;

(viii) the words “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision of this Agreement;

(ix) any reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;

(x) any reference to any law (including statutes and ordinances) means such law (including all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;

(xi) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;

(xii) if there is any conflict between the provisions of the Separation and Distribution Agreement and this Agreement, the provisions of this Agreement shall control with respect to the subject matter hereof;

(xiii) the headings of Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement;

(xiv) any portion of this Agreement obligating a party to take any action or refrain from taking any action, as the case may be, shall mean that such party shall also be obligated to cause its relevant Subsidiaries to take such action or refrain from taking such action, as the case may be; and

(xv) the language of this Agreement shall be deemed to be the language the parties hereto have chosen to express their mutual intent, and no rule of strict construction shall be applied against any party.

2. Sole Tax Sharing Agreement.

This Agreement shall constitute the entire agreement between Remainco and Spinco and their respective Affiliates (including direct or indirect corporate Subsidiaries, controlled partnerships, and controlled limited liability companies) with respect to the subject matters herein. Further, for the avoidance of doubt, this Agreement shall control with respect to any matters set forth herein, including but not limited to preparing and filing Tax Returns (including any amended returns), making any Tax elections, and the control and resolution of disputes with respect to Tax Returns.

 

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3. Preparation and Filing of Tax Returns; Payment of Taxes.

(a) Filing of Tax Returns and Payment of Taxes.

(i) Remainco Combined Income Tax Returns . Remainco shall prepare and file or cause to be prepared and filed all Combined Returns for Income Taxes and shall pay all Income Taxes due with respect to such Income Tax Returns for which Remainco or a member of the Remainco Group is the taxpayer or Tax filer of record. Spinco shall pay to Remainco an amount of the Tax shown as payable on such Tax Return based on the relative contributions of members of the Spinco Group to the items of income, loss, credits, and other specific items included in such Tax Return, calculated in accordance with the principles and methods set forth in Appendix A. On the Distribution Date, Spinco shall be deemed to have paid to Remainco an agreed-upon estimated amount of the Income Taxes that will be payable pursuant to the preceding sentence, calculated in accordance with the historical Tax accounting and allocations methods used by Remainco and the members of its group. Upon the later of (x) 10 Business Days after the filing of the applicable Income Tax Return with respect to Income Taxes pursuant to this Section 3(b)(i), or (y) five Business Days after Remainco provides written notice setting forth the computation of such Income Taxes and Spinco’s allocable share thereof, Spinco shall pay to Remainco any such Income Taxes in excess of the estimated payment previously deemed paid by Spinco or, if the estimated Income Taxes deemed paid by Spinco exceed the amount otherwise payable (including if the amount of Tax shown on such Tax Return is negative; i.e., a Refund is due), Remainco shall refund such excess to Spinco.

(ii) Spinco Combined Income Tax Returns . Spinco shall prepare and file or cause to be prepared and filed all Combined Returns for Income Taxes and shall pay all Income Taxes due with respect to such Income Tax Returns for which Spinco is or a member of the Spinco Group the taxpayer or Tax filer of record. Remainco shall pay to Spinco an amount of the Tax shown as payable on such Tax Return based on the relative contributions of members of the Remainco Group to the items of income, loss, credits, and other specific items included in such Tax Return, calculated in accordance with the principles and methods set forth in Appendix A. On the Distribution Date, Remainco shall be deemed to have paid to Spinco an agreed-upon estimated amount of the Income Taxes that will be be payable pursuant to the preceding sentence, calculated in accordance with the historical Tax accounting and allocations methods used by Spinco and the members of its group. Upon the later of (x) 10 Business Days after the filing of the applicable Income Tax Return with

 

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respect to Income Taxes pursuant to this Section 3(b)(i), or (y) five Business Days after Spinco provides written notice setting forth the computation of such Income Taxes and Remainco’s allocable share thereof, Remainco shall pay to Spinco any such Income Taxes in excess of the estimated payment previously deemed paid by Remainco or, if the estimated Income Taxes deemed paid by Remainco exceed the amount otherwise payable (including if the amount of Income Tax shown on such Tax Return is negative; i.e., a Refund is due), Spinco shall refund such excess to Remainco.

(iii) Other Tax Returns that are Combined Returns . Remainco shall prepare and file or cause to be prepared and filed all Other Tax Returns that are Combined Returns for which Remainco or a member of the Remainco Group is the taxpayer or Tax filer of record, and Spinco shall prepare and file or cause to be prepared and filed all Other Tax Returns that are Combined Returns for which Spinco or a member of the Spinco Group is the taxpayer or Tax filer of record. The Party (Remainco or Spinco) that is responsible for filing the Combined Return (the “Filing Party”) shall pay all Taxes due with respect to such Tax Returns. With respect to each such Combined Return the Party (Remainco or Spinco) that is not the Filing Party but one or more members of whose Group is included in such Tax Return (the “Non-filing Party”) shall pay to the Filing Party an amount equal to the amount of Tax that would have been payable by the members of Non-filing Party’s Group included in such Combined Return if they had been the only entities included in such Combined Return. On the Distribution Date, the Non-filing Party shall be deemed to have have paid to the Filing Party an estimated amount of the Taxes payable pursuant to the preceding sentence. Upon the later of (x) 10 Business Days after the filing of the applicable Tax Return with respect to which such Taxes are due, or (y) five Business Days after the Filing Party provides written notice setting forth the computation of such Taxes, the Non-filing Party shall pay to the Filing Party any such Taxes in excess of the estimated payment previously deemed paid by the Non-filing Party or, if the estimated Taxes paid by the Non-filing Party exceed the amount otherwise payable (including if the Tax shown on such Combined Return is negative; i.e., a Refund is due) , the Filing Party shall refund such excess.

(iv) Payroll Taxes. Remainco and Spinco each shall pay or cause to be paid any Payroll Taxes with respect to Remainco Employees or Spinco Employees, respectively, and shall be responsible for filing any Tax Returns due with respect to such Payroll Taxes.

(v) Remainco Separate Returns . Remainco shall prepare and file or cause to be prepared and filed all Remainco Separate Returns and shall pay, or cause to be paid, and shall be responsible for, any and all Income Taxes or Other Taxes due or required to be paid with respect to any Remainco Separate Return for both Pre-Distribution Taxable Periods and Post-Distribution Taxable Periods

 

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(vi) Spinco Separate Returns . Spinco shall prepare and file or cause to be prepared and filed all Spinco Separate Returns and shall pay, or cause to be paid, and shall be responsible for, any and all Income Taxes or Other Taxes due or required to be paid with respect to any Spinco Separate Return for both Pre-Distribution Taxable Periods and Post-Distribution Taxable Periods.

(vii) Transfer Taxes . Remainco and Spinco jointly and equally shall be responsible for, and shall indemnify the other Party against, all transfer, documentary, sales, use, registration and similar Taxes and related fees incurred as a result of the Spin-Offs Related Transaction. The Party with the legal obligation therefor shall timely prepare and file all Tax Returns as may be required in connection with the payment of such Taxes.

(viii) Amended Returns . Only the Filing Party for any Tax Return, or a member of its Group, shall be entitled to file any Amended Tax Returns with respect to such Tax Return. If any Tax items of a Non-filing Party or its Group that were included in a Combined Tax Return filed by the Filing Party should change, the Filing Party shall file an Amended Tax Return to reflect such change upon approving the request of the Non-filing Party, which approval will not be unreasonably withheld. In the event that an amended Tax Return results in a Refund of Taxes the Party entitled to such Refund shall be the Party that would be entitled to such Refund under Section 3(c)(i) if such Refund had been attributable to a Final Determination, and if such amended Tax Return results in the payment of additional Taxes, such Taxes shall be the responsibility of the Party that would be responsible for such Taxes under Section 3(c)(i) if such Taxes had been attributable to a Remainco Adjustment or a Spinco Adjustment, as the case may be.

(ix) Timing of Payments. Except as otherwise specifically set forth in this Agreement, all payments required to be made by one Party to another Party pursuant to this Section 3 shall be made no later than five days prior to the date such Taxes are due to the relevant Tax Authority or, in the case of any amended Tax Return, within five days after any Taxes or Refund attributable to such Tax Return are Actually Realized.

(b) Preparation of Tax Returns.

(i) In the absence of a controlling change in law, or except as otherwise set forth in this Agreement, all Combined Tax Returns filed after the date of this Agreement shall be prepared on a basis consistent with the elections, accounting methods, conventions and principles of taxation used for the most recent taxable periods for which such Tax Returns and accruals involving similar items have been filed. Except as otherwise provided in this Agreement, all decisions relating to the preparation of such Tax Returns shall be made in the sole discretion of the Filing Party; provided, however, that the Non-filing Party shall have the right to review and comment on such Tax Returns prior to the filing thereof.

 

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(ii) The Filing Party for a Straddle Period Combined Return shall determine the items of income, gain, deduction, loss and credit of each member of the Non-filing Party’s Group that must be included in such Combined Return by closing the books of such members of the Non-filing Party’s Group at the Distribution Date.

(iii) The Non-filing Party shall, and shall cause each other member of its Group that is included in such Combined Return to, prepare and submit at the Filing Party’s request (and in no event later than 60 days after such request), at its own expense, all information that the Filing Party shall reasonably request, in such form as the Filing Party shall reasonably request, to enable the Filing Party to prepare any Combined Income Tax Return or Other Tax Return required to be filed pursuant to this Agreement. The Filing Party shall make any such Tax Return and related workpapers available for review by the Non-filing Party to the extent such Tax Return relates to Taxes for which any member of the Non-filing Party’s Group would reasonably be expected to be liable.

(iv) Except as required by applicable law or as a result of a Final Determination, neither Remainco nor Spinco shall (nor shall either cause or permit any other members of the Remainco Group or Spinco Group, respectively, to) take any position that is either inconsistent with the treatment of the Spin-Off-Related Transactions as having Tax-Free Status (or analogous status under state, local or foreign law) or with respect to a specific item of income, deduction, gain, loss or credit on an Income Tax Return or Other Tax Return, treat such specific item in a manner which is inconsistent with the manner such specific item is reported on an Income Tax Return or Other Tax Return prepared or filed by either Party pursuant to Section 3(b) hereof (including the claiming of a deduction previously claimed on any such Income Tax Return or Other Tax Return).

(c) Tax Adjustments due to a Final Determination.

(i) Combined Returns Tax Adjustment-Allocations. If one or more Remainco Adjustments and/or Spinco Adjustments are made to a Combined Return, the adjustments shall be reflected in the Tax items taken into account in accordance with the principles and methods set forth in Appendix A to determine the adjusted allocation of Tax (or Tax Benefit) among the members of the Groups.

(ii) Payroll Taxes . In the event of any Final Determination that increases the Payroll Taxes payable by any member of the Remainco Group or the Spinco Group for any Pre-Distribution Taxable Period, such Payroll Taxes shall be the responsibility of (A) Remainco if such Payroll Taxes are with respect to a Remainco Employee, or (B) Spinco if such Payroll Taxes are with respect to a Spinco Employee.

 

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4. Indemnification for Income Taxes and Other Taxes.

(a) Indemnification by Remainco. From and after the Distribution Date, Remainco and each other member of the Remainco Group shall jointly and severally indemnify, defend and hold harmless Spinco and each other member of the Spinco Group and each of their respective Representatives from and against (i) all Income Tax Liabilities and Other Tax Liabilities that Remainco or any other member of the Remainco Group is responsible for pursuant to Section 3 and that are not otherwise described in this Section 4(a) or in Section 4(b), (ii) 50% of all Prior Spin-off Tax Liabilities, unless due to Identifiable Cause by either Spinco or Remainco, in which case 100% of such Prior Spin-off Tax Liabilities shall be payable by the Party that caused such Liability; (iii) 60% of all Spin-Off-Related Losses that are not due to Identifiable Cause; and (iv) all Spin-Off Related Losses that are not described in Section 4(a) (iii) or 4(b)(iii).

(b) Indemnification by Spinco. From and after the Distribution Date, Spinco and each other member of the Spinco Group shall jointly and severally indemnify, defend and hold harmless Remainco and each other member of the Remainco Group and each of their respective Representatives from and against (i) all Income Tax Liabilities and Other Tax Liabilities that Spinco or any other member of the Spinco Group is responsible for under Section 3, (ii) 50% of all Prior Spin-off Tax Liabilities, unless due to Identifiable Cause by Remainco or Spinco, in which case 100% of such Prior Spin-off Tax Liabilities shall be payable by the Party that caused such Liability; (iii) 40% of all Spin-Off-Related Losses that are not due to Identifiable Cause; and (iv) all Spin-Off-Related Losses for which Spinco is responsible under Section 5.

(c) Timing of Indemnification Payments. Any payment with respect to any indemnification obligation pursuant to this Section 4 shall be made by the Indemnifying Party promptly, but, in any event, no later than:

(i) in the case of an indemnification obligation with respect to any Income Tax Liabilities or Other Tax Liabilities, the later of (A) five Business Days after the Indemnified Party notifies the Indemnifying Party and (B) five Business Days prior to the date the Indemnified Party is required to make a payment of taxes, interest, or penalties to the applicable Tax Authority (including a payment with respect to an assessment of a tax deficiency by any Taxing Jurisdiction or a payment made in settlement of an asserted tax deficiency) or realizes a reduced Refund; and

(ii) in the case of any payment or indemnification of any Losses not described in Section 4(c)(i) (including, but not limited to, any Losses described in the definition of Spin-Off-Related Losses), the later of (A) five Business Days after the Indemnified Party notifies the Indemnifying Party and (B) five Business Days prior to the date the Indemnified Party makes a payment thereof.

 

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(d) Tax Benefits .

(i) Indemnified Tax Adjustments . If an adjustment or resulting indemnification obligation under Section 4 results in increased deductions, losses, or credits, or decreases in income, gains or recapture of Tax credits (“Tax Benefits”) to any member of the Indemnified Party’s Group which would not be allowable but for the indemnification obligation (or the adjustment giving rise to such indemnification obligation); then the Indemnified Party shall pay the Indemnifying Party the amount by which such Tax Benefit actually reduces, in cash, the amount of Tax that the Indemnified Party or any other member of its Group would have been required to pay (or increases, in cash, the amount of a Refund to which the Indemnified Party or any other member of the its Group would have been entitled) but for such indemnification obligation (or adjustment giving rise to such indemnification obligation), in accordance with Appendix A. The Indemnified Party shall pay the Indemnifying Party for such Tax Benefit no later than five Business Days after such Tax Benefit is Actually Realized.

(ii) Other Tax Adjustments — Pre-distribution Taxable Periods . If an adjustment resulting in increased Tax liability to one Party also results in a corresponding adjustment resulting in a Tax Benefit to the other Party, which would not be allowable but for such adjustment, then the Party realizing the Tax Benefit shall pay the other Party the amount by which such Tax Benefit actually reduces, in cash, the amount of Tax that such Party would have been required to pay (or increases, in cash, the amount of a Refund which such Party or any member of its Group would have been entitled) but for such Tax Benefit ( provided that the amount of such Tax Benefit payable under this section 4(d)(ii) shall not exceed the amount of the increased Tax liability of the other Party); in accordance with Appendix A. The Party realizing the Tax Benefit shall pay the other Party for such Tax Benefit no later than five Business Days after such Tax Benefit is Actually Realized.

(iii) Employee Compensation — Post-distribution Taxable Periods . With respect to the Remainco Equity Compensation Awards and Spinco Equity Compensation Awards (each as defined in the Employee Matters Agreement) held by Remainco Employees, Remainco or the appropriate member of the Remainco Group shall claim any federal, state and/or local tax deductions after the Distribution Date, and no member of the Spinco Group shall claim any such deductions. With respect to the Remainco Equity Compensation Awards and Spinco Equity Compensation Awards held by Spinco Employees, Spinco or the

 

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appropriate member of the Spinco Group shall claim any federal, state and/or local tax deductions after the Distribution Date, and no member of the Remainco Group shall claim any such deductions. If either Remainco or Spinco determines in its reasonable judgment that there is a substantial likelihhod that a tax deduction that was assigned to the Remainco Group or the Spinco Group pursuant to this Section 4(d)(iii) will instead be available only to the other party (whether as a result of a determination by the Internal Revenue Service or another tax authority, a change in the Code or the regulations or guidance thereunder, or otherwise), it shall notify the other party and both parties will negotiate in good faith to resolve the issue in accordance with the following principle: the party entitled to the deduction shall pay to the other party an amount that places the other party in a financial position equivalent to the financial position the party would have been in had the party received the deduction as intended under this Section 4(d)(iii). Such amount shall be paid within 5 days after filing the last tax return necessary to make the determination described in the preceding sentence.

5. Spin-Off Related Matters.

(a) Representations.

(i) Tax Opinion Documents. Remainco and Spinco each hereby represents and warrants to the other that it has examined the Tax Opinion Documents (including the representations to the extent that they relate to the plans, proposals, intentions, and policies of itself, its Subsidiaries, its Business, or its Group), and to the extent in reference to itself, its Subsidiaries, its Business, or its Group, the facts presented and the representations made therein are true, correct and complete.

(ii) Tax-Free Status. Remainco and Spinco each hereby represents and warrants to the other that neither itself nor any other member of its Group has a plan or intention to take any action, or fail to take any action, or knows of any circumstance, that could reasonably be expected to (A) cause any of the Spin-Off-Related Transactions not to have Tax-Free Status or (B) cause any representation or factual statement made in this Agreement, the Separation and Distribution Agreement or the Tax Opinion Documents to be untrue in a manner that would have an adverse effect on the Tax-Free Status of any of the Spin-Off-Related Transactions.

(iii) Plan or Series of Related Transactions. Spinco hereby represents and warrants that, to the best knowledge of Spinco, none of the Spin-Off-Related Transactions are part of a plan (or series of related transactions) pursuant to which a Person will acquire stock representing a Fifty-Percent or Greater Interest in Spinco or any successor to Spinco.

 

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(b) Covenants.

(i) Actions Consistent with Representations and Covenants . Neither Remainco nor Spinco shall take any action or permit any other member of the Remainco Group or the Spinco Group, respectively, to take any action, or shall fail to take any action or permit any other member of the Remainco Group or the Spinco Group, respectively, to fail to take any action, where such action or failure to act would be inconsistent with or cause to be untrue any material information, covenant or representation in this Agreement, the Master Separation Agreement or the Tax Opinion Documents.

(ii) Preservation of Tax-Free Status . Spinco shall not take any action (including any cessation, transfer or disposition of all or any portion of any Spinco Business, payment of extraordinary dividends, acquisitions or issuances of stock or entering into any agreement, understanding, arrangement or substantial negotiations regarding any such actions) or permit any other member of the Spinco Group to take any such action, or fail to take any such action or permit any other member of the Spinco Group to fail to take any such action, in each case , unless such action or failure to act would not cause any of the Spin-Off-Related Transactions to fail to have Tax-Free Status or could not require Remainco or Spinco to reflect a liability or reserve with respect to any of the Spin-Off-Related Transactions in its financial statements

(iii) Spinco Business Continuation . Until the first day after the Restriction Period, none of Spinco or any member of the Spinco Group shall engage in any transaction (including any cessation, transfer or disposition of all or any portion of any Spinco Business) that would result in Spinco or its “separate affiliated group” (within the meaning of Section 355(b) of the Code) ceasing to be engaged in any Spinco Business for purposes of Section 355(b).

(iv) Sales, Issuances and Redemptions of Equity Securities. Until the first day after the Restriction Period, none of Spinco or any other member of the Spinco Group shall, or shall agree to, sell or otherwise issue to any Person, or redeem or otherwise acquire from any Person, any Equity Securities of Spinco or any other member of the Spinco Group; provided, however, that Spinco may issue such Equity Securities to the extent such issuances satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulation Section 1.355-7(d).

(v) Tender Offer; Other Business Transactions. Until the first day after the Restriction Period, none of Spinco or any other member of the Spinco Group shall (A) solicit any Person to make a tender offer for, or otherwise acquire or sell, the Equity Securities of Spinco, (B) participate in or support any unsolicited tender offer for, or other acquisition, issuance or disposition of, the Equity Securities of Spinco or (C) approve or otherwise permit any proposed business combination or any transaction which, in the case of clauses (A) or (B), individually or in the aggregate, together with any transaction

 

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occurring within the four-year period beginning on the date which is two years before the Distribution Date and any other transaction which is part of a plan or series of related transactions (within the meaning of Section 355(e) of the Code) that includes the Spin-Off, could result in one or more Persons acquiring (except for acquisitions that otherwise satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulation Section 1.355-7(d)) directly or indirectly stock representing a 40% or greater interest, by vote or value, in Spinco (or any successor thereto).

(vi) Dispositions of Assets. Until the first day after the Restriction Period none of Spinco or any other member of the Spinco Group shall sell, transfer or dispose of, or agree to sell, transfer or dispose of, more than 50 percent of the gross assets of any Spinco Business (such percentages to be measured by fair market values on the Distribution Date) or transfer any assets of the Spinco Group in a transaction described in Section 351 of the Code (other than a transfer to a corporation that is a member of Spinco’s “separate affiliated group” within the meaning of Section 355(b) of the Code). The foregoing sentence shall not apply to sales, transfers, or dispositions of inventory in the ordinary course of business.

(vii) Liquidations, Mergers, Reorganizations. Until the first day after the Restriction Period, neither Spinco nor any of its Subsidiaries shall, or shall agree to, voluntarily dissolve or liquidate or engage in any transaction involving a merger, consolidation or other reorganization in which stock of Spinco or any of its Subsidiaries is acquired by a person other than Spinco or one of its Subsidiaries; provided, however, that mergers of direct or indirect wholly-owned Subsidiaries of Spinco solely with and into Spinco or with other direct or indirect wholly-owned Subsidiaries of Spinco, and liquidations of Spinco’s Subsidiaries are not subject to this Section 5(b)(vi) to the extent not inconsistent with the Tax-Free Status of the Spin-Off-Related Transactions.

(c) Permitted Transactions. Notwithstanding the restrictions otherwise imposed by Sections 5(b)(iii) through 5(b)(vii), during the Restriction Period, Spinco or members of the Spinco Group may (i) engage in a transaction or transactions that would otherwise breach any of the covenants set forth in Sections 5(b)(iii) through (vii) if and only if such transaction would not violate Section 5(b)(i) or Section 5(b)(ii) and prior to entering into any agreement contemplating such a transaction: (X) Spinco shall provide Remainco with an Unqualified Tax Opinion in form and substance satisfactory to Remainco in its reasonable discretion (Y) Spinco shall request that Remainco obtain a private letter ruling from the IRS to the effect that such transaction will not affect the Tax-Free Status of any of the Spin-Off-Related Transactions and Remainco shall have received such a private letter, in form and substance reasonably satisfactory to Remainco, or (Z) Remainco in its sole and absolute discretion shall have waived in writing the requirement to obtain such Unqualified Tax Opinion or private letter ruling.

 

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(d) Liability of Spinco for Undertaking Certain Actions. Notwithstanding anything in this Agreement to the contrary, Spinco and each other member of the Spinco Group shall be responsible for any and all Spin-Off-Related Losses that are attributable to, or result from:

(i) any act or failure to act by Spinco or any other member of the Spinco Group, which act or failure to act breaches any of the covenants described in Section 5(b)(i) through 5(b)(vii) of this Agreement (without regard to the exceptions or provisos set forth in such provisions), expressly including, for this purpose, any Permitted Transaction and any act or failure to act that breaches Section 5(b)(i) or 5(b)(ii), regardless of whether such act or failure to act is permitted by Section 5(b)(iii) through 5(b)(vii);

(ii) any acquisition of Equity Securities of Spinco or any other member of the Spinco Group by any Person or Persons (including as a result of an issuance of Spinco Equity Securities or a merger of another entity with and into Spinco or any other member of the Spinco Group) or any acquisition of assets of Spinco or any other member of the Spinco Group (including as a result of a merger) by any Person or Persons; and

(iii) Tax Counsel withdrawing all or any portion of the Tax Opinion issued to Remainco in connection with the Spin-Off-Related Transactions because of a breach by Spinco or any other member of the Spinco Group of a representation made in this Agreement (or made in connection with the Tax Opinion.).

(e) Cooperation.

(i) Remainco and Spinco shall reasonably cooperate with each other in connection with any request by either for an Unqualified Tax Opinion or private letter ruling from the IRS with respect to any proposed action described in Section 5(b) (for this purpose, read as if Section 5(b) applied to both Remainco and Spinco).

(ii) Until the first day after the Restriction Period, Spinco will provide adequate advance notice to Remainco in accordance with the terms of Section 5(e)(iii) of any action described in Sections 5(b)(i) through 5(b)(vii) within a period of time sufficient to enable Remainco to seek injunctive relief as contemplated by Section 5(f).

(iii) Each notice required by Section 5(e)(ii) shall set forth the terms and conditions of any such proposed transaction, including (A) the nature of any related action proposed to be taken by the board of directors of Spinco, (B) the

 

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approximate number of Equity Securities (and their voting and economic rights) of Spinco or any other member of the Spinco Group (if any) proposed to be sold or otherwise issued, (C) the approximate value of Spinco’s assets (or assets of any other member of the Spinco Group) proposed to be transferred, and (D) the proposed timetable for such transaction, all with sufficient particularity to enable Remainco to seek injunctive relief pursuant to Section 5(f). Promptly, but in any event within 30 days after Remainco receives such written notice from Spinco, Remainco shall notify Spinco in writing of Remainco’s decision to seek such injunctive relief.

(f) Enforcement. The parties hereto acknowledge that irreparable harm would occur in the event that any of the provisions of this Section 5 were not performed in accordance with their specific terms or were otherwise breached. The parties hereto agree that, in order to preserve the Tax-Free Status of the Spin-Off-Related Transactions, injunctive relief is appropriate to prevent any violation of the foregoing covenants; provided, however, that injunctive relief shall not be the exclusive legal or equitable remedy for any such violation.

6. Tax Contests.

(a) Notification. Each of Remainco and Spinco shall notify the other party in writing of any demand, claim or notice of the commencement of an audit received by such Party from any Tax Authority or other Person with respect to any Income Taxes or Other Taxes of Remainco or any other member of the Remainco Group, or Spinco or any other member of the Spinco Group, respectively, for which a member of the Spinco Group or the Remainco Group, respectively, may be responsible pursuant to this Agreement within ten (10) Business Days of receipt; provided, however, that in the case of any demand, claim or notice of the commencement of an audit that is reasonably expected to give rise to a Distribution-Related Proceeding, regardless of whether Spinco or Remainco may be responsible for any resulting Taxes, Remainco or Spinco, as the case may be, shall provide written notice to the other party no later than ten (10) Business Days after Remainco or Spinco receives any written notice of such a demand, claim or notice of commencement of an audit from the IRS or other Tax Authority. Each of Remainco and Spinco shall include with such notice a true, correct and complete copy of any written communication, and an accurate and complete written summary of any oral communication, received by Remainco or any other member of the Remainco Group, or Spinco or any other member of the Spinco Group, respectively. The failure of Remainco or Spinco timely to provide such notice in accordance with the first sentence of this Section 6(a) shall not relieve Spinco or Remainco, respectively, of any obligation to pay such Income Tax Liability or Other Tax Liability or indemnify Remainco and the other members of the Remainco Group, or Spinco and the other members of the Spinco Group, respectively, and their respective Representatives therefor, except to the extent that the failure timely to provide such notice actually prejudices the ability of Spinco or Remainco to contest such Income Tax Liability or Other Tax Liability or increases the amount of such Income Tax Liability or Other Tax Liability.

 

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(b) Representation with Respect to Tax Disputes. (i) Remainco (or such other member of the Remainco Group as Remainco may designate) shall have the sole right to represent the interests of the members of the Remainco Group and the members of the Spinco Group and to employ counsel of its choice in any Proceeding relating to (y) any U.S. consolidated federal Income Tax Returns of the Remainco Consolidated Group, (y) any Combined Returns for which Remainco or a member of the Remainco Group is the Filing Party, and (z) any Remainco Separate Returns. Remainco may affirmatively elect, in writing and at its sole and absolute discretion, not to assert control of a Proceeding described in clause (y) of the immediately preceding sentence, in which case Spinco shall have the right to control such Proceeding and Remainco shall have the right to participate therein at its own cost; provided, however, that Spinco shall not have the right to settle any such Proceeding without the prior written consent of Remainco (which shall not be unreasonably withheld). Remainco shall bear all expenses relating to any Proceeding referred to in this Section 6(b)(ii), except that, with respect to a Proceeding described in Section 6(b)(i)(y) or Section 6(b)(ii)(x), expenses shall be borne by Remainco and Spinco to the extent such expenses are attributable to Remainco Adjustments or Spinco Adjustments, respectively; provided, however, that to the extent such expenses cannot reasonably be attributed to Remainco Adjustments or Spinco Adjustments, such expenses shall be borne equally by Remainco and Spinco.

(ii) Spinco (or such other member of the Spinco Group as Spinco may designate) shall have the sole right to represent the interests of the members of the Spinco Group and to employ counsel of its choice at its expense in any Proceeding relating to (x) any Combined Returns for which Spinco or a member of the Spinco Group is the Filing Party and (y) any Spinco Separate Returns. Spinco may affirmatively elect, in writing and at its sole and absolute discretion, not to assert control of a Proceeding described in clause (x) of the immediately preceding sentence, in which case Remainco shall have the right to control such Proceeding and Spinco shall have the right to participate therein at its own cost; provided, however, that Remainco shall not have the right to settle any such Proceeding without the prior written consent of Spinco (which shall not be unreasonably withheld). Spinco shall bear all expenses relating to any Proceeding referred to in this Section 6(b)(ii) except that with respect to a Proceeding described in Section 6(b)(i)(y) or Section 6(b)(ii)(x), expenses shall be borne by Spinco and Remainco to the extent such expenses are attributable to Spinco Adjustments or Remainco Adjustments, respectively; provided, however, that to the extent such expenses cannot reasonably be attributed to Spinco Adjustments or Remainco Adjustments, such expenses shall be borne equally by Spinco and Remainco.

 

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(c) Power of Attorney. Each member of the Spinco Group shall execute and deliver to Remainco (or such other member of the Remainco Group as Remainco may designate) any power of attorney or other document reasonably requested by Remainco (or such designee) in connection with any Proceeding described in Section 6(b)(i). Each member of the Remainco Group shall execute and deliver to Spinco (or such other member of the Spinco Group and Spinco may designate) any power of attorney or other document reasonably requested by Spinco (as such designee) in connection with any Proceeding described in Section 6(b)(ii).

(d) Conduct of Proceedings .

(i) In the event of any Distribution-Related Proceeding or Proceeding relating to a Tax liability as a result of which Spinco could reasonably be expected to become liable for Tax or any Spin-Off-Related Losses and with respect to which Remainco has the right to represent the interests of the Spinco Group pursuant to Section 6(b)(i) above, (A) Remainco shall consult with Spinco reasonably in advance of taking any significant action in connection with such Proceeding, (B) Remainco shall consult with Spinco and offer Spinco a reasonable opportunity to comment before submitting any written materials prepared or furnished in connection with such Proceeding, (C) Remainco shall defend such Proceeding diligently and in good faith as if it were the only party in interest in connection with such Proceeding, (D) Spinco shall be entitled to participate in such Proceeding and receive copies of any written materials relating to such Proceeding received from the relevant Tax Authority, and (E) Remainco shall not settle, compromise or abandon any such Proceeding without obtaining the prior written consent of Spinco, which consent shall not be unreasonably withheld.

(ii) In the event of any Distribution-Related Proceeding or Proceeding relating to a Tax liability as a result of which Remainco could reasonably be expected to become liable for Tax or any Spin-Off-Related Losses and with respect to which Spinco has the right to represent the interests of the Remainco Group pursuant to Section 6(b)(ii) above, (A) Spinco shall consult with Remainco reasonably in advance of taking any significant action in connection with such Proceeding, (B) Spinco shall consult with Remainco and offer Remainco a reasonable opportunity to comment before submitting any written materials prepared or furnished in connection with such Proceeding, (C) Spinco shall defend such Proceeding diligently and in good faith as if it were the only party in interest in connection with such Proceeding, (D) Remainco shall be entitled to participate in such Proceeding and receive copies of any written materials relating to such Proceeding received from the relevant Tax Authority, and (E) Spinco shall not settle, compromise or abandon any such Proceeding without obtaining the prior written consent of Remainco, which consent shall not be unreasonably withheld.

 

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7. Apportionment of Tax Attributes; Carrybacks.

(a) Apportionment of Tax Attributes.

(i) If the Remainco Consolidated Group has a Tax Attribute, the portion, if any, of such Tax Attribute apportioned by Remainco to Spinco or any other member of the Spinco Consolidated Group and treated as a carryover to the first Post-Distribution Taxable Period of Spinco (or such member) shall be determined in accordance with Treasury Regulation Sections 1.1502-9T, 1.1502-21, 1.1502-21T, 1.1502-22, 1.1502-79 and, if applicable, l.1502-79A.

(ii) Tax Attributes other than those allocated under Section 7(a)(i) with respect to consolidated, combined or unitary state, local or foreign Income Tax, in each case, arising in respect of a Combined Return shall be apportioned by the Filing Party to the Non-Filing Party or any other member of the Non-filing Party’s Group, to the extent required under applicable law.

(iii) The amount of earnings and profits to be apportioned to Spinco or any other member of the Spinco Group shall be determined in accordance with applicable law.

(iv) Except as otherwise required by a Final Determination, no member of the Non-filing Party’s Group shall take any position (whether on a Tax Return or otherwise) that is inconsistent with the apportionment by the Filing Party in Section 7(a).

(b) Carrybacks. Except to the extent otherwise consented to by the Filing Party or prohibited by applicable law, the Non-filing Party and each other member of its Group shall elect to relinquish, waive or otherwise forgo all Carrybacks. In the event that the Non-filing Party (or the appropriate other member of its Group) is prohibited by applicable law from relinquishing, waiving or otherwise forgoing a Carryback (or the Filing Party consents to a Carryback), (i) the Filing Party shall cooperate with the Non-filing Party, at the Non-filing Party’s expense, in seeking from the appropriate Tax Authority such Refund as reasonably would result from such Carryback, and (ii) the Non-filing Party shall be entitled to any Income Tax Benefit Actually Realized by a member of the Filing Party’s Group (including any interest thereon received from such Tax Authority), to the extent that such Refund is directly attributable to such Carryback, within 15 Business Days after such Refund is Actually Realized; provided, however, that the Non-filing Party shall indemnify and hold the members of the Filing Party’s Group harmless from and against any and all collateral Tax consequences resulting from or caused by any such Carryback, including (but not limited to) the loss or postponement of any benefit from the use of Tax Attributes generated by a member of the Filing Party’s Group or an Affiliate thereof if (x) such Tax Attributes expire unutilized, but would have been utilized but for such Carryback, or (y) the use of such Tax Attributes is postponed to a later taxable period than the taxable period in which such Tax Attributes would have been utilized but for such Carryback.

 

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8. Cooperation and Exchange of Information.

(a) Cooperation and Exchange of Information. Each of Remainco and Spinco, on behalf of itself and each other member of the Remainco Group and the Spinco Group, respectively, agrees to provide the other Party (or its designee) with such cooperation or information as such other party (or its designee) reasonably shall request in connection with the determination of any payment or any calculations described in this Agreement, the preparation or filing of any Income Tax Return or Other Tax Return or claim for Refund, or the conduct of any Proceeding. Such cooperation and information shall include, upon reasonable notice, (i) promptly forwarding copies of appropriate notices and forms or other communications (including information document requests, revenue agent’s reports and similar reports, notices of proposed adjustments and notices of deficiency) received from or sent to any Tax Authority or any other administrative, judicial or governmental authority, (ii) providing copies of all relevant Income Tax Returns or Other Tax Returns, together with accompanying schedules and related workpapers, documents relating to rulings or other determinations by any Tax Authority, and such other records concerning the ownership and Tax basis of property, or other relevant information, (iii) the provision of such additional information and explanations of documents and information provided under this Agreement (including statements, certificates, forms, returns and schedules delivered by either party) as shall be reasonably requested by Remainco (or its designee) or Spinco (or its designee), as the case may be, (iv) the execution of any document that may be necessary or reasonably helpful in connection with the filing of an Income Tax Return or Other Tax Return, a claim for a Refund, or in connection with any Proceeding, including such waivers, consents or powers of attorney as may be necessary for Remainco or Spinco, as the case may be, to exercise its rights under this Agreement, and (v) the use of Remainco’s or Spinco’s, as the case may be, reasonable efforts to obtain any documentation from a governmental authority or a Third Party that may be necessary or reasonably helpful in connection with any of the foregoing. It is expressly the intention of the parties to this Agreement to take all actions that shall be necessary to establish the Filing Party as the sole agent for Income Tax or Other Tax purposes of each member of the Non-filing Party’s Group with respect to all Combined Returns. Upon reasonable notice, each of Remainco and Spinco shall make its, or shall cause the other members of the Remainco Group or the Spinco Group, as applicable, to make their, employees and facilities available on a mutually convenient basis to provide explanation of any documents or information provided hereunder. Any information obtained under this Section 8 shall be kept confidential, except as otherwise reasonably may be necessary in connection with the filing of Income Tax Returns or Other Tax Returns or claims for Refund or in conducting any Proceeding.

 

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(b) Retention of Records. Each of Remainco and Spinco agrees to retain all Income Tax Returns and Other Tax Returns, related schedules and workpapers, and all material records and other documents as required under Section 6001 of the Code and the regulations promulgated thereunder (and any similar provision of state, local or foreign law) existing on the date hereof or created in respect of (i) any Pre-Distribution Taxable Period or (ii) any taxable period that may be subject to a claim hereunder, in each case, until the later of (A) the expiration of the statute of limitations (including extensions) for the taxable periods to which such Income Tax Returns, Other Tax Returns and other documents relate and (B) the Final Determination of any payments that may be required in respect of such taxable periods under this Agreement.

9. Resolution of Disputes. Remainco and Spinco shall attempt in good faith to resolve any disagreement arising with respect to this Agreement, including any dispute in connection with a claim by a Third Party (a “Tax Dispute”). Any party to this Agreement may give any other Party hereto written notice of any Tax Dispute not resolved in the normal course of business. If the Parties cannot agree by the tenth Business Day following the date on which one Party gives such notice, then the Parties shall promptly retain the services of a nationally recognized law or accounting firm reasonably acceptable to the Parties (the “Tax Dispute Arbitrator”). The Tax Dispute Arbitrator shall be instructed to resolve the Tax Dispute, and such resolution shall be (a) set forth in writing and signed by the Tax Dispute Arbitrator, (b) delivered to each Party involved in the Tax Dispute as soon as practicable after the Tax Dispute is submitted to the Tax Dispute Arbitrator, but no later than the fifteenth Business Day after the Tax Dispute Arbitrator is instructed to resolve the dispute, (c) made in accordance with this Agreement, and (d) final, binding and conclusive on the Parties involved in the Tax Dispute on the date of delivery of such resolution. The Tax Dispute Arbitrator shall be authorized on any one issue to decide in favor of and choose the position of either of the Parties involved in the Tax Dispute or to decide upon a compromise position within the range between the positions presented by the Parties to the Tax Dispute Arbitrator. The fees and expenses of the Tax Dispute Arbitrator shall be borne 50% by Remainco and 50% by Spinco.

10. Payments.

(a) Method of Payment. All payments required by this Agreement shall be made by (i) wire transfer to the appropriate bank account as may from time to time be designated by the respective Parties for such purpose; provided, however, that, on the date of such wire transfer, notice of the transfer is given to the recipient thereof in accordance with Section 11, or (ii) any other method agreed to by the Parties. All payments due under this Agreement shall be deemed to be paid when available funds are actually received by the payee.

 

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(b) Interest. Any payment required by this Agreement that is not made on or before the date required hereunder shall bear interest, from and after such date through the date of payment, at the Underpayment Rate.

(c) Characterization of Payments. For all tax purposes, the parties hereto agree to treat, and to cause their respective Affiliates to treat any payment required by this Agreement as either a contribution by Remainco to Spinco or a distribution by Spinco to Remainco, as the case may be, occurring immediately prior to the Spin-Off, except as otherwise mandated by applicable law or a Final Determination; provided, however, that in the event it is determined (i) pursuant to applicable law, or (ii) pursuant to a Final Determination, that any such treatment is not permissible (or that an Indemnified Party nevertheless suffers an Income Tax or Other Tax detriment as a result of such payment), the payment in question shall be adjusted to place the Indemnified Party in the same after-tax position it would have enjoyed absent such applicable law or Final Determination.

11. Notices. Notices, requests, permissions, waivers, and other communications hereunder shall be in writing and shall be deemed to have been duly given upon (a) a transmitter’s confirmation of a receipt of a facsimile transmission (but only if followed by confirmed delivery of a standard overnight courier the following Business Day or if delivered by hand the following Business Day), or (b) confirmed delivery of a standard overnight courier or delivered by hand, to the parties at the following addresses (or at such other addresses for a party as shall be specified by like notice):

 

If to Remainco, to:   
   The Babcock & Wilcox Company
   11525 North Community House Rd.
   Suite 600
   Charlotte, NC 28277
If to Spinco, to:   
   Babcock & Wilcox Enterprises, Inc.
   13024 Ballantyne Corporate Place
   Suite 700
   Charlotte, NC 28277

Such names and addresses may be changed by notice given in accordance with this Section 12.

12. Designation of Affiliate. Each of Remainco and Spinco may assign any of its rights or obligations under this Agreement to any member of the Remainco Group or the Spinco Group, respectively, as it shall designate; provided, however, that no such assignment shall relieve Remainco or Spinco, respectively, of any obligation hereunder, including any obligation to make a payment hereunder to Spinco or Remainco, respectively, to the extent such designee fails to make such payment.

 

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13. Miscellaneous. To the extent not inconsistent with any specific term of this Agreement, the following sections of the Master Separation Agreement shall apply in relevant part to this Agreement: Section 7.3 (Entire Agreement), Section 7.10 (Governing Law), Section 7.5 (Amendment), Section 7.6 (Waiver, etc.), Section 7.9 (Severability), Section 7.8 (Counterparts), Section 7.4 (Binding Effect, No Third-Party Beneficiaries, Assignment.), Section 7.12 (Performance), Section 7.13 (Limited Liability), and Section 7.2 (Termination).

 

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf by its officers thereunto duly authorized, all as of the day and year first written above.

 

THE BABCOCK & WILCOX COMPANY
By:  

/s/ James D. Canafax

  Name:   James D. Canafax
  Title:   Senior Vice President, General Counsel and Chief Compliance Officer

 

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf by its officers thereunto duly authorized, all as of the day and year first written above.

 

BABCOCK & WILCOX ENTERPRISES, INC.
By:  

/s/ E. James Ferland

  Name:   E. James Ferland
  Title:   Chairman and CEO

 

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Appendix A

Tax Allocation Principles and Methods

 

I. Original Combined Returns (See generally Ex. 1)

 

  A. Net income/loss before § 199 deduction and NOLs:

 

  (a) items of income, deduction, loss, capital cost or liability definitely attributable to one Group: allocate to Group and Spinco Group according to actual items attributable to Remainco Group members and Spinco Group members.

 

  (b) items of income, deduction, loss, capital cost or liability not directly attributable to one Group: allocate 50/50 to each group.

 

  (c) interest and penalties: if attributable to a tax, allocate with the tax; if attributable to a filing obligation, allocate to party with the filing obligation

 

  B. § 199 deduction: allocate to Remainco Group and Spinco Group in proportion to their relative QPAI

 

  C. Consolidated NOLs (current-year or c/f): allocated to offset each Group’s taxable income without regard to which Group generated; no compensation by one Group for use of other Group’s NOLs (See Ex’s 6 & 7)

 

  D. Tax before Credits: allocate in proportion to relative taxable income of each Group computed in accordance with A, B and C. If one Group has net loss, all tax allocated to other Group; loss Group is not entitled to compensation for use of its loss. (See Ex. 6)

 

  E. Foreign Tax Credits: allocate in proportion to the FTCs actually generated by each Group for the year. If a Group has a net loss, all FTC allocated to other Group.

 

  F. R&D Credits: allocate in proportion to the QREs actually generated by each Group for the year. If a Group has a net loss, all R&D credit allocated to other Group.

 

  G. Refunds: allocate in accordance with computation of each Group’s allocated tax (calculated under A through F) and estimated taxes paid/deemed paid by each Group.

 

II. Carryforwards from Combined Return Tax Years

 

  A. NOLs: allocate according computation of relative taxable income/loss under I.A. and B.

 

  B. Credits: allocate according to computations under I.E. and F., above. (See Ex. 1)

 

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III. Post-original Filing/Post-spin-off Adjustments (Amended Returns and/or Audits)

 

  A. Increases in Tax - Combined Returns

 

  (a) attributable to adjustments to only one Group: allocate entirely to Group with adjustments (See Ex. 2)

 

  (b) attributable to net positive adjustments to both Groups: allocate in proportion to the adjustments to each Group (See Ex’s. 3 & 5)

 

  (c) attributable to net positive adjustments to one Group and net negative adjustments to other Group: allocate entirely to Group with net positive adjustments; Group with net positive adjustments must also compensate other Group for use of its negative adjustments (consistent with III.B.)

 

  B. Increase in Taxable Income of one Group in Combined Returns offset by Tax Benefits ( e.g. , NOLs) allocable to other Group: Group using tax benefits must compensate other Group for loss of tax benefits at time that other Group would have been able to utilize the benefits to reduce taxes on a separate return (see Ex’s 8 & 9) or receive a refund (see Ex. 10).

 

  C. Decreases in Tax (Refunds) in Combined Returns:

 

  (a) attributable to adjustments to only one Group: entire refund allocated to Group with adjustments (See Ex. 4).

 

  (b) attributable to net negative adjustments to both Groups: refund allocated in proportion to adjustments to each Group.

 

  (c) attributable to net negative adjustments to one Group and net positive adjustments to other Group: entire refund to Group with net negative adjustments; Group with net positive adjustments must pay the difference in refund that negative-adjustment Group would have received but for net positive adjustments to other Group.

 

  D. Items in Combined Returns not attributable:

 

  (a) items of income, deduction, loss, capital cost, liability, or benefit not directly attributable to one Group is shared equally among the parties.

 

  E. Adjustments for Tax Benefits/Detriments

 

  (a) Tax benefits from increases in tax payable: compensation for increase in tax payable is accompanied by obligation of compensated party to pay to compensating party any correlative tax benefit from the tax increase; if related adjustments to separate returns result in Tax payable by one Group and Tax Benefit to other Group, Group realizing Tax Benefit must pay to other Group an amount of benefit not exceeding the amount of such Group’s increase in Tax payable. If realization of tax benefit is deferred, payment only as actually realized (unless otherwise agreed by parties). (See Ex’s 9 & 11)

 

  (b) Tax detriments from refunds: payment by one Group of an amount of a tax refund allocable to the other Group is net of any correlative tax payable by the Group that received the refund.

 

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Example 1 – Original combined tax liability allocated between members based on relative contribution

PGG and BWXT participate in a federal combined filing for a tax period that begins prior to the distribution date. The group reports $300m of net consolidated taxable income before the §199 deduction, a §199 deduction of $27m (i.e., TI limited for the year), foreign tax credits of $3m, R&D credits of $5m, and a net tax liability of $87.55m ({$300m - $27m * 35%} - $3m - $5m).

The $300m of net consolidated taxable income before the §199 deduction is composed of (i) $230m of net taxable income attributable to members of the BWXT group and (ii) $70m of net taxable income attributable to members of the PGG group. The §199 deduction of $27m is limited to TI, but is related to QPAI of $400m, composed of (i) $240m of QPAI attributable to members of the BWXT group and (ii) $160m of QPAI attributable to members of the PGG group. The $3m of foreign tax credits utilized in the current year is associated with $8.6m of foreign source income generated in the current year. The foreign tax credits generated in the current year is composed of (i) $2m of foreign tax credits generated by members of the BWXT group and (ii) $4m of foreign tax credits generated by members of the PGG group. The components of foreign source income is irrelevant since this attribute does not drive the allocation, the tax generation does. The $5m of R&D credits utilized in the current year is computed based on QRE’s generated in the current year of $100m, composed of (i) $60m of QRE’s attributable to members of the BWXT group and (ii) $40m of QRE’s attributable to members of the PGG group.

Pursuant to Appendix A, Section I, the $87.55m of net tax liability is allocated (i) $70.83m to BWXT and (ii) $16.72m to PGG. A schedule is presented below to summarize the net tax liability computations for each party.

It should be further noted that the excess FTC’s generated in the CY by the consolidated group and not utilized within the consolidated tax return should also be attributable to the members based on their relative contribution. Pursuant to Appendix A, Section II.B, the $3m of foreign tax credits carried forward into the subsequent tax periods ($6m generated - $3m utilized) is comprised of (i) $1m attributable to the BWXT group ($2m/$6m * $3m) and (ii) $2m attributable to the PGG group ($4m/$6m * $3m).

 

     BWXT         PGG         TOTAL  

Taxable Income before S199

     230.00          70.00          300.00   

S199 Deduction (allocated by QPAI)

     (16.20   (240/400)     (10.80   (160/400)     (27.00
  

 

 

     

 

 

     

 

 

 

Taxable Income after S199

     213.80          59.20          273.00   

Tax Liability before Credits (35%)

     74.83          20.72          95.55   

Foreign Tax Credits (allocated by FTC’s)

     (1.00   (2/6)     (2.00   (4/6)     (3.00

R&D Credits (allocated by QRE’s)

     (3.00   (60/100)     (2.00   (40/100)     (5.00
  

 

 

     

 

 

     

 

 

 
     70.83          16.72          87.55   


Example 2 – Incremental tax expense allocated to member who gave rise to the adjustment

Same facts as example 1, except an audit adjustment is made in a future year to decrease PGG’s associated QRE’s. This audit adjustment decreases the generation and utilization of the combined groups R&D credit by $150,000. Due to BWXT being the taxpayer of the combined filing, BWXT will be required to pay the taxing jurisdiction for the increase in tax. However, pursuant to Appendix A Section III.A.(a),., PGG will be required to compensate BWXT for the applicable tax payment since the audit adjustment was solely related to the PGG group.

Example 3 – Incremental tax expense allocated to each member based on relative weight

Same facts as example 1, except an audit adjustment is made in the future to decrease the QRE’s attributable to PGG by $1m and the QRE’s attributable to BWXT by $2m. This audit adjustment decreases the generation and utilization of the combined group’s R&D credit by $300,000. Pursuant to Appendix A Section III.A.(b) PGG will be liable for $100,000 ($1m/$3m * $300,000) and BWXT will be liable for $200,000 ($2m/$3m * $300,000) of the associated additional tax.

Example 4 – Incremental net tax benefit allocated to member who gave rise to the adjustment

Same facts as example 1, but subsequent to the distribution year, BWXT files an amended return claiming $25m of additional deductions to its separate company taxable income. The recognition of these additional deductions does not change the company’s §199 computation from the TI limitation described in IRC §199(a). Therefore, due to the combined group’s §199 deduction being subject to the taxable income limitation, this decrease to BWXT’s separate company taxable income also decreases the combined group’s §199 deduction by $2.25m ($25m * 9%). The IRS audits the amended filing and concludes that BWXT is due a refund of $7.96m ($25m-$2.25m * 35%). Pursuant to Appendix A Section III.C.(a), BWXT is entitled to the net refund of $7.96m and is not entitled to receive compensation from PGG for the correlative decrease in the combined group’s §199 deduction.

Example 5 – Incremental net tax expense allocated to each member based on relative weight

Same facts as example 1, but subsequent to the distribution year, the IRS audits the combined return and determines that BWXT underreported income by $20m and PGG underreported income by $10m. The recognition of this additional income does not change the company’s §199 computation from the TI limitation described in IRC §199(a). Therefore, due to the combined group’s §199 deduction being subject to the taxable income limitation, this increase to the combined group’s taxable income also increases the combined group’s §199 deduction by $2.7m ($30m * 9%). The final net audit adjustments results in a net tax due of $9.55m ($30m-$2.7m * 35%). Pursuant to Appendix A Section III.A.(b), BWXT is liable for $6.37m of the $9.55m ($20m/$30m * $9.55m) and PGG is liable for $3.18m of the $9.55m ($10m/$30m * $9.55m).

Example 6 - Original combined tax liability allocated between members based on relative contribution, but no compensation/indemnity for tax benefit utilized within original combined return

PGG and BWXT participate in a federal combined filing for a tax period that begins prior to the distribution date. The group reports $200m of net consolidated taxable income, no credits, and a tax liability of $70m ($200m * 35%). The $300m of net consolidated taxable income is composed of (i) $300m of net taxable

 

36


income attributable to members of the BWXT group and (ii) a $100m net operating loss is attributable to members of the PGG group. Pursuant to Appendix A Section I.C, the $70m of tax liability is attributable entirely to the BWXT group and BWXT is not required to compensate PGG for the utilization of the $100m net operating loss.

Example 7 – No compensation/indemnity for tax benefit utilized within original combined return (State NOL Carry-forwards)

PGG and BWXT participate in a combined state filing for a tax period that begins prior to the distribution date. The combined filing utilizes a NOL generated and carried forward into the tax filing by the PGG group. Pursuant to Appendix A Section I.C. the utilization of this NOL C/F that is applied to and against any liability allocated to the BWXT group is not considered a tax benefit for which BWXT must compensate PGG.

Example 8 – Potential compensation/indemnity for tax benefit utilized subsequent to original combined filing (State NOL Carry-forwards)

Same facts as example 7, except an audit adjustment is made in a future year to increase BWXT’s applicable tax liability for the combined year. This increase to BWXT’s applicable tax liability increases the utilization of the NOL C/F and therefore decreases the NOL C/F available to the PGG group post-distribution. Pursuant to Appendix A Section III.B., this decrease to the PGG groups deferred tax asset is a tax benefit for which BWXT must compensate PGG when and if a resulting economic loss is realized by PGG.

Example 9 – Compensation/indemnity paid when economic benefit or detriment realized or incurred (State NOL Carry-forwards)

In addition to the facts detailed out within examples 7 & 8 PGG filed an original return in the tax year subsequent to the distribution date utilizing the remaining NOL carried forward from the distribution tax year. Due to the audit adjustment against BWXT’s tax liability described in example 8, PGG must file an amended return reflecting this decrease in the available NOL carried forward into and utilized within the post-distribution tax filing. PGG is required to pay the taxing jurisdiction an additional $100,000 due to the loss of available NOL C/F from the pre-distribution tax filing. Pursuant to Appendix A Section III.B, BWXT is required to compensate PGG within 30 days of PGG making the associated payment to the taxing jurisdiction. However, pursuant to Appendix A Section IV.A., BWXT is only required to compensate PGG $65,000 ($100,000 * 65%) for the net economic impact (i.e., net of federal benefit).

Example 10 – Compensation/indemnity paid when economic benefit or detriment realized or incurred (loss of refund)

PGG and BWXT participate in a combined tax return for a pre-distribution tax period, and each pays its allocable share of the tax shown as due thereon. After the distribution, audit adjustments are made that increase the taxable income allocable to BWXT and decreases the taxable income allocable to PGG. The PGG decreases offset the BWXT increases. Without the BWXT increases, PGG would have been entitled to receive a refund. (See Appendix A Section III.C.(a) and Ex. 4 above.) Pursuant to Appendix A Section III.B., BWXT must compensate PGG for the loss of its refund.

 

37


Example 11 – Compensation/indemnity paid when economic benefit or detriment realized or incurred (tax benefits received by one party from increases in tax payable of the other party)

PGG and BWXT participate in a federal combined filing for a tax period that begins prior to the distribution date. As part of this filing, BWXT transfers IP to PGG in a taxable transaction valued at $10m. Subsequent to the distribution year, the IRS audits the combined return and determines the value of the IP to be $30m. Pursuant to Section Appendix A, Section III.A.(d), the adjustment is attributable to BWXT and therefore BWXT would be responsible for the additional tax of $7m ($30m-$10m * 35%). However, this increase to the IP valuation also increases the amortizable basis of the IP in the hands of PGG, for which PGG will receive future deductions or benefits (i.e., in the form of amortization). Pursuant to Appendix A, Section IV.A., PGG must provide compensation to BWXT when these future benefits are actually realized. Since the realization of the tax benefits by PGG will occur over a 15 year period (i.e., the IRS amortization period), the two parties may wish to agree on a settlement amount at the time of the IRS audit adjustment to eliminate the need for multiple indemnity payments over a significant time period.

 

38

Exhibit 10.2

Execution Version

EMPLOYEE MATTERS AGREEMENT

between

THE BABCOCK & WILCOX COMPANY

and

BABCOCK & WILCOX ENTERPRISES, INC.

dated as of

June 8, 2015


TABLE OF CONTENTS

 

         Page  

ARTICLE I

 

DEFINITIONS

     1   

Section 1.1

 

Definitions

     1   

Section 1.2

 

Interpretation

     9   

ARTICLE II

 

ASSIGNMENT OF EMPLOYEES

     10   

Section 2.1

 

Active Employees

     10   

Section 2.2

 

Former Employees

     11   

Section 2.3

 

Employment Law Obligations

     12   

Section 2.4

 

Employee Records

     12   

ARTICLE III

 

EQUITY AND INCENTIVE COMPENSATION PLANS

     14   

Section 3.1

 

General Principles

     14   

Section 3.2

 

Tax Reporting and Withholding; Payment of Option Exercise Price

     15   

Section 3.3

 

Restricted Stock Units and Restricted Stock

     16   

Section 3.4

 

Stock Options and Stock Appreciation Rights

     18   

Section 3.5

 

Performance-Based Awards

     20   

Section 3.6

 

Section 16(b) of the Exchange Act; Code Sections 162(m) and 409A

     23   

Section 3.7

 

Certain Bonus Payments

     23   

Section 3.8

 

Change in Control

     24   

Section 3.9

 

Conformity with Non-U.S. Laws

     24   

Section 3.10

 

Employment Treatment

     24   

ARTICLE IV

 

GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES

     25   

Section 4.1

 

General Principles

     25   

Section 4.2

 

Sponsorship and/or Establishment of SpinCo Plans

     27   

Section 4.3

 

Service Credit

     27   

Section 4.4

 

Plan Administration

     28   

ARTICLE V

 

PENSION, EXCESS AND SUPPLEMENTAL PLANS

     28   

Section 5.1

 

General Principles

     28   

Section 5.2

 

U.S. Pension Transfers

     29   

Section 5.3

 

Canada Pension Transfer

     32   

Section 5.4

 

Excess and Supplemental Plans    

     32   

Section 5.5

 

Group Annuity Contract

     33   

 

-i-


TABLE OF CONTENTS

(continued)

 

         Page  

ARTICLE VI

 

THRIFT PLANS

     33   

Section 6.1

 

U.S. Thrift Plans

     33   

Section 6.2

 

Treatment of RemainCo Common Stock and SpinCo Common Stock

     34   

Section 6.3

 

U.S. Transfer of Accounts

     35   

Section 6.4

 

Canada Thrift Plans

     35   

Section 6.5

 

Canada Transfer of Accounts

     36   

ARTICLE VII

 

WELFARE PLANS

     36   

Section 7.1

 

Establishment of SpinCo Welfare Plans

     36   

Section 7.2

 

Transitional Matters Under SpinCo Welfare Plans

     37   

Section 7.3

 

VEBA

     38   

Section 7.4

 

Continuity of Benefits, Benefit Elections and Beneficiary Designations

     38   

Section 7.5

 

Insurance Contracts

     38   

Section 7.6

 

Third-Party Vendors

     39   

Section 7.7

 

Claims Experience

     39   

Section 7.8

 

Allocation of Demutualization Proceeds

     39   

Section 7.9

 

Grandfathered Foundry Employees

     39   

ARTICLE VIII

 

BENEFIT ARRANGEMENTS

     40   

ARTICLE IX

 

WORKERS’ COMPENSATION AND UNEMPLOYMENT COMPENSATION

     40   

Section 9.1

 

General Principles

     40   

Section 9.2

 

Crossover Claims

     40   

Section 9.3

 

Additional Details

     40   

Section 9.4

 

Ohio Guarantees

     41   

ARTICLE X

 

RETENTION, SEVERANCE AND OTHER MATTERS

     41   

Section 10.1

 

Retention Agreements

     41   

Section 10.2

 

Severance

     42   

Section 10.3

 

Accrued Time Off

     42   

Section 10.4

 

Leaves of Absence

     42   

 

-ii-


TABLE OF CONTENTS

(continued)

 

         Page  

Section 10.5

 

Collective Bargaining Agreements

     42   

Section 10.6

 

Director Programs

     42   

Section 10.7

 

Restrictive Covenants in Employment and Other Agreements

     43   

Section 10.8

 

Non-Solicitation

     43   

ARTICLE XI

 

GENERAL PROVISIONS

     44   

Section 11.1

 

Preservation of Rights to Amend

     44   

Section 11.2

 

Confidentiality

     44   

Section 11.3

 

Administrative Complaints/Litigation

     44   

Section 11.4

 

Reimbursement and Indemnification

     45   

Section 11.5

 

Costs of Compliance with Agreement

     45   

Section 11.6

 

Fiduciary Matters

     45   

Section 11.7

 

Registration Statement

     46   

Section 11.8

 

Entire Agreement

     46   

Section 11.9

 

Binding Effect; No Third-Party Beneficiaries; Assignment

     46   

Section 11.10

 

Amendment

     46   

Section 11.11

 

Failure or Indulgence Not Waiver; Remedies Cumulative

     46   

Section 11.12

 

Notices

     47   

Section 11.13

 

Counterparts

     47   

Section 11.14

 

Severability

     47   

Section 11.15

 

Governing Law

     47   

Section 11.16

 

Performance

     47   

Section 11.17

 

Construction

     48   

Section 11.18

 

Effect if Distribution Does Not Occur

     48   

 

-iii-


EMPLOYEE MATTERS AGREEMENT

This EMPLOYEE MATTERS AGREEMENT is entered into as of June 8, 2015 between The Babcock & Wilcox Company, a Delaware corporation (“RemainCo”), and Babcock & Wilcox Enterprises, Inc., a Delaware corporation (“SpinCo”). RemainCo and SpinCo are sometimes referred to herein, individually, as a “Party,” and, collectively, as the “Parties.” Capitalized terms used herein and not otherwise defined shall have the respective meanings ascribed to such terms in Article I hereof.

RECITALS

WHEREAS, SpinCo is a wholly owned subsidiary of RemainCo;

WHEREAS, the Board of Directors of RemainCo has determined that it would be appropriate and in the best interests of RemainCo and its stockholders to effectuate the Distribution as described in the Master Separation Agreement between RemainCo and SpinCo dated as of June 8, 2015 (the “Master Separation Agreement”);

WHEREAS, the Master Separation Agreement provides, among other things, subject to the terms and conditions thereof, for the Distribution and for the execution and delivery of certain other agreements, including this Agreement, in order to facilitate and provide for the separation of SpinCo and its subsidiaries from RemainCo; and

WHEREAS, in order to ensure an orderly transition under the Master Separation Agreement, it will be necessary for the Parties to allocate between them assets, liabilities and responsibilities with respect to certain employee compensation, benefit plans and programs, and certain employment matters.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, the Parties, intending to be legally bound, agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions . As used in this Agreement, the following terms shall have the meanings set forth in this Section 1.1:

“Additional mPower Performance RSUs” has the meaning set forth in Section 3.5(d).

“Additional RemainCo RSUs” has the meaning set forth in Section 3.3(b).

“Additional SpinCo RSAs” has the meaning set forth in Section 3.3(d).

“Additional SpinCo RSUs” has the meaning set forth in Section 3.3(c).

“Affiliate” has the meaning set forth in the Master Separation Agreement.


“Agreement” means this Employee Matters Agreement together with all Schedules hereto and all amendments, modifications and changes hereto and thereto entered into in accordance with Section 11.10.

“Ancillary Agreements” has the meaning set forth in the Master Separation Agreement.

“Benefit Arrangement” means any contract, agreement, policy, practice, program, plan, trust or arrangement (other than any Welfare Plan, any RemainCo Pension Plan, Thrift Plan, Excess Plan, Restoration Plan, SERP or SPP, any SpinCo Pension Plan, Thrift Plan or Excess Plan, the SpinCo New Restoration Plan, the SpinCo New SERP, the SpinCo SPP, or any bonus, stock-based compensation or other form of incentive compensation), providing for benefits, perquisites or compensation of any nature to any Employee, or to any family member, dependent or beneficiary of any such Employee, including, travel and accident, tuition reimbursement, vacation, sick, personal or bereavement days, and holidays.

“COBRA” means the U.S. Consolidated Omnibus Budget Reconciliation Act of 1985, as codified at Part 6 of Subtitle B of Title I of ERISA and at Code Section 4980B.

“Code” means the U.S. Internal Revenue Code of 1986.

“Confidential Information” has the meaning set forth in the Master Separation Agreement.

“Crossover Claim” has the meaning set forth in Section 9.2.

“Distribution” has the meaning set forth in the Master Separation Agreement.

“Distribution Date” has the meaning set forth in the Master Separation Agreement.

“Distribution Multiple” has the meaning set forth in the Master Separation Agreement.

“Employee” means any RemainCo Employee, Former RemainCo Employee, SpinCo Employee or Former SpinCo Employee.

“Employee Transfer Date” means June 1, 2015.

“ERISA” means the U.S. Employee Retirement Income Security Act of 1974.

“Former RemainCo Employee” has the meaning set forth in Section 2.2(b).

“Former SpinCo Employee” has the meaning set forth in Section 2.2(c).

“Grandfathered Foundry Employee” means a Former RemainCo Employee who terminated employment prior to January 1, 2007 while performing services at SpinCo’s Barberton, Ohio foundry site in the normal course of such employee’s duties.

“Initial Trust Transfer Amount” has the meaning set forth in Section 5.2(d).

“Initial Trust Transfer Date” has the meaning set forth in Section 5.2(d).

 

- 2 -


“IRS” means the U.S. Internal Revenue Service.

“Master Separation Agreement” has the meaning set forth in the recitals to this Agreement.

“McDermott EMA” means that certain Employee Matters Agreement dated as of July 2, 2010, by and among McDermott International Inc., a Pennsylvania corporation, McDermott Investments, LLC, a Delaware limited liability company, RemainCo and Babcock & Wilcox Investment Company, a Delaware corporation, as amended by Amendment to Employee Matters Agreement, dated as of August 3, 2010, and as further amended by Amendment No. 2 to Employee Matters Agreement, dated as of August 10, 2010.

“MEGTEC Performance RSU” has the meaning set forth in Section 3.5(e).

“mPower Performance RSU” has the meaning set forth in Section 3.5(d).

“Non-U.S. Holder” means a grantee under any of the RemainCo Legacy Equity Plans who is listed on Schedule 1.1(a).

“NYSE” means the New York Stock Exchange.

“Participating SpinCo Employers” has the meaning set forth in Section 7.1.

“Participation Period” has the meaning set forth in Section 7.4(b).

“Party” or “Parties” has the meaning set forth in the preamble to this Agreement.

“Person” has the meaning set forth in the Master Separation Agreement.

“Post-Distribution RemainCo Option” has the meaning set forth in Section 3.4(b).

“Post-Distribution RemainCo Share Price” means the simple average of the volume weighted average per share price of RemainCo Common Stock trading on the NYSE on each of the first three trading days following the Distribution Date.

“Post-Distribution SpinCo Share Price” means the simple average of the volume weighted average per share price of SpinCo Common Stock trading on the NYSE on each of the first three trading days following the Distribution Date.

“Pre-Distribution RemainCo Share Price” means the volume weighted average per share price of RemainCo Common Stock trading “regular way” on the NYSE on the Distribution Date.

“Privacy Contract” means any contract entered into in connection with applicable privacy protection laws or regulations.

“Registration Statement Effectiveness Date” means the first date on which the applicable registration statement on Form S-1, Form S-8 or another appropriate form as contemplated by Section 11.7 shall be effective under the Securities Act of 1933.

 

- 3 -


“RemainCo” has the meaning set forth in the preamble to this Agreement.

“RemainCo Actuary” means an enrolled actuary appointed by RemainCo.

“RemainCo Annuity Contract” means Metropolitan Life Insurance Company Group Annuity Contract Nos: 9088 and 9088A by and between RemainCo or its Subsidiary and Metropolitan Life Insurance Company, which provide for the payment of pension benefits to certain U.S.-based Former RemainCo Employees and Former SpinCo Employees.

“RemainCo Benefit Arrangement” means any Benefit Arrangement sponsored or maintained by a member of the RemainCo Group on the Employee Transfer Date.

“RemainCo Business” has the meaning set forth in the Master Separation Agreement.

“RemainCo Canada Pension Plans” means the RemainCo Canada Salaried Pension Plan and the Babcock & Wilcox Canada Ltd. Hourly-Paid Employees’ Pension Plan.

“RemainCo Canada Salaried Pension Plan” means the Babcock & Wilcox Canada Ltd. Salaried Employees’ Retirement Plan.

“RemainCo Canada Thrift Plan” means the savings arrangement for salaried employees of Babcock & Wilcox Canada Ltd. and Babcock & Wilcox Power Generation Group Canada Corp. consisting of the Registered Retirement Savings Plan, group policy # 20000796; the Employee Profit Sharing Plan, group policy # 40000796; and the Tax Free Savings account, group policy # 41000007.

“RemainCo Common Stock” means the common stock of RemainCo, par value $0.01 per share.

“RemainCo Employee” means any individual who is employed by a member of the RemainCo Group on the Employee Transfer Date.

“RemainCo Entity” has the meaning set forth in the Master Separation Agreement.

“RemainCo Equity Compensation Award” means each RemainCo RSU, Additional RemainCo RSU, RemainCo RSA, Post-Distribution RemainCo Option, Replacement RemainCo Unit, mPower Performance RSU, Additional mPower Performance RSU, and MEGTEC Performance RSU.

“RemainCo Excess Plan” means any excess plan sponsored or maintained by any one or more members of the RemainCo Group on the Employee Transfer Date, including each of those set forth on Schedule 1.1(b).

“RemainCo Governmental Operations Plan” means the Retirement Plan for Employees of Babcock & Wilcox Governmental Operations.

“RemainCo Group” has the meaning set forth in the Master Separation Agreement.

 

- 4 -


“RemainCo Legacy Award Holders” means the holders of one or more RemainCo RSUs, RemainCo RSAs, RemainCo Options or performance-based equity awards under any of the RemainCo Legacy Equity Plans who will not be a RemainCo Employee or a SpinCo Employee and will not, as of the Distribution Date, be a member of the Board of Directors of either RemainCo or SpinCo; provided, however, that the term “RemainCo Legacy Award Holder” shall not include any SpinCo Legacy Award Holder.

“RemainCo Legacy Equity Plan” means any equity plan sponsored or maintained by a member of the RemainCo Group immediately prior to the Distribution Date, including each of those set forth on Schedule 1.1(c).

“RemainCo Master Trust” means the trust that holds the commingled assets of the RemainCo U.S. Pension Plans and the SpinCo U.S. Pension Plan.

“RemainCo Ohio Guarantees” has the meaning set forth in the Master Separation Agreement.

“RemainCo Options” means options to purchase shares of RemainCo Common Stock and stock appreciation rights with respect to shares of RemainCo Common Stock, in either case granted pursuant to any of the RemainCo Legacy Equity Plans before the Distribution Date.

“RemainCo Pension Plans” means the defined benefit retirement plans sponsored and maintained by any one or more members of the RemainCo Group on the Employee Transfer Date, including the RemainCo Canada Pension Plans and the RemainCo U.S. Pension Plans, but excluding the RemainCo Excess Plan.

“RemainCo Restoration Plan” means The Babcock & Wilcox Company Defined Contribution Restoration Plan.

“RemainCo RSAs” means restricted stock awards issued under any of the RemainCo Legacy Equity Plans before the Distribution Date.

“RemainCo RSUs” means restricted stock units or deferred stock units issued under any of the RemainCo Legacy Equity Plans before the Distribution Date that are not subject to performance conditions.

“RemainCo SERP” means the Supplemental Executive Retirement Plan of The Babcock & Wilcox Company.

“RemainCo SPP” means The Babcock & Wilcox Company Supplemental Payments Plan.

“RemainCo Thrift Plans” means the defined contribution retirement plans sponsored and maintained by any one or more members of the RemainCo Group on the Employee Transfer Date, including the RemainCo U.S. Thrift Plan, the RemainCo Canada Thrift Plan, the Nuclear Fuel Services Inc. Savings Plan for Hourly Employees, and the NOG-E Hourly Employees’ Savings Plan, but excluding the RemainCo Restoration Plan and the RemainCo SERP.

 

- 5 -


“RemainCo Transfer Amount” has the meaning set forth in Section 5.2(c).

“RemainCo Transfer Date” has the meaning set forth in Section 5.2(a).

“RemainCo U.S. Pension Plans” means the RemainCo Governmental Operations Plan, the Nuclear Fuel Services, Inc. Retirement Plan for Salaried Employees and the Nuclear Fuel Services, Inc. Retirement Plan for Hourly Employees.

“RemainCo U.S. Pension Beneficiaries” has the meaning set forth in Section 5.2(a).

“RemainCo U.S. Thrift Plan” means The Babcock & Wilcox Company Thrift Plan.

“RemainCo U.S. Thrift Plan Beneficiaries” has the meaning set forth in Section 6.1.

“RemainCo U.S. Transferred Benefit” has the meaning set forth in Section 5.2(a).

“RemainCo Welfare Plan” means any Welfare Plan sponsored or maintained by any one or more members of the RemainCo Group on the Employee Transfer Date.

“Replacement MEGTEC Performance RSU” has the meaning set forth in Section 3.5(e).

“Replacement RemainCo Units” has the meaning set forth in Section 3.5(b).

“Replacement SpinCo Option” has the meaning set forth in Section 3.4(a).

“Replacement SpinCo Units” has the meaning set forth in Section 3.5(a).

“Replacement SpinCo RSUs” has the meaning set forth in Section 3.3(a).

“SpinCo” has the meaning set forth in the preamble to this Agreement.

“SpinCo Actuary” means an enrolled actuary appointed by SpinCo.

“SpinCo Business” has the meaning set forth in the Master Separation Agreement.

“SpinCo Canada Pension Beneficiaries” has the meaning set forth in Section 5.3.

“SpinCo Canada Pension Plans” means the SpinCo Canada Salaried Pension Plan, the Diamond CanaPower Pension Plan and the Registered Pension Plan for Melville Hourly Employees.

“SpinCo Canada Salaried Pension Plan” has the meaning set forth in Section 5.3.

“SpinCo Canada Thrift Plan” has the meaning set forth in Section 6.4.

“SpinCo Canada Thrift Plan Beneficiaries” has the meaning set forth in Section 6.4.

“SpinCo Canada Transferred Benefit” has the meaning set forth in Section 5.3.

 

- 6 -


“SpinCo Commercial Operations Plan” means the Retirement Plan for Employees of Babcock & Wilcox Commercial Operations.

“SpinCo Common Stock” means the common stock of SpinCo, par value $0.01 per share.

“SpinCo Employee” means any individual who is employed by a member of the SpinCo Group on the Employee Transfer Date.

“SpinCo Entity” has the meaning set forth in the Master Separation Agreement.

“SpinCo Equity Compensation Award” means each Replacement SpinCo RSU, Additional SpinCo RSU, Additional SpinCo RSA, Replacement SpinCo Option, Replacement SpinCo Unit, and Replacement MEGTEC Performance RSUs.

“SpinCo Excess Plan” means any excess plan sponsored or maintained by any one or more members of the SpinCo Group on the Employee Transfer Date, including each of those set forth on Schedule 1.1(d).

“SpinCo FSA” has the meaning set forth in Section 7.4(b).

“SpinCo Group” has the meaning set forth in the Master Separation Agreement.

“SpinCo Legacy Award Holders” means the holders of one or more RemainCo RSUs, RemainCo RSAs, RemainCo Options or performance-based equity awards under any of the RemainCo Legacy Equity Plans who are former employees of a member of the SpinCo Group (and will not be SpinCo Employees or RemainCo Employees and will not, immediately after the Distribution Date, serve on the Board of Directors of either RemainCo or SpinCo) and are listed on Schedule 1.1(e).

“SpinCo Master Trust” has the meaning set forth in Section 5.2(d).

“SpinCo New Equity Plan” means the plan or plans adopted by SpinCo and approved by RemainCo, as sole stockholder of SpinCo prior to the Distribution, as set forth on Schedule 1.1(f), under which the SpinCo equity-based awards described in Article III shall be issued.

“SpinCo New Restoration Plan” means the defined contribution restoration plan adopted by SpinCo prior to the Distribution.

“SpinCo New SERP” means the supplemental executive retirement plan adopted by SpinCo prior to the Distribution.

“SpinCo Ohio Guarantees” has the meaning set forth in the Master Separation Agreement.

“SpinCo Pension Plans” means the defined benefit retirement plans sponsored and maintained by any one or more members of the SpinCo Group on the Employee Transfer Date, including the SpinCo Canada Pension Plans, the SpinCo U.S. Pension Plan and the Diamond Power Specialty Limited Retirement Benefits Plan, but excluding the SpinCo Excess Plan.

 

- 7 -


“SpinCo SPP” has the meaning set forth in Section 5.4(d).

“SpinCo Thrift Plans” means the defined contribution retirement plans sponsored and maintained by any one or more member of the SpinCo Group on the Employee Transfer Date, including the SpinCo U.S. Thrift Plan and the SpinCo Canada Thrift Plan, but excluding the SpinCo New Restoration Plan and the SpinCo New SERP.

“SpinCo Transfer Amount” has the meaning set forth in Section 5.2(c).

“SpinCo Transfer Date” has the meaning set forth in Section 5.2(a).

“SpinCo U.S. Pension Beneficiaries” has the meaning set forth in Section 5.2(a).

“SpinCo U.S. Pension Plan” means the SpinCo Commercial Operations Plan.

“SpinCo U.S. Thrift Plan” has the meaning set forth in Section 6.1.

“SpinCo U.S. Thrift Plan Beneficiaries” has the meaning set forth in Section 6.1.

“SpinCo U.S. Transferred Benefit” has the meaning set forth in Section 5.2(a).

“SpinCo Welfare Plan” means any Welfare Plan sponsored or maintained by any one or more members of the SpinCo Group on the Employee Transfer Date.

“SpinCo Welfare Plan Participants” has the meaning set forth in Section 7.1.

“Subsidiary” has the meaning set forth in the Master Separation Agreement.

“U.S.” means the United States of America.

“True Up Payment” has the meaning set forth in Section 5.2(d).

“Trust Transfer Date” has the meaning set forth in Section 5.2(f).

“Value” has the meaning set forth in Section 5.2(e).

“VEBA” has the meaning set forth in Section 7.3.

“WARN” means the U.S. Worker Adjustment and Retraining Notification Act, and any applicable state or local law equivalent.

“Welfare Plan” means a “welfare plan” as defined in ERISA Section 3(1) and also means a cafeteria plan under Code Section 125 and any benefits offered thereunder, including pre-tax premium conversion benefits, a dependent care assistance program, contribution funding toward a health savings account and flex or cashable credits.

 

- 8 -


Section 1.2 Interpretation . In this Agreement, unless the context clearly indicates otherwise:

(a) words used in the singular include the plural and words used in the plural include the singular;

(b) if a word or phrase is defined in this Agreement, its other grammatical forms, as used in this Agreement, shall have a corresponding meaning;

(c) reference to any gender includes the other gender and the neuter;

(d) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”;

(e) the words “shall” and “will” are used interchangeably and have the same meaning;

(f) the word “or” shall have the inclusive meaning represented by the phrase “and/or”;

(g) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;

(h) all references to a specific time of day in this Agreement shall be based upon Eastern Standard Time or Eastern Daylight Savings Time, as applicable, on the date in question;

(i) whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified;

(j) accounting terms used herein shall have the meanings historically ascribed to them by RemainCo and its Subsidiaries, including SpinCo for this purpose, in its and their internal accounting and financial policies and procedures in effect immediately prior to the date of this Agreement;

(k) reference to any Article, Section or Schedule means such Article or Section of, or such Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;

(l) the words “this Agreement,” “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision of this Agreement;

(m) the term “commercially reasonable efforts” means efforts which are commercially reasonable to enable a Party, directly or indirectly, to satisfy a condition to or otherwise assist in the consummation of a desired result and which do not require the performing Party to expend funds or assume liabilities other than expenditures and liabilities which are customary and reasonable in nature and amount in the context of a series of related transactions similar to the Separation;

 

- 9 -


(n) reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;

(o) reference to any Law (including statutes and ordinances) means such Law (including any and all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;

(p) references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement; and any reference to a third party shall be deemed to mean a Person who is not a Party or an Affiliate of a Party;

(q) if there is any conflict between the provisions of the main body of this Agreement and the Schedules hereto, the provisions of the main body of this Agreement shall control unless explicitly stated otherwise in such Schedule;

(r) unless otherwise specified in this Agreement, all references to dollar amounts herein shall be in respect of lawful currency of the U.S.;

(s) the titles to Articles and headings of Sections contained in this Agreement and in any Schedule and in the table of contents to this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement; and

(t) any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Subsidiaries to take such action or refrain from taking such action, as the case may be.

ARTICLE II

ASSIGNMENT OF EMPLOYEES

Section 2.1 Active Employees .

(a) SpinCo Employees . Except as otherwise set forth in this Agreement, effective as of the Employee Transfer Date, the employment of the SpinCo Employees will commence with or be continued by a member of the SpinCo Group. Each of the Parties agrees to execute, and to seek to have the applicable employees execute, such documentation as may be necessary to reflect such assignments and transfers.

(b) RemainCo Employees . Except as otherwise set forth in this Agreement, effective as of the Employee Transfer Date, the employment of the RemainCo Employees will

 

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commence with or be continued by a member of the RemainCo Group. Each of the Parties agrees to execute, and to seek to have the applicable employees execute, such documentation as may be necessary to reflect such assignments and transfers.

(c) At-Will Status . Notwithstanding the above or any other provision of this Agreement, nothing in this Agreement shall create any obligation on the part of any member of the RemainCo Group or any member of the SpinCo Group to continue the employment of any employee for any period following the date of this Agreement or the Distribution or to change the employment status of any employee from “at will,” to the extent such employee is an “at will” employee under applicable law.

(d) Severance . The Distribution and the assignment, transfer or continuation of the employment of employees as contemplated by this Section 2.1 shall not be deemed a severance of employment of any employee for purposes of this Agreement and, except as otherwise provided in Section 6.2, any plan, policy, practice or arrangement of any member of the RemainCo Group or any member of the SpinCo Group.

(e) Change of Control/Change in Control . Neither the completion of the Distribution nor any transaction in connection with the Distribution shall be deemed a “change of control” or “change in control” for purposes of any plan, policy, practice or arrangement relating to directors, employees or consultants of any member of the RemainCo Group or any member of the SpinCo Group.

Section 2.2 Former Employees .

(a) General Principles . Except as otherwise provided in this Agreement, each former employee of any member of the RemainCo Group or any member of the SpinCo Group as of the Employee Transfer Date will be considered a former employee of the RemainCo Group or the SpinCo Group based on his employer as of his last day of employment with any RemainCo Entity or SpinCo Entity.

(b) Former RemainCo Employees . For purposes of this Agreement, former employees of the RemainCo Group shall be deemed to include (i) all employees who, as of their last day of employment, were employed by a RemainCo Entity and will not be either a SpinCo Employee or a RemainCo Employee and (ii) all employees who are categorized as “Former B&W Employees” for purposes of the McDermott EMA by the parties to such agreement and who will not be a SpinCo Employee, a RemainCo Employee or a Former SpinCo Employee as of the Employee Transfer Date (collectively, the “Former RemainCo Employees”).

(c) Former SpinCo Employees . For purposes of this Agreement, former employees of the SpinCo Group shall be deemed to include all employees who, as of their last day of employment, were employed by a SpinCo Entity and will not be either a SpinCo Employee or a RemainCo Employee (collectively, the “Former SpinCo Employees”).

 

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Section 2.3 Employment Law Obligations .

(a) WARN Act . Effective as of the Employee Transfer Date, (i) the RemainCo Group shall be responsible for providing any necessary WARN notice (and meeting any similar state law notice requirements) with respect to any termination of any RemainCo Employee and (ii) the SpinCo Group shall be responsible for providing any necessary WARN notice (and meeting any similar state law notice requirements) with respect to any termination of any SpinCo Employee.

(b) Compliance With Employment Laws . Effective as of the Employee Transfer Date, (i) each member of the RemainCo Group shall be responsible for adopting and maintaining any policies or practices, and for all other actions and inactions, necessary to comply with employment-related laws and requirements relating to the employment of its RemainCo Employees and the treatment of any applicable Former RemainCo Employees in respect of their former employment, and (ii) each member of the SpinCo Group shall be responsible for adopting and maintaining any policies or practices, and for all other actions and inactions, necessary to comply with employment-related laws and requirements relating to the employment of its SpinCo Employees and the treatment of any applicable Former SpinCo Employees in respect of their former employment.

Section 2.4 Employee Records .

(a) Records Relating to RemainCo Employees and Former RemainCo Employees . All records and data in any form relating to RemainCo Employees and Former RemainCo Employees shall be the property of the RemainCo Group, except that records and data pertaining to such an employee and relating to any period that such employee was (i) employed by any member of the SpinCo Group or (ii) covered under any employee benefit plan sponsored by any member of the SpinCo Group (to the extent that such records or data relate to such coverage) prior to the Employee Transfer Date shall be jointly owned by those members of the SpinCo Group and the RemainCo Group.

(b) Records Relating to SpinCo Employees and Former SpinCo Employees . All records and data in any form relating to SpinCo Employees and Former SpinCo Employees shall be the property of the SpinCo Group, except that records and data pertaining to such an employee and relating to any period that such employee was (i) employed by any member of the RemainCo Group or (ii) covered under any employee benefit plan sponsored by any member of the RemainCo Group (to the extent that such records or data relate to such coverage) prior to the Employee Transfer Date shall be jointly owned by those members of the RemainCo Group and the SpinCo Group.

(c) Sharing of Records . The Parties shall use their respective commercially reasonable efforts to provide the other Party such employee-related records and information as necessary or appropriate to carry out their respective obligations under applicable law (including any relevant privacy protection laws or regulations in any applicable jurisdictions or Privacy Contract), this Agreement, any other Ancillary Agreement or the Master Separation Agreement, and for the purposes of administering their respective employee benefit plans and policies. All information and records regarding employment, personnel and employee benefit

 

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matters of RemainCo Employees and Former RemainCo Employees shall be accessed, retained, held, used, copied and transmitted on and after the Employee Transfer Date by members of the RemainCo Group in accordance with all applicable laws, policies and Privacy Contracts relating to the collection, storage, retention, use, transmittal, disclosure and destruction of such records. All information and records regarding employment, personnel and employee benefit matters of SpinCo Employees and Former SpinCo Employees shall be accessed, retained, held, used, copied and transmitted on and after the Employee Transfer Date by members of the SpinCo Group in accordance with all applicable laws, policies and Privacy Contracts relating to the collection, storage, retention, use, transmittal, disclosure and destruction of such records.

(d) Access to Records . To the extent not inconsistent with this Agreement and any applicable privacy protection laws or regulations or Privacy Contracts, access to such records on and after the Employee Transfer Date will be provided to members of the RemainCo Group and members of the SpinCo Group in accordance with the Master Separation Agreement. In addition, notwithstanding anything to the contrary, the RemainCo Group shall be provided reasonable access to those records necessary for their administration of any plans or programs on behalf of RemainCo Employees and Former RemainCo Employees on and after the Employee Transfer Date as permitted by any applicable privacy protection laws or regulations or Privacy Contracts. The RemainCo Group shall also be permitted to retain copies of all restrictive covenant agreements with any SpinCo Employee or Former SpinCo Employee in which any member of the RemainCo Group has a valid business interest. In addition, the SpinCo Group shall be provided reasonable access to those records necessary for their administration of any plans or programs on behalf of SpinCo Employees and Former SpinCo Employees on and after the Employee Transfer Date as permitted by any applicable privacy protection laws or regulations or Privacy Contracts. The SpinCo Group shall also be permitted to retain copies of all restrictive covenant agreements with any RemainCo Employee or Former RemainCo Employee in which any member of the SpinCo Group has a valid business interest.

(e) Maintenance of Records . With respect to retaining, destroying, transferring, sharing, copying and permitting access to all such information, RemainCo and SpinCo shall (and shall cause their respective Subsidiaries to) comply with all applicable laws, regulations, Privacy Contracts and internal policies, and shall indemnify and hold harmless each other from and against any and all liability, claims, actions, and damages that arise from a failure (by the indemnifying party or its Subsidiaries or their respective agents) to so comply with all applicable laws, regulations, Privacy Contracts and internal policies applicable to such information.

(f) No Access to Computer Systems or Files . Except as set forth in the Master Separation Agreement or any Ancillary Agreement, no provision of this Agreement shall give (i) any member of the RemainCo Group direct access to the computer systems or other files, records or databases of any member of the SpinCo Group or (ii) any member of the SpinCo Group direct access to the computer systems or other files, records or databases of any member of the RemainCo Group, unless specifically permitted by the owner of such systems, files, records or databases.

 

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(g) Relation to Master Separation Agreement . The provisions of this Section 2.4 shall be in addition to, and not in derogation of, the provisions of the Master Separation Agreement governing Confidential Information, including Sections 6.3, 6.4 and 6.5 of the Master Separation Agreement.

(h) Confidentiality . Except as otherwise set forth in this Agreement, all records and data relating to Employees shall, in each case, be subject to the confidentiality provisions of the Master Separation Agreement and any other applicable agreement and applicable law.

(i) Cooperation . Each Party shall use commercially reasonable efforts to cooperate to share, retain and maintain data and records that are necessary or appropriate to further the purposes of this Section 2.4 and for each Party to administer its respective benefit plans to the extent consistent with this Agreement and applicable law, and each Party agrees to cooperate as long as is reasonably necessary to further the purposes of this Section 2.4. Except as provided under any Ancillary Agreement, no Party shall charge another Party a fee for such cooperation.

ARTICLE III

EQUITY AND INCENTIVE COMPENSATION PLANS

Section 3.1 General Principles .

(a) For the avoidance of doubt, the provisions of this Article III shall not apply unless the Distribution takes place. RemainCo and SpinCo shall take any and all reasonable action as shall be necessary and appropriate to further the provisions of this Article III.

(b) Where an award granted under one of the RemainCo Legacy Equity Plans is replaced by an award under the SpinCo New Equity Plan in accordance with the provisions of this Article III, such award generally shall be on terms which are in all material respects identical to the terms of the award which it replaces (including any requirements of continued employment) but subject to any necessary changes to take into account (i) that the award relates to SpinCo Common Stock, (ii) that the SpinCo New Equity Plan is administered by SpinCo, (iii) if applicable, that the grantee under the award is employed or affiliated with a new employer or plan sponsor, and (iv) the adjustments required by this Article III. Where an award granted under one of the RemainCo Legacy Equity Plans is adjusted in accordance with the provisions of this Article III, such award shall otherwise continue to retain the same terms and conditions of the original award, subject to any necessary changes to take into account that the grantee under the award is employed or affiliated with a new employer or plan sponsor, if applicable, and the adjustments required by this Article III.

(c) Subject to Section 3.10, following the Distribution, a grantee who has outstanding awards under one or more of the RemainCo Legacy Equity Plans and/or replacement awards under the SpinCo New Equity Plan shall be considered to have been employed by the applicable plan sponsor before and after the Distribution for purposes of (i) vesting and (ii) determining the date of termination of employment as it applies to any such award.

 

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(d) No award described in this Article III, whether outstanding or to be issued, adjusted, substituted or cancelled by reason of or in connection with the Distribution, shall be adjusted, settled, cancelled, or exercisable, until in the judgment of the administrator of the applicable plan or program such action is consistent with all applicable law, including federal securities laws. Any period of exercisability will not be extended on account of a period during which such an award is not exercisable in accordance with the preceding sentence.

(e) Except as otherwise expressly provided in this Article III, from and after the Distribution Date, (i) SpinCo shall have sole responsibility for the administration of the SpinCo New Equity Plan and the settlement of the SpinCo Equity Compensation Awards, and no member of the RemainCo Group shall have any liability or responsibility therefor, and (ii) the appropriate member of the RemainCo Group shall have sole responsibility for the administration of the RemainCo Legacy Equity Plans and the settlement of the RemainCo Equity Compensation Awards, and no member of the SpinCo Group shall have any liability or responsibility therefor. Notwithstanding the foregoing, SpinCo and its designees shall have exclusive authority and discretion with respect to all employment-related determinations or decisions required or permitted to be made by the applicable sponsor, administrator or employer entity under the terms of the RemainCo Legacy Equity Plans with respect to RemainCo Equity Compensation Awards held by SpinCo Employees, and RemainCo and its designees shall have exclusive authority and discretion with respect to all employment-related determinations or decisions required or permitted to be made by the applicable sponsor, administrator or employer entity under the terms of the SpinCo New Equity Plan with respect to SpinCo Equity Compensation Awards held by RemainCo Employees. RemainCo and SpinCo agree to administer the RemainCo Equity Compensation Awards and SpinCo Equity Compensation Awards, respectively, in accordance with any determination or decision made by the other Party in accordance with the preceding sentence upon reasonable notice of such determination or decision.

(f) Notwithstanding Section 3.1(e), in the case of any outstanding RemainCo Equity Compensation Awards or SpinCo Equity Compensation Awards with respect to which (i) the award is vested as of the Distribution Date (or to the extent partially vested as of the Distribution Date) and (ii) a valid deferral election is in effect as of the Distribution Date, (x) RemainCo (or one or more members of the RemainCo Group, as designated by RemainCo) shall have sole responsibility for the settlement of those SpinCo Equity Compensation Awards held by RemainCo Legacy Award Holders, RemainCo Employees or, as of the Distribution Date, members of the Board of Directors of RemainCo and (y) SpinCo (or one or more members of the SpinCo Group, as designated by SpinCo) shall have sole responsibility for the settlement of those RemainCo Equity Compensation Awards held by Spinco Legacy Award Holders, SpinCo Employees or, as of the Distribution Date, members of the Board of Directors of SpinCo.

Section 3.2 Tax Reporting and Withholding; Payment of Option Exercise Price .

(a) SpinCo (or one or more members of the SpinCo Group, as designated by SpinCo) shall be responsible for (i) the satisfaction of all tax reporting and withholding requirements in respect of the issuance, vesting or settlement, on or after the Distribution Date, of RemainCo Equity Compensation Awards and SpinCo Equity Compensation Awards held by

 

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SpinCo Legacy Award Holders, SpinCo Employees and, as of the Distribution Date, members of the Board of Directors of SpinCo and (ii) remitting the appropriate tax or withholding amounts to the appropriate taxing authorities in respect of the distribution and vesting of all such awards.

(b) RemainCo (or one or more members of the RemainCo Group, as designated by RemainCo) shall be responsible for (i) the satisfaction of all tax reporting and withholding requirements in respect of the issuance, vesting or settlement, on or after the Distribution Date, of RemainCo Equity Compensation Awards and SpinCo Equity Compensation Awards held by RemainCo Legacy Award Holders, RemainCo Employees and, as of the Distribution Date, members of the Board of Directors of RemainCo and (ii) remitting the appropriate tax or withholding amounts to the appropriate taxing authorities in respect of the distribution and vesting of all such awards.

(c) Upon the exercise of a Post-Distribution RemainCo Option or a Replacement SpinCo Option, the exercise price of such stock option will be remitted in cash by the option administrator to the issuer of the option (the appropriate member of the RemainCo Group or the SpinCo Group, as applicable) and the applicable withholding taxes of such stock option or stock appreciation right will be remitted in cash by the option administrator to the entity (the appropriate member of the RemainCo Group or the SpinCo Group, as applicable) responsible for payroll taxes, withholding and reporting with respect to the option pursuant to this Section 3.2. Upon vesting or payment, as applicable, of RemainCo RSUs, Additional RemainCo RSUs, RemainCo RSAs, Replacement RemainCo Units, mPower Performance RSUs, Additional mPower Performance RSUs, MEGTEC Performance RSUs, Replacement SpinCo RSUs, Additional SpinCo RSUs, Additional SpinCo RSAs, Replacement SpinCo Units, and Replacement MEGTEC Performance RSUs, the applicable withholding will be remitted in cash by the administrator to the entity (the appropriate member of the RemainCo Group or the SpinCo Group, as applicable) responsible for payroll taxes, withholding and reporting with respect to such awards pursuant to this Section 3.2. To the extent necessary to provide the withholding amount in cash to the entity responsible for payroll taxes, withholding, and reporting ( e.g ., in the case of share withholding), the issuer of the applicable award will provide the withholding amount in cash. Notwithstanding the foregoing, the method of remittance of the exercise price of any stock option or any applicable withholding taxes may vary for legal or administrative reasons.

(d) Each Party shall use commercially reasonable efforts to cooperate to share, retain and maintain data and records that are necessary or appropriate to further the purposes of this Section 3.2, and each Party agrees to cooperate as long as is reasonably necessary to further the purposes of this Section 3.2. Except as provided under any Ancillary Agreement, no Party shall charge another Party a fee for such cooperation.

Section 3.3 Restricted Stock Units and Restricted Stock .

(a) 2015 RSUs and Non-U.S. Awards—SpinCo Holders . Each SpinCo Legacy Award Holder and each grantee under any of the RemainCo Legacy Equity Plans who will be a SpinCo Employee, in either case who holds, as of the Distribution Date, one or more RemainCo RSUs (excluding RemainCo RSUs granted in respect of service on the Board of

 

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Directors of RemainCo) that were granted (i) on or after January 1, 2015 or (ii) to a Non-U.S. Holder, shall receive, effective as of the Distribution Date and immediately prior to the Distribution, as a replacement award in substitution for each such RemainCo RSU (which shall be cancelled), a number of restricted or deferred (as applicable) stock units with respect to and payable in shares of SpinCo Common Stock or (if, but only if, provided for under the terms of the applicable RemainCo RSU) cash (“Replacement SpinCo RSUs”) under the SpinCo New Equity Plan having a value immediately after the Distribution Date equal to the value of the shares of RemainCo Common Stock subject to the RemainCo RSU (calculated using the Pre-Distribution RemainCo Share Price), as calculated pursuant to the following provisions. In each case, the number of Replacement SpinCo RSUs shall be equal to (x) divided by (y), where (x) is the Pre-Distribution RemainCo Share Price multiplied by the number of RemainCo RSUs that are being cancelled and replaced pursuant to this Section 3.3(a), and (y) is the Post-Distribution SpinCo Share Price, with the resulting number of Replacement SpinCo RSUs being rounded up or down to the nearest whole unit. Except as provided in the foregoing provisions of this Section 3.3(a), Replacement SpinCo RSUs shall be granted on terms which are in all material respects identical (including with respect to vesting) to the terms of the RemainCo RSUs which they replace.

(b) 2015 RSUs and Non-U.S. Awards—RemainCo Holders . Each RemainCo Legacy Award Holder and each grantee under any of the RemainCo Legacy Equity Plans who will be a RemainCo Employee, in either case who holds, as of the Distribution Date, one or more RemainCo RSUs (excluding RemainCo RSUs granted in respect of service on the Board of Directors of RemainCo) that were granted (i) on or after January 1, 2015 or (ii) to a Non-U.S. Holder, shall receive, effective as of the Distribution Date and immediately prior to the Distribution, for each such award of RemainCo RSUs (in lieu of receiving any SpinCo restricted or deferred stock units in connection with such RemainCo RSUs), a number of additional restricted or deferred (as applicable) stock units with respect to and payable in RemainCo Common Stock or (if, but only if, provided for under the terms of the applicable RemainCo RSU) cash (the “Additional RemainCo RSUs”), under one of the RemainCo Legacy Equity Plans. In each case, the number of shares of RemainCo Common Stock subject to an award of Additional RemainCo RSUs shall be equal to the product of (x) and (y), where (x) is the number of shares of RemainCo Common Stock covered by the original award of RemainCo RSUs and (y) is equal to (a) the Pre-Distribution RemainCo Share Price minus the Post-Distribution RemainCo Share Price, divided by (b) the Post-Distribution RemainCo Share Price, with the resulting number of shares subject to the Additional RemainCo RSUs being rounded up or down to the nearest whole share. Except as provided in the foregoing provisions of this Section 3.3(b), Additional RemainCo RSUs shall be granted on such terms which are in all material respects identical (including with respect to vesting) to the terms of the RemainCo RSUs with respect to which they are granted.

(c) Pre-2015 RSUs and Director RSUs . Each grantee under any of the RemainCo Legacy Equity Plans (other than a Non-U.S. Holder) who holds, as of the Distribution Date, one or more RemainCo RSUs that were granted (i) prior to January 1, 2015 or (ii) in respect of such holder’s service on the Board of Directors of RemainCo shall receive, effective as of the Distribution Date and immediately prior to the Distribution, for each such award of RemainCo RSUs, an additional number of restricted or deferred (as applicable) stock units with respect to and payable in shares of SpinCo Common Stock or (if, but only if, provided for under the

 

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terms of the applicable RemainCo RSU) cash (the “Additional SpinCo RSUs”) under the SpinCo New Equity Plan. In each case, the number of shares of SpinCo Common Stock subject to an award of Additional SpinCo RSUs shall be equal to the number of shares of SpinCo Common Stock that would have been distributed in the Distribution with respect to the number of shares of RemainCo Common Stock subject to the grantee’s RemainCo RSUs, with the resulting number of shares subject to the Additional SpinCo RSU being rounded up or down to the nearest whole share. Except as provided in the foregoing provisions of this Section 3.3(c), Additional SpinCo RSUs shall be granted on terms which are in all material respects identical (including with respect to vesting) to the terms of the RemainCo RSUs with respect to which they are granted.

(d) Restricted Stock Awards . Each grantee under any of the RemainCo Legacy Equity Plans who holds, as of the Distribution Date, one or more RemainCo RSAs that are unvested as of the Distribution Date will generally receive, as of the Distribution Date and pursuant to the Distribution, for each such award of RemainCo RSAs, a number of restricted shares of SpinCo Common Stock (the “Additional SpinCo RSAs”) determined in the same manner as for other shareholders of RemainCo Common Stock based on the Distribution Multiple, with the value of any fractional share paid to the holder in cash, less any applicable taxes, as soon as practicable following the Distribution Date, except to the extent that such cash payment would result in adverse tax consequences to the holder under Section 409A of the Code. Except as provided in the foregoing provisions of this Section 3.3(d), Additional SpinCo RSAs shall be subject to the SpinCo New Equity Plan and subject to terms which are in all material respects identical (including with respect to vesting) to the terms of the RemainCo RSAs to which they relate.

Section 3.4 Stock Options and Stock Appreciation Rights .

(a) 2015 Awards and Non-U.S. Awards—SpinCo Holders . Each grantee under any of the RemainCo Legacy Equity Plans (i) who is a SpinCo Legacy Award Holder or will be a SpinCo Employee, or who will not be a SpinCo Employee but will serve on the Board of Directors of SpinCo immediately after the Distribution Date, and (ii) who holds as of the Distribution Date one or more RemainCo Options that were granted (A) on or after January 1, 2015 or (B) to a Non-U.S. Holder, shall receive, effective as of the Distribution Date and immediately prior to the Distribution, as a replacement award in substitution for each such RemainCo Option (which shall be cancelled), an option to purchase a number of shares of SpinCo Common Stock or stock appreciation right with respect to a number of shares of SpinCo Common Stock, as applicable, under the SpinCo New Equity Plan (a “Replacement SpinCo Option”) having a value (calculated using the Post-Distribution SpinCo Share Price) equal to the value of the shares of RemainCo Common Stock subject to the RemainCo Option (calculated using the Pre-Distribution RemainCo Share Price), as calculated pursuant to the following provisions. The number of shares of SpinCo Common Stock subject to a Replacement SpinCo Option shall be equal to the product of (x) the number of shares of RemainCo Common Stock subject to a RemainCo Option as of the Distribution Date and (y) a fraction, the numerator of which is the Pre-Distribution RemainCo Share Price and the denominator of which is the Post-Distribution SpinCo Share Price, with the resulting number of shares subject to the Replacement SpinCo Option being rounded down to the nearest whole share. Each such Replacement SpinCo Option shall have the same comparative ratio of the

 

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exercise price to the Post-Distribution SpinCo Share Price as the exercise price of each RemainCo Option to the Pre-Distribution RemainCo Share Price, provided that the exercise price for the Replacement SpinCo Option shall be rounded up to the nearest whole cent. Replacement SpinCo Options shall not be exercisable until the Registration Statement Effectiveness Date. Except as provided in the foregoing provisions of this Section 3.4(a), Replacement SpinCo Options granted under this Section 3.4(a) shall be granted on terms which are in all material respects identical (including with respect to vesting) to the terms of the RemainCo Options which they replace.

(b) 2015 Awards and Non-U.S. Awards—RemainCo Holders . Each grantee under any of the RemainCo Legacy Equity Plans (i) who is a RemainCo Legacy Award Holder or will be a RemainCo Employee, or who will not be a RemainCo Employee but will serve on the Board of Directors of RemainCo immediately after the Distribution Date, and (ii) who holds as of the Distribution Date one or more RemainCo Options that were granted (A) on or after January 1, 2015 or (B) to a Non-U.S. Holder, shall receive, effective as of the Distribution Date and immediately prior to the Distribution, in substitution for each such RemainCo Option (which shall be cancelled), an option to purchase a number of shares of RemainCo Common Stock or a stock appreciation right with respect to a number of shares of RemainCo Common Stock, as applicable, under one of the RemainCo Legacy Equity Plans (a “Post-Distribution RemainCo Option”) having a value (calculated using the Post-Distribution RemainCo Share Price) equal to the value of the shares of RemainCo Common Stock subject to the RemainCo Option (calculated using the Pre-Distribution RemainCo Share Price), as calculated pursuant to the following provisions. The number of shares of RemainCo Common Stock subject to a Post-Distribution RemainCo Option shall be equal to the product of (x) the number of shares of RemainCo Common Stock subject to a RemainCo Option as of the Distribution Date and (y) a fraction, the numerator of which is the Pre-Distribution RemainCo Share Price and the denominator of which is the Post-Distribution RemainCo Share Price, with the resulting number of shares subject to the Post-Distribution RemainCo Option being rounded down to the nearest whole share. Each such Post-Distribution RemainCo Option shall have the same comparative ratio of the exercise price to the Post-Distribution RemainCo Share Price as the exercise price of each RemainCo Option to the Pre-Distribution RemainCo Share Price, provided that the exercise price for the Post-Distribution RemainCo Option shall be rounded up to the nearest whole cent. Except as provided in the foregoing provisions of this Section 3.4(b), Post-Distribution RemainCo Options shall be granted on terms which are in all material respects identical (including with respect to vesting) to the terms of the RemainCo Options which they replace.

(c) Pre-2015 Awards . Each grantee under any of the RemainCo Legacy Equity Plans (other than a Non-U.S. Holder) who holds as of the Distribution Date one or more RemainCo Options that were granted prior to January 1, 2015 shall receive, effective as of the Distribution Date and immediately prior to the Distribution, in substitution for each such RemainCo Option (which shall be cancelled), both a Replacement SpinCo Option with respect to shares of SpinCo Common Stock and a Post-Distribution RemainCo Option with respect to shares of RemainCo Common Stock, with such shares of SpinCo Common Stock and RemainCo Common Stock having an aggregate value (calculated using the Post-Distribution RemainCo Share Price and the Post-Distribution SpinCo Share Price) equal to the value of the shares of RemainCo Common Stock subject to the RemainCo Option (calculated using the Pre-

 

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Distribution RemainCo Share Price), as calculated pursuant to the following provisions. In each case, the number of shares of RemainCo Common Stock subject to a Post-Distribution RemainCo Option shall be equal to the product of (x) the number of shares of RemainCo Common Stock subject to a RemainCo Option as of the Distribution Date and (y) a fraction, the numerator of which is the Pre-Distribution RemainCo Share Price and the denominator of which is the sum of (I) the product of the Distribution Multiple and the Post-Distribution SpinCo Share Price and (II) the Post-Distribution RemainCo Share Price, with the resulting number of shares subject to the Post-Distribution RemainCo Option being rounded down to the nearest whole share. In each case, the number of shares of SpinCo Common Stock subject to a Replacement SpinCo Option shall be equal to the product of (x) the number of shares of RemainCo Common Stock subject to a RemainCo Option as of the Distribution Date and (y) a fraction, the numerator of which is the Pre-Distribution RemainCo Share Price and the denominator of which is the sum of (I) the quotient obtained by dividing the Post-Distribution RemainCo Share Price by the Distribution Multiple and (II) the Post-Distribution SpinCo Share Price, with the resulting number of shares subject to the Replacement SpinCo Option being rounded down to the nearest whole share. Each of the Replacement SpinCo Options and the Post-Distribution RemainCo Options shall have the same comparative ratio of the exercise price to the Post-Distribution SpinCo Share Price and Post-Distribution RemainCo Share Price, respectively, as the exercise price of the RemainCo Option being replaced to the Pre-Distribution RemainCo Share Price, provided that the exercise price for each Replacement SpinCo Option and each Post-Distribution RemainCo Option shall be rounded up to the nearest whole cent. Replacement SpinCo Options shall not be exercisable until the Registration Statement Effectiveness Date. Except as provided in the foregoing provisions of this Section 3.4(c), Replacement SpinCo Options and Post-Distribution RemainCo Options shall be granted on such terms which are in all material respects identical (including with respect to vesting) to the terms of the RemainCo Options with respect to which they are granted.

(d) Notwithstanding anything to the contrary in this Section 3.4, the exercise price, the number of shares of RemainCo Common Stock and SpinCo Common Stock subject to each Post-Distribution RemainCo Option and Replacement SpinCo Option, and the terms and conditions of exercise of such options shall be determined in a manner consistent with the requirements of Section 409A of the Code. For purposes of Section 409A of the Code, the Pre-Distribution RemainCo Share Price shall be treated as the fair market value of a share of RemainCo Common Stock immediately prior to the substitutions described in this Section 3.4 and the Post-Distribution RemainCo Share Price and the Post-Distribution SpinCo Share Price shall be treated as the fair market value of a share of RemainCo Common Stock and the fair market value of a share of SpinCo Common Stock, respectively, immediately after such substitutions.

Section 3.5 Performance-Based Awards .

(a) Non-U.S. Awards—SpinCo Holders . Each SpinCo Legacy Award Holder and each grantee under any of the RemainCo Legacy Equity Plans who will be a SpinCo Employee, in either case who holds, as of the Distribution Date, one or more performance-based equity awards that were granted to a Non-U.S. Holder (excluding any mPower Performance RSUs and MEGTEC Performance RSUs), shall receive, effective as of the Distribution Date and immediately prior to the Distribution, as a replacement award in

 

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substitution for each such performance-based award (which shall be cancelled), a number of restricted or deferred stock units, as applicable, with respect to and payable in shares of SpinCo Common Stock or (if, but only if, provided for under the terms of the applicable performance-based equity award) cash (“Replacement SpinCo Units”). In each case, the number of shares of SpinCo Common Stock subject to an award of Replacement SpinCo Units shall be equal to (x) divided by (y), where (x) is the Pre-Distribution RemainCo Share Price multiplied by the number of shares of RemainCo Common Stock that would have been earned at target performance for the applicable performance-based equity award, and (y) is the Post-Distribution SpinCo Share Price, with the resulting number of shares subject to the Replacement SpinCo Units being rounded up or down to the nearest whole share. Continued employment conditions applicable to the performance-based equity award will apply to the corresponding Replacement SpinCo Units.

(b) Non-U.S. Awards—RemainCo Holders . Each RemainCo Legacy Award Holder and each grantee under any of the RemainCo Legacy Equity Plans who will be a RemainCo Employee, in either case who holds, as of the Distribution Date, one or more performance-based equity awards that were granted to a Non-U.S. Holder (excluding any mPower Performance RSUs and MEGTEC Performance RSUs), shall receive, effective as of the Distribution Date and immediately prior to the Distribution, as a replacement award in substitution for each such performance-based award (which shall be cancelled), a number of restricted or deferred stock units, as applicable, with respect to and payable in shares of RemainCo Common Stock or (if, but only if, provided for under the terms of the applicable performance-based equity award) cash (“Replacement RemainCo Units”). In each case, the number of shares of RemainCo Common Stock subject to an award of Replacement RemainCo Units shall be equal to (x) divided by (y), where (x) is the Pre-Distribution RemainCo Share Price multiplied by the number of shares of RemainCo Common Stock that would have been earned at target performance for the applicable performance-based equity award, and (y) is the Post-Distribution RemainCo Share Price, with the resulting number of shares subject to the Replacement RemainCo Units being rounded up or down to the nearest whole share. Continued employment conditions applicable to the performance-based equity award will apply to the corresponding Replacement RemainCo Units.

(c) U.S. Awards . Each grantee under the RemainCo Legacy Equity Plans (other than a Non-U.S. Holder) who holds, as of the Distribution Date, one or more performance-based equity awards (excluding any mPower Performance RSUs and MEGTEC Performance RSUs) shall receive, effective as of the Distribution Date and immediately prior to the Distribution, as a replacement award in substitution for each such performance-based award (which shall be cancelled), a number of Replacement RemainCo Units equal to the number of shares of RemainCo Common Stock that would have been earned at target performance for each such performance-based equity award, with the resulting number of Replacement RemainCo Units being rounded up or down to the nearest whole unit, and shall also receive, effective as of the Distribution Date and immediately prior to the Distribution, a number of Replacement SpinCo Units equal to the number of shares of SpinCo Common Stock that would have been distributed in the Distribution with respect to the Replacement RemainCo Units as if each of such Replacement RemainCo Units had been RemainCo Common Stock, with the resulting number of Replacement SpinCo Units being rounded up or down to the nearest whole unit. Continued employment conditions applicable to the performance-based equity award will apply to the corresponding Replacement RemainCo Units and Replacement SpinCo Units.

 

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(d) mPower Performance RSUs . Each grantee under the RemainCo Legacy Equity Plans who holds, as of the Distribution Date, one or more performance-based restricted stock units listed on Schedule 3.5(d) (“mPower Performance RSUs”) shall receive, effective as of the Distribution Date and immediately prior to the Distribution, for each such mPower Performance RSU (in lieu of receiving any SpinCo restricted stock units in connection with such mPower Performance RSUs), a number of additional performance-based restricted stock units with respect to RemainCo Common Stock (the “Additional mPower Performance RSUs”), under one of the RemainCo Legacy Equity Plans. In each case, the number of shares of RemainCo Common Stock subject to an award of Additional mPower Performance RSUs shall be equal to the product of (x) and (y), where (x) is the number of shares of RemainCo Common Stock covered by the original award of mPower Performance RSUs and (y) is equal to (a) the Pre-Distribution RemainCo Share Price minus the Post-Distribution RemainCo Share Price, divided by (b) the Post-Distribution RemainCo Share Price, with the resulting number of shares subject to the Additional mPower Performance RSUs being rounded up or down to the nearest whole share. Except as provided in the foregoing provisions of this Section 3.5(d), Additional mPower Performance RSUs shall be granted on such terms which are in all material respects identical (including with respect to vesting and performance conditions) to the terms of the mPower Performance RSUs with respect to which they are granted.

(e) MEGTEC Performance RSUs . Each grantee under the RemainCo Legacy Equity Plans who holds, as of the Distribution Date, one or more cash-settled performance-based restricted stock units listed on Schedule 3.5(e) (“MEGTEC Performance RSUs”) shall receive, effective as of the Distribution Date and immediately prior to the Distribution, as a replacement award in substitution for each such MEGTEC Performance RSU (which shall be cancelled), a number of cash-settled performance-based restricted stock units with respect to shares of SpinCo Common Stock (“Replacement MEGTEC Performance RSUs”) under the SpinCo New Equity Plan having a value immediately after the Distribution Date equal to the value of the shares of RemainCo Common Stock subject to the MEGTEC Performance RSU (calculated using the Pre-Distribution RemainCo Share Price), as calculated pursuant to the following provisions. In each case, the number of Replacement MEGTEC Performance RSUs shall be equal to (x) divided by (y), where (x) is the Pre-Distribution RemainCo Share Price multiplied by the number of MEGTEC Performance RSUs that are being cancelled and replaced pursuant to this Section 3.5(e), and (y) is the Post-Distribution SpinCo Share Price, with the resulting number of Replacement MEGTEC Performance RSUs being rounded up or down to the nearest whole unit. Except as provided in the foregoing provisions of this Section 3.5(e), Replacement MEGTEC Performance RSUs shall be granted on terms which are in all material respects identical (including with respect to vesting and performance conditions) to the terms of the MEGTEC Performance RSUs which they replace.

(f) To the extent necessary to implement the provisions of this Section 3.5, the RemainCo Legacy Equity Plan shall be deemed amended. Notwithstanding the foregoing provisions of this Section 3.5, a performance-based equity award granted under the RemainCo Legacy Equity Plan which is no longer subject to performance conditions as of immediately prior to the Distribution shall be treated as if it were a RemainCo RSU under the applicable provisions of Section 3.3.

 

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Section 3.6 Section 16(b) of the Exchange Act; Code Sections 162(m) and 409A .

(a) By approving the adoption of this Agreement, the respective boards of directors of RemainCo and SpinCo intend to exempt from the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, by reason of the application of Rule 16b-3 thereunder, all acquisitions and dispositions of equity incentive awards by directors and executive officers of each of RemainCo and SpinCo, and the respective boards of directors of RemainCo and SpinCo also intend to expressly approve, in respect of any equity-based award, the use of any method for the payment of an exercise price and the satisfaction of any applicable tax withholding (specifically including the actual or constructive tendering of shares in payment of an exercise price and the withholding of option shares from delivery in satisfaction of applicable tax withholding requirements) to the extent such method is permitted under the applicable equity incentive plan and award agreement.

(b) Notwithstanding anything in this Agreement to the contrary (including the treatment of supplemental and deferred compensation plans, outstanding long-term incentive awards and annual incentive awards as described herein), RemainCo and SpinCo agree to negotiate in good faith regarding the need for any treatment different from that otherwise provided herein to ensure that, to the extent deemed desirable by RemainCo and SpinCo, (i) a federal income tax deduction for the payment of such supplemental or deferred compensation or long-term incentive award, annual incentive award or other compensation is not limited by reason of Code Section 162(m), and (ii) the treatment of such supplemental or deferred compensation or long-term incentive award, annual incentive award or other compensation does not cause the imposition of a tax under Code Section 409A.

Section 3.7 Certain Bonus Payments .

(a) Except to the extent otherwise provided in Section 10.1, annual incentive bonuses in respect of 2015 shall be paid to RemainCo Employees and SpinCo Employees by RemainCo and SpinCo, respectively, at the time such bonuses are normally paid (but no later than March 15, 2016) in accordance with the bonus pools determined by the Compensation Committee of the respective Board of Directors. The annual incentive bonuses in respect of 2015 for RemainCo Employees and SpinCo Employees who were employed by the RemainCo Group during 2015 prior to the Distribution Date shall be bifurcated. Each such individual’s bonus shall be the sum of: (i) the bonus based on the applicable bonus plan provisions, prorated for the period between January 1, 2015 and the Distribution Date, and (ii) the bonus based on the applicable bonus plan provisions, prorated for the period between the day after the Distribution Date and December 31, 2015.

(b) SpinCo shall assume responsibility for the grant of 2015 bonuses and liability for payment of bonuses to the individuals listed on Schedule 3.7(b) earned under The Babcock & Wilcox Executive Incentive Compensation Plan and The Babcock & Wilcox Company Management Incentive Plan. RemainCo shall maintain liability for payment of bonuses to individuals other than those listed on Schedule 3.7(b) earned under The Babcock & Wilcox

 

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Executive Incentive Compensation Plan and The Babcock & Wilcox Company Management Incentive Plan. SpinCo shall assume responsibility for the grant of 2015 bonuses and liability for payment of bonuses to SpinCo Employees earned under the The Babcock & Wilcox Company Salaried Employees Incentive Plan. RemainCo shall maintain liability for payment of bonuses to individuals other than the SpinCo Employees earned under The Babcock & Wilcox Company Salaried Employees Incentive Plan.

Section 3.8 Change in Control.

(a) In the event a change in control (as defined in the applicable equity incentive plan or award agreement) occurs with respect to RemainCo, then (i) any accelerated vesting and/or exercisability applicable to RemainCo Equity Compensation Awards held by RemainCo Employees and RemainCo Legacy Award Holders shall apply to the SpinCo Equity Compensation Awards then held by such individuals, and (ii) all RemainCo Equity Compensation Awards then held by SpinCo Employees and SpinCo Legacy Award Holders shall fully vest (and, to the extent applicable, become exercisable).

(b) In the event a change in control (as defined in the applicable equity incentive plan or award agreement) occurs with respect to SpinCo, then (i) any accelerated vesting and/or exercisability applicable to SpinCo Equity Compensation Awards held by SpinCo Employees and SpinCo Legacy Award Holders shall apply to the RemainCo Equity Compensation Awards then held by such individuals, and (ii) all SpinCo Equity Compensation Awards then held by RemainCo Employees and RemainCo Legacy Award Holders shall fully vest (and, to the extent applicable, become exercisable).

(c) Notwithstanding the foregoing, this Section 3.8 will not apply to the extent that it would cause adverse tax consequences under Code Section 409A. For the avoidance of doubt, this Section 3.8 shall not apply to awards granted under the RemainCo Legacy Equity Plans or SpinCo New Equity Plan after the Distribution Date.

Section 3.9 Conformity with Non-U.S. Laws . Notwithstanding anything to the contrary in this Agreement, (i) to the extent any of the provisions in this Article III (or any equity award described herein) do not conform with applicable non-U.S. laws (including provisions for the collection of withholding taxes), such provisions shall be modified to the extent necessary to conform with such non-U.S. laws in such manner as is equitable and to preserve the intent hereof, as determined by the Parties in good faith, and (ii) the provisions of this Article III may be modified to the extent necessary to avoid undue cost or administrative burden arising out of the application of this Article III to awards subject to non-U.S. laws.

Section 3.10 Employment Treatment .

(a) Continuous employment with the SpinCo Group and the RemainCo Group following the Distribution Date will be deemed to be continuing service for purposes of vesting and exercisability for the SpinCo Equity Compensation Awards and the RemainCo Equity Compensation Awards. However, in the event that a SpinCo Employee terminates employment after the Distribution Date and becomes employed by the RemainCo Group, for purposes of Article III, the SpinCo Employee will be deemed terminated and the terms and

 

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conditions of the applicable performance incentive plan under which grants were made will apply. Similarly, in the event that a RemainCo Employee terminates employment after the Distribution Date and becomes employed by the SpinCo Group, for purposes of Article III, the RemainCo Employee will be deemed terminated and the terms and conditions of the applicable performance incentive plan under which grants were made will apply. In addition, a non-employee member of the Board of Directors of RemainCo or SpinCo will be treated in a similar manner to that described in this Section 3.10.

(b) If, after the Distribution Date, RemainCo or SpinCo identifies an administrative error in the individuals identified as holding RemainCo Equity Compensation Awards and SpinCo Equity Compensation Awards, the amount of such awards so held, the vesting level of such awards, or any other similar error, RemainCo and SpinCo will mutually cooperate in taking such actions as are necessary or appropriate to place, as nearly as reasonably practicable, the individual and RemainCo and SpinCo in the position in which they would have been had the error not occurred.

ARTICLE IV

GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES

Section 4.1 General Principles .

(a) (i) Each member of the RemainCo Group and each member of the SpinCo Group shall take any and all reasonable action as shall be necessary or appropriate so that active participation in the RemainCo Pension Plans, RemainCo Thrift Plans, RemainCo Welfare Plans and RemainCo Benefit Arrangements by all SpinCo Employees and Former SpinCo Employees shall terminate in connection with the Distribution as and when provided under this Agreement (or if not specifically provided under this Agreement, as of 11:59 p.m. on the day before the Employee Transfer Date), and each member of the SpinCo Group shall cease to be a participating employer under the terms of such RemainCo Pension Plans, RemainCo Thrift Plans, RemainCo Welfare Plans and RemainCo Benefit Arrangements as of such time.

(ii) Each member of the SpinCo Group and each member of the RemainCo Group shall take any and all reasonable action as shall be necessary or appropriate so that active participation in the SpinCo Pension Plans, SpinCo Thrift Plans, SpinCo Welfare Plans and SpinCo Benefit Arrangements by all RemainCo Employees and Former RemainCo Employees shall terminate in connection with the Distribution as and when provided under this Agreement (or if not specifically provided under this Agreement, as of 11:59 p.m. on the day before the Employee Transfer Date), and each member of the RemainCo Group shall cease to be a participating employer under the terms of such SpinCo Pension Plans, SpinCo Thrift Plans, SpinCo Welfare Plans and SpinCo Benefit Arrangements as of such time.

(iii) Except as otherwise provided in this Agreement, one or more members of the SpinCo Group (as designated by SpinCo) shall continue to be responsible for or assume, effective as of the Employee Transfer Date, all employee benefits liabilities for

 

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SpinCo Employees and Former SpinCo Employees, and any assets relating to such employee benefits for SpinCo Employees and Former SpinCo Employees shall be transferred to or continue to be held by one or more members of the SpinCo Group (as designated by SpinCo); and one or more members of the RemainCo Group (as designated by RemainCo) shall continue to be responsible for or assume, effective as of the Employee Transfer Date, all employee benefits liabilities for RemainCo Employees and Former RemainCo Employees, and any assets relating to such employee benefits for RemainCo Employees and Former RemainCo Employees shall be transferred to or continue to be held by one or more members of the RemainCo Group (as designated by RemainCo).

(b) Except as otherwise provided in this Agreement, effective as of the Employee Transfer Date, one or more members of the SpinCo Group (as determined by SpinCo) shall assume or continue the sponsorship of, and no member of the RemainCo Group shall have any further liability for or under, the following agreements, obligations and liabilities, and SpinCo shall indemnify each member of the RemainCo Group, and the officers, directors, and employees of each member of the RemainCo Group, and hold them harmless with respect to such agreements, obligations or liabilities:

(i) any and all individual agreements entered into between any member of the RemainCo Group and any SpinCo Employee or Former SpinCo Employee;

(ii) any and all agreements entered into between any member of the RemainCo Group and any individual who is an independent contractor providing services primarily for the business activities of the SpinCo Group;

(iii) any and all wages, salaries, incentive compensation (as the same may be modified by this Agreement), commissions and bonuses payable to any SpinCo Employees or Former SpinCo Employees after the Employee Transfer Date, without regard to when such wages, salaries, incentive compensation, commissions and bonuses are or may have been earned;

(iv) any and all moving expenses and obligations related to relocation, repatriation, transfers or similar items incurred by or owed to any SpinCo Employees or Former SpinCo Employees, whether or not accrued as of the Employee Transfer Date (other than such expenses and obligations incurred by RemainCo prior to the Employee Transfer Date as a result of which there is an existing liability as of the day before the Employee Transfer Date, all of which shall remain RemainCo’s obligation);

(v) any and all immigration-related, visa, work application or similar rights, obligations and liabilities related to any SpinCo Employees or Former SpinCo Employees; and

(vi) any and all liabilities and obligations whatsoever with respect to claims made by or with respect to any SpinCo Employees or Former SpinCo Employees in connection with any employee benefit plan, program or policy not otherwise retained or assumed by any member of the RemainCo Group pursuant to this Agreement, including such liabilities relating to actions or omissions of or by any member of the SpinCo Group or any officer, director, employee or agent thereof prior to the Employee Transfer Date.

(c) Except as otherwise provided in this Agreement, effective as of the Employee Transfer Date, no member of the SpinCo Group shall have any further liability for, and RemainCo shall indemnify each member of the SpinCo Group, and the officers, directors, and employees of each member of the SpinCo Group, and hold them harmless with respect to any and all liabilities and obligations whatsoever with respect to, claims made by or with respect to any RemainCo Employees or Former RemainCo Employees in connection with any employee benefit plan, program or policy not otherwise retained or assumed by any member of the SpinCo Group pursuant to this Agreement, including such liabilities relating to actions or omissions of or by any member of the RemainCo Group or any officer, director, employee or agent thereof prior to the Employee Transfer Date.

 

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Section 4.2 Sponsorship and/or Establishment of SpinCo Plans . RemainCo Welfare Plans in which both (i) RemainCo Employees or Former RemainCo Employees and (ii) SpinCo Employees or Former SpinCo Employees participate shall be divided into two separate plans, with one covering RemainCo Employees and Former RemainCo Employees sponsored by a member of the RemainCo Group, and the other covering SpinCo Employees and Former SpinCo Employees sponsored by a member of the SpinCo Group.

Section 4.3 Service Credit .

(a) Service for Eligibility and Vesting Purposes . Except as otherwise provided in any other provision of this Agreement, for purposes of eligibility and vesting under the SpinCo Pension Plans, SpinCo Thrift Plans, SpinCo Benefit Arrangements and SpinCo Welfare Plans, SpinCo shall, and shall cause each member of the SpinCo Group to, credit each SpinCo Employee and Former SpinCo Employee with service for any period of employment with any member of the RemainCo Group prior to the Employee Transfer Date to the same extent such service would be credited if it had been performed for a member of the SpinCo Group.

(b) Service for Benefit Purposes . Except as otherwise provided in any other provision of this Agreement, and except to the extent the following would result in a duplication of benefits, (i) for purposes of benefit levels and accruals and benefit commencement entitlements under the SpinCo Pension Plans, SpinCo Thrift Plans and SpinCo Welfare Plans, SpinCo shall, and shall cause each member of the SpinCo Group to, credit each SpinCo Employee and Former SpinCo Employee with service for any period of employment with any member of the RemainCo Group prior to the Employee Transfer Date to the same extent that such service is taken into account pursuant to the terms of the RemainCo Pension Plans, RemainCo Thrift Plans and RemainCo Welfare Plans, and (ii) for purposes of benefit levels and accruals and benefit commencement entitlements under the RemainCo Pension Plans, RemainCo Thrift Plans and RemainCo Welfare Plans, RemainCo shall, and shall cause each member of the RemainCo Group to, credit each RemainCo Employee and Former RemainCo Employee with service for any period of employment with any member of the SpinCo Group prior to the Employee Transfer Date to the same extent such service would be credited if it had been performed for a member of the RemainCo Group.

(c) Evidence of Prior Service . Notwithstanding anything to the contrary, but subject to applicable law, upon reasonable request by one Party to the other Party, the first Party will provide to the other Party copies of any records available to the first Party to document such service, plan participation and membership of such Employees and cooperate with the first Party to resolve any discrepancies or obtain any missing data for purposes of determining benefit eligibility, participation, vesting and calculation of benefits with respect to any Employee.

 

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Section 4.4 Plan Administration .

(a) Transition Services . The Parties acknowledge that the RemainCo Group or the SpinCo Group may provide administrative services for certain of the other Party’s benefit programs for a transitional period under the terms of an applicable transition services agreement. The Parties agree to enter into a business associate agreement (if required by applicable health information privacy laws) in connection with such transition services agreement.

(b) Administration . SpinCo shall use its best efforts to, and shall cause each member of the SpinCo Group to use its best efforts to, administer its benefit plans in a manner that does not jeopardize the tax-favored status of the tax-favored benefit plans maintained by any member of the RemainCo Group. RemainCo shall use its best efforts to, and shall cause each member of the RemainCo Group to use its best efforts to, administer its benefit plans in a manner that does not jeopardize the tax-favored status of the tax-favored benefit plans maintained by any member of the SpinCo Group.

(c) Participant Elections and Beneficiary Designations . All participant elections and beneficiary designations made under any plan sponsored by a member of the RemainCo Group or SpinCo Group prior to the effective date as of which assets or liabilities relating to that plan are transferred or allocated to a member of the SpinCo Group or RemainCo Group, as applicable, shall continue in effect under any plan maintained by any member of the SpinCo Group or RemainCo Group, as applicable, to which liabilities are transferred or allocated pursuant to this Agreement until such time as any applicable participant changes his elections or beneficiary designations in accordance with the procedures of the relevant plan, as the case may be, including deferral, investment, and payment form elections, dividend elections, coverage options and levels, beneficiary designations and the rights of alternate payees under qualified domestic relations orders.

ARTICLE V

PENSION, EXCESS AND SUPPLEMENTAL PLANS

Section 5.1 General Principles . The SpinCo Pension Plans shall continue to be maintained and sponsored by one or more members of the SpinCo Group on and after the Employee Transfer Date, and the RemainCo Pension Plans shall continue to be maintained and sponsored by one or more members of the RemainCo Group on and after the Employee Transfer Date. The RemainCo Group and the SpinCo Group shall each be responsible for the funding of their respective pension plans on and after the Employee Transfer Date.

 

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Section 5.2 U.S. Pension Transfers .

(a) Transfer Date .

(i) SpinCo Commercial Operations Plan . On or prior to the Employee Transfer Date, the SpinCo Commercial Operations Plan shall be amended in order that the SpinCo Commercial Operations Plan will provide to each SpinCo Employee and Former SpinCo Employee who was a participant in the RemainCo Governmental Operations Plan (and each alternate payee or beneficiary of such person) (the “SpinCo U.S. Pension Beneficiaries”) benefits identical to those accrued with respect to such person under the RemainCo Governmental Operations Plan as of the close of business on April 30, 2015 (the “SpinCo Transfer Date”) (the “SpinCo U.S. Transferred Benefit”). A SpinCo U.S. Pension Beneficiary shall not accrue benefits under the RemainCo Governmental Operations Plan after the SpinCo Transfer Date, unless such SpinCo U.S. Pension Beneficiary shall become employed by any member of the RemainCo Group that participates in the RemainCo Governmental Operations Plan on or after the SpinCo Transfer Date.

(ii) RemainCo Governmental Operations Plan . On or prior to the Employee Transfer Date, the RemainCo Governmental Operations Plan shall be amended in order that the RemainCo Governmental Operations Plan will provide to each RemainCo Employee and Former RemainCo Employee (excluding any Grandfathered Foundry Employee) who was a participant in the SpinCo Commercial Operations Plan (and each alternate payee or beneficiary of such person) (the “RemainCo U.S. Pension Beneficiaries”) benefits identical to those accrued with respect to such person under the SpinCo Commercial Operations Plan as of the close of business on April 30, 2015 (the “RemainCo Transfer Date”) (the “RemainCo U.S. Transferred Benefit”). A RemainCo U.S. Pension Beneficiary shall not accrue benefits under the SpinCo Commercial Operations Plan after the RemainCo Transfer Date, unless such RemainCo U.S. Pension Beneficiary shall become employed by any member of the SpinCo Group that participates in the SpinCo Commercial Operations Plan on or after the RemainCo Transfer Date. Each Grandfathered Foundry Employee who is a participant in the SpinCo Commercial Operations Plan as of the RemainCo Transfer Date shall remain a participant in such plan on and after the RemainCo Transfer Date.

(b) Transfer .

(i) SpinCo Commercial Operations Plan . Following the determination of the SpinCo Transfer Amount (as defined below) by RemainCo, RemainCo shall cause to be transferred from the RemainCo Governmental Operations Plan to the SpinCo Commercial Operations Plan assets having an aggregate Value (as defined below) equal to the SpinCo Transfer Amount. On and before the SpinCo Transfer Date, the RemainCo Governmental Operations Plan shall continue to make the required benefit payments to the SpinCo U.S. Pension Beneficiaries. After the SpinCo Transfer Date, the SpinCo Commercial Operations Plan shall commence making the required benefit payments. Effective as of the SpinCo Transfer Date, the sponsor of the SpinCo Commercial Operations Plan shall assume all liabilities with respect to the benefits previously accrued under the RemainCo Governmental Operations Plan by the SpinCo U.S. Pension Beneficiaries.

 

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(ii) RemainCo Governmental Operations Plan . Following the determination of the RemainCo Transfer Amount (as defined below) by SpinCo, SpinCo shall cause to be transferred from the SpinCo Commercial Operations Plan to the RemainCo Governmental Operations Plan assets having an aggregate Value (as defined below) equal to the RemainCo Transfer Amount. On and before the RemainCo Transfer Date, the SpinCo Commercial Operations Plan shall continue to make the required benefit payments to the RemainCo U.S. Pension Beneficiaries. After the RemainCo Transfer Date, the RemainCo Governmental Operations Plan shall commence making the required benefit payments. Effective as of the RemainCo Transfer Date, the sponsor of the RemainCo Governmental Operations Plan shall assume all liabilities with respect to the benefits previously accrued under the SpinCo Commercial Operations Plan by the RemainCo U.S. Pension Beneficiaries.

(c) Calculation of Transfer Amount .

(i) SpinCo Commercial Operations Plan . Promptly following the SpinCo Transfer Date, the RemainCo Actuary shall determine the SpinCo Transfer Amount. The “SpinCo Transfer Amount” means the amount required to be transferred from the RemainCo Governmental Operations Plan to the SpinCo Commercial Operations Plan in respect of the assumption by the SpinCo Commercial Operations Plan of the SpinCo U.S. Transferred Benefit obligations, as determined in accordance with Code Section 414(l) and the regulations thereunder. Promptly upon determination of the SpinCo Transfer Amount, RemainCo shall cause the RemainCo Actuary to provide to SpinCo a written statement of the SpinCo Transfer Amount, a summary of the calculation of such amount and a written statement that the SpinCo Transfer Amount satisfies the requirements of Code Section 414(l).

(ii) RemainCo Governmental Operations Plan . Promptly following the RemainCo Transfer Date, the SpinCo Actuary shall determine the RemainCo Transfer Amount. The “RemainCo Transfer Amount” means the amount required to be transferred from the SpinCo Commercial Operations Plan to the RemainCo Governmental Operations Plan in respect of the assumption by the RemainCo Governmental Operations Plan of the RemainCo U.S. Transferred Benefit obligations, as determined in accordance with Code Section 414(l) and the regulations thereunder. Promptly upon determination of the RemainCo Transfer Amount, SpinCo shall cause the SpinCo Actuary to provide to RemainCo a written statement of the RemainCo Transfer Amount, a summary of the calculation of such amount and a written statement that the RemainCo Transfer Amount satisfies the requirements of Code Section 414(l).

(d) Establishment and Transfer to SpinCo Trust . On May 29, 2015 (the “Initial Trust Transfer Date”), SpinCo shall have established a trust intended to be qualified under Code Section 501(a) (the “SpinCo Master Trust”), and RemainCo shall have caused to be transferred from the RemainCo Master Trust to the SpinCo Master Trust assets having an aggregate Value (as defined below) equal to 95% of the Value of the assets of the SpinCo

 

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Commercial Operations Plan, calculated as of April 30, 2015, as determined in good faith by RemainCo (the “Initial Trust Transfer Amount”). Promptly after the Initial Trust Transfer Date: (i) if the aggregate Value of the assets of the SpinCo Commercial Operations Plan, calculated as of the Initial Trust Transfer Date, exceeds the Initial Trust Transfer Amount, RemainCo shall cause to be transferred from the RemainCo Master Trust to the SpinCo Master Trust assets having a Value equal to such excess, and (ii) if the Initial Trust Transfer Amount exceeds the aggregate Value of the assets of the SpinCo Commercial Operations Plan, calculated as of the Initial Trust Transfer Date, SpinCo shall cause to be transferred from the SpinCo Master Trust to the RemainCo Master Trust assets having a Value equal to such excess (the payments described in (i) and (ii), the “True Up Payment”).

(e) Assets and Value .

(i) Assets To Be Transferred . Assets to be transferred under Section 5.2(b) shall be in cash. Assets to be transferred under Section 5.2(d) shall be in kind and/or in cash in a manner that represents, as closely as commercially practical, a pro rata portion of each investment in a publicly traded portfolio or commingled investment fund (other than an investment in a private equity or real estate limited partnership) held by the RemainCo Master Trust or the SpinCo Master Trust, as applicable, as of the date of such transfer, except that reasonable adjustments shall be made where RemainCo (with respect to transfers from the RemainCo Master Trust) or SpinCo (with respect to transfers from the SpinCo Master Trust) determines such transfers cannot reasonably be made due to investment manager account minimums or where other considerations prevent such pro rata transfers or render such pro rata transfers impractical. Assets to be transferred under Section 5.2(f) shall be in cash and/or in kind, as reasonably determined by RemainCo.

(ii) Value . For purposes of this Section 5.2, the “Value” of all pension assets shall be the fair market value of such assets as determined in good faith by the named fiduciary of the RemainCo Master Trust based on the most recent audited account statements provided to such named fiduciary by the trustee of the RemainCo Master Trust, or, in the event of a transfer from the SpinCo Master Trust, as determined in good faith by the named fiduciary of the SpinCo Master Trust based on the most recent audited account statements provided to such named fiduciary by the trustee of the SpinCo Master Trust.

(f) Post-Transfer Investment Proceeds . Following the date on which assets are transferred from the RemainCo Master Trust to the SpinCo Master Trust in accordance with Section 5.2(d) (the “Trust Transfer Date”), RemainCo shall cause to be transferred from the RemainCo Master Trust to the SpinCo Master Trust a pro rata portion of any investment proceeds received by the RemainCo Master Trust that relate to a period prior to the applicable Trust Transfer Date, according to the proportion of the total amount of assets that were transferred from the RemainCo Master Trust to the SpinCo Master Trust pursuant to Section 5.2(d) to the total amount of assets held by the RemainCo Master Trust prior to any such transfer. This Section 5.2(f) shall not apply to (i) any proceeds or earnings of the RemainCo Master Trust that are taken into account in the calculation of the amount transferred pursuant to Section 5.2(d) or (ii) any proceeds or earnings attributable to an investment that is a private equity or real estate limited partnership.

 

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Section 5.3 Canada Pension Transfer . Effective as of January 1, 2015, SpinCo has established a defined benefit pension plan (the “SpinCo Canada Salaried Pension Plan”) to provide retirement benefits to employees of the SpinCo Group and Former SpinCo Employees as of December 31, 2014 who participated in the RemainCo Canada Salaried Pension Plan prior to January 1, 2015 (and each beneficiary of such person) (the “SpinCo Canada Pension Beneficiaries”). The SpinCo Canada Salaried Pension Plan assumed liability for all benefits accrued with respect to the SpinCo Canada Pension Beneficiaries under the RemainCo Canada Salaried Pension Plan as of December 31, 2014 (the “SpinCo Canada Transferred Benefit”). A SpinCo Canada Pension Beneficiary shall not accrue benefits under the RemainCo Canada Salaried Pension Plan after December 31, 2014. As soon as practicable after regulatory approval has been obtained, RemainCo shall cause to be transferred from the RemainCo Canada Salaried Pension Plan to the SpinCo Canada Salaried Pension Plan assets having an aggregate value equal to the SpinCo Canada Transferred Benefit, as determined in accordance with applicable laws by an actuary appointed by RemainCo.

Section 5.4 Excess and Supplemental Plans .

(a) Excess Plans . The liabilities attributable to RemainCo Employees and Former RemainCo Employees in a SpinCo Excess Plan, if any, shall be assumed by a member of the RemainCo Group which sponsors the RemainCo Excess Plans, and the liabilities attributable to SpinCo Employees and Former SpinCo Employees in a RemainCo Excess Plan, if any, shall be assumed by a member of the SpinCo Group which sponsors a SpinCo Excess Plan, each effective as of the Employee Transfer Date.

(b) Supplemental Plans . On or prior to the Employee Transfer Date, SpinCo shall establish the SpinCo New SERP. The liabilities attributable to SpinCo Employees and Former SpinCo Employees in the RemainCo SERP shall be assumed by a member of the SpinCo Group which sponsors the SpinCo New SERP, effective as of the Employee Transfer Date. Each member of the SpinCo Group shall cease to be a participating employer in the RemainCo SERP, and the SpinCo Employees and the Former SpinCo Employees shall no longer participate in the RemainCo SERP, each effective as of the Employee Transfer Date, unless any such SpinCo Employee or Former SpinCo Employee shall become employed by any member of the RemainCo Group after such date and such member participates in the RemainCo SERP and such employee is eligible for participation therein.

(c) Restoration Plans . On or prior to the Employee Transfer Date, SpinCo shall establish the SpinCo New Restoration Plan. The liabilities attributable to SpinCo Employees and Former SpinCo Employees in the RemainCo Restoration Plan shall be assumed by a member of the SpinCo Group which sponsors the SpinCo New Restoration Plan, effective as of the Employee Transfer Date. Each member of the SpinCo Group shall cease to be a participating employer in the RemainCo Restoration Plan, and the SpinCo Employees and the Former SpinCo Employees shall no longer participate in the RemainCo Restoration Plan, each effective as of the Employee Transfer Date, unless any such SpinCo Employee or Former SpinCo Employee shall become employed by any member of the RemainCo Group after such date and such member participates in the RemainCo Restoration Plan and such employee is eligible for participation therein.

 

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(d) Supplemental Payment Plans . Effective as of the Employee Transfer Date, SpinCo shall assume the liabilities attributable to SpinCo Employees and Former SpinCo Employees in the RemainCo SPP (such portion of the RemainCo SPP which is assumed and continued by SpinCo, the “SpinCo SPP”). Each member of the SpinCo Group shall cease to be a participating employer in the RemainCo SPP, and the SpinCo Employees and the Former SpinCo Employees shall no longer participate in the RemainCo SPP, each effective as of the Employee Transfer Date.

(e) Liability and Responsibility . SpinCo shall have sole responsibility for the administration of each SpinCo Excess Plan, the SpinCo New SERP, the SpinCo New Restoration Plan and the SpinCo SPP and the payment of benefits thereunder to or on behalf of SpinCo Employees and Former SpinCo Employees, and no member of the RemainCo Group shall have any liability or responsibility therefor. RemainCo shall have sole responsibility for the administration of each RemainCo Excess Plan, the RemainCo SERP, the RemainCo Restoration Plan and the RemainCo SPP and the payment of benefits thereunder to or on behalf of RemainCo Employees and Former RemainCo Employees, and no member of the SpinCo Group shall have any liability or responsibility therefor.

Section 5.5 Group Annuity Contract . RemainCo and SpinCo will cooperate and use their commercially reasonable efforts to replicate the RemainCo Annuity Contract such that all remaining benefits payable thereunder to each Former SpinCo Employee (and each beneficiary or alternate payee of such person) shall be governed under a new annuity contract by and between SpinCo or its Subsidiary and the insurance company effective as of the Employee Transfer Date. In the event it cannot be determined prior to the Employee Transfer Date whether an individual with a remaining benefit under the RemainCo Annuity Contract is a Former SpinCo Employee or beneficiary or alternate payee of such person, on the one hand, or a Former RemainCo Employee or beneficiary or alternate payee of such person, on the other hand, then such individual shall be deemed to be a Former SpinCo Employee for purposes of this Section 5.5.

ARTICLE VI

THRIFT PLANS

Section 6.1 U.S. Thrift Plans . Prior to the Employee Transfer Date, SpinCo will establish and adopt a qualified employee cash or deferred arrangement under Code Section 401(k) (the “SpinCo U.S. Thrift Plan”) intended to be qualified under Code Section 401(a) and containing provisions that will provide, among other things, (i) benefits for each SpinCo Employee and Former SpinCo Employee who is a participant with a remaining account balance in the RemainCo U.S. Thrift Plan immediately prior to the effective date of the SpinCo U.S. Thrift Plan (and each beneficiary and alternate payee of such person) (the “SpinCo U.S. Thrift Plan Beneficiaries”) identical (except as provided in this Article VI) to those in effect for the SpinCo U.S. Thrift Plan Beneficiaries under the RemainCo U.S. Thrift Plan as of the date of transfer of assets and liabilities with respect to such plan (as described below), and (ii) for each RemainCo Employee or Former RemainCo Employee who has a remaining account balance under the RemainCo U.S. Thrift Plan immediately prior to the Employee Transfer Date (and each beneficiary or alternate payee of such person) (the “RemainCo US. Thrift Plan

 

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Beneficiaries”), an account under the SpinCo U.S. Thrift Plan to reflect any shares of SpinCo Common Stock received in the Distribution as a result of such RemainCo U.S. Thrift Plan Beneficiaries’ accounts under the RemainCo U.S. Thrift Plan. Each SpinCo Employee who was an active participant in the RemainCo U.S. Thrift Plan on the day prior to the effective date of the SpinCo U.S. Thrift Plan shall participate in the SpinCo U.S. Thrift Plan effective from and after the effective date of the SpinCo U.S. Thrift Plan. SpinCo Employees and Former SpinCo Employees shall not make or receive additional contributions under the RemainCo U.S. Thrift Plan on and after the effective date of the SpinCo U.S. Thrift Plan, unless any such SpinCo Employee or Former SpinCo Employee shall become employed by any member of the RemainCo Group after such date and such member participates in the RemainCo U.S. Thrift Plan. A RemainCo Employee or Former RemainCo Employee shall not make or receive contributions under the SpinCo U.S. Thrift Plan unless any such RemainCo Employee or Former RemainCo Employee shall become employed by any member of the SpinCo Group on and after the effective date of the SpinCo U.S. Thrift Plan and such member participates in the SpinCo U.S. Thrift Plan. The interest of each SpinCo U.S. Thrift Plan Beneficiary in the RemainCo U.S. Thrift Plan attributable to employer matching contributions as of the day prior to the Employee Transfer Date shall be 100% vested on the Employee Transfer Date. The interest of each RemainCo U.S. Thrift Plan Beneficiary in the SpinCo U.S. Thrift Plan attributable to employer matching contributions as of the Employee Transfer Date shall be 100% vested on the Employee Transfer Date. In the event a participant (other than a SpinCo Employee or RemainCo Employee) or his or her alternate payee or beneficiary has a remaining account balance in the RemainCo U.S. Thrift Plan immediately prior to the effective date of the SpinCo U.S. Thrift Plan and it cannot be determined prior to the effective date of the SpinCo U.S. Thrift Plan whether such participant is a Former SpinCo Employee or a Former RemainCo Employee, such participant shall be deemed to be a Former SpinCo Employee for purposes of this Article VI.

Section 6.2 Treatment of RemainCo Common Stock and SpinCo Common Stock .

(a) SpinCo Common Stock Fund . The SpinCo U.S. Thrift Plan will provide as of the Distribution Date: (i) for the establishment of a SpinCo Common Stock fund; (ii) that such SpinCo Common Stock fund shall receive and hold all shares of SpinCo Common Stock to be distributed in the Distribution on behalf of SpinCo U.S. Thrift Plan Beneficiaries and RemainCo U.S. Thrift Plan Beneficiaries; (iii) that, following the Distribution Date, contributions made by or on behalf of SpinCo U.S. Thrift Plan Beneficiaries may be allocated to the SpinCo Common Stock fund; (iv) that the RemainCo U.S. Thrift Plan Beneficiaries will be prohibited from increasing their holdings in the SpinCo Common Stock fund; (v) that the RemainCo U.S. Thrift Plan Beneficiaries may elect to liquidate their holdings in the SpinCo Common Stock fund and invest those monies in any other investment fund offered under the SpinCo U.S. Thrift Plan; and (vi) that the RemainCo U.S. Thrift Plan Beneficiaries may elect to receive their holdings in the SpinCo U.S. Thrift Plan in accordance with the distribution options provided under such plan to terminated employees. Additionally, SpinCo shall cause the SpinCo U.S. Thrift Plan to provide that the RemainCo U.S. Thrift Plan Beneficiaries shall participate in the SpinCo U.S. Thrift Plan in respect of their accounts thereunder; provided, however, the sponsor of the SpinCo U.S. Thrift Plan may in its discretion provide that the SpinCo Common Stock fund shall no longer be offered as an investment alternative under the SpinCo U.S. Thrift Plan.

 

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(b) RemainCo Common Stock Fund . The RemainCo U.S. Thrift Plan shall be amended, on or prior to the Distribution Date, to provide that, following the Distribution: (i) the RemainCo Common Stock fund will hold the assets of the accounts of the SpinCo U.S. Thrift Plan Beneficiaries invested in the RemainCo Common Stock fund; (ii) the SpinCo U.S. Thrift Plan Beneficiaries will be prohibited from increasing their holdings in the RemainCo Common Stock fund; (iii) the SpinCo U.S. Thrift Plan Beneficiaries may elect to liquidate their holdings in the RemainCo Common Stock fund and invest those monies in any other investment fund offered under the RemainCo U.S. Thrift Plan; and (iv) the SpinCo U.S. Thrift Plan Beneficiaries may elect to receive their holdings in the RemainCo U.S. Thrift Plan in accordance with the distribution options available under such plan to terminated employees. RemainCo shall cause the RemainCo U.S. Thrift Plan to provide that SpinCo U.S. Thrift Plan Beneficiaries shall participate in the RemainCo U.S. Thrift Plan in respect of their accounts thereunder; provided, however, the sponsor of the RemainCo U.S. Thrift Plan may in its discretion provide that the RemainCo Common Stock fund shall no longer be offered as an investment alternative under the RemainCo U.S. Thrift Plan.

Section 6.3 U.S. Transfer of Accounts . As of the effective date of the SpinCo U.S. Thrift Plan, RemainCo will cause to be transferred from the trust under the RemainCo U.S. Thrift Plan to the trust under the SpinCo U.S. Thrift Plan the aggregate amount that was credited to the accounts of the SpinCo U.S. Thrift Plan Beneficiaries as of such date, save and except for the portion of the RemainCo Common Stock fund attributable to the accounts of the SpinCo U.S. Thrift Plan Beneficiaries. The transfer shall, to the extent reasonably possible, be an in-kind transfer, subject to the reasonable consent of the trustee of the SpinCo U.S. Thrift Plan trust and shall include the transfer of the aggregate assets held in the accounts relating to each SpinCo U.S. Thrift Plan Beneficiary under the RemainCo U.S. Thrift Plan and any participant loan notes held under such plans. RemainCo shall cause the RemainCo U.S. Thrift Plan to allocate to the SpinCo U.S. Thrift Plan a proportionate share of any forfeiture account under the RemainCo U.S. Thrift Plan.

Section 6.4 Canada Thrift Plans . Prior to the Employee Transfer Date, SpinCo will establish and adopt a savings arrangement (the “SpinCo Canada Thrift Plan”) that will provide, among other things, benefits and tax treatment for each employee of the SpinCo Group and Former SpinCo Employee who is a participant with a remaining account balance in the RemainCo Canada Thrift Plan immediately prior to the effective date of the SpinCo Canada Thrift Plan (and each beneficiary of such person) (the “SpinCo Canada Thrift Plan Beneficiaries”) identical to those in effect for the SpinCo Canada Thrift Plan Beneficiaries under the RemainCo Canada Thrift Plan as of the date of transfer of assets and liabilities with respect to such plan (as described below). Each employee of the SpinCo Group who was an active participant in the RemainCo Canada Thrift Plan on the day prior to the effective date of the SpinCo Canada Thrift Plan shall participate in the SpinCo Canada Thrift Plan effective from and after the effective date of the SpinCo Canada Thrift Plan. Employees of the SpinCo Group and Former SpinCo Employees shall not make or receive additional contributions under the RemainCo Canada Thrift Plan on and after the effective date of the SpinCo Canada Thrift Plan, unless any such employee of the SpinCo Group or Former SpinCo Employee shall become employed by any member of the RemainCo Group after such date and such member participates in the RemainCo Canada Thrift Plan. A RemainCo Employee or Former RemainCo Employee shall not make or receive contributions under the SpinCo Canada Thrift Plan unless any such

 

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RemainCo Employee or Former RemainCo Employee shall become employed by any member of the SpinCo Group on and after the effective date of the SpinCo Canada Thrift Plan and such member participates in the SpinCo Canada Thrift Plan.

Section 6.5 Canada Transfer of Accounts . As of the effective date of the SpinCo Canada Thrift Plan, RemainCo will cause to be transferred from the trust under the RemainCo Canada Thrift Plan to the trust under the SpinCo Canada Thrift Plan the aggregate amount that was credited to the accounts of the SpinCo Canada Thrift Plan Beneficiaries as of such date. The transfer shall, to the extent reasonably possible, be an in-kind transfer, subject to the reasonable consent of the trustee of the SpinCo Canada Thrift Plan trust and shall include the transfer of the aggregate assets held in the accounts relating to each SpinCo Canada Thrift Plan Beneficiary under the RemainCo Canada Thrift Plan.

ARTICLE VII

WELFARE PLANS

Section 7.1 Establishment of SpinCo Welfare Plans .

(a) Except as provided below, the members of the SpinCo Group who had previously adopted a RemainCo Welfare Plan and were participating employers therein on the day before the Employee Transfer Date (“Participating SpinCo Employers”) will, at 11:59 p.m. on that date, withdraw from such participation, and, effective as of the Employee Transfer Date, one or more of the Participating SpinCo Employers has assumed sponsorship, under newly established welfare plans, of the coverage and benefits which were offered under such plans to the SpinCo Employees and the Former SpinCo Employees (and their eligible spouses and dependents as the case may be) of the Participating SpinCo Employers (collectively, the “SpinCo Welfare Plan Participants”). Such coverage and benefits shall then be provided to the SpinCo Welfare Plan Participants on an uninterrupted basis under the newly established SpinCo Welfare Plans which shall contain substantially the same benefit provisions as in effect under the corresponding RemainCo Welfare Plan on the day before the Employee Transfer Date. Except as provided below, effective as of the Employee Transfer Date, liabilities relating to the SpinCo Welfare Plan Participants shall be spun off from each RemainCo Welfare Plan and allocated to the corresponding new SpinCo Welfare Plan.

(b) As a result of withdrawal from participation in the RemainCo Welfare Plans by the Participating SpinCo Employers, the SpinCo Welfare Plan Participants ceased to be eligible for coverage under the RemainCo Welfare Plans at 11:59 p.m. on the day before the Employee Transfer Date. SpinCo Welfare Plan Participants shall not participate in any RemainCo Welfare Plans on and after the Employee Transfer Date, unless they shall become employed after such date by any member of the RemainCo Group that participates in such plans and meet the terms and conditions of participation thereunder. RemainCo Employees and Former RemainCo Employees shall not participate in any SpinCo Welfare Plans, unless they shall become employed on and after the Employee Transfer Date by any member of the SpinCo Group that participates in such plans and meet the terms and conditions of participation thereunder.

 

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Section 7.2 Transitional Matters Under SpinCo Welfare Plans .

(a) Treatment of Claims Incurred .

(i) Self-Insured Benefits . SpinCo has assumed and is responsible for the funding of payment for any unpaid covered claim and eligible expense:

(A) incurred by any SpinCo Welfare Plan Participant prior to the Employee Transfer Date under a RemainCo Welfare Plan that is not described in section 7.2(a)(ii) below, to the extent such participant has coverage under such plan as, or through, an employee or former employee of a Participating SpinCo Employer on the date such claim or expense is incurred; or

(B) incurred by any SpinCo Employee or Former SpinCo Employee prior to the Employee Transfer Date under a RemainCo Benefit Arrangement that is not described in section 7.2(a)(ii) below. No member of the RemainCo Group shall be responsible for any liability with respect to any such claims or expenses.

(ii) Insured Benefits . With respect to benefits that, prior to the Employee Transfer Date, were provided for under the RemainCo Welfare Plans through the purchase of insurance, RemainCo shall cause the RemainCo Welfare Plans to fully perform, pay and discharge all claims of SpinCo Welfare Plan Participants that were incurred prior to the Employee Transfer Date.

(iii) Claims Incurred . For purposes of this Section 7.2(a), a claim or liability is deemed to be incurred (A) with respect to medical, dental, vision and/or prescription drug benefits, upon the rendering of health services giving rise to such claim or liability; (B) with respect to life insurance, accidental death and dismemberment and business travel accident insurance, upon the occurrence of the event giving rise to such claim or liability; (C) with respect to long-term disability benefits, upon the date of an individual’s disability, as determined by the disability benefit insurance carrier or claim administrator, giving rise to such claim or liability; and (D) with respect to a period of continuous hospitalization, upon the date of admission to the hospital, unless otherwise provided under the terms of the applicable RemainCo Welfare Plan or RemainCo Benefit Arrangement.

(b) Credit for Deductibles and Other Limits . With respect to each SpinCo Welfare Plan Participant, the SpinCo Welfare Plans will give credit in plan year 2015 for any amount paid, number of services obtained or visits provided under the comparable type RemainCo Welfare Plan by such SpinCo Welfare Plan Participant in plan year 2015 toward deductibles, out-of-pocket maximums, limits on number of services or visits, or other similar limitations to the extent such amounts are taken into account under the comparable type RemainCo Welfare Plan. For purposes of any life-time maximum benefit limit payable to a SpinCo Welfare Plan Participant under any SpinCo Welfare Plan, the SpinCo Welfare Plans will recognize any expenses paid or reimbursed by a RemainCo Welfare Plan with respect to such participant prior to the Employee Transfer Date to the same extent such expense payments or reimbursements would be recognized in respect of an active plan participant under that RemainCo Welfare Plan.

(c) COBRA . Effective as of the Employee Transfer Date, SpinCo has assumed and will satisfy all requirements under COBRA with respect to all SpinCo Employees and Former SpinCo Employees and their qualified beneficiaries, including for individuals who are already receiving benefits as of such date under COBRA.

 

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Section 7.3 VEBA . As of the Employee Transfer Date, RemainCo or a member of the RemainCo Group shall continue as settlor and sponsor of each Code Section 501(c)(9) trust (“VEBA”) that holds the plan assets of a RemainCo Welfare Plan.

Section 7.4 Continuity of Benefits, Benefit Elections and Beneficiary Designations .

(a) Benefit Elections and Designations . As of the Employee Transfer Date (or such other date provided for under subsection 7.4(b)), SpinCo has caused the SpinCo Welfare Plans to recognize and give effect to all elections and designations (including all coverage and contribution elections and beneficiary designations) made by each SpinCo Welfare Plan Participant under, or with respect to, the corresponding RemainCo Welfare Plan for plan year 2015.

(b) Additional Details Regarding Flexible Spending Accounts . To the extent any SpinCo Welfare Plan provides or constitutes a health care flexible spending account or dependent care flexible spending account (each a “SpinCo FSA”), such SpinCo Welfare Plan shall be effective as of January 1, 2015 rather than the Employee Transfer Date. It is the intention of the Parties that all activity under a SpinCo Welfare Plan Participant’s flexible spending account with RemainCo for plan year 2015 be treated instead as activity under the corresponding SpinCo FSA. Accordingly, (i) any period of participation by a SpinCo Welfare Plan Participant in a RemainCo flexible spending account during plan year 2015 (the “Participation Period”) will be deemed a period when the SpinCo Welfare Plan Participant participated in the corresponding SpinCo FSA; (ii) all expenses incurred during a Participation Period will be deemed incurred while the participant’s coverage was in effect under the corresponding SpinCo FSA; and (iii) all elections and reimbursements made with respect to a Participation Period under a RemainCo flexible spending account will be deemed to have been made with respect to the corresponding SpinCo FSA.

(c) Employer Non-elective Contributions . As of the Employee Transfer Date, SpinCo has caused any SpinCo Welfare Plan that constitutes a cafeteria plan under Section 125 of the Code to recognize and give effect to all non-elective employer contributions payable and paid toward coverage of a SpinCo Welfare Plan Participant under the corresponding RemainCo Welfare Plan that is a cafeteria plan under Section 125 of the Code for the applicable cafeteria plan year.

Section 7.5 Insurance Contracts . To the extent any RemainCo Welfare Plan is funded through the purchase of an insurance contract or is subject to any stop loss contract, RemainCo and SpinCo will cooperate and use their commercially reasonable efforts to replicate such insurance contracts for SpinCo (except to the extent changes are required under applicable state

 

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insurance laws) and to maintain any pricing discounts or other preferential terms for both RemainCo and SpinCo for a reasonable term. Neither Party shall be liable for failure to obtain such pricing discounts or other preferential terms for the other Party. Each Party shall be responsible for any additional premiums, charges or administrative fees that such Party may incur pursuant to this Section 7.5.

Section 7.6 Third-Party Vendors . Except as provided below, to the extent any RemainCo Welfare Plan is administered by a third-party vendor, RemainCo and SpinCo will cooperate and use their commercially reasonable efforts to replicate any contract with such third-party vendor for SpinCo and to maintain any pricing discounts or other preferential terms for both RemainCo and SpinCo for a reasonable term. Neither Party shall be liable for failure to obtain such pricing discounts or other preferential terms for the other Party. Each Party shall be responsible for any additional premiums, charges or administrative fees that such Party may incur pursuant to this Section 7.6.

Section 7.7 Claims Experience . Notwithstanding the foregoing, RemainCo and SpinCo shall use commercially reasonable efforts to ensure that any claims experience under the RemainCo Welfare Plans attributable to SpinCo Welfare Beneficiaries shall be available to the SpinCo Welfare Plans, as permitted by any applicable privacy protection laws or regulations or Privacy Contracts.

Section 7.8 Allocation of Demutualization Proceeds . To the extent demutualization or similar proceeds were paid or credited to the RemainCo Group or a RemainCo Welfare Plan prior to the Employee Transfer Date with respect to an insurance contract that funded a RemainCo Welfare Plan covering SpinCo Welfare Plan Participants and such proceeds remain unallocated as of the Employee Transfer Date, RemainCo shall transfer to SpinCo as soon as practicable following the Employee Transfer Date a pro rata portion of such proceeds, according to the proportion of the total number of SpinCo Employees and Former SpinCo Employees participating in such plan as of the day before the Employee Transfer Date to the total number of employees participating in such plan as of the day before the Employee Transfer Date.

Section 7.9 Grandfathered Foundry Employees . Each Grandfathered Foundry Employee shall be deemed to be a Former SpinCo Employee for purposes of this Article VII; provided, however, that on and after the Employee Transfer Date RemainCo shall continue to be responsible for providing pre-age 65 post-retirement medical and life insurance to each Grandfathered Foundry Employee who is eligible for such coverage under a RemainCo Welfare Plan as of immediately prior to the Employee Transfer Date until the earlier of (a) the last day of the month in which such employee attains age 65 and (b) such other date as the employee ceases to be eligible for such coverage. SpinCo shall have the obligation to provide post-retirement medical and life insurance to each Grandfathered Foundry Employee who is eligible for such coverage commencing with the first of the month following such employee’s attainment of age 65. Notwithstanding the foregoing, nothing in this Agreement shall constitute an acknowledgment by RemainCo or SpinCo that either is obligated to continue to provide any level of post-retirement medical or life benefits for any period of time.

 

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ARTICLE VIII

BENEFIT ARRANGEMENTS

Except as otherwise provided under this Agreement, effective as of the Employee Transfer Date, SpinCo Employees and Former SpinCo Employees are no longer eligible to participate in any RemainCo Benefit Arrangement.

ARTICLE IX

WORKERS’ COMPENSATION AND UNEMPLOYMENT COMPENSATION

Section 9.1 General Principles. Subject to Section 9.2, effective as of the Employee Transfer Date, (a) SpinCo shall have (and, to the extent it has not previously had such obligations, assume) the obligations for all claims and liabilities relating to workers’ compensation and unemployment compensation benefits for all SpinCo Employees and Former SpinCo Employees and (b) RemainCo shall have (and, to the extent it has not previously had such obligations, assume) the obligations for all claims and liabilities relating to workers’ compensation and unemployment compensation benefits for all RemainCo Employees and Former RemainCo Employees.

Section 9.2 Crossover Claims. Section 9.1 shall not apply to a workers’ compensation claim of a SpinCo Employee, Former SpinCo Employee, RemainCo Employee or Former RemainCo Employee attributable to or arising in connection with work or services by such employee or former employee prior to the Employee Transfer Date and which (a) arises in connection with (i) both (x) work or services performed for the RemainCo Business and (y) work or services performed for the SpinCo Business or (ii) work or services performed for both the RemainCo Business and the SpinCo Business, (b) arises in connection with work or services performed by a SpinCo Employee or Former SpinCo Employee on behalf of a member of the RemainCo Group in the normal course of such employee’s duties, or (c) arises in connection with work or services performed by a RemainCo Employee or Former RemainCo Employee on behalf of a member of the SpinCo Group in the normal course of such employee’s duties (any such claim in (a), (b) or (c), a “Crossover Claim”). With respect to any Crossover Claim, effective as of the Employee Transfer Date, (i) SpinCo shall have (and, to the extent it has not previously had such obligations, assume) the obligations for all Crossover Claims for which the last injurious exposure occurred at a location owned or operated by a SpinCo Entity, and (ii) RemainCo shall have (and, to the extent it has not previously had such obligations, assume) the obligations for all Crossover Claims for which the last injurious exposure occurred at a location owned or operated by a RemainCo Entity. In the event that ownership or operation of such a location is not known with respect to a Crossover Claim, responsibility for the claim will be allocated to SpinCo if the employee was employed by a SpinCo Entity at the time of last injurious exposure and to RemainCo if the employee was employed by a RemainCo Entity at the time of last injurious exposure.

Section 9.3 Additional Details . SpinCo and RemainCo shall use commercially reasonable efforts to provide that workers’ compensation and unemployment insurance costs are not adversely affected for either of them by reason of the Distribution. For the avoidance of

 

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doubt, the obligations for a workers’ compensation claim will be allocated between the Parties in accordance with Section 9.1 or 9.2, as applicable, even if the claim is registered or becomes registered by the state workers’ compensation authority in the name of a Party (or the Affiliate of a Party) other than the Party to which the claim is allocated in accordance with Section 9.1 or 9.2, as applicable. The Party to which a workers’ compensation claim is allocated pursuant to Sections 9.1 and 9.2 shall be responsible for all related costs and expenses, including compensation payments, medical payments, Disabled Workers’ Relief Fund payments, self-insured assessments, legal fees and expenses, administration costs and expenses, and violations of specific safety requirement assessments/fines.

Section 9.4 Ohio Guarantees . RemainCo shall indemnify, defend and hold harmless SpinCo and each member of the SpinCo Group and their respective Affiliates, successors and assigns from and against any and all losses of such Persons relating to any liability arising from a SpinCo Ohio Guarantee as a result of any workers’ compensation claim allocated to RemainCo pursuant to Section 9.1 or 9.2, as applicable. SpinCo shall indemnify, defend and hold harmless RemainCo, each member of the RemainCo Group and their respective Affiliates, successors and assigns from and against any and all losses of such Persons relating to any liability arising from a RemainCo Ohio Guarantee as a result of any workers’ compensation claim allocated to SpinCo pursuant to Section 9.1 or 9.2, as applicable.

ARTICLE X

RETENTION, SEVERANCE AND OTHER MATTERS

Section 10.1 Retention Agreements .

(a) SpinCo Obligations . Effective as of the Employee Transfer Date, RemainCo hereby assigns to SpinCo, and SpinCo hereby accepts such assignment and assumes, RemainCo’s rights and obligations arising under the retention, severance and/or employment agreements described in Schedule 10.1(a), and SpinCo agrees to honor the terms and conditions of those agreements applicable to SpinCo as a successor under the terms of such agreements. Except for SpinCo’s assumption of the retention, severance and/or employment agreements as described above, the terms of the retention agreements shall in all other respects be unaffected. The Parties agree that the SpinCo Employees who are covered by retention, severance and/or employment agreements described above are express beneficiaries of this Section 10.1(a).

(b) RemainCo Obligations . RemainCo shall continue to be responsible for and remain obligated under the retention, severance and/or employment agreements described in Schedule 10.1(b) and agrees to honor the terms and conditions of those agreements.

(c) Additional Obligations . SpinCo and RemainCo shall each be solely responsible for any other retention arrangements entered into by any member of the SpinCo Group or any member of the RemainCo Group, respectively, and that are not otherwise allocated by this Agreement to a member of either the RemainCo Group or the SpinCo Group.

(d) Effect on Equity Awards . Notwithstanding any provision of this Article X, and except as otherwise provided in Article III, RemainCo shall remain responsible for administering and settling the RemainCo Equity Compensation Awards, and SpinCo shall remain responsible for administering and settling the SpinCo Equity Compensation Awards. Any provision in a retention agreement described in Schedule 10.1(a) or 10.1(b) which provides for the accelerated vesting of equity awards shall apply in accordance with its terms to RemainCo Equity Compensation Awards and SpinCo Equity Compensation Awards on and after the Employee Transfer Date.

 

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Section 10.2 Severance .

(a) Except as otherwise provided in this Agreement, on and after the Employee Transfer Date, RemainCo shall have no liability or obligation under any RemainCo severance plan or policy with respect to SpinCo Employees or Former SpinCo Employees.

(b) Except as otherwise provided in this Agreement, effective on and after the Employee Transfer Date, SpinCo shall assume and shall be responsible for administering all payments and benefits under the applicable RemainCo severance policies or any termination agreements with Former SpinCo Employees whose employment terminated prior to the Employee Transfer Date for an eligible reason under such policies or in accordance with such agreements.

Section 10.3 Accrued Time Off . SpinCo shall recognize and assume all liability for all vacation, holiday, sick leave, flex days, personal days and paid-time off with respect to SpinCo Employees, and SpinCo shall credit each SpinCo Employee with such accrual effective as of the Employee Transfer Date.

Section 10.4 Leaves of Absence . SpinCo will continue to apply the appropriate leave of absence policies applicable to inactive SpinCo Employees who are on an approved leave of absence as of the Employee Transfer Date. Leaves of absence taken by SpinCo Employees prior to the Employee Transfer Date shall be deemed to have been taken as employees of a member of the SpinCo Group.

Section 10.5 Collective Bargaining Agreements . The RemainCo Group shall have no further liability for all collective bargaining agreements, collective agreements, multiemployer plans, pension and welfare plans and arrangements and trade union or works council agreements entered into with any member of the RemainCo Group, in each case with respect to any union, works council or other body representing only SpinCo Employees and/or Former SpinCo Employees.

Section 10.6 Director Programs . RemainCo shall retain responsibility for the payment of any fees payable in respect of service on the RemainCo Board of Directors that are payable but not yet paid as of the Employee Transfer Date, and SpinCo shall not have any responsibility for any such payments.

 

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Section 10.7 Restrictive Covenants in Employment and Other Agreements .

(a) To the fullest extent permitted by the agreements described in this Section 10.7(a) and applicable law, RemainCo hereby assigns, or shall cause a member of the RemainCo Group to assign, to SpinCo or a member of the SpinCo Group, as designated by SpinCo, all agreements containing restrictive covenants (including confidentiality and non-competition provisions) between a member of the RemainCo Group and a SpinCo Employee or Former SpinCo Employee, with such assignment effective as of the Employee Transfer Date. To the extent that assignment of such agreements is not permitted, effective as of the Employee Transfer Date, each member of the SpinCo Group shall be considered to be a successor to each member of the RemainCo Group for purposes of, and a third-party beneficiary with respect to, all agreements containing restrictive covenants (including confidentiality and non-competition provisions) between a member of the RemainCo Group and a SpinCo Employee or Former SpinCo Employee whom SpinCo reasonably determines have substantial knowledge of the business activities of the SpinCo Group, such that each member of the SpinCo Group shall enjoy all the rights and benefits under such agreements (including rights and benefits as a third-party beneficiary), with respect to the business operations of the SpinCo Group; provided, however, that in no event shall RemainCo be permitted to enforce such restrictive covenant agreements against SpinCo Employees or Former SpinCo Employees for action taken in their capacity as employees of a member of the SpinCo Group.

(b) To the fullest extent permitted by the agreements described in this Section 10.7(b) and applicable law, SpinCo hereby assigns, or shall cause a member of the SpinCo Group to assign, to RemainCo or a member of the RemainCo Group, as designated by RemainCo, all agreements containing restrictive covenants (including confidentiality and non-competition provisions) between a member of the SpinCo Group and a RemainCo Employee or Former RemainCo Employee, with such assignment effective as of the Employee Transfer Date. To the extent that assignment of such agreements is not permitted, effective as of the Employee Transfer Date, each member of the RemainCo Group shall be considered to be a successor to each member of the SpinCo Group for purposes of, and a third-party beneficiary with respect to, all agreements containing restrictive covenants (including confidentiality and non-competition provisions) between a member of the SpinCo Group and a RemainCo Employee or Former RemainCo Employee whom RemainCo reasonably determines have substantial knowledge of the business activities of the RemainCo Group, such that RemainCo and each member of the RemainCo Group shall enjoy all the rights and benefits under such agreements (including rights and benefits as a third-party beneficiary), with respect to the business operations of the RemainCo Group; provided, however, that in no event shall SpinCo be permitted to enforce such restrictive covenant agreements against RemainCo Employees or Former RemainCo Employees for action taken in their capacity as employees of a member of the RemainCo Group.

Section 10.8 Non-Solicitation .

(a) During the 18 month period commencing on the Distribution Date, RemainCo will not, directly or indirectly, on its own behalf or in conjunction with any person or legal entity, recruit, solicit, or induce, or attempt to recruit, solicit or induce, any employee of the SpinCo Group to terminate his or her employment relationship with the SpinCo Group. The

 

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foregoing restriction does not include the placement of general advertisements for employment with the RemainCo Group in the same types of print or electronic publications used by the RemainCo Group to advertise for employment prior to the Distribution Date and consistent with RemainCo Group practice prior to the Distribution Date. RemainCo will advise any third parties recruiting on RemainCo’s behalf of the obligation set forth in this Section 10.8 and will direct those third parties to comply with that obligation.

(b) During the 18 month period commencing on the Distribution Date, SpinCo will not, directly or indirectly, on its own behalf or in conjunction with any person or legal entity, recruit, solicit, or induce, or attempt to recruit, solicit or induce, any employee of the RemainCo Group to terminate their employment relationship with the RemainCo Group. The foregoing restriction does not include the placement of general advertisements for employment with the SpinCo Group in the same types of print or electronic publications used by the SpinCo Group to advertise for employment prior to the Distribution Date and consistent with SpinCo Group practice prior to the Distribution Date. SpinCo will advise any third parties recruiting on SpinCo’s behalf of the obligation set forth in this Section 10.8 and will direct those third parties to comply with that obligation.

ARTICLE XI

GENERAL PROVISIONS

Section 11.1 Preservation of Rights to Amend . The rights of each member of the RemainCo Group and each member of the SpinCo Group to amend, waive, or terminate any plan, arrangement, agreement, program, or policy referred to herein shall not be limited in any way by this Agreement.

Section 11.2 Confidentiality . Each Party agrees that any information conveyed or otherwise received by or on behalf of a Party in conjunction herewith that is not otherwise public through no fault of such Party is confidential and is subject to the terms of the confidentiality provisions set forth in the Master Separation Agreement.

Section 11.3 Administrative Complaints/Litigation .

(a) Except as otherwise provided in this Agreement, on and after the Employee Transfer Date, SpinCo shall assume, and be solely liable for, the handling, administration, investigation and defense of actions, including ERISA, occupational safety and health, employment standards, union grievances, wrongful dismissal, discrimination or human rights and unemployment compensation claims asserted at any time against RemainCo or any member of the RemainCo Group by any SpinCo Employee or Former SpinCo Employee (including any dependent or beneficiary of any such Employee) or any other person, to the extent such actions or claims arise out of or relate to employment or the provision of services (whether as an employee, contractor, consultant or otherwise) to or with respect to the business activities of any member of the SpinCo Group, whether or not such employment or services were performed before or after the Distribution.

 

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(b) Except as otherwise provided in this Agreement, on and after the Employee Transfer Date, RemainCo shall assume, and be solely liable for, the handling, administration, investigation and defense of actions, including ERISA, occupational safety and health, employment standards, union grievances, wrongful dismissal, discrimination or human rights and unemployment compensation claims asserted at any time against SpinCo or any member of the SpinCo Group by any RemainCo Employee or Former RemainCo Employee (including any dependent or beneficiary of any such Employee) or any other person, to the extent such actions or claims arise out of or relate to employment or the provision of services (whether as an employee, contractor, consultant or otherwise) to or with respect to the business activities of any member of the RemainCo Group, whether or not such employment or services were performed before or after the Distribution.

(c) To the extent that any legal action relates to a putative or certified class of plaintiffs, which includes both RemainCo Employees (or Former RemainCo Employees) and SpinCo Employees (or Former SpinCo Employees) and such action involves employment or benefit plan related claims, reasonable costs and expenses incurred by the Parties in responding to such legal action shall be allocated among the Parties equitably in proportion to a reasonable assessment of the relative proportion of Employees included in or represented by the putative or certified plaintiff class. The procedures contained in the indemnification and related litigation cooperation provisions of the Master Separation Agreement shall apply with respect to each Party’s indemnification obligations under this Section 11.3.

Section 11.4 Reimbursement and Indemnification . RemainCo and SpinCo hereto agrees to reimburse the other Party, within 60 days of receipt from the other Party of reasonable verification, for all costs and expenses which the other Party may incur on its behalf as a result of any of the respective RemainCo and SpinCo Welfare Plans, Pension Plans, Thrift Plans and Benefit Arrangements and, as contemplated by Section 10.2, any termination or severance payments or benefits. All liabilities retained, assumed or indemnified against by SpinCo pursuant to this Agreement, and all liabilities retained, assumed or indemnified against by RemainCo pursuant to this Agreement, shall in each case be subject to the indemnification provisions of the Master Separation Agreement. Notwithstanding anything to the contrary, (i) no provision of this Agreement shall require any member of the SpinCo Group to pay or reimburse to any member of the RemainCo Group any benefit-related cost item that a member of the SpinCo Group has previously paid or reimbursed to any member of the RemainCo Group; and (ii) no provision of this Agreement shall require any member of the RemainCo Group to pay or reimburse to any member of the SpinCo Group any benefit-related cost item that a member of the RemainCo Group has previously paid or reimbursed to any member of the SpinCo Group.

Section 11.5 Costs of Compliance with Agreement . Except as otherwise provided in this Agreement or any other Ancillary Agreement, each Party shall pay its own expenses in fulfilling its obligations under this Agreement.

Section 11.6 Fiduciary Matters . RemainCo and SpinCo each acknowledge that actions required to be taken pursuant to this Agreement may be subject to fiduciary duties or standards of conduct under ERISA or other applicable law, and no Party shall be deemed to be in violation of this Agreement if it fails to comply with any provisions hereof based upon its good faith determination (as supported by advice from counsel experienced in such matters) that to do so

 

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would violate such a fiduciary duty or standard. Each Party shall be responsible for taking such actions as are deemed necessary and appropriate to comply with its own fiduciary responsibilities and shall fully release and indemnify the other Party for any liabilities caused by the failure to satisfy any such responsibility.

Section 11.7 Registration Statement . Before the Distribution or as soon as reasonably practicable thereafter and subject to applicable law, SpinCo shall prepare and file with the SEC one or more registration statements on Form S-1, Form S–8 or another appropriate form registering under the Securities Act of 1933 the offering of an aggregate number of shares of SpinCo Common Stock at a minimum equal to the number of shares subject to the Replacement SpinCo Options, the Replacement SpinCo RSUs, the Additional SpinCo RSUs, the Additional SpinCo RSAs, the Replacement SpinCo Units, and the Replacement MEGTEC Performance RSUs. SpinCo shall use commercially reasonable efforts to cause any such registration statement to be kept effective (and the current status of the prospectus or prospectuses required thereby shall be maintained) as long as any Replacement SpinCo Options, Replacement SpinCo RSUs, Additional SpinCo RSUs, Additional SpinCo RSAs, Replacement SpinCo Units or Replacement MEGTEC Performance RSUs applicable to such registration statement may remain outstanding.

Section 11.8 Entire Agreement . This Agreement, together with the documents referenced herein (including the Master Separation Agreement, the Ancillary Agreements and the plans and agreements referenced herein), constitutes the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersedes all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof. To the extent any provision of this Agreement conflicts with the provisions of the Master Separation Agreement, the provisions of this Agreement shall be deemed to control with respect to the subject matter hereof.

Section 11.9 Binding Effect; No Third-Party Beneficiaries; Assignment . This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. Except as otherwise expressly provided in Section 10.1(a), this Agreement is solely for the benefit of the Parties and should not be deemed to confer upon any third parties any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to this Agreement. Nothing in this Agreement is intended to amend any employee benefit plan or affect the applicable plan sponsor’s right to amend or terminate any employee benefit plan pursuant to the terms of such plan. Except as otherwise provided in Section 10.1(a), the provisions of this Agreement are solely for the benefit of the Parties, and no current or former Employee, officer, director or independent contractor or any other individual associated therewith shall be regarded for any purpose as a third-party beneficiary of this Agreement. This Agreement may not be assigned by any Party, except with the prior written consent of the other Party.

Section 11.10 Amendment . No change or amendment may be made to this Agreement except by an instrument in writing signed on behalf of both of the Parties.

Section 11.11 Failure or Indulgence Not Waiver; Remedies Cumulative . No failure or delay on the part of either Party in the exercise of any right hereunder shall impair such right or

 

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be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant or agreement contained herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement or the Schedules attached hereto are cumulative to, and not exclusive of, any rights or remedies otherwise available.

Section 11.12 Notices . Unless otherwise expressly provided herein, all notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to be duly given: (i) when personally delivered, (ii) if mailed by registered or certified mail, postage prepaid, return receipt requested, on the date the return receipt is executed or the letter is refused by the addressee or its agent, (iii) if sent by overnight courier which delivers only upon the executed receipt of the addressee, on the date the receipt acknowledgment is executed or refused by the addressee or its agent, or (iv) if sent by facsimile or electronic mail, on the date confirmation of transmission is received (provided that a copy of any notice delivered pursuant to this clause (iv) shall also be sent pursuant to clause (i), (ii) or (iii)), addressed to the attention of the addressee’s General Counsel at the address of its principal executive office or to such other address or facsimile number for a Party as it shall have specified by like notice.

Section 11.13 Counterparts . This Agreement, including the Schedules hereto and the other documents referred to herein, may be executed in multiple counterparts, each of which when executed shall be deemed to be an original but all of which together shall constitute one and the same agreement.

Section 11.14 Severability . If any term or other provision of this Agreement or the Schedules attached hereto is determined by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the court, administrative agency or arbitrator shall interpret this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

Section 11.15 Governing Law . To the extent not preempted by applicable federal law, this Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of Delaware, without regard to any conflicts of law provisions thereof that would result in the application of the laws of any other jurisdiction.

Section 11.16 Performance . Each of RemainCo and SpinCo shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any member of the RemainCo Group and any member of the SpinCo Group, respectively. The Parties each agree to take such further actions and to execute, acknowledge and deliver, or to cause to be executed, acknowledged and delivered, all such further documents as are reasonably requested by the other for carrying out the purposes of this Agreement or of any document delivered pursuant to this Agreement.

 

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Section 11.17 Construction . This Agreement shall be construed as if jointly drafted by the Parties and no rule of construction or strict interpretation shall be applied against any Party.

Section 11.18 Effect if Distribution Does Not Occur . Notwithstanding anything in this Agreement to the contrary, if the Master Separation Agreement is terminated prior to the Distribution Date, this Agreement shall be of no further force and effect.

[INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in their names by a duly authorized officer as of the date first written above.

 

THE BABCOCK & WILCOX COMPANY
By:  

/s/ James D. Canafax

  Name:   James D. Canafax
  Title:   Senior Vice President, General Counsel and Chief Compliance Officer
BABCOCK & WILCOX ENTERPRISES, INC.
By:  

/s/ E. James Ferland

  Name:   E. James Ferland
  Title:   Chairman and Chief Executive Officer

[SIGNATURE PAGE TO EMPLOYEE MATTERS AGREEMENT]


The company agrees to furnish supplementally a copy of any omitted exhibit or schedule to the Commission upon request.

Exhibit 10.3

EXECUTION VERSION

TRANSITION SERVICES AGREEMENT

between

THE BABCOCK & WILCOX COMPANY

(as service provider)

and

BABCOCK & WILCOX ENTERPRISES, INC.

(as service receiver)

Dated June 8, 2015


TABLE OF CONTENTS

 

          Page  

ARTICLE I

  

DEFINITIONS

     1   

Section 1.1

  

Definitions

     1   

ARTICLE II

  

SERVICES

     2   

Section 2.1

  

Services

     2   

Section 2.2

  

Service Coordinators

     3   

Section 2.3

  

Additional Services

     3   

Section 2.4

  

Third Party Services

     3   

Section 2.5

  

Standard of Performance; Limitation of Liability

     4   

Section 2.6

  

Service Boundaries and Scope

     5   

Section 2.7

  

Cooperation

     5   

Section 2.8

  

Transitional Nature of Services; Changes

     6   

Section 2.9

  

Access

     6   

ARTICLE III

  

SERVICE CHARGES

     6   

Section 3.1

  

Compensation

     6   

ARTICLE IV

  

PAYMENT

     6   

Section 4.1

  

Payment

     6   

Section 4.2

  

Payment Disputes

     7   

Section 4.3

  

Review of Charges; Error Correction

     7   

Section 4.4

  

Taxes

     7   

Section 4.5

  

Records

     8   

ARTICLE V

  

TERM

     8   

Section 5.1

  

Term

     8   

ARTICLE VI

  

DISCONTINUATION OF SERVICES

     8   

Section 6.1

  

Discontinuation of Services

     8   

Section 6.2

  

Procedures Upon Discontinuation or Termination of Services

     9   

ARTICLE VII

  

DEFAULT

     9   

Section 7.1

  

Termination for Default

     9   

ARTICLE VIII

  

INDEMNIFICATION AND WAIVER

     9   

Section 8.1

  

Waiver of Consequential Damages

     9   

Section 8.2

  

Services Received

     10   

Section 8.3

  

Express Negligence

     11   

 

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TABLE OF CONTENTS

(continued)

 

          Page  

ARTICLE IX

  

CONFIDENTIALITY

     11   

Section 9.1

  

Confidentiality

     11   

Section 9.2

  

System Security

     11   

ARTICLE X

  

FORCE MAJEURE

     12   

Section 10.1

  

Performance Excused

     12   

Section 10.2

  

Notice

     12   

Section 10.3

  

Cooperation

     12   

ARTICLE XI

  

MISCELLANEOUS

     12   

Section 11.1

  

Entire Agreement

     12   

Section 11.2

  

Binding Effect; No Third-Party Beneficiaries; Assignment

     13   

Section 11.3

  

Amendment; Waivers

     13   

Section 11.4

  

Notices

     13   

Section 11.5

  

Counterparts

     13   

Section 11.6

  

Severability

     13   

Section 11.7

  

Governing Law

     14   

Section 11.8

  

Performance

     14   

Section 11.9

  

Relationship of Parties

     14   

Section 11.10

  

Regulations

     14   

Section 11.11

  

Construction

     14   

Section 11.12

  

Effect if Separation does not Occur

     14   

 

-ii-


Schedules

Schedule A - Tax Services

Schedule B - Accounting and Financial Reporting Services

Schedule C - Internal Records Management Services

Schedule D - External Records Management Services

Schedule E - Human Resources Services

Schedule F - Utility Services

Schedule G - Legal Services

Schedule H - Global ERP Technical Services

Schedule I - Global HCM Technical Services

Schedule 2.4 - Certain Subcontractors

Schedule 4.1 - Payment Instructions

 

iii


TRANSITION SERVICES AGREEMENT

This TRANSITION SERVICES AGREEMENT (together with the Schedules hereto, this “Agreement”) is entered into as of June 8, 2015, by and between The Babcock & Wilcox Company, a Delaware corporation (“RemainCo”), and Babcock & Wilcox Enterprises, Inc., a Delaware corporation (“SpinCo”).

WHEREAS, the Board of Directors of RemainCo has determined that it would be appropriate and desirable for RemainCo to distribute (the “Distribution”) on a pro rata basis to the holders of outstanding shares of common stock, par value $0.01 per share, of RemainCo all of the outstanding shares of common stock, par value $0.01 per share, of SpinCo owned by RemainCo;

WHEREAS, in order to effectuate the foregoing, RemainCo and SpinCo have entered into a Master Separation Agreement, dated as of the date hereof (the “Master Separation Agreement”), which provides, among other things, upon the terms and subject to the conditions thereof, for the separation of the respective businesses of RemainCo and SpinCo and the Distribution, and the execution and delivery of certain other agreements, including this Agreement, in order to facilitate and provide for the foregoing; and

WHEREAS, in order to provide for an orderly transition under the Master Separation Agreement, it will be advisable for RemainCo, through members of the RemainCo Group, to provide to SpinCo certain services described herein for a transitional period.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions . As used in this Agreement, the following terms shall have the meanings set forth below:

“Additional Services” has the meaning set forth in Section 2.3.

“Agreement” has the meaning set forth in the preamble.

“Availed Party” has the meaning set forth in Section 9.2(a).

“Distribution” has the meaning set forth in the recitals.

“Force Majeure Event” has the meaning set forth in Section 10.1.

“Master Separation Agreement” has the meaning set forth in the recitals.


“RemainCo” has the meaning set forth in the preamble.

“Schedules” means the Schedules attached hereto.

“Security Regulations” has the meaning set forth in Section 9.2(a).

“Service Coordinator” has the meaning set forth in Section 2.2.

“Services” has the meaning set forth in Section 2.1(a).

“SpinCo” has the meaning set forth in the preamble.

“Systems” has the meaning set forth in Section 9.2(a).

“Tax” has the meaning set forth in Section 4.4.

Capitalized terms used but not otherwise defined in this Agreement shall have the respective meanings assigned to such terms in the Master Separation Agreement.

ARTICLE II

SERVICES

Section 2.1 Services .

(a) Upon the terms and subject to the conditions of this Agreement, RemainCo, acting directly and/or through its Affiliates and their respective employees, agents, contractors or independent third parties designated by any of them, agrees to use commercially reasonable efforts to provide or to cause to be provided services to the SpinCo Group as set forth in Schedules A through I (including any Additional Services provided in accordance with Section 2.3 hereof, all such services are collectively referred to herein as the “Services”).

(b) At all times during the performance of the Services, all Persons performing such Services (including agents, temporary employees, independent third parties and consultants) shall be construed as being independent from the SpinCo Group, and such Persons shall not be considered or deemed to be employees of any member of the SpinCo Group nor entitled to any employee benefits of SpinCo as a result of this Agreement. The responsibility of such Persons is to perform the Services in accordance with this Agreement and, as necessary, to advise the applicable member of the SpinCo Group in connection therewith, and such Persons shall not be responsible for decision-making on behalf of any member of the SpinCo Group. Such Persons shall not be required to report to management of any member of the SpinCo Group nor be deemed to be under the management or direction of any member of the SpinCo Group. SpinCo acknowledges and agrees that, except as may be expressly set forth herein as a Service (including any Additional Services provided in accordance with Section 2.3 hereof) or otherwise expressly set forth in the Master Separation Agreement or an Ancillary Agreement, no member of the RemainCo Group shall be obligated to provide, or cause to be provided, any service or goods to any member of the SpinCo Group.

(c) Notwithstanding anything to the contrary in this Agreement, RemainCo and members of the RemainCo Group shall not be required to perform Services hereunder or take any actions relating thereto that conflict with or violate any applicable Law, contract, license, authorization, certification or permit or RemainCo’s Code of Business Conduct or other governance policies, as they may be amended from time to time.

 

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Section 2.2 Service Coordinators . Each party will nominate in writing a representative to act as the primary contact with respect to the provision of the Services and the resolution of disputes under this Agreement (each such person, a “Service Coordinator”). The initial Service Coordinators shall be David S. Black (for RemainCo) and Jude T. Broussard (for SpinCo) (or their designated delegates) for each of RemainCo and SpinCo, respectively. The Service Coordinators shall meet as expeditiously as possible to resolve any dispute hereunder; and any dispute that is not resolved by the Service Coordinators within 45 days shall be resolved in accordance with the dispute resolution procedures set forth in Article V of the Master Separation Agreement. Each party hereto may treat an act of a Service Coordinator of the other party hereto which is consistent with the provisions of this Agreement as being authorized by such other party without inquiring behind such act or ascertaining whether such Service Coordinator had authority to so act; provided , however , that no such Service Coordinator shall have authority to amend this Agreement. RemainCo and SpinCo shall advise each other promptly (in any case no more than three Business Days) in writing of any change in their respective Service Coordinators, setting forth the name of the replacement, and stating that the replacement Service Coordinator is authorized to act for such party in accordance with this Section 2.2.

Section 2.3 Additional Services . SpinCo may request additional Services (the “Additional Services”) from RemainCo by providing written notice. Upon the mutual written agreement as to the nature, cost, duration and scope of such Additional Services, RemainCo and SpinCo shall supplement in writing the Schedules hereto to include such Additional Services. Subject to the other limitations in this Agreement, including the provisions in Section 2.6, but notwithstanding the foregoing provisions of this Section 2.3, in addition to providing the Services specified in the Schedules, RemainCo, acting directly and/or through its Affiliates and their respective employees, agents, contractors or independent third parties designated by any of them, shall use commercially reasonable efforts to provide or to cause to be provided additional, de minimis administrative support services to the SpinCo Group as may be requested by any member of the SpinCo Group from time to time, at no cost beyond the amounts set forth in the Schedules (as the amounts set forth in the Schedules contemplate such additional, de minimis administrative support services); provided, however, that, for any such additional services to be considered de minimis for purposes of this sentence, such additional services shall not require the attention of (i) any one employee of any member of the RemainCo Group for more than 2 hours in any single calendar month or (ii) any group of employees of any one or more members of the RemainCo Group for more than 30 hours in any single calendar month. Except where the context otherwise indicates or requires, any such additional services referred to in the immediately preceding sentence shall be deemed to be “Services” under this Agreement.

Section 2.4 Third Party Services . RemainCo shall have the right to hire third-party subcontractors to provide all or part of any Service hereunder, except as specifically prohibited by the Schedule defining such Service; provided, that RemainCo shall consult in good faith with

 

- 3 -


SpinCo regarding the proposed hiring of any third-party subcontractor that has not previously been involved in the activities relating to such Service prior to the date hereof; provided, further, that, in the event such subcontracting is inconsistent with the practice applied by RemainCo generally from time to time within its own organization, RemainCo shall give notice to SpinCo of its intent to subcontract any portion of the Services and SpinCo shall have 20 days (or such lesser period set forth in the notice as may be practicable in the event of exigent circumstances) to determine, in its sole discretion, whether to permit such subcontracting or whether to cancel such Service in accordance with Article VI hereof. If SpinCo opts to cancel a Service pursuant to the immediately preceding sentence, it shall not be liable to RemainCo pursuant to Section 6.1 for any costs or expenses RemainCo or any member of the RemainCo Group remains obligated to pay to the third-party subcontractor identified in the notice provided by RemainCo as described above. RemainCo shall not be required to give notice of its intent to subcontract Services to any party listed on Exhibit 2.4 hereto, nor shall SpinCo have any right to cancel any Service subcontracted to any such listed party pursuant to this Section 2.4 (provided, that this sentence shall not prevent SpinCo from cancelling any Service pursuant to Section 6.1).

Section 2.5 Standard of Performance; Limitation of Liability .

(a) The Services to be provided hereunder shall be performed with the same general degree of care, at the same general level and at the same general degree of accuracy and responsiveness, as when performed within the RemainCo organization (including, for this purpose, SpinCo and the SpinCo Group) prior to the date of this Agreement. It is understood and agreed that RemainCo and the members of the RemainCo Group are not professional providers of the types of services included in the Services and that RemainCo personnel performing Services have other responsibilities and will not be dedicated full-time to performing Services hereunder.

(b) In the event RemainCo or any member of the RemainCo Group fails to provide, or cause to be provided, the Services in accordance with the standard of service set forth in Section 2.5(a), the sole and exclusive remedy of SpinCo shall be, at SpinCo’s sole discretion, within 90 days from the date that RemainCo or such member of the RemainCo Group first fails to provide such Service, to not pay for such Service; provided that in the event RemainCo defaults in the manner described in clause (ii) of Section 7.1, SpinCo shall have the further rights set forth in Article VII.

(c) EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 2.5, NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESSED OR IMPLIED (INCLUDING THE WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR CONFORMITY TO ANY REPRESENTATION OR DESCRIPTION), ARE MADE BY REMAINCO OR ANY MEMBER OF THE REMAINCO GROUP WITH RESPECT TO THE SERVICES UNDER THIS AGREEMENT AND, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ALL SUCH REPRESENTATIONS OR WARRANTIES ARE HEREBY WAIVED AND DISCLAIMED. SPINCO (ON ITS OWN BEHALF AND ON BEHALF OF EACH OTHER MEMBER OF THE SPINCO GROUP) HEREBY EXPRESSLY WAIVES ANY RIGHT SPINCO OR ANY MEMBER OF THE SPINCO GROUP MAY OTHERWISE HAVE FOR ANY LOSSES, TO ENFORCE SPECIFIC PERFORMANCE OR TO PURSUE ANY OTHER

 

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REMEDY AVAILABLE IN CONTRACT, AT LAW OR IN EQUITY IN THE EVENT OF ANY NON-PERFORMANCE, INADEQUATE PERFORMANCE, FAULTY PERFORMANCE OR OTHER FAILURE OR BREACH BY REMAINCO OR ANY MEMBER OF THE REMAINCO GROUP UNDER OR RELATING TO THIS AGREEMENT, NOTWITHSTANDING THE NEGLIGENCE OR GROSS NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT OR ACTIVE OR PASSIVE) OF REMAINCO OR ANY MEMBER OF THE REMAINCO GROUP OR ANY THIRD PARTY SERVICE PROVIDER AND WHETHER DAMAGES ARE ASSERTED IN CONTRACT OR TORT, UNDER FEDERAL, STATE OR NON U.S. LAWS OR OTHER STATUTE OR OTHERWISE; PROVIDED, HOWEVER, THAT THE FOREGOING WAIVER SHALL NOT EXTEND TO COVER, AND REMAINCO SHALL BE RESPONSIBLE FOR, SUCH LOSSES CAUSED BY THE WILLFUL MISCONDUCT OF REMAINCO OR ANY MEMBER OF THE REMAINCO GROUP. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL THE REMAINCO GROUP BE LIABLE TO THE SPINCO GROUP WITH RESPECT TO CLAIMS ARISING OUT OF THIS AGREEMENT FOR AMOUNTS IN THE AGGREGATE EXCEEDING THE AGGREGATE SERVICE CHARGES PAID HEREUNDER BY THE SPINCO GROUP.

Section 2.6 Service Boundaries and Scope . Except as provided in a Schedule for a specific Service, the Services shall be available only for purposes of conducting the business of the SpinCo Group substantially in the manner it was conducted immediately prior to the Distribution Date. Except as provided in a Schedule for a specific Service, in providing, or causing to be provided, the Services, RemainCo shall not be obligated to: (i) maintain the employment of any specific employee or hire additional employees or third-party service providers; (ii) purchase, lease or license any additional equipment (including computer equipment, furniture, furnishings, fixtures, machinery, vehicles, tools and other tangible personal property), software or other assets, rights or properties; (iii) make modifications to its existing systems or software; (iv) provide any member of the SpinCo Group with access to any systems or software other than those to which it has authorized access immediately prior to the Distribution Date; or (v) pay any costs related to the transfer or conversion of data of any member of the SpinCo Group. SpinCo acknowledges (on its own behalf and on behalf of the other members of the SpinCo Group) that the employees of RemainCo or any other members of the RemainCo Group who may be assisting in the provision of Services hereunder are at-will employees and, as such, may terminate or be terminated from employment with RemainCo or any of the other members of the RemainCo Group providing Services hereunder at any time for any reason. In no event shall RemainCo or any of its Affiliates or any of their respective employees or agents be required to perform any Services or take any other actions hereunder that conflict with any applicable Law. For the avoidance of doubt and except as may hereafter be designated as Additional Services in accordance with Section 2.3, the Services do not include any services required for or as the result of any business acquisitions, divestitures, start-ups or shutdowns or discontinuation of current business lines by the SpinCo Group. To the extent SpinCo desires RemainCo to provide any services in connection with any such acquisitions, divestitures, start-ups or shutdowns or discontinuation of current business lines, SpinCo shall follow the procedures for requesting Additional Services pursuant to Section 2.3.

Section 2.7 Cooperation . RemainCo and SpinCo shall cooperate with one another and provide such further assistance as the other party may reasonably request in connection with (a) the provision of Services hereunder or (b) the compliance with any Laws imposed on either SpinCo or RemainCo.

 

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Section 2.8 Transitional Nature of Services; Changes . Subject to Sections 2.3 and 2.5, the parties acknowledge the transitional nature of the Services and that RemainCo may make changes from time to time in the manner of performing the Services.

Section 2.9 Access . During the term of this Agreement and for so long as any Services are being provided to SpinCo by RemainCo, SpinCo will provide RemainCo and its authorized representatives reasonable access, during regular business hours upon reasonable notice, to SpinCo and its employees, representatives, facilities and books and records as RemainCo and its representatives may reasonably require in order to perform such Services.

ARTICLE III

SERVICE CHARGES

Section 3.1 Compensation . Subject to the specific terms of this Agreement, the compensation to be received by RemainCo for each Service provided hereunder will be the fees set forth on the Schedule relating to the particular Service, subject to any escalation provided for on such Schedule. In consideration for the provision of a Service, each member of the SpinCo Group receiving such Service shall pay to RemainCo or, at the election of RemainCo, the member of the RemainCo Group providing such Service, the applicable fee for such Service as set forth on the attached Schedules.

ARTICLE IV

PAYMENT

Section 4.1 Payment. Except as otherwise provided in a Schedule for a specific Service, charges for Services shall be invoiced monthly in arrears based on the Services provided by RemainCo or, at its option, the member of the RemainCo Group providing the Service. Except as otherwise provided in a Schedule for a specific Service, SpinCo shall make the corresponding payment no later than 60 days after receipt of the invoice. Unless otherwise provided in this Agreement, SpinCo shall remit funds in payment of invoices provided hereunder either by wire transfer or ACH (Automated Clearing House) in accordance with the payment instructions set forth in Schedule 4.1. Each invoice shall be directed to the SpinCo Service Coordinator or such other person designated in writing from time to time by such Service Coordinator. The invoice shall set forth in reasonable detail the Services rendered and the invoice amount for the Services rendered for the period covered by such invoice. Interest will accrue on any unpaid amounts at ten percent (10%) per annum (compounded monthly) or, if less, the maximum non-usurious rate of interest permitted by applicable law, until such amounts, together with all accrued and unpaid interest thereon, are paid in full. All timely payments under this Agreement shall be made without early payment discount. Any preexisting obligation to make payment for Services provided hereunder shall survive the termination of this Agreement. If RemainCo incurs any reasonable out-of-pocket expenses (including any incremental license fees incurred by RemainCo in connection with performance of the Services and any travel

 

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expenses incurred at the request or with the consent of SpinCo) or remits funds to a third-party on behalf of SpinCo, in either case in connection with the rendering of Services, then RemainCo shall include such amount on its monthly invoice to SpinCo, with reasonable supporting documentation, and SpinCo shall reimburse that amount to RemainCo pursuant to this Section 4.1 as part of its next monthly payment.

Section 4.2 Payment Disputes . SpinCo may object to any amounts for any Service at any time before, at the time of, or after payment is made, provided such objection is made in writing to RemainCo within 90 days following the date of the disputed invoice. SpinCo shall timely pay the disputed items in full while resolution of the dispute is pending; provided, however, that RemainCo shall pay interest at a rate of five percent (5%) per annum (compounded monthly) on any amounts it is required to return to SpinCo upon resolution of the dispute. Payment of any amount shall not constitute approval thereof. The Service Coordinators shall meet as expeditiously as possible to resolve any dispute. Any dispute that is not resolved by the Service Coordinators within 45 days shall be resolved in accordance with the dispute resolution and arbitration procedures set forth in Article V of the Master Separation Agreement. Neither party (or any member of its respective Group) shall have a right of set-off against the other party (or any member of its respective Group) for billed amounts hereunder. Upon written request, RemainCo will provide to SpinCo reasonable detail and support documentation to permit SpinCo to verify the accuracy of an invoice.

Section 4.3 Review of Charges; Error Correction . RemainCo shall maintain accurate books and records (including invoices of third parties) related to the Services sufficient to calculate, and allow SpinCo to verify, the amounts owed under this Agreement. From time to time until 120 days following the termination of this Agreement, SpinCo shall have the right to review, and RemainCo shall provide access to, such books and records to verify the accuracy of such amounts, provided that such reviews shall not occur more frequently than once per calendar quarter. Each such review shall be conducted during normal business hours and in a manner that does not unreasonably interfere with the operations of RemainCo. If, as a result of any such review, SpinCo determines that it overpaid any amount to RemainCo, then SpinCo may raise an objection pursuant to the provisions of Section 4.2. SpinCo shall bear the cost and expense of any such review. RemainCo shall make adjustments to charges as required to reflect the discovery of errors or omissions in charges.

Section 4.4 Taxes . All transfer taxes, excises, fees or other charges (including value added, sales, use or receipts taxes, but not including a tax on or measured by the income, net or gross revenues, business activity or capital of a member of the RemainCo Group), or any increase therein, now or hereafter imposed directly or indirectly by law upon any fees paid hereunder for Services, which a member of the RemainCo Group is required to pay or incur in connection with the provision of Services hereunder (“Tax”), shall be passed on to SpinCo as an explicit surcharge and shall be paid by SpinCo in addition to any Service fee payment, whether included in the applicable Service fee payment, or added retroactively. If SpinCo submits to RemainCo a timely and valid resale or other exemption certificate acceptable to RemainCo and sufficient to support the exemption from Tax, then such Tax will not be added to the Service fee payable pursuant to Article III; provided, however, that if a member of the RemainCo Group is ever required to pay such Tax, SpinCo will promptly reimburse RemainCo for such Tax, including any interest, penalties and attorney’s fees related thereto. The parties will cooperate to minimize the imposition of any Taxes.

 

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Section 4.5 Records . RemainCo shall maintain true and correct records of all receipts, invoices, reports and such other documents relating to the Services hereunder in accordance with its standard accounting practices and procedures, consistently applied. RemainCo shall retain such accounting records and make them available to SpinCo’s authorized representatives and auditors for a period of not less than one year from the close of each fiscal year of RemainCo; provided, however, that RemainCo may, at its option, transfer such accounting records to SpinCo upon termination of this Agreement.

ARTICLE V

TERM

Section 5.1 Term . Subject to Articles VI and VII, the RemainCo Group shall provide the specific Services to the SpinCo Group pursuant to this Agreement for the time period set forth on the Schedule relating to the specific Service. In accordance with the Master Separation Agreement and Article VI of this Agreement, except as otherwise provided in a Schedule for a specific Service, SpinCo shall undertake to provide to itself and members of the SpinCo Group, and to terminate as soon as reasonably practicable, the Services provided to the SpinCo Group hereunder. Except as otherwise provided in a Schedule for a specific Service or group of related Services, all Services provided for hereunder shall terminate on December 31, 2016. Except as otherwise expressly agreed or unless sooner terminated, this Agreement shall commence upon the Distribution Date and shall continue in full force and effect between the parties for so long as any Service set forth in any Schedule hereto is being provided to SpinCo or members of the SpinCo Group and this Agreement shall terminate upon the cessation of all Services provided hereunder; provided that Articles I, IV, VIII, IX and XI and Sections 2.5(c) and 2.7 will survive the termination of this Agreement and any such termination shall not affect any obligation for the payment of Services rendered prior to termination.

ARTICLE VI

DISCONTINUATION OF SERVICES

Section 6.1 Discontinuation of Services . Unless otherwise provided in the relevant Schedule for a particular Service, at any time after the Distribution Date, SpinCo may, without cause and in accordance with the terms and conditions hereunder and the Master Separation Agreement, request the discontinuation of one or more specific Services by giving RemainCo at least 30 days’ prior written notice; provided, however, that any such discontinuation will not affect the amounts payable to RemainCo hereunder unless (and then only to the extent that) the charges for the discontinued Services have been separately identified in the applicable Schedule. SpinCo shall be liable to RemainCo for all costs and expenses RemainCo or any member of the RemainCo Group remains obligated to pay in connection with any discontinued Service or Services, except in the case of a Service terminated by SpinCo pursuant to clause (ii) of the first sentence of Section 7.1 hereof. The parties shall cooperate as reasonably required to effectuate an orderly and systematic transfer to the SpinCo Group of all of the duties and obligations previously performed by RemainCo or a member of the RemainCo Group under this Agreement.

 

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Section 6.2 Procedures Upon Discontinuation or Termination of Services . Upon the discontinuation or termination of a Service hereunder, this Agreement shall be of no further force and effect with respect to such Service, except as otherwise provided in a Schedule for a specific Service and except as to obligations accrued prior to the date of discontinuation or termination; provided, however, that Articles I, IV, VIII, IX and XI and Section 2.5(c) of this Agreement shall survive such discontinuation or termination. Each party and the applicable member(s) of its respective Group shall, within 60 days after discontinuation or termination of a Service, deliver to the other party and the applicable member(s) of its respective Group originals of all books, records, contracts, receipts for deposits and all other papers or documents in its possession which pertain exclusively to the business of the other party and relate to such Service; provided that a party may retain copies of material provided to the other party pursuant to this Section 6.2 as it deems necessary or appropriate in connection with its financial reporting obligations or internal control practices and policies.

ARTICLE VII

DEFAULT

Section 7.1 Termination for Default . In the event (i) of a failure of SpinCo to pay for Services in accordance with Section 4.1, or (ii) any party shall default, in any material respect, in the due performance or observance by it of any of the other terms, covenants or agreements contained in this Agreement, then (1) if the non-defaulting party is RemainCo, RemainCo shall have the right, at its sole discretion, to immediately terminate the Service with respect to which the default occurred, and (2) if the non-defaulting party is SpinCo, SpinCo shall have the right, at its sole discretion, to immediately terminate the Service with respect to which the default occurred, in either case if the defaulting party has failed to cure the default within 30 days of receipt of the written notice of such default. SpinCo’s right to terminate the Service with respect to which the default occurred pursuant to this Article VII and the rights set forth in Section 2.5 shall constitute SpinCo’s sole and exclusive rights and remedies for a breach by RemainCo hereunder (including any breach caused by an Affiliate of RemainCo or other third party providing a Service hereunder).

ARTICLE VIII

INDEMNIFICATION AND WAIVER

Section 8.1 Waiver of Consequential Damages . NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY UNDER THIS AGREEMENT FOR ANY EXEMPLARY, PUNITIVE, SPECIAL, INDIRECT, CONSEQUENTIAL, REMOTE OR SPECULATIVE DAMAGES (INCLUDING IN RESPECT OF LOST PROFITS OR REVENUES), HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE OR GROSS NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATIONS SHALL

 

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NOT LIMIT EACH PARTY’S INDEMNIFICATION OBLIGATIONS FOR LIABILITIES TO THIRD PARTIES AS SET FORTH IN THIS AGREEMENT, THE MASTER SEPARATION AGREEMENT OR ANY ANCILLARY AGREEMENT.

Section 8.2 Services Received . SpinCo hereby acknowledges and agrees that:

(a) the Services to be provided hereunder are subject to and limited by the provisions of Section 2.5, Article VII and the other provisions hereof, including the limitation of remedies available to SpinCo that restricts available remedies resulting from a Service not provided in accordance with the terms hereof to non-payment and, in certain limited circumstances, the right to terminate such Service;

(b) the Services are being provided solely to facilitate the transition of SpinCo to a separate company as a result of the Distribution, and RemainCo and its Affiliates do not provide any such Services to non-Affiliates;

(c) it is not the intent of RemainCo and the other members of the RemainCo Group to render, nor of SpinCo and the other members of the SpinCo Group to receive from RemainCo and the other members of the RemainCo Group, professional advice or opinions, whether with regard to tax, legal, treasury, finance, employment or other business and financial matters, or technical advice, whether with regard to information technology or other matters; SpinCo shall not rely on, or construe, any Service rendered by or on behalf of RemainCo as such professional advice or opinions or technical advice; and SpinCo shall seek all third-party professional advice and opinions or technical advice as it may desire or need, and in any event SpinCo shall be responsible for and assume all risks associated with the Services, except to the limited extent set forth in Section 2.5 and Article VII;

(d) with respect to any software or documentation within the Services, SpinCo shall use such software and documentation internally and for their intended purpose only, shall not distribute, publish, transfer, sublicense or in any manner make such software or documentation available to other organizations or persons, and shall not act as a service bureau or consultant in connection with such software; and

(e) a material inducement to RemainCo’s agreement to provide the Services is the limitation of liability and the release provided by SpinCo in this Agreement.

ACCORDINGLY, EXCEPT WITH REGARD TO THE LIMITED REMEDIES EXPRESSLY SET FORTH HEREIN, SPINCO SHALL ASSUME ALL LIABILITY FOR AND SHALL FURTHER RELEASE, DEFEND, INDEMNIFY AND HOLD REMAINCO, ANY MEMBER OF THE REMAINCO GROUP AND THEIR RESPECTIVE EMPLOYEES, OFFICERS, DIRECTORS AND AGENTS (ALL AS INDEMNIFIED PARTIES) FREE AND HARMLESS FROM AND AGAINST ALL LOSSES RESULTING FROM, ARISING OUT OF OR RELATED TO THE SERVICES, HOWSOEVER ARISING AND WHETHER OR NOT CAUSED BY THE NEGLIGENCE OR GROSS NEGLIGENCE OF REMAINCO, ANY MEMBER OF THE REMAINCO GROUP OR ANY THIRD PARTY SERVICE PROVIDER, OTHER THAN THOSE LOSSES CAUSED BY THE WILLFUL MISCONDUCT OF REMAINCO OR ANY MEMBER OF THE REMAINCO GROUP.

 

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Section 8.3 Express Negligence . THE INDEMNITY, RELEASES AND LIMITATIONS OF LIABILITY IN THIS AGREEMENT (INCLUDING ARTICLES II AND VIII) ARE INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE EXPRESS TERMS AND SCOPE THEREOF NOTWITHSTANDING ANY EXPRESS NEGLIGENCE RULE OR ANY SIMILAR DIRECTIVE THAT WOULD PROHIBIT OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF THE NEGLIGENCE OR GROSS NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT OR ACTIVE OR PASSIVE) OR OTHER FAULT OR STRICT LIABILITY OF ANY OF THE INDEMNIFIED PARTIES.

ARTICLE IX

CONFIDENTIALITY

Section 9.1 Confidentiality . SpinCo and RemainCo each acknowledge and agree that the terms of Section 6.9 of the Master Separation Agreement shall apply to information, documents, plans and other data made available or disclosed by one party to the other in connection with this Agreement. SpinCo and RemainCo each acknowledge and agree that any third party Information (to the extent such Information does not constitute RemainCo Books and Records) provided by any member of the SpinCo Group to any member of the RemainCo Group after the Distribution Date in connection with the provision of the Services by any member of the RemainCo Group, or generated, maintained or held in connection with the provision of the Services by any member of the RemainCo Group after the Distribution Date, in each case that primarily relates to the SpinCo Business, the SpinCo Assets, or the SpinCo Liabilities, shall not be considered Privileged Information of RemainCo or Confidential Information of RemainCo.

Section 9.2 System Security .

(a) If any party hereto is given access to the other party’s computer systems or software (collectively, the “Systems”) in connection with the Services, the party given access (the “Availed Party”) shall comply with all of the other party’s system security policies, procedures and requirements that have been provided to the Availed Party in advance and in writing (collectively, “Security Regulations”), and shall not tamper with, compromise or circumvent any security or audit measures employed by such other party. The Availed Party shall access and use only those Systems of the other party for which it has been granted the right to access and use.

(b) Each party hereto shall use commercially reasonable efforts to ensure that only those of its personnel who are specifically authorized to have access to the Systems of the other party gain such access, and use commercially reasonable efforts to prevent unauthorized access, use, destruction, alteration or loss of information contained therein, including notifying its personnel of the restrictions set forth in this Agreement and of the Security Regulations.

(c) If, at any time, the Availed Party determines that any of its personnel has sought to circumvent, or has circumvented, the Security Regulations, that any unauthorized Availed Party personnel has accessed the Systems, or that any of its personnel has engaged in activities that may lead to the unauthorized access, use, destruction, alteration or loss of data,

 

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information or software of the other party hereto, the Availed Party shall promptly terminate any such person’s access to the Systems and immediately notify the other party hereto. In addition, such other party hereto shall have the right to deny personnel of the Availed Party access to its Systems upon notice to the Availed Party in the event that the other party hereto reasonably believes that such personnel have engaged in any of the activities set forth above in this Section 9.2(c) or otherwise pose a security concern. The Availed Party shall use commercially reasonable efforts to cooperate with the other party hereto in investigating any apparent unauthorized access to such other party’s Systems.

ARTICLE X

FORCE MAJEURE

Section 10.1 Performance Excused . Continued performance of a Service may be suspended immediately to the extent caused by any event or condition beyond the reasonable control of the party suspending such performance (and not involving any willful misconduct of such party), including acts of God, pandemics, floods, fire, earthquakes, labor or trade disturbances, strikes, war, acts of terrorism, civil commotion, electrical shortages or blackouts, breakdown or injury to computing facilities, compliance in good faith with any Law (whether or not it later proves to be invalid), unavailability of materials or bad weather (a “Force Majeure Event”). SpinCo shall not be obligated to pay any amount for Services that it does not receive as a result of a Force Majeure Event (and the parties hereto shall negotiate reasonably to determine the amount applicable to such Services not received). In addition to the reduction of any amounts owed by SpinCo hereunder, during the occurrence of a Force Majeure Event, to the extent the provision of any Service has been disrupted or reduced, during such disruption or reduction, (a) SpinCo may replace any such affected Service by providing any such Service for itself or engaging one or more third parties to provide such Service at the expense of SpinCo and (b) RemainCo shall cooperate with, provide such information to and take such other actions as may be reasonably required to assist such third parties to provide such substitute Service.

Section 10.2 Notice . The party claiming suspension due to a Force Majeure Event will give prompt notice to the other of the occurrence of the Force Majeure Event giving rise to the suspension and of its nature and anticipated duration.

Section 10.3 Cooperation . Upon the occurrence of a Force Majeure Event, the parties shall cooperate with each other to find alternative means and methods for the provision of the suspended Service.

ARTICLE XI

MISCELLANEOUS

Section 11.1 Entire Agreement . This Agreement, together with the documents referenced herein (including the Schedules and the Master Separation Agreement), constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof. To the extent any provision of this Agreement conflicts with the provisions of the Master Separation Agreement, the provisions of this Agreement shall be deemed to control with respect to the subject matter hereof.

 

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Section 11.2 Binding Effect; No Third-Party Beneficiaries; Assignment . This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns; and nothing in this Agreement, express or implied, is intended to confer upon any other person or entity any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. This Agreement may not be assigned by either party hereto, except with the prior written consent of the other party hereto.

Section 11.3 Amendment; Waivers . No change or amendment may be made to this Agreement except by an instrument in writing signed on behalf of both of the parties hereto. No failure or delay on the part of either party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant or agreement contained herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right.

Section 11.4 Notices . Unless otherwise expressly provided herein, all notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to be duly given (i) when personally delivered or (ii) if mailed by registered or certified mail, postage prepaid, return receipt requested, on the date the return receipt is executed or the letter is refused by the addressee or its agent or (iii) if sent by overnight courier which delivers only upon the signed receipt of the addressee, on the date the receipt acknowledgment is executed or refused by the addressee or its agent or (iv) if sent by facsimile or electronic mail, on the date confirmation of transmission is received (provided that a copy of any notice delivered pursuant to this clause (iv) shall also be sent pursuant to clause (i), (ii) or (iii)), addressed to the attention of the addressee’s General Counsel at the address of its principal executive office or to such other address or facsimile number for a party hereto as it shall have specified by like notice.

Section 11.5 Counterparts . This Agreement and the other documents referred to herein, may be executed in multiple counterparts, each of which when executed shall be deemed to be an original but all of which together shall constitute one and the same agreement.

Section 11.6 Severability . If any term or other provision of this Agreement or the Schedules attached hereto is determined by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either party hereto. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the court, administrative agency or arbitrator shall interpret this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

 

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Section 11.7 Governing Law . This Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of Delaware, without regard to any conflicts of law provisions thereof that would result in the application of the laws of any other jurisdiction.

Section 11.8 Performance . Each party hereto 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 or Affiliate of such party.

Section 11.9 Relationship of Parties . This Agreement does not create a fiduciary relationship, partnership, joint venture or relationship of trust or agency between the parties. The parties hereto agree that RemainCo (and any other member of the RemainCo Group which performs Services hereunder) is an independent contractor in the performance of Services for the SpinCo Group under this Agreement.

Section 11.10 Regulations . All employees of RemainCo and the members of the RemainCo Group shall, when on the property of SpinCo, conform to the rules and regulations of SpinCo concerning safety, health and security which are made known to such employees in advance in writing.

Section 11.11 Construction . This Agreement shall be construed as if jointly drafted by the parties hereto and no rule of construction or strict interpretation shall be applied against either party. In this Agreement, unless the context clearly indicates otherwise, words used in the singular include the plural and words used in the plural include the singular; and if a word or phrase is defined in this Agreement, its other grammatical forms, as used in this Agreement, shall have a corresponding meaning. Whenever the context requires, the gender of all words used in this Agreement includes the masculine, feminine and the neuter. Unless the context otherwise requires, the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation,” and the word “or” shall have the inclusive meaning represented by the phrase “and/or.” The words “shall” and “will” are used interchangeably in this Agreement and have the same meaning. Relative to the determination of any period of time hereunder, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including.” Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. Any reference herein to any Article, Section or Schedule means such Article or Section of, or such Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition. As used in this Agreement, the words “this Agreement,” “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision of this Agreement. The titles to Articles and headings of Sections contained in this Agreement, in any Schedule and in the table of contents to this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement.

Section 11.12 Effect if Separation does not Occur . If the Distribution does not occur, then all actions and events that are, under this Agreement, to be taken or occur effective as of or following the Distribution Date, or otherwise in connection with the Distribution, shall not be taken or occur except to the extent specifically agreed by the parties and neither party shall have any liability or further obligation to the other party under this Agreement.

[Signature page follows.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

THE BABCOCK & WILCOX COMPANY
By:  

/s/ James D. Canafax

  Name:   James D. Canafax
  Title:   Senior Vice President and General Counsel
BABCOCK & WILCOX ENTERPRISES, INC.
By:  

/s/ E. James Ferland

  Name:   E. James Ferland
  Title:   Chairman and Chief Executive Officer


SUPPLEMENT NO. 1 TO

TRANSITION SERVICES AGREEMENT

The Babcock & Wilcox Company

(as service provider)

 

    THIS SUPPLEMENT NO. 1 to the TSA (as defined below) dated as of June 29, 2015 (this “Supplement”) is by and between The Babcock & Wilcox Company (to be renamed BWX Technologies, Inc.), a Delaware corporation (“RemainCo”), and Babcock & Wilcox Enterprises, Inc., a Delaware corporation (“SpinCo”, and together with RemainCo, the “Parties”).

PRELIMINARY STATEMENT

 

    WHEREAS, the Parties are parties to a Transition Services Agreement between Babcock & Wilcox Enterprises, Inc. (as service receiver) and The Babcock & Wilcox Company (as service provider), dated as of June 8, 2015 (the “TSA”); capitalized terms used but not defined in this Supplement shall have the respective meanings given such terms in the TSA; and

 

    WHEREAS, pursuant to Section 2.3 of the TSA, the Parties desire to supplement the Schedules to the TSA to add the Additional Services as specified below;

 

    NOW, THEREFORE, in consideration of the premises and the mutual agreements this Supplement contains and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, SpinCo and RemainCo hereby agree as follows:

 

    Section 1. Supplement . The TSA is hereby amended to add the following Additional Services as new Schedule J:

Schedule J

Benefits Accounting Services

Description of Services to be Provided:

Services to be provided as part of Benefits Accounting Transition Services:

Benefits Accounting- Related Benefits and Accounting Services

 

    Provide general advice regarding Benefits Accounting (BA) matters

 

    Provide assistance, information, and respond to inquiries regarding the BA program, including:

 

    Stock Based Compensation; Capital Accounting associated with transactions impacting equity accounts; share repurchase; restricted stock awards; guidance on any new grant agreements from Executive Compensation; assistance with Schwab informational requirements

 

    Ohio Worker’s Compensation Accounting

 

    Non-Captive Ohio Worker’s Compensation Accounting

 

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    Health Care Accounting

 

    Pension Accounting including:

 

    New SERP

 

    Restoration Plan

 

    Rabbi Trust

 

    HSA Funding requirements and accounting

 

    HRA - Health Reimbursement Accounting

 

    Thrift (401K) Funding - Vanguard - requirements and accounting

 

    Provide Benefits Accounting support at 25 hours per month with any excess time billed at an hourly rate of $46/hr. for Mary Earle.

Service Fee:

 

Amount:    $1,155 per month plus excess time billed at a rate of $46 per hour for Mary Earle
Currency:    US Dollars (USD)

Termination Date:

Services provided for up to four (4) months from the Distribution Date.

 

    Section 2. Effect on Agreement . When this Supplement becomes effective pursuant to the provisions of Section 3 hereof, (i) all references to “this Agreement” in the TSA shall be deemed to refer to the TSA as amended by this Supplement, and (ii) all references to the TSA in the Master Separation Agreement or any of the Ancillary Agreements shall be deemed to refer to the TSA as amended by this Supplement, in each case unless the context otherwise requires. Except as modified or amended hereby, all provisions of the TSA remain in full force and effect.

 

    Section 3. Execution in Counterparts; Effectiveness . This Supplement may be executed in two or more counterparts, each of which will be deemed an original but all of which together shall be considered one and the same amendment and shall become effective when counterparts have been signed by each of the Parties and delivered to the other Parties, it being understood that each of the Parties need not sign the same counterpart.

 

    Section 4. Governing Law . To the extent not preempted by applicable federal law, this Supplement shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of Delaware, without regard to any conflicts of law provisions thereof that would result in the application of the laws of any other jurisdiction.

[ REMAINDER OF PAGE INTENTIONALLY BLANK ]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Supplement as of the date first above written.

 

THE BABCOCK & WILCOX COMPANY
By:  

/s/ David S. Black

  Name:   David S. Black
  Title:   Vice President and Chief Accounting Officer
BABCOCK & WILCOX ENTERPRISES, INC.
By:  

/s/ J. André Hall

  Name:   J. André Hall
  Title:   Senior Vice President, General Counsel and Corporate Secretary

 

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The company agrees to furnish supplementally a copy of any omitted exhibit or schedule to the Commission upon request.

Exhibit 10.4

EXECUTION VERSION

TRANSITION SERVICES AGREEMENT

between

BABCOCK & WILCOX ENTERPRISES, INC.

(as service provider)

and

THE BABCOCK & WILCOX COMPANY

(as service receiver)

Dated June 8, 2015


TABLE OF CONTENTS

 

          Page  

ARTICLE I

  

DEFINITIONS

     1   

Section 1.1

  

Definitions

     1   

ARTICLE II

  

SERVICES

     2   

Section 2.1

  

Services

     2   

Section 2.2

  

Service Coordinators

     3   

Section 2.3

  

Additional Services

     3   

Section 2.4

  

Third Party Services

     3   

Section 2.5

  

Standard of Performance; Limitation of Liability

     4   

Section 2.6

  

Service Boundaries and Scope

     5   

Section 2.7

  

Cooperation

     5   

Section 2.8

  

Transitional Nature of Services; Changes

     6   

Section 2.9

  

Access

     6   

ARTICLE III

  

SERVICE CHARGES

     6   

Section 3.1

  

Compensation

     6   

ARTICLE IV

  

PAYMENT

     6   

Section 4.1

  

Payment

     6   

Section 4.2

  

Payment Disputes

     7   

Section 4.3

  

Review of Charges; Error Correction

     7   

Section 4.4

  

Taxes

     7   

Section 4.5

  

Records

     8   

ARTICLE V

  

TERM

     8   

Section 5.1

  

Term

     8   

ARTICLE VI

  

DISCONTINUATION OF SERVICES

     8   

Section 6.1

  

Discontinuation of Services

     8   

Section 6.2

  

Procedures Upon Discontinuation or Termination of Services

     9   

ARTICLE VII

  

DEFAULT

     9   

Section 7.1

  

Termination for Default

     9   

ARTICLE VIII

  

INDEMNIFICATION AND WAIVER

     9   

Section 8.1

  

Waiver of Consequential Damages

     9   

Section 8.2

  

Services Received

     10   

Section 8.3

  

Express Negligence

     11   

 

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TABLE OF CONTENTS

(continued)

 

          Page  

ARTICLE IX

  

CONFIDENTIALITY

     11   

Section 9.1

  

Confidentiality

     11   

Section 9.2

  

System Security

     11   

ARTICLE X

  

FORCE MAJEURE

     12   

Section 10.1

  

Performance Excused

     12   

Section 10.2

  

Notice

     12   

Section 10.3

  

Cooperation

     12   

ARTICLE XI

  

MISCELLANEOUS

     12   

Section 11.1

  

Entire Agreement

     12   

Section 11.2

  

Binding Effect; No Third-Party Beneficiaries; Assignment

     13   

Section 11.3

  

Amendment; Waivers

     13   

Section 11.4

  

Notices

     13   

Section 11.5

  

Counterparts

     13   

Section 11.6

  

Severability

     13   

Section 11.7

  

Governing Law

     14   

Section 11.8

  

Performance

     14   

Section 11.9

  

Relationship of Parties

     14   

Section 11.10

  

Regulations

     14   

Section 11.11

  

Construction

     14   

Section 11.12

  

Effect if Separation does not Occur

     14   

 

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Schedules

Schedule A - Tax Services

Schedule B - Accounting and Financial Reporting Services

Schedule C - Internal Records Management Services

Schedule D - Human Resources Services

Schedule E - Commercial Systems Technical Services

Schedule 2.4 - Certain Subcontractors

Schedule 4.1 - Payment Instructions

 

iii


TRANSITION SERVICES AGREEMENT

This TRANSITION SERVICES AGREEMENT (together with the Schedules hereto, this “Agreement”) is entered into as of June 8, 2015, by and between Babcock & Wilcox Enterprises, Inc., a Delaware corporation (“SpinCo”) and The Babcock & Wilcox Company, a Delaware corporation (“RemainCo”).

WHEREAS, the Board of Directors of RemainCo has determined that it would be appropriate and desirable for RemainCo to distribute (the “Distribution”) on a pro rata basis to the holders of outstanding shares of common stock, par value $0.01 per share, of RemainCo all of the outstanding shares of common stock, par value $0.01 per share, of SpinCo owned by RemainCo;

WHEREAS, in order to effectuate the foregoing, RemainCo and SpinCo have entered into a Master Separation Agreement, dated as of the date hereof (the “Master Separation Agreement”), which provides, among other things, upon the terms and subject to the conditions thereof, for the separation of the respective businesses of RemainCo and SpinCo and the Distribution, and the execution and delivery of certain other agreements, including this Agreement, in order to facilitate and provide for the foregoing; and

WHEREAS, in order to provide for an orderly transition under the Master Separation Agreement, it will be advisable for SpinCo, through members of the SpinCo Group, to provide to RemainCo certain services described herein for a transitional period.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions . As used in this Agreement, the following terms shall have the meanings set forth below:

“Additional Services” has the meaning set forth in Section 2.3.

“Agreement” has the meaning set forth in the preamble.

“Availed Party” has the meaning set forth in Section 9.2(a).

“Distribution” has the meaning set forth in the recitals.

“Force Majeure Event” has the meaning set forth in Section 10.1.

“Master Separation Agreement” has the meaning set forth in the recitals.


“RemainCo” has the meaning set forth in the preamble.

“Schedules” means the Schedules attached hereto.

“Security Regulations” has the meaning set forth in Section 9.2(a).

“Service Coordinator” has the meaning set forth in Section 2.2.

“Services” has the meaning set forth in Section 2.1(a).

“SpinCo” has the meaning set forth in the preamble.

“Systems” has the meaning set forth in Section 9.2(a).

“Tax” has the meaning set forth in Section 4.4.

Capitalized terms used but not otherwise defined in this Agreement shall have the respective meanings assigned to such terms in the Master Separation Agreement.

ARTICLE II

SERVICES

Section 2.1 Services.

(a) Upon the terms and subject to the conditions of this Agreement, SpinCo, acting directly and/or through its Affiliates and their respective employees, agents, contractors or independent third parties designated by any of them, agrees to use commercially reasonable efforts to provide or to cause to be provided services to the RemainCo Group as set forth in Schedules A through E (including any Additional Services provided in accordance with Section 2.3 hereof, all such services are collectively referred to herein as the “Services”).

(b) At all times during the performance of the Services, all Persons performing such Services (including agents, temporary employees, independent third parties and consultants) shall be construed as being independent from the RemainCo Group, and such Persons shall not be considered or deemed to be employees of any member of the RemainCo Group nor entitled to any employee benefits of RemainCo as a result of this Agreement. The responsibility of such Persons is to perform the Services in accordance with this Agreement and, as necessary, to advise the applicable member of the RemainCo Group in connection therewith, and such Persons shall not be responsible for decision-making on behalf of any member of the RemainCo Group. Such Persons shall not be required to report to management of any member of the RemainCo Group nor be deemed to be under the management or direction of any member of the RemainCo Group. RemainCo acknowledges and agrees that, except as may be expressly set forth herein as a Service (including any Additional Services provided in accordance with Section 2.3 hereof) or otherwise expressly set forth in the Master Separation Agreement or an Ancillary Agreement, no member of the SpinCo Group shall be obligated to provide, or cause to be provided, any service or goods to any member of the RemainCo Group.

(c) Notwithstanding anything to the contrary in this Agreement, SpinCo and members of the SpinCo Group shall not be required to perform Services hereunder or take any actions relating thereto that conflict with or violate any applicable Law, contract, license, authorization, certification or permit or SpinCo’s Code of Business Conduct or other governance policies, as they may be amended from time to time.

 

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Section 2.2 Service Coordinators . Each party will nominate in writing a representative to act as the primary contact with respect to the provision of the Services and the resolution of disputes under this Agreement (each such person, a “Service Coordinator”). The initial Service Coordinators shall be David S. Black (for RemainCo) and Jude T. Broussard (for SpinCo) (or their designated delegates) for each of RemainCo and SpinCo, respectively. The Service Coordinators shall meet as expeditiously as possible to resolve any dispute hereunder; and any dispute that is not resolved by the Service Coordinators within 45 days shall be resolved in accordance with the dispute resolution procedures set forth in Article V of the Master Separation Agreement. Each party hereto may treat an act of a Service Coordinator of the other party hereto which is consistent with the provisions of this Agreement as being authorized by such other party without inquiring behind such act or ascertaining whether such Service Coordinator had authority to so act; provided , however , that no such Service Coordinator shall have authority to amend this Agreement. RemainCo and SpinCo shall advise each other promptly (in any case no more than three Business Days) in writing of any change in their respective Service Coordinators, setting forth the name of the replacement, and stating that the replacement Service Coordinator is authorized to act for such party in accordance with this Section 2.2.

Section 2.3 Additional Services . RemainCo may request additional Services (the “Additional Services”) from SpinCo by providing written notice. Upon the mutual written agreement as to the nature, cost, duration and scope of such Additional Services, RemainCo and SpinCo shall supplement in writing the Schedules hereto to include such Additional Services. Subject to the other limitations in this Agreement, including the provisions in Section 2.6, but notwithstanding the foregoing provisions of this Section 2.3, in addition to providing the Services specified in the Schedules, SpinCo, acting directly and/or through its Affiliates and their respective employees, agents, contractors or independent third parties designated by any of them, shall use commercially reasonable efforts to provide or to cause to be provided additional, de minimis administrative support services to the RemainCo Group as may be requested by any member of the RemainCo Group from time to time, at no cost beyond the amounts set forth in the Schedules (as the amounts set forth in the Schedules contemplate such additional, de minimis administrative support services); provided, however, that, for any such additional services to be considered de minimis for purposes of this sentence, such additional services shall not require the attention of (i) any one employee of any member of the SpinCo Group for more than 2 hours in any single calendar month or (ii) any group of employees of any one or more members of the SpinCo Group for more than 30 hours in any single calendar month. Except where the context otherwise indicates or requires, any such additional services referred to in the immediately preceding sentence shall be deemed to be “Services” under this Agreement.

Section 2.4 Third Party Services . SpinCo shall have the right to hire third-party subcontractors to provide all or part of any Service hereunder except as specifically prohibited by the Schedule defining such Service; provided, that SpinCo shall consult in good faith with

 

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RemainCo regarding the proposed hiring of any third-party subcontractor that has not previously been involved in the activities relating to such Service prior to the date hereof; provided, further, that, in the event such subcontracting is inconsistent with the practice applied by SpinCo generally from time to time within its own organization, SpinCo shall give notice to RemainCo of its intent to subcontract any portion of the Services and RemainCo shall have 20 days (or such lesser period set forth in the notice as may be practicable in the event of exigent circumstances) to determine, in its sole discretion, whether to permit such subcontracting or whether to cancel such Service in accordance with Article VI hereof. If RemainCo opts to cancel a Service pursuant to the immediately preceding sentence, it shall not be liable to SpinCo pursuant to Section 6.1 for any costs or expenses SpinCo or any member of the SpinCo Group remains obligated to pay to the third-party subcontractor identified in the notice provided by SpinCo as described above. SpinCo shall not be required to give notice of its intent to subcontract Services to any party listed on Exhibit 2.4 hereto, nor shall RemainCo have any right to cancel any Service subcontracted to any such listed party pursuant to this Section 2.4 (provided, that this sentence shall not prevent RemainCo from cancelling any Service pursuant to Section 6.1).

Section 2.5 Standard of Performance; Limitation of Liability .

(a) The Services to be provided hereunder shall be performed with the same general degree of care, at the same general level and at the same general degree of accuracy and responsiveness, as when performed within the RemainCo organization (including, for this purpose, SpinCo and the SpinCo Group) prior to the date of this Agreement. It is understood and agreed that SpinCo and the members of the SpinCo Group are not professional providers of the types of services included in the Services and that SpinCo personnel performing Services have other responsibilities and will not be dedicated full-time to performing Services hereunder.

(b) In the event SpinCo or any member of the SpinCo Group fails to provide, or cause to be provided, the Services in accordance with the standard of service set forth in Section 2.5(a), the sole and exclusive remedy of RemainCo shall be, at RemainCo’s sole discretion, within 90 days from the date that SpinCo or such member of the SpinCo Group first fails to provide such Service, to not pay for such Service; provided that in the event SpinCo defaults in the manner described in clause (ii) of Section 7.1, RemainCo shall have the further rights set forth in Article VII.

(c) EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 2.5, NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESSED OR IMPLIED (INCLUDING THE WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR CONFORMITY TO ANY REPRESENTATION OR DESCRIPTION), ARE MADE BY SPINCO OR ANY MEMBER OF THE SPINCO GROUP WITH RESPECT TO THE SERVICES UNDER THIS AGREEMENT AND, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ALL SUCH REPRESENTATIONS OR WARRANTIES ARE HEREBY WAIVED AND DISCLAIMED. REMAINCO (ON ITS OWN BEHALF AND ON BEHALF OF EACH OTHER MEMBER OF THE REMAINCO GROUP) HEREBY EXPRESSLY WAIVES ANY RIGHT REMAINCO OR ANY MEMBER OF THE REMAINCO GROUP MAY OTHERWISE HAVE FOR ANY LOSSES, TO ENFORCE SPECIFIC PERFORMANCE OR TO PURSUE ANY OTHER REMEDY AVAILABLE IN CONTRACT, AT LAW OR IN EQUITY IN THE EVENT OF

 

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ANY NON-PERFORMANCE, INADEQUATE PERFORMANCE, FAULTY PERFORMANCE OR OTHER FAILURE OR BREACH BY SPINCO OR ANY MEMBER OF THE SPINCO GROUP UNDER OR RELATING TO THIS AGREEMENT, NOTWITHSTANDING THE NEGLIGENCE OR GROSS NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT OR ACTIVE OR PASSIVE) OF SPINCO OR ANY MEMBER OF THE SPINCO GROUP OR ANY THIRD PARTY SERVICE PROVIDER AND WHETHER DAMAGES ARE ASSERTED IN CONTRACT OR TORT, UNDER FEDERAL, STATE OR NON U.S. LAWS OR OTHER STATUTE OR OTHERWISE; PROVIDED, HOWEVER, THAT THE FOREGOING WAIVER SHALL NOT EXTEND TO COVER, AND SPINCO SHALL BE RESPONSIBLE FOR, SUCH LOSSES CAUSED BY THE WILLFUL MISCONDUCT OF SPINCO OR ANY MEMBER OF THE SPINCO GROUP. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL THE SPINCO GROUP BE LIABLE TO THE REMAINCO GROUP WITH RESPECT TO CLAIMS ARISING OUT OF THIS AGREEMENT FOR AMOUNTS IN THE AGGREGATE EXCEEDING THE AGGREGATE SERVICE CHARGES PAID HEREUNDER BY THE REMAINCO GROUP.

Section 2.6 Service Boundaries and Scope . Except as provided in a Schedule for a specific Service, the Services shall be available only for purposes of conducting the business of the RemainCo Group substantially in the manner it was conducted immediately prior to the Distribution Date. Except as provided in a Schedule for a specific Service, in providing, or causing to be provided, the Services, SpinCo shall not be obligated to: (i) maintain the employment of any specific employee or hire additional employees or third-party service providers; (ii) purchase, lease or license any additional equipment (including computer equipment, furniture, furnishings, fixtures, machinery, vehicles, tools and other tangible personal property), software or other assets, rights or properties; (iii) make modifications to its existing systems or software; (iv) provide any member of the RemainCo Group with access to any systems or software other than those to which it has authorized access immediately prior to the Distribution Date; or (v) pay any costs related to the transfer or conversion of data of any member of the RemainCo Group. RemainCo acknowledges (on its own behalf and on behalf of the other members of the RemainCo Group) that the employees of SpinCo or any other members of the SpinCo Group who may be assisting in the provision of Services hereunder are at-will employees and, as such, may terminate or be terminated from employment with SpinCo or any of the other members of the SpinCo Group providing Services hereunder at any time for any reason. In no event shall SpinCo or any of its Affiliates or any of their respective employees or agents be required to perform any Services or take any other actions hereunder that conflict with any applicable Law. For the avoidance of doubt and except as may hereafter be designated as Additional Services in accordance with Section 2.3, the Services do not include any services required for or as the result of any business acquisitions, divestitures, start-ups or, shutdowns or discontinuation of current business lines by the RemainCo Group. To the extent RemainCo desires SpinCo to provide any services in connection with any such acquisitions, divestitures, start-ups or, shutdowns or discontinuation of current business lines, RemainCo shall follow the procedures for requesting Additional Services pursuant to Section 2.3.

Section 2.7 Cooperation . RemainCo and SpinCo shall cooperate with one another and provide such further assistance as the other party may reasonably request in connection with (a) the provision of Services hereunder or (b) the compliance with any Laws imposed on either SpinCo or RemainCo.

 

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Section 2.8 Transitional Nature of Services; Changes . Subject to Sections 2.3 and 2.5, the parties acknowledge the transitional nature of the Services and that SpinCo may make changes from time to time in the manner of performing the Services.

Section 2.9 Access . During the term of this Agreement and for so long as any Services are being provided to RemainCo by SpinCo, RemainCo will provide SpinCo and its authorized representatives reasonable access, during regular business hours upon reasonable notice, to RemainCo and its employees, representatives, facilities and books and records as SpinCo and its representatives may reasonably require in order to perform such Services.

ARTICLE III

SERVICE CHARGES

Section 3.1 Compensation . Subject to the specific terms of this Agreement, the compensation to be received by SpinCo for each Service provided hereunder will be the fees set forth on the Schedule relating to the particular Service, subject to any escalation provided for on such Schedule. In consideration for the provision of a Service, each member of the RemainCo Group receiving such Service shall pay to SpinCo or, at the election of SpinCo, the member of the SpinCo Group providing such Service, the applicable fee for such Service as set forth on the attached Schedules.

ARTICLE IV

PAYMENT

Section 4.1 Payment . Except as otherwise provided in a Schedule for a specific Service, charges for Services shall be invoiced monthly in arrears based on the Services provided by SpinCo or, at its option, the member of the SpinCo Group providing the Service. Except as otherwise provided in a Schedule for a specific Service, RemainCo shall make the corresponding payment no later than 60 days after receipt of the invoice. Unless otherwise provided in this Agreement, RemainCo shall remit funds in payment of invoices provided hereunder either by wire transfer or ACH (Automated Clearing House) in accordance with the payment instructions set forth in Schedule 4.1. Each invoice shall be directed to the RemainCo Service Coordinator or such other person designated in writing from time to time by such Service Coordinator. The invoice shall set forth in reasonable detail the Services rendered and the invoice amount for the Services rendered for the period covered by such invoice. Interest will accrue on any unpaid amounts at ten percent (10%) per annum (compounded monthly) or, if less, the maximum non-usurious rate of interest permitted by applicable law, until such amounts, together with all accrued and unpaid interest thereon, are paid in full. All timely payments under this Agreement shall be made without early payment discount. Any preexisting obligation to make payment for Services provided hereunder shall survive the termination of this Agreement. If SpinCo incurs any reasonable out-of-pocket expenses (including any incremental license fees incurred by SpinCo in connection with performance of the Services and any travel expenses incurred at the

 

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request or with the consent of RemainCo) or remits funds to a third-party on behalf of RemainCo, in either case in connection with the rendering of Services, then SpinCo shall include such amount on its monthly invoice to RemainCo, with reasonable supporting documentation, and RemainCo shall reimburse that amount to SpinCo pursuant to this Section 4.1 as part of its next monthly payment.

Section 4.2 Payment Disputes . RemainCo may object to any amounts for any Service at any time before, at the time of, or after payment is made, provided such objection is made in writing to SpinCo within 90 days following the date of the disputed invoice. RemainCo shall timely pay the disputed items in full while resolution of the dispute is pending; provided, however, that SpinCo shall pay interest at a rate of five percent (5%) per annum (compounded monthly) on any amounts it is required to return to RemainCo upon resolution of the dispute. Payment of any amount shall not constitute approval thereof. The Service Coordinators shall meet as expeditiously as possible to resolve any dispute. Any dispute that is not resolved by the Service Coordinators within 45 days shall be resolved in accordance with the dispute resolution and arbitration procedures set forth in Article V of the Master Separation Agreement. Neither party (or any member of its respective Group) shall have a right of set-off against the other party (or any member of its respective Group) for billed amounts hereunder. Upon written request, SpinCo will provide to RemainCo reasonable detail and support documentation to permit RemainCo to verify the accuracy of an invoice.

Section 4.3 Review of Charges; Error Correction . SpinCo shall maintain accurate books and records (including invoices of third parties) related to the Services sufficient to calculate, and allow RemainCo to verify, the amounts owed under this Agreement. From time to time until 120 days following the termination of this Agreement, RemainCo shall have the right to review, and SpinCo shall provide access to, such books and records to verify the accuracy of such amounts, provided that such reviews shall not occur more frequently than once per calendar quarter. Each such review shall be conducted during normal business hours and in a manner that does not unreasonably interfere with the operations of SpinCo. If, as a result of any such review, RemainCo determines that it overpaid any amount to SpinCo, then RemainCo may raise an objection pursuant to the provisions of Section 4.2. RemainCo shall bear the cost and expense of any such review. SpinCo shall make adjustments to charges as required to reflect the discovery of errors or omissions in charges.

Section 4.4 Taxes . All transfer taxes, excises, fees or other charges (including value added, sales, use or receipts taxes, but not including a tax on or measured by the income, net or gross revenues, business activity or capital of a member of the SpinCo Group), or any increase therein, now or hereafter imposed directly or indirectly by law upon any fees paid hereunder for Services, which a member of the SpinCo Group is required to pay or incur in connection with the provision of Services hereunder (“Tax”), shall be passed on to RemainCo as an explicit surcharge and shall be paid by RemainCo in addition to any Service fee payment, whether included in the applicable Service fee payment, or added retroactively. If RemainCo submits to SpinCo a timely and valid resale or other exemption certificate acceptable to SpinCo and sufficient to support the exemption from Tax, then such Tax will not be added to the Service fee payable pursuant to Article III; provided, however, that if a member of the SpinCo Group is ever required to pay such Tax, RemainCo will promptly reimburse SpinCo for such Tax, including any interest, penalties and attorney’s fees related thereto. The parties will cooperate to minimize the imposition of any Taxes.

 

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Section 4.5 Records . SpinCo shall maintain true and correct records of all receipts, invoices, reports and such other documents relating to the Services hereunder in accordance with its standard accounting practices and procedures, consistently applied. SpinCo shall retain such accounting records and make them available to RemainCo’s authorized representatives and auditors for a period of not less than one year from the close of each fiscal year of SpinCo; provided, however, that SpinCo may, at its option, transfer such accounting records to RemainCo upon termination of this Agreement.

ARTICLE V

TERM

Section 5.1 Term . Subject to Articles VI and VII, the SpinCo Group shall provide the specific Services to the RemainCo Group pursuant to this Agreement for the time period set forth on the Schedule relating to the specific Service. In accordance with the Master Separation Agreement and Article VI of this Agreement, except as otherwise provided in a Schedule for a specific Service, RemainCo shall undertake to provide to itself and members of the RemainCo Group, and to terminate as soon as reasonably practicable, the Services provided to the RemainCo Group hereunder. Except as otherwise provided in a Schedule for a specific Service or group of related Services, all Services provided for hereunder shall terminate on December 31, 2016. Except as otherwise expressly agreed or unless sooner terminated, this Agreement shall commence upon the Distribution Date and shall continue in full force and effect between the parties for so long as any Service set forth in any Schedule hereto is being provided to RemainCo or members of the RemainCo Group and this Agreement shall terminate upon the cessation of all Services provided hereunder; provided that Articles I, IV, VIII, IX and XI and Sections 2.5(c) and 2.7 will survive the termination of this Agreement and any such termination shall not affect any obligation for the payment of Services rendered prior to termination.

ARTICLE VI

DISCONTINUATION OF SERVICES

Section 6.1 Discontinuation of Services . Unless otherwise provided in the relevant Schedule for a particular Service, at any time after the Distribution Date, RemainCo may, without cause and in accordance with the terms and conditions hereunder and the Master Separation Agreement, request the discontinuation of one or more specific Services by giving SpinCo at least 30 days’ prior written notice; provided, however, that any such discontinuation will not affect the amounts payable to SpinCo hereunder unless (and then only to the extent that) the charges for the discontinued Services have been separately identified in the applicable Schedule. RemainCo shall be liable to SpinCo for all costs and expenses SpinCo or any member of the SpinCo Group remains obligated to pay in connection with any discontinued Service or Services, except in the case of a Service terminated by RemainCo pursuant to clause (ii) of the first sentence of Section 7.1 hereof. The parties shall cooperate as reasonably required to effectuate an orderly and systematic transfer to the RemainCo Group of all of the duties and obligations previously performed by SpinCo or a member of the SpinCo Group under this Agreement.

 

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Section 6.2 Procedures Upon Discontinuation or Termination of Services . Upon the discontinuation or termination of a Service hereunder, this Agreement shall be of no further force and effect with respect to such Service, except as otherwise provided in a Schedule for a specific Service and except as to obligations accrued prior to the date of discontinuation or termination; provided, however, that Articles I, IV, VIII, IX and XI and Section 2.5(c) of this Agreement shall survive such discontinuation or termination. Each party and the applicable member(s) of its respective Group shall, within 60 days after discontinuation or termination of a Service, deliver to the other party and the applicable member(s) of its respective Group originals of all books, records, contracts, receipts for deposits and all other papers or documents in its possession which pertain exclusively to the business of the other party and relate to such Service; provided that a party may retain copies of material provided to the other party pursuant to this Section 6.2 as it deems necessary or appropriate in connection with its financial reporting obligations or internal control practices and policies.

ARTICLE VII

DEFAULT

Section 7.1 Termination for Default . In the event (i) of a failure of RemainCo to pay for Services in accordance with the terms of Section 4.1, or (ii) any party shall default, in any material respect, in the due performance or observance by it of any of the other terms, covenants or agreements contained in this Agreement, then (1) if the non-defaulting party is SpinCo, SpinCo shall have the right, at its sole discretion, to immediately terminate the Service with respect to which the default occurred, and (2) if the non-defaulting party is RemainCo, RemainCo shall have the right, at its sole discretion, to immediately terminate the Service with respect to which the default occurred/this Agreement, in either case if the defaulting party has failed to cure the default within 30 days of receipt of the written notice of such default. RemainCo’s right to terminate the Service with respect to which the default occurred pursuant to this Article VII and the rights set forth in Section 2.5 shall constitute RemainCo’s sole and exclusive rights and remedies for a breach by SpinCo hereunder (including any breach caused by an Affiliate of SpinCo or other third party providing a Service hereunder).

ARTICLE VIII

INDEMNIFICATION AND WAIVER

Section 8.1 Waiver of Consequential Damages . NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY UNDER THIS AGREEMENT FOR ANY EXEMPLARY, PUNITIVE, SPECIAL, INDIRECT, CONSEQUENTIAL, REMOTE OR SPECULATIVE DAMAGES (INCLUDING IN RESPECT OF LOST PROFITS OR REVENUES), HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE OR GROSS NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATIONS SHALL

 

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NOT LIMIT EACH PARTY’S INDEMNIFICATION OBLIGATIONS FOR LIABILITIES TO THIRD PARTIES AS SET FORTH IN THIS AGREEMENT, THE MASTER SEPARATION AGREEMENT OR ANY ANCILLARY AGREEMENT.

Section 8.2 Services Received . RemainCo hereby acknowledges and agrees that:

(a) the Services to be provided hereunder are subject to and limited by the provisions of Section 2.5, Article VII and the other provisions hereof, including the limitation of remedies available to RemainCo that restricts available remedies resulting from a Service not provided in accordance with the terms hereof to non-payment and, in certain limited circumstances, the right to terminate such Service;

(b) the Services are being provided solely to facilitate the transition of RemainCo as a separate company as a result of the Distribution, and SpinCo and its Affiliates do not provide any such Services to non-Affiliates;

(c) it is not the intent of SpinCo and the other members of the SpinCo Group to render, nor of RemainCo and the other members of the RemainCo Group to receive from SpinCo and the other members of the SpinCo Group, professional advice or opinions, whether with regard to tax, legal, treasury, finance, employment or other business and financial matters, or technical advice, whether with regard to information technology or other matters; RemainCo shall not rely on, or construe, any Service rendered by or on behalf of SpinCo as such professional advice or opinions or technical advice; and RemainCo shall seek all third-party professional advice and opinions or technical advice as it may desire or need, and in any event RemainCo shall be responsible for and assume all risks associated with the Services, except to the limited extent set forth in Section 2.5 and Article VII;

(d) with respect to any software or documentation within the Services, RemainCo shall use such software and documentation internally and for their intended purpose only, shall not distribute, publish, transfer, sublicense or in any manner make such software or documentation available to other organizations or persons, and shall not act as a service bureau or consultant in connection with such software; and

(e) a material inducement to SpinCo’s agreement to provide the Services is the limitation of liability and the release provided by RemainCo in this Agreement.

ACCORDINGLY, EXCEPT WITH REGARD TO THE LIMITED REMEDIES EXPRESSLY SET FORTH HEREIN, REMAINCO SHALL ASSUME ALL LIABILITY FOR AND SHALL FURTHER RELEASE, DEFEND, INDEMNIFY AND HOLD SPINCO, ANY MEMBER OF THE SPINCO GROUP AND THEIR RESPECTIVE EMPLOYEES, OFFICERS, DIRECTORS AND AGENTS (ALL AS INDEMNIFIED PARTIES) FREE AND HARMLESS FROM AND AGAINST ALL LOSSES RESULTING FROM, ARISING OUT OF OR RELATED TO THE SERVICES, HOWSOEVER ARISING AND WHETHER OR NOT CAUSED BY THE NEGLIGENCE OR GROSS NEGLIGENCE OF SPINCO, ANY MEMBER OF THE SPINCO GROUP OR ANY THIRD PARTY SERVICE PROVIDER, OTHER THAN THOSE LOSSES CAUSED BY THE WILLFUL MISCONDUCT OF SPINCO OR ANY MEMBER OF THE SPINCO GROUP.

 

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Section 8.3 Express Negligence . THE INDEMNITY, RELEASES AND LIMITATIONS OF LIABILITY IN THIS AGREEMENT (INCLUDING ARTICLES II AND VIII) ARE INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE EXPRESS TERMS AND SCOPE THEREOF NOTWITHSTANDING ANY EXPRESS NEGLIGENCE RULE OR ANY SIMILAR DIRECTIVE THAT WOULD PROHIBIT OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF THE NEGLIGENCE OR GROSS NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT OR ACTIVE OR PASSIVE) OR OTHER FAULT OR STRICT LIABILITY OF ANY OF THE INDEMNIFIED PARTIES.

ARTICLE IX

CONFIDENTIALITY

Section 9.1 Confidentiality . SpinCo and RemainCo each acknowledge and agree that the terms of Section 6.9 of the Master Separation Agreement shall apply to information, documents, plans and other data made available or disclosed by one party to the other in connection with this Agreement. SpinCo and RemainCo each acknowledge and agree that any third party Information (to the extent such Information does not constitute SpinCo Books and Records) provided by any member of the RemainCo Group to any member of the SpinCo Group after the Distribution Date in connection with the provision of the Services by any member of the SpinCo Group, or generated, maintained or held in connection with the provision of the Services by any member of the SpinCo Group after the Distribution Date, in each case that primarily relates to the RemainCo Business, the RemainCo Assets, or the RemainCo Liabilities, shall not be considered Privileged Information of SpinCo or Confidential Information of SpinCo.

Section 9.2 System Security .

(a) If any party hereto is given access to the other party’s computer systems or software (collectively, the “Systems”) in connection with the Services, the party given access (the “Availed Party”) shall comply with all of the other party’s system security policies, procedures and requirements that have been provided to the Availed Party in advance and in writing (collectively, “Security Regulations”), and shall not tamper with, compromise or circumvent any security or audit measures employed by such other party. The Availed Party shall access and use only those Systems of the other party for which it has been granted the right to access and use.

(b) Each party hereto shall use commercially reasonable efforts to ensure that only those of its personnel who are specifically authorized to have access to the Systems of the other party gain such access, and use commercially reasonable efforts to prevent unauthorized access, use, destruction, alteration or loss of information contained therein, including notifying its personnel of the restrictions set forth in this Agreement and of the Security Regulations.

(c) If, at any time, the Availed Party determines that any of its personnel has sought to circumvent, or has circumvented, the Security Regulations, that any unauthorized Availed Party personnel has accessed the Systems, or that any of its personnel has engaged in activities that may lead to the unauthorized access, use, destruction, alteration or loss of data,

 

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information or software of the other party hereto, the Availed Party shall promptly terminate any such person’s access to the Systems and immediately notify the other party hereto. In addition, such other party hereto shall have the right to deny personnel of the Availed Party access to its Systems upon notice to the Availed Party in the event that the other party hereto reasonably believes that such personnel have engaged in any of the activities set forth above in this Section 9.2(c) or otherwise pose a security concern. The Availed Party shall use commercially reasonable efforts to cooperate with the other party hereto in investigating any apparent unauthorized access to such other party’s Systems.

ARTICLE X

FORCE MAJEURE

Section 10.1 Performance Excused . Continued performance of a Service may be suspended immediately to the extent caused by any event or condition beyond the reasonable control of the party suspending such performance (and not involving any willful misconduct of such party), including acts of God, pandemics, floods, fire, earthquakes, labor or trade disturbances, strikes, war, acts of terrorism, civil commotion, electrical shortages or blackouts, breakdown or injury to computing facilities, compliance in good faith with any Law (whether or not it later proves to be invalid), unavailability of materials or bad weather (a “Force Majeure Event”). RemainCo shall not be obligated to pay any amount for Services that it does not receive as a result of a Force Majeure Event (and the parties hereto shall negotiate reasonably to determine the amount applicable to such Services not received). In addition to the reduction of any amounts owed by RemainCo hereunder, during the occurrence of a Force Majeure Event, to the extent the provision of any Service has been disrupted or reduced, during such disruption or reduction, (a) RemainCo may replace any such affected Service by providing any such Service for itself or engaging one or more third parties to provide such Service at the expense of RemainCo and (b) SpinCo shall cooperate with, provide such information to and take such other actions as may be reasonably required to assist such third parties to provide such substitute Service.

Section 10.2 Notice . The party claiming suspension due to a Force Majeure Event will give prompt notice to the other of the occurrence of the Force Majeure Event giving rise to the suspension and of its nature and anticipated duration.

Section 10.3 Cooperation . Upon the occurrence of a Force Majeure Event, the parties shall cooperate with each other to find alternative means and methods for the provision of the suspended Service.

ARTICLE XI

MISCELLANEOUS

Section 11.1 Entire Agreement . This Agreement, together with the documents referenced herein (including the Schedules and the Master Separation Agreement), constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior written and oral and all contemporaneous oral agreements

 

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and understandings with respect to the subject matter hereof. To the extent any provision of this Agreement conflicts with the provisions of the Master Separation Agreement, the provisions of this Agreement shall be deemed to control with respect to the subject matter hereof.

Section 11.2 Binding Effect; No Third-Party Beneficiaries; Assignment . This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns; and nothing in this Agreement, express or implied, is intended to confer upon any other person or entity any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. This Agreement may not be assigned by either party hereto, except with the prior written consent of the other party hereto.

Section 11.3 Amendment; Waivers . No change or amendment may be made to this Agreement except by an instrument in writing signed on behalf of both of the parties hereto. No failure or delay on the part of either party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant or agreement contained herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right.

Section 11.4 Notices . Unless otherwise expressly provided herein, all notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to be duly given (i) when personally delivered or (ii) if mailed by registered or certified mail, postage prepaid, return receipt requested, on the date the return receipt is executed or the letter is refused by the addressee or its agent or (iii) if sent by overnight courier which delivers only upon the signed receipt of the addressee, on the date the receipt acknowledgment is executed or refused by the addressee or its agent or (iv) if sent by facsimile or electronic mail, on the date confirmation of transmission is received (provided that a copy of any notice delivered pursuant to this clause (iv) shall also be sent pursuant to clause (i), (ii) or (iii)), addressed to the attention of the addressee’s General Counsel at the address of its principal executive office or to such other address or facsimile number for a party hereto as it shall have specified by like notice.

Section 11.5 Counterparts . This Agreement and the other documents referred to herein, may be executed in multiple counterparts, each of which when executed shall be deemed to be an original but all of which together shall constitute one and the same agreement.

Section 11.6 Severability . If any term or other provision of this Agreement or the Schedules attached hereto is determined by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either party hereto. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the court, administrative agency or arbitrator shall interpret this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

 

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Section 11.7 Governing Law . This Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of Delaware, without regard to any conflicts of law provisions thereof that would result in the application of the laws of any other jurisdiction.

Section 11.8 Performance . Each party hereto 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 or Affiliate of such party.

Section 11.9 Relationship of Parties . This Agreement does not create a fiduciary relationship, partnership, joint venture or relationship of trust or agency between the parties. The parties hereto agree that SpinCo (and any other member of the SpinCo Group which performs Services hereunder) is an independent contractor in the performance of Services for the RemainCo Group under this Agreement.

Section 11.10 Regulations . All employees of SpinCo and the members of the SpinCo Group shall, when on the property of RemainCo, conform to the rules and regulations of RemainCo concerning safety, health and security which are made known to such employees in advance in writing.

Section 11.11 Construction . This Agreement shall be construed as if jointly drafted by the parties hereto and no rule of construction or strict interpretation shall be applied against either party. In this Agreement, unless the context clearly indicates otherwise, words used in the singular include the plural and words used in the plural include the singular; and if a word or phrase is defined in this Agreement, its other grammatical forms, as used in this Agreement, shall have a corresponding meaning. Whenever the context requires, the gender of all words used in this Agreement includes the masculine, feminine and the neuter. Unless the context otherwise requires, the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation,” and the word “or” shall have the inclusive meaning represented by the phrase “and/or.” The words “shall” and “will” are used interchangeably in this Agreement and have the same meaning. Relative to the determination of any period of time hereunder, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including.” Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. Any reference herein to any Article, Section or Schedule means such Article or Section of, or such Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition. As used in this Agreement, the words “this Agreement,” “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision of this Agreement. The titles to Articles and headings of Sections contained in this Agreement, in any Schedule and in the table of contents to this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement.

Section 11.12 Effect if Separation does not Occur . If the Distribution does not occur, then all actions and events that are, under this Agreement, to be taken or occur effective as of or following the Distribution Date, or otherwise in connection with the Distribution, shall not be taken or occur except to the extent specifically agreed by the parties and neither party shall have any liability or further obligation to the other party under this Agreement.

[Signature page follows.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

BABCOCK & WILCOX ENTERPRISES, INC.
By:  

/s/ E. James Ferland

  Name:   E. James Ferland
  Title:   Chairman and Chief Executive Officer
THE BABCOCK & WILCOX COMPANY
By:  

/s/ James D. Canafax

  Name:   James D. Canafax
  Title:   Senior Vice President and General Counsel


SUPPLEMENT NO. 1 TO

TRANSITION SERVICES AGREEMENT

Babcock & Wilcox Enterprises, Inc.

(as service provider)

 

    THIS SUPPLEMENT NO. 1 to the TSA (as defined below) dated as of June 29, 2015 (this “Supplement”) is by and between The Babcock & Wilcox Company (to be renamed BWX Technologies, Inc.), a Delaware corporation (“RemainCo”), and Babcock & Wilcox Enterprises, Inc., a Delaware corporation (“SpinCo”, and together with RemainCo, the “Parties”).

PRELIMINARY STATEMENT

 

    WHEREAS, the Parties are parties to a Transition Services Agreement between Babcock & Wilcox Enterprises, Inc. (as service provider) and The Babcock & Wilcox Company (as service receiver), dated as of June 8, 2015 (the “TSA”); capitalized terms used but not defined in this Supplement shall have the respective meanings given such terms in the TSA; and

 

    WHEREAS, pursuant to Section 2.3 of the TSA, the Parties desire to supplement the Schedules to the TSA to add the Additional Services as specified below;

 

    NOW, THEREFORE, in consideration of the premises and the mutual agreements this Supplement contains and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, SpinCo and RemainCo hereby agree as follows:

 

    Section 1. Supplement. The TSA is hereby amended to add the following Additional Services as new Schedule F:

Schedule F

Legal Services

Description of Services to be Provided:

Services to be provided as part of Legal Transition Services:

Intellectual Property - Paralegal Services

 

    Provide general assistance, not to include filing or recordation of documents, and information, regarding:

 

    IP Management System (e.g., CPI) data;

 

    IP assignments, declarations, and IP documents;

 

    Transfer or retrieval of any electronic and physical files (including those in remote or off-site storage) not received RemainCo as of Distribution Date;

 

    Confirmation of annuity or maintenance fee payments;

 

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    Assisting with the administrative transfer of Domain name registrations to Remain Co;

 

    Corresponding with outside IP counsel (both domestic and foreign agents) regarding transfer of responsibility for RemainCo IP matters;

 

    Third-party IP licensing services, such as CCC, BMI, and ASCAP; and

 

    Correspondence, notices, or notifications regarding or related to IP matters.

 

    Provide paralegal support from Barberton facility and off-site file storage location(s) at 25 hours per month with any excess time billed at an hourly rate of $39/hr. for Amy Saus.

Notwithstanding the above, the Parties agree that the Additional Services shall be limited to administrative, paralegal services necessitated by RemainCo separating the SpinCo business from the RemainCo business.

Service Fee:

 

Amount:    $985 per month plus excess time billed at a rate of $39 per hour for Amy Saus
Currency:    US Dollars (USD)

Termination Date:

Services provided for up to four (4) months from the Distribution Date.

 

    Section 2. Effect on Agreement . When this Supplement becomes effective pursuant to the provisions of Section 3 hereof, (i) all references to “this Agreement” in the TSA shall be deemed to refer to the TSA as amended by this Supplement, and (ii) all references to the TSA in the Master Separation Agreement or any of the Ancillary Agreements shall be deemed to refer to the TSA as amended by this Supplement, in each case unless the context otherwise requires. Except as modified or amended hereby, all provisions of the TSA remain in full force and effect.

 

    Section 3. Execution in Counterparts; Effectiveness . This Supplement may be executed in two or more counterparts, each of which will be deemed an original but all of which together shall be considered one and the same amendment and shall become effective when counterparts have been signed by each of the Parties and delivered to the other Parties, it being understood that each of the Parties need not sign the same counterpart.

 

    Section 4. Governing Law . To the extent not preempted by applicable federal law, this Supplement shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of Delaware, without regard to any conflicts of law provisions thereof that would result in the application of the laws of any other jurisdiction.

[ REMAINDER OF PAGE INTENTIONALLY BLANK ]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Supplement as of the date first above written.

 

THE BABCOCK & WILCOX COMPANY
By:  

/s/ James D. Canafax

  Name:   James D. Canafax
  Title:   Senior Vice President and General Counsel
BABCOCK & WILCOX ENTERPRISES, INC.
By:  

/s/ J. André Hall

  Name:   J. André Hall
  Title:   Senior Vice President, General Counsel and Corporate Secretary

 

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The company agrees to furnish supplementally a copy of any omitted exhibit or schedule to the Commission upon request.


The company agrees to furnish supplementally a copy of any omitted exhibit or schedule to the Commission upon request.

Exhibit 10.5

EXECUTION VERSION

ASSUMPTION AND LOSS ALLOCATION AGREEMENT

by and among

ACE American Insurance Company,

acting for itself and the ACE Affiliates (as defined below)

and

Babcock & Wilcox Enterprises, Inc.,

a corporation organized and existing under the laws of the State of Delaware

and

The Babcock & Wilcox Company,

a corporation organized and existing under the laws of the State of Delaware

RECITALS

THIS ASSUMPTION AND LOSS ALLOCATION AGREEMENT (the “ Agreement ”), is entered into and effective as of June 19, 2015 (the “ Effective Date ”) by and among ACE AMERICAN INSURANCE COMPANY, individually and acting for the ACE Affiliates (in such capacities, the “ Company ”), Babcock & Wilcox Enterprises, Inc., a Delaware corporation (“SpinCo”), and The Babcock & Wilcox Company, a Delaware corporation (“ RemainCo ”), and, solely with respect to Sections 2, 3 and 5(c), the other SpinCo Entities signatory hereto and the other RemainCo Entities signatory hereto.

WHEREAS , the Company and/or the ACE Affiliates have issued the Existing Policies to one or more SpinCo Entities and one or more RemainCo Entities; and

WHEREAS , in connection with the Existing Policies, the Company, the ACE Affiliates, one or more SpinCo Entities, and/or one or more RemainCo Entities entered into various Existing Insurance Agreements; and

WHEREAS , pursuant to the Existing Policies and the Existing Insurance Agreements, the SpinCo Entities and the RemainCo Entities are obligated, among other things, to pay or reimburse the Company and/or the ACE Affiliates for certain Obligations, which Obligations are secured by the Existing Collateral; and

WHEREAS , RemainCo intends to spin-off SpinCo from RemainCo through a dividend of common stock of SpinCo to the shareholders of RemainCo (the “ Separation ”); and

WHEREAS , in connection with the Separation: (a) the SpinCo Entities desire to transfer and the RemainCo Entities desire to assume any RemainCo Obligations that were

 

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incurred by, or with respect to which there exists any obligation of, a SpinCo Entity, whether such RemainCo Obligations were existing, accruing or arising before, on or after the Effective Date; and (b) the RemainCo Entities desire to transfer and the SpinCo Entities desire to assume any SpinCo Obligations that were incurred by, or with respect to which there exists any obligation of, a RemainCo Entity, whether such SpinCo Obligations were existing, accruing or arising before, on or after the Effective Date; and

WHEREAS , the Company, on its own behalf and on behalf of the ACE Affiliates, is willing to consent to the transfer and assumption of the Obligations as set forth herein, subject to the terms and conditions of this Agreement;

NOW, THEREFORE , in consideration of the mutual promises set out herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, including a one-time administrative fee of $25,000 (the “ Fee ”), and intending to be legally bound, the Parties agree as follows:

1. Definitions . The following terms used herein, including in the recitals and Exhibits hereto, shall have the following meanings:

ACE Affiliate ” means each Affiliate of ACE American Insurance Company that is listed on Exhibit V attached hereto and made a part hereof that has issued an Existing Policy or is party to an Existing Insurance Agreement.

Affiliate ” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the specified Person. For this purpose “control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through ownership of voting securities, by contract or otherwise.

Agreement ” has the meaning set forth in the recitals to this Agreement.

Assumption Time ” means midnight (New York time) on the Effective Date.

Cash Collateral ” has the meaning set forth in Section 7.

Company ” has the meaning set forth in the recitals to this Agreement.

Company Designation ” has the meaning set forth in Section 4(a).

Effective Date ” has the meaning set forth in the recitals to this Agreement.

ESIS ” means ESIS, Inc., an Affiliate of the Company.

Existing Collateral ” means any and all of the following forms of security held by the Company or any ACE Affiliate under the terms of any Existing Policy or Existing Insurance Agreement in order to secure any Obligations outstanding as of the date hereof: (i) any and all letters of credit outstanding as of the date hereof provided by or required to be provided by a

 

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RemainCo Entity or a SpinCo Entity; (ii) any and all Cash Collateral provided by or required to be provided by a RemainCo Entity or a SpinCo Entity; (iii) any securities account pledged by a RemainCo Entity or a SpinCo Entity pursuant to any Existing Insurance Agreement; or (iv) any other collateral or security previously provided by a RemainCo Entity or a SpinCo Entity under the terms of any Existing Policy or Existing Insurance Agreement in order to secure any Obligations outstanding as of the date hereof.

Existing ESIS Agreement ” means any agreement relating to claims or losses under one or more Existing Policies in which ESIS is in direct contractual privity with any SpinCo Entity or any RemainCo Entity.

Existing Insurance Agreement ” means any agreement entered into on or prior to the date hereof by or on behalf of (or which is otherwise binding on) any RemainCo Entity and/or SpinCo Entity with the Company or an ACE Affiliate in connection with an Existing Policy, including, without limitation, any high deductible agreement, any notice of election, any collateral agreement, any agreement relating to any deductible or paid loss retrospectively rated insurance program, any agreement relating to deductibles under any of the Existing Policies, any letter or agreement relating to policy dividends, any early close-out agreement relating to any Existing Policy or Existing Insurance Agreement and any agreement described on Exhibit II and Exhibit VI attached hereto and made a part hereof.

Existing Policy ” means each policy of general liability insurance, automobile liability insurance and workers compensation insurance (other than any insurance policy that is the subject of any reinsurance agreement) issued prior to the date hereof by the Company or an ACE Affiliate to a RemainCo Entity or a SpinCo Entity, as applicable, including those policies identified on Exhibit III and Exhibit VII attached hereto and made a part hereof.

Fee ” has the meaning set forth in the recitals to this Agreement.

Foreign Insurance Agreements ” means the Existing Insurance Agreements listed on Exhibit VI attached hereto and made a part hereof and any other similar written agreements entered into between the Company or any of its Affiliates and a SpinCo Entity or a RemainCo Entity in connection with or relating to insurance policies issued to cover risks located primarily outside of the continental United States.

Foreign Policies ” means the Existing Policies listed on Exhibit VII attached hereto and made a part hereof and any other general liability insurance policy issued by the Company or any of its Affiliates to a SpinCo Entity or a RemainCo Entity to cover risks located primarily outside of the continental United States.

Master Separation Agreement ” means a Master Separation Agreement to be entered into between SpinCo and RemainCo in connection with the Separation.

Obligations ” means any and all amounts, duties, liabilities and obligations, whether accrued, fixed or contingent, mature or inchoate, known or unknown, including deductibles and premium adjustments, payable by or to be performed by a SpinCo Entity or a RemainCo Entity to the Company or any ACE Affiliate under the terms of any Existing Policy or any Existing Insurance Agreement.

 

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Organizational Documents ” means (a) with respect to any corporation, its certificate or articles of incorporation or organization and its bylaws, (b) with respect to any limited partnership, its certificate of limited partnership and its partnership agreement, (c) with respect to any general partnership, its partnership agreement, and (d) with respect to any limited liability company, its certificate or articles of formation or organization and its operating agreement or other organizational documents.

Parties ” means the Company, SpinCo and RemainCo, collectively (and each individually is a “Party”).

Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, a union, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof.

RemainCo ” has the meaning set forth in the recitals to this Agreement.

RemainCo Assumed Obligations ” has the meaning set forth in Section 5(b).

RemainCo Assumption ” has the meaning set forth in Section 2(a).

RemainCo Entity ” means RemainCo and each of the entities listed on Exhibit IV attached hereto and made a part hereof. It is acknowledged and understood that, from and after the effectiveness of the Separation, the RemainCo Entities will not be Subsidiaries or Affiliates of SpinCo or any of the other SpinCo Entities.

RemainCo LOC ” has the meaning set forth in Section 5(b).

RemainCo Obligations ” means any Obligations of, or to the extent arising from the operations, business, or property of, a RemainCo Entity for which any SpinCo Entity is responsible under the terms of an Existing Policy or Existing Insurance Agreement, whether arising prior to, at or after the Effective Date.

RemainCo Pledged Account ” has the meaning set forth in Section 5(b).

RemainCo Retained Obligations ” has the meaning set forth in Section 2(d).

Separation ” has the meaning set forth in the recitals to this Agreement.

SpinCo ” has the meaning set forth in the recitals to this Agreement.

SpinCo Assumed Obligations ” has the meaning set forth in Section 5(a).

SpinCo Assumption ” has the meaning set forth in Section 2(c).

SpinCo Entity ” means SpinCo and each of the entities listed on Exhibit I attached hereto and made a part hereof. It is acknowledged and understood that, from and after the effectiveness of the Separation, the SpinCo Entities will not be Subsidiaries or Affiliates of RemainCo or any of the other RemainCo Entities.

 

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SpinCo LOC ” has the meaning set forth in Section 5(a).

SpinCo Obligations ” means any Obligations of, or to the extent arising from the operations, business, or property of, a SpinCo Entity for which any RemainCo Entity is responsible under the terms of an Existing Policy or Existing Insurance Agreement, whether arising prior to, at or after the Effective Time.

SpinCo Pledged Account ” has the meaning set forth in Section 5(a).

SpinCo Retained Obligations ” has the meaning set forth in Section 2(b).

Subsidiary ” means, with respect to any specified Person, any corporation, partnership, limited liability company, joint venture or other organization, whether incorporated or unincorporated, of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such specified Person or by any one or more of its Subsidiaries, or by such specified Person and one or more of its Subsidiaries.

Substituted Collateral ” means (i) the SpinCo LOC and the RemainCo LOC and (ii) any other collateral or security to be provided on or after the date hereof by a RemainCo Entity or a SpinCo Entity under the terms of any Existing Policy or Existing Insurance Agreement in order to secure any Obligations outstanding as of the date hereof.

2. Assumption .

(a) RemainCo Assumption . Notwithstanding anything in any Existing Insurance Agreement or Existing Policy to the contrary, each SpinCo Entity that is a signatory hereto hereby transfers and assigns, and RemainCo does hereby assume, effective as of the Assumption Time, the RemainCo Obligations; and RemainCo hereby agrees to observe, pay, perform, satisfy, fulfill and discharge any and all now existing and hereafter arising duties, terms, provisions, covenants, obligations and liabilities of any SpinCo Entity under the Existing Policies and Existing Insurance Agreements in respect of the RemainCo Obligations (the “ RemainCo Assumption ”). The Company, on its own behalf and on behalf of the ACE Affiliates, hereby consents to, and agrees to give full force and effect to, the RemainCo Assumption. From and after the Assumption Time, the Company (and/or the applicable ACE Affiliate): (i) may enforce its rights under the Existing Policies and the Existing Insurance Agreements in respect of the RemainCo Obligations against RemainCo to the same extent such Person could, prior to the RemainCo Assumption, enforce such rights against the applicable SpinCo Entity and (ii) releases each SpinCo Entity from its obligation to observe, pay, perform, satisfy, fulfill or discharge any such RemainCo Obligations.

(b) SpinCo Retained Obligations . SpinCo hereby agrees to continue to observe, pay, perform, satisfy, fulfill and discharge any and all of its now existing and

 

5


hereafter arising Obligations (other than RemainCo Obligations) (the “ SpinCo Retained Obligations ”) in accordance with the terms of this Agreement and the applicable Existing Policy and Existing Insurance Agreement.

(c) SpinCo Assumption . Notwithstanding anything in any Existing Insurance Agreement or Existing Policy to the contrary, each RemainCo Entity that is a signatory hereto hereby transfers and assigns, and SpinCo does hereby assume, effective as of the Assumption Time, the SpinCo Obligations; and SpinCo hereby agrees to observe, pay, perform, satisfy, fulfill and discharge any and all now existing and hereafter arising duties, terms, provisions, covenants, obligations and liabilities of any RemainCo Entity under the Existing Policies and Existing Insurance Agreements in respect of the SpinCo Obligations (the “ SpinCo Assumption ”). The Company, on its own behalf and on behalf of the ACE Affiliates, hereby consents to, and agrees to give full force and effect to, the SpinCo Assumption. From and after the Assumption Time, the Company (and/or the applicable ACE Affiliate): (i) may enforce its rights under the Existing Policies and the Existing Insurance Agreements in respect of the SpinCo Obligations against SpinCo to the same extent such Person could, prior to the SpinCo Assumption, enforce such rights against the applicable RemainCo Entity and (ii) releases each RemainCo Entity from its obligation to observe, pay, perform, satisfy, fulfill or discharge any such SpinCo Obligations.

(d) RemainCo Retained Obligations . RemainCo hereby agrees to continue to observe, pay, perform, satisfy, fulfill and discharge any and all of its now existing and hereafter arising Obligations (other than SpinCo Obligations) (the “ RemainCo Retained Obligations ”) in accordance with the terms of this Agreement and the applicable Existing Policy and Existing Insurance Agreement.

(e) Obligations of the Company and the ACE Affiliates . The Parties acknowledge that nothing in this Agreement shall discharge, limit or in any way affect the obligations of the Company or the ACE Affiliates as insurers under any of the Existing Policies. Such obligations shall continue to be performed to the extent and in the manner set forth in the applicable Existing Policy by the Company and/or by the ACE Affiliates, as the case may be, for the benefit of such Persons who are entitled to such performance under the applicable Existing Policy, provided , however , that to the extent that such performance gives rise to Obligations, the responsibility for such Obligations shall be governed by this Agreement.

(f) Existing ESIS Agreements . The Parties shall use commercially reasonable efforts to enter into an agreement with ESIS promptly after the date hereof pursuant to which ESIS shall acknowledge and consent to the RemainCo Assumption and the SpinCo Assumption and the other provisions of this Agreement with respect to determining any SpinCo Obligations, SpinCo Retained Obligations, RemainCo Obligations or RemainCo Retained Obligations (or allocations thereof) in respect of any Existing ESIS Agreement.

3. Joinder . As of the Effective Date, (a) to the extent that RemainCo is not already a party thereto and an Existing Insurance Agreement contains any RemainCo Obligations, each Existing Insurance Agreement is hereby deemed amended to add RemainCo as an “Insured” or

 

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other such obligor thereunder solely to the extent necessary to give effect to the RemainCo Assumption and (b) to the extent that SpinCo is not already a party thereto and an Existing Insurance Agreement contains any SpinCo Obligations, each Existing Insurance Agreement is hereby deemed amended to add SpinCo as an “Insured” or other such obligor thereunder solely to the extent necessary to give effect to the SpinCo Assumption.

4. Allocation .

(a) Company Designations . (i) SpinCo shall continue to pay or perform any and all Obligations constituting SpinCo Retained Obligations pursuant to and in the manner set forth in the applicable Existing Policy and the applicable Existing Insurance Agreement giving rise to such Obligations and (ii) RemainCo shall continue to pay or perform any and all Obligations constituting RemainCo Retained Obligations pursuant to and in the manner set forth in the applicable Existing Policy and the applicable Existing Insurance Agreement giving rise to such Obligations; provided , however , that in each case, SpinCo and RemainCo shall provide to the Company on a timely basis such information as the Company may request so that the Company may determine whether the Obligations constitute SpinCo Retained Obligations or RemainCo Retained Obligations. The Company shall determine whether such Obligations constitute SpinCo Retained Obligations or RemainCo Retained Obligations (the “ Company Designation ”) and shall notify the applicable Party of any such Company Designation. RemainCo agrees that, notwithstanding any dispute or disagreement it may have with respect to any Company Designation, it will pay any RemainCo Retained Obligation pursuant to and in the manner set forth in the applicable Existing Policy and the applicable Existing Insurance Agreement giving rise to such RemainCo Retained Obligation; and SpinCo agrees that, notwithstanding any dispute or disagreement it may have with respect to any Company Designation, it will pay such SpinCo Retained Obligation pursuant to and in the manner set forth in the applicable Existing Policy and the applicable Existing Insurance Agreement giving rise to such SpinCo Retained Obligation; provided , however , that such payment shall not be construed as prejudicial to either Party in any dispute between SpinCo and RemainCo with respect to any such Company Designation.

(b) Disputes . Notwithstanding any dispute or disagreement between SpinCo and RemainCo concerning a Company Designation, the applicable Party shall pay any amount payable pursuant to a Company Designation as set forth in Section 4(a), and any such dispute or disagreement between SpinCo and RemainCo shall be resolved pursuant to Article V of the Master Separation Agreement; provided , that (i) the Company will not be made a party to any arbitration proceeding arising from such dispute or disagreement, but may be called as a witness; (ii) any costs incurred by the Company in respect of any such arbitration proceeding will be fully reimbursed to the Company equally by the Disputing Parties promptly following receipt of a reimbursement demand from the Company; (iii) under no circumstances will SpinCo or RemainCo, as a result of such arbitration proceeding, require the Company to return any amount received by the Company pursuant to a prior Company Designation, whether such amount was received as a result of the Company’s draw against security posted for its benefit or otherwise, (iv) the Company shall comply with the allocation or other resolution of such dispute established by any award or order of such arbitration, or settlement between the

 

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Disputing Parties; and (v) any indemnification and reimbursement of the Company by RemainCo and SpinCo pursuant to this Agreement, the Existing Policies and the Existing Insurance Agreements and any other agreement relating to the disputed Company Designation shall be in accordance with the allocation established by such award, order or settlement of such dispute.

5. Collateral and Fee .

(a) SpinCo LOC and Pledged Account .

(i) SpinCo will, within fifteen (15) days after the Effective Date, provide to the Company, as beneficiary thereof, a clean, irrevocable and unconditional letter of credit in an amount of $4,677,013 in respect of its Obligations under the Existing Insurance Agreements and the Existing Policies (each such letter of credit individually and collectively being referred to herein as the “ SpinCo LOC ”), issued in a form and by a bank or other financial institution, in each case acceptable to the Company; and/or such other forms of collateral as the Company may permit from time to time. The SpinCo LOC shall be in an aggregate amount that is less than the aggregate amount of the Existing Collateral provided by SpinCo and shall secure the SpinCo Retained Obligations and the Obligations assumed by SpinCo in the SpinCo Assumption (the “ SpinCo Assumed Obligations ”).

(ii) The SpinCo LOC shall be “evergreen,” meaning that it shall provide by its terms that it will be renewed automatically each year for an additional year unless written notice of non-renewal is received by the Company at least sixty (60) days prior to the SpinCo LOC’s anniversary date. If the Company permits SpinCo to provide collateral in a form other than the SpinCo LOC, SpinCo shall provide such collateral in an amount and form acceptable to the Company.

(iii) In addition to the SpinCo LOC, SpinCo will, within fifteen (15) days after the Effective Date, enter into a pledge and security agreement in a form acceptable to the Company, pursuant to which SpinCo will establish a securities account for the benefit of the Company and grant the Company a continuing first priority security interest in and lien on all of their respective right, title and interest, if any, in and to the assets deposited in such securities account and all proceeds thereof as security for their now existing and hereafter arising Obligations to the Company or such ACE Affiliates (the “SpinCo Pledged Account”). In addition, SpinCo will enter into a control agreement in a form and with a custodian acceptable to the Company pursuant to which SpinCo will grant the Company with control over the SpinCo Pledged Account such that the Company may perfect its security interest in such account and the assets deposited therein. The initial total market value of the assets to be deposited into the SpinCo Pledged Account is $10,534,118. The SpinCo Pledged Account shall secure the SpinCo Assumed Obligations.

 

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(iv) SpinCo shall keep the SpinCo LOC and the SpinCo Pledged Account in place (or other collateral acceptable to the Company) as security for payment of the SpinCo Retained Obligations and the SpinCo Assumed Obligations, until the Company determines in its sole discretion that there is no longer any need for such collateral. If there shall be a material deterioration in the financial condition of the bank or other financial institution which has issued the SpinCo LOC, the Company shall have the right to require SpinCo to replace the SpinCo LOC with a new letter of credit with similar terms issued by a bank or other financial institution then acceptable to the Company.

(v) The Company shall have the right to draw against the SpinCo LOC or the SpinCo Pledged Account and/or other collateral in each instance where any portion of the SpinCo Retained Obligation or the SpinCo Assumed Obligations for any reason is not fulfilled in the manner and within the time periods required under this Agreement or the Existing Policies or Existing Insurance Agreements giving rise thereto.

(vi) Annually, the Company shall review and redetermine the amount of the SpinCo Retained Obligations and the SpinCo Assumed Obligations and the amount of collateral security required pursuant to this Agreement. At such time, SpinCo will provide its most recent audited financial statements, interim financial statements, and any other financial information reasonably requested by the Company for the purpose of evaluating the financial condition of SpinCo. SpinCo will provide any needed increases in the amount of the SpinCo LOC or the SpinCo Pledged Account (and/or other collateral if acceptable to the Company) within thirty (30) days of the Company’s written request for such increase. The Company will effect any decreases in the amount of the SpinCo LOC or the SpinCo Pledged Account (and/or other collateral) promptly, provided that SpinCo is not in breach of any of its obligations under this Agreement, the Existing Policies or any Existing Insurance Agreement.

(b) RemainCo LOC and Pledged Account .

(i) RemainCo will, within fifteen (15) days after the Effective Date, provide to the Company, as beneficiary thereof, a clean, irrevocable and unconditional letter of credit in an amount of $1,779,466 in respect of its Obligations under the Existing Insurance Agreements and the Existing Policies (each such letter of credit individually and collectively being referred to herein as the “ RemainCo LOC ”), issued in a form and by a bank or other financial institution, in each case acceptable to the Company; and/or such other forms of collateral as the Company may permit from time to time. The RemainCo LOC shall be in an aggregate amount that is less than the aggregate amount of the Existing Collateral provided by RemainCo and shall secure the RemainCo Retained Obligations and the Obligations assumed by RemainCo in the RemainCo Assumption (the “ RemainCo Assumed Obligations ”).

 

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(ii) The RemainCo LOC shall be “evergreen,” meaning that it shall provide by its terms that it will be renewed automatically each year for an additional year unless written notice of non-renewal is received by the Company at least sixty (60) days prior to the RemainCo LOC’s anniversary date. If the Company permits RemainCo to provide collateral in a form other than the RemainCo LOC, RemainCo shall provide such collateral in an amount and form acceptable to the Company.

(iii) In addition to the RemainCo LOC, RemainCo has previously entered into a Pledge and Security Agreement with the Company, pursuant to which RemainCo established a securities account for the benefit of the Company and granted to the Company a continuing first priority security interest in and lien on all of their respective right, title and interest, if any, in and to the assets deposited in such securities account and all proceeds thereof as security for their now existing and hereafter arising Obligations to the Company or such ACE Affiliates (the “RemainCo Pledged Account”). In addition, RemainCo entered into a Control Agreement with Bank of America, pursuant to which RemainCo granted the Company such control over the SpinCo Pledged Account so as to allow the Company to have perfected its security interest in such account and the assets deposited therein. On and after the Effective Date, the total market value of the assets which must be maintained in the RemainCo Pledged Account shall be $4,070,382. Upon receipt of the security to be provided by SpinCo under this Agreement, the Company will consent to the withdrawal of assets on deposit in the RemainCo Pledged Account as necessary to reduce the value of the RemainCo Pledged Account to this amount. The RemainCo Pledged Account shall secure the RemainCo Assumed Obligations.

(iv) RemainCo shall keep the RemainCo LOC and the RemainCo Pledged Account in place (or other collateral acceptable to the Company) as security for payment of the RemainCo Retained Obligations and the RemainCo Assumed Obligations, until the Company determines in its sole discretion that there is no longer any need for such collateral. If there shall be a material deterioration in the financial condition of the bank or other financial institution which has issued the RemainCo LOC, the Company shall have the right to require RemainCo to replace the RemainCo LOC with a new letter of credit with similar terms issued by a bank or other financial institution then acceptable to the Company.

(v) The Company shall have the right to draw against the RemainCo LOC or the RemainCo Pledged Account and/or other collateral in each instance where any portion of the RemainCo Retained Obligations or the RemainCo Assumed Obligations for any reason is not fulfilled in the manner and within the time periods required under this Agreement or the Existing Policies or Existing Insurance Agreements giving rise thereto.

(vi) Annually, the Company shall review and redetermine the amount of the RemainCo Retained Obligations and the RemainCo Assumed Obligations

 

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and the amount of collateral security required pursuant to this Agreement. At such time, RemainCo will provide its most recent audited financial statements, interim financial statements, and any other financial information reasonably requested by the Company for the purpose of evaluating the financial condition of RemainCo. RemainCo will provide any needed increases in the amount of the RemainCo LOC or the RemainCo Pledged Account (and/or other collateral if acceptable to the Company) within thirty (30) days of the Company’s written request. The Company will effect any decreases in the amount of the RemainCo LOC or the RemainCo Pledged Account (and/or other collateral) promptly, provided that RemainCo is not in breach of any of its obligations under this Agreement, the Existing Policies or any Existing Insurance Agreement.

(c) Substituted Collateral . Notwithstanding anything in any Existing Policy or Existing Insurance Agreement to the contrary, the Parties, each RemainCo Entity that is a party hereto and each SpinCo Entity that is a party hereto hereby agree that, upon receipt of the Substituted Collateral, the Existing Collateral shall be replaced with such Substituted Collateral and, accordingly, shall be released by the Company and the ACE Affiliates.

(d) Fee . No later than fifteen (15) days after the Effective Date, RemainCo shall pay to the Company the Fee, which shall be paid pursuant to the Company’s wire instructions as provided to RemainCo in writing prior to the date such Fee is payable.

6. Existing Collateral . The Substituted Collateral required to be provided by SpinCo and RemainCo hereunder shall, except to the extent provided otherwise in this Agreement, be subject to all of the terms and conditions applicable to the Existing Collateral pursuant to the Existing Insurance Agreements to the same extent that such terms and conditions applied to the Existing Collateral thereunder.

7. Security Interest . Each of SpinCo and RemainCo may separately provide (or have provided) to the Company and ESIS, from time to time, funds to be credited to paid loss deposit funds, deductible funds and/ or loss funds (collectively, “ Cash Collateral ”) that the Company or ESIS shall hold pursuant to the Existing Insurance Agreements with respect to the SpinCo Retained Obligations and the SpinCo Assumed Obligations, in the case of SpinCo, and with respect to the RemainCo Retained Obligations and the RemainCo Assumed Obligations, in the case of RemainCo. Each of SpinCo and RemainCo hereby grant to the Company, for its benefit and the benefit of the ACE Affiliates, a continuing first priority security interest in and lien on all of their respective right, title and interest, if any, in and to the Cash Collateral and all proceeds thereof as security for their now existing and hereafter arising Obligations to the Company or such ACE Affiliates. The Company shall hold the Cash Collateral in accordance with the terms of the applicable Existing Insurance Agreement pursuant to which such Cash Collateral was provided to the Company or the applicable ACE Affiliate. The Company shall have the sole and exclusive right, and is hereby authorized, to use the Cash Collateral to pay any and all Obligations of SpinCo and/or RemainCo in accordance with the Company Designation in accordance with the terms of the applicable Existing Insurance Agreement and this Agreement.

 

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8. Billing . On and after the Effective Date, the Company (or any third party administrator acting on behalf of the Company in respect of an Existing Policy) will, in each case in accordance with the billing procedures set forth in the applicable Existing Policy and Existing Insurance Agreement:

(a) bill SpinCo directly for the SpinCo Retained Obligations and the SpinCo Assumed Obligations; and

(b) bill RemainCo directly for the RemainCo Retained Obligations and the RemainCo Assumed Obligations.

9. Amendments . Neither this Agreement nor any provision hereof may be amended, changed, waived, discharged or terminated except by a written instrument signed by the Company, RemainCo, SpinCo and each other Party, if any, against whom enforcement of such amendment, change, waiver, discharge or termination is sought.

10. Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Neither this Agreement nor any right or obligation hereunder may be assigned or conveyed by any Party without the prior written consent of the other Parties, which consent shall not be unreasonably withheld.

11. No Waiver . The failure or refusal by any Party to exercise any rights granted hereunder shall not constitute a waiver of such rights or preclude the subsequent exercise thereof, and no oral communication shall be asserted as a waiver of any such rights hereunder unless such communication shall be confirmed in a writing plainly expressing an intent to waive such rights and signed by the Party against whom such waiver is asserted.

12. Counterparts . This Agreement may be executed in any number of counterparts each of which when so executed and delivered shall constitute an original, but such counterparts together shall constitute one and the same agreement. The exchange of copies of this Agreement and of signature pages by facsimile transmission or by electronic mail shall constitute effective execution and delivery of this Agreement as to the Parties and may be used in lieu of the original Agreement for all purposes. Signatures of the Parties and other Persons signatory hereto transmitted by facsimile or by electronic mail shall be deemed to be their original signatures for all purposes.

13. No Third Party Beneficiary . This Agreement shall not be deemed to give any right or remedy to any third party whatsoever unless otherwise specifically granted hereunder.

14. Parties’ Representations . As of the Effective Date, each of the Parties expressly represents on its own behalf: (a) it is an entity in good standing in its jurisdiction of organization; (b) it has all requisite corporate power and authority to enter into this Agreement, and to perform its obligations hereunder; (c) the execution and delivery by it of this Agreement, and the performance by it of its obligations under this Agreement, have been duly authorized by all necessary corporate or other action; (d) this Agreement, when duly executed and delivered by it, and subject to the due execution and delivery hereof by the other Parties, will be a valid and binding obligation of it, enforceable against it, its successors and permitted assigns, in

 

12


accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles; (e) the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby in accordance with the respective terms and conditions hereof will not (i) violate any provision of its Organizational Documents, (ii) violate any applicable order, judgment, injunction, award or decree of any court, arbitrator or governmental or regulatory body against it, or binding upon it, or any agreement with, or condition imposed by, any governmental or regulatory body, foreign or domestic, binding upon it as of the date hereof, or (iii) violate any agreement, contract, obligation, promise or undertaking that is legally binding and to which it is a party or by which it is bound; and (f) the signatory hereto on behalf of it is duly authorized and legally empowered to enter into this Agreement on its behalf.

15. Notices . Any and all notices, requests, approvals, authorizations, consents, instructions, designations and other communications that are required or permitted to be given pursuant to this Agreement shall be in writing and may be given either by personal delivery, first class prepaid post (airmail if to another country) or by internationally recognized overnight delivery service to the following address, or to such other address and recipient as such Party may have notified in accordance with the terms of this section as being its address or recipient for notification for the purposes of this Agreement:

 

If to the Company    ACE American Insurance Company
   225 E. John Carpenter Freeway, Suite 1300
   Irving, TX 75062
   Attention: Underwriting Manager
  

 ACE Risk Management

   Telephone:        (972) 465.7500
   Facsimile:        (972) 465.7826
If to any SpinCo Entity:    Babcock & Wilcox Enterprises, Inc.
   13024 Ballantyne Place, Suite 700
   Charlotte, NC 28277
   Attention: Senior Manager-Insurance (with a copy to the General Counsel)
   Telephone: (704) 625.4888
   Facsimile: (704) 625.4910
If to any RemainCo Entity:    The Babcock & Wilcox Company
   11525 North Community House Road
   Suite 600
   Charlotte, NC 28277
   Attention: Chief Risk Officer (with a copy to the General Counsel)
   Telephone: (980) 365.4181
   Facsimile: (980) 365-4020

 

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Any notice or communication to any Person shall be deemed to be received by that Person:

 

  (A) upon personal delivery; or

 

  (B) upon receipt if sent by mail or courier.

16. Governing Law . This Agreement shall be governed by and construed in accordance with the internal laws of the Commonwealth of Pennsylvania without regard to those provisions concerning conflicts of laws that would result in the application of the laws of any other jurisdiction.

17. Entire Agreement . This Agreement, together with the Existing Policies and Existing Insurance Agreements, constitute the entire agreement among all of the Parties and supersedes all other prior agreements and understandings, both written and oral, with respect to the subject matter hereof.

18. Dispute Resolution . If a dispute between either SpinCo or RemainCo, on the one hand, and the Company or any ACE Affiliate, on the other hand, involves rights or obligations arising under this Agreement, or any of the Existing Policies or Existing Insurance Agreements, the arbitration provisions in the most recent Existing Insurance Agreement referenced in Exhibit II shall govern the resolution of the entire dispute in all respects. In any such arbitration brought by or against SpinCo or RemainCo, the other of RemainCo or SpinCo, as applicable, shall have right to associate effectively in the defense and/or prosecution of such arbitration.

19. Severability . If any term or other provision of this Agreement or the Exhibits attached hereto is determined by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the court, administrative agency or arbitrator shall interpret this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

20. Rules of Construction . The definitions of terms used herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such

 

14


agreement, instrument or other document as from time to time amended, supplemented or otherwise modified, (b) any reference herein to any law shall be construed as referring to such law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time, (c) any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to the restrictions contained herein), (d) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) with respect to the determination of any time period, the word “from” means “from and including” and the word “to” means “to and including” and (f) any reference herein to Articles, Sections and Exhibits shall be construed to refer to Articles and Sections of, and Exhibits to, this Agreement. No provision of this Agreement shall be interpreted or construed against any Person solely because such Person or its legal representative drafted such provision.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the Parties intending to be legally bound hereby have executed this Agreement, by their duly authorized representatives.

 

ACE AMERICAN INSURANCE COMPANY , on behalf of itself and the ACE Affiliates
By:  

/s/ Richard M. Sica

Name:  

Richard M. Sica

Title:  

Attorney-in-fact

BABCOCK & WILCOX ENTERPRISES, INC.
By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker
Title:   Senior Vice President and Chief Financial Officer
THE BABCOCK & WILCOX COMPANY
By:  

/s/ David S. Black

Name:   David S. Black
Title:   Vice President & Chief Accounting Officer


ACKNOWLEDGED AND AGREED FOR PURPOSES OF SECTIONS 2, 3 and 5(c):

 

SpinCo Entities:
ADTEC AB
By:  

/s/ Mohit Uberoi

Name:   Mohit Uberoi
Title:   Authorized Signatory
B&W PGG LUXEMBOURG CANADA HOLDINGS SARL
B&W PGG LUXEMBOURG FINANCE SARL
B&W PGG LUXEMBOURG HOLDINGS SARL
BABCOCK & WILCOX MONTERREY FINANCE SARL
By:  

/s/ David S. Black

Name:   David S. Black
Title:   Type A Manager
By:  

/s/ Andrej Grossman

Name:   Andrej Grossman
Title:   Type B Manager


AMERICON EQUIPMENT SERVICES, INC.
AMERICON, INC.
B&W DE PANAMA, INC.
BABCOCK & WILCOX CONSTRUCTION CO., INC.
BABCOCK & WILCOX DE MONTERREY S.A. DE C.V.
BABCOCK & WILCOX EBENSBURG POWER, LLC
BABCOCK & WILCOX EQUITY INVESTMENTS, LLC
BABCOCK & WILCOX INDIA HOLDINGS, INC.
BABCOCK & WILCOX INTERNATIONAL INVESTMENTS CO., INC.
BABCOCK & WILCOX INTERNATIONAL SALES AND SERVICE CORPORATION
BABCOCK & WILCOX INTERNATIONAL, INC.
BABCOCK & WILCOX POWER GENERATION GROUP CANADA CORP.
BABCOCK & WILCOX VOLUND A/S
DELTA POWER SERVICES, LLC
By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker
Title:   Treasurer


DIAMOND OPERATING CO., INC.
DIAMOND POWER AUSTRALIA HOLDINGS, INC.
DIAMOND POWER CHINA HOLDINGS, INC.
DIAMOND POWER EQUITY INVESTMENTS, INC.
DIAMOND POWER INTERNATIONAL, INC.
DPS ANSON, LLC
DPS BERLIN, LLC
DPS CADILLAC, LLC
DPS FLORIDA, LLC
DPS GREGORY, LLC
DPS MECKLENBURG, LLC
DPS PIEDMONT, LLC
EBENSBURG ENERGY, LLC
MEGTEC ACQUISITION, LLC
MEGTEC ENERGY & ENVIRONMENTAL LLC

BABCOCK & WILCOX

MEGTEC HOLDINGS, INC.

MEGTEC INDIA HOLDINGS, LLC
MEGTEC SYSTEMS AUSTRALIA, INC.
MEGTEC SYSTEMS, INC.
By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker
Title:   Treasurer


MEGTEC TURBOSONIC TECHNOLOGIES, INC.
MTS ASIA, INC.
O&M HOLDING COMPANY
PALM BEACH RESOURCE RECOVERY CORPORATION
POWER SYSTEMS OPERATIONS, INC.
REVLOC RECLAMATION SERVICE, INC.
SERVICIOS DE FABRICACION DE VALLE SOLEADO, S.A. DE C.V.
SERVICIOS PROFESIONALES DE VALLE SOLEADO, S.A. DE C.V.
SOFCO – EFS HOLDINGS LLC
By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker
Title:   Treasurer
BABCOCK & WILCOX GLOBAL SALES & SERVICES – CHILE SPA
By:  

/s/ Mark S. Low

Name:   Mark S. Low
Title:   Director


BABCOCK & WILCOX GLOBAL SALES & SERVICES SARL
By:  

/s/ David S. Black

Name:   David S. Black
Title:   Type A Manager
By:  

/s/ Mark S. Low

Name:   Mark S. Low
Title:   Type B Manager
BABCOCK & WILCOX HOLDINGS, INC.
By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker
Title:   Senior Vice President and Chief Financial Officer
BABCOCK & WILCOX POWER GENERATION GROUP, INC.
BABCOCK & WILCOX TECHNOLOGY, LLC
DAMPKRAFT INSURANCE COMPANY
By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker
Title:   Vice President and Treasurer


DIAMOND POWER CENTRAL & EASTERN EUROPE S.R.O.
By:  

/s/ Juha K. Mustonen

Name:   Juha K. Mustonen
Title:   Managing Director
By:  

/s/ Maurice J. Barr

Name:   Maurice J. Barr
Title:   Supervisory Director
DIAMOND POWER DO BRASIL LIMITADA
By:  

/s/ Danyelle Bispo Rocha de Oliveira

Name:   Danyelle Bispo Rocha de Oliveira
Title:   Manager
DIAMOND POWER FINLAND OY
By:  

/s/ Maurice J. Barr

Name:   Maurice J. Barr
Title:   Chairman and Ordinary Member
DIAMOND POWER GERMANY GMBH
By:  

/s/ Thomas E. Moskal

Name:   Thomas E. Moskal
Title:   Member


DIAMOND POWER MACHINE (HUBEI) CO., INC.
By:  

/s/ John Ford

Name:   John Ford
Title:   General Manager
DIAMOND POWER SERVICES S.E.A. LTD.
DIAMOND POWER SPECIALTY (PROPRIETARY) LIMITED
DIAMOND POWER SPECIALTY LIMITED
DIAMOND POWER SWEDEN AB
By:  

/s/ Maurice J. Barr

Name:   Maurice J. Barr
Title:   Director
EBENSBURG INVESTORS LIMITED PARTNERSHIP
EBENSBURG POWER COMPANY
By:  

BABCOCK & WILCOX

EBENSBURG POWER, LLC,

General Partner

By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker
Title:   Treasurer


GOTAVERKEN EMISSION TECHNOLOGY AB
By:  

/s/ Mohit Uberoi

Name:   Mohit Uberoi
Title:   Authorized Signatory
GOTAVERKEN MILIJO AB
By:  

/s/ John Veje Oleson

Name:   John Veje Oleson
Title:   Chairman and Director
LOIBL ALLEN-SHERMAN HOFF GMBH
By:  

/s/ Thomas E. Moskal

Name:   Thomas E. Moskal
Title:   Managing Director


MEGTEC EUROPE COOPERATIEF U.A.
MEGTEC IEPG BV
MEGTEC PPG BV
By:  

/s/ Mohit Uberoi

Name:   Mohit Uberoi
Title:   Managing Director A
By:   TMF NETHERLANDS B.V.
  By:  

/s/ Bas Pijnenburg

  By:  

/s/ Stephan de Jonge

  Name:  

Bas Pijnenburg and Stephan de Jonge

  Title:   Managing Director B
MEGTEC SYSTEMS INDIA PRIVATE LTD.
By:  

/s/ Mohit Uberoi

Name:   Mohit Uberoi
Title:   Managing Director, Chief Executive Officer and President
MEGTEC SYSTEMS LIMITED
By:  

/s/ Greg Linn

Name:   Greg Linn
Title:   Company Secretary


MEGTEC SYSTEMS S.A.S.
By:  

/s/ Mohit Uberoi

Name:   Mohit Uberoi
Title:   President
MEGTEC SYSTEMS AB
MEGTEC SYSTEMS AMAL AB
MEGTEC THERMAL ENERGY & ENVIRONMENTAL TECHNOLOGY (SHANGHAI), LTD.
MEGTEC SYSTEMS (SHANGHAI), LTD.
MEGTEC TURBOSONIC INC.
By:  

/s/ Greg Linn

Name:   Greg Linn
Title:   Director
MEGTEC ENVIRONMENTAL LIMITED
By:  

/s/ Greg Linn

Name:   Greg Linn
Title:   Company Secretary
MTS ENVIRONMENTAL GMBH
By:  

/s/ Harald Bauer

Name:   Harald Bauer
Title:   Managing Director


P.T. BABCOCK & WILCOX ASIA
By:  

/s/ J. Randall Data

Name:   J. Randall Data
Title:   President/Director


ACKNOWLEDGED AND AGREED FOR PURPOSES OF SECTIONS 2, 3 and 5(c):

 

RemainCo Entities :
B&W NE LUXEMBOURG SARL
By:  

/s/ David S. Black

Name:   David S. Black
Title:   Type A Manager
By:  

/s/ Andrej Grossman

Name:   Andrej Grossman
Title:   Type B Manager
BABCOCK & WILCOX CANADA LTD.
BABCOCK & WILCOX COMMERCIAL
POWER, INC.
BABCOCK & WILCOX INVESTMENT COMPANY
BABCOCK & WILCOX MPOWER, INC.
BABCOCK & WILCOX NUCLEAR ENERGY, INC.
BABCOCK & WILCOX NUCLEAR OPERATIONS GROUP, INC.
BABCOCK & WILCOX TECHNICAL SERVICES GROUP, INC.
BABCOCK & WILCOX GOVERNMENT AND NUCLEAR OPERATIONS, INC.
INTECH INTERNATIONAL, INC.
By:  

/s/ David S. Black

Name:   David S. Black
Title:   Vice President and Chief Accounting
  Officer


B&W NUCLEAR MAINTENANCE SERVICES, INC.
BABCOCK & WILCOX INTECH, INC.
BABCOCK & WILCOX MODULAR REACTORS LLC
BABCOCK & WILCOX NOG TECHNOLOGIES, INC.
BABCOCK & WILCOX TECHNICAL SERVICES SAVANNAH RIVER COMPANY
BWXT FEDERAL SERVICES, INC.
By:  

/s/ David S. Black

Name:   David S. Black
Title:   Assistant Treasurer
BABCOCK & WILCOX NUCLEAR ENERGY EUROPE SAS
By:  

/s/ James D. Goodfellow

Name:   James D. Goodfellow
Title:   President
BABCOCK & WILCOX TECHNICAL SERVICES (U.K.) LIMITED
By:  

/s/ James D. Canafax

Name:   James D. Canafax
Title:   Joint Secretary


BABCOCK & WILCOX TECHNICAL SERVICES CLINCH RIVER, LLC
BWXT WASHINGTON, INC.
MARINE MECHANICAL CORPORATION
NFS HOLDINGS, INC.
NOG-ERWIN HOLDINGS, INC.
By:  

/s/ David S. Black

Name:   David S. Black
Title:   Vice President and Controller
BWXT CANADA HOLDINGS CORP.
By:  

/s/ David S. Black

Name:   David S. Black
Title:   Officer
BWXT FOREIGN HOLDINGS, LLC
By:  

/s/ David S. Black

Name:   David S. Black
Title:   Treasurer
CREOLE INSURANCE COMPANY, LTD.
By:  

/s/ David S. Black

Name:   David S. Black
Title:   Vice President & Treasurer


GENERATION MPOWER CANADA LTD.
GENERATION MPOWER LLC
By:  

/s/ William A. Fox

Name:   William A. Fox
Title:   President & Chief Executive Officer
KANSAS CITY ADVANCED MANUFACTURING, LLC
By:  

/s/ Joseph G. Henry

Name:   Joseph G. Henry
Title:   Director/Manager
NUCLEAR FUEL SERVICES, INC.
By:  

/s/ David S. Black

Name:   David S. Black
Title:   Vice President, Assistant Treasurer &
  Controller


EXHIBIT I – SPINCO ENTITIES

See Schedule 1.1(d) and Schedule 1.1(l) attached hereto. No SpinCo Entity listed on Schedule 1.1(d) shall be deemed to be an “Insured”, a “Named Insured” or otherwise be deemed to be insured under any Existing Policy or Existing Insurance Agreement solely by virtue of being listed on such Schedule 1.1(d).


Schedule 1.1(d)

Designated SpinCo Entities

 

Reference ID

  

Name

333    Ahahsain Hudson Heat Transfer Co. Ltd
398    Advanced Refractory Technologies, Inc.
   A.M. Lockett & Co., Limited
   Amcermet Corporation
732    Applied Synergistics, Inc.
924    ASEA Babcock
235    Ash Acquisition Company
326    B & W Clarion, Inc.
574    B&W Ebensburg Pa., Inc.
383    B&W Fort Worth Power,Inc.
922    B&W Mexicana, S.A. de C.V.
9991    B&W North Branch G.P., Inc.
9990    B&W North Branch L.P., Inc.
586    B&W Saba, Inc.
591    B&W Service Company
   B&W Tubular Products Limited
212    Babcock & Wilcox Asia Investment Co., Inc.
115    Babcock & Wilcox Asia Limited
533    Babcock & Wilcox Canada Leasing Ltd.
1570    Babcock & Wilcox China Holdings, Inc.
215    Babcock & Wilcox China Investment Co., Inc.
1571    Babcock & Wilcox Denmark Holdings, LLC
594    Babcock & Wilcox do Brasil Limitada
528    Babcock & Wilcox do Brasil Participacoes Limitada
206    Babcock & Wilcox Egypt SAE
169    Babcock & Wilcox Fibras Ceramicas Limitada
557    Babcock & Wilcox Foreign Sales Corporation
175    Babcock & Wilcox Gama Kazan Teknolojisi A.S.
552    Babcock & Wilcox General Contracting Company
395    Babcock & Wilcox HRSG Company
   Babcock & Wilcox Industries, Ltd.
2045    Babcock & Wilcox International Construction Co., Inc.
305    Babcock & Wilcox Jonesboro Power, Inc.
   Babcock & Wilcox Refractories limited
323    Babcock & Wilcox Salt City Power, Inc.
322    Babcock & Wilcox Tracy Power, Inc.
314    Babcock & Wilcox Victorville Power, Inc:
727    Babcock & Wilcox Volund France SAS
315    Babcock PFBC, Inc.


Reference ID

  

Name

559    Babcock Southwest Construction Corporation
936    Babcock-Ultrapower Jonesboro
937    Babcock-Ultrapower West Enfield
951    Bailey Beijing Controls Co., Ltd.
516    Bailey Controls Australia Pty. Limited
517    Bailey Controls International Sales & Services Company, Inc.
954    Bailey Controls Jordan for Process Controls Services, ltd.
563    Bailey Controls Sales & Service (Australia) Pty. Limited
564    Bailey Controls Sales & Services Canada Inc.
561    Bailey do Brasil lnstrumentos Industrials Limitada
114    Bailey International, Inc.
923    Bailey Japan Company Limited
542    Bailey Meter and Controls Company
   Bailey Meter Company
562    Bailey Meter Co. (Japan) Ltd.
   Bailey Meter Company Limited
   Bailey Meter GmbH
   C.C. Moore & Company Engineers
329    Clarion Energy, Inc.
328    Clarion Power Company
   Control Components France
514    Control Components Italy S.R.L.
   Control Components, Inc. (California)
   Control Components, Inc. (Delaware)
948    Control Components Japan
545    Detroit Broach & Machine Corporation
551    Diamond Blower Company Limited
   Diamond Canapower Ltd.
518    Diamond Power lmportacao e Exportacao Ltda.
144    Diamond Power Korea Inc.
526    Diamond Power Specialty (Japan) Ltd.
558    Diamond Power Specialty (Proprietary) Limited
546    Diamond Power Specialty Corporation (Delaware)
   Diamond Power Speciality Corporation (Ohio)
529    Diamond Power Specialty GmbH
1990    DPS Berkeley, LLC
1996    DPS Lowell Cogen, LLC
1991    DPS Michigan, LLC
1994    DPS Mojave, LLC
1998    DPS Sabine, LLC
332    Ebensburg Energy, Inc.
397    Ejendomsaktieselskabet Falkevej2
968    EPC Business Trust


Reference ID

  

Name

919    Especialidades Termomecanicas, S.A. de C.V.
550    Ferry-Diamond Engineering Company Limited
928    Fibras Ceramicas C.A.
509    Fibras Ceramicas, Inc.
547    Globe Steel Tubes Corporation
   Greer Land Co.
   Holmes Insulations Limited
2001    Ivey-Cooper Services, L.L.C.
941    lsolite Babcock Refractories Company, Ltd.
927    lsolite Eastern Union Refractories Co., Ltd.
920    KBW Gasification Systems, Inc.
512    LT Produkter i Skutskar AB
938    Maine Power Services
345    McDermott Heat Transfer Company
344    McDermott Productos Industriales de Mexico, S.A. de C.V.
946    Medidores Bailey, S.A. de C.V.
942    Morganite Ceramic Fibres Limited
943    Morganite Ceramic Fibres Pty. Limited
944    Morganite Ceramic Fibres S. A.
544    National Ecology (Alabama) Incorporated
575    National Ecology (Utah) Incorporated
540    National Ecology Company
976    Nooter/Eriksen - Babcock & Wilcox, L.L.C.
933    North American CWF Partnership
9989    North Branch Power Company L.P.
971    North County Operations Associates
501    North County Recycling, Inc.
1153    P. T. Heat Exchangers Indonesia
934    Palm Beach Energy Associates
   Piedmont Tool Machine Company
581    Power Systems Sunnyside Operations GP, Inc.
583    Power Systems Sunnyside Operations LP, Inc.
508    Productos de Caolin, Inc.
577    PSO Caribbean, Inc.
932    South Point CWF
556    Sunland Construction Co., Inc.
988    Sunnyside Cogeneration Associates
582    Sunnyside II, Inc.
992    Sunnyside II, L.P
303    Sunnyside III, Inc.
993    Sunnyside Operations Associates L.P.
571    Termobloc Industria E Comercio Ltda.
953    Thermax Babcock & Wilcox Limited
502    TLT - Babcock, Inc.
1152    W.E. Smith Hudson Pty. Ltd.


Schedule 1.1(l)

SpinCo Subsidiaries

 

Reference ID

  

Name

  

Jurisdiction

  

Formation

   Adtec AB      
553    Americon Equipment Services, Inc.    Delaware    12/3/1985
554    Americon, Inc.    Delaware    3/29/1985
127    B&W de Panama, Inc.    Panama    3/5/1986
2075    B&W PGG Luxembourg Canada Holdings SARL    Luxembourg    11/21/2013
2054    B&W PGG Luxembourg Finance SARL    Luxembourg    11/15/2011
2053    B&W PGG Luxembourg Holdings SARL    Luxembourg    11/15/2011
555    Babcock & Wilcox Construction Co., Inc.    Delaware    3/29/1985
2107    Babcock & Wilcox Monterrey Finance SARL    Luxembourg    12/5/2014
2011    Babcock & Wilcox de Monterrey S.A. de C.V.    Mexico    9/16/2009
327    Babcock & Wilcox Ebensburg Power, LLC    Delaware    12/2/1986
302    Babcock & Wilcox Equity Investments, LLC    Delaware    12/10/1984
2080    Babcock & Wilcox Global Sales & Services - Chile SpA    Chile    5/19/2014
2081    Babcock & Wilcox Global Sales & Services SARL    Luxembourg    3/19/2014
2114    Babcock & Wilcox Holdings, Inc.    Delaware    4/20/2015
2028    Babcock & Wilcox India Holdings, Inc.    Delaware    3/4/2010
598    Babcock & Wilcox India Private Limited    India    2/3/1999
126    Babcock & Wilcox International Investments Co., Inc.    Panama    10/23/1985
530    Babcock & Wilcox International Sales and Service Corporation    Delaware    9/27/1973
541    Babcock & Wilcox International, Inc.    Delaware    5/20/1981
2072    Babcock & Wilcox Power Generation Group Canada Corp.    Nova Scotia    11/27/2013
500    Babcock & Wilcox Power Generation Group, Inc.    Delaware    12/16/1977
595    Babcock & Wilcox Technology, Inc.    Delaware    3/6/1997
599    Babcock & Wilcox Volund A/S    Denmark    11/22/1999
2113    Dampkraft Insurance Company    South Carolina    4/14/2015
1988    Delta Power Services, LLC    Delaware    3/1/2001
766    Diamond Operating Co., Inc.    Delaware    3/1/2002
1572    Diamond Power Australia Holdings, Inc.    Delaware    9/3/2002
1984    Diamond Power Central & Eastern Europe s.r.o.    Czech Republic    3/25/2008
1573    Diamond Power China Holdings, Inc.    Delaware    9/3/2002
521    Diamond Power do Brasil Limitada    Brazil    2/13/1998
1574    Diamond Power Equity Investments, Inc.    Delaware    9/3/2002


Reference ID

  

Name

  

Jurisdiction

  

Formation

525    Diamond Power Finland OY    Finland    3/14/1985
504    Diamond Power Germany GmbH    Germany    10/30/2001
597    Diamond Power International, Inc.    Delaware    3/6/1997
949    Diamond Power Machine (Hubei) Co., Inc.    China    4/20/2004
1908    Diamond Power Services S.E.A. Ltd.    Thailand    2/22/2000
522    Diamond Power Specialty (Proprietary) Limited    Republic of South Africa    4/29/1998
523    Diamond Power Specialty Limited    United Kingdom    3/5/1913
524    Diamond Power Sweden AB    Sweden    3/2/1965
2079    DPS Anson, LLC    Delaware    1/15/2014
2044    DPS Berlin, LLC    Delaware    2/24/2011
1997    DPS Cadillac, LLC    Delaware    2/17/2006
1995    DPS Florida, LLC    Delaware    10/25/2005
1993    DPS Gregory, LLC    Delaware    11/10/2004
1992    DPS Mecklenburg, LLC    Delaware    9/27/2004
9999    DPS Piedmont, LLC    Delaware    6/29/2010
2082    Ebensburg Energy, LLC    Delaware    3/27/2014
967    Ebensburg Investors Limited Partnership    Pennsylvania    3/26/1992
331    Ebensburg Power Company    Pennsylvania    12/9/1986
   Gotaverken Emission Technology AB      
2027    Gotaverken Milijo AB    Sweden    12/3/2003
2055    Loibl Allen-Sherman Hoff GmbH    Germany    12/16/1993
2104    MEGTEC Acquisition, LLC    Delaware    8/8/2008
2097    MEGTEC Energy & Environmental LLC    Delaware    4/22/2008
2092    MEGTEC Environmental Limited    United Kingdom    12/12/2003
2100    MEGTEC Europe Cooperatief U.A.    Netherlands    8/20/2008
2083    MEGTEC Holdings, Inc.    Delaware    8/8/2008
2089    MEGTEC IEPG BV    Netherlands   
2103    MEGTEC India Holdings, LLC    Delaware    4/22/2008
2101    MEGTEC PPG BV    Netherlands    9/17/2008
2091    MEGTEC Systems AB    Sweden    8/8/1970
2095    MEGTEC Systems Amal AB    Sweden    7/17/2001
2098    MEGTEC Systems Australia, Inc.    Delaware    1/12/1999
2087    MEGTEC Systems India Private Ltd.    India    12/19/2005
2094    MEGTEC Systems Limited    United Kingdom    9/17/2008
2093    MEGTEC Systems S.A.S.    France    11/23/1974
2086    MEGTEC Systems Shanghai Ltd.    China   
2096    MEGTEC Systems, Inc.    Delaware    7/7/1997
2085    MEGTEC Thermal Energy & Environmental Technology (Shanghai), LTD.    China   


Reference ID

  

Name

  

Jurisdiction

  

Formation

2088    MEGTEC TurboSonic Inc.    Ontario    7/1/2000
2099    MEGTEC TurboSonic Technologies, Inc.    Delaware    4/14/1961
2101    MTS Asia, Inc.    Delaware    6/17/2001
2090    MTS Environmental GmbH    Germany    2/27/2008
1989    O&M Holding Company    Delaware    6/26/2008
707    P.T. Babcock & Wilcox Asia    Indonesia    8/24/2000
534    Palm Beach Resource Recovery Corporation    Florida    10/26/1984
560    Power Systems Operations, Inc.    Delaware    10/22/1985
568    Revloc Reclamation Service, Inc.    Delaware    7/2/1990
2013    Servicios de Fabricacion de Valle Soleado, S.A. de C.V.    Mexico    7/31/2009
2012    Servicios Profesionales de Valle Soleado, S.A. de C.V.    Mexico    7/31/2009
767    SOFCo - EFS Holdings LLC    Delaware    2/22/2002


EXHIBIT II –EXISTING INSURANCE AGREEMENTS

 

Name of Agreement

  

Party to Agreement

  

Party to Agreement

  

Party to Agreement

  

Party to Agreement

  

Party to

Agreement

  

Effective Date
of Agreement

Cash Flow Deductible Workers’ Compensation Agreement    The Babcock & Wilcox Company    Insurance Company of North America             4/1/1991
Workers Compensation Deductible Funding Agreement    Babcock & Wilcox Company    CIGNA Insurance Company of Texas    Pacific Employers Insurance Company          4/1/1992
Agreement for Workers Compensation Residual market Assessments    Babcock & Wilcox Company    CIGNA Insurance Company of Texas    Pacific Employers Insurance Company          4/1/1992
Casualty Insurance Program Agreement    The Babcock & Wilcox Company    Pacific Employers Insurance Company             4/1/1993
Agreement for Workers Compensation Residual market Assessments Captive Program    Pacific Employers Insurance Company    Creole Insurance Company, Ltd             4/1/1993
Casualty Insurance Program Agreement    The Babcock & Wilcox Company    Pacific Employers Insurance Company             4/1/1994
Agreement for Workers compensation Residual Market Assessments Captive Program    Pacific Employers Insurance Company    Creole Insurance Company, Ltd             4/1/1994
Casualty Insurance Program Agreement    The Babcock & Wilcox Company    CIGNA Insurance Company    Bankers Standard Insurance Company          4/1/1995
Casualty Insurance Program Agreement    The Babcock & Wilcox Company    CIGNA Insurance Company    Bankers Standard Insurance Company          4/1/1995
Addendum I Casualty Insurance Program Agreement    The Babcock & Wilcox Company    CIGNA Insurance Company    Bankers Standard Insurance Company          4/1/1996
Reinsurance Agreement    Honore Insurance Company Limited    CIGNA Insurance Company             4/1/1997
Reinsurance Agreement    Honore Insurance Company Limited    CIGNA Insurance Company of Canada             4/1/1997
Addendum III Casualty Insurance Program Agreement    The Babcock & Wilcox Company    CIGNA Insurance Company    Bankers Standard Insurance Company    Pacific Employers Insurance Company       4/1/1997
Final Summary of Proposal    Aon Risk Services of Texas, Inc    Pacific Employers Ins/Bankers Standard Ins.             4/1/1997
Canadian Reinsurance Agreement    Honore Insurance Company Limited    CIGNA Insurance Company of Canada             4/1/1997
Addendum I - Canadian Reinsurance Agreement    Honore Insurance Company Limited    CIGNA Insurance Company of Canada             4/1/1997
Agreement Regarding Return Premiums    Babcock & Wilcox Company    Creole Insurance Company, Limited    CIGNA Insurance Company    Indemnity Insurance Company of North American    CIGNA Insurance Company of Canada    7/28/1997


Name of Agreement

  

Party to Agreement

  

Party to Agreement

  

Party to Agreement

  

Party to Agreement

  

Party to

Agreement

  

Effective Date
of Agreement

Agreement Regarding Return Premiums    The Babcock & Wilcox Company    Creole Insurance Company, Limited    CIGNA Insurance Company    Indemnity Insurance Company of NA    CIGNA Insurance Company of Canada    7/28/1997
Agreement    The Babcock & Wilcox Company    Pacific Employers Insurance Company             4/1/1998
Casualty Insurance Program Agreement    The Babcock & Wilcox Company    CIGNA Insurance Company of Texas    Pacific Employers Insurance Company          4/1/1998
Addendum I Reinsurance Agreement    Honore Insurance Company Ltd    CIGNA Insurance Company of Canada             4/1/1998
Casualty Insurance Program Agreement    The Babcock & Wilcox Company    CIGNA Insurance Company of Texas    Pacific Employers Insurance Company          4/1/1998
Cash Flow Deductible Workers’ Compensation Program    AON Risk Services of Texas, Inc.    CIGNA Insurance Company of Texas    Pacific Employers Insurance Company          4/1/1998
Cash Flow High Deductible Program    AON Risk Services of Texas, Inc.    Insurance Company of North America    Pacific Employers Insurance Company          4/1/1998
Specific Excess Workers’ Compensation & Employers’ Liability    AON Risk Services of Texas, Inc.    CIGNA Insurance Company             4/1/1998
TPA Agreement    The Babcock & Wilcox Company    Pacific Employers Insurance Co.             4/1/1998
Casualty Insurance Program Agreement    The Babcock & Wilcox Company    CIGNA Insurance Company of Texas    Pacific Employers Insurance Company          4/1/1998
Casualty Insurance Program Agreement    The Babcock & Wilcox Company    CIGNA Insurance Company of Texas    Pacific Employers Insurance Company          4/1/1998
Final Summary of Proposal    Aon Risk Services of Texas, Inc    Pacific Employers Insurance Co.    CIGNA Insurance Company          4/1/1998
Agreement    The Babcock & Wilcox Company    Pacific Employers Insurance Company             4/1/1999
Addendum I Casualty Insurance Program Agreement    The Babcock & Wilcox Company    Pacific Employers Insurance Company    ACE Insurance Company of Texas (formerly CIGNA Insurance company of Texas       4/1/1999
Addendum II Casualty Insurance Program Agreement    The Babcock & Wilcox Company    Pacific Employers Insurance Company    CIGNA Insurance Company of Texas          4/1/1999
Addendum II to Reinsurance Agreement    Cigna Insurance Company of Canada    Honore Insurance Company Limited             4/1/1999
Addendum III to Reinsurance Agreement    ACE INA Insurance (formerly CIGNA Insurance Company of Canada    Honore Insurance Company Limited             4/1/1999


Name of Agreement

  

Party to Agreement

  

Party to Agreement

  

Party to Agreement

  

Party to Agreement

  

Party to

Agreement

  

Effective Date
of Agreement

Multi-Line Deductible Cash Flow Insurance    AON Risk Services of Texas, Inc.    Pacific Employers Insurance Company    CIGNA Insurance Company    Insurance Company of North America       4/1/1999
Combined Multi-Line Program Agreement    Pacific Employers Insurance Company    Babcock & Wilson Company             1/1/2000
Addendum IV Reinsurance Agreement    ACE INA Insurance    Honore Insurance Company Limited             1/1/2000
Addendum II Combined Multi-line Program Agreement    Pacific Employers Insurance Company    Babcock & Wilson Company             1/1/2001
Addendum V to Reinsurance Agreement    ACE INA Insurance    Honore Insurance Company Limited             1/1/2001
Addendum IV to Combined Multi-Line Program Agreement    Pacific Employers Insurance Company    Babcock & Wilson Company             1/1/2002
Addendum VI to Reinsurance Agreement    ACE INA Insurance    Pirogue Insurance Company, Ltd             1/1/2002
Addendum V to Combined Multi-Line Program Agreement    Babcock & Wilcox Company    ACE American Insurance Company    Pacific Employers Insurance Company          1/1/2003
Addendum VII to Reinsurance Agreement    ACE INA Insurance    Pirogue Insurance Company, Ltd             1/1/2003
Addendum VI to Combined multi-Line Program    Babcock & Wilcox Company    ACE American Insurance Company    Pacific Employers Insurance Company    ACE INA Insurance Company       1/1/2004
Addendum VII to Combined Multi-Line Program Agreement    Babcock & Wilcox Company    ACE American Insurance Company    ACE INA Insurance Company          1/1/2005
Casualty Program Binder    The Babcock & Wilcox Company    ACE American Insurance Company    ACE INA Insurance          1/1/2006
Casualty Program Binder    The Babcock & Wilcox Company    ACE American Insurance Company    ACE INA Insurance          1/1/2007
Casualty Program Binder    The Babcock & Wilcox Company    ACE American Insurance Company    ACE INA Insurance    Indemnity Insurance Company of North America       1/1/2008
Casualty Program Proposal    The Babcock & Wilcox Company    ACE American Insurance Company    ACE INA Insurance    Indemnity Insurance Company of North America       1/1/2009
Casualty Program Proposal    The Babcock & Wilcox Company    ACE American Insurance Company    ACE INA Insurance    Indemnity Insurance Company of North America       1/1/2010
Assumption and Loss Allocation Agreement    Babcock & Wilcox Holdings, Inc.    McDermott International, Inc.    ACE American Insurance Company          5/18/2010
Novation and Assumption Agreement    Creole Insurance Company, Ltd.    Boudin Insurance Company, Ltd.    ACE American Insurance Company          5/18/2010


Name of Agreement

  

Party to Agreement

  

Party to Agreement

  

Party to Agreement

  

Party to Agreement

  

Party to

Agreement

  

Effective Date
of Agreement

Casualty Program Binder    The Babcock & Wilcox Company    ACE American Insurance Company    Indemnity Insurance Company of North America          1/1/2011
Casualty Program Binder    The Babcock & Wilcox Company    ACE American Insurance Company    Indemnity Insurance Company of North America          1/1/2012
Casualty Program Binder    The Babcock & Wilcox Company    ACE American Insurance Company    Indemnity Insurance Company of North America          1/1/2013
Casualty Program Binder    The Babcock & Wilcox Company    ACE American Insurance Company    Indemnity Insurance Company of North America          11/15/2013
Casualty Program Binder    The Babcock & Wilcox Company    ACE American Insurance Company    Indemnity Insurance Company of North America          11/15/2014


EXHIBIT III –EXISTING POLICIES

 

Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

4/1/1982   4/1/1983   GLP 829719    Babcock & Wilcox Company   GL   INA
4/1/1982   4/1/1985   XCP 014414    Intermountain Power Agency Department of Water & Power City of Los Angeles   XGL   INA
4/1/1983   4/1/1984   RSC C20704202    Babcock & Wilcox Company   WC   INA - TX
4/1/1983   4/1/1984   RSC C20704226    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1983   4/1/1984   SCA 5914    The Babcock & Wilcox Company   Auto   INA - TX
4/1/1984   4/1/1985   RSC C22890785    TLT Babcock, Inc., a Joint Venture   WC   Pacific Employers
3/8/1985   3/8/1986   GLP G05111523    Babcock & Wilcox Company   GL   INA
4/1/1985   4/1/1986   RSC C19396812    Babcock & Wilcox Company   WC   Cigna
4/1/1985   4/1/1986   XCP G05111730    Commonwealth Edison Company   XGL   INA
4/1/1985   4/1/1986   XCP G0511326A    Intermountain Power Agency Department of Water & Power City of Los Angeles   GL   INA
4/21/1985   5/2/1985   GLP G05111766    Chevron USA   GL   INA
6/30/1985   7/10/1985   GLP G05112588    Chevron USA   GL   INA
4/1/1986   4/1/1987   CPO G03518656    Babcock & Wilcox Company   GL   INA
4/1/1986   4/1/1987   CPO G05114329    Babcock & Wilcox Company   GL   INA
4/1/1986   4/1/1987   CPO G05114329    Babcock & Wilcox Company   GL   INA
4/1/1986   4/1/1987   XCP G05114184    Arco Oil & Gas Company   XGL   INA
4/1/1987   4/1/1988   CPO G05115401    Babcock & Wilcox Company   XGL   INA
4/1/1987   4/1/1988   CPO G05115620    Babcock & Wilcox Company   GL   INA ILL
4/1/1987   4/1/1988   CPO G05115632    Babcock & Wilcox Company   GL   INA Ohio
4/1/1987   4/1/1988   CPO G05115978    Babcock & Wilcox Company   GL   INA
4/1/1987   4/1/1988   SCA 010999    The Babcock & Wilcox Company   Auto   INA
4/1/1988   4/1/1989   XSL G05194167    The Babcock & Wilcox Company   XGL   INA
4/1/1988   4/1/1989   XSL G05194179    The Babcock & Wilcox Company   XGL   Cigna of Ohio
4/1/1989   4/1/1990   CGO G05195792    Babcock & Wilcox Company   GL   INA
4/1/1989   4/1/1990   CPO G05195809    Babcock & Wilcox Company   GL   INA
4/1/1989   4/1/1990   CPO G05195809    Babcock & Wilcox Company   GL   INA
4/1/1989   4/1/1990   RSC C22291312    B & W Fuel Company   WC   INA
4/1/1989   4/1/1990   RSC C32916879    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1989   4/1/1990   RSC C32916880    Babcock & Wilcox Company   WC   Cigna
4/1/1989   4/1/1990   RSC C32916892    Babcock & Wilcox Company 2   WC   Cigna - ILL
4/1/1989   4/1/1990   RSC C32916922    Babcock & Wilcox Company   WC   Atlantic Employers


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

4/1/1989   4/1/1990   SCA 012151    The Babcock & Wilcox Company   Auto   INA
4/1/1989   4/1/1990   SCA 012152    The Babcock & Wilcox Company   GL   INA
4/1/1989   4/1/1990   XSL G05195780    The Babcock & Wilcox Company   XGL   INA
4/1/1989   4/1/1990   XSL G05195780    The Babcock & Wilcox Company   XGL   INA
9/17/1989   9/17/1990   CRL G0519698A    ASEA - Babcock PFBC Joint Venture   GL   INA
4/1/1990   4/1/1991   CGO G0519751A    Babcock & Wilcox Company   GL   INA
4/1/1990   4/1/1991   CGO G0519751A    Babcock & Wilcox Company   GL   INA
4/1/1990   4/1/1991   CPO G05197521    Babcock & Wilcox Company   GL   INA
4/1/1990   4/1/1991   CPO G05197521    Babcock & Wilcox Company   GL   INA
4/1/1990   4/1/1991   CPO G05197521    Babcock & Wilcox Company   GL   INA
4/1/1990   4/1/1991   RSC C22292286    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1990   4/1/1991   RSC C22292304    Babcock & Wilcox Company   WC   Cigna - ILL
4/1/1990   4/1/1991   RSC C22292316    Babcock & Wilcox Company   WC   Atlantic Employers
4/1/1990   4/1/1991   RSC C22292328    B & W Fuel Company   WC   INA
4/1/1990   4/1/1991   RSC C22292730    Babcock & Wilcox Company   WC   INA
4/1/1990   4/1/1991   RSC C2229362A    Babcock & Wilcox Company   WC   California Union
4/1/1990   4/1/1991   SCA 012197    The Babcock & Wilcox Company   Auto   INA
4/1/1990   4/1/1991   SCA 012198    The Babcock & Wilcox Company   Auto   INA
4/1/1990   4/1/1991   XSL G05197508    The Babcock & Wilcox Company   XGL   INA
9/12/1990   9/12/1991   CPO G13210755    Babcock & Wilcox Company Power Generation Group   GL   INA
4/1/1991   4/1/1992   CGO G13211061    Babcock & Wilcox Company   GL   INA
4/1/1991   4/1/1992   CGO G13211061    Babcock & Wilcox Company   GL   INA
4/1/1991   4/1/1992   CPO G13211073    Babcock & Wilcox Company   GL   INA
4/1/1991   4/1/1992   CPO G13211073    Babcock & Wilcox Company   GL   INA
4/1/1991   4/1/1992   RSC C2229354    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1991   4/1/1992   RSC C22293564    Babcock & Wilcox Company   WC   Atlantic Employers
4/1/1991   4/1/1992   RSC C22293898    Babcock & Wilcox Company   WC   INA
4/1/1991   4/1/1992   SCA 012272    Babcock & Wilcox Company   Auto   INA
4/1/1991   4/1/1992   WLR C22293552    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1991   4/1/1992   WLR C22293849    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1991   4/1/1992   WLR C22293850    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1991   4/1/1992   WLR C22293862    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1991   4/1/1992   WLR C22293874    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1991   4/1/1992   WLR C22293886    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1991   4/1/1992   XSL G1321105A    The Babcock & Wilcox Company   XGL   INA


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

4/1/1991   4/1/1992   XWC 011231    Babcock & Wilcox Company   XWC   Cigna
7/22/1991   7/22/1992   XCP G13211437    City of Lakeland, Florida Department of Electric & Water Utilities   XGL   INA
8/24/1991   8/24/1992   OGL G1321153A    PowerSafety International, Inc.   GL   INA
9/12/1991   9/12/1992   CPO G13211541    Babcock & Wilcox Company Power Generation Group   GL   INA
4/1/1992   4/1/1993   CGO G13211887    Babcock & Wilcox Company   GL   INA
4/1/1992   4/1/1993   CPO G13211899    Babcock & Wilcox Company   GL   INA
4/1/1992   4/1/1993   CPO G13211899    Babcock & Wilcox Company   GL   INA
4/1/1992   4/1/1993   RSC C38326259    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1992   4/1/1993   RSC C38326351    Babcock & Wilcox Company   WC   INA
4/1/1992   4/1/1993   WLR C38326260    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1992   4/1/1993   WLR C38326338    Babcock & Wilcox Company   WC   Cigna - TX
4/1/1992   4/1/1993   XCP G13211991    Naheola Cogeneration Limited Partnership & Industrial Development Board   XGL   INA
4/1/1992   4/1/1993   XSL G13211905    The Babcock & Wilcox Company   XGL   INA
4/1/1992   4/1/1993   XWC 011301    Babcock & Wilcox Company   XWC   Cigna
4/1/1993   4/1/1994   CGO G13212612    Babcock & Wilcox Company   GL   INA
4/1/1993   4/1/1994   CGO G13212612    Babcock & Wilcox Company   GL   INA
4/1/1993   4/1/1994   CPO G13212600    Babcock & Wilcox Company   GL   INA
4/1/1993   4/1/1994   RSC C36158621    Babcock & Wilcox Company   WC   INA
4/1/1993   4/1/1994   RSC C39770489    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1993   4/1/1994   SCA 012527    The Babcock & Wilcox Company   Auto   INA
4/1/1993   4/1/1994   SCA 012528    The Babcock & Wilcox Company   Auto   INA
4/1/1993   4/1/1994   XCP G13212673    Naheola Cogeneration Limited Partnership & Industrial Development Board   GL   INA
4/1/1993   4/1/1994   XSL G13212594    The Babcock & Wilcox Company   XGL   INA
4/1/1993   4/1/1994   XSL G13212594    Babcock & Wilcox Company   XGL   INA
8/24/1993   8/24/1994   OGL G13212879    PowerSafety International, Inc.   GL   INA
9/12/1993   9/13/1994   CPO G13212909    Babcock & Wilcox Company Power Generation Group   GL   INA
10/1/1993   4/1/1994   XSL G13212983    Hudson Companies   XGL   INA
4/1/1994   4/1/1995   CGO G13213215    Babcock & Wilcox Company   GL   INA
4/1/1994   4/1/1995   CGO G13213215    Babcock & Wilcox Company   GL   INA
4/1/1994   4/1/1995   CPO G13213203    Babcock & Wilcox Company   GL   INA
4/1/1994   4/1/1995   CPO G13213203    Babcock & Wilcox Company   GL   INA
4/1/1994   4/1/1995   RSC C40809016    Babcock & Wilcox Company   WC   INA
4/1/1994   4/1/1995   RSC C40809491    Babcock & Wilcox Company   WC   Pacific Employers


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

4/1/1994   4/1/1995   SCA 012556    The Babcock & Wilcox Company   Auto   INA
4/1/1994   4/1/1995   WLR C36160159    Babcock & Wilcox Company   WC   Cigna - TX
4/1/1994   4/1/1995   WLR C40809508    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1994   4/1/1995   XSL G13213197    The Babcock & Wilcox Company   XGL   INA
4/1/1994   4/1/1995   XSL G13213197    Babcock & Wilcox Company   XGL   INA
4/1/1994   4/1/1995   XSL G13213227    Hudson Companies   XGL   INA
4/1/1994   4/1/1995   XSL G13213227    Hudson Companies   XGL   INA
8/24/1994   8/24/1995   OGL G13213410    PowerSafety International, Inc.   GL   INA
9/12/1994   9/12/1995   CPO G13213380    Babcock & Wilcox Company Power Generation Group   GL   INA
4/1/1995   4/1/1996   CGO G13213720    Babcock & Wilcox Company   GL   INA
4/1/1995   4/1/1996   CPO G13213719    Babcock & Wilcox Company   GL   IND
4/1/1995   4/1/1996   NWC C3616248A    Babcock & Wilcox Construction Co.   WC   Cigna
4/1/1995   4/1/1996   RSC C36162028    Babcock & Wilcox Company   WC   Cigna
4/1/1995   4/1/1996   RSC C36162053    Hudson Companies   WC   Bankers Standard
4/1/1995   4/1/1996   RSC C3616234A    Babcock & Wilcox Company   WC   Cigna
4/1/1995   4/1/1996   WLR C36161991    Babcock & Wilcox Company   WC   Cigna
4/1/1995   4/1/1996   WLR C36162004    Babcock & Wilcox Company   WC   Bankers Standard
4/1/1995   4/1/1996   WLR C36162016    Babcock & Wilcox Company   WC   Cigna
4/1/1995   4/1/1996   XSL G13213707    The Babcock & Wilcox Company   XGL   IND
4/1/1995   4/1/1996   XSL G13213707    The Babcock & Wilcox Company   XGL   IND
8/24/1995   8/24/1996   CAL H06353149    Deep Oil Technology, Inc.   Auto   IND
8/24/1995   8/24/1996   NWC C41224319    Deep Oil Technology, Inc.   WC   Cigna
8/24/1995   8/24/1996   OGL G14232096    Deep Oil Technology, Inc.   GL   IND
4/1/1996   4/1/1997   CGO G18967431    Babcock & Wilcox Company   GL   IND
4/1/1996   4/1/1997   CPO G18968599    Babcock & Wilcox Company   GL   IND
4/1/1996   4/1/1997   CPO G18968599    Babcock & Wilcox Company   GL   IND
4/1/1996   4/1/1997   RSC C2733278A    Babcock & Wilcox Company   WC   Cigna
4/1/1996   4/1/1997   RSC C4206726A    Babcock & Wilcox Company   WC   Cigna
4/1/1996   4/1/1997   SCA 012575    The Babcock & Wilcox Company   Auto   IND
4/1/1996   4/1/1997   WLR C27332080    Babcock & Wilcox Company   WC   Cigna
4/1/1996   4/1/1997   WLR C27332766    Hudson Companies   WC   Bankers Standard
4/1/1996   4/1/1997   WLR C27332778    Babcock & Wilcox Company   WC   Bankers Standard
4/1/1996   4/1/1997   WLR C27332808    Babcock & Wilcox Company   WC   Cigna
4/1/1996   4/1/1997   XSL G18967911    Babcock & Wilcox Company   GL   INA
4/1/1996   4/1/1997   XSL G1896823A    Hudson Companies   XGL   IND


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

8/24/1996   8/24/1997   CAL H07132001    Deep Oil Technology, Inc.   Auto   INA
8/24/1996   8/24/1997   NWC C42181018    Deep Oil Technology, Inc.   WC   INA
8/24/1996   8/24/1997   OGL G18967364    Deep Oil Technology, Inc.   GL   INA
4/1/1997   4/1/1998   RSC C42109484    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1997   4/1/1998   RSC C42109502    Babcock & Wilcox Company   WC   Cigna
4/1/1997   4/1/1998   WLR C42109460    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1997   4/1/1998   WLR C42109472    Babcock & Wilcox Company   WC   Bankers Standard
4/1/1997   4/1/1998   WLR C42109496    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1997   4/1/1998   WLR C42109514    Hudson Companies   WC   Bankers Standard
8/24/1997   8/24/1998   CAL H07322574    Deep Oil Technology, Inc.   Auto   INA
8/24/1997   8/24/1998   NWC C42425497    Deep Oil Technology, Inc.   WC   INA
8/24/1997   8/24/1998   OGL G19326792    Deep Oil Technology, Inc.   GL   INA
12/18/1997   12/18/1998   OGL G1965722A    Monmouth Couty Materials Processing & Recovery Facility; National Ecology Company & The Babcock and Wilcox Company   GL   IND
4/1/1998   4/1/1999   HDC G19657280    Babcock & Wilcox Company   GL   Pacific Employers
4/1/1998   4/1/1999   HDO G219657292    Babcock & Wilcox Company   GL   Pacific Employers
4/1/1998   4/1/1999   ISA H07323360    The Babcock & Wilcox Company   Auto   Pacific Employers
4/1/1998   4/1/1999   PWC C42460187    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1998   4/1/1999   WLR C42460151    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1998   4/1/1999   WLR C42460163    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1998   4/1/1999   WLR C42460175    Babcock & Wilcox Company   WC   Cigna - TX
4/1/1998   4/1/1999   WLR C42460205    Hudson Companies   WC   Cigna - TX
4/1/1998   4/1/1999   XSL G19657279    The Babcock & Wilcox Company   XGL   Pacific Employers
4/1/1998   4/1/1999   XSL G19657309    Hudson Companies   XGL   Pacific Employers
4/1/1998   4/1/1999   XSL G19657309    Hudson Companies   XGL   Pacific Employers
8/24/1998   8/24/1999   CAL H07406794    Deep Oil Technology, Inc.   Auto   Cigna
8/24/1998   8/24/1999   OGL G19657905    Deep Oil Technology, Inc.   GL   Cigna
10/1/1998   10/1/2001   XOO G19658193    State Line Energy, LLC   XGL   Cigna
12/18/1998   12/18/1999   CAL H07407385    National Ecology Company   Auto   Cigna
12/18/1998   12/18/1999   OGL G19327024    National Ecology Company, Power Systems Operations, Inc. and The Babcock & Wilcox Company and Monmouth County Materials Processing and Recovery Facility   GL   Cigna
4/1/1999   1/1/2000   HDC G19657280    Babcock & Wilcox Company   GL   Pacific Employers
4/1/1999   1/1/2000   HDO G219657292    Babcock & Wilcox Company   GL   Pacific Employers


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

4/1/1999   4/1/2000   PWC C42643890    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1999   4/1/2000   PWC C42643890    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1999   4/1/2000   WLR C42643889    Hudson Companies   WC   Pacific Employers
4/1/1999   4/1/2000   WLR C42643907    Babcock & Wilcox Company   WC   Pacific Employers
4/1/1999   1/1/2000   XSL G19657279    The Babcock & Wilcox Company   XGL   Pacific Employers
4/1/1999   1/1/2000   XSL G19657309    Hudson Companies   XGL   Pacific Employers
8/24/1999   8/24/2000   CAL H0767823A    Deep Oil Technology, Inc.   Auto   Cigna
8/24/1999   8/24/2000   NWC C42645254    Deep Oil Technology, Inc.   WC   Cigna
8/24/1999   8/24/2000   OGL G1989521A    Deep Oil Technology, Inc.   GL   Cigna
12/18/1999   12/18/2000   CAL H07678903    National Ecology Company   AL   Pacific Employers
12/18/1999   12/18/2000   CUA-104533-0    National Ecology Company   Umb   Westchester Fire Ins Co
12/18/1999   12/18/2000   OGL G19895993    National Ecology Company   GL   Pacific Employers
1/1/2000   1/1/2001   HDC G19657280    Babcock & Wilcox Company   GL   Pacific Employers
1/1/2000   1/1/2001   HDO G219657292    Babcock & Wilcox Company   GL   Pacific Employers
1/1/2000   1/1/2001   PWC C42645618    Babcock & Wilcox Company   WC   Pacific Employers
1/1/2000   1/1/2001   WLR C42645631    Hudson Companies   WC   Pacific Employers
1/1/2000   1/1/2001   WLR C42645643    Babcock & Wilcox Company   WC   Pacific Employers
1/1/2000   1/1/2001   XOO G20292817    Mid American Energy Company   XGL   Pacific Employers
1/1/2000   1/1/2001   XSL G19657279    The Babcock & Wilcox Company   XGL   Pacific Employers
1/1/2000   1/1/2001   XSL G19657309    Hudson Companies   XGL   Pacific Employers
12/11/2000   6/1/2001   XLG G20295624    NRG El Segundo Operations Inc.   XGL   AAI
12/18/2000   12/18/2001   HDO G20295715    National Ecology Company   GL   Pacific Employers
12/18/2000   12/18/2001   ISA H07668016    National Ecology Company   Auto   Pacific Employers
12/18/2000   7/31/2001   XLG G20295661    NRG Cabrillo Power I   XGL   AAI
1/1/2001   1/1/2002   HDC G19657280    Babcock & Wilcox Company   GL   Pacific Employers
1/1/2001   1/1/2002   HDO G219657292    Babcock & Wilcox Company   GL   Pacific Employers
1/1/2001   1/1/2002   SCF C43139988    Babcock & Wilcox Company   WC   Pacific Employers
1/1/2001   1/1/2002   WLR C43139940    Babcock & Wilcox Company   WC   Pacific Employers
1/1/2001   1/1/2002   WLR C43140061    Hudson Companies   WC   Pacific Employers
1/1/2001   1/1/2002   XOO G20292817    Mid American Energy Company   XGL   Pacific Employers
1/1/2001   1/1/2002   XSL G19657279    The Babcock & Wilcox Company   XGL   Pacific Employers
1/1/2001   1/1/2002   XSL G19657309    Hudson Companies   XGL   Pacific Employers
7/2/2001   12/31/2001   XLG G20298017    Mirant Delta LLC   XGL   AAI
7/31/2001   3/31/2002   XLG G20295661    NRG Cabrillo Power I   XGL   AAI
12/18/2001   12/18/2002   HDO G20298431    National Ecology Company   GL   Pacific Employers


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

12/18/2001   12/18/2002   ISA H0766946A    National Ecology Company   AL   Pacific Employers
1/1/2002   1/1/2003   HDC G19657280    Babcock & Wilcox Company   GL   Pacific Employers
1/1/2002   1/1/2003   HDO G219657292    Babcock & Wilcox Company   GL   Pacific Employers
1/1/2002   1/1/2003   SCF C43100075    Babcock & Wilcox Company   WC   Pacific Employers
1/1/2002   1/1/2003   XSL G19657279    The Babcock & Wilcox Company   XGL   Pacific Employers
1/1/2002   1/1/2003   XSL G19657309    Hudson Companies   XGL   Pacific Employers
3/31/2002   4/30/2002   XLG G20295661    NRG Cabrillo Power I   XGL   AAI
10/1/2002   1/1/2003   XLG G20580161    Mid American Energy Company   XGL   AAI
12/18/2002   12/18/2003   HDO G2030442A    National Ecology Company   GL   AAI
12/18/2002   12/18/2003   ISA H07669884    National Ecology Company   AL   AAI
1/1/2003   1/1/2004   HDC G20580124    Babcock & Wilocx Company   GL   AAI
1/1/2003   1/1/2004   HDO G20579997    Babcock & Wilcox Company   GL   AAI
1/1/2003   1/1/2004   ISA H07670060    The Babcock & Wilcox Company   Auto   AAI
1/1/2003   1/1/2004   SCF C43497194    Babcock & Wilcox Company   WC   AAI
1/1/2003   1/1/2004   WLR C43497157    Babcock & Wilcox Company   WC   AAI
1/1/2003   1/1/2004   XSL G20580045    The Babcock & Wilcox Company   XGL   AAI
2/1/2003   12/17/2003   OCP G20304479    Pasadena ISD   GL   AAI
3/1/2003   3/1/2004   XLG G20579511    Reliant Energy   XGL   AAI
12/17/2003   12/17/2004   OCP G20304479    Pasadena ISD   GL   AAI
12/18/2003   12/18/2004   HDO G2030442A    National Ecology Company   GL   AAI
12/18/2003   12/18/2004   ISA H07669884    National Ecology Company   AL   AAI
1/1/2004   1/1/2005   HDC G20300140    Babcock & Wilcox Company   GL   AAI
1/1/2004   1/1/2005   HDO G20300103    Babcock & Wilcox Company   GL   AAI
1/1/2004   1/1/2005   ISA H07670485    The Babcock & Wilcox Company   Auto   AAI
1/1/2004   1/1/2005   SCF C43966169    Babcock & Wilcox Company   WC   AAI
1/1/2004   1/1/2005   WLR C43966157    Babcock & Wilcox Company   WC   AAI
1/1/2004   1/1/2005   XSL G20300061    The Babcock & Wilcox Company   XGL   AAI
2/1/2004   2/1/2005   WCU 014570    Babcock and Wilcox Investment Company   XWC   AAI
12/17/2004   12/17/2005   OCP G20304479    Pasadena ISD   GL   AAI
12/18/2004   12/18/2005   HDO G2030442A    National Ecology Company   GL   AAI
12/18/2004   12/18/2005   ISA H07669884    National Ecology Company   AL   AAI
1/1/2005   1/1/2006   SCF C4396494A    Babcock & Wilcox Company   WC   AAI
1/1/2005   1/1/2006   WLR C43988761    Babcock & Wilcox Company   WC   AAI
9/19/2005   12/18/2005   XSL G20299721    American Electric Power Service Corp   XGL   AAI
9/19/2005   12/18/2005   XSL G20299769    American Electric Power Service Corp   XGL   AAI


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

12/17/2005   12/17/2006   OCP G20304479    Pasadena ISD   GL   AAI
12/18/2005   12/18/2009   HDO G21703618R    National Ecology Company   GL   AAI
1/1/2006   1/1/2007   HDC G21728007    Babcock & Wilcox Company   GL   AAI
1/1/2006   1/1/2007   HDO G21727994    Babcock & Wilcox Company   GL   AAI
1/1/2006   1/1/2007   ISA H07670977    Babcock & Wilcox Company   Auto   AAI
1/1/2006   1/1/2007   SCF C44185520    Babcock & Wilcox Company   WC   AAI
1/1/2006   1/1/2007   WLR C44185532    Babcock & Wilcox Company   WC   AAI
1/1/2006   1/1/2007   XSL G21728068    Babcock & Wilcox Company   GL   AAI
12/18/2006   12/18/2007   CAL H07670928    National Ecology Company   AL   AAI
1/1/2007   1/1/2008   HDC G21736764    Babcock & Wilcox Company   GL   AAI
1/1/2007   1/1/2008   HDC G2372358A    BWXT Services, Inc.   GL   AAI
1/1/2007   1/1/2008   HDO G21736752    Babcock & Wilcox Company   GL   AAI
1/1/2007   1/1/2008   ISA H07673218    Babcock & Wilcox Company   Auto   AAI
1/1/2007   1/1/2008   ISA H07834597    BWXT Services, Inc.   Auto   AAI
1/1/2007   1/1/2008   SCF C44450653    Babcock & Wilcox Company   WC   AAI
1/1/2007   1/1/2008   WCU C44450550    Babcock & Wilcox Investment Company   WC   AAI
1/1/2007   1/1/2008   WLR C44450203    BWXT Services, Inc.   WC   AAI
1/1/2007   1/1/2008   WLR C44450616    Babcock & Wilcox Company   WC   AAI
1/1/2007   1/1/2008   XSL G21736235    BWTX Services, Inc.   GL   AAI
1/1/2007   1/1/2008   XSL G21736740    Babcock & Wilcox Company   GL   AAI
1/1/2008   1/1/2009   HDC G23734758    Babcock & Wilcox Company   GL   AAI
1/1/2008   1/1/2009   HDO G23734746    Babcock & Wilcox Company   GL   AAI
1/1/2008   1/1/2009   ISA H0823839A    The Babcock &Wilcox Company   Auto   AAI
1/1/2008   1/1/2009   WLR C44478596    The Babcock & Wilcox Company   WC   AAI
1/1/2008   1/1/2009   WLR C44479813    The Babcock & Wilcox Company   WC   IND
1/1/2008   1/1/2009   XSL G23733766    The Babcock & Wilcox Company   GL   AAI
1/1/2009   1/1/2010   HDC G23749270    The Babcock & Wilcox Company   GL   AAI
1/1/2009   1/1/2010   HDO G23749233    The Babcock & Wilcox Company   GL   AAI
1/1/2009   1/1/2010   ISA H08252506    The Babcock & Wilcox Company   Auto   AAI
1/1/2009   1/1/2010   SCF C44356909    Babcock & Wilcox Company   WC   AAI
1/1/2009   1/1/2010   WCU C44356867    Babcock & Wilcox Investment Company   WC   AAI
1/1/2009   1/1/2010   WLR C44356946    The Babcock & Wilcox Company   WC   IND
1/1/2009   1/1/2010   WLR C44356983    The Babcock & Wilcox Company   WC   AAI
1/1/2009   1/1/2010   XSL G23749312    The Babcock & Wilcox Company   GL   AAI
1/1/2010   1/1/2011   HDC G24938463    The Babcock & Wilcox Company   GL   AAI


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

1/1/2010   1/1/2011   HDO G24938475    The Babcock & Wilcox Company   GL   AAI
1/1/2010   1/1/2011   SCF C45709516    The Babcock & Wilcox Company   WC   AAI
1/1/2010   1/1/2011   WLR C45709498    The Babcock & Wilcox Company   WC   AAI
1/1/2010   1/1/2011   WLR C45709504    The Babcock & Wilcox Company   WC   IND
1/1/2010   1/1/2011   XSL G24938451    The Babcock & Wilcox Company   GL   AAI
1/1/2011   1/1/2012   WCU C46141052    The Babcock & Wilcox Company   WC   AAI
1/1/2011   1/1/2012   ISA H08631578    The Babcock & Wilcox Company   Auto   AAI
1/1/2011   1/1/2012   WLR C46141027    The Babcock & Wilcox Company   WC   AAI
1/1/2011   1/1/2012   WLR C46141039    The Babcock & Wilcox Company   WC   IND
1/1/2011   1/1/2012   SCF C46141040    The Babcock & Wilcox Company   WC   AAI
1/1/2011   1/1/2012   XSL G25522849    The Babcock & Wilcox Company   XGL   AAI
1/1/2011   1/1/2012   HDC G25522886    The Babcock & Wilcox Company   GL   AAI
1/1/2011   1/1/2012   HDO G25522928    The Babcock & Wilcox Company   GL   AAI
1/1/2012   1/1/2013   WCU C46772544    The Babcock & Wilcox Company   WC   AAI
1/1/2012   1/1/2013   ISA H08693560    The Babcock & Wilcox Company   Auto   AAI
1/1/2012   1/1/2013   WLR C46772556    The Babcock & Wilcox Company   WC   AAI
1/1/2012   1/1/2013   WLR C46772568    The Babcock & Wilcox Company   WC   IND
1/1/2012   1/1/2013   SCF C4677257A    The Babcock & Wilcox Company   WC   AAI
1/1/2012   1/1/2013   XSL G25533677    The Babcock & Wilcox Company   XGL   AAI
1/1/2012   1/1/2013   HDC G25533689    The Babcock & Wilcox Company   GL   AAI
1/1/2012   1/1/2013   HDO G25533690    The Babcock & Wilcox Company   GL   AAI
1/1/2013   11/1/2013   WCU C47124025    The Babcock & Wilcox Company   WC   AAI
1/1/2013   11/1/2013   ISA H08711720    The Babcock & Wilcox Company   Auto   AAI
1/1/2013   11/1/2013   WLR C47124037    The Babcock & Wilcox Company   WC   AAI
1/1/2013   11/1/2013   WLR C47124049    The Babcock & Wilcox Company   WC   IND
1/1/2013   11/1/2013   XSL G27013107    The Babcock & Wilcox Company   XGL   AAI
1/1/2013   11/1/2013   HDC G27013119    The Babcock & Wilcox Company   GL   AAI
1/1/2013   11/1/2013   HDO G27013120    The Babcock & Wilcox Company   GL   AAI
1/1/2013   11/1/2013   SCF C47124050    The Babcock & Wilcox Company   WC   AAI
11/1/2014   11/1/2015   WCU C48019006    The Babcock & Wilcox Company   WC   AAI
11/1/2014   11/1/2015   WLR C48019018    The Babcock & Wilcox Company   WC   AAI
11/1/2014   11/1/2015   WLR C48019031    The Babcock & Wilcox Company   WC   IND
11/1/2014   11/1/2015   SCF C4801902A    The Babcock & Wilcox Company   WC   AAI
11/1/2014   11/1/2015   ISA H08828726    The Babcock & Wilcox Company   Auto   AAI
11/1/2014   11/1/2015   XSL G27337971    The Babcock & Wilcox Company   XSGL   AAI


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

11/1/2014   11/1/2015   HDC G2733796A    The Babcock & Wilcox Company   GL   AAI
11/1/2014   11/1/2015   HDO G27337958    The Babcock & Wilcox Company   GL   AAI
1/1/2011   1/1/2012   OCP G25527963    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2011   1/1/2012   OCP G25528001    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2011   1/1/2012   OCP G25528049    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2011   1/1/2012   OCP G25528128    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2011   1/1/2012   OCP G25527975    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2011   1/1/2012   OCP G25528013    Babcock & Wilcox Power Generation Group Field Service Engineering Service   OCP   AAI
1/1/2011   1/1/2012   OCP G25528050    Babcock & Wilcox Construction Co. , Inc.   OCP   AAI
1/1/2011   1/1/2012   OCP G25528098    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2011   1/1/2012   OCP G2552813A    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2011   1/1/2012   OCP G25528116    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2011   1/1/2012   OCP G25528153    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/4/2015   1/1/2012   OCP G2553220A    Babcock & Wilcox Power Generation Group, Inc./Service Company - Field Engineering Services   OCP   AAI
1/1/2011   1/1/2012   OCP G25532247    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2011   1/1/2012   OCP G25532284    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2011   1/1/2012   OCP G25532326    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2011   1/1/2012   OCP G25532363    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2011   1/1/2012   OCP G25532211    Babcock & Wilcox Construction Co   OCP   AAI
1/1/2011   1/1/2012   CCP G25532259    Babcock & Wilcox Construction Co.   OCP   AAI
1/1/2011   1/1/2012   OCP G25532296    Babcock & Wilcox Construction Co   OCP   AAI
1/1/2011   1/1/2012   OCP G25532338    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2011   1/1/2012   OCP G25532375    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2011   1/1/2012   OCP G25532223    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2011   1/1/2012   OCP G25532260    Babcock & Wilcox Power Generation Group Inc   OCP   AAI
1/1/2011   1/1/2012   OCP G25532302    Babcock & Wilcox Power Generation Group Inc   OCP   AAI
1/1/2011   1/1/2012   OCP G2553234A    Babcock & Wilcox Power Generation Group Inc   OCP   AAI
1/1/2011   1/1/2012   OCP G25532387    Babcock & Wilcox Power Generation Group Inc   OCP   AAI
1/1/2011   1/1/2012   OCP G25532235    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2011   1/1/2012   OCP G25532272    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2011   1/1/2012   OCP G25532314    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2011   1/1/2012   OCP G25532351    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/24/2011   1/1/2012   OCP G25532442    Allen-Sherman-Hoff   OCP   AAI
2/2/2011   1/1/2012   OCP G25532521    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

1/24/2011   1/1/2012   OCP G25532569    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/27/2011   1/1/2012   OCP G25532454    Babcock & Wilcox Power Generation Group Field Engineering Service - BWSC   OCP   AAI
1/24/2011   1/1/2012   OCP G25532491    Babcock & Wilcox Power Generation Group   OCP   AAI
2/2/2011   1/1/2012   OCP G25532533    Babcock & Wilcox Power Generation Group Field Engineering Service - BWSC   OCP   AAI
2/9/2011   1/1/2012   OCP G25532429    Babcock & Wilcox Construction Co. Inc.   OCP   AAI
2/15/2011   1/1/2012   OCP G25532466    Babcock & Wilcox Power Generation Group, Inc. FPD-Environmental Aftermarket Group 0688   OCP   AAI
2/17/2011   1/1/2012   OCP G25532508    Babcock & Wilcox Power Generation Group Field Engineering Service - BWSC   OCP   AAI
2/21/2011   1/1/2012   OCP G25532545    Babcock & Wilcox Power Generation Group Field Engineering Service - BWSC   OCP   AAI
3/7/2011   1/1/2012   OCP G25532430    B&W PGG, Field Engineering Services   OCP   AAI
3/14/2011   1/1/2012   OCP G25532478    Babcock & Wilcox Construction Co., Inc.   OCP   AAI
4/9/2011   1/1/2012   OCP G2553251A    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
3/30/2011   1/1/2012   OCP G25532557    Babcock & Wilcox Power Generation Group, Inc./Service Company – Field Engineering Services   OCP   AAI
3/28/2011   1/1/2012   OCP G25532600    Babcock & Wilcox Construction Co., Inc.   OCP   AAI
4/1/2011   1/1/2012   OCP G25532648    Babcock & Wilcox Power Generation Group   OCP   AAI
4/5/2011   1/1/2012   OCP G25532685    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
5/9/2011   1/1/2012   OCP G25532612    Babcock & Wilcox Construction Co., Inc.   OCP   AAI
5/13/2011   1/1/2012   OCP G25532697    Babcock & Wilcox Power Generation Group, INC.   OCP   AAI
5/13/2011   1/1/2012   OCP G25532739    Babcock & Wilcox Power Generation Group   OCP   AAI
5/23/2011   1/1/2012   OCP G25532776    IveyCooper Services   OCP   AAI
7/18/2011   1/1/2012   OCP G25532636    Babcock & Wilcox Power Generation Group   OCP   AAI
7/26/2011   1/1/2012   OCP G25532715    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
7/27/2011   1/1/2012   OCP G25532752    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
7/29/2011   1/1/2012   OCP G26437362    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
7/31/2011   1/1/2012   OCP G26437404    Babcock & Wilcox Construction Co., Inc.   OCP   AAI
9/1/2011   1/1/2012   OCP G26437489    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
9/26/2011   1/1/2012   OCP G26437453    PPG-Environmental Aftermarket Services   OCP   AAI
9/23/2011   1/1/2012   OCP G26437490    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
10/1/2011   1/1/2012   OCP G26437428    Babcock & Wilcox Power Generation Group   OCP   AAI
10/4/2011   1/1/2012   OCP G26437465    Babcock & Wilcox Power Generation Group   OCP   AAI
10/11/2011   1/1/2012   OCP G26437507    Babcock & Wilcox Power Generation Group   OCP   AAI


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

10/24/2011   1/1/2012   OCP G26437398    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/7/2011   1/1/2012   OCP G26437544    IveyCooper Services   OCP   AAI
11/14/2011   1/1/2012   OCP G26437477    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
12/19/2011   1/1/2012   OCP G26437519    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439127    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439164    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439206    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439243    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439280    B&W PGG, Field Engineering Services   OCP   AAI
1/1/2012   1/1/2013   OCP G26439322    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G2643936A    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439401    Allen-Sherman-Hoff   OCP   AAI
1/1/2012   1/1/2013   OCP G26439449   

Babcock & Wilcox Power Generation Group, Inc.

Field Engineering Services - BWSC

  OCP   AAI
1/1/2012   1/1/2013   OCP G26439486    Babcock & Wilcox Construction Co   OCP   AAI
1/1/2012   1/1/2013   OCP G26439528    Babcock & Wilcox Power Generation Group Field Engineering Service - BWSC   OCP   AAI
1/1/2012   1/1/2013   OCP G26439565    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439607    Babcock & Wilcox Construction Co., Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439644    Babcock & Wilcox Construction Co., Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439681    Babcock & Wilcox Construction Co., Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439723    Babcock & Wilcox Power Generation Group   OCP   AAI
1/1/2012   1/1/2013   OCP G26439760    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439802    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G2643984A    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439887    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439139    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439176    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439218    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439255    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439292    Babcock & Wilcox Power Generation Group Field Engineering Service - BWSC   OCP   AAI
1/1/2012   1/1/2013   OCP G26439334   

Babcock & Wilcox Power Generation Group, Inc.

Field Engineering Services - BWSC

  OCP   AAI
1/1/2012   1/1/2013   OCP G26439371    Babcock & Wilcox Power Generation Group, Inc. FPD-Environmental Aftermarket Group 0688   OCP   AAI


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

1/1/2012   1/1/2013   OCP G26439413    Babcock & Wilcox Power Generation Group Field Engineering Service - BWSC   OCP   AAI
1/1/2012   1/1/2013   OCP G26439450   

Babcock & Wilcox Power Generation Group, Inc.

Field Engineering Services - BWSC

  OCP   AAI
1/1/2012   1/1/2013   OCP G26439498    Babcock & Wilcox Power Generation Group Field Engineering Service - BWSC   OCP   AAI
1/1/2012   1/1/2013   OCP G2643953A    Babcock & Wilcox Power Generation Group Field Service Engineering Service   OCP   AAI
1/1/2012   1/1/2013   OCP G26439577    Babcock & Wilcox Construction Co., Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439619    Babcock & Wilcox Power Generation Group   OCP   AAI
1/1/2012   1/1/2013   OCP G26439656    Babcock & Wilcox Power Generation Group   OCP   AAI
1/1/2012   1/1/2013   OCP G26439693    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439735    Babcock & Wilcox Construction Co. Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439772    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439814    Babcock & Wilcox Power Generation Group   OCP   AAI
1/1/2012   1/1/2013   OCP G26439851    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439899    Babcock & Wilcox Construction Co   OCP   AAI
1/1/2012   1/1/2013   OCP G26439140   

Babcock & Wilcox Power Generation Group, Inc.

Field Engineering Services - BWSC

  OCP   AAI
1/1/2012   1/1/2013   OCP G26439188    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G2643922A    Babcock & Wilcox Power Generation Group, Inc./Service Company – Field Engineering Services   OCP   AAI
1/1/2012   1/1/2013   OCP G26439267    Babcock & Wilcox Power Generation Group Inc   OCP   AAI
1/1/2012   1/1/2013   OCP G26439309    Babcock & Wilcox Power Generation Group Inc   OCP   AAI
1/1/2012   1/1/2013   OCP G26439346    Babcock & Wilcox Power Generation Group Inc   OCP   AAI
1/1/2012   1/1/2013   OCP G26439383    Babcock & Wilcox Power Generation Group   OCP   AAI
1/1/2012   1/1/2013   OCP G26439425    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439462    Babcock & Wilcox Power Generation Group, Inc. (FPD)   OCP   AAI
1/1/2012   1/1/2013   OCP G26439504    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439541    Babcock & Wilcox Power Generation Group   OCP   AAI
1/1/2012   1/1/2013   OCP G26439589    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2012   1/1/2013   OCP G26439620    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/20/2012   1/1/2013   OCP G26439516    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/4/2012   1/1/2013   OCP G26439553    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/10/2012   1/1/2013   OCP G26439632    Babcock & Wilcox Power Generation Group   OCP   AAI
1/1/2012   1/1/2013   OCP G2643967A    Babcock & Wilcox Construction Company, Inc.   OCP   AAI


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

1/24/2012   1/1/2013   OCP G26439711    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/25/2012   1/1/2013   OCP G26439759   

Babcock & Wilcox Power Generation Group

Field Engineering Service - BWSC

  OCP   AAI
1/26/2012   1/1/2013   OCP G26439796    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/26/2012   1/1/2013   OCP G26439838    IveyCooper Services, LLC   OCP   AAI
1/30/2012   1/1/2013   OCP G26439875    Babcock & Wilcox Power Generation Group, Inc./Service Company – Field Engineering Services   OCP   AAI
2/2/2012   1/1/2013   OCP G26439929   

Babcock & Wilcox Power Generation Group, Inc.

Field Engineering Service - BWSC

  OCP   AAI
2/2/2012   1/1/2013   OCP G26439966    Babcock & Wilcox PGG/BWSC/RP   OCP   AAI
2/6/2012   1/1/2013   OCP G26439930    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
2/7/2012   1/1/2013   OCP G26439942   

Diamond Power Specialty Company

Allen-Sherman-Hoff

Diamond Power Controls & Diagnostics

  OCP   AAI
2/14/2012   1/1/2013   OCP G2643998A    Babcock & Wilcox Power Generation Group Field Service Engineering Service   OCP   AAI
3/2/2012   1/1/2013   OCP G26439991    B&W PGG, Inc. KVB Enertec Products Emissions Monitoring   OCP   AAI
3/19/2012   1/1/2013   OCP G2644004A    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
3/22/2012   1/1/2013   OCP G26440087    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
3/28/2012   1/1/2013   OCP G26440014   

Babcock & Wilcox Power Generation Group, Inc.

Field Engineering Services

  OCP   AAI
4/3/2012   1/1/2013   OCP G26440099    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
4/2/2012   1/1/2013   OCP G26440026    Babcock & Wilcox Power Generation Group, Inc. Field Engineering Services   OCP   AAI
4/2/2012   1/1/2013   OCP G26440063    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
4/11/2012   1/1/2013   OCP G26440105   

Diamond Power Specialty Company

Allen-Sherman-Hoff

Diamond Power Controls & Diagnostics

  OCP   AAI
5/1/2012   1/1/2013   OCP G26440038    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
4/23/2012   1/1/2013   OCP G26440117    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
5/2/2012   1/1/2013   OCP G27011949    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
6/4/2012   1/1/2013   OCP G27011986    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
5/25/2012   1/1/2013   OCP G27012024    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
6/4/2012   1/1/2013   OCP G27012103    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

6/6/2012   1/1/2013   OCP G27012140    IveyCooper Services LLC   OCP   AAI
6/19/2012   1/1/2013   OCP G27012188    Babcock & Wilcox Construction Co., Inc.   OCP   AAI
6/28/2012   1/1/2013   OCP G27012267    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
8/1/2012   1/1/2013   OCP G27012346    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
9/20/2012   1/1/2013   OCP G27011950    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
10/11/2012   1/1/2013   OCP G27012073    Babcock & Wilcox Power Generation Group Inc./ B&W Service Company   OCP   AAI
10/15/2012   1/1/2013   OCP G27012115    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
10/9/2012   1/1/2013   OCP G27012152   

Babcock & Wilcox Power Generation Group

Field Engineering Service - BWSC

  OCP   AAI
10/29/2012   1/1/2013   OCP G2701219A   

Babcock & Wilcox Power Generation Group

Field Engineering Service - BWSC

  OCP   AAI
11/12/2012   1/1/2013   OCP G27012279   

Diamond Power International, Inc.

 

2600 E. Main Street

Lancaster, OH 43130

  OCP   AAI
12/3/2012   1/1/2013   OCP G27012310   

Diamond Power Specialty Company

Allen-Sherman-Hoff

Diamond Power Controls & Diagnostics

  OCP   AAI
12/4/2012   1/1/2013   OCP G27012358   

Allen-Sherman-Hoff, a Division of Diamond Power International, Inc.

 

2600 E. Main Street, P.O. Box 415, Lancaster, OH 43130

  OCP   AAI
11/1/2012   1/1/2013   OCP G27012395    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27012437    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27011962    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27012000    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27012048    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27012085    B&W PGG, Field Engineering Services   OCP   AAI
1/1/2013   11/15/2013   OCP G27012127    Allen-Sherman-Hoff   OCP   AAI
1/1/2013   11/15/2013   OCP G27012164    Babcock & Wilcox Power Generation Group Field Engineering Service - BWSC   OCP   AAI


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

1/1/2013   11/15/2013   OCP G27012206    Babcock & Wilcox Power Generation Group   OCP   AAI
1/1/2013   11/15/2013   OCP G27012243    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27012280    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27012322    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G2701236A    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27012401   

Babcock & Wilcox Power Generation Group

Field Engineering Service - BWSC

  OCP   AAI
1/1/2013   11/15/2013   OCP G27012012    Babcock & Wilcox Power Generation Group, Inc. FPD-Environmental Aftermarket Group 0688   OCP   AAI
1/1/2013   11/15/2013   OCP G2701205A   

Babcock & Wilcox Power Generation Group, Inc.

Field Engineering Services - BWSC

  OCP   AAI
1/1/2013   11/15/2013   OCP G27012097    Babcock & Wilcox Power Generation Group Field Engineering Service - BWSC   OCP   AAI
1/1/2013   11/15/2013   OCP G27012139    Babcock & Wilcox Power Generation Group Field Service Engineering Service   OCP   AAI
1/1/2013   11/15/2013   OCP G27012176    Babcock & Wilcox Construction Co., Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27012218    Babcock & Wilcox Power Generation Group   OCP   AAI
1/1/2013   11/15/2013   OCP G27012255    Babcock & Wilcox Power Generation Group   OCP   AAI
1/1/2013   11/15/2013   OCP G27012292    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27012334    Babcock & Wilcox Power Generation Group   OCP   AAI
1/1/2013   11/15/2013   OCP G27012371    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27012413    Babcock & Wilcox Construction Co   OCP   AAI
1/1/2013   11/15/2013   OCP G27018622    Babcock & Wilcox Power Generation Group Inc   OCP   AAI
1/1/2013   11/15/2013   OCP G2701866A    Babcock & Wilcox Power Generation Group Inc   OCP   AAI
1/1/2013   11/15/2013   OCP G27018701    Babcock & Wilcox Power Generation Group Inc   OCP   AAI
1/1/2013   11/15/2013   OCP G27018749    Babcock & Wilcox Power Generation Group   OCP   AAI
1/1/2013   11/15/2013   OCP G27018786    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27018828    Babcock & Wilcox Power Generation Group, Inc. (FPD)   OCP   AAI
1/1/2013   11/15/2013   OCP G27018865    Babcock & Wilcox Power Generation Group   OCP   AAI
1/1/2013   11/15/2013   OCP G27018907    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27018944    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27018981    Babcock & Wilcox Power Generation Group, Inc./Service Company – Field Engineering Services   OCP   AAI
1/1/2013   11/15/2013   OCP G2701902A    B&W PGG, Inc. KVB Enertec Products Emissions Monitoring   OCP   AAI


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

1/1/2013   11/15/2013   OCP G27019067    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27019109    Babcock & Wilcox Power Generation Group, Inc. Field Engineering Services   OCP   AAI
1/1/2013   11/15/2013   OCP G27019146    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27019183    Babcock & Wilcox Power Generation Group, Inc. Field Engineering Services   OCP   AAI
1/1/2013   11/15/2013   OCP G27019225    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27019262    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27019304    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27019341    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27019389    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27019420    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27018580    Babcock & Wilcox Power Generation Group Field Engineering Service - BWSC   OCP   AAI
1/1/2013   11/15/2013   OCP G27012449    Babcock & Wilcox Power Generation Group Field Engineering Service - BWSC   OCP   AAI
1/1/2013   11/15/2013   OCP G27011974    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27018956    Babcock & Wilcox Power Generation Group Field Engineering Service - BWSC   OCP   AAI
1/1/2013   11/15/2013   OCP G27018993    Babcock & Wilcox Power Generation Group Field Engineering Service - BWSC   OCP   AAI
1/1/2013   11/15/2013   OCP G27019031    Babcock & Wilcox Power Generation Group Field Engineering Service - BWSC   OCP   AAI
1/1/2013   11/15/2013   OCP G27019079    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27019110    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27019158    Babcock & Wilcox Construction Co   OCP   AAI
1/1/2013   11/15/2013   OCP G27019195    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27019237    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
1/1/2013   11/15/2013   OCP G27019316    Babcock & Wilcox Power Generation Group, Inc. Field Engineering Services   OCP   AAI
1/10/2013   11/15/2013   OCP G27019353    Babcock & Wilcox Power Generation Group, Inc., Field Engineering Services   OCP   AAI


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

1/1/2013   11/15/2013   OCP G27019390    Babcock & Wilcox Power Generation Group, Inc., Field Engineering Services   OCP   AAI
1/10/2013   11/15/2013   OCP G27019432    Babcock & Wilcox Power Generation Group, Inc., Field Engineering Services   OCP   AAI
1/1/2013   11/15/2013   OCP G2701947A    Babcock & Wilcox Power Generation Group, Inc., Field Engineering Services   OCP   AAI
1/10/2013   11/15/2013   OCP G27019511    Babcock & Wilcox Power Generation Group, Inc., Field Engineering Services   OCP   AAI
1/1/2013   11/15/2013   OCP G27019559    Babcock & Wilcox Power Generation Group, Inc., Field Engineering Services   OCP   AAI
1/1/2013   11/15/2013   OCP G27018609    Babcock & Wilcox Power Generation Group, Inc., Field Engineering Services   OCP   AAI
1/1/2013   11/15/2013   OCP G27018646    Babcock & Wilcox Power Generation Group, Inc., Field Engineering Services   OCP   AAI
2/1/2013   11/15/2013   OCP G27018683    BWSC – Field Engineering Services   OCP   AAI
1/25/2013   11/15/2013   OCP G27018762    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/28/2013   11/15/2013   OCP G27018804    Allen Sherman Hoff – 1876   OCP   AAI
1/31/2013   11/15/2013   OCP G27018841   

Babcock & Wilcox Power Generation Group, Inc.

Field Engineering Service - BWSC

  OCP   AAI
1/1/2013   11/15/2013   OCP G27018968    Babcock & Wilcox Construction Co., Inc.   OCP   AAI
2/8/2013   11/15/2013   OCP G27019006    B&W Nuclear Operations Group, Inc.   OCP   AAI
2/25/2013   11/15/2013   OCP G27019043    B&W Nuclear Operations Group, Inc.   OCP   AAI
2/12/2013   11/15/2013   OCP G27019080    B&W Power Generation Group   OCP   AAI
2/18/2013   11/15/2013   OCP G27019201   

Babcock & Wilcox Power Generation Group, Inc.

Field Engineering Services - BWSC

  OCP   AAI
3/4/2013   11/15/2013   OCP G27019249   

Babcock & Wilcox Power Generation Group, Inc

BWSC – Field Engineering Services

  OCP   AAI
3/4/2013   11/15/2013   OCP G27019286    Field Engineering Services / G. Nakoneczy   OCP   AAI
3/8/2013   11/15/2013   OCP G27019365    Babcock & Wilcox Nuclear Operations Group Inc.   OCP   AAI
3/12/2013   11/15/2013   OCP G27019407    Babcock & Wilcox Power Generation Group, Inc. Field Engineering Service - BWSC   OCP   AAI
3/13/2013   11/15/2013   OCP G27019444   

Diamond Power Specialty Company

Allen-Sherman-Hoff

Diamond Power Controls & Diagnostics

  OCP   AAI
3/19/2013   11/15/2013   OCP G27019481    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
4/5/2013   11/15/2013   OCP G27019523    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

4/5/2013   11/15/2013   OCP G27019560    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
5/1/2013   11/15/2013   OCP G27018610    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
4/29/2013   11/15/2013   OCP G27018658    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
5/8/2013   11/15/2013   OCP G27018695   

Babcock & Wilcox Power Generation Group, Inc.

Field Engineering Service - BWSC

  OCP   AAI
5/8/2013   11/15/2013   OCP G27018737   

Diamond Power Specialty Company

Allen-Sherman-Hoff

Diamond Power Controls & Diagnostics

  OCP   AAI
5/13/2013   11/15/2013   OCP G27018774    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
5/16/2013   11/15/2013   OCP G27018816   

Diamond Power Specialty Company

Allen-Sherman-Hoff

Diamond Power Controls & Diagnostics

  OCP   AAI
5/16/2013   11/15/2013   OCP G27018853   

Diamond Power Specialty Company

Allen-Sherman-Hoff

Diamond Power Controls & Diagnostics

  OCP   AAI
5/23/2013   11/15/2013   OCP G27018932    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
5/31/2013   11/15/2013   OCP G2701897A    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
6/10/2013   11/15/2013   OCP G27019018    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
6/11/2013   11/15/2013   OCP G27019055   

Diamond Power Specialty Company

Allen-Sherman-Hoff

Diamond Power Controls & Diagnostics

  OCP   AAI
6/17/2013   11/15/2013   OCP G27019092   

Diamond Power Specialty Company

Allen-Sherman-Hoff

Diamond Power Controls & Diagnostics

  OCP   AAI
6/12/2013   11/15/2013   OCP G27019171    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
6/25/2013   11/15/2013   OCP G27019250   

Diamond Power Specialty Company

Allen-Sherman-Hoff

Diamond Power Controls & Diagnostics

  OCP   AAI
5/1/2013   11/15/2013   OCP G2701933A    Diamond Power International, Inc.   OCP   AAI
7/18/2013   11/15/2013   OCP G27019377   

Diamond Power Specialty Company

Allen-Sherman-Hoff

Diamond Power Controls & Diagnostics

  OCP   AAI
7/25/2013   11/15/2013   OCP G27019419    Babcock & Wilcox PGG/BWSC/RP   OCP   AAI
9/1/2013   11/15/2013   OCP G27019456    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
8/19/2013   11/15/2013   OCP G27019493   

Babcock & Wilcox Power Generation Group, Inc.

Field Engineering Service - BWSC

  OCP   AAI


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

8/8/2013   11/15/2013   OCP G27019535   

Diamond Power Specialty Company

Allen-Sherman-Hoff

Diamond Power Controls & Diagnostics

  OCP   AAI
8/28/2013   11/15/2013   OCP G27019572   

Diamond Power Specialty Company

Allen-Sherman-Hoff

Diamond Power Controls & Diagnostics

  OCP   AAI
10/1/2013   11/15/2013   OCP G27019274    Babcock & Wilcox Power Generation Group, Inc. GSD/FES   OCP   AAI
10/15/2013   11/15/2013   OCP G27325671    BABCOCK & WILCOX POWER GENERATION GROUP, INC.   OCP   AAI
11/10/2013   11/15/2013   OCP G27325750    Ivey Cooper Services, LLC   OCP   AAI
11/15/2014   11/15/2015   OCP G27394772    Babcock & Wilcox Power Generation Group   OCP   AAI
11/15/2014   11/15/2015   OCP G27394814    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G27394851    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G27394899    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G27394930    BABCOCK & WILCOX POWER GENERATION GROUP, INC.   OCP   AAI
11/15/2014   11/15/2015   OCP G27394978    BABCOCK & WILCOX POWER GENERATION GROUP, INC.   OCP   AAI
11/15/2014   11/15/2015   OCP G27395016    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G27395053    Babcock & Wilcox Power Generation Group   OCP   AAI
11/15/2014   11/15/2015   OCP G27395090    Babcock & Wilcox Power Generation Group   OCP   AAI
11/15/2014   11/15/2015   OCP G27395132    Babcock & Wilcox Power Generation Group   OCP   AAI
11/15/2014   11/15/2015   OCP G2739517A    Babcock & Wilcox Power Generation Group   OCP   AAI
11/15/2014   11/15/2015   OCP G27395211    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G27395259    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G27395296    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G27395338    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G27395375    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G27395417    BABCOCK & WILCOX POWER GENERATION GROUP, INC.   OCP   AAI
11/15/2014   11/15/2015   OCP G27395454    BABCOCK & WILCOX POWER GENERATION GROUP, INC.   OCP   AAI
11/15/2014   11/15/2015   OCP G27395491    BABCOCK & WILCOX POWER GENERATION GROUP, INC.   OCP   AAI
11/15/2014   11/15/2015   OCP G27395533    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

11/17/2014   11/15/2015   OCP G27395570    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G27395612    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G2739565A    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   12/1/2015   OCP G27395697    BABCOCK & WILCOX POWER GENERATION GROUP, INC.   OCP   AAI
11/15/2014   11/15/2015   OCP G27395739   

Babcock & Wilcox Power Generation Group, Inc.

Field Engineering Services

  OCP   AAI
11/15/2014   11/15/2015   OCP G27394784   

Babcock & Wilcox Power Generation Group, Inc.

Field Engineering Services

  OCP   AAI
11/15/2014   11/15/2015   OCP G27394826    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G27394863    B&W PGG, Field Engineering Services   OCP   AAI
11/15/2014   11/15/2015   OCP G27394905    BWSC – Field Engineering Services   OCP   AAI
11/15/2014   11/15/2015   OCP G27394942    Babcock & Wilcox Power Generation Group Field Engineering Service - BWSC   OCP   AAI
11/15/2014   11/15/2015   OCP G2739498A    Field Engineering Services / G. Nakoneczy   OCP   AAI
11/15/2014   11/15/2015   OCP G27395028    B&W PGG - Field Engineering Services   OCP   AAI
11/15/2014   11/15/2015   OCP G27395065    B&W PGG - Field Engineering Services   OCP   AAI
11/15/2014   11/15/2015   OCP G27395107    B&W PGG - Field Engineering Services   OCP   AAI
11/15/2014   11/15/2015   OCP G27395144    B&W PGG - Field Engineering Services   OCP   AAI
11/15/2014   11/15/2015   OCP G27395181    B&W PGG - Field Engineering Services   OCP   AAI
11/15/2014   11/15/2015   OCP G27395223    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G27395260    Babcock & Wilcox Power Generation Group, Inc., Field Engineering Services   OCP   AAI
11/15/2014   11/15/2015   OCP G27395302    Babcock & Wilcox Power Generation Group, Inc., Field Engineering Services   OCP   AAI
11/15/2014   11/15/2015   OCP G2739534A    Babcock & Wilcox Power Generation Group, Inc., Field Engineering Services   OCP   AAI
11/15/2014   11/15/2015   OCP G27395387    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G27395429    Babcock & Wilcox Power Generation Group, Inc. Field Engineering Services   OCP   AAI
11/15/2014   11/15/2015   OCP G27395466    Babcock & Wilcox Power Generation Group, Inc., Field Engineering Services   OCP   AAI
11/15/2014   11/15/2015   OCP G27395508    Babcock & Wilcox Power Generation Group, Inc., Field Engineering Services   OCP   AAI


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

11/15/2014   11/15/2015   OCP G27395545    Babcock & Wilcox Power Generation Group, Inc., Field Engineering Services   OCP   AAI
11/15/2014   11/15/2015   OCP G27395582    Babcock & Wilcox Power Generation Group, Inc., Field Engineering Services   OCP   AAI
11/15/2014   12/31/2017   OCP G27395624    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   4/1/2017   OCP G27395661    B&W PGG, Inc. KVB Enertec Products Emissions Monitoring   OCP   AAI
11/15/2014   6/30/2017   OCP G27395703    Babcock & Wilcox Power Generation Group, Inc. KVB-Enertec Products and Services – Hatfield, PA   OCP   AAI
11/15/2014   7/16/2017   OCP G27395740    Babcock & Wilcox Power Generation Group, Inc. KVB-Enertec Products and Services – Hatfield, PA   OCP   AAI
11/15/2014   11/15/2015   OCP G27394796    B&W Nuclear Operations Group, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G27394838   

Babcock & Wilcox Power Generation Group, Inc.

Field Engineering Service - BWSC

  OCP   AAI
11/15/2014   11/15/2015   OCP G27394875   

Babcock & Wilcox Power Generation Group

Field Engineering Service - BWSC

  OCP   AAI
11/15/2014   11/15/2015   OCP G27394917   

Babcock & Wilcox Power Generation Group, Inc.

Field Engineering Service - BWSC

  OCP   AAI
11/15/2014   11/15/2015   OCP G27394954    Babcock & Wilcox Power Generation Group Field Engineering Service - BWSC   OCP   AAI
11/15/2014   11/15/2015   OCP G27394991    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G2739503A    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G27395077    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G27395119    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G27395156    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G27395193    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G27395235   

Babcock & Wilcox Power Generation Group, Inc.

Field Engineering Service - BWSC

  OCP   AAI
11/15/2013   8/31/2014   OCP G27395272    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G27395314   

Babcock & Wilcox Power Generation Group, Inc.

Field Engineering Services

  OCP   AAI
11/15/2014   11/15/2015   OCP G27395351    Babcock & Wilcox Power Generation Group, Inc. Field Engineering Services   OCP   AAI
11/15/2014   11/15/2015   OCP G27395399    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI


Effective Date

 

Expiration Date

 

Policy Number

  

Named Insured

 

Type of Policy
(LOB)

 

Issuing Company

11/15/2014   11/15/2015   OCP G27395430   

Babcock & Wilcox Power Generation Group, Inc.

Field Engineering Service - BWSC

  OCP   AAI
11/15/2014   11/15/2015   OCP G27395478    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
11/15/2014   11/15/2015   OCP G2739551A   

Babcock & Wilcox Power Generation Group, Inc.

Field Engineering Service - BWSC

  OCP   AAI
11/15/2014   11/15/2015   OCP G27395557    Babcock & Wilcox PGG/BWSC/RP   OCP   AAI
11/15/2014   11/15/2015   OCP G27395594    Babcock & Wilcox Power Generation Group   OCP   AAI
12/8/2014   11/15/2015   OCPG27395636    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
12/8/2014   11/15/2015   OCP G27395673    B&W PGG/GSD/FES   OCP   AAI
1/5/2015   11/15/2015   OCP G27395715    Diamond Power Specialty Company Allen-Sherman-Hoff Diamond Power Controls & Diagnostics   OCP   AAI
2/1/2015   11/15/2015   OCP G27395752    Babcock & Wilcox Power Generation Group, Inc.   OCP   AAI
1/13/2015   11/15/2015   OCP G27394802    Babcock & Wilcox PGG/BWSC/RP   OCP   AAI
3/23/2015   11/15/2015   OCP G2739484A    Babcock & Wilcox Power Generation Group   OCP   AAI
2/5/2015   11/15/2015   OCP G27394887    Diamond Power Specialty Company Allen-Sherman-Hoff Diamond Power Controls & Diagnostics   OCP   AAI
2/16/2015   11/15/2015   OCP G27394929    B&W PGG/GSD   OCP   AAI
4/15/2015   11/15/2015   OCP G27395041    Babcock & Wilcox Power Generation Group   OCP   AAI
05/01/2015   11/15/2015   OCP G27395089    Babcock & Wilcox Power Generation Group   OCP   AAI
11/15/2014   11/15/2015   OCP G27395004    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
02/826/2015   11/15/2015   OCP G27394966    Babcock & Wilcox Construction Company, Inc.   OCP   AAI
    AAI    ACE American Insurance Company    
    INA    Insurance Company of North America    
    IND    Indemnity Insurance Company of North America  
    Cigna    Cigna Insurance Company    
    INA ILL    INA Insurance Company of Illinois    
    INA Ohio    INA Insurance Company of Ohio    
    Alaska    Alaska Pacific Insurance Company    
    Cigna - TX    Cigna Insurance Company of Texas    
    Cigna - ILL    Cigna Insurance Company of Illinois    
    INA _ TX    INA Insurance Company of Texas    


Effective Date

  

Expiration Date

  

Policy Number

  

Named Insured

  

Type of Policy

(LOB)

  

Issuing Company

1-Apr-82    1-Apr-83   

RSC 75 58 07

RSC 75 58 08

RSC 75 58 09

RSC 75 58 10

RSC 75 58 11

GLP 83 97 21

GLP 83 97 22

SCG 28 34 20

GLP 00 00 26

SCA 58 38

SCA 58 37

CAC 20 00 80

   Babcock & Wilcox    Domestic General Liability and Domestic Automobile Liability and Worker’s Compensation/ Employers Liability   

Insurance Company of  North America

CIGNA Insurance Company of Texas

CIGNA Insurance Company of Illinois

Atlantic Employers Insurance Company

Pacific Employers Insurance

CIGNA Insurance Company of Ohio

1-Apr-83    1-Apr-84   

RSC 065426 PEl

RSC 070420 INA TX

RSC 070421 PEl

RSC 070422 PEl

RSC 070423 PEl

SCG 351742 INA

GLP 351743 PEl

GLP 839722 INA

XCP 014414 INA

GLP 000026 PEl

GLP 000027 PEl

SCA 005913 INA

SCA 005914 INA TX

CAC 200080 PEl

   Babcock & Wilcox    Domestic General Liability and Domestic Automobile Liability and Worker’s Compensation/ Employers Liability   

Insurance Company of  North America

CIGNA Insurance Company of Texas

CIGNA Insurance Company of Illinois

Atlantic Employers Insurance Company

Pacific Employers Insurance

CIGNA Insurance Company of Ohio


Effective Date

  

Expiration Date

  

Policy Number

  

Named Insured

  

Type of Policy

(LOB)

  

Issuing Company

1-Apr-84    1-Apr-85   

RSC 289078 PEl

RSC 289362 INA TX

RSC 289363 PEl

RSC 289364 PEl

RSC 289365 PEl

RSC 939527 PEl

SCG 351742 INA

GLP 351743 PEl

GLP 839722 INA

XCP 014414 INA

GLP 000026 PEl

SCA 005913 INA

SCA 005914 INA TX

CAC 200080 PEl

   Babcock & Wilcox    Domestic General Liability and Domestic Automobile Liability and Worker’s Compensation/Employers Liability   

Insurance Company of  North America

CIGNA Insurance Company of Texas

CIGNA Insurance Company of Illinois

Atlantic Employers Insurance Company

Pacific Employers Insurance

CIGNA Insurance Company of Ohio

1-Apr-85    1-Apr-86   

RSC - C1939680-0

RSC - C1939682-4

SCG - GO 511143-2

GLP - GO 519344-8

SCA - 9619

SCA - 9620

   Babcock & Wilcox    Domestic General Liability and Domestic Automobile Liability and Worker’s Compensation/Employers Liability   

Insurance Company of  North America

CIGNA Insurance Company of Texas

CIGNA Insurance Company of Illinois

Atlantic Employers Insurance Company

Pacific Employers Insurance

CIGNA Insurance Company of Ohio


Effective Date

  

Expiration Date

  

Policy Number

  

Named Insured

  

Type of Policy

(LOB)

  

Issuing Company

1-Apr-86    1-Apr-87   

WC/EL RSC-C2219259-0 (All States)

WC/EL RSC-C2219260-7 (TX & OK)

WC/EL RSC-C2219261-9 (TLT Babcock)

OCP CPO-G0511415-9

CAL SCA-010563 (All states)

CAL SCA-OI0564 (Texas)

   Babcock & Wilcox    Domestic General Liability and Domestic Automobile Liability and Worker’s Compensation/Employers Liability   

Insurance Company of  North America

CIGNA Insurance Company of Texas

CIGNA Insurance Company of Illinois

Atlantic Employers Insurance Company

Pacific Employers Insurance

CIGNA Insurance Company of Ohio

1-Apr-87    1-Apr-88   

RSC - C2219445-8

RSC - C2219446-A

RSC - C2219463-A

CPO - GO 511596-6

CGL 23777 (Canada)

SCG GO 5194490 (Canada)

SCA 01 09 96

SCA 01 09 97

SCA 01 09 98

CAC 39 10 25 (Canada)

SCA 01 16 18 (Canada)

   Babcock & Wilcox    Domestic General Liability and Domestic Automobile Liability and Worker’s Compensation/Employers Liability   

Insurance Company of  North America

CIGNA Insurance Company of Texas

CIGNA Insurance Company of Illinois

Atlantic Employers Insurance Company

Pacific Employers Insurance

CIGNA Insurance Company of Ohio


Effective Date

  

Expiration Date

  

Policy Number

  

Named Insured

  

Type of Policy

(LOB)

  

Issuing Company

1-Apr-88    1-Apr-89   

RSC C2 21 95 45-1

RSC C2 21 95 46-3

RSC C2 21 95 47-5

RSC C2 21 96 11-0

XSL GO 51 94 18-0

CGO GO 51 94 19-2

CPO GO 51 94 20-9

CGO GO 51 94 79-2

CPO GO 51 95 80-9

CGL 23 777

SCG GO S1 94 52-0

SCA 01 14 54

SCA 01 14 57

SCA 01 14 56

SCA 01 14 55

SCA 01 14 S3

SCA 01 16 19

CAC 391025

   Babcock & Wilcox    Domestic General Liability and Domestic Automobile Liability and Worker’s Compensation/Employers Liability   

Insurance Company of  North America

CIGNA Insurance Company of Texas

CIGNA Insurance Company of Illinois

Atlantic Employers Insurance Company

Pacific Employers Insurance

CIGNA Insurance Company of Ohio

1-Apr-90    1-Apr-91   

CGL23777

OCP23778

CGL32656

OLT24298

OGLG13210457

CAC391025

SCA012215

   Babcock & Wilcox    Domestic General Liability and Domestic Automobile Liability and Worker’s Compensation/Employers Liability   

Insurance Company of  North America

CIGNA Insurance Company of Texas

CIGNA Insurance Company of Illinois

Atlantic Employers Insurance Company

Pacific Employers Insurance

CIGNA Insurance Company of Ohio


Effective Date

  

Expiration Date

  

Policy Number

  

Named Insured

  

Type of Policy

(LOB)

  

Issuing Company

1-Apr-91    1-Apr-92   

XSL G1 32 11 90 5

RSC C2 22 93 57-6

SCA 01 22 73

   Babcock & Wilcox    Domestic General Liability and Domestic Automobile Liability and Worker’s Compensation/Employers Liability   

Insurance Company of  North America

CIGNA Insurance Company of Texas

CIGNA Insurance Company of Illinois

Atlantic Employers Insurance Company

Pacific Employers Insurance

CIGNA Insurance Company of Ohio

1-Apr-92    1-Apr-93   

CPO G1 32 12 29-6

XSL G1 32 11 90 5

CPO G1 32 48 87

SCA 01 24 38

SCA 01 24 39

   Babcock & Wilcox    Domestic General Liability and Domestic Automobile Liability and Worker’s Compensation/Employers Liability   

Insurance Company of  North America

Pacific Employers Insurance Company

1-Apr-94    1-Apr-95   

CAC 39 10 25

CGL 02 37 77

OGL 02 37 78

CGL 02 42 98

   Babcock & Wilcox    Domestic General Liability and Domestic Automobile Liability and Worker’s Compensation/Employers Liability   

Insurance Company of  North America

Pacific Employers Insurance Company

1-Jan-02    31-Dec-02    WLRC43100038    BWX Technologies, Inc.    Workers’ Compensation    Pacific Employers Ins. Co.


EXHIBIT IV – REMAINCO ENTITIES

See Schedule 1.1(b) and Schedule 1.1(e) attached hereto.

No RemainCo Entity listed on Schedule 1.1(b) shall be deemed to be an “Insured”, a “Named Insured” or otherwise be deemed to be insured under any Existing Policy or Existing Insurance Agreement solely by virtue of being listed on such Schedule 1.1(b).


Schedule 1.1(b)

Designated RemainCo Entities

 

Reference ID

  

Name

2037    American Centrifuge Manufacturing, LLC
460    B&W Energy Investments, Inc.
950    B&W Fuel Company
535    B&W Fuel, Inc.
537    B&W Nuclear Service Company
960    B&W Nuclear Service Company
536    B&W Nuclear, Inc.
381    B&W Special Projects, Inc.
569    B&W Triso Corporation
573    B&W/OHM Weldon Spring, Inc.
565    Babcock & Wilcox Government Services Company
1999    Babcock & Wilcox Michoud Operations, LLC
2010    Babcock & Wilcox Modular Nuclear Energy, LLC
2007    Babcock & Wilcox Nevada, LLC
2018    Babcock & Wilcox Nuclear Services (U.K.) Limited
945    Babcock-Brown Boveri Reaktor GmbH
2000    BCE Parts Ltd.
   Burlington Niche Services Ltd.
0589    BWXT Hanford Company
0382    BWXT of Idaho, Inc.
0592    BWXT of Ohio, Inc.
590    BWXT Protec, Inc.
1973    C3 Nuclear Limited
0975    Columbia Basin Ventures, LLC
321    Conam Nuclear, Inc.
1914    CTR Solutions, LLC
0930    DM Petroleum Operations Company
961    Enserch Environmental Management Company, Inc.
461    International Disarmament Corporation
2030    Isotek Systems, LLC
   Nuclear Materials and Equipment Corporation
2057    Nuclear Production Partners, LLC
958    Olin Pantex Inc.
0973    Rocky Flats Technical Associates, Inc.
1980    Savannah River Alliance LLC
2008    Savannah River Tactical Services LLC
570    Triso
2040    Tubesolve Ltd.


Schedule 1.1(e)

RemainCo Subsidiaries

 

Reference ID

  

Name

  

Jurisdiction

  

Formation

2058    B&W NE Luxembourg SARL    Luxembourg    6/7/2012
2046    B&W Nuclear Maintenance Services, Inc.    Delaware    3/23/2011
532    Babcock & Wilcox Canada Ltd.    Ontario    6/5/1922
2049    Babcock & Wilcox Commercial Power, Inc.    Delaware    6/15/2011
2014    Babcock & Wilcox Conversion Services, LLC    Delaware    7/14/2009
2002    Babcock & Wilcox Intech, Inc.    Tennessee    7/29/1994
2048    Babcock & Wilcox International Technical Services, Inc.    Delaware    6/1/2011
380    Babcock & Wilcox Investment Company    Delaware    7/12/1990
2042    Babcock & Wilcox Modular Reactors LLC    Delaware    12/21/2010
2056    Babcock & Wilcox mPower, Inc.    Delaware    1/11/2012
2071    Babcock & Wilcox NOG Technologies, Inc.    Delaware    6/12/2013
2059    Babcock & Wilcox Nuclear Energy Europe SAS    France    7/5/2012
1967    Babcock & Wilcox Nuclear Energy, Inc.    Delaware    5/23/2007
1974    Babcock & Wilcox Nuclear Operations Group, Inc.    Delaware    11/20/2007
1961    Babcock & Wilcox Technical Services (U.K.) Limited    United Kingdom    12/19/2006
1970    Babcock & Wilcox Technical Services Clinch River, LLC    Delaware    5/16/2007
572    Babcock & Wilcox Technical Services Group, Inc.    Delaware    12/11/1991
587    Babcock & Wilcox Technical Services Savannah River Company    Delaware    9/1/1995
596    Babcock & Wilcox Government and Nuclear Operations, Inc.    Delaware    3/19/1997
2035    BWSR, LLC    Delaware    5/19/2010
3088    BWXT Canada Holdings Corp.    Nova Scotia    5/12/2015
580    BWXT Federal Services, Inc.    Delaware    10/13/1994
3087    BWXT Foreign Holdings, LLC    Delaware    4/20/2015
1576    BWXT Washington, Inc.    Delaware    9/29/2004
710    BWXT Y – 12, LLC    Delaware    4/20/2000
189    Creole Insurance Company, Ltd.    South Carolina    6/7/1973
2062    Generation mPower Canada Ltd    Saskatchewan    10/17/2012
2043    Generation mPower LLC    Delaware    12/16/2010
2009    Idaho Treatment Group, LLC    Delaware    12/22/2008
2003    Intech International, Inc.    Ontario    12/17/1997
2110    Kansas City Advanced Manufacturing, LLC    Delaware    1/27/2015
1968    Marine Mechanical Corporation    Delaware    2/3/1994


Reference ID

  

Name

  

Jurisdiction

  

Formation

2005    NFS Holdings, Inc.    Delaware    9/25/2007
2004    NOG-Erwin Holdings, Inc.    Delaware    7/30/2008
2006    Nuclear Fuel Services, Inc.    Delaware    9/25/2007
2029    The Babcock & Wilcox Company    Delaware    3/8/2010


EXHIBIT V

ACE AFFILIATES

ACE American Insurance Company

ACE Fire Underwriters Insurance Company

ACE Indemnity Insurance Company

ACE Insurance Company of the Midwest

ACE Property and Casualty Insurance Company

Illinois Union Insurance Company

Indemnity Insurance Company of North America

Insurance Company of North America

Pacific Employers Insurance Company

Bankers Standard Insurance Company

Atlantic Employers Insurance Company


EXHIBIT VI –FOREIGN INSURANCE AGREEMENTS

 

EFFECTIVE

DATE/

YEAR

  

PARTIES

  

TYPE

  

PROGRAMS
COVERED

  

POLICIES
COVERED

May 18, 2010   

The Babcock & Wilcox Company

ACE American Insurance Company

   Security Agreement    As set out in the agreement    As set out in the agreement
January 1, 2012   

The Babcock & Wilcox Company

ACE American Insurance Company

   Addendum No. 1 to Security Agreement    As set out in the addendum    As set out in the Addendum
January 1, 2013   

The Babcock & Wilcox Company

ACE American Insurance Company

   Addendum No. 3 to Security Agreement    As set out in the addendum    As set out in the Addendum
February 22, 2013   

The Babcock & Wilcox Company

ACE American Insurance Company

   Endorsement No. 1 to Security Agreement    As set out in the addendum    As set out in the Addendum
November 15, 2013   

The Babcock & Wilcox Company

ACE American Insurance Company

   Addendum No. 4 to Security Agreement    As set out in the addendum    As set out in the Addendum
November 15, 2014   

The Babcock & Wilcox Company

ACE American Insurance Company

   Addendum No. 5 to Security Agreement    As set out in the addendum    As set out in the Addendum


EXHIBIT VII –FOREIGN POLICIES

 

Policy

  

Policy Period

  

Issuing Company

Master Policy No. No(s). CMXD36904422, CMXD36904434 and all Locally Admitted Policies and any extension, renewal, amendment or endorsement of any such Master and Locally Admitted Policies    January 1, 2006 to January 1, 2007 and any extension or renewal thereof    ACE American Insurance Company and Affiliated and Non-Affiliated Companies
Master Policy No. No(s). CMX043528, CMX043529 and all Locally Admitted Policies and any extension, renewal, amendment or endorsement of any such Master and Locally Admitted Policies    January 1, 2007 to January 1, 2009 and any extension or renewal thereof    ACE American Insurance Company and Affiliated and Non-Affiliated Companies
Master Policy No. No(s). CMX043541, CMX043542 and all Locally Admitted Policies and any extension, renewal, amendment or endorsement of any such Master and Locally Admitted Policies    January 1, 2009 to January 1, 2010 and any extension or renewal thereof    ACE American Insurance Company and Affiliated and Non-Affiliated Companies
Master Policy No. No(s). CMX043548, CMX043549, CMX043550 and all Locally Admitted Policies and any extension, renewal, amendment or endorsement of any such Master and Locally Admitted Policies    January 1, 2010 to January 1, 2011 and any extension or renewal thereof    ACE American Insurance Company and Affiliated and Non-Affiliated Companies
Master Policy No. No(s). CSZ0318480 and all Locally Admitted Policies and any extension, renewal, amendment or endorsement of any such Master and Locally Admitted Policies    January 1, 2011 to January 1, 2012 and any extension or renewal thereof    ACE American Insurance Company and Affiliated and Non-Affiliated Companies


Master Policy No. No(s). CSZ0318774 and all Locally Admitted Policies and any extension, renewal, amendment or endorsement of any such Master and Locally Admitted Policies    January 1, 2012 to January 1, 2013 and any extension or renewal thereof    ACE American Insurance Company and Affiliated and Non-Affiliated Companies
Master Policy No. No(s). CSZ G27174553 001 and all Locally Admitted Policies and any extension, renewal, amendment or endorsement of any such Master and Locally Admitted Policies    January 1, 2013 to November 15, 2013 and any extension or renewal thereof    ACE American Insurance Company and Affiliated and Non-Affiliated Companies
Master Policy No. No(s). CSZ G27174553 002 and all Locally Admitted Policies and any extension, renewal, amendment or endorsement of any such Master and Locally Admitted Policies    November 15, 2013 to November 15, 2014 and any extension or renewal thereof    ACE American Insurance Company and Affiliated and Non-Affiliated Companies
Master Policy No. No(s). CSZ G27174553 003 and all Locally Admitted Policies and any extension, renewal, amendment or endorsement of any such Master and Locally Admitted Policies    November 15, 2014 to November 15, 2015 and any extension or renewal thereof    ACE American Insurance Company and Affiliated and Non-Affiliated Companies

Exhibit 10.6

EXECUTION VERSION

REINSURANCE NOVATION AND ASSUMPTION AGREEMENT

by and among

ACE American Insurance Company, acting for itself and its affiliates including, without

limitation, Pacific Employers Insurance Company;

ACE INA Insurance Company;

ACE Insurance Company;

Insurance Company of North America

and

Creole Insurance Company, Ltd.; and

Dampkraft Insurance Company

RECITALS

THIS REINSURANCE NOVATION AND ASSUMPTION AGREEMENT (the “ Agreement ”), is entered into and effective as of June 19, 2015 (the “ Effective Date ”) by and among ACE American Insurance Company, individually and acting for the ACE Affiliates (in such capacities, the “ Company ”), Creole Insurance Company, Ltd., a South Carolina corporation (“ Creole ”), and Dampkraft Insurance Company, a South Carolina company (“ Dampkraft ”).

WHEREAS , the Company and/or the ACE Affiliates have previously entered into the Existing Reinsurance Agreements with Boudin Insurance Company , Ltd. (“ Boudin ”) and Creole; and

WHEREAS , in connection with a previous spin-off transaction between McDermott International, Inc. and Babcock & Wilcox Holdings, Inc. (the “ Prior Divestiture ”), Creole, Boudin and the ACE Affiliates entered into that certain Novation and Assumption Agreement effective as of May 18, 2010 (the “ Prior Novation Agreement ”); and

WHEREAS , pursuant to the Existing Reinsurance Agreements and the Prior Novation Agreement, Creole remains obligated, among other things, to reinsure the Company and/or the ACE Affiliates with regard to certain Existing Policies; and

WHEREAS , Creole, prior to the Separation, is a wholly owned Subsidiary of The Babcock & Wilcox Company (“ RemainCo ”); and

WHEREAS , Dampkraft, is a wholly owned Subsidiary of Babcock & Wilcox Enterprises, Inc. (“ SpinCo ”); and

WHEREAS , RemainCo intends to spin-off SpinCo (including Dampkraft) from RemainCo through a dividend of common stock of SpinCo to the shareholders of RemainCo (the “ Separation ”); and


WHEREAS , in connection with the Separation, the Parties wish to provide that Creole be the reinsurer with respect to cessions arising under the Existing Reinsurance Agreements and novated to Creole under the Prior Novation Agreement, from the operations, business, or property of RemainCo; and that Dampkraft be the reinsurer with respect to cessions arising under the Existing Reinsurance Agreements and novated to Creole under the Prior Novation Agreement, from the operations, business, or property of SpinCo, in each case whether such obligations were existing, accruing or arising before, on or after the Effective Date; and

WHEREAS , the Company, on its own behalf and on behalf of the ACE Affiliates, is willing to consent to the transfer, assumption, and novation of the matters as set forth herein, subject to the terms and conditions of this Agreement;

NOW, THEREFORE , in consideration of the mutual promises set out herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. Definitions. The following terms used herein, including in the recitals and Exhibits hereto, shall have the following meanings:

ACE Affiliate ” means each Affiliate of ACE that has issued an Existing Policy, including Pacific Employers Insurance Company, ACE INA Insurance Company, ACE Insurance Company and Insurance Company of North America.

Affiliate ” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the specified Person. For this purpose “control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through ownership of voting securities, by contract or otherwise.

Agreement ” has the meaning set forth in the recitals to this Agreement.

ALAA ” means the Assumption and Loss Allocation Agreement, dated as of the date hereof, among the Company, RemainCo, SpinCo and certain other RemainCo Entities and SpinCo Entities signatory thereto.

Assumed-by-Dampkraft Reinsurance Agreement ” means, as to any Novated-to-Creole Reinsurance Agreement after the Assumption Time and giving effect to this Agreement, all rights, duties, and obligations of Creole to and in respect of the Company under such Novated-to-Creole Reinsurance Agreement as and to the extent novated to and assumed by Dampkraft.

Assumption Time ” means midnight (New York time) on the Effective Date.

Boudin ” has the meaning set forth in the recitals to this Agreement.

Company ” has the meaning set forth in the recitals to this Agreement.

 

2


Company SpinCo Obligation ” means any obligation of the Company or an ACE Affiliate to or for the benefit of an Insured under an Existing Policy that arises, will arise, or has arisen from the operations, business, or property of a SpinCo Entity.

Company RemainCo Obligation ” means any obligation of the Company or an ACE Affiliate to or for the benefit of an Insured under an Existing Policy that arises, will arise, or has arisen from the operations, business, or property of a RemainCo Entity.

Creole LOC ” has the meaning set forth in Section 3(a).

Dampkraft Assumption and Novation ” has the meaning set forth in Section 2(c).

Dampkraft LOC ” has the meaning set forth in Section 3(b).

Effective Date ” has the meaning set forth in the recitals to this Agreement.

ESIS ” means ESIS, Inc., an Affiliate of the Company.

Existing Collateral ” means any and all letters of credit or trust agreements outstanding as of the date hereof provided by or required to be provided by Creole under the terms of any Existing Reinsurance Agreement in order to secure obligations arising thereunder.

Existing Policy ” means each policy of general liability insurance, automobile liability insurance, or workers compensation insurance issued prior to the date hereof by the Company or an ACE Affiliate and covering one or more SpinCo Entities and/or one or more RemainCo Entities that is subject to an Existing Reinsurance Agreement.

Existing Reinsurance Agreement ” means each reinsurance agreement (whether denominated a treaty, a reinsurance policy, a reinsurance agreement, a facultative certificate, or otherwise) in which (a) Creole is the reinsurer, (b) one or more of the Company and/or ACE Affiliates is or are the reinsureds, and (c) the ceded risk includes risk under any Existing Policy. “Existing Reinsurance Agreements” shall not mean or include any Existing Security Agreements (as defined below). Exhibit II attached hereto and made a part hereof reflects the Parties’ best efforts to list all Existing Reinsurance Agreements, but the definitions in this Agreement shall control in the event of any errors or omissions on such Exhibit.

Existing Security Agreements ” shall mean and include any trust agreement, collateral agreement, pledge and security agreement or other similar contract between the Company or an ACE Affiliate and Creole which was entered into in connection with or pursuant to any Existing Reinsurance Agreement (as defined above), and which are embodied in separately-executed written instruments.

Go-Forward Creole Obligations ” means the obligations of Creole under the Wholly Retained Creole Reinsurance Agreements, in each case after giving effect to the transfers, assumptions, novations, and releases effected by this Agreement.

 

3


Go-Forward Dampkraft Obligations ” means those obligations of Dampkraft under the Assumed-by-Dampkraft Reinsurance Agreements, in each case after giving effect to the transfers, assumptions, novations, and releases effected by this Agreement.

Insured ,” as a noun in reference to one or more insurance policies, means any Person who is insured by such policy or policies, regardless of whether such Person is designated an “Insured” or a “Named Insured” in such policy or is otherwise expressly identified therein.

Master Separation Agreement ” means a Master Separation Agreement to be entered into between RemainCo and SpinCo in connection with the Separation.

Novated-to-Creole Reinsurance Agreement ” means, the aggregate of all rights, duties, and obligations of Creole to and in respect of the Company under the Existing Reinsurance Agreements as and to the extent novated to and assumed by Creole pursuant to the Prior Novation Agreement.

Organizational Documents ” means (a) with respect to any corporation, its certificate or articles of incorporation or organization and its bylaws, (b) with respect to any limited partnership, its certificate of limited partnership and its partnership agreement, (c) with respect to any general partnership, its partnership agreement, and (d) with respect to any limited liability company, its certificate or articles of formation or organization and its operating agreement or other organizational documents.

Parties ” means the Company, Dampkraft and Creole, collectively (and each individually is a “Party”).

Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, a union, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof.

Prior Novation Agreement ” has the meaning set forth in the Recitals to this Agreement.

RemainCo ” has the meaning set forth in the recitals of this Agreement.

RemainCo Entity ” means RemainCo and each of the entities listed on Exhibit III attached hereto and made a part hereof. It is acknowledged and understood that, from and after the effectiveness of the Separation, the RemainCo Entities will not be Subsidiaries or Affiliates of SpinCo or any of the other SpinCo Entities.

Separation ” has the meaning set forth in the recitals to this Agreement.

SpinCo ” has the meaning set forth in the recitals to this Agreement.

SpinCo Entity ” means SpinCo and each of the entities listed on Exhibit I attached hereto and made a part hereof. It is acknowledged and understood that, from and after the effectiveness of the Separation, the SpinCo Entities will not be Subsidiaries or Affiliates of RemainCo or any of the other RemainCo Entities.

 

4


Subsidiary ” means, with respect to any specified Person, any corporation, partnership, limited liability company, joint venture or other organization, whether incorporated or unincorporated, of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such specified Person or by any one or more of its Subsidiaries, or by such specified Person and one or more of its Subsidiaries.

Substituted Collateral ” means the Creole LOC and the Dampkraft LOC.

Wholly Retained Creole Reinsurance Agreement ” means a Novated-to-Creole Reinsurance Agreement that is not an Assumed-by-Dampkraft Reinsurance Agreement

2. Assumption and Novation.

(a) Dampkraft Assumption and Novation . Notwithstanding anything in any Existing Reinsurance Agreement to the contrary, and effective as of the Assumption Time, Creole hereby transfers and assigns, and Dampkraft hereby assumes by novation, so much of each Novated-to-Creole Reinsurance Agreement as reinsures any Company SpinCo Obligation. In connection with such transfer, assignment, and novation:

(i) Dampkraft hereby agrees to observe, pay, perform, satisfy, fulfill and discharge, to the extent and in the manner required under the applicable Novated-to-Creole Reinsurance Agreement, any and all now existing and hereafter arising duties, terms, provisions, covenants, obligations and liabilities of Creole under the Novated-to-Creole Reinsurance Agreements with respect to the Company SpinCo Obligations insofar as transferred above (the “ SpinCo Assumption and Novation ”); and

(ii) The Company and each ACE Affiliate hereby consent to, and agree to give full force and effect to, the Dampkraft Assumption and Novation. From and after the Assumption Time, Dampkraft and not Creole shall be treated as the Company’s (or applicable ACE Affiliate’s) contractual counterparty with respect the contracts and mutual rights and obligations subject to the Dampkraft Assumption and Novation. Without limitation, the Company and each ACE Affiliate, as applicable:

 

  a may enforce against Dampkraft its rights with respect to the Company SpinCo Obligations under the Novated-to-Creole Reinsurance Agreements to the same extent such Person could, prior to the Dampkraft Assumption and Novation, enforce such rights against Creole, and

 

  b

shall perform for the benefit of Dampkraft any obligation with respect to the Company SpinCo Obligations under the Novated-to-

 

5


  Creole Reinsurance Agreements to the same extent such Person was obligated, prior to the Dampkraft Assumption and Novation, to perform such obligations for the benefit of Creole, and

 

  c releases Creole from its obligation to observe, pay, perform, satisfy, fulfill or discharge any obligations under any Novated-to-Creole Reinsurance Agreement with respect to any Company SpinCo Obligation.

(b) No Transfer or Novation of Creole Obligations arising from RemainCo Operations . The Wholly Retained Creole Reinsurance Agreements are not novated or otherwise affected by the Dampkraft Assumption and Novation. The Assumed-by-Dampkraft Reinsurance Agreements are novated to Dampkraft as set forth above only to the extent that they reinsure Company SpinCo Obligations. To the extent that the Novated-to-Creole Reinsurance Agreements reinsure Company RemainCo Obligations, the Parties acknowledge that Creole and not Dampkraft shall continue to observe, pay, perform, satisfy, fulfill and discharge any and all now existing and hereafter arising duties, terms, provisions, covenants, obligations and liabilities of Creole as reinsurer under the Novated-to-Creole Reinsurance Agreements.

(c) No Effect on Aggregate Limits of Liability . It is understood and agreed that the aggregate liability of Creole and Dampkraft, taken together, under the Existing Reinsurance Agreements (or any of them) is not intended to be, and shall be deemed not to be, increased by implementation of this Agreement. In particular, and without limitation, to the extent that any Existing Reinsurance Agreement contains an aggregate limit of liability, that aggregate limit of liability shall, after the Assumption Time, apply as a single, joint aggregate limit of liability. Neither Creole nor Dampkraft shall have any further liability under a Novated-to-Creole Reinsurance Agreement upon actual exhaustion by payment of the single, joint aggregate limit of liability thereunder; provided, however, that each of Creole and Dampkraft agree that the Company may determine the order in which any such single, joint aggregate limit of liability may be payable by each of them under such Novated-to-Creole Reinsurance Agreement, and provided further that (x) neither Creole nor Dampkraft may refuse to pay any amount due to the Company on the basis of any claim or contention that in determining the order in which such limits are to be paid thereunder, the Company has not acted in good faith or has acted improperly, and (y) neither Creole nor Dampkraft may assert any such claim or contention as a defense to liability or payment or otherwise.

3. Collateral.

(a) Creole LOC .

(i) Creole will, within fifteen (15) days after the Effective Date, provide to the Company, as beneficiary thereof, an irrevocable letter of credit (the “ Creole LOC ”) in an amount of $ $1,000,176, issued in a form and by a bank or other financial institution, in each case acceptable to the Company; and/or such other forms of collateral as the Company may permit in writing from time to time. The Creole LOC shall secure the Go-Forward Creole Obligations.

 

6


(ii) The Creole LOC shall be “evergreen,” meaning that it shall provide by its terms that it will be renewed automatically each year for an additional year unless written notice of non-renewal is received by the Company at least sixty (60) days prior to the Creole LOC’s anniversary date. If the Company permits Creole to provide collateral in a form other than the Creole LOC, Creole shall provide such collateral in an amount and form acceptable to the Company.

(iii) Creole shall continue to provide the Creole LOC (or other collateral acceptable to the Company) as security for payment of the Go-Forward Creole Obligations, until the Company determines that there is no longer any need for such collateral. If there shall be a material deterioration in the financial condition of the bank or other financial institution which has issued the Creole LOC, the Company shall have the right to require Creole to replace the Creole LOC with a new letter of credit with similar terms issued by a bank or other financial institution then acceptable to the Company.

(iv) The Company shall have the right to draw against the Creole LOC and/or other collateral solely (a) in accordance with the terms of the applicable Novated-to-Creole Reinsurance Agreement, as the case may be, and/or as required and permitted by the laws and regulations of the Commonwealth of Pennsylvania, or (b) in the event that a notice of nonrenewal is received pursuant to the evergreen clause.

(v) Annually, the Company shall review and redetermine the amount of the Go-Forward Creole Obligations and the amount of collateral security required pursuant to this Agreement. At such time, RemainCo will provide its most recent audited financial statements, interim financial statements, and any other financial information reasonably requested by the Company for the purpose of evaluating the financial condition of RemainCo. RemainCo will provide any needed increases in the amount of the Creole LOC (and/or other collateral if acceptable to the Company) within thirty (30) days of the Company’s written request for any additional required amount of the Creole LOC. The Company will effect any decreases in the amount of the Creole LOC (and/or other collateral) promptly, provided that Creole is not in breach of any of its obligations under this Agreement or the Existing Reinsurance Agreements as transferred and novated hereunder and RemainCo is not in breach of any of its obligations to the Company under the ALAA.

(b) Dampkraft LOC .

(i) Dampkraft will, within fifteen (15) days after the Effective Date, provide to the Company, as beneficiary thereof, an irrevocable letter of credit (the “ Dampkraft LOC ”) in an amount of $ $1,926,507, issued in a form and by a bank or other financial institution, in each case acceptable to the Company; and/or such other forms of collateral as the Company may permit in writing from time to time. The Dampkraft LOC shall secure the Go-Forward Dampkraft Obligations.

 

7


(ii) The Dampkraft LOC shall be “evergreen,” meaning that it shall provide by its terms that it will be renewed automatically each year for an additional year unless written notice of non-renewal is received by the Company at least sixty (60) days prior to the Dampkraft LOC’s anniversary date. If the Company permits Dampkraft to provide collateral in a form other than the Dampkraft LOC, Dampkraft shall provide such collateral in an amount and form acceptable to the Company.

(iii) Dampkraft shall continue to provide the Dampkraft LOC (or other collateral acceptable to the Company) as security for payment of the Go-Forward Dampkraft Obligations, until the Company determines that there is no longer any need for such collateral. If there shall be a material deterioration in the financial condition of the bank or other financial institution which has issued the Dampkraft LOC, the Company shall have the right to require Dampkraft to replace the Dampkraft LOC with a new letter of credit with similar terms issued by a bank or other financial institution then acceptable to the Company.

(iv) The Company shall have the right to draw against the Dampkraft LOC and/or other collateral solely (a) in accordance with the terms of the applicable Novated-to-Dampkraft Reinsurance Agreement, as the case may be, and/or as required and permitted by the laws and regulations of the Commonwealth of Pennsylvania, or (b) in the event that a notice of nonrenewal is received pursuant to the evergreen clause.

(v) Annually, the Company shall review and redetermine the amount of the Go-Forward Dampkraft Obligations and the amount of collateral security required pursuant to this Agreement. At such time, SpinCo will provide its most recent audited financial statements, interim financial statements, and any other financial information reasonably requested by the Company for the purpose of evaluating the financial condition of SpinCo. Dampkraft will provide any needed increases in the amount of the Dampkraft LOC (and/or other collateral if acceptable to the Company) within thirty (30) days of the Company’s written request for any additional required amount of the Dampkraft LOC. The Company will effect any decreases in the amount of the Dampkraft LOC (and/or other collateral) promptly, provided that Dampkraft is not in breach of any of its obligations under this Agreement or the Existing Reinsurance Agreements as transferred and novated hereunder and SpinCo is not in breach of any of its obligations to the Company under the ALAA.

(c) Existing Security Agreements; Substituted Collateral . Notwithstanding anything in any Existing Reinsurance Agreement or any Existing Security Agreement to the contrary, the Company shall release the Existing Collateral (including, without limitation, providing the necessary directions to issuing banks of letters of credit, trustees of reinsurance trusts, and/or similar third parties) upon receipt of the Substituted Collateral as set forth in Section 3(a)(i) and 3(b)(i), and the Parties shall take all actions and execute any documents necessary to terminate the Existing Security Agreements.

(d) Adjustments of Funds Withheld . To the extent that the Company has retained funds of Creole or Dampkraft as funds withheld under any Existing Reinsurance Agreement (including, without limitation, by allocating reinsurance premium or other funds of the reinsurers to claim payment funds held by ESIS), such funds shall continue to be maintained following the transactions contemplated by this Agreement. If the Company desires to effect a one-time reallocation of such funds withheld as between Creole and Dampkraft as a result of the transactions contemplated by this Agreement, it shall provide notice of such reallocation as promptly as possible after the Assumption Time, but in any event no later than fifteen (15) days following the Effective Date, and Creole and Dampkraft shall accept the Company’s determination of the amount of such reallocation.

 

8


4. Existing Collateral. The Substituted Collateral required to be provided by Creole and Dampkraft hereunder shall, except to the extent provided otherwise in this Agreement, be subject to all of the terms and conditions applicable to the Existing Collateral pursuant to the Existing Reinsurance Agreements to the same extent that such terms and conditions applied to the Existing Collateral thereunder.

5. Allocation.

(a) Company Designations . The Company’s determination as to whether an obligation is a Go-Forward Creole Obligation or a Go-Forward Dampkraft Obligation (a “ Company Designation ”) shall be binding on Creole and Dampkraft, and they shall not delay, or make any deduction with respect to, their payment or other response to such obligation on account of any disagreement with such determination, provided , however , that such payment or other response shall not be construed as prejudicial to either Party in any dispute between Creole and Dampkraft with respect to any such Company Designation.

(b) Disputes . Any dispute or disagreement between Creole and Dampkraft with respect to the correctness of a Company Designation shall be resolved pursuant to Article V of the Separation Agreement; provided , that (i) the Company will not be made a party to any arbitration proceeding arising from such dispute or disagreement, but may be called as a witness; (ii) any reasonable costs incurred by the Company in respect of any such arbitration proceeding will be fully reimbursed to the Company promptly following receipt of a reimbursement demand from the Company; (iii) under no circumstances will RemainCo, SpinCo, Creole or Dampkraft, as a result of such arbitration proceeding, require the Company to return any amount received by the Company pursuant to a prior Company Designation, whether such amount was received as a result of the Company’s draw against security posted for its benefit or otherwise, and (iv) the Company shall comply with the allocation or other resolution of such dispute.

6. Billing. On and after the Effective Date, the Company will (in each case in accordance with the billing procedures set forth in the applicable Existing Reinsurance Agreement)

(a) bill Creole directly for such of the Go-Forward Creole Obligations as are then due and payable, and provide Creole with appropriate reports and accounting with respect to such obligations; and

(b) bill Dampkraft directly for such of the Go-Forward Dampkraft Obligations as are then due and payable, and provide Dampkraft with appropriate reports and accounting with respect to such obligations.

 

9


7. Amendments. Neither this Agreement nor any provision hereof may be amended, changed, waived, discharged or terminated except by a written instrument signed by each Party.

8. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Neither this Agreement nor any right or obligation hereunder may be assigned or conveyed by any Party without the prior written consent of the other Parties, which consent shall not be unreasonably withheld.

9. No Waiver. The failure or refusal by any Party to exercise any rights granted hereunder shall not constitute a waiver of such rights or preclude the subsequent exercise thereof, and no oral communication shall be asserted as a waiver of any such rights hereunder unless such communication shall be confirmed in a writing plainly expressing an intent to waive such rights and signed by the Party against whom such waiver is asserted.

10. Counterparts. This Agreement may be executed in any number of counterparts each of which when so executed and delivered shall constitute an original, but such counterparts together shall constitute one and the same agreement. The exchange of copies of this Agreement and of signature pages by facsimile transmission shall constitute effective execution and delivery of this Agreement as to the Parties and may be used in lieu of the original Agreement for all purposes. Signatures of the Parties and other Persons signatory hereto transmitted by facsimile shall be deemed to be their original signatures for all purposes.

11. No Third Party Beneficiary. This Agreement shall not be deemed to give any right or remedy to any third party whatsoever unless otherwise specifically granted hereunder.

12. Parties’ Representations. As of the Effective Date, each of the Parties expressly represents on its own behalf: (a) it is an entity in good standing in its jurisdiction of organization; (b) it has all requisite corporate power and authority to enter into this Agreement, and to perform its obligations hereunder; (c) the execution and delivery by it of this Agreement, and the performance by it of its obligations under this Agreement, have been duly authorized by all necessary corporate or other action; (d) this Agreement, when duly executed and delivered by it, and subject to the due execution and delivery hereof by the other Parties, will be a valid and binding obligation of it, enforceable against it, its successors and permitted assigns, in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles; (e) the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby in accordance with the respective terms and conditions hereof will not (i) violate any provision of its Organizational Documents, (ii) violate any applicable order, judgment, injunction, award or decree of any court, arbitrator or governmental or regulatory body against it, or binding upon it, or any agreement with, or condition imposed by, any governmental or regulatory body, foreign or domestic, binding upon it as of the date hereof, or (iii) violate any agreement, contract, obligation, promise or undertaking that is legally binding and to which it is a party or by which it is bound; and (f) the signatory hereto on behalf of it is duly authorized and legally empowered to enter into this Agreement on its behalf.

 

10


13. Notices. Any and all notices, requests, approvals, authorizations, consents, instructions, designations and other communications that are required or permitted to be given pursuant to this Agreement shall be in writing and may be given either by personal delivery, first class prepaid post (airmail if to another country) or by internationally recognized overnight delivery service to the following address, or to such other address and recipient as such Party may have notified in accordance with the terms of this section as being its address or recipient for notification for the purposes of this Agreement:

 

If to the Company    ACE American Insurance Company
   225 E. John Carpenter Freeway, Suite 1300
   Irving, TX 75062
   Attention:    Underwriting Manager
      ACE Risk Management
   Telephone:    (972) 465.7500
   Facsimile:    (972) 465.7826
If to Creole:    Creole Insurance Company, Ltd.,
or any RemainCo Entity:    11525 North Community House Road
   Suite 600
   Charlotte, NC 28277
   Attention:    Chief Risk Officer (with a copy to General Counsel)
   Telephone:    (980) 365.4181
   Facsimile:    (980) 365.4020
If to Dampkraft:    Dampkraft Insurance Company
or any SpinCo Entity:    13024 Ballantyne Place
   Suite 700
   Charlotte, NC 28277
   Attention:    Senior Manager-Insurance (with a copy to General Counsel)
   Telephone:    (704) 625.4888
   Facsimile:    (704) 625.4910

Any notice or communication to any Person shall be deemed to be received by that Person:

 

  (A) upon personal delivery; or

 

  (B) upon receipt if sent by overnight mail or courier.

 

11


14. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the Commonwealth of Pennsylvania without regard to those provisions concerning conflicts of laws that would result in the application of the laws of any other jurisdiction.

15. Entire Agreement. THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT AMONG ALL OF THE PARTIES WITH RESPECT TO THE TRANSFERS, ASSUMPTIONS, AND NOVATIONS DESCRIBED HEREIN AND SUPERSEDES ALL OTHER PRIOR AGREEMENTS AND UNDERSTANDINGS, BOTH WRITTEN AND ORAL, WITH RESPECT TO SUCH TRANSFERS, ASSUMPTIONS, AND NOVATIONS. SOLELY FOR INTERPRETATION PURPOSES, THE PARTIES ACKNOWLEDGE THAT THIS AGREEMENT IS INTENDED TO BE READ TOGETHER WITH THE ALAA.

16. Dispute Resolution. For dispute resolution purposes as between Creole and Dampkraft, and all disputes between Creole and Dampkraft arising out of this Agreement, including without limitation as to whether a given obligation is a Go-Forward Creole Obligation or a Go-Forward Dampkraft Obligation, shall be resolved in accordance with the procedures set forth in Article V of the Separation Agreement.

As between the Company on the one hand and Creole and/or Dampkraft, on the other hand, all disputes arising hereunder shall be resolved in accordance with the arbitration provisions of the most recent Existing Reinsurance Agreement. In any such arbitration, the entity named in the applicable Company Designation shall be the party formally opposed to the Company, but the other of Creole or Dampkraft shall have right to associate effectively in the defense and/or prosecution of such arbitration.

17. Severability. If any term or other provision of this Agreement or the Exhibits attached hereto is determined by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the court, administrative agency or arbitrator shall interpret this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

18. Rules of Construction. The definitions of terms used herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified, (b) any reference herein to any law shall be construed as referring to such law as amended, modified,

 

12


codified or reenacted, in whole or in part, and in effect from time to time, (c) any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to the restrictions contained herein), (d) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) with respect to the determination of any time period, the word “from” means “from and including” and the word “to” means “to and including” and (f) any reference herein to Articles, Sections and Exhibits shall be construed to refer to Articles and Sections of, and Exhibits to, this Agreement. No provision of this Agreement shall be interpreted or construed against any Person solely because such Person or its legal representative drafted such provision.

[Remainder of Page Intentionally Left Blank]

 

13


IN WITNESS WHEREOF, the Parties intending to be legally bound hereby have executed this Agreement, by their duly authorized representatives.

 

ACE AMERICAN INSURANCE COMPANY
By:  

/s/ Richard M. Sica

  Name:  

Richard M. Sica

  Title:  

Attorney-in-fact

CREOLE INSURANCE COMPANY, LTD.
By:  

/s/ David S. Black

  Name:   David S. Black
  Title:   Vice President and Treasurer
DAMPKRAFT INSURANCE COMPANY
By:  

/s/ Jenny L. Apker

  Name:   Jenny L. Apker
  Title:   Vice President and Treasurer

Signature Page to Group II Agreement


EXHIBIT I – SPINCO ENTITIES

See Schedule 1.1(d) and Schedule 1.1(l) attached hereto. No SpinCo Entity listed on Schedule 1.1(d) shall be deemed to be an “Insured”, a “Named Insured” or otherwise be deemed to be insured under any Existing Policy or Existing Reinsurance Agreement solely by virtue of being listed on such Schedule 1.1(d).


Schedule 1.1(d)

Designated SpinCo Entities

 

Reference ID

  

Name

333    Ahahsain Hudson Heat Transfer Co. Ltd
398    Advanced Refractory Technologies, Inc.
   A.M. Lockett & Co., Limited
   Amcermet Corporation
732    Applied Synergistics, Inc.
924    ASEA Babcock
235    Ash Acquisition Company
326    B & W Clarion, Inc.
574    B&W Ebensburg Pa., Inc.
383    B&W Fort Worth Power, Inc.
922    B&W Mexicana, S.A. de C.V.
9991    B&W North Branch G.P., Inc.
9990    B&W North Branch L.P., Inc.
586    B&W Saba, Inc.
591    B&W Service Company
   B&W Tubular Products Limited
212    Babcock & Wilcox Asia Investment Co., Inc.
115    Babcock & Wilcox Asia Limited
533    Babcock & Wilcox Canada Leasing Ltd.
1570    Babcock & Wilcox China Holdings, Inc.
215    Babcock & Wilcox China Investment Co., Inc.
1571    Babcock & Wilcox Denmark Holdings, LLC
594    Babcock & Wilcox do Brasil Limitada
528    Babcock & Wilcox do Brasil Participacoes Limitada
206    Babcock & Wilcox Egypt SAE
169    Babcock & Wilcox Fibras Ceramicas Limitada
557    Babcock & Wilcox Foreign Sales Corporation
175    Babcock & Wilcox Gama Kazan Teknolojisi A.S.
552    Babcock & Wilcox General Contracting Company
395    Babcock & Wilcox HRSG Company
   Babcock & Wilcox Industries, Ltd.
2045    Babcock & Wilcox International Construction Co., Inc.
305    Babcock & Wilcox Jonesboro Power, Inc.
   Babcock & Wilcox Refractories limited
323    Babcock & Wilcox Salt City Power, Inc.
322    Babcock & Wilcox Tracy Power, Inc.
314    Babcock & Wilcox Victorville Power, Inc:
727    Babcock & Wilcox Volund France SAS
315    Babcock PFBC, Inc.
559    Babcock Southwest Construction Corporation


Reference ID

  

Name

936    Babcock-Ultrapower Jonesboro
937    Babcock-Ultrapower West Enfield
951    Bailey Beijing Controls Co., Ltd.
516    Bailey Controls Australia Pty. Limited
517    Bailey Controls International Sales & Services Company, Inc.
954    Bailey Controls Jordan for Process Controls Services, ltd.
563    Bailey Controls Sales & Service (Australia) Pty. Limited
564    Bailey Controls Sales & Services Canada Inc.
561    Bailey do Brasil lnstrumentos Industrials Limitada
114    Bailey International, Inc.
923    Bailey Japan Company Limited
542    Bailey Meter and Controls Company
   Bailey Meter Company
562    Bailey Meter Co. (Japan) Ltd.
   Bailey Meter Company Limited
   Bailey Meter GmbH
   C.C. Moore & Company Engineers
329    Clarion Energy, Inc.
328    Clarion Power Company
   Control Components France
514    Control Components Italy S.R.L.
   Control Components, Inc. (California)
   Control Components, Inc. (Delaware)
948    Control Components Japan
545    Detroit Broach & Machine Corporation
551    Diamond Blower Company Limited
   Diamond Canapower Ltd.
518    Diamond Power lmportacao e Exportacao Ltda.
144    Diamond Power Korea Inc.
526    Diamond Power Specialty (Japan) Ltd.
558    Diamond Power Specialty (Proprietary) Limited
546    Diamond Power Specialty Corporation (Delaware)
   Diamond Power Speciality Corporation (Ohio)
529    Diamond Power Specialty GmbH
1990    DPS Berkeley, LLC
1996    DPS Lowell Cogen, LLC
1991    DPS Michigan, LLC
1994    DPS Mojave, LLC
1998    DPS Sabine, LLC
332    Ebensburg Energy, Inc.
397    Ejendomsaktieselskabet Falkevej2
968    EPC Business Trust
919    Especialidades Termomecanicas, S.A. de C.V.


Reference ID

  

Name

550    Ferry-Diamond Engineering Company Limited
928    Fibras Ceramicas C.A.
509    Fibras Ceramicas, Inc.
547    Globe Steel Tubes Corporation
   Greer Land Co.
   Holmes Insulations Limited
2001    Ivey-Cooper Services, L.L.C.
941    lsolite Babcock Refractories Company, Ltd.
927    lsolite Eastern Union Refractories Co., Ltd.
920    KBW Gasification Systems, Inc.
512    LT Produkter i Skutskar AB
938    Maine Power Services
345    McDermott Heat Transfer Company
344    McDermott Productos Industriales de Mexico, S.A. de C.V.
946    Medidores Bailey, S.A. de C.V.
942    Morganite Ceramic Fibres Limited
943    Morganite Ceramic Fibres Pty. Limited
944    Morganite Ceramic Fibres S. A.
544    National Ecology (Alabama) Incorporated
575    National Ecology (Utah) Incorporated
540    National Ecology Company
976    Nooter/Eriksen - Babcock & Wilcox, L.L.C.
933    North American CWF Partnership
9989    North Branch Power Company L.P.
971    North County Operations Associates
501    North County Recycling, Inc.
1153    P. T. Heat Exchangers Indonesia
934    Palm Beach Energy Associates
   Piedmont Tool Machine Company
581    Power Systems Sunnyside Operations GP, Inc.
583    Power Systems Sunnyside Operations LP, Inc.
508    Productos de Caolin, Inc.
577    PSO Caribbean, Inc.
932    South Point CWF
556    Sunland Construction Co., Inc.
988    Sunnyside Cogeneration Associates
582    Sunnyside II, Inc.
992    Sunnyside II, L.P
303    Sunnyside Ill, Inc.
993    Sunnyside Operations Associates L.P.
571    Termobloc Industria E Comercio Ltda.
953    Thermax Babcock & Wilcox Limited
502    TLT - Babcock, Inc.
1152    W.E. Smith Hudson Pty. Ltd.


Schedule 1.1(l)

SpinCo Subsidiaries

 

Reference ID

  

Name

  

Jurisdiction

  

Formation

   Adtec AB      
553    Americon Equipment Services, Inc.    Delaware    12/3/1985
554    Americon, Inc.    Delaware    3/29/1985
127    B&W de Panama, Inc.    Panama    3/5/1986
2075    B&W PGG Luxembourg Canada Holdings SARL    Luxembourg    11/21/2013
2054    B&W PGG Luxembourg Finance SARL    Luxembourg    11/15/2011
2053    B&W PGG Luxembourg Holdings SARL    Luxembourg    11/15/2011
555    Babcock & Wilcox Construction Co., Inc.    Delaware    3/29/1985
2107    Babcock & Wilcox Monterrey Finance SARL    Luxembourg    12/5/2014
2011    Babcock & Wilcox de Monterrey S.A. de C.V.    Mexico    9/16/2009
327    Babcock & Wilcox Ebensburg Power, LLC    Delaware    12/2/1986
302    Babcock & Wilcox Equity Investments, LLC    Delaware    12/10/1984
2080    Babcock & Wilcox Global Sales & Services - Chile SpA    Chile    5/19/2014
2081    Babcock & Wilcox Global Sales & Services SARL    Luxembourg    3/19/2014
2114    Babcock & Wilcox Holdings, Inc.    Delaware    4/20/2015
2028    Babcock & Wilcox India Holdings, Inc.    Delaware    3/4/2010
598    Babcock & Wilcox India Private Limited    India    2/3/1999
126    Babcock & Wilcox International Investments Co., Inc.    Panama    10/23/1985
530    Babcock & Wilcox International Sales and Service Corporation    Delaware    9/27/1973
541    Babcock & Wilcox International, Inc.    Delaware    5/20/1981
2072    Babcock & Wilcox Power Generation Group Canada Corp.    Nova Scotia    11/27/2013
500    Babcock & Wilcox Power Generation Group, Inc.    Delaware    12/16/1977
595    Babcock & Wilcox Technology, Inc.    Delaware    3/6/1997
599    Babcock & Wilcox Volund A/S    Denmark    11/22/1999
2113    Dampkraft Insurance Company    South Carolina    4/14/2015
1988    Delta Power Services, LLC    Delaware    3/1/2001
766    Diamond Operating Co., Inc.    Delaware    3/1/2002
1572    Diamond Power Australia Holdings, Inc.    Delaware    9/3/2002
1984    Diamond Power Central & Eastern Europe s.r.o.    Czech Republic    3/25/2008
1573    Diamond Power China Holdings, Inc.    Delaware    9/3/2002
521    Diamond Power do Brasil Limitada    Brazil    2/13/1998
1574    Diamond Power Equity Investments, Inc.    Delaware    9/3/2002


Reference ID

  

Name

  

Jurisdiction

  

Formation

525    Diamond Power Finland OY    Finland    3/14/1985
504    Diamond Power Germany GmbH    Germany    10/30/2001
597    Diamond Power International, Inc.    Delaware    3/6/1997
949    Diamond Power Machine (Hubei) Co., Inc.    China    4/20/2004
1908    Diamond Power Services S.E.A. Ltd.    Thailand    2/22/2000
522    Diamond Power Specialty (Proprietary) Limited    Republic of South Africa    4/29/1998
523    Diamond Power Specialty Limited    United Kingdom    3/5/1913
524    Diamond Power Sweden AB    Sweden    3/2/1965
2079    DPS Anson, LLC    Delaware    1/15/2014
2044    DPS Berlin, LLC    Delaware    2/24/2011
1997    DPS Cadillac, LLC    Delaware    2/17/2006
1995    DPS Florida, LLC    Delaware    10/25/2005
1993    DPS Gregory, LLC    Delaware    11/10/2004
1992    DPS Mecklenburg, LLC    Delaware    9/27/2004
9999    DPS Piedmont, LLC    Delaware    6/29/2010
2082    Ebensburg Energy, LLC    Delaware    3/27/2014
967    Ebensburg Investors Limited Partnership    Pennsylvania    3/26/1992
331    Ebensburg Power Company    Pennsylvania    12/9/1986
   Gotaverken Emission Techology AB      
2027    Gotaverken Milijo AB    Sweden    12/3/2003
2055    Loibl Allen-Sherman Hoff GmbH    Germany    12/16/1993
2104    MEGTEC Acquisition, LLC    Delaware    8/8/2008
2097    MEGTEC Energy & Environmental LLC    Delaware    4/22/2008
2092    MEGTEC Environmental Limited    United Kingdom    12/12/2003
2100    MEGTEC Europe Cooperatief U.A.    Netherlands    8/20/2008
2083    MEGTEC Holdings, Inc.    Delaware    8/8/2008
2089    MEGTEC IEPG BV    Netherlands   
2103    MEGTEC India Holdings, LLC    Delaware    4/22/2008
2101    MEGTEC PPG BV    Netherlands    9/17/2008
2091    MEGTEC Systems AB    Sweden    8/8/1970
2095    MEGTEC Systems Amal AB    Sweden    7/17/2001
2098    MEGTEC Systems Australia, Inc.    Delaware    1/12/1999
2087    MEGTEC Systems India Private Ltd.    India    12/19/2005
2094    MEGTEC Systems Limited    United Kingdom    9/17/2008
2093    MEGTEC Systems S.A.S.    France    11/23/1974
2086    MEGTEC Systems Shanghai Ltd.    China   
2096    MEGTEC Systems, Inc.    Delaware    7/7/1997
2085    MEGTEC Thermal Energy & Environmental Technology (Shanghai), LTD.    China   


Reference ID

  

Name

  

Jurisdiction

  

Formation

2088    MEGTEC TurboSonic Inc.    Ontario    7/1/2000
2099    MEGTEC TurboSonic Technologies, Inc.    Delaware    4/14/1961
2101    MTS Asia, Inc.    Delaware    6/17/2001
2090    MTS Environmental GmbH    Germany    2/27/2008
1989    O&M Holding Company    Delaware    6/26/2008
707    P.T. Babcock & Wilcox Asia    Indonesia    8/24/2000
534    Palm Beach Resource Recovery Corporation    Florida    10/26/1984
560    Power Systems Operations, Inc.    Delaware    10/22/1985
568    Revloc Reclamation Service, Inc.    Delaware    7/2/1990
2013    Servicios de Fabricacion de Valle Soleado, S.A. de C.V.    Mexico    7/31/2009
2012    Servicios Profesionales de Valle Soleado, S.A. de C.V.    Mexico    7/31/2009
767    SOFCo - EFS Holdings LLC    Delaware    2/22/2002


EXHIBIT II - EXISTING REINSURANCE AGREEMENTS

 

Reinsurance Agreement (agreement # 22004)    Creole Insurance Company, Ltd.    Insurance Company of North America    McDermott Incorporated Et AI.          6/1/1975
Reinsurance Agreement    Creole Insurance Company, Ltd.    Insurance Company of North America             4/1/1977
Reinsurance Agreement    Creole Insurance Company, Ltd.    Insurance Company of North America             4/1/1977
Reinsurance Agreement    Creole Insurance Company, Ltd.    Insurance Company of North America    INA of Texas          4/1/1978
Reinsurance Agreement    Creole Insurance Company, Ltd.    Insurance Company of North America             4/1/1978
Reinsurance Agreement    Creole Insurance Company, Ltd.    Insurance Company of North America    INA of Texas          4/1/1979
Reinsurance Agreement    Creole Insurance Company, Ltd.    Insurance Company of North America    INA of Texas          4/1/1979
Reinsurance Agreement    Creole Insurance Company, Ltd.    Insurance Company of North America    INA of Texas          4/1/1980
Reinsurance Agreement    Creole Insurance Company, Ltd.    Insurance Company of North America    INA of Texas          4/1/1980
Reinsurance Agreement    Creole Insurance Company, Ltd.    Insurance Company of North America             4/1/1982
Addendum Number Five to Reinsurance Agreement effective 4/1/1982    Creole Insurance Company, Ltd.    Insurance Company of North America             4/1/1983
Addendum Number Six to Reinsurance Agreement effective 4/1/1982    Creole Insurance Company, Ltd.    Insurance Company of North America             4/1/1984
Addendum Number Seven to Reinsurance Agreement effective 4/1/1982    Creole Insurance Company, Ltd.    Insurance Company of North America             4/1/1985
Reinsurance Agreement    Creole Insurance Company, Ltd.    Insurance Company of North America             4/1/1986


Reinsurance Agreement    Creole Insurance Company, Ltd.    Insurance Company of North America             4/1/1987
Reinsurance Agreement    Creole Insurance Company, Ltd.    CIGNA Insurance Company             4/1/1987
Reinsurance Agreement    Creole Insurance Company, Ltd.    Insurance Company of North America             4/1/1988
Reinsurance Agreement    Creole Insurance Company, Ltd.    CIGNA Insurance Company             4/1/1988
Trust Agreement    Creole Insurance Company, Ltd.    Pacific Employers Insurance Company    Morgan Guaranty Trust Company of New York          6/24/1988
Reinsurance Agreement    Creole Insurance Company, Ltd.    Insurance Company of North America             4/1/1989
Reinsurance Agreement    Creole Insurance Company, Ltd.    Insurance Company of North America             4/1/1990
Reinsurance Agreement    Creole Insurance Company, Ltd.    Insurance Company of North America             4/1/1990
Reinsurance Agreement    Creole Insurance Company, Ltd.    CIGNA Insurance Company             4/18/1990
Reinsurance Agreement - Addendum I    Creole Insurance Company, Ltd.    CIGNA Insurance Company             4/19/1990
Reinsurance Agreement    Creole Insurance Company, Ltd.    Insurance Company of North America             4/1/1991
Reinsurance Agreement    Creole Insurance Company, Ltd.    Insurance Company of North America             4/1/1991
Reinsurance Agreement    Creole Insurance Company, Ltd.    Insurance Company of North America    Pacific Employers Insurance Company          4/1/1992
Reinsurance Agreement    Creole Insurance Company, Ltd.    Insurance Company of North America    Pacific Employers Insurance Company          4/1/1993
Reinsurance Agreement    Creole Insurance Company, Ltd.    Insurance Company of North America    Pacific Employers Insurance Company          4/1/1994
Reinsurance Agreement    Creole Insurance Company, Ltd.    CIGNA Insurance Company of Texas             4/1/1994
Workers Compensation Residual Market Assessments Captive Programs    Creole Insurance Company, Ltd.    CIGNA Insurance Company of Texas             4/1/1994


Reinsurance Agreement    Creole Insurance Company, Ltd.    CIGNA Insurance Company             4/1/1995
Agreement for Workers Compenstion Redsidual Market Assessments Captive Programs    Creole Insurance Company, Ltd.    CIGNA Insurance Company             4/1/1995
Reinsurance Agreement    Creole Insurance Company, Ltd.    CIGNA Insurance Company    Indemnity Insurance Company of North America    CIGNA Insurance Company of Canada       4/1/1995
Reinsurance Agreement    Creole Insurance Company, Ltd.    Bankers Standard Insurance Company             4/1/1995
Workers Compensation Residual Market Assessments 1995 Captive Programs    Creole Insurance Company, Ltd.    Bankers Standard Insurance Company             4/1/1995
Reinsurance Agreement    Creole Insurance Company, Ltd.    Indemnity Insurance Co. of N.A.    CIGNA Insurance Company    CIGNA Insurance Company of Canada       4/1/1995
Addendum I to Reinsurance Agreement    Creole Insurance Company, Ltd.    Indemnity Insurance Company of North America    CIGNA Insurance Company    CIGNA Insurance Company of Canada       4/1/1996
Reinsurance Agreement    Creole Insurance Company, Ltd.    Indemnity Insurance Co. of N.A.    CIGNA Insurance Company    CIGNA Insurance Company of Canada    Pacific Employers Insurance Company    4/1/1997


EXHIBIT III – REMAINCO ENTITIES

See Schedule 1.1(b) and Schedule 1.1(e) attached hereto. No RemainCo Entity listed on Schedule 1.1(b) shall be deemed to be an “Insured”, a “Named Insured” or otherwise be deemed to be insured under any Existing Policy or Existing Reinsurance Agreement solely by virtue of being listed on such Schedule 1.1(b).


Schedule 1.1(b)

Designated RemainCo Entities

 

Reference ID

  

Name

2037    American Centrifuge Manufacturing, LLC
460    B&W Energy Investments, Inc.
950    B&W Fuel Company
535    B&W Fuel, Inc.
537    B&W Nuclear Service Company
960    B&W Nuclear Service Company
536    B&W Nuclear, Inc.
381    B&W Special Projects, Inc.
569    B&W Triso Corporation
573    B&W/OHM Weldon Spring, Inc.
565    Babcock & Wilcox Government Services Company
1999    Babcock & Wilcox Michoud Operations, LLC
2010    Babcock & Wilcox Modular Nuclear Energy, LLC
2007    Babcock & Wilcox Nevada, LLC
2018    Babcock & Wilcox Nuclear Services (U.K.) Limited
945    Babcock-Brown Boveri Reaktor GmbH
2000    BCE Parts Ltd.
   Burlington Niche Services Ltd.
0589    BWXT Hanford Company
0382    BWXT of Idaho, Inc.
0592    BWXT of Ohio, Inc.
590    BWXT Protec, Inc.
1973    C3 Nuclear Limited
0975    Columbia Basin Ventures, LLC
321    Conam Nuclear, Inc.
1914    CTR Solutions, LLC
0930    DM Petroleum Operations Company
961    Enserch Environmental Management Company, Inc.
461    International Disarmament Corporation
2030    Isotek Systems, LLC
   Nuclear Materials and Equipment Corporation
2057    Nuclear Production Partners, LLC
958    Olin Pantex Inc.
0973    Rocky Flats Technical Associates, Inc.
1980    Savannah River Alliance LLC
2008    Savannah River Tactical Services LLC
570    Triso
2040    Tubesolve Ltd.


Schedule 1.1(e)

RemainCo Subsidiaries

 

Reference ID

  

Name

 

Jurisdiction

  

Formation

2058    B&W NE Luxembourg SARL   Luxembourg    6/7/2012
2046    B&W Nuclear Maintenance Services, Inc.   Delaware    3/23/2011
532    Babcock & Wilcox Canada Ltd.   Ontario    6/5/1922
2049    Babcock & Wilcox Commercial Power, Inc.   Delaware    6/15/2011
2014    Babcock & Wilcox Conversion Services, LLC   Delaware    7/14/2009
2002    Babcock & Wilcox Intech, Inc.   Tennessee    7/29/1994
2048    Babcock & Wilcox International Technical Services, Inc.   Delaware    6/1/2011
380    Babcock & Wilcox Investment Company   Delaware    7/12/1990
2042    Babcock & Wilcox Modular Reactors LLC   Delaware    12/21/2010
2056    Babcock & Wilcox mPower, Inc.   Delaware    1/11/2012
2071    Babcock & Wilcox NOG Technologies, Inc.   Delaware    6/12/2013
2059    Babcock & Wilcox Nuclear Energy Europe SAS   France    7/5/2012
1967    Babcock & Wilcox Nuclear Energy, Inc.   Delaware    5/23/2007
1974    Babcock & Wilcox Nuclear Operations Group, Inc.   Delaware    11/20/2007
1961    Babcock & Wilcox Technical Services (U.K.) Limited   United Kingdom    12/19/2006
1970    Babcock & Wilcox Technical Services Clinch River, LLC   Delaware    5/16/2007
572    Babcock & Wilcox Technical Services Group, Inc.   Delaware    12/11/1991
587    Babcock & Wilcox Technical Services Savannah River Company   Delaware    9/1/1995
596    Babcock & Wilcox Government and Nuclear Operations, Inc.   Delaware    3/19/1997
2035    BWSR, LLC   Delaware    5/19/2010
3088    BWXT Canada Holdings Corp.   Nova Scotia    5/12/2015
580    BWXT Federal Services, Inc.   Delaware    10/13/1994
3087    BWXT Foreign Holdings, LLC   Delaware    4/20/2015
1576    BWXT Washington, Inc.   Delaware    9/29/2004
710    BWXT Y – 12, LLC   Delaware    4/20/2000
189    Creole Insurance Company, Ltd.   South Carolina    6/7/1973
2062    Generation mPower Canada Ltd   Saskatchewan    10/17/2012
2043    Generation mPower LLC   Delaware    12/16/2010
2009    Idaho Treatment Group, LLC   Delaware    12/22/2008
2003    Intech International, Inc.   Ontario    12/17/1997
2110    Kansas City Advanced Manufacturing, LLC   Delaware    1/27/2015
1968    Marine Mechanical Corporation   Delaware    2/3/1994
2005    NFS Holdings, Inc.   Delaware    9/25/2007


Reference ID

  

Name

 

Jurisdiction

  

Formation

2004    NOG-Erwin Holdings, Inc.   Delaware    7/30/2008
2006    Nuclear Fuel Services, Inc.   Delaware    9/25/2007
2029    The Babcock & Wilcox Company   Delaware    3/8/2010

Exhibit 10.7

EXECUTION VERSION

NOVATION AND ASSUMPTION AGREEMENT

by and among

THE BABCOCK & WILCOX COMPANY,

a Delaware corporation,

and

BABCOCK & WILCOX ENTERPRISES, INC.,

a Delaware corporation,

and

DAMPKRAFT INSURANCE COMPANY, a South Carolina corporation

and

CREOLE INSURANCE COMPANY, a South Carolina corporation,

RECITALS

THIS NOVATION AND ASSUMPTION AGREEMENT (the “ Agreement ”), is entered into and effective as of June 19, 2015 (the “ Effective Date ”) by and among THE BABCOCK & WILCOX COMPANY, a Delaware corporation (“ RemainCo ”), BABCOCK & WILCOX ENTERPRISES, INC., a Delaware corporation (“ SpinCo ”), CREOLE INSURANCE COMPANY, a South Carolina corporation (“ Creole ”), and DAMPKRAFT INSURANCE COMPANY, LTD., a South Carolina corporation (“ Dampkraft ”) and, solely with respect to Sections 2(a)(ii) and 2(c)(ii), respectively, the other RemainCo Entities signatory hereto and the other SpinCo Entities signatory hereto.

WHEREAS , Creole has issued the Existing Policies to one or more RemainCo Entities and one or more SpinCo Entities;

WHEREAS , pursuant to the Existing Policies, Creole is obligated, among other things, to pay or reimburse RemainCo Entities and/or SpinCo Entities for certain obligations;

WHEREAS , SpinCo, prior to the Separation, is a wholly owned Subsidiary of RemainCo;

WHEREAS , RemainCo intends to spin-off SpinCo from RemainCo through a dividend of common stock of SpinCo to the shareholders of RemainCo (the “ Separation ”);

WHEREAS , in connection with the Separation, Creole desires to transfer and Dampkraft desires to assume any Transferable Creole Policies insofar as such policies relate to SpinCo Entities;


WHEREAS , RemainCo and SpinCo are parties, together with ACE American Insurance Company and certain of its affiliates (collectively, “ ACE ”) to a certain Assumption and Loss Allocation Agreement (the “ ALAA ”) that, among other things, assists in effecting the Separation by identifying certain RemainCo Obligations and certain SpinCo Obligations and allocating liability and responsibility therefor;

WHEREAS , certain of the liabilities of RemainCo and/or SpinCo and their respective Affiliates that are insured by the Existing Policies under this Agreement are RemainCo Obligations and/or SpinCo Obligations under the ALAA, and the parties desire that the allocation of liability in this Agreement conform to that in the ALAA insofar as such overlap may exist; and

WHEREAS , each of RemainCo and SpinCo, each for itself and for its respective Subsidiaries, is willing to consent to the transfer, assumption, and novation of the matters set forth herein, subject to the terms and conditions of this Agreement.

NOW , THEREFORE , in consideration of the mutual promises set out herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. Definitions . The following terms used herein, including in the recitals and Exhibits hereto, shall have the following meanings:

ACE ” has the meaning set forth in the recitals to this Agreement.

Affiliate ” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the specified Person. For this purpose “control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through ownership of voting securities, by contract or otherwise.

Agreement ” has the meaning set forth in the recitals to this Agreement.

ALAA ” has the meaning set forth in the recitals to this Agreement.

Assumption Time ” means the time at which the Separation is effective on the Effective Date.

Dampkraft Assumption and Novation ” has the meaning set forth in Section 2(a)(i).

Effective Date ” has the meaning set forth in the recitals to this Agreement.

Existing Policies ” means the Transferable Creole Policies and the Wholly Retained Creole Policies.

Insured ,” as a noun in reference to one or more insurance policies, means any Person who is insured by such policy or policies, regardless of whether such Person is designated an “Insured” or a “Named Insured” in such policy or is otherwise expressly identified therein.

 

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Insured SpinCo Obligation ” means an obligation of Creole or Dampkraft under the Existing Policies that arises from an obligation, (a) to any insurance company that is an Obligation of a SpinCo Entity or (b) to ACE or its Affiliates that is a SpinCo Obligation under the ALAA.

Insured RemainCo Obligation ” means an obligation of Creole under the Existing Policies that arises from an obligation, (a) to any insurance company that is an Obligation of a RemainCo Entity or (b) to ACE or its Affiliates that is an RemainCo Obligation under the ALAA.

Insurer ,” as a noun in reference to one or more insurance policies, means the Person identified in such policy or policies as the insurer.

Loss Portfolio ” means (a) all of the accumulated reserves (actual and incurred but not reported) which Creole holds in respect of its liabilities (actual and contingent) under the Transferable Creole Policy, (b) the unearned premium reserve with respect to each Transferable Creole Policy, (c) the other liabilities (comprising accounts payable, accrued expenses and loss payables) and (d) an amount as agreed upon between Creole and Dampkraft with respect to a loss deterioration reserve under the Transferable Creole Policy.

Master Separation Agreement ” means a Master Separation Agreement to be entered into between RemainCo and SpinCo in connection with the Separation.

Organizational Documents ” means (a) with respect to any corporation, its certificate or articles of incorporation or organization and its bylaws, (b) with respect to any limited partnership, its certificate of limited partnership and its partnership agreement, (c) with respect to any general partnership, its partnership agreement, and (d) with respect to any limited liability company, its certificate or articles of formation or organization and its operating agreement or other organizational documents.

Parties ” means RemainCo, SpinCo, Dampkraft and Creole collectively (and each individually is a “Party”).

Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, a union, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof.

RemainCo ” has the meaning set forth in the recitals to this Agreement.

RemainCo Entity ” means RemainCo and each of the entities listed on Exhibit II attached hereto and made a part hereof. It is acknowledged and understood that, from and after the effectiveness of the Separation, the RemainCo Entities will not be Subsidiaries or Affiliates of SpinCo or any of the other SpinCo Entities.

RemainCo Obligations ” shall have the meaning ascribed to such term in the ALAA and shall be interpreted under this Agreement to conform to interpretations under the ALAA.

Separation ” has the meaning set forth in the recitals to this Agreement.

 

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SpinCo ” has the meaning set forth in the recitals to this Agreement.

SpinCo Entity ” means SpinCo and each of the entities listed on Exhibit I attached hereto and made a part hereof. It is acknowledged and understood that, from and after the effectiveness of the Separation, the SpinCo Entities will not be Subsidiaries or Affiliates of RemainCo or any of the other RemainCo Entities.

SpinCo Obligations ” shall have the meaning ascribed to such term in the ALAA and shall be interpreted under this Agreement to conform to interpretations under the ALAA.

Subsidiary ” means, with respect to any specified Person, any corporation, partnership, limited liability company, joint venture or other organization, whether incorporated or unincorporated, of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such specified Person or by any one or more of its Subsidiaries, or by such specified Person and one or more of its Subsidiaries.

Transferable Creole Policy ” means each insurance policy issued prior to the date hereof by Creole on which an SpinCo Entity is named or otherwise identified as an insured (including without limitation by being within a generic description such as “Affiliates” or “Subsidiaries”).

Transferred Dampkraft Policy ” means, as to any Transferable Creole Policy after the Assumption Time and giving effect to this Agreement, the aggregate of all rights, duties, and obligations of Dampkraft with respect to the SpinCo Entities that were, prior to the Assumption Time, Insureds of Creole under such Transferable Creole Policy

Wholly Retained Creole Policy ” means an insurance policy issued by Creole to one or more RemainCo Entities (and possibly others) that is not a Transferable Creole Policy.

2. Assumption .

(a) Dampkraft Assumption and Novation . Notwithstanding anything in any Transferable Creole Policy to the contrary, and effective as of the Assumption Time, Creole hereby transfers and assigns, and Dampkraft hereby assumes by novation, (x) so much of each Transferable Creole Policy as relates to SpinCo or any SpinCo Entity as an Insured thereunder; and (y) any and all rights and obligations of Creole under any of the Existing Policies that arise from Insured SpinCo Obligations. In connection with and implementation of such transfer, assignment, and novation:

(i) Dampkraft hereby agrees to observe, pay, perform, satisfy, fulfill and discharge any and all now existing and hereafter arising duties, terms, provisions, covenants, obligations and liabilities of Creole under the Transferable Creole Policies and with respect to the Insured SpinCo Obligations, both insofar as transferred above (the “ Dampkraft Assumption and Novation ”); and

(ii) Each SpinCo Entity that is a signatory hereto hereby consents to, and agrees to give full force and effect to, the Dampkraft Assumption and Novation. From and

 

- 4 -


after the Assumption Time, Dampkraft and not Creole shall be treated as the applicable SpinCo Entity’s contractual counterparty with respect to the contracts and mutual rights and obligations subject to the Dampkraft Assumption and Novation. Without limitation, each SpinCo Entity:

 

  a. may enforce against Dampkraft its rights under the Transferable Creole Policies or with respect to any Insured SpinCo Obligation to the same extent such Person could, prior to the Dampkraft Assumption and Novation, enforce such rights against Creole, and

 

  b. shall perform for the benefit of Dampkraft any obligation under the Transferable Creole Policies or with respect to any Insured SpinCo Obligation to the same extent such Person was obligated, prior to the Dampkraft Assumption and Novation, to perform such obligations for the benefit of Creole, and

 

  c. releases Creole from its obligation to observe, pay, perform, satisfy, fulfill or discharge any obligations under any Transferable Creole Policy or with respect to any Insured SpinCo Obligation.

(iii) With respect to each Transferable Creole Policy that is subject to the Dampkraft Assumption and Novation, the aggregate of rights, duties, and obligations set forth in subsections (a)(i) and (a)(ii) above shall be treated as the Transferred Dampkraft Policy relating to such Transferable Creole Policy.

(b) No Transfer or Novation of Insured RemainCo Obligations to SpinCo Entities . Except to the extent that the Wholly Retained Creole Policies are determined to cover Insured SpinCo Obligations notwithstanding the absence of any SpinCo Entity as an Insured thereunder, the Wholly Retained Creole Policies are not novated or otherwise affected by the Dampkraft Assumption and Novation. The Transferable Creole Policies are novated to Dampkraft as set forth above only to the extent that one or more SpinCo Entities is an insured thereunder. To the extent that RemainCo Entities are insureds under the Transferable Creole Policies, the Parties acknowledge that Creole and not Dampkraft shall continue to observe, pay, perform, satisfy, fulfill and discharge any and all now existing and hereafter arising duties, terms, provisions, covenants, obligations and liabilities of the Insurer under the Transferable Creole Policies. The Parties further acknowledge that Creole and not Dampkraft shall continue to observe, pay, perform, satisfy, fulfill and discharge any and all now existing and hereafter arising duties, terms, provisions, covenants, obligations and liabilities of the Insurer with respect to the Insured RemainCo Obligations.

(c) No Effect on Aggregate Limits of Liability . For the avoidance of doubt, it is understood and agreed that the aggregate liability of Creole and Dampkraft, taken together, is not intended to be, and shall be deemed not to be, increased by implementation of this Agreement. In particular, and without limitation, to the extent that any Transferable Creole Policy contains an aggregate limit of liability, that aggregate limit of liability shall, after the

 

- 5 -


Assumption Time, apply as a single, joint aggregate limit of liability as between (i) the resulting Transferred Dampkraft Policy and (ii) the portions of the Transferable Creole Policy that are retained pursuant to Section 2(b) above. Disputes as to priority of claims and/or allocation of the single, joint aggregate limit of liability shall be resolved pursuant to Section 12 hereof.

(d) Transfer of Assets . In consideration of Dampkraft’s agreement to assume and discharge Creole’s obligations under each Transferable Creole Policy, Creole agrees to transfer to Dampkraft no later than 30 days after the Effective Date all of the assets, liabilities, rights and obligations comprising the aggregate value of the Loss Portfolio.

3. Amendments . Neither this Agreement nor any provision hereof may be amended, changed, waived, discharged or terminated except by a written instrument signed by each Party.

4. Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Neither this Agreement nor any right or obligation hereunder may be assigned or conveyed by any Party without the prior written consent of the other Parties, which consent shall not be unreasonably withheld.

5. No Waiver . The failure or refusal by any Party to exercise any rights granted hereunder shall not constitute a waiver of such rights or preclude the subsequent exercise thereof, and no oral communication shall be asserted as a waiver of any such rights hereunder unless such communication shall be confirmed in a writing plainly expressing an intent to waive such rights and signed by the Party against whom such waiver is asserted.

6. Counterparts . This Agreement may be executed in any number of counterparts each of which when so executed and delivered shall constitute an original, but such counterparts together shall constitute one and the same agreement. The exchange of copies of this Agreement and of signature pages by facsimile or email transmission shall constitute effective execution and delivery of this Agreement as to the Parties and may be used in lieu of the original Agreement for all purposes. Signatures of the Parties and other Persons signatory hereto transmitted by facsimile or email shall be deemed to be their original signatures for all purposes.

7. No Third Party Beneficiary . This Agreement shall not be deemed to give any right or remedy to any third party whatsoever unless otherwise specifically granted hereunder.

8. Parties’ Representations . As of the Effective Date, each of the Parties expressly represents on its own behalf: (a) it is an entity in good standing in its jurisdiction of organization; (b) it has all requisite corporate power and authority to enter into this Agreement, and to perform its obligations hereunder; (c) the execution and delivery by it of this Agreement, and the performance by it of its obligations under this Agreement, have been duly authorized by all necessary corporate or other action; (d) this Agreement, when duly executed and delivered by it, and subject to the due execution and delivery hereof by the other Parties, will be a valid and binding obligation of it, enforceable against it, its successors and permitted assigns, in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity

 

- 6 -


principles; (e) the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby in accordance with the respective terms and conditions hereof will not (i) violate any provision of its Organizational Documents, (ii) violate any applicable order, judgment, injunction, award or decree of any court, arbitrator or governmental or regulatory body against it, or binding upon it, or any agreement with, or condition imposed by, any governmental or regulatory body, foreign or domestic, binding upon it as of the date hereof, or (iii) violate any agreement, contract, obligation, promise or undertaking that is legally binding and to which it is a party or by which it is bound; and (f) the signatory hereto on behalf of it is duly authorized and legally empowered to enter into this Agreement on its behalf.

9. Notices . Any and all notices, requests, approvals, authorizations, consents, instructions, designations and other communications that are required or permitted to be given pursuant to this Agreement shall be in writing and may be given either by personal delivery, first class prepaid post (airmail if to another country) or by a recognized overnight delivery service to the following address, or to such other address and recipient as such Party may have notified in accordance with the terms of this section as being its address or recipient for notification for the purposes of this Agreement:

 

If to Dampkraft:    Dampkraft Insurance Company, c/o Babcock & Wilcox
or any SpinCo Entity:    Enterprises, Inc.
   13024 Ballantyne Corporate Place, Suite 700
   Charlotte, North Carolina 28277
   Attention:    Senior Manager - Insurance (with copy to General Counsel)
   Telephone:    (704) 625.4888
   Facsimile:    (704) 625.4910
   Electronic Mail:    rmrozelle@babcock.com
If to Creole:    Creole Insurance Company
or any RemainCo Entity:      
   Creole Insurance Company, c/o The Babcock & Wilcox Company, Inc.
   11525 North Community House Road
   Suite 600
   Charlotte, NC 28277
   Attention:    Chief Risk Officer
      (with copy to General Counsel)
   Telephone:    (980) 365.4181
   Facsimile:    (980) 365-4020
   Electronic Mail:    tkfischer@bwxt.com

Any notice or communication to any Person shall be deemed to be received by that Person:

 

  (A) upon personal delivery; or

 

  (B) upon receipt if sent by mail or overnight courier.

 

- 7 -


10. Governing Law . This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without regard to those provisions concerning conflicts of laws that would result in the application of the laws of any other jurisdiction.

11. Entire Agreement . THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT AMONG ALL OF THE PARTIES WITH RESPECT TO THE TRANSFERS, ASSUMPTIONS, AND NOVATIONS DESCRIBED HEREIN AND SUPERSEDES ALL OTHER PRIOR AGREEMENTS AND UNDERSTANDINGS, BOTH WRITTEN AND ORAL, WITH RESPECT TO THE SUBJECT MATTER HEREOF. SOLELY FOR INTERPRETATION PURPOSES, THE PARTIES ACKNOWLEDGE THAT THIS AGREEMENT IS INTENDED TO BE READ TOGETHER WITH THE ALAA, AND THE PARTIES FURTHER ACKNOWLEDGE THE CONTROLLING NATURE OF THE ALAA WITH RESPECT TO DISPUTE RESOLUTION, AS SET FORTH IN THE FOLLOWING PARAGRAPH.

12. Dispute Resolution . Any and all disputes arising out of this Agreement shall be resolved in accordance with the procedures set for in Section V of the Master Separation Agreement. Issues as to whether a given obligation is an Insured SpinCo Obligation or an Insured RemainCo Obligation shall be resolved as set forth in the ALAA, which resolution shall be binding for all purposes of this Agreement. Any such assertions may be made, to the extent appropriate, in connection with the dispute resolution under the ALAA but may not be made as a basis for challenging such resolution.

13. Severability . If any term or other provision of this Agreement or the Exhibits attached hereto is determined by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the court, administrative agency or arbitrator shall interpret this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

14. Rules of Construction . The definitions of terms used herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified, (b) any reference herein to any law shall be construed as referring to such law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time, (c) any reference herein to any Person shall be construed to include such Person’s

 

- 8 -


successors and assigns (subject to the restrictions contained herein), (d) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) with respect to the determination of any time period, the word “from” means “from and including” and the word “to” means “to and including” and (f) any reference herein to Articles, Sections and Exhibits shall be construed to refer to Articles and Sections of, and Exhibits to, this Agreement. No provision of this Agreement shall be interpreted or construed against any Person solely because such Person or its legal representative drafted such provision.

[Remainder of Page Intentionally Left Blank]

 

- 9 -


IN WITNESS WHEREOF, the Parties intending to be legally bound hereby have executed this Agreement, by their duly authorized representatives.

 

THE BABCOCK & WILCOX COMPANY
By:  

/s/ David S. Black

Name:   David S. Black
Title:   Vice President & Chief Accounting Officer
CREOLE INSURANCE COMPANY
By:  

/s/ David S. Black

Name:   David S. Black
Title:   Vice President and Treasurer
BABCOCK & WILCOX ENTERPRISES, INC.
By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker

Title:

  Senior Vice President and Chief Accounting Officer
DAMPKRAFT INSURANCE COMPANY
By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker
Title:   Vice President and Treasurer


ACKNOWLEDGED AND AGREED FOR PURPOSES OF SECTION 2:

 

SPINCO ENTITIES :
ADTEC AB
By:  

/s/ Mohit Uberoi

Name:   Mohit Uberoi
Title:   Authorized Signatory
B&W PGG LUXEMBOURG CANADA HOLDINGS SARL
B&W PGG LUXEMBOURG FINANCE SARL
B&W PGG LUXEMBOURG HOLDINGS SARL
BABCOCK & WILCOX MONTERREY FINANCE SARL
By:  

/s/ David S. Black

Name:   David S. Black
Title:   Type A Manager
By:  

/s/ Andrej Grossman

Name:   Andrej Grossman
Title:   Type B Manager


AMERICON EQUIPMENT SERVICES, INC.
AMERICON, INC.
B&W DE PANAMA, INC.
BABCOCK & WILCOX CONSTRUCTION CO., INC.
BABCOCK & WILCOX DE MONTERREY S.A. DE C.V.
BABCOCK & WILCOX EBENSBURG POWER, LLC
BABCOCK & WILCOX EQUITY INVESTMENTS, LLC
BABCOCK & WILCOX INDIA HOLDINGS, INC.
BABCOCK & WILCOX INTERNATIONAL INVESTMENTS CO., INC.
BABCOCK & WILCOX INTERNATIONAL SALES AND SERVICE CORPORATION
BABCOCK & WILCOX INTERNATIONAL, INC.
BABCOCK & WILCOX POWER GENERATION GROUP CANADA CORP.
BABCOCK & WILCOX VOLUND A/S
DELTA POWER SERVICES, LLC
By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker
Title:   Treasurer


DIAMOND OPERATING CO., INC.
DIAMOND POWER AUSTRALIA HOLDINGS, INC.
DIAMOND POWER CHINA HOLDINGS, INC.
DIAMOND POWER EQUITY INVESTMENTS, INC.
DIAMOND POWER INTERNATIONAL, INC.
DPS ANSON, LLC
DPS BERLIN, LLC
DPS CADILLAC, LLC
DPS FLORIDA, LLC
DPS GREGORY, LLC
DPS MECKLENBURG, LLC
DPS PIEDMONT, LLC
EBENSBURG ENERGY, LLC
MEGTEC ACQUISITION, LLC
MEGTEC ENERGY & ENVIRONMENTAL LLC
BABCOCK & WILCOX
MEGTEC HOLDINGS, INC.
MEGTEC INDIA HOLDINGS, LLC
MEGTEC SYSTEMS AUSTRALIA, INC.
MEGTEC SYSTEMS, INC.
By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker
Title:   Treasurer


MEGTEC TURBOSONIC TECHNOLOGIES, INC.
MTS ASIA, INC.
O&M HOLDING COMPANY
PALM BEACH RESOURCE RECOVERY CORPORATION
POWER SYSTEMS OPERATIONS, INC.
REVLOC RECLAMATION SERVICE, INC.
SERVICIOS DE FABRICACION DE VALLE SOLEADO, S.A. DE C.V.
SERVICIOS PROFESIONALES DE VALLE SOLEADO, S.A. DE C.V.
SOFCO – EFS HOLDINGS LLC
By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker
Title:   Treasurer
BABCOCK & WILCOX GLOBAL SALES & SERVICES – CHILE SPA
By:  

/s/ Mark S. Low

Name:   Mark S. Low
Title:   Director
BABCOCK & WILCOX GLOBAL SALES & SERVICES SARL
By:  

/s/ David S. Black

Name:   David S. Black
Title:   Type A Manager
By:  

/s/ Mark S. Low

Name:   Mark S. Low
Title:   Type B Manager


BABCOCK & WILCOX HOLDINGS, INC.
By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker
Title:   Senior Vice President and Chief Financial Officer
BABCOCK & WILCOX POWER GENERATION GROUP, INC.
BABCOCK & WILCOX TECHNOLOGY, LLC
DAMPKRAFT INSURANCE COMPANY
By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker
Title:   Vice President and Treasurer
DIAMOND POWER CENTRAL & EASTERN EUROPE S.R.O.
By:  

/s/ Juha K. Mustonen

Name:   Juha K. Mustonen
Title:   Managing Director
By:  

/s/ Maurice J. Barr

Name:   Maurice J. Barr
Title:   Supervisory Director
DIAMOND POWER DO BRASIL LIMITADA
By:  

/s/ Danyelle Bispo Rocha de Oliveira

Name:   Danyelle Bispo Rocha de Oliveira
Title:   Manager


DIAMOND POWER FINLAND OY
By:  

/s/ Maurice J. Barr

Name:   Maurice J. Barr
Title:   Chairman and Ordinary Member
DIAMOND POWER GERMANY GMBH
By:  

/s/ Thomas E. Moskal

Name:   Thomas E. Moskal
Title:   Member
DIAMOND POWER MACHINE (HUBEI) CO., INC.
By:  

/s/ John Ford

Name:   John Ford
Title:   General Manager
DIAMOND POWER SERVICES S.E.A. LTD.
DIAMOND POWER SPECIALTY (PROPRIETARY) LIMITED
DIAMOND POWER SPECIALTY LIMITED
DIAMOND POWER SWEDEN AB
By:  

/s/ Maurice J. Barr

Name:   Maurice J. Barr
Title:   Director


EBENSBURG INVESTORS LIMITED PARTNERSHIP
EBENSBURG POWER COMPANY
By:   BABCOCK & WILCOX
  EBENSBURG POWER, LLC,
  General Partner
By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker
Title:   Treasurer
GOTAVERKEN EMISSION TECHNOLOGY AB
By:  

/s/ Mohit Uberoi

Name:   Mohit Uberoi
Title:   Authorized Signatory
GOTAVERKEN MILIJO AB
By:  

/s/ John Veje Oleson

Name:   John Veje Oleson
Title:   Chairman and Director
LOIBL ALLEN-SHERMAN HOFF GMBH
By:  

/s/ Thomas E. Moskal

Name:   Thomas E. Moskal
Title:   Managing Director


MEGTEC EUROPE COOPERATIEF U.A.
MEGTEC IEPG BV
MEGTEC PPG BV
By:  

/s/ Mohit Uberoi

Name:   Mohit Uberoi
Title:   Managing Director A
By:   TMF NETHERLANDS B.V.
  By:  

/s/ Bas Pijnenburg and Stephan de Jonge

  Name:  

Bas Pijnenburg and Stephan de Jonge

  Title:   Managing Director B
MEGTEC SYSTEMS INDIA PRIVATE LTD.
By:  

/s/ Mohit Uberoi

Name:   Mohit Uberoi
Title:   Managing Director, Chief Executive Officer and President
MEGTEC SYSTEMS LIMITED
By:  

/s/ Greg Linn

Name:   Greg Linn
Title:   Company Secretary
MEGTEC SYSTEMS S.A.S.
By:  

/s/ Mohit Uberoi

Name:   Mohit Uberoi
Title:   President


MEGTEC SYSTEMS AB
MEGTEC SYSTEMS AMAL AB
MEGTEC THERMAL ENERGY & ENVIRONMENTAL TECHNOLOGY (SHANGHAI), LTD.
MEGTEC SYSTEMS (SHANGHAI), LTD.
MEGTEC TURBOSONIC INC.
By:  

/s/ Greg Linn

Name:   Greg Linn
Title:   Director
MEGTEC ENVIRONMENTAL LIMITED
By:  

/s/ Greg Linn

Name:   Greg Linn
Title:   Company Secretary
MTS ENVIRONMENTAL GMBH
By:  

/s/ Harald Bauer

Name:   Harald Bauer
Title:   Managing Director
P.T. BABCOCK & WILCOX ASIA
By:  

/s/ J. Randall Data

Name:   J. Randall Data
Title:   President/Director


EXHIBIT I – SPINCO ENTITIES

See Schedule 1.1(d) and Schedule 1.1(l) attached hereto. No SpinCo Entity listed on Schedule 1.1(d) shall be deemed to be an “Insured”, a “Named Insured” or otherwise be deemed to be insured under any Existing Policy solely by virtue of being listed on such Schedule 1.1(d).


Schedule 1.1(d)

Designated SpinCo Entities

 

Reference ID

  

Name

333    Ahahsain Hudson Heat Transfer Co. Ltd
398    Advanced Refractory Technologies, Inc.
   A.M. Lockett & Co., Limited
   Amcermet Corporation
732    Applied Synergistics, Inc.
924    ASEA Babcock
235    Ash Acquisition Company
326    B & W Clarion, Inc.
574    B&W Ebensburg Pa., Inc.
383    B&W Fort Worth Power, Inc.
922    B&W Mexicana, S.A. de C.V.
9991    B&W North Branch G.P., Inc.
9990    B&W North Branch L.P., Inc.
586    B&W Saba, Inc.
591    B&W Service Company
   B&W Tubular Products Limited
212    Babcock & Wilcox Asia Investment Co., Inc.
115    Babcock & Wilcox Asia Limited
533    Babcock & Wilcox Canada Leasing Ltd.
1570    Babcock & Wilcox China Holdings, Inc.
215    Babcock & Wilcox China Investment Co., Inc.
1571    Babcock & Wilcox Denmark Holdings, LLC
594    Babcock & Wilcox do Brasil Limitada
528    Babcock & Wilcox do Brasil Participacoes Limitada
206    Babcock & Wilcox Egypt SAE
169    Babcock & Wilcox Fibras Ceramicas Limitada
557    Babcock & Wilcox Foreign Sales Corporation
175    Babcock & Wilcox Gama Kazan Teknolojisi A.S.
552    Babcock & Wilcox General Contracting Company
395    Babcock & Wilcox HRSG Company
   Babcock & Wilcox Industries, Ltd.
2045    Babcock & Wilcox International Construction Co., Inc.
305    Babcock & Wilcox Jonesboro Power, Inc.
   Babcock & Wilcox Refractories limited
323    Babcock & Wilcox Salt City Power, Inc.
322    Babcock & Wilcox Tracy Power, Inc.
314    Babcock & Wilcox Victorville Power, Inc:
727    Babcock & Wilcox Volund France SAS


Reference ID

  

Name

315    Babcock PFBC, Inc.
559    Babcock Southwest Construction Corporation
936    Babcock-Ultrapower Jonesboro
937    Babcock-Ultrapower West Enfield
951    Bailey Beijing Controls Co., Ltd.
516    Bailey Controls Australia Pty. Limited
517    Bailey Controls International Sales & Services Company, Inc.
954    Bailey Controls Jordan for Process Controls Services, ltd.
563    Bailey Controls Sales & Service (Australia) Pty. Limited
564    Bailey Controls Sales & Services Canada Inc.
561    Bailey do Brasil lnstrumentos Industrials Limitada
114    Bailey International, Inc.
923    Bailey Japan Company Limited
542    Bailey Meter and Controls Company
   Bailey Meter Company
562    Bailey Meter Co. (Japan) Ltd.
   Bailey Meter Company Limited
   Bailey Meter GmbH
   C.C. Moore & Company Engineers
329    Clarion Energy, Inc.
328    Clarion Power Company
   Control Components France
514    Control Components Italy S.R.L.
   Control Components, Inc. (California)
   Control Components, Inc. (Delaware)
948    Control Components Japan
545    Detroit Broach & Machine Corporation
551    Diamond Blower Company Limited
   Diamond Canapower Ltd.
518    Diamond Power lmportacao e Exportacao Ltda.
144    Diamond Power Korea Inc.
526    Diamond Power Specialty (Japan) Ltd.
558    Diamond Power Specialty (Proprietary) Limited
546    Diamond Power Specialty Corporation (Delaware)
   Diamond Power Speciality Corporation (Ohio)
529    Diamond Power Specialty GmbH
1990    DPS Berkeley, LLC
1996    DPS Lowell Cogen, LLC
1991    DPS Michigan, LLC
1994    DPS Mojave, LLC
1998    DPS Sabine, LLC
332    Ebensburg Energy, Inc.
397    Ejendomsaktieselskabet Falkevej2


Reference ID

  

Name

968    EPC Business Trust
919    Especialidades Termomecanicas, S.A. de C.V.
550    Ferry-Diamond Engineering Company Limited
928    Fibras Ceramicas C.A.
509    Fibras Ceramicas, Inc.
547    Globe Steel Tubes Corporation
   Greer Land Co.
   Holmes Insulations Limited
2001    Ivey-Cooper Services, L.L.C.
941    lsolite Babcock Refractories Company, Ltd.
927    lsolite Eastern Union Refractories Co., Ltd.
920    KBW Gasification Systems, Inc.
512    LT Produkter i Skutskar AB
938    Maine Power Services
345    McDermott Heat Transfer Company
344    McDermott Productos Industriales de Mexico, S.A. de C.V.
946    Medidores Bailey, S.A. de C.V.
942    Morganite Ceramic Fibres Limited
943    Morganite Ceramic Fibres Pty. Limited
944    Morganite Ceramic Fibres S. A.
544    National Ecology (Alabama) Incorporated
575    National Ecology (Utah) Incorporated
540    National Ecology Company
976    Nooter/Eriksen - Babcock & Wilcox, L.L.C.
933    North American CWF Partnership
9989    North Branch Power Company L.P.
971    North County Operations Associates
501    North County Recycling, Inc.
1153    P. T. Heat Exchangers Indonesia
934    Palm Beach Energy Associates
   Piedmont Tool Machine Company
581    Power Systems Sunnyside Operations GP, Inc.
583    Power Systems Sunnyside Operations LP, Inc.
508    Productos de Caolin, Inc.
577    PSO Caribbean, Inc.
932    South Point CWF
556    Sunland Construction Co., Inc.
988    Sunnyside Cogeneration Associates
582    Sunnyside II, Inc.
992    Sunnyside II, L.P
303    Sunnyside Ill, Inc.
993    Sunnyside Operations Associates L.P.
571    Termobloc Industria E Comercio Ltda.


Reference ID

  

Name

953    Thermax Babcock & Wilcox Limited
502    TLT - Babcock, Inc.
1152    W.E. Smith Hudson Pty. Ltd.


Schedule 1.1(l)

SpinCo Subsidiaries

 

Reference ID

  

Name

  

Jurisdiction

  

Formation

   Adtec AB      
553    Americon Equipment Services, Inc.    Delaware    12/3/1985
554    Americon, Inc.    Delaware    3/29/1985
127    B&W de Panama, Inc.    Panama    3/5/1986
2075    B&W PGG Luxembourg Canada Holdings SARL    Luxembourg    11/21/2013
2054    B&W PGG Luxembourg Finance SARL    Luxembourg    11/15/2011
2053    B&W PGG Luxembourg Holdings SARL    Luxembourg    11/15/2011
555    Babcock & Wilcox Construction Co., Inc.    Delaware    3/29/1985
2107    Babcock & Wilcox Monterrey Finance SARL    Luxembourg    12/5/2014
2011    Babcock & Wilcox de Monterrey S.A. de C.V.    Mexico    9/16/2009
327    Babcock & Wilcox Ebensburg Power, LLC    Delaware    12/2/1986
302    Babcock & Wilcox Equity Investments, LLC    Delaware    12/10/1984
2080    Babcock & Wilcox Global Sales & Services - Chile SpA    Chile    5/19/2014
2081    Babcock & Wilcox Global Sales & Services SARL    Luxembourg    3/19/2014
2114    Babcock & Wilcox Holdings, Inc.    Delaware    4/20/2015
2028    Babcock & Wilcox India Holdings, Inc.    Delaware    3/4/2010
598    Babcock & Wilcox India Private Limited    India    2/3/1999
126    Babcock & Wilcox International Investments Co., Inc.    Panama    10/23/1985
530    Babcock & Wilcox International Sales and Service Corporation    Delaware    9/27/1973
541    Babcock & Wilcox International, Inc.    Delaware    5/20/1981
2072    Babcock & Wilcox Power Generation Group Canada Corp.    Nova Scotia    11/27/2013
500    Babcock & Wilcox Power Generation Group, Inc.    Delaware    12/16/1977
595    Babcock & Wilcox Technology, Inc.    Delaware    3/6/1997
599    Babcock & Wilcox Volund A/S    Denmark    11/22/1999
2113    Dampkraft Insurance Company    South Carolina    4/14/2015
1988    Delta Power Services, LLC    Delaware    3/1/2001
766    Diamond Operating Co., Inc.    Delaware    3/1/2002
1572    Diamond Power Australia Holdings, Inc.    Delaware    9/3/2002
1984    Diamond Power Central & Eastern Europe s.r.o.    Czech Republic    3/25/2008
1573    Diamond Power China Holdings, Inc.    Delaware    9/3/2002
521    Diamond Power do Brasil Limitada    Brazil    2/13/1998
1574    Diamond Power Equity Investments, Inc.    Delaware    9/3/2002


Reference ID

  

Name

  

Jurisdiction

  

Formation

525    Diamond Power Finland OY    Finland    3/14/1985
504    Diamond Power Germany GmbH    Germany    10/30/2001
597    Diamond Power International, Inc.    Delaware    3/6/1997
949    Diamond Power Machine (Hubei) Co., Inc.    China    4/20/2004
1908    Diamond Power Services S.E.A. Ltd.    Thailand    2/22/2000
522    Diamond Power Specialty (Proprietary) Limited    Republic of South Africa    4/29/1998
523    Diamond Power Specialty Limited    United Kingdom    3/5/1913
524    Diamond Power Sweden AB    Sweden    3/2/1965
2079    DPS Anson, LLC    Delaware    1/15/2014
2044    DPS Berlin, LLC    Delaware    2/24/2011
1997    DPS Cadillac, LLC    Delaware    2/17/2006
1995    DPS Florida, LLC    Delaware    10/25/2005
1993    DPS Gregory, LLC    Delaware    11/10/2004
1992    DPS Mecklenburg, LLC    Delaware    9/27/2004
9999    DPS Piedmont, LLC    Delaware    6/29/2010
2082    Ebensburg Energy, LLC    Delaware    3/27/2014
967    Ebensburg Investors Limited Partnership    Pennsylvania    3/26/1992
331    Ebensburg Power Company    Pennsylvania    12/9/1986
   Gotaverken Emission Techology AB      
2027    Gotaverken Milijo AB    Sweden    12/3/2003
2055    Loibl Allen-Sherman Hoff GmbH    Germany    12/16/1993
2104    MEGTEC Acquisition, LLC    Delaware    8/8/2008
2097    MEGTEC Energy & Environmental LLC    Delaware    4/22/2008
2092    MEGTEC Environmental Limited    United Kingdom    12/12/2003
2100    MEGTEC Europe Cooperatief U.A.    Netherlands    8/20/2008
2083    MEGTEC Holdings, Inc.    Delaware    8/8/2008
2089    MEGTEC IEPG BV    Netherlands   
2103    MEGTEC India Holdings, LLC    Delaware    4/22/2008
2101    MEGTEC PPG BV    Netherlands    9/17/2008
2091    MEGTEC Systems AB    Sweden    8/8/1970
2095    MEGTEC Systems Amal AB    Sweden    7/17/2001
2098    MEGTEC Systems Australia, Inc.    Delaware    1/12/1999
2087    MEGTEC Systems India Private Ltd.    India    12/19/2005
2094    MEGTEC Systems Limited    United Kingdom    9/17/2008
2093    MEGTEC Systems S.A.S.    France    11/23/1974
2086    MEGTEC Systems Shanghai Ltd.    China   
2096    MEGTEC Systems, Inc.    Delaware    7/7/1997
2085    MEGTEC Thermal Energy & Environmental Technology (Shanghai), LTD.    China   


Reference ID

  

Name

  

Jurisdiction

  

Formation

2088    MEGTEC TurboSonic Inc.    Ontario    7/1/2000
2099    MEGTEC TurboSonic Technologies, Inc.    Delaware    4/14/1961
2101    MTS Asia, Inc.    Delaware    6/17/2001
2090    MTS Environmental GmbH    Germany    2/27/2008
1989    O&M Holding Company    Delaware    6/26/2008
707    P.T. Babcock & Wilcox Asia    Indonesia    8/24/2000
534    Palm Beach Resource Recovery Corporation    Florida    10/26/1984
560    Power Systems Operations, Inc.    Delaware    10/22/1985
568    Revloc Reclamation Service, Inc.    Delaware    7/2/1990
2013    Servicios de Fabricacion de Valle Soleado, S.A. de C.V.    Mexico    7/31/2009
2012    Servicios Profesionales de Valle Soleado, S.A. de C.V.    Mexico    7/31/2009
767    SOFCo - EFS Holdings LLC    Delaware    2/22/2002


EXHIBIT II – REMAINCO ENTITIES

See Schedule 1.1(b) and Schedule 1.1(e) attached hereto. No RemainCo Entity listed on Schedule 1.1(b) shall be deemed to be an “Insured”, a “Named Insured” or otherwise be deemed to be insured under any Existing Policy solely by virtue of being listed on such Schedule 1.1(b).


Schedule 1.1(b)

Designated RemainCo Entities

 

Reference ID

  

Name

2037    American Centrifuge Manufacturing, LLC
460    B&W Energy Investments, Inc.
950    B&W Fuel Company
535    B&W Fuel, Inc.
537    B&W Nuclear Service Company
960    B&W Nuclear Service Company
536    B&W Nuclear, Inc.
381    B&W Special Projects, Inc.
569    B&W Triso Corporation
573    B&W/OHM Weldon Spring, Inc.
565    Babcock & Wilcox Government Services Company
1999    Babcock & Wilcox Michoud Operations, LLC
2010    Babcock & Wilcox Modular Nuclear Energy, LLC
2007    Babcock & Wilcox Nevada, LLC
2018    Babcock & Wilcox Nuclear Services (U.K.) Limited
945    Babcock-Brown Boveri Reaktor GmbH
2000    BCE Parts Ltd.
   Burlington Niche Services Ltd.
0589    BWXT Hanford Company
0382    BWXT of Idaho, Inc.
0592    BWXT of Ohio, Inc.
590    BWXT Protec, Inc.
1973    C3 Nuclear Limited
0975    Columbia Basin Ventures, LLC
321    Conam Nuclear, Inc.
1914    CTR Solutions, LLC
0930    DM Petroleum Operations Company
961    Enserch Environmental Management Company, Inc.
461    International Disarmament Corporation
2030    Isotek Systems, LLC
   Nuclear Materials and Equipment Corporation
2057    Nuclear Production Partners, LLC
958    Olin Pantex Inc.
0973    Rocky Flats Technical Associates, Inc.
1980    Savannah River Alliance LLC
2008    Savannah River Tactical Services LLC
570    Triso
2040    Tubesolve Ltd.


Schedule 1.1(e)

RemainCo Subsidiaries

 

Reference ID

  

Name

  

Jurisdiction

  

Formation

2058    B&W NE Luxembourg SARL    Luxembourg    6/7/2012
2046    B&W Nuclear Maintenance Services, Inc.    Delaware    3/23/2011
532    Babcock & Wilcox Canada Ltd.    Ontario    6/5/1922
2049    Babcock & Wilcox Commercial Power, Inc.    Delaware    6/15/2011
2014    Babcock & Wilcox Conversion Services, LLC    Delaware    7/14/2009
2002    Babcock & Wilcox Intech, Inc.    Tennessee    7/29/1994
2048    Babcock & Wilcox International Technical Services, Inc.    Delaware    6/1/2011
380    Babcock & Wilcox Investment Company    Delaware    7/12/1990
2042    Babcock & Wilcox Modular Reactors LLC    Delaware    12/21/2010
2056    Babcock & Wilcox mPower, Inc.    Delaware    1/11/2012
2071    Babcock & Wilcox NOG Technologies, Inc.    Delaware    6/12/2013
2059    Babcock & Wilcox Nuclear Energy Europe SAS    France    7/5/2012
1967    Babcock & Wilcox Nuclear Energy, Inc.    Delaware    5/23/2007
1974    Babcock & Wilcox Nuclear Operations Group, Inc.    Delaware    11/20/2007
1961    Babcock & Wilcox Technical Services (U.K.) Limited    United Kingdom    12/19/2006
1970    Babcock & Wilcox Technical Services Clinch River, LLC    Delaware    5/16/2007
572    Babcock & Wilcox Technical Services Group, Inc.    Delaware    12/11/1991
587    Babcock & Wilcox Technical Services Savannah River Company    Delaware    9/1/1995
596    Babcock & Wilcox Government and Nuclear Operations, Inc.    Delaware    3/19/1997
2035    BWSR, LLC    Delaware    5/19/2010
3088    BWXT Canada Holdings Corp.    Nova Scotia    5/12/2015
580    BWXT Federal Services, Inc.    Delaware    10/13/1994
3087    BWXT Foreign Holdings, LLC    Delaware    4/20/2015
1576    BWXT Washington, Inc.    Delaware    9/29/2004
710    BWXT Y – 12, LLC    Delaware    4/20/2000
189    Creole Insurance Company, Ltd.    South Carolina    6/7/1973
2062    Generation mPower Canada Ltd    Saskatchewan    10/17/2012
2043    Generation mPower LLC    Delaware    12/16/2010
2009    Idaho Treatment Group, LLC    Delaware    12/22/2008
2003    Intech International, Inc.    Ontario    12/17/1997
2110    Kansas City Advanced Manufacturing, LLC    Delaware    1/27/2015
1968    Marine Mechanical Corporation    Delaware    2/3/1994


Reference ID

  

Name

  

Jurisdiction

  

Formation

2005    NFS Holdings, Inc.    Delaware    9/25/2007
2004    NOG-Erwin Holdings, Inc.    Delaware    7/30/2008
2006    Nuclear Fuel Services, Inc.    Delaware    9/25/2007
2029    The Babcock & Wilcox Company    Delaware    3/8/2010

Exhibit 10.8

BABCOCK & WILCOX ENTERPRISES, INC.

2015 LONG-TERM INCENTIVE PLAN

ARTICLE 1

Establishment, Objectives and Duration

1.1 Establishment of the Plan . Babcock & Wilcox Enterprises, Inc., a corporation organized and existing under the laws of the State of Delaware (hereinafter referred to as the “Company”), hereby establishes an incentive compensation plan to be known as the Babcock & Wilcox Enterprises, Inc. 2015 Long-Term Incentive Plan (hereinafter referred to as this “Plan”), as set forth in this document. This Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, and Cash Incentive Awards (each as hereinafter defined). This Plan also permits the issuance of awards in partial substitution for awards relating to the common stock of BWXT immediately prior to the spin-off of the Company by BWXT (the “Spin-off”), in accordance with the terms of an Employee Matters Agreement into which BWXT and the Company intend to enter in connection with the Spin-off (the “Employee Matters Agreement”).

1.2 Objectives . This Plan is designed to promote the success and enhance the value of the Company by linking the personal interests of Participants (as hereinafter defined) to those of the Company’s stockholders, and by providing Participants with an incentive for performance. This Plan is further intended to provide flexibility to the Company in its ability to motivate, attract and retain the employment and/or services of Participants.

1.3 Duration . This Plan shall commence on the Effective Date and shall remain in effect, subject to the right of the Board of Directors (as hereinafter defined) to amend or terminate this Plan at any time pursuant to Article 16 hereof, until all Shares (as hereinafter defined) subject to it shall have been purchased or acquired according to this Plan’s provisions; provided , however , that in no event may an Award (as hereinafter defined) be granted under this Plan on or after June 1, 2025.

ARTICLE 2

Definitions

As used in this Plan, the following terms shall have the respective meanings set forth below:

2.1 “ Adjusted Award means an award that is issued under this Plan in accordance with the terms of the Employee Matters Agreement, as an adjustment to, in substitution of, or in accordance with, a stock option, stock appreciation right, share of restricted stock, restricted stock unit, performance share or deferred restricted stock unit that was granted under a BWXT Plan.


2.2 “ Appreciation Right means a right granted pursuant to Article 7 of this Plan, and will include both Free-Standing Appreciation Rights and Tandem Appreciation Rights.

2.3 “ Base Price means the price to be used as the basis for determining the Spread upon the exercise of a Free-Standing Appreciation Right or a Tandem Appreciation Right.

2.4 “ Award means a grant under this Plan of any Nonqualified Stock Option, Incentive Stock Option, Appreciation Right, Restricted Stock, Restricted Stock Unit, Cash Incentive Award, Performance Share or Performance Unit, dividend equivalents that are settled in Shares, or other award granted pursuant to Article 11 of the Plan.

2.5 “ Award Agreement means an agreement, certificate, resolution or other type or form of writing or other evidence approved by the Committee that sets forth the terms and provisions applicable to an Award granted under this Plan. An Award Agreement may be in an electronic medium, may be limited to notation on the books and records of the Company and, unless otherwise determined by the Committee, need not be signed by a representative of the Company or a Participant. With respect to Adjusted Awards, the term also includes any memorandum or summary of terms that may be specified by the Committee, together with any evidence of award under any BWXT Plan that may be referred to therein.

2.6 “ Award Limitations has the meaning ascribed to such term in Section 4.2.

2.7 “ BWXT means The Babcock & Wilcox Company, a Delaware corporation.

2.8 “ BWXT Participan t ” means a current or former employee or officer of BWXT or any of its Subsidiaries, a current or former member of the board of directors of BWXT, or any other person who holds stock options, stock appreciation rights, shares of restricted stock, restricted stock units, deferred restricted stock units, or performance shares under a BWXT Plan as of the date immediately prior to the Distribution Date.

2.9 “ BWXT Plan means The Babcock & Wilcox Company 2010 Long-Term Incentive Plan (as amended and restated February 25, 2014) or the 2012 Babcock & Wilcox Technical Services Group, Inc. Long-Term Incentive Plan, as amended.

2.10 “ Beneficial Owner or Beneficial Ownership shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

2.11 “ Board or Board of Directors means the Board of Directors of the Company.

2.12 “ Cash Incentive Award means a cash award granted pursuant to Article 9 of this Plan.

2.13 “ Change in Control means, for purposes of this Plan and any Awards, unless otherwise set forth in an applicable Award Agreement by the Committee, the occurrence of any of the following:

(a) 30% Ownership Change : Any Person, other than an ERISA-regulated pension plan established by the Company, makes an acquisition of Outstanding Voting


Stock and is, immediately thereafter, the beneficial owner of 30% or more of the then Outstanding Voting Stock, unless such acquisition is made directly from the Company in a transaction approved by a majority of the Incumbent Directors; or any group is formed that is the beneficial owner of 30% or more of the Outstanding Voting Stock (other than a group formation for the purpose of making an acquisition directly from the Company and approved (prior to such group formation) by a majority of the Incumbent Directors); or

(b) Board Majority Change : Individuals who are Incumbent Directors cease for any reason to constitute a majority of the members of the Board; or

(c) Major Mergers and Acquisitions : Consummation of a Business Combination unless, immediately following such Business Combination, (i) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Voting Stock immediately before such Business Combination beneficially own, directly or indirectly, more than 51% of the then outstanding shares of voting stock of the parent corporation resulting from such Business Combination in substantially the same relative proportions as their ownership, immediately before such Business Combination, of the Outstanding Voting Stock, (ii) if the Business Combination involves the issuance or payment by the Company of consideration to another entity or its shareholders, the total fair market value of such consideration plus the principal amount of the consolidated long-term debt of the entity or business being acquired (in each case, determined as of the date of consummation of such Business Combination by a majority of the Incumbent Directors) does not exceed 50% of the sum of the fair market value of the Outstanding Voting Stock plus the principal amount of the Company’s consolidated long-term debt (in each case, determined immediately before such consummation by a majority of the Incumbent Directors), (iii) no Person (other than any corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of the then outstanding shares of voting stock of the parent corporation resulting from such Business Combination and (iv) a majority of the members of the board of directors of the parent corporation resulting from such Business Combination were Incumbent Directors of the Company immediately before consummation of such Business Combination; or

(d) Major Asset Dispositions : Consummation of a Major Asset Disposition unless, immediately following such Major Asset Disposition, (i) individuals and entities that were beneficial owners of the Outstanding Voting Stock immediately before such Major Asset Disposition beneficially own, directly or indirectly, more than 70% of the then outstanding shares of voting stock of the Company (if it continues to exist) and of the entity that acquires the largest portion of such assets (or the entity, if any, that owns a majority of the outstanding voting stock of such acquiring entity) and (ii) a majority of the members of the Board (if it continues to exist) and of the entity that acquires the largest portion of such assets (or the entity, if any, that owns a majority of the outstanding voting stock of such acquiring entity) were Incumbent Directors of the Company immediately before consummation of such Major Asset Disposition.

For purposes of this definition of “Change in Control”,

(1) “ Person means an individual, entity or group;


(2) “ group is used as it is defined for purposes of Section 13(d)(3) of the Exchange Act;

(3) “ beneficial owner is used as it is defined for purposes of Rule 13d-3 under the Exchange Act;

(4) “ Outstanding Voting Stock means outstanding voting securities of the Company entitled to vote generally in the election of directors; and any specified percentage or portion of the Outstanding Voting Stock (or of other voting stock) is determined based on the combined voting power of such securities;

(5) “ Incumbent Director means a director of the Company (x) who was a director of the Company on the Effective Date or (y) who becomes a director after such date and whose election, or nomination for election by the Company’s shareholders, was approved by a vote of a majority of the Incumbent Directors at the time of such election or nomination, except that any such director will not be deemed an Incumbent Director if his or her initial assumption of office occurs as a result of an actual or threatened election contest or other actual or threatened solicitation of proxies by or on behalf of a Person other than the Board;

(6) “ Business Combination means:

(x) a merger or consolidation involving the Company or its stock; or

(y) an acquisition by the Company, directly or through one or more subsidiaries, of another entity or its stock or assets.

(7) “ parent corporation resulting from a Business Combination means the Company if its stock is not acquired or converted in the Business Combination and otherwise means the entity which as a result of such Business Combination owns the Company or all or substantially all the Company’s assets either directly or through one or more subsidiaries; and

(8) “ Major Asset Disposition means the sale or other disposition in one transaction or a series of related transactions of 70% or more of the assets of the Company and its subsidiaries on a consolidated basis; and any specified percentage or portion of the assets of the Company will be based on fair market value, as determined by a majority of the Incumbent Directors.

However, in no event shall a Change in Control be deemed to have occurred under this Plan with respect to a Participant if the Participant is part of a purchasing group which consummates a transaction resulting in a Change in Control. A Participant shall be deemed “part of a purchasing group” for purposes of the preceding sentence if the Participant is an equity participant in the purchasing company or group (except for: (i) passive ownership of less than three percent (3%) of the stock of the purchasing company; or (ii) ownership of equity participation in the purchasing company or group which is otherwise not significant, as determined prior to the Change in Control by a majority of the non-employee continuing directors).

2.14 “ Code means the Internal Revenue Code of 1986, as amended from time to time.


2.15 “ Committee means the Compensation Committee of the Board, or such other committee of the Board appointed by the Board to administer this Plan, as specified in Article 3 hereof; provided , however , that prior to the initial formation of the Compensation Committee of the Board, references in this Plan to the Committee (unless otherwise indicated) will be deemed to be references to the Board.

2.16 “ Company means Babcock & Wilcox Enterprises, Inc., a corporation organized and existing under the laws of the State of Delaware, and, except where the context otherwise indicates, shall include the Company’s Subsidiaries and, except with respect to the definition of “Change in Control” set forth above and the application of any defined terms used in such definition, any successor to any of such entities as provided in Article 19 hereof.

2.17 “ Consultant means a natural person who is neither an Employee nor a Director and who performs services for the Company or a Subsidiary pursuant to a contract, provided that those services are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities.

2.18 “ Date of Grant means the date specified by the Committee on which a grant of Options, Appreciation Rights, Performance Shares, Performance Units, or other awards contemplated by Article 11 of this Plan, or a grant or sale of Restricted Shares, Restricted Stock Units, or other awards contemplated by Article 11 of this Plan, will become effective (which date will not be earlier than the date on which the Committee takes action with respect thereto).

2.19 “ Director means any individual who is a member of the Board of Directors; provided, however , that any member of the Board of Directors who is employed by the Company shall be considered an Employee under this Plan.

2.20 “ Disability means, unless otherwise set forth in an applicable Award Agreement by the Committee and as determined by the Committee in its sole discretion, a Participant’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months.

2.21 Distribution Date ” means the effective date of the distribution, in connection with the Spin-off, of Shares to the holders of common stock of BWXT.

2.22 “ Economic Value Added means net operating profit after tax minus the product of capital and the cost of capital.

2.23 “ Effective Date shall mean June 1, 2015.

2.24 “ Employee means any person who is employed by the Company.

2.25 “ Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, as such law, rules and regulations may be amended from time to time.


2.26 “ ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time.

2.27 “ Fair Market Value of a Share shall mean, as of a particular date, (a) if Shares are listed on a national securities exchange, the closing sales price per Share on the consolidated transaction reporting system for the principal national securities exchange on which Shares are listed on that date, or, if no such sale is so reported on that date, on the last preceding date on which such a sale was so reported, (b) if Shares are not so listed but are traded on an over-the-counter market, the mean between the closing bid and asked prices for Shares on that date, or, if there are no such quotations available for that date, on the last preceding date for which such quotations are available, as reported by the National Quotation Bureau Incorporated, or (c) if no Shares are publicly traded, a value determined in good faith by the Committee, provided that such value is in compliance with the fair market value pricing rules set forth in Section 409A of the Code.

2.28 “ Fiscal Year means the year commencing January 1 and ending December 31.

2.29 “ Free-Standing Appreciation Right means an Appreciation Right granted pursuant to Article 7 of this Plan that is not granted in tandem with an Option.

2.30 “ Incentive Stock Option or ISO means an Option to purchase Shares granted under Article 6 hereof and which is designated as an Incentive Stock Option and is intended to meet the requirements of Code Section 422, or any successor provision.

2.31 “ Nonqualified Stock Option or NQSO means an option to purchase Shares granted under Article 6 hereof and which is not an Incentive Stock Option.

2.32 “ Officer means an Employee of the Company included in the definition of “Officer” under Section 16 of the Exchange Act and rules and regulations promulgated thereunder or such other Employees who are designated as “Officers” by the Board.

2.33 “ Option means an Incentive Stock Option or a Nonqualified Stock Option.

2.34 “ Option Price means the price at which a Share may be purchased by a Participant pursuant to an Option, as determined by the Committee.

2.35 “ Participant means an eligible Officer, Director, Consultant or Employee who has been selected for participation in this Plan in accordance with Section 5.2. Notwithstanding any provision of this Plan to the contrary, the term “Participant” shall also include a BWXT Participant; provided that, pursuant to Article 23, a BWXT Participant who is not otherwise eligible to be a Participant pursuant to the previous sentence of this definition may receive only Adjusted Awards.

2.36 “ Performance-Based Award means an Award (other than an Option) that is designed to qualify for the Performance-Based Exception.

2.37 “ Performance-Based Exception means the performance-based exception from the deductibility limitations of Section 162(m) of the Code.


2.38 “ Performance Period means, with respect to a Performance-Based Award, the period of time during which the performance goals specified in such Award must be met in order to determine the degree of payout and/or vesting with respect to that Performance-Based Award, and with respect to an Award that is not a Performance-Based Award, the period of time during which the performance goals specified in such Award must be met in order to determine the degree of payout and/or vesting with respect to such Award.

2.39 “ Performance Share means a bookkeeping entry that records the equivalent of one Share awarded pursuant to Article 9 of this Plan.

2.40 “ Performance Unit means a bookkeeping entry awarded pursuant to Article 9 of this Plan that records a unit equivalent to $1.00 or such other value as is determined by the Committee.

2.41 “ Period of Restriction means the period during which the transfer of Shares of Restricted Stock is limited in some way (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, in its sole discretion) as set forth in the related Award Agreement, and/or the Shares are subject to a substantial risk of forfeiture (within the meaning of Section 83 of the Code), as provided in Article 8 hereof.

2.42 “ Person shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Section 13(d) and 14(d) thereof, including a “group” (as that term is used in Section 13(d)(3) thereof).

2.43 “ Restricted Stock means Shares granted or sold pursuant to Article 8 of this Plan as to which neither the substantial risk of forfeiture (within the meaning of Section 83 of the Code) nor the prohibition on transfers has expired.

2.44 “ Restricted Stock Unit or RSU means a contractual promise to distribute to a Participant one Share and/or cash equal to the Fair Market Value of one Share, determined in the sole discretion of the Committee, which shall be delivered to the Participant upon satisfaction of the vesting and any other requirements set forth in the related Award Agreement.

2.45 “ Retirement shall have the meaning ascribed to such term by the Committee, as set forth in the applicable Award Agreement.

2.46 “ Shares means the common stock, par value $ 0.01 per share, of the Company.

2.47 Spread ” means the excess of the Fair Market Value per Share on the date when an Appreciation Right is exercised over the Option Price or Base Price provided for in the related Option or Free-Standing Appreciation Right, respectively.

2.48 “ Subsidiary means any corporation, partnership, joint venture, affiliate or other entity in which the Company has a majority voting interest; provided , however , that for purposes of determining whether any person may be a Participant for purposes of any grant of Incentive Stock Options, “Subsidiary” means any corporation in which at the time the Company owns or controls, directly or indirectly, more than 50 percent of the total combined voting power represented by all classes of stock issued by such corporation.


2.49 “ Tandem Appreciation Right means an Appreciation Right granted pursuant to Article 7 of this Plan that is granted in tandem with an Option.

2.50 “ Vesting Period means the period during which an Award granted hereunder is subject to a service or performance-related restriction, as set forth in the related Award Agreement.

ARTICLE 3

Administration

3.1 The Committee . This Plan shall be administered by the Committee or, prior to the initial formation of such Committee, the Board, each as constituted from time to time. The members of the Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board of Directors. The Committee, after its initial formation, shall be composed of not less than three members of the Board, each of whom shall (a) meet all applicable independence requirements of the New York Stock Exchange, or if the Shares are not traded on the New York Stock Exchange, the principal national securities exchange on which the Shares are traded, (b) be a “non-employee director” within the meaning of Rule 16b-3 and (c) be an “outside director” within the meaning of Section 162(m) of the Code. The Committee may from time to time delegate all or any part of its authority under this Plan to any subcommittee thereof. To the extent of any such delegation, references in this Plan to the Committee will be deemed to be references to such subcommittee.

3.2 Authority of the Committee . Except as limited by law or by the Articles of Incorporation or By-Laws of the Company (each as amended from time to time), the Committee shall have full and exclusive power and authority to take all actions specifically contemplated by this Plan or that are necessary or appropriate in connection with the administration hereof and shall also have full and exclusive power and authority to interpret this Plan and to adopt such rules, regulations and guidelines for carrying out this Plan as the Committee may deem necessary or proper. The Committee shall have full power and sole discretion to: select Officers, Directors, Consultants, Employees and BWXT Participants who shall be granted Awards under this Plan; determine the sizes and types of Awards (including Adjusted Awards); determine the time when Awards are to be granted and any conditions that must be satisfied before an Award is granted; determine the terms and conditions of Awards in a manner consistent with this Plan; determine whether the conditions for earning an Award have been met and whether a Performance-Based Award will be paid at the end of an applicable performance period; determine the guidelines and/or procedures for the payment or exercise of Awards; and determine whether a Performance-Based Award should qualify, regardless of its amount, as deductible in its entirety for federal income tax purposes, including whether a Performance-Based Award granted to an Officer should qualify as performance-based compensation. The Committee may, in its sole discretion, accelerate the vesting or exercisability of an Award, eliminate or make less restrictive any restrictions contained in an Award, waive any restriction or other provision of this Plan or any Award or otherwise amend or modify any Award in any manner that is either (a) not adverse to


the Participant to whom such Award was granted or (b) consented to in writing by such Participant, and (c) consistent with the requirements of Section 11.2, Section 11.3 and Section 409A of the Code, if applicable. The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent the Committee deems necessary or desirable to further this Plan’s objectives. Further, the Committee shall make all other determinations that may be necessary or advisable for the administration of this Plan. As permitted by law and the terms of this Plan, the Committee may delegate its authority as identified herein.

3.3 Delegation of Authority . To the extent permitted under applicable law, the Committee may delegate to the Chief Executive Officer and to other senior officers of the Company its duties under this Plan pursuant to such conditions or limitations as the Committee may establish; provided , however , that (a) the Committee may not delegate any authority to grant Awards to an Employee who is an officer, director or more than 10% beneficial owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Committee in accordance with Section 16 of the Exchange Act, or any person subject to Section 162(m) of the Code, (b) the resolution providing for such authorization to grant Awards sets forth the total number of Shares such officer(s) may grant and the terms of any Award that such officer(s) may grant, and (c) the officer(s) shall report periodically to the Committee regarding the nature and scope of the Awards granted pursuant to the authority delegated.

3.4 Decisions Binding . All determinations and decisions made by the Committee pursuant to the provisions of this Plan and all related orders and resolutions of the Committee shall be final, conclusive and binding on all persons concerned, including the Company, its stockholders, Officers, Directors, Employees, Consultants, Participants and their estates and beneficiaries. No member of the Committee shall be liable for any such action or determination made in good faith. In addition, the Committee is authorized to take any action it determines in its sole discretion to be appropriate subject only to the express limitations contained in this Plan, and no authorization in any provision of this Plan is intended or may be deemed to constitute a limitation on the authority of the Committee.

3.5 Non-U.S. Participants . In order to facilitate the making of any grant or combination of grants under this Plan, the Committee may provide for such special terms for awards to Participants who are foreign nationals or who are employed by the Company or any Subsidiary outside of the United States of America or who provide services to the Company under an agreement with a foreign nation or agency, as the Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Moreover, the Committee may approve such supplements to or amendments, restatements or alternative versions of this Plan (including, without limitation, sub-plans) as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of this Plan as in effect for any other purpose, and the Secretary or other appropriate officer of the Company may certify any such document as having been approved and adopted in the same manner as this Plan. No such special terms, supplements, amendments or restatements, however, will include any provisions that are inconsistent with the terms of this Plan as then in effect unless this Plan could have been amended to eliminate such inconsistency without further approval by the shareholders of the Company.


ARTICLE 4

Shares Subject to this Plan

4.1 Number of Shares Available for Grants of Awards . Subject to adjustment as provided in Section 4.4 hereof, there are reserved for Awards under this Plan Five Million Eight Hundred Thousand (5,800,000) Shares. Shares subject to Awards under this Plan that are cancelled, forfeited, terminated or expire unexercised, or are settled in cash, in whole or in part, shall immediately become available for the granting of Awards under this Plan to the extent of such cancellation, forfeiture, termination, expiration or cash settlement. Additionally, the Committee may from time to time adopt and observe such procedures concerning the counting of Shares against this Plan maximum as it may deem appropriate, provided that notwithstanding anything to the contrary contained herein, the following Shares will not be added to the aggregate number of Shares available for Awards under this Section 4.1: (a) Shares tendered or otherwise used in payment of the Option Price of an Option, (b) Shares withheld or otherwise used by the Company to satisfy a tax withholding obligation, (c) Shares subject to an Appreciation Right that are not actually issued in connection with its Shares settlement on exercise thereof, and (d) Shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of Options. The Shares reserved for issuance under this Section 4.1 may be Shares of original issuance or Shares held in treasury, or a combination thereof.

4.2 Limits on Grants in Any Fiscal Year . The following rules (“Award Limitations”) shall apply to grants of Awards under this Plan:

(a) Option and Appreciation Rights. The maximum aggregate number of Shares issuable pursuant to Awards of Options and/or Appreciation Rights that may be granted in any one Fiscal Year of the Company to any one Participant shall be One Million Two Hundred Thousand (1,200,000).

(b) Restricted Stock and Restricted Stock Units. The maximum aggregate number of Shares subject to Performance-Based Awards of Restricted Stock and RSUs that may be granted in any one Fiscal Year to any one Participant shall be One Million Two Hundred Thousand (1,200,000).

(c) Performance Shares. The maximum aggregate number of Shares subject to Performance-Based Awards of Performance Shares that may be granted in any one Fiscal Year to any one Participant shall be One Million Two Hundred Thousand (1,200,000).

(d) Performance Units. The maximum aggregate cash payout with respect to Performance-Based Awards of Performance Units granted in any one Fiscal Year to any one Participant shall be $6,000,000, with such cash value determined as of the Date of Grant.


(e) Cash Incentive Awards. The maximum aggregate cash payout with respect to Performance-Based Awards of Cash Incentive Awards granted in any one Fiscal Year to any one Participant shall be $6,000,000.

(f) Other Awards. The maximum aggregate cash payout with respect to Performance-Based Awards of other awards payable in cash under Article 11 granted in any one Fiscal Year to any one Participant shall be $6,000,000, with such cash value determined as of the Date of Grant.

4.3 Limit on Incentive Stock Options . Notwithstanding anything in this Article 4 or elsewhere in this Plan to the contrary and subject to adjustment as provided in Section 4.4, the maximum aggregate number of Shares actually issued pursuant to the exercise of Awards of Incentive Stock Options shall be One Million Two Hundred Thousand (1,200,000).

4.4 Adjustments in Authorized Shares . The existence of outstanding Awards shall not affect in any manner the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the capital stock of the Company or its business or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock (whether or not such issue is prior to, on a parity with or junior to the Shares) or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business or any other corporate act or proceeding of any kind, whether or not of a character similar to that of the acts or proceedings enumerated above.

If there shall be any change in the Shares of the Company or the capitalization of the Company through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, reverse stock split, split-up, spin-off, combination of shares, exchange of shares, dividend in kind or other like change in capital structure or distribution (other than normal cash dividends) to stockholders of the Company, the Committee, in its sole discretion, in order to prevent dilution or enlargement of Participants’ rights under this Plan, shall adjust, in such manner as it deems equitable and that complies with Section 409A of the Code, as applicable, the number and kind of Shares that may be granted as Awards under this Plan, the number and kind of Shares subject to outstanding Awards, the exercise or other price applicable to outstanding Awards, the Awards Limitations (to the extent that such adjustment would not cause any Option intended to qualify as an Incentive Stock Option to fail to so qualify), the Fair Market Value of the Shares and other value determinations and other terms applicable to outstanding Awards; provided, however , that the number of Shares subject to any Award shall always be a whole number. In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Committee shall be authorized, in its sole discretion, to: (a) grant or assume Awards by means of substitution of new Awards, as appropriate, for previously granted Awards or to assume previously granted Awards as part of such adjustment; (b) make provision, prior to the transaction, for the acceleration of the vesting and exercisability of, or lapse of restrictions with respect to, Awards and the termination of Options that remain unexercised at the time of such transaction; (c) provide for the acceleration of the vesting and exercisability of Options and the cancellation thereof in exchange for such payment as the Committee, in its sole discretion, determines is a reasonable approximation of the value thereof; (d) cancel any Awards and direct the Company to deliver to the Participants who are the holders of such Awards cash in an


amount that the Committee shall determine in its sole discretion is equal to the fair market value of such Awards as of the date of such event, which, in the case of any Option or Appreciation Right, shall be the amount equal to the excess of the Fair Market Value of a Share as of such date over the per-share exercise price for such Option or Base Price for such Appreciation Right (for the avoidance of doubt, if such exercise price or Base Price is less than such Fair Market Value, the Option or Appreciation Right may be canceled for no consideration); or (e) cancel Awards that are Options or Appreciation Rights and give the Participants who are the holders of such Awards notice and opportunity to exercise prior to such cancellation. Moreover, in the event of any such transaction or event or in the event of a Change in Control, the Committee shall provide in substitution for any or all outstanding Awards under this Plan such alternative consideration (including cash), if any, as it, in good faith, shall determine to be equitable in the circumstances and shall require in connection therewith the surrender of all awards so replaced in a manner that complies with Section 409A of the Code.

ARTICLE 5

Eligibility and Participation

5.1 Eligibility . Persons eligible to participate in this Plan include all Officers, Directors, Employees, Consultants and, only with respect to Adjusted Awards, BWXT Participants, as determined in the sole discretion of the Committee.

5.2 Actual Participation . Subject to the provisions of this Plan, the Committee may, from time to time, select from all Officers, Directors, Employees, Consultants, and BWXT Participants, those to whom Awards (or Adjusted Awards) shall be granted and shall determine the nature and amount of each Award. No Officer, Director, Employee or Consultant shall have the right to be selected for participation in this Plan, or, having been so selected, to be selected to receive a future award.

ARTICLE 6

Options

6.1 Grant of Options . Subject to the terms and provisions of this Plan, Options may be granted to Participants in such number, upon such terms, at any time, and from time to time, as shall be determined by the Committee; provided, however, that ISOs may be awarded only to Employees who meet the definition of “employees” under Section 3401(c) of the Code. Subject to the terms of this Plan, the Committee shall have discretion in determining the number of Shares subject to Options granted to each Participant.

6.2 Option Award Agreement . Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the duration of the Option, the number of Shares to which the Option pertains (subject to the limitations set forth in Article 4 of this Plan), and such other provisions as the Committee shall determine that are not inconsistent with the terms of this Plan. The Award Agreement also shall specify whether the Option is intended to be an ISO or an NQSO (provided that, in the absence of such specification, the Option shall be an NQSO).


6.3 Option Price . The Option Price for each grant of an Option under this Plan shall be as determined by the Committee; provided, however , that, subject to any subsequent adjustment that may be made pursuant to the provisions of Section 4.4 hereof, the Option Price shall be not less than one hundred percent (100%) of the Fair Market Value of a Share on the Date of Grant (except with respect to Adjusted Awards or awards under Article 22 of this Plan). Except as otherwise provided in Section 4.4 hereof, without prior stockholder approval, no repricing of Options awarded under this Plan shall be permitted such that the terms of outstanding Options may not be amended to reduce the Option Price; further, except as otherwise provided in Section 4.4 hereof, without prior stockholder approval, Options may not be replaced or regranted through cancellation, in exchange for cash or other Awards, or if the effect of the replacement or regrant would be to reduce the Option Price of the Options or would constitute a repricing under generally accepted accounting principles in the United States (as applicable to the Company’s public reporting).

6.4 Duration of Options . Subject to any earlier expiration that may be effected pursuant to the provisions of Section 4.4 hereof, each Option shall expire at such time as the Committee shall determine at the time of grant; provided, however , that an Option shall not be exercisable later than the tenth (10th) anniversary date of its grant.

6.5 Exercise of Options . Options granted under this Plan shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant, and may provide that such Options be exercised early, including in the event of the retirement, death or disability of a Participant; provided, however, that in the event of a Change in Control, a grant of an Option (excluding an Option that is an Adjusted Award) may only provide for the earlier exercise of such Option where either (a) within a specified period the Participant is involuntarily terminated for reasons other than for cause or terminates his or her employment for good reason or (b) such Option is not assumed or converted into replacement awards in a manner described in the Award Agreement. The exercise of an Option will result in the cancellation on a share-for-share basis of any Tandem Appreciation Right authorized under Article 7 of this Plan.

6.6 Payment . (a) Any Option granted under this Article 6 shall be exercised by the delivery of a notice of exercise to the Company in the manner prescribed in the related Award Agreement, setting forth the number of Shares with respect to which the Option is to be exercised, and either (i) accompanied by full payment of the Option Price for the Shares issuable on such exercise or (ii) exercised in a manner that is in accordance with applicable law and the “cashless exercise” procedures (if any) approved by the Committee involving a broker or dealer.

(b) The Option Price upon exercise of any Option shall be payable to the Company in full: (i) in cash or by check acceptable to the Company or by wire transfer of immediately available funds; (ii) by tendering previously acquired Shares owned by the Participants having a value at the time of exercise equal to the total Option Price; (iii) subject to any conditions or limitations established by the Committee, by the Company’s withholding of Shares otherwise issuable upon exercise of an Option pursuant to a “net exercise” arrangement; (iv) by a combination of such methods of payment; or (v) any other method approved by the Committee, in its sole discretion.

(c) Subject to any governing rules or regulations, as soon as practicable after receipt of a notification of exercise and full payment, the Company shall deliver to the Participant, in the Participant’s name, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option.


6.7 Restrictions on Share Transferability . The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Plan as it may deem advisable, including, without limitation, restrictions under applicable U.S. federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and under any blue sky or state securities laws applicable to such Shares.

6.8 Termination of Employment, Service or Directorship . Each Option Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s employment, service or directorship with the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in each Award Agreement entered into with a Participant with respect to an Option Award, need not be uniform among all Options granted pursuant to this Article 6 and may reflect distinctions based on the reasons for termination.

6.9 Transferability of Options .

(a) Incentive Stock Options. No ISO granted under this Plan may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of ERISA, or the regulations thereunder. Further, all ISOs granted to a Participant under this Plan shall be exercisable during his or her lifetime only by such Participant.

(b) Nonqualified Stock Options. Except as otherwise provided in a Participant’s Award Agreement, NQSOs granted under this Plan may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of ERISA, or the regulations thereunder. Further, except as otherwise provided in a Participant’s Award Agreement, all NQSOs granted to a Participant under this Plan shall be exercisable during his or her lifetime only by such Participant.

6.10 No Dividend Rights . Options granted under this Plan may not provide for any dividend or dividend equivalents thereon.

6.11 Deferred Payment . To the extent permitted by law, any grant may provide for deferred payment of the Option Price from the proceeds of sale through a bank or broker on a date satisfactory to the Company of some or all of the shares to which such exercise relates.

6.12 Performance Goals. Any grant of Options may specify performance goals that must be achieved as a condition to the exercise of such Options.


ARTICLE 7

Appreciation Rights

7.1 Grant of Appreciation Rights . Subject to the terms and provisions of this Plan, the Committee may, from time to time and upon such terms and conditions as it may determine, authorize the granting (a) to any Optionee, of Tandem Appreciation Rights in respect of Options granted hereunder, and (b) to any Participant, of Free-Standing Appreciation Rights. A Tandem Appreciation Right will be a right of the Optionee, exercisable by surrender of the related Option, to receive from the Company an amount determined by the Committee, which will be expressed as a percentage of the Spread (not exceeding 100 percent) at the time of exercise. Tandem Appreciation Rights may be granted at any time prior to the exercise or termination of the related Options; provided , however , that a Tandem Appreciation Right awarded in relation to an Incentive Stock Option must be granted concurrently with such Incentive Stock Option. A Free-Standing Appreciation Right will be a right of the Participant to receive from the Company an amount determined by the Committee, which will be expressed as a percentage of the Spread (not exceeding 100 percent) at the time of exercise.

7.2 Appreciation Rights Award Agreement . Each Appreciation Right grant shall be evidenced by an Award Agreement that shall specify the Base Price (if applicable), the duration of the Appreciation Right, identify the related Options (if applicable), and such other provisions as the Committee shall determine that are not inconsistent with the terms of this Plan.

7.3 Payment . Each grant of Appreciation Rights may specify that the amount payable on exercise of an Appreciation Right (a) will be paid by the Company in cash, Shares or any combination thereof and (b) may not exceed a maximum specified by the Committee at the Date of Grant.

7.4 Waiting Period and Exercisability. Any grant of Appreciation Rights may specify waiting periods before exercise and permissible exercise dates or periods. Furthermore, each grant may specify the period or periods of continuous service by the Participant with the Company or any Subsidiary that is necessary before the Appreciation Rights or installments thereof will become exercisable. Moreover, any grant of Appreciation Rights may provide that such Appreciation Rights be exercised early, including in the event of the retirement, death or disability of a Participant; provided, however, that in the event of a Change in Control, a grant of Appreciation Rights (excluding Appreciation Rights that are an Adjusted Award) may only provide for the earlier exercise of such Appreciation Rights where either (a) within a specified period the Participant is involuntarily terminated for reasons other than for cause or terminates his or her employment for good reason or (b) such Appreciation Rights are not assumed or converted into replacement awards in a manner described in the Award Agreement.

7.5 Performance Goals. Any grant of Appreciation Rights may specify performance goals that must be achieved as a condition of the exercise of such Appreciation Rights.


7.6 Termination of Employment, Service or Directorship . Each Appreciation Rights Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Appreciation Rights following termination of the Participant’s employment, service or directorship with the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in each Award Agreement entered into with a Participant with respect to an Appreciation Rights Award, need not be uniform among all Appreciation Rights granted pursuant to this Article 7 and may reflect distinctions based on the reasons for termination.

7.7 Tandem Appreciation Rights . Any grant of Tandem Appreciation Rights will provide that such Tandem Appreciation Rights may be exercised only at a time when the related Option is also exercisable and at a time when the Spread is positive, and by surrender of the related Option for cancellation. Successive grants of Tandem Appreciation Rights may be made to the same Participant regardless of whether any Tandem Appreciation Rights previously granted to the Participant remain unexercised.

7.8 No Dividend Rights . Appreciation Rights granted under this Plan may not provide for any dividends or dividend equivalents thereon.

7.9 Transferability . Except as otherwise provided in a Participant’s Award Agreement, Appreciation Rights granted under this Plan may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of ERISA, or the regulations thereunder. Further, except as otherwise provided in a Participant’s Award Agreement, all Appreciation Rights granted to a Participant under this Plan shall be exercisable during his or her lifetime only by such Participant.

7.10 Free-Standing Appreciation Rights . These terms apply only to Free-Standing Appreciation Rights:

(a) Base Price. Each grant will specify in respect of each Free-Standing Appreciation Right a Base Price, which (except with respect to awards under Article 22 of this Plan) may not be less than the Fair Market Value per Share on the Date of Grant. Except as otherwise provided in Section 4.4 hereof, without prior stockholder approval, no repricing of Appreciation Rights awarded under this Plan shall be permitted such that the terms of outstanding Appreciation Rights may not be amended to reduce the Base Price; further, except as otherwise provided in Section 4.4 hereof, without prior stockholder approval, Appreciation Rights may not be replaced or regranted through cancellation, in exchange for cash or other Awards, or if the effect of the replacement or regrant would be to reduce the Base Price of the Appreciation Rights or would constitute a repricing under generally accepted accounting principles in the United States (as applicable to the Company’s public reporting).

(b) Duration . No Free-Standing Appreciation Right granted under this Plan may be exercised more than 10 years from the Date of Grant.


ARTICLE 8

Restricted Stock

8.1 Grant of Restricted Stock . Subject to the terms and provisions of this Plan, the Committee at any time, and from time to time, may grant or sell Shares as Restricted Stock (“Shares of Restricted Stock”) to Participants in such amounts as the Committee shall determine.

8.2 Restricted Stock Award Agreement . Each Award of Restricted Stock shall be evidenced by an Award Agreement that shall specify the Period of Restriction, the number of Shares of Restricted Stock granted or to be sold, and such other provisions as the Committee shall determine.

8.3 Transferability . Except as provided in the Participant’s related Award Agreement and/or this Article 8, the Shares of Restricted Stock granted or sold to a Participant under this Plan may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee and specified in the related Award Agreement entered into with that Participant, or upon earlier satisfaction of any other conditions, as specified by the Committee in its sole discretion and set forth in the Award Agreement. During the applicable Period of Restriction, all rights with respect to the Restricted Stock granted to a Participant under this Plan shall be available during his or her lifetime only to such Participant. Any attempted assignment of Restricted Stock in violation of this Section 8.3 shall be null and void.

8.4 Other Restrictions . (a) The Committee may impose such other conditions and/or restrictions on any Shares of Restricted Stock granted pursuant to this Plan as it may deem advisable, including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock, restrictions based upon the achievement of specific performance goals, time-based restrictions on vesting following the attainment of the performance goals and/or restrictions under applicable U.S. federal or state securities laws. Further, a grant or sale of Shares of Restricted Stock may provide for earlier termination of restrictions, including in the event of the retirement, death or disability of a Participant; provided, however, that in the event of a Change in Control, a grant or sale of Shares of Restricted Stock (excluding Shares of Restricted Stock that are an Adjusted Award) may only provide for the earlier termination of restrictions where either (i) within a specified period the Participant is involuntarily terminated for reasons other than for cause or terminates his or her employment for good reason or (ii) such Shares of Restricted Stock are not assumed or converted into replacement awards in a manner described in the Award Agreement.

(b) Unless otherwise directed by the Committee, (i) all certificates representing Shares of Restricted Stock will be held in custody by the Company until all restrictions thereon will have lapsed, together with a stock power or powers executed by the Participant in whose name such certificates are registered, endorsed in blank and covering such shares or (ii) all Shares of Restricted Stock will be held at the Company’s transfer agent in book entry form with appropriate restrictions relating to the transfer of such Shares of Restricted Stock.


8.5 Removal of Restrictions . Except as otherwise provided in this Article 8, Shares of Restricted Stock covered by each Restricted Stock Award made under this Plan shall become freely transferable by the Participant after all conditions and restrictions applicable to such Shares have been satisfied or have lapsed.

8.6 Voting Rights . To the extent permitted by the Committee or required by law, Participants holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares during the applicable Period of Restriction.

8.7 Dividends . During the applicable Period of Restriction, Participants holding Shares of Restricted Stock granted or sold hereunder shall, unless the Committee otherwise determines, be credited with cash dividends paid with respect to the Shares, in a manner determined by the Committee in its sole discretion. The Committee may apply any restrictions to the dividends that it deems appropriate; provided , however , that dividends or other distributions on Shares of Restricted Stock that lapse as a result of the achievement of performance goals will be deferred until and paid contingent upon the achievement of the applicable performance goals.

8.8 Termination of Employment, Service or Directorship . Each Restricted Stock Award Agreement shall set forth the extent to which the Participant shall have the right to receive unvested Shares of Restricted Stock following termination of the Participant’s employment, service or directorship with the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in each Award Agreement entered into with a Participant with respect to Shares of Restricted Stock, need not be uniform among all Shares of Restricted Stock granted pursuant to this Article 8 and may reflect distinctions based on the reasons for termination.

ARTICLE 9

Performance Units, Performance Shares and Cash Incentive Awards

9.1 Grant of Performance Units, Performance Shares and Cash Incentive Awards . Subject to the terms of this Plan, Performance Units, Performance Shares and Cash Incentive Awards may be granted to Participants in such amounts and upon such terms, and at any time and from time to time, as shall be determined by the Committee.

9.2 Award Agreement . Each Award of Performance Units, Performance Shares or Cash Incentive Award shall be evidenced by an Award Agreement that shall specify the Performance Period, the number of Performance Units or Performance Shares or amount of Cash Incentive Award granted, and such other provisions as the Committee shall determine. Further, the Performance Period may be subject to earlier lapse or modification, including in the event of retirement, death or disability of a Participant; provided, however, that in the event of a Change in Control, the Performance Period for such Performance Units, Performance Shares or Cash Incentive Award (excluding an award that is an Adjusted Award) may be subject to earlier lapse or modification only where either (a) within a specified period the Participant is involuntarily


terminated for reasons other than for cause or terminates his or her employment for good reason or (b) such Performance Units, Performance Shares or Cash Incentive Awards are not assumed or converted into replacement awards in a manner described in the Award Agreement; further provided, that no such adjustment will be made in the case of a Performance-Based Award (other than in connection with the death or disability of the Participant or a Change in Control) where such action would result in the loss of the otherwise available exemption of the award under Section 162(m) of the Code. In such event, the Award Agreement will specify the time and terms of delivery.

9.3 Value of Performance Units, Performance Shares and Cash Incentive Awards . Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. Each Performance Share shall have an initial value equal to one hundred percent (100%) of the Fair Market Value of a Share on the date of grant. The Committee shall set performance goals in its discretion that, depending on the extent to which they are met, will determine the number and/or value of Performance Units, Performance Shares or Cash Incentive Awards which will be paid out to the Participant.

9.4 Earning of Performance Units, Performance Shares and Cash Incentive Awards . Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of Performance Units, Performance Shares or Cash Incentive Awards shall be entitled to receive payment of the number and value of Performance Units, Performance Shares or Cash Incentive Awards earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved.

9.5 Form and Timing of Payment of Performance Units, Performance Shares and Cash Incentive Awards . Subject to the provisions of Article 13 hereof or as otherwise determined by the Committee in the Award Agreement, payment of earned Performance Units, Performance Shares or Cash Incentive Awards to a Participant shall be made no later than March 15 following the end of the calendar year in which such Performance Units, Performance Shares or Cash Incentive Awards vest, or as soon as administratively practicable thereafter if payment is delayed due to unforeseeable events. Subject to the terms of this Plan, the Committee, in its sole discretion, may pay earned Performance Units or Performance Shares in the form of cash or in Shares (or in a combination thereof) that have an aggregate Fair Market Value equal to the value of the earned Performance Units or Performance Shares at the close of the applicable Performance Period. Any Shares issued or transferred to a Participant for this purpose may be granted subject to any restrictions that are deemed appropriate by the Committee.

9.6 Termination of Employment, Service or Directorship . Each Award Agreement providing for a Performance Unit, Performance Share or Cash Incentive Award shall set forth the extent to which the Participant shall have the right to receive a payout of cash or Shares with respect to unvested Performance Units, Performance Shares or Cash Incentive Award following termination of the Participant’s employment, service or directorship with the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with the Participant, need not be uniform among all Awards of Performance Units, Performance Shares or Cash Incentive Awards granted pursuant to this Article 9 and may reflect distinctions based on the reasons for termination.


9.7 Transferability . Except as otherwise provided in a Participant’s related Award Agreement, Performance Units, Performance Shares and Cash Incentive Awards may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of ERISA, or the regulations thereunder. Further, except as otherwise provided in a Participant’s related Award Agreement, a Participant’s rights with respect to Performance Units, Performance Shares or Cash Incentive Awards granted to that Participant under this Plan shall be exercisable during the Participant’s lifetime only by the Participant. Any attempted assignment of Performance Units, Performance Shares or Cash Incentive Award in violation of this Section 9.7 shall be null and void.

9.8 Voting Rights and Dividends . During the applicable Vesting Period, Participants holding Performance Units or Performance Shares shall not have voting rights with respect to the Shares underlying such units or shares. During the applicable Vesting Period, Participants holding Performance Units or Performance Shares granted hereunder shall, unless the Committee otherwise determines, be credited with dividend equivalents, in the form of cash or additional Performance Units or Performance Shares (as determined by the Committee in its sole discretion), if a cash dividend is paid with respect to the Shares. The extent to which dividend equivalents shall be credited shall be determined in the sole discretion of the Committee. Such dividend equivalents shall be subject to a Vesting Period equal to the remaining Vesting Period of the Performance Units or Performance Shares with respect to which the dividend equivalents are paid. Dividend equivalents credited with respect to Performance Units or Performance Shares that do not vest shall be forfeited.

ARTICLE 10

Restricted Stock Units

10.1 Grant of RSUs . Subject to the terms and provisions of this Plan, the Committee at any time, and from time to time, may grant or sell RSUs to eligible Participants in such amounts as the Committee shall determine.

10.2 RSU Award Agreement . Each RSU Award to a Participant shall be evidenced by an RSU Award Agreement entered into with that Participant, which shall specify the Vesting Period, the number of RSUs granted, the time and manner of payment for earned RSUs, and such other provisions as the Committee shall determine in its sole discretion. Further, any grant or sale of Restricted Stock Units may provide for the early termination of restrictions, including in the event of retirement, death or disability of a Participant; provided, however, that in the event of a Change of Control, a grant or sale of Restricted Stock Units (excluding Restricted Stock Units that are an Adjusted Award) may provide for the earlier termination of restrictions only where either (a) within a specified period the Participant is involuntarily terminated for reasons other than for cause or terminates his or her employment for good reason or (b) such Restricted Stock Units are not assumed or converted into replacement awards in a manner described in the Award Agreement; further provided, that no award of Restricted Stock Units intended to be a Performance-Based Award will provide for such early lapse or modification of the Restriction Period (other than in connection with the death or disability of the Participant or a Change in Control) to the extent such provisions would cause such award to fail to be a Performance-Based Award.


10.3 Transferability . Except as provided in a Participant’s related Award Agreement, RSUs granted hereunder may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of ERISA, or the regulations thereunder. Further, except as otherwise provided in a Participant’s related Award Agreement, a Participant’s rights with respect to an RSU Award granted to that Participant under this Plan shall be available during his or her lifetime only to such Participant. Any attempted assignment of an RSU Award in violation of this Section 10.3 shall be null and void.

10.4 Form and Timing of Delivery . If a Participant’s RSU Award Agreement provides for payment in cash, payment equal to the Fair Market Value of the Shares underlying the RSU Award, calculated as of the last day of the applicable Vesting Period, shall be made in a single lump-sum payment. If a Participant’s RSU Award Agreement provides for payment in Shares, the Shares underlying the RSU Award shall be delivered to the Participant. Subject to the provisions of Article 13 hereof or as otherwise determined by the Committee in the Award Agreement, such payment of cash or Shares shall be made no later than March 15 following the end of the calendar year during which the RSU Award vests, or as soon as practicable thereafter if payment is delayed due to unforeseeable events. Such delivered Shares shall be freely transferable by the Participant.

10.5 Voting Rights and Dividends . During the applicable Vesting Period, Participants holding RSUs shall not have voting rights with respect to the Shares underlying such RSUs. During the applicable Vesting Period, Participants holding RSUs granted hereunder shall, unless the Committee otherwise determines, be credited with dividend equivalents, in the form of cash or additional RSUs (as determined by the Committee in its sole discretion), if a cash dividend is paid with respect to the Shares. The extent to which dividend equivalents shall be credited shall be determined in the sole discretion of the Committee. Such dividend equivalents shall be subject to a Vesting Period equal to the remaining Vesting Period of the RSUs with respect to which the dividend equivalents are paid. Dividend equivalents credited with respect to Performance Units/Shares that do not vest shall be forfeited.

10.6 Termination of Employment, Service or Directorship . Each RSU Award Agreement shall set forth the extent to which the applicable Participant shall have the right to receive a payout of cash or Shares with respect to unvested RSUs following termination of the Participant’s employment, service or directorship with the Company and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in each Award Agreement entered into with a Participant with respect to RSUs, need not be uniform among all RSUs granted pursuant to this Article 10 and may reflect distinctions based on the reasons for termination.


ARTICLE 11

Other Awards

11.1 Grant of Other Awards. Subject to applicable law and the limit set forth in Article 3 of this Plan, the Committee may grant to any Participant such other awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares or factors that may influence the value of such shares, including, without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into Shares, purchase rights for Shares, awards with value and payment contingent upon performance of the Company or specified Subsidiaries, affiliates or other business units thereof or any other factors designated by the Committee, and awards valued by reference to the book value of the Shares or the value of securities of, or the performance of specified Subsidiaries or affiliates or other business units of the Company. The Committee will determine the terms and conditions of such awards. Shares delivered pursuant to an award in the nature of a purchase right granted under this Article 11 will be purchased for such consideration, paid for at such time, by such methods, and in such forms, including, without limitation, Shares, other awards, notes or other property, as the Committee determines.

11.2 Tandem Awards . Cash awards, as an element of, or supplement to, any other award granted under this Plan, may also be granted pursuant to this Article 11.

11.3 Shares as Bonus. The Committee may grant Shares as a bonus, or may grant other awards in lieu of obligations of the Company or a Subsidiary to pay cash or deliver other property under this Plan or under other plans or compensatory arrangements, subject to such terms as will be determined by the Committee in a manner that complies with Section 409A of the Code.

11.4 Early Terminations. Any grant of an award under this Article 11 may provide for the early vesting or termination of restrictions, including in the event of retirement, death or disability of a Participant; provided, however, that in the event of a Change in Control, any grant of an award under this Article 11 (excluding an award that is an Adjusted Award) may provide for the earlier termination of restrictions on such award only where either (a) within a specified period the Participant is involuntarily terminated for reasons other than for cause or terminates his or her employment for good reason or (b) such award granted under this Article 11 is not assumed or converted into replacement awards in a manner described in the Award Agreement; further provided, that no award granted under this Article 11 that is intended to be a Performance-Based Award will provide for such early lapse or modification (other than in connection with the death or disability of the Participant or a Change in Control) to the extent such provisions would cause such award to fail to be a Performance-Based Award. In such event, the Award Agreement will specify the time and terms of delivery.


ARTICLE 12

Performance Measures

12.1 Performance Measures . Unless and until the Committee proposes and stockholders approve a change in the general performance measures set forth in this Article 12, the attainment of which may determine the degree of payout and/or vesting with respect to Awards which are designed to qualify for the Performance-Based Exception, the performance measure(s) to be used for purposes of such Performance-Based Awards shall be chosen from among the following alternatives:

(a) Cash Flow (including operating cash flow and free cash flow);

(b) Cash Flow Return on Capital;

(c) Cash Flow Return on Assets;

(d) Cash Flow Return on Equity;

(e) Net Income;

(f) Return on Capital;

(g) Return on Invested Capital;

(h) Return on Assets;

(i) Return on Equity;

(j) Share Price;

(k) Earnings Per Share (basic or diluted);

(l) Earnings Before Interest and Taxes;

(m) Earnings Before Interest, Taxes, Depreciation and Amortization;

(n) Total and Relative Shareholder Return;

(o) Operating Income;

(p) Return on Net Assets;

(q) Gross or Operating Margins;

(r) Safety; and

(s) Economic Value Added or EVA.

Subject to the terms of this Plan, each of these measures may be described in terms of Company-wide objectives or objectives that are related to the performance of the individual Participant or of one or more of the Subsidiaries, divisions, departments, regions, functions or other organizational units within the Company or its Subsidiaries. Each of these measures may


be made relative to the performance of other companies or subsidiaries, divisions, departments, regions, functions or other organizational units within such other companies, and may be made relative to an index or one or more of the performance objectives themselves. Furthermore, in the case of a Performance-Based Award, each performance measure will be objectively determinable to the extent required under Section 162(m) of the Code, and, unless otherwise determined by the Committee and to the extent consistent with Section 162(m) of the Code, may include or exclude specified research and development expenses, acquisition costs, operating expenses from acquired businesses or corporate transactions, and such other unusual or infrequent items as defined by the Committee in its sole discretion and as identified on the Date of Grant.

Notwithstanding the foregoing, with respect to an Adjusted Award, performance measures shall mean any performance objectives defined in the applicable Award Agreement.

12.2 Adjustments . The Committee shall have the sole discretion to adjust determinations of the degree of attainment of the pre-established performance goals; provided , however , that, except in connection with a Change in Control, a Performance-Based Award may not be adjusted in a manner that would result in the Award no longer qualifying for the Performance-Based Exception. The Committee shall retain the discretion to adjust such Awards downward.

12.3 Compliance with Code Section 162(m) . In the event that applicable tax and/or securities laws or regulations change to permit Committee discretion to alter the governing performance measures without obtaining stockholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining stockholder approval; provided that after such change or changes the Award continues to qualify for the Performance-Based Exception. In addition, in the event that the Committee determines that it is advisable to grant Awards that will not qualify for the Performance-Based Exception, the Committee may make such grants without satisfying the requirements of Section 162(m) of the Code and the regulations issued thereunder. Any performance-based Awards granted to Officers or Directors that are not intended to qualify as qualified performance-based compensation under Section 162(m) of the Code shall be based on achievement of such performance measure(s) and be subject to such terms, conditions and restrictions as the Committee shall determine.

ARTICLE 13

Deferrals

The Committee may, in its sole discretion, permit selected Participants to elect to defer payment of some or all types of Awards, or may provide for the deferral of an Award in an Award Agreement; provided , however , that the timing of any such election and payment of any such deferral shall be specified in the Award Agreement and shall conform to the requirements of Section 409A(a)(2), (3) and (4) of the Code and the regulations and rulings issued thereunder. Any deferred payment, whether elected by a Participant or specified in an Award Agreement or by the Committee, may be forfeited if and to the extent that the applicable Award Agreement so provides.


ARTICLE 14

Rights of Employees, Directors and Consultants

14.1 Employment or Service . Nothing in this Plan shall interfere with or limit in any way the right of the Company to terminate any Participant’s employment or service at any time, nor confer upon any Participant any right to continue in the employ or service of the Company.

14.2 No Contract of Employment . Neither an Award nor any benefits arising under this Plan shall constitute part of a Participant’s employment contract with the Company or any Subsidiary, and accordingly, subject to the provisions of Article 16 hereof, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Board without giving rise to liability on the part of the Company or any Subsidiary for severance payments.

14.3 Transfers Between Participating Entities . For purposes of this Plan, a transfer of a Participant’s employment between the Company and a Subsidiary, or between Subsidiaries, shall not be deemed to be a termination of employment. Upon such a transfer, subject to the terms of this Plan, the Committee may make such adjustments to outstanding Awards as it deems appropriate to reflect the change in reporting relationships.

ARTICLE 15

Change in Control

The treatment of outstanding Awards upon the occurrence of a Change in Control, unless otherwise specifically prohibited under applicable laws, or by the rules and regulations of any governing governmental agencies or national securities exchanges, shall be determined in the sole discretion of the Committee in accordance with the terms of this Plan and shall be described in the Award Agreements and need not be uniform among all Participants or Awards granted pursuant to this Plan.

ARTICLE 16

Amendment, Modification and Termination

16.1 Amendment, Modification, and Termination . The Board may at any time and from time to time, alter, amend, suspend or terminate this Plan in whole or in part; provided, however, that stockholder approval shall be required for any amendment that materially alters the terms of this Plan or is otherwise required by applicable legal requirements. No amendment or alteration that would adversely affect the rights of any Participant under any Award previously granted to such Participant shall be made without the consent of such Participant. Notwithstanding anything in this Plan to the contrary, Participant consent shall not be required for any amendment to Article 20 hereof or otherwise that is deemed necessary or appropriate by the Company to ensure compliance with the Dodd-Frank Wall Street Reform and Consumer Protection Act or Section 10D of the Exchange Act, or any rules or regulations promulgated thereunder.

16.2 Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events . If permitted by Section 409A of the Code and Section 162(m) of the Code and subject to Sections 4.4 and 6.3 of this Plan, the Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.4 hereof) affecting the Company or the financial statements of the Company or in recognition of changes in applicable laws, regulations or accounting principles, whenever the Committee determines that such adjustments are appropriate.


ARTICLE 17

Withholding

The Company shall have the right to deduct applicable taxes from any Award payment and withhold, at the time of delivery or vesting of cash or Shares under this Plan, or at the time applicable law otherwise requires, an appropriate amount of cash or number of Shares or a combination thereof for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes. The Committee may permit withholding to be satisfied by the transfer to the Company of Shares theretofore owned by the holder of the Award with respect to which withholding is required. If Shares are used to satisfy tax withholding, such Shares shall be valued at their fair market value on the date when the tax withholding is required to be made and the value withheld shall not exceed the minimum amount of taxes required to be withheld.

ARTICLE 18

Indemnification

Each person who is or shall have been a member of the Committee, or of the Board, or an officer of the Company to whom the Committee has delegated authority in accordance with Article 3 hereof, shall be indemnified and held harmless by the Company against and from: (a) 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 reason of any action taken or failure to act under this Plan, except for any such action or failure to act that constitutes willful misconduct on the part of such person or as to which any applicable statute prohibits the Company from providing indemnification; and (b) any and all amounts paid by him or her in settlement of any claim, action, suit or proceeding as to which indemnification is provided pursuant to clause (a) of this sentence, with the Company’s approval, or paid by him or her in satisfaction of any judgment or award in any such 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 handle and defend it on his or her own behalf. The foregoing right of indemnification shall be in addition to any other rights of indemnification to which such persons may be entitled under the Company’s Articles of Incorporation or By-Laws (each, as amended from time to time), as a matter of law, or otherwise.


ARTICLE 19

Successors

All obligations of the Company under this Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the direct or indirect result of a merger, consolidation, purchase of all or substantially all of the business and/or assets of the Company or other transaction.

ARTICLE 20

Clawback Provisions

The ability of the Company and/or the Board to forfeit Awards granted or recover Awards paid under this Plan, unless otherwise specifically prohibited under applicable laws, or by the rules and regulations of any governing governmental agencies or national securities exchanges, may be determined in the sole discretion of the Committee and described in the Award Agreements and need not be uniform among all Participants or Awards granted pursuant to this Plan.

ARTICLE 21

General Provisions

21.1 Restrictions and Legends . No Shares or other form of payment shall be issued or transferred with respect to any Award unless the Company shall be satisfied that such issuance or transfer will be in compliance with applicable U.S. federal and state securities laws. The Committee may require each person receiving Shares pursuant to an Award under this Plan to represent to and agree with the Company in writing that the Participant is acquiring the Shares for investment without a view to distribution thereof. Any certificates evidencing Shares delivered under this Plan (to the extent that such Shares are so evidenced) may be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or transaction reporting system upon which the Shares are then listed or to which they are admitted for quotation and any applicable U.S. federal or state securities law. In addition to any other legend required by this Plan, any certificates for such Shares may include any legend that the Committee deems appropriate to reflect any restrictions on transfer of such Shares.

21.2 Gender and Number . Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular and the singular shall include the plural.

21.3 Severability . If any provision of this Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

21.4 Requirements of Law . The granting of Awards and the issuance of Shares under this Plan shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.


21.5 Uncertificated Shares . To the extent that this Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange or transaction reporting system on which the Shares are listed or to which the Shares are admitted for quotation.

21.6 Unfunded Plan . Insofar as this Plan provides for Awards of cash, Shares or rights thereto, it will be unfunded. Although the Company may establish bookkeeping accounts with respect to Participants who are entitled to cash, Shares or rights thereto under this Plan, it will use any such accounts merely as a bookkeeping convenience. Participants shall have no right, title or interest whatsoever in or to any investments that the Company may make to aid it in meeting its obligations under this Plan. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative or any other person. To the extent that any person acquires a right to receive payments from the Company under this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts, except as expressly set forth in this Plan. This Plan is not intended to be subject to ERISA.

21.7 No Fractional Shares . No fractional Shares shall be issued or delivered pursuant to this Plan or any Award. The Committee shall determine whether cash, Awards or other property shall be delivered or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

21.8 Governing Law . This Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by mandatory provisions of the Code or the securities laws of the United States, will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any conflicts of laws provisions thereof that would result in the application of the laws of any other jurisdiction.

21.9 Compliance with Code Section 409A . (a) To the extent applicable, it is intended that this Plan and any grant made hereunder comply with or be exempt from the provisions of Section 409A of the Code. This Plan and any grants made hereunder shall be administered and interpreted in a manner consistent with this intent. Any reference in this Plan to Section 409A of the Code will also include any regulations or any other formal guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.

(b) Neither a Participant nor any of a Participant’s creditors or beneficiaries will have the right to subject any deferred compensation (within the meaning of Section 409A of the Code) payable under this Plan and grants hereunder to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A of the Code, any deferred compensation (within the meaning of Section 409A of the Code) payable to a Participant or for a Participant’s benefit under this Plan and grants hereunder may not be reduced by, or offset against, any amount owing by a Participant to the Company or any of its Subsidiaries.


(c) If, at the time of a Participant’s separation from service (within the meaning of Section 409A of the Code), (i) the Participant will be a specified employee (within the meaning of Section 409A of the Code and using the identification methodology selected by the Company from time to time) and (ii) the Company makes a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of Section 409A of the Code) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A of the Code in order to avoid taxes or penalties under Section 409A of the Code, then the Company will not pay such amount on the otherwise scheduled payment date but will instead pay it, without interest, on the first business day of the seventh month after such separation from service.

(d) Notwithstanding any provision of this Plan and grants hereunder to the contrary, in light of the uncertainty with respect to the proper application of Section 409A of the Code, the Company reserves the right to make amendments to this Plan and grants hereunder as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A of the Code. In any case, a Participant will be solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on a Participant or for a Participant’s account in connection with this Plan and grants hereunder (including any taxes and penalties under Section 409A of the Code), and neither the Company nor any of its affiliates will have any obligation to indemnify or otherwise hold a Participant harmless from any or all of such taxes or penalties.

ARTICLE 22

Stock-Based Awards in Substitution for Options or Awards Granted by Other Company

Notwithstanding anything in this Plan to the contrary:

(a) Awards may be granted under this Plan in substitution for or in conversion of, or in connection with an assumption of, stock options, stock appreciation rights, restricted stock, restricted stock units or other stock or stock-based awards held by awardees of an entity engaging in a corporate acquisition or merger transaction with the Company or any Subsidiary. Any conversion, substitution or assumption will be effective as of the close of the merger or acquisition, and, to the extent applicable, will be conducted in a manner that complies with Section 409A of the Code. The awards so granted may reflect the original terms of the awards being assumed or substituted or converted for and need not comply with other specific terms of this Plan, and may account for Shares substituted for the securities covered by the original awards and the number of shares subject to the original awards, as well as any exercise or purchase prices applicable to the original awards, adjusted to account for differences in stock prices in connection with the transaction.


(b) In the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary merges has shares available under a pre-existing plan previously approved by stockholders and not adopted in contemplation of such acquisition or merger, the shares available for grant pursuant to the terms of such plan (as adjusted, to the extent appropriate, to reflect such acquisition or merger) may be used for awards made after such acquisition or merger under the Plan; provided , however , that awards using such available shares may not be made after the date awards or grants could have been made under the terms of the pre-existing plan absent the acquisition or merger, and may only be made to individuals who were not employees or directors of the Company or any Subsidiary prior to such acquisition or merger.

(c) Any Common Shares that are issued or transferred by, or that are subject to any awards that are granted by, or become obligations of, the Company under Sections 22(a) or 22(b) above will not reduce the Shares available for issuance or transfer under the Plan or otherwise count against the limits contained in Article 4 of the Plan. In addition, no Shares that are issued or transferred by, or that are subject to any awards that are granted by, or become obligations of, the Company under Sections 22(a) or 22(b) above will be added to the aggregate plan limit contained in Article 4 of the Plan.

ARTICLE 23

BWXT Awards

The Company is authorized to issue Adjusted Awards to BWXT Participants in connection with the adjustment and replacement by BWXT of certain stock options, stock appreciation rights, restricted shares, restricted stock units, deferred shares, and performance shares previously granted by BWXT. Notwithstanding any other provision of this Plan to the contrary, the number of Shares to be subject to an Adjusted Award and the other terms and conditions of each Adjusted Award, including option exercise price, as applicable, shall be determined by the Committee, all in accordance with the terms of the Employee Matters Agreement.

Exhibit 10.9

BABCOCK & WILCOX ENTERPRISES, INC.

EXECUTIVE INCENTIVE COMPENSATION PLAN

Effective as of June 1, 2015


Table of Contents

 

ARTICLE 1 – PURPOSE      1   
ARTICLE 2 – DEFINITIONS      1   

(a)

 

Affiliated Company

     1   

(b)

 

Award Opportunity

     1   

(c)

 

Board

     1   

(d)

 

Code

     1   

(e)

 

Committee

     1   

(f)

 

Company

     1   

(g)

 

Consolidated Balance Sheet

     1   

(h)

 

Consolidated Financial Statements

     1   

(i)

 

Covered Employee

     2   

(j)

 

Economic Value Added

     2   

(k)

 

Employee

     2   

(l)

 

Equity

     2   

(m)

 

Final Award

     2   

(n)

 

Participant

     2   

(o)

 

Plan

     2   

(p)

 

Qualified Performance-Based Award

     2   

(q)

 

Salary

     2   

(r)

 

Subsidiary

     2   

(s)

 

Target Incentive Award

     2   
ARTICLE 3 – UNFUNDED STATUS OF THE PLAN      2   
ARTICLE 4 – ADMINISTRATION OF THE PLAN      3   
ARTICLE 5 – ELIGIBILITY AND PARTICIPATION      3   
ARTICLE 6 – AWARD DETERMINATION      3   

(a)

 

Performance Measures and Performance Goals

     3   

(b)

 

Award Opportunities

     4   

(c)

 

Adjustment of Performance Goals and Award Opportunities

     4   

(d)

 

Final Award Determinations

     4   

 

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(e)

 

Award Limit

     4   

(f)

 

Threshold Levels of Performance

     5   
ARTICLE 7 – PAYMENT OF AWARDS      5   
ARTICLE 8 – QUALIFIED PERFORMANCE-BASED AWARDS      5   

(a)

 

Applicability of Article 8

     5   

(b)

 

Establishment of Award Opportunities

     5   

(c)

 

Components of Award Opportunities

     5   

(d)

 

No Adjustment of Performance Goals or Award Opportunities

     6   
ARTICLE 9 – LIMITATIONS      6   
ARTICLE 10 – CLAWBACK PROVISIONS      7   
ARTICLE 11 – AMENDMENT, SUSPENSION, TERMINATION, OR ALTERATION OF THE PLAN      7   
ARTICLE 12 – COMMENCEMENT OF AWARDS      8   

 

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Article 1 – Purpose

The purpose of the plan is to make provision for the payment of supplemental compensation to managerial and other key Employees who contribute materially to the success of the Company or one or more of its Subsidiary or Affiliated Companies, thereby affording them an incentive for and a means of participating in that success.

Article 2 – Definitions

For the purpose of the Plan, the following definitions shall be applicable:

(a) Affiliated Company. Any corporation, joint venture, or other legal entity in which Babcock & Wilcox Enterprises, Inc., directly or indirectly, through one or more Subsidiaries, owns less than fifty percent (50%) but at least twenty percent (20%) of its voting control.

(b) Award Opportunity. The various levels of incentive award payouts which a Participant may earn under the Plan, as established by the Committee pursuant to Sections 6(a), 6(b) and 8(b) herein.

(c) Board. The Board of Directors of Babcock & Wilcox Enterprises, Inc.

(d) Code. “Code” means the Internal Revenue Code of 1986, as amended.

(e) Committee. “Committee” means the Compensation Committee of the Board of Directors. The Committee shall be constituted so as to permit the Program to comply with the exemptive provisions of Section 16 of the Securities Exchange Act of 1934, and the rules promulgated thereunder, and the rules and regulations approved by national securities exchanges.

(f) Company. “Company” means The Babcock & Wilcox Enterprises, Inc., a Delaware corporation (or any successor thereto).

(g) Consolidated Balance Sheet With respect to each fiscal year of the Company, the Consolidated Balance Sheet included in the Company’s Consolidated Financial Statements for such year, as certified by the Company’s independent public accountants, and set forth in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

(h) Consolidated Financial Statements. With respect to each fiscal year of the Company, the Company’s Consolidated Balance Sheet and Consolidated Statement of Income and Retained Earnings for such year.

 

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(i) Covered Employee. A Participant who is one of the group of “covered employees,” as defined in the Regulations promulgated under Code Section 162(m)(3) or who the Committee determines is likely to become one of the group of “covered employees” as defined under Code Section 162(m).

(j) Economic Value Added . Economic Value Added, with respect to each fiscal year of the Company, is defined as net operating profit after tax minus the product of capital and the cost of capital.

(k) Employee. Any person who is regularly employed by the Company or any of its Subsidiary or Affiliated Companies on a full-time salaried basis, including any Employee who also is an officer or director of the Company or of any of its Subsidiary or Affiliated Companies.

(l) Equity. Total stockholders’ equity as reported in the Company’s Consolidated Balance Sheet.

(m) Final Award. The actual award earned during a plan year by a Participant, as determined by the Committee following the end of a plan year; provided Participant is still an Employee when payment is to be made pursuant to Article 7 herein.

(n) Participant. An Employee who has received an Award Opportunity.

(o) Plan. The Executive Incentive Compensation Plan of Babcock & Wilcox Enterprises, Inc.

(p) Qualified Performance-Based Award. An award or portion of an award granted to a Covered Employee that is intended to satisfy the requirements for “qualified performance-based compensation” under Code Section 162(m).

(q) Salary. The annual basic compensation earned during a plan year (including any portion which may have been deferred).

(r) Subsidiary. Any corporation, joint venture or other legal entity in which the Company, directly or indirectly, owns more than fifty percent (50%) of its voting control.

(s) Target Incentive Award . The award to be paid to Participants when the Company meets “targeted” performance results, as established by the Committee.

Article 3 – Unfunded Status of the Plan

(a) Each Final Award shall be paid from the general funds of the Participant’s employer. The entire expense of administering the Plan shall be borne by the Company.

(b) No special or separate funds shall be established, or other segregation of assets made to execute payment of Final Awards. No Employee, or other person, shall have,

 

2


under any circumstances, any interest whatsoever, vested or contingent, in any particular property or asset of the Company or any Subsidiary or Affiliated Company by virtue of any Final Award.

Article 4 – Administration of the Plan

Full power and authority to construe, interpret and administer the Plan shall be vested in the Committee. A determination by the Committee in carrying out or administering the Plan shall be final and binding for all purposes and upon all interested persons, their heirs, and personal representative(s). Except as prohibited by applicable law or limited by Article 8 herein, the Committee may delegate to the Chief Executive Officer and to executive officers of the Company its duties under this Plan pursuant to such conditions or limitations as the Committee may establish.

Article 5 – Eligibility and Participation

All Employees are eligible for participation in the Plan. Actual participation in the Plan shall be based upon recommendations by the Chief Executive Officer of the Company, subject to approval by the Committee. The Chief Executive Officer of the Company shall automatically participate in the Plan.

Article 6 – Award Determination

(a) Performance Measures and Performance Goals.

For each plan year, the Committee shall select performance measures and shall establish performance goals for that plan year. Except as provided in Article 8 herein, the performance measures may be based on any combination of corporate, segment, group, subsidiary, divisional, and/or individual goals.

For each plan year, the Committee shall establish ranges of performance goals which will correspond to various levels of Award Opportunities. Each performance goal range shall include a level of performance at which one hundred percent (100%) of the Target Incentive Award shall be earned. In addition, each range shall include levels of performance above and below the one hundred percent (100%) performance level.

After the performance goals are established, the Committee will align the achievement of the performance goals with the Award Opportunities (as described in Article 6(b) herein), such that the level of achievement of the pre-established performance goals at the end of the plan year will determine the Final Awards. Except as provided in Article 8 herein, the Committee shall have the authority to exercise subjective discretion in the determination of Final Awards, and the authority to delegate the ability to exercise subjective discretion in this respect.

 

3


(b) Award Opportunities.

For each plan year, the Committee shall establish, in writing, Award Opportunities which correspond to various levels of achievement of the pre-established performance goals. The established Award Opportunities shall vary in relation to the job classification of each Participant.

(c) Adjustment of Performance Goals and Award Opportunities.

Once established, performance goals normally shall not be changed during the plan year. However, except as provided in Article 8 herein, if the Committee determines that external changes or other unanticipated business conditions have materially affected the fairness of the goals, then the Committee may approve appropriate adjustments to the performance goals (either up or down) during the plan year as such goals apply to the Award Opportunities of specified Participants. In addition, the Committee shall have the authority to reduce or eliminate the Final Award determinations, based upon any objective or subjective criteria it deems appropriate.

Notwithstanding any other provision of this Plan, in the event of any change in Corporate capitalization, such as a stock split, or a corporate transaction, such as any merger, consolidation, separation, including a spin-off, or other distribution of stock or property of the Company, any reorganization (whether or not such reorganization comes within the definition of such term in Code Section 368), or any partial or complete liquidation of the Company, an adjustment shall be made in the Award Opportunities and/or the performance measures or performance goals related to then-current performance periods, as may be determined to be appropriate and equitable by the Committee, in its sole discretion, to prevent dilution or enlargement of rights; provided, however, that subject to Article 8 herein, no such adjustment shall be made to a Qualified Performance-Based Award where such action would cause the award to no longer qualify for the exception for “qualified performance-based compensation” under Code Section 162(m).

(d) Final Award Determinations.

At the end of each plan year, Final Awards shall be computed for each Participant as determined by the Committee. Subject to the terms of Article 8 herein, Final Award amounts may vary above or below the Target Incentive Award, based on the level of achievement of the pre-established corporate, segment, group, divisional, and/or individual performance goals.

(e) Award Limit.

The Committee may establish guidelines governing the maximum Final Awards that may be earned by Participants (either in the aggregate, by Employee class, or among individual Participants) in each plan year. The guidelines may be expressed as a

 

4


percentage of goals or financial measures, or such other measures as the Committee shall from time to time determine; provided, however, that the maximum payout with respect to a Final Award payable to any one Participant in connection with performance in any one plan year shall be three million dollars ($3,000,000).

(f) Threshold Levels of Performance.

The Committee may establish minimum levels of performance goal achievement, below which no payouts of Final Awards shall be made to any Participant.

Article 7 – Payment of Awards

Each and every Final Award shall be payable in a lump sum no later than the March 15 following the end of the Plan year during which the award is earned, or as soon as administratively practicable thereafter in the event payment is delayed due to unforeseeable events.

Article 8 – Qualified Performance-Based Awards

(a) Applicability of Article 8.

The provisions of this Article 8 shall apply only to Qualified Performance-Based Awards. Qualified Performance-Based Awards include only those awards that are designated by the Committee as Qualified Performance-Based Awards. In the event of any inconsistencies between this Article 8 and the other Plan provisions as they pertain to Qualified Performance-Based Awards, the provisions of this Article 8 shall control.

(b) Establishment of Award Opportunities.

Except as provided for by the Committee at the time a Qualified Performance Based Award is made, Qualified Performance-Based Awards shall be established as a function of the Covered Employee’s base Salary. As specified by the Committee at the time the Qualified Performance-Based Award is made, base Salary for this purpose may be stated as a percentage of the base Salary of a Covered Employee at the time the performance measures are established, at the time the Final Award is paid or during the plan year. For each plan year, the Committee shall establish, in writing, various levels of Final Awards which will be paid with respect to specified levels of attainment of the pre-established performance goals.

(c) Components of Award Opportunities.

Each Qualified Performance-Based Award shall be based on: (a) the Covered Employee’s Target Incentive Award; (b) the potential Final Awards corresponding to various levels of achievement of the pre-established performance goals, as established by the Committee; and (c) Company, segment, group, subsidiary or division performance in

 

5


relation to the pre-established performance goals. Performance measures which may serve as determinants of Qualified Performance-Based Awards shall be limited to Cash Flow (Operating Cash Flow and Free Cash Flow), Cash Flow Return on Capital, Cash Flow Return on Assets, Cash Flow Return on Equity, Earnings Per Share (basic or diluted), Net Income, Operating Income, Return on Assets, Return on Capital, Return on Equity, Return on Invested Capital, Safety, Share Price, Total and Relative Shareholder Return and Economic Value Added. At the time the performance measures are established, the Committee, in a manner consistent with Code Section 162(m), may specify that such performance measures shall be adjusted to exclude any negative impact caused by research and development expenses, acquisition costs, operating expenses from acquired businesses or corporate transactions, changes in accounting principles and such other unusual, nonrecurring or extraordinary items specified by the Committee in its sole discretion. The Committee shall have the right through discretionary downward adjustments to exclude the positive impact of the aforementioned items and occurrences.

(d) No Adjustment of Performance Goals or Award Opportunities.

In the case of Qualified Performance-Based Awards, each Covered Employee’s Final Award shall be based exclusively on the Award Opportunity levels established by the Committee at the time the Qualified Performance-Based Award is made. In addition, performance goals shall not be changed following their establishment where such action would cause the award to no longer qualify for the exception for “qualified performance-based compensation” under Code Section 162(m), and no payout shall be made when the minimum performance goals are not met or exceeded. The Committee, however, shall have the discretion to decrease or eliminate the amount of the Final Award otherwise payable on account of a Qualified Performance-Based Award. Notwithstanding the above, in the event that changes in the tax law are made to Code Section 162(m) to permit greater flexibility with respect to any Qualified Performance-Based Award available under the Plan, the Committee, subject to Article 11, may make such adjustments it deems appropriate, provided that after such adjustment the award would continue to satisfy the requirement for “qualified performance-based compensation” under Code Section 162(m).

Article 9 – Limitations

(a) No person shall at any time have any right to a payment hereunder for any fiscal year, and no person shall have authority to enter into an agreement for the making of an Award Opportunity or payment of a Final Award or to make any representation or guarantee with respect thereto.

 

6


(b) An employee receiving an Award Opportunity shall have no rights in respect of such Award Opportunity, except the right to receive payments, subject to the conditions herein, of such Award Opportunity, which right may not be assigned or transferred except by will or by the laws of descent and distribution.

(c) Neither the action of the Company in establishing the Plan, nor any action taken by the Committee under the Plan, nor any provision of the Plan shall be construed as giving to any person the right to be retained in the employ of the Company or any of its Subsidiary or Affiliated Companies.

Article 10 – Clawback Provisions

(a) For any Award Opportunity established under this Plan in the event that the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the U.S. federal securities laws as a result of fraud (a “Restatement”), the Company will have the right to recover from each current or former Participant who the Board reasonably determines knowingly engaged in the fraud (the “Subject Participant”) who earned a Final Award during the three-year period preceding the date on which the Board or the Company, as applicable, determines the Company is required to prepare the Restatement (the “Three-Year Period”) the amount of such Final Award in excess of what would have been earned by the current or former Subject Participant under the Restatement.

(b) In the event a Restatement is required, the Board, based upon a recommendation by the Committee, will (1) review each current and former Subject Participant’s Final Awards earned under this Plan during the Three-Year Period and (2) in accordance with Article 10 hereof, with respect to each current and former Subject Participant, will take reasonable action to seek recovery of the amount of such Final Awards in excess of what would have been earned by the current or former Subject Participant under the Restatement (but in no event more than the total amount of such Awards), as such excess amount is reasonably determined by the Board, in compliance with Section 409A of the Code. There shall be no duplication of recovery under Article 10 hereof and any of 15 U.S.C. Section 7243 (Section 304 of The Sarbanes-Oxley Act of 2002) and Section 10D of the Securities Exchange Act of 1934 (the “Exchange Act”).

Article 11 – Amendment, Suspension, Termination, or Alteration of the Plan

The Board may, at any time or from time to time, amend, suspend, terminate or alter the Plan, in whole or in part, but it may not thereby affect adversely rights of Participants, their spouses, children, and personal representative(s) with respect to Final Awards previously made. Notwithstanding anything in this Plan to the contrary, the Board may make any amendment to Article 10 hereof that is deemed necessary or appropriate by the Company to ensure compliance with the Dodd-Frank Wall Street Reform and Consumer Protection Act or Section 10D of the Exchange Act, or any rules or regulations promulgated thereunder.

 

7


Article 12 – Commencement of Awards

The Company’s fiscal year ending December 31, 2015 shall be the first fiscal year with respect to which Award Opportunities may be made under the Plan.

 

8

Exhibit 10.10

BABCOCK & WILCOX ENTERPRISES, INC.

MANAGEMENT INCENTIVE COMPENSATION PLAN

Effective as of June 1, 2015


TABLE OF CONTENTS

 

     Page  

ARTICLE 1 – PURPOSE

     1   

ARTICLE 2 – DEFINITIONS

     1   

ARTICLE 3 – UNFUNDED STATUS OF THE PLAN

     2   

ARTICLE 4 – ADMINISTRATION OF THE PLAN

     2   

ARTICLE 5 – ELIGIBILITY AND PARTICIPATION

     2   

ARTICLE 6 – AWARD DETERMINATION

     3   

ARTICLE 7 – PAYMENT OF AWARDS

     4   

ARTICLE 8 – LIMITATIONS

     4   

ARTICLE 9 – AMENDMENT, SUSPENSION, TERMINATION OR ALTERATION OF THE PLAN

     5   

ARTICLE 10 – COMMENCEMENT OF AWARDS

     5   

 

i


ARTICLE 1 – PURPOSE

The Purpose of the Plan is to make provision for the payment of supplemental compensation to managerial and other key Employees who contribute materially to the success of the Company or one or more of its Subsidiary or Affiliated Companies, thereby affording them an incentive for and a means of participating in that success.

ARTICLE 2 – DEFINITIONS

For the purpose of the Plan, the following definitions shall be applicable:

 

(a) Affiliated Company . Any corporation, joint venture, or other legal entity in which Babcock & Wilcox Enterprises, Inc., directly or indirectly, through one or more Subsidiaries, owns less than fifty percent (50%) but at least twenty percent (20%) of its voting control.

 

(b) Award Opportunity . The various levels of incentive award payouts which a Participant may earn under the Plan, as established by the Committee or its designee pursuant to Sections 6(a) and 6(b) herein.

 

(c) Board . The Board of Directors of the Company.

 

(d) Committee . “Committee” means the Compensation Committee of the Board of Directors.

 

(e) Company . “Company” means Babcock & Wilcox Enterprises, Inc., a Delaware corporation (or any successor thereto) and its subsidiaries and affiliates.

 

(f) Designee. “Designee” means the Chief Human Resources Officer of the Company.

 

(g) Employee . Any person who is regularly employed by the Company or any of its Subsidiary or Affiliated Companies on a full-time salaried basis.

 

(h) Final Award . The actual award earned during a plan year by a Participant, as determined by the Committee or its Designee following the end of a plan year; provided the Participant is still an Employee when payment is to be made pursuant to Article 7 hereof.

 

(i) Participant . An Employee who has been selected to participate in the Plan in Accordance with Section 5(a) received an Award.

 

(j) Plan . Babcock & Wilcox Enterprises, Inc. Management Incentive Compensation Plan.

 

(k) Subsidiary . Any corporation, joint venture or other legal entity that the Company, directly or indirectly, owns more than fifty percent (50%) of its voting control.

 

(l) Target Incentive Award . The award to be paid to Participants when the Company meets “targeted” performance results, as established by the Committee or its Designee.

 

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ARTICLE 3 – UNFUNDED STATUS OF THE PLAN

 

(a) Each Final Award shall be paid from the general funds of the Participant’s employer. The entire expense of administering the Plan shall be borne by the Company.

 

(b) No special or separate funds shall be established, or other segregation of assets made to execute payment of Final Awards. No Employee, or other person, shall have, under any circumstances, any interest whatsoever, vested or contingent, in any particular property or asset of the Company or any Subsidiary or Affiliated Company by virtue of any Final Award.

ARTICLE 4 – ADMINISTRATION OF THE PLAN

Full power and authority to construe, interpret, and administer the Plan shall be vested in the Committee. A determination by the Committee in carrying out or administering the Plan shall be final and binding for all purposes and upon all interested persons, their heirs, and personal representative(s). Except as prohibited by applicable law, the Committee may delegate to a Designee its duties under this Plan pursuant to such conditions or limitations as the Committee may establish.

ARTICLE 5 – ELIGIBILITY AND PARTICIPATION

 

(a) All Employees are eligible for participation in the Plan. Actual participation in the Plan shall be determined by the Committee, or its Designee, based upon recommendations by the operating unit President with respect to Employees of the operating groups and the Chief Executive Officer of the Company or his designee with respect to corporate Employees.

 

(b) An Employee who becomes eligible after the beginning of a plan year may be permitted to participate in the Plan for that plan year. Such situations may include, but are not limited to (i) new hires, (ii) when an Employee is promoted from a position which did not meet the eligibility criteria, or (iii) when an Employee is transferred from an affiliate which does not participate in the Plan. Actual participation in the initial plan year of eligibility for any of the aforementioned Employees shall be determined by the Committee or its Designee, based upon recommendations by the operating group President with respect to Employees of the operating groups and the Chief Executive Officer of the Company with respect to corporate Employees.

 

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ARTICLE 6 – AWARD DETERMINATION

 

(a) For each plan year, the applicable business unit President with respect to its Employees and the Chief Executive Officer of the Company or his designee with respect to corporate Employees (“Responsible Person”) shall select performance measures and shall establish performance goals for that plan year. The performance measures may be based on any combination of corporate, segment, operating group, divisional and/or individual goals.

For each plan year, there shall be established ranges of performance goals which will correspond to various levels of Award Opportunities. Each performance goal range shall include a level of performance at which one hundred percent (100%) of the Target Incentive Award shall be earned. In addition, each range shall include levels of performance above and below the one hundred percent (100%) performance level.

After the performance goals are established, the Responsible Person will align the achievement of the performance goals with the Award Opportunities (as described in Article 6(b) herein), such that the level of achievement of the pre-established performance goals at the end of the plan year will determine the Final Awards. The Committee or its Designee shall have the authority to exercise subjective discretion in the determination of Final Awards, and the authority to delegate the ability to exercise subjective discretion in this respect.

 

(b) For each plan year, the Committee or its Designee(s) shall establish, in writing, Award Opportunities which correspond to various levels of achievement of the pre-established performance goals. The established Award Opportunities shall vary in relation to the job classification of each Participant.

 

(c) Once established, performance goals normally shall not be changed during the plan year. However, if the Committee or its Designee(s) determines that external changes or other unanticipated business conditions have materially affected the fairness of the goals, than it may approve appropriate adjustments to the performance goals (either up or down) during the plan year as such goals apply to the Award Opportunities of specified Participants. In addition, the Committee or its Designee(s) shall have the authority to reduce or eliminate the Final Award determinations, based upon any objective or subjective criteria it deems appropriate.

Notwithstanding any other provision of this Plan, in the event of any change in Corporate capitalization, such as a stock split, or a Corporate transaction, such as any merger, consolidation, separation, including a spin-off, or other distribution of stock or property of the Company, any reorganization (whether or not such reorganization comes within the definition of such term in Code Section 368), or any partial or complete liquidation of the Company, such adjustment shall be made in the Award Opportunities and/or the performance measures or performance goals related to then-current performance periods, as may be determined to be appropriate and equitable by the Committee, in its sole discretion, to prevent dilution or enlargement of rights.

 

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(d) At the end of each plan year, Final Awards shall be computed for each Participant as determined by the Responsible Person. Final Award amounts may vary above or below the Target Incentive Award, based on the level of achievement of the pre-established corporate, segment, group, divisional and/or individual performance goals.

 

(e) The Committee or its Designee may establish guidelines governing the maximum Final Awards that may be earned by Participants (either in the Aggregate, by Employee class, or among individual participants) in each plan year. The guidelines may be expressed as a percentage of goals or financial measures, or such other measures as the Committee or its Designee shall from time to time determine.

 

(f) The Committee or its Designee may establish minimum levels of performance goal achievement, below which no payouts of Final Awards shall be made to any Participant.

ARTICLE 7 – PAYMENT OF AWARDS

Each and every Final Award shall be payable in a lump sum as soon as administratively practicable following the determination that a Final Award is payable under the Plan, but in no event later than the March 15 following the end of the plan year during which the award is earned, or as soon as administratively possible thereafter in the event payment is delayed due to unforeseeable circumstances.

ARTICLE 8 – LIMITATIONS

 

(a) No person shall at any time have any right to a payment hereunder for any fiscal year, and no person shall have authority to enter into an agreement for the making of an Award Opportunity or payment of a Final Award or to make any representation or guarantee with respect thereto.

 

(b) An employee receiving an Award Opportunity shall have no rights in respect of such Award Opportunity, except the right to receive payments, subject to the conditions herein, or such Award Opportunity, which right may not be assigned or transferred except by will or by the laws of descent and distribution.

 

(c) Neither the action of the Company in establishing the Plan, nor any action taken by the Committee its Designee or any Responsible Person under the Plan, nor any provision of the Plan shall be construed as giving to any person the right to be retained in the employ of the Company or any of its Subsidiary or Affiliated Companies.

 

- 4 -


ARTICLE 9 – AMENDMENT, SUSPENSION, TERMINATION OR ALTERATION OF THE PLAN

The Board may, at anytime or from time to time, amend, suspend, terminate or alter the Plan, in whole or in part, but it may not thereby affect adversely rights of Participants, their spouses, children, and personal representative(s) with respect to Final Awards previously made.

ARTICLE 10 – COMMENCEMENT OF AWARDS

The Company’s fiscal year ending December 31, 2015 shall be the first fiscal year with respect to which Awards may be made under the Plan.

 

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Exhibit 10.11

Supplemental Executive Retirement Plan

of Babcock & Wilcox Enterprises, Inc.

Effective June 1, 2015

ARTICLE I

Purpose

1.1 Purpose of Plan . The purpose of this Supplemental Executive Retirement Plan of Babcock & Wilcox Enterprises, Inc. (the “Plan”) is to advance the interests of Babcock & Wilcox Enterprises, Inc., its subsidiaries and affiliates by providing certain deferred compensation opportunities for directors and officers as well as retirement benefits for officers that will attract and retain highly qualified directors and key employees accountable for the successful conduct of its business.

1.2 ERISA Status . The Plan is governed by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). It has been designed to qualify for certain exemptions under Title I of ERISA that apply to plans that are unfunded and maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees. The Plan is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended, and regulations and rulings issued thereunder, to the extent applicable.

1.3 Effective Date . The effective date of this Plan is June 1, 2015.

ARTICLE II

Definitions and Construction

Definitions . Where the following words and phrases appear in the Plan, they shall have the respective meanings set forth below, unless their context clearly indicates to the contrary.

 

  2.1 Account . Collectively, means the Participant’s Company Account and the Participant’s Deferral Account.

 

  2.2 Account Value . At any given time, the sum of all amounts credited to the Participant’s Account, adjusted for any income, gain or loss and any payments attributable to such account. The opening Account Value (and the opening value of the Company Account and Defferral Account described in Sections 5.1 and 5.2, respectively) on the Effective Date of a Participant who was a participant in the Predecessor Plan on the day before the Effective Date (a “Predecessor Plan Participant”) shall be equal to his account value in the Predecessor Plan determined as of the close of business on the last business day immediately preceding the Effective Date.


  2.3 Beneficiary . Each person designated by a Participant, on a form provided by the Company for this purpose, to receive the Participant’s distribution under Article VI in the event of the Participant’s death prior to receiving complete payment of his Account. In order to be effective under this Plan, any form designating a Beneficiary must be delivered to the Committee before the Participant’s death. In the absence of such an effective designation of a Beneficiary, “Beneficiary” means the Participant’s spouse, or if there is no spouse on the date of the Participant’s death, the Participant’s estate, or heirs at law if there is no administration of the Participant’s estate.

 

  2.4 Board . The Board of Directors of The Babcock & Wilcox Company or the board of directors of a company that is a successor to the Company.

 

  2.5 Bonus . Any bonus paid to a Participant under any plan, policy or program of the Company providing for the payment of annual bonuses to employees or any extraordinary payment paid to a Participant if such payment is designated by the Committee to be a Bonus for purposes of this Plan. Bonus shall not include any compensation under the 2010 Long-Term Incentive Plan of The Babcock & Wilcox Company and any successor plan thereto.

 

  2.6 Cause . Cause means:

 

  (a) the willful and continued failure of a Participant to perform substantially his duties with the Company (occasioned by reason other than physical or mental illness or disability) after a written demand for substantial performance is delivered to such Participant by the Committee or the Chief Executive Officer of the Company which specifically identifies the manner in which the Committee or the Chief Executive Officer believes that such Participant has not substantially performed his duties, after which such Participant shall have thirty (30) days to defend or remedy such failure to substantially perform his duties;

 

  (b) the willful engaging by a Participant in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company; or

 

  (c) the conviction of a Participant with no further possibility of appeal or, or plea of nolo contendere by such Participant to, any felony or crime of falsehood.


The cessation of employment of a Participant in connection with circumstances described in subparagraph (a) and (b) above shall not be deemed to be for “Cause” unless and until there shall have been delivered to such Participant a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Committee at a meeting of such Committee called and held for such purpose (after reasonable notice is provided to the Participant and the Participant is given an opportunity to be heard before the Committee), finding that, in the good faith opinion of the Committee, the Participant is guilty of the conduct described in subparagraph (a) or (b) above, and specifying the particulars thereof in detail.

2.7 Change in Control . A Change in Control will be deemed to have occurred for purposes of this Plan on the occurrence of any of the following:

 

  (a) 30% Ownership Change: Any Person, other than an ERISA-regulated pension plan established by the Company, makes an acquisition of Outstanding Voting Stock and is, immediately thereafter, the beneficial owner of 30% or more of the then Outstanding Voting Stock, unless such acquisition is made directly from the Company in a transaction approved by a majority of the Incumbent Directors; or any group is formed that is the beneficial owner of 30% or more of the Outstanding Voting Stock (other than a group formation for the purpose of making an acquisition directly from the Company and approved (prior to such group formation) by a majority of the Incumbent Directors); or

 

  (b) Board Majority Change:  Individuals who are Incumbent Directors cease for any reason to constitute a majority of the members of the Board; or

 

  (c)

Major Mergers and Acquisitions:  Consummation of a Business Combination unless, immediately following such Business Combination, (i) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Voting Stock immediately before such Business Combination beneficially own, directly or indirectly, more than 51% of the then outstanding shares of voting stock of the parent corporation resulting from such Business Combination in substantially the same relative proportions as their ownership, immediately before such Business Combination, of the Outstanding Voting Stock, (ii) if the Business Combination involves the issuance or payment by the Company of consideration to another entity or its shareholders, the total fair market value of such consideration plus the principal amount of the consolidated long-term debt of the entity or business being acquired (in each case, determined as of the date of consummation of such Business Combination by a majority of the Incumbent Directors) does not exceed 50% of the sum of the fair market value of the Outstanding Voting Stock plus the principal amount of the Company’s consolidated long-term debt (in each case, determined immediately before such consummation by a majority of the Incumbent Directors), (iii) no Person (other than any corporation resulting


  from such Business Combination) beneficially owns, directly or indirectly, 30% or more of the then outstanding shares of voting stock of the parent corporation resulting from such Business Combination and (iv) a majority of the members of the board of directors of the parent corporation resulting from such Business Combination were Incumbent Directors of the Company immediately before consummation of such Business Combination; or

 

  (d) Major Asset Dispositions : Consummation of a Major Asset Disposition unless, immediately following such Major Asset Disposition, (i) individuals and entities that were beneficial owners of the Outstanding Voting Stock immediately before such Major Asset Disposition beneficially own, directly or indirectly, more than 70% of the then outstanding shares of voting stock of the Company (if it continues to exist) and of the entity that acquires the largest portion of such assets (or the entity, if any, that owns a majority of the outstanding voting stock of such acquiring entity) and (ii) a majority of the members of the Board (if it continues to exist) and of the entity that acquires the largest portion of such assets (or the entity, if any, that owns a majority of the outstanding voting stock of such acquiring entity) were Incumbent Directors of the Company immediately before consummation of such Major Asset Disposition.

For purposes of this definition of “Change in Control”,

 

  (1) “Person” means an individual, entity or group;

 

  (2) “group” is used as it is defined for purposes of Section 13(d)(3) of the Exchange Act;

 

  (3) “beneficial owner” is used as it is defined for purposes of Rule 13d-3 under the Exchange Act;

 

  (4) “Outstanding Voting Stock” means outstanding voting securities of the Company entitled to vote generally in the election of directors; and any specified percentage or portion of the Outstanding Voting Stock (or of other voting stock) is determined based on the combined voting power of such securities;

 

  (5)

“Incumbent Director” means a director of the Company (x) who was a director of the Company on the effective date of this Agreement or (y) who becomes a director after such date and whose election, or nomination for election by the Company’s shareholders, was approved by a vote of a majority of the Incumbent Directors at the time of such election or nomination, except that any such director will not be deemed an Incumbent Director if his or her initial assumption of office occurs as a result


  of an actual or threatened election contest or other actual or threatened solicitation of proxies by or on behalf of a Person other than the Board;

 

  (6) “election contest” is used as it is defined for purposes of Rule 14a-11 under the Exchange Act;

 

  (7) “Business Combination means

 

  (x) a merger or consolidation involving the Company or its stock or

 

  (y) an acquisition by the Company, directly or through one or more subsidiaries, of another entity or its stock or assets;

 

  (8) “parent corporation resulting from a Business Combination” means the Company if its stock is not acquired or converted in the Business Combination and otherwise means the entity which as a result of such Business Combination owns the Company or all or substantially all the Company’s assets either directly or through one or more subsidiaries; and

 

  (9) “Major Asset Disposition” means the sale or other disposition in one transaction or a series of related transactions of 70% or more of the assets of the Company and its subsidiaries on a consolidated basis; and any specified percentage or portion of the assets of the Company will be based on fair market value, as determined by a majority of the Incumbent Directors.

However, in no event shall a Change in Control be deemed to have occurred under this Plan with respect to a Participant if the Participant is part of a purchasing group which consummates a transaction resulting in a Change in Control. A Participant shall be deemed “part of a purchasing group” for purposes of the preceding sentence if the Participant is an equity participant in the purchasing company or group (except for: (i) passive ownership of less than three percent (3%) of the stock of the purchasing company; or (ii) ownership of equity participation in the purchasing company or group which is otherwise not significant, as determined prior to the Change in Control by a majority of the non-employee continuing directors). In no event shall the spinoff of The Company by The Babcock & Wilcox Company constitute a Change in Control hereunder.

 

  2.8 Code . The Internal Revenue Code of 1986, as amended.

 

  2.9 Committee . The Compensation Committee of the Board, or such other administrative committee that is appointed by the Board to administer the Plan.


  2.10 Company . Babcock & Wilcox Enterprises, Inc. and except where the context clearly indicates otherwise, shall include the Company’s subsidiaries and affiliates, as well as any successor to any such entities.

 

  2.11 Company Account . The notional account maintained by the Committee reflecting each Participant’s Company Contributions, together with any income, gain or loss and any payments attributable to such account.

 

  2.12 Company Contribution . The total contributions credited to a Participant’s Company Account for each Plan Year pursuant to the provisions of Section 4.1 or 4.2.

 

  2.13 Compensation . In the case of Participants who are Eligible Employees, the salary, wages and other cash remuneration received by a Participant during any Plan Year or in respect of employment with the Company, including any contributions made to a plan described in Sections 125, 132(f) or 401(k) of the Code pursuant to a salary reduction agreement entered into between a Participant and the Company and Bonuses, and amounts, if any, deferred by the Participant under this Plan or the Company’s Defined Contribution Restoration Plan, but excluding cash payments under any Long-Term Incentive Plan of the Company or The Babcock & Wilcox Company and any successor plan(s) thereto and other additional remuneration in any form. In the case of a Participant who is a Director and not an employee of the Company, the annual retainer and fees received by the Participant during any Plan Year.

 

  2.14 Deemed Investments . With respect to any Account, the hypothetical investment options with respect to which such Account is deemed to be invested in for purposes of determining the value of such Account under this Plan, as selected from time to time by the Committee in its discretion.

 

  2.15 Deferral Account . The notional account maintained by the Committee reflecting each Participant’s Deferral Contributions, together with any income, gain or loss and any payments attributable to such amount.

 

  2.16 Deferral Contribution . The Compensation deferred by a Participant pursuant to Section 4.3 and credited to a Participant’s Deferral Account pursuant to Section 4.3.

 

  2.17 Director . Any individual who is a member of the Board; provided, however, that any member of the Board who is employed by the Company shall be considered an Eligible Employee under the Plan and not a Director (except for purposes of Section 2.6).

 

  2.18

Disabled . A Participant will be considered Disabled if the Committee determines in its sole discretion that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable


  physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months.

 

  2.19 Eligible Employee . The Company’s CEO and any officers of the Company and its subsidiaries and affiliates.

 

  2.20 ERISA . The Employee Retirement Income Security Act of 1974, as amended.

 

  2.21 Exchange Act . The Securities Exchange Act of 1934, as amended.

 

  2.22 Participant . An Eligible Employee who has been selected by the Committee as a Participant in the Plan or a Director until such Eligible Employee or Director ceases to be a Participant in accordance with Article III of the Plan.

 

  2.23 Plan Year . The twelve-consecutive month period commencing January 1 of each year.

 

  2.24 Predecessor Plan. The Babcock & Wilcox Company Supplemental Executive Retirement Plan, as amended and in effect on May 31, 2015.

 

  2.25 Retirement . Retirement means, in the case of an employee of the Company, Separation from Service with the Company on or after the first day of the calendar month coincident with or following the Participant’s attainment of the age of 65.

 

  2.26 Separation from Service . If the Participant is an employee of the Company, a Separation from Service occurs on the date such Participant dies, retires or otherwise has a termination of employment with the Company. A termination of employment occurs on the date after which the Participant and the Company reasonably anticipate that no further services will be performed by the Participant or that the level of bona fide services reasonably anticipated to be performed after such date will permanently decrease to 49% or less of the average level of bona fide services provided in the immediately preceding thirty-six months.

If the Participant is a Director who is not an employee of the Company, a Separation from Service occurs on the date such Participant ceases to be a Director, provided that as of such date the Participant and the Company reasonably anticipate that no further services will be performed by the Participant or that the level of bona fide services reasonably anticipated to be performed after such date will permanently decrease to 49% or less of the average level of bona fide services provided in the immediately preceding thirty-six months.


  2.27 Specified Person . Specified Person shall have the meaning set forth in Code Section 409A(a)(2)(B)(i) and regulations and ruling promulgated thereunder.

 

  2.28 Unforeseeable Emergency . A severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s Beneficiary, or the Participant’s dependent (as defined in Section 409A of the Code); loss of the Participant’s property due to casualty; or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. Whether a Participant is faced with an Unforeseeable Emergency is to be determined by the Committee in its sole discretion, based on the relevant facts and circumstances of each case. In any case, a distribution on account of Unforeseeable Emergency may not exceed the amount necessary to relieve the emergency, plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent that the emergency may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or by cessation of deferrals under the Plan.

 

  2.29 Vested Account . The sum of the Participant’s vested Company Account and the Participant’s Deferral Account.

 

  2.30 Vested Percentage . The percentage as to which a Participant is vested in his or her Company Account as determined under Sections 5.4 and 5.5.

 

  2.31 Years of Participation . The sum of whole Plan Years of participation in the Plan as an active employee in continuous employment or as a Director in continuous service, excluding fractional years. With respect to Eligible Employees who became Participants as of June 1, 2015 and were participants in the Predecessor Plan on May 29, 2015, Years of Participation in the Plan shall be determined by including periods of participation in the Predecessor Plan as an active employee.


ARTICLE III

Participation

The Committee, in its sole discretion, shall select and notify in writing those Eligible Employees of the Company who shall participate in the Plan or a portion thereof. An Eligible Employee who has been selected by the Committee as a Participant shall begin participation in the Plan effective on the date specified by the Committee. Each Director shall begin participation in the Plan on the Effective Date or the date he becomes a Director, whichever is later. Participation shall continue until (a) the Participant’s Separation from Service, or (b) if the Participant is an employee of the Company, the date the Committee notifies him that he is no longer eligible to participate in the Plan, if earlier. A Participant who ceases to participate in the Plan pursuant to Clause (b) of the preceding sentence shall be treated as if he had terminated employment with the Company but (i) his benefit, if any, payable upon Separation from Service shall not be payable until after his actual Separation from Service, and (ii) his Vested Account shall be adjusted as provided in Article V. An Eligible Employee who is rehired by the Company following his Separation from Service shall become a Participant only if such Eligible Employee is again selected to participate in the Plan by the Committee. A Director who again becomes a member of the Board following his Separation from Service shall automatically resume participation in the Plan on the first day of the following Plan Year.

ARTICLE IV

Contributions

4.1 Annual Company Contribution . As of the first day of each Plan Year, the Company shall declare a contribution percentage, which may be zero, for the Company Account of each Participant who is an Eligible Employee. The contribution percentage declared for a Participant may, but need not be, the same as the contribution percentage declared for other Participants. Company Contributions shall be credited as a bookkeeping entry as of the first day of the Plan Year or at other such times as determined by the Committee to each Participant’s Company Account, in an amount equal to the contribution percentage declared for the Participant multiplied by the Participant’s Compensation received during the prior Plan Year.

4.2 Discretionary Company Contribution . The Committee may in its sole discretion at any time make an extraordinary contribution to the Company Account of any Participant.

4.3 Participant Deferrals . For any Plan Year, the Committee may, in its sole discretion, allow a Participant to elect to defer the payment by the Company of any whole percentage (or dollar amount) of his annual base salary, retainers and fees that would otherwise be paid during such Plan Year and/or of any whole percentage (or dollar amount) of any Bonus earned during such Plan Year, and instead have such amounts


credited as a bookkeeping entry to his Deferral Account. The Compensation otherwise payable to a Participant shall be reduced by the amount the Participant elected to have contributed to the Participant’s Deferral Account, which shall be a Deferral Contribution.

4.4 Participant Elections . Unless a different time is established by the Committee for a particular deferral election, prior to the first day of each Plan Year, each Participant shall file a written election with the Committee specifying (i) the type(s) and amount(s) of Compensation that he wishes to defer pursuant to Section 4.3, if Deferral Contributions are permitted by the Committee for the relevant Plan Year, (ii) the payment date or payment commencement date pertaining to the portion of his Vested Account that is attributable to contributions made in the relevant Plan Year, and (iii) the form of payment of the portion of his Vested Account that is attributable to contributions made in the relevant Plan Year. Such election with respect to any Plan Year must be filed with the Committee no later than the last day of the immediately preceding Plan Year; provided however, that an election made by a new Participant who is first eligible to participate in the Plan may be made no later than the 30 th day following the date on which he is initially eligible to participate in the Plan but only with respect to Compensation earned after the effective date of such election. If Deferral Contributions are permitted, (a) a Participant who is an Eligible Employee may elect to defer up to 50% of his annual salary and/or up to 100% of any Bonus earned in any Plan Year, and (b) a Director may elect to defer up to 100% of his annual retainer and fees earned in any Plan Year.

Except as set forth in Section 6.3, a Participant shall not be permitted to change his election with respect to the timing or form of payment and any election made hereunder shall not apply with respect to prior Plan Years. Failure to make a timely Deferral Contribution election will result in no Deferral Contributions for the relevant Plan Year. If a Participant fails to make a timely election specifying time and form of payment, payment of the portion of the Participant’s Vested Account that is attributable to contributions made in the relevant Plan Year shall be paid in accordance with Section 6.4.

Participant elections made with respect to the portion of a Participant’s Account attributable to contributions to the Predecessor Plan prior to the Effective Date shall continue in full force and effect.

4.5 Suspension of Deferral Contributions . Except as provided below, an election to make Deferral Contributions in a Plan Year shall be irrevocable on the last day of the immediately preceding Plan Year. To the extent expressly permitted under Code Section 409A and regulations and rulings issued thereunder, a Participant’s deferral election shall be suspended during any unpaid leave of absence granted in accordance with Company policies; provided, however that such deferral election shall become fully operative as of the first day of the payroll period commencing coincident with or next following the Participant’s return to active employment following termination of the approved unpaid leave in the Plan Year to which the Participant’s deferral pertains. In the event of an Unforeseeable Emergency, a Participant shall suspend deferrals in order to relieve the emergency, provided that the deferrals must be suspended for the entire remainder of the applicable Plan Year. In the event of a Disability, the Participant may


suspend deferrals by the later of the end of the taxable year of the Company in which the Disability arises, or the 15 th of the third month following the date that the Disability arises.

ARTICLE V

Accounts

5.1 Company Accounts . The Committee shall establish and maintain an individual bookkeeping account for each Participant, which shall be the Participant’s Company Account. A separate “Company Sub Account” may be maintained for each Participant for each Plan Year in respect of which Company Contributions are credited under the Plan for the benefit of the Participant. The Committee shall credit the amount of each Company Contribution made on behalf of a Participant to such Participant’s Company Account pursuant to Section 4.1 and 4.2. The Committee shall further debit and/or credit the Participant’s Company Account with any income, gain or loss based upon the performance of the Deemed Investments selected by the participant and any payments attributable to such account on a daily basis, or at such other times as it shall determine appropriate. The sole purpose of the Participant’s Company Account is to record and reflect the Company’s Plan obligations related to Company Contributions to each Participant under the Plan. The Company shall not be required to segregate any of its assets with respect to Plan obligations nor shall any provision of the Plan be construed as constituting such segregation.

5.2 Deferral Accounts . The Committee shall establish and maintain an individual bookkeeping account for each Participant, which shall be the Participant’s Deferral Account. A separate “Deferral Sub Account” may be maintained for each Participant for each Plan Year in respect of which Deferral Contributions are credited under the Plan for the benefit of the Participant. The Committee shall credit the amount of each Deferral Contribution made on behalf of a Participant to such Participant’s Deferral Account as soon as administratively feasible following the applicable deferral. The Committee shall further debit and/or credit the Participant’s Deferral Account with any income, gain or loss based upon the performance of the Deemed Investments selected by the Participant and any payments attributable to such Account on a daily basis, or at such other times as it shall determine appropriate. The sole purpose of the Participant’s Deferral Account is to record and reflect the Company’s Plan obligations related to Deferral Contributions of each Participant under the Plan. The Company shall not be required to segregate any of its assets with respect to Plan obligations, nor shall any provision of the Plan be construed as constituting such segregation.

5.3 Hypothetical Accruals to the Account . In accordance with procedures established by the Committee and subject to this Section 5.3, each Participant may designate the Deemed Investments with respect to which his or her Account shall be deemed to be invested. If a Participant fails to make a proper designation, then his Account shall be deemed to be invested in the Deemed Investments designated by the


Committee in its sole discretion. A Participant may change such designation with respect to future Company and Deferral Contributions, as well as amounts, already credited to his Account in accordance with procedures established by the Committee. A copy of any available prospectus or other disclosure materials for each of the Deemed Investments shall be made available to each Participant upon request. The Committee shall determine from time to time each of the Deemed Investments made available under the Plan and may change any such determinations at any time. Nothing herein shall obligate the Company to invest any part of its assets in any of the investment vehicles serving as the Deemed Investments.

5.4 Vesting of Company Account . A Participant’s vested percentage with respect to the Participant’s Company Account, adjusted by any income, gain or loss and any payments attributable thereto, shall be the lesser of i) twenty percent times the Participant’s Years of Participation, and ii) 100%. Except as provided in Section 5.5, upon Separation from Service or cessation of Plan participation, whichever is earlier, a Participant shall forfeit all amounts credited to his Account other than his Vested Account value determined as of the close of business coincident with or next following the date of such Separation from Service or cessation of Plan participation, as applicable, provided, however, that amounts not so forfeited shall continue to be debited and credited in accordance with Section 5.3 from and after Separation from Service.

5.5 Accelerated Vesting . The vesting provisions in Section 5.4 notwithstanding, each Participant shall have a Vested Percentage of 100% for his entire Account upon the soonest of the following to occur during the Participant’s employment with the Company: (i) the date of Separation from Service as a result of the Participant’s death or disability or termination by the Company for any reason other than Cause, (ii) the Participant’s Disability, (iii) the Participant’s Retirement (if the Participant is not a Director), (iv) the date a Change in Control occurs, or (v) under such other circumstances as the Committee may determine in its sole discretion. Each Participant who was a participant in the McDermott International, Inc. Supplemental Executive Retirement Plan (the “MII SERP”) on December 31, 2008 shall have a vested percentage of 100% with respect to amounts allocated to his Account that are attributable to amounts allocated to his MII SERP Account as of December 31, 2008 and future gains and losses thereon.

5.6 Vesting of Deferral Account . A Participant’s Vested Percentage with regard to his Deferral Account shall at all times be 100%.

5.7 Nature and Source of Payments . The obligation to make distributions under this Plan with respect to each Participant and any Beneficiary in accordance with the terms of this Plan shall constitute a liability of the entity within the Company which employed the Participant or for whom the Participant rendered services when the obligation was accrued, and no other entity shall have such obligation and any failure by a particular entity to live up to its obligation under this Plan shall have no effect on any other entity. All distributions payable hereunder shall be made from the general assets of the Company, and nothing herein shall be deemed to create a trust of any kind between


the Company and any Participant or other person. No special or separate fund shall be established nor shall any other segregation of assets be made to assure that distributions will be made under this Plan. No Participant or Beneficiary shall have any interest in any particular asset of the Company by virtue of the existence of this Plan. Each Participant and Beneficiary shall, with respect to his rights and benefits under this Plan (including Accounts), be an unsecured general creditor of the Company.

5.8 Statements to Participants . Periodically as determined by the Committee, but not less frequently than annually, the Committee shall transmit to each Participant a written statement regarding the Participant’s Account for the period beginning on the date following the effective date of the preceding statement and ending on the effective date of the current statement.

ARTICLE VI

Payment of Benefits

6.1 Occasions for Distributions . The Company shall distribute a Participant’s Vested Account following the events and in the manner set forth in this Article VI. A Participant’s Vested Account shall be debited in the amount of any distribution made from the Account as of the date of the distribution. The occasions for distributions shall be (i) the Participant’s Separation From Service, including upon Retirement (if the Participant is not a Director) or death, (ii) Disability, (iii) the occurrence of an Unforeseeable Emergency, or (iv) the completion of fixed period of deferral.

6.2 Distribution Elections . A Participant shall elect the time and form of payment of his Vested Account in the manner set forth in Section 4.4. A Participant who fails to timely file a distribution election for a Plan Year shall be deemed to have elected to receive the portion of his Vested Account attributable to the relevant Plan Year in a single lump sum payment within 30 days after his Separation from Service, or on the first day of the seventh month following his Separation from Service if he is a Specified Person as of the date of the Separation from Service. If a Participant’s Vested Account is less than $50,000, it will be distributed in a single lump sum distribution irrespective of any election to the contrary .

6.3 Change of Former Timing of Payments . A Participant may make a subsequent election no later than twelve months prior to the date that he would be eligible to receive a distribution under the Plan, to change the timing and form of payment of the distribution; provided, however, that the payment, or first payment in the case of a series of payments, under the subsequent election shall be deferred to a date that is at least five (5) years after the date the Participant would have been eligible to receive, or begin receiving, the distribution under the prior election. To be effective, any such election must be in writing timely and received by the Committee, and cannot be effective for at least twelve months after the date on which the election is made. The requirement in this Section 6.3 that the first payment with respect to which any election thereunder applies must be deferred for at least five (5) years shall not apply to a payment on account of the Participant’s death, Disability or in the event of an Unforeseeable Emergency.


6.4 Distribution on Account of Separation from Service or Disability . Subject to Section 6.8, upon a Participant’s Disability or Separation from Service, the Company shall distribute, or begin distributing, to the Participant (or the Participant’s Beneficiary) the Participant’s Vested Account. Such distribution(s) shall be in the form specified on the distribution election form(s) filed with the Committee that covers the relevant Vested Account.

6.5 Continuation of Hypothetical Accruals to the Vested Account After Commencement of Distributions . If any Vested Account of a Participant is to be distributed in a form other than a lump sum, then such Vested Account shall continue to be adjusted for hypothetical income, gain or loss and any payment or distributions attributable to the Vested Account as described in Section 5.1, and 5.2, until the entire Vested Account has been distributed.

6.6 Unforeseeable Emergency Distribution . In the event that the Committee, upon the written request of a Participant, determines in its sole discretion that such Participant has incurred an Unforeseeable Emergency, as defined in Section 2.28, such Participant may be entitled to receive a distribution of part or all of the Participant’s Vested Account, in an amount not to exceed the lesser of (a) the amount determined by the Committee under Section 2.28, or (b) the value of such Participant’s Vested Account at the time of the emergency. Such amount shall be paid in a single lump sum payment as soon as administratively practicable after the Committee has made its determination with respect to the availability and amount of such distribution; provided, however, that the payment shall not be made after the later of the end of the taxable year of the Company in which the Unforeseeable Emergency arises or the 15 th day of the third month following the date of the occurrence of the Unforeseeable Emergency. If a Participant’s Account is deemed to be invested in more than one Deemed Investment, such distribution shall be made pro rata from each of such Deemed Investments. For purposes of the foregoing, such distribution shall be made from the Participant’s Account beginning with the oldest Account in the following order: First , such amount shall be debited from the Participant’s Deferral Account, and second , from the Participant’s Company Account (subject to forfeitures with respect to the non-vested portion of the Company Account utilized for such distribution).

6.7 Distribution on Account of Completion of a Fixed Deferral Period . At the time of a Participant’s election to participate in the Plan, the Participant may elect to receive the Distribution of a Participant’s Vested Account (established only in respect of the relevant Plan Year), or any applicable Vested Plan Year Company Sub-Account or Plan Year Deferral Sub-Account on the completion of a fixed deferral period elected by the Participant on forms provided by the Committee.

6.8 Limitation on Distributions to Certain Key Employees. Notwithstanding any other provision of the Plan to the contrary, to the extent that a Participant is a Specified Person and the Participant’s distribution is on account of Separation from Service, distributions may not be made before the date which is six months after the date of the Separation from Service. Payments to which the Participant would otherwise be entitled during the six-month period described above shall be delayed and paid in a lump sum on the first day of the seventh month after the date of his Separation from Service.


ARTICLE VII

Committee

7.1 Authority . The Committee has full and absolute discretion in the exercise of each and every aspect of the rights, power, authority and duties retained or granted it under the Plan, including without limitation, the authority to determine all facts, to interpret this Plan, to apply the terms of this Plan to the facts determined, to make decisions based upon those facts and to make any and all other decisions required of it by this Plan, such as the right to benefits, the correct amount and form of benefits, the determination of any appeal, the review and correction of the actions of any prior administrative committee, and the other rights, powers, authority and duties specified in this Article and elsewhere in this Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Plan or any agreement or document related to this Plan in the manner and to the extent the Committee deems necessary or appropriate. Notwithstanding any provision of law, or any explicit ruling or implicit provision of this document, any action taken, or finding, interpretation, ruling or decision made by the Committee in the exercise of any of its rights, powers, authority or duties under this Plan shall be final and conclusive as to all parties, including without limitation all Participants, former Participants and beneficiaries, regardless of whether the Committee or one or more if its members may have an actual or potential conflict of interest with respect to the subject matter of the action, finding, interpretation, ruling or decision. No final action, finding, interpretation, ruling or decision of the Committee shall be subject to de novo review in any judicial proceeding. No final action, finding, interpretation, ruling or decision of the Committee may be set aside unless it is held to have been arbitrary and capricious by a final judgment of a court having jurisdiction with respect to the issue. To the extent Plan distributions are payable in a form other than a single lump sum (e.g., installments), the Committee shall determine the methodology for computing such payments.

7.2 Delegation of Authority . The Committee may delegate any of its powers or responsibilities to one or more members of the Committee or any other person or entity.

7.3 Procedures . The Committee may establish procedures to conduct its operations and to carry out its rights and duties under the Plan. Committee decisions may be made by majority action. The Committee may act by written consent.


7.4 Compensation and Expenses . The members of the Committee shall serve without compensation for their services, but all expenses of the Committee and all other expense incurred in administering the Plan shall be paid by the Company.

7.5 Indemnification . The Company shall indemnify the members of the Committee and/or any of their delegates against the reasonable expenses, including attorney’s fees, actually and appropriately incurred by them in connection with the defense of any action, suit or proceeding, or in connection with any appeal thereto, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) and against all amounts paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in a suit of final adjudication that such Committee member is liable for fraud, deliberate dishonesty or willful misconduct in the performance of his duties; provided that within 60 days after the institution of any such action, suit or proceeding a Committee member has offered in writing to allow the Company, at its own expense, to handle and defend any such action, suit or proceeding.

ARTICLE VIII

Amendment and Termination

The Company retains the power to amend the Plan or to terminate the Plan at any time by action of the Board. No such amendment or termination shall adversely affect any Participant or Beneficiary with respect to his right to receive a benefit in accordance with Article VI, determined as of the later of the date that the Plan amendment or termination is adopted or the date such Plan amendment or termination is effective, unless the affected Participant or Beneficiary consents to such amendment or termination. No amendment or termination of this Plan shall be made in a manner that results in noncompliance with the requirements of Code Section 409A, to the extent applicable.

ARTICLE IX

Miscellaneous

9.1 Plan Does Not Confer Right to Be a Director or Employee . Nothing contained in this Plan shall be deemed to give any Participant the right to be retained in the employment or directorship of the Company, to interfere with the rights of the Company to discharge any Participant at any time or to interfere with a Participant’s right to terminate his employment or directorship at any time.

9.2 Nonalienation and Nonassignment . Except for debts owed the Company by a Participant or Beneficiary in accordance with Section 9.5, no amounts payable or to


become payable under the Plan to a Participant or Beneficiary shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, whether voluntary, involuntary, by operation of law or otherwise, and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the same by a Participant or Beneficiary prior to distribution as herein provided shall be null and void.

9.3 Tax Withholding . The Company shall have the right to deduct from any payments to a Participant or Beneficiary under the Plan any taxes required by law to be withheld with respect to such payments. In addition, the Company shall have the right to deduct from any Participant’s base salary or other compensation any applicable employment taxes or other required withholdings with respect to a Participant.

9.4 FICA Withholding/Employee Deferrals/Company Contributions . If the Participant is an employee of the Company, for each payroll period, the Company shall withhold from that portion of the Participant’s Compensation that is not being deferred under this Plan, the Participant’s share of FICA and other applicable taxes that are required to be withheld with respect to (i) Employee Deferrals, and (ii) Company Contributions as they vest and become subject to such FICA withholding. To the extent that there are insufficient funds to satisfy all applicable tax withholding requirements in a timely manner, the Company reserves the right to reduce the Participant’s Employee Deferrals, as required to provide available funds for applicable tax withholding requirements. To the extent there are still insufficient funds to satisfy all such applicable tax withholding requirements, the Participant shall timely remit cash funds to the Company sufficient to cover such withholding requirements.

9.5 Setoffs . As a condition to the receipt of any benefits hereunder, the Committee, in its sole discretion, may require a Participant or Beneficiary to first execute a written authorization, in the form established by the Committee, authorizing the Company to offset from the benefits otherwise due hereunder any and all amounts, debts or other obligations, incurred in the ordinary course of the service relationship, owed to the Company by the Participant. Where such written authorization has been so executed by a Participant, benefits hereunder shall be reduced accordingly. The Committee shall have full discretion to determine the application of such offset and the manner in which such offset will reduce benefits under the Plan; provided, however, that the amount offset in any one taxable year does not exceed $5,000 and the offset is taken at the same time and in the same amount as the debt otherwise would have been due from the Participant, but only at the time that an amount is otherwise payable to a Participant under the Plan.

9.6 Number and Gender . Wherever appropriate herein, words used in the singular shall be considered to include the plural and words used in the plural shall be considered to include the singular. The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender.

9.7 Headings . The headings of Articles and Sections herein are included solely for convenience, and if there is any conflict between such headings and the text of the Plan, the text shall control.


9.8 Applicable Law . Except to the extent preempted by federal law, the terms and provisions of the Plan shall be construed in accordance with the laws of the State of Delaware, without regard to the application of any conflicts of law.

9.9 Successors . All obligations under the Plan shall be binding upon the Company and any successors and assigns, in accordance with its terms, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or other transaction, involving all or substantially all of the business and/or assets of the Company.

9.10 Claims Procedure . The Committee shall have sole discretionary authority with regard to the adjudication of any claims made under the Plan. All claims for benefits under the Plan shall be submitted in writing, shall be signed by the claimant and shall be considered filed on the date the claim is received by the Committee. In the event a claim is denied, in whole or in part, the claims procedures set forth below shall be applicable.

Upon the filing of a claim as above provided and in the event the claim is denied, in whole or in part, the Committee shall within ninety (90) days, (forty five (45) days for disability related claims,) provide the claimant with a written statement which shall be delivered or mailed to the claimant to his last known address, which statement shall contain the following:

 

(a) the specific reason or reasons for the denial of benefits;

 

(b) a specific reference to the pertinent provisions of the Plan upon which the denial is based;

 

(c) a description of any additional material or information necessary for the claimant to perfect his claim for benefits and an explanation of why such material and information is necessary; and

 

(d) an explanation of the review procedure provided below.

If special circumstances require additional time for processing the claim, the Committee shall advise the claimant prior to the end of the initial ninety (90) day or forty-five (45) day period, setting forth the reasons for the delay and the approximate date the Committee expects to render its decision. Any such extension shall not exceed ninety (90) days, or thirty (30) days for disability related claims.

Within ninety (90) days after receipt of the written notice of denial of a claim as provided above, a claimant or his authorized representative may request a review of the denial upon written application to the Committee, may review pertinent documents and may submit issues and comments in writing to the Committee. Within sixty (60) days (or forty-five days in the case of a disability related claim) after receipt of a written request


for review, or within one hundred and twenty (120) days (or ninety days for disability related claims) in the event of special circumstances which require an extension of time for processing such application for review, the Committee shall notify the claimant of its decision by delivery or by Certified or Registered Mail to his last known address. The decision of the Committee shall be in writing and shall include the specific reasons for the decision and specific references to the pertinent provisions of the Plan on which such decision is based. The Committee shall advise the claimant prior to the end of the initial sixty (60) day or forty-five day period, as applicable, if additional time is needed to process such application for review. The decision of the Committee shall be final and conclusive.

9.11 Claims/Disputes . Any dispute or claim arising out of this Plan or the breach thereof, which is not settled under the Plan’s administrative claims procedure and which is pursued beyond such claims procedure, shall be brought in Federal District Court, in Mecklenburg County, North Carolina.

9.12 Conduct Injurious to the Company . Notwithstanding anything in the Plan to the contrary, any and all benefits otherwise payable to any Participant hereunder, except to the extent of any prior distributions under the Plan, shall be forever forfeited if it is determined by the Committee, in its sole discretion, that such Participant has engaged in conduct injurious to the Company, including but not limited to the following:

 

(a) dishonesty while in the employ of the Company or while serving as a Director;

 

(b) imparting, disclosing or appropriating proprietary information for himself or to or for any other person, firm, corporation, association or entity for any reason or purpose whatsoever, except if required by law or at the Company’s direction;

 

(c) performing any act or engaging in any course of conduct which has or may reasonably have the effect of demeaning the name or business reputation of the Company; or

 

(d) providing goods or services to or becoming an employee, owner, officer, agent, consultant, advisor or director of any firm or person in any geographic area which competes with the Company in any phase of any of the business lines or services offered by the Company as of the Participant’s Retirement Date or the date the Participant ceases to be a Director.

9.13 Compliance with Code Section 409A . The Plan is intended to meet the requirements of Section 409A of the Code in order to avoid any adverse tax consequences resulting from any failure to comply with Section 409A of the Code and, as a result, the Plan shall be operated in a manner consistent with such compliance. Except to the extent expressly set forth in the Plan, the Participant (and/or the Participant’s Beneficiary, as applicable) shall have no right to dictate the taxable year in which any payment hereunder that is subject to Section 409A of the Code should be paid.


9.14 No Guarantee of Tax Consequences . None of the Board, officers or employees of the Company, the Company or any affiliate of the Company makes any commitment or guarantee that any federal, state or local tax treatment will apply or be available to any individual or person participating hereunder or eligible to participate hereunder.

9.15 Entire Agreement . This Plan document constitutes the entire Plan governing the Company and the Participant with respect to the subject matters hereof and supercedes all prior written and oral and all contemporaneous written and oral agreements and understandings, with respect to the subject matters hereof. This Plan may not be changed orally, but only by an amendment in writing signed by the Company, subject to the provisions in this Plan regarding amendments thereto.

IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its duly authorized officer, effective as provided herein.

 

Babcock & Wilcox Enterprises, Inc.
By:  

/s/ E. James Ferland

Title:   Chairman and Chief Executive Officer

Exhibit 10.12

Babcock & Wilcox Enterprises, Inc.

Defined Contribution Restoration Plan

Effective June 1, 2015

ARTICLE I

Purpose

1.1 Purpose of Plan . The purpose of the Babcock & Wilcox Enterprises, Inc. Defined Contribution Restoration Plan (the “Plan”) is to restore the benefits provided to participants in the B&W Thrift Plan that are precluded by the application of Sections 401(a)(17) and 415(c) of the Internal Revenue Code of 1986, as amended.

1.2 ERISA Status . The Plan is governed by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). It has been designed to qualify for certain exemptions under Title I of ERISA that apply to plans that are unfunded and maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees. The Plan is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended, and regulations and rulings issued thereunder, to the extent applicable.

1.3 Effective Date . The Plan has been adopted on June 8, 2015, and shall become effective on June 1, 2015 (the “Effective Date”).

ARTICLE II

Definitions and Construction

Definitions . Where the following words and phrases appear in the Plan, they shall have the respective meanings set forth below, unless their context clearly indicates to the contrary. Capitalized terms used in this Plan that are not defined below shall have the same meaning assigned to them in the Thrift Plan.

 

  2.1 Account . Collectively, means the Participant’s Company Matching Account, Company Service Based Account and Deferral Account.

 

  2.2 Account Value . At any given time, the sum of all amounts credited to the Participant’s Account, adjusted for any income, gain or loss and any payments attributable to such account. The opening Account Value on the Effective Date of a Participant who was a participant in the Predecessor Plan on the day before the Effective Date (a “Predecessor Plan Participant”) shall be equal to his account value in the Predecessor Plan determined as of the close of business on the last business day immediately preceding the Effective Date.


  2.3 Beneficiary . Each person designated by a Participant, on a form provided by the Company for this purpose, to receive the Participant’s distribution under Article VI in the event of the Participant’s death prior to receiving complete payment of his Account. In order to be effective under this Plan, any form designating a Beneficiary must be delivered to the Committee before the Participant’s death. In the absence of such an effective designation of a Beneficiary, “Beneficiary” means the Participant’s spouse, or if there is no spouse on the date of the Participant’s death, the Participant’s estate, or heirs at law if there is no administration of the Participant’s estate.

 

  2.4 Board . The Board of Directors of Babcock & Wilcox Enterprises, Inc. or the board of directors of a company that is a successor to the Company.

 

  2.5 Cause . Cause means:

 

  (a) the willful and continued failure of a Participant to perform substantially his duties with the Company (occasioned by reason other than physical or mental illness or disability) after a written demand for substantial performance is delivered to such Participant by the Committee or the Chief Executive Officer of the Company which specifically identifies the manner in which the Committee or the Chief Executive Officer believes that such Participant has not substantially performed his duties, after which such Participant shall have thirty (30) days to defend or remedy such failure to substantially perform his duties;

 

  (b) the willful engaging by a Participant in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company; or

 

  (c) the conviction of a Participant with no further possibility of appeal, or plea of nolo contendere by such Participant to, any felony or crime of falsehood.

The cessation of employment of a Participant in connection with circumstances described in subparagraph (a) and (b) above shall not be deemed to be for “Cause” unless and until there shall have been delivered to such Participant a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Committee at a meeting of such Committee called and held for such purpose (after reasonable notice is provided to the Participant and the Participant is given an opportunity to be heard before the Committee), finding that, in the good faith opinion of the Committee, the Participant is guilty of the conduct described in subparagraph (a) or (b) above, and specifying the particulars thereof in detail.


2.6 Change in Control . A Change in Control will be deemed to have occurred for purposes of this Plan on the occurrence of any of the following:

 

  (a) 30% Ownership Change : Any Person, other than an ERISA-regulated pension plan established by the Company, makes an acquisition of Outstanding Voting Stock and is, immediately thereafter, the beneficial owner of 30% or more of the then Outstanding Voting Stock, unless such acquisition is made directly from the Company in a transaction approved by a majority of the Incumbent Directors; or any group is formed that is the beneficial owner of 30% or more of the Outstanding Voting Stock (other than a group formation for the purpose of making an acquisition directly from the Company and approved (prior to such group formation) by a majority of the Incumbent Directors); or

 

  (b) Board Majority Change : Individuals who are Incumbent Directors cease for any reason to constitute a majority of the members of the Board; or

 

  (c) Major Mergers and Acquisitions : Consummation of a Business Combination unless, immediately following such Business Combination, (i) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Voting Stock immediately before such Business Combination beneficially own, directly or indirectly, more than 51% of the then outstanding shares of voting stock of the parent corporation resulting from such Business Combination in substantially the same relative proportions as their ownership, immediately before such Business Combination, of the Outstanding Voting Stock, (ii) if the Business Combination involves the issuance or payment by the Company of consideration to another entity or its shareholders, the total fair market value of such consideration plus the principal amount of the consolidated long-term debt of the entity or business being acquired (in each case, determined as of the date of consummation of such Business Combination by a majority of the Incumbent Directors) does not exceed 50% of the sum of the fair market value of the Outstanding Voting Stock plus the principal amount of the Company’s consolidated long-term debt (in each case, determined immediately before such consummation by a majority of the Incumbent Directors), (iii) no Person (other than any corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of the then outstanding shares of voting stock of the parent corporation resulting from such Business Combination and (iv) a majority of the members of the board of directors of the parent corporation resulting from such Business Combination were Incumbent Directors of the Company immediately before consummation of such Business Combination; or

 

  (d)

Major Asset Dispositions : Consummation of a Major Asset Disposition unless, immediately following such Major Asset Disposition,


  (i) individuals and entities that were beneficial owners of the Outstanding Voting Stock immediately before such Major Asset Disposition beneficially own, directly or indirectly, more than 70% of the then outstanding shares of voting stock of the Company (if it continues to exist) and of the entity that acquires the largest portion of such assets (or the entity, if any, that owns a majority of the outstanding voting stock of such acquiring entity) and (ii) a majority of the members of the Board (if it continues to exist) and of the entity that acquires the largest portion of such assets (or the entity, if any, that owns a majority of the outstanding voting stock of such acquiring entity) were Incumbent Directors of the Company immediately before consummation of such Major Asset Disposition.

For purposes of this definition of “Change in Control”,

 

  (1) Person ” means an individual, entity or group;

 

  (2) group ” is used as it is defined for purposes of Section 13(d)(3) of the Exchange Act;

 

  (3) beneficial owner ” is used as it is defined for purposes of Rule 13d-3 under the Exchange Act;

 

  (4) Outstanding Voting Stock ” means outstanding voting securities of the Company entitled to vote generally in the election of directors; and any specified percentage or portion of the Outstanding Voting Stock (or of other voting stock) is determined based on the combined voting power of such securities;

 

  (5) Incumbent Director ” means a director of the Company (x) who was a director of the Company on the effective date of this Agreement or (y) who becomes a director after such date and whose election, or nomination for election by the Company’s shareholders, was approved by a vote of a majority of the Incumbent Directors at the time of such election or nomination, except that any such director will not be deemed an Incumbent Director if his initial assumption of office occurs as a result of an actual or threatened election contest or other actual or threatened solicitation of proxies by or on behalf of a Person other than the Board;

 

  (6) election contest ” is used as it is defined for purposes of Rule 14a-11 under the Exchange Act;

 

  (7) Business Combination ” means

 

  (x) a merger or consolidation involving the Company or its stock or

 

  (y) an acquisition by the Company, directly or through one or more subsidiaries, of another entity or its stock or assets;


  (8) parent corporation resulting from a Business Combination ” means the Company if its stock is not acquired or converted in the Business Combination and otherwise means the entity which as a result of such Business Combination owns the Company or all or substantially all the Company’s assets either directly or through one or more subsidiaries; and

 

  (9) Major Asset Disposition ” means the sale or other disposition in one transaction or a series of related transactions of 70% or more of the assets of the Company and its subsidiaries on a consolidated basis; and any specified percentage or portion of the assets of the Company will be based on fair market value, as determined by a majority of the Incumbent Directors.

However, in no event shall a Change in Control be deemed to have occurred under this Plan with respect to a Participant if the Participant is part of a purchasing group which consummates a transaction resulting in a Change in Control. A Participant shall be deemed “part of a purchasing group” for purposes of the preceding sentence if the Participant is an equity participant in the purchasing company or group (except for: (i) passive ownership of less than three percent (3%) of the stock of the purchasing company; or (ii) ownership of equity participation in the purchasing company or group which is otherwise not significant, as determined prior to the Change in Control by a majority of the non-employee continuing directors). In no event shall the spinoff of the Company by The Babcock & Wilcox Company constitute a Change in Control hereunder.

 

  2.7 Code . The Internal Revenue Code of 1986, as amended.

 

  2.8 Committee . The Compensation Committee of the Board, or such other administrative committee that is appointed by the Board to administer the Plan.

 

  2.9 Company . Babcock & Wilcox Enterprises, Inc. and except where the context clearly indicates otherwise, shall include the Company’s subsidiaries and affiliates, as well as any successor to any such entities.

 

  2.10 Company Matching Account . The notional account maintained under the Plan reflecting each Participant’s Company Matching Contributions, together with any income, gain or loss and any payments attributable to such account.


  2.11 Company Matching Contribution . The total contributions credited to a Participant’s Company Matching Account for each Plan Year pursuant to the provisions of Section 4.3.

 

  2.12 Company Service Based Account . The notional account maintained under the Plan reflecting each Participant’s Company Service Based Contributions, together with any income, gain or loss and any payments attributable to such account.

 

  2.13 Company Service Based Contribution . The total contributions credited to a Participant’s Company Service Based Account for each Plan Year pursuant to the provisions of Section 4.1.

 

  2.14 Compensation . The excess of (a) over (b), where

 

  (a) equals the salary, wages and other cash remuneration received by a Participant during any Plan Year in respect of employment with the Company, including any contributions made to a plan described in Sections 125, 132(f) or 401(k) of the Code pursuant to a salary reduction agreement entered into between a Participant and the Company and amounts, if any, deferred by the Participant under this Plan and the Supplemental Executive Retirement Plan of The Babcock & Wilcox Company, overtime pay, incentive pay based on units of production, commissions and expatriate pay, but excluding bonuses, other special or supplemental compensation, severance pay, Company contributions to, and any withdrawals or distributions from this or any other plan of deferred compensation, amounts for or in lieu of reimbursement for expenses and other additional remuneration in any form; and

 

  (b) equals the Basic Compensation (as defined in the Thrift Plan) received by such Participant during that Plan Year, but including amounts, if any, deferred by the Participant under this Plan and the Supplemental Executive Retirement Plan of the Company to the extent such deferral causes the Participant’s Basic Compensation to be below the applicable Code Section 401(a)(17) limit.

 

  2.15 Deemed Investments . With respect to any Account, the hypothetical investment options with respect to which such Account is deemed to be invested in for purposes of determining the value of such Account under this Plan, as selected from time to time by the Committee in its discretion.

 

  2.16 Deferral Account . The notional account maintained by the Committee reflecting each Participant’s Deferral Contributions, together with any income, gain or loss and any payments attributable to such amount.


  2.17 Deferral Contribution . The Compensation deferred by a Participant and credited to his Deferral Account pursuant to Section 4.2.

 

  2.18 Disabled . A Participant will be considered Disabled if the Committee determines in its sole discretion that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months.

 

  2.19 Eligible Employee . An “eligible employee” as defined in the Thrift Plan whose Basic Compensation in a Plan Year exceeds the applicable Code Section 401(a)(17) compensation limit, or would exceed such limit but for elective deferrals made under this Plan or the Supplemental Executive Retirement Plan of the Company.

 

  2.20 ERISA . The Employee Retirement Income Security Act of 1974, as amended.

 

  2.21 Exchange Act . The Securities Exchange Act of 1934, as amended.

 

  2.22 Participant . An Eligible Employee who has become a participant in the Plan in accordance with Article III and for whom an Account is maintained.

 

  2.23 Period of Service. A Participant’s Period of Service that is taken into account for purposes of determining his vested account balance under the Thrift Plan.

 

  2.24 Plan Year . The twelve-consecutive month period commencing on January 1 of each calendar year.

 

  2.25 Predecessor Plan. The Babcock & Wilcox Company Defined Contribution Restoration Plan, as amended and in effect on May 31, 2015.

 

  2.26 Retirement . Retirement means, in the case of an employee of the Company, Separation from Service with the Company on or after the first day of the calendar month coincident with or following the Participant’s attainment of the age of 65.

 

  2.27 Separation from Service . A Separation from Service occurs on the date a Participant dies, retires or otherwise has a termination of employment with the Company. A termination of employment occurs on the date after which the Participant and the Company reasonably anticipate that no further services will be performed by the Participant or that the level of bona fide services reasonably anticipated to be performed after such date will permanently decrease to 49% or less of the average level of bona fide services provided in the immediately preceding thirty-six months.


  2.28 Thrift Plan. The B&W Thrift Plan, as it may be amended from time to time and any successor plan thereto.

 

  2.29 Unforeseeable Emergency . A severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s Beneficiary, or the Participant’s dependent (as defined in Section 409A of the Code); loss of the Participant’s property due to casualty; or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. Whether a Participant is faced with an Unforeseeable Emergency is to be determined by the Committee in its sole discretion, based on the relevant facts and circumstances of each case. In any case, a distribution on account of Unforeseeable Emergency may not exceed the amount necessary to relieve the emergency, plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent that the emergency may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or by cessation of deferrals under the Plan.

 

  2.30 Vested Account . The aggregate of the Participant’s vested Company Matching Account, Company Service Based Account and Deferral Account, determined in accordance Sections 5.3 and 5.4.

 

  2.31 Years of Service . The number of a Participant’s Years of Service taken into account for purposes of determining the amount of his Service-Based Contribution under the Thrift Plan.

ARTICLE III

Participation

3.1 Current Employees.

(a) Service-Based Contribution Participants. Each Eligible Employee who is a Service-Based Contribution Participant in the Thrift Plan and is employed by the Company on the Effective Date shall become a Participant on the Effective Date.

(b) Other Thrift Plan Participants. Each other Eligible Employee who is employed by the Company on the Effective Date shall become a Participant as of the Effective Date or the first day of any subsequent Plan Year by electing to make Deferral Contributions in accordance with Section 4.4.


3.2 Newly Eligible Employees.

(a) Service-Based Contribution Participants. Each Eligible Employee who is hired or rehired by the Company after the Effective Date and is a Service-Based Contribution Participant in the Thrift Plan shall become a Participant on his date of hire or rehire, as applicable.

(b) Other Thrift Plan Participants. Each other Eligible Employee who is hired or rehired by the Company after the Effective Date shall become a Participant by electing to make Deferral Contributions in accordance with Section 4.4. within the 30 day period beginning on his date of hire or rehire, effective as of such election date, or as of the first day of any subsequent Plan Year by electing to make Deferral Contributions in accordance with Section 4.4.

(c) Mid-Year Compensation Increases. Each other Employee who becomes an Eligible Employee during a Plan Year due to an increase in pay shall become a Participant on the first day of the following Plan Year or any subsequent Plan Year by electing to make Deferral Contributions in accordance with Section 4.4.

ARTICLE IV

Contributions

4.1 Company Service Based Contribution . Each Participant who is a Service-Based Contribution Participant in the Thrift Plan shall be credited with a Company Service Based Contribution each payroll period equal to the percentage of his Compensation determined in accordance with the following table:

 

Years of Service

   Contribution Percentage  

Up to 5

     3

5 up to 10

     4

10 up to 15

     5

15 up to 20

     6

20 up to 25

     7

25 or more

     8

In addition, each such Participant who is precluded from receiving the full amount of Service-Based Contributions otherwise provided under the Thrift Plan in a Plan Year by the application of Code Section 415(c) shall be credited with a Company Service Based Contribution for such Plan Year equal to the excess of the amount of Service-Based Contributions that would have been made to the Participant’s Thrift Plan account without the application of Code Section 415(c) for the Plan Year over the amount of Service-Based Contributions actually made to such Participant’s Thrift Plan account for the Plan Year. Company Service Based Contributions shall be credited as a bookkeeping entry to such Participant’s Company Service Based Account.


4.2 Participant Deferrals . For any Plan Year, a Participant who has elected to make Elective Deferral Contributions and/or Employee Contributions under the Thrift Plan may elect to defer the payment by the Company of a portion of his annual Compensation otherwise to be paid during such Plan Year and instead have such amounts credited as a bookkeeping entry to his Deferral Account. The Compensation otherwise payable to a Participant shall be reduced by the amount the Participant elected to have contributed to his Deferral Account, which shall be a Deferral Contribution. The amount of such Deferral Contribution in a Plan Year shall be equal to the Participant’s Compensation multiplied by the percentage of his Thrift Plan Elective Deferral Contribution election and/or Employee Contribution election(s) as in effect on the date he files his written deferral election in accordance with Section 4.4.

In addition, each such Participant whose actual Elective Deferral Contributions and/or Employee Contributions elected under the Thrift Plan in a Plan Year are limited by the application of Code Section 415(c) may elect to defer the payment by the Company of the portion of his Basic Compensation for such Plan Year equal to the excess of the amount of Elective Deferral Contributions and/or Employee Contributions that would have been made to the Participant’s Thrift Plan account without the application of Code Section 415(c) for the Plan Year over the amount of Elective Deferral Contributions and/or Employee Contributions actually made to such Participant’s Thrift Plan account for the Plan Year. Any such Deferral Contributions shall be credited as a bookkeeping entry to such Participant’s Deferral Account.

4.3 Company Matching Contributions. For any Plan Year, a Participant who has elected to make Deferral Contributions in accordance with Section 4.2 shall be credited with a Company Matching Contribution equal to 50% of such Deferral Contribution, up to a maximum Company Matching Contribution of 3% of Compensation.

In addition, each such Participant who is precluded from receiving the full amount of Employer Matching Contributions otherwise provided under the Thrift Plan in a Plan Year by the application of Code Section 415(c) shall be credited with a Company Matching Contribution for such Plan Year equal to the excess of the amount of Employer Matching Contributions that would have been made to the Participant’s Thrift Plan account without the application of Code Section 415(c) for the Plan Year over the amount of Employer Matching Contributions actually made to such Participant’s Thrift Plan account for the Plan Year. Company Matching Contributions shall be credited as a bookkeeping entry to such Participant’s Company Matching Account.

4.4 Participant Elections . Unless a different time is established by the Committee for a particular deferral election, prior to the first day of each Plan Year, each


Participant shall file a written election with the Committee specifying (i) whether and in what amount Deferral Contributions will be made in the relevant Plan Year, (ii) the payment date or payment commencement date pertaining to the portion of his Vested Account that is attributable to contributions made in the relevant Plan Year, for each distribution event described in Section 6.1 and (iii) the form of payment of the portion of his Vested Account that is attributable to contributions made in the relevant Plan Year for each distribution event described in Section 6.1. Such election with respect to any Plan Year must be filed with the Committee no later than the last day of the immediately preceding Plan Year; provided however, that an election made by a new Participant who is first eligible to participate in the Plan may be made no later than the 30 th day following the date on which he is initially eligible to participate in the Plan but only with respect to Compensation earned after the effective date of such election.

Except as set forth in Section 6.3, a Participant shall not be permitted to change his election with respect to the timing or form of payment and any election made hereunder shall not apply with respect to prior Plan Years. Failure to make a timely Deferral Contribution election will result in no Deferral Contributions for the relevant Plan Year. If a Participant fails to make a timely election specifying time and form of payment, payment of the portion of the Participant’s Vested Account that is attributable to contributions made in the relevant Plan Year shall be paid in accordance with Section 6.4.

4.5 Suspension of Deferral Contributions . Except as provided below, an election to make Deferral Contributions in a Plan Year shall be irrevocable on the last day of the immediately preceding Plan Year. To the extent expressly permitted under Code Section 409A and regulations and rulings issued thereunder, a Participant’s deferral election shall be suspended during any unpaid leave of absence granted in accordance with Company policies; provided, however that such deferral election shall become fully operative as of the first day of the payroll period commencing on or next following the Participant’s return to active employment following termination of the approved unpaid leave in the Plan Year to which the Participant’s deferral pertains. In the event of an Unforeseeable Emergency, a Participant shall suspend deferrals in order to relieve the emergency, provided that the deferrals must be suspended for the entire remainder of the applicable Plan Year. In the event of a Disability, the Participant may suspend deferrals by the later of the end of the taxable year of the Company in which the Disability arises, or the 15 th of the third month following the date that the Disability arises.

ARTICLE V

Accounts

5.1 Plan Accounts . The Committee shall establish and maintain an individual bookkeeping account for each Participant, which shall be the Participant’s Account. A separate “Sub Account” may be maintained for each Participant for each Plan Year in


respect of which contributions are credited under the Plan for the benefit of the Participant. The Committee shall credit the amount of each Deferral Contribution, Company Matching Contribution and/or Company Service Based Contribution made on behalf of a Participant to such Participant’s Account as soon as administratively feasible following the applicable payroll period. The Committee shall further debit and/or credit the Participant’s Account with any income, gain or loss based upon the performance of the Deemed Investments selected by the Participant and any payments attributable to such Account on a daily basis, or at such other times as it shall determine appropriate. The sole purpose of the Participant’s Account is to record and reflect the Company’s Plan obligations related to the Deferral Contributions, Company Matching Contributions and/or Company Service Based Contributions of each Participant under the Plan. The Company shall not be required to segregate any of its assets with respect to Plan obligations, nor shall any provision of the Plan be construed as constituting such segregation.

5.2 Hypothetical Accruals to the Account . In accordance with procedures established by the Committee and subject to this Section 5.2, each Participant may designate the Deemed Investments with respect to which his Account shall be deemed to be invested. If a Participant fails to make a proper designation, then his Account shall be deemed to be invested in the Deemed Investments designated by the Committee in its sole discretion. A Participant may change such designation with respect to future contributions, as well as amounts, already credited to his Account in accordance with procedures established by the Committee. A copy of any available prospectus or other disclosure materials for each of the Deemed Investments shall be made available to each Participant. The Committee shall determine from time to time each of the Deemed Investments available under the Plan and may change any such determinations at any time. Nothing herein shall obligate the Company to invest any part of its assets in any of the investment vehicles serving as the Deemed Investments.

5.3 Vesting of Account . A Participant shall have a 100% vested interest in the value of his Deferral Contribution Account at all times. A Participant shall have a 100% vested interest in the value of his Company Matching Account and Company Service Based Account upon completion of a three (3) year Period of Service. Except as provided in Section 5.4, upon Separation from Service a Participant shall forfeit all amounts credited to his Account other than his Vested Account value determined as of the close of business on the date of such Separation from Service, provided, however, that amounts not so forfeited shall continue to be debited and credited in accordance with Section 5.2 from and after Separation from Service.

5.4 Accelerated Vesting . The vesting provisions in Section 5.3 notwithstanding, each Participant shall have a 100% vested interest in his entire Account upon the soonest of the following to occur during the Participant’s employment with the Company: (i) the date of Separation from Service as a result of the Participant’s death or disability or termination by the Company for any reason other than Cause, (ii) the Participant’s Disability, (iii) the Participant’s Retirement, (iv) the date a Change in Control occurs, or (v) under such other circumstances as the Committee may determine in its sole discretion.


5.5 Nature and Source of Payments . The obligation to make distributions under this Plan with respect to each Participant and any Beneficiary in accordance with the terms of this Plan shall constitute a liability of the entity within the Company which employed the Participant or for whom the Participant rendered services when the obligation was accrued, and no other entity shall have such obligation and any failure by a particular entity to live up to its obligation under this Plan shall have no effect on any other entity. All distributions payable hereunder shall be made from the general assets of the Company, and nothing herein shall be deemed to create a trust of any kind between the Company and any Participant or other person. No special or separate fund shall be established nor shall any other segregation of assets be made to assure that distributions will be made under this Plan. No Participant or Beneficiary shall have any interest in any particular asset of the Company by virtue of the existence of this Plan. Each Participant and Beneficiary shall, with respect to his rights and benefits under this Plan (including Accounts), be an unsecured general creditor of the Company.

5.6 Statements to Participants . Periodically as determined by the Committee, but not less frequently than annually, the Committee shall transmit to each Participant a written statement regarding the Participant’s Account for the period beginning on the date following the effective date of the preceding statement and ending on the effective date of the current statement.

ARTICLE VI

Payment of Benefits

6.1 Distribution Events . The Company shall distribute, or begin distributing a Participant’s Vested Account following the first to occur of the events and in the manner set forth in this Article VI. A Participant’s Vested Account shall be debited in the amount of any distribution made from the Account as of the date of the distribution. The distribution events shall be (i) the Participant’s Separation from Service, including upon Retirement or death, (ii) Disability, (iii) the occurrence of an Unforeseeable Emergency, or (iv) the completion of any specified period of deferral.

6.2 Distribution Elections . A Participant shall elect the time and form of payment of his Vested Account in the manner set forth in Section 4.4. A Participant who fails to timely file a distribution election for a Plan Year shall be deemed to have elected to receive the portion of his Vested Account attributable to the relevant Plan Year in a single lump sum payment on the earliest to occur of (i) the first day of the seventh month following his Separation from Service, (ii) death, or (iii) Disability If a Participant’s Vested Account is less than $50,000, or if distribution is on account of Disability or death, the Vested Account will be distributed in a single lump sum distribution irrespective of any election to the contrary . In no event shall a distribution to a Participant on account of Separation from Service commence prior to the first day of the seventh month following Separation from Service.


6.3 Change of Former Timing of Payments . A Participant may make a subsequent election no later than twelve months prior to the date that he would be eligible to receive a distribution under the Plan, to change the timing and form of payment of the distribution; provided, however, that the payment, or first payment in the case of a series of payments, under the subsequent election shall be deferred to a date that is at least five (5) years after the date the Participant would have been eligible to receive, or begin receiving, the distribution under the prior election. To be effective, any such election must be in writing timely and received by the Committee, and cannot be effective for at least twelve months after the date on which the election is made. The requirement in this Section 6.3 that the first payment with respect to which any election thereunder applies must be deferred for at least five (5) years shall not apply to a payment on account of the Participant’s death, Disability or in the event of an Unforeseeable Emergency.

6.4 Continuation of Hypothetical Accruals to the Vested Account After Commencement of Distributions . If any Vested Account of a Participant is to be distributed in a form other than a lump sum, then such Vested Account shall continue to be adjusted for hypothetical income, gain or loss and any payment or distributions attributable to the Vested Account as described in Section 5.1, and 5.2, until the entire Vested Account has been distributed.

6.5 Unforeseeable Emergency Distribution . In the event that the Committee, upon the written request of a Participant, determines in its sole discretion that such Participant has incurred an Unforeseeable Emergency, as defined in Section 2.29, such Participant may be entitled to receive a distribution of part or all of the Participant’s Vested Account, in an amount not to exceed the lesser of (a) the amount determined by the Committee under Section 2.29, or (b) the value of such Participant’s Vested Account at the time of the emergency. Such amount shall be paid in a single lump sum payment as soon as administratively practicable after the Committee has made its determination with respect to the availability and amount of such distribution; provided, however, that the payment shall not be made after the later of the end of the taxable year of the Company in which the Unforeseeable Emergency arises or the 15 th day of the third month following the date of the occurrence of the Unforeseeable Emergency. If a Participant’s Account is deemed to be invested in more than one Deemed Investment, such distribution shall be made pro rata from each of such Deemed Investments. For purposes of the foregoing, such distribution shall be made from the Participant’s Account beginning with the oldest Account in the following order: First , such amount shall be debited from the Participant’s Deferral Account, second , from the Participant’s Company Matching Account and third from the Participant’s Company Service Based Account (subject to forfeitures with respect to the non-vested portion of the Company Matching Account and/or Company Service Based Account utilized for such distribution).


ARTICLE VII

Committee

7.1 Authority . The Committee has full and absolute discretion in the exercise of each and every aspect of the rights, power, authority and duties retained or granted it under the Plan, including without limitation, the authority to determine all facts, to interpret this Plan, to apply the terms of this Plan to the facts determined, to make decisions based upon those facts and to make any and all other decisions required of it by this Plan, such as the right to benefits, the correct amount and form of benefits, the determination of any appeal, the review and correction of the actions of any prior administrative committee, and the other rights, powers, authority and duties specified in this Article and elsewhere in this Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Plan or any agreement or document related to this Plan in the manner and to the extent the Committee deems necessary or appropriate. Notwithstanding any provision of law, or any explicit ruling or implicit provision of this document, any action taken, or finding, interpretation, ruling or decision made by the Committee in the exercise of any of its rights, powers, authority or duties under this Plan shall be final and conclusive as to all parties, including without limitation all Participants, former Participants and beneficiaries, regardless of whether the Committee or one or more if its members may have an actual or potential conflict of interest with respect to the subject matter of the action, finding, interpretation, ruling or decision. No final action, finding, interpretation, ruling or decision of the Committee shall be subject to de novo review in any judicial proceeding. No final action, finding, interpretation, ruling or decision of the Committee may be set aside unless it is held to have been arbitrary and capricious by a final judgment of a court having jurisdiction with respect to the issue. To the extent Plan distributions are payable in a form other than a single lump sum (e.g., installments), the Committee shall determine the methodology for computing such payments.

7.2 Delegation of Authority . The Committee may delegate any of its powers or responsibilities to one or more members of the Committee or any other person or entity.

7.3 Procedures . The Committee may establish procedures to conduct its operations and to carry out its rights and duties under the Plan. Committee decisions may be made by majority action. The Committee may act by written consent.

7.4 Compensation and Expenses . The members of the Committee shall serve without compensation for their services, but all expenses of the Committee and all other expense incurred in administering the Plan shall be paid by the Company.

7.5 Indemnification . The Company shall indemnify the members of the Committee and/or any person to whom the Committee has delegated authority in accordance with Section 7.2 hereof against the reasonable expenses, including attorney’s fees, actually and appropriately incurred by them in connection with the defense of any


action, suit or proceeding, or in connection with any appeal thereto, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) and against all amounts paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in a suit of final adjudication that such Committee member is liable for fraud, deliberate dishonesty or willful misconduct in the performance of his duties or as to which any applicable statute prohibits the Company from providing indemnification; provided that within 60 days after the institution of any such action, suit or proceeding a Committee member or delegate, as applicable, has offered in writing to allow the Company, at its own expense, to handle and defend any such action, suit or proceeding. Notwithstanding the foregoing, the failure of any Committee member or delegate to give such notice shall not relieve the Company of its obligations under this Section 7.5, except to the extent that the Company is actually prejudiced by such failure to give notice.

The foregoing right of indemnification shall be in addition to any other rights of indemnification to which such persons may be entitled under the Company’s Certificate of Incorporation or By-Laws (each, as amended from time to time), as a matter of law, or otherwise.

ARTICLE VIII

Amendment and Termination

The Company retains the right to amend the Plan or to terminate the Plan at any time by action of the Board. No such amendment or termination shall adversely affect any Participant or Beneficiary with respect to his right to receive a benefit in accordance with Article VI, determined as of the later of the date that the Plan amendment or termination is adopted or the date such Plan amendment or termination is effective, unless the affected Participant or Beneficiary consents to such amendment or termination. No amendment or termination of this Plan shall be made in a manner that results in noncompliance with the requirements of Code Section 409A, to the extent applicable.

ARTICLE IX

Miscellaneous

9.1 Plan Does Not Confer Right to Employment . Nothing contained in this Plan shall be deemed to give any Participant the right to be retained in the employment of the Company, to interfere with the rights of the Company to discharge any Participant at any time or to interfere with a Participant’s right to terminate his employment at any time.


9.2 Nonalienation and Nonassignment . Except for debts owed the Company by a Participant or Beneficiary in accordance with Section 9.5, no amounts payable or to become payable under the Plan to a Participant or Beneficiary shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, whether voluntary, involuntary, by operation of law or otherwise, and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the same by a Participant or Beneficiary prior to distribution as herein provided shall be null and void.

9.3 Tax Withholding . The Company shall have the right to deduct from any payments to a Participant or Beneficiary under the Plan any taxes required by law to be withheld with respect to such payments. In addition, the Company shall have the right to deduct from any Participant’s base salary or other compensation any applicable employment taxes or other required withholdings with respect to a Participant.

9.4 FICA Withholding/Employee Deferrals/Company Contributions . If the Participant is an employee of the Company, for each payroll period, the Company shall withhold from that portion of the Participant’s Compensation that is not being deferred under this Plan, the Participant’s share of FICA and other applicable taxes that are required to be withheld with respect to (i) Employee Deferrals, (ii) Company Matching Contributions and (iii) Company Service Based Contributions as they vest and become subject to such FICA withholding. To the extent that there are insufficient funds to satisfy all applicable tax withholding requirements in a timely manner, the Company reserves the right to reduce the Participant’s Employee Deferrals, as required to provide available funds for applicable tax withholding requirements. To the extent there are still insufficient funds to satisfy all such applicable tax withholding requirements, the Participant shall timely remit cash funds to the Company sufficient to cover such withholding requirements.

9.5 Setoffs . As a condition to the receipt of any benefits hereunder, the Committee, in its sole discretion, may require a Participant or Beneficiary to first execute a written authorization, in the form established by the Committee, authorizing the Company to offset from the benefits otherwise due hereunder any and all amounts, debts or other obligations, incurred in the ordinary course of the service relationship, owed to the Company by the Participant. Where such written authorization has been so executed by a Participant, benefits hereunder shall be reduced accordingly. The Committee shall have full discretion to determine the application of such offset and the manner in which such offset will reduce benefits under the Plan; provided, however, that the amount offset in any one taxable year does not exceed $5,000 and the offset is taken at the same time and in the same amount as the debt otherwise would have been due from the Participant, but only at the time that an amount is otherwise payable to a Participant under the Plan.

9.6 Number and Gender . Wherever appropriate herein, words used in the singular shall be considered to include the plural and words used in the plural shall be considered to include the singular. The masculine gender, where appearing in the Plan, shall be deemed to include the feminine gender unless the context plainly requires otherwise.


9.7 Headings . The headings of Articles and Sections herein are included solely for convenience, and if there is any conflict between such headings and the text of the Plan, the text shall control.

9.8 Applicable Law . Except to the extent preempted by federal law, the terms and provisions of the Plan shall be construed in accordance with the laws of the State of Delaware, without regard to the application of any conflicts of law.

9.9 Successors . All obligations under the Plan shall be binding upon the Company and any successors and assigns, in accordance with its terms, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or other transaction, involving all or substantially all of the business and/or assets of the Company.

9.10 Claims Procedure . The Committee shall have sole discretionary authority with regard to the adjudication of any claims made under the Plan. All claims for benefits under the Plan shall be submitted in writing, shall be signed by the claimant and shall be considered filed on the date the claim is received by the Committee. In the event a claim is denied, in whole or in part, the claims procedures set forth below shall be applicable.

Upon the filing of a claim as above provided and in the event the claim is denied, in whole or in part, the Committee shall within ninety (90) days, (forty five (45) days for disability related claims,) provide the claimant with a written statement which shall be delivered or mailed to the claimant to his last known address, which statement shall contain the following:

 

(a) the specific reason or reasons for the denial of benefits;

 

(b) a specific reference to the pertinent provisions of the Plan upon which the denial is based;

 

(c) a description of any additional material or information necessary for the claimant to perfect his claim for benefits and an explanation of why such material and information is necessary; and

 

(d) an explanation of the review procedure provided below.

If special circumstances require additional time for processing the claim, the Committee shall advise the claimant prior to the end of the initial ninety (90) day or forty-five (45) day period, setting forth the reasons for the delay and the approximate date the Committee expects to render its decision. Any such extension shall not exceed ninety (90) days, or thirty (30) days for disability related claims.


Within ninety (90) days after receipt of the written notice of denial of a claim as provided above, a claimant or his authorized representative may request a review of the denial upon written application to the Committee, may review pertinent documents and may submit issues and comments in writing to the Committee. Within sixty (60) days (or forty-five days in the case of a disability related claim) after receipt of a written request for review, or within one hundred and twenty (120) days (or ninety days for disability related claims) in the event of special circumstances which require an extension of time for processing such application for review, the Committee shall notify the claimant of its decision by delivery or by Certified or Registered Mail to his last known address. The decision of the Committee shall be in writing and shall include the specific reasons for the decision and specific references to the pertinent provisions of the Plan on which such decision is based. The Committee shall advise the claimant prior to the end of the initial sixty (60) day or forty-five (45) day period, as applicable, if additional time is needed to process such application for review. The decision of the Committee shall be final and conclusive.

9.11 Claims/Disputes . Any dispute or claim arising out of this Plan or the breach thereof, which is not settled under the Plan’s administrative claims procedure and which is pursued beyond such claims procedure, shall be brought in Federal District Court, in Mecklenburg County, North Carolina.

9.12 Conduct Injurious to the Company . Notwithstanding anything in the Plan to the contrary, any and all benefits otherwise payable to any Participant hereunder attributable to Company Matching Contributions and Company Service Based Contributions, except to the extent of any prior distributions under the Plan, shall be forever forfeited if it is determined by the Committee, in its sole discretion, that such Participant has engaged in conduct injurious to the Company, including but not limited to the following:

 

(a) dishonesty while in the employ of the Company or while serving as a Director;

 

(b) imparting, disclosing or appropriating proprietary information for himself or to or for any other person, firm, corporation, association or entity for any reason or purpose whatsoever, except if required by law or at the Company’s direction;

 

(c) performing any act or engaging in any course of conduct which has or may reasonably have the effect of demeaning the name or business reputation of the Company; or

 

(d) providing goods or services to or becoming an employee, owner, officer, agent, consultant, advisor or director of any firm or person in any geographic area which competes with the Company in any phase of any of the business lines or services offered by the Company as of the Participant’s Retirement Date or the date the Participant ceases to be a Director.


9.13 Compliance with Code Section 409A . The Plan is intended to meet the requirements of Section 409A of the Code in order to avoid any adverse tax consequences resulting from any failure to comply with Section 409A of the Code and, as a result, the Plan shall be operated in a manner consistent with such compliance. Except to the extent expressly set forth in the Plan, the Participant (and/or the Participant’s Beneficiary, as applicable) shall have no right to dictate the taxable year in which any payment hereunder that is subject to Section 409A of the Code should be paid.

9.14 No Guarantee of Tax Consequences . None of the Board, officers or employees of the Company, the Company or any affiliate of the Company makes any commitment or guarantee that any federal, state or local tax treatment will apply or be available to any individual or person participating hereunder or eligible to participate hereunder.

9.15 Entire Agreement . This Plan document constitutes the entire Plan governing the Company and the Participant with respect to the subject matters hereof and supercedes all prior written and oral and all contemporaneous written and oral agreements and understandings, with respect to the subject matters hereof. This Plan may not be changed orally, but only by an amendment in writing signed by the Company, subject to the provisions in this Plan regarding amendments thereto.

IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its duly authorized officer, effective as provided herein.

 

BABCOCK & WILCOX ENTERPRISES, INC.
By:  

/s/ E. James Ferland

Title:   Chairman and Chief Executive Officer

Exhibit 10.13

INTELLECTUAL PROPERTY AGREEMENT

between

BABCOCK & WILCOX POWER GENERATION GROUP, INC.

and

BWXT FOREIGN HOLDINGS, LLC

dated as of

June 26, 2015


TABLE OF CONTENTS

 

ARTICLE I    DEFINITIONS      1   

Section 1.1

     

Definitions

     1   

Section 1.2

     

Interpretation

     4   
ARTICLE II    INTELLECTUAL PROPERTY ASSIGNMENT AND OWNERSHIP      6   

Section 2.1

     

Assignment of Transferred Intellectual Property

     6   

Section 2.2

     

Actions; Correspondence

     6   

Section 2.3

     

Assistance by Employees; Inventor Compensation

     7   

Section 2.4

     

Reserved

     7   

Section 2.5

     

Rights Arising in the Future

     7   
ARTICLE III    RESERVED      8   
ARTICLE IV    RESERVED      8   
ARTICLE V    INTELLECTUAL PROPERTY LICENSES AND COVENANTS      8   

Section 5.1

     

Reserved

     8   

Section 5.2

     

Cross-License of Patents

     8   

Section 5.3

     

License of Copyrights

     9   

Section 5.4

     

Cross-Licenses of Software

     9   

Section 5.5

     

Cross-Licenses of Additional Know-How

     10   

Section 5.6

     

Sublicensing; Assignability

     11   

Section 5.7

     

Restrictions on Licensor Exploitation of Intellectual Property

     11   

Section 5.8

     

Third Party Agreements; Reservation of Rights

     12   

Section 5.9

     

Maintenance of Intellectual Property

     12   

Section 5.10

     

Covenants

     13   
ARTICLE VI   

TECHNICAL ASSISTANCE AND TECHNOLOGY TRANSFER

     13   

Section 6.1

     

Documentation Transfer

     13   

Section 6.2

     

Technical Assistance

     15   

Section 6.3

     

No Additional Technical Assistance

     16   
ARTICLE VII   

NO WARRANTIES

     16   
ARTICLE VIII   

THIRD-PARTY INFRINGEMENT

     17   

Section 8.1

     

No Obligation

     17   

Section 8.2

     

Notice Regarding Infringement

     17   

Section 8.3

     

Suits for Infringement

     17   
ARTICLE IX   

CONFIDENTIALITY

     19   

 

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ARTICLE X    MISCELLANEOUS      20   

Section 10.1

     

Authority

     20   

Section 10.2

     

Entire Agreement

     21   

Section 10.3

     

Binding Effect; Third-Party Beneficiaries; Assignment

     21   

Section 10.4

     

Amendment

     21   

Section 10.5

     

Failure or Indulgence Not Waiver; Remedies Cumulative

     21   

Section 10.6

     

Notices

     21   

Section 10.7

     

Counterparts

     21   

Section 10.8

     

Severability

     22   

Section 10.9

     

Governing Law

     22   

Section 10.10

     

Construction

     22   

Section 10.11

     

Performance

     22   

 

SCHEDULES   
Schedule 1.1(e)    SpinCo Core Field; RemainCo Core Field
Schedule 1.1(i)    Specific RemainCo Field; Specific SpinCo Field
Schedule 2.1(b)    Transferred PGG Intellectual Property
Schedule 5.2(a)(i)    PGG General Patents
Schedule 5.2(a)(ii)    BWXT General Patents
Schedule 5.2(b)(i)    PGG Specific Patents
Schedule 5.3    PGG Licensed Copyrights
Schedule 5.4(b)    PGG Licensed Software
Schedule 5.4(d)    PGG Special Licensed Software
Schedule 5.5(c)    Special PGG Know-How
EXHIBITS   
Exhibit A    Intellectual Property Assignment Agreements

 

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INTELLECTUAL PROPERTY AGREEMENT

This INTELLECTUAL PROPERTY AGREEMENT (this “Agreement”) is entered into as of June 26, 2015 at 6:50 pm Eastern Time (the “Effective Date”), between Babcock & Wilcox Power Generation Group, Inc., a Delaware corporation, (“PGG”) and BWXT Foreign Holdings, LLC, a Delaware limited liability company (“BWXT”). BWXT and PGG are sometimes referred to herein individually as a “Party,” and collectively as the “Parties.” Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in Article I hereof.

RECITALS

WHEREAS, Babcock & Wilcox Enterprises, Inc., a Delaware corporation (“SpinCo”) is a wholly owned Subsidiary of The Babcock & Wilcox Company (“RemainCo”) and the Board of Directors of RemainCo has determined that it would be appropriate and in the best interests of RemainCo and its stockholders for RemainCo to separate the SpinCo Business from the RemainCo Business;

WHEREAS, in order to effectuate the foregoing, RemainCo and SpinCo have entered into a Master Separation Agreement, dated as of June 8, 2015 (the “Master Separation Agreement”), which provides, among other things, upon the terms and subject to the conditions thereof, for the separation of the respective businesses of SpinCo and RemainCo and the Distribution, and the execution and delivery of certain other agreements, including this Agreement, in order to facilitate and provide for the foregoing;

WHEREAS, it is the intent of the Parties, in order to facilitate the foregoing separation, in anticipation of the Distribution and in accordance with the Master Separation Agreement, that BWXT convey to PGG certain Intellectual Property rights and licenses subject to the terms and conditions set forth in this Agreement; and

WHEREAS, it is the intent of the Parties, in order to facilitate the foregoing separation, in anticipation of the Distribution and in accordance with the Master Separation Agreement, that PGG convey to BWXT certain Intellectual Property rights and licenses subject to the terms and conditions set forth in this Agreement; and

NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions . Except for the terms defined below, the capitalized terms used in this Agreement shall have the meanings ascribed to them in Section 1.1 of the Master Separation Agreement:

“BWXT” has the meaning set forth in the recitals.

 

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“BWXT General Patents” has the meaning set forth in Section 5.2(a)(ii) .

“BWXT Know-How” means all Know-How owned by BWXT as of the Effective Date.

“Confidential Information” has the meaning set forth in Section 9.2 .

“Enabling Technology Know-How” means the PGG Know-How related to:

 

  i. thermodynamics (as related to steam/water, liquid metals, and liquid sodium);

 

  ii. fluid dynamics (as related to steam/water, liquid metals, and liquid sodium);

 

  iii. heat transfer from/to each pairing of: gas, metal, subcooled water, boiling water, superheated steam (for subcritical applications), metal working fluids (liquid metal and liquid sodium), excluding fired furnace and gasifier furnace heat transfer (including combusted gas radiation, and wall effects from various fuels);

 

  iv. single phase flow and two-phase flow and circulation of steam/water (e.g.: water hammer, natural and forced, local and system dynamics/instabilities), transient two-phase, steam/water separation, cyclonic separation, critical velocity separation, departure from nucleate boiling, saturated water head, sub-cooled boiling, for smooth and non-smooth inside surface tube technology;

 

  v. feedwater and condensate chemistry, feedwater purity requirements, influence and control of pH, dissolved oxygen, and impurities, and feedwater treatments for all volatile-reducing;

 

  vi. steam chemistry, including impurity volatility in steam, impurity solubility in steam and steam purity calculations;

 

  vii. deposit chemistry, including deposit process and morphology;

 

  viii. chemical cleaning compositions and procedures;

 

  ix. All design, fabrication and materials knowledge in the following areas for operation up to 900F for:

 

  a. materials properties (e.g.: tensile, hardness, toughness, formability, microstructure, operational conditions, stress at design temperature), metal applications, tubular and wrought product forms and castings (e.g.: steels, carbon, ferritic, martensitic, austenitic stainless, nickel alloys);

 

  b. weld processes, including narrow groove Gas Tungsten Arc Welding of nickel-based alloys, and tube expansion and repair techniques (e.g. hydraulic, kinetic, roll / induction heating);

 

  c. non-destructive examinations, including strain, residual stress measurement and distortion during fabrication processes (e.g. welding); quality/code requirements, including Weld Process Qualification Records and Weld Procedure Specifications);

 

  d. steam and water corrosion for metal materials (e.g.: carbon and low alloy steels, stainless, and nickel-based alloys), including flow accelerated corrosion, stress corrosion cracking, pitting, intergranular attack, effect of temperature, pH, dissolved oxygen, and/or feedwater treatment and under-deposit corrosion – hydrogen damage; and

 

2


  e. structural analysis and design, including fracture mechanics, structural support, fatigue analysis, creep rupture; and

 

  x. control rod drive mechanism technology including but not limited to: roller nut, magnetic jack, rack and pinion drive mechanisms, mechanical and electromechanical design, material properties, corrosion, wear characteristics, fabrication, assembly, welding, testing, inspection, instrumentation, latching and power control, operating history and maintenance;

provided, however, that Enabling Technology Know-How expressly excludes Special PGG Know-How and nothing in the foregoing shall be interpreted to encompass Special PGG Know-How.

“Intellectual Property” means the rights associated with or arising out of any of the following in any jurisdiction throughout the world: (i) all patents and patent applications, together with all reissuances, divisionals, continuations, continuations-in-part, revisions, renewals, extensions, and reexaminations thereof, and any identified invention disclosures (“Patents”); (ii) trade secret rights and corresponding rights in confidential information and other non-public information (whether or not patentable), including ideas, formulas, compositions, inventor’s notes, discoveries and improvements, know how, manufacturing and production processes and techniques, design manuals, testing information (including testing protocols and results), research and development information, prototypes, inventions, invention disclosures, unpatented blueprints, drawings, specifications, designs, plans, proposals and technical data, business and marketing plans, market surveys, market know-how and customer lists and information, including all tangible embodiments of the foregoing and unregistered copyrights (“Know-How”); (iii) all registered or unregistered copyrights, copyrightable works, rights in databases, data collections, “moral” rights, mask works, copyright registrations, applications and extensions therefor and corresponding rights in works of authorship (“Copyrights”); (iv) all trademarks, service marks, logos, trade dress and trade names indicating the source of goods or services, and other indicia of commercial source or origin (whether registered, common law, statutory or otherwise), all registrations and applications to register the foregoing anywhere in the world and all goodwill associated therewith (“Trademarks”); (v) all computer software and code, including assemblers, applets, compilers, source code, object code, development tools, design tools, utilities, library files, user interfaces and data, and all documentation and manuals related to such computer software and code in any form or format, however fixed (“Software”); (vi) all internet electronic addresses, uniform resource locators and alphanumeric designations associated therewith and all registrations for any of the foregoing (“Domain Names”); and (vii) any similar, corresponding or equivalent rights to any of the foregoing anywhere in the world.

“Intellectual Property Assignment Agreements” has the meaning set forth in Section 2.1(c) .

“IP Proceedings” has the meaning set forth in Section 2.3 .

“Licensed BWXT Intellectual Property” means all BWXT General Patents.

“Licensed PGG Intellectual Property” means all PGG General Patents, PGG Specific Patents, PGG Licensed Copyrights, PGG Licensed Software, Enabling Technology Know-How, Special PGG Know-How and PGG Special Licensed Software.

 

3


“Master Separation Agreement” has the meaning set forth in the recitals.

“PGG” has the meaning set forth in the recitals.

“PGG General Patents” has the meaning set forth in Section 5.2(a)(i) .

“PGG Know-How” means all Know-How owned by PGG as of the Effective Date.

“PGG Licensed Copyrights” has the meaning set forth in Section 5.3 .

“PGG Licensed Software” has the meaning set forth in Section 5.4(b) .

“PGG Specific Patents” has the meaning set forth in Section 5.2(b)(i) .

“PGG Special Licensed Software” has the meaning set forth in Section 5.4(d) .

“RemainCo” has the meaning set forth in the recitals.

“RemainCo Core Field” has the meaning set forth on Schedule 1.1(e) .

“Special PGG Know-How” has the meaning set forth in Section 5.5(c) .

“Specific RemainCo Field” has the meaning set forth on Schedule 1.1(i) .

“Specific SpinCo Field” has the meaning set forth on Schedule 1.1(i) .

“SpinCo” has the meaning set forth in the recitals.

“SpinCo Core Field” has the meaning set forth on Schedule 1.1(e) .

“Transferred PGG Intellectual Property” has the meaning set forth in Schedule 2.1(b) .

Section 1.2 Interpretation . In this Agreement, unless the context clearly indicates otherwise:

(a) words used in the singular include the plural and words used in the plural include the singular;

(b) if a word or phrase is defined in this Agreement, its other grammatical forms, as used in this Agreement, shall have a corresponding meaning;

(c) reference to any gender includes the other gender and the neuter;

(d) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”;

(e) the words “shall” and “will” are used interchangeably and have the same meaning;

 

4


(f) the word “or” shall have the inclusive meaning represented by the phrase “and/or”;

(g) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;

(h) all references to a specific time of day in this Agreement shall be based upon Eastern Standard Time or Eastern Daylight Savings Time, as applicable, on the date in question;

(i) whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified;

(j) reference to any Article, Section or Schedule means such Article or Section of, or such Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;

(k) the words “this Agreement,” “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision of this Agreement;

(l) the term “commercially reasonable efforts” means efforts which are commercially reasonable to enable a Party, directly or indirectly, to satisfy a condition to or otherwise assist in the consummation of a desired result and which do not require the performing Party to expend funds or assume liabilities other than expenditures and liabilities which are customary and reasonable in nature and amount in the context of a series of related transactions similar to the transaction contemplated herein;

(m) reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;

(n) reference to any Law (including statutes and ordinances) means such Law (including any and all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;

(o) references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement; a reference to such Person’s “Affiliates” shall be deemed to mean such Person’s Affiliates following the Distribution and any reference to a Third Party shall be deemed to mean a Person who is not a Party or an Affiliate of a Party;

(p) if there is any conflict between the provisions of the main body of this Agreement and the Schedules hereto, the provisions of the main body of this Agreement shall control unless explicitly stated otherwise in such Schedule;

(q) the titles to Articles and headings of Sections contained in this Agreement, in any Schedule and in the table of contents to this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement; and

(r) any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Subsidiaries and Affiliates to take such action or refrain from taking such action, as the case may be.

 

5


ARTICLE II

INTELLECTUAL PROPERTY ASSIGNMENT AND OWNERSHIP

Section 2.1 Assignment of Transferred Intellectual Property .

(a) Reserved .

(b) PGG, as a capital contribution, hereby assigns, transfers and conveys to BWXT all right, title and interest, held by PGG or any other member of the SpinCo Group, in and to the Intellectual Property set forth on Schedule 2.1(b) (the “Transferred PGG Intellectual Property”), including all right, title and interest in and to all proceeds, causes of actions and rights of recovery against Third Parties for past and future infringement, misappropriation, or other violation or impairment of such Intellectual Property, except to the extent prohibited by, or requiring any Consent under (to the extent such Consent has not been obtained), any Contract under which PGG holds or uses such Transferred PGG Intellectual Property.

(c) PGG shall, and shall cause any members of the SpinCo Group as applicable and necessary to, execute intellectual property assignment agreements in a form substantially similar to that attached hereto as Exhibit A, as applicable to the Transferred PGG Intellectual Property, as well as such additional specific assignments as reasonably necessary to carry out the intent of the Parties as set forth herein (collectively, the “Intellectual Property Assignment Agreements”). All Transferred PGG Intellectual Property is transferred subject to licenses granted in this Agreement and all other rights granted under or in connection with agreements related such Transferred PGG Intellectual Property existing and in force as of the Effective Date, in each case subject to the terms and conditions contained in each such agreement, including, without limitation, any license agreements, any security agreements or any liens granted in and to such Transferred PGG Intellectual Property.

(d) PGG shall deliver to BWXT all Intellectual Property Assignment Agreements contemplated herein that effectuate the assignment of Transferred PGG Intellectual Property from PGG or any member of the SpinCo Group to BWXT. BWXT shall have the sole responsibility, at its sole cost and expense, to file such Intellectual Property Assignment Agreements and any other forms or documents required to record such assignments, provided, however, that upon request, PGG shall provide reasonable assistance to BWXT to record an assignment, at BWXT’s sole cost and expense.

Section 2.2 Actions; Correspondence . BWXT shall, in its sole discretion, pay all fees incurred and take all actions with respect to the Transferred PGG Intellectual Property subsequent to the Distribution Date. PGG shall forward to BWXT or its designee copies of all files related to and correspondence received from any Governmental Authority regarding the Transferred PGG Intellectual Property.

 

6


Section 2.3 Assistance by Employees; Inventor Compensation . Each Party agrees that it shall make available to the other Party the services of its employees and contractors reasonably necessary to assist the other Party with the prosecution of, and other patent or trademark office proceedings (e.g., reissue, reexamination, interference, inter partes review, post-grant review, supplemental examination, and other similar proceedings) regarding the other Party’s Patents, Trademarks and other Intellectual Property (collectively, “IP Proceedings”). Each Party agrees to reasonably make available to the other Party (i) inventors and other reasonably necessary persons employed by it for the other Party’s reasonable needs regarding execution of documents, interviews, declarations and testimony, and (ii) documents, materials and information for the other Party’s reasonable good faith needs regarding such IP Proceedings. The Party involved in the IP Proceedings shall be responsible for the actual and reasonable out-of-pocket expenses associated with such assistance, expressly excluding the value of the time of the other Party’s personnel. Each Party will be responsible for providing inventor incentive compensation to its employees under its own internal policies. No Party shall have any obligation to provide any inventor incentive compensation to an employee of the other Party except as required by law.

Section 2.4 Reserved .

Section 2.5 Rights Arising in the Future .

(a) As between BWXT and PGG, unless otherwise agreed in writing by BWXT or any member of the RemainCo Group and PGG or any member of the SpinCo Group, any and all Intellectual Property created, conceived, or actually reduced to practice by or on behalf of BWXT or any member of the RemainCo Group after the Distribution Date, including, without limitation, any improvements or modifications to any Licensed PGG Intellectual Property or, shall belong solely and exclusively to BWXT and neither PGG nor any member of the SpinCo Group shall have any right, title or interest in or to such Intellectual Property. BWXT shall have no obligation to notify PGG or any member of the SpinCo Group of any such improvements or modifications or to disclose or license any such improvements or modifications to PGG or any member of the SpinCo Group.

(b) As between BWXT and PGG, unless otherwise agreed in writing by BWXT or any member of the RemainCo Group and PGG or any member of the SpinCo Group, any and all Intellectual Property created, conceived, or actually reduced to practice by or on behalf of PGG or any member of the SpinCo Group after the Distribution Date, including, without limitation, any improvements or modifications to any Licensed BWXT Intellectual Property, shall belong solely and exclusively to PGG and neither BWXT nor any member of the RemainCo Group shall have any right, title or interest in or to such Intellectual Property. PGG shall have no obligation to notify BWXT or any member of the RemainCo Group of any such improvements or modifications or to disclose or license any such improvements or modifications to BWXT or any member of the RemainCo Group.

 

7


ARTICLE III

RESERVED.

ARTICLE IV

RESERVED.

ARTICLE V

INTELLECTUAL PROPERTY LICENSES AND COVENANTS

Section 5.1 Reserved .

Section 5.2 Cross-License of Patents .

(a) General License .

(i) PGG, as a capital contribution, hereby grants to BWXT a perpetual, irrevocable, exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ), to use and exploit the Patents set forth on Schedule 5.2(a)(i) (the “PGG General Patents”) for the continued operation of the RemainCo Business and any future extensions of the RemainCo Business in the RemainCo Core Field, including the right to make, have made, use, lease, sell, offer for sale, and import products and services utilizing the PGG General Patents; provided, however, the foregoing license shall not extend to (i) PGG General Patents to the extent the licensing of same to BWXT would constitute a breach of an agreement with any Third Party executed prior to the Effective Date or result in any expense to PGG or any member of the SpinCo Group for payments to such Third Party or (ii) any Intellectual Property not owned by one or more members of the SpinCo Group, or as to which no member of the SpinCo Group has the right to grant sublicenses, as of the Effective Date.

(ii) BWXT hereby grants to PGG a perpetual, irrevocable, exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ), to use and exploit the Patents set forth on Schedule 5.2(a)(ii) (the “BWXT General Patents”) for the continued operation of the SpinCo Business and any future extensions of the SpinCo Business in the SpinCo Core Field, including the right to make, have made, use, lease, sell, offer for sale, and import products and services utilizing the BWXT General Patents; provided, however, the foregoing license shall not extend to (i) BWXT General Patents to the extent the licensing of same to PGG would constitute a breach of an agreement with any Third Party executed prior to the Effective Date or result in any expense to PGG or any member of the SpinCo Group for payments to such Third Party or (ii) any Intellectual Property not owned by one or more members of the RemainCo Group, or as to which no member of the RemainCo Group has the right to grant sublicenses, as of the Effective Date.

 

8


(b) Specific License .

(i) PGG, as a capital contribution, hereby grants to BWXT a perpetual, irrevocable, exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ), to use and exploit the Patents set forth on Schedule 5.2(b)(i) (the “PGG Specific Patents”) for the continued operation of the RemainCo Business and any future extensions of the RemainCo Business solely in the Specific RemainCo Field, including the right to make, have made, use, lease, sell, offer for sale, and import products and services utilizing the PGG Specific Patents; provided, however, the foregoing license shall not extend to (i) PGG Specific Patents to the extent the licensing of same to BWXT would constitute a breach of an agreement with any Third Party executed prior to the Effective Date or result in any expense to PGG or any member of the SpinCo Group for payments to such Third Party or (ii) any Intellectual Property not owned by one or more members of the SpinCo Group, or as to which no member of the SpinCo Group has the right to grant sublicenses, as of the Effective Date.

Section 5.3 License of Copyrights . PGG, as a capital contribution, hereby grants to BWXT a perpetual, irrevocable, exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ), to use, reproduce, prepare derivative works of, distribute copies, display, perform and exploit the Copyrights set forth on Schedule 5.3 (the “PGG Licensed Copyrights”) for the continued operation of the RemainCo Business and any future extensions of the RemainCo Business in the RemainCo Core Field, including the right to make, have made, use, lease, sell, offer for sale, and import products and services utilizing the PGG Licensed Copyrights; provided, however, the foregoing license shall not extend to (i) PGG Licensed Copyrights to the extent the licensing of same to BWXT would constitute a breach of an agreement with any Third Party executed prior to the Effective Date or result in any expense to PGG or any member of the SpinCo Group for payments to such Third Party or (ii) any Intellectual Property not owned by one or more members of the SpinCo Group, or as to which no member of the SpinCo Group has the right to grant sublicenses, as of the Effective Date or (iii) the distribution of any source code contained in any PGG Licensed Copyrights to any Third Party without the express written consent of PGG.

Section 5.4 Cross-Licenses of Software .

(a) Reserved .

(b) PGG, as a capital contribution, hereby grants to BWXT a perpetual, irrevocable, exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ), to use the Software set forth on Schedule 5.4(b) (the “PGG Licensed Software”) for the continued operation of the RemainCo Business and any future extensions of the RemainCo Business in the RemainCo Core Field; provided, however, the foregoing license shall not extend to (i) PGG Licensed Software licensed by PGG or any other member of the SpinCo Group if and to the extent the licensing of same to BWXT would constitute a breach of an agreement with any Third Party executed prior to the Effective Date or result in any expense to PGG or any member of the SpinCo Group for payments to such Third Party or (ii) any intellectual property not owned by one or more members of the SpinCo Group, or as to which no member of the SpinCo Group has the right to grant sublicenses, as of the Effective Date. The foregoing license includes the right to use, modify, and reproduce in source code and object code for such PGG Licensed Software. To the extent not already in the possession of BWXT, PGG

 

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will provide BWXT with a copy of all object code and source code for the PGG Licensed Software and all associated documentation, including, without limitation, all validation and other documentation, within 120 days of the Distribution Date.

(c) Reserved .

(d) PGG, as a capital contribution, hereby grants to BWXT a perpetual, irrevocable, exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ), to use the Software set forth on Schedule 5.4(d) (“PGG Special Licensed Software”) for the continued operation of the RemainCo Business and any future extensions of the RemainCo Business in the Specific RemainCo Field; provided, however, the foregoing license shall not extend to (i) PGG Licensed Software licensed by PGG or any other member of the SpinCo Group if and to the extent the licensing of same to BWXT would constitute a breach of an agreement with any Third Party executed prior to the Effective Date or result in any expense to PGG or any member of the SpinCo Group for payments to such Third Party or (ii) any intellectual property not owned by one or more members of the SpinCo Group, or as to which no member of the SpinCo Group has the right to grant sublicenses, as of the Effective Date. The foregoing license includes the right to use, modify, and reproduce in source code and object code for such PGG Licensed Software. To the extent not already in the possession of BWXT, PGG will provide BWXT with a copy of all object code and source code for the PGG Licensed Software and all associated documentation, including, without limitation, all validation and other documentation, within 120 days of the Distribution Date.

Section 5.5 Cross-Licenses of Additional Know-How .

(a) PGG, as a capital contribution, hereby grants to BWXT a perpetual, irrevocable, exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ), to use the Enabling Technology Know-How for the continued operation of the RemainCo Business and any future extensions of the RemainCo Business in the RemainCo Core Field; provided, however, the foregoing license shall not extend to (i) Enabling Technology Know-How to the extent the licensing of same to BWXT would constitute a breach of an agreement with any Third Party executed prior to the Effective Date or result in any expense to PGG or any member of the SpinCo Group for payments to such Third Party or (ii) any intellectual property not owned by one or more members of the SpinCo Group, or as to which no member of the SpinCo Group has the right to grant sublicenses, as of the Effective Date. For purposes of clarity, the foregoing license does not include and shall not be construed to include or apply to any Know-How not in existence as of the Effective Date.

(b) Reserved .

(c) PGG, as a capital contribution, hereby grants to BWXT a perpetual, irrevocable, exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ), to use the PGG Know-How set forth on Schedule 5.5(c) (the “Special PGG Know-How”) for the continued operation of the RemainCo Business and any future extensions of the RemainCo Business solely in the Specific RemainCo Field; provided, however, the foregoing license shall not extend to (i) Special PGG Know-How licensed by PGG or any other member of the SpinCo Group if and to the extent the licensing of same to BWXT would

 

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constitute a breach of an agreement with any Third Party executed prior to the Effective Date or result in any expense to PGG or any member of the SpinCo Group for payments to such Third Party or (ii) any intellectual property not owned by one or more members of the SpinCo Group, or as to which no member of the SpinCo Group has the right to grant sublicenses, as of the Effective Date. For purposes of clarity, the foregoing license does not include and shall not be construed to include or apply to any Know-How not in existence as of the Effective Date.

Section 5.6 Sublicensing; Assignability .

(a) The foregoing licenses shall be assignable in whole or in part only (i) to any Affiliate or (ii) to the extent the licensee transfers to a Third Party all or substantially all of the assets of the business to which such Licensed PGG Intellectual Property or the Licensed BWXT Intellectual Property, as applicable, relates.

(b) BWXT may sublicense the Licensed PGG Intellectual Property to Affiliates of BWXT, even if they become Affiliates after the Distribution Date, solely within the scope of its licenses in Article 5 , provided that such sublicense shall only be effective for such time as such entity remains an Affiliate of BWXT, subject to Section 5.6(a)(ii) . BWXT may, and may permit its sublicensees to, sublicense erection and arrangement drawings; form, fit, and function drawings; and product and installation/erection specifications based upon the Licensed PGG Intellectual Property to: (i) customers to enable them to use, operate, maintain and repair the equipment, services or other deliverables which incorporate or are derived from the Licensed PGG Intellectual Property and which were sold to them by BWXT or its sublicensees; and (ii) to contractors, subcontractors and vendors to enable them to manufacture, erect, install, service, repair and maintain those products to which the licenses set forth in Article 5 relate.

(c) PGG may sublicense the Licensed BWXT Intellectual Property to Affiliates of PGG, even if they become Affiliates after the Distribution Date, solely within the scope of its licenses in Article 5 , provided that such sublicense shall only be effective for such time as such entity remains an Affiliate of PGG, subject to Section 5.6(a)(ii) . PGG may, and may permit its sublicensees to, sublicense erection and arrangement drawings; form, fit, and function drawings; and product and installation/erection specifications based upon the Licensed BWXT Intellectual Property to: (i) customers to enable them to use, operate, maintain and repair the equipment, services or other deliverables which incorporate or are derived from the Licensed BWXT Intellectual Property and which were sold to them by PGG or its sublicensees; and (ii) to contractors, subcontractors and others to enable them to manufacture, erect, install, service, repair and maintain those products to which the license set forth in Article 5 relate.

Section 5.7 Restrictions on Licensor Exploitation of Intellectual Property .

(a) BWXT (i) shall not use or exploit the Licensed BWXT Intellectual Property in the SpinCo Core Field and (ii) shall not, and shall not permit any member of the RemainCo Group to, license, provide or otherwise grant to any Third Party the right to use, exploit or access any Licensed BWXT Intellectual Property in the SpinCo Core Field.

(b) PGG (i) shall not use or exploit the Licensed PGG Intellectual Property in the RemainCo Core Field and (ii) shall not, and shall not permit any member of the SpinCo Group to, license, provide or otherwise grant to any Third Party the right to use, exploit or access any Licensed PGG Intellectual Property in the RemainCo Core Field.

 

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Section 5.8 Third Party Agreements; Reservation of Rights .

(a) All licenses granted herein are expressly made only subject to, and only to the extent permissible under, all pre-existing rights, obligations and restrictions contained in any existing agreements related to the applicable Intellectual Property licensed herein, including, without limitation, licenses or other rights existing in third parties granted by PGG or BWXT and/or their sublicensees in existing license agreements, applicable agreements in existence between members of the RemainCo Group and the United States Department of Energy, applicable agreements in existence between members of the SpinCo Group and the United States Department of Energy and all existing security agreements and liens in place in connection with such licensed Intellectual Property.

(b) Except for the limited rights granted in this Agreement in connection with the Licensed BWXT Intellectual Property, including, without limitation, the rights and obligations arising out of or related to Section 5.10 , BWXT reserves to itself all right, title and interest in and to the Licensed BWXT Intellectual Property. Without limiting the foregoing, for purposes of clarity, as between BWXT and PGG, BWXT retains all rights in and to, and to use and exploit, and including without limitation the right to make, have made, use, lease, sell, offer for sale, and import, and use, reproduce, prepare derivative works of, distribute copies, perform and display products and services which utilize or embody such Licensed BWXT Intellectual Property in the RemainCo Core Field. Except for the limited rights granted in this Agreement in connection with the Licensed PGG Intellectual Property, including, without limitation, the rights and obligations arising out of or related to Section 5.10 , PGG reserves to itself all right, title and interest in and to the Licensed PGG Intellectual Property. Without limiting the foregoing, for purposes of clarity, as between BWXT and PGG, PGG retains all rights in and to, and to use and exploit, and including without limitation the right to make, have made, use, lease, sell, offer for sale, and import, and use, reproduce, prepare derivative works of, distribute copies, perform and display products and services which utilize or embody such Licensed PGG Intellectual Property in the SpinCo Core Field.

Section 5.9 Maintenance of Intellectual Property .

(a) BWXT shall not have, nor shall any member of the RemainCo Group have, any obligation to maintain the pendency, subsistence, validity, enforceability or confidentiality of any Licensed BWXT Intellectual Property. BWXT may, and may permit an applicable member of the RemainCo Group to, discontinue maintenance, abandon or dedicate to the public any Licensed BWXT Intellectual Property.

(b) PGG shall not have, nor shall any member of the SpinCo Group have, any obligation to maintain the pendency, subsistence, validity, enforceability or confidentiality of any Licensed PGG Intellectual Property. PGG may, and may permit an applicable member of the SpinCo Group to, discontinue maintenance, abandon or dedicate to the public any Licensed PGG Intellectual Property.

 

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Section 5.10 Covenants .

(a) BWXT hereby covenants not to sue PGG under any BWXT General Patents for infringement or misappropriation based upon any action that occurs in connection with the continued operation of the SpinCo Business and any future extensions of the SpinCo Business in any field other than the RemainCo Core Field after the Distribution Date. The foregoing covenant shall extend to any permitted assignees or sublicensees of PGG hereunder. BWXT further covenants to impose the obligations set forth in this Section 5.10(a) on any subsequent Third Party or Affiliate to whom BWXT may sell, transfer, convey or otherwise assign any of the foregoing Intellectual Property and shall ensure that any such Person agrees, in writing, to be bound by the covenants and obligations set forth herein.

(b) PGG hereby covenants not to sue BWXT under PGG General Patents, PGG Licensed Copyrights, PGG Licensed Software and Enabling Technology Know-How for infringement or misappropriation based upon any action that occurs in connection with the continued operation of the RemainCo Business and any future extensions of the RemainCo Business in any field other than the SpinCo Core Field after the Distribution Date. The foregoing covenant shall extend to any permitted assignees or sublicensees of BWXT hereunder. PGG further covenants to impose the obligations set forth in this Section 5.10(b) on any subsequent Third Party or Affiliate to whom PGG may sell, transfer, convey or otherwise assign any of the foregoing Intellectual Property and shall ensure that any such Person agrees, in writing, to be bound by the covenants and obligations set forth herein.

ARTICLE VI

TECHNICAL ASSISTANCE AND TECHNOLOGY TRANSFER

Section 6.1 Documentation Transfer .

(a) Special PGG Know-How; Enabling Technologies.

(i) To the extent that any physical embodiments of the Special PGG Know-How and the Enabling Technology Know-How, including documents, designs, drawings, manuals, standards, computer programs (including source code and documentation), materials and training programs, are not held by or in the possession of BWXT as of the Distribution Date, BWXT shall have the right, from time to time, but for not longer than thirty-six (36) months after the Distribution Date, to request that PGG provide copies of or access to such Know-How at BWXT’s cost (as agreed upon by the Parties), provided that (i) PGG shall not be obligated to provide, and BWXT shall have no right to request, copies of or access to any Know-How not in existence as of the Distribution Date; (ii) the determination as to what physical embodiments of the applicable Know-How are related to the Special PGG Know-How and the Enabling Technology Know-How shall be in PGG’s sole reasonable determination; and (iii) in the event that a request remains pending at the end of the permitted thirty-six (36) month period, PGG will use all reasonable efforts to fulfill that request within one (1) month, provided that BWXT shall not be permitted to make additional requests or any follow-up requests in that one (1) month period. PGG and BWXT acknowledge and agree that PGG shall not be obligated to expend more than 200 collective man hours per calendar year in the first year after the Distribution Date,

 

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160 collective man hours per calendar year in the second year after the Distribution Date and 140 collective man hours per calendar year in the third year after the Distribution Date, in connection with fulfilling requests for physical embodiments of the Special PGG Know-How and Enabling Technology Know-How, provided that PGG shall evaluate, respond to and fulfill such requests in good faith and as efficiently and expediently as possible in light of the requests and PGG’s ongoing business operations. BWXT shall retain and not remove or alter any proprietary notices on documents, designs, drawings, manuals and materials provided by PGG pursuant to the foregoing, and shall (x) retain any such notices on any copies and (y) include such notices on documents containing PGG proprietary information. All such material shall be held confidential by BWXT and treated as Confidential Information of PGG, subject to the terms and conditions of the license rights granted herein, and used only pursuant to the licenses set forth herein.

(ii) Without limiting Section 6.1(a)(i) or Section 6.2 , the Parties acknowledge and agree that certain physical engineering manuals in PGG’s possession, presently located in an office designated by PGG at PGG’s Barberton facilities, at Mail Station, BVS02B, contain a significant amount of Special PGG Know-How and Enabling Technology Know-How. Unless otherwise agreed by the Parties, to facilitate an expedient and efficient transfer of such documentation related to Special PGG Know-How and Enabling Technology Know-How, PGG and BWXT will use commercially reasonable efforts to work together to effect the transfer of all physical engineering manuals, including any sections, subsections or pages thereof, that embody the Special PGG Know-How or Enabling Technology Know-How within one (1) year of the Distribution Date. Without limiting the foregoing, PGG will permit an employee of BWXT or one of its Affiliates disciplined in the material to be reviewed, designated in advance by BWXT and then approved by PGG, to review the engineering manuals in the location designated by PGG to determine the collective set of standards or subsections or pages, BWXT believes embody the Special PGG Know-How or Enabling Technology Know-How. During the contemplated review, BWXT will identify to PGG said manuals or parts thereof that BWXT believes embody the Special PGG Know-How or Enabling Technology Know-How. PGG and BWXT will meet and confer in good faith to discuss any disputes, provided, however, that the determination as to what design standards or design manuals are related to the Special PGG Know-How and the Enabling Technology Know-How shall be in PGG’s sole reasonable determination. PGG will provide to BWXT, no later than two months after the review, a final list of those physical engineering manuals, presently located in the office located at PGG’s Barberton facilities, Mail Station BVS02B, including sections, subsections, or pages thereof, which PGG believes embody PGG Know-How or Enabling Technology Know-How, along with an estimate of the expense for copying the applicable documentation and a schedule to complete the copying and delivery of the applicable documentation. All man hours expended by PGG in connection with the foregoing review process (but not including any hours associated with administrative copying of the applicable documentation) shall constitute man hours within the limitation set forth in Section 6.1(a)(i) . Within the time period mutually agreed upon by the Parties, upon BWXT’s agreement to incur the estimated costs associated with copying the documentation and BWXT’s agreement to proceed, PGG will provide copies of all agreed upon documentation to BWXT, in a format reasonably requested by BWXT, but in an uneditable format with watermarks or other permanent identification marking reasonably selected by PGG. BWXT shall reimburse PGG for all administrative costs associated with providing such copies, provided, however, that such administrative costs, and any man hours associated therewith, shall not constitute man hours within the limitations set forth in Section 6.1(a)(i) . For purposes of

 

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clarity, the foregoing agreed upon process and procedure is not meant to limit BWXT’s rights with respect to design manuals and design standards which constitute Special PGG Know-How and the Enabling Technology Know-How and BWXT retains the right to request, pursuant to Section 6.1(a)(i) , additional physical embodiments, including any design manuals or design standards not previously provided, after the delivery of materials contemplated in this Section 6.1(a)(ii) without limitation.

(b) Reserved .

Section 6.2 Technical Assistance .

(a) In connection with Special PGG Know-How and Enabling Technology Know-How, BWXT shall have the right, from time to time, but for not longer than eighteen (18) months after the Distribution Date, to request that PGG provide technical assistance and training with respect to such Know-How at BWXT’s cost (as agreed upon by the Parties), provided that (i) PGG shall not be obligated to provide, and BWXT shall have no right to request, technical assistance and training related to any Know-How not in existence as of the Distribution Date; (ii) the determination as to what technical assistance and training are related to the Special PGG Know-How and the Enabling Technology Know-How shall be in the PGG’s sole reasonable determination, provided that BWXT may reasonably request the types of technical assistance and training that it believes would be effective and helpful; (iii) technical assistance and training will be provided in “sessions” related to specific categories related to Special PGG Know-How and/or Enabling Technology Know-How; and (iv) in the event that any requests remain pending at the end of the permitted eighteen (18) month period, PGG will use all reasonable efforts to fulfill all requests within thirty (30) business days, provided that BWXT shall not be permitted to make additional requests or any follow-up requests in that thirty (30) day period. PGG and BWXT acknowledge and agree that PGG shall not be obligated to expend more than 625 collective man hours in the allotted eighteen (18) month period in connection with fulfilling requests for technical assistance and training related to the Special PGG Know-How and Enabling Technology Know-How, provided that PGG shall evaluate, respond to and fulfill such requests in good faith and as efficiently and expediently as possible in light of the requests and PGG’s ongoing business operation, and that the following additional limitations shall apply: (i) 40 person hours per technical person per month, including the technical person’s preparation time and (ii) 160 person hours per technical person, including that technical person’s preparation time, over the entire 18 month period; and (iii) no more than one session at any given time. Notwithstanding the foregoing, (i) while only one session shall be conducted at a given time, multiple sessions may be requested in advance (sessions need not be requested/scheduled sequentially); (ii) BWXT, when initially requesting information, may identify the approximate number of hours to be incurred by PGG in connection with a given issue/topic and the Parties shall agree on session content and magnitude of hours, including session preparation time; (iii) BWXT is not limited to one session on a given topic; and (iv) PGG will provide a monthly summary of hours expended against the amounts permitted under this Agreement.

(b) Reserved .

(c) PGG shall, and shall cause the applicable members of the SpinCo Group to, provide the technical assistance and training contemplated above using substantially the same skill, care and judgment that such Party would use if it were to provide similar technical assistance and training to its own similarly situated businesses.

 

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Section 6.3 No Additional Technical Assistance . Except as expressly set forth in this Article 6 or elsewhere in this Agreement, in the Master Separation Agreement or in a separate agreement between a member of the SpinCo Group and a member of the RemainCo Group, no Party shall be required to provide the other Party with any technical assistance or to furnish any other Party with any documents, materials or other information or Know-How.

ARTICLE VII

NO WARRANTIES.

Except as expressly set forth in this Agreement, PGG and BWXT understand and agree that no member of the RemainCo Group is making any representation or warranty of any kind whatsoever, express or implied, to PGG or any member of the SpinCo Group in any way as to the SpinCo Business or the Licensed BWXT Intellectual Property; and, no member of the SpinCo Group is making any representation or warranty of any kind whatsoever, express or implied, to BWXT or any member of the RemainCo Group in any way as to the RemainCo Business, Transferred PGG Intellectual Property or the Licensed PGG Intellectual Property. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING THE TRANSFERS AND LICENSES REFERRED TO IN THIS AGREEMENT (INCLUDING PRIOR TRANSFERS) HAVE BEEN, OR WILL BE, MADE WITHOUT ANY REPRESENTATION OR WARRANTY OF ANY NATURE, EXPRESS OR IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE, RELATING TO (A) THE VALUE OR FREEDOM FROM ENCUMBRANCE OF, ANY ASSETS OR INTELLECTUAL PROPERTY, (B) THE CONDITION OR SUFFICIENCY OF ANY ASSETS OR INTELLECTUAL PROPERTY (INCLUDING ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, MARKETABILITY, TITLE, VALUE, FREEDOM FROM ENCUMBRANCE OR OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR THE PRESENCE OR ABSENCE OF ANY HAZARDOUS MATERIALS IN OR ON, OR DISPOSED OR DISCHARGED FROM, SUCH ASSETS), (C) THE NON-INFRINGEMENT OF ANY PATENT OR OTHER INTELLECTUAL PROPERTY RIGHT OF ANY THIRD PARTY, (D) ANY OTHER MATTER CONCERNING ANY ASSETS OR INTELLECTUAL PROPERTY (E) AS TO THE LEGAL SUFFICIENCY TO CONVEY TITLE TO ANY ASSETS OR INTELLECTUAL PROPERTY OR (F) THAT THE LICENSOR HAS ANY RIGHTS OR TITLE AT ALL IN OR TO ANY INTELLECTUAL PROPERTY. WITHOUT LIMITING THE FOREGOING, BWXT AND PGG HEREBY ACKNOWLEDGE AND AGREE THAT ALL INTELLECTUAL PROPERTY TRANSFERRED OR LICENSED PURSUANT TO THIS AGREEMENT AND ALL INTELLECTUAL PROPERTY INCLUDED IN PRIOR TRANSFERS ARE BEING OR WERE LICENSED OR TRANSFERRED “AS IS, WHERE IS.”

 

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ARTICLE VIII

THIRD-PARTY INFRINGEMENT

Section 8.1 No Obligation . No Party shall have any obligation to institute or maintain any action or suit against any Third Party for infringement or misappropriation of any Intellectual Property licensed hereunder, or to defend any action or suit brought by a Third Party which challenges or concerns the validity of any such Intellectual Property or which claims that any Intellectual Property licensed to the other Party infringes or constitutes misappropriation of the Intellectual Property rights of any Third Party.

Section 8.2 Notice Regarding Infringement . Each Party shall promptly notify the other Party in writing upon learning that a Third Party may potentially be infringing, misappropriating or otherwise violating any Intellectual Property licensed under this Agreement, which notice shall set forth in reasonable detail the identity of the suspected infringer and nature of suspected infringement.

Section 8.3 Suits for Infringement .

(a) Licensed BWXT Intellectual Property .

(i) With respect to any Licensed BWXT Intellectual Property to which BWXT has granted PGG an exclusive license hereunder, as between BWXT and PGG, BWXT shall have the first right to initiate, prosecute and control any action or proceeding to restrain infringement or misappropriation of such Licensed BWXT Intellectual Property in the SpinCo Core Field, and, for purposes of clarity, the sole and exclusive right to initiate, prosecute and control such proceedings in the RemainCo Core Field and in any field other than the SpinCo Core Field. BWXT shall provide prompt written notice to PGG of any determination to initiate, prosecute and control any such action or proceeding in the SpinCo Core Field. PGG, as the exclusive licensee, agrees to be joined as a party if necessary to prosecute the action or proceeding, and shall provide all reasonable cooperation, including any necessary use of their name, required to prosecute such action or proceeding. In such instance, BWXT shall control any such action or proceeding and negotiations for its settlement and compromise and shall have sole discretion regarding the settlement or compromise thereof. In connection with the foregoing, PGG may, at its option, elect to assume and pay its and BWXT’s out-of-pocket costs incurred in connection with such litigation or proceeding undertaken by BWXT, including, without limitation, attorney’s fees. PGG will provide prompt written notice to BWXT, in any event no later than thirty (30) days after receipt of BWXT’s notice of its determination to initiate, prosecute and control such action or proceeding in the SpinCo Core Field, of its determination to elect to assume and pay the applicable costs or to decline to pay assume and pay the applicable costs. In the event PGG does not elect to assume and pay the costs associated with BWXT’s initiation, prosecution and control of such action or proceeding in the SpinCo Core Field, BWXT shall assume and pay its and PGG’s out-of-pocket costs incurred in connection with such litigation or proceeding undertaken by BWXT, including, without limitation, attorney’s fees. Any recovery obtained as a result of such proceeding in the SpinCo Core Field shall be retained by (i) PGG in the event that PGG assumed and paid the applicable costs of the litigation or proceeding or (ii) BWXT in the event that BWXT assumed and paid the applicable costs of the litigation or proceeding in accordance with this Section 8.3(a)(i) .

 

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(ii) If BWXT does not exercise its right to enforce any applicable Licensed BWXT Intellectual Property in the SpinCo Core Field, BWXT shall provide notice to that effect to PGG and, as between BWXT and PGG, PGG shall have the right to initiate, prosecute and control any action or proceeding to restrain infringement or misappropriation of such Licensed BWXT Intellectual Property in the SpinCo Core Field. PGG shall provide prompt written notice to BWXT of any determination to initiate, prosecute and control any such action or proceeding in the SpinCo Core Field. BWXT, as the owner and licensor, agrees to be joined as a party if necessary to prosecute the action or proceeding, and shall provide all reasonable cooperation, including any necessary use of their name, required to prosecute such action or proceeding. In connection with the foregoing, PGG shall assume and pay its and BWXT’s out-of-pocket costs incurred in connection with any litigations or proceedings described above, including, without limitation, attorney’s fees. Any recovery obtained as a result of such proceeding related to infringement or misappropriation in the SpinCo Core Field shall be retained by PGG.

(iii) In the event that a Third Party may potentially be infringing, misappropriating or otherwise violating any Licensed BWXT Intellectual Property in both the SpinCo Core Field and the RemainCo Core Field, PGG and BWXT will meet and confer in good faith regarding the manner in which to respond to such infringement in the SpinCo Core Field and RemainCo Core Field collectively, provided, however, that the foregoing does not limit the rights set forth in Section 8.3(a)(i) or Section 8.3(a)(ii) .

(b) Licensed PGG Intellectual Property .

(i) With respect to any Licensed PGG Intellectual Property to which PGG has granted BWXT an exclusive license hereunder, as between PGG and BWXT, PGG shall have the first right to initiate, prosecute and control any action or proceeding to restrain infringement or misappropriation of such Licensed PGG Intellectual Property in the RemainCo Core Field, and, for purposes of clarity, the sole and exclusive right to initiate, prosecute and control such proceedings in the SpinCo Core Field and in any field other than the RemainCo Core Field. PGG shall provide prompt written notice to BWXT of any determination to initiate, prosecute and control any such action or proceeding in the RemainCo Core Field. BWXT, as the exclusive licensee, agrees to be joined as a party if necessary to prosecute the action or proceeding, and shall provide all reasonable cooperation, including any necessary use of their name, required to prosecute such action or proceeding. In such instance, PGG shall control any such action or proceeding and negotiations for its settlement and compromise and shall have sole discretion regarding the settlement or compromise thereof. In connection with the foregoing, BWXT may, at its option, elect to assume and pay its and PGG’s out-of-pocket costs incurred in connection with such litigation or proceeding, including, without limitation, attorney’s fees. BWXT will provide prompt written notice to PGG, in any event no later than thirty (30) days after receipt of PGG’s notice of its determination to initiate, prosecute and control such action or proceeding in the RemainCo Core Field, of its determination to elect to assume and pay the applicable costs or to decline to pay assume and pay the applicable costs. In the event BWXT does not elect to assume and pay the costs associated with PGG’s initiation, prosecution and control of such action or proceeding in the RemainCo Core Field, PGG shall assume and pay its and BWXT’s

 

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out-of-pocket costs incurred in connection with such litigation or proceeding undertaken by PGG, including, without limitation, attorney’s fees. Any recovery obtained as a result of such proceeding in the RemainCo Core Field shall be retained by (i) BWXT in the event that BWXT assumed and paid the applicable costs of the litigation or proceeding or (ii) PGG in the event that PGG assumed and paid the applicable costs of the litigation or proceeding in accordance with this Section 8.4(b)(i) .

(ii) If PGG does not exercise its right to enforce any applicable Licensed PGG Intellectual Property in the RemainCo Core Field, PGG shall provide notice to that effect to BWXT and, as between PGG and BWXT, BWXT shall have the right to initiate, prosecute and control any action or proceeding to restrain infringement or misappropriation of such Licensed PGG Intellectual Property in the RemainCo Core Field. BWXT shall provide prompt written notice to PGG of any determination to initiate, prosecute and control any such action or proceeding. PGG, as the owner and licensor, agrees to be joined as a party if necessary to prosecute the action or proceeding, and shall provide all reasonable cooperation, including any necessary use of their name, required to prosecute such action or proceeding. In connection with the foregoing, BWXT shall assume and pay its and PGG’s out-of-pocket costs incurred in connection with any litigations or proceedings described above, including, without limitation, attorney’s fees. Any recovery obtained as a result of such proceeding related to infringement or misappropriation in the RemainCo Core Field shall be retained by BWXT.

(iii) In the event that a Third Party may potentially be infringing, misappropriating or otherwise violating any Licensed PGG Intellectual Property in both the RemainCo Core Field and the SpinCo Core Field, PGG and BWXT will meet and confer in good faith regarding the manner in which to respond to such infringement in the RemainCo Core Field and SpinCo Core Field collectively, provided, however, that the foregoing does not limit the rights set forth in Section 8.4(b)(i) or Section 8.4(b)(ii) .

ARTICLE IX

CONFIDENTIALITY

Section 9.1 BWXT and PGG shall hold and shall cause the members of the RemainCo Group and the SpinCo Group, respectively, to hold, and shall each cause their respective officers, employees, agents, consultants and advisors to hold, in strict confidence and not to disclose or release without the prior written consent of the other Party, any and all Confidential Information (as defined herein) of such other Party or the members of its Group; provided, that the Parties may disclose, or may permit disclosure of, such Confidential Information (i) to their respective auditors, attorneys, financial advisors, bankers and other appropriate consultants and advisors who have a need to know such information and are informed of their obligation to hold such information confidential to the same extent as is applicable to the Parties and in respect of whose failure to comply with such obligations, BWXT or PGG, as the case may be, will be responsible or (ii) to the extent any member of the RemainCo Group or the SpinCo Group is compelled to disclose any such Confidential Information by judicial or administrative process or, in the opinion of legal counsel, by other requirements of Law. Notwithstanding the foregoing, in the event that any demand or request for disclosure of Confidential Information is made pursuant to clause (ii) above, BWXT or PGG, as the case may be, shall promptly notify the other of the

 

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existence of such request or demand and shall provide the other a reasonable opportunity to seek an appropriate protective order or other remedy, which both Parties will cooperate in seeking to obtain. In the event that such appropriate protective order or other remedy is not obtained, the Party who is being compelled to disclose (or whose Group member is being compelled to disclose) shall, and shall cause the applicable members at its Group to, furnish, or cause to be furnished, only that portion of such Confidential Information that is legally required to be disclosed.

Section 9.2 As used in this Article 9 , “Confidential Information” shall mean all proprietary, technical or proprietary, operational information (including Know-How and proprietary information relating to the ages, birth dates, social security numbers, health-related matters or other confidential matters concerning employees or former employees) of one Party or members of its Group which, prior to or following the Distribution Time, has been disclosed by BWXT or members of the RemainCo Group, on the one hand, or PGG or members of the SpinCo Group, on the other hand, to, or otherwise has come into the possession of, the other Group, including pursuant to the technical assistance and technology transfer provisions of Article VI hereof or any other provision of this Agreement (except to the extent that such information can be shown to have been (a) in the public domain through no fault of such Party (or, in the case of BWXT, any other member of the RemainCo Group or, in the case of PGG, any other member of the SpinCo Group) or (b) later lawfully acquired from other sources by the Party (or, in the case of BWXT, such member of the RemainCo Group or, in the case of PGG, such member of the SpinCo Group) to which it was furnished; provided, however, in the case of (b) that such sources did not provide such information in breach of any confidentiality obligations), or (c) independently developed by employees or agents of such Party who had no access, direct or indirect, to such information provided by the other Party.

(a) Each Party shall use the Confidential Information only as permitted pursuant to this Agreement and shall not disclose any Confidential Information to any Third Party unless permitted pursuant to this Agreement. Each Party shall exercise the same degree of care to protect and maintain the confidentiality of the Confidential Information received from the other Party hereunder (but no less than a reasonable degree of care) as they take to preserve confidentiality for their own similar information. Without limiting the foregoing, each Party will take commercially reasonable efforts to implement and maintain comprehensive security protocols to protect and maintain the confidentiality of the Confidential Information received from the other Party hereunder, including, without limitation, implementing administrative, technical, digital, electronic and physical security strategies and access restrictions to protect Confidential Information.

ARTICLE X

MISCELLANEOUS

Section 10.1 Authority . Each of the Parties represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it has been duly authorized by all necessary corporate or other actions, (c) it has duly and validly executed and delivered this Agreement to be executed and delivered on or prior to the Effective Date, and (d) this Agreement

 

20


is legal, valid and binding obligations, enforceable against it in accordance with their respective terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally and general equity principles.

Section 10.2 Entire Agreement . This Agreement and the Schedules referenced herein or therein or attached hereto or thereto, constitute the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersedes all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof.

Section 10.3 Binding Effect; Third-Party Beneficiaries; Assignment . Except as expressly set forth in Section 5.10 and except for the Affiliates of the Parties, which are intended to be third party beneficiaries hereunder, this Agreement does not and is not intended to confer any rights or remedies upon any Person other than the Parties. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. This Agreement may not be assigned by either Party, except with the prior written consent of the other Party.

Section 10.4 Amendment . No change or amendment may be made to this Agreement except by an instrument in writing signed on behalf of both of the Parties.

Section 10.5 Failure or Indulgence Not Waiver; Remedies Cumulative . No failure or delay on the part of either Party in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant or agreement contained herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement or the Schedules attached hereto are cumulative to, and not exclusive of, any rights or remedies otherwise available.

Section 10.6 Notices . Unless otherwise expressly provided herein, all notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to be duly given (i) when personally delivered or (ii) if mailed by registered or certified mail, postage prepaid, return receipt requested, on the date the return receipt is executed or the letter is refused by the addressee or its agent or (iii) if sent by overnight courier which delivers only upon the signed receipt of the addressee, on the date the receipt acknowledgment is executed or refused by the addressee or its agent or (iv) if sent by facsimile or electronic mail, on the date confirmation of transmission is received (provided that a copy of any notice delivered pursuant to this clause (iv) shall also be sent pursuant to clause (i), (ii) or (iii)), addressed to the attention of the addressee’s General Counsel at the address of its principal executive office or to such other address or facsimile number for a Party as it shall have specified by like notice.

Section 10.7 Counterparts . This Agreement, including the Schedules and Exhibits hereto and the other documents referred to herein, may be executed in multiple counterparts, each of which when executed shall be deemed to be an original but all of which together shall constitute one and the same agreement.

 

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Section 10.8 Severability . If any term or other provision of this Agreement or the Schedules attached hereto is determined by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the court, administrative agency or arbitrator shall interpret this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

Section 10.9 Governing Law . This Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of Delaware, without regard to any conflicts of law provisions thereof that would result in the application of the laws of any other jurisdiction.

Section 10.10 Construction . This Agreement shall be construed as if jointly drafted by PGG and BWXT and no rule of construction or strict interpretation shall be applied against either Party. The Parties represent that this Agreement is entered into with full consideration of any and all rights which the Parties may have. The Parties have relied upon their own knowledge and judgment and upon the advice of the attorneys of their choosing. The Parties have had access to independent legal advice, have conducted such investigations they and their counsel thought appropriate, and have consulted with such other independent advisors as they and their counsel deemed appropriate regarding this Agreement and their rights and asserted rights in connection therewith. The Parties are not relying upon any representations or statements made by any other Party, or such other Party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are expressly set forth or incorporated in this Agreement. The Parties are not relying upon a legal duty, if one exists, on the part of the other Party (or such other Party’s employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or its preparation, it being expressly understood that neither Party shall ever assert any failure to disclose information on the part of the other Party as a ground for challenging this Agreement.

Section 10.11 Performance . Each Party 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 or Affiliate of such Party.

[INTENTIONALLY LEFT BLANK]

 

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WHEREFORE, the Parties have signed this Agreement effective as of the date first set forth above.

 

BABCOCK & WILCOX POWER GENERATION GROUP, INC.
By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker
Title:   Vice President and Treasurer
BWXT FOREIGN HOLDINGS, LLC
By:  

/s/ David S. Black

Name:   David S. Black
Title:   Treasurer

 

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Schedule 1.1(e)

SpinCo Core Field; RemainCo Core Field

SpinCo Core Field means:

 

1. Ownership and/or operation of power generation facilities fired with combustible fossil fuels (e.g., coal, coal slurry, oil or natural gas), biomass, municipal solid waste or concentrated solar energy through tower based solar thermal conversion systems, in each case for the provision of power, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

2. Design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning related to:

 

  (a). Fired steam generators encompassing fossil fuel boilers which are fueled by combustible fossil fuels (e.g., coal, coal slurry, oil or natural gas) or support subsystems, equipment or components thereof, including fuel drying, fuel feed, pulverizers, burners, combustion systems, grates, pressure parts, air heaters, fans, boiler cleaning systems, ash systems, valves, controls & diagnostics, oxycombustion systems, condensing heat exchangers used in connection with such fired steam generators, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (b). Fired steam generators encompassing waste fuel boilers which are fueled by combustible waste fuels (e.g., carbon monoxide, biomass, black liquor, municipal solid waste (MSW) or refuse-derived fuel (RDF)) or support subsystems, equipment or components thereof, including fuel drying, fuel feed, pulverizers, burners, combustion systems, grates, pressure parts, air heaters, fans, boiler cleaning systems, ash systems, valves, controls & diagnostics, oxycombustion systems, condensing heat exchangers used in connection with such fired steam generators, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

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  (c). Gasifier systems which partially convert fossil or waste fuels (e.g., coal, oil, natural gas or biomass) to syngas and support subsystems, equipment or components thereof, including fuel drying, fuel feed, pulverizers, burners, combustion systems, gasifiers, heat exchangers used in connection with such gasifier systems, pressure parts, boiler cleaning systems, ash systems, valves, controls & diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (d). Tower-based solar thermal conversion systems which are enabled by solar energy and support subsystems, equipment or components thereof, including receiver system, pressure parts, molten salt or particle systems (e.g., heat exchangers specifically for tower-based solar thermal conversion systems enabled by solar energy or associated pumps or tanks), valves, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (e). The following specific unfired heat exchangers Turbine Exhaust Gas boilers (10K2), Heat Recovery Steam Generation Boilers (10K22), Water Tube Waste Heat Boilers Two Drum (Stirling Types) (1K4), 3 Drum Waste Heat Recovery Boiler (1K4), Water Tube Waste Heat “H” Stirling Boiler (1K4), Water Tube Long Drum (LD) boiler (1K4), CO boiler (1K26), Waste Heat (WH) (1K4), Oxygen Convertor Hoods (1K44), Gas Tube (FT) boilers (1K46), FM boilers (1K239), FO boilers (1K2311), Struthers Wells type EOR boiler as defined by the existing specific referenced design standards, or support subsystems, equipment or components thereof, including pressure parts, cleaning systems, valves, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (f). Chemical looping conversion systems which are fueled by combustible fossil fuels (e.g., coal, coal slurry, oil or natural gas) and which produce an energy output of steam, CO 2 , H 2 or syngas or support subsystems, equipment or components thereof, including fuel feed, pulverizers, reactors, pressure parts, air heaters, fans, boiler cleaning systems, ash systems, valves, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (g). Pulverized coal injection systems for use in connection with steel production or support subsystems, equipment or components thereof, including pulverizers, pressurization systems, tanks, valves, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

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  (h). Heat transfer surface cleaning systems and support subsystems, equipment and components thereof (other than said systems related to or utilized in connection with nuclear fueled systems and expressly excluding nuclear steam generators), including sootblowers (air, steam, water or sonic), related valve or piping systems, sprayers, controls (basic, intelligent) or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (i). Ash handling systems or support subsystems, equipment or components thereof, including mechanical conveyors (wet or dry), pneumatic conveyors (wet, dry, dilute, or dense phase), ash conditioning, tanks, valves, specialty piping, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (j). Industrial pulverizer or grinding equipment systems or support subsystems (other than said systems or support subsystems related to or utilized in connection with nuclear fuel manufacturing or processing), other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (k). Drying and/or coating systems utilizing continuous and/or batch flow dryer/oven equipment for industrial processes, including but not limited to various production lines (e.g., roll fed, sheet fed, coating, drying or web handling), dryers and/or ovens (e.g., air flotation dryers or ovens, roll support dryers, infrared dryers, ultraviolet dryers, microwave or radio frequency), coating line auxiliary equipment, festoon and catenary style ovens, valves and material handling systems, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (l). Utility emissions control systems used in connection with combustion power generation systems, which are designed to remove nitrogen oxides (e.g., SCR or SNCR), sulfur oxides (e.g., WFGD, SDA, CDS, DSI, or others), particulates (e.g., dry ESP, wet ESP, fabric filter or cyclonic), carbon dioxide (e.g., scrubber systems), hydrocarbons, or air toxics (e.g., Sb, Be, Cd, Cr, Co, Pb, Mn, Ni, (SO2)3, HF, Hg, P, Se, Cd, As, or HCl (or other acid gases)), HAPS, dioxins, furans or others) and/or subsequent energy or waste recovery or associated subsystems, equipment or components thereof, including valves, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (m).

Wastewater treatment systems (i) that process wastewater derived from combustion power generation and municipal solid waste (“MSW”) systems, including

 

26


  without limitation FGD dewatering systems or zero liquid discharge (ZLD) systems, or associated subsystems, equipment or components thereof, including valves or (ii) that process wastewater as part of or ancillary to the systems set forth in SpinCo Core Field 2(k), 2(l) or 2(n), in each case other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (n). Industrial emission control, gas cleaning and/or conditioning, or liquids purification and/or recovery systems (other than said systems set forth in RemainCo Core Field 1(m)), including SCR, SNCR, WFGD, SDA, CDS, DSI, other scrubbers, dry ESP, wet ESP, fabric filter, cyclonic, solvent recovery systems, biological abatement systems, solvent distillation systems (including waste water treatment), evaporative gas conditioning and cooling systems or regenerative thermal (and other) oxidation systems or associated subsystems, equipment or components thereof, including valves, for the removal of nitrogen oxides, sulfur oxides, particulates, carbon dioxide, hydrocarbons, or air toxics (e.g., Sb, Be, Cd, Cr, Co, Pb, Mn, Ni, (SO2) 3 , HF, Hg, P, Se, As, Cd, HCl (or other acid gases)), HAPS, dioxins, furans, others) and/or subsequent energy or waste recovery, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (o). Hybrid power generation systems or associated equipment where renewable energy sources are combined with a combustible fossil fuel (e.g., coal, coal slurry, oil or natural gas) or combustible waste fuel (e.g., carbon monoxide, biomass, black liquor, MSW or RDF) primary energy source, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

3. Engineering procurement, construction, installation, supply, lease, commissioning, training, delivery, inspection, testing of, support, operations, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, relocation, project management, construction management, technical advice, construction consultation, siting support or consultation, environmental services or consultation, safety, health, troubleshooting, cleaning, upgrading and tooling of balance of plant for power generation facilities fired with combustible fossil fuels (e.g., coal, coal slurry, oil or natural gas) and pulp and paper facilities, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

RemainCo Core Field means:

 

1.

Design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair,

 

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  refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning, related to:

 

  (a). Nuclear facilities and nuclear reactor plants, nuclear reactor systems, nuclear reactors, including all thermal reactors (including all heavy-water and light-water reactors), all water cooled reactors, all liquid metal cooled reactors (including sodium cooled reactors), gas cooled reactors (including helium, carbon dioxide and nitrogen) and molten salt reactors, breeder reactors, traveling wave reactors, high temperature reactors, small modular nuclear reactors, medical isotope reactors and components thereof and all Generation I, Generation II, Generation III and all advanced reactors, including and Generation IV reactors and iterations thereof regardless of design, and hybrid power generation systems and associated equipment where renewable energy sources are combined with a nuclear primary energy source.

 

  (b). Support systems and subsystems, equipment and components of nuclear systems and nuclear reactors, including, reactor coolant systems, reactor protection, control and instrumentation systems, reactor auxiliary and safety systems, balance of plant systems, reactor vessel closure heads, reactor and other pressure vessels and internals, reactor coolant pumps, stators and motors, reactor fuel channels, feeders and related components, steam generators, reactor control rod drive mechanisms and other reactor electro-mechanical equipment and controls therefore, specialized tooling and inspection systems, heat exchangers, pressurizers, primary and secondary piping, valves and pumps, spent fuel and other nuclear fuel and nuclear material storage and shipping, nuclear waste containers and related systems, audio/visual systems, steam generator tube inspection systems, repair, modification and stabilization systems, tube plugging and tube removal systems.

 

  (c). Nuclear fuel and nuclear fuel components, including enrichment and any related components, assembly, nuclear fuel plant processes, manufacturing systems and processes and systems for the chemical processing of radiological materials, fuel core and fuel bearing precision components, fuel powder, sources, targets, targets for medical isotope production and industrial isotope production, targets for research and analysis in research reactors, graphite reflectors and control rods, poisons and other special nuclear materials for development and manufacturing of fuel components for pebble bed and other reactors.

 

  (d). Electro-mechanical devices related to or used in commercial, research, government, military and other nuclear facilities, reactors or vessels and associated subsystems, equipment and components thereof.

 

  (e). Advanced power systems for space applications and associated subsystems, equipment and components thereof.

 

  (f). Nuclear and non-nuclear propulsion systems for naval (U.S. and foreign) submarines and aircraft carriers and associated subsystems, equipment and components thereof, including all aftermarket, replacement and repair parts, components and equipment for existing naval submarines and aircraft carriers.

 

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  (g). Nuclear propulsion systems for naval (U.S. and foreign) vessels other than submarines and aircraft carriers and associated subsystems, equipment and components thereof, including aftermarket, replacement and repair parts, components and equipment for such existing vessels.

 

  (h). Single crystal composite and ceramic materials for use in nuclear, defense, space and aerospace applications and subsystems, equipment and components thereof

 

  (i). High energy physics equipment, including electro-magnetic storage devices, power conversion and conditioning systems, superconducting materials and plasma energy systems, and, in each case, subsystems and components thereof, excluding energy storage systems that store kinetic energy using a rotating mass with low friction losses and deliver the stored energy via power electronics that convert kinetic to electrical energy using electrical equipment typical for that type of service.

 

  (j). Ordnance components, subsystems and components thereof.

 

  (k). Unfired heat exchangers where the applicable heat source energy input is derived from the release and/or use of nuclear energy or support subsystems, equipment or components thereof, including pressure parts, cleaning systems, valves, controls or diagnostics.

 

  (l). Wastewater treatment systems that process wastewater derived from the release and/or use of nuclear energy and subsystems, equipment and components thereof

 

  (m). Emission control systems related to nuclear fuel manufacture or fabrication, storage of nuclear materials and waste and nuclear powered systems and subsystems, equipment and components thereof.

 

2. Chemical and physical processing, storage and decontamination of and other management, operations, safety, security, emergency management, remediation and technical services related to radiological materials (including highly enriched uranium, low enriched uranium, natural uranium, fissile material and transuranic material), including receipt, storage, inspection, characterization, dissolution, recovery and purification, downblending, recycling, scrap recovery and processing and related research, development, engineering and analysis.

 

3. Developing and providing services related to security (including direct security services as well as training, consulting and similar services) for new or existing commercial, research, government, military and other facilities or vessels, including tactical security, security training, IT security, development of security processes, fitness for duty and government compliance (both contractual compliance) and in connection with NRC or other applicable licensing requirements.

 

4.

Provide facility operation and maintenance services, including production and program management, maintenance (including maintenance and service of fossil fired and renewable power generation systems performed as part of overall facility operation and management contracts), operation, environmental health and safety, security, emergency management, wastewater treatment, remediation and abatement, decontamination and decommissioning material storage and disposition and other related technical services, to domestic or foreign agencies (including but not limited to NNSA, NASA, DOD, DOE as well as United Kingdom NDA or MOD sites) and commercial entities related to critical infrastructure, nuclear, non-nuclear and biological activities such as nuclear operations of reactors and reactor facilities, laboratory (including national laboratories) and other facility operations, weapons production, refurbishment, storage and stockpile management, component

 

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  (including centrifuge) manufacturing, medical and industrial isotope development and manufacture, and Chemical Laboratory Analysis Capability by SEM, Mass Spectrometer and similar equipment, excluding the provision of the foregoing services for solely standalone power generation facilities fired with combustible fossil fuels, biomass or municipal solid waste or concentrated solar energy through tower based solar thermal conversion systems For the avoidance of doubt, the foregoing does not include the design, manufacture, installation, supply, sale and supply of hardware, including entire systems, within the SpinCo Core Field (including, without limitation, the systems set forth in SpinCo Core Field 2(k), 2(l), 2(m) and 2(n)) to domestic or foreign agencies or commercial entities.

For the avoidance of doubt, the following are not included in the SpinCo Core Field or the RemainCo Core Field:

Design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning related to the following:

 

  (a). Un-fired heat exchangers other than those identified in SpinCo Core Field 2(e) or unfired heat exchangers where the applicable heat source energy input is derived from the release and/or use of nuclear energy, and support subsystems, equipment and components thereof, including pressure parts, cleaning systems, valves, controls, diagnostics, repair equipment and services.

 

  (b). Production of hydrogen by other high temperature processes.

 

  (c). Non-nuclear propulsion systems for naval (U.S. and foreign) vessels other than submarines and aircraft carriers, and associated subsystems equipment and components thereof, including aftermarket, replacement and repair parts, components and equipment for such existing vessels.

 

  (d). Non-naval (i.e., commercial marine) propulsion systems and associated subsystems, equipment and components thereof, including aftermarket, replacement and repair parts, components and equipment for existing systems.

 

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Schedule 1.1(i)

Specific RemainCo Field; Specific SpinCo Field

“Specific SpinCo Field” means the design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning, related to heat exchangers specifically for tower-based solar thermal conversion systems enabled by solar energy and support subsystems, equipment or components thereof, including pressure parts, cleaning systems, valves, controls or diagnostics.

“Specific RemainCo Field” means the design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning, related to:

 

  (a). Nuclear facilities and nuclear reactor plants, nuclear reactor systems, nuclear reactors, including all thermal reactors (including all heavy-water and light-water reactors), all water cooled reactors, all liquid metal cooled reactors (including sodium cooled reactors), gas cooled reactors (including helium, carbon dioxide and nitrogen) and molten salt reactors, breeder reactors, traveling wave reactors, high temperature reactors, small modular nuclear reactors, medical isotope reactors and components thereof and all Generation I, Generation II, Generation III and all advanced reactors, including and Generation IV reactors and iterations thereof regardless of design, and hybrid power generation systems and associated equipment where renewable energy sources are combined with a nuclear primary energy source.

 

  (b).

Support systems and subsystems, equipment and components of nuclear systems and nuclear reactors, including, reactor coolant systems, reactor protection, control and instrumentation systems, reactor auxiliary and safety systems, balance of plant systems, reactor vessel closure heads, reactor and other pressure vessels and internals, reactor coolant pumps, stators and motors, reactor fuel channels, feeders and related components, steam generators, reactor control rod drive mechanisms and other reactor electro-mechanical equipment and controls therefore, specialized tooling and inspection systems,

 

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  heat exchangers, pressurizers, primary and secondary piping, valves and pumps, spent fuel and other nuclear fuel and nuclear material storage and shipping, nuclear waste containers and related systems, audio/visual systems, steam generator tube inspection systems, repair, modification and stabilization systems, tube plugging and tube removal systems.

 

  (c). Nuclear fuel and nuclear fuel components, including enrichment and any related components, assembly, nuclear fuel plant processes, manufacturing systems and processes and systems for the chemical processing of radiological materials, fuel core and fuel bearing precision components, fuel powder, sources, targets, targets for medical isotope production and industrial isotope production, targets for research and analysis in research reactors, graphite reflectors and control rods, poisons and other special nuclear materials for development and manufacturing of fuel components for pebble bed and other reactors.

 

  (d). Naval nuclear propulsion systems and associated subsystems, equipment and components thereof, including aftermarket, replacement and repair parts, components and equipment for existing systems.

 

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The company agrees to furnish supplementally a copy of any omitted exhibit or schedule to the Commission upon request.

Exhibit 10.14

INTELLECTUAL PROPERTY AGREEMENT

between

BABCOCK & WILCOX TECHNOLOGY, LLC

and

BABCOCK & WILCOX INVESTMENT COMPANY

dated as of

June 27, 2015


TABLE OF CONTENTS

 

ARTICLE I

 

DEFINITIONS

     1   

Section 1.1

 

Definitions

     1   

Section 1.2

 

Interpretation

     3   

ARTICLE II

 

INTELLECTUAL PROPERTY ASSIGNMENT AND OWNERSHIP

     4   

Section 2.1

 

Assignment of Transferred Intellectual Property

     4   

Section 2.2

 

Actions; Correspondence

     5   

Section 2.3

 

Assistance by Employees; Inventor Compensation

     5   

Section 2.4

 

Reserved

     5   

SECTION 2.5

 

RIGHTS ARISING IN THE FUTURE

     5   

ARTICLE III

 

RESERVED

     6   

ARTICLE IV

 

RESERVED

     6   

ARTICLE V

 

INTELLECTUAL PROPERTY LICENSES AND COVENANTS

     6   

Section 5.1

 

Reserved

     6   

Section 5.2

 

Patent License

     6   

Section 5.3

 

Reserved

     6   

Section 5.4

 

Reserved

     6   

Section 5.5

 

Reserved

     7   

Section 5.6

 

Sublicensing; Assignability

     7   

Section 5.7

 

Restrictions on Licensor Exploitation of Intellectual Property

     7   

Section 5.8

 

Third Party Agreements; Reservation of Rights

     7   

Section 5.9

 

Maintenance of Intellectual Property

     8   

Section 5.10

 

Covenants

     8   

ARTICLE VI

 

RESERVED

     8   

ARTICLE VII

 

NO WARRANTIES

     8   

ARTICLE VIII

 

THIRD-PARTY INFRINGEMENT

     9   

Section 8.1

 

No Obligation

     9   

Section 8.2

 

Notice Regarding Infringement

     9   

Section 8.3

 

Suits for Infringement

     9   

ARTICLE IX

 

CONFIDENTIALITY

     10   

ARTICLE X

 

MISCELLANEOUS

     11   

Section 10.1

 

Authority

     11   

 

i


Section 10.2

 

Entire Agreement

     12   

Section 10.3

 

Binding Effect; Third-Party Beneficiaries; Assignment

     12   

Section 10.4

 

Amendment

     12   

Section 10.5

 

Failure or Indulgence Not Waiver; Remedies Cumulative

     12   

Section 10.6

 

Notices

     12   

Section 10.7

 

Counterparts

     12   

Section 10.8

 

Severability

     13   

Section 10.9

 

Governing Law

     13   

Section 10.10

 

Construction

     13   

Section 10.11

 

Performance

     13   

SCHEDULES

    

Schedule 1.1(e)

 

SpinCo Core Field; RemainCo Core Field

  

Schedule 1.1(i)

 

Specific RemainCo Field; Specific SpinCo Field

  

Schedule 2.1(a)

 

Transferred BWTI Intellectual Property

  

Schedule 5.2(a)(i)

 

BWTI General Patents

  

EXHIBITS

    

Exhibit A

 

Intellectual Property Assignment Agreements

  

 

ii


INTELLECTUAL PROPERTY AGREEMENT

This INTELLECTUAL PROPERTY AGREEMENT (this “Agreement”) is entered into as of June 27, 2015 at 6:10 pm Eastern Time (the “Effective Date”), between Babcock & Wilcox Technology, LLC, a Delaware limited liability company (“BWTI”) and Babcock & Wilcox Investment Company, a Delaware corporation (“BWICO”). BWTI and BWICO are sometimes referred to herein individually as a “Party,” and collectively as the “Parties.” Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in Article 1 hereof.

RECITALS

WHEREAS, Babcock & Wilcox Enterprises, Inc., a Delaware corporation (“SpinCo”) is a wholly owned Subsidiary of The Babcock & Wilcox Company (“RemainCo”) and the Board of Directors of RemainCo has determined that it would be appropriate and in the best interests of RemainCo and its stockholders for RemainCo to separate the SpinCo Business from the RemainCo Business;

WHEREAS, in order to effectuate the foregoing, RemainCo and SpinCo have entered into a Master Separation Agreement, dated as of June 8, 2015 (the “Master Separation Agreement”), which provides, among other things, upon the terms and subject to the conditions thereof, for the separation of the respective businesses of SpinCo and RemainCo and the Distribution, and the execution and delivery of certain other agreements, including this Agreement, in order to facilitate and provide for the foregoing;

WHEREAS, it is the intent of the Parties, in order to facilitate the foregoing separation, in anticipation of the Distribution and in accordance with the Master Separation Agreement, that BWTI convey to BWICO certain Intellectual Property rights and licenses subject to the terms and conditions set forth in this Agreement; and

NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions . Except for the terms defined below, the capitalized terms used in this Agreement shall have the meanings ascribed to them in Section 1.1 of the Master Separation Agreement:

“BWICO” has the meaning set forth in the recitals.

“BWTI” has the meaning set forth in the recitals.

“BWTI General Patents” has the meaning set forth in Section 5.2(a)(i) .

 

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“Confidential Information” has the meaning set forth in Section 9.2 .

“Intellectual Property” means the rights associated with or arising out of any of the following in any jurisdiction throughout the world: (i) all patents and patent applications, together with all reissuances, divisionals, continuations, continuations-in-part, revisions, renewals, extensions, and reexaminations thereof, and any identified invention disclosures (“Patents”); (ii) trade secret rights and corresponding rights in confidential information and other non-public information (whether or not patentable), including ideas, formulas, compositions, inventor’s notes, discoveries and improvements, know how, manufacturing and production processes and techniques, design manuals, testing information (including testing protocols and results), research and development information, prototypes, inventions, invention disclosures, unpatented blueprints, drawings, specifications, designs, plans, proposals and technical data, business and marketing plans, market surveys, market know-how and customer lists and information, including all tangible embodiments of the foregoing and unregistered copyrights (“Know-How”); (iii) all registered or unregistered copyrights, copyrightable works, rights in databases, data collections, “moral” rights, mask works, copyright registrations, applications and extensions therefor and corresponding rights in works of authorship (“Copyrights”); (iv) all trademarks, service marks, logos, trade dress and trade names indicating the source of goods or services, and other indicia of commercial source or origin (whether registered, common law, statutory or otherwise), all registrations and applications to register the foregoing anywhere in the world and all goodwill associated therewith (“Trademarks”); (v) all computer software and code, including assemblers, applets, compilers, source code, object code, development tools, design tools, utilities, library files, user interfaces and data, and all documentation and manuals related to such computer software and code in any form or format, however fixed (“Software”); (vi) all internet electronic addresses, uniform resource locators and alphanumeric designations associated therewith and all registrations for any of the foregoing (“Domain Names”); and (vii) any similar, corresponding or equivalent rights to any of the foregoing anywhere in the world.

“Intellectual Property Assignment Agreements” has the meaning set forth in Section 2.1(b) .

“IP Proceedings” has the meaning set forth in Section 2.3 .

“Licensed BWTI Intellectual Property” means all BWTI General Patents.

“Master Separation Agreement” has the meaning set forth in the recitals.

“RemainCo Core Field” has the meaning set forth on Schedule 1.1(e) .

“Specific RemainCo Field” has the meaning set forth on Schedule 1.1(i) .

“Specific SpinCo Field” has the meaning set forth on Schedule 1.1(i) .

“SpinCo Core Field” has the meaning set forth on Schedule 1.1(e) .

“Transfer” has the meaning set forth in Section 2.1(a) .

“Transferred BWTI Intellectual Property” has the meaning set forth in Schedule 2.1(a) .

 

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Section 1.2 Interpretation . In this Agreement, unless the context clearly indicates otherwise:

(a) words used in the singular include the plural and words used in the plural include the singular;

(b) if a word or phrase is defined in this Agreement, its other grammatical forms, as used in this Agreement, shall have a corresponding meaning;

(c) reference to any gender includes the other gender and the neuter;

(d) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”;

(e) the words “shall” and “will” are used interchangeably and have the same meaning;

(f) the word “or” shall have the inclusive meaning represented by the phrase “and/or”;

(g) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;

(h) all references to a specific time of day in this Agreement shall be based upon Eastern Standard Time or Eastern Daylight Savings Time, as applicable, on the date in question;

(i) whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified;

(j) reference to any Article, Section or Schedule means such Article or Section of, or such Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;

(k) the words “this Agreement,” “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision of this Agreement;

(l) the term “commercially reasonable efforts” means efforts which are commercially reasonable to enable a Party, directly or indirectly, to satisfy a condition to or otherwise assist in the consummation of a desired result and which do not require the performing Party to expend funds or assume liabilities other than expenditures and liabilities which are customary and reasonable in nature and amount in the context of a series of related transactions similar to the transaction contemplated herein;

(m) reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;

 

3


(n) reference to any Law (including statutes and ordinances) means such Law (including any and all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;

(o) references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement; a reference to such Person’s “Affiliates” shall be deemed to mean such Person’s Affiliates following the Distribution and any reference to a Third Party shall be deemed to mean a Person who is not a Party or an Affiliate of a Party;

(p) if there is any conflict between the provisions of the main body of this Agreement and the Schedules hereto, the provisions of the main body of this Agreement shall control unless explicitly stated otherwise in such Schedule;

(q) the titles to Articles and headings of Sections contained in this Agreement, in any Schedule and in the table of contents to this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement; and

(r) any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Subsidiaries and Affiliates to take such action or refrain from taking such action, as the case may be.

ARTICLE II

INTELLECTUAL PROPERTY ASSIGNMENT AND OWNERSHIP

Section 2.1 Assignment of Transferred Intellectual Property .

(a) BWTI hereby sells, assigns, conveys and transfers (the “Transfer”) to BWICO all right, title and interest, held by BWTI, in and to the Intellectual Property set forth on Schedule 2.1(a) (the “Transferred BWTI Intellectual Property”), including all right, title and interest in and to all proceeds, causes of actions and rights of recovery against Third Parties for past and future infringement, misappropriation, or other violation or impairment of such Intellectual Property, except to the extent prohibited by, or requiring any Consent under (to the extent such Consent has not been obtained), any Contract under which BWTI holds or uses such Transferred BWTI Intellectual Property. As consideration for the Transfer and for the rights and licenses granted in Article 5 herein, BWICO hereby agrees to promptly pay $2,050,000 to BWTI.

(b) BWTI shall, and shall cause any members of the SpinCo Group as applicable and necessary to, execute intellectual property assignment agreements in a form substantially similar to that attached hereto as Exhibit A, as applicable to the Transferred BWTI Intellectual Property, as well as such additional specific assignments as reasonably necessary to carry out the intent of the Parties as set forth herein (collectively, the “Intellectual Property Assignment Agreements”). All Transferred BWTI Intellectual Property is transferred subject to licenses granted in this Agreement and in the Continuing Agreement and all other rights granted under or in connection

 

4


with agreements related such Transferred BWTI Intellectual Property existing and in force as of the Effective Date, in each case subject to the terms and conditions contained in each such agreement, including, without limitation, any license agreements, any security agreements or any liens granted in and to such Transferred BWTI Intellectual Property.

(c) BWTI shall deliver to BWICO all Intellectual Property Assignment Agreements contemplated herein that effectuate the assignment of Transferred BWTI Intellectual Property from BWTI or any member of the SpinCo Group to BWICO. BWICO shall have the sole responsibility, at its sole cost and expense, to file such Intellectual Property Assignment Agreements and any other forms or documents required to record such assignments, provided, however, that upon request, BWTI shall provide reasonable assistance to BWICO to record an assignment, at BWICO’s sole cost and expense.

Section 2.2 Actions; Correspondence . BWICO shall, in its sole discretion, pay all fees incurred and take all actions with respect to the Transferred BWTI Intellectual Property subsequent to the Effective Date. BWTI shall forward to BWICO or its designee copies of all files related to and correspondence received from any Governmental Authority regarding the Transferred BWTI Intellectual Property.

Section 2.3 Assistance by Employees; Inventor Compensation . Each Party agrees that it shall make available to the other Party the services of its employees and contractors reasonably necessary to assist the other Party with the prosecution of, and other patent or trademark office proceedings (e.g., reissue, reexamination, interference, inter partes review, post-grant review, supplemental examination, and other similar proceedings) regarding the other Party’s Patents, Trademarks and other Intellectual Property (collectively, “IP Proceedings”). Each Party agrees to reasonably make available to the other Party (i) inventors and other reasonably necessary persons employed by it for the other Party’s reasonable needs regarding execution of documents, interviews, declarations and testimony, and (ii) documents, materials and information for the other Party’s reasonable good faith needs regarding such IP Proceedings. The Party involved in the IP Proceedings shall be responsible for the actual and reasonable out-of-pocket expenses associated with such assistance, expressly excluding the value of the time of the other Party’s personnel. Each Party will be responsible for providing inventor incentive compensation to its employees under its own internal policies. No Party shall have any obligation to provide any inventor incentive compensation to an employee of the other Party except as required by law.

Section 2.4 Reserved .

Section 2.5 Rights Arising in the Future .

(a) As between BWTI and BWICO, unless otherwise agreed in writing by BWTI or any remember of the SpinCo Group and BWICO or any member of the RemainCo Group, any and all Intellectual Property created, conceived, or actually reduced to practice by or on behalf of BWTI or any member of the SpinCo Group after the Distribution Date, including, without limitation, any improvements or modifications to any Licensed BWTI Intellectual Property, shall belong solely and exclusively to BWTI and neither BWICO nor any member of the RemainCo Group shall have any right, title or interest in or to such Intellectual Property. BWTI shall have no obligation to notify BWICO or any member of the RemainCo Group of any such improvements or modifications or to disclose or license any such improvements or modifications to BWICO or any member of the RemainCo Group.

(b) As between BWICO and BWTI, unless otherwise agreed in writing by BWICO or any member of the RemainCo Group and BWTI or any member of the SpinCo Group, any and all Intellectual Property created, conceived, or actually reduced to practice by or on behalf of BWICO or any member of the RemainCo Group after the Distribution Date, including, without limitation, any improvements or modifications to any Licensed BWTI Intellectual Property, shall belong solely and exclusively to BWICO and neither BWTI nor any member of the SpinCo Group shall have any right, title or interest in or to such Intellectual Property. BWICO shall have no obligation to notify BWTI or any member of the SpinCo Group of any such improvements or modifications or to disclose or license any such improvements or modifications to BWTI or any member of the SpinCo Group.

 

5


ARTICLE III

RESERVED

ARTICLE IV

RESERVED

ARTICLE V

INTELLECTUAL PROPERTY LICENSES AND COVENANTS

Section 5.1 Reserved .

Section 5.2 Patent License .

(a) General License .

(i) BWTI hereby grants to BWICO a perpetual, irrevocable, exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ), to use and exploit the Patents set forth on Schedule 5.2(a)(i) (the “BWTI General Patents”) for the continued operation of the RemainCo Business and any future extensions of the RemainCo Business in the RemainCo Core Field, including the right to make, have made, use, lease, sell, offer for sale, and import products and services utilizing the BWTI General Patents; provided, however, the foregoing license shall not extend to (i) BWTI General Patents to the extent the licensing of same to BWICO would constitute a breach of an agreement with any Third Party executed prior to the Effective Date or result in any expense to BWTI or any member of the SpinCo Group for payments to such Third Party or (ii) any Intellectual Property not owned by one or more members of the SpinCo Group, or as to which no member of the SpinCo Group has the right to grant sublicenses, as of the Effective Date.

Section 5.3 Reserved .

Section 5.4 Reserved .

 

6


Section 5.5 Reserved .

Section 5.6 Sublicensing; Assignability .

(a) The foregoing licenses shall be assignable in whole or in part only (i) to any Affiliate or (ii) to the extent the licensee transfers to a Third Party all or substantially all of the assets of the business to which such Licensed BWTI Intellectual Property, as applicable, relates.

(b) BWICO may sublicense the Licensed BWTI Intellectual Property to Affiliates of BWICO, even if they become Affiliates after the Distribution Date, solely within the scope of its licenses in Article 5 , provided that such sublicense shall only be effective for such time as such entity remains an Affiliate of BWICO, subject to Section 5.6(a)(ii) . BWICO may, and may permit its sublicensees to, sublicense erection and arrangement drawings; form, fit, and function drawings; and product and installation/erection specifications based upon the Licensed BWTI Intellectual Property to: (i) customers to enable them to use, operate, maintain and repair the equipment, services or other deliverables which incorporate or are derived from the Licensed BWTI Intellectual Property and which were sold to them by BWICO or its sublicensees; and (ii) to contractors, subcontractors and vendors to enable them to manufacture, erect, install, service, repair and maintain those products to which the licenses set forth in Article 5 relate.

Section 5.7 Restrictions on Licensor Exploitation of Intellectual Property .

(a) BWTI (i) shall not use or exploit the Licensed BWTI Intellectual Property in the RemainCo Core Field and (ii) shall not, and shall not permit any member of the SpinCo Group to, license, provide or otherwise grant to any Third Party the right to use, exploit or access any Licensed BWTI Intellectual Property in the RemainCo Core Field.

Section 5.8 Third Party Agreements; Reservation of Rights .

(a) All licenses granted herein are expressly made only subject to, and only to the extent permissible under, all pre-existing rights, obligations and restrictions contained in any existing agreements related to the applicable Intellectual Property licensed herein, including, without limitation, licenses or other rights existing in Third Parties granted by BWTI or their sublicensees in existing license agreements, applicable agreements in existence between members of the RemainCo Group and the United States Department of Energy, applicable agreements in existence between members of the SpinCo Group and the United States Department of Energy and all existing security agreements and liens in place in connection with such licensed Intellectual Property.

(b) Except for the limited rights granted in this Agreement in connection with the Licensed BWTI Intellectual Property, including, without limitation, the rights and obligations arising out of or related to Section 5.10 , BWTI reserves to itself all right, title and interest in and to the Licensed BWTI Intellectual Property. Without limiting the foregoing, for purposes of clarity, as between BWTI and BWICO, BWTI retains all rights in and to, and to use and exploit, and including without limitation the right to make, have made, use, lease, sell, offer for sale, and import, and use, reproduce, prepare derivative works of, distribute copies, perform and display products and services which utilize or embody such Licensed BWTI Intellectual Property in the SpinCo Core Field.

 

7


Section 5.9 Maintenance of Intellectual Property .

(a) BWTI shall not have any obligation to maintain the pendency, subsistence, validity, enforceability or confidentiality of any Licensed BWTI Intellectual Property. BWTI may discontinue maintenance, abandon or dedicate to the public any Licensed BWTI Intellectual Property.

Section 5.10 Covenants .

(a) BWTI hereby covenants not to sue BWICO under any BWTI General Patents for infringement or misappropriation based upon any action that occurs in connection with the continued operation of the RemainCo Business and any future extensions of the RemainCo Business in any field other than the SpinCo Core Field after the Distribution Date. The foregoing covenant shall extend to any permitted assignees or sublicensees of BWICO hereunder. BWTI further covenants to impose the obligations set forth in this Section 5.10(a) on any subsequent Third Party or Affiliate to whom BWTI may sell, transfer, convey or otherwise assign any of the foregoing Intellectual Property and shall ensure that any such Person agrees, in writing, to be bound by the covenants and obligations set forth herein.

ARTICLE VI

RESERVED.

ARTICLE VII

NO WARRANTIES.

Except as expressly set forth in this Agreement, BWTI and BWICO understand and agree that BWTI is not making any representation or warranty of any kind whatsoever, express or implied, to BWICO in any way as to the SpinCo Business, the Transferred BWTI Intellectual Property or the Licensed BWTI Intellectual Property. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING THE TRANSFERS AND LICENSES REFERRED TO IN THIS AGREEMENT (INCLUDING PRIOR TRANSFERS) HAVE BEEN, OR WILL BE, MADE WITHOUT ANY REPRESENTATION OR WARRANTY OF ANY NATURE, EXPRESS OR IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE, RELATING TO (A) THE VALUE OR FREEDOM FROM ENCUMBRANCE OF, ANY ASSETS OR INTELLECTUAL PROPERTY, (B) THE CONDITION OR SUFFICIENCY OF ANY ASSETS OR INTELLECTUAL PROPERTY (INCLUDING ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, MARKETABILITY, TITLE, VALUE, FREEDOM FROM ENCUMBRANCE OR OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR THE PRESENCE OR ABSENCE OF ANY HAZARDOUS MATERIALS IN OR ON, OR DISPOSED OR DISCHARGED FROM, SUCH ASSETS), (C) THE NON-INFRINGEMENT OF ANY PATENT OR OTHER INTELLECTUAL PROPERTY RIGHT OF ANY THIRD PARTY, (D) ANY OTHER MATTER CONCERNING ANY ASSETS OR INTELLECTUAL PROPERTY (E) AS TO THE LEGAL SUFFICIENCY TO CONVEY TITLE TO ANY ASSETS OR INTELLECTUAL PROPERTY OR (F) THAT THE LICENSOR HAS ANY

 

8


RIGHTS OR TITLE AT ALL IN OR TO ANY INTELLECTUAL PROPERTY. WITHOUT LIMITING THE FOREGOING, BWICO AND BWTI HEREBY ACKNOWLEDGE AND AGREE THAT ALL INTELLECTUAL PROPERTY TRANSFERRED OR LICENSED PURSUANT TO THIS AGREEMENT AND ALL INTELLECTUAL PROPERTY INCLUDED IN PRIOR TRANSFERS ARE BEING OR WERE LICENSED OR TRANSFERRED “AS IS, WHERE IS.”

ARTICLE VIII

THIRD-PARTY INFRINGEMENT

Section 8.1 No Obligation . No Party shall have any obligation to institute or maintain any action or suit against any Third Party for infringement or misappropriation of any Intellectual Property licensed hereunder, or to defend any action or suit brought by a Third Party which challenges or concerns the validity of any such Intellectual Property or which claims that any Intellectual Property licensed to the other Party infringes or constitutes misappropriation of the Intellectual Property rights of any Third Party.

Section 8.2 Notice Regarding Infringement . Each Party shall promptly notify the other Party in writing upon learning that a Third Party may potentially be infringing, misappropriating or otherwise violating any Intellectual Property licensed under this Agreement, which notice shall set forth in reasonable detail the identity of the suspected infringer and nature of suspected infringement.

Section 8.3 Suits for Infringement .

(a) Licensed BWTI Intellectual Property .

(i) With respect to any Licensed BWTI Intellectual Property to which BWTI has granted BWICO an exclusive license hereunder, as between BWTI and BWICO, BWTI shall have the first right to initiate, prosecute and control any action or proceeding to restrain infringement or misappropriation of such Licensed BWTI Intellectual Property in the RemainCo Core Field, and, for purposes of clarity, the sole and exclusive right to initiate, prosecute and control such proceedings in the SpinCo Core Field and in any field other than the RemainCo Core Field. BWTI shall provide prompt written notice to BWICO of any determination to initiate, prosecute and control any such action or proceeding in the RemainCo Core Field. BWICO, as the exclusive licensee, agrees to be joined as a party if necessary to prosecute the action or proceeding, and shall provide all reasonable cooperation, including any necessary use of their name, required to prosecute such action or proceeding. In such instance, BWTI shall control any such action or proceeding and negotiations for its settlement and compromise and shall have sole discretion regarding the settlement or compromise thereof. In connection with the foregoing, BWICO may, at its option, elect to assume and pay its and BWTI’s out-of-pocket costs incurred in connection with such litigation or proceeding undertaken by BWTI, including, without limitation, attorney’s fees. BWICO will provide prompt written notice to BWTI, in any event no later than thirty (30) after receipt of BWTI’s notice of its determination to initiate, prosecute and control such action or proceeding in the RemainCo Core Field, of its determination to elect to assume and pay the applicable costs or to decline to pay assume and pay

 

9


the applicable costs. In the event BWICO does not elect to assume and pay the costs associated with BWTI’s initiation, prosecution and control of such action or proceeding in the RemainCo Core Field, BWTI shall assume and pay its and BWICO’s out-of-pocket costs incurred in connection with such litigation or proceeding undertaken by BWTI, including, without limitation, attorney’s fees. Any recovery obtained as a result of such proceeding in the RemainCo Core Field shall be retained by (i) BWICO in the event that BWICO assumed and paid the applicable costs of the litigation or proceeding or (ii) BWTI in the event that BWTI assumed and paid the applicable costs of the litigation or proceeding in accordance with this Section 8.3(a)(i) .

(ii) If BWTI does not exercise its right to enforce any applicable Licensed BWTI Intellectual Property in the RemainCo Core Field, BWTI shall provide notice to that effect to BWICO and, as between BWTI and BWICO, BWICO shall have the right to initiate, prosecute and control any action or proceeding to restrain infringement or misappropriation of such Licensed BWTI Intellectual Property in the RemainCo Core Field. BWICO shall provide prompt written notice to BWTI of any determination to initiate, prosecute and control any such action or proceeding in the RemainCo Core Field. BWTI, as the owner and licensor, agrees to be joined as a party if necessary to prosecute the action or proceeding, and shall provide all reasonable cooperation, including any necessary use of their name, required to prosecute such action or proceeding. In connection with the foregoing, BWICO shall assume and pay its and BWTI’s out-of-pocket costs incurred in connection with any litigations or proceedings described above, including, without limitation, attorney’s fees. Any recovery obtained as a result of such proceeding related to infringement or misappropriation in the RemainCo Core Field shall be retained by BWICO.

(iii) In the event that a Third Party may potentially be infringing, misappropriating or otherwise violating any Licensed BWTI Intellectual Property in both the RemainCo Core Field and the SpinCo Core Field, BWICO and BWTI will meet and confer in good faith regarding the manner in which to respond to such infringement in the RemainCo Core Field and SpinCo Core Field collectively, provided, however, that the foregoing does not limit the rights set forth in Section 8.3(a)(i) or Section 8.3(a)(ii) .

ARTICLE IX

CONFIDENTIALITY

Section 9.1 BWTI and BWICO shall hold and shall cause the members of the SpinCo Group and the RemainCo Group, respectively, to hold, and shall each cause their respective officers, employees, agents, consultants and advisors to hold, in strict confidence and not to disclose or release without the prior written consent of the other Party, any and all Confidential Information (as defined herein) of such other Party or the members of its Group; provided, that the Parties may disclose, or may permit disclosure of, such Confidential Information (i) to their respective auditors, attorneys, financial advisors, bankers and other appropriate consultants and advisors who have a need to know such information and are informed of their obligation to hold such information confidential to the same extent as is applicable to the Parties and in respect of whose failure to comply with such obligations, BWTI or BWICO, as the case may be, will be responsible or (ii) to the extent any member of the SpinCo Group or the RemainCo Group is

 

10


compelled to disclose any such Confidential Information by judicial or administrative process or, in the opinion of legal counsel, by other requirements of Law. Notwithstanding the foregoing, in the event that any demand or request for disclosure of Confidential Information is made pursuant to clause (ii) above, BWTI or BWICO, as the case may be, shall promptly notify the other of the existence of such request or demand and shall provide the other a reasonable opportunity to seek an appropriate protective order or other remedy, which both Parties will cooperate in seeking to obtain. In the event that such appropriate protective order or other remedy is not obtained, the Party who is being compelled to disclose (or whose Group member is being compelled to disclose) shall, and shall cause the applicable members at its Group to, furnish, or cause to be furnished, only that portion of such Confidential Information that is legally required to be disclosed.

Section 9.2 As used in this Article 9 , “Confidential Information” shall mean all proprietary, technical or proprietary, operational information (including Know-How and proprietary information relating to the ages, birth dates, social security numbers, health-related matters or other confidential matters concerning employees or former employees) of one Party or members of its Group which, prior to or following the Distribution Time, has been disclosed by BWTI or members of the SpinCo Group, on the one hand, or BWICO or members of the RemainCo Group, on the other hand, to, or otherwise has come into the possession of, the other Group, including pursuant to the technical assistance and technology transfer provisions of Article VI hereof or any other provision of this Agreement (except to the extent that such information can be shown to have been (a) in the public domain through no fault of such Party (or, in the case of BWTI, any other member of the SpinCo Group or, in the case of BWICO, any other member of the RemainCo Group) or (b) later lawfully acquired from other sources by the Party (or, in the case of BWTI, such member of the SpinCo Group or, in the case of BWICO, such member of the RemainCo Group) to which it was furnished; provided, however, in the case of (b) that such sources did not provide such information in breach of any confidentiality obligations), or (c) independently developed by employees or agents of such Party who had no access, direct or indirect, to such information provided by the other Party.

(a) Each Party shall use the Confidential Information only as permitted pursuant to this Agreement and shall not disclose any Confidential Information to any Third Party unless permitted pursuant to this Agreement. Each Party shall exercise the same degree of care to protect and maintain the confidentiality of the Confidential Information received from the other Party hereunder (but no less than a reasonable degree of care) as they take to preserve confidentiality for their own similar information. Without limiting the foregoing, each Party will take commercially reasonable efforts to implement and maintain comprehensive security protocols to protect and maintain the confidentiality of the Confidential Information received from the other Party hereunder, including, without limitation, implementing administrative, technical, digital, electronic and physical security strategies and access restrictions to protect Confidential Information.

 

11


ARTICLE X

MISCELLANEOUS

Section 10.1 Authority . Each of the Parties represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it has been duly authorized by all necessary corporate or other actions, (c) it has duly and validly executed and delivered this Agreement to be executed and delivered on or prior to the Effective Date, and (d) this Agreement is legal, valid and binding obligations, enforceable against it in accordance with their respective terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally and general equity principles.

Section 10.2 Entire Agreement . This Agreement and the Schedules referenced herein or therein or attached hereto or thereto, constitute the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersedes all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof.

Section 10.3 Binding Effect; Third-Party Beneficiaries; Assignment . Except as expressly set forth in Section 5.10 and except for the Affiliates of the Parties, which are intended to be third party beneficiaries hereunder, this Agreement does not and is not intended to confer any rights or remedies upon any Person other than the Parties. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. This Agreement may not be assigned by either Party, except with the prior written consent of the other Party.

Section 10.4 Amendment . No change or amendment may be made to this Agreement except by an instrument in writing signed on behalf of both of the Parties.

Section 10.5 Failure or Indulgence Not Waiver; Remedies Cumulative . No failure or delay on the part of either Party in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant or agreement contained herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement or the Schedules attached hereto are cumulative to, and not exclusive of, any rights or remedies otherwise available.

Section 10.6 Notices . Unless otherwise expressly provided herein, all notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to be duly given (i) when personally delivered or (ii) if mailed by registered or certified mail, postage prepaid, return receipt requested, on the date the return receipt is executed or the letter is refused by the addressee or its agent or (iii) if sent by overnight courier which delivers only upon the signed receipt of the addressee, on the date the receipt acknowledgment is executed or refused by the addressee or its agent or (iv) if sent by facsimile or electronic mail, on the date confirmation of transmission is received (provided that a copy of any notice delivered pursuant to this clause (iv) shall also be sent pursuant to clause (i), (ii) or (iii)), addressed to the attention of the addressee’s General Counsel at the address of its principal executive office or to such other address or facsimile number for a Party as it shall have specified by like notice.

Section 10.7 Counterparts . This Agreement, including the Schedules and Exhibits hereto and the other documents referred to herein, may be executed in multiple counterparts, each of which when executed shall be deemed to be an original but all of which together shall constitute one and the same agreement.

 

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Section 10.8 Severability . If any term or other provision of this Agreement or the Schedules attached hereto is determined by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the court, administrative agency or arbitrator shall interpret this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

Section 10.9 Governing Law . This Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of Delaware, without regard to any conflicts of law provisions thereof that would result in the application of the laws of any other jurisdiction.

Section 10.10 Construction . This Agreement shall be construed as if jointly drafted by BWICO and BWTI and no rule of construction or strict interpretation shall be applied against either Party. The Parties represent that this Agreement is entered into with full consideration of any and all rights which the Parties may have. The Parties have relied upon their own knowledge and judgment and upon the advice of the attorneys of their choosing. The Parties have had access to independent legal advice, have conducted such investigations they and their counsel thought appropriate, and have consulted with such other independent advisors as they and their counsel deemed appropriate regarding this Agreement and their rights and asserted rights in connection therewith. The Parties are not relying upon any representations or statements made by any other Party, or such other Party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are expressly set forth or incorporated in this Agreement. The Parties are not relying upon a legal duty, if one exists, on the part of the other Party (or such other Party’s employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or its preparation, it being expressly understood that neither Party shall ever assert any failure to disclose information on the part of the other Party as a ground for challenging this Agreement.

Section 10.11 Performance . Each Party 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 or Affiliate of such Party.

[INTENTIONALLY LEFT BLANK]

 

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WHEREFORE, the Parties have signed this Agreement effective as of the date first set forth above.

 

BABCOCK & WILCOX TECHNOLOGY, LLC
By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker
Title:   Vice President and Treasurer
BABCOCK & WILCOX INVESTMENT COMPANY
By:  

/s/ David S. Black

Name:   David S. Black
Title:   Vice President and Chief Accounting Officer


Schedule 1.1(e)

SpinCo Core Field; RemainCo Core Field

SpinCo Core Field means:

 

1. Ownership and/or operation of power generation facilities fired with combustible fossil fuels (e.g., coal, coal slurry, oil or natural gas), biomass, municipal solid waste or concentrated solar energy through tower based solar thermal conversion systems, in each case for the provision of power, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

2. Design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning related to:

 

  (a). Fired steam generators encompassing fossil fuel boilers which are fueled by combustible fossil fuels (e.g., coal, coal slurry, oil or natural gas) or support subsystems, equipment or components thereof, including fuel drying, fuel feed, pulverizers, burners, combustion systems, grates, pressure parts, air heaters, fans, boiler cleaning systems, ash systems, valves, controls & diagnostics, oxycombustion systems, condensing heat exchangers used in connection with such fired steam generators, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (b). Fired steam generators encompassing waste fuel boilers which are fueled by combustible waste fuels (e.g., carbon monoxide, biomass, black liquor, municipal solid waste (MSW) or refuse-derived fuel (RDF)) or support subsystems, equipment or components thereof, including fuel drying, fuel feed, pulverizers, burners, combustion systems, grates, pressure parts, air heaters, fans, boiler cleaning systems, ash systems, valves, controls & diagnostics, oxycombustion systems, condensing heat exchangers used in connection with such fired steam generators, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).


  (c). Gasifier systems which partially convert fossil or waste fuels (e.g., coal, oil, natural gas or biomass) to syngas and support subsystems, equipment or components thereof, including fuel drying, fuel feed, pulverizers, burners, combustion systems, gasifiers, heat exchangers used in connection with such gasifier systems, pressure parts, boiler cleaning systems, ash systems, valves, controls & diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (d). Tower-based solar thermal conversion systems which are enabled by solar energy and support subsystems, equipment or components thereof, including receiver system, pressure parts, molten salt or particle systems (e.g., heat exchangers specifically for tower-based solar thermal conversion systems enabled by solar energy or associated pumps or tanks), valves, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (e). The following specific unfired heat exchangers Turbine Exhaust Gas boilers (10K2), Heat Recovery Steam Generation Boilers (10K22), Water Tube Waste Heat Boilers Two Drum (Stirling Types) (1K4), 3 Drum Waste Heat Recovery Boiler (1K4), Water Tube Waste Heat “H” Stirling Boiler (1K4), Water Tube Long Drum (LD) boiler (1K4), CO boiler (1K26), Waste Heat (WH) (1K4), Oxygen Convertor Hoods (1K44), Gas Tube (FT) boilers (1K46), FM boilers (1K239), FO boilers (1K2311), Struthers Wells type EOR boiler as defined by the existing specific referenced design standards, or support subsystems, equipment or components thereof, including pressure parts, cleaning systems, valves, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (f). Chemical looping conversion systems which are fueled by combustible fossil fuels (e.g., coal, coal slurry, oil or natural gas) and which produce an energy output of steam, CO 2 , H 2 or syngas or support subsystems, equipment or components thereof, including fuel feed, pulverizers, reactors, pressure parts, air heaters, fans, boiler cleaning systems, ash systems, valves, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (g). Pulverized coal injection systems for use in connection with steel production or support subsystems, equipment or components thereof, including pulverizers, pressurization systems, tanks, valves, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).


  (h). Heat transfer surface cleaning systems and support subsystems, equipment and components thereof (other than said systems related to or utilized in connection with nuclear fueled systems and expressly excluding nuclear steam generators), including sootblowers (air, steam, water or sonic), related valve or piping systems, sprayers, controls (basic, intelligent) or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (i). Ash handling systems or support subsystems, equipment or components thereof, including mechanical conveyors (wet or dry), pneumatic conveyors (wet, dry, dilute, or dense phase), ash conditioning, tanks, valves, specialty piping, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (j). Industrial pulverizer or grinding equipment systems or support subsystems (other than said systems or support subsystems related to or utilized in connection with nuclear fuel manufacturing or processing), other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (k). Drying and/or coating systems utilizing continuous and/or batch flow dryer/oven equipment for industrial processes, including but not limited to various production lines (e.g., roll fed, sheet fed, coating, drying or web handling), dryers and/or ovens (e.g., air flotation dryers or ovens, roll support dryers, infrared dryers, ultraviolet dryers, microwave or radio frequency), coating line auxiliary equipment, festoon and catenary style ovens, valves and material handling systems, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (l). Utility emissions control systems used in connection with combustion power generation systems, which are designed to remove nitrogen oxides (e.g., SCR or SNCR), sulfur oxides (e.g., WFGD, SDA, CDS, DSI, or others), particulates (e.g., dry ESP, wet ESP, fabric filter or cyclonic), carbon dioxide (e.g., scrubber systems), hydrocarbons, or air toxics (e.g., Sb, Be, Cd, Cr, Co, Pb, Mn, Ni, (SO2)3, HF, Hg, P, Se, Cd, As, or HCl (or other acid gases)), HAPS, dioxins, furans or others) and/or subsequent energy or waste recovery or associated subsystems, equipment or components thereof, including valves, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (m).

Wastewater treatment systems (i) that process wastewater derived from combustion power generation and municipal solid waste (“MSW”) systems, including


  without limitation FGD dewatering systems or zero liquid discharge (ZLD) systems, or associated subsystems, equipment or components thereof, including valves or (ii) that process wastewater as part of or ancillary to the systems set forth in SpinCo Core Field 2(k), 2(l) or 2(n), in each case other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (n). Industrial emission control, gas cleaning and/or conditioning, or liquids purification and/or recovery systems (other than said systems set forth in RemainCo Core Field 1(m)), including SCR, SNCR, WFGD, SDA, CDS, DSI, other scrubbers, dry ESP, wet ESP, fabric filter, cyclonic, solvent recovery systems, biological abatement systems, solvent distillation systems (including waste water treatment), evaporative gas conditioning and cooling systems or regenerative thermal (and other) oxidation systems or associated subsystems, equipment or components thereof, including valves, for the removal of nitrogen oxides, sulfur oxides, particulates, carbon dioxide, hydrocarbons, or air toxics (e.g., Sb, Be, Cd, Cr, Co, Pb, Mn, Ni, (SO2) 3 , HF, Hg, P, Se, As, Cd, HCl (or other acid gases)), HAPS, dioxins, furans, others) and/or subsequent energy or waste recovery, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (o). Hybrid power generation systems or associated equipment where renewable energy sources are combined with a combustible fossil fuel (e.g., coal, coal slurry, oil or natural gas) or combustible waste fuel (e.g., carbon monoxide, biomass, black liquor, MSW or RDF) primary energy source, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

3. Engineering procurement, construction, installation, supply, lease, commissioning, training, delivery, inspection, testing of, support, operations, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, relocation, project management, construction management, technical advice, construction consultation, siting support or consultation, environmental services or consultation, safety, health, troubleshooting, cleaning, upgrading and tooling of balance of plant for power generation facilities fired with combustible fossil fuels (e.g., coal, coal slurry, oil or natural gas) and pulp and paper facilities, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

RemainCo Core Field means:

 

1.

Design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair,


  refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning, related to:

 

  (a). Nuclear facilities and nuclear reactor plants, nuclear reactor systems, nuclear reactors, including all thermal reactors (including all heavy-water and light-water reactors), all water cooled reactors, all liquid metal cooled reactors (including sodium cooled reactors), gas cooled reactors (including helium, carbon dioxide and nitrogen) and molten salt reactors, breeder reactors, traveling wave reactors, high temperature reactors, small modular nuclear reactors, medical isotope reactors and components thereof and all Generation I, Generation II, Generation III and all advanced reactors, including and Generation IV reactors and iterations thereof regardless of design, and hybrid power generation systems and associated equipment where renewable energy sources are combined with a nuclear primary energy source.

 

  (b). Support systems and subsystems, equipment and components of nuclear systems and nuclear reactors, including, reactor coolant systems, reactor protection, control and instrumentation systems, reactor auxiliary and safety systems, balance of plant systems, reactor vessel closure heads, reactor and other pressure vessels and internals, reactor coolant pumps, stators and motors, reactor fuel channels, feeders and related components, steam generators, reactor control rod drive mechanisms and other reactor electro-mechanical equipment and controls therefore, specialized tooling and inspection systems, heat exchangers, pressurizers, primary and secondary piping, valves and pumps, spent fuel and other nuclear fuel and nuclear material storage and shipping, nuclear waste containers and related systems, audio/visual systems, steam generator tube inspection systems, repair, modification and stabilization systems, tube plugging and tube removal systems.

 

  (c). Nuclear fuel and nuclear fuel components, including enrichment and any related components, assembly, nuclear fuel plant processes, manufacturing systems and processes and systems for the chemical processing of radiological materials, fuel core and fuel bearing precision components, fuel powder, sources, targets, targets for medical isotope production and industrial isotope production, targets for research and analysis in research reactors, graphite reflectors and control rods, poisons and other special nuclear materials for development and manufacturing of fuel components for pebble bed and other reactors.

 

  (d). Electro-mechanical devices related to or used in commercial, research, government, military and other nuclear facilities, reactors or vessels and associated subsystems, equipment and components thereof.

 

  (e). Advanced power systems for space applications and associated subsystems, equipment and components thereof.

 

  (f). Nuclear and non-nuclear propulsion systems for naval (U.S. and foreign) submarines and aircraft carriers and associated subsystems, equipment and components thereof, including all aftermarket, replacement and repair parts, components and equipment for existing naval submarines and aircraft carriers.


  (g). Nuclear propulsion systems for naval (U.S. and foreign) vessels other than submarines and aircraft carriers and associated subsystems, equipment and components thereof, including aftermarket, replacement and repair parts, components and equipment for such existing vessels.

 

  (h). Single crystal composite and ceramic materials for use in nuclear, defense, space and aerospace applications and subsystems, equipment and components thereof

 

  (i). High energy physics equipment, including electro-magnetic storage devices, power conversion and conditioning systems, superconducting materials and plasma energy systems, and, in each case, subsystems and components thereof, excluding energy storage systems that store kinetic energy using a rotating mass with low friction losses and deliver the stored energy via power electronics that convert kinetic to electrical energy using electrical equipment typical for that type of service.

 

  (j). Ordnance components, subsystems and components thereof.

 

  (k). Unfired heat exchangers where the applicable heat source energy input is derived from the release and/or use of nuclear energy or support subsystems, equipment or components thereof, including pressure parts, cleaning systems, valves, controls or diagnostics.

 

  (l). Wastewater treatment systems that process wastewater derived from the release and/or use of nuclear energy and subsystems, equipment and components thereof

 

  (m). Emission control systems related to nuclear fuel manufacture or fabrication, storage of nuclear materials and waste and nuclear powered systems and subsystems, equipment and components thereof.

 

2. Chemical and physical processing, storage and decontamination of and other management, operations, safety, security, emergency management, remediation and technical services related to radiological materials (including highly enriched uranium, low enriched uranium, natural uranium, fissile material and transuranic material), including receipt, storage, inspection, characterization, dissolution, recovery and purification, downblending, recycling, scrap recovery and processing and related research, development, engineering and analysis.

 

3. Developing and providing services related to security (including direct security services as well as training, consulting and similar services) for new or existing commercial, research, government, military and other facilities or vessels, including tactical security, security training, IT security, development of security processes, fitness for duty and government compliance (both contractual compliance) and in connection with NRC or other applicable licensing requirements.

 

4. Provide facility operation and maintenance services, including production and program management, maintenance (including maintenance and service of fossil fired and renewable power generation systems performed as part of overall facility operation and management contracts), operation, environmental health and safety, security, emergency management, wastewater treatment, remediation and abatement, decontamination and decommissioning material storage and disposition and other related technical services, to domestic or foreign agencies (including but not limited to NNSA, NASA, DOD, DOE as well as United Kingdom NDA or MOD sites) and commercial entities related to critical infrastructure, nuclear, non-nuclear and biological activities such as nuclear operations of reactors and reactor facilities, laboratory (including national laboratories) and other facility operations, weapons production, refurbishment, storage and stockpile management, component


  (including centrifuge) manufacturing, medical and industrial isotope development and manufacture, and Chemical Laboratory Analysis Capability by SEM, Mass Spectrometer and similar equipment, excluding the provision of the foregoing services for solely standalone power generation facilities fired with combustible fossil fuels, biomass or municipal solid waste or concentrated solar energy through tower based solar thermal conversion systems For the avoidance of doubt, the foregoing does not include the design, manufacture, installation, supply, sale and supply of hardware, including entire systems, within the SpinCo Core Field (including, without limitation, the systems set forth in SpinCo Core Field 2(k), 2(l), 2(m) and 2(n)) to domestic or foreign agencies or commercial entities.

For the avoidance of doubt, the following are not included in the SpinCo Core Field or the RemainCo Core Field:

Design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning related to the following:

 

  (a). Un-fired heat exchangers other than those identified in SpinCo Core Field 2(e) or unfired heat exchangers where the applicable heat source energy input is derived from the release and/or use of nuclear energy, and support subsystems, equipment and components thereof, including pressure parts, cleaning systems, valves, controls, diagnostics, repair equipment and services.

 

  (b). Production of hydrogen by other high temperature processes.

 

  (c). Non-nuclear propulsion systems for naval (U.S. and foreign) vessels other than submarines and aircraft carriers, and associated subsystems equipment and components thereof, including aftermarket, replacement and repair parts, components and equipment for such existing vessels.

 

  (d). Non-naval (i.e., commercial marine) propulsion systems and associated subsystems, equipment and components thereof, including aftermarket, replacement and repair parts, components and equipment for existing systems.


Schedule 1.1(i)

Specific RemainCo Field; Specific SpinCo Field

“Specific SpinCo Field” means the design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning, related to heat exchangers specifically for tower-based solar thermal conversion systems enabled by solar energy and support subsystems, equipment or components thereof, including pressure parts, cleaning systems, valves, controls or diagnostics.

“Specific RemainCo Field” means the design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning, related to:

 

  (a). Nuclear facilities and nuclear reactor plants, nuclear reactor systems, nuclear reactors, including all thermal reactors (including all heavy-water and light-water reactors), all water cooled reactors, all liquid metal cooled reactors (including sodium cooled reactors), gas cooled reactors (including helium, carbon dioxide and nitrogen) and molten salt reactors, breeder reactors, traveling wave reactors, high temperature reactors, small modular nuclear reactors, medical isotope reactors and components thereof and all Generation I, Generation II, Generation III and all advanced reactors, including and Generation IV reactors and iterations thereof regardless of design, and hybrid power generation systems and associated equipment where renewable energy sources are combined with a nuclear primary energy source.

 

  (b).

Support systems and subsystems, equipment and components of nuclear systems and nuclear reactors, including, reactor coolant systems, reactor protection, control and instrumentation systems, reactor auxiliary and safety systems, balance of plant systems, reactor vessel closure heads, reactor and other pressure vessels and internals, reactor coolant pumps, stators and motors, reactor fuel channels, feeders and related components, steam generators, reactor control rod drive mechanisms and other reactor electro-mechanical equipment and controls therefore, specialized tooling and inspection systems,


  heat exchangers, pressurizers, primary and secondary piping, valves and pumps, spent fuel and other nuclear fuel and nuclear material storage and shipping, nuclear waste containers and related systems, audio/visual systems, steam generator tube inspection systems, repair, modification and stabilization systems, tube plugging and tube removal systems.

 

  (c). Nuclear fuel and nuclear fuel components, including enrichment and any related components, assembly, nuclear fuel plant processes, manufacturing systems and processes and systems for the chemical processing of radiological materials, fuel core and fuel bearing precision components, fuel powder, sources, targets, targets for medical isotope production and industrial isotope production, targets for research and analysis in research reactors, graphite reflectors and control rods, poisons and other special nuclear materials for development and manufacturing of fuel components for pebble bed and other reactors.

 

  (d). Naval nuclear propulsion systems and associated subsystems, equipment and components thereof, including aftermarket, replacement and repair parts, components and equipment for existing systems.


The company agrees to furnish supplementally a copy of any omitted exhibit or schedule to the Commission upon request.

Exhibit 10.15

INTELLECTUAL PROPERTY AGREEMENT

between

BABCOCK & WILCOX CANADA LTD.

and

BABCOCK & WILCOX POWER GENERATION GROUP CANADA CORP.

dated as of

May 29, 2015


TABLE OF CONTENTS

 

ARTICLE I

 

DEFINITIONS

     2   

Section 1.1

 

Definitions

     2   

Section 1.2

 

Interpretation

     5   

ARTICLE II

 

INTELLECTUAL PROPERTY ASSIGNMENT AND OWNERSHIP

     7   

Section 2.1

 

Assignment of Transferred Intellectual Property

     7   

Section 2.2

 

Actions; Correspondence

     7   

Section 2.3

 

Assistance by Employees; Inventor Compensation

     8   

Section 2.4

 

Reserved

     8   

Section 2.5

 

Rights Arising in the Future

     8   

ARTICLE III

 

CONSIDERATION

     9   

Section 3.1

 

Canada Thermal

     9   

Section 3.2

 

Canada Nuclear

     9   

ARTICLE IV

 

RESERVED

     9   

ARTICLE V

 

INTELLECTUAL PROPERTY LICENSES AND COVENANTS

     9   

Section 5.1

 

Reserved

     9   

Section 5.2

 

Cross-License of Patents

     9   

Section 5.3

 

Reserved

     10   

Section 5.4

 

Cross-Licenses of Software

     10   

Section 5.5

 

Cross-Licenses of Additional Know-How

     10   

Section 5.6

 

Sublicensing; Assignability

     11   

Section 5.7

 

Restrictions on Licensor Exploitation of Intellectual Property

     11   

Section 5.8

 

Third Party Agreements; Reservation of Rights

     12   

Section 5.9

 

Maintenance of Intellectual Property

     12   

Section 5.10

 

Covenants

     13   

ARTICLE VI

 

TECHNICAL ASSISTANCE AND TECHNOLOGY TRANSFER

     13   

Section 6.1

 

Documentation Transfer

     13   

Section 6.2

 

Technical Assistance

     14   

Section 6.3

 

No Additional Technical Assistance

     15   

ARTICLE VII

 

NO WARRANTIES

     15   

ARTICLE VIII

 

THIRD-PARTY INFRINGEMENT

     16   

Section 8.1

 

No Obligation

     16   

Section 8.2

 

Notice Regarding Infringement

     16   

Section 8.3

 

Suits for Infringement

     16   

 

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ARTICLE IX

 

CONFIDENTIALITY

     19   

ARTICLE X

 

MISCELLANEOUS

     20   

Section 10.1

 

Authority

     20   

Section 10.2

 

Entire Agreement

     20   

Section 10.3

 

Binding Effect; Third-Party Beneficiaries; Assignment

     20   

Section 10.4

 

Amendment

     20   

Section 10.5

 

Failure or Indulgence Not Waiver; Remedies Cumulative

     20   

Section 10.6

 

Notices

     21   

Section 10.7

 

Counterparts

     21   

Section 10.8

 

Severability

     21   

Section 10.9

 

Governing Law

     21   

Section 10.10

 

Construction

     21   

Section 10.11

 

Performance

     22   

 

SCHEDULES

 

  
Schedule 1.1(e)    SpinCo Core Field; RemainCo Core Field
Schedule 1.1(i)    Specific RemainCo Field; Specific SpinCo Field
Schedule 2.1(a)    Transferred Canada Nuclear Intellectual Property
Schedule 5.2(a)(i)    Canada Thermal General Patents
Schedule 5.2(a)(ii)    Canada Nuclear General Patents
Schedule 5.4(c)    Canada Nuclear Licensed Software
Schedule 5.5(b)    Special Canada Nuclear Know-How

 

EXHIBITS

 

  
Exhibit A   

Intellectual Property Assignment Agreements

 

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INTELLECTUAL PROPERTY AGREEMENT

This INTELLECTUAL PROPERTY AGREEMENT (this “Agreement”) is entered into as of May 29, 2015 (the “Effective Date”), between Babcock & Wilcox Canada Ltd., an entity formed in Ontario (“Canada Nuclear”) and Babcock & Wilcox Power Generation Group Canada Corp., a Nova Scotia unlimited liability company (“Canada Thermal”). Canada Nuclear and Canada Thermal are sometimes referred to herein individually as a “Party,” and collectively as the “Parties.” Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in Article I hereof.

RECITALS

WHEREAS, Babcock & Wilcox Enterprises, Inc., a Delaware corporation (“SpinCo”) is a wholly owned Subsidiary of The Babcock & Wilcox Company (“RemainCo”) and the Board of Directors of RemainCo has determined that it would be appropriate and in the best interests of RemainCo and its stockholders for RemainCo to separate the SpinCo Business from the RemainCo Business;

WHEREAS, in order to effectuate the foregoing, RemainCo and SpinCo intend to enter into a Master Separation Agreement (the “Master Separation Agreement”), which will provide, among other things, upon the terms and subject to the conditions thereof, for the separation of the respective businesses of SpinCo and RemainCo and the distribution of the Capital Stock of SpinCo to the public shareholders of RemainCo (the “Distribution”) as defined in the Master Separation Agreement as of the date set forth in the Master Separation Agreement (the “Distribution Date”) and at the time set forth in the Master Separation Agreement (the “Distribution Time”);

WHEREAS, as of the date of this Agreement, RemainCo is the sole owner of all the outstanding Capital Stock (as defined below) of, inter alia, each of SpinCo and Babcock & Wilcox Investment Company, a Delaware corporation (“BWICO”);

WHEREAS, as of the date of this Agreement, BWICO is the sole owner of all the outstanding Capital Stock of each of Babcock & Wilcox Government & Nuclear Operations, Inc., a Delaware corporation, Babcock & Wilcox Commercial Power, Inc., a Delaware corporation (“CPI”) and Babcock & Wilcox Technology, LLC, a Delaware limited liability company (“BWTI”);

WHEREAS, as of the date of this Agreement, BWTI is the sole owner of all the outstanding Capital Stock of SoFCo-EFS Holdings, LLC, a Delaware limited liability company;

WHEREAS, as of the date of this Agreement, CPI is the sole owner of all the outstanding Capital Stock of each of Babcock & Wilcox mPower, Inc., a Delaware corporation, Babcock & Wilcox Nuclear Energy, Inc., a Delaware corporation and Babcock & Wilcox Power Generation Group, Inc., a Delaware corporation (“PGG”);

WHEREAS, as of the date of this Agreement, PGG is the sole owner of all of the outstanding Capital Stock of Diamond Power International Inc., a Delaware corporation; which,

 

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in turn, is the sole owner of all of the outstanding Capital Stock of (i) BWXT Foreign Holdings, LLC, a Delaware limited liability company and (ii) B&W PGG Lux Holdings SARL, an entity formed in Luxembourg, which, in turn, is the sole owner of all of the outstanding Capital Stock of B&W PGG Lux Finance SARL, an entity formed in Luxembourg, which, in turn, is the sole owner of all of the outstanding Capital Stock of (i) Canada Nuclear, (ii) B&W PGG Luxembourg Canada Holdings SARL, an entity formed in Luxembourg which, in turn is the sole owner of all of the outstanding Capital Stock of Canada Thermal and (iii) BWXT Canada Holdings Corp., a Nova Scotia unlimited liability company;

WHEREAS, it is the intent of the Parties, in anticipation of the Distribution and the execution of the Master Separation Agreement, that Canada Thermal convey to Canada Nuclear certain Intellectual Property licenses subject to the terms and conditions set forth in this Agreement;

WHEREAS, it is the intent of the Parties, in anticipation of the Distribution and the execution of the Master Separation Agreement, that Canada Nuclear convey to Canada Thermal certain Intellectual Property rights and licenses subject to the terms and conditions set forth in this Agreement; and

NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions . As used in this Agreement, the following terms shall have the meanings set forth in this Section 1.1:

“Affiliate” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the specified Person. For this purpose “control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through ownership of voting securities, by contract or otherwise.

“Business Day” means a day other than a Saturday, a Sunday or a day on which the Federal Reserve Bank of New York is closed.

“Canada Nuclear” has the meaning set forth in the recitals.

“Canada Nuclear General Patents” has the meaning set forth in Section 5.2(a)(ii) .

“Canada Nuclear Know-How” means all Know-How owned by Canada Nuclear as of the Effective Date.

“Canada Nuclear Licensed Software” has the meaning set forth in Section 5.4(c) .

 

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“Canada Thermal General Patents” has the meaning set forth in Section 5.2(a)(i) .

“Capital Stock” means any and all shares, interests, rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests (however designated) in the equity (which includes common stock, preferred stock and partnership, limited liability company, joint venture interests and other ownership interests) of any entity (excluding any debt that is convertible into, or exchangeable for, such equity).

“Canada Thermal” has the meaning set forth in the recitals.

“Confidential Information” has the meaning set forth in Section 9.2 .

“Consent” means any consents, waivers or approvals from, or notification requirements to, any third parties, including any notices or reports to be submitted to, filings to be made with, or consents, registrations, approvals, permits or authorizations to be obtained from, any Governmental Authority.

“Contract” means any written, oral, implied or other contract, agreement, covenant, lease, license, guaranty, indemnity, representation, warranty, assignment, sales order, purchase order, power of attorney, instrument or other commitment, assurance, undertaking or arrangement that is binding on any Person or entity or any part of its property under applicable Law.

“CPI” has the meaning set forth in the recitals.

“Distribution” has the meaning set forth in the recitals.

“Distribution Date” has the meaning set forth in the recitals.

“Distribution Time” has the meaning set forth in the recitals.

“Governmental Authority” shall mean any U.S. federal, state, local or non-U.S. court, government, department, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority.

“Intellectual Property” means the rights associated with or arising out of any of the following in any jurisdiction throughout the world: (i) all patents and patent applications, together with all reissuances, divisionals, continuations, continuations-in-part, revisions, renewals, extensions, and reexaminations thereof, and any identified invention disclosures (“Patents”); (ii) trade secret rights and corresponding rights in confidential information and other non-public information (whether or not patentable), including ideas, formulas, compositions, inventor’s notes, discoveries and improvements, know how, manufacturing and production processes and techniques, design manuals, testing information (including testing protocols and results), research and development information, prototypes, inventions, invention disclosures, unpatented blueprints, drawings, specifications, designs, plans, proposals and technical data, business and marketing plans, market surveys, market know-how and customer lists and information, including all tangible embodiments of the foregoing and unregistered copyrights (“Know-How”); (iii) all registered or unregistered copyrights, copyrightable works, rights in databases, data collections, “moral” rights, mask works, copyright registrations, applications and

 

3


extensions therefor and corresponding rights in works of authorship (“Copyrights”); (iv) all trademarks, service marks, logos, trade dress and trade names indicating the source of goods or services, and other indicia of commercial source or origin (whether registered, common law, statutory or otherwise), all registrations and applications to register the foregoing anywhere in the world and all goodwill associated therewith (“Trademarks”); (v) all computer software and code, including assemblers, applets, compilers, source code, object code, development tools, design tools, utilities, library files, user interfaces and data, and all documentation and manuals related to such computer software and code in any form or format, however fixed (“Software”); (vi) all internet electronic addresses, uniform resource locators and alphanumeric designations associated therewith and all registrations for any of the foregoing (“Domain Names”); and (vii) any similar, corresponding or equivalent rights to any of the foregoing anywhere in the world.

“Information Statement” means the information statement and any related documentation to be provided to holders of outstanding shares of common stock, par value $0.01 per share, of RemainCo in connection with the Distribution, including any amendments or supplements thereto.

“IP Proceedings” has the meaning set forth in Section 2.3 .

“Law” means any law, statute, ordinance, code, rule, regulation, order, writ, proclamation, judgment, injunction or decree of any Governmental Authority.

“Master Separation Agreement” has the meaning set forth in the recitals.

“Licensed Canada Nuclear Intellectual Property” means all Canada Nuclear General Patents, Canada Nuclear Licensed Software and Special Canada Nuclear Know-How.

“Licensed Canada Thermal Intellectual Property” means all Canada Thermal General Patents.

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, a union, an unincorporated organization or a Governmental Authority or any department, agency or political subdivision thereof.

“PGG” has the meaning set forth in the recitals.

“RemainCo Business” means any business of RemainCo and its Subsidiaries other than the SpinCo Business.

“RemainCo Core Field” has the meaning set forth on Schedule 1.1(e) .

“RemainCo Group” means RemainCo and its Subsidiaries, other than the SpinCo Group.

“Special Canada Nuclear Know-How” has the meaning set forth in Section 5.5(b) .

“Specific RemainCo Field” has the meaning set forth on Schedule 1.1(i) .

 

4


“Specific SpinCo Field” has the meaning set forth on Schedule 1.1(i) .

“SpinCo Business” means the business and operations conducted by the SpinCo Group as of the Distribution Date, as such business and operations are described in the Information Statement.

“SpinCo Core Field” has the meaning set forth on Schedule 1.1(e) .

“SpinCo Group” means SpinCo and each Person that is a Subsidiary of SpinCo immediately after the Distribution Time or becomes a Subsidiary of SpinCo after the Distribution Time. For the avoidance of doubt, Canada Thermal will be a Subsidiary of SpinCo immediately after the Distribution Time.

“Subsidiary” means, with respect to any specified Person, any corporation, partnership, limited liability company, joint venture or other organization, whether incorporated or unincorporated, of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such specified Person or by any one or more of its Subsidiaries, or by such specified Person and one or more of its Subsidiaries.

“Transfer” has the meaning set forth in Section 2.1(a) .

“Transferred Canada Nuclear Intellectual Property” has the meaning set forth in Schedule 2.1(a) .

Section 1.2 Interpretation . In this Agreement, unless the context clearly indicates otherwise:

(a) words used in the singular include the plural and words used in the plural include the singular;

(b) if a word or phrase is defined in this Agreement, its other grammatical forms, as used in this Agreement, shall have a corresponding meaning;

(c) reference to any gender includes the other gender and the neuter;

(d) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”;

(e) the words “shall” and “will” are used interchangeably and have the same meaning;

(f) the word “or” shall have the inclusive meaning represented by the phrase “and/or”;

(g) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;

 

5


(h) all references to a specific time of day in this Agreement shall be based upon Eastern Standard Time or Eastern Daylight Savings Time, as applicable, on the date in question;

(i) whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified;

(j) reference to any Article, Section or Schedule means such Article or Section of, or such Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;

(k) the words “this Agreement,” “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision of this Agreement;

(l) the term “commercially reasonable efforts” means efforts which are commercially reasonable to enable a Party, directly or indirectly, to satisfy a condition to or otherwise assist in the consummation of a desired result and which do not require the performing Party to expend funds or assume liabilities other than expenditures and liabilities which are customary and reasonable in nature and amount in the context of a series of related transactions similar to the transaction contemplated herein;

(m) reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;

(n) reference to any Law (including statutes and ordinances) means such Law (including any and all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;

(o) references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement; a reference to such Person’s “Affiliates” shall be deemed to mean such Person’s Affiliates following the Distribution and any reference to a Third Party shall be deemed to mean a Person who is not a Party or an Affiliate of a Party;

(p) if there is any conflict between the provisions of the main body of this Agreement and the Schedules hereto, the provisions of the main body of this Agreement shall control unless explicitly stated otherwise in such Schedule;

(q) the titles to Articles and headings of Sections contained in this Agreement, in any Schedule and in the table of contents to this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement; and

(r) any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Subsidiaries and Affiliates to take such action or refrain from taking such action, as the case may be.

 

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ARTICLE II

INTELLECTUAL PROPERTY ASSIGNMENT AND OWNERSHIP

Section 2.1 Assignment of Transferred Intellectual Property .

(a) Canada Nuclear hereby sells, assigns, conveys and transfers (the “Transfer”) to Canada Thermal all right, title and interest, held by Canada Nuclear or any member of the RemainCo Group, in and to the Intellectual Property set forth on Schedule 2.1(a) (the “Transferred Canada Nuclear Intellectual Property”), including all right, title and interest in and to all proceeds, causes of actions and rights of recovery against Third Parties for past and future infringement, misappropriation, or other violation or impairment of such Intellectual Property, except to the extent prohibited by, or requiring any Consent under (to the extent such Consent has not been obtained), any Contract under which Canada Nuclear holds or uses such Transferred Canada Nuclear Intellectual Property.

(b) Canada Nuclear shall, and shall cause any members of the RemainCo Group as applicable and necessary to, execute intellectual property assignment agreements in a form substantially similar to that attached hereto as Exhibit A, as applicable to the Transferred Canada Nuclear Intellectual Property, as well as such additional specific assignments as reasonably necessary to carry out the intent of the Parties as set forth herein (collectively, the “Intellectual Property Assignment Agreements”). All Transferred Canada Nuclear Intellectual Property is transferred subject to licenses granted in this Agreement and all other rights granted under or in connection with agreements related such Transferred Canada Nuclear Intellectual Property existing and in force as of the Effective Date, in each case subject to the terms and conditions contained in each such agreement, including, without limitation, any license agreements, any security agreements or any liens granted in and to such Transferred Canada Nuclear Intellectual Property.

(c) Canada Nuclear shall deliver to Canada Thermal all Intellectual Property Assignment Agreements contemplated herein that effectuate the assignment of Transferred Canada Nuclear Intellectual Property from Canada Nuclear or any member of the RemainCo Group to Canada Thermal. Canada Thermal shall have the sole responsibility, at its sole cost and expense, to file such Intellectual Property Assignment Agreements and any other forms or documents required to record such assignments, provided, however, that upon request, Canada Nuclear shall provide reasonable assistance to Canada Thermal to record an assignment, at Canada Thermal’s sole cost and expense.

Section 2.2 Actions; Correspondence . Canada Thermal shall, in its sole discretion, pay all fees incurred and take all actions with respect to the Transferred Canada Nuclear Intellectual Property subsequent to the Distribution Date. Canada Nuclear shall forward to Canada Thermal or its designee copies of all files related to and correspondence received from any Governmental Authority regarding the Transferred Canada Nuclear Intellectual Property.

 

7


Section 2.3 Assistance by Employees; Inventor Compensation . Each Party agrees that it shall make available to the other Party the services of its employees and contractors reasonably necessary to assist the other Party with the prosecution of, and other patent or trademark office proceedings (e.g., reissue, reexamination, interference, inter partes review, post-grant review, supplemental examination, and other similar proceedings) regarding the other Party’s Patents, Trademarks and other Intellectual Property (collectively, “IP Proceedings”). Each Party agrees to reasonably make available to the other Party (i) inventors and other reasonably necessary persons employed by it for the other Party’s reasonable needs regarding execution of documents, interviews, declarations and testimony, and (ii) documents, materials and information for the other Party’s reasonable good faith needs regarding such IP Proceedings. The Party involved in the IP Proceedings shall be responsible for the actual and reasonable out-of-pocket expenses associated with such assistance, expressly excluding the value of the time of the other Party’s personnel. Each Party will be responsible for providing inventor incentive compensation to its employees under its own internal policies. No Party shall have any obligation to provide any inventor incentive compensation to an employee of the other Party except as required by law.

Section 2.4 Reserved .

Section 2.5 Rights Arising in the Future .

(a) As between Canada Nuclear and Canada Thermal, unless otherwise agreed in writing by Canada Nuclear or any member of the RemainCo Group and Canada Thermal or any member of the SpinCo Group, any and all Intellectual Property created, conceived, or actually reduced to practice by or on behalf of Canada Nuclear or any member of the RemainCo Group after the Distribution Date, including, without limitation, any improvements or modifications to any Licensed Canada Thermal Intellectual Property, shall belong solely and exclusively to Canada Nuclear and neither Canada Thermal nor any member of the SpinCo Group shall have any right, title or interest in or to such Intellectual Property. Canada Nuclear shall have no obligation to notify Canada Thermal or any member of the SpinCo Group of any such improvements or modifications or to disclose or license any such improvements or modifications to Canada Thermal or any member of the SpinCo Group.

(b) As between Canada Nuclear and Canada Thermal, unless otherwise agreed in writing by Canada Nuclear or any member of the RemainCo Group and Canada Thermal or any member of the SpinCo Group, any and all Intellectual Property created, conceived, or actually reduced to practice by or on behalf of Canada Thermal or any member of the SpinCo Group after the Distribution Date, including, without limitation, any improvements or modifications to any Licensed Canada Nuclear Intellectual Property, shall belong solely and exclusively to Canada Thermal and neither Canada Nuclear nor any member of the RemainCo Group shall have any right, title or interest in or to such Intellectual Property. Canada Thermal shall have no obligation to notify Canada Nuclear or any member of the RemainCo Group of any such improvements or modifications or to disclose or license any such improvements or modifications to Canada Nuclear or any member of the RemainCo Group.

 

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ARTICLE III

CONSIDERATION

Section 3.1 Canada Thermal. As consideration for the Transfer and for the rights and licenses granted from Canada Nuclear to Canada Thermal in Article 5 herein, Canada Thermal hereby agrees to promptly pay $5,250,000 to Canada Nuclear.

Section 3.2 Canada Nuclear. As consideration for the rights and licenses granted from Canada Thermal to Canada Nuclear in Article 5 herein, Canada Nuclear hereby agrees to promptly pay $67,000 to Canada Thermal.

ARTICLE IV

RESERVED.

ARTICLE V

INTELLECTUAL PROPERTY LICENSES AND COVENANTS

Section 5.1 Reserved .

Section 5.2 Cross-License of Patents .

(a) General License .

(i) Canada Thermal hereby grants to Canada Nuclear a perpetual, irrevocable, exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ), to use and exploit the Patents set forth on Schedule 5.2(a)(i) (the “Canada Thermal General Patents”) for the continued operation of the RemainCo Business and any future extensions of the RemainCo Business in the RemainCo Core Field, including the right to make, have made, use, lease, sell, offer for sale, and import products and services utilizing the Canada Thermal General Patents; provided, however, the foregoing license shall not extend to (i) Canada Thermal General Patents to the extent the licensing of same to Canada Nuclear would constitute a breach of an agreement with any Third Party executed prior to the Effective Date or result in any expense to Canada Thermal or any member of the SpinCo Group for payments to such Third Party or (ii) any Intellectual Property not owned by one or more members of the SpinCo Group, or as to which no member of the SpinCo Group has the right to grant sublicenses, as of the Effective Date.

(ii) Canada Nuclear hereby grants to Canada Thermal a perpetual, irrevocable, exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ), to use and exploit the Patents set forth on Schedule 5.2(a)(ii) (the “Canada Nuclear General Patents”) for the continued operation of the SpinCo Business and any future extensions of the SpinCo Business in the SpinCo Core Field, including the right to make, have made, use, lease, sell, offer for sale, and import products and services utilizing the Canada Nuclear General Patents; provided, however, the foregoing license shall not extend to (i) Canada Nuclear General Patents to the extent the licensing of same to Canada Thermal would constitute

 

9


a breach of an agreement with any Third Party executed prior to the Effective Date or result in any expense to Canada Thermal or any member of the SpinCo Group for payments to such Third Party or (ii) any Intellectual Property not owned by one or more members of the RemainCo Group, or as to which no member of the RemainCo Group has the right to grant sublicenses, as of the Effective Date.

Section 5.3 Reserved .

Section 5.4 Cross-Licenses of Software .

(a) Reserved .

(b) Reserved .

(c) Canada Nuclear hereby grants to Canada Thermal a perpetual, irrevocable, exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ), to use the Software set forth on Schedule 5.4(c) (“Canada Nuclear Licensed Software”) for the continued operation of the SpinCo Business and any future extensions of the SpinCo Business in the SpinCo Core Field; provided, however, the foregoing license shall not extend to (i) Canada Nuclear Licensed Software licensed by Canada Nuclear or any other member of the RemainCo Group if and to the extent the licensing of same to Canada Thermal would constitute a breach of an agreement with any Third Party executed prior to the Effective Date or result in any expense to Canada Nuclear or any member of the RemainCo Group for payments to such Third Party or (ii) any intellectual property not owned by one or more members of the RemainCo Group, or as to which no member of the RemainCo Group has the right to grant sublicenses, as of the Effective Date. The foregoing license includes the right to use, modify, and reproduce in source code and object code for such Canada Nuclear Licensed Software. To the extent not already in the possession of Canada Thermal, Canada Nuclear will provide Canada Thermal with a copy of all object code and source code for the Canada Nuclear Licensed Software and all associated documentation, including, without limitation, all validation and other documentation, within 120 days of the Distribution Date.

Section 5.5 Cross-Licenses of Additional Know-How .

(a) Reserved .

(b) Canada Nuclear hereby grants to Canada Thermal a perpetual, irrevocable, exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ), to use the Canada Nuclear Know-How set forth on Schedule 5.5(b) (the “Special Canada Nuclear Know-How”) for the continued operation of the SpinCo Business and any future extensions of the SpinCo Business in the Specific SpinCo Field; provided, however, the foregoing license shall not extend to (i) Special Canada Nuclear Know-How licensed by Canada Nuclear or any other member of the RemainCo Group if and to the extent the licensing of same to Canada Thermal would constitute a breach of an agreement with any Third Party executed prior to the Effective Date or result in any expense to Canada Nuclear or any member of the RemainCo Group for payments to such Third Party or (ii) any intellectual property not owned by one or more members of the RemainCo Group, or as to which no member of the RemainCo Group has the right to grant sublicenses, as of the Effective Date. For purposes of clarity, the foregoing license does not include and shall not be construed to include or apply to any Know-How not in existence as of the Effective Date.

 

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Section 5.6 Sublicensing; Assignability .

(a) The foregoing licenses shall be assignable in whole or in part only (i) to any Affiliate or (ii) to the extent the licensee transfers to a Third Party all or substantially all of the assets of the business to which such Licensed Canada Thermal Intellectual Property or the Licensed Canada Nuclear Intellectual Property, as applicable, relates.

(b) Canada Nuclear may sublicense the Licensed Canada Thermal Intellectual Property to Affiliates of Canada Nuclear, even if they become Affiliates after the Distribution Date, solely within the scope of its licenses in Article 5 , provided that such sublicense shall only be effective for such time as such entity remains an Affiliate of Canada Nuclear, subject to Section 5.6(a)(ii) . Canada Nuclear may, and may permit its sublicensees to, sublicense erection and arrangement drawings; form, fit, and function drawings; and product and installation/erection specifications based upon the Licensed Canada Thermal Intellectual Property to: (i) customers to enable them to use, operate, maintain and repair the equipment, services or other deliverables which incorporate or are derived from the Licensed Canada Thermal Intellectual Property and which were sold to them by Canada Nuclear or its sublicensees; and (ii) to contractors, subcontractors and vendors to enable them to manufacture, erect, install, service, repair and maintain those products to which the licenses set forth in Article 5 relate.

(c) Canada Thermal may sublicense the Licensed Canada Nuclear Intellectual Property to Affiliates of Canada Thermal, even if they become Affiliates after the Distribution Date, solely within the scope of its licenses in Article 5 , provided that such sublicense shall only be effective for such time as such entity remains an Affiliate of Canada Thermal, subject to Section 5.6(a)(ii) . Canada Thermal may, and may permit its sublicensees to, sublicense erection and arrangement drawings; form, fit, and function drawings; and product and installation/erection specifications based upon the Licensed Canada Nuclear Intellectual Property to: (i) customers to enable them to use, operate, maintain and repair the equipment, services or other deliverables which incorporate or are derived from the Licensed Canada Nuclear Intellectual Property and which were sold to them by Canada Thermal or its sublicensees; and (ii) to contractors, subcontractors and others to enable them to manufacture, erect, install, service, repair and maintain those products to which the license set forth in Article 5 relate.

Section 5.7 Restrictions on Licensor Exploitation of Intellectual Property .

(a) Canada Nuclear (i) shall not use or exploit the Licensed Canada Nuclear Intellectual Property in the SpinCo Core Field and (ii) shall not, and shall not permit any member of the RemainCo Group to, license, provide or otherwise grant to any Third Party the right to use, exploit or access any Licensed Canada Nuclear Intellectual Property in the SpinCo Core Field.

(b) Canada Thermal (i) shall not use or exploit the Licensed Canada Thermal Intellectual Property in the RemainCo Core Field and (ii) shall not, and shall not permit any

 

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member of the SpinCo Group to, license, provide or otherwise grant to any Third Party the right to use, exploit or access any Licensed Canada Thermal Intellectual Property in the RemainCo Core Field.

Section 5.8 Third Party Agreements; Reservation of Rights .

(a) All licenses granted herein are expressly made only subject to, and only to the extent permissible under, all pre-existing rights, obligations and restrictions contained in any existing agreements related to the applicable Intellectual Property licensed herein, including, without limitation, licenses or other rights existing in Third Parties granted by Canada Thermal or Canada Nuclear and/or their sublicensees in existing license agreements, applicable agreements in existence between members of the RemainCo Group and the United States Department of Energy, applicable agreements in existence between members of the SpinCo Group and the United States Department of Energy and all existing security agreements and liens in place in connection with such licensed Intellectual Property.

(b) Except for the limited rights granted in this Agreement in connection with the Licensed Canada Nuclear Intellectual Property, including, without limitation, the rights and obligations arising out of or related to Section 5.10 , Canada Nuclear reserves to itself all right, title and interest in and to the Licensed Canada Nuclear Intellectual Property. Without limiting the foregoing, for purposes of clarity, as between Canada Nuclear and Canada Thermal, Canada Nuclear retains all rights in and to, and to use and exploit, and including without limitation the right to make, have made, use, lease, sell, offer for sale, and import, and use, reproduce, prepare derivative works of, distribute copies, perform and display products and services which utilize or embody such Licensed Canada Nuclear Intellectual Property in the RemainCo Core Field. Except for the limited rights granted in this Agreement in connection with the Licensed Canada Thermal Intellectual Property, including, without limitation, the rights and obligations arising out of or related to Section 5.10 , Canada Thermal reserves to itself all right, title and interest in and to the Licensed Canada Thermal Intellectual Property. Without limiting the foregoing, for purposes of clarity, as between Canada Nuclear and Canada Thermal, Canada Thermal retains all rights in and to, and to use and exploit, and including without limitation the right to make, have made, use, lease, sell, offer for sale, and import, and use, reproduce, prepare derivative works of, distribute copies, perform and display products and services which utilize or embody such Licensed Canada Thermal Intellectual Property in the SpinCo Core Field.

Section 5.9 Maintenance of Intellectual Property .

(a) Canada Nuclear shall not have, nor shall any member of the RemainCo Group have, any obligation to maintain the pendency, subsistence, validity, enforceability or confidentiality of any Licensed Canada Nuclear Intellectual Property. Canada Nuclear may, and may permit an applicable member of the RemainCo Group to, discontinue maintenance, abandon or dedicate to the public any Licensed Canada Nuclear Intellectual Property.

(b) Canada Thermal shall not have, nor shall any member of the SpinCo Group have, any obligation to maintain the pendency, subsistence, validity, enforceability or confidentiality of any Licensed Canada Thermal Intellectual Property. Canada Thermal may, and may permit an applicable member of the RemainCo Group to, discontinue maintenance, abandon or dedicate to the public any Licensed Canada Nuclear Intellectual Property.

 

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Section 5.10 Covenants .

(a) Canada Nuclear hereby covenants not to sue Canada Thermal under any Canada Nuclear General Patents and Canada Nuclear Licensed Software for infringement or misappropriation based upon any action that occurs in connection with the continued operation of the SpinCo Business and any future extensions of the SpinCo Business in any field other than the RemainCo Core Field after the Distribution Date. The foregoing covenant shall extend to any permitted assignees or sublicensees of Canada Thermal hereunder. Canada Nuclear further covenants to impose the obligations set forth in this Section 5.10(a) on any subsequent Third Party or Affiliate to whom Canada Nuclear may sell, transfer, convey or otherwise assign any of the foregoing Intellectual Property and shall ensure that any such Person agrees, in writing, to be bound by the covenants and obligations set forth herein.

(b) Canada Thermal hereby covenants not to sue Canada Nuclear under any Canada Thermal General Patents for infringement or misappropriation based upon any action that occurs in connection with the continued operation of the RemainCo Business and any future extensions of the RemainCo Business in any field other than the SpinCo Core Field after the Distribution Date. The foregoing covenant shall extend to any permitted assignees or sublicensees of Canada Nuclear hereunder. Canada Thermal further covenants to impose the obligations set forth in this Section 5.10(b) on any subsequent Third Party or Affiliate to whom Canada Thermal may sell, transfer, convey or otherwise assign any of the foregoing Intellectual Property and shall ensure that any such Person agrees, in writing, to be bound by the covenants and obligations set forth herein.

ARTICLE VI

TECHNICAL ASSISTANCE AND TECHNOLOGY TRANSFER

Section 6.1 Documentation Transfer .

(a) Reserved .

(b) To the extent that any physical embodiments of the Special Canada Nuclear Know-How, including documents, designs, drawings, manuals, standards, computer programs (including source code and documentation), materials and training programs, are not held by or in the possession of Canada Thermal as of the Distribution Date, Canada Thermal shall have the right, from time to time, but for not longer than thirty-six (36) months after the Distribution Date, to request that Canada Nuclear provide copies of or access to such Know-How at Canada Thermal’s cost (as agreed upon by the Parties), provided that (i) Canada Nuclear shall not be obligated to provide, and Canada Thermal shall have no right to request, copies of or access to any Know-How not in existence as of the Distribution Date; (ii) the determination as to what physical embodiments of the applicable Know-How are related to the Special Canada Nuclear Know-How shall be in Canada Nuclear’s sole reasonable determination; and (iii) in the event that a request remains pending at the end of the permitted thirty-six (36) month period, Canada

 

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Nuclear will use all reasonable efforts to fulfill that request within one (1) month, provided that Canada Thermal shall not be permitted to make additional requests or any follow-up requests in that one (1) month period. Canada Thermal and Canada Nuclear acknowledge and agree that Canada Nuclear shall not be obligated to expend more than 200 collective man hours per calendar in the first year after the Distribution Date, 160 collective man hours per calendar year in the second year after the Distribution Date and 140 collective man hours per calendar year in the third year after the Distribution Date, in connection with fulfilling requests for physical embodiments of the Special Canada Nuclear Know-How, provided that Canada Nuclear shall evaluate, respond to and fulfill such requests in good faith and as efficiently and expediently as possible in light of the requests and Canada Nuclear’s ongoing business operations. Canada Thermal shall retain and not remove or alter any proprietary notices on documents, designs, drawings, manuals and materials provided by Canada Nuclear pursuant to the foregoing, and shall (x) retain any such notices on any copies and (y) include such notices on documents containing Canada Nuclear proprietary information. All such material shall be held confidential by Canada Nuclear and treated as Confidential Information of Canada Thermal, subject to the terms and conditions of the license rights granted herein, and used only pursuant to the licenses set forth herein.

Section 6.2 Technical Assistance .

(a) Reserved .

(b) In connection with Special Canada Nuclear Know-How, Canada Thermal shall have the right, from time to time, but for not longer than eighteen (18) months after the Distribution Date, to request that Canada Nuclear provide technical assistance and training with respect to such Know-How at Canada Thermal’s cost (as agreed upon by the Parties), provided that (i) Canada Nuclear shall not be obligated to provide, and Canada Thermal shall have no right to request, technical assistance and training related to any Know-How not in existence as of the Distribution Date; (ii) the determination as to what technical assistance and training are related to the Special Canada Nuclear Know-How shall be in the Canada Nuclear’s sole reasonable determination, provided that Canada Thermal may reasonably request the types of technical assistance and training that it believes would be effective and helpful; and (iii) in the event that any requests remain pending at the end of the permitted eighteen (18) month period, Canada Nuclear will use all reasonable efforts to fulfill all requests within thirty (30) business days provided that Canada Thermal shall not be permitted to make additional requests or any follow-up requests in that thirty (30) day period. Canada Thermal and Canada Nuclear acknowledge and agree that Canada Nuclear shall not be obligated to expend more than 625 collective man hours in the allotted eighteen (18) month period in connection with fulfilling requests for technical assistance and training related to the Special Canada Nuclear Know-How, provided that Canada Nuclear shall evaluate, respond to and fulfill such requests in good faith and as efficiently and expediently as possible in light of the requests and Canada Nuclear’s ongoing business operations, and that the following additional limitations shall apply: (i) 40 person hours per technical person per month, including the technical person’s preparation time; (ii) 160 person hours per technical person, including that technical person’s preparation time, over the entire 18 month period; and (iii) no more than one session at any given time. Notwithstanding the foregoing, (i) while only one session shall be conducted at a given time, multiple sessions may be requested in advance (sessions need not be requested/scheduled

 

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sequentially); (ii) Canada Thermal, when initially requesting information, may identify the approximate number of hours to be incurred by Canada Nuclear in connection with a given issue/topic and the Parties shall agree on session content and magnitude of hours, including session preparation time; (iii) Canada Thermal is not limited to one session on a given topic; and (iv) Canada Nuclear will provide a monthly summary of hours expended against the amounts permitted under this Agreement.

(c) Canada Nuclear shall, and shall cause the applicable members of the RemainCo Group to, provide the technical assistance and training contemplated above using substantially the same skill, care and judgment that such Party would use if it were to provide similar technical assistance and training to its own similarly situated businesses.

Section 6.3 No Additional Technical Assistance . Except as expressly set forth in this Article 6 or elsewhere in this Agreement, in the Master Separation Agreement or in a separate agreement between a member of the SpinCo Group and a member of the RemainCo Group, no Party shall be required to provide the other Party with any technical assistance or to furnish any other Party with any documents, materials or other information or Know-How.

ARTICLE VII

NO WARRANTIES.

Except as expressly set forth in this Agreement, Canada Thermal and Canada Nuclear understand and agree that Canada Nuclear is not making any representation or warranty of any kind whatsoever, express or implied, to Canada Thermal or any member of the SpinCo Group in any way as to the SpinCo Business, the Transferred Canada Nuclear Intellectual Property or the Licensed Canada Nuclear Intellectual Property; and Canada Thermal is not making any representation or warranty of any kind whatsoever, express or implied, to Canada Nuclear or any member of the RemainCo Group in any way as to the RemainCo Business or the Licensed Canada Thermal Intellectual Property. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING THE TRANSFERS AND LICENSES REFERRED TO IN THIS AGREEMENT (INCLUDING PRIOR TRANSFERS) HAVE BEEN, OR WILL BE, MADE WITHOUT ANY REPRESENTATION OR WARRANTY OF ANY NATURE, EXPRESS OR IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE, RELATING TO (A) THE VALUE OR FREEDOM FROM ENCUMBRANCE OF, ANY ASSETS OR INTELLECTUAL PROPERTY, (B) THE CONDITION OR SUFFICIENCY OF ANY ASSETS OR INTELLECTUAL PROPERTY (INCLUDING ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, MARKETABILITY, TITLE, VALUE, FREEDOM FROM ENCUMBRANCE OR OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR THE PRESENCE OR ABSENCE OF ANY HAZARDOUS MATERIALS IN OR ON, OR DISPOSED OR DISCHARGED FROM, SUCH ASSETS), (C) THE NON-INFRINGEMENT OF ANY PATENT OR OTHER INTELLECTUAL PROPERTY RIGHT OF ANY THIRD PARTY, (D) ANY OTHER MATTER CONCERNING ANY ASSETS OR INTELLECTUAL PROPERTY (E) AS TO THE LEGAL SUFFICIENCY TO CONVEY TITLE TO ANY ASSETS OR INTELLECTUAL PROPERTY OR (F) THAT THE LICENSOR HAS ANY RIGHTS OR TITLE AT ALL IN OR TO ANY INTELLECTUAL PROPERTY. WITHOUT LIMITING THE FOREGOING,

 

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CANADA NUCLEAR AND CANADA THERMAL HEREBY ACKNOWLEDGE AND AGREE THAT ALL INTELLECTUAL PROPERTY TRANSFERRED OR LICENSED PURSUANT TO THIS AGREEMENT AND ALL INTELLECTUAL PROPERTY INCLUDED IN PRIOR TRANSFERS ARE BEING OR WERE LICENSED OR TRANSFERRED “AS IS, WHERE IS.”

ARTICLE VIII

THIRD-PARTY INFRINGEMENT

Section 8.1 No Obligation . No Party shall have any obligation to institute or maintain any action or suit against any Third Party for infringement or misappropriation of any Intellectual Property licensed hereunder, or to defend any action or suit brought by a Third Party which challenges or concerns the validity of any such Intellectual Property or which claims that any Intellectual Property licensed to the other Party infringes or constitutes misappropriation of the Intellectual Property rights of any Third Party.

Section 8.2 Notice Regarding Infringement . Each Party shall promptly notify the other Party in writing upon learning that a Third Party may potentially be infringing, misappropriating or otherwise violating any Intellectual Property licensed under this Agreement, which notice shall set forth in reasonable detail the identity of the suspected infringer and nature of suspected infringement.

Section 8.3 Suits for Infringement .

(a) Licensed Canada Nuclear Intellectual Property .

(i) With respect to any Licensed Canada Nuclear Intellectual Property to which Canada Nuclear has granted Canada Thermal an exclusive license hereunder, as between Canada Nuclear and Canada Thermal, Canada Nuclear shall have the first right to initiate, prosecute and control any action or proceeding to restrain infringement or misappropriation of such Licensed Canada Nuclear Intellectual Property in the SpinCo Core Field, and, for purposes of clarity, the sole and exclusive right to initiate, prosecute and control such proceedings in the RemainCo Core Field and in any field other than the SpinCo Core Field. Canada Nuclear shall provide prompt written notice to Canada Thermal of any determination to initiate, prosecute and control any such action or proceeding in the SpinCo Core Field. Canada Thermal, as the exclusive licensee, agrees to be joined as a party if necessary to prosecute the action or proceeding, and shall provide all reasonable cooperation, including any necessary use of their name, required to prosecute such action or proceeding. In such instance, Canada Nuclear shall control any such action or proceeding and negotiations for its settlement and compromise and shall have sole discretion regarding the settlement or compromise thereof. In connection with the foregoing, Canada Thermal may, at its option, elect to assume and pay its and Canada Nuclear’s out-of-pocket costs incurred in connection with such litigation or proceeding undertaken by Canada Nuclear, including, without limitation, attorney’s fees. Canada Thermal will provide prompt written notice to Canada Nuclear, in any event no later than thirty (30) after receipt of Canada Nuclear’s notice of its determination to initiate, prosecute and control such action or proceeding in the SpinCo Core Field, of its determination to elect to assume and pay

 

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the applicable costs or to decline to pay assume and pay the applicable costs. In the event Canada Thermal does not elect to assume and pay the costs associated with Canada Nuclear’s initiation, prosecution and control of such action or proceeding in the SpinCo Core Field, Canada Nuclear shall assume and pay its and Canada Thermal’s out-of-pocket costs incurred in connection with such litigation or proceeding undertaken by Canada Nuclear, including, without limitation, attorney’s fees. Any recovery obtained as a result of such proceeding in the SpinCo Core Field shall be retained by (i) Canada Thermal in the event that Canada Thermal assumed and paid the applicable costs of the litigation or proceeding or (ii) Canada Nuclear in the event that Canada Nuclear assumed and paid the applicable costs of the litigation or proceeding in accordance with this Section 8.3(a)(i) .

(ii) If Canada Nuclear does not exercise its right to enforce any applicable Licensed Canada Nuclear Intellectual Property in the SpinCo Core Field, Canada Nuclear shall provide notice to that effect to Canada Thermal and, as between Canada Nuclear and Canada Thermal, Canada Thermal shall have the right to initiate, prosecute and control any action or proceeding to restrain infringement or misappropriation of such Licensed Canada Nuclear Intellectual Property in the SpinCo Core Field. Canada Thermal shall provide prompt written notice to Canada Nuclear of any determination to initiate, prosecute and control any such action or proceeding in the SpinCo Core Field. Canada Nuclear, as the owner and licensor, agrees to be joined as a party if necessary to prosecute the action or proceeding, and shall provide all reasonable cooperation, including any necessary use of their name, required to prosecute such action or proceeding. In connection with the foregoing, Canada Thermal shall assume and pay its and Canada Nuclear’s out-of-pocket costs incurred in connection with any litigations or proceedings described above, including, without limitation, attorney’s fees. Any recovery obtained as a result of such proceeding related to infringement or misappropriation in the SpinCo Core Field shall be retained by Canada Thermal.

(iii) In the event that a Third Party may potentially be infringing, misappropriating or otherwise violating any Licensed Canada Nuclear Intellectual Property in both the SpinCo Core Field and the RemainCo Core Field, Canada Thermal and Canada Nuclear will meet and confer in good faith regarding the manner in which to respond to such infringement in the SpinCo Core Field and RemainCo Core Field collectively, provided, however, that the foregoing does not limit the rights set forth in Section 8.3(a)(i) or Section 8.3(a)(ii) .

(b) Licensed Canada Thermal Intellectual Property .

(i) With respect to any Licensed Canada Thermal Intellectual Property to which Canada Thermal has granted Canada Nuclear an exclusive license hereunder, as between Canada Thermal and Canada Nuclear, Canada Thermal shall have the first right to initiate, prosecute and control any action or proceeding to restrain infringement or misappropriation of such Licensed Canada Thermal Intellectual Property in the RemainCo Core Field, and, for purposes of clarity, the sole and exclusive right to initiate, prosecute and control such proceedings in the SpinCo Core Field and in any field other than the RemainCo Core Field. Canada Thermal shall provide prompt written notice to Canada Nuclear of any determination to initiate, prosecute and control any such action or proceeding in the RemainCo Core Field. Canada Nuclear, as the exclusive licensee, agrees to be joined as a party if necessary to prosecute

 

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the action or proceeding, and shall provide all reasonable cooperation, including any necessary use of their name, required to prosecute such action or proceeding. In such instance, Canada Thermal shall control any such action or proceeding and negotiations for its settlement and compromise and shall have sole discretion regarding the settlement or compromise thereof. In connection with the foregoing, Canada Nuclear may, at its option, elect to assume and pay its and Canada Thermal’s out-of-pocket costs incurred in connection with such litigation or proceeding, including, without limitation, attorney’s fees. Canada Nuclear will provide prompt written notice to Canada Thermal, in any event no later than thirty (30) after receipt of Canada Thermal’s notice of its determination to initiate, prosecute and control such action or proceeding in the RemainCo Core Field, of its determination to elect to assume and pay the applicable costs or to decline to pay assume and pay the applicable costs. In the event Canada Nuclear does not elect to assume and pay the costs associated with Canada Thermal’s initiation, prosecution and control of such action or proceeding in the RemainCo Core Field, Canada Thermal shall assume and pay its and Canada Nuclear’s out-of-pocket costs incurred in connection with such litigation or proceeding undertaken by Canada Thermal, including, without limitation, attorney’s fees. Any recovery obtained as a result of such proceeding in the RemainCo Core Field shall be retained by (i) Canada Nuclear in the event that Canada Nuclear assumed and paid the applicable costs of the litigation or proceeding or (ii) Canada Thermal in the event that Canada Thermal assumed and paid the applicable costs of the litigation or proceeding in accordance with this Section 8.4(a)(i) .

(ii) If Canada Thermal does not exercise its right to enforce any applicable Licensed Canada Thermal Intellectual Property in the RemainCo Core Field, Canada Thermal shall provide notice to that effect to Canada Nuclear and, as between Canada Thermal and Canada Nuclear, Canada Nuclear shall have the right to initiate, prosecute and control any action or proceeding to restrain infringement or misappropriation of such Licensed Canada Thermal Intellectual Property in the RemainCo Core Field. Canada Nuclear shall provide prompt written notice to Canada Thermal of any determination to initiate, prosecute and control any such action or proceeding. Canada Thermal, as the owner and licensor, agrees to be joined as a party if necessary to prosecute the action or proceeding, and shall provide all reasonable cooperation, including any necessary use of their name, required to prosecute such action or proceeding. In connection with the foregoing, Canada Nuclear shall assume and pay its and Canada Thermal’s out-of-pocket costs incurred in connection with any litigations or proceedings described above, including, without limitation, attorney’s fees. Any recovery obtained as a result of such proceeding related to infringement or misappropriation in the RemainCo Core Field shall be retained by Canada Nuclear.

(iii) In the event that a Third Party may potentially be infringing, misappropriating or otherwise violating any Licensed Canada Thermal Intellectual Property in both the RemainCo Core Field and the SpinCo Core Field, Canada Thermal and Canada Nuclear will meet and confer in good faith regarding the manner in which to respond to such infringement in the RemainCo Core Field and SpinCo Core Field collectively, provided, however, that the foregoing does not limit the rights set forth in Section 8.4(a)(i) or Section 8.4(a)(ii) .

 

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ARTICLE IX

CONFIDENTIALITY

Section 9.1 Canada Nuclear and Canada Thermal shall hold and shall cause the members of the RemainCo Group and the SpinCo Group, respectively, to hold, and shall each cause their respective officers, employees, agents, consultants and advisors to hold, in strict confidence and not to disclose or release without the prior written consent of the other Party, any and all Confidential Information (as defined herein) of such other Party or the members of its Group; provided, that the Parties may disclose, or may permit disclosure of, such Confidential Information (i) to their respective auditors, attorneys, financial advisors, bankers and other appropriate consultants and advisors who have a need to know such information and are informed of their obligation to hold such information confidential to the same extent as is applicable to the Parties and in respect of whose failure to comply with such obligations, Canada Nuclear or Canada Thermal, as the case may be, will be responsible or (ii) to the extent any member of the RemainCo Group or the SpinCo Group is compelled to disclose any such Confidential Information by judicial or administrative process or, in the opinion of legal counsel, by other requirements of Law. Notwithstanding the foregoing, in the event that any demand or request for disclosure of Confidential Information is made pursuant to clause (ii) above, Canada Nuclear or Canada Thermal, as the case may be, shall promptly notify the other of the existence of such request or demand and shall provide the other a reasonable opportunity to seek an appropriate protective order or other remedy, which both Parties will cooperate in seeking to obtain. In the event that such appropriate protective order or other remedy is not obtained, the Party who is being compelled to disclose (or whose Group member is being compelled to disclose) shall, and shall cause the applicable members at its Group to, furnish, or cause to be furnished, only that portion of such Confidential Information that is legally required to be disclosed.

Section 9.2 As used in this Article 9 , “Confidential Information” shall mean all proprietary, technical or proprietary, operational information (including Know-How and proprietary information relating to the ages, birth dates, social security numbers, health-related matters or other confidential matters concerning employees or former employees) of one Party or members of its Group which, prior to or following the Distribution Time, has been disclosed by Canada Nuclear or members of the RemainCo Group, on the one hand, or Canada Thermal or members of the SpinCo Group, on the other hand, to, or otherwise has come into the possession of, the other Group, including pursuant to the technical assistance and technology transfer provisions of Article VI hereof or any other provision of this Agreement (except to the extent that such information can be shown to have been (a) in the public domain through no fault of such Party (or, in the case of Canada Nuclear, any other member of the RemainCo Group or, in the case of Canada Thermal, any other member of the SpinCo Group) or (b) later lawfully acquired from other sources by the Party (or, in the case of Canada Nuclear, such member of the RemainCo Group or, in the case of Canada Thermal, such member of the SpinCo Group) to which it was furnished; provided, however, in the case of (b) that such sources did not provide such information in breach of any confidentiality obligations), or (c) independently developed by employees or agents of such Party who had no access, direct or indirect, to such information provided by the other Party.

 

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(a) Each Party shall use the Confidential Information only as permitted pursuant to this Agreement and shall not disclose any Confidential Information to any Third Party unless permitted pursuant to this Agreement. Each Party shall exercise the same degree of care to protect and maintain the confidentiality of the Confidential Information received from the other Party hereunder (but no less than a reasonable degree of care) as they take to preserve confidentiality for their own similar information. Without limiting the foregoing, each Party will take commercially reasonable efforts to implement and maintain comprehensive security protocols to protect and maintain the confidentiality of the Confidential Information received from the other Party hereunder, including, without limitation, implementing administrative, technical, digital, electronic and physical security strategies and access restrictions to protect Confidential Information.

ARTICLE X

MISCELLANEOUS

Section 10.1 Authority . Each of the Parties represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it has been duly authorized by all necessary corporate or other actions, (c) it has duly and validly executed and delivered this Agreement to be executed and delivered on or prior to the Distribution Time, and (d) this Agreement is legal, valid and binding obligations, enforceable against it in accordance with their respective terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally and general equity principles.

Section 10.2 Entire Agreement . This Agreement and the Schedules referenced herein or therein or attached hereto or thereto, constitute the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersedes all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof.

Section 10.3 Binding Effect; Third-Party Beneficiaries; Assignment . Except as expressly set forth in Section 5.10 and except for the Affiliates of the Parties, which are intended to be third party beneficiaries hereunder, this Agreement does not and is not intended to confer any rights or remedies upon any Person other than the Parties. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. This Agreement may not be assigned by either Party, except with the prior written consent of the other Party.

Section 10.4 Amendment . No change or amendment may be made to this Agreement except by an instrument in writing signed on behalf of both of the Parties.

Section 10.5 Failure or Indulgence Not Waiver; Remedies Cumulative . No failure or delay on the part of either Party in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant or agreement contained herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement or the Schedules attached hereto are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

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Section 10.6 Notices . Unless otherwise expressly provided herein, all notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to be duly given (i) when personally delivered or (ii) if mailed by registered or certified mail, postage prepaid, return receipt requested, on the date the return receipt is executed or the letter is refused by the addressee or its agent or (iii) if sent by overnight courier which delivers only upon the signed receipt of the addressee, on the date the receipt acknowledgment is executed or refused by the addressee or its agent or (iv) if sent by facsimile or electronic mail, on the date confirmation of transmission is received (provided that a copy of any notice delivered pursuant to this clause (iv) shall also be sent pursuant to clause (i), (ii) or (iii)), addressed to the attention of the addressee’s General Counsel at the address of its principal executive office or to such other address or facsimile number for a Party as it shall have specified by like notice.

Section 10.7 Counterparts . This Agreement, including the Schedules and Exhibits hereto and the other documents referred to herein, may be executed in multiple counterparts, each of which when executed shall be deemed to be an original but all of which together shall constitute one and the same agreement.

Section 10.8 Severability . If any term or other provision of this Agreement or the Schedules attached hereto is determined by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the court, administrative agency or arbitrator shall interpret this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

Section 10.9 Governing Law . This Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of Delaware, without regard to any conflicts of law provisions thereof that would result in the application of the laws of any other jurisdiction.

Section 10.10 Construction . This Agreement shall be construed as if jointly drafted by Canada Thermal and Canada Nuclear and no rule of construction or strict interpretation shall be applied against either Party. The Parties represent that this Agreement is entered into with full consideration of any and all rights which the Parties may have. The Parties have relied upon their own knowledge and judgment and upon the advice of the attorneys of their choosing. The Parties have had access to independent legal advice, have conducted such investigations they and their counsel thought appropriate, and have consulted with such other independent advisors as they and their counsel deemed appropriate regarding this Agreement and their rights and asserted rights in connection therewith. The Parties are not relying upon any representations or

 

21


statements made by any other Party, or such other Party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are expressly set forth or incorporated in this Agreement. The Parties are not relying upon a legal duty, if one exists, on the part of the other Party (or such other Party’s employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or its preparation, it being expressly understood that neither Party shall ever assert any failure to disclose information on the part of the other Party as a ground for challenging this Agreement.

Section 10.11 Performance . Each Party 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 or Affiliate of such Party.

[INTENTIONALLY LEFT BLANK]

 

22


WHEREFORE, the Parties have signed this Agreement effective as of the date first set forth above.

 

BABCOCK & WILCOX CANADA LTD.
By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker
Title:   Treasurer
BABCOCK & WILCOX POWER GENERATION GROUP CANADA CORP.
By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker
Title:   Treasurer


Schedule 1.1(e)

SpinCo Core Field; RemainCo Core Field

SpinCo Core Field means:

 

1. Ownership and/or operation of power generation facilities fired with combustible fossil fuels (e.g., coal, coal slurry, oil or natural gas), biomass, municipal solid waste or concentrated solar energy through tower based solar thermal conversion systems, in each case for the provision of power, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

2. Design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning related to:

 

  (a). Fired steam generators encompassing fossil fuel boilers which are fueled by combustible fossil fuels (e.g., coal, coal slurry, oil or natural gas) or support subsystems, equipment or components thereof, including fuel drying, fuel feed, pulverizers, burners, combustion systems, grates, pressure parts, air heaters, fans, boiler cleaning systems, ash systems, valves, controls & diagnostics, oxycombustion systems, condensing heat exchangers used in connection with such fired steam generators, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (b). Fired steam generators encompassing waste fuel boilers which are fueled by combustible waste fuels (e.g., carbon monoxide, biomass, black liquor, municipal solid waste (MSW) or refuse-derived fuel (RDF)) or support subsystems, equipment or components thereof, including fuel drying, fuel feed, pulverizers, burners, combustion systems, grates, pressure parts, air heaters, fans, boiler cleaning systems, ash systems, valves, controls & diagnostics, oxycombustion systems, condensing heat exchangers used in connection with such fired steam generators, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).


  (c). Gasifier systems which partially convert fossil or waste fuels (e.g., coal, oil, natural gas or biomass) to syngas and support subsystems, equipment or components thereof, including fuel drying, fuel feed, pulverizers, burners, combustion systems, gasifiers, heat exchangers used in connection with such gasifier systems, pressure parts, boiler cleaning systems, ash systems, valves, controls & diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (d). Tower-based solar thermal conversion systems which are enabled by solar energy and support subsystems, equipment or components thereof, including receiver system, pressure parts, molten salt or particle systems (e.g., heat exchangers specifically for tower-based solar thermal conversion systems enabled by solar energy or associated pumps or tanks), valves, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (e). The following specific unfired heat exchangers Turbine Exhaust Gas boilers (10K2), Heat Recovery Steam Generation Boilers (10K22), Water Tube Waste Heat Boilers Two Drum (Stirling Types) (1K4), 3 Drum Waste Heat Recovery Boiler (1K4), Water Tube Waste Heat “H” Stirling Boiler (1K4), Water Tube Long Drum (LD) boiler (1K4), CO boiler (1K26), Waste Heat (WH) (1K4), Oxygen Convertor Hoods (1K44), Gas Tube (FT) boilers (1K46), FM boilers (1K239), FO boilers (1K2311), Struthers Wells type EOR boiler as defined by the existing specific referenced design standards, or support subsystems, equipment or components thereof, including pressure parts, cleaning systems, valves, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (f). Chemical looping conversion systems which are fueled by combustible fossil fuels (e.g., coal, coal slurry, oil or natural gas) and which produce an energy output of steam, CO 2 , H 2 or syngas or support subsystems, equipment or components thereof, including fuel feed, pulverizers, reactors, pressure parts, air heaters, fans, boiler cleaning systems, ash systems, valves, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (g). Pulverized coal injection systems for use in connection with steel production or support subsystems, equipment or components thereof, including pulverizers, pressurization systems, tanks, valves, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).


  (h). Heat transfer surface cleaning systems and support subsystems, equipment and components thereof (other than said systems related to or utilized in connection with nuclear fueled systems and expressly excluding nuclear steam generators), including sootblowers (air, steam, water or sonic), related valve or piping systems, sprayers, controls (basic, intelligent) or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (i). Ash handling systems or support subsystems, equipment or components thereof, including mechanical conveyors (wet or dry), pneumatic conveyors (wet, dry, dilute, or dense phase), ash conditioning, tanks, valves, specialty piping, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (j). Industrial pulverizer or grinding equipment systems or support subsystems (other than said systems or support subsystems related to or utilized in connection with nuclear fuel manufacturing or processing), other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (k). Drying and/or coating systems utilizing continuous and/or batch flow dryer/oven equipment for industrial processes, including but not limited to various production lines (e.g., roll fed, sheet fed, coating, drying or web handling), dryers and/or ovens (e.g., air flotation dryers or ovens, roll support dryers, infrared dryers, ultraviolet dryers, microwave or radio frequency), coating line auxiliary equipment, festoon and catenary style ovens, valves and material handling systems, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (l). Utility emissions control systems used in connection with combustion power generation systems, which are designed to remove nitrogen oxides (e.g., SCR or SNCR), sulfur oxides (e.g., WFGD, SDA, CDS, DSI, or others), particulates (e.g., dry ESP, wet ESP, fabric filter or cyclonic), carbon dioxide (e.g., scrubber systems), hydrocarbons, or air toxics (e.g., Sb, Be, Cd, Cr, Co, Pb, Mn, Ni, (SO2)3, HF, Hg, P, Se, Cd, As, or HCl (or other acid gases)), HAPS, dioxins, furans or others) and/or subsequent energy or waste recovery or associated subsystems, equipment or components thereof, including valves, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (m).

Wastewater treatment systems (i) that process wastewater derived from combustion power generation and municipal solid waste (“MSW”) systems, including


  without limitation FGD dewatering systems or zero liquid discharge (ZLD) systems, or associated subsystems, equipment or components thereof, including valves or (ii) that process wastewater as part of or ancillary to the systems set forth in SpinCo Core Field 2(k), 2(l) or 2(n), in each case other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (n). Industrial emission control, gas cleaning and/or conditioning, or liquids purification and/or recovery systems (other than said systems set forth in RemainCo Core Field 1(m)), including SCR, SNCR, WFGD, SDA, CDS, DSI, other scrubbers, dry ESP, wet ESP, fabric filter, cyclonic, solvent recovery systems, biological abatement systems, solvent distillation systems (including waste water treatment), evaporative gas conditioning and cooling systems or regenerative thermal (and other) oxidation systems or associated subsystems, equipment or components thereof, including valves, for the removal of nitrogen oxides, sulfur oxides, particulates, carbon dioxide, hydrocarbons, or air toxics (e.g., Sb, Be, Cd, Cr, Co, Pb, Mn, Ni, (SO2) 3 , HF, Hg, P, Se, As, Cd, HCl (or other acid gases)), HAPS, dioxins, furans, others) and/or subsequent energy or waste recovery, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (o). Hybrid power generation systems or associated equipment where renewable energy sources are combined with a combustible fossil fuel (e.g., coal, coal slurry, oil or natural gas) or combustible waste fuel (e.g., carbon monoxide, biomass, black liquor, MSW or RDF) primary energy source, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

3. Engineering procurement, construction, installation, supply, lease, commissioning, training , delivery, inspection, testing of, support, operations, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, relocation, project management, construction management, technical advice, construction consultation, siting support or consultation, environmental services or consultation, safety, health, troubleshooting, cleaning, upgrading and tooling of balance of plant for power generation facilities fired with combustible fossil fuels (e.g., coal, coal slurry, oil or natural gas) and pulp and paper facilities, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

RemainCo Core Field means:

 

1.

Design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair,


  refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning, related to:

 

  (a). Nuclear facilities and nuclear reactor plants, nuclear reactor systems, nuclear reactors, including all thermal reactors (including all heavy-water and light-water reactors), all water cooled reactors, all liquid metal cooled reactors (including sodium cooled reactors), gas cooled reactors (including helium, carbon dioxide and nitrogen) and molten salt reactors, breeder reactors, traveling wave reactors, high temperature reactors, small modular nuclear reactors, medical isotope reactors and components thereof and all Generation I, Generation II, Generation III and all advanced reactors, including and Generation IV reactors and iterations thereof regardless of design, and hybrid power generation systems and associated equipment where renewable energy sources are combined with a nuclear primary energy source.

 

  (b). Support systems and subsystems, equipment and components of nuclear systems and nuclear reactors, including, reactor coolant systems, reactor protection, control and instrumentation systems, reactor auxiliary and safety systems, balance of plant systems, reactor vessel closure heads, reactor and other pressure vessels and internals, reactor coolant pumps, stators and motors, reactor fuel channels, feeders and related components, steam generators, reactor control rod drive mechanisms and other reactor electro-mechanical equipment and controls therefore, specialized tooling and inspection systems, heat exchangers, pressurizers, primary and secondary piping, valves and pumps, spent fuel and other nuclear fuel and nuclear material storage and shipping, nuclear waste containers and related systems, audio/visual systems, steam generator tube inspection systems, repair, modification and stabilization systems, tube plugging and tube removal systems.

 

  (c). Nuclear fuel and nuclear fuel components, including enrichment and any related components, assembly, nuclear fuel plant processes, manufacturing systems and processes and systems for the chemical processing of radiological materials, fuel core and fuel bearing precision components, fuel powder, sources, targets, targets for medical isotope production and industrial isotope production, targets for research and analysis in research reactors, graphite reflectors and control rods, poisons and other special nuclear materials for development and manufacturing of fuel components for pebble bed and other reactors.

 

  (d). Electro-mechanical devices related to or used in commercial, research, government, military and other nuclear facilities, reactors or vessels and associated subsystems, equipment and components thereof.

 

  (e). Advanced power systems for space applications and associated subsystems, equipment and components thereof.

 

  (f). Nuclear and non-nuclear propulsion systems for naval (U.S. and foreign) submarines and aircraft carriers and associated subsystems, equipment and components thereof, including all aftermarket, replacement and repair parts, components and equipment for existing naval submarines and aircraft carriers.


  (g). Nuclear propulsion systems for naval (U.S. and foreign) vessels other than submarines and aircraft carriers and associated subsystems, equipment and components thereof, including aftermarket, replacement and repair parts, components and equipment for such existing vessels.

 

  (h). Single crystal composite and ceramic materials for use in nuclear, defense, space and aerospace applications and subsystems, equipment and components thereof

 

  (i). High energy physics equipment, including electro-magnetic storage devices, power conversion and conditioning systems, superconducting materials and plasma energy systems, and, in each case, subsystems and components thereof, excluding energy storage systems that store kinetic energy using a rotating mass with low friction losses and deliver the stored energy via power electronics that convert kinetic to electrical energy using electrical equipment typical for that type of service.

 

  (j). Ordnance components, subsystems and components thereof.

 

  (k). Unfired heat exchangers where the applicable heat source energy input is derived from the release and/or use of nuclear energy or support subsystems, equipment or components thereof, including pressure parts, cleaning systems, valves, controls or diagnostics.

 

  (l). Wastewater treatment systems that process wastewater derived from the release and/or use of nuclear energy and subsystems, equipment and components thereof

 

  (m). Emission control systems related to nuclear fuel manufacture or fabrication, storage of nuclear materials and waste and nuclear powered systems and subsystems, equipment and components thereof.

 

2. Chemical and physical processing, storage and decontamination of and other management, operations, safety, security, emergency management, remediation and technical services related to radiological materials (including highly enriched uranium, low enriched uranium, natural uranium, fissile material and transuranic material), including receipt, storage, inspection, characterization, dissolution, recovery and purification, downblending, recycling, scrap recovery and processing and related research, development, engineering and analysis.

 

3. Developing and providing services related to security (including direct security services as well as training, consulting and similar services) for new or existing commercial, research, government, military and other facilities or vessels, including tactical security, security training, IT security, development of security processes, fitness for duty and government compliance (both contractual compliance) and in connection with NRC or other applicable licensing requirements.

 

4.

Provide facility operation and maintenance services, including production and program management, maintenance (including maintenance and service of fossil fired and renewable power generation systems performed as part of overall facility operation and management contracts), operation, environmental health and safety, security, emergency management, wastewater treatment, remediation and abatement, decontamination and decommissioning material storage and disposition and other related technical services, to domestic or foreign agencies (including but not limited to NNSA, NASA, DOD, DOE as well as United Kingdom NDA or MOD sites) and commercial entities related to critical infrastructure, nuclear, non-nuclear and biological activities such as nuclear operations of reactors and reactor facilities, laboratory (including national laboratories) and other facility operations, weapons production, refurbishment, storage and stockpile management, component


  (including centrifuge) manufacturing, medical and industrial isotope development and manufacture, and Chemical Laboratory Analysis Capability by SEM, Mass Spectrometer and similar equipment, excluding the provision of the foregoing services for solely standalone power generation facilities fired with combustible fossil fuels, biomass or municipal solid waste or concentrated solar energy through tower based solar thermal conversion systems For the avoidance of doubt, the foregoing does not include the design, manufacture, installation, supply, sale and supply of hardware, including entire systems, within the SpinCo Core Field (including, without limitation, the systems set forth in SpinCo Core Field 2(k), 2(l), 2(m) and 2(n)) to domestic or foreign agencies or commercial entities.

For the avoidance of doubt, the following are not included in the SpinCo Core Field or the RemainCo Core Field:

Design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning related to the following:

 

  (a). Un-fired heat exchangers other than those identified in SpinCo Core Field 2(e) or unfired heat exchangers where the applicable heat source energy input is derived from the release and/or use of nuclear energy, and support subsystems, equipment and components thereof, including pressure parts, cleaning systems, valves, controls, diagnostics, repair equipment and services.

 

  (b). Production of hydrogen by other high temperature processes.

 

  (c). Non-nuclear propulsion systems for naval (U.S. and foreign) vessels other than submarines and aircraft carriers, and associated subsystems equipment and components thereof, including aftermarket, replacement and repair parts, components and equipment for such existing vessels.

 

  (d). Non-naval (i.e., commercial marine) propulsion systems and associated subsystems, equipment and components thereof, including aftermarket, replacement and repair parts, components and equipment for existing systems.


Schedule 1.1(i)

Specific RemainCo Field; Specific SpinCo Field

“Specific SpinCo Field” means the design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning, related to heat exchangers specifically for tower-based solar thermal conversion systems enabled by solar energy and support subsystems, equipment or components thereof, including pressure parts, cleaning systems, valves, controls or diagnostics.

“Specific RemainCo Field” means the design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning, related to:

 

  (a). Nuclear facilities and nuclear reactor plants, nuclear reactor systems, nuclear reactors, including all thermal reactors (including all heavy-water and light-water reactors), all water cooled reactors, all liquid metal cooled reactors (including sodium cooled reactors), gas cooled reactors (including helium, carbon dioxide and nitrogen) and molten salt reactors, breeder reactors, traveling wave reactors, high temperature reactors, small modular nuclear reactors, medical isotope reactors and components thereof and all Generation I, Generation II, Generation III and all advanced reactors, including and Generation IV reactors and iterations thereof regardless of design, and hybrid power generation systems and associated equipment where renewable energy sources are combined with a nuclear primary energy source.

 

  (b).

Support systems and subsystems, equipment and components of nuclear systems and nuclear reactors, including, reactor coolant systems, reactor protection, control and instrumentation systems, reactor auxiliary and safety systems, balance of plant systems, reactor vessel closure heads, reactor and other pressure vessels and internals, reactor coolant pumps, stators and motors, reactor fuel channels, feeders and related components, steam generators, reactor control rod drive mechanisms and other reactor electro-mechanical equipment and controls therefore, specialized tooling and inspection systems,


  heat exchangers, pressurizers, primary and secondary piping, valves and pumps, spent fuel and other nuclear fuel and nuclear material storage and shipping, nuclear waste containers and related systems, audio/visual systems, steam generator tube inspection systems, repair, modification and stabilization systems, tube plugging and tube removal systems.

 

  (c). Nuclear fuel and nuclear fuel components, including enrichment and any related components, assembly, nuclear fuel plant processes, manufacturing systems and processes and systems for the chemical processing of radiological materials, fuel core and fuel bearing precision components, fuel powder, sources, targets, targets for medical isotope production and industrial isotope production, targets for research and analysis in research reactors, graphite reflectors and control rods, poisons and other special nuclear materials for development and manufacturing of fuel components for pebble bed and other reactors.

 

  (d). Naval nuclear propulsion systems and associated subsystems, equipment and components thereof, including aftermarket, replacement and repair parts, components and equipment for existing systems.


The company agrees to furnish supplementally a copy of any omitted exhibit or schedule to the Commission upon request.

Exhibit 10.16

INTELLECTUAL PROPERTY AGREEMENT

between

BABCOCK & WILCOX mPOWER, INC.

and

BABCOCK & WILCOX POWER GENERATION GROUP, INC.

dated as of

May 29, 2015


TABLE OF CONTENTS

 

ARTICLE I

 

DEFINITIONS

     2   
 

Section 1.1

 

Definitions

     2   
 

Section 1.2

 

Interpretation

     5   

ARTICLE II

 

INTELLECTUAL PROPERTY ASSIGNMENT AND OWNERSHIP

     6   
 

Section 2.1

 

Assignment of Transferred Intellectual Property

     6   
 

Section 2.2

 

Actions; Correspondence

     7   
 

Section 2.3

 

Assistance by Employees; Inventor Compensation

     7   
 

Section 2.4

 

Reserved

     8   
 

Section 2.5

 

Rights Arising in the Future

     8   
 

Section 2.6

 

Reserved

     8   
 

Section 2.7

 

Certain Domain Names

     8   

ARTICLE III

 

RESERVED

     9   

ARTICLE IV

 

RESERVED

     9   

ARTICLE V

 

INTELLECTUAL PROPERTY LICENSES AND COVENANTS

     9   
 

Section 5.1

 

Reserved

     9   
 

Section 5.2

 

Reserved

     9   
 

Section 5.3

 

Reserved

     9   
 

Section 5.4

 

Licenses of Software

     9   
 

Section 5.5

 

Reserved

     10   
 

Section 5.6

 

Sublicensing; Assignability

     10   
 

Section 5.7

 

Restrictions on Licensor Exploitation of Intellectual Property

     10   
 

Section 5.8

 

Third Party Agreements; Reservation of Rights

     10   
 

Section 5.9

 

Maintenance of Intellectual Property

     11   
 

Section 5.10

 

Covenants

     11   

ARTICLE VI

 

RESERVED

     11   

ARTICLE VII

 

NO WARRANTIES

     11   

ARTICLE VIII

 

THIRD-PARTY INFRINGEMENT

     12   
 

Section 8.1

 

No Obligation

     12   
 

Section 8.2

 

Notice Regarding Infringement

     12   
 

Section 8.3

 

Suits for Infringement

     12   

ARTICLE IX

 

CONFIDENTIALITY

     14   

 

i


ARTICLE X

 

MISCELLANEOUS

     15   
 

Section 10.1

 

Authority

     15   
 

Section 10.2

 

Entire Agreement

     15   
 

Section 10.3

 

Binding Effect; Third-Party Beneficiaries; Assignment

     15   
 

Section 10.4

 

Amendment

     15   
 

Section 10.5

 

Failure or Indulgence Not Waiver; Remedies Cumulative

     15   
 

Section 10.6

 

Notices

     16   
 

Section 10.7

 

Counterparts

     16   
 

Section 10.8

 

Severability

     16   
 

Section 10.9

 

Governing Law

     16   
 

Section 10.10

 

Construction

     16   
 

Section 10.11

 

Performance

     17   

SCHEDULES

 

Schedule 1.1(e)    SpinCo Core Field; RemainCo Core Field
Schedule 1.1(i)    Specific RemainCo Field; Specific SpinCo Field
Schedule 1.1(o)    SpinCo House Marks
Schedule 2.1(a)    Transferred mPower Intellectual Property
Schedule 2.7    Certain Domain Names
Schedule 3.4    RemainCo Trademarks
Schedule 5.4(c)    mPower Licensed Software

EXHIBITS

 

Exhibit A    Intellectual Property Assignment Agreements

 

ii


INTELLECTUAL PROPERTY AGREEMENT

This INTELLECTUAL PROPERTY AGREEMENT (this “Agreement”) is entered into as of May 29, 2015 (the “Effective Date”), between Babcock & Wilcox mPower, Inc., a Delaware corporation, (“mPower”) and Babcock & Wilcox Power Generation Group, Inc., a Delaware corporation (“PGG”). mPower and PGG are sometimes referred to herein individually as a “Party,” and collectively as the “Parties.” Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in Article I hereof.

RECITALS

WHEREAS, Babcock & Wilcox Enterprises, Inc., a Delaware corporation (“SpinCo”) is a wholly owned Subsidiary of The Babcock & Wilcox Company (“RemainCo”) and the Board of Directors of RemainCo has determined that it would be appropriate and in the best interests of RemainCo and its stockholders for RemainCo to separate the SpinCo Business from the RemainCo Business;

WHEREAS, in order to effectuate the foregoing, RemainCo and SpinCo intend to enter into a Master Separation Agreement (the “Master Separation Agreement”), which will provide, among other things, upon the terms and subject to the conditions thereof, for the separation of the respective businesses of SpinCo and RemainCo and the distribution of the Capital Stock of SpinCo to the public shareholders of RemainCo (the “Distribution”) as defined in the Master Separation Agreement as of the date set forth in the Master Separation Agreement (the “Distribution Date”) and at the time set forth in the Master Separation Agreement (the “Distribution Time”);

WHEREAS, as of the date of this Agreement, RemainCo is the sole owner of all the outstanding Capital Stock (as defined below) of, inter alia, each of SpinCo and Babcock & Wilcox Investment Company, a Delaware corporation (“BWICO”);

WHEREAS, as of the date of this Agreement, BWICO is the sole owner of all the outstanding Capital Stock of each of Babcock & Wilcox Government & Nuclear Operations, Inc., a Delaware corporation, mPower, Babcock & Wilcox Commercial Power, Inc., a Delaware corporation (“CPI”) and Babcock & Wilcox Technology, LLC, a Delaware limited liability company (“BWTI”);

WHEREAS, as of the date of this Agreement, BWTI is the sole owner of all the outstanding Capital Stock of SoFCo-EFS Holdings, LLC, a Delaware limited liability company;

WHEREAS, as of the date of this Agreement, CPI is the sole owner of all the outstanding Capital Stock of each of mPower, Babcock & Wilcox Nuclear Energy, Inc., a Delaware corporation and PGG;

WHEREAS, as of the date of this Agreement, PGG is the sole owner of all of the outstanding Capital Stock of Diamond Power International Inc., a Delaware corporation; which, in turn, is the sole owner of all of the outstanding Capital Stock of (i) BWXT Foreign Holdings, LLC, a Delaware limited liability company and (ii) B&W PGG Lux Holdings SARL, an entity formed in Luxembourg, which, in turn, is the sole owner of all of the outstanding Capital Stock

 

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of B&W PGG Lux Finance SARL, an entity formed in Luxembourg, which, in turn, is the sole owner of all of the outstanding Capital Stock of (i) Babcock & Wilcox Canada, Ltd., an entity formed in Ontario, Canada, (ii) B&W PGG Luxembourg Canada Holdings SARL, an entity formed in Luxembourg which, in turn is the sole owner of all of the outstanding Capital Stock of Babcock & Wilcox Power Generation Group Canada Corp., a Nova Scotia unlimited liability company and (iii) BWXT Canada Holdings Corp., a Nova Scotia unlimited liability company;

WHEREAS, it is the intent of the Parties, in anticipation of the Distribution and the execution of the Master Separation Agreement, that mPower convey to PGG certain Intellectual Property rights and licenses subject to the terms and conditions set forth in this Agreement; and

NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions . As used in this Agreement, the following terms shall have the meanings set forth in this Section 1.1:

“Affiliate” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the specified Person. For this purpose “control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through ownership of voting securities, by contract or otherwise.

“Business Day” means a day other than a Saturday, a Sunday or a day on which the Federal Reserve Bank of New York is closed.

“Capital Stock” means any and all shares, interests, rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests (however designated) in the equity (which includes common stock, preferred stock and partnership, limited liability company, joint venture interests and other ownership interests) of any entity (excluding any debt that is convertible into, or exchangeable for, such equity).

“Confidential Information” has the meaning set forth in Section 9.2 .

“Consent” means any consents, waivers or approvals from, or notification requirements to, any third parties, including any notices or reports to be submitted to, filings to be made with, or consents, registrations, approvals, permits or authorizations to be obtained from, any Governmental Authority.

“Contract” means any written, oral, implied or other contract, agreement, covenant, lease, license, guaranty, indemnity, representation, warranty, assignment, sales order, purchase order, power of attorney, instrument or other commitment, assurance, undertaking or arrangement that is binding on any Person or entity or any part of its property under applicable Law.

 

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“CPI” has the meaning set forth in the recitals.

“Distribution” has the meaning set forth in the recitals.

“Distribution Date” has the meaning set forth in the recitals.

“Distribution Time” has the meaning set forth in the recitals.

“Domain Name Notice” has the meaning set forth in Section 2.7(b) .

“Governmental Authority” shall mean any U.S. federal, state, local or non-U.S. court, government, department, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority.

“Information Statement” means the information statement and any related documentation to be provided to holders of outstanding shares of common stock, par value $0.01 per share, of RemainCo in connection with the Distribution, including any amendments or supplements thereto.

“Intellectual Property” means the rights associated with or arising out of any of the following in any jurisdiction throughout the world: (i) all patents and patent applications, together with all reissuances, divisionals, continuations, continuations-in-part, revisions, renewals, extensions, and reexaminations thereof, and any identified invention disclosures (“Patents”); (ii) trade secret rights and corresponding rights in confidential information and other non-public information (whether or not patentable), including ideas, formulas, compositions, inventor’s notes, discoveries and improvements, know how, manufacturing and production processes and techniques, design manuals, testing information (including testing protocols and results), research and development information, prototypes, inventions, invention disclosures, unpatented blueprints, drawings, specifications, designs, plans, proposals and technical data, business and marketing plans, market surveys, market know-how and customer lists and information, including all tangible embodiments of the foregoing and unregistered copyrights (“Know-How”); (iii) all registered or unregistered copyrights, copyrightable works, rights in databases, data collections, “moral” rights, mask works, copyright registrations, applications and extensions therefor and corresponding rights in works of authorship (“Copyrights”); (iv) all trademarks, service marks, logos, trade dress and trade names indicating the source of goods or services, and other indicia of commercial source or origin (whether registered, common law, statutory or otherwise), all registrations and applications to register the foregoing anywhere in the world and all goodwill associated therewith (“Trademarks”); (v) all computer software and code, including assemblers, applets, compilers, source code, object code, development tools, design tools, utilities, library files, user interfaces and data, and all documentation and manuals related to such computer software and code in any form or format, however fixed (“Software”); (vi) all internet electronic addresses, uniform resource locators and alphanumeric designations associated therewith and all registrations for any of the foregoing (“Domain Names”); and (vii) any similar, corresponding or equivalent rights to any of the foregoing anywhere in the world.

 

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“Intellectual Property Assignment Agreements” has the meaning set forth in Section 2.1(b) .

“IP Proceedings” has the meaning set forth in Section 2.3 .

“Law” means any law, statute, ordinance, code, rule, regulation, order, writ, proclamation, judgment, injunction or decree of any Governmental Authority.

“Licensed mPower Intellectual Property” means all mPower Licensed Software.

“Master Separation Agreement” has the meaning set forth in the recitals.

“mPower” the meaning set forth in the recitals.

“mPower Licensed Software” has the meaning set forth in Section 5.4(c) .

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, a union, an unincorporated organization or a Governmental Authority or any department, agency or political subdivision thereof.

“PGG” has the meaning set forth in the recitals.

“RemainCo Business” means any business of RemainCo and its Subsidiaries other than the SpinCo Business.

“RemainCo Core Field” has the meaning set forth on Schedule 1.1(e) .

“RemainCo Group” means RemainCo and its Subsidiaries, other than the SpinCo Group.

“RemainCo Trademarks” means the Trademarks set forth on Schedule 3.4 .

“Specific RemainCo Field” has the meaning set forth on Schedule 1.1(i) .

“Specific SpinCo Field” has the meaning set forth on Schedule 1.1(i) .

“SpinCo Business” means the business and operations conducted by the SpinCo Group as of the Distribution Date, as such business and operations are described in the Information Statement.

“SpinCo Core Field” has the meaning set forth on Schedule 1.1(e) .

“SpinCo Group” means SpinCo and each Person that is a Subsidiary of SpinCo immediately after the Distribution Time or becomes a Subsidiary of SpinCo after the Distribution Time. For the avoidance of doubt, PGG will be a Subsidiary of SpinCo immediately after the Distribution Time.

“SpinCo House Marks” means all Trademarks that incorporate “Babcock,” “Wilcox,” “Babcock and Wilcox,” “Babcock & Wilcox,” “B&W,” or “B&W & HERO ENGINE DESIGN”

 

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and any translations or derivatives thereof and any terms of a confusingly similar nature, and all goodwill embodied in the foregoing, including, without limitation, all Trademarks set forth on Schedule 1.1(o), but expressly excluding “BWX Technologies,” “BWXT” and “BWX”.

“Subsidiary” means, with respect to any specified Person, any corporation, partnership, limited liability company, joint venture or other organization, whether incorporated or unincorporated, of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such specified Person or by any one or more of its Subsidiaries, or by such specified Person and one or more of its Subsidiaries.

“Transfer” has the meaning set forth in Section 2.1(a) .

“Transferred mPower Intellectual Property” has the meaning set forth in Schedule 2.1(a) .

Section 1.2 Interpretation . In this Agreement, unless the context clearly indicates otherwise:

(a) words used in the singular include the plural and words used in the plural include the singular;

(b) if a word or phrase is defined in this Agreement, its other grammatical forms, as used in this Agreement, shall have a corresponding meaning;

(c) reference to any gender includes the other gender and the neuter;

(d) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”;

(e) the words “shall” and “will” are used interchangeably and have the same meaning;

(f) the word “or” shall have the inclusive meaning represented by the phrase “and/or”;

(g) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;

(h) all references to a specific time of day in this Agreement shall be based upon Eastern Standard Time or Eastern Daylight Savings Time, as applicable, on the date in question;

(i) whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified;

(j) reference to any Article, Section or Schedule means such Article or Section of, or such Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;

 

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(k) the words “this Agreement,” “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision of this Agreement;

(l) the term “commercially reasonable efforts” means efforts which are commercially reasonable to enable a Party, directly or indirectly, to satisfy a condition to or otherwise assist in the consummation of a desired result and which do not require the performing Party to expend funds or assume liabilities other than expenditures and liabilities which are customary and reasonable in nature and amount in the context of a series of related transactions similar to the transaction contemplated herein;

(m) reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;

(n) reference to any Law (including statutes and ordinances) means such Law (including any and all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;

(o) references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement; a reference to such Person’s “Affiliates” shall be deemed to mean such Person’s Affiliates following the Distribution and any reference to a Third Party shall be deemed to mean a Person who is not a Party or an Affiliate of a Party;

(p) if there is any conflict between the provisions of the main body of this Agreement and the Schedules hereto, the provisions of the main body of this Agreement shall control unless explicitly stated otherwise in such Schedule;

(q) the titles to Articles and headings of Sections contained in this Agreement, in any Schedule and in the table of contents to this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement; and

(r) any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Subsidiaries and Affiliates to take such action or refrain from taking such action, as the case may be.

ARTICLE II

INTELLECTUAL PROPERTY ASSIGNMENT AND OWNERSHIP

Section 2.1 Assignment of Transferred Intellectual Property .

(a) mPower hereby sells, assigns, conveys and transfers (the “Transfer”) to PGG all right, title and interest, held by mPower or any member of the RemainCo Group, in and to the

 

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Intellectual Property set forth on Schedule 2.1(a) (the “Transferred mPower Intellectual Property”), including all right, title and interest in and to all proceeds, causes of actions and rights of recovery against Third Parties for past and future infringement, misappropriation, or other violation or impairment of such Intellectual Property, except to the extent prohibited by, or requiring any Consent under (to the extent such Consent has not been obtained), any Contract under which mPower holds or uses such Transferred mPower Intellectual Property. As consideration for the Transfer and for the rights and licenses granted in Article 5 herein, PGG hereby agrees to promptly pay $500,000 to mPower.

(b) mPower shall, and shall cause any members of the RemainCo Group as applicable and necessary to, execute intellectual property assignment agreements in a form substantially similar to that attached hereto as Exhibit A, as applicable to the Transferred mPower Intellectual Property, as well as such additional specific assignments as reasonably necessary to carry out the intent of the Parties as set forth herein (collectively, the “Intellectual Property Assignment Agreements”). All Transferred mPower Intellectual Property is transferred subject to all rights granted under or in connection with agreements related such Transferred mPower Intellectual Property existing and in force as of the Effective Date, in each case subject to the terms and conditions contained in each such agreement, including, without limitation, any license agreements, any security agreements or any liens granted in and to such Transferred mPower Intellectual Property.

(c) mPower shall deliver to PGG all Intellectual Property Assignment Agreements contemplated herein that effectuate the assignment of Transferred mPower Intellectual Property from mPower or any member of the RemainCo Group to PGG. PGG shall have the sole responsibility, at its sole cost and expense, to file such Intellectual Property Assignment Agreements and any other forms or documents required to record such assignments, provided, however, that upon request, mPower shall provide reasonable assistance to PGG to record an assignment, at PGG’s sole cost and expense.

Section 2.2 Actions; Correspondence . PGG shall, in its sole discretion, pay all fees incurred and take all actions with respect to the Transferred mPower Intellectual Property subsequent to the Effective Date. mPower shall forward to PGG or its designee copies of all files related to and correspondence received from any Governmental Authority regarding the Transferred mPower Intellectual Property.

Section 2.3 Assistance by Employees; Inventor Compensation . Each Party agrees that it shall make available to the other Party the services of its employees and contractors reasonably necessary to assist the other Party with the prosecution of, and other patent or trademark office proceedings (e.g., reissue, reexamination, interference, inter partes review, post-grant review, supplemental examination, and other similar proceedings) regarding the other Party’s Patents, Trademarks and other Intellectual Property (collectively, “IP Proceedings”). Each Party agrees to reasonably make available to the other Party (i) inventors and other reasonably necessary persons employed by it for the other Party’s reasonable needs regarding execution of documents, interviews, declarations and testimony, and (ii) documents, materials and information for the other Party’s reasonable good faith needs regarding such IP Proceedings. The Party involved in the IP Proceedings shall be responsible for the actual and reasonable out-of-pocket expenses associated with such assistance, expressly excluding the value of the time of the other Party’s

 

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personnel. Each Party will be responsible for providing inventor incentive compensation to its employees under its own internal policies. No Party shall have any obligation to provide any inventor incentive compensation to an employee of the other Party except as required by law.

Section 2.4 Reserved .

Section 2.5 Rights Arising in the Future .

(a) As between mPower and PGG, unless otherwise agreed in writing by PGG or any member of the SpinCo Group and mPower or any member of the RemainCo Group, any and all Intellectual Property created, conceived, or actually reduced to practice by or on behalf of PGG or any member of the SpinCo Group after the Distribution Date, including, without limitation, any improvements or modifications to any Licensed mPower Intellectual Property, shall belong solely and exclusively to PGG and neither mPower nor any member of the RemainCo Group shall have any right, title or interest in or to such Intellectual Property. PGG shall have no obligation to notify mPower or any member of the RemainCo Group of any such improvements or modifications or to disclose or license any such improvements or modifications to mPower or any member of the RemainCo Group.

(b) As between mPower and PGG, unless otherwise agreed in writing by mPower or any member of the RemainCo Group and PGG or any member of the SpinCo Group, any and all Intellectual Property created, conceived, or actually reduced to practice by or on behalf of mPower or any member of the RemainCo Group after the Distribution Date, including, without limitation, any improvements or modifications to any Licensed mPower Intellectual Property, shall belong solely and exclusively to mPower and neither PGG nor any member of the SpinCo Group shall have any right, title or interest in or to such Intellectual Property. mPower shall have no obligation to notify PGG or any member of the SpinCo Group of any such improvements or modifications or to disclose or license any such improvements or modifications to PGG or any member of the SpinCo Group.

Section 2.6 Reserved .

Section 2.7 Certain Domain Names .

(a) PGG and mPower acknowledge and agree that certain Domain Names, set forth on Schedule 2.7(a) , which encompass both SpinCo House Marks and RemainCo Trademarks, will be owned by PGG as of the Distribution Date. Notwithstanding the foregoing, PGG does not have any right, title or interest in or to any RemainCo Trademarks and, other than as expressly set forth in this Agreement, does not have a license to use such RemainCo Trademarks. With respect to the Domain Names set forth on Schedule 2.7(a) , PGG shall (i) maintain current registrations for such Domain Names on a perpetual basis (subject to Section 2.7(b) ) at PGG’s cost, including paying all applicable fees; (ii) not use such Domain Names or permit any member of the SpinCo Group or any Third Party to use such Domain Names for any purpose, without the express written consent of mPower; and (iii) not transfer, convey, sell, or otherwise assign any right, title and interest in or to such Domain Names to any Third Party without the express written consent of mPower, except that no consent is required in connection with the sale of all or substantially all of the SpinCo Business or a change in control (provided that in the event of

 

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the foregoing, any successor in interest must agree in writing to comply with the obligations set forth in this Section 2.7 ) or in connection with granting security interests or associated liens to lenders or agents therefor in the ordinary course of business.

(b) In the event that PGG desires to cease maintaining the registration for any Domain Name set forth on Schedule 2.7(a) , PGG shall notify mPower of such determination in writing no fewer than ninety (90) days in advance of the earlier of the expiration of the registration of such Domain Name or the date of PGG’s desired termination of such registration (the “Domain Name Notice”). Upon receipt of the Domain Name Notice, mPower shall have the option to acquire the applicable Domain Name from PGG at no cost to mPower and shall notify PGG within thirty (30) days of its desire to elect the option or decline the option. In the event that mPower elects the foregoing option, PGG will take all necessary steps to assign, transfer and convey the Domain Name and applicable registration to mPower and, as of the date of transfer, the maintenance of such Domain Name shall be within mPower’s sole discretion. In the event that mPower declines the foregoing option, PGG shall be permitted to cease maintaining the registration for the applicable Domain Name, provided that if PGG does not cease the maintenance, the provisions of this Section 2.7 still apply in their entirety.

ARTICLE III

RESERVED.

ARTICLE IV

RESERVED.

ARTICLE V

INTELLECTUAL PROPERTY LICENSES AND COVENANTS

Section 5.1 Reserved .

Section 5.2 Reserved .

Section 5.3 Reserved .

Section 5.4 Licenses of Software .

(a) Reserved .

(b) Reserved

(c) mPower hereby grants to PGG a perpetual, irrevocable, exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ), to use the Software set forth on Schedule 5.4(c) (“mPower Licensed Software”) for the continued operation of the SpinCo Business and any future extensions of the SpinCo Business in the SpinCo Core Field; provided, however, the foregoing license shall not extend to (i) mPower Licensed Software licensed by mPower or any other member of the RemainCo Group if and to

 

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the extent the licensing of same to PGG would constitute a breach of an agreement with any Third Party executed prior to the Effective Date or result in any expense to mPower or any member of the RemainCo Group for payments to such Third Party or (ii) any intellectual property not owned by one or more members of the RemainCo Group, or as to which no member of the RemainCo Group has the right to grant sublicenses, as of the Effective Date. The foregoing license includes the right to use, modify, and reproduce in source code and object code for such mPower Licensed Software. To the extent not already in the possession of PGG, mPower will provide PGG with a copy of all object code and source code for the mPower Licensed Software and all associated documentation, including, without limitation, all validation and other documentation, within 120 days of the Distribution Date.

Section 5.5 Reserved .

Section 5.6 Sublicensing; Assignability .

(a) The foregoing licenses shall be assignable in whole or in part only (i) to any Affiliate or (ii) to the extent the licensee transfers to a Third Party all or substantially all of the assets of the business to which such the Licensed mPower Intellectual Property, as applicable, relates.

(b) PGG may sublicense the Licensed mPower Intellectual Property to Affiliates of PGG, even if they become Affiliates after the Distribution Date, solely within the scope of its licenses in Article 5 , provided that such sublicense shall only be effective for such time as such entity remains an Affiliate of PGG, subject to Section 5.6(a)(ii) . PGG may, and may permit its sublicensees to, sublicense erection and arrangement drawings; form, fit, and function drawings; and product and installation/erection specifications based upon the Licensed mPower Intellectual Property to: (i) customers to enable them to use, operate, maintain and repair the equipment, services or other deliverables which incorporate or are derived from the Licensed mPower Intellectual Property and which were sold to them by PGG or its sublicensees; and (ii) to contractors, subcontractors and others to enable them to manufacture, erect, install, service, repair and maintain those products to which the license set forth in Article 5 relate.

Section 5.7 Restrictions on Licensor Exploitation of Intellectual Property .

(a) mPower (i) shall not use or exploit the Licensed mPower Intellectual Property in the SpinCo Core Field and (ii) shall not, and shall not permit any member of the RemainCo Group to, license, provide or otherwise grant to any Third Party the right to use, exploit or access any Licensed mPower Intellectual Property in the SpinCo Core Field.

Section 5.8 Third Party Agreements; Reservation of Rights .

(a) All licenses granted herein are expressly made only subject to, and only to the extent permissible under, all pre-existing rights, obligations and restrictions contained in any existing agreements related to the applicable Intellectual Property licensed herein, including, without limitation, licenses or other rights existing in Third Parties granted by PGG or mPower and/or their sublicensees in existing license agreements, applicable agreements in existence between members of the RemainCo Group and the United States Department of Energy, applicable agreements in existence between members of the SpinCo Group and the United States Department of Energy and all existing security agreements and liens in place in connection with such licensed Intellectual Property.

 

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(b) Except for the limited rights granted in this Agreement in connection with the Licensed mPower Intellectual Property, including, without limitation, the rights and obligations arising out of or related to Section 5.10 , mPower reserves to itself all right, title and interest in and to the Licensed mPower Intellectual Property. Without limiting the foregoing, for purposes of clarity, as between mPower and PGG, mPower retains all rights in and to, and to use and exploit, and including without limitation the right to make, have made, use, lease, sell, offer for sale, and import, and use, reproduce, prepare derivative works of, distribute copies, perform and display products and services which utilize or embody such Licensed mPower Intellectual Property in the RemainCo Core Field.

Section 5.9 Maintenance of Intellectual Property .

(a) mPower shall not have, nor shall any member of the RemainCo Group have, any obligation to maintain the pendency, subsistence, validity, enforceability or confidentiality of any Licensed mPower Intellectual Property. mPower may, and may permit an applicable member of the RemainCo Group to, discontinue maintenance, abandon or dedicate to the public any Licensed mPower Intellectual Property.

Section 5.10 Covenants .

(a) mPower hereby covenants not to sue PGG under any mPower Licensed Software, including, for infringement or misappropriation based upon any action that occurs in connection with the continued operation of the SpinCo Business and any future extensions of the SpinCo Business in any field other than the RemainCo Core Field after the Distribution Date. The foregoing covenant shall extend to any permitted assignees or sublicensees of PGG hereunder. mPower further covenants to impose the obligations set forth in this Section 5.10(a) on any subsequent Third Party or Affiliate to whom mPower may sell, transfer, convey or otherwise assign any of the foregoing Intellectual Property and shall ensure that any such Person agrees, in writing, to be bound by the covenants and obligations set forth herein.

ARTICLE VI

RESERVED.

ARTICLE VII

NO WARRANTIES.

Except as expressly set forth in this Agreement, PGG and mPower understand and agree that mPower is not making any representation or warranty of any kind whatsoever, express or implied, to PGG or any member of the SpinCo Group in any way as to the SpinCo Business, the Transferred mPower Intellectual Property or the Licensed mPower Intellectual Property. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING THE TRANSFERS AND LICENSES REFERRED TO IN THIS AGREEMENT (INCLUDING PRIOR TRANSFERS) HAVE BEEN, OR WILL BE, MADE WITHOUT ANY REPRESENTATION OR

 

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WARRANTY OF ANY NATURE, EXPRESS OR IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE, RELATING TO (A) THE VALUE OR FREEDOM FROM ENCUMBRANCE OF, ANY ASSETS OR INTELLECTUAL PROPERTY, (B) THE CONDITION OR SUFFICIENCY OF ANY ASSETS OR INTELLECTUAL PROPERTY (INCLUDING ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, MARKETABILITY, TITLE, VALUE, FREEDOM FROM ENCUMBRANCE OR OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR THE PRESENCE OR ABSENCE OF ANY HAZARDOUS MATERIALS IN OR ON, OR DISPOSED OR DISCHARGED FROM, SUCH ASSETS), (C) THE NON-INFRINGEMENT OF ANY PATENT OR OTHER INTELLECTUAL PROPERTY RIGHT OF ANY THIRD PARTY, (D) ANY OTHER MATTER CONCERNING ANY ASSETS OR INTELLECTUAL PROPERTY (E) AS TO THE LEGAL SUFFICIENCY TO CONVEY TITLE TO ANY ASSETS OR INTELLECTUAL PROPERTY OR (F) THAT THE LICENSOR HAS ANY RIGHTS OR TITLE AT ALL IN OR TO ANY INTELLECTUAL PROPERTY. WITHOUT LIMITING THE FOREGOING, MPOWER AND PGG HEREBY ACKNOWLEDGE AND AGREE THAT ALL INTELLECTUAL PROPERTY TRANSFERRED OR LICENSED PURSUANT TO THIS AGREEMENT AND ALL INTELLECTUAL PROPERTY INCLUDED IN PRIOR TRANSFERS ARE BEING OR WERE LICENSED OR TRANSFERRED “AS IS, WHERE IS.”

ARTICLE VIII

THIRD-PARTY INFRINGEMENT

Section 8.1 No Obligation . No Party shall have any obligation to institute or maintain any action or suit against any Third Party for infringement or misappropriation of any Intellectual Property licensed hereunder, or to defend any action or suit brought by a Third Party which challenges or concerns the validity of any such Intellectual Property or which claims that any Intellectual Property licensed to the other Party infringes or constitutes misappropriation of the Intellectual Property rights of any Third Party.

Section 8.2 Notice Regarding Infringement . Each Party shall promptly notify the other Party in writing upon learning that a Third Party may potentially be infringing, misappropriating or otherwise violating any Intellectual Property licensed under this Agreement, which notice shall set forth in reasonable detail the identity of the suspected infringer and nature of suspected infringement.

Section 8.3 Suits for Infringement .

(a) Licensed mPower Intellectual Property .

(i) With respect to any Licensed mPower Intellectual Property to which mPower has granted PGG an exclusive license hereunder, as between mPower and PGG, mPower shall have the first right to initiate, prosecute and control any action or proceeding to restrain infringement or misappropriation of such Licensed mPower Intellectual Property in the SpinCo Core Field, and, for purposes of clarity, the sole and exclusive right to initiate, prosecute and control such proceedings in the RemainCo Core Field and in any field other than the SpinCo

 

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Core Field. mPower shall provide prompt written notice to PGG of any determination to initiate, prosecute and control any such action or proceeding in the SpinCo Core Field. PGG, as the exclusive licensee, agrees to be joined as a party if necessary to prosecute the action or proceeding, and shall provide all reasonable cooperation, including any necessary use of their name, required to prosecute such action or proceeding. In such instance, mPower shall control any such action or proceeding and negotiations for its settlement and compromise and shall have sole discretion regarding the settlement or compromise thereof. In connection with the foregoing, PGG may, at its option, elect to assume and pay its and mPower’s out-of-pocket costs incurred in connection with such litigation or proceeding undertaken by mPower, including, without limitation, attorney’s fees. PGG will provide prompt written notice to mPower, in any event no later than thirty (30) after receipt of mPower’s notice of its determination to initiate, prosecute and control such action or proceeding in the SpinCo Core Field, of its determination to elect to assume and pay the applicable costs or to decline to pay assume and pay the applicable costs. In the event PGG does not elect to assume and pay the costs associated with mPower’s initiation, prosecution and control of such action or proceeding in the SpinCo Core Field, mPower shall assume and pay its and PGG’s out-of-pocket costs incurred in connection with such litigation or proceeding undertaken by mPower, including, without limitation, attorney’s fees. Any recovery obtained as a result of such proceeding in the SpinCo Core Field shall be retained by (i) PGG in the event that PGG assumed and paid the applicable costs of the litigation or proceeding or (ii) mPower in the event that mPower assumed and paid the applicable costs of the litigation or proceeding in accordance with this Section 8.3(a)(i) .

(ii) If mPower does not exercise its right to enforce any applicable Licensed mPower Intellectual Property in the SpinCo Core Field, mPower shall provide notice to that effect to PGG and, as between mPower and PGG, PGG shall have the right to initiate, prosecute and control any action or proceeding to restrain infringement or misappropriation of such Licensed mPower Intellectual Property in the SpinCo Core Field. PGG shall provide prompt written notice to mPower of any determination to initiate, prosecute and control any such action or proceeding in the SpinCo Core Field. mPower, as the owner and licensor, agrees to be joined as a party if necessary to prosecute the action or proceeding, and shall provide all reasonable cooperation, including any necessary use of their name, required to prosecute such action or proceeding. In connection with the foregoing, PGG shall assume and pay its and mPower’s out-of-pocket costs incurred in connection with any litigations or proceedings described above, including, without limitation, attorney’s fees. Any recovery obtained as a result of such proceeding related to infringement or misappropriation in the SpinCo Core Field shall be retained by PGG.

(iii) In the event that a Third Party may potentially be infringing, misappropriating or otherwise violating any Licensed mPower Intellectual Property in both the SpinCo Core Field and the RemainCo Core Field, PGG and mPower will meet and confer in good faith regarding the manner in which to respond to such infringement in the SpinCo Core Field and RemainCo Core Field collectively, provided, however, that the foregoing does not limit the rights set forth in Section 8.3(a)(i) or Section 8.3(a)(ii) .

 

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ARTICLE IX

CONFIDENTIALITY

Section 9.1 mPower and PGG shall hold and shall cause the members of the RemainCo Group and the SpinCo Group, respectively, to hold, and shall each cause their respective officers, employees, agents, consultants and advisors to hold, in strict confidence and not to disclose or release without the prior written consent of the other Party, any and all Confidential Information (as defined herein) of such other Party or the members of its Group; provided, that the Parties may disclose, or may permit disclosure of, such Confidential Information (i) to their respective auditors, attorneys, financial advisors, bankers and other appropriate consultants and advisors who have a need to know such information and are informed of their obligation to hold such information confidential to the same extent as is applicable to the Parties and in respect of whose failure to comply with such obligations, mPower or PGG, as the case may be, will be responsible or (ii) to the extent any member of the RemainCo Group or the SpinCo Group is compelled to disclose any such Confidential Information by judicial or administrative process or, in the opinion of legal counsel, by other requirements of Law. Notwithstanding the foregoing, in the event that any demand or request for disclosure of Confidential Information is made pursuant to clause (ii) above, mPower or PGG, as the case may be, shall promptly notify the other of the existence of such request or demand and shall provide the other a reasonable opportunity to seek an appropriate protective order or other remedy, which both Parties will cooperate in seeking to obtain. In the event that such appropriate protective order or other remedy is not obtained, the Party who is being compelled to disclose (or whose Group member is being compelled to disclose) shall, and shall cause the applicable members at its Group to, furnish, or cause to be furnished, only that portion of such Confidential Information that is legally required to be disclosed.

Section 9.2 As used in this Article 9 , “Confidential Information” shall mean all proprietary, technical or proprietary, operational information (including Know-How and proprietary information relating to the ages, birth dates, social security numbers, health-related matters or other confidential matters concerning employees or former employees) of one Party or members of its Group which, prior to or following the Distribution Time, has been disclosed by mPower or members of the RemainCo Group, on the one hand, or PGG or members of the SpinCo Group, on the other hand, to, or otherwise has come into the possession of, the other Group, including pursuant to the technical assistance and technology transfer provisions of Article VI hereof or any other provision of this Agreement (except to the extent that such information can be shown to have been (a) in the public domain through no fault of such Party (or, in the case of mPower, any other member of the RemainCo Group or, in the case of PGG, any other member of the SpinCo Group) or (b) later lawfully acquired from other sources by the Party (or, in the case of mPower, such member of the RemainCo Group or, in the case of PGG, such member of the SpinCo Group) to which it was furnished; provided, however, in the case of (b) that such sources did not provide such information in breach of any confidentiality obligations), or (c) independently developed by employees or agents of such Party who had no access, direct or indirect, to such information provided by the other Party.

(a) Each Party shall use the Confidential Information only as permitted pursuant to this Agreement and shall not disclose any Confidential Information to any Third Party unless

 

14


permitted pursuant to this Agreement. Each Party shall exercise the same degree of care to protect and maintain the confidentiality of the Confidential Information received from the other Party hereunder (but no less than a reasonable degree of care) as they take to preserve confidentiality for their own similar information. Without limiting the foregoing, each Party will take commercially reasonable efforts to implement and maintain comprehensive security protocols to protect and maintain the confidentiality of the Confidential Information received from the other Party hereunder, including, without limitation, implementing administrative, technical, digital, electronic and physical security strategies and access restrictions to protect Confidential Information.

ARTICLE X

MISCELLANEOUS

Section 10.1 Authority . Each of the Parties represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it has been duly authorized by all necessary corporate or other actions, (c) it has duly and validly executed and delivered this Agreement to be executed and delivered on or prior to the Effective Date, and (d) this Agreement is legal, valid and binding obligations, enforceable against it in accordance with their respective terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally and general equity principles.

Section 10.2 Entire Agreement . This Agreement and the Schedules referenced herein or therein or attached hereto or thereto, constitute the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersedes all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof.

Section 10.3 Binding Effect; Third-Party Beneficiaries; Assignment . Except as expressly set forth in Section 5.10 and except for the Affiliates of the Parties, which are intended to be third party beneficiaries hereunder, this Agreement does not and is not intended to confer any rights or remedies upon any Person other than the Parties. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. This Agreement may not be assigned by either Party, except with the prior written consent of the other Party.

Section 10.4 Amendment . No change or amendment may be made to this Agreement except by an instrument in writing signed on behalf of both of the Parties.

Section 10.5 Failure or Indulgence Not Waiver; Remedies Cumulative . No failure or delay on the part of either Party in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant or agreement contained herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement or the Schedules attached hereto are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

15


Section 10.6 Notices . Unless otherwise expressly provided herein, all notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to be duly given (i) when personally delivered or (ii) if mailed by registered or certified mail, postage prepaid, return receipt requested, on the date the return receipt is executed or the letter is refused by the addressee or its agent or (iii) if sent by overnight courier which delivers only upon the signed receipt of the addressee, on the date the receipt acknowledgment is executed or refused by the addressee or its agent or (iv) if sent by facsimile or electronic mail, on the date confirmation of transmission is received (provided that a copy of any notice delivered pursuant to this clause (iv) shall also be sent pursuant to clause (i), (ii) or (iii)), addressed to the attention of the addressee’s General Counsel at the address of its principal executive office or to such other address or facsimile number for a Party as it shall have specified by like notice.

Section 10.7 Counterparts . This Agreement, including the Schedules and Exhibits hereto and the other documents referred to herein, may be executed in multiple counterparts, each of which when executed shall be deemed to be an original but all of which together shall constitute one and the same agreement.

Section 10.8 Severability . If any term or other provision of this Agreement or the Schedules attached hereto is determined by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the court, administrative agency or arbitrator shall interpret this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

Section 10.9 Governing Law . This Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of Delaware, without regard to any conflicts of law provisions thereof that would result in the application of the laws of any other jurisdiction.

Section 10.10 Construction . This Agreement shall be construed as if jointly drafted by PGG and mPower and no rule of construction or strict interpretation shall be applied against either Party. The Parties represent that this Agreement is entered into with full consideration of any and all rights which the Parties may have. The Parties have relied upon their own knowledge and judgment and upon the advice of the attorneys of their choosing. The Parties have had access to independent legal advice, have conducted such investigations they and their counsel thought appropriate, and have consulted with such other independent advisors as they and their counsel deemed appropriate regarding this Agreement and their rights and asserted rights in connection therewith. The Parties are not relying upon any representations or statements made by any other Party, or such other Party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are expressly set forth or incorporated in this Agreement. The Parties are not relying upon a legal duty, if one

 

16


exists, on the part of the other Party (or such other Party’s employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or its preparation, it being expressly understood that neither Party shall ever assert any failure to disclose information on the part of the other Party as a ground for challenging this Agreement.

Section 10.11 Performance . Each Party 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 or Affiliate of such Party.

[INTENTIONALLY LEFT BLANK]

 

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WHEREFORE, the Parties have signed this Agreement effective as of the date first set forth above.

 

BABCOCK & WILCOX mPOWER, INC
By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker
Title:   Vice President and Treasurer
BABCOCK & WILCOX POWER GENERATION GROUP, INC.
By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker
Title:   Vice President and Treasurer


Schedule 1.1(e)

SpinCo Core Field; RemainCo Core Field

SpinCo Core Field means:

 

1. Ownership and/or operation of power generation facilities fired with combustible fossil fuels (e.g., coal, coal slurry, oil or natural gas), biomass, municipal solid waste or concentrated solar energy through tower based solar thermal conversion systems, in each case for the provision of power, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

2. Design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning related to:

 

  (a). Fired steam generators encompassing fossil fuel boilers which are fueled by combustible fossil fuels (e.g., coal, coal slurry, oil or natural gas) or support subsystems, equipment or components thereof, including fuel drying, fuel feed, pulverizers, burners, combustion systems, grates, pressure parts, air heaters, fans, boiler cleaning systems, ash systems, valves, controls & diagnostics, oxycombustion systems, condensing heat exchangers used in connection with such fired steam generators, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (b). Fired steam generators encompassing waste fuel boilers which are fueled by combustible waste fuels (e.g., carbon monoxide, biomass, black liquor, municipal solid waste (MSW) or refuse-derived fuel (RDF)) or support subsystems, equipment or components thereof, including fuel drying, fuel feed, pulverizers, burners, combustion systems, grates, pressure parts, air heaters, fans, boiler cleaning systems, ash systems, valves, controls & diagnostics, oxycombustion systems, condensing heat exchangers used in connection with such fired steam generators, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).


  (c). Gasifier systems which partially convert fossil or waste fuels (e.g., coal, oil, natural gas or biomass) to syngas and support subsystems, equipment or components thereof, including fuel drying, fuel feed, pulverizers, burners, combustion systems, gasifiers, heat exchangers used in connection with such gasifier systems, pressure parts, boiler cleaning systems, ash systems, valves, controls & diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (d). Tower-based solar thermal conversion systems which are enabled by solar energy and support subsystems, equipment or components thereof, including receiver system, pressure parts, molten salt or particle systems (e.g., heat exchangers specifically for tower-based solar thermal conversion systems enabled by solar energy or associated pumps or tanks), valves, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (e). The following specific unfired heat exchangers Turbine Exhaust Gas boilers (10K2), Heat Recovery Steam Generation Boilers (10K22), Water Tube Waste Heat Boilers Two Drum (Stirling Types) (1K4), 3 Drum Waste Heat Recovery Boiler (1K4), Water Tube Waste Heat “H” Stirling Boiler (1K4), Water Tube Long Drum (LD) boiler (1K4), CO boiler (1K26), Waste Heat (WH) (1K4), Oxygen Convertor Hoods (1K44), Gas Tube (FT) boilers (1K46), FM boilers (1K239), FO boilers (1K2311), Struthers Wells type EOR boiler as defined by the existing specific referenced design standards, or support subsystems, equipment or components thereof, including pressure parts, cleaning systems, valves, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (f). Chemical looping conversion systems which are fueled by combustible fossil fuels (e.g., coal, coal slurry, oil or natural gas) and which produce an energy output of steam, CO 2 , H 2 or syngas or support subsystems, equipment or components thereof, including fuel feed, pulverizers, reactors, pressure parts, air heaters, fans, boiler cleaning systems, ash systems, valves, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (g). Pulverized coal injection systems for use in connection with steel production or support subsystems, equipment or components thereof, including pulverizers, pressurization systems, tanks, valves, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).


  (h). Heat transfer surface cleaning systems and support subsystems, equipment and components thereof (other than said systems related to or utilized in connection with nuclear fueled systems and expressly excluding nuclear steam generators), including sootblowers (air, steam, water or sonic), related valve or piping systems, sprayers, controls (basic, intelligent) or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (i). Ash handling systems or support subsystems, equipment or components thereof, including mechanical conveyors (wet or dry), pneumatic conveyors (wet, dry, dilute, or dense phase), ash conditioning, tanks, valves, specialty piping, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (j). Industrial pulverizer or grinding equipment systems or support subsystems (other than said systems or support subsystems related to or utilized in connection with nuclear fuel manufacturing or processing), other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (k). Drying and/or coating systems utilizing continuous and/or batch flow dryer/oven equipment for industrial processes, including but not limited to various production lines (e.g., roll fed, sheet fed, coating, drying or web handling), dryers and/or ovens (e.g., air flotation dryers or ovens, roll support dryers, infrared dryers, ultraviolet dryers, microwave or radio frequency), coating line auxiliary equipment, festoon and catenary style ovens, valves and material handling systems, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (l). Utility emissions control systems used in connection with combustion power generation systems, which are designed to remove nitrogen oxides (e.g., SCR or SNCR), sulfur oxides (e.g., WFGD, SDA, CDS, DSI, or others), particulates (e.g., dry ESP, wet ESP, fabric filter or cyclonic), carbon dioxide (e.g., scrubber systems), hydrocarbons, or air toxics (e.g., Sb, Be, Cd, Cr, Co, Pb, Mn, Ni, (SO2)3, HF, Hg, P, Se, Cd, As, or HCl (or other acid gases)), HAPS, dioxins, furans or others) and/or subsequent energy or waste recovery or associated subsystems, equipment or components thereof, including valves, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (m).

Wastewater treatment systems (i) that process wastewater derived from combustion power generation and municipal solid waste (“MSW”) systems, including


  without limitation FGD dewatering systems or zero liquid discharge (ZLD) systems, or associated subsystems, equipment or components thereof, including valves or (ii) that process wastewater as part of or ancillary to the systems set forth in SpinCo Core Field 2(k), 2(l) or 2(n), in each case other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (n). Industrial emission control, gas cleaning and/or conditioning, or liquids purification and/or recovery systems (other than said systems set forth in RemainCo Core Field 1(m)), including SCR, SNCR, WFGD, SDA, CDS, DSI, other scrubbers, dry ESP, wet ESP, fabric filter, cyclonic, solvent recovery systems, biological abatement systems, solvent distillation systems (including waste water treatment), evaporative gas conditioning and cooling systems or regenerative thermal (and other) oxidation systems or associated subsystems, equipment or components thereof, including valves, for the removal of nitrogen oxides, sulfur oxides, particulates, carbon dioxide, hydrocarbons, or air toxics (e.g., Sb, Be, Cd, Cr, Co, Pb, Mn, Ni, (SO2) 3 , HF, Hg, P, Se, As, Cd, HCl (or other acid gases)), HAPS, dioxins, furans, others) and/or subsequent energy or waste recovery, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (o). Hybrid power generation systems or associated equipment where renewable energy sources are combined with a combustible fossil fuel (e.g., coal, coal slurry, oil or natural gas) or combustible waste fuel (e.g., carbon monoxide, biomass, black liquor, MSW or RDF) primary energy source, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

3. Engineering procurement, construction, installation, supply, lease, commissioning, training, delivery, inspection, testing of, support, operations, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, relocation, project management, construction management, technical advice, construction consultation, siting support or consultation, environmental services or consultation, safety, health, troubleshooting, cleaning, upgrading and tooling of balance of plant for power generation facilities fired with combustible fossil fuels (e.g., coal, coal slurry, oil or natural gas) and pulp and paper facilities, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

RemainCo Core Field means:

 

1.

Design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair,


  refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning, related to:

 

  (a). Nuclear facilities and nuclear reactor plants, nuclear reactor systems, nuclear reactors, including all thermal reactors (including all heavy-water and light-water reactors), all water cooled reactors, all liquid metal cooled reactors (including sodium cooled reactors), gas cooled reactors (including helium, carbon dioxide and nitrogen) and molten salt reactors, breeder reactors, traveling wave reactors, high temperature reactors, small modular nuclear reactors, medical isotope reactors and components thereof and all Generation I, Generation II, Generation III and all advanced reactors, including and Generation IV reactors and iterations thereof regardless of design, and hybrid power generation systems and associated equipment where renewable energy sources are combined with a nuclear primary energy source.

 

  (b). Support systems and subsystems, equipment and components of nuclear systems and nuclear reactors, including, reactor coolant systems, reactor protection, control and instrumentation systems, reactor auxiliary and safety systems, balance of plant systems, reactor vessel closure heads, reactor and other pressure vessels and internals, reactor coolant pumps, stators and motors, reactor fuel channels, feeders and related components, steam generators, reactor control rod drive mechanisms and other reactor electro-mechanical equipment and controls therefore, specialized tooling and inspection systems, heat exchangers, pressurizers, primary and secondary piping, valves and pumps, spent fuel and other nuclear fuel and nuclear material storage and shipping, nuclear waste containers and related systems, audio/visual systems, steam generator tube inspection systems, repair, modification and stabilization systems, tube plugging and tube removal systems.

 

  (c). Nuclear fuel and nuclear fuel components, including enrichment and any related components, assembly, nuclear fuel plant processes, manufacturing systems and processes and systems for the chemical processing of radiological materials, fuel core and fuel bearing precision components, fuel powder, sources, targets, targets for medical isotope production and industrial isotope production, targets for research and analysis in research reactors, graphite reflectors and control rods, poisons and other special nuclear materials for development and manufacturing of fuel components for pebble bed and other reactors.

 

  (d). Electro-mechanical devices related to or used in commercial, research, government, military and other nuclear facilities, reactors or vessels and associated subsystems, equipment and components thereof.

 

  (e). Advanced power systems for space applications and associated subsystems, equipment and components thereof.

 

  (f). Nuclear and non-nuclear propulsion systems for naval (U.S. and foreign) submarines and aircraft carriers and associated subsystems, equipment and components thereof, including all aftermarket, replacement and repair parts, components and equipment for existing naval submarines and aircraft carriers.


  (g). Nuclear propulsion systems for naval (U.S. and foreign) vessels other than submarines and aircraft carriers and associated subsystems, equipment and components thereof, including aftermarket, replacement and repair parts, components and equipment for such existing vessels.

 

  (h). Single crystal composite and ceramic materials for use in nuclear, defense, space and aerospace applications and subsystems, equipment and components thereof

 

  (i). High energy physics equipment, including electro-magnetic storage devices, power conversion and conditioning systems, superconducting materials and plasma energy systems, and, in each case, subsystems and components thereof, excluding energy storage systems that store kinetic energy using a rotating mass with low friction losses and deliver the stored energy via power electronics that convert kinetic to electrical energy using electrical equipment typical for that type of service.

 

  (j). Ordnance components, subsystems and components thereof.

 

  (k). Unfired heat exchangers where the applicable heat source energy input is derived from the release and/or use of nuclear energy or support subsystems, equipment or components thereof, including pressure parts, cleaning systems, valves, controls or diagnostics.

 

  (l). Wastewater treatment systems that process wastewater derived from the release and/or use of nuclear energy and subsystems, equipment and components thereof

 

  (m). Emission control systems related to nuclear fuel manufacture or fabrication, storage of nuclear materials and waste and nuclear powered systems and subsystems, equipment and components thereof.

 

2. Chemical and physical processing, storage and decontamination of and other management, operations, safety, security, emergency management, remediation and technical services related to radiological materials (including highly enriched uranium, low enriched uranium, natural uranium, fissile material and transuranic material), including receipt, storage, inspection, characterization, dissolution, recovery and purification, downblending, recycling, scrap recovery and processing and related research, development, engineering and analysis.

 

3. Developing and providing services related to security (including direct security services as well as training, consulting and similar services) for new or existing commercial, research, government, military and other facilities or vessels, including tactical security, security training, IT security, development of security processes, fitness for duty and government compliance (both contractual compliance) and in connection with NRC or other applicable licensing requirements.

 

4.

Provide facility operation and maintenance services, including production and program management, maintenance (including maintenance and service of fossil fired and renewable power generation systems performed as part of overall facility operation and management contracts), operation, environmental health and safety, security, emergency management, wastewater treatment, remediation and abatement, decontamination and decommissioning material storage and disposition and other related technical services, to domestic or foreign agencies (including but not limited to NNSA, NASA, DOD, DOE as well as United Kingdom NDA or MOD sites) and commercial entities related to critical infrastructure, nuclear, non-nuclear and biological activities such as nuclear operations of reactors and reactor facilities, laboratory (including national laboratories) and other facility operations, weapons production, refurbishment, storage and stockpile management, component


  (including centrifuge) manufacturing, medical and industrial isotope development and manufacture, and Chemical Laboratory Analysis Capability by SEM, Mass Spectrometer and similar equipment, excluding the provision of the foregoing services for solely standalone power generation facilities fired with combustible fossil fuels, biomass or municipal solid waste or concentrated solar energy through tower based solar thermal conversion systems For the avoidance of doubt, the foregoing does not include the design, manufacture, installation, supply, sale and supply of hardware, including entire systems, within the SpinCo Core Field (including, without limitation, the systems set forth in SpinCo Core Field 2(k), 2(l), 2(m) and 2(n)) to domestic or foreign agencies or commercial entities.

For the avoidance of doubt, the following are not included in the SpinCo Core Field or the RemainCo Core Field:

Design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning related to the following:

 

  (a). Un-fired heat exchangers other than those identified in SpinCo Core Field 2(e) or unfired heat exchangers where the applicable heat source energy input is derived from the release and/or use of nuclear energy, and support subsystems, equipment and components thereof, including pressure parts, cleaning systems, valves, controls, diagnostics, repair equipment and services.

 

  (b). Production of hydrogen by other high temperature processes.

 

  (c). Non-nuclear propulsion systems for naval (U.S. and foreign) vessels other than submarines and aircraft carriers, and associated subsystems equipment and components thereof, including aftermarket, replacement and repair parts, components and equipment for such existing vessels.

 

  (d). Non-naval (i.e., commercial marine) propulsion systems and associated subsystems, equipment and components thereof, including aftermarket, replacement and repair parts, components and equipment for existing systems.


Schedule 1.1(i)

Specific RemainCo Field; Specific SpinCo Field

“Specific SpinCo Field” means the design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning, related to heat exchangers specifically for tower-based solar thermal conversion systems enabled by solar energy and support subsystems, equipment or components thereof, including pressure parts, cleaning systems, valves, controls or diagnostics.

“Specific RemainCo Field” means the design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning, related to:

 

  (a). Nuclear facilities and nuclear reactor plants, nuclear reactor systems, nuclear reactors, including all thermal reactors (including all heavy-water and light-water reactors), all water cooled reactors, all liquid metal cooled reactors (including sodium cooled reactors), gas cooled reactors (including helium, carbon dioxide and nitrogen) and molten salt reactors, breeder reactors, traveling wave reactors, high temperature reactors, small modular nuclear reactors, medical isotope reactors and components thereof and all Generation I, Generation II, Generation III and all advanced reactors, including and Generation IV reactors and iterations thereof regardless of design, and hybrid power generation systems and associated equipment where renewable energy sources are combined with a nuclear primary energy source.

 

  (b).

Support systems and subsystems, equipment and components of nuclear systems and nuclear reactors, including, reactor coolant systems, reactor protection, control and instrumentation systems, reactor auxiliary and safety systems, balance of plant systems, reactor vessel closure heads, reactor and other pressure vessels and internals, reactor coolant pumps, stators and motors, reactor fuel channels, feeders and related components, steam generators, reactor control rod drive mechanisms and other reactor electro-mechanical equipment and controls therefore, specialized tooling and inspection systems,


  heat exchangers, pressurizers, primary and secondary piping, valves and pumps, spent fuel and other nuclear fuel and nuclear material storage and shipping, nuclear waste containers and related systems, audio/visual systems, steam generator tube inspection systems, repair, modification and stabilization systems, tube plugging and tube removal systems.

 

  (c). Nuclear fuel and nuclear fuel components, including enrichment and any related components, assembly, nuclear fuel plant processes, manufacturing systems and processes and systems for the chemical processing of radiological materials, fuel core and fuel bearing precision components, fuel powder, sources, targets, targets for medical isotope production and industrial isotope production, targets for research and analysis in research reactors, graphite reflectors and control rods, poisons and other special nuclear materials for development and manufacturing of fuel components for pebble bed and other reactors.

 

  (d). Naval nuclear propulsion systems and associated subsystems, equipment and components thereof, including aftermarket, replacement and repair parts, components and equipment for existing systems.


The company agrees to furnish supplementally a copy of any omitted exhibit or schedule to the Commission upon request.

Exhibit 10.17

INTELLECTUAL PROPERTY AGREEMENT

between

THE BABCOCK & WILCOX COMPANY

and

BABCOCK & WILCOX ENTERPRISES, INC.

dated as of

June 26, 2015


TABLE OF CONTENTS

 

ARTICLE I  

DEFINITIONS

     1   
 

Section 1.1

 

Definitions

     1   
 

Section 1.2

 

Interpretation

     4   

ARTICLE II

 

INTELLECTUAL PROPERTY ASSIGNMENT AND OWNERSHIP

     5   
 

Section 2.1

 

Reserved

     5   
 

Section 2.2

 

Reserved

     5   
 

Section 2.3

 

Assistance by Employees; Inventor Compensation

     5   
 

Section 2.4

 

Ownership

     6   
 

Section 2.5

 

Rights Arising in the Future

     6   
 

Section 2.6

 

Abandonment of Certain Intellectual Property

     7   
 

Section 2.7

 

Reserved

     7   
 

Section 2.8

 

Steam/Its Generation and Use

     7   

ARTICLE III

 

TRADEMARKS

     8   
 

Section 3.1

 

House Marks

     8   
 

Section 3.2

 

Limited License to Use SpinCo House Marks

     9   
 

Section 3.3

 

Removal of Classes from SpinCo Marks

     10   
 

Section 3.4

 

RemainCo Marks

     10   
 

Section 3.5

 

Duty to Avoid Confusion

     10   

ARTICLE IV

 

SHARED LIBRARY MATERIALS

     11   
 

Section 4.1

 

Shared Library Materials

     11   
 

Section 4.2

 

Cross-License of Shared Library Materials

     11   
 

Section 4.3

 

Maintenance of Shared Library Materials

     11   
 

Section 4.4

 

Potential Allocation of Shared Library Materials

     12   
 

Section 4.5

 

Confidentiality and Trade Secret Status of Shared Library Materials

     13   
 

Section 4.6

 

Third Party Materials Contained in the Shared Library Materials

     13   

ARTICLE V

 

INTELLECTUAL PROPERTY LICENSES AND COVENANTS

     13   
 

Section 5.1

 

Cross-License of Shared Know-How

     13   
 

Section 5.2

 

Reserved

     14   
 

Section 5.3

 

Reserved

     14   

 

i


 

Section 5.4

 

Cross-Licenses of Software

     14   
 

Section 5.5

 

Reserved

     15   
 

Section 5.6

 

Sublicensing; Assignability

     15   
 

Section 5.7

 

Restrictions on Licensor Exploitation of Intellectual Property

     16   
 

Section 5.8

 

Third Party Agreements; Reservation of Rights

     16   
 

Section 5.9

 

Maintenance of Intellectual Property

     16   
 

Section 5.10

 

Covenants

     17   

ARTICLE VI

 

TECHNICAL ASSISTANCE AND TECHNOLOGY TRANSFER

     17   
 

Section 6.1

 

Reserved

     17   
 

Section 6.2

 

Reserved

     17   
 

Section 6.3

 

No Additional Technical Assistance

     17   

ARTICLE VII

 

NO WARRANTIES

     18   

ARTICLE VIII

 

THIRD-PARTY INFRINGEMENT

     18   
 

Section 8.1

 

No Obligation

     18   
 

Section 8.2

 

Notice Regarding Infringement

     19   
 

Section 8.3

 

Suits for Infringement

     19   

ARTICLE IX

 

CONFIDENTIALITY

     21   

ARTICLE X

 

MISCELLANEOUS

     22   
 

Section 10.1

 

Authority

     22   
 

Section 10.2

 

Entire Agreement

     22   
 

Section 10.3

 

Binding Effect; Third-Party Beneficiaries; Assignment

     23   
 

Section 10.4

 

Amendment

     23   
 

Section 10.5

 

Failure or Indulgence Not Waiver; Remedies Cumulative

     23   
 

Section 10.6

 

Notices

     23   
 

Section 10.7

 

Counterparts

     23   
 

Section 10.8

 

Severability

     23   
 

Section 10.9

 

Governing Law

     24   
 

Section 10.10

 

Construction

     24   
 

Section 10.11

 

Performance

     24   

SCHEDULES

 

Schedule 1.1(e)    SpinCo Core Field; RemainCo Core Field
Schedule 1.1(i)    Specific RemainCo Field; Specific SpinCo Field
Schedule 1.1(o)    SpinCo House Marks
Schedule 1.1(p)    RemainCo House Marks

 

ii


Schedule 2.4(a)    RemainCo Ownership
Schedule 2.4(b)    SpinCo Ownership
Schedule 2.6    Abandonment of Certain Intellectual Property
Schedule 3.1    SpinCo Trademarks
Schedule 3.3    Required Actions and Filings
Schedule 3.4    RemainCo Trademarks
Schedule 4.1    Shared Library Materials
Schedule 4.4    Nuclear Design Materials
Schedule 5.4(a)    Foundational Software

 

iii


INTELLECTUAL PROPERTY AGREEMENT

This INTELLECTUAL PROPERTY AGREEMENT (this “Agreement”) is entered into as of June 26, 2015 (the “Effective Date”), between The Babcock & Wilcox Company, a Delaware corporation, (“RemainCo”) and Babcock & Wilcox Enterprises, Inc., a Delaware corporation (“SpinCo”). RemainCo and SpinCo are sometimes referred to herein individually as a “Party,” and collectively as the “Parties.” Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in Article 1 hereof.

RECITALS

WHEREAS, SpinCo is a wholly owned Subsidiary of RemainCo;

WHEREAS, the Board of Directors of RemainCo has determined that it would be appropriate and in the best interests of RemainCo and its stockholders for RemainCo to separate the SpinCo Business from the RemainCo Business;

WHEREAS, in order to effectuate the foregoing, RemainCo and SpinCo have entered into a Master Separation Agreement, dated as of June 8, 2015 (the “Master Separation Agreement”), which provides, among other things, upon the terms and subject to the conditions thereof, for the separation of the respective businesses of SpinCo and RemainCo and the Distribution, and the execution and delivery of certain other agreements, including this Agreement, in order to facilitate and provide for the foregoing;

WHEREAS, it is the intent of the Parties, in order to facilitate the foregoing separation, in anticipation of the Distribution and in accordance with the Master Separation Agreement, that RemainCo convey to SpinCo certain Intellectual Property rights and licenses subject to the terms and conditions set forth in this Agreement; and

WHEREAS, it is the intent of the Parties, in order to facilitate the foregoing separation, in anticipation of the Distribution and in accordance with the Master Separation Agreement, that SpinCo convey to RemainCo certain Intellectual Property rights and licenses subject to the terms and conditions set forth in this Agreement;

NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions . Except for the terms defined below, the capitalized terms used in this Agreement shall have the meanings ascribed to them in Section 1.1 of the Master Separation Agreement:

“Confidential Information” has the meaning set forth in Section 9.2 .

 

1


“Foundational Software” has the meaning set forth in Section 5.4(a) .

“Intellectual Property” means the rights associated with or arising out of any of the following in any jurisdiction throughout the world: (i) all patents and patent applications, together with all reissuances, divisionals, continuations, continuations-in-part, revisions, renewals, extensions, and reexaminations thereof, and any identified invention disclosures (“Patents”); (ii) trade secret rights and corresponding rights in confidential information and other non-public information (whether or not patentable), including ideas, formulas, compositions, inventor’s notes, discoveries and improvements, know how, manufacturing and production processes and techniques, design manuals, testing information (including testing protocols and results), research and development information, prototypes, inventions, invention disclosures, unpatented blueprints, drawings, specifications, designs, plans, proposals and technical data, business and marketing plans, market surveys, market know-how and customer lists and information, including all tangible embodiments of the foregoing and unregistered copyrights (“Know-How”); (iii) all registered or unregistered copyrights, copyrightable works, rights in databases, data collections, “moral” rights, mask works, copyright registrations, applications and extensions therefor and corresponding rights in works of authorship (“Copyrights”); (iv) all trademarks, service marks, logos, trade dress and trade names indicating the source of goods or services, and other indicia of commercial source or origin (whether registered, common law, statutory or otherwise), all registrations and applications to register the foregoing anywhere in the world and all goodwill associated therewith (“Trademarks”); (v) all computer software and code, including assemblers, applets, compilers, source code, object code, development tools, design tools, utilities, library files, user interfaces and data, and all documentation and manuals related to such computer software and code in any form or format, however fixed (“Software”); (vi) all internet electronic addresses, uniform resource locators and alphanumeric designations associated therewith and all registrations for any of the foregoing (“Domain Names”); and (vii) any similar, corresponding or equivalent rights to any of the foregoing anywhere in the world.

“IP Proceedings” has the meaning set forth in Section 2.3 .

“Licensed RemainCo Know-How” has the meaning set forth in Section 5.1(b) .

“Licensed SpinCo Know-How” has the meaning set forth in Section 5.1(a) .

“Licensed RemainCo Intellectual Property” means all Licensed RemainCo Know-How and, to the extent licensed by RemainCo hereunder, RemainCo’s right, title and interest in and to Shared Library Materials and Foundational Software.

“Licensed SpinCo Intellectual Property” means all Licensed SpinCo Know-How and, to the extent licensed by SpinCo hereunder, SpinCo’s right, title and interest in and to Shared Library Materials and Foundational Software.

“Master Separation Agreement” has the meaning set forth in the recitals.

“Nuclear Design Materials” has the meaning set forth in Section 4.4 .

“Notifying Party” has the meaning set forth in Section 4.4 .

 

2


“RemainCo” has the meaning set forth in the recitals.

“RemainCo Core Field” has the meaning set forth on Schedule 1.1(e) .

“RemainCo House Marks” means all Trademarks that incorporate “BWX,” “BWX Technologies,” or “BWXT,” and any translations or derivatives thereof and any terms of a confusingly similar nature, and all goodwill embodied in the foregoing, including, without limitation, all Trademarks set forth on Schedule 1.1(p) , but expressly excluding “Babcock,” “Wilcox,” “Babcock and Wilcox,” “Babcock & Wilcox,” B&W,” or “B&W & HERO ENGINE DESIGN.”

“RemainCo Know-How” means all Know-How owned by RemainCo as of the Effective Date.

“RemainCo Trademarks” has the meaning set forth in Section 3.4 .

“Reviewing Party” has the meaning set forth in Section 4.4 .

“Shared Library Materials” means (i) proprietary research reports, letter reports, photographs, micrographs or other materials recorded in a tangible, microfilm, microfiche, and/or electronic form or media, or a combination thereof, which may contain trade secrets, know-how, methods, techniques, formulas, drawings, sketches or other proprietary materials reduced to tangible form, and which were developed by and/or contained in the Research & Development Division library at the former Alliance Research Center in Alliance, Ohio (“Research Documents”) and (ii) publicly available books, textbooks, reference manuals, periodicals, journals or other publications that were located at the Research & Development Division library at the former Alliance Research Center in Alliance, Ohio (“Reference Materials”), in each case which are presently stored in certain identified vaults and storage accounts maintained with Third Party vendor document retention vendor Iron Mountain.

“Specific RemainCo Field” has the meaning set forth on Schedule 1.1(i) .

“Specific SpinCo Field” has the meaning set forth on Schedule 1.1(i) .

“SpinCo” has the meaning set forth in the recitals.

“SpinCo Core Field” has the meaning set forth on Schedule 1.1(e) .

“SpinCo House Marks” means all Trademarks that incorporate “Babcock,” “Wilcox,” “Babcock and Wilcox,” “Babcock & Wilcox,” “B&W,” or “B&W & HERO ENGINE DESIGN” and any translations or derivatives thereof and any terms of a confusingly similar nature, and all goodwill embodied in the foregoing, including, without limitation, all Trademarks set forth on Schedule 1.1(o) , but expressly excluding “BWX Technologies,” “BWXT” and “BWX”.

“SpinCo Know-How” means all Know-How owned by SpinCo as of the Effective Date.

“SpinCo Trademarks” has the meaning set forth in Section 3.1(a) .

 

3


“Steam Book” has the meaning set forth in Section 2.8 .

Section 1.2 Interpretation . In this Agreement, unless the context clearly indicates otherwise:

(a) words used in the singular include the plural and words used in the plural include the singular;

(b) if a word or phrase is defined in this Agreement, its other grammatical forms, as used in this Agreement, shall have a corresponding meaning;

(c) reference to any gender includes the other gender and the neuter;

(d) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”;

(e) the words “shall” and “will” are used interchangeably and have the same meaning;

(f) the word “or” shall have the inclusive meaning represented by the phrase “and/or”;

(g) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;

(h) all references to a specific time of day in this Agreement shall be based upon Eastern Standard Time or Eastern Daylight Savings Time, as applicable, on the date in question;

(i) whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified;

(j) reference to any Article, Section or Schedule means such Article or Section of, or such Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;

(k) the words “this Agreement,” “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision of this Agreement;

(l) the term “commercially reasonable efforts” means efforts which are commercially reasonable to enable a Party, directly or indirectly, to satisfy a condition to or otherwise assist in the consummation of a desired result and which do not require the performing Party to expend funds or assume Liabilities other than expenditures and Liabilities which are customary and reasonable in nature and amount in the context of a series of related transactions similar to the Separation;

 

4


(m) reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;

(n) reference to any Law (including statutes and ordinances) means such Law (including any and all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;

(o) references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement; a reference to such Person’s “Affiliates” shall be deemed to mean such Person’s Affiliates following the Distribution and any reference to a Third Party shall be deemed to mean a Person who is not a Party or an Affiliate of a Party;

(p) if there is any conflict between the provisions of the main body of this Agreement and the Schedules hereto, the provisions of the main body of this Agreement shall control unless explicitly stated otherwise in such Schedule;

(q) the titles to Articles and headings of Sections contained in this Agreement, in any Schedule and in the table of contents to this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement; and

(r) any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Subsidiaries and Affiliates to take such action or refrain from taking such action, as the case may be.

ARTICLE II

INTELLECTUAL PROPERTY ASSIGNMENT AND OWNERSHIP

Section 2.1 Reserved .

Section 2.2 Reserved .

Section 2.3 Assistance by Employees; Inventor Compensation . Each Party agrees that it shall make available to the other Party the services of its employees and contractors reasonably necessary to assist the other Party with the prosecution of, and other patent or trademark office proceedings (e.g., reissue, reexamination, interference, inter partes review, post-grant review, supplemental examination, and other similar proceedings) regarding the other Party’s Patents, Trademarks and other Intellectual Property (collectively, “IP Proceedings”). Each Party agrees to reasonably make available to the other Party (i) inventors and other reasonably necessary persons employed by it for the other Party’s reasonable needs regarding execution of documents, interviews, declarations and testimony, and (ii) documents, materials and information for the other Party’s reasonable good faith needs regarding such IP Proceedings. The Party involved in the IP Proceedings shall be responsible for the actual and reasonable out-of-pocket expenses

 

5


associated with such assistance, expressly excluding the value of the time of the other Party’s personnel. Each Party will be responsible for providing inventor incentive compensation to its employees under its own internal policies. No Party shall have any obligation to provide any inventor incentive compensation to an employee of the other Party except as required by law.

Section 2.4 Ownership .

(a) SpinCo expressly acknowledges that, as between RemainCo and SpinCo (and any other member of the SpinCo Group), as of the Distribution Time and after effectuating all Prior Transfers and all assignments contemplated in the Intellectual Property Agreements, RemainCo is and shall be the sole and exclusive owner of the Intellectual Property set forth on Schedule 2.4(a) , and SpinCo agrees that it shall do nothing inconsistent with such ownership.

(b) RemainCo expressly acknowledges that, as between SpinCo and RemainCo (and any other member of the RemainCo Group), as of the Distribution Time and after effectuating all Prior Transfers and all assignments contemplated in the Intellectual Property Agreements, SpinCo is the sole and exclusive owner of the Intellectual Property set forth on Schedule 2.4(b) , and RemainCo agrees that it shall do nothing inconsistent with such ownership.

(c) If, within thirty-six (36) months of the Distribution Date, either Party has a good faith belief, based on reasonable inquiry, that Schedule 2.4(a) or Schedule 2.4(b) contains an error as to the allocation of ownership of any item of Intellectual Property set forth therein or that, as of the Distribution Date, any item of Intellectual Property was not otherwise properly allocated between RemainCo and the members of the RemainCo Group on the one hand and SpinCo and members of the SpinCo Group on the other hand, such Party will provide written notice to the other party regarding the error or discrepancy and the Parties shall, or shall cause the relevant members of the RemainCo Group and/or SpinCo Group, as necessary, to negotiate in good faith a mutually agreeable resolution.

Section 2.5 Rights Arising in the Future .

(a) As between RemainCo and SpinCo, unless otherwise agreed in writing by RemainCo or any member of the RemainCo Group and SpinCo or any member of the SpinCo Group, any and all Intellectual Property created, conceived, or actually reduced to practice by or on behalf of RemainCo or any member of the RemainCo Group after the Distribution Date, including, without limitation, any improvements or modifications to any Licensed SpinCo Intellectual Property or Shared Library Materials or any other Intellectual Property licensed by any member of the RemainCo Group or the SpinCo Group pursuant to any other Intellectual Property Agreement, shall belong solely and exclusively to RemainCo and neither SpinCo nor any member of the SpinCo Group shall have any right, title or interest in or to such Intellectual Property. RemainCo shall have no obligation to notify SpinCo or any member of the SpinCo Group of any such improvements or modifications or to disclose or license any such improvements or modifications to SpinCo or any member of the SpinCo Group.

(b) As between RemainCo and SpinCo, unless otherwise agreed in writing by RemainCo or any member of the RemainCo Group and SpinCo or any member of the SpinCo Group, any and all Intellectual Property created, conceived, or actually reduced to practice by or

 

6


on behalf of SpinCo or any member of the SpinCo Group after the Distribution Date, including, without limitation, any improvements or modifications to any Licensed RemainCo Intellectual Property or Shared Library Materials or any other Intellectual Property licensed by any member of the RemainCo Group or the SpinCo Group pursuant to any other Intellectual Property Agreement, shall belong solely and exclusively to SpinCo and neither RemainCo nor any member of the RemainCo Group shall have any right, title or interest in or to such Intellectual Property. SpinCo shall have no obligation to notify RemainCo or any member of the RemainCo Group of any such improvements or modifications or to disclose or license any such improvements or modifications to RemainCo or any member of the RemainCo Group.

Section 2.6 Abandonment of Certain Intellectual Property . SpinCo and RemainCo acknowledge and agree that, as of the Distribution Date, neither SpinCo nor RemainCo has an interest in maintaining or continuing the prosecution and maintenance of the Intellectual Property set forth on Schedule 2.6 , which Intellectual Property will be owned and controlled by the SpinCo Group as of the Distribution. SpinCo will, and will cause the applicable members of the SpinCo Group, to take all actions necessary to discontinue the maintenance and prosecution of the Intellectual Property set forth on Schedule 2.6 as of the date any applicable renewal fees are due in the future. For clarity, SpinCo shall not be obligated to affirmatively abandon such Intellectual Property prior to the date that any renewal fees are due in the future.

Section 2.7 Reserved .

Section 2.8 Steam/its generation and use . The Parties acknowledge and agree that the engineering textbook/publication titled “ Steam/its generation and use ” and previously titled “Steam” (the “Steam Book”) is a highly regarded and well respected publication in worldwide utility and industrial power generation fields. SpinCo and RemainCo acknowledge and agree that, as of the Distribution Date, SpinCo (i) owns all right, title and interest in and to the Copyright in all editions of the Steam Book throughout the world; (ii) shall have the exclusive right to publish and shall be solely responsible for all aspects of the publication of the Steam Book in all languages and in all media of expression now known or later developed, throughout the world, subject to the provisions of this Section 2.8 ; (iii) shall have the right to retain all proceeds derived from exploiting the Copyright of any edition of the Steam Book; and (iv) subject to Section 2.8(c) , shall have the sole right to determine the content contained in all future editions of the Steam Book.

(a) SpinCo and RemainCo agree and acknowledge that, although RemainCo was responsible for publishing the current forty-second (42 nd ) edition of the Steam Book, as of the Distribution Date, all rights, responsibilities, duties and obligations related to the publication, distribution and sale of this edition shall be transferred to SpinCo. SpinCo shall retain all proceeds of the sales of this publication.

(b) SpinCo shall have the sole right to use the title Steam/its generation and use to publish future editions of the Steam Book. As between SpinCo and RemainCo, SpinCo will retain and own all Copyrights in and to any future editions of the Steam Book, provided, however, that content contributed by RemainCo in the future may be owned by, and the Copyright therein owned by, RemainCo, as may be set forth in a subsequent agreement related to such contributions.

 

7


(c) The Parties acknowledge that it is desirable for future editions of the Steam Book to present a comprehensive view of how steam is generated and used from a variety of energy sources including, inter alia , nuclear energy sources. SpinCo shall have the sole right to determine the content contained in future editions of the Steam Book, provided, however, that SpinCo will provide RemainCo with a right of first refusal to collaborate with SpinCo to provide content related to nuclear subject matter in the forty-third (43 rd ) edition of the Steam Book, with allocation of costs and revenues and any attribution and Copyright ownership with respect to RemainCo contributed content to be negotiated in good faith by the Parties. The foregoing right of first refusal shall cease in the event of a Change of Control of either RemainCo or SpinCo, provided, however, that the Parties will discuss the feasibility of future collaboration, specifically related to the contribution of nuclear related subject matter by RemainCo, in good faith in the event of a Change of Control.

(d) RemainCo shall have, and SpinCo hereby grants to RemainCo, an unlimited, non-exclusive, perpetual, irrevocable, royalty free, worldwide right and license to use the content contained in the Steam Book, including the current edition and any past edition and any future edition to which RemainCo makes a contribution, for any purpose, including, without limitation, to reproduce, publicly display, modify, make derivative works, distribute, publicly perform and distribute for RemainCo’s internal business purposes, including in connection with customer related activities, provided, however, that RemainCo shall (i) not use any non-nuclear content contained in the Steam Book in connection with publishing or distributing a publication which competes with the Steam Book and (ii) provide attribution and accreditation using a copyright notice having the format required by law in connection with the use of any protectable expression of the non-nuclear content contained in the Steam Book. SpinCo shall provide RemainCo with five hundred (500) copies of the current edition of the Steam Book at no cost to RemainCo, which copies RemainCo may distribute without limitation, including to RemainCo customers at no charge. In the event that RemainCo wishes to order additional copies of the current edition of the Steam Book or has a desire to purchase existing stock of earlier editions of the Steam Book, SpinCo will sell such copies to RemainCo at cost, which copies RemainCo may distribute without limitation, including to RemainCo customers at no charge.

ARTICLE III

TRADEMARKS

Section 3.1 House Marks .

(a) RemainCo agrees and acknowledges that (i) as of Distribution Date, as between the RemainCo Group and the SpinCo Group, all right, title and interest in and to the Trademarks set forth on Schedule 3.1 (the “SpinCo Trademarks”), including the SpinCo House Marks, shall be the sole and exclusive property of the SpinCo Group and (ii) except as otherwise provided in Section 3.2 , the RemainCo Group shall cease and discontinue all use of the SpinCo Marks, including the SpinCo House Marks, as of the Distribution Date. In addition, RemainCo agrees to use its best efforts to change its name to eliminate Babcock & Wilcox therefrom, and, if applicable, to cause the members of the RemainCo Group to change their names to eliminate “Babcock,” “Wilcox,” “Babcock and Wilcox,” “Babcock & Wilcox” or “B&W” therefrom and to cease and discontinue the use of the term “Babcock & Wilcox” or “B&W” and any of the

 

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SpinCo Marks in its business or operations as promptly as practicable following the Distribution Date. Notwithstanding the foregoing, SpinCo agrees and acknowledges that RemainCo will change its name to BWX Technologies and that RemainCo and the RemainCo Group may continue to use “BW” and derivations thereof and therefrom (but not “B&W”) in its business or operations after the Distribution Date. SpinCo agrees not to, and shall not permit any member of the SpinCo Group to, oppose, petition to cancel, or otherwise challenge or object to the use of or any current application and/or subsequent application for registration by RemainCo or any member of the RemainCo Group of any RemainCo House Marks as long as such use and/or registration does not make use of the SpinCo House Marks and further agrees to take such actions as may be reasonably requested by RemainCo and execute or cause to be executed by the appropriate members of the SpinCo Group such other agreements, instruments and other documents, including coexistence agreements and letters of consent, as may be reasonably requested by RemainCo to facilitate the registration and continued prosecution of RemainCo House Marks (e.g., in the event that any SpinCo House Mark is cited against an application for a RemainCo House Mark).

(b) RemainCo agrees not to, and shall not permit any member of the RemainCo Group to, oppose, petition to cancel, or otherwise challenge or object to the use of or any current application and/or subsequent application for registration by SpinCo or any member of the SpinCo Group of any SpinCo House Marks, as long as such use and/or registration does not make use of the RemainCo House Marks and further agrees to take such actions as may be reasonably requested by SpinCo and execute or cause to be executed by the appropriate members of the RemainCo Group such other agreements, instruments and other documents, including coexistence agreements and letters of consent, as may be reasonably requested by SpinCo to facilitate the registration and continued prosecution of SpinCo House Marks (e.g., in the event that any RemainCo House Mark is cited against an application for a SpinCo House Mark).

Section 3.2 Limited License to Use SpinCo House Marks . RemainCo shall have the right to use the SpinCo House Marks in connection with the operation of the RemainCo Business for a limited period of 270 days following the Distribution Date. After such 270-day period, RemainCo shall discontinue all use of the SpinCo House Marks, including any use on stationery or letterhead and any use on or in connection with other RemainCo Assets. However, the Parties agree that the RemainCo Group may continue, beyond such 270-day period, to distribute copies of any existing inventory of its marketing literature, including technical papers, brochures, and printed promotional material, in existence on the Distribution Date, provided, however, that reasonable efforts are made to remove or cover up any SpinCo House Marks appearing thereon prior to distribution. Notwithstanding the foregoing provisions of this Section 3.2 , in no event shall any of the members of the RemainCo Group continue to use the SpinCo House Marks (whether in any of the materials referenced in the immediately preceding sentence or otherwise) following a Change of Control of RemainCo. For the avoidance of doubt, none of the foregoing shall apply to any stationery, letterhead or marketing literature, including technical papers, brochures, and printed promotional material, distributed by any member of the RemainCo Group to its customers prior to the Distribution Date or to any SpinCo House Marks included on or in any copies of the Steam Book distributed by RemainCo or any member of the RemainCo Group prior to or after the Distribution Date. All of RemainCo’s use of the SpinCo House Marks shall inure to the benefit of SpinCo. RemainCo agrees to use the SpinCo House Marks in accordance with such quality standards as are used by the SpinCo Group as of the date of this Agreement. Except as set forth in this Section 3.2 , it is expressly agreed that RemainCo is not obtaining any right, title or interest in the SpinCo House Marks.

 

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Section 3.3 Removal of Classes from SpinCo Marks .

(a) Within sixty (60) days from the Distribution Date, SpinCo will make all necessary filings and take all necessary actions, subject to all applicable local Laws, to (i) as applicable, amend the description of goods and services to remove references to nuclear subject matter included in any existing registration for any SpinCo House Mark registered in the United States, Canada, the United Kingdom, the People’s Republic of China, Romania, South Korea, Vietnam, India, Indonesia, Japan, Mexico, Norway, South Africa, Ukraine, the European Union and Argentina and (ii) as applicable, to amend or modify the description of goods and services to remove references to nuclear subject matter contained in any application pending for any SpinCo House Mark in the United States, Canada, the United Kingdom, the People’s Republic of China, Romania, South Korea, Vietnam, India, Indonesia, Japan, Mexico, Norway, South Africa, Ukraine, the European Union and Argentina. Without limiting the foregoing, within sixty (60) days from the Distribution Date, SpinCo will make all necessary filings and take all necessary actions, subject to all applicable local Laws, to amend the description of goods and services to remove referenced to nuclear subject matter from the registrations and applications for SpinCo House Marks listed on Schedule 3.3 .

(b) Within ninety (90) days from the Distribution Date, SpinCo will make all necessary filings and take all necessary actions, subject to all applicable local Laws, to (i) as applicable, amend the description of goods and services to remove references to nuclear subject matter included in any existing registration for any SpinCo Trademarks (other than SpinCo House Marks otherwise covered by Section 3.3(a) ) and (ii) as applicable, amend or modify any application pending for any SpinCo Mark (other than SpinCo House Marks otherwise covered by Section 3.3(a) ) to amend the description of goods and services to remove references to nuclear subject matter contained in such application.

Section 3.4 RemainCo Marks . SpinCo agrees and acknowledges that (i) as of the Date of this Agreement, as between the SpinCo Group and the RemainCo Group, all right, title and interest in and to the Trademarks set forth on Schedule 3.4 (the “RemainCo Trademarks”) shall be the sole and exclusive property of the RemainCo Group and the SpinCo Group shall cease and discontinue all use of the RemainCo Marks as of the Distribution Date.

Section 3.5 Duty to Avoid Confusion . The Parties confirm their belief that the likelihood of confusion will not result from their respective use of the SpinCo Marks and RemainCo Marks, including RemainCo’s continuing use of the name BWX Technologies and continued use of the terms “BWX”, “BWX Technologies” or “BWXT” and derivations thereof and therefrom, due to the differences in the goods and services primarily associated therewith (e.g., nuclear versus fossil fuel). In the event that either Party becomes aware of any actual confusion or mistake occurring as a result of their uses of their respective marks, the Parties agree to communicate all details of each such instance to each other, and to cooperate reasonably to take steps to abate the cause of confusion or mistake, and to prevent any such confusion or mistake from arising again.

 

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ARTICLE IV

SHARED LIBRARY MATERIALS

Section 4.1 Shared Library Materials . RemainCo and SpinCo acknowledge and agree that the Shared Library Materials represent a collection of shared historical and foundational information related to and derived from more than fifty (50) years of research and development focused on technology and design criteria applicable to the businesses of RemainCo and SpinCo, which information, including all Know-How and Copyrights contained therein, has application to the businesses of RemainCo and SpinCo. The Shared Library Materials identified as of the Distribution Date are set forth on Schedule 4.1 , which may be amended or modified upon mutual agreement of the Parties from time to time to (i) include additional Shared Library Materials discovered after the Distribution Date or (ii) to reflect the results of the allocation process contemplated in Section 4.4 below.

Section 4.2 Cross-License of Shared Library Materials . The Parties acknowledge and agree that each of RemainCo and SpinCo and additional members of the RemainCo Group and SpinCo Group presently have shared access to and rights to exploit the Shared Library Materials and may have a right and interest in and to certain Shared Library Materials, including in and to Intellectual Property embodied therein. Accordingly, (i) with respect to RemainCo’s right and interest in and to the Shared Library Materials, RemainCo, for itself and as representative of all other members of the RemainCo Group, hereby grants to SpinCo (x) a perpetual (subject to Section 4.4 ), irrevocable, exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ) to use the Shared Library Materials, including all Know-How and Copyrights embodied therein, for any purpose in the SpinCo Core Field and (y) a perpetual (subject to Section 4.4 ), irrevocable, non-exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ) to use the Shared Library Materials, including all Know-How and Copyrights embodied therein, for any purpose in any field other than the RemainCo Core Field or the SpinCo Core Field and (ii) with respect to SpinCo’s right and interest in and to the Shared Library Materials, SpinCo, for itself and as representative of all other members of the SpinCo Group, hereby grants to RemainCo (x) a perpetual (subject to Section 4.4 ), irrevocable, exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ) to use the Shared Library Materials, including all Know-How and Copyrights embodied therein, for any purpose in the RemainCo Core Field and (y) a perpetual (subject to Section 4.4 ), irrevocable, non-exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ) to use the Shared Library Materials, including all Know-How and Copyrights embodied therein, for any purpose in any field other than the SpinCo Core Field or the RemainCo Core Field. The foregoing licenses include the right to reproduce, prepare derivative works, distribute, perform and otherwise exploit such Shared Library Materials and to use the Shared Library Materials to design, develop, manufacture, have manufactured, sell and support products and services, subject in each case to applicable export control Laws and the provisions of Section 4.5 .

Section 4.3 Maintenance of Shared Library Materials . Unless mutually agreed upon by the Parties in writing, all Shared Library Materials (other than those which have been allocated pursuant to Section 4.4 ) shall be maintained in a mutually agreed upon location accessible to both Parties (the “Shared Location”) and in a manner mutually agreeable to both Parties with respect to shared access, removal and replacement of documents and similar issues.

 

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(a) Notwithstanding the foregoing, the Parties acknowledge and agree that (i) archival copies of certain Shared Library Materials are recorded on microfiche; (ii) two sets of the applicable microfiche exist as of the Distribution Time; and (iii) rather than maintaining such microfiche in a mutually agreed upon location accessible to both Parties, each Party will be entitled to maintain a copy of the microfiche at its own location, provided, however, that in the event that any Shared Library Materials are found to be missing from or otherwise inaccessible using one Party’s copy of the applicable microfiche, the other Party will provide such Party with access to the microfiche in its possession for copying, with all copying costs to be paid by the Party seeking to obtain the copy.

(b) RemainCo and SpinCo agree to share all costs and expenses of maintaining the Shared Library Materials on an equal basis and to share all costs and expenses of maintaining the Shared Location as set forth in Schedule 6.3 of the Master Separation Agreement. In the event that one Party is responsible vis-a-vis a Third Party for the payment of costs and expenses related to the Shared Location, such Party will provide to the other Party a statement of all costs and expenses incurred in connection with the Shared Location as set forth in Schedule 6.3 of the Master Separation Agreement. The other Party will reimburse the responsible Party for the applicable percentage of such costs and expenses within thirty (30) days of receipt of such statement, unless otherwise agreed upon by the Parties.

(c) Without limiting this Section 4.3 , the Parties agree that as of the Distribution Time, the Shared Location will be the Iron Mountain storage facility located at Boyers, Pennsylvania, which will be maintained pursuant to an agreement between RemainCo and Iron Mountain for the 137RC account and by SpinCo for the 1100 account. RemainCo and SpinCo shall share all costs and expenses related to storing the Shared Library Materials with Iron Mountain in a manner consistent with Section 4.3(b) above.

Section 4.4 Potential Allocation of Shared Library Materials . The Parties acknowledge and agree that the Shared Library Materials may contain limited material that could be allocated solely to one Party with respect to ownership and use. In the event that one Party (the “Notifying Party”) discovers an item of Shared Library Material which it believes should be allocated to one Party based upon a good faith belief that such items belongs to or relates exclusively to the business of such Party, the Notifying Party will notify the other Party (the “Reviewing Party”) of the item and the proposed allocation, including the Notifying Party’s rationale, in writing and designate at least one representative from the relevant operating division to negotiate the proposal. The Reviewing Party will designate at least one representative from the relevant operating division to review and negotiate the proposed allocation. The Parties, including the designated representatives, shall negotiate regarding the Notifying Party’s proposal in good faith. In the event that the Parties mutually agree that the Notifying Party’s proposal is valid, the applicable item of Shared Library Material (i) shall be deemed to be owned by the specified Party, (ii) shall no longer constitute Shared Library Material; (iii) shall be permanently removed from the Shared Location by the specified Party and (iv) shall be removed from Schedule 4.1 , provided, however, that the foregoing shall not limit a Party’s existing use of any Shared Library Material or obligate any Party to cease utilizing any derivative works of such

 

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Shared Library Material made prior to the date of agreement regarding the Notifying Party’s proposal. In the event that the Parties do not agree that the Notifying Party’s proposal is valid, the applicable item shall remain Shared Library Material under the terms of this Agreement. Without limiting the foregoing, the Parties agree and acknowledge that the Shared Library Materials may contain design standards and design manuals related solely to nuclear content set forth on Schedule 4.4 (collectively, the “Nuclear Design Manuals”), and that such Nuclear Design Manuals are deemed to be owned by RemainCo, subject only to SpinCo’s right to confirm that such Nuclear Design Manuals, including each page therein, are marked with the engineering standards series and numbering set forth on Schedule 4.4 . SpinCo’s right to such confirmation is expressly limited to confirmation of the engineering standards series and numbering system contained in or on such Nuclear Design Materials for purposes of confirmation of the document’s identification and does not include the right to analyze, review, or approve any of the content contained in any such Nuclear Design Manual.

Section 4.5 Confidentiality and Trade Secret Status of Shared Library Materials . The Parties acknowledge that the Research Documents contained within the Shared Library Materials likely contain proprietary trade secret information. Each Party will use reasonable efforts to maintain confidentiality of any trade secret or proprietary information contained within the Shared Library Materials in a manner materially consistent with the how the applicable Party protects its own trade secret or proprietary information.

Section 4.6 Third Party Materials Contained in the Shared Library Materials . The Parties acknowledge that the Shared Library Materials contain Third Party-owned material, including, without limitation, the Reference Materials, and this Agreement does not include any license to utilize such Third Party-owned material or any representation, warranty or indemnity from or to SpinCo or RemainCo or any member of the SpinCo Group or RemainCo Group related to the use of such Third Party-owned material in connection with the Shared Library Materials.

ARTICLE V

INTELLECTUAL PROPERTY LICENSES AND COVENANTS

Section 5.1 Cross-License of Shared Know-How .

(a) SpinCo, for itself and as representative of all other members of the SpinCo Group, hereby grants to RemainCo (x) a perpetual, irrevocable, exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ) to use the SpinCo Know-How currently or previously used in connection with the RemainCo Business or otherwise in the possession of RemainCo or any member of the RemainCo Group as of Distribution Date (the “Licensed SpinCo Know-How”), for the continued operation of the RemainCo Business and any future extensions of the RemainCo Business in the RemainCo Core Field and (y) a perpetual, irrevocable, non-exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ) to use the Licensed SpinCo Know-How for the continued operation of the RemainCo Business and any future extensions of the RemainCo Business in any field other than the RemainCo Core Field or the SpinCo Core Field; provided, however, the foregoing licenses shall not extend to (i) SpinCo Know-How

 

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licensed by SpinCo or any other member of the SpinCo Group if and to the extent the licensing of same to RemainCo would constitute a breach of an agreement with any Third Party executed prior to the Effective Date or result in any expense to SpinCo or any member of the SpinCo Group for payments to such Third Party or (ii) any intellectual property not owned by one or more members of the SpinCo Group, or as to which no member of the SpinCo Group has the right to grant sublicenses, as of the Effective Date.

(b) RemainCo, for itself and as representative of all other members of the RemainCo Group, hereby grants to SpinCo (x) a perpetual, irrevocable, exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ) to use the RemainCo Know-How currently or previously used in connection with the SpinCo Business or otherwise in the possession of SpinCo or any member of the SpinCo Group as of the Distribution Date (the “Licensed RemainCo Know-How”), for the continued operation of the SpinCo Business and any future extensions of the SpinCo Business in the SpinCo Core Field and (y) a perpetual, irrevocable, non-exclusive, royalty-free, worldwide right and license with the right to grant sublicenses (solely as set forth in Section 5.6 ) to use the Licensed RemainCo Know-How for the continued operation of the SpinCo Business and any future extensions of the SpinCo Business in any field other than the RemainCo Core Field or the SpinCo Core Field; provided, however, the foregoing licenses shall not extend to (i) RemainCo Know-How licensed by RemainCo or any other member of the RemainCo Group if and to the extent the licensing of same to SpinCo would constitute a breach of an agreement with any Third Party executed prior to the Effective Date or result in any expense to RemainCo or any member of the RemainCo Group for payments to such Third Party or (ii) any intellectual property not owned by one or more members of the RemainCo Group, or as to which no member of the RemainCo Group has the right to grant sublicenses, as of the Effective Date.

Section 5.2 Reserved .

Section 5.3 Reserved .

Section 5.4 Cross-Licenses of Software .

(a) The Parties acknowledge and agree that each of RemainCo and SpinCo and additional members of the RemainCo Group and SpinCo Group presently have shared access to and rights to exploit the Software set forth on Schedule 5.4(a) (the “Foundational Software”) and may have a right and interest in and to the Foundational Software, including in and to Intellectual Property embodied therein. Accordingly, (i) with respect to RemainCo’s right and interest in and to the Foundational Software, RemainCo, for itself and as representative of all other members of the RemainCo Group, hereby grants to SpinCo (x) a perpetual, irrevocable, exclusive, royalty-free, worldwide right and license to use the Foundational Software, including any Intellectual Property embodied therein, for the continued operation of the SpinCo Business and any future extensions of the SpinCo Business in the SpinCo Core Field and (y) a perpetual, irrevocable, non-exclusive, royalty-free, worldwide right and license to use the Foundational Software, including any Intellectual Property embodied therein, for the continued operation of the SpinCo Business and any future extensions of the SpinCo Business in any field other than the SpinCo Core Field or the RemainCo Core Field; and (ii) with respect to SpinCo’s right and interest in and to the Foundational Software, SpinCo, for itself and as representative of all other members

 

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of the SpinCo Group, hereby grants to RemainCo (x) a perpetual, irrevocable, exclusive, royalty-free, worldwide right and license to use the Foundational Software, including any Intellectual Property embodied therein, for the continued operation of the RemainCo Business and any future extensions of the RemainCo Business in the RemainCo Core Field and (y) a perpetual, irrevocable, non-exclusive, royalty-free, worldwide right and license to use the Foundational Software, including any Intellectual Property embodied therein, for the continued operation of the RemainCo Business and any future extensions of the RemainCo Business in any field other than the SpinCo Core Field or the RemainCo Core Field. The foregoing licenses includes the right to reproduce, prepare derivative works, distribute, perform and otherwise exploit such Foundational Software and to use the Foundational Software to design, develop, manufacture, have manufactured, sell and support products and services.

Section 5.5 Reserved .

Section 5.6 Sublicensing; Assignability .

(a) The foregoing licenses shall be assignable in whole or in part only (i) to any Affiliate or (ii) to the extent the licensee transfers to a Third Party all or substantially all of the assets of the business to which such Licensed SpinCo Intellectual Property or the Licensed RemainCo Intellectual Property, as applicable, relates.

(b) RemainCo may sublicense the Licensed SpinCo Intellectual Property to Affiliates of RemainCo, even if they become Affiliates after the Distribution Date, solely within the scope of its licenses in Article 5 , provided that such sublicense shall only be effective for such time as such entity remains an Affiliate of RemainCo, subject to Section 5.6(a)(ii) . RemainCo may, and may permit its sublicensees to, sublicense erection and arrangement drawings; form, fit, and function drawings; and product and installation/erection specifications based upon the Licensed SpinCo Intellectual Property to: (i) customers to enable them to use, operate, maintain and repair the equipment, services or other deliverables which incorporate or are derived from the Licensed SpinCo Intellectual Property and which were sold to them by RemainCo or its sublicensees; and (ii) to contractors, subcontractors and vendors to enable them to manufacture, erect, install, service, repair and maintain those products to which the licenses set forth in Article 5 relate.

(c) SpinCo may sublicense the Licensed RemainCo Intellectual Property to Affiliates of SpinCo, even if they become Affiliates after the Distribution Date, solely within the scope of its licenses in Article 5 , provided that such sublicense shall only be effective for such time as such entity remains an Affiliate of SpinCo, subject to Section 5.6(a)(ii) . SpinCo may, and may permit its sublicensees to, sublicense erection and arrangement drawings; form, fit, and function drawings; and product and installation/erection specifications based upon the Licensed RemainCo Intellectual Property to: (i) customers to enable them to use, operate, maintain and repair the equipment, services or other deliverables which incorporate or are derived from the Licensed RemainCo Intellectual Property and which were sold to them by SpinCo or its sublicensees; and (ii) to contractors, subcontractors and others to enable them to manufacture, erect, install, service, repair and maintain those products to which the license set forth in Article 5 relate.

 

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Section 5.7 Restrictions on Licensor Exploitation of Intellectual Property .

(a) RemainCo (i) shall not use or exploit the Licensed RemainCo Intellectual Property in the SpinCo Core Field and (ii) shall not, and shall not permit any member of the RemainCo Group to, license, provide or otherwise grant to any Third Party the right to use, exploit or access any Licensed RemainCo Intellectual Property in the SpinCo Core Field.

(b) SpinCo (i) shall not use or exploit the Licensed SpinCo Intellectual Property in the RemainCo Core Field and (ii) shall not, and shall not permit any member of the SpinCo Group to, license, provide or otherwise grant to any Third Party the right to use, exploit or access any Licensed SpinCo Intellectual Property in the RemainCo Core Field.

Section 5.8 Third Party Agreements; Reservation of Rights .

(a) All licenses granted herein are expressly made only subject to, and only to the extent permissible under, all pre-existing rights, obligations and restrictions contained in any existing agreements related to the applicable Intellectual Property licensed herein, including, without limitation, licenses or other rights existing in third parties granted by SpinCo or RemainCo and/or their sublicensees in existing license agreements, applicable agreements in existence between members of the RemainCo Group and the United States Department of Energy, applicable agreements in existence between members of the SpinCo Group and the United States Department of Energy and all existing security agreements and liens in place in connection with such licensed Intellectual Property.

(b) Except for the limited rights granted in this Agreement in connection with the Licensed RemainCo Intellectual Property, including, without limitation, the rights and obligations arising out of or related to Section 5.10 , RemainCo reserves to itself all right, title and interest in and to the Licensed RemainCo Intellectual Property. Without limiting the foregoing, for purposes of clarity, as between RemainCo and SpinCo, RemainCo retains all rights in and to, and to use and exploit, and including without limitation the right to make, have made, use, lease, sell, offer for sale, and import, and use, reproduce, prepare derivative works of, distribute copies, perform and display products and services which utilize or embody such Licensed RemainCo Intellectual Property in the RemainCo Core Field. Except for the limited rights granted in this Agreement in connection with the Licensed SpinCo Intellectual Property, including, without limitation, the rights and obligations arising out of or related to Section 5.10 , SpinCo reserves to itself all right, title and interest in and to the Licensed SpinCo Intellectual Property. Without limiting the foregoing, for purposes of clarity, as between RemainCo and SpinCo, SpinCo retains all rights in and to, and to use and exploit, and including without limitation the right to make, have made, use, lease, sell, offer for sale, and import, and use, reproduce, prepare derivative works of, distribute copies, perform and display products and services which utilize or embody such Licensed SpinCo Intellectual Property in the SpinCo Core Field.

Section 5.9 Maintenance of Intellectual Property .

(a) RemainCo shall not have, nor shall any member of the RemainCo Group have, any obligation to maintain the pendency, subsistence, validity, enforceability or confidentiality of any Licensed RemainCo Intellectual Property. RemainCo may, and may permit an applicable member of the RemainCo Group to, discontinue maintenance, abandon or dedicate to the public any Licensed RemainCo Intellectual Property.

 

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(b) SpinCo shall not have, nor shall any member of the SpinCo Group have, any obligation to maintain the pendency, subsistence, validity, enforceability or confidentiality of any Licensed SpinCo Intellectual Property. SpinCo may, and may permit an applicable member of the RemainCo Group to, discontinue maintenance, abandon or dedicate to the public any Licensed RemainCo Intellectual Property.

Section 5.10 Covenants .

(a) RemainCo hereby covenants not to sue SpinCo under any Licensed RemainCo Know-How and under RemainCo’s right, title and interest in and to Shared Library Materials and Foundational Software, including, without limitation, all applicable Patents, Copyrights, and Know-How, for infringement or misappropriation based upon any action that occurs in connection with the continued operation of the SpinCo Business and any future extensions of the SpinCo Business in any field other than the RemainCo Core Field after the Distribution Date. The foregoing covenant shall extend to any permitted assignees or sublicensees of SpinCo hereunder. RemainCo further covenants to impose the obligations set forth in this Section 5.10(a) on any subsequent Third Party or Affiliate to whom RemainCo may sell, transfer, convey or otherwise assign any of the foregoing Intellectual Property and shall ensure that any such Person agrees, in writing, to be bound by the covenants and obligations set forth herein.

(b) SpinCo hereby covenants not to sue RemainCo under any Licensed SpinCo Know-How and under SpinCo’s right, title and interest in and to Shared Library Materials and Foundational Software, including, without limitation, all applicable Patents, Copyrights, and Know-How, for infringement or misappropriation based upon any action that occurs in connection with the continued operation of the RemainCo Business and any future extensions of the RemainCo Business in any field other than the SpinCo Core Field after the Distribution Date. The foregoing covenant shall extend to any permitted assignees or sublicensees of RemainCo hereunder. SpinCo further covenants to impose the obligations set forth in this Section 5.10(b) on any subsequent Third Party or Affiliate to whom SpinCo may sell, transfer, convey or otherwise assign any of the foregoing Intellectual Property and shall ensure that any such Person agrees, in writing, to be bound by the covenants and obligations set forth herein.

ARTICLE VI

TECHNICAL ASSISTANCE AND TECHNOLOGY TRANSFER

Section 6.1 Reserved .

Section 6.2 Reserved .

Section 6.3 No Additional Technical Assistance . Except as expressly set forth in the Master Separation Agreement or any other Intellectual Property Agreement or other Ancillary Agreement, no Party shall be required to provide the other Party with any technical assistance or to furnish any other Party with any documents, materials or other information or Know-How.

 

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ARTICLE VII

NO WARRANTIES.

Except as expressly set forth in this Agreement, SpinCo and RemainCo understand and agree that no member of the RemainCo Group is making any representation or warranty of any kind whatsoever, express or implied, to SpinCo or any member of the SpinCo Group in any way as to the SpinCo Business, the Foundational Software, Shared Library Materials or the Licensed RemainCo Intellectual Property; and, no member of the SpinCo Group is making any representation or warranty of any kind whatsoever, express or implied, to RemainCo or any member of the RemainCo Group in any way as to the RemainCo Business, the Shared Library Materials, the Foundational Software or the Licensed SpinCo Intellectual Property. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING THE TRANSFERS AND LICENSES REFERRED TO IN THIS AGREEMENT (INCLUDING PRIOR TRANSFERS) HAVE BEEN, OR WILL BE, MADE WITHOUT ANY REPRESENTATION OR WARRANTY OF ANY NATURE, EXPRESS OR IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE, RELATING TO (A) THE VALUE OR FREEDOM FROM ENCUMBRANCE OF, ANY ASSETS OR INTELLECTUAL PROPERTY, (B) THE CONDITION OR SUFFICIENCY OF ANY ASSETS OR INTELLECTUAL PROPERTY (INCLUDING ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, MARKETABILITY, TITLE, VALUE, FREEDOM FROM ENCUMBRANCE OR OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR THE PRESENCE OR ABSENCE OF ANY HAZARDOUS MATERIALS IN OR ON, OR DISPOSED OR DISCHARGED FROM, SUCH ASSETS), (C) THE NON-INFRINGEMENT OF ANY PATENT OR OTHER INTELLECTUAL PROPERTY RIGHT OF ANY THIRD PARTY, (D) ANY OTHER MATTER CONCERNING ANY ASSETS OR INTELLECTUAL PROPERTY (E) AS TO THE LEGAL SUFFICIENCY TO CONVEY TITLE TO ANY ASSETS OR INTELLECTUAL PROPERTY OR (F) THAT THE LICENSOR HAS ANY RIGHTS OR TITLE AT ALL IN OR TO ANY INTELLECTUAL PROPERTY. WITHOUT LIMITING THE FOREGOING, REMAINCO AND SPINCO HEREBY ACKNOWLEDGE AND AGREE THAT ALL INTELLECTUAL PROPERTY TRANSFERRED OR LICENSED PURSUANT TO THIS AGREEMENT AND ALL INTELLECTUAL PROPERTY INCLUDED IN PRIOR TRANSFERS ARE BEING OR WERE LICENSED OR TRANSFERRED “AS IS, WHERE IS.”

ARTICLE VIII

THIRD-PARTY INFRINGEMENT

Section 8.1 No Obligation . No Party shall have any obligation to institute or maintain any action or suit against any Third Party for infringement or misappropriation of any Intellectual Property licensed hereunder, or to defend any action or suit brought by a Third Party which challenges or concerns the validity of any such Intellectual Property or which claims that any Intellectual Property licensed to the other Party infringes or constitutes misappropriation of the Intellectual Property rights of any Third Party.

 

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Section 8.2 Notice Regarding Infringement . Each Party shall promptly notify the other Party in writing upon learning that a Third Party may potentially be infringing, misappropriating or otherwise violating any Intellectual Property licensed under this Agreement, which notice shall set forth in reasonable detail the identity of the suspected infringer and nature of suspected infringement.

Section 8.3 Suits for Infringement .

(a) Licensed RemainCo Intellectual Property .

(i) With respect to any Licensed RemainCo Intellectual Property to which RemainCo has granted SpinCo an exclusive license hereunder, as between RemainCo and SpinCo, RemainCo shall have the first right to initiate, prosecute and control any action or proceeding to restrain infringement or misappropriation of such Licensed RemainCo Intellectual Property in the SpinCo Core Field, and, for purposes of clarity, the sole and exclusive right to initiate, prosecute and control such proceedings in the RemainCo Core Field and in any field other than the SpinCo Core Field. RemainCo shall provide prompt written notice to SpinCo of any determination to initiate, prosecute and control any such action or proceeding in the SpinCo Core Field. SpinCo, as the exclusive licensee, agrees to be joined as a party if necessary to prosecute the action or proceeding, and shall provide all reasonable cooperation, including any necessary use of their name, required to prosecute such action or proceeding. In such instance, RemainCo shall control any such action or proceeding and negotiations for its settlement and compromise and shall have sole discretion regarding the settlement or compromise thereof. In connection with the foregoing, SpinCo may, at its option, elect to assume and pay its and RemainCo’s out-of-pocket costs incurred in connection with such litigation or proceeding undertaken by RemainCo, including, without limitation, attorney’s fees. SpinCo will provide prompt written notice to RemainCo, in any event no later than thirty (30) days after receipt of RemainCo’s notice of its determination to initiate, prosecute and control such action or proceeding in the SpinCo Core Field, of its determination to elect to assume and pay the applicable costs or to decline to pay assume and pay the applicable costs. In the event SpinCo does not elect to assume and pay the costs associated with RemainCo’s initiation, prosecution and control of such action or proceeding in the SpinCo Core Field, RemainCo shall assume and pay its and SpinCo’s out-of-pocket costs incurred in connection with such litigation or proceeding undertaken by RemainCo, including, without limitation, attorney’s fees. Any recovery obtained as a result of such proceeding in the SpinCo Core Field shall be retained by (i) SpinCo in the event that SpinCo assumed and paid the applicable costs of the litigation or proceeding or (ii) RemainCo in the event that RemainCo assumed and paid the applicable costs of the litigation or proceeding in accordance with this Section 8.3(a)(i) .

(ii) If RemainCo does not exercise its right to enforce any applicable Licensed RemainCo Intellectual Property in the SpinCo Core Field, RemainCo shall provide notice to that effect to SpinCo and, as between RemainCo and SpinCo, SpinCo shall have the right to initiate, prosecute and control any action or proceeding to restrain infringement or misappropriation of such Licensed RemainCo Intellectual Property in the SpinCo Core Field. SpinCo shall provide prompt written notice to RemainCo of any determination to initiate, prosecute and control any such action or proceeding in the SpinCo Core Field. RemainCo, as the owner and licensor, agrees to be joined as a party if necessary to prosecute the action or proceeding, and shall

 

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provide all reasonable cooperation, including any necessary use of their name, required to prosecute such action or proceeding. In connection with the foregoing, SpinCo shall assume and pay its and RemainCo’s out-of-pocket costs incurred in connection with any litigations or proceedings described above, including, without limitation, attorney’s fees. Any recovery obtained as a result of such proceeding related to infringement or misappropriation in the SpinCo Core Field shall be retained by SpinCo.

(iii) In the event that a Third Party may potentially be infringing, misappropriating or otherwise violating any Licensed RemainCo Intellectual Property in both the SpinCo Core Field and the RemainCo Core Field, SpinCo and RemainCo will meet and confer in good faith regarding the manner in which to respond to such infringement in the SpinCo Core Field and RemainCo Core Field collectively, provided, however, that the foregoing does not limit the rights set forth in Section 8.3(a)(i) or Section 8.3(a)(ii) .

(b) Licensed SpinCo Intellectual Property .

(i) With respect to any Licensed SpinCo Intellectual Property to which SpinCo has granted RemainCo an exclusive license hereunder, as between SpinCo and RemainCo, SpinCo shall have the first right to initiate, prosecute and control any action or proceeding to restrain infringement or misappropriation of such Licensed SpinCo Intellectual Property in the RemainCo Core Field, and, for purposes of clarity, the sole and exclusive right to initiate, prosecute and control such proceedings in the SpinCo Core Field and in any field other than the RemainCo Core Field. SpinCo shall provide prompt written notice to RemainCo of any determination to initiate, prosecute and control any such action or proceeding in the RemainCo Core Field. RemainCo, as the exclusive licensee, agrees to be joined as a party if necessary to prosecute the action or proceeding, and shall provide all reasonable cooperation, including any necessary use of their name, required to prosecute such action or proceeding. In such instance, SpinCo shall control any such action or proceeding and negotiations for its settlement and compromise and shall have sole discretion regarding the settlement or compromise thereof. In connection with the foregoing, RemainCo may, at its option, elect to assume and pay its and SpinCo’s out-of-pocket costs incurred in connection with such litigation or proceeding, including, without limitation, attorney’s fees. RemainCo will provide prompt written notice to SpinCo, in any event no later than thirty (30) days after receipt of SpinCo’s notice of its determination to initiate, prosecute and control such action or proceeding in the RemainCo Core Field, of its determination to elect to assume and pay the applicable costs or to decline to pay assume and pay the applicable costs. In the event RemainCo does not elect to assume and pay the costs associated with SpinCo’s initiation, prosecution and control of such action or proceeding in the RemainCo Core Field, SpinCo shall assume and pay its and RemainCo’s out-of-pocket costs incurred in connection with such litigation or proceeding undertaken by SpinCo, including, without limitation, attorney’s fees. Any recovery obtained as a result of such proceeding in the RemainCo Core Field shall be retained by (i) RemainCo in the event that RemainCo assumed and paid the applicable costs of the litigation or proceeding or (ii) SpinCo in the event that SpinCo assumed and paid the applicable costs of the litigation or proceeding in accordance with this Section 8.4(b)(i) .

(ii) If SpinCo does not exercise its right to enforce any applicable Licensed SpinCo Intellectual Property in the RemainCo Core Field, SpinCo shall provide notice to that

 

20


effect to RemainCo and, as between SpinCo and RemainCo, RemainCo shall have the right to initiate, prosecute and control any action or proceeding to restrain infringement or misappropriation of such Licensed SpinCo Intellectual Property in the RemainCo Core Field. RemainCo shall provide prompt written notice to SpinCo of any determination to initiate, prosecute and control any such action or proceeding. SpinCo, as the owner and licensor, agrees to be joined as a party if necessary to prosecute the action or proceeding, and shall provide all reasonable cooperation, including any necessary use of their name, required to prosecute such action or proceeding. In connection with the foregoing, RemainCo shall assume and pay its and SpinCo’s out-of-pocket costs incurred in connection with any litigations or proceedings described above, including, without limitation, attorney’s fees. Any recovery obtained as a result of such proceeding related to infringement or misappropriation in the RemainCo Core Field shall be retained by RemainCo.

(iii) In the event that a Third Party may potentially be infringing, misappropriating or otherwise violating any Licensed SpinCo Intellectual Property in both the RemainCo Core Field and the SpinCo Core Field, SpinCo and RemainCo will meet and confer in good faith regarding the manner in which to respond to such infringement in the RemainCo Core Field and SpinCo Core Field collectively, provided, however, that the foregoing does not limit the rights set forth in Section 8.4(b)(i) or Section 8.4(b)(ii) .

ARTICLE IX

CONFIDENTIALITY

Section 9.1 RemainCo and SpinCo shall hold and shall cause the members of the RemainCo Group and the SpinCo Group, respectively, to hold, and shall each cause their respective officers, employees, agents, consultants and advisors to hold, in strict confidence and not to disclose or release without the prior written consent of the other Party, any and all Confidential Information (as defined herein) of such other Party or the members of its Group; provided, that the Parties may disclose, or may permit disclosure of, such Confidential Information (i) to their respective auditors, attorneys, financial advisors, bankers and other appropriate consultants and advisors who have a need to know such information and are informed of their obligation to hold such information confidential to the same extent as is applicable to the Parties and in respect of whose failure to comply with such obligations, RemainCo or SpinCo, as the case may be, will be responsible or (ii) to the extent any member of the RemainCo Group or the SpinCo Group is compelled to disclose any such Confidential Information by judicial or administrative process or, in the opinion of legal counsel, by other requirements of Law. Notwithstanding the foregoing, in the event that any demand or request for disclosure of Confidential Information is made pursuant to clause (ii) above, RemainCo or SpinCo, as the case may be, shall promptly notify the other of the existence of such request or demand and shall provide the other a reasonable opportunity to seek an appropriate protective order or other remedy, which both Parties will cooperate in seeking to obtain. In the event that such appropriate protective order or other remedy is not obtained, the Party who is being compelled to disclose (or whose Group member is being compelled to disclose) shall, and shall cause the applicable members at its Group to, furnish, or cause to be furnished, only that portion of such Confidential Information that is legally required to be disclosed.

 

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Section 9.2 As used in this Article 9 , “Confidential Information” shall mean all proprietary, technical or proprietary, operational information (including Know-How and proprietary information relating to the ages, birth dates, social security numbers, health-related matters or other confidential matters concerning employees or former employees) of one Party or members of its Group which, prior to or following the Distribution Time, has been disclosed by RemainCo or members of the RemainCo Group, on the one hand, or SpinCo or members of the SpinCo Group, on the other hand, to, or otherwise has come into the possession of, the other Group, including pursuant to the technical assistance and technology transfer provisions of Article VI hereof or any other provision of this Agreement (except to the extent that such information can be shown to have been (a) in the public domain through no fault of such Party (or, in the case of RemainCo, any other member of the RemainCo Group or, in the case of SpinCo, any other member of the SpinCo Group) or (b) later lawfully acquired from other sources by the Party (or, in the case of RemainCo, such member of the RemainCo Group or, in the case of SpinCo, such member of the SpinCo Group) to which it was furnished; provided, however, in the case of (b) that such sources did not provide such information in breach of any confidentiality obligations), or (c) independently developed by employees or agents of such Party who had no access, direct or indirect, to such information provided by the other Party.

(a) Each Party shall use the Confidential Information only as permitted pursuant to this Agreement and shall not disclose any Confidential Information to any Third Party unless permitted pursuant to this Agreement. Each Party shall exercise the same degree of care to protect and maintain the confidentiality of the Confidential Information received from the other Party hereunder (but no less than a reasonable degree of care) as they take to preserve confidentiality for their own similar information. Without limiting the foregoing, each Party will take commercially reasonable efforts to implement and maintain comprehensive security protocols to protect and maintain the confidentiality of the Confidential Information received from the other Party hereunder, including, without limitation, implementing administrative, technical, digital, electronic and physical security strategies and access restrictions to protect Confidential Information.

ARTICLE X

MISCELLANEOUS

Section 10.1 Authority . Each of the Parties represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it has been duly authorized by all necessary corporate or other actions, (c) it has duly and validly executed and delivered this Agreement to be executed and delivered on or prior to the Distribution Time, and (d) this Agreement is legal, valid and binding obligations, enforceable against it in accordance with their respective terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally and general equity principles.

Section 10.2 Entire Agreement . This Agreement and the Schedules referenced herein or therein or attached hereto or thereto, constitute the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersedes all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof.

 

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Section 10.3 Binding Effect; Third-Party Beneficiaries; Assignment . Except as expressly set forth in Section 5.10 and except for the Affiliates of the Parties, which are intended to be third party beneficiaries hereunder, this Agreement does not and is not intended to confer any rights or remedies upon any Person other than the Parties. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. This Agreement may not be assigned by either Party, except with the prior written consent of the other Party.

Section 10.4 Amendment . No change or amendment may be made to this Agreement except by an instrument in writing signed on behalf of both of the Parties.

Section 10.5 Failure or Indulgence Not Waiver; Remedies Cumulative . No failure or delay on the part of either Party in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant or agreement contained herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement or the Schedules attached hereto are cumulative to, and not exclusive of, any rights or remedies otherwise available.

Section 10.6 Notices . Unless otherwise expressly provided herein, all notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to be duly given (i) when personally delivered or (ii) if mailed by registered or certified mail, postage prepaid, return receipt requested, on the date the return receipt is executed or the letter is refused by the addressee or its agent or (iii) if sent by overnight courier which delivers only upon the signed receipt of the addressee, on the date the receipt acknowledgment is executed or refused by the addressee or its agent or (iv) if sent by facsimile or electronic mail, on the date confirmation of transmission is received (provided that a copy of any notice delivered pursuant to this clause (iv) shall also be sent pursuant to clause (i), (ii) or (iii)), addressed to the attention of the addressee’s General Counsel at the address of its principal executive office or to such other address or facsimile number for a Party as it shall have specified by like notice.

Section 10.7 Counterparts . This Agreement, including the Schedules and Exhibits hereto and the other documents referred to herein, may be executed in multiple counterparts, each of which when executed shall be deemed to be an original but all of which together shall constitute one and the same agreement.

Section 10.8 Severability . If any term or other provision of this Agreement or the Schedules attached hereto is determined by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the court, administrative agency or arbitrator shall interpret this Agreement so as to effect the original

 

23


intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

Section 10.9 Governing Law . This Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of Delaware, without regard to any conflicts of law provisions thereof that would result in the application of the laws of any other jurisdiction.

Section 10.10 Construction . This Agreement shall be construed as if jointly drafted by SpinCo and RemainCo and no rule of construction or strict interpretation shall be applied against either Party. The Parties represent that this Agreement is entered into with full consideration of any and all rights which the Parties may have. The Parties have relied upon their own knowledge and judgment and upon the advice of the attorneys of their choosing. The Parties have had access to independent legal advice, have conducted such investigations they and their counsel thought appropriate, and have consulted with such other independent advisors as they and their counsel deemed appropriate regarding this Agreement and their rights and asserted rights in connection therewith. The Parties are not relying upon any representations or statements made by any other Party, or such other Party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are expressly set forth or incorporated in this Agreement. The Parties are not relying upon a legal duty, if one exists, on the part of the other Party (or such other Party’s employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or its preparation, it being expressly understood that neither Party shall ever assert any failure to disclose information on the part of the other Party as a ground for challenging this Agreement.

Section 10.11 Performance . Each Party 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 or Affiliate of such Party.

[INTENTIONALLY LEFT BLANK]

 

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WHEREFORE, the Parties have signed this Agreement effective as of the date first set forth above.

 

THE BABCOCK & WILCOX COMPANY
By:  

/s/ David S. Black

Name:   David S. Black
Title:   Vice President and Chief Accounting Officer
BABCOCK & WILCOX ENTERPRISES, INC.
By:  

/s/ J. André Hall

Name:   J. André Hall
Title:   Senior Vice President, General Counsel and Secretary


Schedule 1.1(e)

SpinCo Core Field; RemainCo Core Field

SpinCo Core Field means:

 

1. Ownership and/or operation of power generation facilities fired with combustible fossil fuels (e.g., coal, coal slurry, oil or natural gas), biomass, municipal solid waste or concentrated solar energy through tower based solar thermal conversion systems, in each case for the provision of power, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

2. Design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning related to:

 

  (a). Fired steam generators encompassing fossil fuel boilers which are fueled by combustible fossil fuels (e.g., coal, coal slurry, oil or natural gas) or support subsystems, equipment or components thereof, including fuel drying, fuel feed, pulverizers, burners, combustion systems, grates, pressure parts, air heaters, fans, boiler cleaning systems, ash systems, valves, controls & diagnostics, oxycombustion systems, condensing heat exchangers used in connection with such fired steam generators, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (b). Fired steam generators encompassing waste fuel boilers which are fueled by combustible waste fuels (e.g., carbon monoxide, biomass, black liquor, municipal solid waste (MSW) or refuse-derived fuel (RDF)) or support subsystems, equipment or components thereof, including fuel drying, fuel feed, pulverizers, burners, combustion systems, grates, pressure parts, air heaters, fans, boiler cleaning systems, ash systems, valves, controls & diagnostics, oxycombustion systems, condensing heat exchangers used in connection with such fired steam generators, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).


  (c). Gasifier systems which partially convert fossil or waste fuels (e.g., coal, oil, natural gas or biomass) to syngas and support subsystems, equipment or components thereof, including fuel drying, fuel feed, pulverizers, burners, combustion systems, gasifiers, heat exchangers used in connection with such gasifier systems, pressure parts, boiler cleaning systems, ash systems, valves, controls & diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (d). Tower-based solar thermal conversion systems which are enabled by solar energy and support subsystems, equipment or components thereof, including receiver system, pressure parts, molten salt or particle systems (e.g., heat exchangers specifically for tower-based solar thermal conversion systems enabled by solar energy or associated pumps or tanks), valves, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (e). The following specific unfired heat exchangers Turbine Exhaust Gas boilers (10K2), Heat Recovery Steam Generation Boilers (10K22), Water Tube Waste Heat Boilers Two Drum (Stirling Types) (1K4), 3 Drum Waste Heat Recovery Boiler (1K4), Water Tube Waste Heat “H” Stirling Boiler (1K4), Water Tube Long Drum (LD) boiler (1K4), CO boiler (1K26), Waste Heat (WH) (1K4), Oxygen Convertor Hoods (1K44), Gas Tube (FT) boilers (1K46), FM boilers (1K239), FO boilers (1K2311), Struthers Wells type EOR boiler as defined by the existing specific referenced design standards, or support subsystems, equipment or components thereof, including pressure parts, cleaning systems, valves, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (f). Chemical looping conversion systems which are fueled by combustible fossil fuels (e.g., coal, coal slurry, oil or natural gas) and which produce an energy output of steam, CO 2 , H 2 or syngas or support subsystems, equipment or components thereof, including fuel feed, pulverizers, reactors, pressure parts, air heaters, fans, boiler cleaning systems, ash systems, valves, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (g). Pulverized coal injection systems for use in connection with steel production or support subsystems, equipment or components thereof, including pulverizers, pressurization systems, tanks, valves, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).


  (h). Heat transfer surface cleaning systems and support subsystems, equipment and components thereof (other than said systems related to or utilized in connection with nuclear fueled systems and expressly excluding nuclear steam generators), including sootblowers (air, steam, water or sonic), related valve or piping systems, sprayers, controls (basic, intelligent) or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (i). Ash handling systems or support subsystems, equipment or components thereof, including mechanical conveyors (wet or dry), pneumatic conveyors (wet, dry, dilute, or dense phase), ash conditioning, tanks, valves, specialty piping, controls or diagnostics, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (j). Industrial pulverizer or grinding equipment systems or support subsystems (other than said systems or support subsystems related to or utilized in connection with nuclear fuel manufacturing or processing), other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (k). Drying and/or coating systems utilizing continuous and/or batch flow dryer/oven equipment for industrial processes, including but not limited to various production lines (e.g., roll fed, sheet fed, coating, drying or web handling), dryers and/or ovens (e.g., air flotation dryers or ovens, roll support dryers, infrared dryers, ultraviolet dryers, microwave or radio frequency), coating line auxiliary equipment, festoon and catenary style ovens, valves and material handling systems, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (l). Utility emissions control systems used in connection with combustion power generation systems, which are designed to remove nitrogen oxides (e.g., SCR or SNCR), sulfur oxides (e.g., WFGD, SDA, CDS, DSI, or others), particulates (e.g., dry ESP, wet ESP, fabric filter or cyclonic), carbon dioxide (e.g., scrubber systems), hydrocarbons, or air toxics (e.g., Sb, Be, Cd, Cr, Co, Pb, Mn, Ni, (SO2)3, HF, Hg, P, Se, Cd, As, or HCl (or other acid gases)), HAPS, dioxins, furans or others) and/or subsequent energy or waste recovery or associated subsystems, equipment or components thereof, including valves, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (m).

Wastewater treatment systems (i) that process wastewater derived from combustion power generation and municipal solid waste (“MSW”) systems, including


  without limitation FGD dewatering systems or zero liquid discharge (ZLD) systems, or associated subsystems, equipment or components thereof, including valves or (ii) that process wastewater as part of or ancillary to the systems set forth in SpinCo Core Field 2(k), 2(l) or 2(n), in each case other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (n). Industrial emission control, gas cleaning and/or conditioning, or liquids purification and/or recovery systems (other than said systems set forth in RemainCo Core Field 1(m)), including SCR, SNCR, WFGD, SDA, CDS, DSI, other scrubbers, dry ESP, wet ESP, fabric filter, cyclonic, solvent recovery systems, biological abatement systems, solvent distillation systems (including waste water treatment), evaporative gas conditioning and cooling systems or regenerative thermal (and other) oxidation systems or associated subsystems, equipment or components thereof, including valves, for the removal of nitrogen oxides, sulfur oxides, particulates, carbon dioxide, hydrocarbons, or air toxics (e.g., Sb, Be, Cd, Cr, Co, Pb, Mn, Ni, (SO2) 3 , HF, Hg, P, Se, As, Cd, HCl (or other acid gases)), HAPS, dioxins, furans, others) and/or subsequent energy or waste recovery, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

  (o). Hybrid power generation systems or associated equipment where renewable energy sources are combined with a combustible fossil fuel (e.g., coal, coal slurry, oil or natural gas) or combustible waste fuel (e.g., carbon monoxide, biomass, black liquor, MSW or RDF) primary energy source, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

 

3. Engineering procurement, construction, installation, supply, lease, commissioning, training , delivery, inspection, testing of, support, operations, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, relocation, project management, construction management, technical advice, construction consultation, siting support or consultation, environmental services or consultation, safety, health, troubleshooting, cleaning, upgrading and tooling of balance of plant for power generation facilities fired with combustible fossil fuels (e.g., coal, coal slurry, oil or natural gas) and pulp and paper facilities, other than maintenance and operation services performed as part of overall facility operation and management contracts for domestic or foreign government agencies or entities (including but not limited to NNSA, NASA, DOD, DOE, as well as United Kingdom NDA or MOD sites).

RemainCo Core Field means:

 

1.

Design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair,


  refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning, related to:

 

  (a). Nuclear facilities and nuclear reactor plants, nuclear reactor systems, nuclear reactors, including all thermal reactors (including all heavy-water and light-water reactors), all water cooled reactors, all liquid metal cooled reactors (including sodium cooled reactors), gas cooled reactors (including helium, carbon dioxide and nitrogen) and molten salt reactors, breeder reactors, traveling wave reactors, high temperature reactors, small modular nuclear reactors, medical isotope reactors and components thereof and all Generation I, Generation II, Generation III and all advanced reactors, including and Generation IV reactors and iterations thereof regardless of design, and hybrid power generation systems and associated equipment where renewable energy sources are combined with a nuclear primary energy source.

 

  (b). Support systems and subsystems, equipment and components of nuclear systems and nuclear reactors, including, reactor coolant systems, reactor protection, control and instrumentation systems, reactor auxiliary and safety systems, balance of plant systems, reactor vessel closure heads, reactor and other pressure vessels and internals, reactor coolant pumps, stators and motors, reactor fuel channels, feeders and related components, steam generators, reactor control rod drive mechanisms and other reactor electro-mechanical equipment and controls therefore, specialized tooling and inspection systems, heat exchangers, pressurizers, primary and secondary piping, valves and pumps, spent fuel and other nuclear fuel and nuclear material storage and shipping, nuclear waste containers and related systems, audio/visual systems, steam generator tube inspection systems, repair, modification and stabilization systems, tube plugging and tube removal systems.

 

  (c). Nuclear fuel and nuclear fuel components, including enrichment and any related components, assembly, nuclear fuel plant processes, manufacturing systems and processes and systems for the chemical processing of radiological materials, fuel core and fuel bearing precision components, fuel powder, sources, targets, targets for medical isotope production and industrial isotope production, targets for research and analysis in research reactors, graphite reflectors and control rods, poisons and other special nuclear materials for development and manufacturing of fuel components for pebble bed and other reactors.

 

  (d). Electro-mechanical devices related to or used in commercial, research, government, military and other nuclear facilities, reactors or vessels and associated subsystems, equipment and components thereof.

 

  (e). Advanced power systems for space applications and associated subsystems, equipment and components thereof.

 

  (f). Nuclear and non-nuclear propulsion systems for naval (U.S. and foreign) submarines and aircraft carriers and associated subsystems, equipment and components thereof, including all aftermarket, replacement and repair parts, components and equipment for existing naval submarines and aircraft carriers.


  (g). Nuclear propulsion systems for naval (U.S. and foreign) vessels other than submarines and aircraft carriers and associated subsystems, equipment and components thereof, including aftermarket, replacement and repair parts, components and equipment for such existing vessels.

 

  (h). Single crystal composite and ceramic materials for use in nuclear, defense, space and aerospace applications and subsystems, equipment and components thereof

 

  (i). High energy physics equipment, including electro-magnetic storage devices, power conversion and conditioning systems, superconducting materials and plasma energy systems, and, in each case, subsystems and components thereof, excluding energy storage systems that store kinetic energy using a rotating mass with low friction losses and deliver the stored energy via power electronics that convert kinetic to electrical energy using electrical equipment typical for that type of service.

 

  (j). Ordnance components, subsystems and components thereof.

 

  (k). Unfired heat exchangers where the applicable heat source energy input is derived from the release and/or use of nuclear energy or support subsystems, equipment or components thereof, including pressure parts, cleaning systems, valves, controls or diagnostics.

 

  (l). Wastewater treatment systems that process wastewater derived from the release and/or use of nuclear energy and subsystems, equipment and components thereof

 

  (m). Emission control systems related to nuclear fuel manufacture or fabrication, storage of nuclear materials and waste and nuclear powered systems and subsystems, equipment and components thereof.

 

2. Chemical and physical processing, storage and decontamination of and other management, operations, safety, security, emergency management, remediation and technical services related to radiological materials (including highly enriched uranium, low enriched uranium, natural uranium, fissile material and transuranic material), including receipt, storage, inspection, characterization, dissolution, recovery and purification, downblending, recycling, scrap recovery and processing and related research, development, engineering and analysis.

 

3. Developing and providing services related to security (including direct security services as well as training, consulting and similar services) for new or existing commercial, research, government, military and other facilities or vessels, including tactical security, security training, IT security, development of security processes, fitness for duty and government compliance (both contractual compliance) and in connection with NRC or other applicable licensing requirements.

 

4.

Provide facility operation and maintenance services, including production and program management, maintenance (including maintenance and service of fossil fired and renewable power generation systems performed as part of overall facility operation and management contracts), operation, environmental health and safety, security, emergency management, wastewater treatment, remediation and abatement, decontamination and decommissioning material storage and disposition and other related technical services, to domestic or foreign agencies (including but not limited to NNSA, NASA, DOD, DOE as well as United Kingdom NDA or MOD sites) and commercial entities related to critical infrastructure, nuclear, non-nuclear and biological activities such as nuclear operations of reactors and reactor facilities, laboratory (including national laboratories) and other facility operations, weapons production, refurbishment, storage and stockpile management, component


  (including centrifuge) manufacturing, medical and industrial isotope development and manufacture, and Chemical Laboratory Analysis Capability by SEM, Mass Spectrometer and similar equipment, excluding the provision of the foregoing services for solely standalone power generation facilities fired with combustible fossil fuels, biomass or municipal solid waste or concentrated solar energy through tower based solar thermal conversion systems For the avoidance of doubt, the foregoing does not include the design, manufacture, installation, supply, sale and supply of hardware, including entire systems, within the SpinCo Core Field (including, without limitation, the systems set forth in SpinCo Core Field 2(k), 2(l), 2(m) and 2(n)) to domestic or foreign agencies or commercial entities.

For the avoidance of doubt, the following are not included in the SpinCo Core Field or the RemainCo Core Field:

Design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning related to the following:

 

  (a). Un-fired heat exchangers other than those identified in SpinCo Core Field 2(e) or unfired heat exchangers where the applicable heat source energy input is derived from the release and/or use of nuclear energy, and support subsystems, equipment and components thereof, including pressure parts, cleaning systems, valves, controls, diagnostics, repair equipment and services.

 

  (b). Production of hydrogen by other high temperature processes.

 

  (c). Non-nuclear propulsion systems for naval (U.S. and foreign) vessels other than submarines and aircraft carriers, and associated subsystems equipment and components thereof, including aftermarket, replacement and repair parts, components and equipment for such existing vessels.

 

  (d). Non-naval (i.e., commercial marine) propulsion systems and associated subsystems, equipment and components thereof, including aftermarket, replacement and repair parts, components and equipment for existing systems.


Schedule 1.1(i)

Specific RemainCo Field; Specific SpinCo Field

“Specific SpinCo Field” means the design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning, related to heat exchangers specifically for tower-based solar thermal conversion systems enabled by solar energy and support subsystems, equipment or components thereof, including pressure parts, cleaning systems, valves, controls or diagnostics.

“Specific RemainCo Field” means the design, development, research, engineering, procurement, fabrication, analysis, manufacture, construction, installation, supply, marketing, sale, lease, rent, commissioning, training, delivery, inspection, testing of, support, operations, inspection, maintenance, upgrade, repair, refurbishment, rebuilding, replacement, modification, repowering/fuel switching, relocation, localization, or other services, including project management, construction project management or consultation, plant, system or component licensing, siting support or consultation, environmental, safety, health, laboratory analysis, engineering studies, field engineering services, nondestructive testing, evaluation or analytical services, metallographic analysis, consulting services, troubleshooting, failure analysis, cleaning, upgrading, tooling, or decommissioning, related to:

 

  (a). Nuclear facilities and nuclear reactor plants, nuclear reactor systems, nuclear reactors, including all thermal reactors (including all heavy-water and light-water reactors), all water cooled reactors, all liquid metal cooled reactors (including sodium cooled reactors), gas cooled reactors (including helium, carbon dioxide and nitrogen) and molten salt reactors, breeder reactors, traveling wave reactors, high temperature reactors, small modular nuclear reactors, medical isotope reactors and components thereof and all Generation I, Generation II, Generation III and all advanced reactors, including and Generation IV reactors and iterations thereof regardless of design, and hybrid power generation systems and associated equipment where renewable energy sources are combined with a nuclear primary energy source.

 

  (b).

Support systems and subsystems, equipment and components of nuclear systems and nuclear reactors, including, reactor coolant systems, reactor protection, control and instrumentation systems, reactor auxiliary and safety systems, balance of plant systems, reactor vessel closure heads, reactor and other pressure vessels and internals, reactor coolant pumps, stators and motors, reactor fuel channels, feeders and related components, steam generators, reactor control rod drive mechanisms and other reactor electro-mechanical equipment and controls therefore, specialized tooling and inspection systems,


  heat exchangers, pressurizers, primary and secondary piping, valves and pumps, spent fuel and other nuclear fuel and nuclear material storage and shipping, nuclear waste containers and related systems, audio/visual systems, steam generator tube inspection systems, repair, modification and stabilization systems, tube plugging and tube removal systems.

 

  (c). Nuclear fuel and nuclear fuel components, including enrichment and any related components, assembly, nuclear fuel plant processes, manufacturing systems and processes and systems for the chemical processing of radiological materials, fuel core and fuel bearing precision components, fuel powder, sources, targets, targets for medical isotope production and industrial isotope production, targets for research and analysis in research reactors, graphite reflectors and control rods, poisons and other special nuclear materials for development and manufacturing of fuel components for pebble bed and other reactors.

 

  (d). Naval nuclear propulsion systems and associated subsystems, equipment and components thereof, including aftermarket, replacement and repair parts, components and equipment for existing systems.


The company agrees to furnish supplementally a copy of any omitted exhibit or schedule to the Commission upon request.

Exhibit 10.18

 

 

 

Published CUSIP Number: 056147AA1

Revolving Credit CUSIP Number: 05614TAB9

CREDIT AGREEMENT

dated as of May 11, 2015

among

BABCOCK & WILCOX ENTERPRISES, INC.,

as the Borrower,

BANK OF AMERICA, N.A. ,

as Administrative Agent,

Swing Line Lender and an L/C Issuer,

and

The Other Lenders Party Hereto

BNP PARIBAS,

JPMORGAN CHASE BANK, N.A.,

WELLS FARGO BANK, NATIONAL ASSOCIATION and

CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK,

as Co-Syndication Agents

BRANCH BANKING AND TRUST COMPANY,

CITIZENS BANK OF PENNSYLVANIA,

COMPASS BANK,

TD BANK, N.A.,

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD. and

U.S. BANK NATIONAL ASSOCIATION,

as Co-Documentation Agents

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

BNP PARIBAS SECURITIES CORP.,

J.P. MORGAN SECURITIES LLC,

WELLS FARGO SECURITIES, LLC and

CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK,

as Joint Lead Arrangers and Joint Book Managers

 

 

 


TABLE OF CONTENTS

 

Section

   Page  

ARTICLE I.

 

DEFINITIONS AND ACCOUNTING TERMS

     1   

1.01

 

Defined Terms

     1   

1.02

 

Other Interpretive Provisions

     35   

1.03

 

Accounting Terms

     36   

1.04

 

Rounding

     36   

1.05

 

Exchange Rates; Currency Equivalents

     37   

1.06

 

Alternative Currencies

     37   

1.07

 

Times of Day; Rates

     37   

1.08

 

Letter of Credit Amounts

     38   

ARTICLE II.

 

THE COMMITMENTS AND CREDIT EXTENSIONS

     38   

2.01

 

Revolving Credit Loans

     38   

2.02

 

Borrowings, Conversions and Continuations of Loans

     38   

2.03

 

Letters of Credit

     40   

2.04

 

Swing Line Loans

     49   

2.05

 

Prepayments

     52   

2.06

 

Termination or Reduction of Commitments

     54   

2.07

 

Repayment of Loans

     55   

2.08

 

Interest

     55   

2.09

 

Fees

     56   

2.10

 

Computation of Interest and Fees

     56   

2.11

 

Evidence of Debt

     57   

2.12

 

Payments Generally; Administrative Agent’s Clawback

     57   

2.13

 

Sharing of Payments by Lenders

     59   

2.14

 

Increase in Commitments

     60   

2.15

 

Cash Collateral

     62   

2.16

 

Defaulting Lenders

     63   

ARTICLE III.

 

TAXES, YIELD PROTECTION AND ILLEGALITY

     65   

3.01

 

Taxes

     65   

3.02

 

Illegality

     70   

3.03

 

Inability to Determine Rates

     70   

3.04

 

Increased Costs; Reserves on Eurocurrency Rate Loans

     71   

3.05

 

Compensation for Losses

     73   

 

i


TABLE OF CONTENTS (continued)

 

Section

   Page  

3.06

 

Mitigation Obligations

     73   

3.07

 

Survival

     74   

ARTICLE IV.

 

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

     74   

4.01

 

Conditions of Execution Date

     74   

4.02

 

Conditions of Closing Date

     75   

4.03

 

Conditions to all Credit Extensions

     79   

ARTICLE V.

 

REPRESENTATIONS AND WARRANTIES

     80   

5.01

 

Corporate Existence, Compliance with Law

     80   

5.02

 

Corporate Power; Authorization; Enforceable Obligations

     80   

5.03

 

Ownership of Borrower; Subsidiaries

     81   

5.04

 

Financial Statements

     82   

5.05

 

Material Adverse Change

     82   

5.06

 

Solvency

     82   

5.07

 

Litigation

     83   

5.08

 

Taxes

     83   

5.09

 

Full Disclosure

     83   

5.10

 

Margin Regulations

     83   

5.11

 

No Burdensome Restrictions; No Defaults

     83   

5.12

 

Investment Company Act

     83   

5.13

 

Use of Proceeds

     84   

5.14

 

Insurance

     84   

5.15

 

Labor Matters

     84   

5.16

 

ERISA

     84   

5.17

 

Environmental Matters

     85   

5.18

 

Intellectual Property

     85   

5.19

 

Title; Real Property

     85   

5.20

 

Security Instruments

     87   

5.21

 

OFAC

     87   

5.22

 

Anti-Corruption Laws

     87   

ARTICLE VI.

 

AFFIRMATIVE COVENANTS

     87   

6.01

 

Financial Statements

     87   

6.02

 

Collateral Reporting Requirements

     89   

6.03

 

Default and certain other Notices

     90   

6.04

 

Litigation

     90   

 

ii


TABLE OF CONTENTS (continued)

 

Section        Page  

6.05

 

Labor Relations

     90   

6.06

 

Tax Returns

     90   

6.07

 

Insurance

     91   

6.08

 

ERISA Matters

     91   

6.09

 

Environmental Matters

     91   

6.10

 

Patriot Act Information

     92   

6.11

 

Other Information

     92   

6.12

 

Preservation of Corporate Existence, Etc

     92   

6.13

 

Compliance with Laws, Etc

     92   

6.14

 

Conduct of Business

     92   

6.15

 

Payment of Taxes, Etc

     92   

6.16

 

Maintenance of Insurance

     93   

6.17

 

Access

     93   

6.18

 

Keeping of Books

     93   

6.19

 

Maintenance of Properties, Etc

     93   

6.20

 

Application of Proceeds

     93   

6.21

 

Environmental

     93   

6.22

 

Additional Collateral and Guaranties

     95   

6.23

 

Real Property

     96   

6.24

 

Further Assurances

     97   

6.25

 

Anti-Corruption Laws; Sanctions

     97   

6.26

 

Cash Collateralization of Extended Letters of Credit

     97   

6.27

 

Post Closing Deliveries

     97   

ARTICLE VII.

 

NEGATIVE COVENANTS

     98   

7.01

 

Indebtedness

     98   

7.02

 

Liens

     99   

7.03

 

Investments

     101   

7.04

 

Asset Sales

     102   

7.05

 

Restricted Payments

     103   

7.06

 

Fundamental Changes

     104   

7.07

 

Change in Nature of Business

     104   

7.08

 

Transactions with Affiliates

     105   

7.09

 

Burdensome Agreements

     105   

7.10

 

Form 10

     106   

 

iii


TABLE OF CONTENTS (continued)

 

Section        Page  

7.11

 

Fiscal Year

     106   

7.12

 

Use of Proceeds

     106   

7.13

 

Sale Leasebacks

     106   

7.14

 

No Speculative Transactions

     106   

7.15

 

Anti-Corruption Laws

     106   

7.16

 

Financial Covenants

     106   

7.17

 

Sanctions

     107   

ARTICLE VIII.

 

EVENTS OF DEFAULT AND REMEDIES

     107   

8.01

 

Events of Default

     107   

8.02

 

Remedies Upon Event of Default

     109   

8.03

 

Application of Funds

     109   

ARTICLE IX.

 

ADMINISTRATIVE AGENT

     110   

9.01

 

Appointment and Authority

     110   

9.02

 

Rights as a Lender

     111   

9.03

 

Exculpatory Provisions

     111   

9.04

 

Reliance by Administrative Agent

     112   

9.05

 

Delegation of Duties

     112   

9.06

 

Resignation of Administrative Agent

     112   

9.07

 

Non-Reliance on Administrative Agent and Other Lenders

     114   

9.08

 

No Other Duties, Etc

     114   

9.09

 

Administrative Agent May File Proofs of Claim

     114   

9.10

 

Collateral and Guaranty Matters

     116   

9.11

 

Secured Cash Management Agreements and Secured Hedge Agreements

     116   

ARTICLE X.

 

MISCELLANEOUS

     117   

10.01

 

Amendments, Etc

     117   

10.02

 

Notices; Effectiveness; Electronic Communication

     119   

10.03

 

No Waiver; Cumulative Remedies; Enforcement

     121   

10.04

 

Expenses; Indemnity; Damage Waiver

     121   

10.05

 

Payments Set Aside

     124   

10.06

 

Successors and Assigns

     124   

10.07

 

Treatment of Certain Information; Confidentiality

     128   

10.08

 

Right of Setoff

     129   

10.09

 

Interest Rate Limitation

     130   

10.10

 

Counterparts; Integration; Effectiveness

     130   

 

iv


TABLE OF CONTENTS (continued)

 

Section

       Page  

10.11

 

Survival of Representations and Warranties

     130   

10.12

 

Severability

     131   

10.13

 

Replacement of Lenders

     131   

10.14

 

Governing Law; Jurisdiction; Etc

     131   

10.15

 

Waiver of Jury Trial

     132   

10.16

 

No Advisory or Fiduciary Responsibility

     133   

10.17

 

Electronic Execution of Assignments and Certain Other Documents

     133   

10.18

 

Judgment Currency

     133   

SIGNATURES

       S-1   

 

 

v


SCHEDULES

 

1.01(a)

 

Affiliate Agreements

1.01(b)

 

Initial Guarantors

2.01

 

Commitments and Applicable Percentages

4.02(a)(iii)

 

Mortgaged Properties

5.02

 

Consents

5.03

 

Ownership of Subsidiaries

5.04

 

Supplement to Financial Statements

5.07

 

Litigation

5.19(b)

 

Real Property

7.01

 

Existing Indebtedness

7.02

 

Existing Liens

7.03

 

Existing Investments

10.02

 

Administrative Agent’s Office; Certain Addresses for Notices

EXHIBITS

 
 

Form of

A

 

Committed Loan Notice

B

 

Swing Line Loan Notice

C

 

Note

D

 

Compliance Certificate

E-1

 

Assignment and Assumption

E-2

 

Administrative Questionnaire

F

 

Guaranty

G

 

Collateral Agreement

H

 

Forms of U.S. Tax Compliance Certificates

 

vi


CREDIT AGREEMENT

This CREDIT AGREEMENT is entered into as of May 11, 2015, among BABCOCK & WILCOX ENTERPRISES, INC., a Delaware corporation, as the borrower hereunder (the “ Borrower ”), each lender from time to time party hereto (collectively, the “ Lenders ” and individually, a “ Lender ”), and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer.

The Borrower has requested that the Lenders provide a revolving credit facility, and the Lenders are willing to do so on the terms and conditions set forth herein.

In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

1.01 Defined Terms . As used in this Agreement, the following terms shall have the meanings set forth below:

Acquired Entity ” means a Person to be acquired, or whose assets are to be acquired, in an Acquisition.

Acquisition ” means, by way of any single transaction or a series of related transactions, the acquisition of all or substantially all of (a) the assets of an Acquired Entity, (b) the assets constituting what is known to the Borrower to be all or substantially all of the business of a division, branch or other unit operation of an Acquired Entity, or (c) the Stock and Stock Equivalents (other than director’s qualifying shares and the like, as may be required by applicable Requirements of Law) of, an Acquired Entity.

Additional Lender ” has the meaning specified in Section 2.14(b) .

Administrative Agent ” means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

Administrative Agent’s Office ” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02 , or such other address or account as the Administrative Agent may from time to time notify to the Borrower and the Lenders.

Administrative Questionnaire ” means an Administrative Questionnaire in substantially the form of Exhibit E-2 or any other form approved by the Administrative Agent.

Affiliate ” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

Affiliate Agreements ” means, collectively, the agreements listed on Schedule 1.01(a) hereto.

Aggregate Commitments ” means the Commitments of all the Lenders.

Agreement ” means this Credit Agreement.


Alternative Currency ” means, with respect to any Letter of Credit, those currencies (other than Dollars) that are approved by the L/C Issuer issuing such Letters of Credit in accordance with Section 1.06 .

Alternative Currency Equivalent ” means, at any time, with respect to any amount denominated in Dollars, the equivalent amount thereof in the applicable Alternative Currency as determined by the Administrative Agent or the applicable L/C Issuer, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of such Alternative Currency with Dollars.

Alternative Currency Sublimit ” means an amount equal to the lesser of the Revolving Credit Facility and $300,000,000. The Alternative Currency Sublimit is part of, and not in addition to, the Revolving Credit Facility.

Anti-Corruption Laws ” means all laws, rules and regulations of any jurisdiction applicable to the Borrower or any of its Subsidiaries from time to time concerning or relating to bribery or corruption, including, without limitation, the United States Foreign Corrupt Practices Act of 1977 and the UK Bribery Act 2010.

Applicable Percentage ” means, with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) of the Revolving Credit Facility represented by such Lender’s Commitment at such time, subject to adjustment as provided in Section 2.16 . If the Commitment of each Lender to make Loans and the obligation of each L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02 or if the Commitments have expired, then the Applicable Percentage of each Lender shall be determined based on the Applicable Percentage of such Lender most recently in effect, giving effect to any subsequent assignments. The initial Applicable Percentage of each Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

 

-2-


Applicable Rate ” means the following percentages per annum, based upon the Leverage Ratio as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 6.01(c) :

 

Applicable Rate        

Pricing

Level

 

Leverage Ratio

  Commitment
Fee
    Eurocurrency
Rate/
Financial Letter
of

Credit Fees
    Base
Rate
    Performance
Letter of
Credit Fees /
Commercial
Letter of
Credit Fees
 
1   Less than 1.00 to 1.00     0.25     1.375     0.375     0.825
2  

Greater than or equal to 1.00 to 1.00, but less than 2.00 to 1.00

    0.30     1.625     0.625     0.975
3   Greater than or equal to 2.00 to 1.00     0.35     1.875     0.875     1.125

Any increase or decrease in the Applicable Rate resulting from a change in the Leverage Ratio shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.01(c) ; provided that if a Compliance Certificate is not delivered when due in accordance with such Section, then, upon the request of the Required Lenders, Pricing Level 3 shall apply as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered and shall remain in effect until the date on which such Compliance Certificate is delivered. The Applicable Rate in effect from the Closing Date through the date of delivery of the Compliance Certificate for the first full fiscal quarter of the Borrower after the fiscal quarter in which the Closing Date occurs shall be determined based upon Pricing Level 1.

Notwithstanding anything to the contrary contained in this definition, the determination of the Applicable Rate for any period shall be subject to the provisions of Section 2.10(b) .

Approved Fund ” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

Arranger ” means MLPFS, BNP Paribas Securities Corp., J.P. Morgan Securities LLC, Wells Fargo Securities, LLC and Crédit Agricole Corporate and Investment Bank, each in its capacity as a joint lead arranger and joint book manager.

Asset Sale ” has the meaning specified in Section 7.04 .

Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.06(b) ), and accepted by the Administrative Agent, in substantially the form of Exhibit E-1 or any other form (including electronic documentation generated by use of an electronic platform) approved by the Administrative Agent.

 

-3-


Availability Period ” means the period from and including the Closing Date to the earliest of (a) the Maturity Date, (b) the date of termination of the Aggregate Commitments pursuant to Section 2.06 , and (c) the date of termination of the Commitment of each Lender to make Loans and of the obligation of the L/C Issuers to make L/C Credit Extensions pursuant to Section 8.02 .

Bank of America ” means Bank of America, N.A. and its successors.

Base Rate ” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate” and (c) the Eurocurrency Rate determined in accordance with clause (b) of the definition thereof, plus 1.00%; provided that if the Base Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement. The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in the “prime rate” announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

Base Rate Loan ” means a Loan that bears interest based on the Base Rate. All Base Rate Loans shall be denominated in Dollars.

Borrower ” has the meaning specified in the introductory paragraphs hereto.

Borrower Materials ” has the meaning specified in Section 6.01 .

Borrower’s Accountants ” means Deloitte & Touche LLP or another firm of independent nationally recognized public accountants.

Borrowing ” means a Revolving Credit Borrowing or a Swing Line Borrowing, as the context may require.

Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Requirements of Law of, or are in fact closed in, the state where the Administrative Agent’s Office with respect to Obligations denominated in Dollars is located and:

(a) if such day relates to any interest rate settings as to a Eurocurrency Rate Loan denominated in Dollars, any fundings, disbursements, settlements and payments in Dollars in respect of any such Eurocurrency Rate Loan, or any other dealings in Dollars to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Loan, means any such day that is also a London Banking Day; and

(b) if such day relates to any determination of the Spot Rate pursuant to this Agreement, means any such day on which banks are open for foreign exchange business in the principal financial center of the country of the relevant Alternative Currency for which the Spot Rate is being determined.

BWC ” means The Babcock & Wilcox Company, a Delaware corporation, and (as of the date hereof, and prior to the Spinoff) the direct or indirect owner of 100% of the equity interests of the Borrower.

BWPGG ” means Babcock & Wilcox Power Generation Group, Inc., a Delaware corporation.

 

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Capital Lease ” means, with respect to any Person, any lease of (or other arrangement conveying the right to use) property by such Person as lessee that would be accounted for as a capital lease on a balance sheet of such Person prepared in conformity with GAAP.

Capital Lease Obligations ” means, with respect to any Person, the capitalized amount of all obligations of such Person or any of its Subsidiaries under Capital Leases, as determined on a consolidated basis in conformity with GAAP.

Captive Insurance Subsidiaries ” means, collectively or individually as of any date of determination, those regulated Subsidiaries of the Borrower primarily engaged in the business of providing insurance and insurance-related services to the Borrower, its other Subsidiaries and certain other Persons.

Cash Collateralize ” means to pledge and deposit with or deliver directly to an L/C Issuer or to the Administrative Agent, for the benefit of the Administrative Agent, any L/C Issuer or any Lender (including the Swing Line Lender), as the context may indicate, as collateral for L/C Obligations, Obligations in respect of Swing Line Loans, or obligations of Lenders to fund participations in respect of either thereof (as the context may require), cash or deposit account balances or, if the L/C Issuer or Swing Line Lender benefitting from such collateral shall agree in its sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to (a) the Administrative Agent (but only if the Administrative Agent is a party to such Cash Collateral arrangement) and (b) the applicable L/C Issuer or the Swing Line Lender (as applicable). “ Cash Collateral ” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

Cash Collateralized Letter of Credit ” has the meaning specified in Section 2.03(o) .

Cash Equivalents ” means (a) securities issued or fully guaranteed or insured by the United States government or any agency thereof, (b) certificates of deposit, eurodollar time deposits, overnight bank deposits and bankers’ acceptances of (i) any commercial bank organized under the laws of the United States, any state thereof, the District of Columbia, any foreign bank, or any branch or agency of any of the foregoing, in each case if such bank has a minimum rating at the time of investment of A-3 by S&P or P-3 by Moody’s, or (ii) any Lender or any branch or agency of any Lender, (c) commercial paper, (d) municipal issued debt securities, including notes and bonds, (e) (i) shares of any money market fund that has net assets of not less than $500,000,000 and satisfies the requirements of rule 2a-7 under the Investment Company Act of 1940 and (ii) shares of any offshore money market fund that has net assets of not less than $500,000,000 and a $1 net asset mandate, (f) fully collateralized repurchase agreements, (g) demand deposit accounts and (h) obligations issued or guaranteed by the government or by a governmental agency of Canada, Japan, Australia, Switzerland or a country belonging to the European Union; provided , however , that (i) all obligations of the type specified in clauses (c) or (d) above shall have a minimum rating of A-1 or AAA by S&P or P-1 or Aaa by Moody’s, in each case at the time of acquisition thereof, (ii) the country credit rating of any country issuing or guaranteeing (or whose governmental agency issues or guarantees) any obligation of the type specified in clause (h) above shall be AA or higher by S&P or an equivalent rating or higher by another generally recognized rating agency providing country credit ratings and (iii) the maturities of all obligations of the type described in clause (b) or (h) above shall not exceed one year from the date of acquisition thereof.

Cash Interest Expense ” means, with respect to any Person for any period, the Interest Expense of such Person for such period less , to the extent included in the calculation of Interest Expense of such Person for such period, (a) the amount of debt discount and debt issuance costs amortized, (b) charges relating to write-ups or write-downs in the book or carrying value of existing Financial Covenant Debt and (c) interest payable in evidences of Indebtedness or by addition to the principal of the related Indebtedness.

 

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Cash Management Agreement ” means any agreement to provide cash management services, including treasury, depository, overdraft, credit or debit card, electronic funds transfer and other cash management arrangements in the ordinary course of business of the Borrower and its Subsidiaries, but excluding any such agreement providing for overdraft services or financing that may remain outstanding for more than three Business Days.

Cash Management Bank ” means (a) any Person that, at the time it enters into a Cash Management Agreement, is a Lender or an Affiliate of a Lender, in its capacity as a party to such Cash Management Agreement, and (b) any Person that is a party to a Cash Management Agreement at the time it or its relevant Affiliate becomes a Lender (whether on the Closing Date or at a later date pursuant to Section 10.06 ), in its capacity as a party to such Cash Management Agreement.

Change in Law ” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

Change of Control ” means an event or series of events by which:

(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding (i) any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan and (ii) underwriters in the course of their distribution of Voting Stock in an underwritten registered public offering provided such underwriters shall not hold such Stock for longer than five Business Days) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934), directly or indirectly, of more than 30% of the equity securities of the Borrower entitled to vote for members of the board of directors or equivalent governing body of the Borrower on a fully-diluted basis; or

(b) during any period of twelve consecutive calendar months, a majority of the members of the board of directors or other equivalent governing body of the Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body; provided that individuals who are elected or appointed as members of the board of directors or other equivalent governing body in connection with the Spinoff (to the extent consistent with the Form 10 Transactions) shall, from and after the date the Spinoff is consummated, be deemed to be members of the board of directors or equivalent governing body pursuant to clause (i) above.

 

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Closing Date ” means the first date all the conditions precedent in Section 4.02 are satisfied or waived in accordance with Section 10.01 .

Code ” means the Internal Revenue Code of 1986.

Collateral ” means, collectively, the Pledged Interests and all other personal and real property of the Borrower, any Guarantor or any other Person in which the Administrative Agent or any Secured Party is granted a Lien under any Security Instrument as security for all or any portion of the Obligations or any other obligation arising under any Loan Document.

Collateral Agreement ” means the Pledge and Security Agreement dated as of the Closing Date by the Borrower and the Guarantors to the Administrative Agent for the benefit of the Secured Parties, substantially in the form of Exhibit G .

Commitment ” means, as to each Lender, its obligation to (a) make Revolving Credit Loans to the Borrower pursuant to Section 2.01 , (b) purchase participations in L/C Obligations, and (c) purchase participations in Swing Line Loans, in an aggregate principal amount at any one time outstanding not to exceed the Dollar amount set forth opposite such Lender’s name on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.

Commitment Letter ” means that certain commitment letter dated as of April 7, 2015 by and among the Borrower, BWPGG, the Arrangers, Bank of America, BNP Paribas, JPMorgan Chase Bank, N.A., Wells Fargo Bank, National Association and Crédit Agricole Corporate and Investment Bank.

Committed Loan Notice ” means a notice of (a) a Revolving Credit Borrowing, (b) a conversion of Loans from one Type to the other, or (c) a continuation of Eurocurrency Rate Loans, pursuant to Section 2.02(a) , which shall be substantially in the form of Exhibit A or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system, as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the Borrower.

Commodity Exchange Act ” means the Commodity Exchange Act (7 U.S.C. § 1 et seq .), as amended from time to time, and any successor statute.

Compliance Certificate ” means a certificate substantially in the form of Exhibit D .

Connection Income Taxes ” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

Consolidated Net Income ” means, for any period, the net income (or loss) of the Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP.

Consolidated Tangible Assets ” means, as of any date of determination, the difference of (a) the consolidated total assets of the Borrower and its Subsidiaries as of such date, determined in accordance with GAAP, minus (b) all Intangible Assets of the Borrower and its Subsidiaries on a consolidated basis as of such date.

 

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Consortium ” means any joint venture, consortium or other similar arrangement that is not a separate legal entity entered into by the Borrower or any of its Subsidiaries and one or more third parties, provided that no Loan Party shall, whether pursuant to the Constituent Documents of such joint venture or otherwise, be under any Contractual Obligation to make Investments or incur Guaranty Obligations after the Closing Date, or, if later, at the time of, or at any time after, the initial formation of such joint venture, consortium or similar arrangement that would be in violation of any provision of this Agreement.

Constituent Documents ” means, with respect to any Person, (a) the articles of incorporation, certificate of incorporation or certificate of formation (or the equivalent organizational documents) of such Person and (b) the bylaws, partnership agreement or operating agreement (or the equivalent governing documents) of such Person.

Contaminant ” means any material, substance or waste that is classified, regulated or otherwise characterized under any Environmental Law as hazardous, toxic, a contaminant or a pollutant or by other words of similar meaning or regulatory effect, including any petroleum or petroleum derived substance or waste, asbestos and polychlorinated biphenyls.

Contractual Obligation ” of any Person means any obligation, agreement, undertaking or similar provision of any Security issued by such Person or of any agreement, undertaking, contract, lease, indenture, mortgage, deed of trust or other instrument (excluding the Loan Documents) to which such Person is a party or by which it or any of its property is bound.

Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “ Controlling ” and “ Controlled ” have meanings correlative thereto.

Credit Extension ” means each of the following: (a) a Borrowing and (b) an L/C Credit Extension.

Customary Permitted Liens ” means, with respect to any Person, any of the following Liens:

(a) Liens with respect to the payment of taxes, assessments or governmental charges in each case that are not yet due or that are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained to the extent required by GAAP and, in the case of Mortgaged Property, there is no material risk of forfeiture of such property;

(b) Liens of landlords arising by statute or lease contracts entered into in the ordinary course, inchoate, statutory or construction liens and liens of suppliers, mechanics, carriers, materialmen, warehousemen, producers, operators or workmen and other liens imposed by law created in the ordinary course of business for amounts not yet due or that are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained to the extent required by GAAP;

(c) liens, pledges or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance or other types of social security benefits, taxes, assessments, statutory obligations or other similar charges or to secure the performance of bids, tenders, sales, leases, contracts (other than for the repayment of borrowed money) or in connection with surety, appeal, customs or performance bonds or other similar instruments;

 

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(d) encumbrances arising by reason of zoning restrictions, easements, licenses, reservations, covenants, rights-of-way, utility easements, building restrictions and other similar encumbrances on the use of Real Property not materially detracting from the value of such Real Property and not materially interfering with the ordinary conduct of the business conducted at such Real Property;

(e) encumbrances arising under leases or subleases of Real Property that do not, individually or in the aggregate, materially detract from the value of such Real Property or materially interfere with the ordinary conduct of the business conducted at such Real Property;

(f) financing statements with respect to a lessor’s rights in and to personal property leased to such Person in the ordinary course of such Person’s business;

(g) liens, pledges or deposits relating to escrows established in connection with the purchase or sale of property otherwise permitted hereunder and the amounts secured thereby shall not exceed the aggregate consideration in connection with such purchase or sale (whether established for an adjustment in purchase price or liabilities, to secure indemnities, or otherwise);

(h) bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one or more accounts maintained by the Borrower or a Subsidiary, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank with respect to cash management and operating account arrangements, including those involving pooled accounts and netting arrangements; provided that, unless such Liens are non-consensual and arise by operation of law, in no case shall any such Liens secure (either directly or indirectly) the repayment of any Indebtedness; and

(i) options, put and call arrangements, rights of first refusal and similar rights (i) relating to Investments in Subsidiaries, Joint Ventures and Consortiums or (ii) provided for in contracts or agreements entered into in the ordinary course of business.

Debtor Relief Laws ” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Requirements of Law of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

Default ” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

Default Rate ” means (a) when used with respect to Obligations arising under any Loan Document other than Letter of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the Applicable Rate applicable to Base Rate Loans plus (iii) 2% per annum; provided , however , that with respect to a Eurocurrency Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum, and (b) when used with respect to Letter of Credit Fees, a rate equal to the Applicable Rate applicable to Letter of Credit Fees plus 2% per annum.

Defaulting Lender ” means, subject to Section 2.16(b) , any Lender that (a) has failed to (i) fund all or any portion of its Loans within three Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding

 

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(each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, any L/C Issuer, the Swing Line Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swing Line Loans) within three Business Days of the date when due, (b) has notified the Borrower, the Administrative Agent, any L/C Issuer or the Swing Line Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, and of the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.16(b) ) as of the date established therefor by the Administrative Agent in a written notice of such determination, which shall be delivered by the Administrative Agent to the Borrower, each L/C Issuer, the Swing Line Lender and each other Lender promptly following such determination.

Designated Jurisdiction ” means any country or territory to the extent that such country or territory itself is, or whose government is, at the time of determination, the subject of any Sanction.

Disqualified Stock ” means with respect to any Person, any Stock that, by its terms (or by the terms of any Security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is exchangeable for Indebtedness of such Person, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the Maturity Date.

Disregarded Entity ” means any Person that is disregarded as an entity separate from its owner for U.S. federal income tax purposes.

Dollar ” and “ $ ” mean lawful money of the United States.

Dollar Equivalent ” means, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in any Alternative Currency, the equivalent amount thereof in Dollars as determined by the Administrative Agent or the applicable L/C Issuer, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of Dollars with such Alternative Currency.

 

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Domestic Subsidiary ” means any Subsidiary that is organized under the laws of any political subdivision of the United States.

EBITDA ” means, for any period,

(a) Consolidated Net Income for such period;

plus

(b) the sum of, in each case to the extent deducted in the calculation of such Consolidated Net Income but without duplication,

(i) any provision for income taxes,

(ii) Interest Expense,

(iii) depreciation expense,

(iv) amortization of intangibles or financing or acquisition costs,

(v) any aggregate net loss from the sale, exchange or other disposition of business units by the Borrower or its Subsidiaries, and

(vi) all other non-cash charges (including impairment of intangible assets and goodwill) and non-cash losses for such period (excluding any non-cash item to the extent it represents an accrual of, or reserve for, cash disbursements for any period ending prior to the Maturity Date);

provided , that, to the extent that all or any portion of the income or gains of any Person is deducted pursuant to any of clauses (c)(iv) and (v) below for a given period, any amounts set forth in any of the preceding clauses (b)(i) through (b)(vi) that are attributable to such Person shall not be included for purposes of this clause (b) for such period,

minus

(c) the sum of, in each case to the extent included in the calculation of such Consolidated Net Income but without duplication,

(i) any credit for income tax,

(ii) non-cash interest income,

(iii) any other non-cash gains or other items which have been added in determining Consolidated Net Income (other than any such gain or other item that has been deducted in determining EBITDA for a prior period),

(iv) the income of any Subsidiary or Joint Venture to the extent that the declaration or payment of dividends or similar distributions or transfers or loans by such Subsidiary or Joint Venture, as applicable, of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, statute, rule or governmental regulation applicable to such Subsidiary or Joint Venture, as applicable,

(v) the income of any Person (other than a Subsidiary) in which any other Person (other than the Borrower or a Wholly-Owned Subsidiary or any director holding qualifying shares in accordance with applicable law) has an interest, except to the extent of the amount of dividends or other distributions or transfers or loans actually paid to the Borrower or a Wholly-Owned Subsidiary by such Person during such period, and

 

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(vi) any aggregate net gains from the sale, exchange or other disposition of business units by the Borrower or any of its Subsidiaries out of the ordinary course of business.

For any period of measurement that includes any Permitted Acquisition or any sale, exchange or disposition of any Subsidiary or business unit of the Borrower or any Subsidiary, EBITDA (and the relevant elements thereof) shall be computed on a pro forma basis for each such transaction as if it occurred on the first day of the period of measurement thereof, so long as the Borrower provides to the Administrative Agent reconciliations and other detailed information relating to adjustments to the relevant financial statements (including copies of financial statements of the acquired Person or assets in any Permitted Acquisition) used in computing EBITDA (and the relevant elements thereof) sufficient to demonstrate such pro forma calculations in reasonable detail.

Eligible Assignee ” means any Person that meets the requirements to be an assignee under Section 10.06(b)(iii) and (v)  (subject to such consents, if any, as may be required under Section 10.06(b)(iii) ).

Eligible Line of Business ” means the businesses and activities engaged in by the Borrower and its Subsidiaries on the Closing Date, any other businesses or activities reasonably related or incidental thereto and any other businesses that, when taken together with the existing businesses of the Borrower and its Subsidiaries, are immaterial with respect to the assets and liabilities of the Borrower and its Subsidiaries, taken as a whole.

Employee Benefit Plan ” means any “employee benefit plan” as defined in Section 3(3) of ERISA which is sponsored, maintained or contributed to by, or required to be contributed to by, the Borrower, any of its Subsidiaries, any Guarantor or any of their respective ERISA Affiliates or was sponsored, maintained or contributed to by, or required to be contributed to by, the Borrower, any of its Subsidiaries, any Guarantor or any of their respective ERISA Affiliates with respect to liabilities for which the Borrower, any such Subsidiary, any such Guarantor or any of their respective ERISA Affiliates could be liable under the Code or ERISA.

Environmental Laws ” means all applicable Requirements of Law now or hereafter in effect and as amended or supplemented from time to time, relating to pollution or the regulation and protection of human health, safety, the environment or natural resources, including the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. § 9601 et seq. ); the Hazardous Material Transportation Act, as amended (49 U.S.C. § 1801 et seq. ); the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. § 136 et seq. ); the Resource Conservation and Recovery Act, as amended (42 U.S.C. § 6901 et seq. ); the Toxic Substance Control Act, as amended (15 U.S.C. § 2601 et seq. ); the Clean Air Act, as amended (42 U.S.C. § 7401 et seq. ); the Federal Water Pollution Control Act, as amended (33 U.S.C. § 1251 et seq. ); the Occupational Safety and Health Act, as amended (29 U.S.C. § 651 et seq. ); the Safe Drinking Water Act, as amended (42 U.S.C. § 300f et seq. ); and each of their state and local counterparts or equivalents.

Environmental Liabilities and Costs ” means, with respect to any Person, all liabilities, obligations, responsibilities, Remedial Actions, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including all fees, disbursements and expenses of counsel, experts and consultants and costs of investigation and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any claim or demand by any other Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute and arising under any Environmental Law, Permit, order or agreement with any Governmental Authority or other Person, in each case relating to and resulting from the past, present or future operations of, or ownership of property by, such Person or any of its Subsidiaries.

 

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Environmental Lien ” means any Lien in favor of any Governmental Authority pursuant to any Environmental Law.

ERISA ” means the Employee Retirement Income Security Act of 1974.

ERISA Affiliate ” means any trade or business (whether or not incorporated) under common control or treated as a single employer with the Borrower, any of its Subsidiaries or any Guarantor within the meaning of Section 414(b), (c), (m) or (o) of the Code. Any former ERISA Affiliate of the Borrower, any of its Subsidiaries or any Guarantor shall continue to be considered an ERISA Affiliate of the Borrower, such Subsidiary or such Guarantor within the meaning of this definition solely with respect to the period such entity was an ERISA Affiliate of the Borrower, such Subsidiary or such Guarantor and with respect to liabilities arising after such period for which the Borrower, such Subsidiary or such Guarantor could be liable under the Code or ERISA.

ERISA Event ” means (a) a reportable event described in Section 4043(b) or 4043(c) of ERISA with respect to a Title IV Plan, (b) the withdrawal of the Borrower, any of its Subsidiaries, any Guarantor or any ERISA Affiliate from a Title IV Plan subject to Section 4063 or Section 4064 of ERISA during a plan year in which any such entity was a “substantial employer” (as defined in Section 4001(a)(2) of ERISA) or the termination of any such Title IV Plan resulting, in either case, in a material liability to any such entity, (c) the “complete or partial withdrawal” (within the meaning of Sections 4203 and 4205 of ERISA) of the Borrower, any of its Subsidiaries, any Guarantor or any ERISA Affiliate from any Multiemployer Plan where the Withdrawal Liability is reasonably expected to exceed $1,000,000 (individually or in the aggregate), (d) notice of reorganization, insolvency, intent to terminate or termination of a Multiemployer Plan is received by the Borrower, any of its Subsidiaries, any Guarantor or any ERISA Affiliate, (e) the filing of a notice of intent to terminate a Title IV Plan under Section 4041(c) of ERISA or the treatment of a plan amendment as a termination under Section 4041(e) of ERISA, where such termination constitutes a “distress termination” under Section 4041(c) of ERISA, (f) the institution of proceedings to terminate a Title IV Plan by the PBGC, (g) the failure to make any required contribution to a Title IV Plan or Multiemployer Plan or to meet the minimum funding standard of Sections 430 and 431 of the Code (in either case, whether or not waived), (h) the imposition of a Lien with respect to any employee pension plan under the provisions of the Code that relate to such plans or ERISA on the Borrower, any of its Subsidiaries, any Guarantor or any ERISA Affiliate, (i) any other event or condition that might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan or the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, (j) the imposition of liability on the Borrower, any of its Subsidiaries, any Guarantor or any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA, (k) the occurrence of an act or omission which would reasonably be expected to give rise to the imposition on the Borrower, any of its Subsidiaries, any Guarantor or any of their respective ERISA Affiliates of fines, penalties, taxes or related charges under Chapter 43 of the Code or under Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any “employee pension plan” (within the meaning of Section 3(2) of ERISA), or (l) receipt from the IRS of notice of the failure of any employee pension plan that is intended to be qualified under Section 401(a) of the Code so to qualify under Section 401(a) of the Code, or the failure of any trust forming part of any such employee pension plan to qualify for exemption from taxation under Section 501(a) of the Code.

 

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Eurocurrency Rate ” means:

(a) for any Interest Period with respect to a Eurocurrency Rate Loan, the rate per annum equal to (i) the London Interbank Offered Rate (“ LIBOR ”), as published by Bloomberg (or other commercially available source providing quotations of LIBOR as may be designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two London Banking Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period or (ii) if such rate is not available at such time for any reason, the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in Same Day Funds in the approximate amount of the Eurocurrency Rate Loan being made, continued or converted and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two London Banking Days prior to the commencement of such Interest Period; and

(b) for any interest calculation of the Eurocurrency Rate with respect to a Base Rate Loan on any date, the rate per annum equal to (i) LIBOR, at approximately 11:00 a.m., London time determined two London Banking Days prior to such date for Dollar deposits being delivered in the London interbank market for a term of one month commencing that day or (ii) if such published rate is not available at such time for any reason, the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the date of determination in Same Day Funds in the approximate amount of the Base Rate Loan being made or maintained and with a term equal to one month would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at the date and time of determination.

Notwithstanding the foregoing, if the Eurocurrency Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

Eurocurrency Rate Loan ” means a Revolving Credit Loan that bears interest at a rate based on clause (a) of the definition of “Eurocurrency Rate.”

Event of Default ” has the meaning specified in Section 8.01 .

Excluded Domestic Subsidiary ” means any direct or indirect Subsidiary of a Loan Party that is directly or indirectly owned (in whole or in part) by any Foreign Subsidiary of a Loan Party.

Excluded Swap Obligation ” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guaranty of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act (determined after giving effect to any “keepwell, support or other agreement” for the benefit of such Guarantor and any and all guarantees of such Guarantor’s Swap Obligations by other Loan Parties) at the time the Guaranty of such Guarantor, or a grant by such Guarantor of a security interest, becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guaranty or security interest is or becomes excluded in accordance with the first sentence of this definition.

 

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Excluded Taxes ” means any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender or L/C Issuer, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender or L/C Issuer (as applicable) with respect to an applicable interest in a Loan or Commitment or otherwise under a Loan Document pursuant to a law in effect on the date on which (i) such Lender or L/C Issuer (as applicable) acquires such interest in the Loan or Commitment or becomes a party to this Agreement (other than pursuant to an assignment request by the Borrower under Section 10.13 ) or (ii) such Lender or L/C Issuer (as applicable) changes its Lending Office, except in each case to the extent that, pursuant to Section 3.01(b) , amounts with respect to such Taxes were payable either to such Lender’s or L/C Issuer’s (as applicable) assignor immediately before such Lender or L/C Issuer (as applicable) became a party hereto or to such Lender or L/C Issuer (as applicable) immediately before it changed its Lending Office, (c) Taxes attributable to such Recipient’s failure to comply with Section 3.01(f) and (d) any U.S. federal withholding Taxes imposed pursuant to FATCA.

Execution Date ” means the first date on which all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 10.01 .

Existing Credit Agreement ” means that certain Second Amended and Restated Credit Agreement dated as of June 24, 2014 by and among BWC, as the borrower, Bank of America, as the administrative agent, and the lenders from time to time party thereto.

Extended Letter of Credit ” has the meaning specified in Section 2.03(a)(ii) .

Fair Market Value ” means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party; provided that, for any determination of Fair Market Value in connection with an Asset Sale to be made pursuant to Section 7.04(i) in which the Fair Market Value of the properties disposed of in such Asset Sale exceeds $25,000,000, the Borrower shall provide evidence reasonably satisfactory to the Administrative Agent with respect to the calculation of such Fair Market Value.

FASB ASC ” means the Accounting Standards Codification of the Financial Accounting Standards Board.

FATCA ” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code, and any intergovernmental agreements that implement or modify the foregoing (together with any Requirement of Law implementing such agreements).

Federal Funds Rate ” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal

 

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Funds Rate for such day shall be such rate on such transactions on the immediately preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.

Fee Letters ” means each of (a) the fee letter dated as of April 7, 2015 by and among the Borrower, BWPGG, the Arrangers, Bank of America, BNP Paribas, JPMorgan Chase Bank, N.A., Wells Fargo Bank, National Association and Crédit Agricole Corporate and Investment Bank, (b) the fee letter dated as of April 7, 2015by and among the Borrower, BWPGG, Bank of America and MLPFS, (c) the fee letter dated as of April 7, 2015 by and among the Borrower, BWPGG, BNP Paribas and BNP Paribas Securities Corp., (d) the fee letter dated as of April 7, 2015 by and among the Borrower, BWPGG, JPMorgan Chase Bank, N.A. and J.P. Morgan Securities LLC, (e) the fee letter dated as of April 7, 2015 by and among the Borrower, BWPGG, Wells Fargo Bank, National Association and Wells Fargo Securities, LLC and (f) the fee letter dated as of April 7, 2015 by and among the Borrower, BWPGG and Crédit Agricole Corporate and Investment Bank.

Financial Covenant Debt ” of any Person means, without duplication, Indebtedness of the type specified in clauses (a), (b), (c), (d), (e), (f), (g) and (h) of the definition of “Indebtedness”. For the avoidance of doubt, the term “Financial Covenant Debt” shall not include (a) reimbursement or other obligations with respect to unmatured or undrawn, as applicable, Performance Guarantees and (b) Indebtedness of the Borrower or any Subsidiary of the Borrower that is owed to the Borrower or any Subsidiary of the Borrower.

Financial Letter of Credit ” means any standby Letter of Credit that is not a Performance Letter of Credit.

First-Tier Foreign Subsidiary ” mean a Foreign Subsidiary all or any portion of whose Stock is owned directly by the Borrower or a Domestic Subsidiary that is a Guarantor.

Fiscal Quarter ” means the fiscal quarter of the Borrower ending on March 31, June 30, September 30 or December 31 of the applicable calendar year, as applicable.

Fiscal Year ” means the fiscal year of the Borrower, which is the same as the calendar year.

Foreign Lender ” means a Lender that is not a U.S. Person.

Foreign Subsidiary ” means any Subsidiary that is organized under the laws of a jurisdiction other than the United States, a State thereof or the District of Columbia.

Foreign Subsidiary Reorganization ” means the transfer (whether by Asset Sale, dividend, distribution, contribution, merger or otherwise), in a series of transactions, of the Stock and Stock Equivalents of certain Foreign Subsidiaries and Investments owned, directly or indirectly, by the Borrower among the Borrower and its Subsidiaries; provided that:

(a) both before and after giving effect thereto, no Default shall have occurred and be continuing;

(b) all of the Stock and Stock Equivalents of such Foreign Subsidiaries and Investments owned, directly or indirectly, by the Borrower on the Closing Date shall be owned, directly or indirectly, by the Borrower upon the completion thereof (other than any such Stock, Stock Equivalents or Investments that are retired or replaced);

 

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(c) any Stock, Stock Equivalents or Investments issued or made in connection therewith, to the extent replacing Stock, Stock Equivalents or Investments previously owned, directly or indirectly, by the Borrower on the Closing Date shall be owned, directly or indirectly, by the Borrower upon the completion thereof;

(d) after giving effect thereto, the Borrower shall be in compliance with Section 6.22 (including, without limitation, by pledging any Pledged Interests issued by any First Tier Foreign Subsidiary owned by any Loan Party)

(f) in connection therewith, no assets owned by any Loan Party that is a party to the Collateral Agreement, other than Stock and Stock Equivalents of Foreign Subsidiaries, shall be transferred to any Person that is not a Loan Party that is a party to the Collateral Agreement; provided that the foregoing shall not prohibit Investments otherwise permitted by a provision of Section 7.03 other than Section 7.03(k) .

Form 10 ” means the Form 10 (together with any exhibits thereto) filed with the SEC relating to the Spinoff.

Form 10 Transactions ” means the individual transactions entered into in connection with the Spinoff on substantially the same terms as set forth in the Form 10 (with non-material changes or other additional non-material transactions, steps or terms that are not adverse to any material interest of the Lenders being considered to be “on substantially the same terms”); provided that any amendments, additions, or other modifications to the Form 10 are made in accordance with Section 7.10 .

FRB ” means the Board of Governors of the Federal Reserve System of the United States.

Fronting Exposure ” means, at any time there is a Defaulting Lender, (a) with respect to each L/C Issuer, such Defaulting Lender’s Applicable Percentage of the outstanding L/C Obligations with respect to Letters of Credit issued by such L/C Issuer, other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to the Swing Line Lender, such Defaulting Lender’s Applicable Percentage of Swing Line Loans other than Swing Line Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.

Fund ” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.

GAAP ” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

 

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Governmental Authority ” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

Guarantors ” means, collectively, each Wholly-Owned Domestic Subsidiary of the Borrower listed on Schedule 1.01(b) hereto, and each other Person that is or becomes a party to the Guaranty (including by execution of a Joinder Agreement pursuant to Section 6.22 ), but expressly excludes all Captive Insurance Subsidiaries and all Excluded Domestic Subsidiaries.

Guaranty ” means the Guaranty Agreement dated as of the Closing Date made by the Borrower (solely with respect to Obligations in the nature of Secured Cash Management Agreements and Secured Hedge Agreements) and by the Guarantors in favor of the Administrative Agent for the benefit of the Secured Parties, substantially in the form of Exhibit F , and any Joinder Agreement with respect thereto.

Guaranty Obligation ” means, as applied to any Person, without duplication, any direct or indirect liability, contingent or otherwise, of such Person with respect to any Indebtedness of another Person, if the purpose of such Person in incurring such liability is to provide assurance to the obligee of such Indebtedness that such Indebtedness will be paid or discharged, or that any agreement relating thereto will be complied with, or that any holder of such Indebtedness will be protected (in whole or in part) against loss in respect thereof, including (a) the direct or indirect guaranty, endorsement (other than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of Indebtedness of another Person and (b) any liability of such Person for Indebtedness of another Person through any agreement (contingent or otherwise) (i) to purchase, repurchase or otherwise acquire such Indebtedness or any security therefor, or to provide funds for the payment or discharge of such Indebtedness (whether in the form of a loan, advance, stock purchase, capital contribution or otherwise), (ii) to maintain the solvency or any balance sheet item, level of income or financial condition of another Person, (iii) to make take-or-pay or similar payments, regardless of non-performance by any other party or parties to an agreement, (iv) to purchase, sell or lease (as lessor or lessee) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Indebtedness or to assure the holder of such Indebtedness against loss or (v) to supply funds to, or in any other manner invest in, such other Person (including to pay for property or services irrespective of whether such property is received or such services are rendered), if (and only if) in the case of any agreement described under clause (b)(i), (ii), (iii), (iv) or (v) above the primary purpose or intent thereof is to provide assurance to the obligee of Indebtedness of any other Person that such Indebtedness will be paid or discharged, or that any agreement relating thereto will be complied with, or that any holder of such Indebtedness will be protected (in whole or in part) against loss in respect thereof. The amount of any Guaranty Obligation shall be equal to the amount of the Indebtedness so guaranteed or otherwise supported or, if such amount is not stated or otherwise determinable, the maximum reasonable anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. For the avoidance of doubt, the term “Guaranty Obligation” shall not include reimbursement or other obligations with respect to unmatured or undrawn, as applicable, Performance Guarantees.

Hedge Bank ” means (a) any Person that, at the time it enters into a Secured Swap Contract, is a Lender or an Affiliate of a Lender, in its capacity as a party to such Secured Swap Contract, and (b) any Person that is a party to a Secured Swap Contract at the time it or its relevant Affiliate becomes a Lender (whether on the Closing Date or at a later date pursuant to Section 10.06 ), in its capacity as a party to such Secured Swap Contract.

 

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Immaterial Subsidiary ” means any Subsidiary of the Borrower that, together with its Subsidiaries, (a) contributed less than $3,000,000 to the EBITDA of the Borrower and its Subsidiaries during the most recently-ended four-quarter period of the Borrower (taken as a single period) and (b) as of any date of determination has assets with an aggregate net book value of $3,000,000 or less.

Increase Effective Date ” has the meaning specified in Section 2.14(c) .

Indebtedness ” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person evidenced by promissory notes, bonds, debentures or similar instruments, (c) all matured reimbursement obligations with respect to letters of credit, bankers’ acceptances, surety bonds, performance bonds, bank guarantees, and other similar obligations, (d) all other obligations with respect to letters of credit, bankers’ acceptances, surety bonds, performance bonds, bank guarantees and other similar obligations, whether or not matured, other than unmatured or undrawn, as applicable, obligations with respect to Performance Guarantees, (e) all indebtedness for the deferred purchase price of property or services, other than trade payables incurred in the ordinary course of business that are not overdue by more than ninety days or are being disputed in good faith, (f) all indebtedness of such Person created or arising under any conditional sale or other title retention agreement (other than operating leases) with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (g) all Capital Lease Obligations of such Person, (h) all Guaranty Obligations of such Person, (i) all obligations of such Person to purchase, redeem, retire, defease or otherwise acquire for value any Stock or Stock Equivalents of such Person, valued, in the case of redeemable preferred stock, at the greater of its voluntary liquidation preference and its involuntary liquidation preference plus accrued and unpaid dividends, (j) net payments that such Person would have to make in the event of an early termination as determined on the date Indebtedness of such Person is being determined in respect of Swap Contracts of such Person and (k) all Indebtedness of the type referred to above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including accounts and general intangibles) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, but limited to the value of the property owned by such Person securing such Indebtedness. For the avoidance of doubt, the term “Indebtedness” shall not include reimbursement or other obligations with respect to unmatured or undrawn, as applicable, Performance Guarantees.

Indemnified Taxes ” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.

Indemnitees ” has the meaning specified in Section 10.04(b) .

Information ” has the meaning specified in Section 10.07 .

Information Memorandum ” means the Confidential Information Memorandum, dated June 2014, in respect of the credit facilities provided under this Agreement.

Intangible Assets ” means assets that are considered to be intangible assets under GAAP, including customer lists, goodwill, computer software, copyrights, trade names, trademarks, patents, franchises and licenses.

Intellectual Property Security Agreement ” has the meaning given to such term in the Collateral Agreement.

 

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Intercompany Subordinated Debt Payment” means any payment or prepayment, whether required or optional, of principal, interest or other charges on or with respect to any Subordinated Debt of the Borrower or any Subsidiary of the Borrower, so long as (a) such Subordinated Debt is owed to the Borrower or a Subsidiary of the Borrower and (b) no Event of Default under  Sections 8.01(a) , (b)  or (f)  shall have occurred and be continuing.

Interest Coverage Ratio ” means, with respect to the Borrower and its Subsidiaries as of any day, the ratio of (a) EBITDA for the Borrower and its Subsidiaries for the last four full Fiscal Quarters ending on or prior to such day for which the financial statements and certificates required by Section 6.01(a) or 6.01(b) have been delivered to (b) the Cash Interest Expense of the Borrower and its Subsidiaries for the last four full Fiscal Quarters ending on or prior to such day for which the financial statements and certificates required by Section 6.01(a) or 6.01(b) have been delivered.

Interest Expense ” means, for any Person for any period, total interest expense of such Person and its Subsidiaries for such period, as determined on a consolidated basis in conformity with GAAP and including, in any event (without duplication for any period or any amount included in any prior period), (a) net costs under Interest Rate Contracts for such period, (b) any commitment fee (including, in the case of the Borrower or any of its Subsidiaries, the commitment fees hereunder) accrued, accreted or paid by such Person during such period, (c) any fees and other obligations (other than reimbursement obligations) with respect to letters of credit (including, in respect of the Borrower or any of its Subsidiaries, the Letter of Credit Fees) and bankers’ acceptances (whether or not matured) accrued, accreted or paid by such Person for such period and (d) the fronting fee with respect to each Letter of Credit. For purposes of the foregoing, interest expense shall (i) be determined after giving effect to any net payments made or received by the Borrower or any Subsidiary with respect to interest rate Swap Contracts, (ii) exclude interest expense accrued, accreted or paid by the Borrower or any Subsidiary of the Borrower to the Borrower or any Subsidiary of the Borrower and (iii) exclude credits to interest expense resulting from capitalization of interest related to amounts that would be reflected as additions to property, plant or equipment on a consolidated balance sheet of the Borrower and its Subsidiaries prepared in conformity with GAAP.

Interest Payment Date ” means, (a) as to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided , however , that if any Interest Period for a Eurocurrency Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan (including a Swing Line Loan), the last Business Day of each March, June, September and December and the Maturity Date.

Interest Period ” means, as to each Eurocurrency Rate Loan, the period commencing on the date such Eurocurrency Rate Loan is disbursed or converted to or continued as a Eurocurrency Rate Loan and ending on the date one, two, three or six months thereafter (in each case, subject to availability), as selected by the Borrower in its Committed Loan Notice or such other period that is twelve months or less requested by the Borrower and consented to by all the Lenders; provided that:

(a) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the immediately preceding Business Day;

(b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

 

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(c) no Interest Period shall extend beyond the Maturity Date.

Interest Rate Contracts ” means all interest rate swap agreements, interest rate cap agreements, interest rate collar agreements and interest rate insurance.

Investment ” means, as to any Person, (a) any purchase or similar acquisition by such Person of (i) any Security issued by, (ii) a beneficial interest in any Security issued by, or (iii) any other equity ownership interest in, any other Person, (b) any purchase by such Person of all or substantially all of the assets of a business conducted by any other Person, or all or substantially all of the assets constituting what is known to the Borrower to be the business of a division, branch or other unit operation of any other Person, (c) any loan, advance (other than deposits with financial institutions available for withdrawal on demand, prepaid expenses, accounts receivable and similar items made or incurred in the ordinary course of business) or capital contribution by such Person to any other Person, including all Indebtedness of any other Person to such Person arising from a sale of property by such Person other than in the ordinary course of its business and (d) any Guaranty Obligation incurred by such Person in respect of Indebtedness of any other Person. For the avoidance of doubt, the term “Investment” shall not include reimbursement or other obligations with respect to unmatured or undrawn, as applicable, Performance Guarantees.

Inventory ” has the meaning specified in the Collateral Agreement.

IRS ” means the United States Internal Revenue Service.

ISP ” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).

Issuer Documents ” means with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the L/C Issuer and the Borrower (or any other Permitted L/C Party) or in favor of the L/C Issuer and relating to such Letter of Credit.

Joinder Agreement ” means a joinder agreement, in form and substance satisfactory to the Administrative Agent, with respect to the Guaranty or any Security Instrument.

Joint Venture ” means any Person (a) in which the Borrower, directly or indirectly, owns any Stock and Stock Equivalents of such Person and (b) that is not a Subsidiary of the Borrower, provided that (i) the Administrative Agent, on behalf of the Secured Parties, has a valid, perfected, first priority security interest in the Stock and Stock Equivalents in such joint venture owned directly by any Loan Party except where (x) the Constituent Documents of such joint venture prohibit such a security interest to be granted to the Administrative Agent or (y) such joint venture has incurred Non-Recourse Indebtedness the terms of which either (A) require security interests in such Stock and Stock Equivalents to be granted to secure such Non-Recourse Indebtedness or (B) prohibit such a security interest to be granted to the Administrative Agent, and (ii) no Loan Party shall, whether pursuant to the Constituent Documents of such joint venture or otherwise, be under any Contractual Obligation to make Investments or incur Guaranty Obligations after the Closing Date, or, if later, at the time of, or at any time after, the initial formation of such joint venture, that would be in violation of any provision of this Agreement.

Landlord Lien Waiver ” means a lien waiver signed by a landlord in such form as is reasonably satisfactory to the Administrative Agent.

 

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L/C Advance ” means, with respect to each Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Applicable Percentage. All L/C Advances shall be denominated in Dollars.

L/C Borrowing ” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Revolving Credit Borrowing. All L/C Borrowings shall be denominated in Dollars.

L/C Credit Extension ” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.

L/C Issuer ” means Bank of America, each other Lender that is listed on the signature pages hereto as an “L/C Issuer” and any other Lender that becomes an L/C Issuer in accordance with Section 2.03(l) hereof, each in its respective capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder (whether pursuant to Section 2.03(l) , 2.03(m) , 9.06 , 10.06 or otherwise), but excluding any Lender that resigns or is removed as an L/C Issuer pursuant to the terms hereof (except to the extent such Person has continuing rights and/or obligations with respect to Letters of Credit after such resignation or removal). References to the L/C Issuer herein shall, as the context may indicate (including with respect to any particular Letter of Credit, L/C Credit Extension, L/C Borrowing or L/C Obligations), mean the applicable L/C Issuer, each L/C Issuer, any L/C Issuer, or all L/C Issuers.

L/C Issuer Sublimit ” means with respect to each L/C Issuer, such amount as may be separately agreed between such L/C Issuer and the Borrower from time to time (with specific notice of such amount, and any change thereto, with respect to each L/C Issuer being promptly communicated to the Administrative Agent), provided that the L/C Issuer Sublimit with respect to any Person that ceases to be an L/C Issuer for any reason pursuant to the terms hereof shall be $0 (subject to the Letters of Credit of such Person remaining outstanding in accordance with the provisions hereof).

L/C Obligations ” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.08 . For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn. The L/C Obligations of (a) any Lender at any time shall be its Applicable Percentage of the total L/C Obligations at such time, and (b) any particular L/C Issuer at any time shall mean the L/C Obligations allocable to Letters of Credit issued by such L/C Issuer.

Lender ” has the meaning specified in the introductory paragraphs hereto and, unless the context requires otherwise, includes the Swing Line Lender.

Lending Office ” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent, which office may include any Affiliate of such Lender or any domestic or foreign branch of such Lender or such Affiliate. Unless the context otherwise requires each reference to a Lender shall include its applicable Lending Office.

Letter of Credit ” means any letter of credit issued hereunder providing for the payment of cash upon the honoring of a presentation thereunder, and includes all letters of credit issued under the Existing

 

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Credit Agreement that are outstanding on the Closing Date and issued for the account of a Permitted L/C Party, which shall in each case be deemed to have been issued hereunder. A Letter of Credit may be a commercial letter of credit or a standby letter of credit, and a standby Letter of Credit may be a Performance Letter of Credit or a Financial Letter of Credit.

Letter of Credit Application ” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.

Letter of Credit Expiration Date ” means the day that is 30 days prior to the Maturity Date (or, if such day is not a Business Day, the immediately preceding Business Day).

Letter of Credit Fee ” has the meaning specified in Section 2.03(h) .

Leverage Ratio ” means, with respect to the Borrower and its Subsidiaries as of any day, the ratio of (a) Financial Covenant Debt of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP as of such day to (b) EBITDA for the Borrower and its Subsidiaries for the last four full Fiscal Quarters ending on or prior to such day for which the financial statements and certificates required by Section 6.01(a) or 6.01(b) have been delivered.

Leverage Ratio Increase ” has the meaning specified in Section 7.16(b) .

Lien ” means any mortgage, deed of trust, pledge, hypothecation, collateral assignment, charge, deposit arrangement, encumbrance, lien (statutory or other), security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever intended to assure payment of any Indebtedness or the performance of any other obligation, including any conditional sale or other title retention agreement, the interest of a lessor under a Capital Lease and any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any effective financing statement under the UCC or comparable law of any jurisdiction naming the owner of the asset to which such Lien relates as debtor.

Loan ” means an extension of credit by a Lender to the Borrower under Article II in the form of a Revolving Credit Loan or a Swing Line Loan.

Loan Documents ” means this Agreement, each Note, the Guaranty, each Security Instrument, each Joinder Agreement, each Committed Loan Notice, each Issuer Document, each Fee Letter, any agreement creating or perfecting rights in Cash Collateral pursuant to the provisions of Section 2.03 or 2.15 of this Agreement and all other instruments and documents heretofore or hereafter executed or delivered to or in favor of the Administrative Agent, any Lender or any L/C Issuer in connection with the Loans made, Letters of Credit issued and transactions contemplated by this Agreement.

Loan Parties ” means, collectively, the Borrower, each Guarantor and any other Person (other than a Lender) providing Collateral pursuant to any Security Instrument.

London Banking Day ” means any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

Material Acquisition ” means a Permitted Acquisition in which the sum of the cash consideration paid (including for the repayment and retirement of outstanding Indebtedness) plus any Indebtedness assumed equals or exceeds $100,000,000.

 

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Material Adverse Effect ” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, assets, properties, liabilities (actual or contingent), or condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the rights and remedies of the Administrative Agent or any Lender under any Loan Document or of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.

Material Intellectual Property ” has the meaning specified in the Collateral Agreement.

Material Real Property ” means, any parcel of real property located in the United States and owned by any Loan Party that has a Fair Market Value in excess of $3,000,000; provided that, upon request of the Borrower, the Administrative Agent may agree in its sole discretion to exclude from this definition any parcel of real property (and/or the buildings and contents therein) that is located in a special flood hazard area as designated by any federal Governmental Authority.

Material Subsidiary ” means, as of any date of determination, any Subsidiary of the Borrower that (a) has assets that represent more than 10% of the consolidated GAAP value of the assets of the Borrower and its Subsidiaries, inclusive of the subject Subsidiary, as of such date or (b) contributed more than 10% of the EBITDA of the Borrower and its Subsidiaries, inclusive of the subject Subsidiary, during the most recently-ended four-quarter period of the Borrower (taken as a single period), or (c) with respect to any new Person acquired or created by the Borrower, (i) would have contributed more than 10% of the EBITDA of the Borrower and its Subsidiaries, inclusive of the subject Subsidiary, on a pro forma basis as of the last day of the most recently ended four-quarter period of the Borrower (taken as a single period) or (ii) held more than 10% of the consolidated GAAP value of the assets of the Borrower and its Subsidiaries, inclusive of the subject Subsidiary, as of such date, or (d) owns, directly or indirectly, Stock or Stock Equivalents in one or more other Subsidiaries of the Borrower that, when aggregated with such Subsidiary, (i) contributed more than 10% of the EBITDA of the Borrower and its Subsidiaries, inclusive of the subject Subsidiary, during the most recently ended four-quarter period of the Borrower (taken as single period) or (ii) held more than 10% of the consolidated GAAP value of the assets of the Borrower and its Subsidiaries, inclusive of the subject Subsidiary, as of such date.

Maturity Date ” means the fifth anniversary of the Closing Date; provided that if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day.

Minimum Collateral Amount ” means, at any time, (i) with respect to Cash Collateral consisting of cash or deposit account balances provided to reduce or eliminate Fronting Exposure during the existence of a Defaulting Lender, an amount equal to 100% of the Fronting Exposure of each L/C Issuer with respect to Letters of Credit issued by such L/C Issuer and outstanding at such time and (ii) with respect to Cash Collateral consisting of cash or deposit account balances provided in accordance with the provisions of Section 2.15(a)(i) or (a)(ii) , an amount equal to 100% of the Outstanding Amount of all LC Obligations.

MLPFS ” means Merrill Lynch, Pierce, Fenner & Smith Incorporated.

Moody’s ” means Moody’s Investors Service, Inc. and any successor thereto.

Mortgagee Policies ” has the meaning specified in Section 4.02(a)(iii)(B) .

 

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Mortgaged Properties ” mean, initially, (a) each parcel of Real Property and the improvements thereto specified on Schedule 4.02(a)(iii) (except to the extent the Administrative Agent agrees, as provided in such definition, between the Execution Date and the Closing Date to exclude any such parcel (and/or the buildings and contents therein) from the definition of Material Real Property) and (b) shall include each other parcel of Material Real Property and improvements thereto with respect to which a Mortgage is granted pursuant to Section 6.23 .

Mortgages ” mean the fee or leasehold mortgages or deeds of trust, assignments of leases and rents and other security documents (including any such document delivered in connection with the Existing Credit Agreement and remaining in place in connection with this Agreement) granting a Lien on any Mortgaged Property to secure the Obligations, each in form and substance reasonably satisfactory to the Administrative Agent, as the same may be amended, supplemented, replaced or otherwise modified from time to time in accordance with this Agreement.

Multiemployer Plan ” means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which the Borrower, any of its Subsidiaries, any Guarantor or any ERISA Affiliate has any obligation or liability, contingent or otherwise.

Net Cash Proceeds ” means:

(a) with respect to any Asset Sale by, or Recovery Event of, the Borrower or any of its Subsidiaries, the excess, if any, of (i) the sum of cash and Cash Equivalents received in connection with such transaction (including any cash or Cash Equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) over (ii) the sum of (A) the principal amount of any Indebtedness that is secured by the applicable asset and that is required to be repaid in connection with such transaction (other than Indebtedness under the Loan Documents), (B) the reasonable out-of-pocket expenses incurred by the Borrower or such Subsidiary in connection with such transaction and (C) Taxes actually paid or withheld or reasonably expected to be paid or withheld within the twenty-four month period following the date of the relevant transaction (and Tax distributions or payments under a Tax sharing agreement with respect thereto) in connection with such Asset Sale or Recovery Event (including any Taxes paid or withheld or reasonably expected to be paid or withheld within the twenty-four month period following the date of the relevant transaction as a result of any gain recognized in connection therewith or any repatriation of the resulting cash or Cash Equivalents to the United States); provided that, if the amount of any estimated taxes pursuant to subclause (C) exceeds the amount of taxes actually required to be paid in cash in respect of such Asset Sale or Recovery Event, the aggregate amount of such excess shall constitute Net Cash Proceeds; and

(b) with respect to the incurrence or issuance of any Indebtedness by the Borrower or any of its Subsidiaries, the excess of (i) the sum of the cash and Cash Equivalents received in connection with such transaction over (ii) the underwriting discounts and commissions, and other reasonable and customary out-of-pocket expenses and Taxes, incurred by the Borrower or such Subsidiary in connection therewith.

Non-Cash Consideration ” means the Fair Market Value of non-cash consideration received by the Borrower or a Subsidiary in connection with an Asset Sale less the amount of cash or Cash Equivalents received in connection with a subsequent sale of or collection on such Non-Cash Consideration.

 

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Non-Recourse Indebtedness ” means Indebtedness of a Joint Venture or Subsidiary of the Borrower (in each case that is not a Loan Party) (a) that, if it is incurred by a Subsidiary of the Borrower, is on terms and conditions reasonably satisfactory to the Administrative Agent, (b) that is not, in whole or in part, Indebtedness of any Loan Party (and for which no Loan Party has created, maintained or assumed any Guaranty Obligation) and for which no holder thereof has or could have upon the occurrence of any contingency, any recourse against any Loan Party or the assets thereof (other than (i) the Stock or Stock Equivalents issued by the Joint Venture or Subsidiary that is primarily obligated on such Indebtedness that are owned by a Loan Party and (ii) a requirement that a Loan Party make an Investment of equity in such Joint Venture in connection with the terms of such Indebtedness), (c) owing to an unaffiliated third-party (which for the avoidance of doubt does not include the Borrower, any Subsidiary thereof, any other Loan Party, any Joint Venture (or owner of any interest therein) and any Affiliate of any of them) and (d) the source of repayment for which is expressly limited to (i) the assets or cash flows of such Subsidiary or Joint Venture and (ii) the Stock and Stock Equivalents of such Subsidiary or Joint Venture securing such Indebtedness in compliance with the provisions of clause (b) above.

Note ” means a promissory note made by the Borrower in favor of a Lender evidencing Revolving Credit Loans or Swing Line Loans, as the case may be, made by such Lender, substantially in the form of Exhibit C .

Obligations ” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party (and, with respect to Secured Cash Management Agreements and Secured Hedge Agreements only, any Subsidiary of the Borrower) arising under any Loan Document or otherwise with respect to any Loan, Letter of Credit, Secured Cash Management Agreement or Secured Hedge Agreement, in each case whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party (or any Subsidiary of the Borrower solely with respect to Secured Cash Management Agreements and Secured Hedge Agreements) of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding; provided that the Obligations shall exclude any Excluded Swap Obligations.

OFAC ” means the Office of Foreign Assets Control of the United States Department of the Treasury.

Other Connection Taxes ” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

Other Taxes ” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 10.13 ).

Outstanding Amount ” means (a) with respect to Revolving Credit Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of such Revolving Credit Loans occurring on such date; (b) with respect to Swing Line Loans

 

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on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of such Swing Line Loans occurring on such date; and (c) with respect to any L/C Obligations on any date, the Dollar Equivalent amount of the aggregate outstanding amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by the Borrower of Unreimbursed Amounts.

Overnight Rate ” means, for any day, the greater of (a) the Federal Funds Rate and (b) an overnight rate determined by the Administrative Agent, the L/C Issuer, or the Swing Line Lender, as the case may be, in accordance with banking industry rules on interbank compensation.

Participant ” has the meaning specified in Section 10.06(d) .

Participant Register ” has the meaning specified in Section 10.06(d) .

PBGC ” means the Pension Benefit Guaranty Corporation or any successor thereto.

Performance Guarantee ” of any Person means (a) any letter of credit, bankers acceptance, surety bond, performance bond, bank guarantee or other similar obligation issued for the account of such Person to support only trade payables or nonfinancial performance obligations of such Person, (b) any letter of credit, bankers acceptance, surety bond, performance bond, bank guarantee or other similar obligation issued for the account of such Person to support any letter of credit, bankers acceptance, surety bond, performance bond, bank guarantee or other similar obligation issued for the account of a Subsidiary, a Joint Venture or a Consortium of such Person to support only trade payables or non-financial performance obligations of such Subsidiary, Joint Venture or Consortium, and (c) any parent company guarantee or other direct or indirect liability, contingent or otherwise, of such Person with respect to trade payables or non-financial performance obligations of a Subsidiary, a Joint Venture or a Consortium of such Person, if the purpose of such Person in incurring such liability is to provide assurance to the obligee that such contractual obligation will be performed, or that any agreement relating thereto will be complied with.

Performance Letter of Credit ” means (a) a standby Letter of Credit issued to secure ordinary course performance obligations in connection with project engineering, procurement, construction, maintenance and other similar projects (including projects about to be commenced) or bids for prospective project engineering, procurement, construction, maintenance and other similar projects, and (b) a standby Letter of Credit issued to back a bank guarantee, surety bond, performance bond or other similar obligation in each case issued to support ordinary course performance obligations in connection with project engineering, procurement, construction, maintenance and other similar projects (including projects about to be commenced) or bids for prospective project engineering, procurement, construction, maintenance and other similar projects.

Permit ” means any permit, approval, authorization, license, variance or permission required from a Governmental Authority under any applicable Requirements of Law.

Permitted Acquisition ” means, the Acquisition of an Acquired Entity; provided that:

(a) such Acquisition was approved by the board of directors of such Acquired Entity;

(b) the Acquired Entity shall be in an Eligible Line of Business;

 

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(c) the Borrower and its Subsidiaries shall comply with Sections 6.22 and 6.23 , as applicable, within the time periods set forth in such Sections;

(d) at the time of such transaction:

(i) both before and after giving effect thereto, no Default shall have occurred and be continuing;

(ii) the Borrower would be in compliance with the Leverage Ratio set forth in Section 7.16(b) as of the last day of the most recently completed four Fiscal Quarter period ended prior to such transaction for which the financial statements and certificates required by Section 6.01(a) or 6.01(b) have been delivered, after giving pro forma effect to such transaction and to any other event occurring after such period as to which pro forma recalculation is appropriate as if such transaction had occurred as of the first day of such period (assuming, for purposes of pro forma compliance with Section 7.16(b) , that the maximum Leverage Ratio permitted at the time by such Section was in fact 0.25 to 1.00 more restrictive than the Leverage Ratio actually provided for in such Section at such time); provided that if such Acquisition is a Material Acquisition with respect to which the Borrower is effectuating a Leverage Ratio Increase, then the Leverage Ratio required to be satisfied pursuant to this clause (ii) shall be determined as if such Leverage Ratio Increase was in effect as of the last day of the four Fiscal Quarter period being utilized for such measurement; and

(iii) if the purchase price for such Acquisition is in excess of $50,000,000, the Borrower shall have delivered (prior to or simultaneously with the closing of such Acquisition) a certificate of a Responsible Officer, certifying as to the foregoing and containing reasonably detailed calculations in support thereof, in form and substance reasonably satisfactory to the Administrative Agent; and

(e) if (i) the Borrower is a party to such transaction, it shall be a surviving entity thereof and shall continue as the Borrower hereunder, and (ii) if any party to any such transaction is a Guarantor, the surviving entity of such transaction shall either be a Guarantor or become a Guarantor pursuant to Section 6.22 .

Permitted L/C Party ” means (a) the Borrower, (b) any Subsidiary of the Borrower, (c) any Joint Venture and (d) any Consortium.

Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

Platform ” has the meaning specified in Section 6.01 .

Pledged Interests ” means (a) the Stock and Stock Equivalents of each of the existing or hereafter organized or acquired direct Domestic Subsidiaries of a Loan Party; and (b) 65% of the Voting Stock (or if the relevant Person shall own less than 65% of such Voting Stock, then 100% of the Voting Stock owned by such Person) and 100% of the nonvoting Stock and Stock Equivalents of each existing or hereafter organized or acquired First-Tier Foreign Subsidiary; provided that Pledged Interests shall not include any Stock or Stock Equivalents in (i) any Captive Insurance Subsidiary, (ii) any Joint Venture to the extent that the Constituent Documents of such Joint Venture prohibit such a security interest to be granted to the Administrative Agent, or (iii) any Subsidiary that is not a Loan Party or any Joint Venture to the extent that such Joint Venture or Subsidiary has incurred Non-Recourse Indebtedness the terms of

 

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which either (A) require security interests in such Stock and Stock Equivalents to be granted to secure such Non-Recourse Indebtedness or (B) prohibit such a security interest to be granted to the Administrative Agent; provided , further , that the Pledged Interests (x) shall not include, in the aggregate, more than 65% of the “stock entitled to vote” (within the meaning of Treasury Regulation Section 1.956-2(c)(2)) of any Foreign Subsidiary of any Person (taking into account any stock of such Foreign Subsidiary that may be deemed to be pledged for U.S. federal income tax purposes as a result of a pledge of Stock or Stock Equivalents in a Disregarded Entity), (y) shall not include any Stock or Stock Equivalents of a Foreign Subsidiary owned by any Person other than the Borrower or a Guarantor, and (z) shall not include any Stock or Stock Equivalents of any Excluded Domestic Subsidiary.

Prepayment Event ” means:

(a) (i) any Asset Sale (other than an Asset Sale permitted by any of Section 7.04(a) , (b) , (c) , (e) , (f) , (g) , (h) , (j) , (k)  or (l)), (ii) any sale and leaseback transaction (whether or not permitted by Section 7.13 ) resulting in aggregate Net Cash Proceeds in excess of $3,000,000 for any single transaction or a series of related transactions or (iii) any Recovery Event; or

(b) the incurrence by the Borrower or any of its Subsidiaries of any Indebtedness, other than Indebtedness permitted under Section 7.01 .

Projections ” means those financial projections prepared by management of the Borrower consisting of balance sheets, income statements and cashflow statements of the Borrower and its Subsidiaries (giving effect to the Spinoff and the related transactions) covering the Fiscal Years ending in 2015 through 2019, inclusive, delivered to the Administrative Agent by the Borrower.

Public Lender ” has the meaning specified in Section 6.01 .

Rabbi Trust ” means a “rabbi trust” or other similar arrangement established by the Borrower or any of its Subsidiaries to hold assets in connection with an employee benefit plan or arrangement.

Real Property ” means all Mortgaged Property and all other real property owned or leased from time to time by any Loan Party or any of its Subsidiaries.

Recipient ” means the Administrative Agent, any Lender or any L/C Issuer.

Recovery Event ” shall mean any settlement of or payment in respect of any property or casualty insurance claim or any taking or condemnation proceeding relating to any asset of the Borrower or any Subsidiary resulting in aggregate Net Cash Proceeds in excess of $3,000,000 for any single transaction or a series of related transactions.

Register ” has the meaning specified in Section 10.06(c) .

Related Parties ” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.

Release ” means, with respect to any Person, any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration, in each case, of any Contaminant into the indoor or outdoor environment or into or out of any property owned by such Person, including the movement of Contaminants through or in the air, soil, surface water, ground water or property and, in each case, in violation of Environmental Law.

 

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Remainco Credit Facilities ” means the senior secured credit facilities to be entered into by (a) BWC on or about the Execution Date and (b) certain of its Subsidiaries (other than the Borrower and its Subsidiaries) on or about the Closing Date.

Remedial Action ” means all actions required by any applicable Requirement of Law to (a) clean up, remove, treat or in any other way address any Contaminant in the indoor or outdoor environment, (b) prevent the Release or threat of Release or minimize the further Release so that a Contaminant does not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment or (c) perform pre remedial studies and investigations and post remedial monitoring and care.

Request for Credit Extension ” means (a) with respect to a Borrowing, conversion or continuation of Revolving Credit Loans, a Committed Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit Application, and (c) with respect to a Swing Line Loan, a Swing Line Loan Notice.

Required Lenders ” means, as of any date of determination, Lenders holding more than 50% of the sum of (a) the Total Outstandings (with the aggregate amount of each Lender’s risk participation and funded participation in L/C Obligations and Swing Line Loans being deemed “held” by such Lender for purposes of this definition) and (b) the unused Aggregate Commitments. The Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders; provided that the amount of any participation in any Swing Line Loan and any Unreimbursed Amounts that such Defaulting Lender has failed to fund that have not been reallocated to and funded by another Lender shall be deemed to be held by the Lender that is the Swing Line Lender or applicable L/C Issuer, as the case may be, in making such determination.

Requirement of Law ” means, with respect to any Person, the common law and all federal, state, local and foreign laws, rules and regulations, orders, judgments, decrees and other determinations of any Governmental Authority or arbitrator, applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

Responsible Officer ” means the chief executive officer, president, chief financial officer, treasurer or controller of a Loan Party and, solely for purposes of notices given for Credit Extensions, amendments to Letters of Credit, and continuations and conversions of Loans, any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Administrative Agent (which such notice shall include a specimen signature and incumbency confirmation reasonably satisfactory to the Administrative Agent). Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

Restricted Payment ” means (a) any dividend, distribution or any other payment whether direct or indirect, on account of any Stock or Stock Equivalents of the Borrower or any of its Subsidiaries now or hereafter outstanding, except a dividend payable solely in Stock or Stock Equivalents (other than Disqualified Stock) or a dividend or distribution payable solely to the Borrower or one or more Guarantors, (b) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any Stock or Stock Equivalents of the Borrower or any of its Subsidiaries now or hereafter outstanding other than one payable solely to the Borrower or one or more

 

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Guarantors and (c) any payment or prepayment of principal, premium (if any), interest, fees (including fees to obtain any waiver or consent in connection with any Indebtedness) or other charges on, or redemption, purchase, retirement, defeasance, sinking fund or similar payment with respect to, any Subordinated Debt of the Borrower or any other Loan Party, other than any Intercompany Subordinated Debt Payment or any required payment, prepayment, redemption, retirement, purchases or other payments, in each case to the extent permitted to be made by the terms of such Subordinated Debt.

Revaluation Date ” means, with respect to any Letter of Credit, each of the following: (a) each date of issuance of a Letter of Credit denominated in an Alternative Currency, (b) each date of an amendment of any such Letter of Credit having the effect of increasing the amount thereof (solely with respect to the increased amount), (c) each date of any payment by an L/C Issuer under any Letter of Credit denominated in an Alternative Currency, (d) in the case of Letters of Credit denominated in an Alternative Currency and outstanding as of the Closing Date under the Existing Credit Agreement for the account of a Permitted L/C Party, the Closing Date, and (e) such additional dates as the Administrative Agent or the applicable L/C Issuer shall determine or the Required Lenders shall require.

Revolving Credit Borrowing ” means a borrowing consisting of simultaneous Revolving Credit Loans of the same Type and, in the case of Eurocurrency Rate Loans, having the same Interest Period made by each of the Lenders pursuant to Section 2.01 .

Revolving Credit Exposure ” means, as to any Lender at any time, the aggregate principal amount at such time of its outstanding Revolving Credit Loans and such Lender’s participation in L/C Obligations and Swing Line Loans at such time.

Revolving Credit Facility ” means, at any time, the aggregate amount of the Lenders’ Commitments at such time. As of the Closing Date, the aggregate amount of the Lenders’ Commitments shall equal $600,000,000.

Revolving Credit Increase ” has the meaning specified in Section 2.14(a) .

Revolving Credit Increase Lender ” has the meaning specified in Section 2.14(d)(ii) .

Revolving Credit Loan ” has the meaning specified in Section 2.01 .

S&P ” means Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. and any successor thereto.

Same Day Funds ” means (a) with respect to disbursements and payments in Dollars, immediately available funds, and (b) with respect to disbursements and payments in an Alternative Currency, same day or other funds as may be determined by the Administrative Agent or the applicable L/C Issuer, as the case may be, to be customary in the place of disbursement or payment for the settlement of international banking transactions in the relevant Alternative Currency.

Sanction(s) ” means any sanction or trade embargo imposed, administered or enforced at the time of determination by the United States Government (including without limitation, OFAC), the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority exercising jurisdiction, the violation of which constitutes a violation of the law of the United States or, as to any Subsidiary that is organized under the laws of any non-United States jurisdiction, the law of that jurisdiction.

 

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SEC ” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

Secured Cash Management Agreement ” means any Cash Management Agreement that is entered into by and between or among the Borrower and/or any (or one or more) Subsidiary of the Borrower and any Cash Management Bank.

Secured Hedge Agreement ” means any Secured Swap Contract that is entered into by and between or among the Borrower and/or any (or one or more) Subsidiary of the Borrower and any Hedge Bank.

Secured Swap Contracts ” means all Swap Contracts entered into by the Borrower and/or any (or one or more) Subsidiary of the Borrower designed to alter the risks of any Person arising from fluctuations in interest rates, currency values or commodity prices.

Secured Parties ” means, collectively, the Administrative Agent, the Lenders, each L/C Issuer, the Hedge Banks, the Cash Management Banks, each co-agent or sub-agent appointed by the Administrative Agent from time to time pursuant to Section 9.05 , and the other Persons the Obligations owing to which are or are purported to be secured by the Collateral under the terms of the Security Instruments.

Security ” means any Stock, Stock Equivalent, voting trust certificate, bond, debenture, promissory note or other evidence of Indebtedness, whether secured, unsecured, convertible or subordinated, or any certificate of interest, share or participation in, or any temporary or interim certificate for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing, but shall not include any evidence of the Obligations.

Security Instruments ” means, collectively, the Collateral Agreement, the Mortgages, each Intellectual Property Security Agreement, and all other agreements (including Joinder Agreements, control agreements, supplements, collateral assignments and similar agreements), instruments and other documents, whether now existing or hereafter in effect, pursuant to which the Borrower, any Subsidiary or other Person (other than a Lender) shall grant or convey to the Administrative Agent (for the benefit of the Secured Parties) a Lien in, or any other Person shall acknowledge any such Lien in, property as security for all or any portion of the Obligations or any other obligation under any Loan Document.

Senior Secured Leverage Ratio ” means, with respect to the Borrower and its Subsidiaries as of any day, the ratio of (a) all Financial Covenant Debt of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP as of such day that is secured by a consensual Lien on any asset of the Borrower or any of its Subsidiaries to (b) EBITDA for the Borrower and its Subsidiaries for the last four full Fiscal Quarters ending on or prior to such day for which the financial statements and certificates required by Section 6.01(a) or 6.01(b) have most recently been delivered.

Solvent ” means, with respect to any Person, that the value of the assets of such Person (both at fair value and present fair saleable value) is, on the date of determination, greater than the total amount of liabilities (including contingent and unliquidated liabilities) of such Person as of such date and that, as of such date, such Person is able to pay all liabilities of such Person as such liabilities are expected to mature and does not have unreasonably small capital for its then current business activities. In computing the amount of contingent or unliquidated liabilities at any time, such liabilities shall be computed at the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

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Spinoff ” means the distribution of 100% of the issued and outstanding Stock of the Borrower to the shareholders of BWC, to occur on or after the Closing Date, the result of which is that immediately thereafter 100% of the Stock of the Borrower shall be owned directly by the shareholders of BWC immediately prior to such Restricted Payment.

Spot Rate ” for a currency means the rate determined by the applicable L/C Issuer, with notice thereof to the Administrative Agent, to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date as of which the foreign exchange computation is made; provided that the applicable L/C Issuer may obtain such spot rate from another financial institution designated by such L/C Issuer if the Person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency; and provided further that such L/C Issuer may use such spot rate quoted on the date as of which the foreign exchange computation is made in the case of any Letter of Credit denominated in an Alternative Currency.

Stock ” means shares of capital stock (whether denominated as common stock or preferred stock), partnership or membership interests, equity participations or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or similar business entity, whether voting or non-voting.

Stock Equivalents ” means all securities convertible into or exchangeable for Stock and all warrants, options or other rights to purchase or subscribe for any Stock, whether or not presently convertible, exchangeable or exercisable.

Subordinated Debt ” means Indebtedness of the Borrower or any of its Subsidiaries that is, by its terms, expressly subordinated to the prior payment of any of the Obligations pursuant to subordination terms and conditions reasonably satisfactory to the Administrative Agent. The terms of any Subordinated Debt may permit Intercompany Subordinated Debt Payments.

Subsidiary ” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person; provided that any reference herein or in any other Loan Document to a “Subsidiary” of the Borrower shall exclude any Person whose financial statements are not consolidated with the financial statements of the Borrower in accordance with GAAP. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.

Swap Contract ” means (a) any and all interest rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms

 

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and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “ Master Agreement ”), including any such obligations or liabilities under any Master Agreement.

Swap Obligations ” means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

Swing Line Borrowing ” means a borrowing of a Swing Line Loan pursuant to Section 2.04 .

Swing Line Lender ” means Bank of America in its capacity as provider of Swing Line Loans, or any successor swing line lender hereunder.

Swing Line Loan ” has the meaning specified in Section 2.04(a) .

Swing Line Loan Notice ” means a notice of a Swing Line Borrowing pursuant to Section 2.04(b) , which, if in writing, shall be substantially in the form of Exhibit B or such other form as approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the Borrower.

Swing Line Sublimit ” means an amount equal to the lesser of (a) $25,000,000 and (b) the Revolving Credit Facility. The Swing Line Sublimit is part of, and not in addition to, the Revolving Credit Facility.

Tax Affiliate ” means, with respect to any Person, (a) any Subsidiary of such Person, and (b) any Affiliate of such Person with which such Person files or is eligible to file consolidated U.S. federal income tax returns or consolidated, combined, unitary or similar tax returns for state, local or foreign tax purposes.

Tax Return ” has the meaning specified in Section 5.08 .

Taxes ” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

Title IV Plan ” means an “employee pension benefit plan” (as defined by Section 3(2) of ERISA), other than a Multiemployer Plan, covered by Title IV of ERISA and to which the Borrower, any of its Subsidiaries, any Guarantor or any ERISA Affiliate has any obligation or liability (contingent or otherwise).

Total Credit Exposure ” means, as to any Lender at any time, the unused Commitments and the Revolving Credit Exposure held by such Lender at such time.

Total Outstandings ” means the aggregate Outstanding Amount of all Loans and all L/C Obligations.

Type ” means, with respect to a Loan, its character as a Base Rate Loan or a Eurocurrency Rate Loan.

 

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UCC ” has the meaning specified in the Collateral Agreement.

UCP ” means, with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce (“ ICC ”) Publication No. 600 (or such later version thereof as may be in effect at the time of issuance).

United States ” and “ U.S. ” mean the United States of America.

Unreimbursed Amount ” has the meaning specified in Section 2.03(c)(i) .

U.S. Person ” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.

U.S. Tax Compliance Certificate ” has the meaning specified in Section 3.01(f)(ii)(B)(III) .

Voting Stock ” means Stock of any Person having ordinary power to vote in the election of members of the board of directors, managers, trustees or similar controlling Persons, of such Person (irrespective of whether, at the time, Stock of any other class or classes of such entity shall have or might have voting power by reason of the happening of any contingency).

Wholly-Owned ” means, in respect of any Subsidiary of any Person, a circumstance where all of the Stock of such Subsidiary (other than director’s qualifying shares, and the like, as may be required by applicable law) is owned by such Person, either directly or indirectly through one or more Wholly-Owned Subsidiaries thereof.

Withdrawal Liability ” means, with respect to the Borrower, any of its Subsidiaries or any Guarantor, the aggregate liability incurred (whether or not assessed) with respect to all Multiemployer Plans pursuant to Section 4201 of ERISA.

1.02 Other Interpretive Provisions . With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “ include ,” “ includes ” and “ including ” shall be deemed to be followed by the phrase “without limitation.” The word “ will ” shall be construed to have the same meaning and effect as the word “ shall .” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Constituent Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “ hereto ,” “ herein ,” “ hereof ” and “ hereunder ,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “ asset ” and “ property ” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

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(b) In the computation of periods of time from a specified date to a later specified date, the word “ from ” means “ from and including ;” the words “to” and “ until ” each mean “ to but excluding ;” and the word “ through ” means “ to and including .”

(c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

1.03 Accounting Terms .

(a) Generally . All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the audited financial statements for the Fiscal Year ended December 31, 2014, except as otherwise specifically prescribed herein. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Borrower and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded.

(b) Changes in GAAP . If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that , until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. Without limiting the foregoing, leases (including leases entered into or renewed after the Closing Date) shall be classified and accounted for (and the interest component thereof calculated) on a basis consistent with that reflected in the audited financial statements for the Fiscal Year ended December 31, 2014 for all purposes of this Agreement, notwithstanding any change in GAAP relating thereto, unless the parties hereto shall enter into a mutually acceptable amendment addressing such changes, as provided for above.

(c) Consolidation of Variable Interest Entities . All references herein to consolidated financial statements of the Borrower and its Subsidiaries or to the determination of any amount for the Borrower and its Subsidiaries on a consolidated basis or any similar reference shall, in each case, be deemed to include each variable interest entity that the Borrower is required to consolidate pursuant to FASB ASC 810 as if such variable interest entity were a Subsidiary as defined herein.

1.04 Rounding. Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

 

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1.05 Exchange Rates; Currency Equivalents.

(a) The applicable L/C Issuer shall determine the Spot Rates (and notify the Administrative Agent of the same) as of each Revaluation Date to be used for calculating Dollar Equivalent amounts of L/C Credit Extensions and Outstanding Amounts denominated in Alternative Currencies. Such Spot Rates shall become effective as of such Revaluation Date and shall be the Spot Rates employed in converting any amounts between the applicable currencies until the next Revaluation Date to occur. Except for purposes of financial statements delivered by Loan Parties hereunder or calculating financial covenants hereunder or except as otherwise provided herein, the applicable amount of any currency (other than Dollars) for purposes of the Loan Documents shall be such Dollar Equivalent amount as so determined by the Administrative Agent or the applicable L/C Issuer, as applicable.

(b) Wherever in this Agreement in connection with the issuance, amendment or extension of a Letter of Credit, an amount, such as a required minimum or multiple amount, is expressed in Dollars, but such Letter of Credit is denominated in an Alternative Currency, such amount shall be the relevant Alternative Currency Equivalent of such Dollar amount (rounded to the nearest unit of such Alternative Currency, with 0.5 of a unit being rounded upward), as determined by the Administrative Agent or the applicable L/C Issuer, as the case may be.

1.06 Alternative Currencies.

(a) The Borrower may from time to time request that one or more L/C Issuers issue and maintain Letters of Credit denominated in a currency other than Dollars. Any such request shall be subject to the approval of the L/C Issuer that will be issuing Letters of Credit in such currency.

(b) Any such request shall be made by the Borrower to one or more L/C Issuers not later than 11:00 a.m., ten Business Days prior to the date of the desired issuance of a Letter of Credit in such currency (or such other time or date as may be agreed by any such L/C Issuer, in its sole discretion).

(c) If any L/C Issuer consents to the issuance of Letters of Credit in such requested currency, such L/C Issuer shall so notify the Borrower and the Administrative Agent, and such currency shall thereupon be deemed for all purposes to be an Alternative Currency hereunder for purposes of any Letter of Credit issuances by each such approving L/C Issuer (but not by any L/C Issuer not approving such currency).

(d) Prior to the Closing Date, each L/C Issuer may agree, or may have agreed under the Existing Credit Agreement, with the Borrower to issue Letters of Credit in particular currencies (other than Dollars) immediately upon, and at all times after, the Closing Date, or under the Existing Credit Agreement, and each L/C Issuer and the Borrower shall notify the Administrative Agent (if not already notified pursuant to the Existing Credit Agreement) of the currencies (other than Dollars) approved by such L/C Issuer prior to or on the Closing Date.

1.07 Times of Day; Rates.

(a) Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

(b) The Administrative Agent does not warrant, nor accept responsibility, nor shall the Administrative Agent have any liability with respect to, the administration, submission or any other matter related to the rates in the definition of “Eurocurrency Rate” or with respect to any comparable or successor rate thereto.

 

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1.08 Letter of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the Dollar Equivalent of the stated amount of such Letter of Credit in effect at such time; provided , however , that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the Dollar Equivalent of the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

ARTICLE II.

THE COMMITMENTS AND CREDIT EXTENSIONS

2.01 Revolving Credit Loans. Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans to the Borrower in Dollars (each such loan, a “ Revolving Credit Loan ”) from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time outstanding the amount of such Lender’s Commitment; provided , however , that after giving effect to any Revolving Credit Borrowing, (i) the Total Outstandings shall not exceed the Revolving Credit Facility, and (ii) the Revolving Credit Exposure of any Lender shall not exceed such Lender’s Commitment. Within the limits of each Lender’s Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.01 , prepay under Section 2.05 , and reborrow under this Section 2.01 . Revolving Credit Loans may be Base Rate Loans or Eurocurrency Rate Loans, as further provided herein.

2.02 Borrowings, Conversions and Continuations of Loans.

(a) Each Revolving Credit Borrowing, each conversion of Revolving Credit Loans from one Type to the other, and each continuation of Eurocurrency Rate Loans shall be made upon the Borrower’s irrevocable notice to the Administrative Agent, which may be given by (A) telephone or (B) a Committed Loan Notice; provided that any telephonic notice must be confirmed promptly by delivery to the Administrative Agent of a Committed Loan Notice. Each such notice must be received by the Administrative Agent not later than 1:00 p.m. (i) three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Eurocurrency Rate Loans or of any conversion of Eurocurrency Rate Loans to Base Rate Loans, and (ii) on the requested date of any Borrowing of Base Rate Loans; provided that if the Borrower wishes to request Eurocurrency Rate Loans having an Interest Period other than one, two, three or six months in duration as provided in the definition of “Interest Period,” the applicable notice must be received by the Administrative Agent not later than 1:00 p.m. four Business Days prior to the requested date of such Borrowing, conversion or continuation of Eurocurrency Rate Loans, whereupon the Administrative Agent shall give prompt notice to the Lenders of such request and determine whether the requested Interest Period is acceptable to all of them. Not later than 1:00 p.m., three Business Days before the requested date of such Borrowing, conversion or continuation of Eurocurrency Rate Loans having an Interest period other than one, two, three or six months in duration as provided in the definition of “Interest Period”, the Administrative Agent shall notify the Borrower (which notice may be by telephone) whether or not the requested Interest Period has been consented to by all the Lenders. Each Borrowing of, conversion to or continuation of Eurocurrency Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Except as provided in Sections 2.03(c) and 2.04(c) , each Revolving Credit Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each Committed Loan Notice shall specify (i) whether the Borrower is requesting a Revolving Credit

 

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Borrowing, a conversion of Revolving Credit Loans from one Type to the other, or a continuation of Eurocurrency Rate Loans, (ii) the requested date of the Revolving Credit Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Revolving Credit Loans to be borrowed, converted or continued, (iv) the Type of Revolving Credit Loans to be borrowed or to which existing Revolving Credit Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of Revolving Credit Loan in a Committed Loan Notice or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Revolving Credit Loans shall be made as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurocurrency Rate Loans. If the Borrower requests a Borrowing of, conversion to, or continuation of Eurocurrency Rate Loans in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. Notwithstanding anything to the contrary herein, a Swing Line Loan may not be converted to a Eurocurrency Rate Loan.

(b) Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Applicable Percentage of the Revolving Credit Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans as described in Section 2.02(a) . In the case of a Revolving Credit Borrowing, each Lender shall make the amount of its Revolving Credit Loan available to the Administrative Agent in Same Day Funds at the Administrative Agent’s Office not later than (i) 1:00 p.m. on the Business Day specified in the applicable Committed Loan Notice so long as such Committed Loan Notice was received prior to the Business Day specified for such Revolving Credit Borrowing in such Committed Loan Notice and (ii) 3:00 p.m. in the case of any Revolving Credit Borrowing requested in a Committed Loan Notice that was received on the same Business Day as the Business Day specified for such Revolving Credit Borrowing in the applicable Committed Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.03 (and, if such Borrowing is the initial Credit Extension, Section 4.02 ), the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower; provided , however , that if, on the date a Committed Loan Notice with respect to a Revolving Credit Borrowing is given by the Borrower, there are L/C Borrowings outstanding, then the proceeds of such Revolving Credit Borrowing, first , shall be applied to the payment in full of any such L/C Borrowings, and second , shall be made available to the Borrower as provided above.

(c) Except as otherwise provided herein, a Eurocurrency Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurocurrency Rate Loan. During the existence of a Default, no Loans may be requested as, converted to or continued as Eurocurrency Rate Loans without the consent of the Required Lenders.

(d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest rate applicable to any Interest Period for Eurocurrency Rate Loans upon determination of such interest rate. At any time that Base Rate Loans are outstanding, the Administrative Agent shall notify the Borrower and the Lenders of any change in Bank of America’s prime rate used in determining the Base Rate promptly following the public announcement of such change.

 

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(e) After giving effect to all Revolving Credit Borrowings, all conversions of Revolving Credit Loans from one Type to the other, and all continuations of Revolving Credit Loans as the same Type, there shall not be more than five Interest Periods in effect in respect of the Revolving Credit Facility.

2.03 Letters of Credit.

(a) The Letter of Credit Commitment .

(i) Subject to the terms and conditions set forth herein, (A) each L/C Issuer agrees, in reliance upon the agreements of the Lenders set forth in this Section 2.03 , (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit denominated in Dollars or in one or more Alternative Currencies applicable to such L/C Issuer for the account of any Permitted L/C Party, and to amend or extend Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drawings under the Letters of Credit; and (B) the Lenders severally agree to participate in Letters of Credit issued for the account of any Permitted L/C Party and any drawings thereunder; provided that after giving effect to any L/C Credit Extension with respect to any Letter of Credit, (v) the Total Outstandings shall not exceed the Revolving Credit Facility, (w) the Revolving Credit Exposure of any Lender shall not exceed such Lender’s Commitment, (x) the Outstanding Amount of the L/C Obligations in Alternative Currencies shall not exceed the Alternative Currency Sublimit, (y) the aggregate Outstanding Amount of all Financial Letters of Credit and commercial letters of credit shall not exceed $150,000,000 and (z) the Outstanding Amount of L/C Obligations of any L/C Issuer shall not exceed the L/C Issuer Sublimit of such L/C Issuer. Each request by the Borrower or a Permitted L/C Party for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by the Borrower that the L/C Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing period listed in subclause (A)(1) of this Section, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed. For the avoidance of doubt, all Letters of Credit outstanding under the Existing Credit Agreement as of the Closing Date for the account of a Permitted L/C Party shall in each case be deemed to have been Letters of Credit issued pursuant hereto, and from and after the Closing Date shall be subject to and governed by the terms and conditions hereof.

(ii) No L/C Issuer shall issue any Letter of Credit if the expiry date of such requested Letter of Credit would occur after the date that is seven Business Days prior to the Maturity Date (each such issued Letter of Credit, an “ Extended Letter of Credit ”) unless the applicable L/C Issuer has approved such later expiry date, it being acknowledged and agreed that each such Extended Letter of Credit shall be Cash Collateralized in accordance with Section 6.26 .

(iii) No L/C Issuer shall be under any obligation to issue any Letter of Credit if:

(A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such L/C Issuer from issuing the Letter of Credit, or any Requirement of Law applicable to such L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such L/C Issuer shall prohibit, or request that such L/C Issuer refrain from, the issuance of letters of credit generally or the Letter of Credit in particular

 

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or shall impose upon such L/C Issuer with respect to the Letter of Credit any restriction, reserve or capital requirement (for which such the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon such L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which such L/C Issuer in good faith deems material to it;

(B) the issuance of the Letter of Credit would violate one or more policies of such L/C Issuer applicable to letters of credit generally;

(C) except as otherwise agreed by such L/C Issuer, the Letter of Credit is in an initial stated amount less than $100,000, in the case of a commercial Letter of Credit, or $500,000, in the case of a standby Letter of Credit;

(D) except as otherwise agreed by such L/C Issuer, the Letter of Credit is to be denominated in a currency other than Dollars or an Alternative Currency applicable to such L/C Issuer;

(E) such L/C Issuer does not, as of the issuance date of such requested Letter of Credit, issue Letters of Credit in the requested currency; or

(F) any Lender is at that time a Defaulting Lender, unless such L/C Issuer has entered into arrangements, including the delivery of Cash Collateral, satisfactory to such L/C Issuer (in its sole discretion) with the Borrower or such Lender to eliminate such L/C Issuer’s actual or potential Fronting Exposure (after giving effect to Section 2.16(a)(iv) ) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other L/C Obligations as to which such L/C Issuer has actual or potential Fronting Exposure, as it may elect in its sole discretion.

(iv) No L/C Issuer shall amend any Letter of Credit if such L/C Issuer would not be permitted at such time to issue the Letter of Credit in its amended form under the terms hereof.

(v) No L/C Issuer shall be under any obligation to amend any Letter of Credit if (A) such L/C Issuer would have no obligation at such time to issue the Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of the Letter of Credit does not accept the proposed amendment to the Letter of Credit.

(vi) Each L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and each L/C Issuer shall have all of the benefits and immunities (A) provided to the Administrative Agent in Article IX with respect to any acts taken or omissions suffered by such L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in Article IX included the L/C Issuers with respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C Issuers or any of them.

 

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(b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension Letters of Credit .

(i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to the applicable L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Borrower or the applicable Permitted L/C Party. Such Letter of Credit Application may be sent by facsimile, by United States mail, by overnight courier, by electronic transmission using the system provided by the applicable L/C Issuer, by personal delivery or by any other means acceptable to such L/C Issuer. Such Letter of Credit Application must be received by the L/C Issuer and the Administrative Agent not later than 11:00 a.m. at least two Business Days (or such later date and time as the Administrative Agent and the L/C Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day unless otherwise permitted by such L/C Issuer); (B) the amount and currency thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; (G) whether such requested Letter of Credit is a Performance Letter of Credit, a Financial Letter of Credit or a commercial Letter of Credit; (H) the Permitted L/C Party for whom such Letter of Credit is to be issued; and (I) such other matters as the L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day unless otherwise permitted by such L/C Issuer); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may reasonably require. Additionally, the Borrower shall furnish to the L/C Issuer and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as the L/C Issuer or the Administrative Agent may reasonably require.

(ii) Promptly after receipt of any Letter of Credit Application, the applicable L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, the L/C Issuer will provide the Administrative Agent with a copy thereof. Unless the L/C Issuer has received written notice from any Lender, the Administrative Agent or any Loan Party, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Article IV shall not then be satisfied, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the applicable Permitted L/C Party or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of the Applicable Percentage of such Lender times the amount of such Letter of Credit.

(iii) If the Borrower or any Permitted L/C Party so requests in any applicable Letter of Credit Application, the applicable L/C Issuer may, in its sole discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “ Auto-Extension Letter of Credit ”); provided that any such Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any

 

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such extension at least once prior to the then applicable expiration date of such Letter of Credit (without giving effect to the next ensuing extension thereof) by giving prior notice to the beneficiary thereof not later than a day (the “ Non-Extension Notice Date ”) to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, the Borrower shall not be required to make a specific request to the L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit such extensions of such Letter of Credit; provided that if any such extension results in any such Letter of Credit becoming an Extended Letter of Credit the Borrower shall provide Cash Collateral therefor in accordance with Section 6.26 ; provided , however , that the L/C Issuer shall not permit any such extension if (A) the L/C Issuer has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of Section 2.03(a) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is seven Business Days before the Non-Extension Notice Date (1) from the Administrative Agent that the Required Lenders have elected not to permit such extension or (2) from the Administrative Agent, any Lender or the Borrower that one or more of the applicable conditions specified in Section 4.03 is not then satisfied, and in each such case directing the L/C Issuer not to permit such extension.

(v) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.

(c) Drawings and Reimbursements; Funding of Participations .

(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the applicable L/C Issuer shall notify the Borrower and the Administrative Agent thereof. In the case of any draw under a Letter of Credit denominated in an Alternative Currency, the L/C Issuer shall notify the Borrower of the Dollar Equivalent of the amount of the drawing promptly following the determination thereof. The Borrower agrees to pay to the L/C Issuer of any Letter of Credit that has been drawn upon the amount of all draws thereunder, in Dollars (or the Dollar Equivalent of such payment if such payment was made in an Alternative Currency), no later than (x) the Business Day on which the L/C Issuer has provided notice thereof to the Borrower if such notice has been provided prior to 11:00 a.m. on such Business Day, or (y) no later than 10:00 a.m. on the next succeeding Business Day after the Borrower receives such notice from such L/C Issuer if such notice is not received prior to 11:00 a.m. on such day (each such date, an “ Honor Date ”), and such L/C Issuer shall provide prompt notice to the Administrative Agent of such reimbursement. If the Borrower fails to so reimburse the applicable L/C Issuer by such time, such L/C Issuer shall promptly notify the Administrative Agent of the Honor Date and the amount of the unreimbursed drawing (expressed in Dollars in the amount of the Dollar Equivalent thereof in the case of a Letter of Credit denominated in an Alternative Currency) (the “ Unreimbursed Amount ”), and the Administrative Agent shall provide such notice, along with the amount of such Lender’s Applicable Percentage thereof, to each Lender. In such event, the Borrower shall be deemed to have requested a Revolving Credit Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion

 

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of the Commitments and the conditions set forth in Section 4.03 (other than the delivery of a Committed Loan Notice). Any notice given by any L/C Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

(ii) Each Lender shall upon any notice pursuant to Section 2.03(c)(i) make funds available (and the Administrative Agent may apply Cash Collateral provided for this purpose) for the account of the L/C Issuer, in Dollars, at the Administrative Agent’s Office for Dollar-denominated payments in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 2.03(c)(iii) , each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the L/C Issuer in Dollars.

(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Revolving Credit Borrowing of Base Rate Loans because the conditions set forth in Section 4.03 cannot be satisfied or for any other reason, the Borrower shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Lender’s payment to the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section 2.03 .

(iv) Until each Lender funds its Revolving Credit Loan or L/C Advance pursuant to this Section 2.03(c) to reimburse the applicable L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Applicable Percentage of such amount shall be solely for the account of the applicable L/C Issuer.

(v) Each Lender’s obligation to make Revolving Credit Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c) , shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against any L/C Issuer, the Borrower, any Subsidiary or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided , however , that each Lender’s obligation to make Revolving Credit Loans pursuant to this Section 2.03(c) is subject to the conditions set forth in Section 4.03 (other than delivery by the Borrower of a Committed Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair the obligation of the Borrower to reimburse the applicable L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein.

(vi) If any Lender fails to make available to the Administrative Agent for the account of any L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii) , then, without limiting the other provisions of this Agreement, the applicable L/C Issuer shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount

 

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with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the applicable Overnight Rate from time to time in effect, plus any administrative, processing or similar fees customarily charged by the L/C Issuer in connection with the foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Revolving Credit Loan included in the relevant Revolving Credit Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as the case may be. A certificate of the applicable L/C Issuer submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (vi)  shall be conclusive absent manifest error.

(d) Repayment of Participations .

(i) At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(c) , if the Administrative Agent receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Borrower or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its Applicable Percentage thereof in Dollars and in the same funds as those received by the Administrative Agent.

(ii) If any payment received by the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by the L/C Issuer in its discretion), each Lender shall pay to the Administrative Agent for the account of the L/C Issuer its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the applicable Overnight Rate from time to time in effect. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

(e) Obligations Absolute . The obligation of the Borrower to reimburse the applicable L/C Issuer for each drawing under each Letter of Credit and, without duplication, to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:

(i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;

(ii) the existence of any claim, counterclaim, setoff, defense or other right that the Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;

(iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;

 

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(iv) waiver by the L/C Issuer of any requirement that exists for the L/C Issuer’s protection and not the protection of the Borrower or any waiver by the L/C Issuer which does not in fact materially prejudice the Borrower;

(v) any payment made by the L/C Issuer in respect of an otherwise complying item presented after the date specified as the expiration date of, or the date by which documents must be received under such Letter of Credit if presentation after such date is authorized by the UCC, the ISP or the UCP, as applicable;

(vi) any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law;

(vii) any adverse change in the relevant exchange rates or in the availability of the relevant Alternative Currency to the Borrower or any Subsidiary or in the relevant currency markets generally; or

(viii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower or any Subsidiary.

The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Borrower’s instructions or other irregularity, the Borrower will immediately notify the L/C Issuer. The Borrower shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid, but only to the extent not prohibited by any applicable Requirement of Law.

(f) Role of L/C Issuer . Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, no L/C Issuer shall have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuers, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of any L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided , however , that this assumption is not intended to, and shall not, preclude the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuers, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of any L/C Issuer shall be liable or responsible for any of the matters described in clauses (i) through (viii) of Section 2.03(e) ; provided , however , that anything in such clauses to the contrary notwithstanding, the Borrower may have a claim against the applicable L/C Issuer, and the applicable L/C Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered

 

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by the Borrower which the Borrower proves were caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, each L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and no L/C Issuer shall be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. The applicable L/C Issuer may send a Letter of Credit or conduct any communication to or from the beneficiary via the Society for Worldwide Interbank Financial Telecommunication (“ SWIFT ”) message or overnight courier, or any other commercially reasonable means of communicating with a beneficiary.

(g) Applicability of ISP and UCP; Limitation of Liability . Unless otherwise expressly agreed by the applicable L/C Issuer and the Borrower when a Letter of Credit is issued, (i) the rules of the ISP shall apply to each standby Letter of Credit, and (ii) the rules of the UCP shall apply to each commercial Letter of Credit. Notwithstanding the foregoing, no L/C Issuer shall be responsible to the Borrower or any other Permitted L/C Party for, and no L/C Issuer’s rights and remedies against the Borrower or any other Permitted L/C Party shall be impaired by, any action or inaction of such L/C Issuer required or permitted under any law, order, or practice that is required or permitted to be applied to any Letter of Credit or this Agreement, including any Requirement of Law or any order of a jurisdiction where the applicable L/C Issuer or the beneficiary is located, the practice stated in the ISP or UCP, as applicable, or in the decisions, opinions, practice statements, or official commentary of the ICC Banking Commission, the Bankers Association for Finance and Trade - International Financial Services Association (BAFT-IFSA), or the Institute of International Banking Law & Practice, whether or not any Letter of Credit chooses such law or practice.

(h) Letter of Credit Fees . The Borrower shall pay to the Administrative Agent for the account of each Lender (subject to Section 2.16 ) in accordance with its Applicable Percentage, in Dollars, a Letter of Credit fee (the “ Letter of Credit Fee ”) (i) for each commercial Letter of Credit equal to the Applicable Rate for commercial Letters of Credit times the Dollar Equivalent of the daily amount available to be drawn under such Letter of Credit, and (ii) for each standby Letter of Credit equal to the Applicable Rate for such type (Financial Letter of Credit or Performance Letter of Credit) of such Letter of Credit times the Dollar Equivalent of the daily amount available to be drawn under such Letter of Credit. For purposes of computing the Dollar Equivalent of the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.08 . Letter of Credit Fees shall be (i) due and payable on the tenth Business Day after the last Business Day of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand and (ii) computed on a quarterly basis in arrears. If there is any change in the Applicable Rate during any quarter, the Dollar Equivalent of the daily amount available to be drawn under each Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect. Notwithstanding anything to the contrary contained herein, upon the request of the Required Lenders, while any Event of Default exists, all Letter of Credit Fees shall accrue at the Default Rate.

(i) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer . The Borrower shall pay directly to the applicable L/C Issuer for its own account, in Dollars, a fronting fee (i) with respect to each commercial Letter of Credit, at a rate separately agreed to between the Borrower and

 

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such L/C Issuer, computed on the Dollar Equivalent of the amount of such Letter of Credit, and payable upon the issuance thereof, (ii) with respect to any amendment of a commercial Letter of Credit increasing the amount of such Letter of Credit, at a rate separately agreed between the Borrower and such L/C Issuer, computed on the Dollar Equivalent of the amount of such increase, and payable upon the effectiveness of such amendment, and (iii) with respect to each standby Letter of Credit, at the rate per annum specified in the applicable Fee Letter or otherwise agreed between such L/C Issuer and the Borrower, computed on the Dollar Equivalent of the daily amount available to be drawn under such Letter of Credit on a quarterly basis in arrears. Such fronting fee with respect to standby Letters of Credit shall be due and payable on the tenth Business Day after the last Business Day of each March, June, September and December in respect of the then-ended quarterly period (or portion thereof, in the case of the first payment), commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. Such fronting fee with respect to commercial Letters of Credit shall be due and payable as provided in subparts (i) and (ii) above. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.08 . In addition, the Borrower shall pay directly to the applicable L/C Issuer for its own account, in Dollars, the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.

(j) Conflict with Issuer Documents . In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.

(k) Letters of Credit Issued for Permitted L/C Parties . Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, is for the account of, or the applicant therefor is, a Permitted L/C Party other than the Borrower, the Borrower shall be obligated to reimburse the L/C Issuer hereunder for any and all drawings under such Letter of Credit. The Borrower hereby acknowledges that the issuance of Letters of Credit for the account, or upon the application, of Permitted L/C Parties other than the Borrower inures to the benefit of the Borrower, and that the Borrower’s business derives substantial benefits from the businesses of such Permitted L/C Parties.

(l) Additional L/C Issuers . In addition to Bank of America and each L/C Issuer listed on the signature pages hereto as an “L/C Issuer,” the Borrower may from time to time, with notice to the Lenders and the consent of the Administrative Agent and the applicable Lender being so appointed, appoint additional Lenders to be L/C Issuers hereunder, provided that the total number of L/C Issuers at any time shall not exceed six Lenders (or such larger number of additional Lenders as the Administrative Agent may agree to permit from time to time). Upon the appointment of a Lender as an L/C Issuer hereunder such Person shall become vested with all of the rights, powers, privileges and duties of an L/C Issuer hereunder.

(m) Removal of L/C Issuers . The Borrower may at any time remove Bank of America or any L/C Issuer that is appointed pursuant to subpart (l) above, if either such Person is at such time a Defaulting Lender or such Person consents to such removal; provided that (i) such removal shall be made upon not less than 30 days’ prior written notice to such L/C Issuer and the Administrative Agent (or such shorter time as such L/C Issuer shall agree) and (ii) such removed L/C Issuer shall retain all the rights, powers, privileges and duties of an L/C Issuer hereunder with respect to all Letters of Credit issued by such L/C Issuer and outstanding as of the effective date of its removal as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Revolving Credit Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c) ). Without

 

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limiting the foregoing, upon the removal of a Lender as an L/C Issuer hereunder, the Borrower may, or at the request of such removed L/C Issuer the Borrower shall use commercially reasonable efforts to, arrange for one or more of the other L/C Issuers to issue Letters of Credit hereunder in substitution for the Letters of Credit, if any, issued by such removed L/C Issuer and outstanding at the time of such removal, or make other arrangements satisfactory to the removed L/C Issuer to effectively cause another L/C Issuer to assume the obligations of the removed L/C Issuer with respect to any such Letters of Credit.

(n) Reporting of Letter of Credit Information and L/C Issuer Sublimit . At any time that there is more than one L/C Issuer, then on (i) the last Business Day of each calendar month, and (ii) each date that an L/C Credit Extension occurs with respect to any Letter of Credit, each L/C Issuer (or, in the case of part (ii), the applicable L/C Issuer) shall deliver to the Administrative Agent a report setting forth in form and detail reasonably satisfactory to the Administrative Agent information with respect to each Letter of Credit issued by such L/C Issuer that is outstanding hereunder, including any auto-renewal or termination of auto-renewal provisions in such Letter of Credit. In addition, each L/C Issuer shall provide notice to the Administrative Agent of its L/C Issuer Sublimit, or any change thereto, promptly upon it becoming an L/C Issuer or making any change to its L/C Issuer Sublimit. No failure on the part of any L/C Issuer to provide such information pursuant to this Section 2.03(n) shall limit the obligation of the Borrower or any Lender hereunder with respect to its reimbursement and participation obligations, respectively, pursuant to this Section 2.03 .

(o) Cash Collateralized Letters of Credit . If the Borrower has fully Cash Collateralized the applicable L/C Issuer with respect to any Extended Letter of Credit issued by such L/C Issuer in accordance with Section 6.26 and the Borrower and the applicable L/C Issuer have made arrangements between them with respect to the pricing and fees associated therewith (each such Extended Letter of Credit a “ Cash Collateralized Letter of Credit ”), then on the day that is 95 days (or such shorter period of time permitted by such L/C Issuer) after the date of notice to the Administrative Agent thereof by the applicable L/C Issuer (so long as such Cash Collateral has remained in place for the entirety of such 95-day (or applicable shorter) period), and for so long as such Cash Collateral remains in place (i) such Cash Collateralized Letter of Credit shall cease to be a “Letter of Credit” hereunder, (ii) such Cash Collateralized Letter of Credit shall not constitute utilization of the Revolving Credit Facility, (iii) no Lender shall have any further obligation to fund participations, L/C Borrowings or Revolving Credit Loans to reimburse any drawing under any such Cash Collateralized Letter of Credit, (iv) no Letter of Credit Fee shall be due or payable to the Lenders, or any of them, hereunder with respect to such Cash Collateralized Letter of Credit, and (v) any fronting fee, issuance fee or other fee with respect to such Cash Collateralized Letter of Credit shall be as agreed separately between the Borrower and such L/C Issuer.

2.04 Swing Line Loans.

(a) The Swing Line . Subject to the terms and conditions set forth herein, the Swing Line Lender, in reliance upon the agreements of the other Lenders set forth in this Section 2.04 , may in its sole discretion make loans in Dollars (each such loan, a “ Swing Line Loan ”) to the Borrower from time to time on any Business Day during the Availability Period in an aggregate amount not to exceed at any time outstanding the amount of the Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated with the Applicable Percentage of the Outstanding Amount of Revolving Credit Loans and L/C Obligations of the Lender acting as Swing Line Lender, may exceed the amount of such Lender’s Commitment; provided that after giving effect to any Swing Line Loan, (i) the Total Outstandings shall not exceed the Revolving Credit Facility at such time and (ii) the Revolving Credit Exposure of any Lender shall not exceed such Lender’s Commitment; provided further that the Borrower shall not use the

 

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proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan. Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.04 , prepay under Section 2.05 , and reborrow under this Section 2.04 . Each Swing Line Loan shall be a Base Rate Loan. Immediately upon the making of a Swing Line Loan, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Swing Line Loan.

(b) Borrowing Procedures . Each Swing Line Borrowing shall be made upon the Borrower’s irrevocable notice to the Swing Line Lender and the Administrative Agent, which may be given by (A) telephone or (B) by a Swing Line Loan Notice; provided that any telephonic notice must be confirmed promptly by delivery to the Swing Line Lender and the Administrative Agent of a Swing Line Loan Notice. Each such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a minimum of $100,000, and (ii) the requested borrowing date, which shall be a Business Day. Promptly after receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the Swing Line Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the Administrative Agent of the contents thereof. Unless the Swing Line Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any Lender) prior to 2:00 p.m. on the date of the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the first proviso to the first sentence of Section 2.04(a) , or (B) that one or more of the applicable conditions specified in Article IV is not then satisfied, then, subject to the terms and conditions hereof, the Swing Line Lender will, not later than 3:00 p.m. on the borrowing date specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the Borrower.

(c) Refinancing of Swing Line Loans .

(i) The Swing Line Lender at any time in its sole and absolute discretion may request, on behalf of the Borrower (which hereby irrevocably authorizes the Swing Line Lender to so request on its behalf), that each Lender make a Base Rate Loan in an amount equal to such Lender’s Applicable Percentage of the amount of Swing Line Loans then outstanding. Such request shall be made in writing (which written request shall be deemed to be a Committed Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.02 , without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but subject to the unutilized portion of the Revolving Credit Facility and the conditions set forth in Section 4.03 . The Swing Line Lender shall furnish the Borrower with a copy of the applicable Committed Loan Notice promptly after delivering such notice to the Administrative Agent. Each Lender shall make an amount equal to its Applicable Percentage of the amount specified in such Committed Loan Notice available to the Administrative Agent in Same Day Funds (and the Administrative Agent may apply Cash Collateral available with respect to the applicable Swing Line Loan) for the account of the Swing Line Lender at the Administrative Agent’s Office for Dollar-denominated payments not later than 1:00 p.m. on the day specified in such Committed Loan Notice, whereupon, subject to Section 2.04(c)(ii) , each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the Swing Line Lender.

 

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(ii) If for any reason any Swing Line Loan cannot be refinanced by such a Revolving Credit Borrowing in accordance with Section 2.04(c)(i) , the request for Base Rate Loans submitted by the Swing Line Lender as set forth herein shall be deemed to be a request by the Swing Line Lender that each of the Lenders fund its risk participation in the relevant Swing Line Loan and each Lender’s payment to the Administrative Agent for the account of the Swing Line Lender pursuant to Section 2.04(c)(i) shall be deemed payment in respect of such participation.

(iii) If any Lender fails to make available to the Administrative Agent for the account of the Swing Line Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(i) , the Swing Line Lender shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swing Line Lender at a rate per annum equal to the applicable Overnight Rate from time to time in effect, plus any administrative, processing or similar fees customarily charged by the Swing Line Lender in connection with the foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Revolving Credit Loan included in the relevant Revolving Credit Borrowing or funded participation in the relevant Swing Line Loan, as the case may be. A certificate of the Swing Line Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.

(iv) Each Lender’s obligation to make Revolving Credit Loans or to purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.04(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the Swing Line Lender, the Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided , however , that each Lender’s obligation to make Revolving Credit Loans pursuant to this Section 2.04(c) is subject to the conditions set forth in Section 4.03 . No such funding of risk participations shall relieve or otherwise impair the obligation of the Borrower to repay Swing Line Loans, together with interest as provided herein.

(d) Repayment of Participations .

(i) At any time after any Lender has purchased and funded a risk participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line Loan, the Swing Line Lender will distribute to such Lender its Applicable Percentage thereof in the same funds as those received by the Swing Line Lender.

(ii) If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan is required to be returned by the Swing Line Lender under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by the Swing Line Lender in its discretion), each Lender shall pay to the Swing Line Lender its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the applicable Overnight Rate. The Administrative Agent will make such demand upon the request of the Swing Line Lender. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

 

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(e) Interest for Account of Swing Line Lender . The Swing Line Lender shall be responsible for invoicing the Borrower for interest on the Swing Line Loans. Until each Lender funds its Base Rate Loan or risk participation pursuant to this Section 2.04 to refinance such Lender’s Applicable Percentage of any Swing Line Loan, interest in respect of such Applicable Percentage shall be solely for the account of the Swing Line Lender.

(f) Payments Directly to Swing Line Lender . The Borrower shall make all payments of principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender.

2.05 Prepayments.

(a) Optional . The Borrower may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay Revolving Credit Loans in whole or in part without premium or penalty; provided that (i) such notice must be in a form acceptable to the Administrative Agent and be received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurocurrency Rate Loans, and (B) on the date of prepayment of Base Rate Loans; (ii) any prepayment of Eurocurrency Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid and, if Eurocurrency Rate Loans are to be prepaid, the Interest Period(s) of such Loans. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s ratable portion of such prepayment (based on such Lender’s Applicable Percentage in respect of the Revolving Credit Facility). If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurocurrency Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05 . Subject to Section 2.16 , each such prepayment shall be paid to the Lenders in accordance with their respective Applicable Percentages in respect of each of the relevant Facilities.

(i) The Borrower may, upon notice to the Swing Line Lender (with a copy to the Administrative Agent), at any time or from time to time, voluntarily prepay Swing Line Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. on the date of the prepayment, and (ii) any such prepayment shall be in a minimum principal amount of $100,000. Each such notice shall specify the date and amount of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.

(b) Mandatory .

(i) In the event, and on each occasion, that any Net Cash Proceeds are received by or on behalf of the Borrower or any of its Subsidiaries in respect of any Prepayment Event, the Borrower shall, within five Business Days after such Net Cash Proceeds are received (or, in the case of a Prepayment Event described in clause (b)  of the definition of the term “Prepayment Event”, on or before the next succeeding Business Day following the occurrence of such Prepayment Event), prepay Revolving Credit Loans in an aggregate amount equal to 100% of the amount of such Net Cash Proceeds (such mandatory prepayments to be applied as set forth in clause (ii)  below); provided that, in the case of any event described in clause (a)  of the definition

 

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of the term “ Prepayment Event ”, so long as no Default shall have occurred and be continuing and notice of the intent to utilize the reinvestment provisions of this proviso is provided to the Administrative Agent prior to the date such prepayment would otherwise be required to be made, if the Borrower and/or any of its Subsidiaries invests (or commits to invest) the Net Cash Proceeds from such event (or a portion thereof) within 365 days after receipt of such Net Cash Proceeds in assets used or useful in the business of the Borrower and its Subsidiaries, then no prepayment shall be required pursuant to this paragraph in respect of such Net Cash Proceeds from such Prepayment Event (or the applicable portion of such Net Cash Proceeds, if applicable, with any balance required to be utilized to prepay the Loans in accordance with this provision) except to the extent of any such Net Cash Proceeds therefrom that have not been so invested (or committed to be invested) by the end of such 365-day period (or if committed to be so invested within such 365-day period, have not been so invested within 18 months after the date of receipt of such Net Cash Proceeds), at which time a prepayment shall be required in an amount equal to such Net Cash Proceeds that have not been so invested.

(ii) Each prepayment of Revolving Credit Loans pursuant to Section 2.05(b)(i) shall be applied to the Revolving Credit Facility (without permanent reduction of the Commitments) in the manner set forth in clause (iv)  of this Section 2.05(b) .

(iii) If the Administrative Agent notifies the Borrower at any time that the Total Outstandings at such time exceed the Revolving Credit Facility in effect at such time, then, within two Business Days after receipt of such notice, the Borrower shall prepay Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount sufficient to reduce such Outstanding Amount as of such date of payment to an amount not to exceed the Revolving Credit Facility then in effect; provided , however , that the Borrower shall not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.05(b)(iii) unless, after the prepayment in full of the Revolving Credit Loans, the Total Outstandings exceed the Revolving Credit Facility then in effect. The Administrative Agent may, at any time and from time to time after the initial deposit of such Cash Collateral, request that additional Cash Collateral be provided in order to protect against the results of further exchange rate fluctuations.

(iv) Except as otherwise provided in Section 2.16 , prepayments of the Revolving Credit Facility made pursuant to this Section 2.05(b) , first , shall be applied ratably to the L/C Borrowings and the Swing Line Loans, second , shall be applied ratably to the outstanding Revolving Credit Loans, and, third , shall be used to Cash Collateralize the remaining L/C Obligations in full; and, in the case of prepayments of the Revolving Credit Facility required pursuant to clause (i)  of this Section 2.05(b) , the amount remaining, if any, after the prepayment in full of all L/C Borrowings, Swing Line Loans and Revolving Credit Loans outstanding at such time and the Cash Collateralization of the remaining L/C Obligations in full may be retained by the Borrower for use in the ordinary course of its business. Upon the drawing of any Letter of Credit that has been Cash Collateralized, the funds held as Cash Collateral shall be applied (without any further action by or notice to or from the Borrower or any other Loan Party or any Defaulting Lender that has provided Cash Collateral) to reimburse the applicable L/C Issuer or the applicable Lenders, as applicable.

(v) Notwithstanding anything to the contrary contained in any other provision of this Section 2.05(b) , to the extent any mandatory prepayment required pursuant to Section 2.05(b)(i) (without giving effect to this Section 2.05(b)(v) ) is attributable to a Prepayment Event by a Foreign Subsidiary of the Borrower or an Excluded Domestic Subsidiary, no such prepayment (or

 

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a portion thereof) shall be required to be made if either (A) such prepayment (or portion thereof, or dividend or distribution to facilitate such prepayment) shall, at the time it is required to be made, be prohibited by applicable Requirement of Law (including by reason of financial assistance, corporate benefit, restrictions on upstreaming or transfer of cash intra group and the fiduciary and statutory duties of the directors of relevant Subsidiaries), provided that the Borrower and its Subsidiaries shall make commercially reasonable efforts with respect to such Requirement of Law to permit such prepayment (or portion thereof, or dividend or distribution to facilitate such prepayment) in accordance therewith (it being understood that such efforts shall not require (x) any expenditure in excess of a nominal amount of funds or (y) modifications to the organizational or tax structure of the Borrower and its Subsidiaries to permit such prepayment (or portion thereof, or dividend or distribution to facilitate such prepayment)), or (B) a Restricted Payment or other distribution is reasonably necessary (notwithstanding the Loan Parties’ commercially reasonable efforts to make such mandatory prepayment without making such Restricted Payment or other distribution) in connection with such prepayment (or portion thereof) and the Borrower determines in good faith that the Borrower or any Subsidiary would incur a material liability in respect of Taxes (including any withholding tax) in connection with making such Restricted Payment or other distribution (outside of any taxes applicable to such Prepayment Event that both (x) are deducted in calculating the Net Cash Proceeds thereof and (y) would be incurred even if no such Restricted Payment or other distribution were made). Notwithstanding anything in the preceding sentence to the contrary, in the event the limitations or restrictions described therein cease to apply to any prepayment (or portion thereof, or dividend or distribution to facilitate such prepayment) required under Section 2.05(b)(i) , the Borrower shall make such prepayment in an amount equal to the lesser of (x) the amount of such prepayment previously required to have been made without having given effect to such limitations or restrictions and (y) the amount of cash and Cash Equivalents on hand at such time, in each case, less the amount by which the Net Cash Proceeds from the Prepayment Event were previously used for the permanent repayment of Indebtedness (including any reductions in commitments related thereto).

2.06 Termination or Reduction of Commitments .

(a) Optional . The Borrower may, upon notice to the Administrative Agent, terminate the Revolving Credit Facility, or from time to time permanently reduce the Revolving Credit Facility; provided that (a) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. five Business Days prior to the date of termination or reduction, (b) any such partial reduction shall be in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof, (c) the Borrower shall not terminate or reduce the Revolving Credit Facility if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Outstandings would exceed the Revolving Credit Facility, and (d) if, after giving effect to any reduction of the Revolving Credit Facility, the Alternative Currency Sublimit or the Swing Line Sublimit exceeds the amount of the Revolving Credit Facility, such Sublimit shall be automatically reduced by the amount of such excess. Except as provided in the preceding sentence, the amount of any such Revolving Credit Facility reduction shall not be applied to the Alternative Currency Sublimit or the Swing Line Sublimit unless otherwise specified by the Borrower.

(b) Application of Commitment Reductions; Payment of Fees .

(i) The Administrative Agent will promptly notify the Lenders of any notice of termination or reduction of the Revolving Credit Facility. Any reduction of the Revolving Credit Facility shall be applied to the Commitment of each Lender according to its Applicable Percentage. All fees in respect of the Revolving Credit Facility accrued until the effective date of any termination of the Revolving Credit Facility shall be paid on the effective date of such termination.

 

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(ii) Notwithstanding anything to the contrary contained herein, a notice of termination of the Aggregate Commitments and the prepayment in full of the Loans in connection therewith may state that such notice is conditioned upon the effectiveness of other credit facilities, and if any notice so states it may be revoked by the Borrower by notice to the Administrative Agent on or prior to the date specified for the termination of the Aggregate Commitments and such prepayment that the refinancing condition has not been met and the termination and prepayment is to be revoked, provided that the Borrower will continue to be responsible for any costs or expenses pursuant to Section 3.05 in connection with the failure to prepay Loans resulting from such revocation.

2.07 Repayment of Loans .

(a) Revolving Credit Loans . The Borrower shall repay to the Lenders on the Maturity Date the aggregate principal amount of all Revolving Credit Loans made to the Borrower outstanding on such date.

(b) Swing Line Loans . The Borrower shall repay each Swing Line Loan on the earlier to occur of (i) the date 10 Business Days after such Loan is made and (ii) the Maturity Date.

2.08 Interest .

(a) Subject to the provisions of subsection (b) below, (i) each Eurocurrency Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurocurrency Rate for such Interest Period plus the Applicable Rate; (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate; and (iii) each Swing Line Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate for Base Rate Loans.

(b) (i) If any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Requirements of Law.

(ii) If any amount (other than principal of any Loan) payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Requirements of Law.

(iii) Upon the request of the Required Lenders, while any Event of Default exists (other than as set forth in clauses 2.08(b)(i) and (b)(ii) above), the Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Requirements of Law.

 

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(iv) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

(c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

2.09 Fees . In addition to certain fees described in subsections (h) and (i) of Section 2.03 :

(a) Commitment Fee .

(i) The Borrower shall pay to the Administrative Agent for the account of each Lender (subject to Section 2.16(a)(iii) with respect to Defaulting Lenders) in accordance with its Applicable Percentage, a commitment fee in Dollars equal to the Applicable Rate times the actual daily amount by which the Revolving Credit Facility exceeds the sum of (i) the Outstanding Amount of Revolving Credit Loans and (ii) the Outstanding Amount of L/C Obligations, subject to adjustment as provided in Section 2.16 . The commitment fee with respect to the Revolving Credit Facility shall accrue at all times during the Availability Period with respect to the Revolving Credit Facility, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the tenth Business Day after the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Closing Date, and on the last day of the Availability Period for the Revolving Credit Facility.

(ii) The commitment fees set forth in clause (i) above shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by such Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.

(b) Other Fees .

(i) The Borrower shall pay to the Arrangers and the Administrative Agent for their own respective accounts, in Dollars, fees in the amounts and at the times specified in the Fee Letters. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

(ii) The Borrower shall pay to the Lenders, in Dollars, such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

2.10 Computation of Interest and Fees .

(a) All computations of interest for Base Rate Loans (including Base Rate Loans determined by reference to the Eurocurrency Rate) shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on

 

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which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.12(a) , bear interest for one day. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

(b) If, as a result of any restatement of or other adjustment to the financial statements of the Borrower or for any other reason, the Borrower, the Administrative Agent or the Required Lenders determine that (i) the Leverage Ratio as calculated by the Borrower as of any applicable date was inaccurate and (ii) a proper calculation of the Leverage Ratio would have resulted in higher pricing for such period, the Borrower shall immediately and retroactively be obligated to pay to the Administrative Agent for the account of the applicable Lenders or L/C Issuer, as the case may be, promptly on demand by the Administrative Agent (or, after the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, automatically and without further action by the Administrative Agent, any Lender or any L/C Issuer), an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period. This paragraph shall not limit the rights of the Administrative Agent, any Lender or any L/C Issuer, as the case may be, under Section 2.03(c)(iii) , 2.03(h) or 2.08(b) or under Article VIII . The Borrower’s obligations under this paragraph shall survive the termination of the Aggregate Commitments and the repayment of all other Obligations hereunder.

2.11 Evidence of Debt.

(a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Promptly after the request of any Lender to the Borrower made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Loans to the Borrower in addition to such accounts or records. Each Lender may attach schedules to a Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.

(b) In addition to the accounts and records referred to in subsection (a), each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit and Swing Line Loans. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.

2.12 Payments Generally; Administrative Agent’s Clawback.

(a) General . All payments to be made by the Borrower shall be made free and clear and without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative

 

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Agent’s Office in Dollars and in Same Day Funds not later than 2:00 p.m. on the date specified herein. Without limiting the generality of the foregoing, the Administrative Agent may require that any payments due under this Agreement be made in the United States. The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent or the applicable L/C Issuer after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

(b) (i) Funding by Lenders; Presumption by Administrative Agent . Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing of Eurocurrency Rate Loans (or, in the case of any Revolving Credit Borrowing of Base Rate Loans, prior to (A) 12:00 noon on the date of such Revolving Credit Borrowing if such Revolving Credit Borrowing is to be made on a Business Day other than the date the Administrative Agent received the applicable Committed Loan Notice with respect to such Revolving Credit Borrowing and (B) 2:00 p.m. on the date of such Revolving Credit Borrowing if such Revolving Credit Borrowing is to be made on the same Business Day as the date the Administrative Agent received the applicable Committed Loan Notice with respect to such Revolving Credit Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Revolving Credit Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of a Revolving Credit Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02 ) and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Revolving Credit Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in Same Day Funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the Overnight Rate, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

(ii) Payments by Borrower; Presumptions by Administrative Agent . Unless the Administrative Agent shall have received notice from the Borrower prior to the time at which any payment is due to the Administrative Agent for the account of the Lenders or the applicable L/C Issuer hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the applicable L/C Issuer, as the

 

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case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the applicable L/C Issuer, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or such L/C Issuer, in Same Day Funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the Overnight Rate.

A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.

(c) Failure to Satisfy Conditions Precedent . If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender to the Borrower as provided in the foregoing provisions of this Article II , and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

(d) Obligations of Lenders Several . The obligations of the Lenders hereunder to make Revolving Credit Loans, to fund participations in Letters of Credit and Swing Line Loans and to make payments pursuant to Section 10.04(c) are several and not joint. The failure of any Lender to make any Loan, to fund any such participation or to make any payment under Section 10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase its participation or to make its payment under Section 10.04(c) .

(e) Funding Source . Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

(f) Insufficient Funds . Subject to the application of Section 8.03 by its terms, if at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, L/C Borrowings, interest and fees then due hereunder, such funds shall be applied (i) first, toward payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, toward payment of principal and L/C Borrowings then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and L/C Borrowings then due to such parties.

2.13 Sharing of Payments by Lenders . If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Revolving Credit Loans made by it, or the participations in L/C Obligations or in Swing Line Loans held by it resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Revolving Credit Loans or participations and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Revolving Credit Loans and subparticipations in L/C Obligations and Swing Line Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Credit Loans and other amounts owing them, provided that:

(i) if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

 

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(ii) the provisions of this Section shall not be construed to apply to (x) any payment made by or on behalf of the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (y) the application of Cash Collateral provided for in Section 2.15 , or (z) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or subparticipations in L/C Obligations or Swing Line Loans to any assignee or participant, other than an assignment to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this Section shall apply).

The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

2.14 Increase in Commitments .

(a) Request for Increase . The Borrower may, from time to time, request by written notice to the Administrative Agent one or more increases in the Revolving Credit Facility (each, a “ Revolving Credit Increase ”); provided that (i) the principal amount for all such Revolving Credit Increases, in the aggregate, since the Closing Date (including the then requested Revolving Credit Increase) shall not exceed the sum (with utilization being determined by the Borrower subject to the limits provided herein) of (x) $200,000,000 plus (y) a principal amount such that, after giving effect to such proposed Revolving Credit Increase (measured assuming the entire principal amount of any proposed Revolving Credit Increase being incurred pursuant to this clause (y) is fully drawn), any repayment of other Indebtedness in connection therewith and any other appropriate pro forma adjustment events, the Senior Secured Leverage Ratio is not greater than 2.00 to 1.00; (ii) any such request shall be in a minimum amount of $10,000,000 (or a lesser amount in the event such amount represents all remaining availability under this Section) and the Borrower may make a maximum of five such requests (excluding any requests that are not consummated); (iii) no Revolving Credit Increase shall increase the Swing Line Sublimit without the consent of the Swing Line Lender; (iv) any Revolving Credit Increase may, at the request of the Borrower, be available for the issuance of Letters of Credit within the limits of the L/C Issuer Sublimits; and (v) each Revolving Credit Increase shall constitute Obligations hereunder and shall be guaranteed and secured pursuant to the Guaranty, Collateral Agreement and the other Security Instruments on a pari passu basis with the other Obligations hereunder.

(b) Process for Increase . Revolving Credit Increases may be (but shall not be required to be) provided by any existing Lender, in each case on terms permitted in this Section 2.14 and otherwise on terms reasonably acceptable to the Borrower and the Administrative Agent, or by any other Person that qualifies as an Eligible Assignee (each such other Person, an “ Additional Lender ”) pursuant to a joinder agreement in form and substance reasonably satisfactory to the Administrative Agent; provided that (i) the Administrative Agent shall have consented (in each case, such consent not to be unreasonably withheld, delayed or conditioned) to each proposed Additional Lender providing such Revolving Credit Increase to the extent the Administrative Agent would be required to consent to an assignment to such Additional Lender pursuant to Section 10.06(b)(iii) and (ii) each L/C Issuer and the Swing Line Lender shall have consented to each such Lender or proposed Additional Lender providing such Revolving Credit

 

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Increase if such consent by the L/C Issuers or the Swing Line Lender, as the case may be, would be required under Section 10.06(b)(iii) for an assignment of Revolving Credit Loans or Commitments to such Lender or proposed Additional Lender; provided further that the Borrower shall not be required to offer or accept commitments from existing Lenders for any Revolving Credit Increase. No Lender shall have any obligation to increase its Revolving Commitment pursuant to a request for a Revolving Credit Increase, and no consent of any Lender, other than the Lenders agreeing to provide any portion of a Revolving Credit Increase, shall be required to effectuate such Revolving Credit Increase.

(c) Effective Date and Allocations . The Administrative Agent and the Borrower shall determine the effective date of any Revolving Credit Increase (the “ Increase Effective Date ”). The Administrative Agent shall promptly notify the Borrower and the Lenders of the final allocation of such Revolving Credit Increase and the Increase Effective Date.

(d) Conditions .

(i) As a condition precedent to each Revolving Credit Increase, the Borrower shall deliver to the Administrative Agent a certificate of the Borrower and, if reasonably determined by the Administrative Agent to be necessary or desirable under applicable Requirements of Law with respect to the Loan Documents of a Guarantor, of each such Guarantor, dated as of the Increase Effective Date, signed by a Responsible Officer of the Borrower or each such Guarantor, as applicable, and (A) certifying and attaching the resolutions adopted by the Borrower or such Guarantor approving or consenting to such Revolving Credit Increase (which, with respect to any such Loan Party, may, if applicable, be the resolutions entered into by such Loan Party in connection with the incurrence of the Obligations on the Closing Date) and (B) certifying that (1) both before and immediately after giving effect to such Revolving Credit Increase, as of the Increase Effective Date no Default or Event of Default shall exist and be continuing, (2) immediately after giving effect to such Revolving Credit Increase, as of the Increase Effective Date the Borrower shall be in pro forma compliance (after giving effect to the incurrence of such Revolving Credit Increase and the use of proceeds thereof) with each of the financial covenants contained in Section 7.16 and (3) the representations and warranties of the Borrower and each other Loan Party contained in Article V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, are true and correct in all material respects (or, with respect to representations and warranties modified by a materiality or Material Adverse Effect standard, in all respects) on and as of the Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects (or, with respect to representations and warranties modified by a materiality or Material Adverse Effect standard, in all respects) as of such earlier date, and except that for purposes of this clause (i)(B)(3) , the representations and warranties contained in Sections 5.04(a) and (b)  shall be deemed to refer to the most recent statements furnished pursuant to Sections 6.01(a) and (b) , respectively. In addition, as a condition precedent to each Revolving Credit Increase, the Borrower shall deliver or cause to be delivered such other officer’s certificates, Organization Documents and legal opinions of the type delivered on the Closing Date as are reasonably requested by, and in form and substance reasonably satisfactory to, the Administrative Agent.

(ii) Each Revolving Credit Increase shall have the same terms as the outstanding Revolving Credit Loans and be part of the existing Revolving Credit Facility hereunder. Upon each Revolving Credit Increase (x) each Lender having a Commitment immediately prior to such increase will automatically and without further act be deemed to have assigned to each Lender

 

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providing a portion of the Revolving Credit Increase (each, a “ Revolving Credit Increase Lender ”) in respect of such increase, and each such Revolving Credit Increase Lender will automatically and without further act be deemed to have assumed a portion of such Lender’s participations hereunder in outstanding Letters of Credit and Swing Line Loans such that, after giving effect to each such deemed assignment and assumption of participations, the percentage of the aggregate outstanding participations hereunder in (1) Letters of Credit and (2) Swing Line Loans, will, in each case, equal each Lender’s Applicable Percentage (after giving effect to such increase in the Revolving Credit Facility) and (y) if, on the date of such increase there are any Revolving Credit Loans outstanding, the Lenders shall make such payments among themselves as the Administrative Agent may reasonably request to the extent necessary to keep the outstanding Revolving Credit Loans ratable with any revised Applicable Percentages arising from such Revolving Credit Increase, and the Borrower shall pay to the applicable Lenders any amounts required to be paid pursuant to Section 3.05 in connection with such payments among the Lenders as if such payments were effected by prepayments of Revolving Credit Loans.

(e) Conflicting Provisions . This Section shall supersede any provisions in Section 2.13 or 10.01 to the contrary.

2.15 Cash Collateral.

(a) Certain Credit Support Events . If (i) as of the Letter of Credit Expiration Date, any L/C Obligation for any reason remains outstanding, (ii) the Borrower shall be required to provide Cash Collateral pursuant to Section 8.02(c) , or (iii) there shall exist a Defaulting Lender, the Borrower shall immediately (in the case of clause (ii) above) or within one Business Day (in all other cases) (or such longer period of time permitted by the Administrative Agent and the applicable L/C Issuer) following any request by the Administrative Agent or the applicable L/C Issuer, provide Cash Collateral in an amount not less than the applicable Minimum Collateral Amount (determined in the case of Cash Collateral provided pursuant to clause (iii) above, after giving effect to Section 2.16(a)(iv) and any Cash Collateral provided by the Defaulting Lender). If at any time the Administrative Agent determines that any funds held as Cash Collateral pursuant to the preceding sentence are subject to any right or claim of any Person other than the Administrative Agent or that the total amount of such funds is less than the applicable Minimum Collateral Amount as required by the preceding sentence, the Borrower will, forthwith upon demand by the Administrative Agent, pay to the Administrative Agent, as additional funds to be deposited as Cash Collateral, an amount equal to the excess of (x) such applicable Minimum Collateral Amount over (y) the total amount of funds, if any, then held as Cash Collateral that the Administrative Agent determines to be free and clear of any such right and claim. Upon the drawing of any Letter of Credit for which funds are on deposit as Cash Collateral, such funds shall be applied, to the extent permitted under applicable Laws, to reimburse the applicable L/C Issuer.

(b) Grant of Security Interest . All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in blocked, non-interest bearing (unless otherwise agreed by the depositary) deposit accounts at the Administrative Agent or the relevant L/C Issuer, as applicable. To the extent provided by the Borrower, the Borrower, and to the extent provided by any Lender, such Lender, hereby grants to (and subjects to the control of) the relevant L/C Issuer or to the Administrative Agent, for the benefit of the Administrative Agent, the L/C Issuer and the Lenders (including the Swing Line Lender), as applicable, and agrees to maintain, a first priority security interest in all such cash, deposit accounts and all balances therein, and all other property so provided as collateral pursuant to this Section 2.15 , and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section 2.15(c) . If at any time the Administrative Agent determines

 

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that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent or the applicable L/C Issuer as herein provided, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Borrower or the relevant Defaulting Lender will, promptly (but in any event within five Business Days) after demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency. The Borrower shall pay on demand therefor from time to time all customary account opening, activity and other administrative fees and charges in connection with the maintenance and disbursement of Cash Collateral.

(c) Application . Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.15 or Sections 2.03 , 2.04 , 2.05 , 2.16 or 8.02 in respect of Letters of Credit or Swing Line Loans shall be held and applied to the satisfaction of the specific L/C Obligations, Swing Line Loans, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may be provided for herein.

(d) Release . Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or to secure other obligations shall be released promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee following compliance with Section 10.06(b)(vi) )) or (ii) the Administrative Agent’s and the applicable L/C Issuer’s good faith determination that there exists excess Cash Collateral; provided that (x) Cash Collateral furnished by or on behalf of a Loan Party shall not be released during the continuance of a Default (and following application as provided in this Section 2.15 may be otherwise applied in accordance with Section 8.03 ), and (y) the Person providing Cash Collateral and the L/C Issuer or Swing Line Lender, as applicable, may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations.

2.16 Defaulting Lenders.

(a) Adjustments . Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Requirements of Law:

(i) Waivers and Amendments . Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of “Required Lenders” and Section 10.01 .

(ii) Defaulting Lender Waterfall . Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 10.08 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first , to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second , to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to the L/C Issuer or Swing Line Lender hereunder; third , to Cash Collateralize the L/C Issuer’s Fronting Exposure with respect to such Defaulting Lender in accordance with Section 2.15 ; fourth , as the Borrower may request (so long as no Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required

 

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by this Agreement, as determined by the Administrative Agent; fifth , if so determined by the Administrative Agent and the Borrower, to be held in a non-interest bearing (unless otherwise agreed by the depositary) deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize the L/C Issuer’s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with Section 2.15 ; sixth , to the payment of any amounts owing to the Lenders, the L/C Issuer or Swing Line Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the L/C Issuer or the Swing Line Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh , so long as no Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth , to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or L/C Borrowings in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 4.03 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C Obligations owed to, all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or L/C Obligations owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in L/C Obligations and Swing Line Loans are held by the Lenders pro rata in accordance with the Commitments hereunder without giving effect to Section 2.16(a)(iv) . Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.16(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(iii) Certain Fees .

(A) No Defaulting Lender shall be entitled to receive any commitment fee payable under Section 2.09(a) for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).

(B) Each Defaulting Lender shall be entitled to receive Letter of Credit Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Applicable Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 2.15 .

(C) With respect to any Letter of Credit Fee not required to be paid to any Defaulting Lender pursuant to clause (B) above, the Borrower shall (x) pay to each non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in L/C Obligations that has been reallocated to such non-Defaulting Lender pursuant to clause (iv) below, (y) pay to the applicable L/C Issuer the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such L/C Issuer’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.

 

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(iv) Reallocation of Applicable Percentages to Reduce Fronting Exposure . All or any part of such Defaulting Lender’s participation in L/C Obligations and Swing Line Loans shall be reallocated among the non-Defaulting Lenders in accordance with their respective Applicable Percentages (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that such reallocation does not cause the aggregate Revolving Credit Exposure of any non-Defaulting Lender to exceed such non-Defaulting Lender’s Commitment. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a non-Defaulting Lender as a result of such non-Defaulting Lender’s increased exposure following such reallocation.

(v) Cash Collateral, Repayment of Swing Line Loans . If the reallocation described in clause (a)(iv) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under any applicable Requirement of Law, (x)  first , prepay Swing Line Loans in an amount equal to the Swing Line Lenders’ Fronting Exposure and (y)  second , Cash Collateralize the L/C Issuers’ Fronting Exposure in accordance with the procedures set forth in Section 2.15 .

(b) Defaulting Lender Cure . If the Borrower, the Administrative Agent, Swing Line Lender and the L/C Issuer agree in writing that a Lender is no longer a Defaulting Lender (except that during the continuance of an Event of Default, the Borrower’s agreement shall not be required), the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit and Swing Line Loans to be held on a pro rata basis by the Lenders in accordance with their Applicable Percentages (without giving effect to Section 2.16(a)(iv) ), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided , further , that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01 Taxes.

(a) L/C Issuer . For purposes of this Section 3.01 , the term “Lender” includes any L/C Issuer and the term “Requirements of Law” includes FATCA.

(b) Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes .

(i) Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable Requirements of Law. If any applicable Requirements of Law (as determined in the good faith discretion of the Administrative Agent) require the deduction or withholding of any Tax from any such payment by the Administrative Agent or a Loan Party, then the Administrative Agent or such Loan Party shall be entitled to make such deduction or withholding, upon the basis of the information and documentation to be delivered pursuant to subsection (f)  below.

 

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(ii) If any Loan Party or the Administrative Agent shall be required by the Code to withhold or deduct any Taxes, including both United States Federal backup withholding and withholding taxes, from any payment made hereunder or under any other Loan Document, then (A) the Administrative Agent shall withhold or make such deductions as are determined in the good faith discretion of the Administrative Agent to be required based upon the information and documentation it has received pursuant to subsection (f)  below, (B) the Administrative Agent shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with the Code, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 3.01 ) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction for Indemnified Taxes been made.

(iii) If any Loan Party or the Administrative Agent shall be required by any applicable Requirements of Law other than the Code to withhold or deduct any Taxes from any payment made hereunder or under any other Loan Document, then (A) such Loan Party or the Administrative Agent, as required by such Requirements of Law as determined in the good faith discretion of such Loan Party or the Administrative Agent (as applicable), shall withhold or make such deductions as are determined by it to be required based upon the information and documentation it has received pursuant to subsection (f)  below, (B) such Loan Party or the Administrative Agent, to the extent required by such Requirements of Law, shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with such Requirements of Law, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 3.01 ) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction for Indemnified Taxes been made.

(c) Payment of Other Taxes by the Borrower . The Loan Parties shall timely pay to the relevant Governmental Authority in accordance with applicable Requirements of Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

(d) Tax Indemnifications . (i) Each of the Loan Parties shall jointly and severally indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 3.01 ) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability (setting forth in reasonable detail the basis and calculation of such payment or liability) delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. Notwithstanding anything to the contrary in this Agreement or any other Loan Document, the Loan Parties are not indemnifying any Person for Excluded Taxes, except to the extent provided in the immediately succeeding sentence. Each of the Loan Parties shall jointly and

 

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severally indemnify the Administrative Agent, within 10 days after demand therefor, for any amount which a Lender for any reason fails to pay indefeasibly to the Administrative Agent as required pursuant to Section 3.01(d)(ii) below. Upon making such payment to the Administrative Agent, the Borrower shall be subrogated to the rights of the Administrative Agent pursuant to Section 3.01(d)(ii) below against the applicable defaulting Lender (other than the right of set off pursuant to the last sentence of Section 3.01(d)(ii) ).

(ii) Each Lender shall, and does hereby, severally indemnify, and shall make payment in respect thereof within 10 days after demand therefor, ( x ) the Administrative Agent against any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), ( y ) the Administrative Agent and the Loan Parties, as applicable, against any Taxes attributable to such Lender’s failure to comply with the provisions of Section 10.06(d) relating to the maintenance of a Participant Register and ( z ) the Administrative Agent and the Loan Parties, as applicable, against any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent or a Loan Party in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this clause (ii) .

(e) Evidence of Payments . Upon request by the Borrower or the Administrative Agent, as the case may be, after any payment of Taxes by the Borrower or by the Administrative Agent to a Governmental Authority as provided in this Section 3.01 , the Borrower shall deliver to the Administrative Agent or the Administrative Agent shall deliver to the Borrower, as the case may be, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by Requirements of Law to report such payment or other evidence of such payment reasonably satisfactory to the Borrower or the Administrative Agent, as the case may be.

(f) Status of Lenders; Tax Documentation .

(i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Requirements of Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 3.01(f)(ii)(A) , (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

 

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(ii) Without limiting the generality of the foregoing,

(A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), and the Administrative Agent shall deliver to the Borrower on or prior to the date it becomes the Administrative Agent under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower), properly completed and executed originals of IRS Form W-9 certifying that such Lender (or the Administrative Agent, as applicable) is exempt from U.S. federal backup withholding tax;

(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:

(I) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, properly completed and executed originals of IRS Form W-8BEN or W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, properly completed and executed originals of IRS Form W-8BEN or W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(II) properly completed and executed originals of IRS Form W-8ECI;

(III) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit H-1 to the effect that such Foreign Lender is neither a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, nor a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “ U.S. Tax Compliance Certificate ”) and (y) properly completed and executed originals of IRS Form W-8BEN or W-8BEN-E, as applicable; or

(IV) to the extent a Foreign Lender is not the beneficial owner, properly completed and executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E, as applicable, a U.S.

 

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Tax Compliance Certificate substantially in the form of Exhibit H-2 or Exhibit H-3 , IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit H-4 on behalf of each such direct and indirect partner;

(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), properly completed and executed originals of any other form prescribed by applicable Requirements of Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable Requirements of Law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and

(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by Requirements of Law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable Requirements of Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

(iii) Each Lender and the Administrative Agent agrees that if any form or certification it previously delivered pursuant to this Section 3.01 expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.

(g) Treatment of Certain Refunds . If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 3.01 (including by the payment of additional amounts pursuant to this Section 3.01 ), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this subsection (g)  (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental

 

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Authority. Notwithstanding anything to the contrary in this subsection (g) , in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this subsection (g)  the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid. This subsection (g)  shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

(h) Survival . Each party’s obligations under this Section 3.01 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all other Obligations.

3.02 Illegality. If any Lender determines that any Requirement of Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to the Eurocurrency Rate, or to determine or charge interest rates based upon the Eurocurrency Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the applicable interbank market, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, (a) any obligation of such Lender to make or continue Eurocurrency Rate Loans or to convert Base Rate Loans to Eurocurrency Rate Loans shall be suspended, and (b) if such notice asserts the illegality of such Lender making or maintaining Base Rate Loans the interest rate on which is determined by reference to the Eurocurrency Rate component of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurocurrency Rate component of the Base Rate, in each case until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurocurrency Rate Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurocurrency Rate component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurocurrency Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurocurrency Rate Loans and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Eurocurrency Rate, the Administrative Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the Eurocurrency Rate component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Eurocurrency Rate. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.

3.03 Inability to Determine Rates. If in connection with any request for a Eurocurrency Rate Loan or a conversion to or continuation thereof, (a) the Administrative Agent determines that (i) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such Eurocurrency Rate Loan or (ii) adequate and reasonable means do not exist for determining the Eurocurrency Rate for any requested Interest Period with respect to a proposed Eurocurrency Rate Loan or in connection with an existing or proposed Base Rate Loan (in each case with respect to clause (a) above, “ Impacted Loans ”), or (b) the Required Lenders determine that for any reason the Eurocurrency Rate for any requested Interest Period with respect to a proposed Eurocurrency Rate

 

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Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so notify the Borrower and each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain Eurocurrency Rate Loans shall be suspended (to the extent of the affected Eurocurrency Rate Loans or Interest Periods), and (y) in the event of a determination described in the preceding sentence with respect to the Eurocurrency Rate component of the Base Rate, the utilization of the Eurocurrency Rate component in determining the Base Rate shall be suspended, in each case until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of Eurocurrency Rate Loans (to the extent of the affected Eurocurrency Rate Loans or Interest Periods) or, failing that, will be deemed to have converted such request into a request for a Revolving Credit Borrowing of Base Rate Loans in the amount specified therein.

Notwithstanding the foregoing, if the Administrative Agent has made the determination described in clause (a)(i) of this Section, the Administrative Agent, with the consent of the Borrower and in consultation with the affected Lenders, may establish an alternative interest rate for the Impacted Loans, in which case, such alternative rate of interest shall apply with respect to the Impacted Loans until (1) the Administrative Agent revokes the notice delivered with respect to the Impacted Loans under clause (a) of the first sentence of this Section, (2) the Administrative Agent or the affected Lenders notify the Administrative Agent and the Borrower that such alternative interest rate does not adequately and fairly reflect the cost to such Lenders of funding the Impacted Loans, or (3) any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for such Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to such alternative rate of interest or to determine or charge interest rates based upon such rate or any Governmental Authority has imposed material restrictions on the authority of such Lender to do any of the foregoing and provides the Administrative Agent and the Borrower written notice thereof.

3.04 Increased Costs; Reserves on Eurocurrency Rate Loans.

(a) Increased Costs Generally . If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement contemplated by Section 3.04(e) ) or the L/C Issuer;

(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

(iii) impose on any Lender or the L/C Issuer or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Eurocurrency Rate Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making, converting to or continuing or maintaining any Loan the interest on which is determined by reference to the Eurocurrency Rate (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or the L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or the L/C Issuer hereunder (whether of principal, interest or

 

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any other amount) then, upon request of such Lender or the L/C Issuer, the Borrower will pay to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer, as the case may be, for such additional costs incurred or reduction suffered.

(b) Capital Requirements . If any Lender or the L/C Issuer determines that any Change in Law affecting such Lender or the L/C Issuer or any Lending Office of such Lender or such Lender’s or the L/C Issuer’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or the L/C Issuer’s capital or on the capital of such Lender’s or the L/C Issuer’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit or Swing Line Loans held by, such Lender, or the Letters of Credit issued by the L/C Issuer, to a level below that which such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s holding company with respect to capital adequacy or liquidity), then from time to time the Borrower will pay to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company for any such reduction suffered.

(c) Certificates for Reimbursement . A certificate of a Lender or the L/C Issuer setting forth the amount or amounts necessary to compensate such Lender or the L/C Issuer or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section 3.04 and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender or the L/C Issuer, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

(d) Delay in Requests . Failure or delay on the part of any Lender or the L/C Issuer to demand compensation pursuant to the foregoing provisions of this Section 3.04 shall not constitute a waiver of such Lender’s or the L/C Issuer’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of this Section 3.04 for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or the L/C Issuer, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the L/C Issuer’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

(e) Additional Reserve Requirements . The Borrower shall pay to each Lender, (i) as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal amount of each Eurocurrency Rate Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), and (ii) as long as such Lender shall be required to comply with any reserve ratio requirement or analogous requirement of any other central banking or financial regulatory authority imposed in respect of the maintenance of the Commitments or the funding of the Eurocurrency Rate Loans, such additional costs (expressed as a percentage per annum and rounded upwards, if necessary, to the nearest five decimal places) equal to the actual costs allocated to such Commitment or Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which in each case shall be due and payable on each date on which interest is payable on such Loan, provided the Borrower shall have received at least 10 days’ prior notice (with a copy to the Administrative Agent) of such additional interest or costs from such Lender. If a Lender fails to give

 

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notice 10 days prior to the relevant Interest Payment Date, such additional interest or costs shall be due and payable 10 days from receipt of such notice, provided that, with respect to interest payable on any Interest Payment Date, the Borrower shall not be required to compensate a Lender pursuant to the foregoing provisions of this Section 3.04(e) for any reserves (or analogous amount) suffered by such Lender more than four months prior to such Interest Payment Date.

3.05 Compensation for Losses . Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

(a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

(b) any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Borrower;

(c) any failure by the Borrower to make payment of any drawing under any Letter of Credit (or interest due thereon) denominated in an Alternative Currency on its scheduled due date or any payment thereof in a different currency; or

(d) any assignment of a Eurocurrency Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section 10.13 ;

including any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan, or from fees payable to terminate the deposits from which such funds were obtained, but excluding any loss of profits or margin. The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing. A certificate of a Lender setting forth the amount of any such loss, cost or expense provided for in this Section and delivered to the Borrower shall be conclusive absent manifest error.

For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 3.05 , each Lender shall be deemed to have funded each Eurocurrency Rate Loan made by it at the Eurocurrency Rate for such Loan by a matching deposit or other borrowing in the offshore interbank market for such currency for a comparable amount and for a comparable period, whether or not such Eurocurrency Rate Loan was in fact so funded.

3.06 Mitigation Obligations. Each Lender may make any Credit Extension to the Borrower through any Lending Office, provided that the exercise of this option shall not affect the obligation of the Borrower to repay the Credit Extension in accordance with the terms of this Agreement. If any Lender requests compensation under Section 3.04 , or the Borrower is required to pay any Indemnified Taxes or any additional amount to any Lender, the L/C Issuer, or any Governmental Authority for the account of any Lender or the L/C Issuer pursuant to Section 3.01 , or if any Lender gives a notice pursuant to Section 3.02 , then at the request of the Borrower such Lender or the L/C Issuer shall, as applicable, use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender or the L/C Issuer, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04 , as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02 , as applicable, and (ii) in each case, would not subject such Lender or the L/C

 

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Issuer, as the case may be, to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender or the L/C Issuer, as the case may be. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender or the L/C Issuer in connection with any such designation or assignment.

3.07 Survival. All of the Borrower’s obligations under this Article III shall survive termination of the Aggregate Commitments, repayment of all other Obligations hereunder, and resignation of the Administrative Agent.

ARTICLE IV.

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

4.01 Conditions of Execution Date. The effectiveness of this Agreement and the occurrence of the Execution Date are subject to the Administrative Agent’s receipt of the following, each of which shall be originals, telecopies or electronic images (e.g., “pdf” or “tif”) (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the Borrower (to the extent applicable), each dated the Execution Date (or, in the case of certificates of governmental officials, a recent date before the Execution Date) and each in form and substance reasonably satisfactory to the Administrative Agent and each of the Lenders:

(a) executed counterparts of this Agreement, sufficient in number for distribution to the Administrative Agent, each Lender and the Borrower;

(b) a Note executed by the Borrower in favor of each Lender requesting a Note;

(c) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of the Borrower as the Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement;

(d) such documents and certifications as the Administrative Agent may reasonably require to evidence that the Borrower is duly organized or formed, and that the Borrower is validly existing and in good standing in its jurisdiction of organization;

(e) a favorable opinion of (A) Baker Botts L.L.P., counsel to the Borrower and (B) Andre Hall, internal counsel to the Borrower, in each case addressed to the Administrative Agent and each Lender, in form and substance reasonably satisfactory to the Administrative Agent and the Lenders and addressing such matters concerning the Borrower and the Loan Documents to be provided on or prior to the Execution Date as the Required Lenders may reasonably request;

(f) a certificate of a Responsible Officer of the Borrower either (A) attaching copies of all consents, licenses and approvals required in connection with the execution, delivery and performance by the Borrower and the validity against the Borrower of this Agreement, and such consents, licenses and approvals shall be in full force and effect, or (B) stating that no such consents, licenses or approvals are so required;

(g) a certificate of the chief financial officer or treasurer of the Borrower certifying that as of the Execution Date (A) all of the representations and warranties in this Agreement (other than those that speak solely to a date after the Execution Date, including the Closing Date) are true and correct in all material respects (or, to the extent any such representation and warranty is modified by a materiality or

 

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Material Adverse Effect standard, in all respects) as of such date (except to the extent that such representations and warranties expressly relate to an earlier date, in which case they shall be true and correct in all material respects (or, to the extent any such representation and warranty is modified by a materiality or Material Adverse Effect standard, in all respects) as of such earlier date) and (B) no Default shall exist, or would result from the occurrence of the Execution Date (determined as if each provision of Section 8.01 applied on the Execution Date, other than Section 8.01(d) (solely with respect to Articles VI and VII ) and Section 8.01(i) );

(h) such documentation and other information as has been reasonably requested by the Administrative Agent or any Lender prior to the Execution Date with respect to the Loan Parties in connection with the provisions of Sections 6.10 and 6.11 hereof;

(i) the Projections; and

(j) the Form 10, along with any amendments or additions thereto, or modifications thereof, in each case effectuated prior to the Execution Date, which shall include the three years of audited financial statements and any unaudited quarterly financial statements required thereby (and, to the extent not otherwise required to be included in the Form 10, unaudited financial statements of the Borrower and its Subsidiaries for any fiscal quarter ending after December 31, 2014 and at least 45 days prior to the Execution Date).

Without limiting the generality of the provisions of the last paragraph of Section 9.03 , for purposes of determining compliance with the conditions specified in this Section 4.01 , each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Execution Date specifying its objection thereto.

4.02 Conditions of Closing Date. The occurrence of the Closing Date and the obligation of the L/C Issuer and each Lender to make its initial Credit Extension hereunder, are each subject to satisfaction of the following conditions precedent:

(a) The Administrative Agent’s receipt of the following (to the extent not previously delivered in connection with the Execution Date), each of which shall be originals, telecopies or electronic images (e.g., “pdf” or “tif”) (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party (to the extent applicable), each dated the Closing Date (or, in the case of (x) certificates of governmental officials, a recent date before the Closing Date and (y) documents previously delivered pursuant to Section 4.01 , the date of the prior delivery thereof) and each in form and substance reasonably satisfactory to the Administrative Agent and each of the Lenders:

(i) executed counterparts of the Guaranty, sufficient in number for distribution to the Administrative Agent, each Lender and the Borrower;

(ii) executed counterparts of each Security Instrument to be entered into by any Loan Party on or prior to the Closing Date, duly executed by each Loan Party party thereto, together with:

(A) certificates representing the certificated Pledged Interests pledged under the Collateral Agreement, and accompanied by undated stock or other transfer powers executed in blank,

 

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(B) proper financing statements in form appropriate for filing under the Uniform Commercial Code of all jurisdictions that the Administrative Agent may deem necessary or desirable in order to perfect the Liens created under the Collateral Agreement, covering the Collateral described therein,

(C) completed requests for information, dated on or before the Closing Date, listing all effective financing statements filed in the jurisdictions referred to in clause (B) above that name any Loan Party as debtor, together with copies of such financing statements, and

(D) evidence of the completion of all other actions, recordings and filings of or with respect to the Security Instruments to be entered into on the Closing Date, or that have been entered into prior to the Closing Date, that the Administrative Agent may deem necessary or desirable in order to perfect, or to confirm or continue the prior perfection of, the Liens created thereby (including receipt of duly executed payoff letters and UCC-3 termination statements, if any), and

(E) such Intellectual Property Security Agreements as the Administrative Agent may deem necessary or desirable in order to perfect, or provide notice of, the Liens created under the Collateral Agreement in intellectual property Collateral, in form appropriate for filing with the United States Patent and Trademark Office or the United States Copyright Office;

(iii) with respect to each Mortgaged Property described in clause (a) of such definition, except to the extent the matters set forth in clauses (A), (B), (C) or (F) below are waived by the Administrative Agent (in which case Section 6.27 shall apply to any such matters that are so waived), each of the following:

(A) evidence that counterparts of the Mortgages have been duly executed, acknowledged and delivered and are in form suitable for filing or recording in all filing or recording offices that the Administrative Agent may deem necessary or desirable in order to create, confirm or continue a valid first and subsisting Lien on the property described therein in favor of the Administrative Agent for the benefit of the Secured Parties, excepting only Liens permitted under the Loan Documents, and that all filing, documentary, stamp, intangible and recording taxes and fees have been paid (or the Borrower has made arrangements satisfactory to the Administrative Agent for payment thereof),

(B) fully paid American Land Title Association Lender’s Extended Coverage title insurance policy (or policies) (the “ Mortgagee Policies ”) or marked up unconditional binder for such insurance, in each case with endorsements and in amounts acceptable to the Administrative Agent, issued, coinsured and reinsured by title insurers acceptable to the Administrative Agent, insuring the Mortgages to be valid first and subsisting Liens on the property described therein, free and clear of all defects (including, but not limited to, mechanics’ and materialmen’s Liens) and encumbrances, excepting only Liens permitted under the Loan Documents,

(C) evidence that all premiums in respect of the Mortgagee Policies have been paid (or the Borrower has made arrangements satisfactory to the Administrative Agent for payment thereof),

 

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(D) a completed “Life-of-Loan” Federal Emergency Management Agency Standard Flood Hazard Determination with respect to each Mortgaged Property (together with a notice about special flood hazard area status and flood disaster assistance duly executed by the Borrower and each Loan Party relating thereto),

(E) evidence satisfactory to each Lender of flood insurance as may be required to comply with the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973, the National Flood Insurance Reform Act of 1994 and the Biggert-Waters Flood Insurance Act of 2012, and

(F) evidence that all other action that the Administrative Agent may deem necessary or desirable in order to create valid first and subsisting Liens (excepting only Liens permitted under the Loan Documents) on the property described in the Mortgages has been taken;

(iv) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as the Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party or is to be a party;

(v) such documents and certifications as the Administrative Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and that each Loan Party is validly existing and in good standing in its jurisdiction of organization;

(vi) a favorable opinion of (A) Baker Botts L.L.P., counsel to the Loan Parties, (B) Andre Hall, internal counsel to the Borrower, (C) Vorys, Sater, Seymour and Pease LLP, local Ohio counsel to certain of the Loan Parties, (D) Jones, Walker, Waechter, Poitevent, Carrère & Denègre L.L.P., local Mississippi counsel to certain of the Loan Parties, (E) Beck, Chaet, Bamberger & Polsky, S.C., local Wisconsin counsel to certain of the Loan Parties and (F) K&L Gates, LLP, local Pennsylvania counsel to certain of the Loan Parties, in each case addressed to the Administrative Agent and each Lender, in form and substance reasonably satisfactory to the Administrative Agent and the Lenders and addressing such matters concerning the Loan Parties, this Agreement and the Loan Documents to be executed on the Closing Date as the Required Lenders may reasonably request;

(vii) a certificate of a Responsible Officer of the Borrower (A) either (x) attaching copies of all consents, licenses and approvals required in connection with the execution, delivery and performance by each Loan Party and the validity against each Loan Party of the Loan Documents to which it is a party, and such consents, licenses and approvals shall be in full force and effect, or (y) stating that no such consents, licenses or approvals are so required and (B) either (x) attaching copies of any amendments, additions or modifications to the Form 10 effectuated on or after the Execution Date through and including the Closing Date, provided that the Form 10 shall not have been altered, amended, supplemented or otherwise modified (or the information provided thereby) from the Form 10 provided on or prior to the Execution Date in any manner that could reasonably be expected to be adverse to any material interest of the Administrative Agent or the Lenders (unless approved by the Required Lenders, notwithstanding

 

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the provisions of Section 10.01 to the contrary, such approval not to be unreasonably conditioned, withheld or delayed) or (y) stating that no amendments, additions or modifications to the Form 10 have been effectuated on or after the Execution Date;

(viii) a certificate of the chief financial officer or the treasurer of the Borrower, certifying that (A) as of the last day of the most recently ended Fiscal Quarter (but at least 45 days prior to the Closing Date) or Fiscal Year (but at least 90 days prior to the Closing Date), the Borrower is in compliance with the financial covenants in Section 7.16 after giving pro forma effect to the incurrence and repayment of Indebtedness on the Closing Date (and providing such backup evidence as may reasonably be requested), (B) the Securities and Exchange Commission has declared the Form 10 effective and that no stop orders relating to the Spinoff or other restrictions that would otherwise prohibit or enjoin the occurrence of the Spinoff shall be in existence, (C) the conditions specified in Sections 4.03(a) and (b)  (with satisfaction of Section 4.03(b) determined as if each provision of Section 8.01 , other than Section 8.01(d) (solely with respect to Articles VI and VII ) and Section 8.01(i) , applied on and after the Execution Date) have been satisfied and (D) that there has been no event or circumstance since December 31, 2014 that has had or would be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect;

(ix) evidence that all insurance required to be maintained pursuant to the Loan Documents has been obtained and is in effect, together with the certificates of insurance or other appropriate documentation, naming the Administrative Agent, on behalf of the Secured Parties, as an additional insured or loss payee, as the case may be, under all insurance policies (including flood insurance policies) maintained with respect to the assets and properties of the Loan Parties that constitute Collateral;

(x) such documentation and other information as has been reasonably requested by the Administrative Agent or any Lender prior to the Closing Date with respect to the Loan Parties in connection with the provisions of Sections 6.10 hereof;

(xi) unaudited consolidated financial statements of the Borrower and its Subsidiaries for each fiscal quarter ended after the date of the filing of the Form 10 and at least 45 days prior to the Closing Date;

(xii) a certificate signed by a person that would (if BWC were a Loan Party) be a Responsible Officer of BWC certifying that attached thereto is a true and correct copy of the resolutions of BWC approved and entered into with respect to the approval of the Spinoff, and stating that such resolutions have not been amended, altered or otherwise modified since the date thereof (or attaching any such amendment, alternation or other modification);

(xiii) evidence that the Existing Credit Agreement has been, or substantially concurrently with the Closing Date is being, terminated, all Indebtedness in respect of the Existing Credit Agreement has been, or substantially concurrently with the Closing Date is being, repaid (other than letters of credit thereunder that are being deemed issued under this Agreement or the Remainco Credit Facilities), and all Liens, if any, securing any such repaid and terminated Indebtedness have been or substantially concurrently with the Closing Date are being released; and

 

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(xiv) evidence that the Remainco Credit Facilities have been, or substantially concurrently with the Closing Date are being, entered into by BWC and certain of its Subsidiaries.

(b) The Execution Date shall have occurred.

(c) The Administrative Agent and the Lenders shall have received satisfactory evidence that as of the Closing Date (i) the Borrower is a direct, wholly-owned subsidiary of BWC (unless the Spinoff has occurred or is occurring substantially simultaneously therewith), (ii) BWPGG is a wholly-owned direct or indirect subsidiary of the Borrower, and (iii) substantially all of the subsidiaries of BWPGG (other than Babcock & Wilcox Canada, Ltd. and its subsidiary Intech International, Inc.) are direct or indirect subsidiaries of BWPGG.

(d) The Closing Date shall have occurred on or prior to September 1, 2015.

(e) (i) All fees required to be paid to the Administrative Agent and the Arrangers on or before the Closing Date shall have been paid and (ii) all fees required to be paid to the Lenders on or before the Closing Date shall have been paid, in each case pursuant to the Fee Letters.

(f) Unless waived by the Administrative Agent, the Borrower shall have paid all reasonable out-of-pocket fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent) to the extent invoiced at least two Business Days prior to the Closing Date (with reasonable and customary supporting documentation), plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent).

Without limiting the generality of the provisions of the last paragraph of Section 9.03 , for purposes of determining compliance with the conditions specified in this Section 4.02 , each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

4.03 Conditions to all Credit Extensions . The obligation of each Lender to honor any Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Loans to the other Type, or a continuation of Eurocurrency Rate Loans), including the initial Credit Extension on the Closing Date is subject to the following conditions precedent:

(a) The representations and warranties of (i) the Borrower contained in Article V and (ii) each Loan Party contained in each other Loan Document or in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects (or, with respect to representations and warranties modified by a materiality or Material Adverse Effect standard, in all respects) on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects (or, with respect to representations and warranties modified by a materiality or Material Adverse Effect standard, in all respects) as of such earlier date, and except that for purposes of this Section 4.03 , the representations and warranties contained in subsections (a) and (b) of Section 5.04 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01 .

 

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(b) No Default shall exist, or would result from such proposed Credit Extension or the application of the proceeds thereof.

(c) The Administrative Agent and, if applicable, the L/C Issuer or the Swing Line Lender shall have received a Request for Credit Extension in accordance with the requirements hereof.

(d) In the case of an L/C Credit Extension to be denominated in an Alternative Currency, there shall not have occurred any change in national or international financial, political or economic conditions or currency exchange rates or exchange controls which in the reasonable opinion of the applicable L/C Issuer would make it impracticable for such L/C Credit Extension to be denominated in the relevant Alternative Currency.

Each Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Loans to the other Type or a continuation of Eurocurrency Rate Loans) submitted by the Borrower (or with respect to a Letter of Credit Application, any Permitted L/C Party) shall be deemed to be a representation and warranty of the Borrower that the conditions specified in Sections 4.03(a) and (b)  have been satisfied on and as of the date of the applicable Credit Extension.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

To induce the Lenders, the L/C Issuers and the Administrative Agent to enter into this Agreement, the Borrower represents and warrants each of the following to the Lenders, the L/C Issuers and the Administrative Agent, on and as of the Execution Date (other than those representations and warranties that speak solely to a date after the Execution Date or to a document or agreement executed after the Execution Date), on and as of the Closing Date and the making of Credit Extensions on the Closing Date and on and as of each date as required by Section 4.03 or on any other date required by any Loan Document (with references in this Article V (other than Sections 5.03 , 5.04 and 5.05 ) to “Subsidiaries” to exclude Captive Insurance Subsidiaries):

5.01 Corporate Existence, Compliance with Law . Each of the Borrower and the Borrower’s Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) is duly qualified to do business as a foreign corporation and in good standing under the laws of each jurisdiction where such qualification is necessary, except where the failure to be so qualified or in good standing would not have a Material Adverse Effect, (c) has all requisite corporate or other organizational power and authority and the legal right to own, pledge, mortgage and operate its properties, to lease the property it operates under lease and to conduct its business as now or currently proposed to be conducted, (d) is in compliance with its Constituent Documents, (e) is in compliance with all applicable Requirements of Law except where the failure to be in compliance would not, in the aggregate, have a Material Adverse Effect and (f) has all necessary licenses, permits, consents or approvals from or by, has made all necessary filings with, and has given all necessary notices to, each Governmental Authority having jurisdiction, to the extent required for such ownership, operation and conduct, except for licenses, permits, consents, approvals, filings or notices that can be obtained or made by the taking of ministerial action to secure the grant or transfer thereof or the failure of which to obtain or make would not, in the aggregate, have a Material Adverse Effect.

5.02 Corporate Power; Authorization; Enforceable Obligations.

(a) The execution, delivery and performance by each Loan Party of the Loan Documents to which it is a party and the consummation of the transactions contemplated thereby:

(i) are within such Loan Party’s corporate, limited liability company, partnership or other organizational powers;

 

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(ii) have been duly authorized by all necessary corporate, limited liability company or partnership action, including the consent of shareholders, partners and members where required;

(iii) do not and will not (A) contravene such Loan Party’s or any of its Subsidiaries’ respective Constituent Documents, (B) violate any other Requirement of Law applicable to such Loan Party (including Regulations T, U and X of the FRB), or any order or decree of any Governmental Authority or arbitrator applicable to such Loan Party, (C) conflict with or result in the breach of, or constitute a default under, or result in or permit the termination or acceleration of, any lawful Contractual Obligation of such Loan Party or any of its Subsidiaries, other than in the case of this clause (C) any such conflict, breach, default, termination or acceleration that could not reasonably be expected to have a Material Adverse Effect, or (D) result in the creation or imposition of any Lien upon any property of such Loan Party or any of its Subsidiaries, other than those in favor of the Secured Parties pursuant to the Security Instruments; and

(iv) do not require the consent of, authorization by, approval of, notice to, or filing or registration with, any Governmental Authority or any other Person, other than (A) routine tax filings, of which the failure to so file will not result in any Loan Document being unenforceable against, or the performance of any Loan Document being impaired in any way with respect to, any Loan Party, (B) those listed on Schedule 5.02 or that have been or will be, prior to the Closing Date, obtained or made, copies of which have been or will be delivered to the Administrative Agent pursuant to Section 4.02 , and each of which on the Closing Date will be in full force and effect and, (C) with respect to the Collateral, filings required to perfect the Liens created by the Security Instruments.

(b) This Agreement has been, and each of the other Loan Documents will have been upon delivery thereof pursuant to the terms of this Agreement, duly executed and delivered by each Loan Party who is a party thereto. This Agreement is, and the other Loan Documents will be, when delivered, the legal, valid and binding obligation of each Loan Party who is a party thereto, enforceable against such Loan Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

5.03 Ownership of Borrower; Subsidiaries.

(a) All of the outstanding capital stock of the Borrower is validly issued, fully paid and non-assessable.

(b) Set forth on Schedule 5.03 is a complete and accurate list showing, as of the Closing Date, all Subsidiaries of the Borrower and, as to each such Subsidiary, the jurisdiction of its organization, the number of shares of each class of Stock authorized (if applicable), the number outstanding on the Closing Date, the number and percentage of the outstanding shares of each such class owned (directly or indirectly) by the Borrower. Except as set forth on Schedule 5.03 , as of the Closing Date no Stock of any Subsidiary of the Borrower is subject to any outstanding option, warrant, right of conversion or purchase of any similar right. Except as set forth on Schedule 5.03 , as of the Closing Date all of the outstanding Stock of each Subsidiary of the Borrower owned (directly or indirectly) by the Borrower has been validly issued, is fully paid and non-assessable (to the extent applicable) and is owned by the Borrower or a

 

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Subsidiary of the Borrower, free and clear of all Liens (other than the Lien in favor of the Secured Parties created pursuant to the Security Instruments), options, warrants, rights of conversion or purchase or any similar rights. Except as set forth on Schedule 5.03 , as of the Closing Date neither the Borrower nor any such Subsidiary is a party to, or has knowledge of, any agreement restricting the transfer or hypothecation of any Stock of any such Subsidiary, other than the Loan Documents and, with respect to any Subsidiary that is not a Wholly-Owned Subsidiary, the Constituent Documents of such Subsidiary. The Borrower does not own or hold, directly or indirectly, any Stock of any Person other than such Subsidiaries and Investments permitted by Section 7.03 .

5.04 Financial Statements.

(a) The interim unaudited financial statements for the Borrower and its Subsidiaries for the most-recently ended Fiscal Quarter, copies of which have been furnished to each Lender, fairly present in all material respects, subject to the absence of footnote disclosure and normal recurring year-end audit adjustments, the consolidated financial condition of the Borrower and its Subsidiaries as at such dates and the consolidated results of the operations of the Borrower and its Subsidiaries for the period ended on such dates, all in conformity with GAAP.

(b) The audited consolidated balance sheet of the Borrower and its Subsidiaries as of the end of the Fiscal Year ended December 31, 2014, and the related statements of income and cash flows of the Borrower and its Subsidiaries for such Fiscal Year, copies of which have been furnished to each Lender, (i) were prepared in conformity with GAAP and (ii) fairly present in all material respects, the consolidated financial condition of the Borrower and its Subsidiaries as at the date indicated and the consolidated results of their operations and cash flow for the period indicated in conformity with GAAP applied on a basis consistent with prior years (except for changes with which the Borrower’s Accountants shall concur and that shall have been disclosed in the notes to the financial statements).

(c) Except as set forth on Schedule 5.04 , neither the Borrower nor any of its Subsidiaries has, as of the Closing Date, any material obligation, contingent liability or liability for taxes, long-term leases (other than operating leases) or unusual forward or long-term commitment that is not reflected in the financial statements referred to in clause (b) above and not otherwise permitted by this Agreement.

(d) The Projections have been prepared by the Borrower taking into consideration past operations of its business, and reflect projections for the period beginning approximately January 1, 2015 and ending approximately December 31, 2019 on a Fiscal Year by Fiscal Year basis. The Projections are based upon estimates and assumptions stated therein, all of which the Borrower believes, as of the Closing Date, to be reasonable in light of current conditions and current facts known to the Borrower (other than any necessary adjustments due to fees payable in accordance herewith) and, as of the Closing Date, reflect the Borrower’s good faith estimates of the future financial performance of the Borrower and its Subsidiaries and of the other information projected therein for the periods set forth therein.

5.05 Material Adverse Change. Since December 31, 2014, there has been no event or circumstance, either individually or in the aggregate, that has had or would reasonably be expected to result in a Material Adverse Effect.

5.06 Solvency. Both before and after giving effect to (a) the Credit Extensions to be made or extended on the Closing Date or such other date as Credit Extensions requested hereunder are made or extended, (b) the disbursement of the proceeds of such Loans pursuant to the instructions of the Borrower, (c) the consummation of the transactions contemplated hereby and (d) the payment and accrual of all transaction costs in connection with the foregoing, the Loan Parties, taken as a whole, are Solvent.

 

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5.07 Litigation. Except as set forth on Schedule 5.07 , there are no pending or, to the knowledge of the Borrower, threatened actions, investigations or proceedings against the Borrower or any of its Subsidiaries before any court, Governmental Authority or arbitrator other than those that, in the aggregate, would not reasonably be expected to have a Material Adverse Effect. Schedule 5.07 lists all litigation pending against any Loan Party as of the Closing Date that, if adversely determined, could be reasonably expected to have a Material Adverse Effect.

5.08 Taxes. All federal income and other material tax returns, reports and statements (collectively, the “ Tax Returns ”) required to be filed by the Borrower or any of its Subsidiaries have been filed with the appropriate Governmental Authorities in all jurisdictions in which such Tax Returns are required to be filed, all such Tax Returns are true and correct in all material respects, and all material taxes, charges and other impositions reflected therein or otherwise due and payable have been paid prior to the date on which any fine, penalty, interest, late charge or loss may be added thereto for non-payment thereof except where contested in good faith and by appropriate proceedings if adequate reserves therefor have been established on the books of the Borrower or such Subsidiary in conformity with GAAP. The Borrower and each of its Subsidiaries have withheld and timely paid to the respective Governmental Authorities all material amounts required to be withheld.

5.09 Full Disclosure . The Information Memorandum and any other information prepared or furnished by or on behalf of any Loan Party and delivered to the Lenders in writing in connection with this Agreement or the consummation of the transactions contemplated hereunder or thereunder (in each case, taken as a whole) does not, as of the time of delivery of such information (with respect to the Information Memorandum, as of the Closing Date only), contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein or herein not misleading; provided that to the extent any such information was based upon, or constituted, a forecast or projection, such Loan Party represents only, in respect of such projection or forecast, that it acted in good faith and utilized reasonable assumptions and due care in the preparation of such information.

5.10 Margin Regulations. The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the FRB), and no proceeds of any Credit Extension will be used to purchase or carry any such margin stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock in contravention of Regulation T, U or X of the FRB.

5.11 No Burdensome Restrictions; No Defaults.

(a) Neither the Borrower nor any of its Subsidiaries (i) is a party to any Contractual Obligation (x) the compliance with which could reasonably be expected to have a Material Adverse Effect or (y) the performance of which by any party thereof would result in the creation of a Lien (other than a Lien permitted under Section 7.02 ) on the property or assets of any party thereof or (ii) is subject to any charter restriction that could reasonably be expected to have a Material Adverse Effect.

(b) Neither the Borrower nor any of its Subsidiaries is in default under or with respect to any Contractual Obligation owed by it, other than, in either case, those defaults that would not reasonably be expected to have a Material Adverse Effect.

(c) No Default has occurred and is continuing.

5.12 Investment Company Act. None of the Borrower or any Subsidiary is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

 

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5.13 Use of Proceeds. The (a) proceeds of the Loans are being used by the Borrower only (i) for working capital needs, capital expenditures, Permitted Acquisitions, general corporate purposes and other lawful corporate purposes of the Borrower and its Subsidiaries and (ii) to pay fees and expenses in connection with this Agreement and the related transactions, and (b) Letters of Credit are being solely used by the Borrower to support warranties, bid bonds, payment or performance obligations and for other general corporate purposes by Permitted L/C Parties.

5.14 Insurance. All policies of insurance of any kind or nature currently maintained by the Borrower or any of its Subsidiaries, including policies of fire, theft, product liability, public liability, property damage, other casualty, employee fidelity, workers’ compensation and employee health and welfare insurance, are in full force and effect and are of a nature and provide such coverage as is sufficient and as is customarily carried by businesses of the size and character of such Person.

5.15 Labor Matters.

(a) There are no strikes, work stoppages, slowdowns or lockouts pending or, to the Borrower’s knowledge, threatened against or involving the Borrower, any of its Subsidiaries or any Guarantor, other than those that, in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

(b) There are no unfair labor practices, grievances or complaints pending, or, to the Borrower’s knowledge, threatened, against or involving the Borrower, any of its Subsidiaries or any Guarantor, nor, to the Borrower’s knowledge, are there any unfair labor practices, arbitrations or grievances threatened involving the Borrower, any of its Subsidiaries or any Guarantor, other than those that if resolved adversely to the Borrower, such Subsidiary or such Guarantor, as applicable, would not reasonably be expected to have a Material Adverse Effect.

5.16 ERISA .

(a) Each Employee Benefit Plan that is intended to qualify under Section 401 of the Code (i) (x) has received a favorable determination letter, or is subject to a favorable opinion letter, from the IRS indicating that such Employee Benefit Plan is so qualified and any trust created under any Employee Benefit Plan is exempt from tax under the provisions of Section 501 of the Code, (y) is substantially similar to an “employee benefit plan” as defined in Section 3(3) of ERISA that is, or was, sponsored, maintained, or contributed to by a former ERISA Affiliate that received such a favorable determination letter or opinion letter prior to the Spinoff, or (z) is the subject of an application for such a favorable determination letter or opinion letter that is currently being processed by the IRS, and (ii) to the knowledge of the Borrower, nothing has occurred subsequent to the issuance of such determination or opinion letter, as applicable, which would cause such Employee Benefit Plan to lose its qualified status or that would cause such trust to become subject to tax, except where such failures could not reasonably be expected to have a Material Adverse Effect.

(b) The Borrower, each of its Subsidiaries, each Guarantor and each of their respective ERISA Affiliates is in material compliance with all applicable provisions and requirements of ERISA, the Code and applicable Employee Benefit Plan provisions with respect to each Employee Benefit Plan except for non-compliances that would not reasonably be expected to have a Material Adverse Effect.

(c) There has been no, nor is there reasonably expected to occur, any ERISA Event other than those that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

 

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(d) Except (i) to the extent required under Section 4980B of the Code or similar state laws, and (ii) with respect to which the aggregate liability, calculated on a FAS 106 basis as of December 31, 2014, does not exceed $150,000,000, no Employee Benefit Plan provides health or welfare benefits (through the purchase of insurance or otherwise) to any retired or former employees, consultants or directors (or their dependents) of the Borrower, any of its Subsidiaries, any Guarantor or any of their respective ERISA Affiliates.

5.17 Environmental Matters.

(a) The operations of the Borrower and each of its Subsidiaries have been and are in compliance with all Environmental Laws, including obtaining and complying with all required environmental, health and safety Permits, other than non-compliances that, in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

(b) None of the Borrower or any of its Subsidiaries or any Real Property currently or, to the knowledge of the Borrower, previously owned, operated or leased by or for the Borrower or any of its Subsidiaries is subject to any pending or, to the knowledge of the Borrower, threatened, claim, order, agreement, notice of violation, notice of potential liability or is the subject of any pending or threatened proceeding or governmental investigation under or pursuant to Environmental Laws other than those orders, agreements, notices, proceedings or investigations that, in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

(c) To the knowledge of the Borrower, there are no facts, circumstances or conditions arising out of or relating to the operations or ownership of the Borrower or of Real Property owned, operated or leased by the Borrower or any of its Subsidiaries that are not specifically included in the financial information furnished to the Lenders other than those that, in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

5.18 Intellectual Property. Except where the failure to do so would not, taken as a whole, reasonably be expected to have a Material Adverse Effect, the Borrower and its Subsidiaries own or license or otherwise have the right to use all licenses, permits, patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, copyright applications, franchises, authorizations and other intellectual property rights (including all Intellectual Property as defined in the Collateral Agreement) that are necessary for the operations of their respective businesses, without infringement upon or conflict with the rights of any other Person with respect thereto. Except where the failure to do so would not, taken as a whole, reasonably be expected to have a Material Adverse Effect, no slogan or other advertising device, product, process, method, substance, part or component, or other material now employed, or now contemplated to be employed, by the Borrower or any of its Subsidiaries infringes upon or conflicts with any rights owned by any other Person, and no claim or litigation regarding any of the foregoing is pending or threatened.

5.19 Title; Real Property.

(a) Each of the Borrower and its Subsidiaries has valid and indefeasible title to, or valid leasehold interests in, all of its material properties and assets (including Real Property) and good title to, or valid leasehold interests in, all material personal property, in each case that is purported to be owned or leased by it, including those reflected on the most recent financial statements delivered by the Borrower hereunder, and none of such properties and assets is subject to any Lien, except Liens permitted under Section 7.02 . The Borrower and its Subsidiaries have received all deeds, assignments, waivers, consents, non-disturbance and recognition or similar agreements, bills of sale and other documents, and have duly

 

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effected all recordings, filings and other actions necessary to establish, protect and perfect the Borrower’s and its Subsidiaries’ right, title and interest in and to all such property, other than those that would not reasonably be expected to result in a Material Adverse Effect.

(b) Set forth on Schedule 5.19(b) is a complete and accurate list, as of the Closing Date, of all (i) owned Real Property located in the United States with a reasonably estimated Fair Market Value in excess of $3,000,000 showing, as of the Closing Date, the street address, county (or other relevant jurisdiction or state) and the record owner thereof and (ii) leased Real Property located in the United States with annual lease payments in excess of $1,000,000 showing, as of the Closing Date, the street address and county (or other relevant jurisdiction or state) thereof.

(c) No portion of any Real Property has suffered any material damage by fire or other casualty loss that has not heretofore been completely repaired and restored to its original condition other than those that would not reasonably be expected to have a Material Adverse Effect. As of the Closing Date, no portion of any Mortgaged Property is located in a special flood hazard area as designated by any federal Governmental Authority other than those for which flood insurance has been provided in accordance with Section 4.02(a)(iii) .

(d) Except as would not reasonably be expected to have a Material Adverse Effect, (i) each Loan Party has obtained and holds all Permits required in respect of all Real Property and for any other property otherwise operated by or on behalf of, or for the benefit of, such person and for the operation of each of its businesses as presently conducted and as proposed to be conducted, (ii) all such Permits are in full force and effect, and each Loan Party has performed and observed all requirements of such Permits, (iii) no event has occurred that allows or results in, or after notice or lapse of time would allow or result in, revocation or termination by the issuer thereof or in any other impairment of the rights of the holder of any such Permit, (iv) no such Permits contain any restrictions, either individually or in the aggregate, that are materially burdensome to any Loan Party, or to the operation of any of its businesses or any property owned, leased or otherwise operated by such person, (v) each Loan Party reasonably believes that each of its Permits will be timely renewed and complied with, without material expense, and that any additional Permits that may be required of such Person will be timely obtained and complied with, without material expense and (vi) the Borrower has no knowledge or reason to believe that any Governmental Authority is considering limiting, suspending, revoking or renewing on materially burdensome terms any such Permit.

(e) None of the Borrower or any of its Subsidiaries has received any notice, or has any knowledge, of any pending, threatened or contemplated condemnation proceeding affecting any Real Property or any part thereof, except those that would not reasonably be expected to have a Material Adverse Effect.

(f) Each of the Loan Parties, and, to the knowledge of the Borrower, each other party thereto, has complied with all obligations under all leases of Real Property to which it is a party other than those the failure with which to comply would not reasonably be expected to have a Material Adverse Effect and all such leases are legal, valid, binding and in full force and effect and are enforceable in accordance with their terms other than those the failure of which to so comply with the foregoing would not reasonably be expected to have a Material Adverse Effect. No landlord Lien has been filed, and, to the knowledge of the Borrower, no claim is being asserted, with respect to any lease payment under any lease of Real Property other than those that would not reasonably be expected to have a Material Adverse Effect.

(g) There are no pending or, to the knowledge of the Borrower, proposed special or other assessments for public improvements or otherwise affecting any material portion of the owned Real

 

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Property, nor are there any contemplated improvements to such owned Real Property that may result in such special or other assessments, other than those that would not reasonably be expected to have a Material Adverse Effect.

5.20 Security Instruments. The provisions of the Security Instruments, from and after the Closing Date, are effective to create in favor of the Administrative Agent for the benefit of the Secured Parties a legal, valid and enforceable first priority Lien (subject to Liens permitted by Section 7.02 ) on all right, title and interest of the respective Loan Parties in the Collateral described therein. Except for filings completed on or prior to the Closing Date and filings and other actions contemplated hereby and by the Security Instruments, no filing or other action in the United States will be necessary to perfect or protect such Liens.

5.21 OFAC . Neither the Borrower, nor any of its Subsidiaries, nor, to the knowledge of the Borrower, any director, officer, employee or agent thereof, is or is owned or controlled by an individual or entity that is (i) listed on the List of Specially Designated Nationals and Blocked Persons or Sectoral Sanctions Identifications List maintained by OFAC, (ii) otherwise the subject of any Sanctions or a Person who, under any Sanctions, the Administrative Agent, any Lender or any L/C Issuer is prohibited from transacting business with or (iii) in violation of any applicable Requirement of Law relating to Sanctions. No Loan, nor the proceeds from any Loan, has or have been used, directly by the Borrower or any of its Subsidiaries, or, to the knowledge of the Borrower, by any recipient of those funds from the Borrower or any Subsidiary, to lend, contribute, provide or make available by any Loan Party or any Subsidiary to fund any activity or business in any Designated Jurisdiction if that activity or business would violate any Sanctions, or to fund any activity or business of any Person located, organized or residing in any Designated Jurisdiction or who is the subject of any Sanctions, or in any other manner that, in each case, would result in any violation by any Lender, the Arranger, the Administrative Agent, any L/C Issuer or the Swing Line Lender of Sanctions.

5.22 Anti-Corruption Laws. The Borrower and its Subsidiaries have conducted their businesses in all material respects in compliance with applicable Anti-Corruption Laws and have instituted and maintained policies and procedures intended to promote and achieve compliance with such laws.

ARTICLE VI.

AFFIRMATIVE COVENANTS

The Borrower agrees with the Lenders, L/C Issuers and the Administrative Agent to each of the following, from and after the Closing Date and thereafter as long as any Obligation or any Commitment remains outstanding and, in each case, unless the Required Lenders otherwise consent in writing ( provided that those provisions under this Article VI with which Subsidiaries of the Borrower are required to comply shall exclude from such compliance any Captive Insurance Subsidiary):

6.01 Financial Statements. The Borrower shall furnish to the Administrative Agent each of the following:

(a) Quarterly Reports . Within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year (unless such period is extended pursuant to SEC guidelines), consolidated unaudited balance sheets as of the close of such quarter and the related statements of income and cash flow for such quarter and that portion of the Fiscal Year ending as of the close of such quarter, setting forth in comparative form the figures for the corresponding period in the prior year, in each case certified by a Responsible Officer of the Borrower as fairly presenting in all material respects the consolidated financial

 

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condition of the Borrower and its Subsidiaries as at the dates indicated and the results of their operations and cash flow for the periods indicated in accordance with GAAP (subject to the absence of footnote disclosure and normal year-end audit adjustments).

(b) Annual Reports . Within 90 days after the end of each Fiscal Year (unless such period is extended pursuant to SEC guidelines), consolidated balance sheets of the Borrower and its Subsidiaries as of the end of such Fiscal Year and related statements of income and cash flows of the Borrower and its Subsidiaries for such Fiscal Year, all prepared in conformity with GAAP and certified, in the case of such consolidated financial statements, without qualification as to the scope of the audit or as to the Borrower being a going concern by the Borrower’s Accountants, together with the report of such accounting firm stating that (i) such financial statements fairly present in all material respects the consolidated financial condition of the Borrower and its Subsidiaries as at the dates indicated and the results of their operations and cash flow for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except for changes with which the Borrower’s Accountants shall concur and that shall have been disclosed in the notes to the financial statements) and (ii) the examination by the Borrower’s Accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards.

(c) Compliance Certificate . Together with each delivery of any financial statement pursuant to clause  (a) or (b)  above, a Compliance Certificate (i) showing in reasonable detail the calculations used in determining the Leverage Ratio and demonstrating compliance with each of the other financial covenants contained in Section 7.16 , and (ii) stating that no Default has occurred and is continuing or, if a Default has occurred and is continuing, stating the nature thereof and the action which the Borrower has taken or proposes to take with respect thereto.

The Borrower hereby acknowledges that (i) the Administrative Agent and/or one or more of the Arrangers may, but shall not be obligated to, make available to the Lenders and the L/C Issuers materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “ Borrower Materials ”) by posting the Borrower Materials on Debt Domain, IntraLinks, SyndTrak or another similar electronic system (the “ Platform ”) and (ii) certain of the Lenders (each, a “ Public Lender ”) may have personnel who do not wish to receive material non-public information with respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. The Borrower hereby agrees that (w) all Borrower Materials that the Borrower intends to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, each Arranger, each L/C Issuer and the Lenders to treat the Borrower Materials as not containing any material non-public information with respect to the Borrower or its securities for purposes of United States Federal and state securities laws ( provided , however , that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.07 ); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (z) the Administrative Agent and the Arrangers shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.”

Documents required to be delivered pursuant to Section 6.01(a) or (b)  (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such

 

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documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 10.02 ; or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (i) the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender upon its request to the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrower shall notify the Administrative Agent (by facsimile or electronic mail) of the posting of any such documents. The Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request by a Lender for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

6.02 Collateral Reporting Requirements. The Borrower shall furnish to the Administrative Agent each of the following:

(a) Updated Corporate Chart . If requested by the Administrative Agent, together with each delivery of any financial statement pursuant to Section 6.01(b) , a corporate organizational chart or other equivalent list, current as of the date of delivery, in form and substance reasonably acceptable to the Administrative Agent and certified as true, correct and complete by a Responsible Officer of the Borrower, setting forth, for each of the Loan Parties, all Persons subject to Section 6.22 , all Subsidiaries of any of them and any joint venture (including Joint Ventures) entered into by any of the foregoing, (i) its full legal name, (ii) its jurisdiction of organization and organizational number (if any) and (iii) the number of shares of each class of its Stock authorized (if applicable), the number outstanding as of the date of delivery, and the number and percentage of the outstanding shares of each such class owned (directly or indirectly) by the Borrower.

(b) Additional Information . From time to time, statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral, all as the Administrative Agent may reasonably request, and in reasonable detail.

(c) Additional Filings . At any time and from time to time, upon the reasonable written request of the Administrative Agent, and at the sole expense of the Loan Parties, duly executed, delivered and recorded instruments and documents for the purpose of obtaining or preserving the full benefits of this Agreement, each Security Instrument and each other Loan Document and of the rights and powers herein and therein granted (and each Loan Party shall take such further action as the Administrative Agent may reasonably request for such purpose, including the filing of any financing or continuation statement under the UCC or other similar Requirement of Law in effect in any domestic jurisdiction with respect to the security interest created by the Collateral Agreement but excluding (i) the execution and delivery of any control agreements with respect to deposit accounts or securities accounts (except with respect to deposit accounts holding Cash Collateral provided hereunder), (ii) any filings to perfect Liens on intellectual property, other than any such filings under the UCC or with the U.S. Patent and Trademark Office or U.S. Copyright Office and (iii) any filings or actions in any jurisdiction outside the United States.

The reporting requirements set forth in this Section 6.02 are in addition to, and shall not modify and are not in replacement of, any rights and other obligation set forth in any Loan Document (including notice and reporting requirements) and satisfaction of the reporting obligations in this Section 6.02 shall not, by itself, operate as an update of any Schedule or any schedule of any other Loan Document and shall not cure, or otherwise affect in any way, any Default, including any failure of any representation or warranty of any Loan Document to be correct in any respect when made.

 

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6.03 Default and certain other Notices. Promptly and in any event within five Business Days after a Responsible Officer of the Borrower obtains actual knowledge thereof, the Borrower shall give the Administrative Agent notice:

(a) of the occurrence of any Default or Event of Default;

(b) of any amendments, additions or modifications to the Form 10 effectuated on or after the Closing Date, or of any material notices from the SEC with respect thereto, including, without limitation, notice of the effectiveness of the Spinoff; and

(c) of the issuance of a notice of proposed debarment or notice of proposed suspension by a Governmental Authority or Governmental Authorities.

Each notice pursuant to this Section 6.03 (other than Section 6.03(b) ) shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein, the anticipated effect thereof, and stating what action the Borrower has taken and proposes to take with respect thereto. Each notice pursuant to Section 6.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached. Any notice pursuant to this Section 6.03 , if given by telephone, shall be promptly confirmed in writing on the next Business Day.

6.04 Litigation. Promptly after a Responsible Officer of the Borrower obtains actual knowledge of the commencement thereof, the Borrower shall give the Administrative Agent written notice of the commencement of all actions, suits and proceedings before any domestic or foreign Governmental Authority or arbitrator, regarding the Borrower, any of its Subsidiaries or any Joint Venture that (i) seeks injunctive or similar relief that, in the reasonable judgment of the Borrower, if adversely determined, would reasonably be expected to result in a Material Adverse Effect or (ii) in the reasonable judgment of the Borrower would expose the Borrower, such Subsidiary or such Joint Venture to liability in an amount aggregating $20,000,000 (in excess of insurance as to which a solvent and unaffiliated insurance company has acknowledged coverage) or more or that, if adversely determined, would reasonably be expected to have a Material Adverse Effect.

6.05 Labor Relations. Promptly after a Responsible Officer of the Borrower has actual knowledge of the same, the Borrower shall give the Administrative Agent written notice of (a) any material labor dispute to which the Borrower, any of its Subsidiaries, any Guarantors or any Joint Venture is a party, including any strikes, lockouts or other material disputes relating to any of such Person’s plants and other facilities, provided that such dispute, strike or lockout involves a work stoppage exceeding 30 days, (b) any material Worker Adjustment and Retraining Notification Act or related liability incurred with respect to the closing of any plant or other facility of any such Person affecting 300 or more employees of the Borrower and its Subsidiaries and (c) any material union organization activity with respect to employees of the Borrower or any of its Subsidiaries not covered by a collective bargaining agreement as of the Closing Date.

6.06 Tax Returns. Upon the reasonable request of any Lender, through the Administrative Agent, the Borrower shall provide copies of all federal, state, local and foreign tax returns and reports filed by the Borrower, any of its Subsidiaries or any Joint Venture in respect of taxes measured by income (excluding sales, use and like taxes).

 

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6.07 Insurance. As soon as is practicable and in any event within 90 days after the end of each Fiscal Year, the Borrower shall furnish the Administrative Agent with a report on the standard “Acord” form (or other form acceptable to the Administrative Agent) outlining all material insurance coverage maintained as of the date of such report by the Borrower and its Subsidiaries and the duration of such coverage.

6.08 ERISA Matters . The Borrower shall furnish the Administrative Agent each of the following:

(a) promptly and in any event within 30 days after a Responsible Officer of the Borrower knows, or has reason to know, that any ERISA Event has occurred that, alone or together with any other ERISA Event, would reasonably be expected to result in liability of the Borrower, any Subsidiary, any Guarantor and/or any ERISA Affiliate in an aggregate amount exceeding $20,000,000, written notice describing the nature thereof, what action the Borrower, any of its Subsidiaries, any Guarantor or any of their respective ERISA Affiliates has taken, is taking or proposes to take with respect thereto, including copies of any notices or correspondence with any Governmental Authority and, when known by such Responsible Officer, any action taken or threatened by the IRS, the Department of Labor or the PBGC with respect to such event;

(b) simultaneously with the date that the Borrower, any of its Subsidiaries or any ERISA Affiliate files with the PBGC a notice of intent to terminate any Title IV Plan, if, at the time of such filing, such termination would reasonably be expected to require additional contributions of the Borrower, any Subsidiary, any Guarantor and/or any ERISA Affiliate in an aggregate amount exceeding $20,000,000 in order to be considered a standard termination within the meaning of Section 4041(b) of ERISA, a copy of each notice; and

(c) promptly, copies of (i) each Schedule SB (Actuarial Information) to the annual report (Form 5500 Series) filed by the Borrower, any of its Subsidiaries, any Guarantor or any of their respective ERISA Affiliates with the IRS with respect to each Title IV Plan, which is requested by the Administrative Agent; (ii) all notices received by the Borrower, any of its Subsidiaries, any Guarantor or any of their respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event that would reasonably be expected to result in liability of the Borrower, any Subsidiary, any Guarantor and/or any ERISA Affiliate in an aggregate amount exceeding $20,000,000; and (iii) copies of such other documents or governmental reports or filings relating to any Employee Benefit Plan as the Administrative Agent shall reasonably request.

6.09 Environmental Matters . The Borrower shall provide the Administrative Agent promptly, and in any event within 10 Business Days after any Responsible Officer of the Borrower obtains actual knowledge of any of the following, written notice of each of the following:

(a) that any Loan Party is or may be liable to any Person as a result of a Release or threatened Release that would reasonably be expected to subject such Loan Party to Environmental Liabilities and Costs of $20,000,000 or more;

(b) the receipt by any Loan Party of notification that any material real or personal property of such Loan Party is or is reasonably likely to be subject to any Environmental Lien;

(c) the receipt by any Loan Party of any notice of violation of or potential liability under, or knowledge by a Responsible Officer of the Borrower that there exists a condition that would reasonably be expected to result in a violation of or liability under, any Environmental Law, except for violations and liabilities the consequence of which, in the aggregate, would not be reasonably likely to subject the Loan Parties collectively to Environmental Liabilities and Costs of $20,000,000 or more; and

 

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(d) promptly following reasonable written request by any Lender, through the Administrative Agent, a report providing an update of the status of any environmental, health or safety compliance, hazard or liability issue identified in any notice or report delivered pursuant to this Section 6.09 .

6.10 Patriot Act Information. Each Lender that is subject to the Patriot Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “ Patriot Act ”), it is required to obtain, verify and record information that identifies the Borrower and each other Loan Party, which information includes the name and address of the Borrower and each other Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower and each other Loan Party in accordance with the Patriot Act. The Borrower shall promptly, following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender reasonably requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the Patriot Act.

6.11 Other Information. The Borrower shall provide the Administrative Agent or any Lender with such other information respecting the business, properties, condition, financial or otherwise, or operations of the Borrower, any of its Subsidiaries or any Joint Venture as the Administrative Agent or such Lender, through the Administrative Agent, may from time to time reasonably request. The Administrative Agent shall provide copies of any written information provided to it pursuant to Sections 6.01 through 6.10 above to any Lender requesting the same.

6.12 Preservation of Corporate Existence, Etc. The Borrower shall, and shall cause each of its Subsidiaries to, preserve and maintain its legal existence, rights (charter and statutory) and franchises, except as permitted by Sections 7.03 , 7.04 and 7.06 and except if, in the reasonable business judgment of the Borrower, it is in the business interest of the Borrower or such Subsidiary not to preserve and maintain such rights (charter and statutory) and franchises, and such failure to preserve the same would not reasonably be expected to have a Material Adverse Effect and would not reasonably be expected to materially affect the interests of the Secured Parties under the Loan Documents or the rights and interests of any of them in the Collateral.

6.13 Compliance with Laws, Etc. The Borrower shall, and shall cause each of its Subsidiaries to, comply with all applicable Requirements of Law, Contractual Obligations and Permits, except where the failure so to comply would not reasonably be expected to have a Material Adverse Effect.

6.14 Conduct of Business. The Borrower shall, and shall cause each of its Subsidiaries to, (a) conduct its business in the ordinary course (except for non-material changes in the nature or conduct of its business as carried on as of the Closing Date) and (b) use its reasonable efforts, in the ordinary course, to preserve its business and the goodwill and business of the customers, suppliers and others having business relations with the Borrower or any of its Subsidiaries, except where the failure to comply with the covenants in each of clauses (a) and (b) above would not reasonably be expected to have a Material Adverse Effect.

6.15 Payment of Taxes, Etc. The Borrower shall, and shall cause each of its Subsidiaries to, pay and discharge (or cause to be paid and discharged) before the same shall become delinquent, all

 

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lawful governmental claims, taxes, assessments, charges and levies made, assessed, filed or otherwise imposed on or against any of them, except where (a) contested in good faith, by proper proceedings and adequate reserves therefor have been established on the books of the Borrower or the appropriate Subsidiary in conformity with GAAP or (b) the failure to so pay and discharge would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

6.16 Maintenance of Insurance. The Borrower shall, and shall cause each of its Subsidiaries to, (a) maintain insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as, in the reasonable determination of the Borrower, is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Borrower or such Subsidiary operates and (b) cause all property and general liability insurance to name the Administrative Agent on behalf of the Secured Parties as additional insured (with respect to liability policies), loss payee (with respect to property policies) or lender’s loss payee (with respect to property policies), as appropriate, and to provide that no cancellation, material addition in amount or material change in coverage shall be effective until after 30 days’ written notice thereof to the Administrative Agent.

6.17 Access. The Borrower shall from time to time during normal business hours permit the Administrative Agent, the L/C Issuers and the Lenders, or any agents or representatives thereof, within five Business Days after written notification of the same (except that during the continuance of an Event of Default, no such notice shall be required) to (a) examine and make copies of and abstracts from the records and books of account of the Borrower and each of its Subsidiaries, (b) visit the properties of the Borrower and each of its Subsidiaries, (c) discuss the affairs, finances and accounts of the Borrower and each of its Subsidiaries with any of their respective officers or directors; provided that the Borrower will not be required to permit any examination or visit as set forth in clauses (a) and (b) above with respect to each of the Administrative Agent, the L/C Issuers and the Lenders (or any agents or representatives thereof) (i) within the twelve-month period following the date of the most recent examination or visit by any L/C Issuer, any Lender or the Administrative Agent (or any agents or representatives thereof), as applicable, unless an Event of Default has occurred and is continuing and (ii) unless such visit is coordinated through the Administrative Agent.

6.18 Keeping of Books. The Borrower shall, and shall cause each of its Subsidiaries to keep, proper books of record and account, in which full and correct entries shall be made in conformity with GAAP of the financial transactions and assets and business of the Borrower and each such Subsidiary.

6.19 Maintenance of Properties, Etc. The Borrower shall, and shall cause each of its Subsidiaries to, maintain and preserve (a) in good working order and condition (ordinary wear and tear excepted) all of its properties necessary in the conduct of its business, (b) all rights, permits, licenses, approvals and privileges (including all Permits) necessary in the conduct of its business and (c) all Material Intellectual Property, except where failure to so maintain and preserve the items set forth in clauses (a), (b) and (c) above would not reasonably be expected to have a Material Adverse Effect.

6.20 Application of Proceeds. The Borrower shall use the entire amount of the proceeds of the Loans as provided in Section 5.13 .

6.21 Environmental.

(a) The Borrower shall, and shall cause each of its Subsidiaries to, exercise reasonable due diligence in order to comply in all material respects with all Environmental Laws.

 

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(b) The Borrower agrees that the Administrative Agent may, from time to time, retain, at the expense of the Borrower, an independent professional consultant reasonably acceptable to the Borrower to review any report relating to Contaminants prepared by or for the Borrower and to conduct its own investigation (the scope of which investigation shall be reasonable based upon the circumstances) of any property currently owned, leased, operated or used by the Borrower or any of its Subsidiaries, if (x) a Default or an Event of Default shall have occurred and be continuing, or (y) the Administrative Agent reasonably believes (1) that an occurrence relating to such property is likely to give rise to any Environmental Liabilities and Costs or (2) that a violation of an Environmental Law on or around such property has occurred or is likely to occur, which could, in either such case, reasonably be expected to result in Environmental Liabilities and Costs in excess of $20,000,000, provided that, unless an Event of Default shall have occurred and be continuing, such consultant shall not drill on any property of the Borrower or any of its Subsidiaries without the Borrower’s prior written consent. Borrower shall use its reasonable efforts to obtain for the Administrative Agent and its agents, employees, consultants and contractors the right, upon reasonable notice to Borrower, to enter into or on to the facilities currently owned, leased, operated or used by Borrower or any of its Subsidiaries to perform such tests on such property as are reasonably necessary to conduct such a review and/or investigation. Any such investigation of any property shall be conducted, unless otherwise agreed to by Borrower and the Administrative Agent, during normal business hours and shall be conducted so as not to unreasonably interfere with the ongoing operations at any such property or to cause any damage or loss at such property. Borrower and the Administrative Agent hereby acknowledge and agree that any report of any investigation conducted at the request of the Administrative Agent pursuant to this subsection will be obtained and shall be used by the Administrative Agent and the Lenders for the purposes of the Lenders’ internal credit decisions, to monitor the Obligations and to protect the Liens created by the Loan Documents, and the Administrative Agent and the Lenders hereby acknowledge and agree any such report will be kept confidential by them to the extent permitted by law except as provided in the following sentence. The Administrative Agent agrees to deliver a copy of any such report to Borrower with the understanding that Borrower acknowledges and agrees that (i) it will indemnify and hold harmless the Administrative Agent and each Lender from any costs, losses or liabilities relating to Borrower’s use of or reliance on such report, (ii) neither Administrative Agent nor any Lender makes any representation or warranty with respect to such report, and (iii) by delivering such report to Borrower, neither the Administrative Agent nor any Lender is requiring or recommending the implementation of any suggestions or recommendations contained in such report.

(c) Promptly after a Responsible Officer of the Borrower obtains actual knowledge thereof, the Borrower shall advise the Administrative Agent in writing and in reasonable detail of (i) any Release or threatened Release of any Contaminants required to be reported by Borrower or its Subsidiaries, to any Governmental Authorities under any applicable Environmental Laws and which would reasonably be expected to have Environmental Liabilities and Costs in excess of $20,000,000, (ii) any and all written communications with respect to any pending or threatened claims under Environmental Law in each such case which, individually or in the aggregate, have a reasonable possibility of giving rise to Environmental Liabilities and Costs in excess of $20,000,000, (iii) any Remedial Action performed by Borrower or any other Person in response to (x) any Contaminants on, under or about any property, the existence of which has a reasonable possibility of resulting in Environmental Liabilities and Costs in excess of $20,000,000, or (y) any other Environmental Liabilities and Costs in excess of $20,000,000 that could result in Environmental Liabilities and Costs in excess of $20,000,000, (iv) discovery by Borrower or its Subsidiaries of any occurrence or condition on any material property that could cause Borrower’s or its Subsidiaries’ interest in any such property to be subject to any material restrictions on the ownership, occupancy, transferability or use thereof under any applicable Environmental Laws or Environmental Liens, and (v) any written request for information from any Governmental Authority that fairly suggests

 

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such Governmental Authority is investigating whether Borrower or any of its Subsidiaries may be potentially responsible for a Release or threatened Release of Contaminants which has a reasonable possibility of giving rise to Environmental Liabilities and Costs in excess of $20,000,000.

(d) Borrower shall promptly notify the Administrative Agent of (i) any proposed acquisition of Stock, assets, or property by Borrower or any of its Subsidiaries that would reasonably be expected to expose Borrower or any of its Subsidiaries to, or result in Environmental Liabilities and Costs in excess of $20,000,000 and (ii) any proposed action to be taken by Borrower or any of its Subsidiaries to commence manufacturing, industrial or other similar operations that would reasonably be expected to subject Borrower or any of its Subsidiaries to additional Environmental Laws, that are materially different from the Environmental Laws applicable to the operations of Borrower or any of its Subsidiaries as of the Closing Date.

(e) Borrower shall, at its own expense, provide copies of such documents or information as the Administrative Agent may reasonably request in relation to any matters disclosed pursuant to this subsection.

(f) To the extent required by Environmental Laws or Governmental Authorities under applicable Environmental Laws, Borrower shall promptly take, and shall cause each of its Subsidiaries promptly to take, any and all necessary Remedial Action in connection with the presence, handling, storage, use, disposal, transportation or Release or threatened Release of any Contaminants on, under or affecting any property in order to comply in all material respects with all applicable Environmental Laws and Permits. In the event Borrower or any of its Subsidiaries undertakes any Remedial Action with respect to the presence, Release or threatened Release of any Contaminants on or affecting any property, Borrower or any of its Subsidiaries shall conduct and complete such Remedial Action in material compliance with all applicable Environmental Laws, and in material accordance with the applicable policies, orders and directives of all relevant Governmental Authorities except when, and only to the extent that, Borrower or any such Subsidiaries’ liability for such presence, handling, storage, use, disposal, transportation or Release or threatened Release of any Contaminants is being contested in good faith by Borrower or any of such Subsidiaries. In the event Borrower fails to take required actions to address such Release or threatened Release of Contaminants or to address a violation of or liability under Environmental Law, the Administrative Agent may, upon providing the Borrower with 5 Business Days’ prior written notice, enter the property and, at Borrower’s sole expense, perform whatever action the Administrative Agent reasonably deems prudent to rectify the situation.

6.22 Additional Collateral and Guaranties. Notify the Administrative Agent promptly after any Person (i) becomes a Wholly-Owned Domestic Subsidiary that is not an Immaterial Subsidiary (including a Wholly-Owned Domestic Subsidiary that ceases for any reason to satisfy the definition of “Immaterial Subsidiary” at any time) or (ii) becomes a First-Tier Foreign Subsidiary, and promptly thereafter (and in any event within 30 days, or such longer period of time permitted by the Administrative Agent in its sole discretion):

(a) if such Person is a Wholly-Owned Domestic Subsidiary and is not a Captive Insurance Subsidiary or an Excluded Domestic Subsidiary:

(i) cause such Wholly-Owned Domestic Subsidiary to become a Guarantor by executing and delivering to the Administrative Agent a Joinder Agreement or such other document as the Administrative Agent shall deem reasonably appropriate for such purpose; and

 

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(ii) cause such Person to deliver to the Administrative Agent documents of the types referred to in clauses (iv), (v) and (vii) of Section 4.02(a) and, at the request of the Administrative Agent, favorable opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to in clause (a)(i)), all in form, content and scope reasonably satisfactory to the Administrative Agent;

(iii) cause such Person to deliver to the Administrative Agent for the benefit of the Secured Parties, Security Instruments (or supplements thereto), as specified by and in form and substance reasonably satisfactory to the Administrative Agent (including delivery of all certificated Pledged Interests in and of such Subsidiary, and other instruments of the type specified in Section 4.02(a)(ii) and (iii) ), securing payment of all the Obligations and constituting Liens on all such real and personal properties,

(iv) take whatever action (including the filing of Uniform Commercial Code financing statements and the giving of notices) as may be necessary or advisable in the reasonable opinion of the Administrative Agent to vest in the Administrative Agent (or in any representative of the Administrative Agent designated by it) valid and subsisting Liens on the properties purported to be subject to the Security Instruments (or supplements thereto) delivered pursuant to this Section 6.22 , enforceable against all third parties in accordance with their terms (subject to Liens permitted by the Loan Documents), provided that no such actions shall be required in any jurisdiction outside the United States; and

(b) if such Person is a First-Tier Foreign Subsidiary any of whose Stock is owned by a Loan Party (or a Person becoming a Loan Party pursuant to this Section), cause such Loan Party to deliver to the Administrative Agent for the benefit of the Secured Parties all certificated Pledged Interests in and of such First-Tier Foreign Subsidiary, and any Security Instruments (or supplements thereto), as specified by and in form and substance reasonably satisfactory to the Administrative Agent, in each case securing payment of all the Obligations and constituting Liens on all such Pledged Interests.

6.23 Real Property. With respect to any fee interest in any Material Real Property that is acquired or any lease of domestic Real Property that is leased for more than $5,000,000 annually, in either case after the Closing Date by the Borrower or any other Loan Party, the Borrower or the applicable Loan Party shall promptly (and, in any event, within thirty days following the date of such acquisition, unless such date is extended by the Administrative Agent in its sole discretion) (i) in the case of any Material Real Property, execute and deliver a first priority Mortgage (subject only to Liens permitted by this Agreement and such Mortgage) in favor of the Administrative Agent, for the benefit of the Secured Parties, covering such Real Property and complying with the provisions herein and in the Security Instruments, (ii) in the case of any leased domestic Real Property that is leased for more than $5,000,000 annually, if requested by the Administrative Agent, execute and deliver a first priority Mortgage (subject only to Liens permitted by this Agreement and such Mortgage) in favor of the Administrative Agent, for the benefit of the Secured Parties, covering such Real Property and complying with the provisions herein and in the Security Instruments, (iii) provide the Secured Parties with title insurance in an amount at least equal to the purchase price of such Real Property (or such other amount as the Administrative Agent shall reasonably specify) described in clauses (i) or (ii) above, and if applicable, flood insurance and lease estoppel certificates, all in accordance with the standards for deliveries contemplated on or prior to the Closing Date, as described in Section 4.02(a)(iii) hereof, (iv) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent, and (v) if requested by the Administrative Agent, use commercially reasonable efforts to obtain Landlord

 

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Lien Waivers for each domestic Real Property leasehold interest on which a manufacturing facility or warehouse or other facility where Collateral is stored or held (but excluding any office lease that does not include manufacturing or warehouse facilities), provided that no such landlord Lien Waiver shall be required for any location at which Collateral is stored or located unless the aggregate value of Collateral stored or held at such location exceeds $5,000,000.

6.24 Further Assurances. Promptly upon request by the Administrative Agent, or any Lender through the Administrative Agent, the Borrower or the applicable Loan Party shall (a) correct any material defect or error that may be discovered in any Loan Document or in the execution, acknowledgment, filing or recordation thereof, and (b) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Administrative Agent, or any Lender through the Administrative Agent, may reasonably require from time to time in order to (i) carry out more effectively the purposes of the Loan Documents, (ii) to the fullest extent permitted by applicable law, subject any Loan Party’s properties, assets, rights or interests to the Liens now or hereafter intended to be covered by any of the Security Instruments, (iii) perfect and maintain the validity, effectiveness and priority of any of the Security Instruments and any of the Liens intended to be created thereunder and (iv) assure, convey, grant, assign, transfer, preserve, protect and confirm more effectively unto the Secured Parties the rights granted or now or hereafter intended to be granted to the Secured Parties under any Loan Document or under any other instrument executed in connection with any Loan Document to which any Loan Party is or is to be a party, and cause each of its Subsidiaries that is required by this Agreement to be a Guarantor to do so. Notwithstanding anything to the contrary contained in this Section 6.24 or any Loan Document, no Loan Party shall be required to (i) execute or deliver any control agreements with respect to deposit accounts (other than with respect to Cash Collateral), commodities accounts or securities accounts, (ii) make any filings to perfect Liens on intellectual property, other than any such filings under the UCC or with the U.S. Patent and Trademark Office or U.S. Copyright Office, and (iii) make any filings or take any actions in any jurisdiction outside the United States to create or perfect any Liens created by the Security Instruments.

6.25 Anti-Corruption Laws; Sanctions. The Borrower will, and will cause its Subsidiaries to, maintain in effect and enforce policies and procedures intended to promote and achieve compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents (in their respective activities on behalf of the Borrower and its Subsidiaries) with applicable Anti-Corruption Laws and applicable Sanctions.

6.26 Cash Collateralization of Extended Letters of Credit. The Borrower shall provide Cash Collateral (in an amount equal to 105% of the maximum face amount of each Extended Letter of Credit, calculated in accordance with Section 1.08 ) to each applicable L/C Issuer with respect to each Extended Letter of Credit issued by such L/C Issuer by a date that is no earlier than 120 days prior to the Maturity Date, but no later than 95 days prior to the Maturity Date (or, if such Letter of Credit is issued on or after the date that is 95 days prior to the Maturity Date, on the date of issuance thereof); provided that if the Borrower fails to provide Cash Collateral with respect to any such Extended Letter of Credit by such time, such event shall be treated as a drawing under such Extended Letter of Credit (in an amount equal to 105% of the maximum face amount of each such Letter of Credit, calculated in accordance with Section 1.08 ), which shall be reimbursed (or participations therein funded) in accordance with Section 2.03(c) , with the proceeds being utilized to provide Cash Collateral for such Letter of Credit.

6.27 Post Closing Deliveries. To the extent not delivered on or prior to the Closing Date pursuant to a waiver by the Administrative Agent with respect to such Mortgaged Property as provided in

 

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Section 4.02(a)(iii) , the Borrower shall deliver to the Administrative Agent on or prior to sixty (60) days after the Closing Date (or such later date as the Administrative Agent may agree in its sole discretion) each document, and satisfy each other condition, with respect to such Mortgaged Property as described in Section 4.02(a)(iii) , including (to the extent applicable) a favorable opinion with respect thereto as described in Section 4.02(a)(vi) .

ARTICLE VII.

NEGATIVE COVENANTS

The Borrower agrees with the Lenders and the Administrative Agent to each of the following, from the Closing Date and thereafter as long as any Obligation or any Commitment remains outstanding and, in each case, unless the Required Lenders otherwise consent in writing ( provided that references herein to “Subsidiaries” shall exclude any Captive Insurance Subsidiary for all Sections under this Article VII except Sections 7.01 and 7.02 ):

7.01 Indebtedness. The Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly create, incur, assume or otherwise become or remain directly or indirectly liable with respect to any Indebtedness except for the following:

(a) Indebtedness under the Loan Documents;

(b) Indebtedness outstanding on the Closing Date and listed on Schedule 7.01 ;

(c) Guaranty Obligations incurred by the Borrower or any Guarantor in respect of Indebtedness of the Borrower or any Guarantor that is permitted by this Section 7.01 (other than clause (g) below);

(d) (i) Indebtedness in respect of Capital Lease Obligations and purchase money obligations for tangible property, (ii) Indebtedness in respect of sale and leaseback transactions permitted by Section 7.13 and (iii) other secured Indebtedness (including secured Indebtedness incurred or assumed by the Borrower and its Subsidiaries in connection with a Permitted Acquisition); provided , however , that the aggregate principal amount of all such Indebtedness permitted by this subsection (d) at any one time outstanding shall not exceed $100,000,000 and the Liens securing such Indebtedness shall be within the limitations set forth in Sections 7.02(d) , 7.02(e) or 7.02(k) ;

(e) renewals, extensions, refinancings and refundings of Indebtedness permitted by clause (b) or (d) above or this clause (e); provided , however , that any such renewal, extension, refinancing or refunding is in an aggregate principal amount not greater than the principal amount of (plus reasonable fees, expenses and any premium incurred in connection with the renewal, extension, refinancing or refunding of such Indebtedness), and is on terms that in the aggregate are not materially less favorable to the Borrower or such Subsidiary than, including as to weighted average maturity, the Indebtedness being renewed, extended, refinanced or refunded;

(f) Indebtedness arising from intercompany loans among the Borrower and its Subsidiaries; provided that (x) if any such Indebtedness owing to a Loan Party that is a party to the Collateral Agreement is evidenced by a promissory note, such note shall be subject to a first priority Lien pursuant to the Collateral Agreement, (y) all such Indebtedness owed by a Loan Party to a Subsidiary that is not a Loan Party shall be Subordinated Debt, and (z) any payment by any Guarantor under any guaranty of the Obligations shall result in a pro tanto reduction of the amount of any Indebtedness owed by such

 

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Subsidiary to the Borrower or to any of its Subsidiaries for whose benefit such payment is made; provided , further , that, in each case, the Investment in the intercompany loan by the lender thereof is permitted under Section 7.03 ;

(g) Non-Recourse Indebtedness;

(h) Indebtedness under or in respect of Swap Contracts that are not speculative in nature;

(i) unsecured Indebtedness of any Subsidiary (other than a Guarantor) in aggregate principal amount not to exceed $100,000,000 at any time outstanding;

(j) Indebtedness in respect of any insurance premium financing for insurance being acquired by the Borrower or any Subsidiary under customary terms and conditions and not in connection with the borrowing of money;

(k) Indebtedness under or in respect of Cash Management Agreements;

(l) Indebtedness in respect of matured or drawn Performance Guarantees in the nature of letters of credit, bankers acceptances, bank guarantees or other similar obligations, but only so long as such Indebtedness is reimbursed or extinguished within 5 Business Days of being matured or drawn;

(m) Indebtedness in respect of matured or drawn Performance Guarantees in the nature of surety bonds, performance bonds and other similar obligations, in each case that would appear as indebtedness on a consolidated balance sheet of the Borrower prepared in accordance with GAAP, in an aggregate amount not to exceed $150,000,000 at any time outstanding;

(n) Cash Collateralized Letters of Credit; and

(o) unsecured Indebtedness of any Loan Party so long as at the time of incurrence of such Indebtedness (i) no Default has occurred and is continuing or would result therefrom and (ii) the Borrower and its Subsidiaries are in pro forma compliance with the financial covenants set forth in Section 7.16 immediately before and after giving effect to the incurrence of such Indebtedness.

7.02 Liens. The Borrower shall not, and shall not permit any of its Subsidiaries to, create or suffer to exist any Lien upon or with respect to any of their respective properties or assets, whether now owned or hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any right to receive income, except for the following:

(a) Liens created pursuant to any Loan Document;

(b) Liens existing on the Closing Date and listed on Schedule 7.02 ;

(c) Customary Permitted Liens;

(d) Liens granted by the Borrower or any Subsidiary of the Borrower under a Capital Lease and Liens to which any property is subject at the time, on or after the Closing Date, of the Borrower’s or such Subsidiary’s acquisition thereof in accordance with this Agreement, in each case securing Indebtedness permitted under Section 7.01(d) and limited to the property purchased (and proceeds thereof) with the proceeds subject to such Capital Lease or Indebtedness;

 

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(e) purchase money security interests in real property, improvements thereto or equipment (including any item of equipment purchased in connection with a particular construction project that the Borrower or a Subsidiary expects to sell to its customer with respect to such project and that, pending such sale, is classified as inventory) hereafter acquired (or, in the case of improvements, constructed) by the Borrower or any of its Subsidiaries; provided , however , that (i) such security interests secure purchase money Indebtedness permitted under Section 7.01(d) and are limited to the property purchased with the proceeds of such purchase money Indebtedness (and proceeds thereof), (ii) such security interests are incurred, and the Indebtedness secured thereby is created, within ninety days of such acquisition or construction, and (iii) the Indebtedness secured thereby does not exceed the lesser of the cost or Fair Market Value of such real property, improvements or equipment at the time of such acquisition or construction;

(f) any Lien securing the renewal, extension, refinancing or refunding of any Indebtedness secured by any Lien permitted by clause (b), (d) or (e) above, this clause (f) or clause (k) below, without any material change in the assets subject to such Lien;

(g) Liens in favor of lessors securing operating leases permitted hereunder;

(h) Liens securing Non-Recourse Indebtedness permitted under Section 7.01(g) on (i) the assets of the Subsidiary or Joint Venture financed by such Non-Recourse Indebtedness and (ii) the Stock of the Joint Venture or Subsidiary financed by such Non-Recourse Indebtedness;

(i) Liens arising out of judgments or awards and not constituting an Event of Default under Section 8.01(g) ;

(j) Liens encumbering inventory, work-in-process and related property in favor of customers or suppliers securing obligations and other liabilities to such customers or suppliers (other than Indebtedness) to the extent such Liens are granted in the ordinary course of business and are consistent with past business practices;

(k) Liens not otherwise permitted hereunder securing Indebtedness permitted by Section 7.01(d)(ii) or (iii)  and encumbering assets of (i) Foreign Subsidiaries or (ii) Domestic Subsidiaries that are not (and are not required to be) Guarantors, in each case that do not constitute Collateral;

(l) Liens with respect to foreign exchange netting arrangements to the extent incurred in the ordinary course of business and consistent with past business practices; provided that the aggregate outstanding amount of all such obligations and liabilities secured by such Liens shall not exceed $10,000,000 at any time;

(m) Liens securing insurance premium financing permitted under Section 7.01(j) under customary terms and conditions; provided that no such Lien may extend to or cover any property other than the insurance being acquired with such financing, the proceeds thereof and any unearned or refunded insurance premiums related thereto;

(n) Liens not otherwise permitted by this Section securing obligations or other liabilities (other than Indebtedness for borrowed money) of the Borrower or its Subsidiaries; provided that the aggregate outstanding amount of all such obligations and liabilities secured by such Liens shall not exceed $15,000,000 at any time;

(o) Liens on Cash Collateral securing only Cash Collateralized Letters of Credit;

 

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(p) Liens securing reimbursement obligations of any Foreign Subsidiary in respect of Performance Guarantees (including any obligation to make payments in connection with such performance, but excluding obligations for the payment of borrowed money) issued by a Person that is not the Borrower or an Affiliate of the Borrower; provided such Liens shall be limited to (i) any contract as to which such Performance Guarantee provides credit support, (ii) any accounts receivable arising out of such contract and (iii) the deposit account into which such accounts receivable are deposited (the property described in clauses (i) through (iii), collectively, the “ Performance Guarantee Collateral ”); and

(q) Liens on cash or Cash Equivalents securing (i) reimbursement obligations in respect of Performance Guarantees and other similar obligations (including any obligation to make payments in connection with such performance, but excluding obligations for the payment of borrowed money) and (ii) Swap Contracts that are not speculative in nature; provided that, in each case, the aggregate outstanding amount of all such obligations and liabilities secured by such Liens shall not exceed $200,000,000 at any time;

7.03 Investments. The Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly make or maintain any Investment except for the following:

(a) Investments existing on the Closing Date and disclosed on Schedule 7.03 , and any refinancings of such Investments to the extent constituting Indebtedness otherwise permitted under Section 7.01(b) , provided such refinancing complies with the provisions of Section 7.01(e) ;

(b) Investments held by the Borrower or such Subsidiary in the form of cash or Cash Equivalents;

(c) Investments in accounts, contract rights and chattel paper (each as defined in the UCC), notes receivable and similar items arising or acquired from the sale of Inventory in the ordinary course of business consistent with the past practice of the Borrower and its Subsidiaries;

(d) Investments received in settlement of amounts due to the Borrower or any Subsidiary of the Borrower effected in the ordinary course of business;

(e) Investments by the Borrower in any Wholly-Owned Subsidiary and Investments of any Wholly-Owned Subsidiary in the Borrower or in another Wholly-Owned Subsidiary;

(f) loans or advances to employees of the Borrower or any of its Subsidiaries (or guaranties of loans and advances made by a third party to employees of the Borrower or any of its Subsidiaries) in the ordinary course of business; provided , that the aggregate principal amount of all such loans and advances and guaranties of loans and advances shall not exceed $1,000,000 at any time;

(g) Investments constituting Guaranty Obligations permitted by Section 7.01 ;

(h) Investments in connection with a Permitted Acquisition;

(i) Investments in Rabbi Trusts in an aggregate amount not to exceed $15,000,000 (plus income and capital growth with respect thereto);

(j) Investments in the nature of, and arising directly as a result of, consideration received in connection with an Asset Sale made in compliance with Section 7.04 ;

 

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(k) Investments made in connection with the Foreign Subsidiary Reorganization; and

(l) other Investments not constituting Acquisitions by the Borrower or any Subsidiary made after the Closing Date; provided that the aggregate outstanding amount of all Investments made pursuant to this clause (l) at a time when the Leverage Ratio (after giving pro forma effect to such Investments and any Indebtedness incurred in connection therewith) was greater than or equal to 2.00 to 1.00 shall not exceed 10% of the consolidated total assets of the Borrower and its Subsidiaries, as determined in accordance with GAAP as of the last day of the immediately preceding Fiscal Year; provided further that upon request by the Administrative Agent at any time the Leverage Ratio is greater than or equal to 2.00 to 1.00, the Borrower shall deliver to the Administrative Agent a schedule of all then-outstanding Investments made pursuant to this clause (l) at a time when the Leverage Ratio was less than 2.00 to 1.00.

For purposes of covenant compliance, the amount of any Investment shall be the original cost of such Investment, minus the amount of any portion of such Investment repaid to the investor as a dividend, repayment of loan or advance, release or discharge of a guarantee or other obligation or other transfer of property or return of capital, as the case may be, but without any other adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment or interest earned on such Investment.

7.04 Asset Sales. The Borrower shall not, and shall not permit any of its Subsidiaries to, sell, convey, transfer, lease or otherwise dispose of any of their respective assets or any interest therein (including the sale or factoring at maturity of any accounts) to any Person, or permit or suffer any other Person to acquire any interest in any of their respective assets or, in the case of any Subsidiary, issue or sell any shares of such Subsidiary’s Stock or Stock Equivalent (any such disposition being an “ Asset Sale ”) except for the following:

(a) the sale or disposition of inventory in the ordinary course of business;

(b) transfers resulting from any taking or condemnation of any property of the Borrower or any of its Subsidiaries (or, as long as no Default exists or would result therefrom, deed in lieu thereof);

(c) as long as no Default exists or would result therefrom, the sale or disposition of equipment that the Borrower reasonably determines is no longer useful in its or its Subsidiaries’ business, has become obsolete, damaged or surplus or is replaced in the ordinary course of business;

(d) as long as no Default exists or would result therefrom, the sale or disposition of assets (including the issuance or sale of Stock or Stock Equivalents) of any Subsidiary that either (i) is not a Wholly-Owned Subsidiary or (ii) is an Immaterial Subsidiary that, in each case, both at the time of such sale and as of the Closing Date (or if later, the time of formation or acquisition of such Subsidiary), do not constitute, in the aggregate, all or substantially all of the assets (or the Stock or Stock Equivalents) of such Subsidiary;

(e) as long as no Default exists or would result therefrom, the lease or sublease of Real Property not constituting a sale and leaseback, to the extent not otherwise prohibited by this Agreement or the Mortgages;

(f) as long as no Default exists or would result therefrom, non-exclusive assignments and licenses of intellectual property of the Borrower and its Subsidiaries in the ordinary course of business;

 

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(g) as long as no Default exists or would result therefrom, discounts, adjustments, settlements and compromises of Accounts and contract claims in the ordinary course of business;

(h) any Asset Sale (i) to the Borrower or any Guarantor or (ii) by any Subsidiary that is not a Loan Party to another Subsidiary that is not a Loan Party;

(i) as long as no Default exists or would result therefrom, any other Asset Sale for Fair Market Value and where either (A) at least 75% of the consideration received therefor is cash or Cash Equivalents or (B) the Non-Cash Consideration from such Asset Sale and all other Asset Sales made in reliance upon this subclause (B) during any Fiscal Year does not exceed $10,000,000; provided , however , that with respect to any such Asset Sale in accordance with this clause (i), the aggregate consideration received for the sale of all assets sold in accordance with this clause (i) during any Fiscal Year, including such Asset Sale, shall not exceed 5% of Consolidated Tangible Assets as of the last day of the immediately preceding Fiscal Year;

(j) any single transaction or series of related transactions so long as neither such single transaction nor such series of related transactions involves assets having a Fair Market Value of more than $3,000,000;

(k) Asset Sales permitted by Section 7.13 , Investments permitted by Section 7.03 and Restricted Payments permitted by Section 7.05 ;

(l) the Foreign Subsidiary Reorganization; and

(m) the Form 10 Transactions by and among the Borrower and its Subsidiaries and BWC and its Subsidiaries reasonably necessary to effectuate the Spinoff.

7.05 Restricted Payments. The Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, declare, order, pay or make any sum for any Restricted Payment except for:

(a) Restricted Payments by the Borrower to any Guarantor;

(b) Restricted Payments by (i) any Subsidiary of the Borrower to the Borrower or any Guarantor or (ii) any Subsidiary that is not a Loan Party to another Subsidiary that is not a Loan Party;

(c) Restricted Payments by any Subsidiary that is not a Wholly-Owned Subsidiary to the Borrower or any Guarantor and to any other direct or indirect holders of equity interests in such Subsidiary to the extent (i) such Restricted Payments are made pro rata (or on a basis more favorable to the Borrower or such Guarantor) among the holders of the equity interests in such Subsidiary or (ii) pursuant to the terms of the joint venture or other distribution agreement for such Subsidiary in form and substance approved by the Administrative Agent (such approval not to be unreasonably withheld or delayed);

(d) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any Stock or Stock Equivalents of the Borrower or any of its Subsidiaries (i) made solely with the proceeds received from the exercise of any warrant or option or (ii) that is deemed to occur upon the cashless exercise of stock options or warrants;

 

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(e) the repurchase, redemption or other acquisition or retirement for value of any Stock or Stock Equivalents of the Borrower or any Subsidiary held by any current or former officer, director or employee pursuant to any equity-based compensation plan, equity subscription agreement, stock option agreement, shareholders’ agreement or similar agreement in an aggregate amount not to exceed $20,000,000 in any Fiscal Year;

(f) so long as no Default exists or would result therefrom, the Borrower may make Restricted Payments of the type described in clauses (a) and (b) of the definition thereof (including Restricted Payments of the type described in clause (e) of this Section that are in excess of the aggregate amount permitted in clause (e) of this Section); provided that the aggregate amount of all Restricted Payments made under this clause (f) at a time when the Leverage Ratio (after giving pro forma effect to such proposed Restricted Payment and any Indebtedness incurred in connection therewith) was greater than or equal to 2.00 to 1.00 shall not exceed $150,000,000 in any Fiscal Year;

(g) the dividend or other distribution to BWC and its Subsidiaries of intercompany receivables owed by BWC and its Subsidiaries to the Borrower and its Subsidiaries in connection with the Spinoff to the extent constituting a Form 10 Transaction.

7.06 Fundamental Changes. Merge, amalgamate, dissolve, liquidate, consolidate with or into another Person, or dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default exists or would result therefrom:

(a) any Subsidiary may merge or consolidate with or into (i) the Borrower, provided that the Borrower shall be the continuing or surviving Person, or (ii) any one or more other Subsidiaries, provided that when any Guarantor is merging or consolidating with another Subsidiary, the continuing or surviving Person shall be a Guarantor (whether as the survivor or by becoming a Guarantor in a manner reasonably satisfactory to the Administrative Agent, including by joining the Guaranty);

(b) any Subsidiary may dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Borrower or to another Subsidiary; provided that if the transferor in such a transaction is a Guarantor, then the transferee must either be the Borrower or a Guarantor;

(c) any Person may be merged or amalgamated with or into the Borrower or any Subsidiary of the Borrower in connection with a transaction that constitutes a Permitted Acquisition, provided that (i) if the Borrower is a party to such transaction, the Borrower shall be the continuing or surviving Person, or (ii) if a Guarantor is a party to such transaction, the continuing or surviving Person shall be a Guarantor (whether as the survivor or by becoming a Guarantor in a manner reasonably satisfactory to the Administrative Agent, including by joining the Guaranty);

(d) any Subsidiary may dissolve or liquidate so long as (i) such dissolution or liquidation could not reasonably be expected to result in a Material Adverse Effect or have a material adverse effect on the value of the Guaranty or the Collateral (if any) and (ii) if such dissolving Subsidiary is a Guarantor, it transfers all or substantially all of its assets and operations to another Guarantor; and

(e) an Asset Sale permitted under Section 7.04 may be consummated.

7.07 Change in Nature of Business . The Borrower shall not, and shall not permit any of its Subsidiaries to, engage in any business other than the Eligible Line of Business.

 

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7.08 Transactions with Affiliates . The Borrower shall not, and shall not permit any of its Subsidiaries to, enter into any transaction of any kind involving aggregate payments or consideration in excess of $1,000,000 with any Affiliate of the Borrower, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to the Borrower or such Subsidiary as could reasonably be expected to be obtainable by the Borrower or such Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate except:

(a) transactions among the Borrower and its Subsidiaries not otherwise prohibited under the Loan Documents;

(b) Restricted Payments and Investments otherwise permitted by this Agreement;

(c) transactions in accordance with the Affiliate Agreements or as thereafter amended or replaced in any manner that, taken as a whole, is not more disadvantageous to the Lenders or the Borrower in any material respect than such agreement as it was in effect on the Closing Date;

(d) reasonable director, officer and employee compensation (including bonuses) and other benefits (including pursuant to any employment agreement or any retirement, health, stock option or other benefit plan) and indemnification and insurance arrangements, in each case, as determined in good faith by the Borrower’s board of directors or senior management;

(e) the entering into of a tax sharing agreement, or payments pursuant thereto, between the Borrower and/or one or more Subsidiaries, on the one hand, and any Tax Affiliate, on the other hand, which payments by the Borrower and its Subsidiaries are not in excess of the tax liabilities that would have been payable by them on a stand-alone basis;

(f) so long as the Borrower is subject to the filing requirements of the SEC, any transaction not otherwise prohibited under the Loan Documents with a Person that would constitute an Affiliate of the Borrower solely because the Borrower or a Subsidiary owns Stock in or otherwise Controls such Person;

(g) pledges by the Borrower or any Subsidiary of Stock of any Joint Venture in a transaction permitted by Section 7.02(h)(ii) ;

(h) any transaction entered into by a Person prior to the time such Person becomes a Subsidiary or is merged or consolidated into the Borrower or a Subsidiary ( provided that such transaction is not entered into in contemplation of such event); and

(i) the Form 10 Transactions by and among the Borrower and its Subsidiaries and BWC and its Subsidiaries reasonably necessary to effectuate the Spinoff.

7.09 Burdensome Agreements. Other than pursuant to the Loan Documents and any agreements governing any Non-Recourse Indebtedness, or any Indebtedness permitted by Section 7.01(b) , (d) , (e)  or (g)  (in the case of any such Indebtedness, so long as any prohibition or limitation is only effective against the assets financed thereby), the Borrower shall not, and shall not permit any of its Subsidiaries to, (a) other than for any Subsidiary that is not a Wholly-Owned Subsidiary, agree to enter into or suffer to exist or become effective any consensual encumbrance or consensual restriction of any kind on the ability of such Subsidiary to pay dividends or make any other distribution or transfer of funds or assets or make loans or advances to or other Investments in, or enter into any Guaranty Obligation or pay any Indebtedness owed to, the Borrower or any other Subsidiary of the Borrower or (b) other than

 

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customary non-assignment provisions in contracts entered into in the ordinary course of business, enter into or permit to exist or become effective any enforceable agreement prohibiting or limiting the ability of the Borrower or any Subsidiary to create, incur, assume or permit to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, to secure the Obligations, including any agreement requiring any other Indebtedness or Contractual Obligation to be equally and ratably secured with the Obligations.

7.10 Form 10. Amend, make additions to or otherwise modify the Form 10 on or after the Closing Date in a manner that could reasonably be expected to be adverse to any material interest of the Administrative Agent or the Lenders (unless approved by the Required Lenders, notwithstanding the provisions of Section 10.01 to the contrary, such approval not to be unreasonably conditioned, withheld or delayed); provided that the termination or withdrawal of the Form 10 without the consummation of the Spinoff shall not, without more, be adverse to any material interests of the Lenders.

7.11 Fiscal Year . The Borrower shall not change its Fiscal Year.

7.12 Use of Proceeds. The Borrower shall not, and shall not permit any of its Subsidiaries to, use all or any portion of the proceeds of any credit extended hereunder to purchase or carry margin stock (within the meaning of Regulation U of the FRB) in contravention of Regulation U of the FRB.

7.13 Sale Leasebacks. The Borrower shall not, and shall not permit any of its Subsidiaries to, enter into any sale and leaseback transaction unless the proceeds of such transaction received by the Loan Parties equal the Fair Market Value of the properties subject to such transaction and, after giving effect to such sale and leaseback transaction, the aggregate Fair Market Value of all properties covered at any one time by all sale and leaseback transactions permitted hereunder (other than any sale and leaseback transaction of property entered into within 90 days of the acquisition of such property) does not exceed $20,000,000.

7.14 No Speculative Transactions. The Borrower shall not, and shall not permit any of its Subsidiaries to, engage in any material speculative transaction or in any material transaction involving the entry into of Swap Contracts by such Person except for the sole purpose of hedging in the normal course of business.

7.15 Anti-Corruption Laws. The Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, use the proceeds of any Credit Extension in violation of applicable Anti-Corruption Laws.

7.16 Financial Covenants.

(a) Interest Coverage Ratio . The Borrower shall not permit the Interest Coverage Ratio as of the end of any Fiscal Quarter to be less than 4.00 to 1.00.

(b) Leverage Ratio . The Borrower shall not permit the Leverage Ratio as of the end of any Fiscal Quarter to be greater than 3.00 to 1.00; provided that, at the Borrower’s option, the maximum Leverage Ratio permitted by this clause (b) may be increased to 3.25 to 1.00 (each such election, a “ Leverage Ratio Increase ”) for the four consecutive Fiscal Quarter ending dates (or such shorter time, as may be elected by the Borrower) immediately following the consummation of a Material Acquisition by the Borrower or a Subsidiary; provided further that, in any event (without regard to the making of more than one Material Acquisition), the maximum Leverage Ratio permitted by this clause (b) must return to 3.00 to 1.00 for the Fiscal Quarter ending immediately following each single election by the Borrower of a Leverage Ratio Increase.

 

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7.17 Sanctions . The Borrower shall not, and shall not permit any of its Subsidiaries to use the proceeds of any Credit Extension, or make available such proceeds to any Subsidiary, joint venture partner or other individual or entity, to fund, finance or facilitate any activities of or business with any individual or entity, or in any Designated Jurisdiction, that, in each case at the time of such funding, is the subject of Sanctions, or in any other manner that, to the Borrower’s knowledge, would result in a violation by any Lender, Arranger, Administrative Agent, L/C Issuer or Swing Line Lender of Sanctions.

ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES

8.01 Events of Default. Any of the following shall, at any time on or after the Closing Date (other than with respect to Section 8.01(c) ), and at any time with respect to Section 8.01(c) , constitute an “Event of Default”:

(a) Non-Payment of Principal . the Borrower shall fail to pay any principal of any Loan or any L/C Obligation when the same becomes due and payable; or

(b) Non-Payment of Interest and Other Amounts . the Borrower shall fail to pay any interest on any Loan, any fee under any of the Loan Documents or any other Obligation (other than one referred to in clause (a) above and other than Obligations under any Secured Cash Management Agreement or Secured Hedge Agreement) and such non-payment continues for a period of three Business Days after the due date therefor; or

(c) Representations and Warranties . any representation or warranty made or deemed made by any Loan Party in any Loan Document shall prove to have been incorrect in any material respect (or, with respect to representations and warranties modified by a materiality or Material Adverse Effect standard, in all respects) when made or deemed made; or

(d) Failure to Perform Covenants . any Loan Party shall fail to perform or observe (i) any term, covenant or agreement contained in Sections 6.03(a) , 6.12 (with respect to the existence of the Borrower), 6.17 , 6.25, 6.26 or Article VII or (ii) any other term, covenant or agreement contained in this Agreement or in any other Loan Document if such failure under this clause (ii) shall remain unremedied for 30 days after the earlier of (A) the date on which a Responsible Officer of the Borrower obtains actual knowledge of such failure and (B) the date on which written notice thereof shall have been given to the Borrower by the Administrative Agent, any Lender or any L/C Issuer; or

(e) Cross-Default . (i) the Borrower or any of its Material Subsidiaries shall fail to make any payment on any recourse Indebtedness of the Borrower or any such Material Subsidiary (other than the Obligations (except Obligations under Secured Cash Management Agreements and Secured Hedge Agreements, which are expressly covered by this clause (e))) or any Guaranty Obligation in respect of Indebtedness of any other Person, and, in each case, such failure relates to Indebtedness having a principal amount in excess of $50,000,000 when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand, early termination event or otherwise), (ii) any other event shall occur or condition shall exist under any agreement or instrument relating to any such Indebtedness, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Indebtedness or (iii) any such Indebtedness shall become or be declared to be due and payable, or required to be prepaid or repurchased (other than by a regularly scheduled required

 

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prepayment), prior to the stated maturity thereof; provided that clauses (ii) and (iii) above shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness; or

(f) Insolvency Proceedings, Etc. (i) the Borrower or any of its Material Subsidiaries shall generally not pay its debts as such debts become due, shall admit in writing its inability to pay its debts generally or shall make a general assignment for the benefit of creditors, (ii) any proceeding shall be instituted by or against the Borrower or any of its Material Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts, under any Requirement of Law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a custodian, receiver, trustee or other similar official for it or for any substantial part of its property; provided , however , that, in the case of any such proceedings instituted against the Borrower or any of its Material Subsidiaries (but not instituted by the Borrower or any of its Subsidiaries), either such proceedings shall remain undismissed or unstayed for a period of 60 days or more or an order or decree approving or ordering any of the foregoing shall be entered, or (iii) the Borrower or any of its Material Subsidiaries shall take any corporate action to authorize any action set forth in clauses (i) or (ii) above; or

(g) Judgments. one or more judgments, orders or decrees (or other similar process) for the payment of money in an amount in excess of $35,000,000 in the aggregate (to the extent not covered by insurance as to which a solvent and unaffiliated insurance company has acknowledged coverage), shall be rendered against one or more of the Borrower and its Material Subsidiaries and shall remain unpaid and either (x) enforcement proceedings shall have been commenced by any creditor upon such judgment, injunction or order or (y) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment, injunction or order, by reason of a pending appeal or otherwise, shall not be in effect; or

(h) ERISA. one or more ERISA Events shall occur and the amount of all liabilities and deficiencies resulting therefrom imposed on or which could reasonably be expected to be imposed directly on the Borrower, any of its Subsidiaries or any Guarantor, whether or not assessed, when taken together with amounts of all such liabilities and deficiencies for all other such ERISA Events exceeds $35,000,000 in the aggregate; or

(i) Invalidity of Loan Documents. either:

(i) any provision of any Security Instrument or the Guaranty after delivery thereof pursuant to this Agreement or any other Loan Document shall for any reason, except as permitted by the Loan Documents, cease to be valid and binding on, or enforceable against, any Loan Party which is a party thereto, or any Loan Party shall so state in writing; or

(ii) any Security Instrument shall for any reason fail or cease to create a valid Lien on any Collateral with an aggregate value of $10,000,000 or more purported to be covered thereby or, except as permitted by the Loan Documents, such Lien shall fail or cease to be a perfected and first priority Lien or any Loan Party shall so state in writing; or

(j) Change of Control . there occurs any Change of Control.

 

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8.02 Remedies Upon Event of Default . If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:

(a) declare the Commitment of each Lender to make Loans and any obligation of the L/C Issuers to make L/C Credit Extensions to be terminated, whereupon such Commitments and obligation shall be terminated;

(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower;

(c) require that the Borrower Cash Collateralize the L/C Obligations (in an amount equal to the then Outstanding Amount thereof); and

(d) exercise on behalf of itself, the Lenders and the L/C Issuers all rights and remedies available to it, the Lenders and the L/C Issuers under the Loan Documents;

provided , however , that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans and any obligation of the L/C Issuers to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender.

8.03 Application of Funds. After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 8.02 ), any amounts received on account of the Obligations shall, subject to the provisions of Sections 2.15 and 2.16 , be applied by the Administrative Agent in the following order:

First , to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III ) payable to the Administrative Agent in its capacity as such;

Second , to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders and the L/C Issuers (including fees, charges and disbursements of counsel to the respective Lenders and the L/C Issuers arising under the Loan Documents and amounts payable under Article III ), ratably among them in proportion to the respective amounts described in this clause Second payable to them;

Third , to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Loans, L/C Borrowings and other Obligations arising under the Loan Documents, ratably among the Lenders and the L/C Issuers in proportion to the respective amounts described in this clause Third payable to them;

Fourth , to payment of that portion of the Obligations constituting unpaid principal of the Loans, L/C Borrowings and Obligations then owing under Secured Hedge Agreements and Secured Cash Management Agreements, ratably among the Lenders, the L/C Issuers, the Hedge Banks and the Cash Management Banks in proportion to the respective amounts described in this clause Fourth held by them;

 

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Fifth , to the Administrative Agent for the account of the L/C Issuers, to Cash Collateralize that portion of L/C Obligations composed of the aggregate undrawn amount of Letters of Credit to the extent not otherwise Cash Collateralized by the Borrower pursuant to Sections 2.03 and 2.15 ; and

Last , the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by any applicable Requirement of Law.

Subject to Sections 2.03(c) and 2.15 , amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.

Notwithstanding the foregoing, Obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements shall be excluded from the application described above if the Administrative Agent has not received written notice thereof, together with such supporting documentation as the Administrative Agent may reasonably request, from the applicable Cash Management Bank or Hedge Bank, as the case may be. Each Cash Management Bank or Hedge Bank not a party to the Credit Agreement that has given the notice contemplated by the preceding sentence shall, by such notice, be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of Article IX hereof for itself and its Affiliates as if a “Lender” party hereto.

ARTICLE IX.

ADMINISTRATIVE AGENT

9.01 Appointment and Authority .

(a) Each of the Lenders and each L/C Issuer hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the L/C Issuers, and the Borrower shall not have any rights as a third party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Requirement of Law; provided that the meaning of such term in Section 10.06(c) is intended to be consistent with the meaning of such term as used in Section 5f.103-1(c) of the United States Treasury Regulations. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

(b) The Administrative Agent shall also act as the “collateral agent” under the Loan Documents, and each of the Lenders (including in its capacities as a potential Hedge Bank and a potential Cash Management Bank) and the L/C Issuer hereby irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Lender and the L/C Issuer for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Administrative Agent, as “collateral agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to Section 9.05 for purposes of holding or

 

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enforcing any Lien on the Collateral (or any portion thereof) granted under the Security Instruments, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent), shall be entitled to the benefits of all provisions of this Article IX and Article X (including Section 10.04(c) , as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents) as if set forth in full herein with respect thereto. Without limiting the generality of the foregoing, the Administrative Agent is further authorized on behalf of all the Lenders, without the necessity of any notice to or further consent from the Lenders, from time to time to take any action, or permit the any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent to take any action, with respect to any Collateral or the Loan Documents which may be necessary to perfect and maintain perfected the Liens upon any Collateral granted pursuant to any Loan Document.

9.02 Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

9.03 Exculpatory Provisions. The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent:

(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and

(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.01 and 8.02 ) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable

 

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judgment. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by the Borrower, a Lender or the L/C Issuer.

The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Security Instruments, (v) the value or the sufficiency of any Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

9.04 Reliance by Administrative Agent.

The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the L/C Issuer, the Administrative Agent may presume that such condition is satisfactory to such Lender or the L/C Issuer unless the Administrative Agent shall have received notice to the contrary from such Lender or the L/C Issuer prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

9.05 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub agents appointed by the Administrative Agent. The Administrative Agent and any such sub agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub agent and to the Related Parties of the Administrative Agent and any such sub agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non appealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.

9.06 Resignation of Administrative Agent.

(a) The Administrative Agent may at any time give notice of its resignation to the Lenders, the L/C Issuers and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no

 

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such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “ Resignation Effective Date ”), then the retiring Administrative Agent may (but shall not be obligated to) on behalf of the Lenders and the L/C Issuers, appoint a successor Administrative Agent meeting the qualifications set forth above, provided that in no event shall any such successor Administrative Agent be a Defaulting Lender at the time of such appointment and succession. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.

(b) If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by applicable law, by notice in writing to the Borrower and such Person remove such Person as Administrative Agent and, in consultation with the Borrower, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “ Removal Effective Date ”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.

(c) With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the L/C Issuers under any of the Loan Documents, the retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (2) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and each L/C Issuer directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Administrative Agent (other than as provided in Section 3.01(h) and other than any rights to indemnity payments or other amounts owed to the retiring or removed Administrative Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section) . The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 10.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent.

(d) Any resignation by Bank of America as Administrative Agent pursuant to this Section shall also constitute its resignation as L/C Issuer and Swing Line Lender. If Bank of America resigns as an L/C Issuer, it shall retain all the rights, powers, privileges and duties of an L/C Issuer hereunder with respect to all Letters of Credit issued by it and outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto, including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c) . If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender

 

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provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c) . Upon the appointment by the Borrower of a successor L/C Issuer with respect to the Letters of Credit issued by Bank of America and the related L/C Obligations (which may be another existing L/C Issuer) or Swing Line Lender hereunder (which successor shall in all cases be a Lender other than a Defaulting Lender), (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as applicable, (b) the retiring L/C Issuer and Swing Line Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (c) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.

9.07 Non-Reliance on Administrative Agent and Other Lenders. Each Lender and each L/C Issuer acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and each L/C Issuer also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

9.08 No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of the Book Managers, Arrangers, Co-Syndication Agents, Co-Documentation Agents or Managing Agents listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or an L/C Issuer hereunder.

9.09 Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:

(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations (other than Obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements) that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the L/C Issuers and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the L/C Issuers and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the L/C Issuers and the Administrative Agent under Sections 2.03(h) and (i) , 2.09 and 10.04 ) allowed in such judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

 

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and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and each L/C Issuer to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders and the L/C Issuers, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.09 and 10.04 .

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or any L/C Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or any L/C Issuer to authorize the Administrative Agent to vote in respect of the claim of any Lender or any L/C Issuer in any such proceeding.

The Secured Parties hereby irrevocably authorize the Administrative Agent, at the direction of the Required Lenders, to credit bid all or any portion of the Obligations (including accepting some or all of the Collateral in satisfaction of some or all of the Secured Obligations pursuant to a deed in lieu of foreclosure or otherwise) and in such manner purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral (a) at any sale thereof conducted under the provisions of the Bankruptcy Code of the United States, including under Sections 363, 1123 or 1129 of the Bankruptcy Code of the United States, or any similar Laws in any other jurisdictions to which a Loan Party is subject, (b) at any other sale or foreclosure or acceptance of collateral in lieu of debt conducted by (or with the consent or at the direction of) the Administrative Agent (whether by judicial action or otherwise) in accordance with any applicable Law. In connection with any such credit bid and purchase, the Obligations owed to the Secured Parties shall be entitled to be, and shall be, credit bid on a ratable basis (with Obligations with respect to contingent or unliquidated claims receiving contingent interests in the acquired assets on a ratable basis that would vest upon the liquidation of such claims in an amount proportional to the liquidated portion of the contingent claim amount used in allocating the contingent interests) in the asset or assets so purchased (or in the Stock, Stock Equivalents or debt instruments of the acquisition vehicle or vehicles that are used to consummate such purchase). In connection with any such bid (i) the Administrative Agent shall be authorized to form one or more acquisition vehicles to make a bid, (ii) to adopt documents providing for the governance of the acquisition vehicle or vehicles (provided that any actions by the Administrative Agent with respect to such acquisition vehicle or vehicles, including any disposition of the assets, Stock or Stock Equivalents thereof shall be governed, directly or indirectly, by the vote of the Required Lenders, irrespective of the termination of this Agreement and without giving effect to the limitations on actions by the Required Lenders contained in clauses (a) through (i) of Section 10.01 of this Agreement, (iii) the Administrative Agent shall be authorized to assign the relevant Obligations to any such acquisition vehicle pro rata by the Lenders, as a result of which each of the Lenders shall be deemed to have received a pro rata portion of any Stock, Stock Equivalents and/or debt instruments issued by such an acquisition vehicle on account of the assignment of the Obligations to be credit bid, all without the need for any Secured Party or acquisition vehicle to take any further action, and (iv) to the extent that Obligations that are assigned to an acquisition vehicle are not used to acquire Collateral for any reason (as a result of another bid being higher or better, because the amount of Obligations assigned to the acquisition vehicle exceeds the amount of debt credit bid by the acquisition vehicle or otherwise), such Obligations shall automatically be reassigned to the Lenders pro rata and the Stock, Stock Equivalents and/or debt instruments issued by any acquisition vehicle on account of the Obligations that had been assigned to the acquisition vehicle shall automatically be cancelled, without the need for any Secured Party or any acquisition vehicle to take any further action.

 

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9.10 Collateral and Guaranty Matters. Each of the Lenders (including in its capacities as a potential Cash Management Bank and a potential Hedge Bank, and on behalf of their Affiliates in such capacities) and each L/C Issuer irrevocably authorize the Administrative Agent, at its option and in its discretion,

(a) to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (i) upon termination of the Aggregate Commitments and payment in full of all Obligations (other than (A) contingent indemnification obligations and (B) obligations and liabilities under Secured Cash Management Agreements and Secured Hedge Agreements either (x) as to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made or (y) notice has not been received by the Administrative Agent from the applicable Cash Management Bank or Hedge Bank that such amounts are then due and payable) and the expiration or termination of all Letters of Credit (other than Letters of Credit as to which other arrangements satisfactory to the Administrative Agent and the applicable L/C Issuer shall have been made), (ii) that is sold or otherwise disposed of or to be sold or otherwise disposed of as part of or in connection with any sale or other disposition permitted hereunder or under any other Loan Document (including, without limitation, in connection with the Foreign Subsidiary Reorganization) or (iii) subject to Section 10.01 (including Section 10.01(h) ), if approved, authorized or ratified in writing by the Required Lenders;

(b) to subordinate or release any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 7.02(b) , (d) , (e) , (f)  or (h) , and to enter into any intercreditor agreement, subordination agreement or similar agreement with respect to any such property; and

(c) to release any Guarantor from its obligations under the Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted under the Loan Documents.

Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty pursuant to this Section 9.10 . In each case as specified in this Section 9.10 , the Administrative Agent will, at the Borrower’s expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Security Instruments or to subordinate its interest in such item, or to release such Guarantor from its obligations under the Guaranty, in each case in accordance with the terms of the Loan Documents and this Section 9.10 .

The Administrative Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Administrative Agent’s Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall the Administrative Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral.

9.11 Secured Cash Management Agreements and Secured Hedge Agreements. Except as otherwise expressly set forth herein, no Cash Management Bank or Hedge Bank that obtains the benefits of the provisions of Section 8.03 , the Guaranty or any Collateral by virtue of the provisions hereof or of any Guaranty or any Security Instrument shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) (or to notice of or to consent to any amendment, waiver or modification of the provisions hereof or of the Guaranty or any Security

 

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Instrument) other than in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents. Notwithstanding any other provision of this Article IX to the contrary, the Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements unless the Administrative Agent has received written notice of such Obligations, together with such supporting documentation as the Administrative Agent may request, from the applicable Cash Management Bank or Hedge Bank, as the case may be.

ARTICLE X.

MISCELLANEOUS

10.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided , however , that no such amendment, waiver or consent shall:

(a) waive any condition set forth in Section 4.01 or Section 4.02 (other than Section  4.02(e)(i) or (f) ) without the written consent of each Lender;

(b) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02 ) without the written consent of such Lender;

(c) postpone any date fixed by this Agreement or any other Loan Document for any payment (excluding mandatory prepayments, if any) of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender entitled to such payment;

(d) reduce the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or (subject to clause (iv) of the second proviso to this Section 10.01 ) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender entitled to such amount; provided , however , that only the consent of the Required Lenders shall be necessary (i) to amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest, commitment fees or Letter of Credit Fees at the Default Rate or (ii) to amend any financial covenant hereunder (or any defined term used therein) even if the effect of such amendment would be to reduce the rate of interest on any Loan or L/C Borrowing or to reduce any fee payable hereunder;

(e) change Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender directly and adversely affected thereby;

(f) amend Section 1.06 or the definition of “Alternative Currency” without the written consent of the Administrative Agent and each affected L/C Issuer;

(g) change any provision of this Section 10.01 or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder (other than the definitions specified in clause (ii) of this Section 10.01(h)), without the written consent of each Lender; or

 

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(h) release all or substantially all of the Collateral in any transaction or series of related transactions, or release all or substantially all of the value of the Guaranty, in each case without the written consent of each Lender, except to the extent the release of any Collateral or any Guarantor is permitted pursuant to Section 9.10 (other than Section 9.10(a)(iii) ) (in which case such release may be made by the Administrative Agent acting alone);

and, provided further , that (i) no amendment, waiver or consent shall, unless in writing and signed by the applicable L/C Issuer in addition to the Lenders required above, affect the rights or duties of such L/C Issuer under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Lender in addition to the Lenders required above, affect the rights or duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; and (iv) each Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, (x) no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (1) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (2) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender disproportionately adversely relative to other affected Lenders shall require the consent of such Defaulting Lender and (y) the Administrative Agent, the Borrower and the applicable L/C Issuer may, without the consent of any other Lender or L/C Issuer, make such changes as may be necessary to incorporate provisions with respect to the issuance of Letters of Credit in any Alternative Currency approved by such L/C Issuer. Notwithstanding anything to the contrary contained in this Section, if the Administrative Agent and the Borrower shall have jointly identified (each in its sole discretion) an obvious error or omission of a technical or immaterial nature, in each case, in any provision of the Loan Documents, then the Administrative Agent and the applicable Loan Parties shall be permitted to amend such provision and such amendment shall become effective without any further action or consent of any other party to any Loan Document if the same is not objected to in writing by the Required Lenders within five Business Days following the posting of such amendment to the Lenders.

If any Lender does not consent to a proposed amendment, waiver, consent or release with respect to any Loan Document that requires the consent of such Lender and that has been approved by the Required Lenders, the Borrower may replace such non-consenting Lender in accordance with Section 10.13 ; provided that such amendment, waiver, consent or release can be effected as a result of the assignment contemplated by such Section (together with all other such assignments required by the Borrower to be made pursuant to this paragraph).

Notwithstanding any provision herein to the contrary, this Agreement may be amended with the written consent of the Required Lenders, the Administrative Agent and the Borrower (i) to add one or more additional revolving credit or term loan facilities to this Agreement and to permit the extensions of credit and all related obligations and liabilities arising in connection therewith from time to time outstanding to share ratably (or on a basis subordinated to the existing facilities hereunder) in the benefits of this Agreement and the other Loan Documents with the obligations and liabilities from time to time outstanding in respect of the existing facilities hereunder, and (ii) in connection with the foregoing, to permit, as deemed appropriate by the Administrative Agent and approved by the Required Lenders, the Lenders providing such additional credit facilities to participate in any required vote or action required to

 

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be approved by the Required Lenders or by any other number, percentage or class of Lenders hereunder so long as such amendment does not adversely impact any other Lender’s ability to participate in such vote or action.

10.02 Notices; Effectiveness; Electronic Communication.

(a) Notices Generally . Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile or electronic mail as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

(i) if to the Borrower, the Administrative Agent, Bank of America as an L/C Issuer or the Swing Line Lender, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 10.02 ; and

(ii) if to any other Lender or any other L/C Issuer, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to the Borrower).

Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).

(b) Electronic Communications . Notices and other communications to the Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic communication (including e-mail, FpML messaging, and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or any L/C Issuer pursuant to Article II if such Lender or such L/C Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent, the Swing Line Lender, any L/C Issuer or the Borrower may each, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i)  and (ii) , if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice, email or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.

 

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(c) The Platform . THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “ Agent Parties ”) have any liability to the Borrower, any Lender, any L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s, any Loan Party’s or the Administrative Agent’s transmission of Borrower Materials or notices through the Platform, any other electronic messaging service, or through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided , however , that in no event shall any Agent Party have any liability to the Borrower, any Lender, the L/C Issuer or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).

(d) Change of Address, Etc . Each of the Borrower, the Administrative Agent, the L/C Issuers and the Swing Line Lender may change its address, facsimile or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, facsimile or telephone number for notices and other communications hereunder by notice to the Borrower, the Administrative Agent, each L/C Issuer and the Swing Line Lender. In addition, each Lender and each L/C Issuer agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, facsimile number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender or L/C Issuer. Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Requirements of Law, including United States Federal and state securities laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States Federal or state securities laws.

(e) Reliance by Administrative Agent, L/C Issuer and Lenders . The Administrative Agent, the L/C Issuer and the Lenders shall be entitled to rely and act upon any notices (including telephonic or electronic Committed Loan Notices, Letter of Credit Applications and Swing Line Loan Notices) purportedly given by or on behalf of the Borrower (or with respect to a Letter of Credit Application, any Permitted L/C Party) even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify the Administrative Agent, each L/C Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each

 

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notice purportedly given by or on behalf of the Borrower (or with respect to a Letter of Credit Application, any Permitted L/C Party). All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

10.03 No Waiver; Cumulative Remedies; Enforcement. No failure by any Lender, any L/C Issuer or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.02 for the benefit of all the Lenders and the L/C Issuer; provided , however , that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) any L/C Issuer or the Swing Line Lender from exercising the rights and remedies that inure to its benefit (solely in its capacity as an L/C Issuer or Swing Line Lender, as the case may be) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 10.08 (subject to the terms of Section 2.13 ), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided , further , that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 2.13 , any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.

10.04 Expenses; Indemnity; Damage Waiver.

(a) Costs and Expenses . The Borrower shall pay (i) all reasonable out of pocket expenses incurred by the Administrative Agent and its Affiliates (including MLPFS and including the reasonable fees, charges and disbursements of counsel for the Administrative Agent, and of special and local counsel retained by the Administrative Agent, but not any other separate counsel to the Arrangers or the Lenders), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement (including, without limitation, the administration of any assignment under Section 10.06 that is determined to be void ab initio ) and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out of pocket expenses incurred by each L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out of pocket expenses incurred by the Administrative Agent, any Lender or any L/C Issuer (including the fees, charges and disbursements of any counsel for the Administrative Agent, any Lender or the L/C Issuer) in connection with the enforcement or protection of its rights (A) in connection with this

 

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Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such out of pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit, provided that the Borrower’s obligations to pay or reimburse for legal fees and expenses pursuant to this clause (iii)  shall be limited to the reasonable and documented legal fees and expenses of a single law firm as counsel for the Administrative Agent and one additional law firm as counsel for all other such parties, taken together, in each appropriate jurisdiction (which may include a single law firm as special, local or foreign counsel acting in multiple jurisdictions), except that in the case where any such Person determines in good faith that a conflict of interest does or may exist in connection with such legal representation and such Person advises the Borrower of such actual or potential conflict of interest and engages its own separate counsel, the reasonable and documented legal fees and expenses of such separate counsel shall also be paid or reimbursed.

(b) Indemnification by the Borrower . The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), each Arranger, each Lender and each L/C Issuer, and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (subject to proviso (y) to this sentence below, including the reasonable fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any Person (including the Borrower or any other Loan Party) other than such Indemnitee and its Related Parties arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by any L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Contaminants on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that (x) such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (A) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee, (B) arises solely from disputes solely between or among Indemnitees (except that in the event of a dispute involving the Administrative Agent, an Arranger, any L/C Issuer or the Swing Line Lender (in each case, acting in its capacity as such), the Administrative Agent, such Arranger, such L/C Issuer or the Swing Line Lender, as applicable, shall be entitled (subject to the other limitations and exceptions set forth in this clause (b)) to the benefit of such indemnification) not relating to or in connection with acts or omissions by the Company, any of its Subsidiaries, any of their respective Affiliates or any other Person or entity or (C) result from a claim brought by the Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if the Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction and (y) the Borrower’s obligation to pay or reimburse an Indemnitee for the reasonable fees, charges and disbursements of counsel under this subsection (b) shall be limited to the reasonable and documented fees, charges and disbursements of a single law firm chosen

 

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by the Administrative Agent as counsel for all such Indemnitees, taken together, in each appropriate jurisdiction (which may include a single law firm as special or local counsel acting in multiple jurisdictions), except that in the case where an Indemnitee determines in good faith that a conflict of interest does or may exist in connection with such legal representation and such Indemnitee advises the Borrower of such actual or potential conflict of interest and engages its own separate counsel, the reasonable and documented fees, charges and disbursements of each such separate counsel shall also be paid or reimbursed. This Section 10.04(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

(c) Reimbursement by Lenders . To the extent that the Borrower for any reason fails to indefeasibly pay (and without limiting any obligation of the Borrower so to pay) any amount required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), any L/C Issuer, the Swing Line Lender or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the applicable L/C Issuer, the Swing Line Lender or such Related Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender’s Total Credit Exposure at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender), such payment to be made severally among them based on such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought), provided , further that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent), the applicable L/C Issuer or the Swing Line Lender in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent), such L/C Issuer or the Swing Line Lender in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.12(d) .

(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable law, the Borrower shall not assert, and the Borrower hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for the Borrower’s direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.

(e) Payments . All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.

(f) Survival . The agreements in this Section and the indemnity provisions of Section 10.02(e) shall survive the resignation of the Administrative Agent, any L/C Issuer and/or the Swing Line Lender, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.

 

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10.05 Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent, any L/C Issuer or any Lender, or the Administrative Agent, any L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent, such L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender and each L/C Issuer severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the applicable Overnight Rate from time to time in effect, in the applicable currency of such recovery or payment. The obligations of the Lenders and the L/C Issuers under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

10.06 Successors and Assigns.

(a) Successors and Assigns Generally . The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the L/C Issuers and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans (including for purposes of this subsection (b), participations in L/C Obligations and in Swing Line Loans) at the time owing to it); provided that in each case any such assignment shall be subject to the following conditions:

(i) Minimum Amounts .

(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and/or the Loans at the time owing to it or contemporaneous assignments to related Approved Funds that equal at least the amount specified in paragraph (b)(i)(B) of this Section in the aggregate or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

(B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding

 

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thereunder) determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed).

(ii) Proportionate Amounts . Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned, except that this clause (ii) shall not (A) apply to the Swing Line Lender’s rights and obligations in respect of Swing Line Loans or (B) prohibit any Lender from assigning all or a portion of its rights and obligations under any separate revolving credit or term loan facilities provided pursuant to the last paragraph of Section 10.01 in each case on a non- pro rata basis;

(iii) Required Consents . No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

(A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund, provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five Business Days after having received notice thereof;

(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of any unfunded Commitment if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender; and

(C) the consent of each L/C Issuer and of the Swing Line Lender (each such consent not to be unreasonably withheld or delayed) shall be required for any assignment in respect of the Revolving Credit Facility.

(iv) Assignment and Assumption . The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided , however , that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

(v) No Assignment to Certain Persons . No such assignment shall be made (A) to the Borrower or any of the Borrower’s Affiliates or Subsidiaries, or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B), or (C) to a natural person, or (D) to any competitor of the Borrower or any of its Subsidiaries that is primarily engaged in an Eligible Line of Business and that has been previously identified as such, by legal entity name, by the Borrower to the Administrative Agent and provided by the Administrative Agent to the Lenders on the Platform, it being understood that the Administrative Agent shall have no responsibility for maintaining or otherwise managing any such list of competitors.

 

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(vi) Certain Additional Payments . In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, any L/C Issuer or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit and Swing Line Loans in accordance with its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Requirements of Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01 , 3.04 , 3.05 , and 10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided that, except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

(c) Register . The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower (and such agency being solely for tax purposes), shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it (or the equivalent thereof in electronic form) and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. In addition, the Administrative Agent shall maintain on the Register information regarding the designation, and revocation of designation, of any Lender as a Defaulting Lender. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

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(d) Participations . Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a Person described in Section 10.06(b)(v) that is not permitted to be an assignee with respect to Loans or Commitments) (each, a “ Participant ”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s participations in L/C Obligations and/or Swing Line Loans) owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the Lenders and the L/C Issuer shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 10.04(c) without regard to the existence of any participation.

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 that affects such Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01 , 3.04 and 3.05 (subject to the requirements and limitations therein, including the requirements under Section 3.01(f) (it being understood that the documentation required under Section 3.01(f) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Section 3.06 and 10.13 as if it were an assignee under paragraph (b) of this Section; and (B) shall not be entitled to receive any greater payment under Sections 3.01 or 3.04 , with respect to any participation, than the Lender from whom it acquired the applicable participation would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 10.13 with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender, provided that such Participant agrees to be subject to Section 2.13 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

 

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(e) Reserved .

(f) Certain Pledges . Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note(s), if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(g) Resignation as L/C Issuer or Swing Line Lender after Assignment .

(i) Notwithstanding anything to the contrary contained herein, if at any time Bank of America or any other L/C Issuer assigns all of its Commitment and Loans pursuant to subsection (b) above, then (i) Bank of America or such other L/C Issuer may, upon 30 days’ notice to the Borrower and the Lenders, resign as an L/C Issuer and/or (ii) Bank of America may, upon 30 days’ notice to the Borrower, resign as the Swing Line Lender. In the event of any such resignation of an L/C Issuer or the Swing Line Lender, the Borrower shall be entitled to appoint from among the Lenders a successor L/C Issuer (which may be an existing L/C Issuer) or Swing Line Lender hereunder; provided , however , that no failure by the Borrower to appoint any such successor shall affect the resignation of Bank of America or the applicable L/C Issuer as an L/C Issuer or of Bank of America as the Swing Line Lender, as the case may be.

(ii) If Bank of America or any other L/C Issuer resigns as an L/C Issuer, it shall retain all the rights, powers, privileges and duties of an L/C Issuer hereunder with respect to all Letters of Credit issued by it and outstanding as of the effective date of its resignation as an L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c) ). Upon the appointment of a successor L/C Issuer with respect to such resigning L/C Issuer (x) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer and (y) such successor L/C Issuer (or another of the L/C Issuers, as may be arranged by the Borrower) shall issue letters of credit in substitution for the Letters of Credit, if any, issued by the resigning L/C Issuer and outstanding at the time of such succession, or make other arrangements satisfactory to Bank of America or such other resigning L/C Issuer to effectively assume the obligations of Bank of America or such other resigning L/C Issuer with respect to such Letters of Credit. The provisions of subparts (g)(i) and (g)(ii) of this Section shall not limit the ability of the Borrower to appoint and remove L/C Issuers pursuant to Sections 2.03(l) and (m) .

(iii) If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c) . Upon the appointment of a successor Swing Line Lender, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Swing Line Lender.

10.07 Treatment of Certain Information; Confidentiality . Each of the Administrative Agent, the Lenders and each L/C Issuer agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent

 

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required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or any Eligible Assignee invited to be a Lender pursuant to Section 2.14(c) or (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrower and its obligations, this Agreement or payments hereunder, (g) on a confidential basis to (i) any rating agency in connection with rating the Borrower or its Subsidiaries or the credit facilities provided hereunder or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder, (h) with the consent of the Borrower or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender, any L/C Issuer or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower. In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry and service providers to the Agents and the Lenders in connection with the administration of this Agreement, the other Loan Documents, and the Commitments. For purposes of this Section, “ Information ” means all information received from the Borrower, any Subsidiary or any Affiliate of the Borrower relating to the Borrower, any Subsidiary or any Affiliate of the Borrower or any of their respective businesses, other than any such information that is (i) available to the Administrative Agent, any Lender or any L/C Issuer on a nonconfidential basis prior to disclosure by the Borrower, any Subsidiary or any Affiliate of the Borrower, or (ii) is clearly and conspicuously marked “PUBLIC” by the Borrower, which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the page thereof. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

Each of the Administrative Agent, the Lenders and the L/C Issuers acknowledges that (a) the Information may include material non-public information concerning the Borrower or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Requirements of Law, including United States Federal and state securities laws.

10.08 Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender, each L/C Issuer and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable Requirements of Law to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, such L/C Issuer or any such Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement or any other Loan Document to such Lender or such L/C Issuer or their respective Affiliates, irrespective of whether or not such Lender, such L/C Issuer or such Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch, office or Affiliate of such Lender or such L/C Issuer different from the branch, office or

 

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Affiliate holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.16 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent, the L/C Issuers and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender, each L/C Issuer and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, such L/C Issuer or their respective Affiliates may have. Each Lender and each L/C Issuer agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.

10.09 Interest Rate Limitation . Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Requirements of Law (the “ Maximum Rate ”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Requirements of Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

10.10 Counterparts; Integration; Effectiveness . This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent or any L/C Issuer constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01 , this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic imaging means (e.g., “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Agreement.

10.11 Survival of Representations and Warranties . All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

 

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10.12 Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 10.12 , if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent, any L/C Issuer or the Swing Line Lender, as applicable, then such provisions shall be deemed to be in effect only to the extent not so limited.

10.13 Replacement of Lenders. If any Lender requests compensation under Section 3.04 , or if the Borrower is required to pay any Indemnified Taxes or any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 , or if any Lender is a Defaulting Lender, or if any Lender is subject to replacement pursuant to the last paragraph of Section 10.01 , then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.06 ), all of its interests, rights (other than its existing rights to payments pursuant to Sections 3.01 and 3.04 ) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:

(a) the Borrower shall have paid to the Administrative Agent the assignment fee specified in Section 10.06(b) ;

(b) such Lender shall have received payment of an amount equal to 100% of the outstanding principal of its Loans and L/C Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.05 ) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);

(c) in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01 , such assignment will result in a reduction in such compensation or payments thereafter;

(d) such assignment does not conflict with applicable Requirements of Law; and

(e) in the case of an assignment resulting from a Lender becoming a non-consenting Lender pursuant to the last paragraph of Section 10.01 , the applicable assignee shall have consented to the applicable amendment, waiver or consent.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

10.14 Governing Law; Jurisdiction; Etc.

(a) GOVERNING LAW . THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN

 

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CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

(b) SUBMISSION TO JURISDICTION . THE BORROWER IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE ADMINISTRATIVE AGENT, ANY LENDER, ANY L/C ISSUER, OR ANY RELATED PARTY OF THE FOREGOING IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(c) WAIVER OF VENUE . THE BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

(d) SERVICE OF PROCESS . EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02 . NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

10.15 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON

 

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CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

10.16 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower acknowledges and agrees that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Arrangers and the Lenders are arm’s-length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Administrative Agent, the Arrangers and the Lenders, on the other hand, (B) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent, each Arranger and each Lender is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower, any other Loan Party or any of their respective Affiliates, or any other Person and (B) neither the Administrative Agent, any Arranger nor any Lender has any obligation to the Borrower or any other Loan Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent, the Arrangers, the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower, the other Loan Parties and their respective Affiliates, and neither the Administrative Agent, any Arranger nor any Lender has any obligation to disclose any of such interests to the Borrower, any other Loan Party or any of their respective Affiliates. To the fullest extent permitted by law, the Borrower hereby waives and releases any claims that it may have against the Administrative Agent, any Arranger or any Lender with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

10.17 Electronic Execution of Assignments and Certain Other Documents. The words “execute,” “execution,” “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including without limitation Assignment and Assumptions, amendments or other Committed Loan Notices, Swing Line Loan Notices, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that, notwithstanding anything contained herein to the contrary, the Administrative Agent is under no obligation to agree to accept electronic signatures in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it.

10.18 Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another

 

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currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of the Borrower in respect of any such sum due from it to the Administrative Agent or any Lender hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “ Judgment Currency ”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “ Agreement Currency ”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent or such Lender, as the case may be, of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent or such Lender, as the case may be, may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent or any Lender from the Borrower in the Agreement Currency, the Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or such Lender, as the case may be, against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent or any Lender in such currency, the Administrative Agent or such Lender, as the case may be, agrees to return the amount of any excess to the Borrower (or to any other Person who may be entitled thereto under applicable law).

[ Signature Pages Follow ]

 

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IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be duly executed as of the date first above written.

 

BABCOCK & WILCOX ENTERPRISES, INC.
By:  

/s/ Jenny L. Apker

Name:   Jenny L. Apker
Title:   Treasurer

 

Babcock & Wilcox Enterprises, Inc.

Credit Agreement (2015)

Signature Pages


BANK OF AMERICA, N.A. , as Administrative Agent
By:  

/s/ Bridgett J. Manduk Mowry

Name:   Bridgett J. Manduk Mowry
Title:   Vice President

 

Babcock & Wilcox Enterprises, Inc.

Credit Agreement (2015)

Signature Pages


BANK OF AMERICA, N.A. , as a Lender, an L/C Issuer and Swing Line Lender
By:  

/s/ Stuart Bonomo

Name:   Stuart Bonomo
Title:   Director

 

Babcock & Wilcox Enterprises, Inc.

Credit Agreement (2015)

Signature Pages


BNP PARIBAS , as a Lender and an L/C Issuer
By:  

/s/ Pierre Nicholas Rogers

Name:   Pierre Nicholas Rogers
Title:   Managing Director
By:  

/s/ Brendan Henghan

Name:   Brendan Henghan
Title:   Director

 

Babcock & Wilcox Enterprises, Inc.

Credit Agreement (2015)

Signature Pages


CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK, as a Lender and an L/C Issuer
By:  

/s/ Page Dillehunt

Name:   Page Dillehunt
Title:   Managing Director
By:  

/s/ Michael Willis

Name:   Michael Willis
Title:   Managing Director

 

Babcock & Wilcox Enterprises, Inc.

Credit Agreement (2015)

Signature Pages


JPMORGAN CHASE BANK, N.A. , as a Lender and an L/C Issuer
By:  

/s/ John Emery

Name:   John Emery
Title:   Managing Director

 

Babcock & Wilcox Enterprises, Inc.

Credit Agreement (2015)

Signature Pages


WELLS FARGO BANK, NATIONAL

ASSOCIATION, as a Lender

By:  

/s/ Adam Spreyer

Name:   Adam Spreyer
Title:   Vice President

 

Babcock & Wilcox Enterprises, Inc.

Credit Agreement (2015)

Signature Pages


THE BANK OF TOKYO-MITSUBISHI UFJ,

LTD., as a Lender

By:  

/s/ Lauren Hom

Name:   Lauren Hom
Title:   Director

 

Babcock & Wilcox Enterprises, Inc.

Credit Agreement (2015)

Signature Pages


COMPASS BANK, as a Lender
By:  

/s/ Khoa Duong

Name:   Khoa Duong
Title:   Vice President

 

Babcock & Wilcox Enterprises, Inc.

Credit Agreement (2015)

Signature Pages


TD BANK, NA, as a Lender and an L/C Issuer
By:  

/s/ Betty Chang

Name:   Betty Chang
Title:   Senior Vice President

 

Babcock & Wilcox Enterprises, Inc.

Credit Agreement (2015)

Signature Pages


U.S. BANK, NATIONAL ASSOCIATION, as

a Lender

By:  

/s/ Jonathan F. Lindvall

Name:   Jonathan F. Lindvall
Title:   Vice President

 

Babcock & Wilcox Enterprises, Inc.

Credit Agreement (2015)

Signature Pages


BRANCH BANKING AND TRUST

COMPANY, as a Lender

By:  

/s/ Stuart M. Jones

Name:   Stuart M. Jones
Title:   Senior Vice President

 

Babcock & Wilcox Enterprises, Inc.

Credit Agreement (2015)

Signature Pages


CITIZENS BANK OF PENNSYLVANIA, as

a Lender

By:  

/s/ Michael C. Colella

Name:   Michael C. Colella
Title:   Assistant Vice President

 

Babcock & Wilcox Enterprises, Inc.

Credit Agreement (2015)

Signature Pages


WHITNEY BANK, as a Lender
By:  

/s/ Paul Cole

Name:   Paul Cole
Title:   Senior Vice President

 

Babcock & Wilcox Enterprises, Inc.

Credit Agreement (2015)

Signature Pages


PNC BANK, NATIONAL ASSOCIATION,

as a Lender

By:  

/s/ Jessica F. Sidhom

Name:   Jessica F. Sidhom
Title:   Senior Vice President

 

Babcock & Wilcox Enterprises, Inc.

Credit Agreement (2015)

Signature Pages


NORTHERN TRUST COMPANY, as a Lender
By:  

/s/ John Canty

Name:   John Canty
Title:   Senior Vice President

 

Babcock & Wilcox Enterprises, Inc.

Credit Agreement (2015)

Signature Pages


THE BANK OF NOVA SCOTIA, as a Lender
By:  

/s/ Michelle C. Phillips

Name:   Michelle C. Phillips
Title:   Execution Head & Director

 

Babcock & Wilcox Enterprises, Inc.

Credit Agreement (2015)

Signature Pages


Schedule 1.01(a)

Affiliate Agreements

None.


Schedule 1.01(b)

Initial Guarantors

As of the Closing Date:

 

1. Americon Equipment Services, Inc.
2. Americon, Inc.
3. Babcock & Wilcox Construction Co., Inc.
4. Babcock & Wilcox Ebensburg Power, LLC
5. Babcock & Wilcox Equity Investments, LLC
6. Babcock & Wilcox Holdings, Inc.
7. Babcock & Wilcox India Holdings, Inc.
8. Babcock & Wilcox International Sales and Service Corporation
9. Babcock & Wilcox International, Inc.
10. Babcock & Wilcox MEGTEC Holdings, Inc.
11. Babcock & Wilcox Power Generation Group, Inc.
12. Babcock & Wilcox Technology LLC 1
13. Delta Power Services, LLC
14. Diamond Operating Co., Inc.
15. Diamond Power Australia Holdings, Inc.
16. Diamond Power China Holdings, Inc.
17. Diamond Power Equity Investments, Inc.
18. Diamond Power International, Inc.
19. DPS Anson, LLC
20. DPS Berlin, LLC
21. DPS Cadillac, LLC
22. DPS Florida, LLC
23. DPS Gregory, LLC
24. DPS Mecklenburg, LLC
25. DPS Piedmont, LLC
26. Ebensburg Energy, LLC
27. Ebensburg Investors Limited Partnership
28. Ebensburg Power Company
29. O&M Holding Company
30. Palm Beach Resource Recovery Corporation
31. Power Systems Operations, Inc.
32. Revloc Reclamation Service, Inc.
33. SOFCo – EFS Holdings LLC
34. MEGTEC Acquisition, LLC

 

 

1   Conversion to Babcock & Wilcox Technology, Inc. to be complete by June 30, 2015.


35. MTS Asia, Inc.
36. MEGTEC Systems, Inc.
37. MEGTEC Systems Australia Inc.
38. MEGTEC India Holdings, LLC
39. MEGTEC Energy & Environmental, LLC
40. MEGTEC TurboSonic Technologies, Inc.


Schedule 2.01

Commitments and Applicable Percentages

 

Lender

   Revolving Credit
Commitment
     Applicable Revolving
Credit Percentage
 

Bank of America, N.A.

   $ 49,000,000.00         8.166666667

BNP Paribas

   $ 49,000,000.00         8.166666667

Crédit Agricole Corporate and Investment Bank

   $ 49,000,000.00         8.166666667

JPMorgan Chase Bank, N.A.

   $ 49,000,000.00         8.166666667

Wells Fargo Bank, N.A.

   $ 49,000,000.00         8.166666667

Bank of Tokyo-Mitsubishi UFJ, Ltd.

   $ 40,000,000.00         6.666666667

Compass Bank

   $ 40,000,000.00         6.666666667

TD Bank, N.A.

   $ 40,000,000.00         6.666666667

US Bank, N.A.

   $ 40,000,000.00         6.666666667

Branch Banking and Trust Company

   $ 40,000,000.00         6.666666667

Citizens Bank of Pennsylvania

   $ 40,000,000.00         6.666666667

Whitney Bank

   $ 30,000,000.00         5.000000000

PNC Bank, N.A.

   $ 30,000,000.00         5.000000000

Northern Trust Company

   $ 30,000,000.00         5.000000000

The Bank of Nova Scotia

   $ 25,000,000.00         4.166666666
  

 

 

    

 

 

 

TOTAL:

   $ 600,000,000.00         100.000000000
  

 

 

    

 

 

 


Schedule 4.02(a)(iii)

Mortgaged Properties

A) Owned

 

  1. 20 South Van Buren Avenue, Barberton, Summit County, Ohio 44203 – Babcock & Wilcox Power Generation Group, Inc.

 

  2. 900 B&W Drive and East Halfmile St., West Point, Clay County, Mississippi 39773 – Babcock & Wilcox Power Generation Group, Inc.

 

  3. 3333 Copley Road, Copley, Summit County, Ohio 44321 – Babcock & Wilcox Power Generation Group, Inc.

 

  4. 2600 E. Main Street, Lancaster, Fairfield County, Ohio 43130 – Diamond Power International, Inc.

 

  5. 142 South Van Buren Avenue, Barberton, Summit County, Ohio 44203 – Babcock & Wilcox Power Generation Group, Inc.

 

  6. 180 South Van Buren Avenue, Barberton, Summit County, Ohio 44203 – Babcock & Wilcox Power Generation Group, Inc.

 

  7. 830 Prosper Street, De Pere, Brown County, Wisconsin 54114 – MEGTEC Systems, Inc.

 

  8. 2840 New Germany Rd., Ebensburg, PA 15931 – Ebensburg Power Company

B) Leased

 

  1. None.


Schedule 5.02

Consents

None.


Schedule 5.03

Ownership of Subsidiaries

Part A: Wholly-Owned Domestic Subsidiaries :

 

Name

  

Jurisdiction of

Organization

  

Number of

Shares
Authorized

  

Number of
Shares
Outstanding

   % of Outstanding
Shares held by
Borrower (direct
or indirect)
 

Americon Equipment Services, Inc.

   Delaware    1,000    1,000      100

Americon, Inc.

   Delaware    1,000    100      100

Babcock & Wilcox Construction Co., Inc.

   Delaware    1,000    100      100

Babcock & Wilcox Ebensburg Power, LLC

   Delaware    1,000    1,000      100

Babcock & Wilcox Equity Investments, LLC

   Delaware    N/A    N/A      100

Babcock & Wilcox Holdings, Inc.

   Delaware    1,000    1,000      100

Babcock & Wilcox India Holdings, Inc.

   Delaware    1,000    1,000      100

Babcock & Wilcox International Sales and Service Corporation

   Delaware    1,000    1,000      100

Babcock & Wilcox International, Inc.

   Delaware    1,000    1,000      100

Babcock & Wilcox MEGTEC Holdings, Inc.

   Delaware    1,000    1,000      100

Babcock & Wilcox Power Generation Group, Inc.

   Delaware    101,000    101,000      100

Babcock & Wilcox Technology, LLC

   Delaware    1,000    1,000      100

Dampkraft Insurance Company 1

   South Carolina    2,000,000    2,500      100

Delta Power Services, LLC

   Delaware    N/A    N/A      100

Diamond Operating Co., Inc.

   Delaware    1,000    1,000      100

Diamond Power Australia Holdings, Inc.

   Delaware    1,000    1,000      100

Diamond Power China Holdings, Inc.

   Delaware    1,000    1,000      100

Diamond Power Equity Investments, Inc.

   Delaware    1,000    1,000      100

Diamond Power International, Inc.

   Delaware    1,000    1,000      100

DPS Anson, LLC

   Delaware    N/A    N/A      100

DPS Berlin, LLC

   Delaware    N/A    N/A      100

DPS Cadillac, LLC

   Delaware    N/A    N/A      100

DPS Florida, LLC

   Delaware    N/A    N/A      100

DPS Gregory, LLC

   Delaware    N/A    N/A      100

DPS Mecklenburg, LLC

   Delaware    N/A    N/A      100

DPS Piedmont, LLC

   Delaware    N/A    N/A      100

Ebensburg Energy, LLC

   Delaware    N/A    N/A      100

Ebensburg Investors Limited Partnership

   Pennsylvania    N/A    N/A      100

Ebensburg Power Company ***

   Pennsylvania   

N/A

(Partnership)

   N/A      100

MEGTEC Acquisition, LLC

   Delaware    N/A    N/A      100

 

1   Captive insurance company; shares authorized and outstanding to be increased in connection with internal restructuring.


Name

  

Jurisdiction of

Organization

  

Number of

Shares
Authorized

  

Number of
Shares
Outstanding

   % of Outstanding
Shares held by
Borrower (direct
or indirect)
 

MEGTEC Energy & Environmental, LLC

   Delaware    N/A    N/A      100

MEGTEC India Holdings, LLC

   Delaware    N/A    N/A      100

MEGTEC Systems, Inc.

   Delaware    100    100      100

MEGTEC Systems Australia, Inc.

   Delaware    100    100      100

MEGTEC TurboSonic Technologies, Inc.

   Delaware    1000    1000      100

MTS Asia, Inc.

   Delaware    3,000    100      100

O&M Holding Company

   Delaware    1,000    1,000      100

Palm Beach Resource Recovery Corporation

   Florida    60    60      100

Power Systems Operations, Inc.

   Delaware    1,000    1,000      100

Revloc Reclamation Service, Inc.

   Delaware    1,000    1,000      100

SOFCo – EFS Holdings LLC

   Delaware    N/A    N/A      100

 

*** The Amended & Restated Agreement of Ebensburg Power Company dated as of June 30, 1992 restricts the transfer or hypothecation of any Stock in the partnership. Ebensburg Power Company is a general partnership owned 50.5% by Ebensburg Investors Limited Partnership and 49.5% by Babcock & Wilcox Ebensburg Power, LLC


Part B: Wholly-Owned Foreign Subsidiaries :

 

Name

  

Jurisdiction of

Organization

  

Number of

Shares
Authorized

  

Number of
Shares
Outstanding

   % of Outstanding
Shares held by
Borrower (direct
or indirect)
 

B&W de Panama, Inc.

   Panama    100,000    100,000      100

Babcock & Wilcox Monterrey Finance SARL

   Luxembourg    20,200    20,200      100

B&W PGG Luxembourg Finance

   Luxembourg    6,691,621    6,691,621      100

B&W PGG Luxembourg Canada Holdings

   Luxembourg    12,500    12,500      100

B&W PGG Luxembourg Holdings 1

   Luxembourg    5,100,677    5,100,677      100

Babcock & Wilcox de Monterrey, S.A. de C.V.

   Mexico   

Common – Unlimited

Variable – 11,349,464

  

Common – 50,000

Variable – 11,349,464

     100

Babcock & Wilcox Global Sales & Services

   Luxembourg    60,000    60,000      100

Babcock & Wilcox Global Sales & Services-Chile SpA

   Chile    100    100      100

Babcock & Wilcox India Private Limited

   India    1,000,000    675,020      100

Babcock & Wilcox International Investments Co., Inc.

   Panama    100,000    100,000      100

Babcock & Wilcox Power Generation Group Canada Corp.

   Nova Scotia    Unlimited    10      100

Babcock & Wilcox Volund A/S

   Denmark    100,000    100,000      100

Diamond Power Central & Eastern Europe s.r.o.

   Czech Republic    200,000    200,000      100

Diamond Power do Brasil Limitada

   Brazil    500,000    300,000      100

Diamond Power Finland OY

   Finland    600    600      100

Diamond Power Machine (Hubei) Co., Inc.

   China    N/A    N/A      100

Diamond Power Specialty (Proprietary) Limited

   Republic of South Africa    1,000    1      100

Diamond Power Specialty Limited

   United Kingdom    500,000    500,000      100

Diamond Power Sweden AB

   Sweden    5,000    5,000      100

Gotaverken Miljo AB

   Sweden    5,000    5,000      100

Loibl Allen-Sherman-Hoff GmbH

   Germany    300,000    1      100

P. T. Babcock & Wilcox Asia

   Indonesia    1,200    800      100

Servicios de Fabricacion de Valle Soleado, S.A. de C.V.

   Mexico    Unlimited    50,000      100

Servicios Profesionales de Valle Soleado, S.A. de C.V.

   Mexico    Unlimited    50,000      100

MEGTEC Europe Cooperatief U.A

   Netherlands    36,000    36,000      100

MEGTEC IEPG BV

   Netherlands    90,000    900      100

MEGTEC PPG BV

   Netherlands    90,000    900      100

MTS Environmental GmbH

   Germany    25,000    25,000      100

MEGTEC Systems S.A.S.

   France    328,334    81,670      100

MEGTEC Systems Amal AB

   Sweden    5,000    1,000      100

 

1   Among the issued and outstanding shares of B&W PGG Luxembourg Holdings are Series A Convertible Preferred Equity Certificates (“Series A CPECs”) issued to a Subsidiary of the Company. The Series A CPECs contain certain conversion and repurchase rights as more fully described in the terms of the Series A CPECs.


Name

  

Jurisdiction of

Organization

  

Number of

Shares
Authorized

  

Number of
Shares
Outstanding

   % of Outstanding
Shares held by
Borrower (direct
or indirect)
 

MEGTEC Systems AB

   Sweden    50,000    50,000      100

MEGTEC Environmental Limited

   United Kingdom    100,000    50,000      100

MEGTEC Systems Limited

   United Kingdom    50,000    50,000      100

MEGTEC Systems India Private Limited

   India    100,000    100,000      100

MEGTEC Systems (Shanghai), Ltd.

   China    N/A    N/A      100

MEGTEC Thermal Energy & Environmental Technology (Shanghai), Ltd.

   China    N/A    N/A      100

MEGTEC TurboSonic, Inc.

   Ontario    1,955,000    1,955,000      100


Part C: Subsidiaries that are not Wholly-Owned Subsidiaries :

 

Name

   Jurisdiction of
Organization
   Number of
Shares
Authorized
   Number of
Shares
Outstanding
   % of Outstanding
Shares held by
Borrower (direct
or indirect)
 

Babcock & Wilcox Conversion Services LLC

   Delaware    N/A    N/A      51

Diamond Power Germany GmbH**

   Germany    125,700    125,700     

 

94.9

(119,400 shares


Diamond Power Services S.E.A. Ltd.

   Thailand    784    784     

 

79.7

(625 shares


 

** The Constituent Documents of Diamond Power Germany GmbH restrict the transfer or hypothecation of any Stock in such Person.


Schedule 5.04

Supplement to Financial Statements

None.


Schedule 5.07

Litigation

 

1. McMunn Litigation

 

2. Berlin Station Litigation

 

3. ARPA Litigation

For further description on the above-referenced and other matters, reference is hereby made to The Babcock & Wilcox Company’s annual report on Form 10-K for the year ended December 31, 2014 and The Babcock & Wilcox Company’s quarterly report on Form 10-Q for the quarterly period ended March 31, 2015, and the Babcock & Wilcox Enterprises, Inc. Form 10 and all amendments thereto.


Schedule 5.19(b)

Real Property

A) Owned

 

  1. 20 South Van Buren Avenue, Barberton, Summit County, Ohio 44203 – Babcock & Wilcox Power Generation Group, Inc.

 

  2. 900 B&W Drive and East Halfmile St., West Point, Clay County, Mississippi 39773 – Babcock & Wilcox Power Generation Group, Inc.

 

  3. 3333 Copley Road, Copley, Summit County, Ohio 44321 – Babcock & Wilcox Power Generation Group, Inc.

 

  4. 2600 E. Main Street, Lancaster, Fairfield County, Ohio 43130 – Diamond Power International, Inc.

 

  5. 142 South Van Buren Avenue, Barberton, Summit County, Ohio 44203 – Babcock & Wilcox Power Generation Group, Inc.

 

  6. 180 South Van Buren Avenue, Barberton, Summit County, Ohio 44203 – Babcock & Wilcox Power Generation Group, Inc.

 

  7. 830 Prosper Street, De Pere, Brown County, Wisconsin 54114 – MEGTEC Systems, Inc.

 

  8. 2840 New Germany Rd., Ebensburg, PA 15931 – Ebensburg Power Company

 

  9. 1562 Beeson Street (and Sawburg Road), Alliance, Stark County, Ohio 44601 – Babcock & Wilcox Technology, Inc.

B) Leased

 

  1. The Harris Building, 13204 Ballantyne Corporate Place, Suite 700 and 500, Charlotte, NC 28277 - Babcock & Wilcox Enterprises, Inc.


Schedule 7.01

Existing Indebtedness

 

1. Indebtedness in the principal amount of up to RMB 28,000,000, owed by Diamond Power Machine (Hubei) Co., Inc.@ to Bank of China.

 

2. Indebtedness in the principal amount of up to ZAR 120,000, owed by Diamond Power Specialty (Proprietary) Limited@ to Standard Bank of South Africa.

 

3. Indebtedness in the principal amount of up to GBP 80,000, related to a financial bank guarantee issued on behalf of Diamond Power Specialty Limited@ under a bilateral facility for the benefit of Her Majesty’s Revenue and Customs.

Legend:

@ Foreign Subsidiary; Not a Loan Party


Schedule 7.02

Existing Liens

None.


Schedule 7.03

Existing Investments

 

1. Investments in Subsidiaries and Joint Ventures of the Borrower existing on the Closing Date.


Schedule 10.02

Administrative Agent’s Office; Certain Addresses for Notices

BORROWER:

Babcock & Wilcox Enterprises, Inc.

The Harris Building

13024 Ballantyne Corporate Place, Suite 700

Charlotte, North Carolina 28277

Attention: Treasurer (with copy to General Counsel)

Telephone:

Telecopier:

Electronic Mail:

Website Address: www.babcock.com

U.S. Taxpayer Identification Number: 47-2783641

ADMINISTRATIVE AGENT:

Administrative Agent’s Office

(for payments and Requests for Credit Extensions) :

Bank of America, N.A.

One Independence Center

101 N. Tryon Street

Mail Code: NC1-001-04-39

Charlotte, NC 28255-0001

Attention:

Telephone:

Telecopier:

Electronic Mail:

Account No.:

Ref: Babcock & Wilcox Enterprises, Inc., Attn: Credit Services

ABA#

Other Notices as Administrative Agent :

Bank of America, N.A.

Agency Management

555 California Street, 4 th Floor

Mail Code: CA5-705-04-09

San Francisco, CA 94104

Attention:

Telephone:

Telecopier:

Electronic Mail:


L/C ISSUER:

Bank of America, N.A.

Global Trade Operations

One Fleet Way, 2nd Floor

Mail Code PA6-580-02-30

Scranton, PA 18507

Telephone:

Client Servicing E-mail Address:

General Fax:

SWIFT Address:

SWING LINE LENDER:

Bank of America, N.A.

One Independence Center

101 N. Tryon Street

Mail Code: NC1-001-04-39

Charlotte, NC 28255-0001

Attention:

Telephone:

Telecopier:

Electronic Mail:

Account No.:

Ref: Babcock & Wilcox Enterprises, Inc., Attn: Credit Services

ABA#


EXHIBIT A

FORM OF COMMITTED LOAN NOTICE

Date:             ,         

 

To: Bank of America, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement, dated as of May 11, 2015 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “ Credit Agreement ;” the terms defined therein being used herein as therein defined), among BABCOCK & WILCOX ENTERPRISES, INC., a Delaware corporation, as the borrower thereunder, the Lenders, the Administrative Agent, the Swing Line Lender and each L/C Issuer.

The undersigned hereby requests (select one):

¨     A Revolving Credit Borrowing

¨     A conversion of [Type] to [Type]

¨     A continuation of Eurocurrency Rate Loans

 

  1. On             ,          (a Business Day).

 

  2. In the amount of $        .

[principal amount to be borrowed, converted or continued]

 

  3. Comprised of         .

[Type of Revolving Credit Borrowing requested or to which an existing Revolving Credit Borrowing is to be converted]

 

  4. For Eurocurrency Rate Loans: with an Interest Period of      months.

 

  5. For conversions or continuations of Eurocurrency Rate Loans: Loan Number                     

[The Revolving Credit Borrowing requested herein complies with Section 2.01 of the Credit Agreement.] 1

 

1   Applicable if requesting a Revolving Credit Borrowing.


BABCOCK & WILCOX ENTERPRISES, INC.
By:  

 

Name:  

 

Title:  

 


EXHIBIT B

FORM OF SWING LINE LOAN NOTICE

Date:             ,         

 

To: Bank of America, N.A., as Swing Line Lender

Bank of America, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement, dated as of May 11, 2015 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “ Credit Agreement ;” the terms defined therein being used herein as therein defined), among BABCOCK & WILCOX ENTERPRISES, INC., a Delaware corporation, as the borrower thereunder, the Lenders, the Administrative Agent, the Swing Line Lender and each L/C Issuer.

The undersigned hereby requests a Swing Line Borrowing:

 

  1. On             ,          (a Business Day).

 

  2. In the amount of $        .

The Swing Line Borrowing requested herein complies with the requirements of the proviso to the first sentence of Section 2.04(a) of the Credit Agreement.

 

BABCOCK & WILCOX ENTERPRISES, INC.
By:  

 

Name:  

 

Title:  

 


EXHIBIT C

FORM OF NOTE

            ,         

FOR VALUE RECEIVED, the undersigned (the “ Borrower ”) hereby promises to pay to                      or its registered assigns (the “ Lender ”), in accordance with the provisions of the Credit Agreement (as hereinafter defined), the principal amount of each [Revolving Credit Loan][Swing Line Loan] (as defined in the Credit Agreement) from time to time made by the Lender to the Borrower under that certain Credit Agreement, dated as of May 11, 2015 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “ Credit Agreement ;” the terms defined therein being used herein as therein defined), among BABCOCK & WILCOX ENTERPRISES, INC., a Delaware corporation, as the borrower thereunder, the Lenders, the Administrative Agent, the Swing Line Lender and each L/C Issuer.

The Borrower promises to pay interest on the unpaid principal amount of each [Revolving Credit Loan][Swing Line Loan] from the date of such [Revolving Credit Loan][Swing Line Loan] until such principal amount is paid in full, at such interest rates and at such times as provided in the Credit Agreement. Except as otherwise provided in Section 2.04(f) of the Credit Agreement with respect to Swing Line Loans, all payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent’s Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement for such unpaid amount.

This Note is one of the Notes referred to in the Credit Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. This Note is also entitled to the benefits of the Guaranty and is secured by the Collateral. Upon the occurrence and continuation of one or more of the Events of Default specified in the Credit Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Credit Agreement. [Revolving Credit Loans][Swing Line Loans] made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its [Revolving Credit Loans][Swing Line Loans] and payments with respect thereto.

In accordance with the Credit Agreement, the Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note.

The execution and delivery of this Note shall not constitute a novation of any indebtedness or other obligations owing to any Lender, the Administrative Agent, any L/C Issuer or any other Secured Party under the Credit Agreement or any other Loan Document based on facts or events occurring or existing prior to the execution and delivery of this Note.

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.


BABCOCK & WILCOX ENTERPRISES, INC.
By:  

 

Name:  

 

Title:  

 


EXHIBIT D

FORM OF COMPLIANCE CERTIFICATE

Financial Statement Date:             ,         

 

To: Bank of America, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement, dated as of May 11, 2015 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “ Credit Agreement ;” the terms defined therein being used herein as therein defined), among BABCOCK & WILCOX ENTERPRISES, INC., a Delaware corporation, as the borrower thereunder, the Lenders, the Administrative Agent, the Swing Line Lender and each L/C Issuer.

The undersigned Responsible Officer hereby certifies as of the date hereof that he/she is the [Chief Financial Officer/Treasurer] of the Borrower, and that, as such, he/she is authorized to execute and deliver this Compliance Certificate to the Administrative Agent on behalf of the Borrower in his or her capacity as a Responsible Officer of the Borrower and not in his or her individual capacity, and that:

1.

[Use following paragraph 1 for fiscal year-end financial statements]

The Borrower has delivered the year-end consolidated audited financial statements required by Section 6.01(b) of the Credit Agreement for the Fiscal Year ended as of the above date, together with the report and opinion of Borrower’s Accountant required by such section.

[Use following paragraph 1 for fiscal quarter-end financial statements]

The Borrower has delivered the consolidated unaudited financial statements required by Section 6.01(a) of the Credit Agreement for the Fiscal Quarter ended as of the above date. Such financial statements fairly present in all material respects the consolidated financial position of the Borrower and its Subsidiaries as at such date and the results of operations and cash flows of the Borrower and its Subsidiaries for the periods indicated in accordance with GAAP (subject only to normal year-end audit adjustments and the absence of footnotes).

2. The undersigned has reviewed and is familiar with the terms of the Credit Agreement and has made, or has caused to be made under his/her supervision, a reasonably detailed review of the transactions and consolidated condition (financial or otherwise) of the Borrower and its Subsidiaries during the accounting period covered by such financial statements.

3. A review of the activities of the Borrower and its Subsidiaries during such fiscal period has been made under the supervision of the undersigned with a view to determining whether during such fiscal period the Borrower and its Subsidiaries performed and observed all their respective Obligations under the Loan Documents, and


[select one:]

[to the best knowledge of the undersigned, during such fiscal period each of the Borrower and its Subsidiaries performed and observed each covenant and condition of the Loan Documents applicable to it, and no Default has occurred and is continuing.]

—or—

[to the best knowledge of the undersigned, during such fiscal period the following covenants or conditions have not been performed or observed and the following is a list of each Default and its nature and status:]

4. The financial covenant analyses and information set forth on Annex A attached hereto are true and accurate on and as of the date of this Compliance Certificate.


IN WITNESS WHEREOF , the undersigned has executed this Compliance Certificate as of             ,         .

 

BABCOCK & WILCOX ENTERPRISES, INC.
By:  

 

Name:  

 

Title:  

 


EXHIBIT E-1

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this “ Assignment and Assumption ”) is dated as of the Effective Date set forth below and is entered into by and between the Assignor identified in item 1 below (the “ Assignor ”) and the Assignee identified in item 2 below (the “ Assignee ”). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below, receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (a) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including, without limitation, the Letters of Credit and the Swing Line Loans included in such facilities) and (b) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (a) above (the rights and obligations sold and assigned by the Assignor to the Assignee pursuant to clauses (a) and (b) above being referred to herein collectively as the “ Assigned Interest ”). Each such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

 

1. Assignors :                     

 

2. Assignee :                     

[for each Assignee, indicate [Affiliate][Approved Fund] of [ identify Lender ]]

 

3. Borrower : Babcock & Wilcox Enterprises, Inc.

 

4. Administrative Agent : Bank of America, N.A., as the administrative agent under the Credit Agreement

 

5. Credit Agreement : Credit Agreement, dated as of May 11, 2015 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “ Credit Agreement ;” the terms defined therein being used herein as therein defined), among the Borrower, the Lenders, the Administrative Agent, the Swing Line Lender and each L/C Issuer


6. Assigned Interests in the Commitment :

 

Aggregate Amount of Revolving Credit

Commitment/Revolving Credit Loans for

all Lenders 2

 

Amount of Revolving

Credit Commitment/

Revolving Credit Loans

Assigned

 

Percentage Assigned of

Revolving Credit

Commitment/

Revolving Credit Loans 3

 

CUSIP

Number

     

 

[7. Trade Date:                     ] 4

Effective Date:             , 20     [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR
[NAME OF ASSIGNOR]
By:  

 

Name:  

 

Title:  

 

ASSIGNEE
By:  

 

Name:  

 

Title:  

 

 

2   Amounts in this column and in the column immediately to the right to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.
3   Set forth, to at least 9 decimals, as a percentage of the Revolving Credit Commitment/ Revolving Credit Loans of all Lenders thereunder.
4   To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.


[Consented to and] 5 Accepted:

BANK OF AMERICA, N.A.,

as Administrative Agent

By:  

 

Name:  

 

Title:  

 

Consented to:

BANK OF AMERICA, N.A.,

as an L/C Issuer and Swing Line Lender

By:  

 

Name:  

 

Title:  

 

[Consented to:  
BABCOCK & WILCOX ENTERPRISES, INC.
By:  

 

Name:  

 

Title:  

 

  ]

 

5   To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.


ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties .

1.1. Assignor . The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and (iv) it has reviewed the list of restricted Persons posted on the Platform pursuant to Section 10.06(b)(v)(D) of the Credit Agreement and the Assignee is not a Person to whom assignment is not permitted pursuant to Section 10.06(b)(v)(D) thereof; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2. Assignee . The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 10.06(b) of the Credit Agreement (subject to such consents, if any, as may be required under Section 10.06(b) of the Credit Agreement) and, after review of the list of restricted Persons posted on the Platform pursuant to Section 10.06(b)(v)(D) thereof, is not a Person to whom assignment is not permitted pursuant to Section 10.06(b)(v) thereof, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 6.01 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest, and (vii) attached hereto is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance upon the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

2. Payments . From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.


3. General Provisions . This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York. If the Assignee is a Person to whom assignment is not permitted pursuant to Section 10.06(b)(v)(D) of the Credit Agreement, the Assignor and Assignee agree that the assignment provided herein shall be void ab initio , and that each of them shall, jointly and severally, indemnify the Administrative Agent for any loss, cost or expense arising from the voiding of such assignment.


EXHIBIT E-2

FORM OF ADMINISTRATIVE QUESTIONNAIRE

1. Borrower or Deal Name Babcock & Wilcox Enterprises, Inc.

(i) E-mail this document with your commitment letter to: Bridgett J. Manduk                                                   

E-mail address of recipient: bridgett.manduk@baml.com

 

 

 

2. Legal Name of Lender of Record for Signature Page:  

 

 

  Markit Entity Identifier (MEI) #                                                  
  Fund Manager Name (if applicable)  

 

  Legal Address from Tax Document of Lender of Record:
  Country  

 

  Address  

 

  City  

 

  State/Province  

 

  Country  

 

 

 

 

3. Domestic Funding Address:

 

 

4. Eurodollar Funding Address:

 

Street Address  

 

  Street Address  

 

 

 

 

   
Suite/ Mail Code  

 

  Suite/ Mail Code  

 

 

 

 

   
City  

 

  State  

 

  City  

 

  State  

 

 

Postal Code  

 

  Country  

 

  Postal Code  

 

  Country  

 

 

 

 

5. Credit Contact Information:

Syndicate level information (which may contain material non-public information about the Borrower and its related parties or their respective securities will be made available to the Credit Contact(s). The Credit Contacts identified must be able to receive such information in accordance with his/her institution’s compliance procedures and applicable laws, including Federal and State securities laws.

Primary Credit Contact:

 

First Name  

 

Middle Name  

 

Last Name  

 

Title  

 

Street Address  

 

Suite/Mail Code  

 

City  

 

State  

 

Postal Code  

 

Country  

 

Office Telephone #  

 

Office Facsimile #  

 

Work E-Mail Address  

 

SyndTrak E-Mail Address  

 


Secondary Credit Contact:

 

First Name  

 

Middle Name  

 

Last Name  

 

Title  

 

Street Address  

 

Suite/Mail Code  

 

City  

 

State  

 

Postal Code  

 

Country  

 

Office Telephone #  

 

Office Facsimile #  

 

Work E-Mail Address  

 

SyndTrak E-Mail Address  

 

Additional Syndtrak User Access:

Enter E-Mail Addresses of any respective contact who should have access to Syndtrak below.

SyndTrak E-Mail

Addresses: __________________________________________________________________________

 

Primary Operations Contact:

 

  Secondary Operations Contact:
First  

 

  MI  

 

  Last  

 

  First  

 

  MI  

 

  Last  

 

Title  

 

  Title  

 

Street Address  

 

  Street Address  

 

 

 

 
Suite/ Mail Code  

 

  Suite/ Mail Code  

 

 

 

 

 

City  

 

  State  

 

  City  

 

  State  

 

 

     
Postal Code  

 

  Country  

 

  Postal Code  

 

  Country  

 

 

     
Telephone  

 

  Facsimile  

 

  Telephone  

 

  Facsimile  

 

 

   

 

E-Mail Address  

 

  E-Mail Address  

 

 

 

   
SyndTrak E-Mail     SyndTrak E-Mail  
Address  

 

  Address  

 

 

Does Secondary Operations Contact need copy of notices?        YES        NO

 

Letter of Credit Contact:

 

  Draft Documentation Contact or Legal Counsel:
First  

 

  MI  

 

  Last  

 

  First  

 

  MI  

 

  Last  

 

Title  

 

  Title  

 

Street Address  

 

  Street Address  

 

 

 

 
Suite/ Mail Code  

 

  Suite/ Mail Code  

 

 

 

 


City  

 

  State  

 

  City  

 

  State  

 

 

     
Postal Code  

 

  Country  

 

  Postal Code  

 

  Country  

 

 

     
Telephone  

 

  Facsimile  

 

  Telephone  

 

  Facsimile  

 

 

   

 

E-Mail Address  

 

  E-Mail Address  

 

 

 

   

6. Lender’s Fed Wire Payment Instructions:

Pay to:

 

  Bank Name  

 

 

 

 

 

 

 

 

 

     
  ABA #  

 

 

 

 

 

 

 

 

 

     
  City  

 

 

 

  State  

 

 

 

 

 

 
  Account #  

 

 

 

 

 

 

 

     
  Account Name  

 

 

 

 

 

 

 

 

 

     
  Attention  

 

 

 

 

 

 

 

 

 

     

 

 

7. Lender’s Standby Letter of Credit, Commercial Letter of Credit, and Bankers’ Acceptance Fed Wire Payment Instructions (if applicable):

Pay to:

 

  Bank Name  

 

 

 

 

 

 

 

 

 

     
  ABA #  

 

 

 

 

 

 


 

 

 

     

 

  City  

 

 

 

  State  

 

 

 

 

 

 
  Account #  

 

 

 

 

 

 

 

     
  Account Name  

 

 

 

 

 

 

 

 

 

     
  Attention  

 

 

 

 

 

 

 

 

 

     

Use Lender’s Fed Wire Payment Instructions in Section #6 above?        YES        NO

 

 

8. Lender’s Organizational Structure and Tax Status

Please refer to the enclosed withholding tax instructions below and then complete this section accordingly:

 

Lender Taxpayer Identification Number (TIN):    

 

   

 

 
-  

 

   

 

   

 

   

 

 

 

 

   

 

           

Tax Withholding Form Delivered to Bank of America (check applicable one):

 

         W-9              W-8BEN              W-8ECI              W-8EXP              W-8IMY

 

Tax Contact:

 

First                          MI      Last                         
Title                                                              
Street Address                                                              
Suite/ Mail Code                                                  
City                                      State                 
Postal Code                          Country                     
Telephone                      Facsimile                     
E-Mail Address                                                                          

NON–U.S. LENDER INSTITUTIONS

1. Corporations:

If your institution is incorporated outside of the United States for U.S. federal income tax purposes, and is the beneficial owner of the interest and other income it receives, you must complete one of the following three tax forms, as applicable to your institution: a.) Form W-8BEN (Certificate of Foreign Status of Beneficial Owner) or Form W-8BEN-E, b.) Form W-8ECI (Income Effectively Connected to a U.S. Trade or Business), or c.) Form W-8EXP (Certificate of Foreign Government or Governmental Agency).


A U.S. taxpayer identification number is required for any institution submitting a Form W-8 ECI. It is also required on Form W-8BEN or Form W-8BEN-E for certain institutions claiming the benefits of a tax treaty with the U.S. Please refer to the instructions when completing the form applicable to your institution. In addition, please be advised that U.S. tax regulations do not permit the acceptance of faxed forms. An original tax form must be submitted.

2. Flow-Through Entities

If your institution is organized outside the U.S., and is classified for U.S. federal income tax purposes as either a Partnership, Trust, Qualified or Non-Qualified Intermediary, or other non-U.S. flow-through entity, an original Form W-8IMY (Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. branches for United States Tax Withholding) must be completed by the intermediary together with a withholding statement. Flow-through entities other than Qualified Intermediaries are required to include tax forms for each of the underlying beneficial owners.

Please refer to the instructions when completing this form. In addition, please be advised that U.S. tax regulations do not permit the acceptance of faxed forms. Original tax form(s) must be submitted .

U.S. LENDER INSTITUTIONS:

If your institution is incorporated or organized within the United States, you must complete and return Form W-9 (Request for Taxpayer Identification Number and Certification). Please be advised that we require an original form W-9 .

Pursuant to the language contained in the tax section of the Credit Agreement, the applicable tax form for your institution must be completed and returned on or prior to the date on which your institution becomes a lender under this Credit Agreement. Failure to provide the proper tax form when requested will subject your institution to U.S. tax withholding.

 

* Additional guidance and instructions as to where to submit this documentation can be found at this link:

 

 

LOGO

 

 

9. Bank of America’s Payment Instructions:

 

Pay to:

   Bank of America, N.A.
   ABA #
   New York, NY
   Account #
   Attn: Corporate Credit Services
   Ref: Babcock & Wilcox Enterprises, Inc.


EXHIBIT F

FORM OF GUARANTY

GUARANTY AGREEMENT

This GUARANTY AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time, this “ Guaranty ”), dated as of [                ], 2015, is made by (a) certain Subsidiaries of Babcock & Wilcox Enterprises, Inc., a Delaware corporation (the “ Borrower ”), as identified on the signature pages hereto, and any Additional Guarantor who may become a party to this Guaranty (such signatories and the Additional Guarantors, collectively, the “ Guarantors ” and individually, a “ Guarantor ”), in favor of BANK OF AMERICA, N.A., as administrative agent (in such capacity, the “ Administrative Agent ”) for the ratable benefit of the Administrative Agent, the Lenders, each L/C Issuer, the Hedge Banks, the Cash Management Banks, each co-agent or sub-agent appointed by the Administrative Agent from time to time pursuant to Section 9.05 of the Credit Agreement described below and the other Persons to whom the Guaranteed Obligations are owed (collectively, the “ Guaranteed Parties ”) and (b) the Borrower, in favor of the Administrative Agent for the ratable benefit of the Hedge Banks and the Cash Management Banks (collectively, the “ Borrower Guaranteed Parties ”).

Pursuant to that certain Credit Agreement dated as of May 11, 2015 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among the Borrower, the Lenders party thereto, the Administrative Agent, the Swing Line Lender and each L/C Issuer, the Lenders have agreed to make Credit Extensions to the Borrower upon the terms and subject to the conditions set forth therein.

Each Guarantor will materially benefit from the Credit Extensions made and to be made under the Credit Agreement.

Certain of the Guarantors are required to enter into this Guaranty pursuant to the terms of the Credit Agreement.

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, and to induce the Administrative Agent and the other Guaranteed Parties to enter into, and make their respective Credit Extensions and other accommodations under, the Loan Documents, the Secured Cash Management Agreements or the Secured Hedge Agreements, as applicable, the Borrower and the Guarantors hereby agree with the Administrative Agent, for the ratable benefit of the Borrower Guaranteed Parties and the Guaranteed Parties, as applicable, as follows:

1. Defined Terms . Capitalized terms used and not otherwise defined herein shall have the meanings herein that are assigned to such terms in the Credit Agreement. The following terms when used herein shall have the meanings set forth below:

Additional Guarantor ” means each Person which hereafter becomes a Guarantor pursuant to Section 19 hereof and, if applicable, Section 6.22 of the Credit Agreement.

Borrower Guaranteed Obligations ” has the meaning set forth in Section 2(b) .

Contribution Share ” means, for any Guarantor in respect of any Excess Payment made by any other Guarantor, the ratio (expressed as a percentage) as of the date of such Excess Payment of (a) the amount by which the aggregate present fair salable value of all of its assets and properties exceeds the amount of all debts and liabilities of such Guarantor (including probable contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of such Guarantor hereunder) to (b) the amount by which the aggregate present fair salable value of all assets and other properties of the Guarantors other than the maker of such Excess Payment exceeds the amount of all of the debts and liabilities (including probable contingent, subordinated, unmatured, and unliquidated liabilities, but


excluding the obligations of the Guarantors hereunder) of the Guarantors other than the maker of such Excess Payment; provided that for purposes of calculating the Contribution Shares of the Guarantors in respect of any Excess Payment, any Guarantor that became a Guarantor subsequent to the date of any such Excess Payment shall be deemed to have been a Guarantor on the date of such Excess Payment and the financial information for such Guarantor as of the date such Guarantor became a Guarantor shall be utilized for such Guarantor in connection with such Excess Payment.

Excess Payment ” means the amount paid by any Guarantor in excess of its Ratable Share of any Guaranteed Obligations.

Guaranteed Obligations ” has the meaning set forth in Section 2(a) .

Ratable Share ” means, for any Guarantor in respect of any payment of Guaranteed Obligations, the ratio (expressed as a percentage) as of the date of such payment of Guaranteed Obligations of (a) the amount by which the aggregate present fair salable value of all of its assets and properties exceeds the amount of all debts and liabilities of such Guarantor (including probable contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of such Guarantor hereunder) to (b) the amount by which the aggregate present fair salable value of all assets and other properties of all of the Guarantors exceeds the amount of all of the debts and liabilities (including probable contingent, subordinated, unmatured, and unliquidated liabilities, but excluding the obligations of the Guarantors hereunder) of the Guarantors; provided that for purposes of calculating the Ratable Shares of the Guarantors in respect of any payment of Guaranteed Obligations, any Guarantor that became a Guarantor subsequent to the date of any such payment shall be deemed to have been a Guarantor on the date of such payment and the financial information for such Guarantor as of the date such Guarantor became a Guarantor shall be utilized for such Guarantor in connection with such payment.

2. Guaranty .

(a) Each Guarantor hereby absolutely and unconditionally guarantees, as a guaranty of payment and performance and not merely as a guaranty of collection, prompt payment when due, whether at stated maturity, by required prepayment, upon acceleration, demand or otherwise, and at all times thereafter, of (i) all Obligations, including any and all existing and future indebtedness and liabilities of every kind, nature and character, direct or indirect, absolute or contingent, liquidated or unliquidated, voluntary or involuntary and whether for principal, interest, premiums, fees indemnities, damages, costs, expenses or otherwise, of the Borrower to any Guaranteed Party arising under the Credit Agreement, any other Loan Document, any Secured Cash Management Agreement or any Secured Hedge Agreement and (ii) all Obligations of any Subsidiary of the Borrower in the nature of Secured Cash Management Agreements or Secured Hedge Agreements, in each case including all renewals, extensions, amendments, restatements and other modifications thereof and all costs, attorneys’ fees and expenses incurred by the Administrative Agent or any other Guaranteed Party in connection with the collection or enforcement thereof, and in each case whether recovery upon such indebtedness and liabilities may be or hereafter become unenforceable or shall be an allowed or disallowed claim under any proceeding or case commenced by or against any Guarantor or the Borrower under any Debtor Relief Laws, and including interest that accrues after the commencement by or against the Borrower of any proceeding under any Debtor Relief Laws (collectively, the “ Guaranteed Obligations ”); provided that the Guaranteed Obligations shall exclude any Excluded Swap Obligations with respect to such Guarantor.

(b) The Borrower hereby absolutely and unconditionally guarantees, as a guaranty of payment and performance and not merely as a guaranty of collection, prompt payment when due, whether at stated maturity, by required prepayment, upon acceleration, demand or otherwise, and at all times thereafter, of all Obligations, including any and all existing and future indebtedness and liabilities of

 

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every kind, nature and character, direct or indirect, absolute or contingent, liquidated or unliquidated, voluntary or involuntary and whether for principal, interest, premiums, fees indemnities, damages, costs, expenses or otherwise, of any Subsidiary of the Borrower to any Borrower Guaranteed Party arising under any Secured Cash Management Agreement or any Secured Hedge Agreement (including all renewals, extensions, amendments, restatements and other modifications thereof and all costs, attorneys’ fees and expenses incurred by the Administrative Agent or any other Borrower Guaranteed Party in connection with the collection or enforcement thereof), and whether recovery upon such indebtedness and liabilities may be or hereafter become unenforceable or shall be an allowed or disallowed claim under any proceeding or case commenced by or against the Borrower under any Debtor Relief Laws, and including interest that accrues after the commencement by or against the Borrower of any proceeding under any Debtor Relief Laws (collectively, the “ Borrower Guaranteed Obligations ”).

(c) The books and records of the Administrative Agent and the books and records of each Guaranteed Party or Borrower Guaranteed Party, as applicable, showing the amount of the Guaranteed Obligations or Borrower Guaranteed Obligations, as applicable, shall be admissible in evidence in any action or proceeding, and shall be conclusive absent manifest error of the amount of the Credit Extensions and the interest and payments thereon. This Guaranty shall not be affected by the genuineness, validity, regularity or enforceability of the Guaranteed Obligations or the Borrower Guaranteed Obligations, as applicable, or any instrument or agreement evidencing any Guaranteed Obligations or Borrower Guaranteed Obligations, as applicable, or by the existence, validity, enforceability, perfection, non-perfection or extent of any collateral therefor, or by any fact or circumstance relating to the Guaranteed Obligations or the Borrower Guaranteed Obligations, as applicable, which might otherwise constitute a defense to the obligations of the Borrower or each Guarantor under this Guaranty, and the Borrower and such Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to any or all of the foregoing. Anything contained herein to the contrary notwithstanding, the obligations of each Guarantor hereunder at any time shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of the Bankruptcy Code (Title 11, United States Code) or any comparable provisions of any similar federal or state law.

3. No Setoff or Deductions; Taxes; Payments . Each Guarantor shall make all payments hereunder without setoff or counterclaim and free and clear of and without deduction for any taxes, levies, imposts, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions or conditions of any nature now or hereafter imposed or levied by any jurisdiction or any political subdivision thereof or taxing or other authority therein unless such Guarantor is compelled by Requirement of Law to make such deduction or withholding and each Guarantor shall, jointly and severally, pay and indemnify each Guaranteed Party for Indemnified Taxes and Other Taxes to the extent the Borrower would be required to do so pursuant to Section 3.01 of the Credit Agreement. The obligations of each Guarantor under this paragraph shall survive the payment in full of the Guaranteed Obligations and termination of this Guaranty as to such Guarantor.

4. Rights of Guaranteed Parties . Each Guarantor consents and agrees that, to the extent permitted by the Credit Agreement and the other Loan Documents, as applicable, the Guaranteed Parties may, at any time and from time to time, without notice or demand, and without affecting the enforceability or continuing effectiveness hereof: (a) amend, extend, renew, compromise, discharge, accelerate or otherwise change the time for payment or the terms of the Guaranteed Obligations or any part thereof, (b) take, hold, exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any security for the payment of this Guaranty or any Guaranteed Obligations, (c) apply such security and direct the order or manner of sale thereof as the Guaranteed Parties in their sole discretion may determine and (d) release or substitute one or more of any endorsers or other guarantors of any of the Guaranteed Obligations. Without limiting the generality of the foregoing, such Guarantor consents to the taking of, or failure to take, any action which might in any manner or to any extent vary the risks of such Guarantor under this Guaranty or which, but for this provision, might operate as a discharge of such Guarantor.

 

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5. Certain Waivers . Each Guarantor waives (a) any defense arising by reason of any disability or other defense of the Borrower or any other Guarantor, or the cessation from any cause whatsoever (including any act or omission of any Guaranteed Party) of the liability of the Borrower other than payment and performance in full of the Guaranteed Obligations, (b) any defense based on any claim that such Guarantor’s obligations exceed or are more burdensome than those of the Borrower, (c) the benefit of any statute of limitations affecting such Guarantor’s liability hereunder, (d) any right to require any Guaranteed Party to proceed against the Borrower, proceed against or exhaust any security for the Guaranteed Obligations, or pursue any other remedy in any Guaranteed Party’s power whatsoever, (e) any benefit of and any right to participate in any security now or hereafter held by any Guaranteed Party and (f) to the fullest extent permitted by law, any and all other defenses or benefits that may be derived from or afforded by Requirement of Law limiting the liability of or exonerating guarantors or sureties. Each Guarantor expressly waives all setoffs and counterclaims and all presentments, demands for payment or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever with respect to the Guaranteed Obligations, and all notices of acceptance of this Guaranty or of the existence, creation or incurrence of new or additional Guaranteed Obligations.

6. Obligations Independent . The obligations of each Guarantor hereunder are those of primary obligor, and not merely as surety, and are independent of the Guaranteed Obligations and the obligations of any other Guarantor, and a separate action may be brought against such Guarantor to enforce this Guaranty whether or not the Borrower or any other person or entity is joined as a party.

7. Subrogation . Each Guarantor shall not exercise any right of subrogation, contribution, indemnity, reimbursement or similar rights with respect to any payments it makes under this Guaranty until the termination of this Guaranty in accordance with its terms. If any amounts are paid to any Guarantor in violation of the foregoing limitation, then such amounts shall be held in trust for the benefit of the Guaranteed Parties and shall forthwith be paid to the Administrative Agent (for the benefit of itself and the other Guaranteed Parties) to reduce the amount of the Guaranteed Obligations, whether matured or unmatured.

8. Contribution . Subject to Section 7 , each Guarantor hereby agrees with each other Guarantor that if any Guarantor shall make an Excess Payment, such Guarantor shall have a right of contribution from each other Guarantor in an amount equal to such other Guarantor’s Contribution Share of such Excess Payment. The payment obligations of any Guarantor under this Section shall be subordinate and subject in right of payment to the Guaranteed Obligations until such time as the Guaranteed Obligations have been paid and performed in full, and no Guarantor shall exercise any right or remedy under this Section against any other Guarantor until such Guaranteed Obligations have been paid and performed in full. Each Guarantor recognizes and acknowledges that the rights to contribution arising hereunder shall constitute an asset in favor of the party entitled to such contribution. This Section shall not be deemed to affect any right of subrogation, indemnity, reimbursement or contribution that any Guarantor may have under Requirement of Law against the Borrower in respect of any payment of Guaranteed Obligations.

9. Termination; Reinstatement . This Guaranty is a continuing and irrevocable guarantee of all Guaranteed Obligations, now or hereafter existing, and shall remain in full force and effect with respect to each of the Guarantors not otherwise released from their obligations hereunder pursuant to Section 22(b) , until the termination of this Guaranty in accordance with its terms. Notwithstanding anything to the contrary, this Guaranty shall continue in full force and effect or be revived, as the case

 

4


may be, if any payment by or on behalf of the Borrower or any Guarantor is made, or any Guaranteed Party exercises its right of setoff, in respect of the Guaranteed Obligations and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by any Guaranteed Party in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Laws or otherwise, all as if such payment had not been made or such setoff had not occurred and whether or not any Guaranteed Party is in possession of or has released this Guaranty and regardless of any prior revocation, rescission, termination or reduction. The obligations of each Guarantor under this paragraph shall survive termination of this Guaranty.

10. Subordination . Each Guarantor hereby subordinates the payment of all obligations and indebtedness of the Borrower owing to such Guarantor, whether now existing or hereafter arising, including but not limited to any obligation of the Borrower to such Guarantor as subrogee of any Guaranteed Party or resulting from such Guarantor’s performance under this Guaranty, to the payment in full in cash of all Guaranteed Obligations; provided that, unless an Event of Default has occurred and is continuing, the Borrower may make payments with respect to obligations and indebtedness of the Borrower owing to such Guarantor as permitted by the Credit Agreement and ordinary course payments pursuant to the Borrower’s and its Subsidiaries’ cash management system. If the Administrative Agent so requests when an Event of Default has occurred and is continuing, any such obligation or indebtedness of the Borrower to any Guarantor shall be enforced and performance received by such Guarantor as trustee for the Administrative Agent and the proceeds thereof, as well as any other amounts received by such Guarantor in violation of this Section, shall be paid over to the Administrative Agent on account of the Guaranteed Obligations, but without reducing or affecting in any manner the liability of such Guarantor under this Guaranty.

11. Stay of Acceleration . In the event that acceleration of the time for payment of any of the Guaranteed Obligations is stayed, in connection with any case commenced by or against the Borrower or any Guarantor under any Debtor Relief Laws, or otherwise, all such amounts shall nonetheless be payable by such Guarantor immediately upon demand by the Administrative Agent.

12. Condition of Borrower . Each Guarantor acknowledges and agrees that it has the sole responsibility for, and has adequate means of, obtaining from the Borrower and any other Guarantor such information concerning the financial condition, business and operations of the Borrower and any such other Guarantor as such Guarantor requires, and that no Guaranteed Party has a duty, and such Guarantor is not relying on any Guaranteed Party at any time, to disclose to such Guarantor any information relating to the business, operations or financial condition of the Borrower or any other Guarantor (such Guarantor waiving any duty on the part of any Guaranteed Parties to disclose such information and any defense relating to the failure to provide the same).

13. Representations and Warranties . Each Guarantor represents and warrants that each representation and warranty contained in Article V of the Credit Agreement to the extent such representation and warranty relates to such Guarantor is true and correct in all material respects (or, with respect to representations and warranties qualified by a materiality or a Material Adverse Effect standard, in all respects) to the extent set forth therein and except for such of those representations and warranties expressly stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects (or, with respect to representations and warranties qualified by a materiality or a Material Adverse Effect standard, in all respects) to the extent set forth therein as of such earlier date, as if made by such Guarantor herein; provided that each reference in each such representation and warranty to the Borrower’s knowledge shall, for the purposes of this Section 13 , be deemed to be a reference to such Guarantor’s knowledge.

 

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14. Amendments; Etc. None of the terms or provisions of this Guaranty may be waived, amended, supplemented or otherwise modified, nor any consent be given, except in accordance with Section 10.01 of the Credit Agreement.

15. Notices . All notices and communications hereunder or under any Joinder Agreement as set forth in Section 19 shall be given to the addresses and otherwise made in accordance with Section 10.02 of the Credit Agreement; provided that notices and communications to the Guarantors shall be directed to the Guarantors at the address of the Borrower set forth in Section 10.02 of the Credit Agreement.

16. Expenses; Indemnification and Survival . Without limitation on any other obligations of each Guarantor or remedies of the Administrative Agent or any other Guaranteed Party under this Guaranty, each Guarantor shall, to the fullest extent permitted by Requirement of Law, indemnify, defend and save and hold harmless the Administrative Agent and each other Guaranteed Party from and against, and shall pay on demand, any and all damages, losses, liabilities and out-of-pocket expenses (including attorneys’ fees and expenses) that may be suffered or incurred by the Administrative Agent or any other Guaranteed Party in connection with or as a result of any failure of any Guaranteed Obligations to be the legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their terms. The obligations of such Guarantor under this paragraph shall survive the payment in full of the Guaranteed Obligations and termination of this Guaranty in accordance with its terms.

17. Right of Setoff; Governing Law; Submission to Jurisdiction; Venue; WAIVER OF JURY TRIAL; Judgment Currency . THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. Without limiting the general applicability of the foregoing and the terms of the other Loan Documents to this Guaranty and the parties hereto, the terms of Sections 10.08 , 10.14 , 10.15 and 10.18 of the Credit Agreement are incorporated herein by reference, mutatis mutandis , with each reference to the “Borrower” therein (whether express or by reference to the Borrower as a “party” thereto) being a reference to the Guarantors, and the parties hereto agree to such terms.

18. Counterparts; Electronic Execution . This Guaranty may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Guaranty by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Guaranty.

19. Additional Guarantors . At any time after the date of this Guaranty, one or more additional Persons may become a party hereto by executing and delivering to the Administrative Agent a Joinder Agreement pursuant to Section 6.22 of the Credit Agreement. Immediately upon such execution and delivery of such Joinder Agreement (and without any further action), each such additional Person will become a party to this Guaranty as a “Guarantor” and have all of the rights and obligations of a Guarantor hereunder and this Guaranty shall be deemed amended by such Joinder Agreement. Attached hereto as Exhibit A is a form of Joinder Agreement.

20. Miscellaneous . No failure by any Guaranteed Party to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy or power hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies herein provided are cumulative and not exclusive of any remedies provided by law or in equity. The unenforceability or invalidity of any provision of this Guaranty shall not affect the enforceability or validity of any other provision herein. Unless otherwise agreed by the Administrative Agent and each Guarantor in writing, this Guaranty is not intended to supersede or otherwise affect any other guaranty now or hereafter given by any Guarantor or any other guarantor for the benefit of the Guaranteed Parties or any term or provision thereof.

 

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21. Acknowledgments . Each Guarantor hereby acknowledges that (a) it has been advised by counsel in the negotiation, execution and delivery of this Guaranty and the other Loan Documents to which it is a party and (b) it has received a copy of the Credit Agreement and the other Loan Documents and has reviewed and understands the same.

22. Termination; Release .

(a) At such time as the Loans and the other Obligations (other than (i) contingent indemnification obligations and (ii) Obligations in respect of Secured Cash Management Agreements and Secured Hedge Agreements either (A) as to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made or (B) notice has not been received by the Administrative Agent from the applicable Cash Management Bank or Hedge Bank that such amounts are then due and payable) shall have been paid in full, the Commitments under the Credit Agreement have been terminated or expired and each Letter of Credit issued under the Credit Agreement shall be Cash Collateralized or no longer outstanding (other than Letters of Credit as to which other arrangements satisfactory to the Administrative Agent and the applicable L/C Issuer shall have been made), this Guaranty and all obligations (other than those expressly stated to survive such termination or as may be reinstated after such termination) of the Administrative Agent and each Guarantor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party.

(b) At the request and sole expense of the Borrower, a Guarantor shall be released from its obligations hereunder in the event that all the Stock and Stock Equivalents in such Guarantor shall be sold or otherwise disposed of in a transaction permitted by the Credit Agreement; provided that the Borrower shall have delivered to the Administrative Agent, at least three Business Days (or such lesser period permitted in writing by the Administrative Agent) prior to the date of the proposed release, a written request for such release identifying the relevant Guarantor and the terms of the relevant sale or other disposition in reasonable detail, including the price thereof and any expenses incurred in connection therewith, together with a certification by the Borrower stating that such transaction is in compliance with the Credit Agreement and the other Loan Documents.

23. Subordination of Intercompany Debt . Each Guarantor agrees that, to the extent it owes any Indebtedness to any Subsidiary of the Borrower that is not a Guarantor, payment of the principal of, and interest on and other charges with respect to, such Indebtedness is expressly subordinated and subject in right of payment to the prior payment in full of all obligations of such Guarantor under the Loan Documents, and such Guarantor agrees not to make any payment or prepayment, whether required or optional, of principal, interest or other charges on or with respect to any such Indebtedness if an Event of Default under Sections 8.01(a) , (b)  or (f)  of the Credit Agreement shall have occurred and be continuing. Each Guarantor that owes any Indebtedness to any Subsidiary of the Borrower agrees to cause the payee of such Indebtedness to acknowledge the terms of this Section 23 , either by (i) having such Subsidiary execute an Acknowledgment of Subordination of Intercompany Debt in the form attached to this Guaranty as Exhibit B and delivering such Acknowledgment of Subordinated Intercompany Debt to the Administrative Agent, or (ii) otherwise including the substance of this Section 23 in the documentation for the Intercompany Debt and delivering such documentation to the Administrative Agent.

[Signature Pages Follow]

 

7


IN WITNESS WHEREOF, each of the parties hereto has caused this Guaranty to be duly executed as of the date first above written.

 

BORROWER:     BABCOCK & WILCOX ENTERPRISES, INC.
    By:  

 

    Name:  
    Title:  
GUARANTORS:     BABCOCK & WILCOX HOLDINGS, INC.
    By:  

 

    Name:  
    Title:  
   

BABCOCK & WILCOX POWER GENERATION
GROUP, INC . 1

    BABCOCK & WILCOX TECHNOLOGY, LLC 2
    By:  

 

    Name:  
    Title:  
    AMERICON EQUIPMENT SERVICES, INC.
    AMERICON, INC.
    BABCOCK & WILCOX CONSTRUCTION CO., INC.
    BABCOCK & WILCOX EBENSBURG POWER, LLC
    BABCOCK & WILCOX EQUITY INVESTMENTS, INC.
    BABCOCK & WILCOX INDIA HOLDINGS, INC.
   

BABCOCK & WILCOX INTERNATIONAL SALES

    AND SERVICE CORPORATION

    BABCOCK & WILCOX INTERNATIONAL, INC.
    DELTA POWER SERVICES, LLC
    DIAMOND OPERATING CO., INC.
    DIAMOND POWER AUSTRALIA HOLDINGS, INC.
    DIAMOND POWER CHINA HOLDINGS, INC.
    DIAMOND POWER EQUITY INVESTMENTS, INC.
    DIAMOND POWER INTERNATIONAL, INC.
    By:  

 

    Name:  
    Title:  

 

1   Entity name to be changed to The Babcock & Wilcox Company in connection with the Spin-Off.
2   Babcock & Wilcox Technology, Inc. will convert to an LLC sometime in May 2015

 

Babcock & Wilcox Enterprises, Inc.

Guaranty Agreement

Signature Pages


   DPS ANSON, LLC
   DPS BERLIN, LLC
   DPS CADILLAC, LLC
   DPS FLORIDA, LLC
   DPS GREGORY, LLC
   DPS MECKLENBURG, LLC
   DPS PIEDMONT, LLC
   EBENSBURG ENERGY, LLC
   O&M HOLDING COMPANY
   PALM BEACH RESOURCE RECOVERY CORPORATION
   POWER SYSTEMS OPERATIONS, INC.
   REVLOC RECLAMATION SERVICE, INC.
   SOFCO - EFS HOLDINGS LLC
   By:   

 

   Name:   
   Title:   
   EBENSBURG INVESTORS LIMITED PARTNERSHIP
   EBENSBURG POWER COMPANY
   By:    BABCOCK & WILCOX EBENSBURG POWER, INC.
   Its:    General Partner
   By:   

 

   Name:   
   Title:   
   BABCOCK & WILCOX MEGTEC HOLDINGS, INC.
   MEGTEC ACQUISITION, LLC
   MEGTEC SYSTEMS, INC.
   MTS ASIA, INC.
   MEGTEC SYSTEMS AUSTRALIA INC.
   MEGTEC INDIA HOLDINGS, LLC
   MEGTEC ENERGY & ENVIRONMENTAL, LLC
   MEGTEC TURBOSONIC TECHNOLOGIES, INC.
   By:   

 

   Name:   
   Title:   

 

Babcock & Wilcox Enterprises, Inc.

Guaranty Agreement

Signature Pages


Acknowledged and accepted:

BANK OF AMERICA, N.A.,

as Administrative Agent

By:  

 

Name:   Bridgett J. Manduk
Title:   Vice President

 

Babcock & Wilcox Enterprises, Inc.

Guaranty Agreement

Signature Pages


EXHIBIT A

FORM OF JOINDER AGREEMENT

This JOINDER AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time, this “ Agreement ”) dated as of             , 20     between                     , a                      (the “ New Subsidiary ”), and BANK OF AMERICA, N.A., in its capacity as Administrative Agent (the “ Administrative Agent ”) under that certain Credit Agreement, dated as of May 11, 2015 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among BABCOCK & WILCOX ENTERPRISES, INC., a Delaware corporation, as the borrower thereunder (the “ Borrower ”), the Lenders party thereto, the Administrative Agent, the Swing Line Lender and each L/C Issuer (each as defined therein). All capitalized terms used and not defined herein shall have the meanings given thereto in the Credit Agreement or the applicable Loan Document referred to herein.

The Borrower desires to or is required by Section 6.22 of the Credit Agreement to cause the New Subsidiary to become a “Guarantor”.

Accordingly, the New Subsidiary hereby agrees as follows with the Administrative Agent, for the benefit of the Guaranteed Parties:

1. The New Subsidiary hereby agrees that by execution of this Agreement it is a Guarantor (as defined in the Guaranty) under the Guaranty as if a signatory thereof on the Closing Date, and the New Subsidiary (a) shall comply with, and be subject to, and have the benefit of, all of the terms, conditions, covenants, agreements and obligations set forth in the Guaranty and (b) hereby makes each representation and warranty of a Guarantor, as set forth in the Guaranty. The New Subsidiary hereby agrees that (i) each reference to a “Guarantor” or the “Guarantors” in the Guaranty and the other Loan Documents shall include the New Subsidiary and (ii) each reference to the “Guaranty” as used therein shall mean the Guaranty as supplemented hereby and as otherwise amended, restated, supplemented or otherwise modified prior to the date hereof. Without limiting the generality of the foregoing terms of this paragraph 1 , the New Subsidiary hereby, jointly and severally together with the other Guarantors, guarantees to the Administrative Agent, for the benefit of the Guaranteed Parties, as provided in the Guaranty, the prompt payment and performance of the Guaranteed Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise) strictly in accordance with the terms thereof.

2. The New Subsidiary hereby agrees that by execution of this Agreement it is a Grantor (as defined in the Collateral Agreement) under the Collateral Agreement as if a signatory thereof on the Closing Date, and the New Subsidiary (a) shall comply with, and be subject to, and have the benefit of, all of the terms, conditions, covenants, agreements and obligations set forth in the Collateral Agreement and (b) hereby makes each representation and warranty of a Grantor, as set forth in the Collateral Agreement. The New Subsidiary hereby agrees that (i) each reference to a “Grantor” or the “Grantors” in the Collateral Agreement and the other Loan Documents shall include the New Subsidiary, (ii) each reference to the “Collateral Agreement” as used therein shall mean the Collateral Agreement as supplemented hereby and as otherwise amended, restated, modified or supplemented as of the date hereof and (iii) each reference to a “Collateral” in the Collateral Agreement and the other Loan Documents shall include all Collateral (as defined in the Collateral Agreement) of the New Subsidiary (other than any of New Subsidiary’s Excluded Assets). Without limiting the generality of the foregoing terms of this paragraph 2 , the New Subsidiary hereby grants to the Administrative Agent, for the benefit of the Secured Parties, a continuing security interest in, and a right of setoff against, any and all right, title and interest, whether now or hereafter owned or acquired, of the New Subsidiary in and to the Collateral of the New Subsidiary.


3. Attached hereto as Annex A are supplements to Schedules 5.03 and 5.19(b) of the Credit Agreement and each of the Schedules to the Collateral Agreement to the extent such Schedules have or will change after the execution and delivery hereof (which supplements include, as of the date hereof, all information required to be provided therein with respect to the New Subsidiary).

4. All notices and communications to the New Subsidiary shall be given to the address of the Borrower set forth in, and otherwise made in accordance with, Section 10.02 of the Credit Agreement.

5. The New Subsidiary hereby waives acceptance by the Administrative Agent and the Guaranteed Parties of the guarantee by the New Subsidiary under the Guaranty upon the execution of this Agreement by the New Subsidiary.

6. The New Subsidiary hereby acknowledges that (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents to which it is deemed a party and (b) it has received a copy of the Credit Agreement and the other Loan Documents and has reviewed and understands the same.

7. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Agreement.

8. This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York.

[Signature Pages Follow]


IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed as of the date first above written.

 

[                    ],
as Guarantor
By:  

 

Name:  

 

Title:  

 


Acknowledged and accepted:

BANK OF AMERICA, N.A.,

as Administrative Agent

By:  

 

Name:  

 

Title:  

 


ANNEX A

Supplemental Schedules

Schedules to Credit Agreement

Schedules to Collateral Agreement


EXHIBIT B

ACKNOWLEDGMENT OF SUBORDINATION OF INTERCOMPANY DEBT

Reference is made to the Guaranty Agreement dated as of [            ], 2015 (as amended, restated, supplemented or otherwise modified from time to time, the “ Guaranty ”) among Babcock & Wilcox Enterprises, Inc., a Delaware corporation (the “ Borrower ”), and certain of its Subsidiaries (the Borrower and such Subsidiaries, the “ Loan Parties ”) in favor of Bank of America, N.A., as Administrative Agent for the benefit of the Guaranteed Parties. Unless otherwise defined herein, capitalized terms used herein shall have the meanings given to them in the Guaranty.

The undersigned, a Subsidiary of the Borrower, has or may in the future loan money to a Loan Party (collectively, the “ Intercompany Indebtedness ”). The undersigned hereby agrees that all Intercompany Indebtedness owed to the undersigned by any Loan Party is expressly subordinated and subject in right of payment to the prior payment in full of all obligations of such Loan Party under the Loan Documents, and the undersigned further agrees not to accept any payment or prepayment, whether required or optional, of principal, interest or other charges on or with respect to any such Intercompany Indebtedness if an Event of Default under Sections 8.01(a) , (b)  or (f)  of the Credit Agreement shall have occurred and be continuing. Any payment received in contravention of the foregoing subordination terms shall be promptly turned over to the Administrative Agent, and until so turned over, shall be held by the undersigned in trust for the Guaranteed Parties, segregated from other funds of the undersigned.

 

[SUBSIDIARY]
By:  

 

Name:  
Title:  


EXHIBIT G

FORM OF COLLATERAL AGREEMENT

 

 

 

PLEDGE AND SECURITY AGREEMENT

made by

BABCOCK & WILCOX ENTERPRISES, INC.

and certain Subsidiaries of the Borrower

in favor of

BANK OF AMERICA, N.A., as Administrative Agent,

for the ratable benefit of the Secured Parties

Dated as of [            ], 2015

 

 

 


TABLE OF CONTENTS

 

         Page  

SECTION 1.

 

DEFINED TERMS

     1   

1.1.      

 

Definitions

     1   

1.2.      

 

Other Definitional Provisions

     6   

SECTION 2.

 

GRANT OF SECURITY INTEREST; CONTINUING LIABILITY UNDER COLLATERAL

     6   

2.1.      

 

Grant of Security Interest

     6   

2.2.      

 

Continuing Liability Under Collateral

     7   

2.3.      

 

Foreign Action

     7   

SECTION 3.

 

REPRESENTATIONS AND WARRANTIES

     7   

3.1.      

 

Representations in Credit Agreement

     7   

3.2.      

 

Title; No Other Liens

     8   

3.3.      

 

Perfected First Priority Liens

     8   

3.4.      

 

Name; Jurisdiction of Organization, etc

     8   

3.5.      

 

Inventory and Equipment

     9   

3.6.      

 

Types of Collateral

     9   

3.7.      

 

Investment Property

     9   

3.8.      

 

Receivables

     10   

3.9.      

 

Intellectual Property

     10   

3.10.    

 

Commercial Tort Claims

     11   

3.11.    

 

Contracts

     11   

SECTION 4.

 

COVENANTS

     12   

4.1.      

 

Covenants in Credit Agreement

     12   

4.2.      

 

Delivery and Control of Instruments, Chattel Paper, Negotiable Documents and Investment Property

     12   

4.3.      

 

Maintenance of Insurance

     12   

4.4.      

 

Payment of Obligations

     13   

4.5.      

 

Maintenance of Perfected Security Interest; Further Documentation

     13   

4.6.      

 

Changes in Locations, Name, Jurisdiction of Incorporation, etc

     13   

4.7.      

 

Notices

     14   

4.8.      

 

Investment Property

     14   

4.9.      

 

Receivables

     15   

4.10.    

 

Intellectual Property

     15   

4.11.    

 

Contracts

     18   


         Page  

4.12.    

 

Commercial Tort Claims

     18   

SECTION 5.

 

REMEDIAL PROVISIONS

     18   

5.1.      

 

Certain Matters Relating to Receivables

     18   

5.2.      

 

Communications with Obligors; Grantors Remain Liable

     19   

5.3.      

 

Pledged Securities

     19   

5.4.      

 

Proceeds to be Turned Over To Administrative Agent

     20   

5.5.      

 

Application of Proceeds

     20   

5.6.      

 

Code and Other Remedies

     20   

5.7.      

 

Private Sales, etc

     22   

5.8.      

 

Deficiency

     22   

SECTION 6.

 

THE ADMINISTRATIVE AGENT

     22   

6.1.      

 

Administrative Agent’s Appointment as Attorney-in-Fact, etc

     22   

6.2.      

 

Duty of Administrative Agent

     24   

6.3.      

 

Execution of Financing Statements

     24   

6.4.      

 

Authority of Administrative Agent

     25   

6.5.      

 

Appointment of Co-Administrative Agents

     25   

SECTION 7.

 

MISCELLANEOUS

     25   

7.1.      

 

Amendments in Writing

     25   

7.2.      

 

Notices

     25   

7.3.      

 

No Waiver by Course of Conduct; Cumulative Remedies

     25   

7.4.      

 

Enforcement Expenses; Indemnification

     25   

7.5.      

 

Successors and Assigns

     26   

7.6.      

 

Set-off; Governing Law; Submission to Jurisdiction; Venue; WAIVER OF JURY TRIAL

     26   

7.7.      

 

Counterparts

     26   

7.8.      

 

Severability

     26   

7.9.      

 

Section Headings

     27   

7.10.    

 

Integration

     27   

7.11.    

 

Acknowledgments

     27   

7.12.    

 

Additional Grantors

     27   

7.13.    

 

Releases; Termination of this Agreement

     27   

 

ii


Schedule 3.3 – Perfected First Priority Liens

Schedule 3.4 – Name; Jurisdiction of Organization, etc

Schedule 3.5 – Inventory and Equipment

Schedule 3.7 – Investment Property

Schedule 3.9 – Intellectual Property

Schedule 3.10 – Commercial Tort Claims

Exhibit A – Intellectual Property Notices


This PLEDGE AND SECURITY AGREEMENT, dated as of [            ], 2015, made by each of the signatories hereto (together with any other grantor that may become a party hereto as provided herein, the “ Grantors ”), in favor of BANK OF AMERICA, N.A., as administrative agent (in such capacity and together with its successors in such capacity, the “ Administrative Agent ”) for the benefit of the Secured Parties in connection with that certain Credit Agreement dated as of May 11, 2015 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among BABCOCK & WILCOX ENTERPRISES, INC., a Delaware corporation, as the borrower thereunder, the Lenders, the Administrative Agent, the Swing Line Lender and the L/C Issuers.

Pursuant to the Credit Agreement, the Lenders have severally agreed to make Credit Extensions to the Borrower.

This Agreement is required by the terms of the Credit Agreement.

In consideration of the mutual covenants and agreements contained herein and in the other Loan Documents, the parties hereto covenant and agree as follows:

SECTION 1. DEFINED TERMS

1.1. Definitions .

(a) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement, and the following terms are used herein as defined in the New York UCC: Accounts, Account Debtor, As-Extracted Collateral, Certificated Security, Chattel Paper, Commercial Tort Claim, Commodity Account, Commodity Contract, Commodity Intermediary, Consumer Goods, Deposit Account, Documents, Electronic Chattel Paper, Equipment, Farm Products, Financial Asset, Fixtures, General Intangibles, Goods (as defined in Article 9 of the New York UCC), Instruments, Inventory, Letter-of-Credit Rights, Manufactured Homes, Money, Payment Intangibles, Securities Account, Securities Intermediary, Security, Security Entitlement, Supporting Obligations, Tangible Chattel Paper and Uncertificated Security.

(b) The following terms shall have the following meanings:

Administrative Agent ” shall have the meaning assigned to such term in the preamble.

After-Acquired Intellectual Property ” shall have the meaning assigned to such term in Section 4.10(i) .

Agreement ” shall mean this Pledge and Security Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time.

Collateral ” shall have the meaning assigned to such term in Section 2.1 .

Collateral Account ” shall mean any collateral account established by the Administrative Agent as provided in Sections 5.1 or 5.4 .

Collateral Account Funds ” shall mean, collectively, the following: all funds (including all trust monies) and investments (including all cash equivalents) credited to, or purchased with funds from, any Collateral Account and all certificates and instruments from time to time representing or evidencing such investments; all Money, notes, certificates of deposit, checks and other instruments from time to time hereafter delivered to or otherwise possessed by the Administrative Agent for or on behalf of any Grantor


in substitution for, or in addition to, any or all of the Collateral; and all interest, dividends, cash, instruments and other property from time to time received in, receivable or otherwise distributed to the Collateral Account in respect of or in exchange for any or all of the items constituting Collateral.

Contracts ” shall mean all contracts and agreements between any Grantor and any other Person (in each case, whether written or oral, or third party or intercompany) as the same may be amended, assigned, extended, restated, supplemented, replaced or otherwise modified from time to time including (a) all rights of any Grantor to receive moneys due and to become due to it thereunder or in connection therewith, (b) all rights of any Grantor to receive proceeds of any insurance, indemnity, warranty or guaranty with respect thereto, (c) all rights of any Grantor to damages arising thereunder and (d) all rights of any Grantor to terminate and to perform and compel performance of, such Contracts and to exercise all remedies thereunder.

Copyright Licenses ” shall mean any agreement, whether written or oral, naming any Grantor as licensor or licensee (including those listed in Schedule 3.9(a) (as such schedule may be amended or supplemented from time to time)), granting any right in, to or under any Copyright, including the grant of rights to publicly perform, display, copy, prepare derivative works or distribute under any Copyright. This term shall exclude implied licenses and any rights obtained or granted under a copyright pursuant to the doctrines of first sale or estoppel.

Copyrights ” shall mean (a) all copyrights arising under the laws of the United States, any other country, or union of countries, or any political subdivision of any of the foregoing, whether registered or unregistered and whether published or unpublished (including those listed in Schedule 3.9(a) (as such schedule may be amended or supplemented from time to time)), all registrations and recordings thereof, and all applications in connection therewith and rights corresponding thereto throughout the world, including all registrations, recordings and applications in the United States Copyright Office, and all Mask Works (as defined in 17 USC 901), (b) the right to, and to obtain, all extensions and renewals thereof, and the right to sue for past, present and future infringements of any of the foregoing, (c) all proceeds of the foregoing, including license, royalties, income, payments, claims, damages, and proceeds of suit and (d) all other rights of any kind whatsoever accruing thereunder or pertaining thereto.

Credit Agreement ” shall have the meaning assigned to such term in the preamble.

Excluded Assets ” shall mean:

(a) any lease, license, contract, property right or agreement to which any Grantor is a party or any of its rights or interests thereunder if, and only for so long as, the grant of a security interest hereunder shall constitute or result in a breach, termination or default under any such lease, license, contract, property right or agreement (other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC of any relevant jurisdiction or any other applicable law or principles of equity); provided , however , that such security interest shall attach immediately to any portion of such lease, license, contract, property rights or agreement that does not result in any of the consequences specified above;

(b) all Security Entitlements, Securities Accounts, Deposit Accounts, Financial Assets, Letter-of-Credit Rights (other than Letter-of-Credit Rights constituting a Supporting Obligation), Commodity Contracts and Commodity Accounts to which any Grantor has any right, title or interest;

(c) the Excluded Stock; and

 

2


(d) all cars, trucks, trailers and other vehicles covered by a certificate of title under the laws of any state to which any Grantor has any right, title or interest.

Excluded Stock ” shall mean:

(e) the Voting Stock of any Foreign Subsidiary in excess of 65% of the outstanding Voting Stock of such Foreign Subsidiary;

(f) the Stock and Stock Equivalents of any Captive Insurance Subsidiary;

(g) the Stock and Stock Equivalents of any Joint Venture to the extent that the Constituent Documents of such Joint Venture prohibit such a security interest to be granted to the Administrative Agent; and

(h) the Stock and Stock Equivalents of (i) any Subsidiary that is not a Loan Party or (ii) any Joint Venture, to the extent that such Subsidiary or Joint Venture has incurred Non-Recourse Indebtedness the terms of which either (A) require security interests in such Stock and Stock Equivalents to be granted to secure such Non-Recourse Indebtedness or (B) prohibit such a security interest to be granted to the Administrative Agent.

Grantors ” shall have the meaning assigned to such term in the preamble.

Insurance ” shall mean all insurance policies covering any or all of the Collateral (regardless of whether the Administrative Agent is the loss payee thereof).

Intellectual Property ” shall mean the collective reference to all intellectual property rights whether arising under United States, multinational or foreign laws or otherwise, including the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the Trademark Licenses, the Trade Secrets and the Trade Secret Licenses.

Intellectual Property Security Agreement ” shall mean a Notice of Grant of Security Interest in substantially the form of Exhibit A or such other form as may be approved by the Administrative Agent and the applicable Grantor.

Intercompany Note ” shall mean any promissory note evidencing Indebtedness permitted to be incurred pursuant to  Section 7.01(f) of the Credit Agreement with respect to any outstanding intercompany obligations and advances owed by or to a Loan Party.

Investment Property ” shall mean the collective reference to (a) all “investment property” as such term is defined in Section 9-102(a)(49) of the New York UCC (other than any Excluded Stock), including all Certificated Securities and Uncertificated Securities and (b) whether or not otherwise constituting “investment property,” all Pledged Notes and all Pledged Equity Interests.

Licensed Intellectual Property ” shall have the meaning assigned to such term in Section 3.9(a) .

Material Intellectual Property ” shall have the meaning assigned to such term in Section 3.9(b) .

New York UCC ” shall mean the Uniform Commercial Code as from time to time in effect in the State of New York.

Owned Intellectual Property ” shall have the meaning assigned to such term in Section 3.9(a) .

 

3


Patent License ” shall mean all agreements, whether written or oral, providing for the grant by or to any Grantor of any right to make, use, import, offer for sale, or sell any invention covered in whole or in part by a Patent, including any of the foregoing listed in Schedule 3.9(a) (as such schedule may be amended or supplemented from time to time). This term shall exclude implied licenses and any rights obtained or granted under a patent pursuant to the doctrines of exhaustion or estoppel.

Patents ” shall mean (a) all United States patents, patents issued by any other country, union of countries or any political subdivision of any of the foregoing, and all reissues and extensions thereof, including any of the foregoing listed in Schedule 3.9(a) (as such schedule may be amended or supplemented from time to time), (b) all patent applications pending in the United States or any other country or union of countries or any political subdivision of any of the foregoing and all divisions, continuations and continuations-in-part thereof, including any of the foregoing listed in Schedule 3.9(a) (as such schedule may be amended or supplemented from time to time), (c) all rights to, and to obtain, any reissues or extensions of the foregoing and (d) all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages and proceeds of suit.

Pledged Equity Interests ” means the Pledged Interests, including the Stock and Stock Equivalents of the Subsidiaries owned by such Grantor as set forth on Schedule 3.7(a) (as such schedule may be amended or supplemented from time to time), in each case together with the certificates (or other agreements or instruments), if any, representing such shares, and all options and other rights, contractual or otherwise, with respect thereto, including, but not limited to, the following:

(a) all Stock and Stock Equivalents representing a dividend thereon, or representing a distribution or return of capital upon or in respect thereof, or resulting from a stock split, reclassification or other exchange therefor, and any subscriptions, warrants, rights or options issued to the holder thereof, or otherwise in respect thereof; and

(b) in the event of any consolidation or merger involving the issuer thereof and in which such issuer is not the surviving Person, all shares of each class of the Stock and Stock Equivalents of the successor Person formed by or resulting from such consolidation or merger, to the extent that such successor Person is a direct Subsidiary of a Grantor.

Pledged LLC/Partnership Interests ” means, with respect to any Grantor, the entire partnership, membership interest or limited liability company interest, as applicable, of such Grantor in each partnership, limited partnership or limited liability company owned thereby, including, without limitation, such Grantor’s capital account, its interest as a partner or member, as applicable, in the net cash flow, net profit and net loss, and items of income, gain, loss, deduction and credit of any such partnership, limited partnership or limited liability company, as applicable, such Grantor’s interest in all distributions made or to be made by any such partnership, limited partnership or limited liability company, as applicable, to such Grantor and all of the other economic rights, titles and interests of such Grantor as a partner or member, as applicable, of any such partnership, limited partnership or limited liability company, as applicable, whether set forth in the partnership agreement or membership agreement, as applicable, of such partnership, limited partnership or limited liability company, as applicable, by separate agreement or otherwise.

Pledged Notes ” shall mean all promissory notes now owned or hereafter acquired by any Grantor, including those listed on Schedule 3.7(b) (as such schedule may be amended or supplemented from time to time) and all Intercompany Notes at any time issued to or held by any Grantor (other than (a) promissory notes in an aggregate principal amount not to exceed $5,000,000 at any time outstanding issued in connection with extensions of trade credit by any Grantor in the ordinary course of business and (b) promissory notes constituting Cash Equivalents that are held by any Grantor).

 

4


Pledged Securities ” shall mean the collective reference to the Pledged Notes and the Pledged Equity Interests.

Proceeds ” shall mean all “proceeds” as such term is defined in Section 9-102(a)(64) of the New York UCC and, in any event, shall include all dividends or other income from the Investment Property, collections thereon or distributions or payments with respect thereto.

Receivable ” shall mean all Accounts and any other right to payment for goods or other property sold, leased, licensed or otherwise disposed of or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper or classified as a Payment Intangible and whether or not it has been earned by performance. References herein to Receivables shall include any Supporting Obligation or collateral securing such Receivable.

Secured Obligations ” shall mean (a) with respect to the Borrower, the Obligations and the Borrower Guaranteed Obligations (as defined in the Guaranty) and (b) with respect to each Grantor other than the Borrower, such Grantor’s Guaranteed Obligations (as defined in the Guaranty).

Securities Act ” shall mean the Securities Act of 1933, as amended.

Trademark License ” shall mean any agreement, whether written or oral, providing for the grant by or to any Grantor of any right in, to or under any Trademark, including any of the foregoing referred to in Schedule 3.9(a) (as such schedule may be amended or supplemented from time to time). This term shall exclude implied licenses and any rights obtained or granted under a trademark pursuant to the doctrines of first sale or estoppel.

Trademarks ” shall mean (a) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos, designs and other source or business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country, union of countries, or any political subdivision of any of the foregoing, or otherwise, and all common-law rights related thereto, including any of the foregoing listed in Schedule 3.9(a) (as such schedule may be amended or supplemented from time to time), (b) the right to, and to obtain, all renewals thereof, (c) the goodwill of the business symbolized by the foregoing and (d) the right to sue for past, present and future infringements or dilution of any of the foregoing or for any injury to goodwill, and all proceeds of the foregoing, including royalties, income, payments, claims, damages and proceeds of suit.

Trade Secret License ” shall mean any agreement, whether written or oral, providing for the grant by or to any Grantor of any right in, to or under any Trade Secret, including any of the foregoing listed in Schedule 3.9(a) (as such schedule may be amended or supplemented from time to time). This term shall exclude implied licenses and any rights obtained or granted under a trade secret pursuant to the doctrine of estoppel.

Trade Secrets ” shall mean (a) all trade secrets and all other confidential or proprietary information and know how whether or not reduced to a writing or other tangible form, (b) all documents and things embodying, incorporating or describing such Trade Secrets, and (c) the right to sue for past, present and future misappropriations of any Trade Secret and all proceeds of the foregoing, including royalties, income, payments, claims, damages and proceeds of suit.

 

5


1.2. Other Definitional Provisions . Without limiting the general applicability of the terms of the other Loan Documents to this Agreement and the parties hereto, the terms of Sections 1.02 of the Credit Agreement are incorporated herein by reference, mutatis mutandis , and the parties hereto agree to such terms.

SECTION 2. GRANT OF SECURITY INTEREST;

CONTINUING LIABILITY UNDER COLLATERAL

2.1. Grant of Security Interest . Each Grantor hereby grants and pledges to the Administrative Agent, for the ratable benefit of the Secured Parties, a security interest in all of such Grantor’s right, title and interest in and to the following property, in each case, wherever located and whether now owned or at any time hereafter acquired by such Grantor or in which such Grantor now has or at any time in the future may acquire any right, title or interest (collectively, the “ Collateral ”), as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of such Grantor’s Secured Obligations:

(a) all Accounts;

(b) all As-Extracted Collateral;

(c) all Chattel Paper;

(d) all Collateral Accounts and all Collateral Account Funds;

(e) all Commercial Tort Claims from time to time specifically described on Schedule 3.10 ;

(f) all Contracts;

(g) all Documents;

(h) all Equipment;

(i) all Fixtures;

(j) all General Intangibles;

(k) all Goods;

(l) all Instruments;

(m) all Insurance;

(n) all Intellectual Property;

(o) all Inventory;

(p) all Investment Property;

(q) all books, records, ledger cards, files, correspondence, customer lists, blueprints, technical specifications, manuals, computer software, computer printouts, tapes, disks and other electronic storage media and related data processing software and similar items that at any time pertain to or evidence or contain information relating to any of the Collateral or are otherwise necessary or helpful in the collection thereof or realization thereupon; and

 

6


(r) to the extent not otherwise included, all Proceeds, goodwill, products, accessions, rents and profits of any and all of the foregoing and all collateral security, Supporting Obligations and guarantees given by any Person with respect to any of the foregoing;

provided that, notwithstanding any other provision set forth in this Section 2.1 , this Agreement shall not, at any time, constitute a grant of a security interest in any property that is, at such time, an Excluded Asset, and the term “Collateral” and each of the defined terms incorporated therein shall exclude the Excluded Assets.

2.2. Continuing Liability Under Collateral . Notwithstanding anything herein to the contrary, (a) each Grantor shall remain liable for all obligations under and in respect of the Collateral and nothing contained herein is intended or shall be a delegation of duties to the Administrative Agent or any other Secured Party, (b) each Grantor shall remain liable under and each of the agreements included in the Collateral, including any Receivables, any Contracts and any agreements relating to Pledged LLC/Partnership Interests, to perform all of the obligations undertaken by it thereunder all in accordance with and pursuant to the terms and provisions thereof and neither the Administrative Agent nor any other Secured Party shall have any obligation or liability under any of such agreements by reason of or arising out of this Agreement or any other document related hereto nor shall the Administrative Agent nor any other Secured Party have any obligation to make any inquiry as to the nature or sufficiency of any payment received by it or have any obligation to take any action to collect or enforce any rights under any agreement included in the Collateral, including any agreements relating to any Receivables, any Contracts or any agreements relating to Pledged LLC/Partnership Interests and (c) the exercise by the Administrative Agent of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral, including any agreements relating to any Receivables, any Contracts and any agreements relating to Pledged LLC/Partnership Interests.

2.3. Foreign Action . Notwithstanding anything to the contrary herein, to the extent any Collateral is located in any jurisdiction outside the United States, or the creation or perfection of a lien in any Collateral requires any action or documentation outside the United States, no such action or documentation outside the United States shall be required with respect to such Collateral.

SECTION 3. REPRESENTATIONS AND WARRANTIES

To induce the Administrative Agent and the Lenders to enter into the Credit Agreement and make their respective Credit Extensions, each Grantor hereby represents and warrants to the Secured Parties that:

3.1. Representations in Credit Agreement .

In the case of each Grantor, the representations and warranties set forth in Article V of the Credit Agreement as they relate to such Grantor or to the Loan Documents to which such Grantor is a party, each of which is hereby incorporated herein by reference, are true and correct, in all material respects (or, with respect to representations and warranties modified by a materiality or Material Adverse Effect standard, in all respects), except for representations and warranties expressly stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects (or, with respect to representations and warranties modified by a materiality or Material Adverse Effect standard, in all respects) as of such earlier date, and the Secured Parties shall be entitled to rely on each of

 

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them as if they were fully set forth herein, provided that each reference in each such representation and warranty to the Borrower’s knowledge shall, for the purposes of this Section 3.l , be deemed to be a reference to such Grantor’s knowledge.

3.2. Title; No Other Liens . Such Grantor owns or licenses or otherwise has the right to use each item of the Collateral free and clear of any and all Liens, including Liens arising as a result of such Grantor becoming bound (as a result of merger or otherwise) as grantor under a security agreement entered into by another Person, except for Liens expressly permitted by Section 7.02 of the Credit Agreement. No effective financing statement, mortgage or other public notice indicating the existence of a Lien with respect to all or any part of the Collateral is on file or of record in any public office, except such as have been filed in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, pursuant to this Agreement or as are expressly permitted by Section 7.02 of the Credit Agreement.

3.3. Perfected First Priority Liens . The security interests granted pursuant to this Agreement (a) upon completion of the filings and other actions specified on Schedule 3.3 (all of which, in the case of all filings and other documents referred to on said Schedule, have been delivered to the Administrative Agent in duly completed and duly executed form, as applicable, and may be filed by the Administrative Agent at any time) and payment of all filing fees, will constitute valid fully perfected security interests in all of the Collateral in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, as collateral security for such Grantor’s Secured Obligations, enforceable in accordance with the terms hereof, to the extent such security interest in such Collateral can be perfected by (i) the filing of a financing statement under the Uniform Commercial Code of any jurisdiction, (ii) the filing with the United States Patent and Trademark Office or the United States Copyright Office of an Intellectual Property Security Agreement, or (iii) the possession of such Collateral, and (b) are prior to all other Liens on the Collateral, except for Liens expressly permitted by Section 7.02 of the Credit Agreement. Without limiting the foregoing, each Grantor has taken all actions necessary or desirable under all Requirements of Law of the United States and of any state, territory or possession thereof, including those specified in Section 4.2 to (i) establish the Administrative Agent’s “control” (within the meanings of Sections 8-106 and 9-106 of the New York UCC) over any portion of the Investment Property constituting Certificated Securities, Uncertificated Securities (each as defined in the New York UCC), other than any such Investment Property issued by a Foreign Subsidiary to the extent establishing “control” over such Investment Property would require actions under the Requirements of Law of a jurisdiction other than the United States or any state, territory or possession thereof, (ii) establish the Administrative Agent’s control (within the meaning of Section 9-105 of the New York UCC) over all Electronic Chattel Paper and (iii) establish the Administrative Agent’s “control” (within the meaning of Section 16 of the Uniform Electronic Transaction Act as in effect in the applicable jurisdiction “UETA”) over all “transferable records” (as defined in UETA).

3.4. Name; Jurisdiction of Organization, etc . On the date hereof, such Grantor’s exact legal name (as indicated on the public record of such Grantor’s jurisdiction of formation or organization), jurisdiction of organization, organizational identification number, if any, United States taxpayer identification number, if any, and the location of such Grantor’s chief executive office or sole place of business are specified on Schedule 3.4 . Each Grantor is organized solely under the law of the jurisdiction so specified and has not filed any certificates of domestication, transfer or continuance in any other jurisdiction. Except as otherwise indicated on Schedule 3.4 , the jurisdiction of each such Grantor’s organization of formation is required to maintain a public record showing the Grantor to have been organized or formed. Except as specified on Schedule 3.4 , as of the Closing Date (or the date of any applicable Joinder Agreement hereto in the case of an Additional Grantor) no such Grantor has changed its name, jurisdiction of organization, chief executive office or sole place of business or its corporate structure in any way (e.g., by merger, consolidation, change in corporate form or otherwise) within the past five years and has not within the last five years become bound (whether as a result of merger or otherwise) as a grantor under a security agreement entered into by another Person, which has not heretofore been terminated.

 

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3.5. Inventory and Equipment .

(a) On the date hereof, the material Inventory, Fixtures and Equipment (other than mobile goods, Inventory in transit, and Inventory, Fixtures and Equipment located outside the United States of America) that is included in the Collateral are kept at the locations listed on Schedule 3.5 .

(b) Any Inventory now or hereafter produced by any Grantor included in the Collateral have been and will be produced in compliance in all material respects with the requirements of all applicable laws and regulations, including the Fair Labor Standards Act, as amended.

(c) No material portion of the Inventory, Fixtures or Equipment that is included in the Collateral is in the possession of an issuer of a negotiable document (as defined in Section 7-104 of the New York UCC) therefor or is otherwise in the possession of any bailee or warehouseman.

3.6. Types of Collateral . None of the Collateral constitutes, or is the Proceeds of (a) Farm Products, (b) As-Extracted Collateral, (c) Consumer Goods, (d) Manufactured Homes, (e) standing timber, or (f) as of the Closing Date, aircraft, airframe, aircraft engine, aircraft lease or any other related property.

3.7. Investment Property .

(a) Schedule 3.7(a) hereto sets forth under the heading “Pledged Equity Interests” all of the Pledged Equity Interests as of the Closing Date, and such Pledged Equity Interests constitute the percentage of issued and outstanding shares of stock, percentage of membership interests, percentage of partnership interests or percentage of beneficial interest of the respective issuers thereof indicated on such schedule. Schedule 3.7(b) sets forth under the heading “Pledged Notes” all of the Pledged Notes owned by any Grantor as of the Closing Date, and all of such Pledged Notes have been duly authorized, authenticated or issued, and delivered and are the legal, valid and binding obligation of the issuers thereof enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principals of equity, regardless of whether considered in a proceeding in equity or at law, and constitute all of the issued and outstanding indebtedness evidenced by an instrument or certificated security of the respective issuers thereof owing to such Grantor.

(b) The shares of Pledged Equity Interests pledged by such Grantor hereunder constitute all of the issued and outstanding shares of all classes of Stock and Stock Equivalents owned by such Grantor in each issuer thereof (other than Excluded Stock).

(c) The Pledged Equity Interests have been duly and validly issued and, except as set forth on Schedule 3.7(a) hereto, are fully paid and nonassessable (to the extent applicable).

(d) Such Grantor is the record and beneficial owner of, and has good and marketable title to, the Investment Property pledged by it hereunder, free of any and all Liens or options in favor of, or claims of, any other Person, except Liens expressly permitted by Section 7.02 of the Credit Agreement, and there are no outstanding warrants, options or other rights to purchase, or shareholder, voting trust or similar agreements outstanding with respect to, or property that is convertible into, or that requires the issuance or sale of, any Pledged Equity Interests.

 

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3.8. Receivables .

(a) No amount payable to such Grantor under or in connection with any Receivable in excess of $5,000,000 that is included in the Collateral is evidenced by any Instrument or Tangible Chattel Paper which has not been delivered to the Administrative Agent or constitutes Electronic Chattel Paper that has not been subjected to the control (within the meaning of Section 9-105 of the New York UCC) of the Administrative Agent.

(b) Each Receivable that is included in the Collateral (i) is and will be the legal, valid and binding obligation of the Account Debtor in respect thereof, representing an unsatisfied obligation of such Account Debtor, (ii) is and will be enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principals of equity, regardless of whether considered in a proceeding in equity or at law, (iii) is not and will not be subject to any setoffs, defenses, taxes or counterclaims (except with respect to refunds, returns and allowances in the ordinary course of business) and (iv) is and will be in compliance with all applicable laws and regulations, except where the failure to comply with this Section 3.8(b) with respect to each Receivable would not reasonably be expected to have a Material Adverse Effect.

3.9. Intellectual Property .

(a) Schedule 3.9(a) lists all Copyrights, Patents, and Trademarks which are registered with the U.S. Patent and Trademark Office or the U.S. Copyright Office or are the subject of an application for registration with any such Governmental Authority, in each case which is owned by such Grantor in its own name on the date hereof (collectively, the “ Owned Intellectual Property ”). Except as set forth in Schedule 3.9(a) , such Grantor is the exclusive owner of the entire and unencumbered right, title and interest in and to all material Owned Intellectual Property and is otherwise entitled to grant to others the right to use (and, where applicable, itself use) all such material Owned Intellectual Property. Such Grantor has a valid and enforceable right to use all material Intellectual Property used by, or licensed to others by, such Grantor which is not Owned Intellectual Property either pursuant to one of the written material Copyright Licenses, Patent Licenses, Trademark Licenses, and/or Trade Secret Licenses listed on Schedule 3.9(a) and subject to the terms thereof (collectively, the “ Licensed Intellectual Property ”) or otherwise.

(b) On the date hereof all Owned Intellectual Property and all Licensed Intellectual Property, in each case, which is material to such Grantor’s business (collectively, the “ Material Intellectual Property ”), is valid, subsisting, unexpired and enforceable and has not been abandoned. The operation of such Grantor’s business as currently conducted or as contemplated to be conducted does not infringe, constitute a misappropriation of, dilute, or otherwise violate the Intellectual Property rights of any other Person where the same would have a Material Adverse Effect.

(c) No claim has been asserted that the use of the Material Intellectual Property does or may infringe upon or constitute a misappropriation of the rights of any other Person.

(d) To such Grantor’s knowledge, no decision or judgment has been rendered by any Governmental Authority or arbitrator in the United States or outside the United States which would materially limit or cancel the validity or enforceability of, or such Grantor’s rights in, any Material Intellectual Property. Such Grantor is not aware of any uses of any item of Material Intellectual Property that could reasonably be expected to lead to such item becoming invalid or unenforceable including unauthorized trademark uses by third parties and uses which were not supported by the goodwill of the business connected with Trademarks and Trademark Licenses.

 

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(e) No action or proceeding is pending, or, to such Grantor’s knowledge, threatened, on the date hereof (i) seeking to limit, cancel or invalidate any Owned Intellectual Property, (ii) alleging that any services provided by, processes used by, or products manufactured or sold by such Grantor infringe any Patent, Trademark, Copyright, or misappropriate any Trade Secret or violate any other right of any other Person, or (iii) alleging that any Material Intellectual Property (A) owned by such Grantor or (B) licensed by such Grantor (to such Grantor’s knowledge), is being licensed or sublicensed in violation of any intellectual property or any other right of any other Person, in each case, which, if adversely determined, would reasonably be expected to have a Material Adverse Effect. To such Grantor’s knowledge, no Person is engaging in any activity that infringes upon or misappropriates, or is otherwise an unauthorized use of, any Material Intellectual Property owned by Grantor. The consummation of the transactions contemplated by this Agreement and the other Loan Documents will not result in the termination of any of the Material Intellectual Property.

(f) With respect to each Copyright License, Trademark License, Trade Secret License and Patent License which license constitutes Material Intellectual Property or the loss of which could otherwise have a Material Adverse Effect: (i) such license is binding and enforceable against the other party thereto; (ii) such license will not cease to be valid and binding and in full force and effect on terms identical to those currently in effect as a result of the rights and interests granted herein (including, but not limited to, the enforceability of such rights and interests with respect to each such license), nor will the grant of such rights and interests (or the enforceability thereof) constitute a breach or default under such license or otherwise give the licensor or licensee a right to terminate such license; (iii) such Grantor has not received any notice of termination or cancellation under such license; (iv) such Grantor has not received any notice of a breach or default under such license, which breach or default has not been cured; and (v) such Grantor is not in breach or default in any material respect, and no event has occurred that, with notice and/or lapse of time, would constitute such a breach or default or permit termination, modification or acceleration under such license.

(g) Except as set forth on Schedule 3.9(g) , such Grantor has made all filings and recordations and paid all required fees and taxes to maintain each and every item of registered Material Intellectual Property in full force and effect and to protect and maintain its interest therein.

(h) To the knowledge of such Grantor, (i) none of the Trade Secrets that constitute Material Intellectual Property of such Grantor have been used, divulged, disclosed or appropriated to the detriment of such Grantor for the benefit of any other Person without permission of such Grantor; and (ii) no employee, independent contractor or agent of such Grantor has misappropriated any Trade Secrets of any other Person in the course of the performance of his or her duties as an employee, independent contractor or agent of such Grantor where the same would reasonably be expected to have a Material Adverse Effect.

(i) Such Grantor has taken commercially reasonable steps to exercise quality control over any licensee of such Grantor’s Trademarks.

3.10. Commercial Tort Claims . No Grantor has knowledge that it has any Commercial Tort Claims as of the date hereof individually or in the aggregate in excess of $5,000,000, except as set forth on Schedule 3.10 .

3.11. Contracts . No amount payable to such Grantor under or in connection with any Contract which has a value in excess of $5,000,000 individually or $10,000,000 in the aggregate is evidenced by any Instrument or Tangible Chattel Paper which has not been delivered to the Administrative Agent or constitutes Electronic Chattel Paper that is not under the control (within the meaning of Section 9-105 of the New York UCC) of the Administrative Agent.

 

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SECTION 4. COVENANTS

Each Grantor covenants and agrees with the Secured Parties that, as of the date hereof and until the termination of this Agreement in accordance with its terms:

4.1. Covenants in Credit Agreement . Each Grantor shall take, or shall refrain from taking, as the case may be, each action that is within its control and is necessary to be taken or not taken, as the case may be, so that no Default or Event of Default is caused by the failure to take such action or to refrain from taking such action by such Grantor or any of its Subsidiaries.

4.2. Delivery and Control of Instruments, Chattel Paper, Negotiable Documents and Investment Property .

(a) If any of the Collateral having a value in excess of $5,000,000 individually or $10,000,000 in the aggregate is or shall become evidenced or represented by any Instrument, Certificated Security, Negotiable Document or Tangible Chattel Paper, such Instrument (other than checks received in the ordinary course of business), Certificated Security, Negotiable Documents or Tangible Chattel Paper shall be promptly delivered to the Administrative Agent, duly endorsed in a manner reasonably satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Agreement, and all of such property owned by any Grantor as of the Closing Date and represented in such form shall be delivered on the Closing Date.

(b) If any of the Collateral having a value in excess of $5,000,000 individually or $10,000,000 in the aggregate is or shall become “Electronic Chattel Paper” such Grantor shall ensure that (i) a single authoritative copy shall exist which is unique, identifiable, unalterable (except as provided in clauses (iii), (iv) and (v) of this paragraph), (ii) such authoritative copy identifies the Administrative Agent as the assignee and is communicated to and maintained by the Administrative Agent or its designee, (iii) copies or revisions that add or change the assignee of the authoritative copy can only be made with the participation of the Administrative Agent, (iv) each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy and that is not the authoritative copy; (v) any revision of the authoritative copy is readily identifiable as an authorized or unauthorized revision, and (vi) the Administrative Agent has “control” within the meaning of the New York UCC of such Electronic Chattel Paper.

(c) If any Collateral having a value in excess of $5,000,000 individually or $10,000,000 in the aggregate is or shall become an Uncertificated Security, such Grantor shall cause the issuer thereof, if such issuer is a Subsidiary of the Borrower, either (i) to register the Administrative Agent as the registered owner of such Uncertificated Security, upon original issue or registration of transfer or (ii) to agree in writing with such Grantor and the Administrative Agent that such issuer will comply with instructions with respect to such Uncertificated Security originated by the Administrative Agent without further consent of such Grantor and such actions shall be taken on or prior to the Closing Date with respect to any such Uncertificated Securities owned as of the Closing Date by any Grantor and the Grantor shall take or cause to be taken all such other actions as may be necessary for the Administrative Agent to have “control” defined in Article 8 of the New York UCC.

4.3. Maintenance of Insurance .

(a) Such Grantor will maintain insurance in accordance with Section 6.16 of the Credit Agreement, and furnish to the Administrative Agent, upon written request, a copy of such insurance policies.

 

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(b) Such Grantor will deliver to the Administrative Agent on behalf of the Secured Parties, (i) on the Closing Date, a certificate dated as of a recent date showing the amount and types of insurance coverage as of such date, (ii) upon reasonable request of the Administrative Agent from time to time, reasonably detailed information as to the insurance carried, (iii) promptly following receipt of notice from any insurer, a copy of any notice of cancellation or material change in coverage from that existing on the Closing Date and (iv) forthwith, notice of any cancellation or nonrenewal of coverage by such Grantor. To the extent applicable, the Administrative Agent shall be named as additional insured on all such liability insurance policies of such Grantor and the Administrative Agent shall be named as loss payee (and, where applicable, mortgagee) on all property and casualty insurance policies of such Grantor.

4.4. Payment of Obligations . Such Grantor shall pay and discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all taxes, assessments and governmental charges or levies imposed upon the Collateral or in respect of income or profits therefrom, as well as all claims of any kind (including claims for labor, materials and supplies) against or with respect to the Collateral, except that no such tax, assessment or charge need be paid if (a) the amount or validity thereof is currently being contested in good faith by appropriate proceedings, reserves in conformity with GAAP with respect thereto have been provided on the books of such Grantor and such proceedings could not reasonably be expected to result in the sale, forfeiture or loss of any material portion of the Collateral or any interest therein, or (b) the failure to so pay and discharge would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

4.5. Maintenance of Perfected Security Interest; Further Documentation .

(a) Except as otherwise expressly permitted by the Credit Agreement, such Grantor shall maintain each of the security interests created by this Agreement as a perfected security interest under all Requirements of Law of the United States and of any state, territory or possession thereof, having at least the priority described in Section 3.3 and shall defend such security interest against any claims and demands of any Persons (other than the Secured Parties), subject to the provisions of Section 7.13 .

(b) Such Grantor shall furnish to the Secured Parties from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the assets and property of such Grantor as the Administrative Agent may reasonably request, all in reasonable detail.

(c) At any time and from time to time, upon the written request of the Administrative Agent, and at the sole expense of such Grantor, such Grantor shall promptly and duly authorize, execute and deliver, and have recorded, such further instruments and documents and take such further actions as the Administrative Agent may reasonably request to be taken in the United States for the purpose of obtaining or preserving the full benefits of this Agreement and of the rights and powers herein granted, including, the filing of any financing or continuation statements under the Uniform Commercial Code (or other similar laws) in effect in the United States or any State, territory or possession thereof with respect to the security interests created hereby and in the case of Investment Property and any other relevant Collateral, taking any actions necessary to enable the Administrative Agent to obtain “control” (within the meaning of the applicable Uniform Commercial Code) with respect thereto.

4.6. Changes in Locations, Name, Jurisdiction of Incorporation, etc . Such Grantor shall not, except upon at least 10 days’ prior written notice (or such shorter period consented to by the Administrative Agent in writing), in each case, to the Administrative Agent and delivery to the Administrative Agent of duly authorized and, where required, executed copies of all additional financing statements and other documents reasonably requested by the Administrative Agent to maintain the validity, perfection and priority of the security interests provided for herein:

(a) change its legal name, jurisdiction of organization or the location of its chief executive office or sole place of business from that referred to in Section 3.4 ; or

 

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(b) change its legal name, identity or structure to such an extent that any financing statement filed by the Administrative Agent in connection with this Agreement would become misleading.

4.7. Notices . Such Grantor shall advise the Administrative Agent promptly, in reasonable detail, of:

(a) any Lien (other than any Lien expressly permitted by Section 7.02 of the Credit Agreement) on any of the Collateral which would adversely affect the ability of the Administrative Agent to exercise any of its remedies hereunder;

(b) the occurrence of any other event of which such Grantor becomes aware that would reasonably be expected to have a Material Adverse Effect on the aggregate value of the Collateral or on the security interests created hereby; and

(c) the acquisition or ownership by any Grantor of any aircraft, airframe, aircraft engine, aircraft lease or any other related property with a value in excess of $5,000,000 individually or in the aggregate.

4.8. Investment Property .

(a) If such Grantor shall become entitled to receive or shall receive any stock or other ownership certificate (including any certificate representing a stock dividend or a distribution in connection with any reclassification, increase or reduction of capital or any certificate issued in connection with any reorganization), option or rights in respect of Stock and Stock Equivalents in any issuer thereof, whether in addition to, in substitution of, as a conversion of, or in exchange for, any shares of or other ownership interests in the Pledged Securities, or otherwise in respect thereof, such Grantor shall accept the same as the agent of the Secured Parties, hold the same in trust for the Secured Parties and promptly deliver the same to the Administrative Agent in the exact form received (other than Excluded Stock), duly endorsed by such Grantor to the Administrative Agent, if required, together with an undated stock power or similar instrument of transfer covering such certificate duly executed in blank by such Grantor and with, if the Administrative Agent so requests, signature guaranteed, to be held by the Administrative Agent, subject to the terms hereof, as additional collateral security for the Obligations. Any sums paid upon or in respect of the Pledged Securities upon the liquidation or dissolution of any issuer thereof shall be paid over to the Administrative Agent to be held by it hereunder as additional collateral security for the Obligations if an Event of Default then exists, and in case any distribution of capital shall be made on or in respect of the Pledged Securities or any property shall be distributed upon or with respect to the Pledged Securities pursuant to the recapitalization or reclassification of the capital of any issuer thereof or pursuant to the reorganization thereof, the property so distributed shall, if an Event of Default then exists, and unless otherwise subject to a perfected security interest in favor of the Administrative Agent, be delivered to the Administrative Agent to be held by it hereunder as additional collateral security for the Obligations. If any sums of money or property so paid or distributed in respect of the Pledged Securities shall be received by such Grantor in violation of the immediately preceding sentence, such Grantor shall, until such money or property is paid or delivered to the Administrative Agent, hold such money or property in trust for the Secured Parties, segregated from other funds of such Grantor, as additional collateral security for the Obligations.

 

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(b) Without the prior written consent of the Administrative Agent, such Grantor shall not (i) vote to enable, or take any other action to permit, any Subsidiary of the Borrower that is an issuer of Pledged Securities to issue any stock, partnership interests, limited liability company interests or other equity securities of any nature or to issue any other securities convertible into or granting the right to purchase or exchange for any stock, partnership interests, limited liability company interests or other equity securities of any nature of any such issuer (except, in each case, pursuant to a transaction expressly permitted by the Credit Agreement), (ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to, any of the Investment Property or Proceeds thereof or any interest therein (except, in each case, pursuant to a transaction expressly permitted by the Credit Agreement), (iii) create, incur or permit to exist any Lien or option in favor of, or any claim of any Person with respect to, any of the Investment Property or Proceeds thereof, or any interest therein, except for the security interests created by this Agreement or any Lien expressly permitted thereon pursuant to Section 7.02 of the Credit Agreement, (iv) enter into any agreement or undertaking restricting the right or ability of such Grantor or the Administrative Agent to sell, assign or transfer any of the Investment Property or Proceeds thereof or any interest therein or (v) without the prior written consent of the Administrative Agent, cause or permit any Subsidiary of the Borrower that is an issuer of any Pledged LLC/Partnership Interests which are not securities (for purposes of the New York UCC) on the date hereof to elect or otherwise take any action to cause such Pledged LLC/Partnership Interests to be treated as Securities for purposes of the New York UCC; provided , however , notwithstanding the foregoing, if any issuer of any Pledged LLC/Partnership Interests takes any such action in violation of the provisions in this clause (v) or any non-Subsidiary of the Borrower that is an issuer takes any of the foregoing actions, such Grantor shall promptly notify the Administrative Agent in writing of any such election or action and, in such event, shall take all steps necessary or advisable to establish the Administrative Agent’s “control” thereof.

(c) In the case of each Grantor which is an issuer of Pledged Securities, such issuer agrees that (i) it shall be bound by the terms of this Agreement relating to the Pledged Securities issued by it and shall comply with such terms insofar as such terms are applicable to it, (ii) it shall notify the Administrative Agent promptly in writing of the occurrence of any of the events described in Section 4.8(a) with respect to the Pledged Securities issued by it and (iii) the terms of Sections 5.3(c) and 5.7 shall apply to it, mutatis mutandis , with respect to all actions that may be required of it pursuant to Section 5.3(c) or 5.7 with respect to the Pledged Securities issued by it. In addition, each Grantor which is either an issuer or an owner of any Pledged Security hereby consents to the grant by each other Grantor of the security interest hereunder in favor of the Administrative Agent and to the transfer of any Pledged Security to the Administrative Agent or its nominee following the occurrence and during the continuance of an Event of Default and to the substitution of the Administrative Agent or its nominee as a partner, member or shareholder of the issuer of the related Pledged Security.

4.9. Receivables . Other than in the ordinary course of business, such Grantor shall not (a) grant any extension of the time of payment of any Receivable, (b) compromise or settle any Receivable for less than the full amount thereof, (c) release, wholly or partially, any Person liable for the payment of any Receivable, (d) allow any credit or discount whatsoever on any Receivable or (e) amend, supplement or modify any Receivable in any manner that could adversely affect the value thereof.

4.10. Intellectual Property .

(a) Such Grantor (either itself or through licensees) shall, in the exercise of its reasonable business judgment, taking into account the Secured Parties’ interests under this Agreement, (i) continue to use each owned Trademark material to its business, (ii) maintain commercially reasonable

 

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quality of products and services offered under such Trademarks and take all necessary steps to ensure that all licensed users of such Trademarks comply with such Grantor’s quality control requirements and maintain reasonable quality, (iii) not adopt or use any mark which is confusingly similar or a colorable imitation of such Trademarks unless the Administrative Agent, for the ratable benefit of the Secured Parties, shall obtain a perfected security interest in such mark pursuant to this Agreement and an Intellectual Property Security Agreement, and (iv) not (and not permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby such Trademark may become invalidated or impaired in any way.

(b) Such Grantor (either itself or through licensees), subject to the exercise of its reasonable business judgment, taking into account the Secured Parties’ interests under this Agreement, shall not do any act, or omit to do any act, whereby any Patent owned by such Grantor material to its business may become forfeited, abandoned or dedicated to the public.

(c) Such Grantor (either itself or through licensees), subject to the exercise of its reasonable business judgment, taking into account the Secured Parties’ interests under this Agreement, shall not (and shall not permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby any material portion of Copyrights owned by such Grantor and material to its business may become invalidated or otherwise impaired. Such Grantor shall not (either itself or through licensees) do any act whereby any material portion of such Copyrights may fall into the public domain.

(d) Such Grantor shall notify the Administrative Agent promptly if it knows or suspects that any application or registration relating to any Material Intellectual Property owned by such Grantor may become forfeited, abandoned or dedicated to the public, or of any adverse determination (including the institution of, or any such determination in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court or tribunal in any country) regarding such Grantor’s ownership of, or the validity of, any such Material Intellectual Property or such Grantor’s right to register the same or to own and maintain the same.

(e) After such Grantor, either by itself or through any agent, employee, licensee or designee, shall file an application for the registration of any Intellectual Property that is material to the business of such Grantor with the United States Patent and Trademark Office or the United States Copyright Office, such Grantor shall report such filing or receipt of a registration to the Administrative Agent prior to or concurrently with the delivery of the Compliance Certificate required by Section 6.01(c) of the Credit Agreement for the earlier to occur of either the Fiscal Quarter ending June 30 or the Fiscal Year ending (or such longer period of time permitted by the Administrative Agent in its sole discretion), in each case, immediately following the date of such filing or receipt of registration. Upon request of the Administrative Agent, such Grantor shall execute and deliver, and have recorded in the United States Patent and Trademark office or the United States Copyright Office, as applicable, any and all agreements, instruments, documents, and papers as the Administrative Agent may request to evidence the Secured Parties’ security interest in any Copyright, Patent, Trademark or other Intellectual Property of such Grantor.

(f) Such Grantor, subject to the exercise of its reasonable business judgment, taking into account the Secured Parties’ interests under this Agreement, shall take reasonable and necessary steps, including in any proceeding before the United States Patent and Trademark Office or the United States Copyright Office, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of Intellectual Property material to its business, including the payment of required fees and taxes, the filing of responses to office actions issued by the United States Patent and Trademark Office and the United States Copyright Office, the filing of applications for renewal or extension, the filing of affidavits of use and affidavits of incontestability, the filing of divisional,

 

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continuation, continuation-in-part, reissue and renewal applications or extensions, the payment of maintenance fees, and the participation in interference, reexamination, opposition, cancellation, infringement and misappropriation proceedings.

(g) Such Grantor (either itself or through licensees), subject to the exercise of its reasonable business judgment, taking into account the Secured Parties’ interests under this Agreement, shall not, without the prior written consent of the Administrative Agent, discontinue use of or otherwise abandon any of its registered Owned Intellectual Property, or abandon any application or any right to file an application for any patent, trademark, or copyright, unless such Grantor shall have previously determined that such use or the pursuit or maintenance of such Intellectual Property is no longer desirable in the conduct of such Grantor’s business and that the loss thereof could not reasonably be expected to have a Material Adverse Effect.

(h) In the event that any Intellectual Property material to its business is infringed, misappropriated or diluted by a third party, such Grantor shall (i) take such actions as such Grantor shall reasonably deem appropriate under the circumstances to protect such Intellectual Property and (ii) if such Intellectual Property is of material economic value, promptly notify the Administrative Agent after it learns thereof and sue for infringement, misappropriation or dilution, to seek injunctive relief where appropriate and to recover any and all damages for such infringement, misappropriation or dilution.

(i) Such Grantor agrees that, should it obtain an ownership interest in any item of intellectual property which is not, as of the Closing Date, a part of the Intellectual Property Collateral (the “ After-Acquired Intellectual Property ”), (i) the provisions of Section 2.1 shall automatically apply thereto, (ii) any such After-Acquired Intellectual Property, and in the case of trademarks, the goodwill of the business connected therewith or symbolized thereby, shall automatically become part of the Intellectual Property Collateral, (iii) provide written notice thereof prior to or concurrently with the delivery of the Compliance Certificate required by Section 6.01(c) of the Credit Agreement for the earlier to occur of either the Fiscal Quarter ending June 30 or the Fiscal Year ending (or such longer period of time permitted by the Administrative Agent in its sole discretion), in each case, following the date on which such ownership is obtained, and (v) promptly after the Administrative Agent’s request, it shall provide the Administrative Agent with an amended Schedule 3.9(a) and take the actions specified in clauses (j) and (k) of Section 4.10 .

(j) Such Grantor agrees to execute an Intellectual Property Security Agreement with respect to its Intellectual Property in order to record the security interest granted herein to the Administrative Agent for the ratable benefit of the Secured Parties with the United States Patent and Trademark Office and the United States Copyright Office.

(k) Such Grantor agrees to execute an Intellectual Property Security Agreement with respect to its After-Acquired Intellectual Property in order to record the security interest granted herein to the Administrative Agent for the ratable benefit of the Secured Parties with the United States Patent and Trademark Office and the United States Copyright Office.

(l) Such Grantor shall take commercially reasonable steps to protect the secrecy of all trade secrets or confidential information material to its business, including entering into confidentiality agreements with employees and labeling and restricting access to secret information and documents.

 

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4.11. Contracts .

(a) Such Grantor shall perform and comply in all material respects with all its obligations under the Contracts, except where the failure to so perform and comply would not reasonably be expected to have a Material Adverse Effect.

(b) Such Grantor shall not amend, modify, terminate, waive or fail to enforce any provision of any Contract in any manner which would reasonably be expected to have a Material Adverse Effect.

(c) Such Grantor shall exercise promptly and diligently each and every material right which it may have under each contract (other than any right of termination), except where the failure to so exercise would not reasonably be expected to have a Material Adverse Effect.

(d) Such Grantor shall not permit to become effective in any document creating, governing or providing for any permit, lease, license or contract, a provision that would limit the creation, perfection or scope of, or exercise or enforcement of remedies in connection with, a Lien on such permit, lease, license or contract in favor of the Administrative Agent for the ratable benefit of the Secured Parties unless such Grantor believes, in its reasonable judgment, that such prohibition is usual and customary in transactions of such type.

4.12. Commercial Tort Claims . Such Grantor shall advise the Administrative Agent promptly after such Grantor becomes aware of any Commercial Tort Claim held by such Grantor individually or in the aggregate in excess of $5,000,000 and shall promptly execute a supplement to this Agreement in form and substance reasonably satisfactory to the Administrative Agent to grant a security interest in such Commercial Tort Claim to the Administrative Agent for the ratable benefit of the Secured Parties.

SECTION 5. REMEDIAL PROVISIONS

5.1. Certain Matters Relating to Receivables .

(a) The Administrative Agent shall have the right (but shall in no way be obligated), at its own expense if an Event of Default does not then exist, to make test verifications of the Receivables that are included in the Collateral in any manner and through any medium that it reasonably considers advisable, and each Grantor shall furnish all such assistance and information as the Administrative Agent may reasonably require in connection with such test verifications.

(b) Subject to the rights of the Administrative Agent under Section 5.2(b) , each Grantor hereby agrees to use its commercially reasonable efforts to continue to collect all amounts due or to become due to such Grantor under the Receivables and any Supporting Obligation and diligently exercise each material right it may have under any Receivable and any Supporting Obligation, in each case, at its own expense. If required by the Administrative Agent at any time after the occurrence and during the continuance of an Event of Default, any payments of Receivables, when collected by any Grantor, (i) shall be promptly (and, in any event, within two Business Days) deposited by such Grantor in the exact form received, duly endorsed by such Grantor to the Administrative Agent if required, in a Collateral Account maintained under the sole dominion and control of the Administrative Agent, subject to withdrawal by the Administrative Agent for the account of the Secured Parties only as provided in Section 5.5 , and (ii) until so turned over, shall be held by such Grantor in trust for the Secured Parties, segregated from other funds of such Grantor. Each such deposit of Proceeds of Receivables shall be accompanied by a report identifying in reasonable detail the nature and source of the payments included in the deposit.

 

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(c) At the Administrative Agent’s request but subject to the confidentiality provisions set forth in the Credit Agreement, during the continuance of an Event of Default each Grantor shall make available to the Administrative Agent original and other documents evidencing, and relating to, the agreements and transactions which gave rise to the Receivables that are included in the Collateral, including original orders, invoices and shipping receipts.

5.2. Communications with Obligors; Grantors Remain Liable .

(a) The Administrative Agent in its own name or in the name of others may at any time after the occurrence and during the continuance of an Event of Default communicate with obligors under the Receivables and parties to the Contracts to verify with them to the Administrative Agent’s satisfaction the existence, amount and terms of any Receivables or Contracts.

(b) The Administrative Agent may at any time after the occurrence and during the continuance of an Event of Default notify, or require any Grantor to so notify, the Account Debtor or counterparty on any Receivable or Contract of the security interest of the Administrative Agent therein. In addition, after the occurrence and during the continuance of an Event of Default, the Administrative Agent may upon written notice to the applicable Grantor, notify, or require any Grantor to notify, the Account Debtor or counterparty to make all payments under the Receivables and/or Contracts directly to the Administrative Agent.

(c) Anything herein to the contrary notwithstanding, each Grantor shall remain liable under each of the Receivables and Contracts to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise thereto. No Secured Party shall have any obligation or liability under any Receivable (or any agreement giving rise thereto) or Contract by reason of or arising out of this Agreement or the receipt by any Secured Party of any payment relating thereto, nor shall any Secured Party be obligated in any manner to perform any of the obligations of any Grantor under or pursuant to any Receivable (or any agreement giving rise thereto) or Contract, to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party thereunder, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.

5.3. Pledged Securities .

(a) Unless an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given notice to the relevant Grantor of the Administrative Agent’s intent to exercise its corresponding rights pursuant to Section 5.3(b) , each Grantor shall be permitted to receive all cash dividends paid in respect of the Pledged Equity Interests and all payments made in respect of the Pledged Notes, to the extent not prohibited by the Credit Agreement, and to exercise all voting, corporate and other ownership (or other similar) rights with respect to the Pledged Securities; provided , however , that no vote shall be cast or corporate or other ownership (or other similar) right exercised or other action taken which would materially impair the Collateral or which would be inconsistent with or result in any violation of any provision of the Credit Agreement, this Agreement or any other Loan Document.

(b) If an Event of Default shall occur and be continuing and the Administrative Agent shall have given notice to the relevant Grantor of the Administrative Agent’s intent to exercise its rights pursuant to this Section 5.3(b) : (i) all rights of each Grantor to exercise or refrain from exercising the voting and other consensual rights which it would otherwise be entitled to exercise pursuant hereto shall cease and all such rights shall thereupon become vested in the Administrative Agent who shall

 

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thereupon have the sole right, but shall be under no obligation, to exercise or refrain from exercising such voting and other consensual rights; (ii) the Administrative Agent shall have the right, without notice to any Grantor (where permitted by applicable law), to transfer all or any portion of the Investment Property to its name or the name of its nominee or agent; and (iii) the Administrative Agent shall have the right, without notice to any Grantor, to exchange any certificates or instruments representing any Investment Property for certificates or instruments of smaller or larger denominations. In order to permit the Administrative Agent to exercise the voting and other consensual rights which it may be entitled to exercise pursuant hereto and to receive all dividends and other distributions which it may be entitled to receive hereunder each Grantor shall promptly execute and deliver (or cause to be executed and delivered) to the Administrative Agent all proxies, dividend payment orders and other instruments as the Administrative Agent may from time to time reasonably request and each Grantor acknowledges that the Administrative Agent may utilize the power of attorney set forth herein.

(c) Each Grantor hereby authorizes and instructs each issuer of any Pledged Securities pledged by such Grantor hereunder to (i) comply with any instruction received by it from the Administrative Agent in writing that (A) states that an Event of Default has occurred and is continuing and (B) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from such Grantor, and each Grantor agrees that each such issuer shall be fully protected in so complying, and (ii) upon any such instruction following the occurrence and during the continuance of an Event of Default, pay any dividends or other payments with respect to the Investment Property, including Pledged Securities, directly to the Administrative Agent.

5.4. Proceeds to be Turned Over To Administrative Agent . In addition to the rights of the Secured Parties specified in Section 5.1 with respect to payments of Receivables, if an Event of Default shall occur and be continuing, all Proceeds received by any Grantor consisting of cash, cash equivalents, checks and other near-cash items shall, if requested in writing by the Administrative Agent, be held by such Grantor in trust for the Secured Parties, segregated from other funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to the Administrative Agent in the exact form received by such Grantor (duly endorsed by such Grantor to the Administrative Agent, if required). All Proceeds received by the Administrative Agent hereunder shall be held by the Administrative Agent in a Collateral Account maintained under its sole dominion and control. All Proceeds while held by the Administrative Agent in a Collateral Account (or by such Grantor in trust for the Secured Parties) shall continue to be held as collateral security for all the Obligations and shall not constitute payment thereof until applied as provided in Section 5.5 .

5.5. Application of Proceeds . At such intervals as may be agreed upon by the Borrower and the Administrative Agent, or, if an Event of Default shall have occurred and be continuing, at any time at the Administrative Agent’s election, the Administrative Agent may apply all or any part of the net Proceeds (after deducting fees and reasonable out-of-pocket expenses as provided in Section 5.6 ) constituting Collateral realized through the exercise by the Administrative Agent of its remedies hereunder, whether or not held in any Collateral Account, and any proceeds of the guarantee set forth in the Guaranty, in payment of the Obligations in accordance with the Credit Agreement.

5.6. Code and Other Remedies .

(a) If an Event of Default shall occur and be continuing, the Administrative Agent, on behalf of the Secured Parties, may exercise, in addition to all other rights and remedies granted to it in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the New York UCC (whether or not the New York UCC applies to the affected Collateral) or its rights under any other applicable law or in equity. Without limiting the generality of the foregoing, the Administrative Agent, without demand of

 

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performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon any Grantor or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived), may in such circumstances collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may sell, lease, license, assign, give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s board or office of any Secured Party or elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. Each Secured Party shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption in any Grantor, which right or equity is hereby waived and released. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent permitted by applicable law) all rights of redemption, stay and/or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten days’ notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Administrative Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Administrative Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. The Administrative Agent may sell the Collateral without giving any warranties as to the Collateral. The Administrative Agent may specifically disclaim or modify any warranties of title or the like. This procedure will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral. Each Grantor agrees that it would not be commercially unreasonable for the Administrative Agent to dispose of the Collateral or any portion thereof by using Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets. To the extent permitted by applicable law, each Grantor hereby waives any claims against the Administrative Agent arising by reason of the fact that the price at which any Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale, even if the Administrative Agent accepts the first offer received and does not offer such Collateral to more than one offeree. Each Grantor further agrees, at the Administrative Agent’s request, to assemble the Collateral and make it available to the Administrative Agent at places which the Administrative Agent shall reasonably select, whether at such Grantor’s premises or elsewhere. To the extent permitted by applicable law, and so long as an Event of Default is continuing, the Administrative Agent shall have the right to enter onto the property where any Collateral is located and take possession thereof with or without judicial process.

(b) The Administrative Agent shall apply the net proceeds of any action taken by it pursuant to this Section 5.6 , after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Secured Parties hereunder, including reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the Obligations and only after such application and after the payment by the Administrative Agent of any other amounts required by any provision of law, including Section 9-615(a) of the New York UCC, need the Administrative Agent account for the surplus, if any, to any Grantor. If the Administrative Agent sells any of the Collateral upon credit, the Grantor will be credited only with payments actually made by the purchaser and received by the Administrative Agent and applied to indebtedness of the purchaser. In the event the purchaser fails to pay for the Collateral, the Administrative Agent may resell the Collateral and the Grantor shall be credited with proceeds of the sale. To the extent permitted by applicable law, each Grantor waives all claims, damages and demands it may acquire against any Secured Party arising out of the exercise by any Secured Party of any rights hereunder.

 

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(c) In the event of any disposition of any of the Intellectual Property, the goodwill of the business connected with and symbolized by any Trademarks subject to such disposition shall be included, and the applicable Grantor shall, to the extent commercially reasonable and feasible under the circumstances, supply the Administrative Agent or its designee with such Grantor’s know-how and expertise, and with documents and things embodying the same, relating to the manufacture, distribution, advertising and sale of products or the provision of services relating to any Intellectual Property subject to such disposition, and such Grantor’s customer lists and other records and documents relating to such Intellectual Property and to the manufacture, distribution, advertising and sale of such products and services.

5.7. Private Sales, etc .

(a) Each Grantor recognizes that the Administrative Agent may be unable to effect a public sale of any or all the Pledged Equity Interests, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Administrative Agent shall be under no obligation to delay a sale of any of the Pledged Equity Interests for the period of time necessary to permit the issuer thereof to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if such issuer would agree to do so.

(b) Each Grantor agrees to use commercially reasonable efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Pledged Equity Interests pursuant to this Section 5.7 valid and binding and in compliance with any and all other applicable Requirements of Law. Each Grantor further agrees that a breach of any of the covenants contained in this Section 5.7 will cause irreparable injury to the Secured Parties, that the Secured Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 5.7 shall be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred and is continuing under the Credit Agreement or a defense of payment.

5.8. Deficiency . Each Grantor shall remain liable for any deficiency if the proceeds of any sale or other disposition of the Collateral are insufficient to pay its Secured Obligations and the reasonable fees and disbursements of any outside attorneys employed by any Secured Party to collect such deficiency.

SECTION 6. THE ADMINISTRATIVE AGENT

6.1. Administrative Agent’s Appointment as Attorney-in-Fact, etc .

(a) Each Grantor hereby irrevocably constitutes and appoints the Administrative Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or in its own name,

 

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for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing, each Grantor hereby gives the Administrative Agent the power and right, on behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the following:

(i) in the name of such Grantor or its own name, or otherwise, take possession of and endorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Receivable or Contract or with respect to any other Collateral and file any claim or take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by the Administrative Agent for the purpose of collecting any and all such moneys due under any Receivable or Contract or with respect to any other Collateral whenever payable;

(ii) in the case of any Intellectual Property, execute and deliver, and have recorded, any and all agreements, instruments, documents and papers as the Administrative Agent may request to evidence the Secured Parties’ security interest in such Intellectual Property and the goodwill and general intangibles of such Grantor relating thereto or represented thereby;

(iii) pay or discharge taxes and Liens levied or placed on or threatened against the Collateral, effect any repairs or any insurance called for by the terms of this Agreement and pay all or any part of the premiums therefor and the costs thereof;

(iv) execute, in connection with any sale provided for in Section 5.7 , any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral; and

(v) (1) direct any party liable for any payment under any of the Collateral to make payment of any and all moneys due or to become due thereunder directly to the Administrative Agent or as the Administrative Agent shall direct; (2) ask or demand for, collect, and receive payment of and receipt for, any and all moneys, claims and other amounts due or to become due at any time in respect of or arising out of any Collateral; (3) sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, notices and other documents in connection with any of the Collateral; (4) commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any portion thereof and to enforce any other right in respect of any Collateral; (5) defend any suit, action or proceeding brought against such Grantor with respect to any Collateral; (6) settle, compromise or adjust any such suit, action or proceeding and, in connection therewith, give such discharges or releases as the Administrative Agent may deem appropriate; (7) assign any Copyright, Patent or Trademark (along with the goodwill of the business to which any such Copyright, Patent or Trademark pertains), throughout the world for such term or terms, on such conditions, and in such manner, as the Administrative Agent shall in its sole discretion determine; and (8) generally, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Administrative Agent were the absolute owner thereof for all purposes, and do, at the Administrative Agent’s option and such Grantor’s expense, at any time, or from time to time, all acts and things which the Administrative Agent deems necessary to protect, preserve or realize upon the Collateral and the Secured Parties’ security interests therein and to effect the intent of this Agreement, all as fully and effectively as such Grantor might do.

 

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Anything in this Section 6.1(a) to the contrary notwithstanding, the Administrative Agent agrees that, except as provided in Section 6.1(b) , it will not exercise any rights under the power of attorney provided for in this Section 6.1(a) unless an Event of Default shall have occurred and be continuing.

(b) If any Grantor fails to perform or comply with any of its agreements contained herein, the Administrative Agent, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such agreement; provided , however , that unless an Event of Default has occurred and is continuing or time is of the essence, the Administrative Agent shall not exercise this power without first making demand on the Grantor and the Grantor failing to promptly comply therewith.

(c) The expenses of the Administrative Agent incurred in connection with actions undertaken as provided in this Section 6.1 , together with interest thereon at a rate per annum equal to the rate per annum at which interest would then be payable on past due Loans that are Base Rate Loans under the Credit Agreement, from the date of payment by the Administrative Agent to the date reimbursed by the relevant Grantor, shall be payable by such Grantor to the Administrative Agent on demand.

(d) Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and are irrevocable until this Agreement is terminated and the security interests created hereby are released.

6.2. Duty of Administrative Agent . The Administrative Agent’s sole duty with respect to the custody, safekeeping and physical preservation of the Collateral in its possession, under Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the same manner as the Administrative Agent deals with similar property for its own account. Neither the Administrative Agent, nor any other Secured Party nor any of their respective officers, directors, partners, employees, agents, attorneys and other advisors, attorneys-in-fact or affiliates shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. The powers conferred on the Secured Parties hereunder are solely to protect the Secured Parties’ interests in the Collateral and shall not impose any duty upon any Secured Party to exercise any such powers. The Secured Parties shall be accountable only for amounts that they actually receive as a result of the exercise of such powers, and neither they nor any of their officers, directors, partners, employees, agents, attorneys and other advisors, attorneys-in-fact or affiliates shall be responsible to any Grantor for any act or failure to act hereunder, except to the extent that any such act or failure to act is found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from their own gross negligence or willful misconduct in breach of a duty owed to such Grantor.

6.3. Execution of Financing Statements . Each Grantor acknowledges that pursuant to Section 9-509(b) of the New York UCC and any other applicable law, each Grantor authorizes the Administrative Agent to file or record financing or continuation statements, and amendments thereto, and other filing or recording documents or instruments with respect to the Collateral, without the signature of such Grantor, in such form and in such offices as the Administrative Agent reasonably determines appropriate to perfect or maintain the perfection of the security interests of the Administrative Agent under this Agreement. Each Grantor agrees that such financing statements may describe the collateral in the same manner as described in this Agreement or as “all assets,” “all personal property” or words of similar effect, regardless of whether or not the Collateral includes all assets or all personal property of such Grantor, or such other description as the Administrative Agent, in its sole judgment, determines is necessary or advisable that is of an equal or lesser scope or with greater detail. A photographic or other reproduction of this Agreement shall, where permitted by applicable law, be sufficient as a financing statement or other filing or recording document or instrument for filing or recording in any jurisdiction.

 

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6.4. Authority of Administrative Agent . Each Grantor acknowledges that the rights and responsibilities of the Administrative Agent under this Agreement with respect to any action taken by the Administrative Agent or the exercise or non-exercise by the Administrative Agent of any option, voting right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Agreement shall, as between the Administrative Agent and the other Secured Parties, be governed by the Credit Agreement and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Administrative Agent and the Grantors, the Administrative Agent shall be conclusively presumed to be acting as agent for the Secured Parties with full and valid authority so to act or refrain from acting, and no Grantor shall be under any obligation, or entitlement, to make any inquiry respecting such authority.

6.5. Appointment of Co-Administrative Agents . At any time or from time to time, in order to comply with any applicable requirement of law, the Administrative Agent may appoint another bank or trust company or one of more other Persons, either to act as co-agent or agents on behalf of the Secured Parties with such power and authority as may be necessary for the effectual operation of the provisions hereof and which may be specified in the instrument of appointment (which may, in the discretion of the Administrative Agent, include provisions for indemnification and similar protections of such co-agent or separate agent).

SECTION 7. MISCELLANEOUS

7.1. Amendments in Writing . None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except by a written instrument executed by each affected Grantor and the Administrative Agent, subject to any consents required under Section 10.01 of the Credit Agreement; provided that any provision of this Agreement imposing obligations on any Grantor may be waived by the Administrative Agent in a written instrument executed thereby.

7.2. Notices . All notices and communications hereunder shall be given to the addresses and otherwise made in accordance with Section 10.02 of the Credit Agreement; provided that notices and communications to any Grantor other than the Borrower shall be directed to such Grantor, at the address of the Borrower.

7.3. No Waiver by Course of Conduct; Cumulative Remedies . No Secured Party shall by any act (except by a written instrument pursuant to Section 7.1 ), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part of any Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by any Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which such Secured Party would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.

7.4. Enforcement Expenses; Indemnification .

(a) Each Grantor agrees to pay or reimburse each Secured Party for its reasonable out-of-pocket costs and expenses incurred in collecting against such Grantor under the guarantee contained in the Guaranty or otherwise enforcing or preserving any rights under this Agreement and the

 

25


other Loan Documents to which such Grantor is a party, including the reasonable fees and disbursements of outside counsel to each Secured Party and outside counsel to the Administrative Agent; provided that each Grantor’s obligation to pay or reimburse for legal fees and expenses pursuant to this subsection (a)  shall be limited to the reasonable and documented legal fees and expenses of a single law firm as counsel for the Administrative Agent and one additional law firm as counsel for all other such Secured Parties, taken together, in each appropriate jurisdiction (which may include a single law firm as special, local or foreign counsel acting in multiple jurisdictions), except that in the case where any such Secured Party determines in good faith that a conflict of interest does or may exist in connection with such legal representation and such Secured Party advises such Grantor of such actual or potential conflict of interest and engages its own separate counsel, the reasonable and documented legal fees and expenses of such separate counsel shall also be paid or reimbursed.

(b) Each Grantor agrees to pay, and to hold the Secured Parties harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits and reasonable out-of-pocket costs, expenses or disbursements of any kind or nature whatsoever with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes (other than Excluded Taxes) which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement.

(c) Each Grantor agrees to pay, and to hold the Secured Parties harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits and reasonable out-of-pocket costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement to the extent the Borrower would be required to do so pursuant to Section 10.04 of the Credit Agreement.

(d) The agreements in this Section shall survive repayment of the Obligations and all other amounts payable under the Credit Agreement and the other Loan Documents.

7.5. Successors and Assigns . This Agreement shall be binding upon the successors and assigns of each Grantor and shall inure to the benefit of the Secured Parties and their permitted successors and assigns; provided that, except as otherwise permitted by the Credit Agreement, no Grantor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent, and any attempted assignment without such consent shall be null and void.

7.6. Set-off; Governing Law; Submission to Jurisdiction; Venue; WAIVER OF JURY TRIAL . THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. Without limiting the general applicability of the foregoing and the terms of the other Loan Documents to this Agreement and the parties hereto, the terms of Sections 10.08 , 10.14 and 10.15 of the Credit Agreement are incorporated herein by reference, mutatis mutandis , with each reference to the “Borrower” therein (whether express or by reference to the Borrower as a “party” thereto) being a reference to the Grantors, and the parties hereto agree to such terms.

7.7. Counterparts . This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

7.8. Severability . Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

26


7.9. Section Headings . The Section headings used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

7.10. Integration . This Agreement and the other Loan Documents represent the agreement of the Grantors, the Administrative Agent and the other Secured Parties with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by any Secured Party relative to subject matter hereof and thereof not expressly set forth or referred to herein or in the other Loan Documents.

7.11. Acknowledgments . Each Grantor hereby acknowledges that:

(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents to which it is a party;

(b) no Secured Party has any fiduciary relationship with or duty to any Grantor arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between the Grantors, on the one hand, and the Secured Parties, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

(c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Secured Parties or among the Grantors and the Secured Parties.

7.12. Additional Grantors . Each Subsidiary of the Borrower that is required to become a party to this Agreement pursuant to Section 6.22 of the Credit Agreement shall become a Grantor for all purposes of this Agreement upon execution and delivery by such Subsidiary of a Joinder Agreement.

7.13. Releases; Termination of this Agreement .

(a) At such time as the Loans and the other Obligations (other than (i) contingent indemnification obligations and (ii) Obligations in respect of Secured Cash Management Agreements and Secured Hedge Agreements either (A) as to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made or (B) notice has not been received by the Administrative Agent from the applicable Cash Management Bank or Hedge Bank that such amounts are then due and payable) shall have been paid in full, the Commitments under the Credit Agreement have been terminated or expired and each Letter of Credit issued under the Credit Agreement shall be Cash Collateralized or no longer outstanding (other than Letters of Credit as to which other arrangements satisfactory to the Administrative Agent and the applicable L/C Issuer shall have been made), the Collateral shall be released from the Liens created hereby, and this Agreement and all obligations (other than those expressly stated to survive such termination) of the Administrative Agent and each Grantor hereunder shall terminate, all without delivery of any instrument or performance of any act by any party, and all rights to the Collateral shall revert to the Grantors. At the request and sole expense of any Grantor following any such termination, the Administrative Agent shall deliver to such Grantor any Collateral held by the Administrative Agent hereunder, and execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination.

 

27


(b) If any of the Collateral shall be sold or otherwise disposed of by any Grantor in a transaction permitted by the Credit Agreement, then the Administrative Agent, at the request and sole expense of such Grantor, shall execute and deliver to such Grantor all releases or other documents reasonably necessary for the release of the Liens created hereby on such Collateral. At the request and sole expense of the Borrower, a Grantor shall be released from its obligations hereunder in the event that all the Stock and Stock Equivalents in such Grantor shall be sold or otherwise disposed of in a transaction permitted by the Credit Agreement; provided that the Borrower shall have delivered to the Administrative Agent, at least three Business Days (or such lesser period permitted in writing by the Administrative Agent) prior to the date of the proposed release, a written request for such release identifying the relevant Grantor and the terms of the relevant sale or other disposition in reasonable detail, including the price thereof and any expenses incurred in connection therewith, together with a certification by the Borrower stating that such transaction is in compliance with the Credit Agreement and the other Loan Documents.

(c) Each Grantor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement originally filed in connection herewith without the prior written consent of the Administrative Agent, subject to such Grantor’s rights under Sections 9-509(d)(2) and 9-518 of the New York UCC.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

28


IN WITNESS WHEREOF, each of the undersigned has caused this Pledge and Security Agreement to be duly executed and delivered as of the date first above written.

 

  BABCOCK & WILCOX ENTERPRISES, INC.
  By:  

 

  Name:  
  Title:  
  BABCOCK & WILCOX HOLDINGS, INC.
  By:  

 

  Name:  
  Title:  
 

BABCOCK & WILCOX POWER GENERATION
GROUP, INC. 1

  BABCOCK & WILCOX TECHNOLOGY, INC.
  By:  

 

  Name:  
  Title:  
  AMERICON EQUIPMENT SERVICES, INC.
  AMERICON, INC.
  BABCOCK & WILCOX CONSTRUCTION CO., INC.
  BABCOCK & WILCOX EBENSBURG POWER, LLC
  BABCOCK & WILCOX EQUITY INVESTMENTS, INC.
  BABCOCK & WILCOX INDIA HOLDINGS, INC.
  BABCOCK & WILCOX INTERNATIONAL SALES
       AND SERVICE CORPORATION
  BABCOCK & WILCOX INTERNATIONAL, INC.
  DELTA POWER SERVICES, LLC
  DIAMOND OPERATING CO., INC.
  DIAMOND POWER AUSTRALIA HOLDINGS, INC.
  DIAMOND POWER CHINA HOLDINGS, INC.
  DIAMOND POWER EQUITY INVESTMENTS, INC.
  DIAMOND POWER INTERNATIONAL, INC.
  By:  

 

  Name:  
  Title:  

 

1   Entity name to be changed to The Babcock & Wilcox Company in connection with the Spin-Off.

 

Babcock & Wilcox Enterprises, Inc.

Pledge and Security Agreement

Signature Page


   DPS ANSON, LLC
   DPS BERLIN, LLC
   DPS CADILLAC, LLC
   DPS FLORIDA, LLC
   DPS GREGORY, LLC
   DPS MECKLENBURG, LLC
   DPS PIEDMONT, LLC
   EBENSBURG ENERGY, LLC
   O&M HOLDING COMPANY
   PALM BEACH RESOURCE RECOVERY CORPORATION
   POWER SYSTEMS OPERATIONS, INC.
   REVLOC RECLAMATION SERVICE, INC.
   SOFCO-EFS HOLDINGS LLC
   By:  

 

   Name:  
   Title:  
   EBENSBURG INVESTORS LIMITED PARTNERSHIP
   EBENSBURG POWER COMPANY
   By:   BABCOCK & WILCOX EBENSBURG POWER, INC.
   Its:   General Partner
   By:  

 

   Name:  
   Title:  
   BABCOCK & WILCOX MEGTEC HOLDINGS, INC.
   MEGTEC ACQUISITION, LLC
   MEGTEC SYSTEMS, INC.
   MTS ASIA, INC.
   MEGTEC SYSTEMS AUSTRALIA INC.
   MEGTEC INDIA HOLDINGS, LLC
   MEGTEC ENERGY & ENVIRONMENTAL, LLC
   MEGTEC TURBOSONIC TECHNOLOGIES, INC.
   By:  

 

   Name:  
   Title:  

 

Babcock & Wilcox Enterprises, Inc.

Pledge and Security Agreement

Signature Page


  BANK OF AMERICA, N.A., as Administrative Agent
  By:  

 

  Name:   Bridgett J. Manduk
  Title:   Vice President

 

Babcock & Wilcox Enterprises, Inc.

Pledge and Security Agreement

Signature Page


SCHEDULES TO

PLEDGE AND SECURITY AGREEMENT


EXHIBIT A

NOTICE

OF

GRANT OF SECURITY INTEREST

IN

PATENTS

DATED:                     

United States Patent and Trademark Office

Ladies and Gentlemen:

Please be advised that pursuant to the Pledge and Security Agreement dated as of [            ], 2015 (as amended, restated, supplemented or otherwise modified from time to time, the “ Agreement ”) among the Grantor (as defined below), the other grantors party thereto and the Administrative Agent for the Secured Parties referenced therein, the undersigned Grantor has granted a continuing security interest in and continuing lien upon the patents and patent applications on Schedule 1 to the Administrative Agent for the ratable benefit of the Secured Parties.

The Grantors and the Administrative Agent, on behalf of the Secured Parties, hereby acknowledge and agree that the security interest in such patents and patent applications (a) may only be terminated in accordance with the terms of the Agreement and (b) is not to be construed as an assignment of any patent or patent application.

 

GRANTOR:   Very truly yours,
[Address]     [GRANTOR]
    By:  

 

Jurisdiction:                         Name:  

 

    Title:  

 

ADMINISTRATIVE AGENT:     Acknowledged and accepted:
[Address]     BANK OF AMERICA, N.A.,
    By:  

 

    Name:  

 

    Title:  

 


SCHEDULE 1

PATENTS

 

Patent No.

 

Description of

Patent Item

 

Date of Patent

                

   
PATENT APPLICATIONS

Patent Applications No.

 

Description of

Patent Applied for

 

Date of

Patent Applications

   


NOTICE

OF

GRANT OF SECURITY INTEREST

IN

TRADEMARKS

DATED:                     

United States Patent and Trademark Office

Ladies and Gentlemen:

Please be advised that pursuant to the Pledge and Security Agreement dated as of [            ], 2015 (as amended, restated, supplemented or otherwise modified from time to time, the “ Agreement ”) among the Grantor (as defined below), the other grantors party thereto and the Administrative Agent for the Secured Parties referenced therein, the undersigned Grantor has granted a continuing security interest in and continuing lien upon the trademarks and trademark applications on Schedule 1 to the Administrative Agent for the ratable benefit of the Secured Parties.

The Grantors and the Administrative Agent, on behalf of the Secured Parties, hereby acknowledge and agree that the security interest in such trademarks and trademark applications (a) may only be terminated in accordance with the terms of the Agreement and (b) is not to be construed as an assignment of any trademark or trademark application.

 

GRANTOR:     Very truly yours,
[Address]     [GRANTOR]
    By:  

 

Jurisdiction:                         Name:  

 

    Title:  

 

ADMINISTRATIVE AGENT:     Acknowledged and accepted:
[Address]     BANK OF AMERICA, N.A.,
    By:  

 

    Name:  

 

    Title:  

 


SCHEDULE 1

 

TRADEMARKS

 

Trademark No.

 

Description of

Trademark Item

 

Date of Trademark

                    

 

TRADEMARK APPLICATIONS

 

Trademark Applications

No.

 

Description of

Trademark Applied for

 

Date of

Trademark Applications

   


NOTICE

OF

GRANT OF SECURITY INTEREST

IN

COPYRIGHTS

DATED:                     

United States Copyright Office

Ladies and Gentlemen:

Please be advised that pursuant to the Pledge and Security Agreement dated as of [            ], 2015 (as amended, restated, supplemented or otherwise modified from time to time, the “ Agreement ”) among the Grantor (as defined below), the other grantors party thereto and the Administrative Agent for the Secured Parties referenced therein, the undersigned Grantor has granted a continuing security interest in and continuing lien upon the copyrights and copyright applications on Schedule 1 to the Administrative Agent for the ratable benefit of the Secured Parties.

The Grantors and the Administrative Agent, on behalf of the Secured Parties, hereby acknowledge and agree that the security interest in such copyrights and copyright applications (a) may only be terminated in accordance with the terms of the Agreement and (b) is not to be construed as an assignment of any copyright or copyright application.

 

GRANTOR:     Very truly yours,
[Address]     [GRANTOR]
    By:  

 

Jurisdiction:                         Name:  

 

    Title:  

 

ADMINISTRATIVE AGENT:     Acknowledged and accepted:
[Address]     BANK OF AMERICA, N.A.,
    By:  

 

    Name:  

 

    Title:  

 


SCHEDULE 1

COPYRIGHTS

 

Copyright No.

 

Description of

Copyright Item

 

Date of Copyright

                

   

COPYRIGHT APPLICATIONS

 

Copyright Applications

No.

 

Description of

Copyright Applied for

 

Date of

Copyright Applications

                

   


EXHIBIT H-1

FORM OF

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement, dated as of May 11, 2015 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among BABCOCK & WILCOX ENTERPRISES, INC., a Delaware corporation, as the borrower thereunder (the “ Borrower ”), the Lenders, and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer.

Pursuant to the provisions of Section 3.01(f) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF LENDER]
By:  

 

Name:  

 

Title:  

 

Date:                  , 20[    ]


EXHIBIT H-2

FORM OF

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement, dated as of May 11, 2015 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) among BABCOCK & WILCOX ENTERPRISES, INC., a Delaware corporation, as the borrower thereunder (the “ Borrower ”), the Lenders, and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer.

Pursuant to the provisions of Section 3.01(f) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN-E. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF PARTICIPANT]
By:  

 

Name:  

 

Title:  

 

Date:                  , 20[    ]


EXHIBIT H-3

FORM OF

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement, dated as of May 11, 2015 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among BABCOCK & WILCOX ENTERPRISES, INC., a Delaware corporation, as the borrower thereunder (the “ Borrower ”), the Lenders, and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer.

Pursuant to the provisions of Section 3.01(f) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect to such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its direct or indirect partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF PARTICIPANT]
By:  

 

Name:  

 

Title:  

 

Date:                  , 20[    ]


EXHIBIT H-4

FORM OF

U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Credit Agreement, dated as of May 11, 2015 (as amended, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among BABCOCK & WILCOX ENTERPRISES, INC., a Delaware corporation, as the borrower thereunder (the “ Borrower ”), the Lenders, and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer.

Pursuant to the provisions of Section 3.01(f) of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to this Credit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its direct or indirect partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF LENDER]
By:  

 

Name:  

 

Title:  

 

Date:                  , 20[    ]

Exhibit 10.19

CHANGE IN CONTROL AGREEMENT

This Change in Control Agreement (“Agreement”) is by and between                                          (the “Company”) and                                          (“Executive”).

The Company considers it essential to the interests of the Company’s stockholders to secure the continued employment of key management personnel. The Board of Directors of the Company recognizes that the possibility of a Change in Control (as defined in Exhibit A to this Agreement) exists and that the uncertainty this raises may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders. In order to encourage the continued attention and dedication of key management personnel, this Agreement is being entered into by the Company and Executive.

The Company and Executive agree as follows:

 

1. D EFINITIONS : Capitalized terms are defined in Exhibit A to this Agreement.

 

2. S EVERANCE B ENEFITS : If Executive experiences a Covered Termination he will be entitled to the following payments and benefits set forth below; provided that the benefits described in Sections 2(b), (c), (d), (e) and (f) shall only be payable if the Executive executes a waiver and release in the form attached as Exhibit B to this Agreement, which releases the Company and its affiliates, directors, officers and other customary persons from any claim or liability arising out of or related to Executive’s employment with or termination of employment from the Company or any of its affiliates (except for amounts to which Executive is legally entitled pursuant to employee benefit plans, Executive’s right to enforce this Agreement and rights to insurance coverage or indemnification) (the “ Release ”), which Release is not revoked within the time period provided therein, and the executed Release is delivered to the Company no later than forty-five (45) days after the Covered Termination.

 

  (a) Accrued Benefits . The Accrued Benefits, payable within sixty (60) days after the effective date of the Covered Termination, or such earlier time as may be required by applicable law.

 

  (b) SERP . As of the effective date of the Covered Termination, a fully vested and non-forfeitable interest in Executive’s account balance in the SERP and Restoration Plan (as applicable), payable in accordance with the terms of SERP and/or Restoration Plan, as applicable.

 

  (c)

Unvested Equity Awards. As of the effective date of the Covered Termination, unless otherwise settled in accordance with the provisions of Section 4 of this Agreement and the plans and agreements referred to therein, a fully vested and non-forfeitable interest in any outstanding unvested equity awards granted on Company Shares (“ Equity Awards ”), to be vested and, in the case of restricted stock units, settled, in any such case within the 60 th day after the effective date of the Covered Termination; provided that no such Equity Award that is subject to Code Section 409A will be paid on a date earlier than is provided in the


  applicable Equity Award agreement to the extent necessary to avoid the imposition of tax penalties pursuant to Code Section 409A; provided further that any performance-based Equity Awards shall be settled with respect to the number of Company Shares earned based on the target rate of performance applicable to such award. , In addition, any Equity Awards that are vested (including as a result of the foregoing provision) options to purchase Company Shares that Executive holds as of the date of his Covered Termination will remain exercisable through the expiration of the original term of such option.

 

  (d) Severance Payment Based on Salary. An amount equal to [2.99] [2] [1] times the sum of Executive’s (x) Salary plus (y) the product of (1) Salary and (2) Target Bonus Percentage, paid in a lump sum in cash within sixty (60) days after the Covered Termination.

 

  (e) Severance Payment Based on Bonus .

 

  (1) Covered Termination Performance Year . An amount equal to the product of (A) the Salary and (B) the Target Bonus Percentage, with the product of (A) and (B) prorated based on the number of days Executive was employed during the bonus year in which Executive’s Covered Termination occurs, paid in a lump sum in cash within sixty (60) days after the effective date of the Covered Termination.

 

  (2) Prior Performance Year. If a bonus for the prior calendar year has not been paid under the Bonus Plan as of the Executive’s effective date of the Covered Termination, then Executive will be entitled to the actual amount of the bonus determined under the Bonus Plan for such prior calendar year (such amount to be determined without the exercise of any downward discretion), paid in a lump sum in cash at the same time such bonus is paid to other Bonus Plan participants.

 

  (f) Health Care Benefits. An amount equal to three (3) times the full annual cost that is payable by Executive for continuation of coverage for medical, dental and vision benefits elected by Executive for him/herself and his/her eligible dependents under COBRA for the year in which Executive’s Covered Termination occurs, paid in a lump sum in cash within sixty (60) days after the Covered Termination.

In no event shall the benefits provided for in Sections 2(a), (d), (e) and (f) above or any payment provided for in (c) above that is not subject to Code Section 409A be paid later than March 15th of the calendar year immediately following the calendar year in which the Executive’s Covered Termination Date occurs. For the avoidance of doubt, in the event of a Covered Termination, in no event shall Executive be eligible for or entitled to any other severance payments or benefits under any other severance plan, program or policy maintained by the Company or any of its Affiliates.

 

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3. L IMITATION   ON  P AYMENTS   AND  B ENEFITS Notwithstanding any provision of this Agreement to the contrary, if any amount or benefit to be paid or provided under this Agreement would be an “Excess Parachute Payment,” within the meaning of Section 280G of the Code, or any successor provision thereto, but for the application of this sentence, then the payments and benefits identified in the last sentence of this Section 3 to be paid or provided under this Agreement will be reduced to the minimum extent necessary (but in no event to less than zero) so that no portion of any such payment or benefit, as so reduced, constitutes an Excess Parachute Payment; provided, however, that no such reduction shall be made if it is not thereby possible to eliminate all Excess Parachute Payments under this Agreement; provided, however, that the foregoing reduction will be made only if and to the extent that such reduction would result in an increase in the aggregate payment and benefits to be provided, determined on an after-tax basis (taking into account the excise tax imposed pursuant to Section 4999 of the Code, or any successor provision thereto, any tax imposed by any comparable provision of state law, and any applicable federal, state and local income and employment taxes). Whether requested by Executive or the Company, the determination of whether any reduction in such payments or benefits to be provided under this Agreement or otherwise is required pursuant to the preceding sentence will be made at the expense of the Company by the Company’s independent accountants, which determination shall take into account a reasonable compensation analysis of the value of services provided or to be provided by Executive, including Executive’s agreeing to refrain from performing services pursuant to a covenant not to compete or similar covenant applicable to Executive (including, without limitation, those contemplated by Section 6, 7 and 8 of this Agreement).

The fact that Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 3 will not of itself limit or otherwise affect any other rights of the Executive other than pursuant to this Agreement. In the event that any payment or benefit intended to be provided under this Agreement or otherwise is required to be reduced pursuant to this Section 3, the Company will reduce the Executive’s payment and/or benefits, to the extent required, in the following order: (i) the lump sum payment provided under Section 2(d); (ii) the lump sum payment provided under Section 2(e)(1); (iii) the lump sum payment related to Health Care Benefits provided under Section 2(f); and (iv) the accelerated vesting of equity-based awards described in Section 2(c).

 

4. C HANGE IN C ONTROL E QUITY -B ASED B ENEFITS If a Change in Control occurs, any benefits Executive may be entitled to with respect to any equity-based compensation (including any Equity Awards) shall be determined in accordance with the applicable plans and award agreements. In the event of any conflict between the terms of any such plans or award agreement and Section 2(c) of this Agreement, the terms of such plan or award agreement shall control to the extent such plan or award agreement provides for accelerated vesting or settlement in connection with a Change in Control (either upon the occurrence of such an event or thereafter). For the avoidance of doubt, if any given equity-based compensation award agreement is silent with respect to the effect of a Change in Control and the plan pursuant to which any such award agreement is granted does not contain provisions that would automatically apply to the given award, then Section 2(c) of this Agreement shall control.

 

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5. I NTERNAL R EVENUE C ODE 409A:

 

  (a) Compliance . It is the intent of the parties that the provisions of this Agreement either comply with Code Section 409A and the Treasury regulations and guidance issued thereunder or that one or more elements of compensation or benefits be exempt from Code Section 409A. Accordingly, the parties intend that this Agreement be interpreted and operated in a manner consistent with such requirements in order to avoid the application of penalty taxes under Code Section 409A to the extent reasonably practicable. The Company shall neither cause nor permit: (i) any payment, benefit or consideration to be substituted for a benefit that is payable under this Agreement if such action would result in the failure of any amount that is subject to Code Section 409A to comply with the applicable requirements of Code Section 409A; or (ii) any adjustments to any equity interest to be made in a manner that would result in the equity interest’s becoming subject to Code Section 409A unless, after such adjustment, the equity interest is in compliance with the requirements of Code Section 409A to the extent applicable. A Covered Termination shall constitute an “involuntary separation from service” for purposes of Code Section 409A.

 

  (b) Waiting Period for Specified Employees . Notwithstanding any provision of this Agreement to the contrary, if Executive is a “Specified Employee” (as that term is defined in Code Section 409A) as of Executive’s Covered Termination Date, then any amounts or benefits which are payable under this Agreement upon Executive’s “Separation from Service” (within the meaning of Code Section 409A), which are subject to the provisions of Code Section 409A and not otherwise exempt under Code Section 409A, and would otherwise be payable during the first six-month period following such Separation from Service, shall be paid on the first business day that (i) is at least six months after the date after Executive’s Covered Termination Date or (ii) follows Executive’s date of death, if earlier (the “Waiting Period”). The benefits in Sections 2(a), (d), (e) and (f) and certain of the benefits in Section 2(c) are intended to be exempt from Code Section 409A under the “short-term deferral exemption” and thus the Waiting Period is not intended to apply to such benefits.

 

6. C ONFIDENTIALITY AND N ON -D ISCLOSURE : Executive acknowledges that pursuant to this Agreement, the Company agrees to provide to him Confidential Information and has previously provided him other such Confidential Information. In return for this and other consideration, provided under this Agreement, Executive agrees that he will not, while employed by the Company or any Affiliate and thereafter, disclose or make available to any other person or entity, or use for his own personal gain, any Confidential Information, except for such disclosures as required in the performance of his duties hereunder as may otherwise be required by law or legal process (in which case Executive shall notify the Company of such legal or judicial proceeding as soon as practicable following his receipt of notice of such a proceeding, and permit the Company to seek to protect its interests and information).

 

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7. R ETURN OF P ROPERTY : Executive agrees that at the time of leaving his or her employ with the Company or an Affiliate, he will deliver to the Company (and will not keep in his possession, recreate or deliver to anyone else) all Confidential Information as well as all other devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, customer or client lists or information, or any other documents or property (including all reproductions of the aforementioned items) belonging to the Company or any of its Affiliates, regardless of whether such items were prepared by Executive.

 

8. N ON -S OLICITATION A ND N ON -C OMPETITION :

 

  (a) For consideration provided under this Agreement, including, but not limited to the Company’s agreement to provide Executive with Confidential Information regarding the Company and its respective businesses, Executive agrees that while employed by the Company or an Affiliate and for [thirty-six (36)] [twenty-four (24)] [twelve (12)] months following a Separation from Service during the term of this Agreement he shall not, without the prior written consent of the General Counsel, directly or indirectly, (i) hire or induce, entice or solicit (or attempt to induce, entice or solicit) any employee of the Company or any of its Affiliates or ventures to leave the employment of the Company or any of its Affiliates or ventures or (ii) solicit or attempt to solicit the business of any customer or acquisition prospect of the Company or any of its Affiliates or ventures with whom Executive had any actual contact or Confidential Information about, in any such case while employed by the Company or an Affiliate.

 

  (b) Additionally, for consideration provided under this Agreement, including, but not limited to the Company’s agreement to provide Executive with Confidential Information regarding the Company and its respective businesses, Executive agrees that while employed by the Company or an Affiliate and for [thirty-six (36)] [twenty-four (24)] [twelve (12)] months following a Covered Termination he will not, without the prior written consent of the Company, acting alone or in conjunction with others, either directly or indirectly, engage in any business that is in competition with the Company or an Affiliate or accept employment with or render services at a comparable level of responsibility to such a business as an officer, agent, employee, independent contractor or consultant, or otherwise engage in activities that are in competition with the Company or an Affiliate.

 

  (c) The restrictions contained in this Section 8 are limited to areas or territories within the United States and in any foreign country in which the Company or an Affiliate engages (or has definite plans to engage) in operations or the marketing of its products or services at the time of Executive’s Separation from Service.

 

  (d)

Executive acknowledges that these restrictive covenants under this Agreement, for which Executive received valuable consideration from the Company as provided in this Agreement, including, but not limited to the Company’s agreement to provide Executive with Confidential Information regarding the Company and its respective businesses, are ancillary to otherwise enforceable

 

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  provisions of this Agreement, that the consideration provided by the Company gives rise to the interest of each of the Company in restraining Executive from competing and that the restrictive covenants are designed to enforce Executive’s consideration or return promises under this Agreement. Additionally, Executive acknowledges that these restrictive covenants contain limitations as to time, geographical area, and scope of activity to be restrained that are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other legitimate business interests of the Company, including, but not limited to, the Company’s need to protect its Confidential Information. Executive further acknowledges that a violation on Executive’s part of any of the restrictive covenants contained in Section 6 or this Section 8 of this Agreement would cause immeasurable and irreparable damage to the Company. Accordingly, Executive agrees that, in addition to any other remedy the Company may have for any such violation: (1) the Company shall be entitled to injunctive relief in any court of competent jurisdiction for any actual or threatened violation of any such covenant in addition to any other remedies it may have; and (2) in addition, if the General Counsel of the Company (or other similarly situated senior executive of the Company) reasonably and in good faith determines that Executive has materially breached any of these restrictive covenants contained in this Section 8 of the Agreement during the applicable period in which they are in effect, after written notice to Executive of such determination and a ten (10) day opportunity to cure such breach (if the General Counsel determines in good faith that such breach is curable), if such breach is not so cured to the reasonable satisfaction of the General Counsel, then Executive shall be required to promptly repay all net after-tax cash amounts previously paid under this Agreement to Executive, and Executive shall forfeit any Equity Awards he or she may then hold.

 

9. N OTICES : For purposes of this Agreement, notices and all other communications must be in writing and will be deemed to have been given when personally delivered or when mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to Company:

If to Executive:

or to such other address as either party may furnish to the other in writing in accordance with this Section.

 

10. A PPLICABLE L AW : The validity, interpretation, construction and performance of this Agreement will be governed by and construed in accordance with the substantive laws of the State of Delaware, but without giving effect to the principles of conflict of laws of such State.

 

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11. S EVERABILITY : If any provision of this Agreement is determined to be invalid or unenforceable (including for the avoidance of doubt any provision (or portion thereof) of Section 6, 7 or 8 of this Agreement), then the invalidity or unenforceability of that provision will not affect the validity or enforceability of any other provision of this Agreement and all other provisions will remain in full force and effect.

 

12. W ITHHOLDING OF T AXES : The Company may withhold from any payments under this Agreement all federal, state, local or other taxes as may be required pursuant to any law or governmental regulation or ruling. Executive acknowledges that other than the Company’s obligation to withhold and remit applicable income and/or employment taxes and pay its share of any applicable payroll taxes, Executive is solely responsible for any and all taxes, interest and penalties that may be imposed with respect to the payments and benefits provided under this Agreement.

 

13. N O A SSIGNMENT ; S UCCESSORS : Executive’s right to receive payments or benefits under this Agreement will not be assignable or transferable, whether by pledge, creation of a security interest or otherwise, whether voluntary, involuntary, by operation of law or otherwise, other than a transfer by will or by the laws of descent or distribution, and in the event of any attempted assignment or transfer contrary to this Section 13 the Company will have no liability to pay any amount so attempted to be assigned or transferred. This Agreement inures to the benefit of and is enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

This Agreement is binding upon and inures to the benefit of the Company and its successors and assigns (including, without limitation, any company into or with which the Company may merge or consolidate and any Successor).

 

14. N UMBER AND G ENDER : Wherever appropriate herein, words used in the singular will include the plural, the plural will include the singular, and the masculine gender will include the feminine gender.

 

15. C ONFLICTS : This Agreement constitutes the entire understanding of the parties with respect to its subject matter and supersedes any other agreement or other understanding, whether oral or written, express or implied, between them concerning, related to or otherwise in connection with, the subject matter hereof; provided, that if Executive is a party to a Restructuring Transaction Retention Agreement, the terms of such agreement shall continue to apply if Executive experiences a Separation from Service prior to the occurrence of a Change in Control during the term of such Agreement, as provided thereunder.

 

16. A MENDMENT AND W AIVER : No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by any party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by any other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

 

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17. C OUNTERPARTS : This Agreement may be executed in several counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument.

 

18. T ERM : The effective date of this Agreement shall commence on [insert effective date of spin] (“ Effective Date ”) and shall end on the earlier of (a) subject to extension in order to give effect to the notice and cure provisions contained in the definition of Good Reason, the second anniversary of the date a Change in Control occurs, or (b) the date on which Executive experiences a Separation from Service under circumstances that do not constitute a Covered Termination; provided that terms of this Agreement which must survive the termination this Agreement in order to be effectuated (including the provisions of Sections 2, 3, 6, 7 and 8) will survive.

 

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COMPANY
By:  

 

Name:  
Title:  
EXECUTIVE
By:  

 

Name:  

 

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EXHIBIT A

D EFINITIONS

The following terms have the meanings set forth below.

“Accrued Benefits” shall mean:

 

  i Any portion of Executive’s Salary earned through the Covered Termination Date and not yet paid;

 

  ii Reimbursement for any and all amounts advanced in connection with Executive’s employment for reasonable and necessary expenses incurred by Executive through the date of the Covered Termination Date in accordance with the Company’s policies and procedures on reimbursement of expenses;

 

  iii Any earned vacation pay not theretofore used or paid in accordance with the Company’s policy for payment of earned and unused vacation time;

 

  iv If Executive participates in the Company’s financial planning program as of the date a Change in Control occurs, financial planning services through AYCO (or a successor) until the earlier of June 30 of the calendar year following the calendar year in which a Covered Termination occurs or the date such program terminates for all similarly situated employees; and

 

  v All other payments and benefits to which Executive may be entitled under the terms of any applicable compensation arrangement or benefit plan or program of the Company that do not specify the time of distribution; provided that Accrued Benefits shall not include any entitlement to severance under any severance plan or policy of the Company.

“Affiliate” means an Affiliate of the Company within the meaning of Rule 12b-2 promulgated under Section 12 of the Exchange Act.

“Board” means the Board of Directors of the Company.

“Bonus Plan” means the Company’s Executive Incentive Compensation Plan or the Company’s Management Incentive Compensation Plan, as applicable to Executive, or any successor plan thereto.

“Cause” means

 

  (i)

the willful and continued failure of Executive to perform substantially Executive’s duties with the Company or an Affiliate (occasioned by reason other than physical or mental illness or disability of Executive) after a written demand for substantial performance is delivered to Executive by the Compensation Committee of the Board or the Chief Executive Officer of the Company which specifically identifies the manner in which the Compensation Committee of the Board or the

 

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  Chief Executive Officer believes that Executive has not substantially performed his duties, after which Executive shall have thirty days to defend or remedy such failure to substantially perform his duties;

 

  (ii) the willful engaging by Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company; or

 

  (iii) the conviction of Executive with no further possibility of appeal for, or plea of guilty or nolo contendere by Executive to, any felony.

The cessation of employment of Executive under subparagraph (i) and (ii) above shall not be deemed to be for “Cause” unless and until there shall have been delivered to Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Compensation Committee of the Board of Directors of the Company at a meeting of such Committee called and held for such purpose (after reasonable notice is provided to Executive and he is given an opportunity, together with his counsel, to be heard before such Committee), finding that, in the good faith opinion of such Committee, Executive is guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail.

A “Change in Control” will be deemed to have occurred upon the occurrence of any of the following:

 

  (a) 30% Ownership Change : Any Person, other than an ERISA-regulated pension plan established by the Company or an Affiliate, makes an acquisition of Outstanding Voting Stock and is, immediately thereafter, the beneficial owner of 30% or more of the then Outstanding Voting Stock, unless such acquisition is made directly from the Company in a transaction approved by a majority of the Incumbent Directors; or any group is formed that is the beneficial owner of 30% or more of the Outstanding Voting Stock (other than a group formation for the purpose of making an acquisition directly from the Company and approved (prior to such group formation) by a majority of the Incumbent Directors); or

 

  (b) Board Majority Change : Individuals who are Incumbent Directors cease for any reason to constitute a majority of the members of the Board; or

 

  (c)

Major Mergers and Acquisitions : Consummation of a Business Combination unless, immediately following such Business Combination, (i) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Voting Stock immediately before such Business Combination beneficially own, directly or indirectly, more than 51% of the then outstanding shares of voting stock of the parent corporation resulting from such Business Combination in substantially the same relative proportions as their ownership, immediately before such Business Combination, of the Outstanding Voting Stock, (ii) if the Business Combination involves the issuance or payment by the Company of consideration to another entity or its shareholders, the total fair

 

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  market value of such consideration plus the principal amount of the consolidated long-term debt of the entity or business being acquired (in each case, determined as of the date of consummation of such Business Combination by a majority of the Incumbent Directors) does not exceed 50% of the sum of the fair market value of the Outstanding Voting Stock plus the principal amount of the Company’s consolidated long-term debt (in each case, determined immediately before such consummation by a majority of the Incumbent Directors), (iii) no Person (other than any corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of the then outstanding shares of voting stock of the parent corporation resulting from such Business Combination and (iv) a majority of the members of the board of directors of the parent corporation resulting from such Business Combination were Incumbent Directors of the Company immediately before consummation of such Business Combination; or

 

  (d) Major Asset Dispositions : Consummation of a Major Asset Disposition unless, immediately following such Major Asset Disposition, (i) individuals and entities that were beneficial owners of the Outstanding Voting Stock immediately before such Major Asset Disposition beneficially own, directly or indirectly, more than 70% of the then outstanding shares of voting stock of the Company (if it continues to exist) and of the entity that acquires the largest portion of such assets (or the entity, if any, that owns a majority of the outstanding voting stock of such acquiring entity) and (ii) a majority of the members of the Board (if it continues to exist) and of the entity that acquires the largest portion of such assets (or the entity, if any, that owns a majority of the outstanding voting stock of such acquiring entity) were Incumbent Directors of the Company immediately before consummation of such Major Asset Disposition.

For purposes of the definition of a “Change in Control”,

 

  (1) “Person” means an individual, entity or group;

 

  (2) “group” is used as it is defined for purposes of Section 13(d)(3) of the Exchange Act;

 

  (3) “beneficial owner” is used as it is defined for purposes of Rule 13d-3 under the Exchange Act;

 

  (4) “Outstanding Voting Stock” means outstanding voting securities of the Company entitled to vote generally in the election of directors; and any specified percentage or portion of the Outstanding Voting Stock (or of other voting stock) is determined based on the combined voting power of such securities;

 

  (5)

“Incumbent Director” means a member of the board of directors of the Company (x) who was a director of the Company on the Effective Date of this Agreement or (y) who becomes a member of the board of directors after such date and whose election, or nomination for election by the

 

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  Company’s shareholders, was approved by a vote of a majority of the Incumbent Directors at the time of such election or nomination, except that any such director will not be deemed an Incumbent Director if his or her initial assumption of office occurs as a result of an actual or threatened election contest or other actual or threatened solicitation of proxies by or on behalf of a Person other than the Board;

 

  (6) Business Combination ” means

 

  (x) a merger or consolidation involving the Company or its stock, or

 

  (y) an acquisition by the Company, directly or through one or more subsidiaries, of another entity or its stock or assets;

 

  (7) “parent corporation resulting from a Business Combination” means the Company if its stock is not acquired or converted in the Business Combination and otherwise means the entity which as a result of such Business Combination owns the Company or all or substantially all the Company’s assets either directly or through one or more subsidiaries; and

 

  (8) “Major Asset Disposition” means the sale or other disposition in one transaction or a series of related transactions of 70% or more of the assets of the Company and its subsidiaries on a consolidated basis; and any specified percentage or portion of the assets of the Company will be based on fair market value, as determined by a majority of the Incumbent Directors.

“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1986 (and any successor legislation thereto).

“Code ” means the Internal Revenue Code of 1986, as amended.

“Company” means [insert name], and, except for purposes of determining whether a Change in Control has occurred, any successor entity thereto.

Company Shares ” means shares of common stock of the Company (or any successor entity thereto).

Confidential Information ” means any and all information, data and knowledge that has been created, discovered, developed or otherwise become known to the Company or any of its Affiliates or in which property rights have been assigned or otherwise conveyed to the Company or any of its Affiliates, which information, data or knowledge has commercial value in the business in which the Company or any of its Affiliates or ventures is engaged, except such information, data or knowledge as is or becomes known to the public without violation of the terms of this Agreement. By way of illustration, but not limitation, Confidential Information includes business trade secrets, secrets concerning the Company’s or any of its Affiliate’s plans and strategies, nonpublic information concerning material market opportunities, technical trade secrets, processes, formulas, know-how, improvements, discoveries, developments, designs,

 

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inventions, techniques, marketing plans, manuals, records of research, reports, memoranda, computer software, strategies, forecasts, new products, unpublished financial information, projections, licenses, prices, costs, and employee, customer and supplier lists.

“Covered Termination” means, during the term of this Agreement (the “ Protection Period ”), there occurs a termination of Executive’s employment (such that Executive ceases to be employed by the Company or an Affiliate) that is a “Separation from Service” (as defined in Code Section 409A and the Treasury regulations and guidance issued thereunder) (i) by the Company or an Affiliate for a reason other than Cause or other than Executive’s Disability or (ii) by Executive for Good Reason (in either case, not including Executive’s death).

“Disability” means circumstances which would qualify Executive for long term disability benefits under the Company’s Long Term Disability Plan, whether or not Executive is covered under such plan.

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

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Good Reason” means any one or more of the following events which occurs during the Protection Period:

 

  (a) a material diminution in the duties or responsibilities of Executive from those applicable immediately before the date on which a Change in Control occurs;

 

  (b) a material reduction in Executive’s annual rate of base salary or target bonus as in effect on the Change in Control or as either of the same may be increased from time to time thereafter;

 

  (c) a material reduction in the amount of Executive’s annual target long-term incentive compensation opportunity (whether payable in cash, Company Shares or a combination thereof) as in effect on the Change in Control or as the same may be increased from time to time thereafter , unless such material reduction applies to all similarly situated executives of the Company and the parent corporation resulting from the Business Combination; and provided that for the avoidance of doubt, a material reduction of such annual target long-term incentive compensation opportunity shall not be deemed to occur if such opportunity becomes payable solely in cash;

or

 

  (d) a change in the location of Executive’s principal place of employment with the Company by more than 50 miles from the location where Executive was principally employed immediately before the Change in Control without the Executive’s consent.

If any of the events described above occurs prior to the second anniversary of a Change in Control (an “ Event ”), Executive shall give the Company written notice (the “ Executive Notice ”)

 

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within sixty (60) days following Executive’s knowledge of an Event that Executive intends to terminate employment as a result. The Company shall have thirty (30) days following receipt of the Executive Notice in which to cure the Event. If the Company does not take such action within that time, the Event shall constitute Good Reason. If Executive does not provide the Executive Notice within sixty (60) days as required above then the Event shall not constitute Good Reason, and thereafter, for purposes of determining whether Executive has Good Reason, Executive’s terms and conditions of employment after the occurrence of the Event shall be substituted for those terms and conditions of Executive’s employment in effect immediately prior to the Change in Control.

“Restoration Plan” means the [insert name] Defined Contribution Restoration Plan, as in effect on the Change in Control.

Restructuring Transaction Retention Agreement ” means a Restructuring Transaction Retention Agreement by and between the Executive and The Babcock & Wilcox Company dated as of November 5, 2014, which agreement has been assumed by the Company in connection with the spinoff.

“Salary” means Executive’s annual rate of base salary as in effect immediately before the Change in Control or, if higher, in effect immediately before the first Event constituting Good Reason.

“SERP” means the [insert name] Supplemental Executive Retirement Plan, as in effect on the Change in Control.

“Subsidiary” means every corporation, limited liability company, partnership or other entity of which 50% or more of the total combined voting power of all classes of voting securities or other equity interests is owned, directly or indirectly, by [insert name].

“Target Bonus Percentage” means the percentage applicable to Executive to determine Executive’s target incentive award opportunity under the Bonus Plan applicable to Executive as in effect immediately before the Covered Termination or, if higher, immediately before the first Event constituting Good Reason.

 

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Term of Change in Control Agreements

 

Name    Position    Severance Multiplier
Jim Ferland    CEO    2.99 (eligible for 1x; adjusted per employment agreement
Jenny Apker    SVP & CFO    2x
Mark Carano    SVP, Corporate Development    2x
Elias Gedeon    SVP, Business Development    2x
Pete Goumas    SVP, Operations    2x
André Hall    SVP & General Counsel    2x
Mark Low    SVP, Global Services    2x
Wendy Radtke    SVP Human Resources    2x
Paul Scavuzzo    SVP, Global Power    2x
Ken Zak    SVP, Industrial Environmental    2x
Randy Bly    VP, Internal Audit    1x
Paul Cappiello    VP, Tax    1x
Dan Hoehn    VP & CAO    1x

EXHIBIT 31.1

CERTIFICATION

I, E. James Ferland, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Babcock & Wilcox Enterprises, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

  a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  c. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 4, 2015

 

/s/ E. James Ferland

E. James Ferland

Chairman and Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION

I, Jenny L. Apker, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Babcock & Wilcox Enterprises, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

  a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  c. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 4, 2015

 

/s/ Jenny L. Apker

Jenny L. Apker

Senior Vice President and Chief Financial Officer

EXHIBIT 32.1

BABCOCK & WILCOX ENTERPRISES, INC.

Certification Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), I, E. James Ferland, President and Chief Executive Officer of Babcock & Wilcox Enterprises, Inc., a Delaware corporation (the “Company”), hereby certify, to my knowledge, that:

 

  (1) the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

  (2) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

 

Dated: August 4, 2015

     

/s/ E. James Ferland

      E. James Ferland
      Chairman and Chief Executive Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

EXHIBIT 32.2

BABCOCK & WILCOX ENTERPRISES, INC.

Certification Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), I, Jenny L. Apker, Senior Vice President and Chief Financial Officer of Babcock & Wilcox Enterprises, Inc., a Delaware corporation (the “Company”), hereby certify, to my knowledge, that:

 

  (1) the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

  (2) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

 

Dated: August 4, 2015

     

/s/ Jenny L. Apker

      Jenny L. Apker
      Senior Vice President and Chief Financial Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

Exhibit 95

 

Mine or Operating Name / MSHA
Identification Number

  Section
104 S&S
Citations

(#)
    Section
104(b)
Orders

(#)
    Section
104(d)
Citations
and
Orders

(#)
    Section
110(b)(2)
Violations

(#)
    Section
107(a)
Orders

(#)
    Total Dollar
Value of
MSHA
Assessments
Proposed

($)
    Total
Number
of
Mining
Related
Fatalities

(#)
    Received
Notice of
Pattern of
Violations
Under
Section
104(e)

(yes/no)
    Received
Notice of
Potential
to Have
Pattern
Under
Section
104(e)

(yes/no)
    Legal
Actions
Pending
as of
6/30/2014

(#)
    Legal
Actions
Initiated
During
Period

(#)
    Legal
Actions
Resolved
During
Period

(#)
 

Revloc Refuse Site
ID # 3608032

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