8-K
--12-31 false 0001723089 false 0001723089 2020-06-03 2020-06-03

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 3, 2020

 

ChampionX Corporation

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware

 

001-38441

 

82-3066826

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

2445 Technology Forest Blvd

Building 4, 12th Floor

The Woodlands, Texas 77381

(Address of Principal Executive Offices, including Zip Code)

(281) 403-5772

(Registrant’s Telephone Number, Including Area Code)

Apergy Corporation

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

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

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

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

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

Securities registered pursuant to Section 12(b) of the Act: None

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, $0.01 par value

 

APY(1)

 

New York Stock Exchange

(1) ChampionX Corporation is expected to commence trading under the ticker symbol “CHX” on June 4, 2020

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

 

 


EXPLANATORY NOTE

On June 3, 2020 (the “Closing Date”), pursuant to that certain Agreement and Plan of Merger and Reorganization dated as of December 18, 2019 (the “Merger Agreement”), by and among ChampionX Corporation, a Delaware corporation (f/k/a Apergy Corporation, the “Company”), Athena Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), Ecolab Inc., a Delaware corporation (“Ecolab”), and ChampionX Holding Inc., a Delaware corporation and a wholly owned subsidiary of Ecolab (“Newco”), the Company completed its Reverse Morris Trust acquisition of Ecolab’s upstream energy business (the “Newco Business”, and the transactions contemplated by the Merger Agreement, the “Transactions”). In connection with the Transactions, (i) on or before the Closing Date, Ecolab transferred the Newco Business to Newco and its subsidiaries (the “Reorganization”) and, thereafter, on the Closing Date, Ecolab distributed to certain stockholders of Ecolab (the “Distribution”) all of the shares of common stock, par value $0.01 per share, of Newco (the “Newco Common Stock”) pursuant to that certain Separation and Distribution Agreement, dated as of December 18, 2019, among the Company, Ecolab and Newco (the “Separation Agreement”), and (ii) following the Distribution, Merger Sub merged with and into Newco (the “Merger”), with Newco surviving the Merger as a wholly owned subsidiary of the Company.

Item 1.01. Entry into a Material Definitive Agreement.

Transaction Agreements

On the Closing Date, in connection with the consummation of the Merger and in accordance with the Separation Agreement and the Merger Agreement:

The Company, Newco and Ecolab entered into a Tax Matters Agreement (the “Tax Matters Agreement”), to govern the parties’ respective rights, responsibilities and obligations with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the retention of records, the control of audits and other tax proceedings and other matters regarding taxes, including cooperation and information sharing with respect to tax matters.

Ecolab and Newco entered into an Intellectual Property Matters Agreement (the “IP Matters Agreement”), which sets forth the terms and conditions under which Newco may use, following the Transactions, certain patents, trademarks, and copyrights allocated to Ecolab pursuant to the Separation Agreement. The IP Matters Agreement also includes a cross-license of certain know-how (including trade secrets) and the terms and conditions under which each party will maintain, support, transfer, or license certain designated product registrations and related data that are allocated to Ecolab or Newco, as applicable, pursuant to the Separation Agreement, but that are held or used by the other party as of the closing of the Transactions.

Ecolab and Newco entered into a Transition Services Agreement (the “Transition Services Agreement”), pursuant to which Ecolab and its subsidiaries and Newco and its subsidiaries will provide to each other with specified support services and other assistance for a limited time following the closing of the Merger.

Ecolab and ChampionX LLC, a Delaware limited liability company, entered into a Cross Supply and Product Transfer Agreement (the “Cross-Supply Agreement”), pursuant to which Ecolab will supply ChampionX LLC with certain products and ChampionX LLC will supply Ecolab with certain products for a transitional period following the closing of the Merger.

The foregoing description does not purport to be complete and is qualified in its entirety by reference to each of the Transition Services Agreement, the IP Matters Agreement, the Cross-Supply Agreement and the Tax Matters Agreement, copies of which are attached hereto as Exhibits 2.4 - 2.7 and each of which is incorporated by reference into this Item 1.01. A summary of the material terms of each of the agreements described above is also contained in the Company’s Registration Statement on Form S-4, as amended (Registration No. 333-236379), which was declared effective by the Securities and Exchange Commission (the “SEC”) on April 30, 2020 (the “Apergy Registration Statement”) and is incorporated by reference into this Item 1.01.

Apergy Credit Agreement Joinder

As previously disclosed, on February 14, 2020, the Company entered into that certain First Amendment to Credit Agreement (the “First Amendment”), amending that certain Credit Agreement dated as of May 9, 2018 (as amended by the First Amendment, the “Apergy Credit Agreement”), by and among the Company, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent.

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The Apergy Credit Agreement provided for the incurrence of an additional $150 million of revolving commitments under the Apergy Credit Agreement (the “Revolver Increase”), upon the consummation of and in connection with the Merger. In addition, the Apergy Credit Agreement requires Newco and certain of its wholly-owned material domestic subsidiaries (the “Newco Joinder Parties”) to guarantee the obligations under the Apergy Credit Agreement (as well as certain cash management obligations and interest rate hedging or other swap agreements) and grant a security interest on substantially all of each Newco Joinder Party’s material assets immediately after the effectiveness of the Merger. On the Closing Date, the Revolver Increase became effective, and the Newco Joinder Parties executed joinder documentation to provide the required guarantees and collateral pursuant to the Apergy Credit Agreement.

The Apergy Credit Agreement is attached hereto as Exhibit 10.1 and is incorporated by reference into this Item 1.01.

Newco Credit Agreement

On the Closing Date, Newco entered into that certain Credit Agreement (the “ChampionX Credit Agreement”), by and among Newco, as borrower, the lenders party thereto and Bank of America, N.A., as administrative agent, pursuant to which the lenders provided a $537 million term loan facility (the “Term Loan Facility”) to Newco to fund a cash payment of approximately $527 million to Ecolab on the Closing Date. The Term Loan Facility matures on the earlier of (a) seven years after the Closing Date and (b) if any of the Company’s existing Senior Unsecured Notes (as defined in the ChampionX Credit Agreement) are still outstanding as of such date, January 30, 2026.

On the Closing Date, the Term Loan Facility was guaranteed by the Newco Joinder Parties, Apergy and the wholly-owned domestic material subsidiaries of Apergy which guarantee the obligations under the Apergy Credit Agreement (together with Newco, collectively, the “ChampionX Loan Parties”). All obligations under the ChampionX Credit Agreement, and the guarantees of those obligations, are secured by substantially all of the material assets of the ChampionX Loan Parties.

Amounts outstanding under the Term Loan Facility shall bear interest, at the option of Newco, at a rate equal to (a) LIBOR plus 5.0% for Eurocurrency Rate Loans or (b) the highest of (i) the Federal Funds Rate plus 1/2 of 1%, (ii) the “prime rate” quoted by Bank of America, N.A., (iii) LIBOR plus 1.00% and (iv) 1.00%, plus 4.0%.

Any voluntary prepayment of the Term Loan Facility which occurs within two years of the Closing Date is subject to a make-whole prepayment premium in the amount of the Applicable Premium (as defined in the ChampionX Credit Agreement) of the aggregate principal amount of the Term Facility prepaid.

ChampionX Loan Parties are subject to various affirmative and negative covenants and reporting obligations under the ChampionX Credit Facility. These include, among others, limitations on indebtedness, liens, sale and leaseback transactions, investments, fundamental changes, assets sales, restricted payments, affiliate transactions, and restricted debt payments. Events of default under the Term Loan Facility include non-payment of amounts due to the lenders, violation of covenants, materially incorrect representations, defaults under other material indebtedness, judgments and specified insolvency-related events, certain ERISA events, and invalidity of loan or collateral documents, subject to, in certain instances, specified thresholds, cure periods and exceptions.

The ChampionX Credit Agreement is attached hereto as Exhibit 10.2 and is incorporated by reference into this Item 1.01.

Item 2.01. Completion of Acquisition or Disposition of Assets.

On the Closing Date, the Merger was consummated pursuant to the Merger Agreement and the Separation Agreement. At the effective time of the Merger (the “Effective Time”), each issued and outstanding share of Newco Common Stock (except for shares of Newco Common Stock held by Newco, which shares were canceled and ceased to exist, and no consideration was delivered in exchange therefor) was converted into the right to receive a number of duly authorized, validly issued, fully paid and nonassessable shares of the Company’s common stock, par value $0.01 per share (the “Company Common Stock”) equal to the Exchange Ratio (as defined in the Merger Agreement). The Exchange Ratio was calculated, pursuant to the Merger Agreement, such that immediately following the Merger, Newco equityholders held approximately 62% of the Company Common Stock on a fully-diluted basis and the Company equityholders prior to the Merger held approximately 38% of the Company Common Stock on a fully-diluted basis.

3


Whole shares of Company Common Stock in uncertificated form will be received by Newco stockholders. Under the terms of the Merger Agreement, fractional shares of Company Common Stock will not be issued. Instead, holders of shares of Newco Common Stock who would otherwise have been entitled to receive a fractional share of Company Common Stock (after aggregating all fractional shares of Company Common Stock issuable to such holder) will receive in cash the dollar amount (rounded to the nearest whole cent) determined by multiplying such fraction by the closing price of Company Common Stock on the New York Stock Exchange (the “NYSE”) on the last business day prior to the Effective Time. The amount received by such holders of shares of Newco Common Stock will be net of any required withholding taxes.

On the Closing Date, Merger Sub merged with and into Newco, with Newco surviving the Merger as a wholly owned subsidiary of the Company.

In connection with the Transactions, the Company, Ecolab, ChampionX LLC and Newco entered into certain additional agreements relating to, among other things, certain tax matters and the provision of certain transition services during a transition period following the consummation of the Merger. The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.01.

The Apergy Registration Statement sets forth certain additional information regarding Newco and the Transactions. The information contained in Items 1.01 and 5.02 of this Current Report on Form 8-K is incorporated by reference into this Item 2.01. In addition, the foregoing description of the Transactions is qualified in its entirety by reference to the Merger Agreement and the Separation Agreement, copies of which are attached as exhibits hereto and are incorporated by reference into this Item 2.01.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.

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

(c)

Executive Officers

Effective as of the Effective Time on the Closing Date, the Company’s board of directors elected Deric Bryant to serve as Senior Vice President and Chief Operating Officer of the Company and Antoine Marcos to serve as Vice President, Corporate Controller and Chief Accounting Officer of the Company.

Mr. Bryant previously served as executive vice president of Ecolab and president of the Ecolab upstream business known as ChampionX. Mr. Bryant had been with Ecolab since 1995 and held roles in sales, marketing and general management. Most recently, he was executive vice president of the upstream business and previously served as vice president of upstream’s CAPEX and Latin American division. Mr. Bryant holds a Bachelor of Science degree in Mechanical Engineering from Texas A&M University. Mr. Marcos previously served as Senior Vice President of Finance for Nalco Champion. Mr. Marcos joined Ecolab in 2003 and held various leadership roles in Finance, including vice president, Commercial Solutions, supporting the global business information priorities of the business and Finance teams.

Neither Mr. Bryant nor Mr. Marcos has a direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.

(d)

Board of Directors

Effective as of the Effective Time on the Closing Date, the board of directors of the Company increased the size of the board from seven members to nine members and appointed the two individuals designated by Ecolab, Heidi Alderman and Stuart Porter, to serve as Class I and Class II directors, respectively. As a result, the board composition will be as follows:

Class I Directors:

 

Mamatha Chamarthi

Stephen M. Todd

Heidi Alderman

4


Class II Directors:

 

Gary P. Luquette

Daniel W. Rabun

Stuart Porter

Class III Directors:

 

Kenneth M. Fisher

Sivasankaran Somasundaram

Stephen K. Wagner

Each of the Ecolab designated directors will be entitled to receive the standard, pro-rated remuneration provided to the Company’s non-management directors. Listed below is the biographical information for the two new directors designated by Ecolab:

Heidi Alderman is the former Senior Vice President, Intermediates of BASF Corporation (a global chemical manufacturing company), a position she held from 2016 until her retirement in 2019. Prior to this role, Ms. Alderman held the positions of Senior Vice President, North American Petrochemicals from 2011 to 2016; Senior Vice President, North American Procurement from 2008 to 2011; Vice President, Functional Polymers from 2005 to 2008; and Business Director, Polymers from 2003 to 2005, all at BASF SE.

Ms. Alderman’s 39-year career in chemicals manufacturing brings a unique and valuable perspective to the Board. She also holds a bachelor’s degree in chemical engineering from Stevens Institute of Technology and a master’s degree in chemical engineering from Drexel University, providing a depth of expertise for the Company’s expanded business. Ms. Alderman has held various positions in business, operations, research, procurement, product and marketing management at BASF, Air Products and Chemicals Inc. and Rohm and Haas, in addition to completing the University of Pennsylvania Wharton Management Program in business administration, providing a global business management perspective to the Board.

Ms. Alderman has served on the Board of Olin Corporation since 2019 where she is a member of the Directors and Corporate Governance Committee.

Stuart Porter founded Denham Capital in 2004 and is a Managing Partner as well as Denman’s Chief Executive Officer and Chief Investment Officer. Mr. Porter holds a Bachelor of Arts from the University of Michigan and a Master of Business Administration from the University of Chicago Booth School of Business.

Mr. Porter brings three plus decades of experience evaluating, investing and advising companies all along the energy value chain. In his current and previous roles, he has overseen the management of 40 upstream, midstream and oilfield service companies representing in excess of $3.5 billion of invested capital. Additionally, Mr. Porter has significant global experience, managing offices in London and Perth Australia for Denham Capital as well as deploying investment capital across more than 25 portfolio companies in Africa, Australasia, and North and South America. In Mr. Porter’s previous roles as a founding partner of Sowood Capital Management LP and Vice President and Portfolio Manager at Harvard Management Company, Inc., Bacon Investments, at J. Aron, a division of Goldman Sachs, and at Cargill Mr. Porter oversaw both trading and investment portfolios in energy in both the public and private sectors.

Ms. Alderman will serve on the Compensation Committee and Mr. Porter will serve on the Audit Committee. Neither Ms. Alderman nor Mr. Porter has a direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.

(e)

As previously disclosed in the Company’s Current Report on Form 8-K filed with the SEC on May 14, 2020, on May 12, 2020, at the Company’s 2020 Annual Meeting of Shareholders, shareholders approved the Company’s Amended and Restated 2018 Equity and Cash Incentive Plan (the “Restated Plan”). On the Closing Date, in connection with the consummation of the Merger, the Company amended the Restated Plan to reflect the change in the name of the Company from “Apergy Corporation” to “ChampionX Corporation” (the “Name Change”), as described in the Apergy Registration Statement. No substantive changes were made to the Restated Plan. The Restated Plan, as amended by such amendment, is attached hereto as Exhibit 10.3 and is incorporated by reference into this Item 5.02.

5


Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

Amendment to Amended and Restated Certificate of Incorporation

On the Closing Date, in connection with the consummation of the Merger, the Company amended its certificate of incorporation to reflect the Name Change. Such amendment is attached hereto as Exhibit 3.1 and is incorporated by reference into this Item 5.03.

Amendment to Amended and Restated By-Laws

On the Closing Date, in connection with the consummation of the Merger, the Company amended its bylaws to reflect the Name Change. Such amendment is attached hereto as Exhibit 3.2 and is incorporated by reference into this Item 5.03.

Item 5.05. Amendments to the Registrant’s Code of Ethics, or Waiver of a Provision of the Code of Ethics.

Effective as of the Effective Time, in connection with the Merger, the board of directors adopted a revised Code of Business Conduct and Ethics for all officers and employees of the Company. A copy of the Code is available under the Corporate Governance section of the Company’s website at https://apergy.com/about-us/our-governance/.

Item 8.01. Other Events.

On the Closing Date, the Company issued a press release announcing the consummation of the Merger, a copy of which is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. The Name Change resulted in a change to the ticker symbol for the Company Common Stock listed on the NYSE. As of June 4, 2020, the Company will trade on the NYSE under the ticker symbol “CHX”.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired

The audited consolidated financial statements of Newco as of December 31, 2019 and 2018 and for each of the three years ended December 31, 2019, and the notes thereto, were included in the Apergy Registration Statement, and are incorporated by reference into this Item 9.01(a).

The unaudited interim consolidated balance sheets of Newco as of March 31, 2020 and the unaudited interim consolidated statements of income and cash flows for the three months ended March 31, 2020, and the notes thereto (together, the “Newco Unaudited Interim Consolidated Financial Statements”), are filed as Exhibit 99.2 to this Current Report on Form 8-K, and are incorporated by reference into this Item 9.01(a).

(b) Pro Forma Financial Information

The unaudited pro forma condensed combined balance sheet of the Company and Newco for the year ended December 31, 2019 and the unaudited pro forma condensed combined statement of income and for the year ended December 31, 2019, and the notes thereto, were included in the Apergy Registration Statement, and are incorporated by reference into this Item 9.01(b).

The unaudited pro forma condensed combined balance sheet of the Company and Newco as of the quarter ended March 31, 2020 and the unaudited pro forma condensed combined statement of income as of the quarter ended March 31, 2020, and the notes thereto, were included in the Current Report on Form 8-K filed on May 18, 2020, and are incorporated by reference into this Item 9.01(b).

6


(d) Exhibits. See Exhibit Index, incorporated herein by reference.

Exhibit Index

Exhibit
No.

   

Description

         
 

2.1

   

Agreement and Plan of Merger and Reorganization, dated as of December 18, 2019, by and among Ecolab Inc., ChampionX Holding Inc., ChampionX Corporation (f/k/a Apergy Corporation) and Athena Merger Sub, Inc.(incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Apergy on December 20, 2019). (1)

         
 

2.2

   

Separation and Distribution Agreement, dated as of December 18, 2019, by and among Ecolab, Newco and the Company (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K filed by the Company on December 20, 2019). (1)

         
 

2.3

   

Employee Matters Agreement, dated as of December 18, 2019, by and among Ecolab, Newco and the Company (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Company on December 20, 2019). (1)

         
 

2.4

   

Tax Matters Agreement, dated as of June 3, 2020, by and among Ecolab, Newco and the Company. (1)

         
 

2.5

   

Transition Services Agreement, dated as of June 3, 2020, by and between Ecolab and Newco. (1)

         
 

2.6

   

Intellectual Property Matters Agreement, dated as of June 3, 2020, by and between Ecolab and Newco. (1)

         
 

2.7

   

Master Cross Supply and Product Transfer Agreement, dated as of June 3, 2020, by and between Ecolab and ChampionX LLC. (1)

         
 

3.1

   

Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company.

         
 

3.2

   

Amendment to Amended and Restated By-Laws of the Company.

         
 

10.1

   

Amendment No. 1, dated February 14, 2020, amending that certain Credit Agreement dated as of May 9, 2018, by and among the Company, as borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Apergy on February 18, 2020).

         
 

10.2

   

Credit Agreement, dated June 3, 2020, among ChampionX Holding Inc., as borrower, the lenders party thereto and Bank of America, N.A., as administrative agent.

         
 

10.3

   

ChampionX Corporation Amended and Restated 2018 Equity and Cash Incentive Plan.

         
 

23.1

   

Consent of PricewaterhouseCoopers LLP.

         
 

99.1

   

Press Release dated June 3, 2020.

         
 

99.2

   

Unaudited Combined Interim Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations of ChampionX as of and for the Quarter Ended March 31, 2020.

         
 

104

   

Cover Page Interactive Data File (embedded within the Inline XBRL document)

(1) Exhibits and schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K and will be supplementally provided to the Securities and Exchange Commission upon request.

7


A list of the schedules to the Tax Matters Agreement follows:

Schedule 2.2(c)

 

Responsibility of Newco

Schedule 2.7(a)

 

Tax Refunds

Schedule 7.2

 

Consistent Treatment

8


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 hereunto duly authorized.

 

 

ChampionX Corporation

 

 

(Registrant)

         

Date: June 3, 2020

 

        

 

/s/ Jay A. Nutt

 

 

Jay A. Nutt

 

 

Senior Vice President and Chief Financial Officer

9

EX-2.4

Exhibit 2.4

TAX MATTERS AGREEMENT

by and among

ECOLAB INC.,

CHAMPIONX HOLDING INC.,

and

APERGY CORPORATION

Dated as of June 3, 2020

 


TABLE OF CONTENTS

 

ARTICLE I       
DEFINITIONS       

Section 1.1

 

General

     2  
ARTICLE II       
PAYMENTS AND TAX REFUNDS       

Section 2.1

 

Responsibility of Everest

     10  

Section 2.2

 

Responsibility of Newco

     10  

Section 2.3

 

Separation and Transfer Taxes

     10  

Section 2.4

 

Specified Pre-Distribution Period Taxes

     10  

Section 2.5

 

Straddle Period Tax Allocation

     11  

Section 2.6

 

Allocation of Employment Taxes

     11  

Section 2.7

 

Tax Refunds

     11  

Section 2.8

 

Tax Benefits

     12  

Section 2.9

 

Prior Agreements

     12  

Section 2.10

 

Apportionment of Taxes

     12  
ARTICLE III       
PREPARATION AND FILING OF TAX RETURNS       

Section 3.1

 

Everest’s Responsibility

     12  

Section 3.2

 

Newco’s Responsibility

     12  

Section 3.3

 

Right To Review Tax Returns

     13  

Section 3.4

 

Canadian Income Tax Returns

     13  

Section 3.5

 

Cooperation

     13  

Section 3.6

 

Tax Reporting Practices

     13  

Section 3.7

 

Reporting of Transactions

     14  

Section 3.8

 

Payment of Taxes

     14  

Section 3.9

 

Amended Returns and Carrybacks

     14  

Section 3.10

 

Tax Attributes

     15  
ARTICLE IV       
TAX-FREE STATUS OF THE DISTRIBUTION       

Section 4.1

 

Representations and Warranties

     16  

Section 4.2

 

Restrictions on Everest

     17  

Section 4.3

 

Restrictions on Newco

     17  


ARTICLE V       
INDEMNITY OBLIGATIONS       

Section 5.1

 

Indemnity Obligations

     20  

Section 5.2

 

Indemnification Payments

     21  

Section 5.3

 

Payment Mechanics

     21  

Section 5.4

 

Treatment of Payments

     22  
ARTICLE VI       
TAX CONTESTS       

Section 6.1

 

Notice

     22  

Section 6.2

 

Control of Tax Contests by Everest

     22  

Section 6.3

 

Control of Tax Contests by Newco

     22  

Section 6.4

 

Tax Contests

     22  

Section 6.5

 

Obligation of Continued Notice

     23  

Section 6.6

 

Settlement Rights

     23  
ARTICLE VII       
COOPERATION       

Section 7.1

 

General

     24  

Section 7.2

 

Consistent Treatment

     24  
ARTICLE VIII       
RETENTION OF RECORDS; ACCESS       

Section 8.1

 

Retention of Records

     24  

Section 8.2

 

Access to Tax Records

     25  
ARTICLE IX       
DISPUTE RESOLUTION       

Section 9.1

 

Dispute Resolution Mechanics

     25  
ARTICLE X       
MISCELLANEOUS PROVISIONS       

Section 10.1

 

Certain Provisions Incorporated By Reference

     26  

Section 10.2

 

Successors

     26  

Section 10.3

 

Conflicting Agreements

     26  

Section 10.4

 

Interest on Late Payments

     26  

 

ii


Section 10.5

 

Application to Present and Future Subsidiaries

     26  

Section 10.6

 

Assignment

     26  

Section 10.7

 

No Fiduciary Relationship

     26  

Section 10.8

 

Further Assurances

     27  

Section 10.9

 

Survival

     27  

Section 10.10

 

Notices

     27  

Section 10.11

 

Effective Date

     28  

EXHIBITS

 

Exhibit A

  

ATOB Entities

 

 

iii


TAX MATTERS AGREEMENT

This TAX MATTERS AGREEMENT (this “Agreement”), dated as of June 3, 2020, is by and among Ecolab Inc. (“Everest”), a Delaware corporation, ChampionX Holding Inc. (“Newco”), a Delaware corporation and wholly owned subsidiary of Everest, and Apergy Corporation (“Athena”), a Delaware corporation. Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in Section 1.1.

RECITALS

WHEREAS, as of the date hereof, Everest is the common parent of an affiliated group of domestic corporations that has elected to file consolidated U.S. federal Income Tax Returns and, as a result of the Distribution, neither Newco nor any of its Subsidiaries will be a member of such group after the close of the Distribution Date;

WHEREAS, the Board of Directors of Everest has determined that it is advisable and in the best interests of Everest and Everest’s stockholders to separate the Newco Business from the other businesses of Everest and to divest the Newco Business in the manner contemplated by the Distribution Agreement and Merger Agreement;

WHEREAS, in order to effect such separation, Everest and Newco have entered into the Distribution Agreement pursuant to which and on the terms and subject to the conditions set forth therein, Everest will undertake the Internal Restructuring and effect the Newco Contribution and, in exchange for the Newco Contribution, Newco shall (i) issue to Everest additional shares of Newco Common Stock and (ii) pay Everest the Cash Payment;

WHEREAS, following the completion of the Internal Restructuring, the Newco Contribution and the payment of the Cash Payment, Everest shall own all of the issued and outstanding shares of Newco Common Stock and shall effect the distribution of all of such outstanding Newco Common Stock to the holders of Everest Common Stock on the terms and subject to the conditions set forth in the Distribution Agreement;

WHEREAS, the Parties contemplate that, pursuant to the Merger Agreement, immediately after the Distribution and at the Effective Time, Merger Sub shall be merged with and into Newco, with Newco surviving the Merger as a wholly owned subsidiary of Athena, and the Newco Common Stock shall be converted into the right to receive shares of common stock of Athena on the terms and subject to the conditions set forth in the Merger Agreement;

WHEREAS, for U.S. federal income tax purposes (i) the Newco Contribution and the Distribution, taken together, are intended to qualify as a transaction described in Sections 355 and 368(a)(1)(D) of the Code, (ii) the Merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code and (iii) each of the Distribution Agreement and Merger Agreement constitute “a plan of reorganization” within the meaning of Section 368 of the Code and Treasury Regulations Section 1.368-2(g);

WHEREAS, Everest has received the Dutch Tax Ruling and Swiss Tax Ruling; and


WHEREAS, the Parties desire to (a) provide for the payment of Tax liabilities and entitlement to refunds thereof, allocate responsibility for, and cooperation in, the filing of Tax Returns, and provide for certain other matters relating to Taxes and (b) set forth certain covenants and indemnities relating to the preservation of the Intended Tax Treatment of the Transactions.

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

ARTICLE I

DEFINITIONS

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

Active Business” shall mean the business conducted by each of the ATOB Entities as of the applicable distribution date as listed on Exhibit A.

Adjustment” shall mean an adjustment of any item of income, gain, loss, deduction, credit or any other item affecting Taxes of a taxpayer pursuant to a Final Determination.

Affiliate” shall have the meaning set forth in the Distribution Agreement.

Agreement” shall have the meaning set forth in the preamble hereto.

Athena” shall have the meaning set forth in the preamble hereto.

Athena Financing” shall have the meaning set forth in the Merger Agreement.

Athena Group” shall have the meaning set forth in the Distribution Agreement.

ATOB Entities” shall mean the entities listed on Exhibit A.

Cash Payment” shall have the meaning set forth in the Distribution Agreement.

Code” shall mean the Internal Revenue Code of 1986, as amended.

Common Parent” shall mean the “common parent corporation” of an “affiliated group” (in each case, within the meaning of Section 1504 of the Code) filing a U.S. federal consolidated Income Tax Return.

Contract” shall have the meaning set forth in the Merger Agreement.

Controlling Party” shall mean, with respect to a Tax Contest, the Party entitled to control such Tax Contest pursuant to Section 6.2, Section 6.3 or Section 6.4 of this Agreement.

 

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Dispute” shall have the meaning set forth in Section 9.1 of this Agreement.

Distribution” shall have the meaning set forth in the Distribution Agreement.

Distribution Agreement” shall mean the Separation and Distribution Agreement, by and among Everest, Newco and Athena, dated as of December 18, 2019.

Distribution Date” shall have the meaning set forth in the Distribution Agreement.

Dutch Tax Ruling” shall mean an advance tax ruling from the Tax and Customs Administration of the Netherlands addressing the Dutch tax consequences of certain aspects of the Transactions.

Dutch Tax Ruling Request” shall mean any letter filed by Everest (or any of its Affiliates) with the Tax and Customs Administration of the Netherlands requesting an advance tax ruling regarding certain Dutch tax consequences of the Transactions and any amendment or supplement to such Dutch Tax Ruling Request letter.

Entity” shall have the meaning set forth in the Merger Agreement.

Everest” shall have the meaning set forth in the preamble hereto.

Everest Common Stock” shall have the meaning set forth in the Distribution Agreement.

Everest Consolidated Tax Return” shall mean the U.S. federal Income Tax Return required to be filed by Everest as the Common Parent.

Everest Controlled Tax Contests” shall have the meaning set forth in Section 6.2 of this Agreement.

Everest Group” shall mean Everest and each Entity that is a Subsidiary of Everest (other than Newco and any other member of the Newco Group).

Everest Retained Business” shall have the meaning set forth in the Distribution Agreement.

Everest Wholly Owned Group” shall mean Everest and each Entity that is a direct or indirect wholly owned Subsidiary of Everest (“wholly owned” determined as of immediately after the Separation Effective Time, treating all of the transactions in the Separation Plan as having occurred by such time).

Effective Time” shall have the meaning set forth in the Merger Agreement.

Employee Matters Agreement” shall have the meaning set forth in the Distribution Agreement.

 

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Employment Taxes” shall mean those Liabilities (as defined in the Distribution Agreement) for Taxes which are allocable pursuant to the provisions of the Employee Matters Agreement.

Final Determination” shall mean the final resolution of liability for any Tax for any taxable period, by or as a result of (a) a final decision, judgment, decree or other order by any court of competent jurisdiction that can no longer be appealed, (b) a final settlement with the IRS, a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the Legal Requirement of other jurisdictions, which resolves the entire Tax liability for any taxable period, (c) any allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such refund or credit may be recovered by the jurisdiction imposing the Tax, or (d) any other final resolution, including by reason of the expiration of the applicable statute of limitations or the execution of a pre-filing agreement with the IRS or other Taxing Authority.

Final Tax Amount” shall have the meaning set forth in the Distribution Agreement.

Group” shall mean either the Newco Group or the Everest Group, as the context requires.

Income Tax” shall mean any federal, state, local or Non-U.S. Tax determined by reference to income, gains, net worth, gross receipts, or any Taxes imposed in lieu of such a Tax.

Incremental Separation Taxes” shall mean any and all Separation Taxes in excess of those Separation Taxes that would have been imposed on the Separation and Internal Restructurings had the Transactions been consummated in accordance with the Separation Plan but the Merger was not consummated, excluding any such Taxes resulting from (a) the provision of any guarantees or collateral in connection with the consummation of the Transactions under the Newco Financing and/or the Athena Financing (or any other financing permitted under Section 5.14 of the Merger Agreement) or any other transactions or actions required to be taken pursuant to such financing in connection with the consummation of the Transactions or (b) any payment required pursuant to the terms of any Contract with respect to such financing (excluding any prepayment required as a result of an action taken by a member of the Athena Group or the Newco Group).

Indemnifying Party” shall have the meaning set forth in Section 5.2 of this Agreement.

Indemnitee” shall have the meaning set forth in Section 5.2 of this Agreement.

Intended Tax Treatment” shall mean the qualification of the Transactions for the intended tax treatment, including as set forth in the Swiss Tax Ruling, Dutch Tax Ruling, any Tax Opinion or the Separation Plan.

Internal Restructuring” shall have the meaning set forth in the Distribution Agreement.

 

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IRS” shall have the meaning set forth in the Merger Agreement.

Intended Tax Treatment Tax Contests” shall have the meaning set forth in Section 6.4 of this Agreement.

Legal Requirement” shall have the meaning set forth in the Merger Agreement.

Merger” shall have the meaning set forth in the preamble hereto.

Merger Agreement” shall have the meaning set forth in the Distribution Agreement.

Newco” shall have the meaning set forth in the preamble hereto.

Newco Business” shall have the meaning set forth in the Distribution Agreement.

Newco Canada 1” shall mean ChampionX Canada ULC, an unlimited liability company formed under the laws of the Province of Alberta.

Newco Canada 2” shall mean ChampionX Holdings 1 ULC, an unlimited liability company formed under the laws of the Province of British Columbia.

Newco Common Stock” shall have the meaning set forth in the Distribution Agreement.

Newco Contribution” shall have the meaning set forth in the Distribution Agreement.

Newco Controlled Tax Contests” shall have the meaning Section 6.3 of this Agreement.

Newco Financing” shall have the meaning set forth in the Merger Agreement.

Newco Group” shall mean Newco and each Entity that will be a Subsidiary of Newco as of immediately after the Separation Effective Time.

Newco JV Entity” shall mean an Entity that is a member of the Newco Group but is not a member of the Newco Wholly Owned Group.

Newco Sub 1” shall mean ChampionX U.S. 3 Inc., a corporation formed under the laws of Delaware.

Newco Sub 2” shall mean ChampionX Gulf Ltd., a limited company formed under the laws of the Bailiwick of Jersey.

Newco Wholly Owned Group” shall mean Newco and each Entity that is a direct or indirect wholly owned Subsidiary of Newco (“wholly owned” determined as of immediately after the Separation Effective Time, treating all of the transactions in the Separation Plan as having occurred by such time).

 

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Non-Controlling Party” shall mean, with respect to a Tax Contest, the Party that is not entitled to control such Tax Contest pursuant to Section 6.2, Section 6.3 or Section 6.4 of this Agreement.

Non-U.S. Tax” shall mean any Tax imposed by any foreign country or any possession of the United States, or by any political subdivision of any foreign country or United States possession.

Parties” shall mean the parties to this Agreement.

Past Practices” shall have the meaning set forth in Section 3.6 of this Agreement.

Person” shall have the meaning set forth in the Merger Agreement.

Post-Distribution Period” shall mean any taxable period (or portion thereof) beginning after the Distribution Date, including for the avoidance of doubt, the portion of any Straddle Period beginning after the Distribution Date.

Post-Distribution Ruling” shall mean a favorable private letter ruling from a Taxing Authority (including the IRS) to the effect that a transaction will not affect the Intended Tax Treatment.

Pre-Distribution Period” shall mean any taxable period (or portion thereof) ending on or before the Distribution Date, including for the avoidance of doubt, the portion of any Straddle Period ending at the end of the day on the Distribution Date.

Preparing Party” shall mean, with respect to a Tax Return, the Party that is required to prepare and file any such Tax Return pursuant to this Agreement.

Proposed Acquisition Transaction” shall mean a transaction or series of transactions (or any agreement, understanding, arrangement or substantial negotiations, within the meaning of Section 355(e) of the Code and Treasury Regulation Section 1.355-7, or any other Treasury Regulations promulgated thereunder, to enter into a transaction or series of transactions), whether such transaction is supported by Newco or Athena management or shareholders, is a hostile acquisition, or otherwise, as a result of which Newco or Athena (or any successor thereto) would merge or consolidate with any other Entity or as a result of which one or more Persons would (directly or indirectly) acquire, or have the right to acquire, from Newco or Athena (or any successor thereto) and/or one or more holders of Newco Common Stock or Athena stock (as the case may be), any amount of stock of Newco or Athena, that would, when combined with any other direct or indirect changes in ownership of the stock of Newco or Athena pertinent for purposes of Section 355(e) of the Code and the Treasury Regulations promulgated thereunder (including the Merger), comprise forty (40) percent or more of (i) the value of all outstanding shares of Newco or Athena as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series, or (ii) the total combined voting power of all outstanding shares of voting stock of Newco or Athena as of the

 

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date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series. Notwithstanding the foregoing, a Proposed Acquisition Transaction shall not include (i) the adoption by Newco or Athena of, or the issuance of stock pursuant to, a shareholder rights plan or (ii) issuances by Newco or Athena that satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulations Section 1.355-7(d). For the avoidance of doubt, Proposed Acquisition Transaction shall not include acquisitions of Newco or Athena stock that satisfy Safe Harbor VII (related to public trading) of Treasury Regulations Section 1.355-7(d). For purposes of determining whether a transaction constitutes an indirect acquisition, (i) any recapitalization or other transaction resulting in a shift of voting power shall be treated as an indirect acquisition of shares of stock by the shareholders experiencing an increase in voting power as a result of such recapitalization or other transaction and (ii) any redemption of shares of stock shall be treated as an indirect acquisition of shares of stock by the non-exchanging shareholders. This definition and the application thereof is intended to monitor compliance with Section 355(e) of the Code and the Treasury Regulations promulgated thereunder and shall be interpreted accordingly. Any clarification of, or change in, the statute or Treasury Regulations promulgated under Section 355(e) of the Code shall be incorporated in this definition and its interpretation. For the avoidance of doubt, the Merger shall not constitute a Proposed Acquisition Transaction.

Reasonable Basis” shall mean reasonable basis within the meaning of Section 6662(d)(2)(B)(ii)(II) of the Code and the Treasury Regulations promulgated thereunder (or such other level of confidence required by the Code at that time to avoid the imposition of penalties).

Refund” shall mean any refund, reimbursement, offset, credit, or other similar benefit in respect of Taxes (including any overpayment of Taxes that can be refunded or, alternatively, applied against other Taxes payable), including any interest paid on or with respect to such refund of Taxes; provided, however, that the amount of any refund of Taxes shall be net of any Taxes imposed by any Taxing Authority on, related to, or attributable to, the receipt of or accrual of such refund, including any Taxes imposed by way of withholding or offset.

Restricted Period” shall mean the period which begins on the Distribution Date and ends two (2) years thereafter.

Reviewing Party” shall mean, with respect to a Tax Return, the Party that is not the Preparing Party.

Separation” shall mean the separation of the Newco Business from the Everest Retained Business and the divestiture of the Newco Business in the manner contemplated by the Distribution Agreement.

Separation Effective Time” shall have the meaning set forth in the Distribution Agreement.

Separation Plan” shall have the meaning set forth in the Distribution Agreement.

 

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Separation Taxes” shall mean those Taxes triggered by, or arising or otherwise incurred as a result of, the Transactions (including any such Taxes resulting from (a) the provision of any guarantees or collateral in connection with the consummation of the Transactions under the Newco Financing and/or the Athena Financing (or any other financing permitted under Section 5.14 of the Merger Agreement) or any other transactions or actions required to be taken pursuant to such financing in connection with the consummation of the Transactions or (b) any payment required pursuant to the terms of any Contract with respect to such financing (excluding any prepayment required as a result of an action taken by a member of the Athena Group or the Newco Group)), and imposed on, or payable by, any member of the Everest Group or the Newco Group, except for (i) any Tax resulting from a breach by any Party of any covenant in this Agreement, (ii) any Tax attributable to any action set out in Section 4.2 or Section 4.3 and (iii) Transfer Taxes.

Specified Pre-Distribution Period Taxes” shall have the meaning set forth in Section 2.4 of this Agreement.

Straddle Period” shall mean any taxable year or other taxable period that begins on or before the Distribution Date and ends after the Distribution Date.

Subsidiary” shall have the meaning set forth in the Merger Agreement.

Swiss Tax Ruling” shall mean an advance tax ruling from the Federal Tax Administration of Switzerland addressing the Swiss tax consequences of certain aspects of the Transactions.

Swiss Tax Ruling Request” shall mean any letter filed by Everest (or any of its Affiliates) with the Federal Tax Administration of Switzerland requesting an advance tax ruling regarding certain Swiss tax consequences of the Transactions and any amendment or supplement to such Swiss Tax Ruling Request letter.

Tax” or “Taxes” shall have the meaning set forth in the Merger Agreement.

Tax Attribute” shall mean net operating losses; capital losses; research and development deductions, credits and carryovers; general business credits and carryovers; investment tax credit carryovers; earnings and profits; foreign tax credit carryovers; overall foreign losses; previously taxed income; separate limitation losses; and any other losses, deductions, credits or other comparable items that could affect a Tax liability for a past or future taxable period.

Tax Certificates” shall mean any certificates of officers of Everest, Newco or Athena provided to Skadden, Arps, Slate, Meagher & Flom LLP, KPMG LLP or any other law or accounting firm in connection with the Transactions.

Tax Contest” shall have the meaning set forth in the Distribution Agreement.

Tax Expert” shall mean independent Tax counsel of recognized national standing or a nationally recognized independent public accounting firm, in either case, with experience in the tax area(s) involved or at issue.

Tax Item” shall mean any item of income, gain, loss, deduction, or credit.

 

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Tax Legal Requirement” shall mean the law of any Taxing Authority or political subdivision thereof relating to any Tax.

Tax Materials” shall have the meaning set forth in Section 4.1(a) of this Agreement.

Tax Opinion” shall mean any written opinion of Skadden, Arps, Slate, Meagher & Flom LLP, KPMG LLP or any other law or accounting firm, regarding certain tax consequences of certain transactions executed as part of the Transactions.

Tax Records” shall have the meaning set forth in Section 8.1 of this Agreement.

Tax-Related Losses” shall mean (i) all Taxes (including interest and penalties thereon) imposed pursuant to any settlement, Final Determination, judgment or otherwise, (ii) all accounting, legal and other professional fees, and court costs incurred in connection with Taxes or Tax Contests, as well as any other out-of-pocket costs incurred in connection with Taxes or Tax Contests; and (iii) all costs, expenses and damages associated with stockholder litigation or controversies and any amount paid by Everest (or any of its Affiliates) or Newco (or any of its Affiliates) in respect of the liability of stockholders, whether paid to stockholders or to the IRS or any other Taxing Authority, in each case, resulting from the failure of any transaction to have the Intended Tax Treatment.

Tax Return” shall have the meaning set forth in the Merger Agreement.

Taxing Authority” shall have the meaning set forth in the Merger Agreement.

Transactions” shall mean, collectively, the Separation, Internal Restructuring, Newco Contribution, Distribution, and Merger.

Transfer Taxes” shall mean any sales, use, transfer, conveyance, ad valorem, stamp, stamp duty, recording or other similar Tax, fee or charge imposed by any Governmental Body upon the sale, transfer or assignment of real, personal, tangible or intangible property or any interest therein pursuant to the Distribution Agreement, the Separation Plan, or the Merger Agreement, or upon the recording of any such sale, transfer or assignment, together with any interest, additions or penalties in respect thereof.

Treasury Regulations” shall have the meaning set forth in the Merger Agreement.

Unqualified Tax Opinion” shall mean a “will” opinion, without substantive qualifications, of a nationally recognized law or accounting firm, to the effect that a transaction will not affect the Intended Tax Treatment of the Transactions. Any such opinion must assume that the Transactions would have qualified for the Intended Tax Treatment if the transaction in question did not occur.

 

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ARTICLE II

PAYMENTS AND TAX REFUNDS

Section 2.1 Responsibility of Everest. Everest shall pay and be responsible for (without duplication) (a) any and all Taxes imposed on or payable by any member of the Newco Wholly Owned Group for all Pre-Distribution Periods, (b) any and all Taxes imposed on or payable by any member of the Everest Wholly Owned Group, (c) any Taxes imposed on Newco or any member of the Newco Group under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or non-U.S. Tax Legal Requirement) as a result of Newco or any such member having been included as part of an Everest Consolidated Tax Return (or any similar consolidated or combined Tax Return under any similar provision of state, local or non-U.S. Tax Legal Requirement), (d) any and all Transfer Taxes and/or Separation Taxes not allocated to Newco pursuant to Section 2.3, and (e) any and all Specified Pre-Distribution Period Taxes not allocated to Newco pursuant to Section 2.4, excluding, in the case of clauses (a) and (b), any such Taxes that are Taxes of the entities set forth on Schedule 2.2(c).

Section 2.2 Responsibility of Newco(a) . Newco shall pay and be responsible for (without duplication) (a) any and all Taxes that are attributable to the Newco Business for all Post-Distribution Periods (in each case, imposed on or payable by a member of the Everest Wholly Owned Group or Newco Wholly Owned Group), (b) any and all Taxes imposed on or payable by any member of the Newco Wholly Owned Group for all Post-Distribution Periods, (c) any and all Taxes of the Entities set forth on Schedule 2.2(c) for all Post-Distribution Periods, (d) any and all Taxes allocated to Newco pursuant to Section 2.3, and (e) any and all Taxes allocated to Newco pursuant to Section 2.4.

Section 2.3 Separation and Transfer Taxes. Notwithstanding anything in this Agreement to the contrary, Newco shall pay and be responsible for (x) any and all Transfer Taxes, and (y) any and all Incremental Separation Taxes; provided that Newco shall not be responsible for Taxes described in the foregoing clauses (x) and (y), in the aggregate, in excess of $12,000,000 (reduced by the Final Tax Amount).

Section 2.4 Specified Pre-Distribution Period Taxes. Newco shall pay and be responsible for (x) any and all Taxes imposed on or payable by the Entities set forth on Schedule 2.2(c) for all Pre-Distribution Periods and (y) any and all Taxes for which a member of the Newco Wholly Owned Group is liable that are attributable to an equity interest in a Newco JV Entity for all Pre-Distribution Periods (determined in accordance with the principles of Section 2.5) (any such Taxes described in the foregoing clause (x) and clause (y), “Specified Pre-Distribution Period Taxes”); provided, that Newco shall not be responsible for Specified Pre-Distribution Period Taxes in excess of (A) $12,000,000 plus (B) any estimated Tax payments made both (i) prior to the Separation Effective Time for Specified Pre-Distribution Period Taxes described in clause (x) and (ii) with respect to Taxable periods for which Tax Returns have not been filed as of the Separation Effective Time.

 

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Section 2.5 Straddle Period Tax Allocation. Everest and Newco shall take all commercially reasonable actions necessary or appropriate to close the taxable year of Newco and each member of the Newco Group for all Tax purposes as of the close of the Distribution Date to the extent permitted by applicable Legal Requirement. If applicable Legal Requirement does not permit Newco or a member of the Newco Group, as the case may be, to close its taxable year on the Distribution Date, then the allocation of income or deductions required to determine any Taxes or other amounts attributable to the portion of the Straddle Period ending on, or beginning after, the Distribution Date shall be made by means of a closing of the books and records of Newco or such member of the Newco Group as of the close of the Distribution Date, except that in the case of any such Taxes attributable to an equity interest in any partnership or other “flowthrough” entity or controlled foreign corporation, the Taxes of the relevant owner of such equity interest shall be determined as if the taxable period of such partnership or other “flowthrough” entity or controlled foreign corporation ended as of the close of business on the Distribution Date; provided that both (i) exemptions, allowances, or deductions that are calculated on an annual or periodic basis, and (ii) property Taxes or other non-Income Taxes that are calculated on an annual or periodic basis and not assessed with respect to a transaction or series of transactions, shall, in each case, be allocated between such portions in proportion to the number of days in each such portion. For the avoidance of doubt, nothing in this Section 2.5 shall require Everest or Newco to cause a change in taxable year of any member of the Newco Group.

Section 2.6 Allocation of Employment Taxes. Notwithstanding anything to the contrary herein, Liability for Employment Taxes shall be governed by the Employee Matters Agreement.

Section 2.7 Tax Refunds.

(a) Everest shall be entitled to (i) all Refunds of Taxes the liability for which is allocated to Everest pursuant to this Agreement (it being understood that any estimated Tax payments made both (x) prior to the Separation Effective Time for such Taxes and (y) with respect to Taxable periods for which Tax Returns have not been filed as of the Separation Effective Time shall be treated as a Refund for this purpose) and (ii) the Refunds of Taxes set forth on Schedule 2.7(a); provided, Everest shall pay and be responsible for any additional Taxes attributable to the claims set forth on Schedule 2.7(a).

(b) Newco shall be entitled to all Refunds of Taxes the liability for which is allocated to Newco pursuant to this Agreement except the Refunds for Taxes set forth on Schedule 2.7(a).

(c) Newco shall pay to Everest any Refund received by Newco or any member of the Newco Group that is allocable to Everest pursuant to this Section 2.7 no later than five (5) Business Days after the receipt of such Refund. Everest shall pay to Newco any Refund received by Everest or any member of the Everest Group that is allocable to Newco pursuant to this Section 2.7 no later than five (5) Business Days after the receipt of such Refund. For purposes of this Section 2.7(c), any Refund that arises as a result of an offset, credit or other similar benefit in respect of Taxes other than a receipt of cash shall be deemed to be received on the date on which payment of the Tax that would have otherwise been paid absent such offset, credit or other similar benefit is due (taking into account any applicable extensions). To the extent that the amount of any Refund in respect of which a payment was made under this Section 2.7 is later reduced by a Taxing Authority or in a Tax Contest, such reduction shall be allocated to the Party to which such Refund was allocated pursuant to this Section 2.7 and an appropriate adjusting payment shall be made.

 

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Section 2.8 Tax Benefits. If (a) one Party is responsible for a Tax pursuant to this Agreement and (b) the other Party is entitled to a deduction, credit or other Tax benefit relating to such Tax, then the Party entitled to such deduction, credit or other Tax benefit shall pay to the Party responsible for such Tax the amount of any cash Tax savings realized by the entitled Party as a result of such deduction, credit or other Tax benefit, net of any Taxes imposed by any Taxing Authority on, related to, or attributable to, the receipt of or accrual of such Tax benefit, including any Taxes imposed by way of withholding or offset, no later than five (5) Business Days after such cash Tax savings are realized. To the extent that the amount of any Tax benefit in respect of which a payment was made under this Section 2.8 is later reduced by a Taxing Authority or in a Tax Contest, the Party that received such payment shall refund such payment to the Party that made such payment to the extent of such reduction.

Section 2.9 Prior Agreements. Except as set forth in this Agreement and in consideration of the mutual indemnities and other obligations of this Agreement, any and all prior Tax sharing or allocation agreements or practices between any member of the Everest Group and any member of the Newco Group shall be terminated with respect to the Newco Group and the Everest Group as of the Distribution Date. No member of either the Newco Group or the Everest Group shall have any continuing rights or obligations under any such agreement.

Section 2.10 Apportionment of Taxes. For all purposes of this Agreement, but subject to Section 3.10, Everest shall determine in good faith, and in consultation with Newco, which Tax Items are properly attributable to assets or activities of the Newco Business (and in the case of a Tax Item that is properly attributable to both the Newco Business and the Everest Retained Business, the allocation of such Tax Item between the Newco Business and the Everest Retained Business). To the extent that Newco may in good faith disagree with any such apportionment, any disputes shall be resolved by the Tax Expert in accordance with Section 9.1.

ARTICLE III

PREPARATION AND FILING OF TAX RETURNS

Section 3.1 Everests Responsibility. Everest shall prepare and file when due (taking into account any applicable extensions), or shall cause to be prepared and filed, any Everest Consolidated Tax Returns and any other Tax Returns required or permitted to be filed by Everest or a member of the Everest Group for any Pre-Distribution Period or Straddle Period. Everest shall be the “Preparing Party” with respect to Tax Returns described in this Section 3.1.

Section 3.2 Newcos Responsibility. Newco shall prepare and file when due (taking into account any applicable extensions), or shall cause to be prepared and filed, all Tax Returns for any Pre-Distribution Period or Straddle Period required to be filed by or with respect to members of the Newco Group other than those Tax Returns for which Everest is responsible under Section 3.1. Newco shall be the “Preparing Party” with respect to Tax Returns described in this Section 3.2.

 

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Section 3.3 Right To Review Tax Returns. To the extent that the positions taken on any Tax Return (i) reasonably relate to matters for which the Reviewing Party has an indemnification obligation to the Preparing Party, or that may give rise to a Refund to which the Reviewing Party would be entitled under this Agreement or (ii) would reasonably be expected to adversely affect the Tax position of the Reviewing Party, the Preparing Party shall provide a draft of the relevant portion of such Tax Return to the Reviewing Party for its review and comment at least thirty (30) Business Days prior to the due date for such Tax Return (taking into account any applicable extensions). The Reviewing Party shall thereafter have fifteen (15) Business Days to review such portion of such Tax Return and provide reasonable comments, if any, on such portion of such Tax Return to the Preparing Party, provided, however, that the Reviewing Party shall provide any comments it may have to the Preparing Party no later than two (2) Business Days prior to the due date for such Tax Return (taking into account any applicable extensions). The Preparing Party shall modify such portion of such Tax Return before filing such Tax Return to include the Reviewing Party’s reasonable comments, provided, however, that nothing herein shall prevent the Preparing Party from timely filing any such Tax Return. Notwithstanding the foregoing, in the case of an Everest Consolidated Tax Return, the covenants and obligations set forth in this Section 3.3 shall not apply. The Parties shall negotiate in good faith to resolve any disputes relating to the review of a Tax Return pursuant to this Section 3.3. Any disputes that the Parties are unable to resolve shall be resolved by the Tax Expert pursuant to Section 9.1. In the event that any dispute is not resolved (whether pursuant to good faith negotiations among the Parties or by the Tax Expert) prior to the due date for the filing of any Tax Return (taking into account any applicable extensions), such Tax Return shall be timely filed by the Preparing Party and the Parties agree to amend such Tax Return as necessary to reflect the resolution of such dispute in a manner consistent with such resolution.

Section 3.4 Canadian Income Tax Returns. Notwithstanding Section 3.2, in the case of each Tax Return required to be filed by any member of the Newco Group with any Canadian Taxing Authority for any Pre-Distribution Period or Straddle Period that reflects the Intended Tax Treatment, Everest shall direct the preparation of the portion of such Tax Return that reflects such treatment. The provisions of Section 3.3 relating to providing draft Tax Returns and providing and incorporating comments with respect thereto shall apply to the portion of any Canadian Income Tax Return prepared at Everests direction pursuant to this Section 3.4, mutatis mutandis, as if Everest were the Preparing Party.

Section 3.5 Cooperation. The Parties shall provide, and shall cause their Subsidiaries to provide, assistance and cooperation to one another in accordance with Article VII with respect to the preparation and filing of Tax Returns, including providing information required to be provided in Article VIII.

Section 3.6 Tax Reporting Practices. With respect to any Tax Return required to be filed by Newco under Section 3.2, such Tax Return shall be prepared in a manner (i) consistent with past practices, accounting methods, elections and conventions (“Past Practices”) used by Everest in preparing similar Tax Returns (unless there is no Reasonable Basis for the use of such Past Practices), and to the extent any items are not covered by Past Practices (or in the event that there is no Reasonable Basis for the use of such Past Practices), in accordance with reasonable Tax accounting practices selected by Newco; and (ii) that, to the extent consistent with clause (i), minimizes the overall amount of Taxes due and payable on such Tax Return for

 

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all of the Parties by cooperating in making such elections or applications for group or other relief or allowances available in the taxing jurisdiction in which such Tax Return is filed; provided, that making such election or application for group or other relief or allowances available in the taxing jurisdiction in which such Tax Return is filed does not have a disproportionate and adverse effect on such Party. Newco shall not take any action inconsistent with the assumptions (including items of income, gain, deduction, loss and credit) made in determining all estimated or advance payments of Taxes on or prior to the Distribution Date. In addition, Newco shall not be permitted, and shall not permit any member of the Newco Group, to make a change in any of its methods of accounting for Tax purposes that is reasonably likely to adversely affect Everest’s liability for Taxes for any Pre-Distribution Periods or Straddle Periods until all applicable statutes of limitations for all Pre-Distribution Periods and Straddle Periods have expired, unless otherwise required by applicable Tax Legal Requirement.

Section 3.7 Reporting of Transactions. Everest, Athena and Newco shall timely file any appropriate information and statements (including as required by Section 6045B of the Code and Section 1.355-5 of the Treasury Regulations and, to the extent applicable, Section 1.368-3 of the Treasury Regulations) to report each step of the Transactions in accordance with the Intended Tax Treatment.

Section 3.8 Payment of Taxes.

(a) With respect to any Tax Return required to be filed pursuant to this Agreement, the Preparing Party shall remit or cause to be remitted to the applicable Taxing Authority in a timely manner any Taxes due in respect of any such Tax Return. The obligation to make payments pursuant to this Section 3.8(a) shall not affect a Party’s right, if any, to receive payments under Article V or otherwise be indemnified with respect to that Tax liability.

(b) In the case of any Tax Return for which the Party that is not the Preparing Party is obligated pursuant to this Agreement to pay all or a portion of the Taxes reported as due on such Tax Return, the Preparing Party shall notify the other Party, in writing, of its obligation to pay such Taxes and, in reasonably sufficient detail, its calculation of the amount due by such other Party and the Party receiving such notice shall pay such amount to the Preparing Party upon the later of two (2) Business Days prior to the date on which such payment is due and fifteen (15) Business Days after the receipt of such notice.

Section 3.9 Amended Returns and Carrybacks.

(a) Newco shall not, and shall not permit any member of the Newco Group to, file or allow to be filed any amended Tax Return or request for an Adjustment for any Pre-Distribution Period or Straddle Period without the prior written consent of Everest, such consent not to be unreasonably withheld, conditioned or delayed.

(b) Except as required by applicable Tax Legal Requirement, Everest shall not, and shall not permit any member of the Everest Group to, file or allow to be filed any amended Tax Return or request for an Adjustment for any Pre-Distribution Period or Straddle Period if the result would be to materially increase any liability of Newco or any member of the Newco Group (other than any such increase to the extent attributable to an adjustment to a Tax Attribute) either (i) under this Agreement or (ii) for a Post-Distribution Period, in each case without the prior written consent of Newco, such consent not to be unreasonably withheld, conditioned or delayed.

 

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(c) Except as prohibited by applicable Tax Legal Requirements, Newco shall, and shall cause each member of the Newco Group to, make any available elections to waive the right to carry back any Tax Attribute from a taxable period or portion thereof ending after the Distribution Date to a taxable period or portion thereof ending on or before the Distribution Date.

(d) Except as prohibited by applicable Tax Legal Requirements, Newco shall not, and shall cause each member of the Newco Group not to, make any affirmative election to carry back any Tax Attribute from a taxable period or portion thereof ending after the Distribution Date to a taxable period or portion thereof ending on or before the Distribution Date, without the prior written consent of Everest, such consent to be exercised in Everest’s sole and absolute discretion.

(e) If Newco has complied with Section 3.9(c) and Section 3.9(d) and pursuant to applicable Tax Legal Requirements a Tax Attribute is nevertheless carried back from a taxable period or portion thereof ending after the Distribution Date to a taxable period or portion thereof ending on or before the Distribution Date, then Everest will cooperate with Newco in seeking from the appropriate Taxing Authority such Refund as reasonably would result from such carry back and, to the extent such Refund is directly attributable to such carry back and allocable to Newco pursuant to Section 2.7, Everest shall pay to Newco the amount of such Refund received by Everest or any member of the Everest Group no later than five (5) Business Days after the receipt of such Refund.

(f) Receipt of consent by Newco or a member of the Newco Group from Everest pursuant to the provisions of this Section 3.9 shall not limit or modify Newco’s continuing indemnification obligation pursuant to Article V.

Section 3.10 Tax Attributes.

(a) Everest and Newco shall work together and cooperate in accordance with Article VII to make determinations regarding the existence and the amount of the Tax Attributes to which a member of the Newco Group is entitled after the Distribution Date; provided, however, that such determinations shall be made in a manner that is (i) consistent with Past Practices; (ii) in accordance with the rules prescribed by applicable Legal Requirement, including the Code and the Treasury Regulations; (iii) consistent with the Tax Certificates and the Intended Tax Treatment; and (iv) reasonably determined by Everest to minimize the aggregate cash Tax liability of the Everest Group; provided, however, that (x) nothing in this Agreement shall require Everest to make any of its own determinations or otherwise create any Tax Records with respect to Tax Attributes and (y) Newco shall reimburse Everest for any out-of-pocket expenses (including accounting, legal, and other professional fees) incurred by Everest in connection with the foregoing.

(b) To the extent that the amount of any Tax Attribute is later reduced or increased by a Taxing Authority or Tax Contest, such reduction or increase shall be allocated to the Party to which such Tax Attribute was allocated pursuant to Section 3.10(a).

 

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ARTICLE IV

TAX-FREE STATUS OF THE DISTRIBUTION

Section 4.1 Representations and Warranties.

(a) Everest, on behalf of itself and all other members of the Everest Group, hereby represents and warrants that (i) it has examined the Dutch Tax Ruling, each submission to the Tax and Customs Administration of the Netherlands in connection with the Dutch Tax Ruling, including the Dutch Tax Ruling Request, the Swiss Tax Ruling, each submission to the Federal Tax Administration of Switzerland in connection with the Swiss Tax Ruling, including the Swiss Tax Ruling Request, the Tax Opinions, the Separation Plan, the Tax Certificates and any other materials delivered or deliverable in connection with the rendering of the Tax Opinions and the creation of the Separation Plan (collectively, the “Tax Materials”), (ii) the facts presented and representations made therein, to the extent descriptive of or otherwise relating to Everest or any member of the Everest Group or the Everest Retained Business, were, at the time presented or represented and from such time until and including the Separation Effective Time, true, correct, and complete in all material respects and (iii) it has delivered copies of all Tax Materials delineated on Schedule 4.1(a) to Athena. Everest, on behalf of itself and all other members of the Everest Group, hereby confirms and agrees to comply with any and all covenants and agreements in the Tax Materials applicable to Everest or any member of the Everest Group or the Everest Retained Business.

(b) Athena, on behalf of itself and all other members of the Athena Group, hereby:

(i) represents and warrants that (1) it has examined the Tax Materials delineated on Schedule 4.1(a), (2) the facts presented and representations made therein, (x) to the knowledge of Athena and to the extent descriptive of or otherwise relating to Newco or any member of the Newco Group or the Newco Business, were, at the time presented or represented and from such time until and including the Separation Effective Time, true, correct, and complete in all material respects and (y) to the extent relating to Athena, descriptive of or otherwise relating to Athena or any member of the Athena Group or the Athena Business (excluding, for the avoidance of doubt, Newco or any member of the Newco Group or the Newco Business), were, at the time presented or represented and from such time until and including the Separation Effective Time, true, correct, and complete in all material respects and (3) it has no plan or intention to (A) modify, reprice, repay, pre-pay, pay down, redeem, retire, defease or otherwise satisfy any portion of the Newco Financing that is outstanding as of the Separation Effective Time (including with proceeds of new third-party indebtedness) (excluding any payments required pursuant to the terms of any Contract with respect to the Newco Financing), (B) take any action which would

 

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accelerate a required payment in respect of any portion of the Newco Financing, (C) add any co-borrower to the Newco Financing (provided, that the provision of any guarantees or collateral in connection with the consummation of the Transactions under the Newco Financing and/or the Athena Financing (or any other financing permitted under Section 5.14 of the Merger Agreement) or any other transactions or actions required to be taken pursuant to such financing in connection with the consummation of the Transactions shall not constitute the addition of any co-borrower to the Newco Financing), or (D) cause any portion of the Newco Financing to be assumed by another Person; and

(ii) confirms and agrees to comply with any and all covenants and agreements in the Tax Materials applicable to Newco or any member of the Newco Group or the Newco Business.

(c) Each of Everest, on behalf of itself and all other members of the Everest Group, and Athena, on behalf of itself and all other members of the Athena Group represents and warrants that it knows of no fact (after due inquiry) that may cause the Transactions not to qualify for the Intended Tax Treatment.

(d) Each of Everest, on behalf of itself and all other members of the Everest Group, and Athena, on behalf of itself and all other members of the Athena Group represents and warrants that it has no plan or intent to take any action which is inconsistent with any statements or representations made in the Tax Materials.

Section 4.2 Restrictions on Everest. Everest, on behalf of itself and all other members of the Everest Group, hereby covenants and agrees that no member of the Everest Group will take, fail to take, or to permit to be taken: (i) any action where such action or failure to act would be inconsistent with or cause to be untrue any statement, information, covenant or representation in the Tax Materials, or (ii) any action where such action or failure to act would adversely affect, or could reasonably be expected to adversely affect, the Intended Tax Treatment of the Transactions.

Section 4.3 Restrictions on Newco and Athena.

(a) Newco, on behalf of itself and all other members of the Newco Group, and Athena, on behalf of itself and all other members of the Athena Group, each hereby covenant and agree that no member of the Newco Group or the Athena Group, as applicable, will take, fail to take, or to permit to be taken: (i) any action where such action or failure to act would be inconsistent with or cause to be untrue any statement, information, covenant or representation in the Tax Materials or this Agreement, or (ii) any action where such action or failure to act adversely affects, or could reasonably be expected to adversely affect, the Intended Tax Treatment of the Transactions.

(b) During the Restricted Period, neither Athena nor Newco:

(i) shall (or shall cause or permit any of its Affiliates to) approve or allow the discontinuance, cessation, or sale or other transfer (to an Affiliate or otherwise) of, or a material change in, any Active Business,

 

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(ii) shall voluntarily dissolve or liquidate itself or any member of the Newco Group (including any action that is a liquidation for U.S. federal income tax purposes),

(iii) shall (or shall cause or permit any of its Affiliates to) (1) enter into any Proposed Acquisition Transaction or, to the extent Athena or Newco has the right to prohibit any Proposed Acquisition Transaction, permit any Proposed Acquisition Transaction to occur, (2) redeem or otherwise repurchase (directly or through an Affiliate) any Athena stock or any Newco stock, or rights to acquire Athena Stock or Newco stock, other than through stock purchases meeting the requirements of section 4.05(1)(b) of Revenue Procedure 96-30, 1996-1 C.B. 696, (3) amend its certificate of incorporation (or other organizational documents), or take any other action, whether through a stockholder vote or otherwise, affecting the relative voting rights of its capital stock (including through the conversion of any capital stock into another class of capital stock), (4) merge or consolidate Newco or any member of the Newco Group with any other Entity (other than pursuant to the Merger) or (5) take any other action or actions (including any action or transaction that would be reasonably likely to be inconsistent with any representation made in the Tax Certificates) (other than any action excluded from the definition of “Proposed Acquisition Transaction” pursuant to the second or third sentences thereof) which in the aggregate (and taking into account the Merger and any other transactions described in this Section 4.3(b)(iii)) would, when combined with any other direct or indirect changes in ownership of Athena capital stock or Newco capital stock pertinent for purposes of Section 355(e) of the Code (including the Merger), have the effect of causing or permitting one or more Persons (whether or not acting in concert) to acquire directly or indirectly stock representing a forty (40) percent or greater interest in Athena or Newco or would reasonably be expected to result in a failure to preserve the Intended Tax Treatment of the Transactions (it being understood that the only acquisitions relevant for this purpose occurring on or before the Effective Time are those occurring pursuant to the Merger, which do not exceed a 38 percent or greater interest in Newco or any member of the Newco Group);

(iv) shall, or shall cause or permit any member of the Newco Group, to sell, transfer, or otherwise dispose of or agree to, sell, transfer or otherwise dispose (including in any transaction treated for federal income tax purposes as a sale, transfer or disposition) of assets (including, any shares of capital stock of a Subsidiary) that, in the aggregate, constitute more than 20 percent of the consolidated gross assets of Newco or any such member, as applicable. The foregoing sentence shall not apply to (1) sales, transfers, or dispositions of assets in the ordinary course of business, (2) any cash paid to acquire assets from an unrelated Person in an arm’s-length transaction, (3) any assets transferred to an Entity that is disregarded as an entity separate from the transferor for federal income tax purposes or (4) any mandatory or optional repayment (or pre-payment) of any indebtedness of Newco or any member of the Newco Group (subject to clause (v) below). The percentages of gross assets or

 

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consolidated gross assets of Newco or a member of the Newco Group, as the case may be, sold, transferred, or otherwise disposed of, shall be based on the fair market value of the gross assets of Newco and the members of the Newco Group as of the Distribution Date. For purposes of this Section 4.3(b)(iv), a merger of Newco or one of its Subsidiaries with and into any Entity that is not a wholly owned Subsidiary of Newco or Athena shall constitute a disposition of all of the assets of Newco or such Subsidiary; and

(v) shall (A) modify, reprice, repay, pre-pay, pay down, redeem, retire, defease or otherwise satisfy any portion of the Newco Financing that is outstanding as of the Separation Effective Time (including with proceeds of new third-party indebtedness) (excluding any payments required pursuant to the terms of any Contract with respect to the Newco Financing), (B) knowingly take any action which would accelerate a required payment in respect of any portion of the Newco Financing, (C) add any co-borrower to the Newco Financing (provided, that the provision of any guarantees or collateral in connection with the consummation of the Transactions under the Newco Financing and/or the Athena Financing (or any other financing permitted under Section 5.14 of the Merger Agreement) or any other transactions or actions required to be taken pursuant to such financing in connection with the consummation of the Transactions shall not constitute the addition of any co-borrower to the Newco Financing), or (D) cause any portion of the Newco Financing to be assumed by another Person.

(c) During the period which begins on the Distribution Date and ends three (3) years thereafter, neither Newco nor Athena:

(i) shall (or shall cause or permit any of its Affiliates to) (A) cease to control Newco Canada 1, Newco Canada 2, or Newco Sub 1 or (B) dispose of any shares of Newco Canada 1, Newco Canada 2, or Newco Sub 1; and

(ii) shall (or shall cause or permit any of its Affiliates to) sell, transfer, or otherwise dispose of any assets, or otherwise take any action (including repayment of Newco Canada 1’s indebtedness owing to Newco Sub 2) that would result in the shares of Newco Canada 1 or Newco Canada 2 having a value that is greater than or equal to ten (10) percent of the equity value of Newco.

(d) Notwithstanding the restrictions imposed by Section 4.3(a), Section 4.3(b) and Section 4.3(c), Athena, Newco or any of their Affiliates may take any of the actions or transactions described therein if Newco either (i) obtains an Unqualified Tax Opinion in form and substance reasonably satisfactory to Everest, (ii) obtains a Post-Distribution Ruling, and Everest shall have received such Post-Distribution Ruling in form and substance reasonably satisfactory to Everest or (iii) obtains the prior written consent of Everest waiving the requirement that Newco obtain an Unqualified Tax Opinion or a Post-Distribution Ruling, such waiver to be provided in Everest’s sole and absolute discretion. Everest’s evaluation of an Unqualified Tax Opinion or a Post-Distribution Ruling may consider, among other factors, the

 

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appropriateness of any underlying assumptions, representations, and covenants made in connection with such opinion or ruling (as applicable). Newco shall bear all costs and expenses of securing any such Unqualified Tax Opinion or Post-Distribution Ruling and shall reimburse Everest for all reasonable out-of-pocket expenses that Everest or any of its Affiliates may incur in good faith in seeking to obtain or evaluate any such Unqualified Tax Opinion or Post-Distribution Ruling. Neither the delivery of an Unqualified Tax Opinion or a Post-Distribution Ruling nor Everest’s waiver of Newco’s obligation to deliver an Unqualified Tax Opinion or a Post-Distribution Ruling shall limit or modify Newco’s continuing indemnification obligation pursuant to Article V.

ARTICLE V

INDEMNITY OBLIGATIONS

Section 5.1 Indemnity Obligations.

(a) Everest shall indemnify and hold harmless Newco from and against, and will reimburse Newco for, (i) all liability for Taxes allocated to Everest pursuant to this Agreement, (ii) all Tax-Related Losses arising out of, based upon, or relating or attributable to any breach of or inaccuracy in, or failure to perform, as applicable, any representation, covenant, or obligation of any member of the Everest Group pursuant to this Agreement (including but not limited to any of the foregoing contained in Section 4.1 or Section 4.2) or any Tax Materials, (iii) any other Tax-Related Loss resulting (for the avoidance of doubt, in whole or in part) from an acquisition after the Distribution of any stock or assets of Everest (or any Everest Affiliate) by any means whatsoever by any Person, and (iv) any other amounts Everest is required to pay to Newco pursuant to the terms of this Agreement.

(b) Without regard to whether an Unqualified Tax Opinion or Post-Distribution Ruling may have been provided or whether any action is permitted or consented to hereunder and notwithstanding anything else to the contrary contained herein (including Section 4.3(b)(iii)), Newco shall indemnify and hold harmless Everest from and against, and will reimburse Everest for, (i) all liability for Taxes allocated to Newco pursuant to this Agreement, (ii) all Tax-Related Losses arising out of, based upon, or relating or attributable to any breach of or inaccuracy in, or failure to perform, as applicable, any representation, covenant, or obligation of any member of the Athena Group or Newco Group pursuant to this Agreement (including but not limited to any of the foregoing contained Section 4.1 or Section 4.3) or any Tax Materials (excluding any such breach, inaccuracy, or failure to perform, as the case may be, of the Newco Group that exists or has occurred as of or prior to the Effective Time), (iii) any other Tax-Related Loss resulting (for the avoidance of doubt, in whole or in part) from an acquisition after the Distribution of any stock or assets of Athena or Newco (or any of their respective Affiliates) by any means whatsoever by any Person (other than as a result of the Merger or any repayment of the Newco Financing or Athena Financing required pursuant to the terms of any Contract with respect to such financing (excluding any prepayment required as a result of an action taken by a member of the Athena Group or the Newco Group)), and (iv) any other amounts Newco is required to pay to Everest pursuant to the terms of this Agreement.

 

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(c) To the extent that any Tax-Related Loss is subject to indemnity pursuant to both Section 5.1(a) and Section 5.1(b), each of Everest and Newco shall pay and be responsible for fifty (50) percent of such Tax-Related Loss.

Section 5.2 Indemnification Payments.

(a) Except as otherwise provided in this Agreement, if either Party (the “Indemnitee”) is required to pay to a Taxing Authority a Tax (taking into account, with respect to Tax Contests, all possible extensions and deferrals, including deferrals relating to the choice of venue for Tax Contests) or to another Person a payment in respect of a Tax that the other Party (the “Indemnifying Party”) is liable for under this Agreement the Indemnitee shall notify the Indemnifying Party, in writing, of its obligation to pay such Tax and, in reasonably sufficient detail, its calculation of the amount due by such Indemnifying Party to the Indemnitee, including any other Tax-Related Losses attributable thereto. The Indemnifying Party shall pay such amount, including any other Tax-Related Losses attributable thereto, to the Indemnitee no later than the later of (i) five (5) Business Days prior to the date on which such payment is due to the applicable Taxing Authority or (ii) fifteen (15) Business Days after the receipt of notice from the other Party.

(b) If, as a result of any change or redetermination made with respect to Article II, any amount previously allocated to and borne by one Party pursuant to the provisions of Article II is thereafter allocated to the other Party, then, no later than fifteen (15) Business Days after such change or redetermination, such other Party shall pay to such Party the amount previously borne by such Party which is allocated to such other Party as a result of such change or redetermination.

(c) If an Indemnitee receives a Refund with respect to a Tax Contest for which the Indemnifying Party made an indemnity payment to the Indemnitee pursuant to Section 5.2(a), the Indemnitee shall pay the amount of such Refund to the Indemnifying Party, such payment to the Indemnifying Party not to exceed such indemnity payment, no later than five (5) Business Days after the receipt of such Refund.

Section 5.3 Payment Mechanics.

(a) Subject to Section 10.6, all payments under this Agreement shall be made by Everest directly to Newco and by Newco directly to Everest; provided, however, that if the Parties mutually agree with respect to any such indemnification payment, any member of the Everest Group, on the one hand, may make such indemnification payment to any member of the Newco Group, on the other hand, and vice versa. All indemnification payments shall be treated in the manner described in Section 5.4.

(b) In the case of any payment of Taxes made by a Preparing Party or Indemnitee pursuant to this Agreement for which such Preparing Party or Indemnitee, as the case may be, has received a payment from the other Party, such Preparing Party or Indemnitee shall provide to the other Party a copy of any official government receipt received with respect to the payment of such Taxes to the applicable Taxing Authority (or, if no such official governmental receipts are available, executed bank payment forms or other reasonable evidence of payment).

 

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Section 5.4 Treatment of Payments. The Parties agree that any payment made among the Parties pursuant to this Agreement shall be treated, to the extent permitted by law, for all U.S. federal income tax purposes as either (i) a non-taxable contribution by Everest to Newco, or (ii) a distribution by Newco to Everest, in each case, made immediately prior to the Distribution. Any Tax indemnity payment made by a Party under this Agreement shall be increased as necessary so that after making all payments in respect to Taxes imposed on or attributable to such indemnity payment, the recipient Party receives an amount equal to the sum it would have received had no such Taxes been imposed; provided, that the recipient Party shall first reasonably cooperate with the paying Party to reduce and/or eliminate any such increase to a Tax indemnity payment (provided, that the recipient Party shall be permitted to use such payment for any purpose in its sole discretion to the extent the recipient Party has paid the underlying liability for which the Tax indemnity payment is made).

ARTICLE VI

TAX CONTESTS

Section 6.1 Notice. Each Party shall notify the other Party in writing within ten (10) Business Days after receipt by such Party or any member of its Group of a written communication from any Taxing Authority with respect to any Tax Contest concerning any Taxes for which the other Party may be liable pursuant to this Agreement.

Section 6.2 Control of Tax Contests by Everest. Everest shall have the sole responsibility and right to control the prosecution of any Tax Contest, including the exclusive right to communicate with agents of the applicable Taxing Authority and to control, resolve, settle, or agree to any deficiency, claim, or adjustment proposed, asserted, or assessed in connection with or as a result of any such Tax Contest, other than Newco Controlled Tax Contests and Intended Tax Treatment Tax Contests (collectively, “Everest Controlled Tax Contests”). For the avoidance of doubt, Tax Contests related to the claims set forth on Schedule 2.7(a) shall be Everest Controlled Tax Contests.

Section 6.3 Control of Tax Contests by Newco. Newco shall have the sole responsibility and right to control the prosecution of any Tax Contest, including the exclusive right to communicate with agents of the applicable Taxing Authority and to control, resolve, settle, or agree to any deficiency, claim, or adjustment proposed, asserted, or assessed in connection with or as a result of any such Tax Contest, that relates exclusively to Taxes for which Newco is responsible pursuant to Section 2.2 (collectively, “Newco Controlled Tax Contests”).

Section 6.4 Tax Contests Related to Intended Tax Treatment. Notwithstanding Section 6.2 or Section 6.3, Everest shall have the right to control the prosecution of any Tax Contest that relates to the Intended Tax Treatment with respect to which Everest or Newco could potentially be liable (collectively, “Intended Tax Treatment Tax Contests”); provided, that (x) Everest shall keep Newco reasonably informed with respect to any Intended Tax Treatment Tax Contest (including by promptly providing Newco with copies of written notices, material correspondence and other documents received by Everest relating to such Intended Tax Treatment Tax Contest), (y) Newco (at its sole expense) shall be entitled to participate in such

 

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Intended Tax Treatment Tax Contest, including, for the avoidance of doubt, with respect to decisions regarding the choice of venue for such Intended Tax Treatment Tax Contest (and Everest shall take any actions and execute any documents necessary to permit Newco to so participate), and (z) Everest shall not settle such Tax Contest without Newco’s prior written consent (such consent not to be unreasonably withheld, conditioned or delayed). With respect to any Intended Tax Treatment Tax Contest in which Newco elects to participate: (a) Everest shall provide Newco with a reasonable opportunity to comment on any draft correspondence or filings Everest proposes to make or submit to any Taxing Authority in connection with such Tax Contest; (b) Everest shall take into account Newco’s reasonable comments in connection with any draft correspondence or filings described in the foregoing clause (a); and (c) Everest shall permit Newco to attend any meetings (whether in person or by teleconference) with the Taxing Authorities concerning such Tax Contest.

Section 6.5 Obligation of Continued Notice. During the pendency of any Tax Contest or threatened Tax Contest, each of the Parties shall provide prompt notice to the other Party of any written communication received by it or a member of its respective Group from a Taxing Authority regarding any Tax Contest for which it is indemnified by the other Party hereunder or for which it may be required to indemnify the other Party hereunder. Such notice shall include copies of the pertinent portion of any written communication from a Taxing Authority and contain factual information (to the extent known) describing any asserted Tax liability in reasonable detail and shall be accompanied by copies of any notice and other documents received from any Taxing Authority in respect of any such matters. Such notice shall be provided in a timely fashion; provided, however, that in the event that timely notice is not provided, a Party shall be relieved of its obligation to indemnify the other Party only to the extent that such delay results in actual increased costs or actual prejudice to such other Party.

Section 6.6 Settlement Rights. Unless waived by the Parties in writing, in connection with any potential adjustment or settlement in a Tax Contest (including any Intended Tax Treatment Tax Contest) as a result of which adjustment or settlement the Non-Controlling Party may reasonably be expected to become liable to make any indemnification payment to the Controlling Party under this Agreement: (i) the Controlling Party shall keep the Non-Controlling Party informed in a timely manner of all actions taken or proposed to be taken by the Controlling Party with respect to such potential adjustment or settlement in such Tax Contest; (ii) the Controlling Party shall timely provide the Non-Controlling Party with copies of any correspondence or filings submitted to any Taxing Authority or judicial authority in connection with such potential adjustment or settlement in such Tax Contest; and (iii) the Controlling Party shall defend such Tax Contest diligently and in good faith. The failure of the Controlling Party to take any action specified in the preceding sentence with respect to the Non-Controlling Party shall not relieve the Non-Controlling Party of any liability and/or obligation which it may have to the Controlling Party under this Agreement except to the extent the Non-Controlling Party is prejudiced thereby, and in no event shall such failure relieve the Non-Controlling Party from any other liability or obligation which it may have to the Controlling Party.

 

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ARTICLE VII

COOPERATION

Section 7.1 General.

(a) Each Party shall fully cooperate, and shall cause all members of such Party’s Group to fully cooperate, with all reasonable requests in writing from the other Party, or from an agent, representative or advisor to such Party, in connection with (i) the preparation and filing of any Tax Return, claims for Refunds, the conduct of any Tax Contest, making determinations regarding Tax Attributes and calculations of amounts required to be paid pursuant to this Agreement, in each case, related or attributable to or arising in connection with Taxes of either Party or any member of either Party’s Group covered by this Agreement and the establishment of any reserve required in connection with any financial reporting and (ii) Newco obtaining a Post-Distribution Ruling or an Unqualified Tax Opinion, in each case, pursuant to Section 4.3(d) (each, a “Tax Matter”). Such cooperation shall include the provision of any information reasonably necessary or helpful in connection with a Tax Matter and shall include, without limitation, at each Party’s own cost:

(i) the provision of any Tax Returns of either Party or any member of either Party’s Group, books, records (including information regarding ownership and Tax basis of property), documentation and other information relating to such Tax Returns, including accompanying schedules, related work papers, and documents relating to rulings or other determinations by Taxing Authorities; and

(ii) the execution of any document (including any power of attorney) in connection with any Tax Contest of either Party or any member of either Party’s Group, or the filing of a Tax Return or a Refund claim of either Party or any member of either Party’s Group.

Each Party shall make its employees and facilities available, without charge, on a mutually convenient basis to facilitate such cooperation.

Section 7.2 Consistent Treatment. Unless and until there has been a Final Determination to the contrary, each Party agrees not to take any position on any Tax Return, in connection with any Tax Contest or otherwise, that is inconsistent with (a) the treatment of payments between the Everest Group and the Newco Group as set forth in Section 5.4, (b) the Intended Tax Treatment or (c) the matters set forth on Schedule 7.2 hereto.

ARTICLE VIII

RETENTION OF RECORDS; ACCESS

Section 8.1 Retention of Records. For so long as the contents thereof may become material in the administration of any matter under applicable Tax Legal Requirement, but in any event until the later of (i) sixty (60) days after the expiration of any applicable statutes of limitation (including any waivers or extensions thereof) and (ii) seven years after the

 

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Distribution Date, the Parties shall retain records, documents, accounting data and other information (including computer data) necessary for the preparation and filing of all Tax Returns (collectively, “Tax Records”) in respect of Taxes of any member of either the Everest Group or the Newco Group for any Pre-Distribution Period, Straddle Period, or Post-Distribution Period or for any Tax Contests relating to such Tax Returns. At any time after the Distribution Date that the Everest Group proposes to destroy such records or documents, it shall first notify the Newco Group in writing and the Newco Group shall be entitled to receive such records or documents proposed to be destroyed. At any time after the Distribution Date that the Newco Group proposes to destroy such records or documents, it shall first notify the Everest Group in writing and the Everest Group shall be entitled to receive such records or documents proposed to be destroyed. The Parties shall notify each other in writing of any waivers or extensions of the applicable statute of limitations that may affect the period for which the foregoing records or other documents must be retained.

Section 8.2 Access to Tax Records. The Parties and their respective Affiliates shall make available to each other for inspection and copying during normal business hours upon reasonable notice all Tax Records (and, for the avoidance of doubt, any pertinent underlying data accessed or stored on any computer program or information technology system) in their possession and shall permit the other Party and its Affiliates, authorized agents and representatives and any representative of a Taxing Authority or other Tax auditor direct access, during normal business hours upon reasonable notice, to any computer program or information technology system used to access or store any Tax Records, in each case to the extent reasonably required by the other Party in connection with the preparation of Tax Returns or financial accounting statements, audits, litigation, or the resolution of items pursuant to this Agreement. The Party seeking access to the records of the other Party shall bear all costs and expenses associated with such access, including any professional fees; provided, however, that if the access to Tax Records pursuant to this Section 8.2 results in a Refund, Tax benefit or other reduction in Taxes to the Party providing such access, the Party providing access shall reimburse the Party seeking access for the providing Party’s allocable portion of the costs and expenses of the Party seeking access, based on the amount of Refund, Tax benefit or other reduction in Taxes realized by the Party providing access.

ARTICLE IX

DISPUTE RESOLUTION

Section 9.1 Dispute Resolution Mechanics. The Parties 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 “Dispute”). Either Party may give the other Party written notice of any Dispute not resolved in the normal course of business. If the Parties cannot agree within thirty (30) Business Days following the date on which one Party gives such notice, then the Dispute shall be referred to a Tax Expert acceptable to each of the Parties to act as an arbitrator in order to resolve the Dispute. If the Parties are unable to agree upon a Tax Expert within ten (10) Business Days, the Tax Expert selected by Everest and the Tax Expert selected by Newco shall jointly select a Tax Expert that will resolve the Dispute. Such Tax Expert shall be empowered to resolve the Dispute, including by engaging nationally recognized law firms, accountants and other experts. The Tax Expert chosen to resolve the Dispute shall furnish written

 

25


notice to the Parties of its resolution of such Dispute as soon as practicable, but in no event later than forty-five (45) Business Days after its acceptance of the matter for resolution. Any such resolution by the Tax Expert shall be conclusive and binding on the Parties. The fees and expenses of the Tax Expert shall be allocated between the Parties in the same proportion that the aggregate amount of disputed items that were determined in favor of the other Party (as finally determined by the Tax Expert) bears to the total amount of disputed items submitted by the Parties.

ARTICLE X

MISCELLANEOUS PROVISIONS

Section 10.1 Certain Provisions Incorporated By Reference. The provisions of Sections 8.1, 8.6, 8.9, 8.12, 8.13, 8.14, 8.15, and 8.19 of the Distribution Agreement are hereby incorporated by reference mutatis mutandis.

Section 10.2 Successors. This Agreement shall be binding on and inure to the benefit of any successor by merger, acquisition of assets, or otherwise, to any of the parties hereto (including without limitation any successor of Everest or Newco succeeding to the Tax Attributes of either under Section 381 of the Code), to the same extent as if such successor had been an original party to this Agreement.

Section 10.3 Conflicting Agreements. In the event and to the extent that there shall be a conflict between the provisions of this Agreement and the provisions of the Distribution Agreement, this Agreement shall control with respect to the subject matter thereof.

Section 10.4 Interest on Late Payments. With respect to any payment between the Parties pursuant to this Agreement not made by the due date set forth in this Agreement for such payment, the outstanding amount will accrue interest at a rate per annum equal to the rate in effect for underpayments under Section 6621 of the Code from such due date to and including the payment date.

Section 10.5 Application to Present and Future Subsidiaries. This Agreement is being entered into by Everest and Newco on behalf of themselves and the members of their respective Groups. This Agreement shall constitute a direct obligation of each such Party and shall be deemed to have been readopted and affirmed on behalf of any entity that becomes a Subsidiary of Everest or Newco in the future.

Section 10.6 Assignment. This Agreement shall be binding upon, and shall be enforceable by and inure solely to the benefit of, the Parties and their respective successors and permitted assigns; provided, however, that neither this Agreement nor any Party’s rights or obligations hereunder may be assigned or delegated by such Party without the prior written consent of the other Parties, and any attempted assignment or delegation of this Agreement or any of such rights or obligations by any Party without the prior written consent of the other Parties shall be void and of no effect.

Section 10.7 No Fiduciary Relationship. The duties and obligations of the Parties, and their respective successors and permitted assigns, contained herein are the extent of the duties and obligations contemplated by this Agreement; nothing in this Agreement is intended to create a fiduciary relationship between the Parties hereto, or any of their successors and permitted assigns, or create any relationship or obligations other than those explicitly described.

 

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Section 10.8 Further Assurances. Subject to the provisions hereof, the Parties hereto shall make, execute, acknowledge and deliver such other instruments and documents, and take all such other actions, as may be reasonably required in order to effectuate the purposes of this Agreement and to consummate the transactions contemplated hereby.

Section 10.9 Survival. Notwithstanding any other provision of this Agreement to the contrary, all representations, covenants and obligations contained in this Agreement shall survive until the expiration of the applicable statute of limitations with respect to any such matter (including extensions thereof).

Section 10.10 Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given or made as follows: (a) if sent by registered or certified mail in the U.S. return receipt requested, upon receipt; (b) if sent by nationally recognized overnight air courier (such as Federal Express), two (2) Business Days after mailing; (c) if sent by facsimile transmission or e-mail before 5:00 p.m. Eastern Time, when transmitted and receipt is confirmed; (d) if sent by facsimile transmission or e-mail after 5:00 p.m. Eastern Time and receipt is confirmed, on the following Business Day; or (e) if otherwise actually personally delivered, when delivered; provided that such notices, requests, demands and other communications are delivered to the physical address, e-mail address or facsimile number set forth below, or to such other address as any Party shall provide by like notice to the other Parties to this Agreement:

if to Athena or Newco:

Apergy Corporation

2445 Technology Forest Blvd., 12th Floor

The Woodlands, TX 77381

Attn: General Counsel

Email: general.counsel@apergy.com

with a copy (which shall not constitute notice) to:

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

  Attn:

Michael J. Aiello

Sachin Kohli

  Email:

michael.aiello@weil.com

sachin.kohli@weil.com

  Fax:

(212) 310-8007

 

27


Weil, Gotshal & Manges LLP

2001 M Street

NW, Suite 600

Washington, DC 20036

Attn: Joseph M. Pari

Graham Magill

  Email:

joseph.pari@weil.com

graham.magill@weil.com

  Fax:

(202) 857-0940

if to Everest:

c/o Ecolab Inc.

1 Ecolab Place

Saint Paul, MN 55102

Attn: General Counsel

Email: general.counsel@ecolab.com

with a copy (which shall not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP

  Attn:

Charles W. Mulaney, Jr.

Richard C. Witzel, Jr.

155 N. Wacker Drive, Suite 2700

Chicago, IL 60606

  Email:

charles.mulaney@skadden.com

rich.witzel@skadden.com

  Fax:

(312) 407-0411

Skadden, Arps, Slate, Meagher & Flom LLP

  Attn:

Steven J. Matays

4 Times Square

New York, New York 10036

  Email:

steven.matays@skadden.com

  Fax:

(212) 735-2372

Section 10.11 Effective Date. This Agreement shall become effective only upon the occurrence of the Distribution.

*         *         *

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

28


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

 

APERGY CORPORATION
By:  

/s/ Julia Wright

  Name: Julia Wright
  Title: Senior Vice President, General Counsel & Secretary
ECOLAB INC.
By:  

/s/ Douglas M. Baker

  Name: Douglas M. Baker
  Title: Chairman of the Board and Chief Executive Officer
CHAMPIONX HOLDING INC.
By:  

/s/ Deric D. Bryant

  Name: Deric D. Bryant
  Title: President and Chief Executive Officer
EX-2.5

Exhibit 2.5

EXECUTION VERSION

TRANSITION SERVICES AGREEMENT

BY AND BETWEEN

ECOLAB INC.

AND

CHAMPIONX HOLDING INC.

DATED AS OF JUNE 3, 2020

 


TABLE OF CONTENTS

 

         Page  
  Article I   
  DEFINITIONS   

Section 1.01

  Certain Defined Terms      1  
  Article II   
  SERVICES, ACCESS TO FACILITIES AND DURATION   

Section 2.01

  Services      3  

Section 2.02

  Access to Facilities      3  

Section 2.03

  Duration of Services and Access to Facilities      3  

Section 2.04

  Additional Services and Access to Additional Facilities      5  

Section 2.05

  Exception to Obligation to Provide Services or Access to Facilities      6  

Section 2.06

  Standard of the Provision of Services or Access to Facilities      6  

Section 2.07

  Change in Services or Access to Facilities      6  

Section 2.08

  Subcontractors      7  

Section 2.09

  Electronic Access      7  

Section 2.10

  Title to Intellectual Property      8  

Section 2.11

  License to Intellectual Property      8  

Section 2.12

  Professional Advice or Opinions      8  
  Article III   
  COSTS AND DISBURSEMENTS   

Section 3.01

  Costs and Disbursements      9  

Section 3.02

  Taxes      10  

Section 3.03

  No Right to Set-Off      11  
  Article IV   
  WARRANTIES AND COMPLIANCE   

Section 4.01

  Disclaimer of Warranties      11  

Section 4.02

  Compliance with Legal Requirements and Regulations      11  

 

i


  Article V   
  LIABILITY AND INDEMNIFICATION   

Section 5.01

  Limitation on Liability      12  

Section 5.02

  Indemnification by Recipients      12  

Section 5.03

  Indemnification by Providers      12  

Section 5.04

  Exclusivity      13  

Section 5.05

  Procedures      13  
  Article VI   
  TERMINATION   

Section 6.01

  Term; Termination      13  

Section 6.02

  Effect of Termination      14  

Section 6.03

  Force Majeure      14  
  Article VII   
  MANAGEMENT AND CONTROL   

Section 7.01

  Cooperation      15  

Section 7.02

  Required Consents      15  

Section 7.03

  Primary Points of Contact for Agreement      16  

Section 7.04

  Provider Personnel      17  

Section 7.05

  No Agency      17  
  Article VIII   
  CONFIDENTIAL INFORMATION   

Section 8.01

  Treatment of Confidential Information      17  
  Article IX   
  MISCELLANEOUS   

Section 9.01

  Certain Provisions Incorporated by Reference; Precedence      17  

Section 9.02

  Notices      18  

Section 9.03

  Assignment      19  

Section 9.04

  Successors and Assigns      19  

Section 9.05

  Payment Terms      19  

Section 9.06

  Third-Party Beneficiaries      19  

Section 9.07

  Schedules      19  

Section 9.08

 

Interpretation.

     19  

 

ii


Schedules

 

Schedule 2.01(a)

  

Everest Provided Services

Schedule 2.01(b)

  

Newco Provided Services

Schedule 2.02(a)

  

Everest Provided Facilities

Schedule 2.02(b)

  

Newco Provided Facilities

 

 

iii


TRANSITION SERVICES AGREEMENT

This TRANSITION SERVICES AGREEMENT (this “Agreement”), dated as of June 3, 2020 (the “Closing Date”), is entered into by and between Ecolab Inc. (“Everest”), a Delaware corporation, and ChampionX Holding Inc. (“Newco”), a Delaware corporation. “Party” or “Parties” means Everest or Newco, individually or collectively, as the case may be.

WHEREAS, the Parties are parties to that certain Separation and Distribution Agreement, dated December 18, 2019 (the “Separation Agreement”); and

WHEREAS, pursuant to the Separation Agreement, certain services are to continue to be provided by Everest to Newco and by Newco to Everest after the Closing Date upon the terms and conditions set forth in this Agreement.

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

ARTICLE I

DEFINITIONS

Section 1.01 Certain Defined Terms.

(a) Unless otherwise defined herein, all capitalized terms used herein shall have the same meanings as in the Separation Agreement.

(b) The following capitalized terms used in this Agreement shall have the meanings set forth below:

Athena” means Apergy Corporation, a Delaware corporation.

Everest Provider” means Everest or a Provider that is a member of the Everest Group.

Force Majeure” means, with respect to a Party, an event beyond the reasonable control of such Party, including acts of God, storms, floods, riots, fires, explosions, sabotage, civil commotion or civil unrest, interference by civil or military authorities, acts of war (declared or undeclared), armed hostilities or other national or international calamity, action or inaction by, or request of, any Governmental Body (including any Legal Requirement), strikes, labor stoppages or slowdowns or other industrial disturbances, acts of terrorism and failure or interruption of networks or energy sources.

Merger Agreement” means the Agreement and Plan of Merger and Reorganization, dated December 18, 2019, by and among Everest, Newco, Athena and Athena Merger Sub, Inc., a Delaware corporation and a direct wholly owned Subsidiary of Athena.


Newco Provider” means Newco or a Provider that is a member of the Newco Group.

Provider” means the Party or its Affiliates providing a Service, an Additional Service or access to a Facility or an Additional Facility under this Agreement.

Provider Indemnitees” means, if the Provider is a member of the Everest Group, each of the Everest Indemnitees, and if the Provider is a member of the Newco Group, each of the Newco Indemnitees.

Recipient” means the Party to whom a Service, an Additional Service or access to a Facility or an Additional Facility is being provided under this Agreement.

Recipient Indemnitees” means, if the Recipient is a member of the Everest Group, each of the Everest Indemnitees, and if the Recipient is a member of the Newco Group, each of the Newco Indemnitees.

Virus(es)” means any computer instructions (i) that have a material adverse effect on the operation, security or integrity of a computing telecommunications or other digital operating or processing system or environment, including without limitation, other programs, data, databases, computer libraries and computer and communications equipment, by altering, destroying, disrupting or inhibiting such operation, security or integrity; (ii) that without functional purpose, self-replicate without manual intervention; or (iii) that purport to perform a useful function but which actually perform either a destructive or harmful function, or perform no useful function and utilize substantial computer, telecommunications or memory resources.

(c) Each of the following terms is defined in the Section set forth opposite such term:

 

Term    Section
Accessing Group    Section 2.09(a)
Additional Amount    Section 3.02(b)
Additional Facilities    Section 2.04(b)
Additional Services    Section 2.04(a)
Agreement    Preamble
Closing Date    Preamble
Everest    Preamble
Everest Provided Facilities    Section 2.02(a)
Everest Provided Services    Section 2.01(a)
Everest Transition Manager    Section 7.03(a)(ii)
Facilities    Section 2.02(b)
Newco    Preamble
Newco Provided Facilities    Section 2.02(b)
Newco Provided Services    Section 2.01(b)
Newco Transition Manager    Section 7.03(a)(i)
Party or Parties    Preamble

 

2


Term    Section
Provider Competitor    Section 6.01(b)
Provider IP    Section 2.10(b)
Recipient IP    Section 2.10(b)
Required Consents    Section 7.02
Sales and Services Taxes    Section 3.02
Separation Agreement    Recitals
Service Charge or Service Charges    Section 3.01(a)
Services    Section 2.01(b)
Service Term    Section 2.03(a)
Term    Section 6.01
Third Party Provider    Section 2.08

ARTICLE II

SERVICES, ACCESS TO FACILITIES AND DURATION

Section 2.01 Services.

(a) Subject to the terms and conditions of this Agreement, Everest shall provide (or cause to be provided) to the Newco Group all of the services listed in Schedule 2.01(a) attached hereto (together with any Additional Services to be provided by an Everest Provider, the “Everest Provided Services”).

(b) Subject to the terms and conditions of this Agreement, Newco shall provide (or cause to be provided) to the Everest Group all of the services listed in Schedule 2.01(b) attached hereto (together with any Additional Services to be provided by a Newco Provider, the “Newco Provided Services”, and collectively with the Everest Provided Services and any Additional Services, the “Services”).

Section 2.02 Access to Facilities.

(a) Subject to the terms and conditions of this Agreement, Everest shall provide (or cause to be provided) to the Newco Group access to the facilities, equipment, and systems listed in Schedule 2.02(a) attached hereto (the “Everest Provided Facilities”).

(b) Subject to the terms and conditions of this Agreement, Newco shall provide (or cause to be provided) to the Everest Group access to the facilities, equipment, and systems listed in Schedule 2.02(b) attached hereto (the “Newco Provided Facilities”, and collectively with the Everest Provided Facilities and any Additional Facilities, the “Facilities”).

Section 2.03 Duration of Services and Access to Facilities.

(a) Subject to Section 6.01 hereof, each of Everest and Newco shall provide or cause to be provided to the respective Recipients each Service or access to each Facility until the expiration of the period set forth next to such Service or Facility on the applicable Schedules hereto or, if no such period is provided with respect to a particular Service or Facility on such Schedules, on May 31, 2022, except and to the extent extended pursuant to Section 6.01 (with respect to each Service or Facility access, the “Service Term”).

 

 

3


(b) The Recipient may request an extension of the Service Term for any Service or Facilities access, provided, that such extension shall in no event exceed a period of one year from the end of the applicable Service Term (for Services or Facilities access that have an initial Service Term ending on or after May 31, 2021), or the period of the initial Service Term (for Services or Facilities access that have an initial Service Term ending prior to May 31, 2021). If such a request is made, the Parties shall discuss in good faith the requested scope, duration and other terms of such proposed extension, including any impact on any related interdependent or bundled Services or Facilities access, and (i) provided that the applicable Recipient has been using good faith and diligent efforts to migrate off of or replace such Service or Facilities access prior to the end of the applicable Service Term, the Provider will use commercially reasonable efforts to accommodate any such extension for a period not to exceed six (6) months and (ii) for any requested extension in excess of six (6) months, the Provider may decline to accommodate all or part of such requested extension of the period in excess of six (6) months for any Service or Facilities access in its sole discretion. Any such request by Recipient to extend any Service or Facilities access requires at least (i) forty-five (45) days’ written notice prior to the expiration of the original Service Term for such Service or Facilities access with an original Service Term ending prior to May 31, 2021 or (ii) ninety (90) days’ written notice prior to the expiration of the original Service Term for Services or Facilities access with an original Service Term ending on or after May 31, 2021; provided, however, that certain Services in Schedule 2.01(a) or (b), as applicable, or Facilities access in Schedule 2.02(a) or (b), as applicable, shall not be eligible for any such extensions or shall require further advance notice (in each case, as specified in Schedule 2.01(a) or (b), or 2.02(a) or (b), as applicable). The fee applicable to any such extended Service Term will be subject to a twenty-five percent (25%) increase over the fees applicable at the end of the original Service Term for such Service or Facilities access, other than to the extent the Parties in their sole discretion agree in writing otherwise, and the Recipient will be responsible for any documented reasonable out-of-pocket costs incurred by the Provider to accommodate any such extension if and to the extent such costs are not already contemplated by the fees applicable to such Service or Facilities access at the end of such original Service Term.

(c) Notwithstanding the foregoing, to the extent that an Everest Provider’s ability to provide an Everest Provided Service or access to an Everest Provided Facility, as the case may be, is dependent on the continuation of either a Newco Provided Service or access to a Newco Provided Facility, as the case may be, Everest’s obligation to provide, or cause to be provided, such Everest Provided Service or access to such Everest Provided Facility shall terminate automatically with the termination of such supporting Newco Provided Service or access to such supporting Newco Provided Facility; provided, further, to the extent that a Newco Provider’s ability to provide a Newco Provided Service or access to a Newco Provided Facility, as the case may be, is dependent on the continuation of either an Everest Provided Service or access to an Everest Provided Facility, as the case may be, Newco’s obligation to provide, or cause to be provided, such Newco Provided Service or access to such Newco Provided Facility shall terminate automatically with the termination of such supporting Everest Provided Service or access to such supporting Everest Provided Facility.

 

4


Section 2.04 Additional Services and Access to Additional Facilities.

(a) If, by September 30, 2020, Everest or Newco (or the Everest Transition Manager or Newco Transition Manager, as applicable) identifies a service that (i) the Everest Group (or a third Person on behalf of the Everest Group) provided to the Newco Group during the one-year period prior to the Closing Date that the Newco Group reasonably needs in order for the Newco Business to continue to operate, and such service was not included in Schedule 2.01(a), and that Everest or its controlled Affiliates are, and Newco and its Affiliates are not, in a reasonable position to provide or procure or (ii) the Newco Group (or a third Person on behalf of the Newco Group) provided to the Everest Group during the one-year period prior to the Closing Date that the Everest Group reasonably needs in order for the Everest Group to continue to operate the Everest Retained Business, and such service was not included in Schedule 2.01(b), and that Newco or its Affiliates (or such third Person) are, and Everest and its controlled Affiliates (or such third Person) are not, in a reasonable position to provide or procure then, in each case, Newco or Everest (as applicable) shall, subject to Section 2.04(c), use commercially reasonable efforts to provide, or cause to be provided, such requested services (such additional services, the “Additional Services”); provided, however, that certain Services as specified and set forth in Schedule 2.01(a) or (b), as applicable, shall not be eligible to become an Additional Service unless otherwise agreed in writing by the Parties.

(b) If, within ninety (90) days after the Closing Date, Everest or Newco identifies access to additional facilities, equipment or systems that (i) the Everest Group (or a third Person on behalf of the Everest Group) provided to the Newco Group during the one year period prior to the Closing Date that the Newco Group reasonably needs in order for the Newco Business to continue to operate, and such access was not included in Schedule 2.02(a), and that Everest or its controlled Affiliates are, and Newco and its Affiliates are not, in a reasonable position to provide or procure or (ii) the Newco Group (or a third Person on behalf of the Newco Group) provided to the Everest Group during the one-year period prior to the Closing Date that the Everest Group reasonably needs in order for the Everest Retained Business to continue to operate, and such access was not included in Schedule 2.02(b), and that Newco or its Affiliates (or such third Person) are, and Everest and its controlled Affiliates (or such third Person) are not, in a reasonable position to provide or procure then, in each case, Newco and Everest shall, subject to Section 2.04(c), use commercially reasonable efforts to provide such requested access (such additional facilities, equipment and systems, the “Additional Facilities”); provided, however, that certain facilities, equipment and systems as specified and set forth in Schedule 2.02(a) or (b), as applicable, shall not be eligible to become an Additional Facility unless otherwise agreed in writing by the Parties.

(c) The Parties shall amend the appropriate Schedule in writing to include such Additional Services or access to Additional Facilities, including (i) the termination date with respect to such Additional Services or access to Additional Facilities, which, for clarity, shall be no later than the end of the last to expire Service Term (as contemplated on the date hereof) and (ii) the monthly fees for such Additional Services or access to Additional Facilities, which shall be determined by the Parties on a basis consistent with the methodology for determination of the Service Charges (including any predetermined increases) initially included in the Schedules (generally, cost plus 5%). Upon such amendment of the appropriate Schedule, such Additional Services or access to Additional Facilities shall be deemed Services or access to Facilities, respectively, hereunder, and accordingly, the Party requested to provide such Additional Services or access to Additional Facilities shall provide such Additional Services or access to Additional Facilities, or cause such Additional Services or access to Additional Facilities to be provided, in accordance with the terms and conditions of this Agreement.

 

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Section 2.05 Exception to Obligation to Provide Services or Access to Facilities. Notwithstanding anything in this Agreement to the contrary, including Everest’s and Newco’s obligations set forth in Section 2.01 hereof, the relevant Providers shall not be obligated to (and neither Everest nor Newco shall be obligated to cause any Provider to) provide any Services or access to any Facilities if the provision of such Services or access to such Facilities would (i) violate any Legal Requirement, (ii) result in breach of any Contract to which Everest, Newco, any of Everest’s or Newco’s Affiliates or any of the Providers are subject, or (iii) if the applicable Required Consent was not obtained (other than as a result of a Provider’s bad faith); provided, however, that Everest and Newco shall comply with Section 7.02 in obtaining any Consents necessary to provide such Services or access to such Facilities. In the event the provision of such Services or access to any Facilities would violate any Legal Requirement, any code of conduct or any Contract to which Everest, Newco, any of Everest’s or Newco’s Affiliates are subject, the Parties agree to use commercially reasonable efforts to supplement, modify, substitute or otherwise alter the Services or access to the Facilities, such that they can be provided in a manner that does not result in such violation; provided, however, that such supplement, modification, substitution or alteration shall not be unduly burdensome to Provider and reasonable adjustments to the associated Service Charges are made to the extent such supplement, modification, substitution or alteration increases the costs to Provider to provide such modified Services or access to Facilities.

Section 2.06 Standard of the Provision of Services or Access to Facilities. The provision of Services and access to Facilities shall be provided in the manner and at a level, volume, availability and scope substantially consistent with that provided by the Providers immediately preceding the Closing Date. All of the Everest Provided Services and Everest Provided Facilities shall be for the sole use and benefit of Newco Group to the extent relating exclusively to the Newco Assets, and all of the Newco Provided Services and Newco Provided Facilities shall be for the sole use and benefit of the Everest Group to the extent relating exclusively to the Everest Retained Assets.

Section 2.07 Change in Services or Access to Facilities. The Providers may from time to time supplement, modify, substitute or otherwise alter the Services provided and access to the Facilities (i) reasonably and in a manner that does not materially adversely affect the quality or availability of Services or access to the Facilities or increase the cost of using such Services or accessing such Facilities or (ii) to the extent that such supplements, modifications, substitutions or alterations are generally applicable to services provided, or facilities operated, by the relevant Provider that are similar to the Services and access to the Facilities provided by such Provider hereunder. In addition, a Recipient may from time to time request adjustments to the scope or other terms of a Service, and the Provider will discuss and consider in good faith such requested change, including any potential impact on any related interdependent or bundled Services and appropriate adjustments to the relevant fees; provided, however, that Provider may decline to accommodate all or any part of any such requested adjustment to Services or access to Facilities in its sole reasonable discretion.

 

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Section 2.08 Subcontractors. A Provider may designate any (1) Affiliate of the Provider or (2) other qualified Person (such other qualified Person, a “Third Party Provider”) to provide the applicable Services or access to Facilities and upon designating any Third Party Provider to perform Services or provide access to Facilities having expected Service Charges greater than $5,000 per month, will use commercially reasonable efforts to provide notice thereof to Recipient; provided, however, that (a) no notice shall be required for (i) designation of any Affiliate, or (ii) designation of a Third Party Provider which was providing the relevant Services or Facilities access prior to the Closing Date (or a third Person who is capable of providing and required to provide the Services or Facilities access in substantially the same manner and to the same standard as the Third Party Provider), or has been engaged by Provider to provide equivalent services to its or its Affiliates’ own businesses and (b) the designating Provider shall in all cases remain primarily responsible for all of its obligations hereunder with respect to the Services provided by such Affiliate or Third Party Provider.

Section 2.09 Electronic Access.

(a) To the extent that the performance or receipt of Services or access to Facilities hereunder requires access to a Group’s intranet or other internal systems by the other Group (the “Accessing Group”), the Party whose Group intranet or other internal systems is being accessed shall provide or cause to be provided limited access to such systems solely for the purpose of, as applicable, providing or receiving the Services or accessing the Facilities, subject to policies, procedures and limitations to be determined by such Party from time to time. From and after the Closing Date, a Party shall cause its Accessing Group to comply with all reasonable security guidelines (including physical security, network access, internet security, confidentiality and personal data security and privacy guidelines and other similar policies) provided in writing to such Party.

(b) While Services and access to Facilities are being provided hereunder, the Parties shall take commercially reasonable measures to ensure that no Virus or similar items are coded or introduced into the Services or Facilities. With respect to Services or access to Facilities provided by third parties, compliance with the applicable agreement with such third party shall be deemed sufficient commercially reasonable measures. If a Virus is found to have been introduced into any Services or Facilities, (i) the Party that discovers the Virus shall promptly notify the other Party and (ii) the Parties shall use commercially reasonable efforts to cooperate and to diligently work together and with each Provider providing the Services or access to Facilities to remediate the effects of the Virus.

(c) The Parties shall, and shall cause their respective Providers to, exercise reasonable care in providing, accessing and using the Services and Facilities to prevent access to the Services and Facilities by unauthorized Persons.

 

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Section 2.10 Title to Intellectual Property.

(a) Except as expressly provided in Section 2.11, each Recipient acknowledges that neither it nor any Affiliate or other member of its Group) shall acquire any right, title or interest (including any license rights or rights of use) in any Intellectual Property which is owned or licensed by any Provider (or any of its Affiliates or other members of its Group) or any third party (including all derivative works, modifications and enhancements thereof), if applicable, by reason of the provision of the Services or access to the Facilities. The Parties hereby reserve all rights, title and interest in and to their respective Intellectual Property not expressly licensed to the other Party under Section 2.11, and nothing in this Agreement shall be construed as granting (by implication, estoppel or otherwise) or giving rise to any other assignment, transfer, grant, license, immunity or authorization of any kind.

(b) Any Intellectual Property created by or on behalf of a Provider (or any of its Affiliates or other members of its Group) as a result of or in the course of providing the Services shall be owned (i) by Recipient to the extent it exclusively relates to the Recipient’s Business or is created specifically for the Recipient’s Business (“Recipient IP”), and (ii) by Provider to the extent it is not Recipient IP (“Provider IP”). Provider hereby assigns all right, title and interest in the Recipient IP to Recipient, and shall do all things reasonably requested by Recipient to give effect to such assignment. Provider hereby grants to Recipient a royalty-free, fully paid-up, non-exclusive, worldwide, sublicensable and transferable license in, to and under all Provider IP, solely to the extent reasonably necessary to receive and use the Services hereunder.

Section 2.11 License to Intellectual Property. Each Party hereby grants to the other Party a non-exclusive, fully paid-up, royalty-free, non-transferable (except as set forth in Section 9.05), worldwide license to the Intellectual Property owned or licensable (without further payment or obligation) by such granting Party and such Party’s Affiliates, solely for the purpose of, as applicable, providing or receiving the Services, in each case, as set forth in and in accordance with this Agreement. A Provider may sublicense the rights granted to it under this Section 2.11 only to Affiliates or subcontractors of Provider. A Recipient may sublicense the rights granted to it under this Section 2.11 only to Affiliates or alternative service providers of Recipient.

Section 2.12 Professional Advice or Opinions. Without limiting the standards required of Provider pursuant to Section 2.06, it is not the intent of any Provider to render, nor of any Recipient to receive from any Provider, professional advice or opinions, whether with regard to tax, legal, regulatory, compliance, treasury, finance, employment or other business and financial matters, technical advice, whether with regard to information technology or other matters, or the handling of or addressing environmental matters. No Recipient shall rely on, or construe, any Service provided by or on behalf of any Provider as such professional advice or opinions or technical advice, and Recipients shall seek all third-party professional advice and opinions or technical advice as they may desire or need independently of this Agreement.

 

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ARTICLE III

COSTS AND DISBURSEMENTS

Section 3.01 Costs and Disbursements.

(a) Each Recipient (or its designee) shall pay to the Provider (or its designee), in consideration for providing or causing to be provided the applicable Service or Facility access, a monthly fee for such Service or Additional Service or access to such Facility or Additional Facility as set forth in the applicable Schedule hereto (each such monthly fee attributable to a specific Service or Facility access, a “Service Charge” and, collectively, the “Service Charges”); provided, however, that a Service Charge for a Service or Facility provided or made available hereunder for less than a full month shall be prorated for the portion of such month provided or made available, other than with respect to the period from the Closing Date through June 30, 2020, which shall be deemed a full month and not prorated. During the Service Term, the amount of a Service Charge for any Services or access to Facilities shall not increase or decrease, except to the extent that there is an increase or decrease after the Closing Date in the costs actually incurred by the Provider in providing such Services or access to Facilities of more than $5,000 per month, in which case Provider shall provide Recipient at least thirty (30) days’ prior written notice in reasonable detail describing such change and, at the request of Recipient, engage in a good faith discussion with Recipient in regards thereto (which discussion shall take place between the Everest Transition Manager and Newco Transition Manager). Any such requested changes in Service Charges shall be substantiated with documentation in reasonable detail substantiating such change in the Service Charges, and the Service Charges will be revised accordingly, but the adjusted Service Charge amount shall in all cases represent Provider’s actual cost for the provision thereof plus an amount equal to five percent (5%) of such cost unless otherwise mutually agreed in writing by the Parties. If Provider ceases to perform any particular Service or access to Facilities pursuant to a request made by Recipient under Section 2.03 or Section 6.02 and Provider is no longer incurring a cost for such Services or access to Facilities, the applicable monthly Service Charge shall be reduced to an amount equal to the Service Charges for those Services that are still being provided or Facilities that are still being accessed, beginning the calendar month following such cessation. If the Parties are unable to agree upon the applicable reduction in Service Charges for the applicable reduced Services or Facilities access, then Provider shall determine in good faith such reduction and, upon the written request of Recipient, furnish to Recipient reasonable detail substantiating such proposed reduction.

(b) In addition, the Recipients shall reimburse the Providers for all incremental costs and expenses reasonably incurred from time to time by any Provider that are attributable to or resulting from the provision of Services to the Recipient to the extent not expressly included in a Service Charge, including out-of-pocket and travel-related costs and expenses.

(c) Each of Everest and Newco (or their designees), as applicable, shall pay to the other Party (or its designees) on or prior to the first (1st) day of each month by wire transfer, the base monthly fee for the Services performed (or access to Facilities granted) by the other Party in the immediately preceding month (as such base monthly fee is set forth in the applicable Schedule), and deliver invoices to the parent company of the other Party (or its designees) for the Service Charges and related costs and expenses due under this Agreement for each calendar quarter of the Term, which invoices shall be delivered on or prior to the 30th day following the end of each calendar quarter during the Term. To the extent the quarterly invoiced amount exceeds the aggregate base monthly payments made to such Party during such quarter, each of Everest or Newco (or their designees) shall pay, or cause to be paid, the balance by wire transfer of immediately available funds to the other Party (or its designees) within 30 days of the date of such invoice. To the extent the amount of the aggregate base monthly payments made for a quarter exceeds the quarterly invoiced amount, each of Everest or Newco (or their designees)

 

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shall reimburse the other Party the balance of the aggregate base monthly payments paid in excess of the quarterly invoiced amount (provided that for purposes of measuring the first month, first quarter and first calendar quarter in this Section 3.01(c), the period from the Closing Date through June 30, 2020, shall be deemed to be a full month for purposes of determining any monthly or quarterly amount). If Everest or Newco (or their designees), as applicable, fails to pay such amount by such date, such Party shall be obligated to pay to the other Party providing, or causing to be provided, the Services and access to the Facilities, in addition to the amount due, interest on such amount at a rate per annum equal to 10%, calculated for the actual number of days elapsed, accrued from the date on which such payment was due up to the date of the actual receipt of payment. Upon Recipient’s reasonable request, Provider shall provide additional, commercially reasonable details regarding the Service Charges or invoices, to the extent not already included in the applicable invoice or Schedule hereto.

Section 3.02 Taxes(a) .

(a) The Service Charges and related costs and expenses do not include any taxes assessed on the provision of the Services or access to the Facilities. All sales, use, transfer, value-added, goods or services Taxes or similar Taxes (other than gross-receipts based Taxes) (“Sales and Services Taxes”) imposed or assessed on the provision of the Services or access to the Facilities, together with all interest and penalties related thereto (solely to the extent such interest or penalties are related to the actions or inactions of the Recipient), shall be the responsibility of the applicable Recipient; provided, the Provider shall cooperate with the Recipient and take any reasonably requested action in order to minimize any Sales and Services Taxes imposed on the sale of the Services or access to the Facilities, including timely providing resale or other applicable Tax exemption certificates or other documentation necessary to support Tax exemption.

(b) In the event that applicable Legal Requirement requires that an amount in respect of any Taxes, levies or charges be withheld from any payment by the Recipient to the Provider under this Agreement, the amount payable to the Provider shall be increased (such increase, an “Additional Amount”) as necessary so that, after the Recipient has withheld amounts required by applicable Legal Requirement, the Provider receives an amount equal to the amount it would have received had no such withholding been required, (subject to Section 3.02(c) below), and the Recipient shall withhold such Taxes, levies or charges and pay such withheld amounts over to the applicable tax authority in accordance with the requirements of the applicable Legal Requirement and provide the Provider with a receipt confirming such payment. However, no such Additional Amounts shall be payable if the withholding from a payment arises as a result of the Provider changing the entity providing the Services or the jurisdiction from which the Services are performed. The Provider shall reasonably cooperate with the Recipient to determine whether any such deduction or withholding applies to the Services, and if so, shall further cooperate to minimize applicable withholding Taxes. Notwithstanding the foregoing, prior to executing this Agreement, each Party shall provide to the other Party any certification reasonably necessary to certify a Party’s eligibility (if any) for applicable treaty benefit or to otherwise properly reduce a Party’s withholding obligations.

 

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(c) Where a Tax credit is available in the jurisdiction in which the Provider is resident and this credit is available to offset any withholding Tax charged as provided in Section 3.02(b) above so that the Provider does not suffer any additional Tax cost as a result of any amounts withheld, then no such increase to the invoiced amount is required.

Section 3.03 No Right to Set-Off. Each of Everest or Newco, as applicable, shall pay the full amount of Service Charges and shall not set-off, counterclaim or otherwise withhold any amount owed to the other Party under this Agreement, on account of any obligation owed by the other Party to Everest or Newco, as applicable, under this Agreement, the Separation Agreement or any other Ancillary Agreement that has not been finally adjudicated, settled or otherwise agreed upon by the Parties in writing; provided, however, that Everest or Newco, as applicable, shall be permitted to assert a set-off right with respect to any obligation that has been so finally adjudicated, settled or otherwise agreed upon by the Parties in writing against amounts owed by the other Party under this Agreement.

ARTICLE IV

WARRANTIES AND COMPLIANCE

Section 4.01 Disclaimer of Warranties. Except as expressly set forth herein, the Parties acknowledge and agree that the Services and Facilities are provided as-is, that the Recipients assume all risks and Liability arising from or relating to its use of and reliance upon the Services and the Facilities and each Party and their respective Providers make no representation or warranty with respect thereto. EXCEPT AS EXPRESSLY SET FORTH HEREIN, EACH PARTY AND THEIR RESPECTIVE PROVIDERS HEREBY EXPRESSLY DISCLAIM ALL REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICES AND THE FACILITIES, WHETHER EXPRESS OR IMPLIED, INCLUDING ANY REPRESENTATION OR WARRANTY IN REGARD TO QUALITY, PERFORMANCE, NONINFRINGEMENT, COMMERCIAL UTILITY, MERCHANTABILITY OR FITNESS OF THE SERVICES AND FACILITIES FOR A PARTICULAR PURPOSE.

Section 4.02 Compliance with Legal Requirements and Regulations. Each Party hereto shall be responsible for its own compliance with any and all Legal Requirements applicable to its performance under this Agreement. FOR THE AVOIDANCE OF DOUBT AND NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, EACH PARTY EXPRESSLY DISCLAIMS ANY EXPRESS OR IMPLIED OBLIGATION OR WARRANTY OF THE SERVICES THAT COULD BE CONSTRUED TO REQUIRE PROVIDER TO DELIVER SERVICES HEREUNDER IN SUCH A MANNER TO ALLOW A RECIPIENT TO ITSELF COMPLY WITH ANY LEGAL REQUIREMENT APPLICABLE TO THE ACTIONS OR FUNCTIONS OF SUCH RECIPIENT OR ANY RECIPIENT ENTITIES.

 

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ARTICLE V

LIABILITY AND INDEMNIFICATION

Section 5.01 Limitation on Liability. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, NEITHER PARTY NOR ANY OF THEIR AFFILIATES SHALL, UNDER ANY CIRCUMSTANCES, BE LIABLE UNDER AND IN CONNECTION WITH THIS AGREEMENT TO THE OTHER PARTY OR ANY OF THEIR AFFILIATES FOR ANY CONSEQUENTIAL DAMAGES (EXCEPT WITH RESPECT TO CONSEQUENTIAL DAMAGES ARISING FROM WILLFUL MISCONDUCT OF A PARTY OR ITS AFFILIATES) OR ANY SPECIAL, INCIDENTAL, INDIRECT, EXEMPLARY OR PUNITIVE DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, BUSINESS INTERRUPTION LOSSES, LOSS OF PROFITS, LOSS OF REVENUE, LOSS OF GOODWILL AND DIMINUTION IN VALUE, WHETHER CAUSED BY BREACH OF THIS AGREEMENT OR OTHERWISE AND WHETHER ARISING IN CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT LIABILITY) OR OTHERWISE REGARDLESS OF WHETHER SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

Section 5.02 Indemnification by Recipients. Recipients shall indemnify, defend and hold harmless the Provider Indemnitees from and against any and all Indemnifiable Losses of the Provider Indemnitees to the extent relating to, arising out of, by reason of or otherwise in connection with the provision of (or failure to provide) the Services and access to the Facilities (whether or not allegedly arising out of contract, tort (including negligence or strict liability) or otherwise), or in connection with the defense of any Action related to such activities; provided, however, that a Provider Indemnitee shall not be entitled to recover any Indemnifiable Losses caused by or resulting from the applicable Provider Indemnitee’s material breach of this Agreement, gross negligence, willful misconduct or fraud in providing any of the Services provided or to be provided by or on behalf of Provider pursuant to this Agreement.

Section 5.03 Indemnification by Providers. Providers shall indemnify, defend and hold harmless the Recipient Indemnitees from and against any and all Indemnifiable Losses of the Recipient Indemnitees to the extent relating to, arising out of, by reason of or otherwise in connection with the provision of (or failure to provide) the Services and access to the Facilities (whether or not allegedly arising out of contract, tort (including negligence or strict liability) or otherwise), but only to the extent such Indemnifiable Losses result from Provider’s (a) material breach of this Agreement or (b) gross negligence or willful misconduct in providing any Services or access to Facilities pursuant to this Agreement; provided, however, that the maximum aggregate liability (whether or not allegedly arising out of contract, tort (including negligence or strict liability) or otherwise) of the Everest Providers or the Newco Providers, as the case may be, to Recipients for Indemnifiable Losses hereunder shall not exceed the sum of the aggregate of all Service Charges paid and payable by Recipients to the Everest Providers or the Newco Providers, as the case may be, with respect to (and prior to provision of (or failure to provide)) the Services or access to the Facilities giving rise to the Indemnifiable Losses.

 

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Section 5.04 Exclusivity. The indemnification obligations set forth in this Article V are the exclusive indemnification obligations and the sole and exclusive monetary remedy with respect to the matters addressed in this Article V.

Section 5.05 Procedures. The provisions of Section 4.4 and Section 4.5 of the Separation Agreement are incorporated herein by reference, mutatis mutandis, and shall govern any claims for indemnification hereunder.

ARTICLE VI

TERMINATION

Section 6.01 Term; Termination.

(a) The term of this Agreement shall commence immediately upon the Closing Date and terminate upon the earlier of (i) the expiration of the last to expire Service Term (including as may be extended pursuant to Section 2.03(b)), or (ii) the mutual written agreement of the Parties to terminate this Agreement in its entirety, in each case, unless earlier terminated under this Section 6.01 (the “Term”).

(b) Notwithstanding Section 2.02, this Agreement may be terminated (i) in its entirety or with respect to one or more Services by mutual written agreement of the Parties, or (ii) by a Party in its entirety or with respect to one or more Services or Facilities: (A) if the other Party is in material breach of this Agreement and such breach is not corrected within thirty (30) days of a written notice from the non-breaching Party; (B) if the other Party fails to pay any outstanding Service Charge or related cost or expense due hereunder and such failure is not corrected within thirty (30) days of a written notice from the terminating Party, except to the extent any part of an outstanding Service Charge or related cost or expense is not paid due to a good faith dispute of such Service Charge or related cost or expense; or (C) immediately upon written notice to a Recipient if the Recipient (1) files for bankruptcy, becomes or is declared insolvent, or is the subject of any proceedings (not dismissed within sixty (60) days) related to its liquidation, insolvency, or the appointment of a receiver or similar officer, or makes an assignment for the benefit of all or substantially all of its creditors, or (2) undergoes a direct or indirect change of control in which the new direct or indirect controlling party is a Provider Competitor without obtaining Provider’s prior written consent. For purposes of the foregoing provision, a “change of control” means the direct or indirect sale of all or substantially all of the assets of a Party, any merger, consolidation or acquisition of a Party with, by or into another Person, or any direct or indirect change in the ownership of more than fifty percent (50%) of the voting capital stock or equity, or power to appoint or elect more than 50% of the members of the board of directors or similar governing body, of a Party in one or more related transactions, and “Provider Competitor” means any Person that manufactures, markets or sells products or services of the same or similar nature to products or services as are manufactured, marketed or sold by Provider or its Affiliates to the same or similar types of customers as of the Closing Date.

 

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(c) Without prejudice to any rights with respect to a Force Majeure, a Recipient may from time to time terminate this Agreement with respect to any Service or access to any Facility, in whole but not in part, effective at the end of a calendar quarter for any reason or no reason: (i) upon providing at least sixty (60) days’ written notice to the Provider’s Newco Transition Manager or Everest Transition Manager, as applicable, of such termination with respect to any Service or Facility with an original duration ending prior to May 31, 2021 or (ii) upon providing at least ninety (90) days’ written notice to the Provider’s Newco Transition Manager or Everest Transition Manager, as applicable, of such termination with respect to any Service or Facility with an original duration ending on or after May 31, 2021, provided that (A) all related interdependent or bundled Services or access to Facilities provided to such Recipient must also be terminated at such time and (B) such Recipient shall reimburse the Provider for all reasonable costs and expenses incurred by the Provider to accommodate such early termination (including any early termination fees incurred with respect to third-party contracts).

Section 6.02 Effect of Termination.

(a) Upon termination of any Service or access to any Facility pursuant to this Agreement, the Provider of the terminated Service or access to the Facility or its Affiliate shall have no further obligation to provide the terminated Service or access to the Facility, and Everest or Newco, as applicable, shall have no obligation to pay any Service Charges relating to any such Service or access to such Facility; provided that Everest or Newco, as applicable shall remain obligated to the other Party for the Service Charges owed and payable in respect of Services or access to Facilities provided prior to the date of termination. In connection with termination of any Service or access to any Facility, the provisions of this Agreement not relating solely to such terminated Service or access to such Facility shall survive any such termination.

(b) In connection with a termination of this Agreement, Article I, Article IV, Article V, this Article VI, Article VII, Article VIII, Article IX and Liability for all due and unpaid Service Charges shall continue to survive indefinitely.

Section 6.03 Force Majeure.

(a) No Party (or any Person acting on its behalf) shall have any Liability or responsibility for failure to fulfill any obligation (other than a payment obligation) under this Agreement so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure; provided that such Party (or such Person) shall have exercised commercially reasonable efforts to minimize the effect of Force Majeure on its obligations. In the event of an occurrence of a Force Majeure, the Party whose performance is affected thereby shall give notice of suspension as soon as reasonably practicable to the other stating the date and extent of such suspension and the cause thereof, and such Party shall resume the performance of such obligations as soon as reasonably practicable after the removal of the cause, and if the Provider is the Party so prevented then the Recipient shall not be obligated to pay the Service Charge for a Service or Facility to the extent and for so long as such Service or Facility is not made available to the Recipient hereunder as a result of such Force Majeure.

 

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(b) During the period of a Force Majeure, the Recipient shall be entitled to seek an alternative service provider at its own cost with respect to such Services or access to such Facilities and Everest or Newco, as applicable, shall be entitled to permanently terminate such Services or access to such Facilities (and shall be relieved of the obligation to pay Service Charges for the provision of such Services or access to such Facilities throughout the duration of such Force Majeure or, in the event of such permanent termination, thereafter) if a Force Majeure shall continue to exist for more than fifteen (15) consecutive days.

ARTICLE VII

MANAGEMENT AND CONTROL

Section 7.01 Cooperation.

(a) During the Term, each Party shall, and shall cause its Affiliate Recipients to, use its commercially reasonable efforts to cooperate with the relevant Provider and its Affiliates with respect to such Provider providing the Services and access to the Facilities and responding to such Provider’s reasonable requests for information related to the functionality or operation of the Services and Facilities. The Parties acknowledge and agree that general cooperation and information sharing of a de minimis nature (i.e., only with respect to activities of a short duration of less than one month and involving less than 10% of the time of a full-time employee during such period), under this Section 7.01 shall be provided by a Party without cost or expense to the other Party. Except as contemplated by Section 2.05 or 2.07, neither Party nor any of its Affiliates shall knowingly take any action which would substantially interfere with or substantially increase the cost of the other Party providing (or causing to be provided) any of the Services or access to the Facilities. After the Closing Date, each Party and its Affiliates shall use its commercially reasonable efforts to enable the other Party or its Affiliates to provide the Services and access the Facilities as soon as possible after the Closing Date. Without limiting the foregoing, each Party shall provide the relevant Provider with reasonable access (during reasonable business hours) to (i) records reasonably necessary for the provision of the Services and access to the Facilities; and (ii) the relevant Party’s personnel and facilities reasonably necessary for the purpose of training and consultation with respect to the Services and access to Facilities.

(b) To the extent the Parties or a member of their respective Group have entered into any third-party Contracts in connection with any of the Services or access to the Facilities, the Recipients shall comply with the terms of such agreement to the extent the Recipients or their Newco Transition Manager or Everest Transition Manager, as applicable, have been informed of such terms.

Section 7.02 Required Consents. Each Party shall use commercially reasonable efforts to obtain any and all third-party Consents necessary or advisable to allow the relevant Provider to provide the Services and access to the Facilities (the “Required Consents”); provided, however, that any additional or incremental fees or other costs of obtaining, or seeking to obtain, such third-party Consents shall be paid by the Recipient of the provision of such Services and access to such Facilities. Each Party shall provide written evidence of receipt of Required Consents to the other Party upon such other Party’s request. Notwithstanding the foregoing, or anything to the contrary contained herein, no Provider shall be required to provide a Service or access to a Facility to the extent that such Provider does not obtain any Required Consent; provided, however,

 

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that the Parties shall cooperate in good faith to find a reasonable alternative to such Services for which such Required Consent cannot be obtained, and the Provider shall use good faith efforts to supplement, modify, substitute or otherwise alter the Services, or access to the Facilities, to provide such Services or access to Facilities without such Required Consent (and the Recipient shall be responsible for paying any increase in Service Charges resulting therefrom, calculated in a manner consistent with that for determining Service Charges upon a change in cost pursuant to Section 3.01(a)).

Section 7.03 Primary Points of Contact for Agreement.

(a) Appointment and Responsibilities. Each Party shall appoint an individual to act as the primary point of operational contact for the administration and operation of this Agreement, as follows:

(i) The individual appointed by Newco as the primary point of operational contact pursuant to this Section 7.03(a) (the “Newco Transition Manager”) shall have overall responsibility for coordinating, on behalf of Newco, all activities undertaken by Newco and its Providers, Affiliates and Representatives hereunder, including the performance of Newco’s obligations hereunder, the coordinating of the provision of the Newco Provided Services and access to the Newco Provided Facilities with Everest, acting as a day-to-day contact with Everest Transition Manager and making available to Everest the data, facilities, resources and other support services from Newco required for Everest Providers to be able to provide the Everest Provided Services and access to the Everest Provided Facilities in accordance with the requirements of this Agreement. Newco may change Newco Transition Manager from time to time upon written notice to Everest. Newco shall use commercially reasonable efforts to provide at least thirty (30) days prior written notice of any such change.

(ii) The individual appointed by Everest as the primary point of operational contact pursuant to this Section 7.03(a) (the “Everest Transition Manager”) shall have overall operational responsibility for coordinating, on behalf of Everest, all activities undertaken by Everest and its Providers, Affiliates and Representatives hereunder, including the performance of Everest’s obligations hereunder, the coordinating of the provision of the Everest Provided Services and access to the Everest Provided Facilities with Newco, acting as a day-to-day contact with Newco Transition Manager and making available to Newco the data, facilities, resources and other support services from Everest required for Newco Providers to be able to provide the Newco Provided Services and access to the Newco Provided Facilities in accordance with the requirements of this Agreement. Everest may change Everest Transition Manager from time to time upon written notice to Newco. Everest shall use commercially reasonable efforts to provide at least thirty (30) days prior written notice of any such change.

(b) Review Meetings. Everest Transition Manager and Newco Transition Manager shall meet either in-person at a mutually acceptable location or via telephone or video conference at least monthly to review Everest’s and Newco’s provision of the Services and access to the Facilities as required under this Agreement.

 

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Section 7.04 Provider Personnel.

(a) The Provider of any Service or access to any Facility shall make available to the Recipient of such Service or access to such Facility such personnel as may be reasonably necessary to provide such Service, in accordance with such Provider’s standard business practices. The Provider shall have the right to (i) designate which personnel it will assign to perform such Service, and (ii) remove and replace such personnel at any time.

(b) The Provider of any Service or Facility access shall be solely responsible for all salary, employment and other benefits of and Liabilities relating to the employment of persons employed by such Provider. In performing their respective duties hereunder, all such employees and representatives of any Provider shall be under the direction, control and supervision of such Provider, and such Provider shall have the sole right to exercise all authority with respect to the employment (including termination of employment), assignment and compensation of such employees and representatives.

Section 7.05 No Agency. Nothing in this Agreement shall be deemed in any way or for any purpose to constitute any party acting as an agent of another unaffiliated party in the conduct of such other party’s business. A Provider of any Service or access to any Facility hereunder shall act as an independent contractor and not as the agent of the Recipient or its Affiliates in performing such Service or providing access to such Facility. No partnership, joint venture, alliance, fiduciary or any relationship other than that of independent contractors is created hereby, expressly or by implication. The Parties’ respective rights and obligations hereunder shall be limited to the contractual rights and obligations expressly set forth herein on the terms and conditions set forth herein.

ARTICLE VIII

CONFIDENTIAL INFORMATION

Section 8.01 Treatment of Confidential Information. The provisions of Section 5.6 of the Separation Agreement are incorporated herein by reference, mutatis mutandis, and shall govern the treatment of Confidential Information hereunder.

ARTICLE IX

MISCELLANEOUS

Section 9.01 Certain Provisions Incorporated by Reference; Precedence. The provisions of Article VII, Sections 8.1, 8.6, 8.9, 8.11, 8.14, 8.15 and 8.19 (other than Sections 8.19(b) and 8.19(j)) of the Separation Agreement are hereby incorporated by reference mutatis mutandis. The provisions of Article VII and Section 8.14 of the Separation Agreement shall govern any Dispute under or in connection with this Agreement. In the event of any inconsistency between this Agreement and any Schedule hereto, the Schedule shall prevail. In the event of any conflict between this Agreement and the Tax Matters Agreement, the terms and conditions of the Tax Matters Agreement shall govern.

 

17


Section 9.02 Notices. All notices, requests, demands and other communications under this Agreement shall be in English, shall be in writing and shall be deemed to have been duly given or made as follows: (a) if sent by registered or certified mail in the U.S. return receipt requested, upon receipt; (b) if sent by nationally recognized overnight air courier (such as Federal Express), two (2) Business Days after mailing; (c) if sent by facsimile transmission or e-mail before 5:00 p.m. Eastern Time, when transmitted and receipt is confirmed; (d) if sent by facsimile transmission or e-mail after 5:00 p.m. Eastern Time and receipt is confirmed, on the following Business Day; or (e) if otherwise actually personally delivered, when delivered; provided that such notices, requests, demands and other communications are delivered to the physical address, e-mail address or facsimile number set forth below, or to such other address as a Party shall provide by like notice to the other Party to this Agreement:

if to Newco:

Apergy Corporation

2445 Technology Forest Blvd., 12th Floor

The Woodlands, TX 77381

Attn: General Counsel

Email: general.counsel@apergy.com

with a copy (which shall not constitute notice) to:

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Attn: Michael J. Aiello

Sachin Kohli

Email:michael.aiello@weil.com

sachin.kohli@weil.com

Fax: (212) 310-8007

if to Everest:

c/o Ecolab Inc.

1 Ecolab Place

Saint Paul, MN 55102

Attn: General Counsel

Email: generalcounsel@ecolab.com

with a copy (which shall not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP

Attn: Charles W. Mulaney, Jr.

 

18


Richard C. Witzel, Jr.

155 N. Wacker Drive, Suite 2700

Chicago, IL 60606

Email:charles.mulaney@skadden.com

rich.witzel@skadden.com

Fax: (312) 407-0411

Section 9.03 Assignment. This Agreement shall not be assignable, in whole or in part, directly or indirectly, by any party hereto without the prior written consent of the other Party (not to be unreasonably withheld or delayed), and any attempt to assign any rights or obligations arising under this Agreement without such consent shall be void. Notwithstanding the foregoing, and without prejudice to either Party’s rights under Section 6.01(a), this Agreement shall be assignable to (i) an Affiliate of a Party, or (ii) a bona fide third party in connection with a merger, reorganization, consolidation or the sale of all or substantially all the assets of a party hereto so long as the resulting, surviving or transferee entity assumes all the obligations of the relevant party hereto by operation of law or pursuant to an agreement in form and substance reasonably satisfactory to the other Party to this Agreement; provided, however, that in the case of each of the preceding clauses (i) and (ii), no assignment permitted by this Section 9.03 shall release the assigning Party from Liability for the full performance of its obligations under this Agreement.

Section 9.04 Successors and Assigns. The provisions of this Agreement and the obligations and rights hereunder shall be binding upon, inure to the benefit of and be enforceable by (and against) the Parties and their respective successors and permitted assigns.

Section 9.05 Payment Terms. Without the consent of the Party receiving any payment under this Agreement specifying otherwise, and except as otherwise specified in the Schedules attached hereto, all payments to be made under this Agreement shall be made in US Dollars. Except as expressly provided herein, any amount which is not expressed in US Dollars shall be converted into US Dollars by using the exchange rate published on Bloomberg at 5:00 pm Eastern Standard time (EST) on the day before the relevant date or in the Wall Street Journal on such date if not so published on Bloomberg.

Section 9.06 Third-Party Beneficiaries. This Agreement is solely for the benefit of the Parties, Athena, and their permitted successors and assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 9.07 Schedules. The Schedules shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein.

Section 9.08 Interpretation. The Parties have participated jointly in the negotiation and drafting of this Agreement. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting or causing any instrument to be drafted.

[signature page follows]

 

19


IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed on the date first written above by their respective duly authorized officers.

 

ECOLAB INC.
By:  

/s/ Douglas M. Baker

Name:   Douglas M. Baker
Title:   Chairman of the Board and Chief Executive Officer
CHAMPIONX HOLDING INC.
By:  

/s/ Deric D. Bryant

Name:   Deric D. Bryant
Title:   President and Chief Executive Officer
EX-2.6

Exhibit 2.6

EXECUTION VERSION

 

 

 

INTELLECTUAL PROPERTY MATTERS AGREEMENT

dated as of June 3, 2020

by and between

ECOLAB INC.

and

CHAMPIONX HOLDING INC.

 

 

 

 

1


TABLE OF CONTENTS

 

         Page  
ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

Section 1.1

  General      1  

Section 1.2

  References; Interpretation      7  
ARTICLE II

 

GRANTS OF RIGHTS

 

Section 2.1

  Licenses to Newco      8  

Section 2.2

  Licenses to Everest      12  

Section 2.3

  Wrong Pockets      14  

Section 2.4

  Sublicenses      16  

Section 2.5

  Third-Party Rights      17  

Section 2.6

  No Use or Promotion Outside Field      18  

Section 2.7

  Reservation of Rights      18  

Section 2.8

  Retention and Transfer of Know-How and Regulatory Data      18  

Section 2.9

  Everest Licensed Trademarks Use and Quality Control      19  

Section 2.10

  Samples      20  

Section 2.11

  Everest Restrictions Regarding NALCO Brand      20  

Section 2.12

  Compliance with Law      20  

Section 2.13

  Audit      20  

Section 2.14

  Certain Manufacturing Restrictions      21  

Section 2.15

  Specified Shared IP Contracts      21  

Section 2.16

  Patent Infringement Claims      21  

Section 2.17

  No Restrictions on Athena Business      21  
ARTICLE III

 

OWNERSHIP

 

Section 3.1

  Ownership      21  

Section 3.2

  Ownership of Improvements and Modifications      22  
ARTICLE IV

 

PROSECUTION AND MAINTENANCE

 

Section 4.1

  Responsibility and Cooperation      22  
ARTICLE V

 

ENFORCEMENT

 

Section 5.1

  Notice      23  

Section 5.2

  Defense and Enforcement      24  


ARTICLE VI

 

INDEMNIFICATION

 

Section 6.1

  Indemnification      25  

Section 6.2

  Indemnification Procedures      25  

Section 6.3

  Disclaimer of Representations and Warranties      26  

Section 6.4

  Limitation on Liability      26  
ARTICLE VII

 

CONFIDENTIALITY

 

Section 7.1

  General Confidentiality      26  

Section 7.2

  Trade Secrets      26  
ARTICLE VIII

 

TERM

 

Section 8.1

  Termination      27  

Section 8.2

  Effect of Termination      29  

Section 8.3

  Patent or Trademark Challenge      30  

Section 8.4

  Reimbursement      31  
ARTICLE IX

 

DISPUTE RESOLUTION

 

Section 9.1

  Negotiation      31  
ARTICLE X

 

MISCELLANEOUS

 

Section 10.1

  Entire Agreement; Construction      31  

Section 10.2

  Notices      31  

Section 10.3

  Waivers      32  

Section 10.4

  Assignment      33  

Section 10.5

  Successors and Assigns      33  

Section 10.6

  Amendments      33  

Section 10.7

  Subsidiaries      33  

Section 10.8

  Third-Party Beneficiaries      33  

Section 10.9

  Schedules      33  

Section 10.10

  Governing Law; Jurisdiction; Specific Performance; Remedies      34  

Section 10.11

  Severability      34  

Section 10.12

  No Duplication; No Double Recovery      35  

Section 10.13

  Bankruptcy      35  

 

ii


SCHEDULES

 

Schedule 1.1(1)    Brand Manual
Schedule 1.1(6)    Fields of Use
Schedule 1.1(9)    Everest Licensed Copyrights
Schedule 1.1(10)    Everest Licensed Chemical Product or Substance Registrations
Schedule 1.1(13)    Everest Licensed Marks
Schedule 1.1(14)    Everest Licensed Names
Schedule 1.1(15)    Everest Licensed Patents
Schedule 1.1(16)    Everest Licensed Regulatory Data
Schedule 1.1(18)    Everest Licensed Software
Schedule 1.1(20)    Everest Reseller Agreement IP
Schedule 1.1(22)    Excluded Everest IP
Schedule 1.1(30)    Licensed JV
Schedule 1.1(35)    Licensed Names Term
Schedule 1.1(36)    Licensed Patent Products
Schedule 1.1(41)    Newco Licensed Chemical Product or Substance Registrations
Schedule 1.1(45)    Newco Licensed Names
Schedule 1.1(46)    Newco Licensed Regulatory Data
Schedule 1.1(57)    Specified Shared IP Contracts
Schedule 2.1(d)(ii)    Everest Form Letter of Access
Schedule 2.1(e)    Newco Exceptions
Schedule 2.2(b)(ii)    Newco Form Letter of Access
Schedule 2.2(c)    Newco Licensed Names Arrangements
Schedule 2.2(d)    Everest Exceptions
Schedule 6.1    Special Indemnity
Schedule 8.1(b)    Specified Applications
Schedule 8.1(c)    Specified Licensed Patents

 

iii


INTELLECTUAL PROPERTY MATTERS AGREEMENT

This INTELLECTUAL PROPERTY MATTERS AGREEMENT (this “Agreement”), dated as of June 3, 2020 (the “Effective Date”), is entered into by and between Ecolab Inc. (“Everest”), on the one hand, and ChampionX Holding Inc. (“Newco”), on the other hand (each of Everest and Newco, a “Party,” and together, the “Parties”).

WHEREAS, Everest and Newco are parties to that certain Separation and Distribution Agreement, dated December 18, 2019 (the “Separation Agreement”);

WHEREAS, as of and following the Closing (as defined in the Separation Agreement), each Party and its Affiliates have rights to certain Intellectual Property and Regulatory Property (each as defined in the Separation Agreement); and

WHEREAS, in connection with the Separation Agreement, Everest wishes to grant to Newco, and Newco wishes to grant to Everest, licenses and other rights to certain of such Intellectual Property and Regulatory Property, in each case as and to the extent set forth herein.

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

ARTICLE I

DEFINITIONS AND INTERPRETATION

Section 1.1 General. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1.1. Capitalized terms that are not defined in this Agreement shall have the meanings set forth in the Separation Agreement.

(1) “Brand Manual” means Everest’s generally applicable guidelines for the form in which the Everest Licensed Trademarks are presented, set forth on Schedule 1.1(1), including any amendments or updates thereto that are generally adopted by Everest and provided in writing to Newco from time to time.

(2) “Challenge” means any direct or indirect (including by voluntary support of a Legal Proceeding brought by another Person) challenge to the validity, patentability, enforceability or inventorship of any Everest Licensed Patent or Everest Licensed Trademark, as applicable, (i) in any court (including any declaratory judgment action) or (ii) in any Legal Proceeding before a patent office, trademark office or other Governmental Body or registrar, including any reissue, reexamination, pre-grant review, post-grant review, opposition, cancellation, inter partes review, protest or similar proceeding.

(3) “Chemical Product or Substance Registration” means any and all chemical substance registrations, biocide active ingredient registrations, and product authorizations, licenses, approvals, registrations, or certification with any Governmental Body or international political or economic organization (such as the European Union or the OSPAR Commission for the Protection of the Marine Environment of the North-East Atlantic).


(4) “Controlled” means, with respect to any Patent, Know-How, Copyright, Trademark, Regulatory Property or Software, (i) such Intellectual Property is owned by the applicable Party or any member of its Group as of the Effective Date, and (ii) such Party or any member of its Group has the ability to grant a license or other rights in, to or under such Patent, Know-How, Copyright, Trademark, Regulatory Property or Software (respectively) on the terms and conditions set forth herein (other than pursuant to a license or other rights granted pursuant to this Agreement) without violating any Contract entered into as of or prior to the Effective Date between such Party or any member of its Group, on the one hand, and any Third Party, on the other hand.

(5) “Cover” means, without limitation of Section 8.3, under a valid, enforceable, unexpired claim, the making, using, selling, offering to sell, or importing of a product or method would infringe such valid, enforceable, unexpired claim in the absence of the license granted under Section 2.1(a).

(6) “Downstream Field” or “Downstream” has the meaning set forth in Schedule 1.1(6) hereto.

(7) “Everest Retained Business” has the meaning set forth in the Separation Agreement.

(8) “Everest Know-How Materials” means those materials (whether written, electronic or otherwise) containing or embodying any Know-How or Copyrights included in the Licensed IP, other than the Newco Know-How Materials.

(9) “Everest Licensed Copyrights” means any and all Copyrights Controlled by Everest or any of its Affiliates, and used in both the Everest Retained Business and the Newco Business, as of the Effective Date, including the Copyrights set forth on Schedule 1.1(9), excluding the Excluded Everest IP.

(10) “Everest Licensed Chemical Product or Substance Registrations” means any and all Chemical Product or Substance Registrations set forth on Schedule 1.1(10).

(11) “Everest Licensed IP” means the Everest Licensed Patents, Everest Licensed Copyrights, Everest Licensed Trademarks, Everest Licensed Know-How, Everest Licensed Software, and Everest Licensed Regulatory Property.

(12) “Everest Licensed Know-How” means any and all Know-How Controlled by Everest or any of its Affiliates, and used in both the Everest Retained Business and the Newco Business, as of the Effective Date, excluding the Excluded Everest IP.

(13) “Everest Licensed Marks” means the Trademarks identified in Schedule 1.1(13) and any translations, transliterations or other localizations thereof, and any other Trademarks Controlled by Everest or any of its Affiliates, and used in the Everest Retained Business and the Newco Business, as of the Effective Date. Notwithstanding the foregoing, Everest Licensed Marks shall not include the Everest Licensed Names.

 

2


(14) “Everest Licensed Names” means the names listed on Schedule 1.1(14) and any translations, transliterations or other localizations thereof solely to the extent used as of the Effective Date as part of the corporate name or a fictitious name of any member of the Newco Group, excluding the Excluded Everest IP.

(15) “Everest Licensed Patents” means any and all: (i) Patents set forth on Schedule 1.1(15) to the extent Controlled by Everest or any of its Affiliates, and (ii) to the extent owned by Everest or any of its Affiliates following the Effective Date, continuations, divisionals, renewals, continuations-in-part, patents of addition, restorations, extensions, supplementary protection certificates, reissues and re-examinations of, and all other Patents that claim priority to, any Patents described in the foregoing clause (i), and foreign equivalents thereof, in each case, to the extent the claims are supported by any Patents described in the foregoing clause (i), excluding the Excluded Everest IP.

(16) “Everest Licensed Regulatory Data” means any and all Regulatory Data (i) to the extent owned by Everest or any of its Affiliates and related to the Everest Licensed Chemical Product or Substance Registrations or (ii) listed on Schedule 1.1(16), excluding the Excluded Everest IP.

(17) “Everest Licensed Regulatory Property” means the Everest Licensed Regulatory Data and Everest Licensed Chemical Product or Substance Registrations related thereto, excluding the Excluded Everest IP.

(18) “Everest Licensed Software” means all Software to the extent Controlled by Everest or any of its Affiliates as of the Effective Date, which Software is reasonably required as of the Effective Date for the conduct of the Newco Business, including the Software listed on Schedule 1.1(18), excluding (i) Software that Newco and its Affiliates have been granted a license or other rights to use under any other Ancillary Agreement, and (ii) the Excluded Everest IP.

(19) “Everest Licensed Trademarks” means the Everest Licensed Marks and the Everest Licensed Names.

(20) “Everest Reseller Agreement IP” means the Intellectual Property and Regulatory Property owned by Everest or its Affiliates and used or practiced in the manufacture, use, sale, offer for sale, marketing, promotion, distribution, importation and exportation, certification or other commercialization or exploitation of Excluded Products, including the Patents set forth in Schedule 1.1(20) hereto.

(21) “Excluded Field” has the meaning set forth in Schedule 1.1(6) hereto.

(22) “Excluded Everest IP” means (i) the Everest Reseller Agreement IP, and (ii) the Intellectual Property set forth on Schedule 1.1(22).

(23) “Excluded Newco IP” means the Newco Reseller Agreement IP.

(24) “Excluded Product” means any product covered by or subject to the Reseller Agreement (other than any product supplied by Newco or any of its Affiliates to Everest or any of its Affiliates under the Reseller Agreement).

 

3


(25) “Governmental Authorization” means any: (i) permit, license, certificate, franchise, permission, variance, clearance, registration, qualification or authorization issued, granted, given or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement; or (ii) right under any Contract with any Governmental Body.

(26) “Governmental Body” means any: (i) nation, state, commonwealth, province, territory, county, political subdivision, municipality, district, judiciary, executive branch, legislature or other jurisdiction of any nature; (ii) federal, state, local, municipal, domestic, foreign, multinational, supranational or other government; (iii) governmental or quasi-governmental authority of any nature (including any governmental division, department, agency, commission, instrumentality, official, ministry, fund, foundation, center, organization, unit, body or Entity and any court or other tribunal); or (iv) self-regulatory organization (including the New York Stock Exchange).

(27) “Intellectual Property” means all U.S. and foreign intellectual property of any kind or nature, including all: (i) trademarks, trade dress, service marks, certification marks, logos, slogans, design rights, names, brand names, corporate names, trade names, Internet domain names, social media accounts and addresses and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing (collectively, “Trademarks”); (ii) patents and patent applications, industrial property rights, and any and all related national or international counterparts thereto, including any renewals, divisionals, continuations, continuations-in-part, reissues, reexaminations, substitutions and extensions thereof (collectively, “Patents”); (iii) copyrights and copyrightable subject matter, excluding Know-How (collectively, “Copyrights”); (iv) trade secrets, and all other confidential or proprietary information, know-how, inventions, processes, formulae (including product formulations), data, models, methodologies, inventor’s notes, specifications, designs, plans, proposals and technical data, business and marketing plans, market know-how and customer lists and information, excluding Patents and Regulatory Property (collectively, “Know-How”); (v) rights in Software; (vi) applications and registrations for the foregoing; and (vii) rights, titles and interests in or relating to any of the foregoing, whether protected, created or arising under the laws of the U.S. or any foreign jurisdiction, and all remedies against past, present, and future infringement, misappropriation, or other violation thereof.

(28) “Legal Proceeding” means any action, complaint, suit, demand, claim, countersuit, litigation, subpoena, case, mediation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding), hearing, inquiry, review, audit, examination or investigation commenced, brought, conducted or heard by or before, or otherwise involving, any court or other Governmental Body, or grand jury, or mediation tribunal, or any arbitrator or arbitration panel.

(29) “Licensed IP” means (i) with respect to the licenses granted to Everest hereunder, the Newco Licensed IP, and (ii) with respect to the licenses granted to Newco hereunder, the Everest Licensed IP.

(30) “Licensed JV” means the joint ventures that, as of the Effective Date, use the Everest Licensed Trademarks, as set forth in Schedule 1.1(30) hereto.

 

4


(31) “Licensed Know-How” means (i) with respect to the licenses granted to Newco hereunder, the Everest Licensed Know-How and (ii) with respect to the licenses granted to Everest hereunder, the Newco Licensed Know-How.

(32) “Licensed Know-How Materials” means those materials (whether written, electronic or otherwise) to the extent containing or embodying any Everest Licensed Know-How, Newco Licensed Know-How, Everest Licensed Copyrights or Everest Licensed Software.

(33) “Licensed Mark Products” means any products offered by Newco or any other member of the Newco Group that bear any of the Everest Licensed Trademarks as of the Effective Date.

(34) “Licensed Marks Term” means twenty-four (24) months from the Effective Date, including for any Everest Licensed Marks used in connection with the Excluded Products (including the Trademarks used in connection with the Excluded Products identified on Schedule 1.1(13)).

(35) “Licensed Names Term” means three (3) months from the Effective Date, except as set forth in Schedule 1.1(35) hereto.

(36) “Licensed Patent Products” means the products set forth in Schedule 1.1(36) hereto.

(37) “Licensed Trademarks Term” means the Licensed Marks Term and the Licensed Names Term.

(38) “Licensee” means (i) Newco and its Affiliates, with respect to the Everest Licensed IP, and (ii) Everest and its Affiliates, with respect to the Newco Licensed IP.

(39) “Licensor” means (i) Newco and its Affiliates (as applicable) with respect to the Newco Licensed IP, and (ii) Everest and its Affiliates (as applicable) with respect to the Everest Licensed IP.

(40) “Newco Know-How Materials” means those materials (whether written, electronic or otherwise) that are owned by Everest and relate exclusively to the Newco Business.

(41) “Newco Licensed Chemical Product or Substance Registrations” means any and all Chemical Product or Substance Registrations set forth on Schedule 1.1(41).

(42) “Newco Licensed Fields” means the Upstream Field and the Shared Midstream Field.

(43) “Newco Licensed IP” means the Newco Licensed Know-How, Newco Licensed Regulatory Property and the Newco Licensed Names.

(44) “Newco Licensed Know-How” means any and all Know-How to the extent Controlled by Newco, and used in both the Newco Business and the Everest Retained Business as of the Effective Date, excluding the Excluded Newco IP.

 

5


(45) “Newco Licensed Names” means the names listed on Schedule 1.1(45) and any translations, transliterations or other localizations thereof solely to the extent used as of the Effective Date as part of the corporate name or a fictitious name of any member of the Everest Group, excluding the Excluded Newco IP.

(46) “Newco Licensed Regulatory Data” means any and all Regulatory Data (i) to the extent Controlled by Newco and related to the Newco Licensed Chemical Product or Substance Registrations or (ii) listed on Schedule 1.1(46), excluding the Excluded Newco IP.

(47) “Newco Licensed Regulatory Property” means the Newco Licensed Regulatory Data and Newco Licensed Chemical Product or Substance Registrations related thereto, excluding the Excluded Newco IP.

(48) “Newco Reseller Agreement IP” means the Intellectual Property and Regulatory Property owned by Newco or its Affiliates and used or practiced in the manufacture, use, sale, offer for sale, marketing, promotion, distribution, importation and exportation, certification or other commercialization or exploitation of products supplied by Newco or its Affiliates under the Reseller Agreement.

(49) “Promote” means to solicit customers for, solicit orders for, advertise, market or otherwise promote.

(50) “Regulatory Data” means any and all regulatory data, including studies, data, raw data, efficacy data, reports, physical samples, reviews (including business risk reviews), opinions, registration dossiers, chemical safety reports, toxicity reports, information or other compliance requirements, including safety, risk and exposure assessments and modeling for product contamination or impurity issues, in written, electronic, computerized, digital, or other tangible or intangible media, actually submitted to, or maintained to support a submission to (whether submitted or not), a Governmental Body or a third party to seek, obtain or maintain a Consent from a Governmental Body or to demonstrate regulatory compliance.

(51) “Regulatory Property” means all Chemical Product or Substance Registrations and Regulatory Data related thereto.

(52) “Reseller Agreement” means Schedule 2.4 and related sub-schedules of the Master Cross Supply and Product Transfer Agreement entered into between the Parties of even date herewith (“Cross Supply Agreement”).

(53) “Shared Midstream Field” or “Shared Midstream” has the meaning set forth in Schedule 1.1(6) hereto.

(54) “Software” means all computer programs (whether in source code, object code, or other form), software implementations of algorithms, and related documentation, including flowcharts and other logic and design diagrams, technical, functional and other specifications, and user and training materials related to any of the foregoing; provided that, “Software” shall exclude Know-How contained or stored in any of the foregoing items.

(55) “Specified Applications” has the meaning set forth in Section 8.1(b).

 

6


(56) “Specified Licensed Patents” has the meaning set forth in Section 8.1(c).

(57) “Specified Shared IP Contracts” means those Shared Contracts set forth on Schedule 1.1(57) hereto.

(58) “Third Party” means any Person other than Everest, Newco, Athena, and their respective Affiliates.

(59) “Third-Party Payments” means any and all obligations on the part of Licensor or its Affiliates to pay royalties, sublicense fees, milestones or other amounts to Third Parties pursuant to Contracts existing as of the Effective Date to which Licensor or any of its Affiliates is a party or is otherwise bound, in each case to the extent that such obligation to pay arises from, or is a result of the grant to or exercise by Licensee or any Sublicensees of any license, sublicense or other right to practice granted hereunder.

(60) “Upstream Field” or “Upstream” has the meaning set forth in Schedule 1.1(6) hereto.

(61) “Water Field” or “Water” has the meaning set forth in Schedule 1.1(6) hereto.

Section 1.2 References; Interpretation. For purposes of this Agreement, whenever the context requires: the singular number shall include the plural, and vice versa; the masculine gender shall include the feminine and neuter genders; the feminine gender shall include the masculine and neuter genders; and the neuter gender shall include masculine and feminine genders. The Parties agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not be applied in the construction or interpretation of this Agreement. As used in this Agreement, unless otherwise specified, the words “include” and “including,” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without limitation.” As used in this Agreement, the word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if.” As used in this Agreement, the word “will” shall be deemed to have the same meaning and effect as the word “shall.” As used in this Agreement, the terms “or,” “any” or “either” are not exclusive. Except as otherwise indicated, all references in this Agreement to “Articles,” “Sections,” “Exhibits” and “Schedules” are intended to refer to Sections or Articles of this Agreement and Exhibits or Schedules to this Agreement. As used in this Agreement, the terms “hereunder,” “hereof,” “hereto,” “herein” and words of similar import shall be deemed to refer to this Agreement as a whole and not to any particular Section or other provision. The titles and headings contained in this Agreement are for convenience of reference only, shall not be deemed to be a part of this Agreement and shall not be referred to in connection with the construction or interpretation of this Agreement. Any payment to be made pursuant hereto shall be made in U.S. dollars and by wire transfer of immediately available funds. The words “written request” when used in this Agreement shall include email. Reference in this Agreement to any time shall be to New York City, New York time unless otherwise expressly provided herein. References to any Legal Requirement shall be deemed to refer to such Legal Requirement as amended from time to time and to any rules or regulations promulgated thereunder. Unless the context requires otherwise, references in this Agreement to “Everest” shall also be deemed to refer to the applicable member of the Everest Group, references to “Newco” shall also be deemed to refer to the

 

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applicable member of the Newco Group and, in connection therewith, any references to actions or omissions to be taken, or refrained from being taken, as the case may be, by Everest or Newco shall be deemed to require Everest or Newco, as the case may be, to cause the applicable members of the Everest Group or the Newco Group, respectively, to take, or refrain from taking, any such action. In the event of any inconsistency or conflict which may arise in the application or interpretation of any of the definitions set forth in Section 1.1, for the purpose of determining what is and is not included in such definitions, any item explicitly included on a Schedule referred to in any such definition shall take priority over any provision of the text thereof.

ARTICLE II

GRANTS OF RIGHTS

Section 2.1 Licenses to Newco.

(a) License to Licensed Patents. Subject to the terms and conditions of this Agreement, Everest hereby grants, on behalf of itself and its Affiliates, to Newco a royalty-free, fully paid-up, sublicensable (to the extent permitted in Section 2.4), worldwide, exclusive (even as to Everest and its Affiliates, but subject to Section 8.1 (as applicable)) with respect to the Upstream Field, and non-exclusive with respect to the Shared Midstream Field, license in, to and under the Everest Licensed Patents, (i) for any and all uses solely in the Upstream Field (including to manufacture, make and have made, use, sell, offer for sale, market, promote, distribute, import and export, certify and otherwise commercialize or exploit Licensed Patent Products and to develop, innovate, manufacture, make and have made, use, sell, offer for sale, market, promote, distribute, import and export, certify and otherwise commercialize or exploit new or improved products (in each case, other than with respect to Excluded Products)) and (ii) to manufacture, make and have made, use, sell, offer for sale, market, promote, distribute, import and export, certify and otherwise commercialize or exploit Licensed Patent Products and to develop, innovate, manufacture, make and have made, use, sell, offer for sale, market, promote, distribute, import and export, certify and otherwise commercialize or exploit new or improved products (in each case, other than with respect to Excluded Products) solely in the Shared Midstream Field, in each case of the foregoing clauses (i) and (ii) subject to Section 2.14. Without limiting the foregoing license, for clarity, (A) neither Everest nor any of its Affiliates shall, directly or indirectly, use, practice or otherwise exploit any of the Everest Licensed Patents or sell, offer for sale, market, promote, or distribute any products under any of the Everest Licensed Patents, including the Licensed Patent Products, in each case, in the Upstream Field, and (B) neither Newco nor any of its Affiliates shall, directly or indirectly, use, practice or otherwise exploit any of the Everest Licensed Patents or sell, offer for sale, market, promote or distribute any products under any of the Everest Licensed Patents, in each case, outside of the Upstream Field or Shared Midstream Field.

(b) License to Other Licensed IP. Subject to the terms and conditions of this Agreement, Everest hereby grants, on behalf of itself and its Affiliates, to Newco a royalty-free, fully paid-up, sublicensable (to the extent permitted in Section 2.4), worldwide, exclusive (even as to Everest and its Affiliates, but subject to Section 8.1 (as applicable)) with respect to the Upstream Field, and non-exclusive with respect to the Shared Midstream Field, license in, to and under the Everest Licensed Know-How, Everest Licensed Copyrights, and Everest Licensed Software for any and all uses solely in any of the Newco Licensed Fields.

 

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(c) License to Everest Licensed Trademarks.

(i) Licensed Names Grant. Subject to the terms and conditions of this Agreement, Everest hereby grants, on behalf of itself and its Affiliates, to Newco a transitional, royalty-free, fully paid-up, sublicensable (to the extent permitted in Section 2.4), worldwide, non-exclusive license for use solely in any of the Newco Licensed Fields for the Licensed Names Term to continue use of the Everest Licensed Names as part of any corporate names or fictitious names for Newco or any other member of the Newco Group (including in connection with the Chemical Product or Substance Registrations), in each case solely (A) to the extent such entity is using such corporate or fictitious name as of the Effective Date, (B) consistently with past practice and (C) for the purpose of enabling continuity and the orderly transition of the Newco Business away from such names. In the case of those Newco Group members identified in Schedule 1.1(35), provided that Newco and the applicable Newco Group member are using reasonable efforts to change the name of such Newco Group member to remove any reference to the Everest Licensed Names in any such jurisdiction prior to the end of the Licensed Names Term, if local conditions or applicable local laws in such jurisdiction do not enable such Newco Group member to change its name within the applicable Licensed Names Term, the Parties will discuss in good faith a reasonable extension of such Licensed Names Term.

(ii) Everest Licensed Marks Grant. Subject to the terms and conditions of this Agreement, Everest hereby grants, on behalf of itself and its Affiliates, to Newco a transitional, royalty-free, fully paid-up, sublicensable (to the extent permitted in Section 2.4), worldwide, non-exclusive license for use solely in any of the Newco Licensed Fields for the Licensed Marks Term to use the Everest Licensed Marks solely (A) on, or in connection with the manufacture, distribution, sale and other commercialization and exploitation of, Licensed Mark Products, (B) consistent with past practice and (C) for the purpose of enabling continuity and the orderly transition of the Newco Business away from Everest Licensed Marks.

(iii) Licensed Trademarks Transition Periods and Continued Use Rights.

(1) Newco shall, and shall cause the other members of the Newco Group to, take the following actions as soon as reasonably practicable, and in no event later than the expiration of the Licensed Names Term: (A) change their names and cause their certificates of incorporation and bylaws (or equivalent organizational documents), as applicable, to be amended to remove any reference to the Everest Licensed Names; (B) cease to make any use of any Everest Licensed Names; and (C) remove, strike over, or otherwise obliterate all Everest Licensed Names from all assets and other materials owned by or in the possession of any member of the Newco Group; provided, however, that the Newco Group shall immediately after the Effective Date (1) cease to hold themselves out as having any current affiliation with Everest or any members of the Everest Group; and (2) post a readily observable disclaimer in a form and manner reasonably acceptable to Everest on the “www.championx.com” website home page (to be maintained until the earlier of the (y) expiration of the Licensed Marks Term and (z) cessation of use of the Everest Licensed Trademarks by the Newco Group) that, as of the Effective Date and thereafter, Newco, and not Everest, is responsible for the operation of the Newco Business, including such website and any applicable services.

 

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(2) Newco shall transition from, and phase out use of, the Everest Licensed Marks as soon as reasonably practicable, in accordance with and in no event later than the expiration of the respective applicable transition periods for the types of uses set forth below (“Target Transition Periods”): (A) nine (9) months with respect to real estate signage; (B) the earlier of depletion and two (2) years for any product and tote, marketing material, or sell sheet related to such product; (C) as soon as reasonably practicable following the Effective Date for any branded vehicles and employee apparel, including clothing and hard hats; (D) one (1) year for any white papers or compatibility reports (provided that, during such period, any such white papers or compatibility reports distributed to Third Parties shall include a readily observable statement by Newco that such white paper or compatibility report was completed prior to the Effective Date); and (E) for any internal documents (including policies and procedures, databases and laboratory reports) existing as of the Effective Date, upon deletion of such documents. Upon expiration of the Licensed Marks Term, Newco shall have the right to continue use of the Everest Licensed Trademarks solely in connection with the Newco Business to the extent reasonably necessary and appropriate to communicate in an accurate, truthful, customary and appropriate manner that Newco has changed its name or is no longer part of Everest, and thereafter shall have the right under “fair use” principles to use a plain text version of the Everest Licensed Trademarks for such purpose.

(3) Notwithstanding anything to the contrary in this Agreement, and except as otherwise required by any applicable Legal Requirement, finished Licensed Mark Products in inventory and Licensed Mark Products in production as of the Effective Date may continue to bear unmodified Everest Licensed Trademarks during the Licensed Marks Term, and to the extent any such Licensed Mark Products have already been labelled as of the Effective Date, and such labels contain an Everest Licensed Name, Newco may sell such Licensed Mark Products that include the Everest Licensed Name without modifying such Everest Licensed Name during the Licensed Marks Term.

(iv) Licensed Patent Products. Notwithstanding any other provision herein to the contrary, except for the rights expressly granted to Licensee under this Section 2.1(c), Licensee shall ensure that all of its and its Affiliates Licensed Patent Products are not branded under any of the Everest Licensed Trademarks (or, for clarity, any Trademarks confusingly similar thereto or derivative thereof).

(v) Joint Ventures. With respect to any Licensed JV, Everest shall have the right to enter into a separate licensing arrangement that grants each such Licensed JV a non-exclusive, transitional license to use the Everest Licensed Trademarks under similar terms and to the extent required under the license agreements in effect with such Licensed JV as of the Effective Date, with each Licensed JV to use commercially reasonable efforts to phase out use of the Everest Licensed Trademarks as soon as reasonably practicable, but not later than the dates set forth in such separate licensing arrangements, unless otherwise agreed in writing by Everest and except as set forth in Schedule 1.1(30). Newco shall cooperate with Everest in connection with implementing such license arrangements with

 

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the Licensed JVs (and to amend its own contracts with such Licensed JVs to remove the license to Everest Licensed Trademarks from such contracts) and shall use commercially reasonable efforts to cause each Licensed JV to phase out use of the Licensed Marks in accordance with the terms of each separate licensing arrangement. In the event and to the extent such separate licensing arrangement is not entered into between Everest and a Licensed JV, Licensee shall reasonably cooperate with Everest, and shall take such actions, to cause Everest to receive all of the rights and benefits under (including rights of approval under and rights to enforce or amend) those portions of such contract that relate to the Everest Licensed Trademarks, in each case as if such portions of such contract had been assigned to Everest.

(d) Licenses of Everest Licensed Regulatory Property.

(i) License. Subject to the terms and conditions of this Agreement, Everest hereby grants, on behalf of itself and its Affiliates, to Newco a royalty-free, fully paid-up, sublicensable (to the extent permitted in Section 2.4), worldwide, exclusive (even as to Everest and its Affiliates, but subject to Section 8.1 (as applicable)) with respect to the Upstream Field, and non-exclusive with respect to the Shared Midstream Field, license in, to and under the Everest Licensed Regulatory Property, for any and all uses solely in the Upstream Field and Shared Midstream Field. For clarity, subject to the terms and conditions of this Agreement, the license set forth in this Section 2.1(d)(i) shall include the right to cite (and allow subregistrants to cite), rely upon and obtain a letter of access (“LOA”) with respect to the Everest Licensed Regulatory Data for use in the applicable Newco Licensed Fields.

(ii) Governmental Filings. To the extent necessary to give effect to Newco and its Affiliates’ rights under Section 2.1(d)(i), upon the reasonable and timely written request of Newco or its Affiliates containing (A) the full address(es) of the Governmental Body(ies) to which LOAs should be sent or from which physical or electronic copies of the Everest Licensed Regulatory Data are required and (B) the specific Everest Licensed Regulatory Data to be submitted to the applicable Governmental Body or for which Newco, its Affiliates or permitted Sublicensees requires an LOA, and at Newco’s sole cost and expense, Everest shall, or shall cause its Affiliates or representatives to, use commercially reasonable efforts to meet any deadline imposed by a Governmental Body, provided that unless otherwise specified by Newco, Everest will assume that such deadline is within thirty (30) Business Days from the receipt of such written request, or such earlier time frame as may be required by the applicable Governmental Body provided Newco or its Affiliates have provided prompt written notice to Everest or its Affiliates of any such requirement (i.e., within two (2) to five (5) Business Days of Newco’s or its Affiliates’ receipt of such requirement from the Governmental Body), after good faith consultation with Newco, (1) file with the relevant Governmental Body an LOA, in substantially the form attached hereto as Schedule 2.1(d)(ii), supporting, in good faith, Newco’s or its Affiliates’ submission to the Governmental Body, authorizing Newco, its Affiliates or permitted Sublicensees to cite to or rely upon the applicable Everest Licensed Regulatory Data or (2) submit to the relevant Governmental Body physical or electronic copies of the Everest Licensed Regulatory Data on behalf of Newco, its Affiliates or permitted Sublicensees, and Newco shall reasonably cooperate with Everest in connection therewith. For the avoidance of doubt, Newco will not be responsible for reimbursing Everest or its Affiliates for its internal administrative costs of responding to requests from Newco or its Affiliates under this Section 2.1(d)(ii).

 

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(iii) New Regulatory Data. Each Party acknowledges and agrees that except as expressly provided in this Agreement or any other Transaction Document or as otherwise agreed upon in writing by the Parties, neither Party shall have any right to cite to, use or have access to any Regulatory Data or other data generated by the other Party on or after the Effective Date; provided that the foregoing shall not limit, or be interpreted to limit, either Party’s right to cite to the Regulatory Data or other data of the other Party in accordance with applicable data compensation Legal Requirements or similar Legal Requirements.

(iv) Regulatory Data Maintenance and Support. Everest and Newco, each on behalf of itself and its respective Affiliates, shall use commercially reasonable efforts to maintain, support, license and authorize reliance by the other Party and its Affiliates upon the Everest Retained Regulatory Property and the Newco Regulatory Property, respectively, to the extent such Regulatory Property is included in the licenses to the other Party hereunder.

(e) Exceptions. Notwithstanding anything to the contrary contained herein, the exceptions set forth in Schedule 2.1(e) shall not constitute (i) a breach of this Agreement or (ii) “direct competition” (as defined in Section 8.1(b)).

Section 2.2 Licenses to Everest.

(a) License to Newco Know-How. Subject to the terms and conditions of this Agreement, Newco hereby grants, on behalf of itself and its Affiliates, to Everest an irrevocable, royalty-free, fully paid-up, sublicensable (to the extent permitted in Section 2.4), transferable (subject to Section 10.5), worldwide, exclusive with respect to the Water Field (even as to Newco and its Affiliates) and non-exclusive in all other fields (other than the Upstream Field), license in, to and under the Newco Licensed Know-How for any and all uses other than in the Upstream Field.

(b) Licenses of Newco Licensed Regulatory Property.

(i) License. Subject to the terms and conditions of this Agreement, Newco hereby grants, on behalf of itself and its Affiliates, to Everest a royalty-free, fully paid-up, sublicensable (to the extent permitted in Section 2.4), worldwide, non-exclusive with respect to the Shared Midstream Field and exclusive (even as to Newco and its Affiliates, but subject to Section 8.1 (as applicable)) with respect to any and all uses other than in any of the Newco Licensed Fields, license in, to and under the Newco Licensed Regulatory Property, for any and all uses solely outside of the Upstream Field. For clarity, subject to the terms and conditions of this Agreement, the license set forth in this Section 2.2(b)(i) shall include the right to cite (and allow subregistrants to cite), rely upon and obtain a LOA with respect to the Newco Licensed Regulatory Data for use outside of the Upstream Field.

 

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(ii) Governmental Filings. To the extent necessary to give effect to Everest and its Affiliates’ rights under Section 2.2(b)(i), upon the reasonable and timely written request of Everest or its Affiliates containing (A) the full address(es) of the Governmental Body(ies) to which LOAs should be sent or from which physical or electronic copies of the Newco Licensed Regulatory Data are required and (B) the specific Newco Licensed Regulatory Data to be submitted to the applicable Governmental Body or for which Everest, its Affiliates or permitted Sublicensees requires an LOA, and at Everest’s sole cost and expense, Newco shall, or shall cause its Affiliates or representatives to, use commercially reasonable efforts to meet any deadline imposed by a Governmental Body, provided that unless otherwise specified by Everest, Newco will assume that such deadline is within thirty (30) Business Days from the receipt of such written request, or such earlier time frame as may be required by the applicable Governmental Body provided Everest or its Affiliates have provided prompt written notice to Newco or its Affiliates of any such requirement (i.e., within two (2) to five (5) Business Days of Everest’s or its Affiliates’ receipt of such requirement from the Governmental Body), after good faith consultation with Everest, (1) file with the relevant Governmental Body an LOA, in substantially the form attached hereto as Schedule 2.2(b)(ii), supporting, in good faith, Everest’s or its Affiliates’ submission to the Governmental Body, authorizing Everest, its Affiliates or permitted Sublicensees to cite to or rely upon the applicable Newco Licensed Regulatory Data or (2) submit to the relevant Governmental Body physical or electronic copies of the Newco Licensed Regulatory Data on behalf of Everest, its Affiliates or permitted Sublicensees, and Everest shall reasonably cooperate with Newco in connection therewith. For the avoidance of doubt, Everest will not be responsible for reimbursing Newco or its Affiliates for its internal administrative costs of responding to requests from Everest or its Affiliates under this Section 2.2(b)(ii).

(c) License to Newco Licensed Names.

(i) Subject to and except as otherwise provided in Schedule 2.2(c), and subject to the terms and conditions of this Agreement, Newco hereby grants, on behalf of itself and its Affiliates, to Everest a transitional, royalty-free, fully paid-up, sublicensable (to the extent permitted in Section 2.4), non-exclusive license for the Licensed Names Term to continue use of the Newco Licensed Names as part of any corporate names or fictitious names for Everest or any other member of the Everest Group (including in connection with the Chemical Product or Substance Registrations), in each case solely (A) to the extent such entity is using such corporate or fictitious name as of the Effective Date, (B) consistently with past practice and (C) for the purpose of enabling continuity and the orderly transition of the Everest Retained Business away from such names. Subject to and except as otherwise provided in Schedule 2.2(c), in the case of those Everest Group members identified in Schedule 1.1(35), provided that Everest and the applicable Everest Group member are using reasonable efforts to change the name of such Everest Group member to remove any reference to the Newco Licensed Names in any such jurisdiction prior to the end of the Licensed Names Term, if local conditions or applicable local laws in such jurisdiction do not enable such Everest Group member to change its name within the applicable Licensed Names Term, the Parties will discuss in good faith a reasonable extension of such Licensed Names Term.

 

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(ii) Subject to and except as otherwise provided in Schedule 2.2(c), Everest shall, and shall cause the other members of the Everest Group to, take the following actions as soon as reasonably practicable, and in no event later than the expiration of the Licensed Names Term: (A) change their names and cause their certificates of incorporation and bylaws (or equivalent organizational documents), as applicable, to be amended to remove any reference to the Newco Licensed Names; (B) cease to make any use of any Newco Licensed Names; and (C) remove, strike over, or otherwise obliterate all Newco Licensed Names from all assets and other materials owned by or in the possession of any member of the Everest Group; provided, however, that the Everest Group shall immediately after the Effective Date (1) cease to hold themselves out as having any current affiliation with Newco or any members of the Newco Group; and (2) post a readily observable disclaimer in a form and manner reasonably acceptable to Newco on the “www.ecolab.com” website home page (to be maintained until the earlier of the (y) expiration of the Licensed Marks Term and (z) cessation of use of the Newco Licensed Names by the Everest Group) that, as of the Effective Date and thereafter, Everest, and not Newco, is responsible for the operation of the Everest Retained Business, including such website and any applicable services.

(d) Exceptions. Notwithstanding anything to the contrary contained herein, the exceptions set forth in Schedule 2.2(d) shall not constitute a breach of this Agreement.

Section 2.3 Wrong Pockets.

(a) Newco shall have the right to provide prompt written notice (a “Wrong Pockets Notice”) to Everest if:

(i) Newco identifies a Patent or Trademark Controlled by Everest that is not included in the Newco Assets, the Everest Licensed Patents or the Everest Licensed Trademarks, and Newco reasonably believes that such Patent or Trademark was used or practiced in the Newco Business in the Upstream Field or Shared Midstream Field as of the Effective Date; or

(ii) Newco identifies a product that is not included in the Licensed Patent Products that Newco reasonably believes was used, manufactured, distributed, sold or otherwise commercialized or exploited in, by or for the Newco Business under an Everest Licensed Patent in the Upstream Field or Shared Midstream Field as of the Effective Date.

(b) Each Wrong Pockets Notice shall both identify the applicable Patent, Trademark or product and describe in reasonable detail the use thereof in the Newco Business and in the Upstream Field or Shared Midstream Field, as applicable, as of the Effective Date (each such Patent, a “Wrong Pockets Patent”, each such Trademark, a “Wrong Pockets Trademark” and each such product, an “Associated Product”). Wrong Pockets Patents, Wrong Pockets Trademarks and Associated Products shall under no circumstances include any Excluded Everest IP or Excluded Product.

 

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(c) Unless otherwise agreed in writing by the Parties, if Newco provides a Wrong Pockets Notice in accordance with Section 2.3(a), Newco shall, within sixty (60) days of providing the Wrong Pockets Notice, demonstrate to Everest by reasonably convincing evidence (the “Evidentiary Requirement”) that the identified Patent, Trademark or product was used in the manner identified in the Wrong Pockets Notice in the Newco Business as of the Effective Date (such evidence, the “Demonstration of Use”). Everest shall notify Newco in writing within thirty (30) days of receipt of the Demonstration of Use whether it reasonably believes in good faith that the identified Patent, Trademark or product was used in the Newco Business as of the Effective Date and whether any such identified Patent was exclusively related to the Newco Business as of the Effective Date. With respect to any Patent identified in the applicable Wrong Pockets Notice that Everest reasonably believes in good faith was exclusively related to the Newco Business as of the Effective Date, Everest agrees to promptly Transfer or cause to be Transferred, for no additional consideration, such Patent to Newco or such member of the Newco Group as Newco may designate; provided that Newco grants to Ecolab a worldwide, irrevocable, royalty-free, fully paid-up, sublicensable, non-exclusive license to such Transferred Patent for any and all uses outside of the Upstream Field. With respect to any other Patent, Trademark or product identified in the applicable Wrong Pockets Notice that Everest reasonably believes in good faith was used in a material respect in the Newco Business as of the Effective Date:

(i) such Patent or Trademark shall be deemed an Everest Licensed Patent or Everest Licensed Trademark, as applicable, and for clarity, the license to Newco therefor shall be subject to all terms and conditions relating to the use of the Everest Licensed Patents or Everest Licensed Trademarks (as applicable) provided in this Agreement (including the Licensed Trademarks Term), and the field for which it is licensed pursuant to this Agreement (which, for clarity, shall be exclusive in the Upstream Field and non-exclusive in the Shared Midstream Field, if and as applicable), subject to the terms and conditions of any licenses and other rights granted by or on behalf of Everest or any of its Affiliates to any Third Parties with respect to such Patent or Trademark prior to the date of the Wrong Pockets Notice; and

(ii) the relevant Associated Product shall be deemed a Licensed Patent Product, and for clarity, the license to Newco therefor shall be exclusive in the Upstream Field and non-exclusive in the Shared Midstream Field, subject to the terms and conditions of any licenses and other rights granted by or on behalf of Everest or any of its Affiliates to any Third Parties with respect to such product prior to the date of the Wrong Pockets Notice.

(d) The Parties acknowledge and agree that, in the good faith reasonable discretion of Everest, a Wrong Pockets Patent, Wrong Pockets Trademark or Associated Product may be subject to restrictions similar to Section 2.14 hereof, or may become covered under and subject to the Reseller Agreement instead of under this Agreement, which Everest shall notify Newco of in writing if and at the time that Everest notifies Newco as described in Section 2.3(c).

(e) Notwithstanding anything to the contrary herein, Newco shall only have twenty-four (24) months with respect to Patents (the “Wrong Pockets Patent Term”) and products, and twelve (12) months with respect to Trademarks, after the Effective Date to provide a Wrong Pockets Notice pursuant to Section 2.3(a).

 

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(f) Notwithstanding the foregoing Sections 2.3(a) through (e), in the event that the Parties expressly discussed prior to the Effective Date that:

(i) any specific Patent or Trademark would not be included in the Newco Assets or as an Everest Licensed Patent or Everest Licensed Trademark (as applicable) in the case of a Wrong Pockets Notice described in Section 2.3(a)(i), such Patent or Trademark shall not be included as a Newco Asset, Everest Licensed Patent or Everest Licensed Trademark (provided that, in determining that such Patent or Trademark would not be included in the Newco Assets or be an Everest Licensed Patent or Everest Licensed Trademark hereunder, the Parties expressly discussed prior to the Effective Date the specific use of such Patent or Trademark identified in the Wrong Pockets Notice for such Patent or Trademark); or

(ii) any specific product would not be included as a Licensed Patent Product in the case of a Wrong Pockets Notice described in Section 2.3(a)(ii), such product shall not be included as a Licensed Patent Product.

(g) If the Notifying Party, as Licensee, notifies Licensor that a Patent shall no longer be licensed to Licensee, the procedures set forth in the foregoing Section 2.3(a) through (f) shall not be available for such Patent.

(h) In the event that a Patent or Trademark included in the Newco Assets is used in the Everest Retained Business as of the Effective Date, then the provisions of this Section 2.3 shall apply to Everest mutatis mutandis with respect thereto (including the opportunity for Everest to obtain a license in connection therewith for uses solely outside of the Upstream Field on terms similar to those contained herein with respect to the Everest Retained Business, mutatis mutandis).

Section 2.4 Sublicenses.

(a) Licensee may sublicense the license and rights granted to Licensee under Sections 2.1, 2.2 and 2.3 (as applicable) to (i) any of its Affiliates, (ii) and other than with respect to the Everest Licensed Trademarks, any Third Parties in connection with the operation of the business of Licensee or its Affiliates, but not for the independent use of any such Third Party (which independent use, for clarity, includes where a principal purpose of such sublicense is in exchange for royalty payments to Licensee or its Affiliates for such sublicense), including manufacturers, suppliers and distributors that need to use or practice the applicable Intellectual Property to provide manufacturing, supply and distribution services, as applicable, to Licensee and its Affiliates, and solely with respect to Everest Licensed Trademarks, Third Parties pursuant to any agreement or contract that Newco is a party to as of the Effective Date as a result of the consummation of the transactions under the Separation Agreement, and (iii) with the prior written consent of Licensor, other Third Parties (each such Affiliate or Third Party, a “Sublicensee”). Notwithstanding the foregoing, Licensee is required to notify Licensor of any sublicense of the license and rights granted to Licensee after the Effective Date under Section 2.1(c)(i) and (ii).

 

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(b) Each sublicense granted by a Licensee under the license granted to such Licensee in Sections 2.1, 2.2 and 2.3 (as applicable) shall be granted pursuant to an agreement that (i) is subject to, and consistent with, the terms and conditions of this Agreement and includes provisions at least as protective of Licensor and its Affiliates as the provisions of this Agreement if the sublicense is granted to an Affiliate, (ii) with respect to Licensed Patents, if Sublicensee is a Third Party, provides that Licensor shall be an intended beneficiary thereunder with the right of direct enforcement against the Sublicensee, and (iii) with respect to Licensed Patents, is in writing if Sublicensee is a Third Party. For clarity, granting a sublicense shall not relieve Licensee of any obligations hereunder and Licensee shall cause each of its Sublicensees to comply, and shall remain responsible for its Sublicensees’ compliance, with the terms hereof applicable to Licensee.

Section 2.5 Third-Party Rights.

(a) Notwithstanding anything to the contrary herein, the terms and conditions of this Agreement (including the licenses granted under Sections 2.1 and 2.2) are subject to any and all rights of and obligations owed to any Third Parties with respect to the Licensed IP under any Contracts existing as of the Effective Date (or in the case of any Wrong Pockets Notice, existing as of the date of the Wrong Pockets Notice) to which Licensor or any of its Affiliates is a party or is otherwise bound, and to the extent that, as a result of such rights or obligations, any license or other rights granted hereunder (i) may not be granted without the consent of or payment of a fee or other consideration to or (ii) will cause Licensor or any of its Affiliates to be in breach of any of its or their obligations to any Third Party, the applicable licenses and other rights granted hereunder shall only be granted to the extent such consent has been obtained or such fee or other consideration has been paid. The Parties shall use commercially reasonable efforts to obtain any such consents to the extent required to grant Licensee the rights granted hereunder; provided that (1) the foregoing shall not require the Parties to duplicate any obligations undertaken under the Separation Agreement (it being understood that Licensor’s obligations with respect to obtaining requisite consents under the Separation Agreement shall not be deemed duplicative of Licensor’s obligations under this Section 2.5 if such consents do not also address the ability to grant the rights and licenses described in this Agreement) and (2) Licensor shall have no obligation to agree to or make any payments or other concessions, except as mutually agreed in writing between the Parties, or participate in any act or omission that would be reasonably likely to cause Licensor or its Affiliates to be in breach of its or their obligations to any Third Party. Notwithstanding the foregoing, Licensee shall not be deemed in breach of this Section 2.5(a) only if, and for such time as, Licensee is not aware of such rights of or obligations owed to such Third Party.

(b) Licensor shall notify Licensee in writing of any Third-Party Payments required to be paid in connection with Licensor’s grant of rights under this Agreement prior to any obligation of Licensee to pay such Third-Party Payments and, if possible without violating any of Licensor’s confidentiality obligations, Licensor shall provide Licensee with copies of applicable agreements or other documentation reasonably necessary for Licensee to verify the amounts of such Third-Party Payments. Licensee shall notify Licensor in writing thirty (30) days following receipt of Licensor’s written notice of such Third-Party Payments if Licensee does not agree to pay such Third-Party Payments, in which case such Third Party rights (and any Intellectual Property giving rise to such Third-Party Payments) shall be excluded from the Licensed IP and Licensee shall not be obligated to pay any such Third-Party Payments.

 

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(c) Notwithstanding anything to the contrary herein, subject to Section 2.5(b), Third-Party Payments, if any, with respect to the Licensed IP shall be Licensee’s sole responsibility. Licensee shall pay the Third-Party Payments directly to the applicable Third Party; provided that if such Third Party does not permit Licensee to pay such Third-Party Payments to such Third Party directly after the Parties have used commercially reasonable efforts to permit Licensee to pay the Third Party directly, the Parties shall cooperate in good faith to ensure that such Third-Party Payments are paid by Licensee to Licensor in a manner that ensures Licensor’s payment thereof is in compliance with the obligations to the applicable Third Party. If either Party becomes aware of any Third-Party Payments, it shall reasonably promptly notify the other Party in writing, and Licensee shall not be deemed in breach of this Section 2.5(b) if, and for such time as, Licensee is not aware of the applicable Third-Party Payments; provided that, upon learning of such Third-Party Payments, Licensee shall promptly pay such Third-Party Payments to the applicable Third Party directly (or such other Person as reasonably directed by Licensor) to the extent such Third-Party Payments are past due.

Section 2.6 No Use or Promotion Outside Field. Each Party shall not, and shall cause its Affiliates to not, (a) as Licensee, exercise rights under any Licensed IP except to the extent expressly licensed hereunder or expressly agreed upon in advance in writing by Licensor, and (b) without limiting the foregoing, (i) if such Party is Newco, directly Promote the use of, or directly encourage Third Parties to use, products or services Covered by an issued Everest Licensed Patent outside the Newco Licensed Fields and (ii) if such Party is Everest, directly Promote the use of, or directly encourage Third Parties to use, products or services Covered by an issued Everest Licensed Patent within the Upstream Field.

Section 2.7 Reservation of Rights. Each Party reserves its and its Affiliates’ rights in and to all Intellectual Property that is not expressly licensed or otherwise granted hereunder. Without limiting the foregoing, this Agreement and the licenses and rights granted herein do not, and shall not be construed to, confer any rights upon either Party, its Affiliates, or its Sublicensees by implication, estoppel, or otherwise (except as expressly licensed or otherwise granted under this Agreement) as to any of the other Party’s or its Affiliates’ Intellectual Property.

Section 2.8 Retention and Transfer of Know-How and Regulatory Data.

(a) If Everest or Newco (the “Requesting Party”) reasonably believes that any Licensed Know-How Materials (including, but not limited to, laboratory notebooks) or Everest Licensed Regulatory Data are in the possession or control of the other Party (such Party, the “Holding Party”) or any of its Affiliates and such Licensed Know-How Materials or Everest Licensed Regulatory Data are not in the possession or control, and are reasonably necessary for the operation of the Business, of the Requesting Party or its Group, and the Requesting Party makes a request in writing (which request shall be during the one (1)-year period following the Effective Date solely with respect to the Everest Licensed Regulatory Data) that the Holding Party deliver the Licensed Know-How Materials or Everest Licensed Regulatory Data to the Requesting Party, the Holding Party shall review such request and, to the extent in the possession or control of the Holding Party or any of its Affiliates, deliver the Licensed Know-How Materials or Everest Licensed Regulatory Data to the Requesting Party as promptly as reasonably practicable following receipt of such request from the Requesting Party; provided that, to the extent the request does not constitute Newco Licensed Know-How (if the Requesting Party is Everest) or Everest Licensed Know-How, Everest Licensed Copyrights, Everest Licensed Regulatory Data or Everest Licensed Software (if the Requesting Party is Newco), the Holding Party shall not be required to deliver such Licensed Know-How Materials or Everest Licensed Regulatory Data to the Requesting Party, but shall provide the Requesting Party with an explanation in reasonable detail of the basis of such determination and shall make itself and its relevant Affiliates available to discuss in good faith with the Requesting Party.

 

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(b) As set forth in the Separation Agreement, Everest has transferred to Newco ownership of the Newco Know-How Materials and Everest has retained ownership of the Everest Know-How Materials. Newco may request access to such retained Everest Know-How Materials by submitting a written request for access to Everest (“Access Request”), which shall contain a reasonably detailed description of the requested Everest Know-How Materials, and Everest shall respond to such Access Request as promptly as reasonably practicable, and shall provide Newco with access to the requested Everest Know-How Materials in a manner reasonably agreed upon by the Parties in writing; provided that, to the extent the request does not constitute Everest Know-How Materials, Everest shall not be required to deliver such materials to Newco, but shall provide Newco with an explanation in reasonable detail of the basis of such determination and shall make itself and its relevant Affiliates available to discuss in good faith with Newco. Newco shall bear the costs and expenses associated with any Access Request (including any costs and expenses incurred by Everest and its Affiliates to comply therewith); provided that, to the extent an Access Request relates to a pending or contemplated Legal Proceeding, Everest shall bear the associated costs and expenses of complying with such Access Request, provided that if such associated costs and expenses would reasonably be expected to be material, Newco will equitably share in the costs and expenses associated with complying with such Access Request as reasonably agreed to by the Parties.

Section 2.9 Everest Licensed Trademarks Use and Quality Control.

(a) Use in Ordinary Course. Newco shall not use the Everest Licensed Trademarks except in the ordinary course of operating the Newco Business and in accordance with the terms and conditions of this Agreement.

(b) Quality. Newco acknowledges and is familiar with the high standards, quality, style, and image of the Everest Licensed Trademarks, and Newco shall use the Everest Licensed Trademarks in a manner consistent with these standards, quality, style, and image. Newco shall ensure that the quality of all Licensed Mark Products provided by Newco, under or in association with the Everest Licensed Trademarks, shall be substantially the same as or greater than the quality of the Licensed Mark Products provided under such Everest Licensed Trademarks immediately prior to the Effective Date. Newco shall not change the way that the Everest Licensed Trademarks are used or depicted (including use in connection with any new materials) in any material respect without the prior written consent of Everest. Without limitation to the foregoing, neither Newco nor any of its Affiliates shall (or shall cause or encourage any Third Party to) use an Everest Licensed Trademark in a manner that may reflect negatively on such Everest Licensed Trademark or on Everest or any member of the Everest Group.

 

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(c) Compliance with Brand Manual. Newco shall present the Everest Licensed Trademarks in a manner consistent with the Brand Manual, subject to Newco exhausting any inventory of Licensed Mark Products and a reasonable time period (which shall be no less than ninety (90) days from receipt of written notice from Everest of any change in any Everest Licensed Trademark) to transition to a new or modified presentation in the event that the Brand Manual is modified or updated during the Term and provided to Newco. Newco and its Affiliates shall use commercially reasonable efforts to include appropriate trademark notices with respect to the Everest Licensed Trademarks consistent with past practice in the Newco Business, the Brand Manual, and any other marketing guidelines Everest may provide.

Section 2.10 Samples. At the reasonable request of Everest from time to time, and at Newco’s expense, Newco shall submit to Everest representative samples of uses of the Everest Licensed Trademarks, for purposes of Everest confirming compliance with this Agreement. Newco shall comply with all reasonable instructions Everest may provide regarding the use of the Everest Licensed Trademarks pursuant to any such sample review in order for Newco to comply with this Agreement.

Section 2.11 Everest Restrictions Regarding NALCO Brand. Everest and its Affiliates shall not, except if and as required by law, use NALCO as a trademark or service mark for any goods or services in the Upstream Field for fifteen (15) years following the Effective Date; provided that such restriction shall be of no further force or effect if Newco or its Affiliates engages in direct competition with Everest or any of its Affiliates in the Water Field.

Section 2.12 Compliance with Law. Licensee agrees to take such actions as are necessary and appropriate to comply with all Legal Requirements applicable to the packaging, handling, manufacture, distribution or sale of the products bearing, or marketed under, the Everest Licensed Trademarks, and to otherwise comply with all applicable Legal Requirements in connection with its use of the Everest Licensed Trademarks under this Agreement. Licensee, at its sole expense, shall be responsible for obtaining and maintaining necessary Governmental Authorizations with respect to the manufacture, distribution or sale of the products bearing or marketed under the Everest Licensed Trademarks. Upon request, Licensee shall furnish to Licensor written evidence from the applicable Governmental Bodies of any such Governmental Authorization.

Section 2.13 Audit. Not more than once per year, or at any time a Party has a reasonable, good faith belief that the other Party has materially breached this Agreement and provides written notice to such other Party as well as detailed documentation or other evidence of such alleged breach, upon at least ten (10) Business Days’ advance written notice, such first Party may have an independent third party audit, subject to confidentiality obligations, during regular business hours and in a manner that complies with the reasonable building and security requirements of the audited Party and its Affiliates, the books, records and facilities of such audited Party and its Affiliates to the extent reasonably necessary to determine such audited Party’s and its Affiliates’ compliance with this Agreement. Any audit conducted under this Section 2.13 shall not interfere unreasonably with the operations of such audited Party or any of its Affiliates and any Confidential Information obtained from the audited Party under this Section 2.13 shall be considered Confidential Information of the audited Party. In the event that an audit by the independent third-party auditor reveals a material breach of this Agreement by the audited Party or its Affiliates, the audited Party shall promptly reimburse the auditing Party for the reasonable costs and expenses incurred in connection with such audit.

 

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Section 2.14 Certain Manufacturing Restrictions. The Licensed Patent Products set forth in Schedule 1.1(36) hereto shall be subject to the restrictions as set forth in such schedule.

Section 2.15 Specified Shared IP Contracts. The Parties shall use commercially reasonable efforts and reasonably cooperate with each other to comply with and enforce the rights and obligations under the Specified Shared IP Contracts.

Section 2.16 Patent Infringement Claims. Everest agrees that, after the Wrong Pockets Patent Term, prior to initiating any Legal Proceeding or assisting any Third Party in any Legal Proceeding against Newco or any of its Affiliates that involves or reasonably could be expected to involve claims of infringement of any Patent, the Parties shall discuss in good faith whether such Patent was used or practiced in the Newco Business in the Upstream Field or Shared Midstream Field as of the Effective Date (and therefore should have been included in the Everest Licensed Patents licensed to Newco and its Affiliates under this Agreement or the Newco Assets). If, in such good faith discussions, the Parties determine that such Patent was used or practiced in the Newco Business in the Upstream Field or Shared Midstream Field as of the Effective Date, unless otherwise mutually agreed upon by the Parties in writing, such Patent will be licensed to Newco and its Affiliates in accordance with the terms of the Reseller Agreement, subject to the terms and conditions of any licenses and other rights previously granted by or on behalf of Everest or any of its Affiliates to any Third Parties with respect to such Patent.

Section 2.17 No Restrictions on Athena Business. The Parties acknowledge and agree that, notwithstanding anything in this Agreement, nothing in this Agreement (including Section 2.11 and Section 8.1(b)) prohibits or restricts Athena or any of its Affiliates (other than Newco or its Subsidiaries), on or after the Effective Date, in any manner whatsoever, from engaging in any business of Athena or any such Affiliate in any area or market with respect to any equipment (such as, for example and without limitation, pumps, valves, filters, seals, bearings, rotating and reciprocating machinery and components) and related after-market services, digital hardware, software, analytics and services, including the development, manufacture, use, sale, offering for sale, marketing, promotion, distribution, importation, exportation, maintenance, commercialization and exploitation of any of the foregoing.

ARTICLE III

OWNERSHIP

Section 3.1 Ownership. As between the Parties (and their respective Affiliates) (a) Everest acknowledges and agrees that Newco and its Affiliates own the Newco Licensed IP, (b) Newco acknowledges and agrees that Everest and its Affiliates own the Everest Licensed IP, and (c) each Party acknowledges and agrees that the other Party, and none of such other Party’s Affiliates or Sublicensees, acquires any ownership rights in the Licensed IP licensed to such other Party hereunder. For the avoidance of doubt, Newco admits the validity and enforceability of the Everest Licensed Trademarks and that all use of the Everest Licensed Trademarks shall inure to the sole benefit of Everest. Newco shall not, other than as expressly permitted by this Agreement, use or register in any country any trademarks, domain names, user names, or other designations, or any trade dress or design elements that consist of, resemble, contain, or would be likely to cause confusion with or dilute the distinctive quality of the Everest Licensed Trademarks.

 

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Section 3.2 Ownership of Improvements and Modifications. As between the Parties (and their respective Affiliates), each Licensee and its Affiliates shall have the right to develop, create and make, and shall own all, improvements, modifications, or alterations made by or on behalf of such Licensee or any of its Affiliates with respect to any of the Licensed IP; provided that (i) the foregoing shall not apply to the Everest Licensed Trademarks and (ii) such improvements, modifications, or alterations shall not include the underlying Licensed IP to which such improvements, modifications or alterations are made.

ARTICLE IV

PROSECUTION AND MAINTENANCE

Section 4.1 Responsibility and Cooperation.

(a) As between the Parties, Licensor shall have sole and exclusive responsibility for filing, prosecuting, and maintaining (but not the obligation to file, prosecute or maintain) all issuances, registrations and applications for issuance or registration of all Patents, Trademarks, Copyrights and Regulatory Property within the Licensed IP with respect to which such Licensor or any of its Affiliates is granting a license to Licensee hereunder; provided that with respect to Patents, (i) the Parties shall equally share the costs and expenses associated with maintaining the Patents (provided that Everest shall bear the cost and expenses associated with abandoning any Patent, including capitalized costs) within the Licensed IP and (ii) Everest shall consider in good faith any comments provided by Newco with respect to any such filings, prosecution or maintenance related to any Licensed IP that is the subject of such filing, prosecution or maintenance that has material economic value to the Newco Business. Notwithstanding the foregoing, if Licensee notifies Licensor in writing that it no longer desires for a particular Patent to be licensed to Licensee, such Patent shall no longer be deemed a Patent within the Licensed IP and Licensee’s obligation to equally share the costs and expenses shall terminate.

(b) If, during the Term, Licensor decides to abandon, or otherwise allow to lapse, any issued Patent or published Patent application included in the Licensed IP, Licensor shall use commercially reasonable efforts to notify Licensee of such decision at least thirty (30) days prior to any deadline for taking action to avoid abandonment (or other loss of rights) of such Patent; provided that Licensor shall not be in breach of the foregoing if Licensor inadvertently and in good faith fails to so notify Licensee. Upon receipt of such notice, Licensee shall have the right to elect to assume responsibility for such prosecution and maintenance solely by providing Licensor with written notice of such election within thirty (30) days (or such shorter period requested where the final deadline is in less than thirty (30) days) following such notice from Licensor, and Licensor shall either: (i) withdraw its decision to abandon and continue prosecuting or maintaining such Patent at the Parties’ shared expense pursuant to Section 4.1(a); or (ii) assign its rights in such Patent to Licensee at Licensee’s sole cost and expense. In the event that Licensor assigns a Patent to Licensee in accordance with the foregoing clause (ii), such Patent shall no longer be Licensed IP and instead shall be non-exclusively licensed from Licensee to Licensor, for which the applicable field shall be all fields of use other than the Upstream Field (unless otherwise mutually agreed upon by the Parties in writing), and the Parties shall equally share the costs and expenses associated with maintaining such Patent until Licensor notifies Licensee that Licensor no longer desires for such Patent to be licensed to Licensor, in which case such Patent shall no longer be licensed to Licensor and Licensor’s obligation to equally share the costs and expenses shall terminate.

 

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(c) If, during the Term, Licensor decides to abandon, or otherwise allow to lapse, any registered Trademark or Trademark application included in the Licensed IP, Licensor shall use commercially reasonable efforts to notify Licensee of such decision at least thirty (30) days prior to any deadline for taking action to avoid abandonment (or other loss of rights) of such Trademark; provided that Licensor shall not be in breach of the foregoing if Licensor inadvertently and in good faith fails to so notify Licensee. Upon receipt of such notice, Licensee shall have the right to notify Licensor of its objection to such decision by providing Licensor with written notice of such objection within thirty (30) days (or such shorter period requested where the final deadline is in less than thirty (30) days) following such notice from Licensor, and Licensor shall withdraw its decision to abandon and continue prosecuting or maintaining such Trademark at its expense for the remainder of the applicable Licensed Trademarks Term. With respect to Trademarks, Licensor’s responsibilities set forth in this Section 4.1 shall terminate upon the expiration of the applicable Licensed Trademarks Term.

(d) If, during the Term, Licensor decides to abandon, or otherwise allow to lapse, any registered Regulatory Property included in the Licensed IP, Licensor shall use commercially reasonable efforts to notify Licensee of such decision at least thirty (30) days prior to any deadline for taking action to avoid abandonment (or other loss of rights) of such Regulatory Property; provided that Licensor shall not be in breach of the foregoing if Licensor inadvertently and in good faith fails to so notify Licensee. Upon receipt of such notice, Licensee shall have the right to elect to assume responsibility for such maintenance solely by providing Licensor with written notice of such election within thirty (30) days (or such shorter period requested where the final deadline is in less than thirty (30) days) following such notice from Licensor, and Licensor shall either: (i) withdraw its decision to abandon and continue maintaining such Regulatory Property at Licensor’s expense; or (ii) assign or transfer its rights in such Regulatory Property to Licensee at Licensee’s sole cost and expense.

(e) Upon the reasonable request of Licensor with respect to the filing, prosecution or maintenance of any Licensed IP, Licensee shall provide reasonable assistance to Licensor in connection with such activities (including by providing information or taking such other actions as required by applicable Legal Requirements), and Licensor shall reimburse Licensee’s reasonable out-of-pocket costs incurred in connection therewith.

ARTICLE V

ENFORCEMENT

Section 5.1 Notice. With respect to any Licensed IP, Licensee shall promptly notify Licensor in writing of (a) any Third-Party activities that constitute, or would reasonably be expected to constitute, an infringement, misappropriation or other violation within the exclusive field for which Licensee has been granted a license hereunder of any such Licensed IP or (b) any Third-Party allegations of invalidity or unenforceability of any Licensed IP licensed to Licensee hereunder (each of the foregoing (a) and (b), a “Third-Party Infringement”); provided that Licensee reasonably believes that such Third-Party Infringement could be material to Licensor or its Affiliates.

 

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Section 5.2 Defense and Enforcement.

(a) Licensors First Right. Subject to the remainder of this Section 5.2, as between the Parties, Licensor shall have the first right, but not the obligation, at its own cost and expense, to control enforcement or defense against any Third-Party Infringement (including by bringing a Legal Proceeding or entering into settlement discussions).

(b) Licensees Subsequent Rights. Subject to Section 5.2(a), Licensee shall have the right, but not the obligation, at its own cost and expense, to control enforcement or defense against any Third-Party Infringement (including by bringing a Legal Proceeding or entering into settlement discussions) if Licensor provides Licensee with written notice that it is not exercising its right to control enforcement of any Licensed IP (as described in Section 5.2(a)), and that Licensee may do so at its option. Licensor shall notify Licensee in writing of any decision not to exercise its right to control enforcement or defense, as applicable, with respect to any Licensed IP. Notwithstanding the foregoing in this Section 5.2(b), Licensee shall not have any right to control such enforcement or defense pursuant to the foregoing in this Section 5.2(b) if Licensor provides Licensee with written notice that it is not exercising its right to control enforcement or defense, as applicable, of such Licensed IP (as described in Section 5.2(a)) and that it has reasonably determined in good faith that the Licensed IP should not be enforced or defended at such time (reasonably taking into account the potential economic impact on Everest and Newco, respectively), and provides Licensee an opportunity to discuss such reasoning in good faith with Licensor.

(c) Cooperation. If the Party controlling enforcement or defense of any Licensed IP against any Third-Party Infringement in accordance with Section 5.2(a) or 5.2(b) (such Party, the “Controlling Party”) brings a Legal Proceeding or enters into settlement discussions with respect thereto, the other Party shall provide reasonable assistance in connection therewith, at the Controlling Party’s request, and such other Party shall be reimbursed for its reasonable out-of-pocket costs and expenses incurred in connection therewith. The Controlling Party shall keep the other Party regularly informed of the status and progress of such enforcement or defense, as applicable, and shall reasonably consider the other Party’s comments in connection with any Legal Proceeding or settlement discussions with respect thereto. Such other Party may, at its sole discretion and cost and expense, join as a party to any such Legal Proceeding; provided that, if necessary for standing purposes, such Party shall join such Legal Proceeding upon the Controlling Party’s request and the Controlling Party shall reimburse the other Party’s reasonable out-of-pocket costs and expenses incurred in connection therewith. Such other Party shall have the right to be represented by counsel (which shall act in an advisory capacity only, except for matters solely directed to such Party) of its own choice in any such Legal Proceeding at its own cost and expense (subject to reimbursement of such other Party’s other costs and expenses as described in, and subject to, the immediately preceding sentence).

(d) Settlements. Notwithstanding anything to the contrary herein, the Controlling Party shall not, without the prior written consent (not to be unreasonably withheld, conditioned or delayed) of the other Party, settle any Third-Party Infringement if doing so could (i) adversely affect the validity, enforceability or scope, or admit non-infringement or other non-violation, of any such Licensed IP that such other Party or its Affiliates are licensing to the Controlling Party hereunder, (ii) grant or waive any of the Controlling Party’s rights under any such Licensed IP within the field within which the Controlling Party or its Affiliates are granting a license to the other Party hereunder or (iii) give rise to liability or any other obligations of such other Party, its Affiliates or its Sublicensees for which the Controlling Party is unwilling or unable to, or otherwise does not, provide full indemnification.

 

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(e) Recoveries. Any and all amounts recovered by the Controlling Party in any Legal Proceeding regarding a Third-Party Infringement or settlement with respect thereto shall, unless otherwise agreed in writing (including in an agreement in connection with obtaining consent to settlement), be allocated first to reimburse the Controlling Party’s out-of-pocket costs and expenses incurred in connection with such Legal Proceeding or settlement (including its obligations to the other Party pursuant to Section 5.2(c)) and next to the other Party’s out-of-pocket costs and expenses incurred in connection with such Legal Proceeding or settlement, with any remainder to be retained by the Controlling Party, except to the extent that amounts recovered are found to be directly attributed to damage to the other Party’s business.

(f) Joint Enforcement. The Parties may mutually agree in writing to jointly take action to control enforcement of or defend against any Third-Party Infringement of the Licensed IP. If the Parties agree to take such action jointly, the Parties shall equally share the costs and expenses associated with such action and any and all amounts recovered in connection with such action, except to the extent otherwise agreed upon in writing by the Parties.

(g) Interferences, etc. Notwithstanding anything to the contrary in Article IV or this Article V, in the event that any Third-Party allegations of invalidity or unenforceability of any Patents included in the Licensed IP licensed to Licensee hereunder arise in an opposition, interference, reissue proceeding, reexamination or other patent office proceeding, Article IV shall govern the Parties’ rights and obligations with respect thereto.

ARTICLE VI

INDEMNIFICATION

Section 6.1 Indemnification.

(a) Each Party (the “Indemnifying Party”) agrees to indemnify, release, defend and hold harmless the other Party and its Affiliates and its and their directors, officers, agents, and successors (each, an “Indemnitee” and collectively, the “Indemnitees”) from and against any and all Indemnifiable Losses incurred or suffered by any of the Indemnitees, (i) to the extent arising out of, relating to or resulting from (1) breach by the Indemnifying Party of this Agreement or (2) if the Indemnifying Party is Licensee, use of the Licensed IP hereunder by or on behalf of such Party or its Sublicensees, except in each case to the extent that such Indemnifiable Losses (y) are subject to indemnification by the other Party pursuant to this Section 6.1 or (z) arise out of bad faith, gross negligence or willful misconduct of the other Party or its Affiliates, or (ii) as specifically set forth in Schedule 6.1.

Section 6.2 Indemnification Procedures. The indemnification procedures set forth in Sections 4.4 through 4.9 of the Separation Agreement shall apply to the matters indemnified hereunder, mutatis mutandis.

 

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Section 6.3 Disclaimer of Representations and Warranties. EACH PARTY HEREBY ACKNOWLEDGES THAT EACH OF EVEREST (ON BEHALF OF ITSELF AND EACH MEMBER OF THE EVEREST GROUP) AND NEWCO (ON BEHALF OF ITSELF AND EACH MEMBER OF THE NEWCO GROUP) UNDERSTANDS AND AGREES THAT NEITHER PARTY IS REPRESENTING OR WARRANTING IN ANY WAY UNDER THIS AGREEMENT (INCLUDING WITH RESPECT TO ANY CONSENTS REQUIRED IN CONNECTION HEREWITH, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT, VALIDITY, ENFORCEABILITY OR SCOPE OF THE LICENSED IP), AND EACH PARTY HEREBY EXPRESSLY DISCLAIMS ALL SUCH REPRESENTATIONS AND WARRANTIES. EXCEPT AS MAY EXPRESSLY BE SET FORTH IN THE SEPARATION AGREEMENT OR IN ANY OTHER ANCILLARY AGREEMENT, ALL LICENSED IP IS BEING LICENSED ON AN “AS IS,” “WHERE IS,” AND “WITH ALL FAULTS” BASIS.

Section 6.4 Limitation on Liability. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT (INCLUDING THIS Article VI), EXCEPT WITH RESPECT TO (A) MATERIAL BREACHES OF THIS AGREEMENT BY NEWCO WITH RESPECT TO THE NEWCO LICENSED FIELDS, (B) USE BY EVEREST OF THE EVEREST LICENSED PATENTS IN THE UPSTREAM FIELD OR (C) A PARTY’S BREACH OF ARTICLE VII, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY OR ITS AFFILIATES, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR OTHERWISE, AT LAW OR IN EQUITY, AND “LOSSES” SHALL NOT INCLUDE ANY AMOUNTS FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES; PROVIDED THAT NOTHING HEREIN SHALL PREVENT ANY INDEMNITEE FROM BEING INDEMNIFIED PURSUANT TO THIS Article VI FOR ALL COMPONENTS OF AWARDS AGAINST THEM IN ANY THIRD-PARTY CLAIM.

ARTICLE VII

CONFIDENTIALITY

Section 7.1 General Confidentiality. The Parties acknowledge and agree that the confidentiality obligations set forth in the Separation Agreement shall apply to Confidential Information of a Party hereunder, mutatis mutandis.

Section 7.2 Trade Secrets. In addition to its obligations under Section 7.1, each Licensee shall maintain any trade secrets included in Licensed Know-How licensed to such Licensee strictly confidential in a manner consistent with such Party’s own valuable trade secrets (and in any event, with no less than a reasonable degree of care consistent with good industry practices). Each Party shall promptly provide written notice to the other Party of any suspected or actual breach of its confidentiality obligations in this Section 7.2.

 

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ARTICLE VIII

TERM

Section 8.1 Termination.

(a) This Agreement shall remain in effect (i) to the extent with respect to the Everest Licensed Patents licensed hereunder and Everest Licensed Copyrights, on a Patent-by-Patent and Copyright-by-Copyright basis, until expiration, invalidation or abandonment of such Everest Licensed Patent or Everest Licensed Copyright (as applicable), (ii) to the extent with respect to any Licensed Know-How, until such Licensed Know-How no longer constitutes Confidential Information (except to the extent either Party or its Affiliates discloses or causes such Licensed Know-How to be disclosed in violation of its confidentiality obligations such that it no longer constitutes Confidential Information); (iii) with respect to any Licensed Trademarks, until the expiration of the Target Transition Periods, as applicable, and in no event later than the expiration of the Licensed Trademarks Term or longer if and to the extent required by applicable Legal Requirements (provided that Licensee has been using diligent and commercially reasonable efforts to transition off such use by the expiration of the Target Transition Periods); and (iv) with respect to Everest Licensed Software and Regulatory Property, in perpetuity (other than with respect to any Regulatory Property transferred to a Party pursuant to the Separation Agreement, which license term shall expire upon completion of such transfer) (the “Term”).

(b) Notwithstanding Section 8.1(a), this Agreement may be terminated: (i) in its entirety or with respect to one or more licenses herein by mutual written agreement of the Parties; (ii) by Everest, in its sole discretion, in its entirety or with respect to one or more licenses to Newco herein: (A) if Newco is in material breach of this Agreement and such breach is not cured within thirty (30) days after Newco’s receipt of written notice of such breach from Everest, provided, however, that Everest cannot terminate this Agreement in its entirety or with respect to one or more licenses herein due to any alleged use or practice of any Everest Licensed IP by Newco or any of its Affiliates outside the scope of the licenses granted herein unless and until a court or other Governmental Body of competent jurisdiction or arbitral body has found in a final, binding order or judgment that is unappealable or unappealed within the time permitted for appeal that Newco or such Affiliate used or practiced such Everest Licensed IP outside of the scope of such licenses; (B) in the event of a Challenge by Newco or any of its Affiliates as set forth in Section 8.3; (C) in the event Newco or its Affiliates enters into direct competition (as defined below) with Everest or its Affiliates in the Water Field; or (D) in the event of a sale or direct or indirect change of control of Newco or its Affiliates (or sale of a material portion of its or their business or assets related to this Agreement) to a direct competitor (as defined below) of Everest or its Affiliates in the Water Field; or (iii) by Newco, in its sole discretion, with respect to one or more licenses to Everest herein with respect to Newco Licensed Regulatory Property or Patents or Trademarks licensed to Everest pursuant to Section 2.3(i) if Everest is in material breach of this Agreement and such breach is not cured within thirty (30) days after Everest’s receipt of written notice of such breach from Newco, provided, however, that Newco cannot terminate this Agreement with respect to one or more such licenses herein due to any alleged use or practice of any Newco Licensed IP by Everest or any of its Affiliates outside the scope of the licenses granted herein unless and until a court or other Governmental Body of competent jurisdiction or arbitral body has found in a final, binding order or judgment that is unappealable or unappealed within the time permitted for appeal that Everest or such Affiliate used or practiced such Newco Licensed IP outside of the scope of

 

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such licenses. In addition, Everest may terminate this Agreement with respect to one or more licenses granted herein in the event that Everest terminates the Reseller Agreement in whole or in part due to (i) a material uncured breach arising from any use or practice of any Everest Reseller Agreement IP by Newco or any of its Affiliates outside the scope of the licenses granted in the Reseller Agreement, subject to a court or other Governmental Body of competent jurisdiction or arbitral body having found in a final, binding order or judgment that is unappealable or unappealed within the time permitted for appeal, that Newco or such Affiliate used or practiced such Everest Reseller Agreement IP outside of the scope of such licenses or (ii) in the event of a Challenge by Newco or any of its Affiliates to any Everest Reseller Agreement IP in the corollary to Section 8.3 of the Reseller Agreement. For purposes of the foregoing provision, (1) a “change of control” means the direct or indirect sale of all or substantially all of the assets of a Party, any merger, consolidation or acquisition of a Party with, by or into another Person, or any direct or indirect change in the ownership of more than fifty percent (50%) of the voting capital stock or equity, or power to appoint or elect more than fifty percent (50%) of the members of the board of directors or similar governing body, of a Party in one or more related transactions and (2) “direct competition” or a “direct competitor” of Everest or its Affiliates means any Person that, to the knowledge of Newco after reasonable inquiry, manufactures, markets or sells products or services in the Water Field of the same or similar products or services as are manufactured, marketed or sold by Everest or its Affiliates to the same or similar types of customers, above a de minimus amount, in each case, as of the Effective Date, including any procurement, partnering or licensing arrangement with any such Person (even if Newco’s and its Affiliates’ activity is only in the Newco Licensed Fields but not including (x) in the event Everest is unable or unwilling to provide a desired solution on agreed terms, subject in each case to (A) Newco providing Everest thirty (30) days’ prior written notice of the supplier and product, procurement of any such Person’s “off the shelf” or “catalog” products that have been generally available in the market for at least twelve (12) months (for water or non-water related applications, but excluding any reformulations, development or customization of such products) on generally available, arms’ length commercial terms for resale by Newco or its Affiliates in the Newco Licensed Fields only, or (B) Everest’s prior written approval (not to be unreasonably withheld or delayed) of the supplier and product, any cooperation or arrangement with any such Person to undertake any reformulation, development or customization of such products, and procurement of any such reformulated products from such Person, for resale by Newco or its Affiliates in the Newco Licensed Fields only, or (y) any procurement, partnering or licensing arrangement with any such Person (including reformulation, development or customization) where the arrangement relates solely to products or applications that are unrelated to the handling and treatment of water or certain critical applications in Upstream that require innovation as specified on Schedule 8.1(b) (the “Specified Applications”) subject to the limitations and conditions set forth therein, in each case subject to the use and sale of any such products or reformulations thereof only in the Upstream Field and Shared Midstream).

(i) The Parties acknowledge and agree that it is necessary that Newco and its Affiliates have the ability to compete and innovate in critical water applications in Upstream and Shared Midstream. Accordingly, in addition to the procurement, partnering or licensing arrangements permissible under Section 8.1(b)(y) above, Everest shall provide Newco and its Affiliates with access to Everest’s and its Affiliates’ portfolio of water products to the extent that they are products specifically scheduled as available for purchase by Newco and its Affiliates under the Reseller Agreement, provided that at the time of any request to purchase such products (A) such products are generally available, (B) Everest

 

28


has no intent to discontinue such products and (C) Newco orders Everest’s Minimum Order Quantity (as defined in the Cross Supply Agreement), and subject to all other terms and conditions of the Reseller Agreement, including any expiration or termination thereof. In addition, Newco and its Affiliates may co-develop products with Everest or its Affiliates, and Everest and its Affiliates will provide good faith consideration to any such request by Newco or its Affiliates; provided, however, Everest shall have no obligation to co-develop unless and except as mutually agreed in writing. The Parties acknowledge and agree that, consistent with and subject to the terms and conditions of this Agreement and the Reseller Agreement and the rights and limitations of the licenses set forth herein and therein, Newco and its Affiliates have the right to internally develop products for use in Upstream and Shared Midstream.

(c) Notwithstanding Section 8.1(b), Everest shall not be entitled to terminate the license, rights and obligations set forth in this Agreement relating to the specific Everest Licensed Patents set forth on Schedule 8.1(c) (the “Specified Licensed Patents”), except in the event of material, uncured breach of this Agreement by Newco or its Affiliates as it relates to any of the Specified Licensed Patents or any Challenge by Newco or its Affiliates to any of the Specified Licensed Patents. To the extent Everest Licensed Know-How or Everest Licensed Regulatory Property are necessary to exploit the rights to the Specified Licensed Patents, Everest shall not be entitled to terminate the license, rights and obligations set forth in this Agreement relating to such Everest Licensed Know-How or Everest Licensed Regulatory Property solely to the extent the license to such Specified Licensed Patents continues under this Section 8.1(c). For clarity, in the event of any termination of any license to Everest Licensed IP other than the Specified Licensed Patents, the terms and conditions, restrictions and limitations of this Agreement and the licenses granted herein as they relate to the Specified Licensed Patents (and as they relate to the license to Everest Licensed Know-How and Everest Licensed Regulatory Property as set forth in the foregoing sentence) shall remain in effect and continue to apply in all respects unless and until terminated by mutual agreement of the Parties or by Everest due to material, uncured breach of this Agreement as it relates to any of the Specified Licensed Patents and related Everest Licensed Know-How and Everest Licensed Regulatory Property, or any Challenge to any of the Specified Licensed Patents.

Section 8.2 Effect of Termination.

(a) In the event that this Agreement expires or is earlier terminated, in whole or in part:

(i) Licensee and its Sublicensees shall promptly cease all use of the Licensed IP (or relevant part thereof, with respect to a partial expiration or termination);

(ii) all rights granted to Licensee under this Agreement (or in relevant part, with respect to a partial expiration or termination) shall immediately revert to Licensor; and

(iii) Licensee shall reasonably cooperate with Licensor in the cancellation of any licenses recorded pursuant to this Agreement with respect to such Licensed IP;

 

29


provided that, if Licensee is using commercially reasonable efforts to cease such use, Licensee shall have the right to phase out such use for a period not to exceed twelve (12) months from the date of such termination (the “Phase-Out Period”).

(b) Accrued Rights. Expiration or termination of this Agreement, in part or in its entirety, shall be without prejudice to any rights that shall have accrued to the benefit of either Party prior to such expiration.

(c) Survival. The following provisions of this Agreement, together with all other provisions of this Agreement that expressly specify that they survive, shall survive expiration or termination of this Agreement, in part or in its entirety: Articles I, II (as set forth in Section 8.2), III, VI, VII, IX and X, and Section 2.1(d)(i) and (ii) (in each case, solely to the extent (and without limitation to any rights under Section 8.1(c)) such license is necessary to maintain and support any products included in the Newco Assets and to the extent such products are not subject to any Licensed IP (other than Everest Licensed Regulatory Property (and for clarity, Section 2.1(d)(iv) shall not survive)), Section 2.2(b)(i) and (ii) (in each case, solely to the extent such license is necessary to maintain and support any products included in the Everest Retained Assets if and to the extent such products are not subject to any Licensed IP (other than Newco Licensed Regulatory Property)), Section 8.1(b) and Section 8.2. For clarity, if and to the extent the licenses relating to the Specified Licensed Patents, Everest Licensed Know-How and Everest Licensed Regulatory Property described in Section 8.1(c) are not terminated or do not expire pursuant to the terms of Section 8.1(a) or (c), Section 8.1(c) shall remain in effect consistent with its terms.

Section 8.3 Patent or Trademark Challenge.

(a) Challenge Notice. In the event of a Challenge by Licensee or any of its Affiliates against any Everest Licensed Patents or Everest Licensed Trademarks, including any Challenges brought by Third Parties with the assistance of Licensee or its Affiliates, Licensor shall have the right to terminate any and all licenses and rights granted under this Agreement to such Licensee or any of its Affiliates, unless such Challenge was inadvertent and in good faith and is withdrawn within thirty (30) days after Licensee’s receipt of written notice of such Challenge from Everest. The Parties agree that if and to the extent Licensee or any of its Affiliates is compelled to respond to any legal process in any Legal Proceedings initiated by a Third Party, such response is not, for purposes of the foregoing sentence, “assistance” by Licensee or such Affiliate.

(b) Newco shall reimburse Everest, quarterly and in arrears, for all reasonable costs and expenses incurred by Everest and its Affiliates in connection with defending any Challenge asserted by Newco or any of its Affiliates that was not inadvertent and in good faith.

(c) Effects of Termination. Upon any termination by Licensor pursuant to this Section 8.3 and subject to the Phase-Out Period, (i) any and all sublicenses that have been granted by Licensee to a Sublicensee with respect to the licenses and rights that have been terminated (such licenses, the “Terminated Licenses”) shall automatically terminate (unless Licensor, in its sole discretion, agrees to have any such sublicenses assigned to Licensor) and (ii) Licensee shall, and shall ensure that its Affiliates and Sublicensees, promptly cease use of all Licensed IP under the Terminated Licenses, subject to the Phase-Out Period. For clarity, in the event that a Licensor elects to terminate this Agreement with respect to any or all licenses granted by such Licensor to Licensee under this Section 8.3, this Agreement shall remain in full force and effect with respect to all non-terminated licenses granted under this Agreement.

 

30


Section 8.4 Reimbursement. Without limitation to Newco’s obligations under Section 8.3(b), each Party shall reimburse all reasonable costs and expenses incurred by the other Party and its Affiliates in connection with enforcement of this Agreement if a court of competent jurisdiction or arbitral body has found in a non-appealable order or judgment that such Party has breached this Agreement.

ARTICLE IX

DISPUTE RESOLUTION

Section 9.1 Negotiation. In the event of a controversy, dispute or Legal Proceeding between the Parties arising out of, in connection with, or in relation to this Agreement or any of the transactions contemplated hereby, including with respect to the interpretation, performance, nonperformance, validity or breach thereof, and including any Legal Proceeding based on contract, tort, statute or constitution, including the arbitrability of such controversy, dispute or Legal Proceeding, the procedures as set forth in Article VII of the Separation Agreement shall apply, mutatis mutandis.

ARTICLE X

MISCELLANEOUS

Section 10.1 Entire Agreement; Construction. This Agreement, including the Schedules hereto, shall constitute the entire agreement and shall supersede all prior agreements and understandings, both written and oral, among or between any of the Parties with respect to the subject matter hereof and thereof. This Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. The exchange of a fully executed Agreement (in counterparts or otherwise) by facsimile or electronic transmission shall be sufficient to bind the Parties to the terms and conditions of this Agreement. In the event of any inconsistency between this Agreement and any Schedule hereto, the Schedule shall prevail. In the event of any conflict between the provisions of this Agreement and the provisions of the Separation Agreement, the terms and conditions of this Agreement shall control (except as expressly set forth in Section 8.2 of the Separation Agreement).

Section 10.2 Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given or made as follows: (a) if sent by registered or certified mail in the U.S. return receipt requested, upon receipt; (b) if sent by nationally recognized overnight air courier (such as Federal Express), two (2) Business Days after mailing; (c) if sent by facsimile transmission or e-mail before 5:00 p.m. Eastern Time, when transmitted and receipt is confirmed; (d) if sent by facsimile transmission or e-mail after 5:00 p.m. Eastern Time and receipt is confirmed, on the following Business Day; or (e) if otherwise actually personally delivered, when delivered; provided that such notices, requests, demands and other communications are delivered to the physical address, e-mail address or facsimile number set forth below, or to such other address as any Party shall provide by like notice to the other Parties to this Agreement:

 

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if to Athena or Newco:

Apergy Corporation

2445 Technology Forest Blvd., 12th Floor

The Woodlands, TX 77381

Attn: General Counsel

Email: general.counsel@apergy.com

with a copy (which shall not constitute notice) to:

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Attn:    Michael J. Aiello

            Sachin Kohli

Email: michael.aiello@weil.com

            sachin.kohli@weil.com

Fax: (212) 310-8007

if to Everest:

c/o Ecolab Inc.

1 Ecolab Place

Saint Paul, MN 55102

Attn: General Counsel

Email: generalcounsel@ecolab.com

with a copy (which shall not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP

Attn:    Charles W. Mulaney, Jr.

            Richard C. Witzel, Jr.

            155 N. Wacker Drive, Suite 2700

            Chicago, IL 60606

Email: charles.mulaney@skadden.com

            rich.witzel@skadden.com

Fax:    (312) 407-0411

Section 10.3 Waivers.

(a) No failure on the part of any Party to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of any Party in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy. The rights and remedies hereunder are cumulative and not exclusive of any rights or remedies that any Party would otherwise have.

 

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(b) No Party shall be deemed to have waived any claim arising out of this Agreement, or any power, right, privilege or remedy under this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered on behalf of such Party; and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given.

Section 10.4 Assignment.

(a) Neither Party may assign this Agreement nor any of its rights, interests or obligations under this Agreement, in whole or in part, by operation of law or otherwise, without the prior written consent of the other Party (which consent may be granted or withheld in the other Party’s sole discretion); provided, however, that either Party may assign, in whole but not in part, by operation of law or otherwise, any of the foregoing (i) to one or more of its Affiliates or (ii) to the successor to all or a portion of the business or assets to which this Agreement relates; provided that (1) such Party shall promptly notify the other Party in writing of any assignments it makes under Section 10.4(a)(ii), (2) in either case of (i) or (ii), the party to whom this Agreement is assigned shall agree in writing to be bound by the terms of this Agreement as if named as a “Party” hereto with respect to all or such portion of this Agreement so assigned and (3) any such assignment shall be without prejudice to the either Party’s rights of termination under Section 8.1(b).

(b) Any assignment or other disposition in violation of this Section 10.4 shall be void. No assignment shall relieve the assigning Party of any of its obligations under this Agreement that accrued prior to such assignment unless agreed to by the non-assigning Party.

Section 10.5 Successors and Assigns. The provisions of this Agreement and the obligations and rights hereunder shall be binding upon, inure to the benefit of and be enforceable by (and against) the Parties and their respective successors and permitted assigns.

Section 10.6 Amendments. This Agreement may not be amended except by an instrument in writing signed by each of the Parties.

Section 10.7 Subsidiaries. Each of the Parties shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary of such Party or by any entity that becomes a Subsidiary of such Party at and after the Effective Date, to the extent such Subsidiary remains a Subsidiary of the applicable Party.

Section 10.8 Third-Party Beneficiaries. Except as provided in Article VI relating to Indemnitees, this Agreement is solely for the benefit of the Parties and nothing in this Agreement, express or implied, is intended to or shall confer upon any Person (other than the Parties) any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 10.9 Schedules. The Schedules shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein. Nothing in the Schedules constitutes an admission of any liability or obligation of any member of the Everest Group or the Newco Group or any of their respective Affiliates to any third party, nor, with respect to any third party, an admission against the interests of any member of the Everest Group or the Newco Group or any of their respective Affiliates.

 

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Section 10.10 Governing Law; Jurisdiction; Specific Performance; Remedies. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof. In any Legal Proceeding between any of the Parties arising out of or relating to this Agreement or any of the transactions contemplated hereby: (a) each of the Parties irrevocably and unconditionally consents and submits to the exclusive jurisdiction and venue of the Court of Chancery of the State of Delaware or, if under applicable Legal Requirements, exclusive jurisdiction over such matter is vested in the federal courts, any federal court in the State of Delaware and any appellate court from any thereof; (b) each of the Parties irrevocably waives the right to trial by jury; and (c) each of the Parties irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, any claim (i) that it is not personally subject to the jurisdiction of the courts in Delaware as described herein for any reason; (ii) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts; and (iii) that (x) the claim, action, suit or other Legal Proceeding in any such court is brought in an inconvenient forum; (y) the venue of such claim, action, suit or other Legal Proceeding is improper; or (z) this Agreement, or the subject matter hereof or thereof, may not be enforced in or by such courts. Each of the Parties further agrees that, to the fullest extent permitted by applicable Legal Requirements, service of any process, summons, notice or document by U.S. registered mail to such Party’s respective address set forth in Section 10.2 will be effective service of process for any claim, action, suit or other Legal Proceeding in the Court of Chancery of the State of Delaware or, to the extent required by Legal Requirements, any federal court in the State of Delaware, with respect to any matters to which it has submitted to jurisdiction as set forth in this paragraph. The Parties hereby agree that a final judgment in any such claim, suit, action or other Legal Proceeding will be conclusive, subject to any appeal, and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Legal Requirements. The Parties agree that irreparable damage would occur and that the Parties would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to specific performance and injunctive or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement without the requirement for the posting of any bond, this being in addition to any other remedy to which they are entitled at law or in equity. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

Section 10.11 Severability. Any term or provision of this Agreement (or part thereof) that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions of this Agreement or the validity or enforceability of the offending term or provision (or part thereof) in any other situation or in any other jurisdiction. If a final judgment of a court of competent jurisdiction declares that any term or provision of this Agreement (or part thereof) is invalid or unenforceable, the Parties agree that the court making such determination shall have the power to limit such term or provision (or part thereof), to delete specific words or phrases or to replace such term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the

 

34


invalid or unenforceable term or provision (or part thereof), and this Agreement shall be valid and enforceable as so modified. In the event such court does not exercise the power granted to it in the prior sentence, the Parties agree to replace such invalid or unenforceable term or provision (or part thereof) with a valid and enforceable term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable term or provision.

Section 10.12 No Duplication; No Double Recovery. Nothing in this Agreement is intended to confer to or impose upon any Party a duplicative right, entitlement, obligation or recovery with respect to any matter arising out of the same facts and circumstances.

Section 10.13 Bankruptcy. All rights and licenses granted under or pursuant to this Agreement by a Licensor are, and will otherwise be deemed to be, for purposes of Section 365(n) of the United States Bankruptcy Code, licenses of rights to “intellectual property” as defined under Section 101 of the United States Bankruptcy Code regardless of the form or type of intellectual property under or to which such rights and licenses are granted and regardless of whether the intellectual property is registered in or otherwise recognized by or applicable to the United States of America or any other country or jurisdiction. The Parties agree that each Licensee will retain and may fully exercise all of its rights and elections under the United States Bankruptcy Code. The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against a Party under the United States Bankruptcy Code, the Party hereto that is not a party to such proceeding will be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property, which, if not already in the non-subject Party’s possession, will be promptly delivered to it (a) upon any such commencement of a bankruptcy proceeding upon the non-subject Party’s written request therefor, unless the Party subject to such proceeding continues to perform all of its obligations under this Agreement or (b) if not delivered under clause (a) above, following the rejection of this Agreement by or on behalf of the Party subject to such proceeding upon written request therefor by the non-subject Party.

* * * * *

[End of page left intentionally blank]

 

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

 

ECOLAB INC.

/s/ Douglas M. Baker

Name: Douglas M. Baker, Jr.
Title: Chairman of the Board and Chief Executive Officer
CHAMPIONX HOLDING INC.

/s/ Deric Bryant

Name: Deric Bryant
Title: President and Chief Executive Officer

[Intellectual Property Matters Agreement Signature Page]

EX-2.7

Exhibit 2.7

EXECUTION VERSION

MASTER CROSS SUPPLY AND PRODUCT

TRANSFER AGREEMENT

Between

ECOLAB INC.

(“EVEREST”)

And

CHAMPIONX LLC

(“NEWCO”)

Dated as of June 3, 2020


MASTER CROSS SUPPLY AND PRODUCT TRANSFER AGREEMENT

This Master Cross Supply and Product Transfer Agreement (“Agreement”), dated this 3rd day of June, 2020, is by and among Ecolab Inc., a Delaware corporation (“Everest”) and ChampionX LLC, a Delaware limited liability company (“Newco”). Everest and Newco are sometimes referred to herein individually as a “Party or collectively as the “Parties.

WITNESSETH:

WHEREAS, Everest and Newco have agreed, pursuant to the Separation and Distribution Agreement between Everest, ChampionX Holding Inc. and Apergy Corporation dated December 18, 2019 (as it may be amended from time to time, the “Separation and Distribution Agreement”), to, among other things, effect (i) the separation of the upstream energy business of Ecolab from the other businesses of Ecolab and (ii) the distribution by Ecolab of shares of ChampionX Holding Inc. common stock to the holders of the Ecolab common stock; and

WHEREAS, each Party currently Manufactures certain Products required by the other Party to service customers; and

WHEREAS, the Parties plan to transfer, over a period not to exceed thirty-six (36) months, the Manufacture of Products on the Transfer List from Newco to Everest and vice versa; and

WHEREAS, Products identified on the Elective Nonstrategic List, Strategic List, Reseller List and Special Supply List, due to intellectual property considerations, manufacturing asset ownership, technical expertise, cost efficiencies, capacity constraints, or other special circumstances, will not be transferred but will be manufactured by one Party for the other; and

WHEREAS, Everest and Newco also wish to set out the obligations and rights of the Parties to certain manufacturing assets not being transferred and other special arrangements which both Parties must secure to service customers and Manufacture relevant Products;

NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements contained in this Agreement, and for other good and valuable consideration, the receipt of which is hereby acknowledged, and intending to be legally bound hereby, the Parties agree as follows:


1.

Definitions; Interpretation.

 

1.1

Unless the context otherwise indicates or requires, the following words and expressions shall have the meaning ascribed to them below:

“Absorption” shall mean the manufacturing variance at a given Plant created by deficits or surpluses, as applicable, of Buyer’s actual purchased volumes of Product from such Plant versus Buyer’s budgeted volumes of Product from such Plant that are set forth in or contemplated by the applicable Annual Budget.

“Accounting Principles” shall have the meaning prescribed in Section 4.1 of this Agreement.

“Acquired Party” shall have the meaning prescribed in Section 22.1 of this Agreement.

Acrylamide Monomer shall have the meaning prescribed in Section 11.2 of this Agreement.

“AffiliateorAffiliatesshall mean, with respect to either Party, any other Person controlling, controlled by or under common control with such Party. For purposes of this definition, the term “control” (and correlative terms) means the power, whether by contract, equity ownership or otherwise, to direct the policies or management of a Person.

“Agreementshall mean this document and the attached Schedules, and any other document identified and incorporated herein.

“Annual Budget” shall have the meaning prescribed in Section 4.1 of this Agreement.

“Applicable Environmental Lawshall mean any statute, law, rule, regulation, ordinance, code, policy or rule of common law of any Governmental Authority now in effect and in each case as amended from time to time, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree, or judgment, relating to the environment, human health, hazardous materials or waste materials.

“Applicable Law shall mean applicable statutes, laws, rules, regulations, ordinances, orders, guidelines and requirements including statutes, laws, rules, regulations, guidelines and requirements related to the development, registration, manufacture, labeling, shipping and marketing of Products and including Applicable Environmental Laws.

“Business Day for each country where Product is Manufactured shall mean the day within a standard five-day work week and excludes days when the national banks of such country are closed for business due to national holiday or observance.

Buyer-Specific RM&I means RM&I that is both (i) required to Manufacture a Product and (ii) not used in Producer’s then-current operations.

“Buying PartyorBuyershall mean the Party that is acquiring a Product from Producer.

Buyer Unique Products shall mean any Products that are Manufactured at a given Plant only for Buyer.


“Change-in-Controlshall mean the sale of all or substantially all the assets of a Party, any merger, consolidation or acquisition of a Party with, by or into another corporation, entity or person, or any change in the ownership of more than fifty percent (50%) of the voting capital stock or equity, or power to appoint or elect more than 50% of the members of the board of directors or similar governing body, of a Party in one or more related transactions; provided, however, that the transactions contemplated in the Separation and Distribution Agreement, including the Merger (as defined in the Separation and Distribution Agreement), will not be considered a Change-in-Control of either Party.

“Claim” shall have the meaning prescribed in Section 14.3(a) of this Agreement.

“Contested Claim” shall have the meaning prescribed in Section 14.5(b) of this Agreement.

“Copyrights shall have the meaning prescribed in the defined term “Intellectual Property.”

“Cross Selling Price” shall have the meaning prescribed in Section 4.3 of this Agreement.

“Current Standard Cost” shall have the meaning prescribed in Section 4.4.1 of this Agreement.

“Damages” shall have the meaning prescribed in Section 14.1 of this Agreement.

“Demand Forecastshall have the meaning prescribed in Section 3.1 of this Agreement.

Derivative Special Supply Innovation shall have the meaning prescribed to it in Section 5.6.4 of this Agreement.

“EHCPshall mean the Eastern Hemisphere Core Plant operated by Newco and as described in Schedule 2.3.2.

“Effective Dateshall mean the date of the Closing (as defined in the Separation and Distribution Agreement).

“Elective Nonstrategic List” shall mean the list of those Products Manufactured, repackaged and/or shipped by one Party as Producer for the other Party as Buyer and for which production is not transferred between the Parties and as defined in Section 2.3 of this Agreement and as contained in Schedule 2.2.

“Elective Nonstrategic Markup” shall have the meaning prescribed in Section 2.2 of this Agreement, as further described in Schedule 2.2.


Ellwood City Furnace Rooms shall mean all of the assets located at the Ellwood site operated by Everest that are necessary to Manufacture the list of Products indicated on Schedule 2.5 as being manufactured at Ellwood City.

E&O Reserve shall have the meaning prescribed in Section 4.5.1 of this Agreement.

“Final Batch Specifications” shall have the meaning prescribed in Section 5.8 of this Agreement.

“Fiscal Quarter” shall mean the applicable quarter of the Fiscal Year.

“Fiscal Year” shall have the meaning prescribed in Section 4.1 of this Agreement.

“Force Majeure” shall have the meaning prescribed in Section 13 of this Agreement.

“Frozen Standards” shall have the meaning prescribed in Section 4.1 of this Agreement.

“Fully Reserved Materials” shall have the meaning prescribed in Section 4.5.5 of this Agreement.

“Garyville Site RM&I” shall have the meaning prescribed in Section 7.5 of this Agreement.

“Governmental Authorityshall mean any governmental department, commission, board, bureau, agency, court or other instrumentality, whether foreign or domestic, of any country, nation, republic, federation or similar entity or any state, county, parish or municipality, jurisdiction or other political subdivision thereof.

Hot List Products shall have the meaning prescribed in Section 4.6.2 of this Agreement.

“Indemnified Party” shall have the meaning prescribed in Section 14.3(a) of this Agreement.

“Indemnifying Party” shall have the meaning prescribed in Section 14.3(a) of this Agreement.

“Indemniteesshall have the meaning prescribed in Section 14.8 of this Agreement.

Innovation or Innovate shall have the meaning prescribed in Section 5.6 of this Agreement.

“Intellectual Propertyshall mean all U.S. and foreign intellectual property of any kind or nature, including all: (i) trademarks, trade dress, service marks, certification marks, logos, slogans, design rights, names, corporate names, trade names, internet domain names, social media accounts and addresses and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing (collectively, “Trademarks”); (ii) patents


and patent applications, and any and all related national or international counterparts thereto, including any divisionals, continuations, continuations-in-part, reissues, reexaminations, substitutions and extensions thereof (collectively, “Patents”); (iii) copyrights and copyrightable subject matter, excluding Know-How (collectively, “Copyrights”); (iv) trade secrets, and all other confidential or proprietary information, know-how, inventions, processes, formulae (including product formulations), data, models, and methodologies, excluding Patents and Regulatory Property (as such term is defined in the IPMA) (collectively, “Know-How”); (v) all applications and registrations for the foregoing; and (vi) all rights and remedies against past, present, and future infringement, misappropriation, or other violation thereof.

“Intermediatesshall mean chemical intermediates which are Manufactured, repackaged and/or shipped by one Party as Producer (including chemical intermediates which are produced by third-party toll manufacturers or contract manufacturers for any such Party), it being acknowledged by the Parties that a chemical intermediate may be either a stand-alone Product or a component of a Product.

Intellectual Property Matters Agreement or IPMA shall have the meaning prescribed in the Separation and Distribution Agreement.

Lead Time shall mean time beginning on the date of receipt by a Producer from a Buyer of a Purchase Order for Manufacture of any Product pursuant to the terms hereof until the date on which such Product is deemed delivered to Buyer pursuant to Section 5.9 of this Agreement.

Legal Proceeding shall have the meaning prescribed in the Separation and Distribution Agreement.

Made to Order ProductorMTO Productshall mean a Product not Manufactured and kept in stock by Producer but instead is only Manufactured when a Purchase Order is received.

“Made to Stock Product” or “MTS Product” shall mean Product Manufactured by a Producer based on anticipated demand and not based on receipt or acceptance of any Purchase Order.

“Manufacture,” “ManufacturingandManufacturedshall mean with respect to Products hereunder, the manufacturing, formulation, or blending of Products.

“Manufacturing Servicesshall have the meaning prescribed in Section 5.1 of this Agreement.

“Maximum Price Protected Quantity” shall have the meaning prescribed in Section 7.5 of this Agreement.


“MIN” shall have the meaning set prescribed in Section 5.6.1 of this Agreement.

“Minimum Order Quantity” or “MOQ” is the minimum volume order size for a Product as set forth in a Product schedule or otherwise determined in accordance with Schedule 5.3.

“Notice of Claim” shall have the meaning prescribed in Section 14.3(a) of this Agreement.

“Notified Party shall have the meaning prescribed in Section 22.1 of this Agreement.

“Odessa Tazo Tea” shall mean all of the assets located at the Odessa site operated by Newco that are necessary to Manufacture the list of Products indicated on Schedule 2.5 as being Manufactured by Newco at its facility located in Odessa, Texas.

“Packaging and Labeling Procedures” shall have the meaning prescribed in Section 8.1 of this Agreement.

Permitted Supply List Innovation shall have the meaning prescribed in Section 5.6.3 of this Agreement.

“Personshall mean any natural person, company, corporation, limited liability company, general partnership, limited partnership, trust, proprietorship, joint venture, other business organization, unincorporated organization or Governmental Authority.

“Plantshall mean the place of Manufacture of a Product under this Agreement.

“PLOH” shall have the meaning prescribed in Section 4.1 of this Agreement.

Producer shall mean the Party that Manufactures a Product for the other Party as Buyer.

“Productshall individually mean each finished good identified on any Product List, which is to be Manufactured, repackaged and/or shipped by one Party as Producer for the other Party as Buyer.

“Product Lists” shall mean, collectively, the Transfer List, Elective Nonstrategic List, Strategic List, Reseller List, and the Special Supply List.

“Product Manufacturing Proceduresshall have the meaning prescribed in Section 5.5 of this Agreement.

“Product Sample shall have the meaning prescribed in Section 5.12 of this Agreement.

“Product Test Kit shall have the meaning prescribed in Section 5.13 of this Agreement.


Product Specifications shall mean the written specifications applicable to a Product as contained in the Product Manufacturing Procedures including In-Process Specifications, Final Batch Specifications, and Approval to Ship Specifications, in each case, which are in effect on the Effective Date and as thereafter updated and revised in accordance with the provisions of this Agreement; provided that for Products introduced or modified after the Effective Date, the Product Specifications for such Products will be established consistent with past practices.

Purchase Order shall have the meaning prescribed in Section 5.2 of this Agreement.

“QC Procedures” shall have the meaning prescribed in Section 10.1 of this Agreement.

“Quarterly Rebate Meetings” shall have the meaning prescribed in Section 7.3 of this Agreement.

“Raw Material Specificationsare the specifications contained in the Corporate Specification Database (i.e. SAP) of each Party as of the Effective Date, which specifications may be modified in writing pursuant to a written amendment to this Agreement executed by each Party.

“Raw Materialsshall mean the chemical components or materials purchased from a third party required to Manufacture Products.

“Reseller List” shall have the meaning prescribed in Section 2.4 of this Agreement.

“Reseller Markupsshall have the meaning prescribed in Section 2.4 of this Agreement, as further described in Schedule 2.4.

“Reseller Renewal Term” shall have the meaning prescribed in Section 17.2.4 of this Agreement.

“Resource Constraint” shall have the meaning prescribed in Section 3.2 of this Agreement.

Restricted Inventory shall mean any Products that fail to conform to the Final Batch Specifications for such Products but for which the Parties agree can be reworked by Buyer to meet the Final Batch Specifications using commercially reasonable efforts.

“RM&I shall mean Raw Materials and Intermediates, collectively.

“Separation and Distribution Agreement” shall have the meaning prescribed in the recitals to this Agreement.

“Services” shall mean all things done and performed by one Party for or on behalf of the other Party pursuant to this Agreement with the expectation of being compensated.


“Small Business Countries” shall have the meaning prescribed in Section 4.7 of this Agreement.

“Small Business Country Markup” shall have the meaning prescribed in Section 4.7 of this Agreement, as further described in Schedule 4.7.

“Special Supply List shall have the meaning prescribed in Section 2.5 of this Agreement.

Special Supply List Markup shall have the meaning prescribed in Section 2.5 of this Agreement, as further described in Schedule 2.5.

Special Supply List Term shall have the meaning prescribed in Section 2.5 of this Agreement.

“Steering Committee shall mean the committee described in Section 2.6 and on Schedule 2.6.

“Standard Cost” shall have the meaning prescribed in Section 4.2 of this Agreement.

“Strategic List” shall have the meaning prescribed in Section 2.3 of this Agreement.

“Target” shall have the meaning prescribed in Section 7.7 of this Agreement.

“Term” shall have the meaning prescribed in Section 17.1 of this Agreement.

“Third Party Claim” shall have the meaning prescribed in Section 14.1 of this Agreement.

“Trademarksshall have the meaning prescribed in the defined term “Intellectual Property.”

Transfer Date shall mean, for each Product on the Transfer List, a date that is no later than the last business day of the calendar Quarter specified for transfer of such Product as set forth on Schedule 2.1, which is the date by which Buyer shall be ready to take over Manufacture of the Product from Producer. The Transfer Date for the Products on the Special Supply List will occur at the end of the Special Supply List Term or earlier at Buyer’s discretion.

Transfer List shall have the meaning prescribed in Section 2.1 of this Agreement.

“Transfer Markupshall have the meaning prescribed in Section 2.1 of this Agreement.

Transfer Measurement Date shall mean, for each Product on the Transfer List, the end of the calendar Quarter that includes the Transfer Date for such Product.


Transfer Package shall mean for each Product on the Transfer List, and for each Product on the Special Supply List that the Buyer Party has the right to Manufacture, hard-copy and/or electronic documentation regarding the recipe for such Product, Product Specifications, Manufacturing processes and procedures specific to such Product, Raw Material Specifications and QC Procedures used in the Manufacture of such Product. The Transfer Package is further defined in Schedule 6.1 to this Agreement.

“Trigger Date” shall mean June 1, 2020.

Utilization Requirementshall have the meaning prescribed to it in Schedule 2.3.2 of this Agreement.

 

1.2

Interpretation.

 

  (a)

Except as otherwise indicated, all references in this Agreement to “Articles,” “Sections,” “Exhibits”, “Attachments”, and “Schedules” are intended to refer to Sections or Articles of this Agreement and Exhibits, Attachments, or Schedules to this Agreement.

 

  (b)

As used in this Agreement, the terms “hereunder,” “hereof,” “hereto,” “herein” and words of similar import shall be deemed to refer to this Agreement as a whole and not to any particular Section or other provision.

 

  (c)

For purposes of this Agreement, whenever the context requires: the singular number shall include the plural, and vice versa; the masculine gender shall include the feminine and neuter genders; the feminine gender shall include the masculine and neuter genders; and the neuter gender shall include masculine and feminine genders.

 

  (d)

References to a Person are also to its successors and permitted assigns.

 

  (e)

Any payment to be made pursuant hereto shall be made in the applicable local currency by wire transfer of immediately available funds. The term “dollars” and “$” means United States dollars.

 

  (f)

As used in this Agreement, unless otherwise specified, the words “include” and “including,” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without limitation”.

 

  (g)

References herein to an agreement, law or regulation include such agreement, law or regulation as amended, restated, supplemented, or otherwise modified from time to time unless otherwise specified.


  (h)

In the event of conflict between any provision of Sections 2 – 11 of this Agreement and any Schedule to this Agreement, the terms and conditions of such Schedule shall prevail.

 

  (i)

Except as expressly set forth herein, in no event shall this Agreement be interpreted to convey to any Party rights to Intellectual Property beyond those rights described in the Intellectual Property Matters Agreement or the Reseller Agreement.

 

  (j)

The Parties agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not be applied in the construction or interpretation of this Agreement.

 

  (k)

As used in this Agreement, the terms “or,” “any” or “either” are not exclusive.

 

  (l)

As used in this Agreement, the word “will” shall be deemed to have the same meaning and effect as the word “shall.”

 

  (m)

As used in this Agreement, the word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”.

 

2.

Product Transfer List; Elective Nonstrategic List; Strategic List; Reseller List.

 

2.1

The Transfer List attached hereto as Schedule 2.1 (the “Transfer List”) contains the listing of each Product which one Party as Producer agrees to Manufacture and supply to the other Party as Buyer until the Transfer Date. Producer agrees to transfer to Buyer the ability to Manufacture each relevant Product on the Transfer List by delivering to Buyer the relevant Transfer Package and then providing reasonable assistance to Buyer as more fully provided in Section 6. For each Product on the Transfer List, the Parties agree to abide by the Transfer List’s provisions relating to Cross Selling Price, MOQ size (if applicable), Lead Time, location of Manufacture, Transfer Date, and other relevant details described on the Transfer List. The Parties acknowledge and agree that the Cross Selling Prices for Products on the Transfer List shall be determined by automatically applying the relevant markup set forth on Schedule 2.1 to the relevant Current Standard Cost (any such markup, a “Transfer Markup). The Parties agree that, on the Transfer Measurement Date for a Product set forth on the Transfer List, Producer may discontinue the supply of the relevant Product in accordance with, and subject to the terms of, Section 6.3; provided that Producer shall use commercially reasonable efforts to continue to supply such Product to Buyer subject to its then-current production capacity until the one year anniversary of the Transfer Measurement Date. The Parties further agree that, in addition to the terms and conditions set forth in this Agreement, the Manufacture and sale of each Product on the Transfer List is subject to the terms and conditions set forth on Schedule 2.1 and to such additional terms and conditions set forth on the Transfer List which


  shall control in the event of conflict between (i) any provision of Sections 2 – 11 of this Agreement and (ii) contrary or conflicting terms and conditions set forth on the Transfer List with respect to the Products on such Transfer List. The Transfer List may by mutual written agreement be amended to correct errors or to remove Products. Products may not be added to the Transfer List after the Effective Date unless otherwise (i) expressly agreed by the Parties in an amendment entered into by the Parties in strict accordance with the provisions of Section 23 of this Agreement, or (ii) approved by the Steering Committee in accordance with Schedule 2.6.

 

2.2

The Elective Nonstrategic List attached hereto as Schedule 2.2 (the “Elective Nonstrategic List”) contains the listing of Products that will not be transferred and will continue to be Manufactured by Producer for Buyer from the Effective Date until the term of the arrangement for the relevant Product on the Elective Nonstrategic List expires or terminates in accordance with Section 17.2.2. For each Product on the Elective Nonstrategic List, the Parties agree to abide by the provisions of the Elective Nonstrategic List relating to Cross Selling Price, MOQ size (if applicable), Lead Time, location of Manufacture, and other relevant details described on the Elective Nonstrategic List. The Parties acknowledge and agree that the Cross Selling Price for each Product on the Elective Nonstrategic List ordered after the second anniversary of the Trigger Date shall be determined by automatically applying a markup to the applicable Current Standard Cost as set forth on Schedule 2.2 (the “Elective Nonstrategic Markup). The Parties further agree that, in addition to the terms and conditions set forth in this Agreement, the Manufacture and sale of each Product on the Elective Nonstrategic List is subject to additional terms and conditions set forth on Schedule 2.2 which shall control in the event of conflict between (i) any provision of Sections 2 – 11 of this Agreement and (ii) contrary or conflicting terms and conditions set forth on the Elective Nonstrategic List with respect to the Products on such Elective Nonstrategic List. The Elective Nonstrategic List may be amended by mutual written agreement to correct errors or to remove Products. Products may not be added to the Elective Nonstrategic List after the Effective Date unless otherwise expressly agreed by the Parties in an amendment entered into by the Parties in strict conformance with the provisions of Section 23 of this Agreement.

 

2.3

Schedule 2.3.1 and Schedule 2.3.2 (collectively, the “Strategic List”) contain the listing of Products that will not be transferred and will continue to be Manufactured by Producer for Buyer from the Effective Date until the term of the arrangement for the relevant Product on the Strategic List expires or terminates in accordance with Section 17.2.3. For each Product on the Strategic List, the Parties agree to abide by the relevant schedule’s provisions relating to Cross Selling Price, MOQ size (if applicable), Lead Time, location of Manufacture, and other relevant details described on the respective schedule. The Parties further agree that, in addition to the terms and conditions set forth in this Agreement, the Manufacture and sale of each Product on the Strategic List is subject to the terms and conditions set forth on the relevant subschedule to Schedule 2.3 and to such additional terms and conditions set forth on the


  relevant schedule which shall control in the event of conflict between (i) any provision of Sections 2 – 11 of this Agreement and (ii) contrary or conflicting terms and conditions set forth on the relevant schedule with respect to the Products on the Strategic List. The subschedules to Schedule 2.3 are:

Schedule 2.3.1 – Garyville Products

Schedule 2.3.2 - Eastern Hemisphere Core Plant Products

 

2.4

The Reseller List attached hereto as Schedule 2.4, together with subschedules Schedule 2.4.1, Schedule 2.4.2, Schedule 2.4.3 and Schedule 2.4.4 as described below and any Schedule created after the Effective Date pursuant to Section 5.6.2 (collectively, the “Reseller List”), contains the listing of Products for which the Intellectual Property rights with respect thereto will not be transferred and which Products will continue to be Manufactured by Producer for Buyer from the Effective Date until the term of the arrangement for the relevant Product on the Reseller List expires or terminates in accordance with Section 17.2.4. For each Product on the Reseller List, the Parties agree to abide by the relevant schedule’s provisions relating to Cross Selling Price, batch or MOQ size (if applicable), Lead Time, location of Manufacture, and other relevant details described on the respective schedule. The Parties acknowledge and agree that the Cross Selling Price for each Product on the Reseller List shall be determined by automatically applying markups to the applicable Current Standard Cost as set forth on Schedule 2.4 (the “Reseller Markups”), which shall also apply to all subschedules to Schedule 2.4. The Parties further agree that, in addition to the terms and conditions set forth in this Agreement, including but not limited to Section 5.6.2, the Manufacture and sale of each Product on the Reseller List is subject to the terms and conditions set forth on Schedule 2.4 and to such additional terms and conditions set forth on the relevant schedule which shall control in the event of conflict between (i) any provision of Sections 2 – 11 of this Agreement and (ii) contrary or conflicting terms and conditions set forth on the relevant schedule with respect to the Products on the Reseller List. Before giving effect to any schedules created after the Effective Date pursuant to Section 5.6.5, the subschedules to Schedule 2.4 are:

Schedule 2.4.1 – Proprietary Everest Water Chemical Products

Schedule 2.4.1.1 - Proprietary Everest Water Equipment Reseller Products (PARETO, FLOCMASTER)

Schedule 2.4.2 – 3D Trasar Chemical Products

Schedule 2.4.2.1 - 3D Trasar Equipment Products

Schedule 2.4.3 – Peracetic Acid Products


Schedule 2.4.4 – Continued Products

Schedule 2.4.5 – Continued Product Patents

Schedule 2.4.6 – Newco Midstream Customers

Schedule 2.4.7 – Everest Midstream Customers

 

2.5

The Special Supply List described in Schedule 2.5 (the “Special Supply List”) contains the listing of Products that will continue to be Manufactured by Producer for Buyer from the Effective Date until the term of the arrangement for the relevant Product described in the relevant Special Supply List expires or terminates in accordance with Section 17.2.5 (for each Product, the “Special Supply List Term”). For each Product described in Schedule 2.5, the Parties agree to abide by the relevant provisions of Schedule 2.5 relating to Cross Selling Price, batch or MOQ size (if applicable), Lead Time, location of Manufacture, and other relevant details described on Schedule 2.5. Schedule 2.5 also indicates which Products thereon contain sensitive Intellectual Property. The Parties acknowledge and agree that the Cross Selling Price for each Product described in the relevant Special Supply List ordered after the third anniversary of the Trigger Date shall be determined by automatically applying a markup to the applicable Current Standard Cost as set forth on Schedule 2.5 (the “Special Supply List Markup). The Parties further agree that, in addition to the terms and conditions set forth in this Agreement, the Manufacture and sale of each Product described in the relevant Special Supply List is subject to the terms and conditions set forth on Schedule 2.5 which shall control in the event of conflict between (i) any provision of Sections 2 – 11 of this Agreement and (ii) contrary or conflicting terms and conditions set forth on the relevant schedule with respect to the Products on Schedule 2.5. Buyer will receive a Transfer Package for Products on the Special Supply List that Buyer Party has the right to Manufacture, and Buyer may begin Manufacturing such Product at any time; however, Producer’s obligation to Manufacture such Product will not expire until the end of the Special Supply List Term or any renewal or extension thereof.

 

  2.5.1

Notwithstanding anything to the contrary in this Agreement, the terms that apply to the Clearing Pilot Plant and Fresno Pilot Plant (as each term is defined in Schedule 2.5.1) are provided in Schedule 2.5.1.

 

  2.5.2

Notwithstanding anything to the contrary in this Agreement, the terms that apply to the Ellwood City Furnace Rooms are provided in Schedule 2.5.2.

 

2.6

The Parties will establish channels for frequent communication among customer service and supply chain support leads to address open order management. The Parties will have (i) weekly communication among planning and manufacturing leads to address tactical supply gaps and product transfer processes, (ii) monthly communication among Operations Business


  Leaders (OBL) and senior supply chain personnel to address supply planning and other supply and operational matters and topics, (iii) quarterly communication among supply chain, commercial and finance executives to review service and financial metrics and Product transfer plans and (iv) an annual review and update of the Product Lists; provided that any addition or removal of (x) any Product on the Transfer List, Elective Nonstrategic List, or Special Supply List requires either Steering Committee approval in accordance with the provisions of Schedule 2.6 or expressly agreed by the Parties in an amendment entered into by the Parties in strict accordance with the provisions of Section 23 of this Agreement and (y) any other Products require mutual written agreement of the Parties. The Parties agree to form and maintain a Steering Committee to address governance matters and to enable collaboration and the resolution of production and technology transfer matters. Such Steering Committee will be formed and governed according to the provisions of Schedule 2.6.

 

3.

Forecast.

 

3.1

Notwithstanding the obligation of Producer to allocate manufacturing capacity to meet the Annual Budget as provided in Section 4.1, beginning within one month of the Trigger Date, each Party in its capacity as Buyer will provide to the other Party a rolling eighteen (18) month forecast updated monthly (“Demand Forecast”) of Products on each Product List which each Party intends to order and purchase from the other Party for the upcoming eighteen (18) months (it being understood that the first two (2) initial Demand Forecasts delivered after the Effective Date will only cover months 3-18). A Party in its capacity as Buyer will promptly give notice to the other Party in its capacity as Producer if such Buyer determines there is a likelihood monthly Purchase Orders for Products will, either in the aggregate on a per-Plant basis, exceed or fall short of the most recent Demand Forecast by ten percent (10%) or greater.

 

  3.1.1

Subject to Section 3.2, the volumes for MTS Products set forth in the first two (2) months of each Demand Forecast will constitute a binding commitment of Buyer to purchase, and Producer to supply, such Products pursuant to the terms of this Agreement and such mutual commitments may only be modified by the mutual agreement of the Parties.

 

  3.1.2

Subject to Section 3.2 and this Section 3.1.2, the volumes for MTO Products set forth in each Demand Forecast will constitute a binding commitment of Producer to supply such Products. Buyer will not have a binding obligation to purchase such forecasted MTO Products unless and until an order from Buyer’s customer is received, at which time Buyer will place an appropriate Purchase Order for the MTO Products. Producer will, in reliance on Buyer’s Demand Forecast, obtain and reserve, in accordance with applicable Lead Times and Minimum Order Quantities, RM&I to meet Buyer’s Demand Forecast for MTO Products. If Buyer does not purchase MTO Products when or in the volume originally forecast in the Demand Forecast and Buyer-Specific RM&I obtained by Producer is not therefore consumed, the Parties will work together in good


  faith to adjust subsequent Demand Forecasts to mitigate the risk of any such Buyer-Specific RM&I becoming obsolete. Notwithstanding the foregoing or anything in Section 4.5 below, Buyer shall issue a Purchase Order to Producer to purchase and take delivery of Buyer-Specific RM&I which remains unused ninety (90) days or longer after the forecasted delivery date for MTO Products such Buyer-Specific RM&I was ordered to fulfil and Producer will invoice Buyer for the same. The Parties may mutually agree to delay Buyer’s obligation to purchase and take delivery of the unused Buyer-Specific RM&I for an additional ninety (90) days (180 days in total) if Buyer in good faith believes it will place Purchase Orders for Products within such period to consume the Buyer-Specific RM&I. For any Purchase Orders for MTO Products that have quantities in excess of the Demand Forecast for the applicable month, Producer will make good faith efforts in accordance with current practices to supply the additional volume but will not be obligated to supply such excess until the end of the standard Lead Time for the applicable MTO Products and subject to availability of any long lead time Buyer-Specific RM&I.

 

  3.1.3

Notwithstanding anything in Section 3.1.1 or 3.1.2 or elsewhere in this Agreement to the contrary, Producer will make good faith efforts to, but is not obligated to, supply Product volumes in any quarter within the Fiscal Year which exceed a quarterly proration of the applicable volume in the Annual Budget by twenty percent (20%) or greater on a per Product per Plant basis. Neither Party will, without the other Party’s written consent, attempt to deliver Product ahead of the delivery date in a Purchase Order if the effect would be to shift under or over Absorption from one accounting period into another.

 

3.2

Producer will notify Buyer and the Steering Committee promptly upon determining that Plant production or RM&I constraints exist that will not allow the Demand Forecast or Purchase Orders to be met (each, a Resource Constraint). Except for (i) events of Force Majeure, (ii) in the event of a Resource Constraint, or (iii) as otherwise provided in this Agreement, each Party as a Producer is obligated to Manufacture the Products on the relevant Product List in accordance with the relevant Demand Forecast for which it receives Purchase Orders that are not inconsistent with such Demand Forecast. In the event that Producer, in good faith, determines that a Resource Constraint exists (including due to an event of Force Majeure), then the following shall apply:

 

  3.2.1

for any Resource Constraint estimated by Producer to be of one month’s duration or less, Producer shall allocate production capacity and other required resources to fill orders from Buyer and other customers of Producer based on estimated delivery dates established by the Producer’s ERP system, whether such orders have been placed by Buyer or Buyer’s customers, on the one hand, or by other customers of Producer, on the other hand; and


  3.2.2

for any Resource Constraint estimated by Producer to be of a duration greater than one month, Producer shall allocate the constrained production capacity or other required resources in a manner consistent with utilization of such constrained production capacity or other required resource in the six-month period preceding the date on which Producer determines the existence of the Resource Constraint.

Once the Resource Constraint has ended, Buyer will, as promptly as reasonably practicable taking into consideration any commitments made by Buyer to a third party in good faith which commitments were reasonably anticipated to last not longer than the duration of the Resource Constraint, resume purchases of the applicable Products from Producer in accordance with the provisions of this Agreement.

 

3.3

Producer will use commercially reasonable efforts to keep sufficient stocks of RM&I and Buyer-Specific RM&I on hand that are required to meet Buyer’s Demand Forecasts. Producer shall keep Buyer reasonably informed as to the quantities of materials on hand to Manufacture Products consistent with Buyer’s Demand Forecasts for Products.

 

3.4

If Buyer loses all demand from its customers for a Product and therefore no longer has any need to purchase a particular Product prior to the date that the term of the arrangement for that Product expires or is terminated in accordance with Section 17.2, Buyer may terminate the arrangement for that Product by providing written notice to Producer that specifically references this Section 3.4, in which case, in addition to any other termination fees that may be applicable and in addition to any payment that may be required under Section 13.3 Buyer will pay to Producer the PLOH of the applicable Plant that was allocated to that Product based on the Annual Budget for the year in which Buyer’s demand for the Product ceases for all months in such year (or portions thereof) that occur after such termination of the relevant arrangement (the “PLOH Absorption Amount”). Buyer will have no liability for not purchasing the relevant Product after the arrangement has been so terminated except for paying, in addition to any other termination fees that may be applicable, the PLOH Absorption Amount; provided, however, that if Buyer and Producer agree that Buyer will purchase one or more other Products that are Manufactured at the same Plant during that same year that either were not included in the Annual Budget for that Plant or will now be purchased in a greater volume than originally forecast, then the PLOH from that Plant that allocated to such additional Products will reduce the PLOH Absorption Amount dollar for dollar of charged Absorption. The PLOH Absorption Amount will be estimated and communicated to Buyer by Producer on a monthly basis and will be invoiced or credited quarterly in arrears. Notwithstanding the foregoing, this Section 3.4 shall not permit either Party to terminate any of the arrangements with respect to Products on the Strategic List (as described in Section 2.3).


4.

Pricing and Payments.

 

4.1

Annual Budget” means the annual budget for each Plant that is mutually agreed upon by the parties for each Fiscal Year that sets forth (1) the agreed upon estimated volume for each Product produced at that Plant that Buyer anticipates purchasing from Producer hereunder during that Fiscal Year, as well as the subsequent two (2) Fiscal Years, which volume is set forth by Product, and by month, (2) the budgeted total manufacturing expenses for that Plant for that Fiscal Year (i.e., the Plant labor and overhead, or “PLOH”) and (3) the initial Standard Cost for each Product to be produced at that Plant for that Fiscal Year (commonly referred to as the “Frozen Standards”). Frozen Standards will be determined each Fiscal Year for each Plant in accordance with the “Accounting Principles” set forth on Schedule 4.1.1 and the other budgetary principles set forth on Schedule 4.1.2. Producer will use the Annual Budget to allocate manufacturing capacity for the applicable Fiscal Year. The Annual Budget for each Plant for the Fiscal Year that ends in 2020 has been agreed upon by the Parties prior to Effective Date. Each subsequent Annual Budget will be agreed upon by the Parties who will use their commercially reasonable efforts to agree upon each subsequent Annual Budget by November 1 of the preceding year, and as the first step in this process, each Party in its capacity as Buyer will provide to the other Party in its capacity as Producer, by July 1, Buyer’s initial estimate of its demand for the upcoming Fiscal Year for each applicable Plant on a Product basis. Each Party will additionally provide a non-binding initial estimate of its Product needs for the two (2) subsequent Fiscal Years to assist Producer in long term demand planning for its manufacturing assets. “Fiscal Year” for a Plant means, for a Plant located outside of the United States, the twelve-month period of December 1 through November 30 and for a Plant located within the United States, the twelve-month period of January 1 through December 31. Beginning in the second Fiscal Year of the Term, Producer will have no obligation to agree to any volumes with respect to a particular Product or Plant for a particular Fiscal Year that are greater than 120% of the corresponding Annual Budget with respect to such particular Product or Plant for the Fiscal Year immediately preceding such particular Fiscal Year; provided, however, that in each case Producer will work with Buyer in good faith and use commercially reasonable efforts to accommodate Buyer’s needs subject to Producer’s production capacity constraints at the applicable Plant, it being understood by the Parties that repeated annual increases by Buyer, even if limited to a 20% (or less) increase over the estimated volume in the Annual Budget from the prior Fiscal Year, may result in such requested increase exceeding Producer’s production capacity (in the absence of additional capital expenditures), and, therefore, in such event, the Producer would be obligated to Manufacture only that portion of any such increase which is within such maximum production capacity.

 

4.2

The “Standard Cost” for each Product for the first month of a Fiscal Year is the Frozen Standards for that Product, and thereafter is the Current Standard Cost for that Product as determined each month beginning with the second month of a Fiscal Year pursuant to Section 4.4.1.


4.3

Producer will invoice Buyer at a price equal to the Cross Selling Price when Products are deemed delivered pursuant to Section 5.9 hereof. The “Cross Selling Price” for a Product is the then Current Standard Cost for the applicable Product plus any applicable mark-up(s) for that Product provided for herein, including the mark-ups provided for in Section 2.1, Section 2.2, Section 2.4, Section 2.5 and Section 4.7.

 

4.4

Following the end of each calendar month:

 

  4.4.1

Producer’s estimated net cost of the RM&I used to produce each Product will be reviewed and updated, including for any costs relating to foreign currency fluctuations, and Producer will inform Buyer each month of the new Standard Cost for each Product based on any known changes to the Producer’s net cost of applicable RM&I. The updated Standard Cost is commonly referred to as the “Current Standard Cost”.

 

  4.4.2

Producer will allocate the actual incurred RM&I cost variance versus the Frozen Standard for RM&I to Buyer in accordance with the provisions of Schedule 4.4.2.

 

  4.4.3

For each Product for which Buyer’s actual purchases during the just completed month differed from the budgeted volume for that Product as reflected in the Annual Budget, there will be an Absorption charge (in the event that actual purchased volume is less than the applicable volume in the Annual Budget) or Absorption credit (in the event that actual purchased volume is greater than the applicable volume in the Annual Budget), calculated on a per Plant basis in each case in accordance with the provisions of Schedule 4.4.3. If Buyer’s purchases of a Product at a Plant during a Fiscal Quarter exceed one hundred and twenty percent (120%) of the budgeted volume for such Product as reflected in the Annual Budget, the amount of the Absorption credit attributable to Buyer’s purchases in excess of one hundred and twenty percent (120%) shall be split evenly between Buyer and Producer; provided that to the extent Buyer has not met the budgeted volume for the Plant in which such Product is Manufactured as reflected in the Annual Budget, Buyer’s Absorption credit shall go towards reducing the Absorption charge that would otherwise apply at such Plant.

 

  4.4.4

Absorption charges or credits will be estimated and communicated to Buyer by Producer monthly on a per Plant basis. The amounts to be charged to or credited to Buyer pursuant to Section 4.4.2 and Section 4.4.3 will be invoiced or credited quarterly in arrears. On a country-by-country basis, these amounts will be calculated based on the operational entities that are incorporated in the relevant country and settled and paid in the applicable functional currency.

 

  4.4.5

Notwithstanding anything to the contrary in this Agreement and subject to Section 13.4, to the extent Producer is unwilling or unable to supply Products for any reason for more than one month or as otherwise mutually agreed upon by the Parties in writing,


  Buyer will not be responsible for or adversely affected through any resulting Absorption charge, reduced Absorption credit or “take or pay” obligations that would otherwise apply with respect to such Products under this Agreement.

 

  4.4.6

Notwithstanding anything to the contrary in this Agreement, nothing in the Schedules regarding the timing of Product transfers will act or be deemed to modify or change the Fiscal Year 2020 Annual Budget of a Party or the calculation of Absorption based on the Annual Budget.

 

4.5

Management of E&O Reserves.

 

  4.5.1

Producer will establish an E&O reserve as of May 31, 2020 in accordance with the Accounting Principles for the RM&I, finished and semi-finished Products in the Producer’s possession that are related to Buyer Unique Products or constitute Buyer-Specific RM&I (as updated pursuant to this Section 4.5.1, the “E&O Reserve”), and such initial reserve will not be charged to Buyer. Producer will thereafter update and provide to Buyer monthly updates of the E&O Reserve in accordance with the Accounting Principles. Each month, RM&I and Products which have been on the E&O Reserve for ninety (90) days or longer will be transferred to Buyer in accordance with Section 4.5 or, at Buyer’s option, disposed of by Producer in accordance with Section 4.5.4. Producer will transfer all inventory that is included in the applicable initial E&O Reserve (i.e., the E&O Reserve established as of May 31, 2020 in accordance with Everest’s historical practices) before further accruing any reserves for such inventory.

 

  4.5.2

After the Effective Date, any newly Manufactured finished and semi-finished Products or RM&I that was procured by Producer pursuant to Section 3.1.2 to meet volumes for MTO Products and MTS Products in the Demand Forecast will be treated as E&O and transferred to Buyer after ninety (90) days if such finished and semi-finished Products or RM&I meet the description of a “No Move 3” in Section 10-8.1.2(d)(i)(a) of the Excess and Obsolete Inventory Policy in Schedule 4.1.1.

 

  4.5.3

Products and RM&I to be transferred to Buyer pursuant to Section 4.5.2 may by mutual consent of the Parties remain with Producer for an additional ninety (90) days if Buyer believes in good faith that there is a reasonable likelihood that such materials may be used during such period.

 

  4.5.4

When Products and RM&I (in each case, except Fully Reserved Materials) are transferred to Buyer pursuant to Section 4.5.2 or Section 4.5.3, Buyer has the option to either (i) take delivery at Producer’s dock or, (ii) if Producer is able to dispose of such E&O materials under a waste manifest in Buyer’s name, dispose of the materials. In either instance Producer will invoice Buyer for the materials and disposal costs if applicable. The price to be charged to Buyer will be the net inventory value (after


  giving effect to any applicable portion of the E&O Reserve and accrued disposal costs) or, for Intermediates and finished goods, at agreed commercial terms but in no event less than Producer’s net book value for the same.

 

  4.5.5

For any RM&I, finished, or semi-finished Products in the Producer’s possession as of the Effective Date that both (i) are related to Buyer Unique Products or constitute Buyer-Specific RM&I that were fully reserved for Buyer by Producer as of the Effective Date and (b) meet the criteria as of the Effective Date for “no move 12” or “unsellable” as provided in Schedule 4.1.1 (collectively, “Fully Reserved Materials”), Buyer may elect, by providing written notice of the election to Producer within sixty (60) days of the Effective Date, one of the following two (2) options for each Fully Reserved Material:

 

  (a)

Option 1: To the extent Producer is able to dispose of Fully Reserved Materials under a waste manifest in Buyer’s name, Buyer may elect for Producer to arrange for the disposal of the Fully Reserved Materials in accordance with Section 15, in which case Buyer’s name will be on such waste manifest, but the costs of the disposal will be billable by the applicable third party to Producer. The difference between (i) the actual costs of disposal minus (ii) the amount of the applicable E&O Reserve (if any) on Producer’s books for disposal costs will be charged (in the case in which the difference is a positive amount) or credited (in the case in which the difference is a negative amount) to Buyer. To the extent Producer is unable to dispose of Fully Reserved Materials under a waste manifest in Buyer’s name, Buyer will be deemed to have elected Option 2 for such Fully Reserved Materials, and Buyer will arrange for the pickup of such Fully Reserved Materials as set forth in Option 2.

 

  (b)

Option 2: Buyer will pick up, or arrange for a third party to pick up, the Fully Reserved Materials, at Buyer’s expense no later than ninety (90) days after the Effective Date. Upon pick up of such Fully Reserved Materials, Buyer will be deemed to have purchased such Fully Reserved Materials on an “as is, where is basis” at Producer’s net book value of such Fully Reserved Materials (i.e., at a price of $0). Buyer may then reuse or rework such Fully Reserved Materials at any facilities of Buyer or any third party, at Buyer’s discretion and at its own risk. To the extent Producer had established any E&O Reserve on its books for disposal costs of such Fully Reserved Materials, the benefit of the release such E&O Reserve will accrue solely to the benefit of Producer.

In the event that Buyer does not provide Producer with a written election with respect to one or more Fully Reserved Materials within sixty (60) days of the Effective Date, Buyer will be deemed to have elected Option 1 for the Fully Reserved Materials for which no written election was delivered within such sixty (60) day period, and


Producer will proceed with disposal of such Fully Reserved Materials as set forth in Option 1. For Plants operating using the NSAP software platform, as further described in Schedule 4.4.3, to facilitate Buyer making a decision, Producer will, no later than fifteen (15) days after the Effective Date, provide to Buyer a written list of Fully Reserved Materials at each such Plant as of the end of the month that immediately precedes the Effective Date. In addition, if Buyer selects Option 2 but fails to pick up (or have picked up) some or all of the Fully Reserved Materials within 48 hours of the period of time set forth in Section 4.5.5(b), Producer may proceed with disposal of such Fully Reserved Materials as set forth in Option 1.

 

4.6

Off-Spec Inventory.

 

  4.6.1

The Standard Cost for each Product will reflect the inclusion of a charge, determined in accordance with past practices of Producer and Buyer (which charge may vary by Plant), to account for materials losses from off-spec inventory, and, therefore, such materials losses will be reflected in the Standard Cost for such Product at such Plant and except as provided in this Section 4.6.1 and Section 4.6.2, will not be separately charged to Buyer; provided, that all materials losses from off-spec inventory that are incurred with respect to a Product Manufactured specifically per the prescription, instruction or request of Buyer which deviates from the normal specifications or process, or a new Product introduced through the Innovation process, will be charged back to Buyer. The Parties will work in good faith, consistent with past practices, to use off-spec inventory to the extent practicable.

 

  4.6.2

Attached as Schedule 4.6 is a list of Products the Parties agree constitute Products that are difficult to manufacture and for which there have been historic materials losses at the levels set forth on Schedule 4.6 (“Hot List Products”). These Hot List Products may require Buyer to obtain waivers from end users for minor Specification variances or require Producer rework the Product at Producer’s cost including blending or filtering and other efforts that are customarily used to avoid rejection of the Product, and the Parties agree to continue working cooperatively in regard to these Products. All materials losses costs incurred by Producer for Hot List Products up to the historic loss levels set forth on Schedule 4.6 will be deemed to be Buyer’s responsibility and will be invoiced to Buyer on a calendar quarterly basis. Materials losses incurred for the Manufacture of a Hot List Product in excess of the applicable historic loss level for such Hot List Product will remain Producer’s responsibility and will not be invoiced to Buyer.

 

  4.6.3

Except as otherwise provided in Sections 4.6.1, 4.6.2 or elsewhere in this Agreement, all materials losses (e.g., from materials usage variances or cycle count adjustments) will be borne by Producer.


4.7

With respect to all Products supplied for use in the countries listed on Schedule 4.7 (the “Small Business Countries”), the Parties agree to abide by the provisions of, and perform their obligations under, the Small Business Country Agreement that is set forth on Schedule 4.7.

 

4.8

All costs and fees (other than for Products, which are governed by Section 4.3) related to Manufacturing and ancillary Services under this Agreement will be invoiced monthly in arrears unless stated otherwise herein.

 

4.9

All invoices are due within thirty (30) days of issuance. The Party receiving an invoice will timely pay the uncontested portion of any invoice and shall only contest an invoice in good faith. To contest an invoice, a written explanation for nonpayment must be submitted within fifteen (15) calendar days of invoice issuance. Interest at the rate of six percent (6%) per annum (or, if lower, the maximum interest rate allowed by Applicable Law) will apply to the unpaid, uncontested portion of any invoice not paid within thirty (30) days of the due date. For any amount that is contested and is ultimately found to be payable to the other Party, interest at the rate of six percent (6%) per annum (or, if lower, the maximum interest rate allowed by Applicable Law) will apply to such amount from the date it was originally due until the date paid.

 

4.10

Neither Party will have a right of offset except as expressly set forth in this Agreement or in any Schedule hereto.

 

4.11

Neither Party will assign, in whole or in part, rights to directly receive any receivables due from the other (with or without notification) as a financing means or otherwise without prior written consent of the other Party. Notwithstanding the foregoing, a Party may make a general pledge of receivables as part of a senior credit facility without obtaining the consent of the other Party, as long as such other Party is not responsible for any incremental administrative costs to the extent due to such pledge of receivables.

 

4.12

Each Party in the capacity of a Buyer shall pay and be responsible for, and shall indemnify and hold Producer harmless from and against, any and all sales, use, transfer, or similar taxes (including any interest, penalties or additions thereto) arising out of or in connection with the provision of Services by Producer to Buyer under this Agreement and payable to a Governmental Authority. The Parties acknowledge and agree that the Cross Selling Price does not include any sales, use, transfer or similar taxes, and Producer shall be entitled, if required under Applicable Law, to add any legally required taxes to such Cross Selling Price, including applicable transactional taxes such as, for example, the three percent (3.0%) transactional tax on manufacturing activities imposed in Argentina. The parties acknowledge and agree that the taxes for which Buyer will be responsible do not include any income taxes or similar taxes payable by Producer, with respect to payments made by Buyer to Producer under this Agreement.


5.

Manufacturing.

 

5.1

The Manufacturing of Products includes Producer’s receipt of Purchase Orders, procurement of Raw Materials, procurement or production of Intermediates, production of the Product, QC Procedures, packaging and labeling, notification to Buyer’s shipper and making the Product available to Buyer’s shipper at Producer’s dock (“Manufacturing Services”). Everest and Newco will each be both a Producer and Buyer with regard to the Manufacturing Services.

 

5.2

Buyer shall, from time to time, during the term of this Agreement, issue to Producer Product orders in a form as may be mutually agreed (each, a “Purchase Order”) designating the Product that Buyer desires Producer to Manufacture. All Purchase Orders must be in writing or submitted through an agreed electronic system (such as EDI). Buyer may cancel a Purchase Order only after receipt of written consent from Producer. The Purchase Order for each Product shall include the name of the Product, any agreed electronic cataloging number of the Product, the quantity of Product required and the requested shipping date that is consistent with the Lead Time of such Product.

 

5.3

All Purchase Orders are for either MTS Products or MTO Products. An MOQ shall apply to MTO Products with four (4) or less planned production batches per year in accordance with Schedule 5.3.

 

5.4

The Lead Time for MTS Products (i) will be fourteen (14) calendar days unless otherwise mutually agreed upon in writing by Buyer and Producer and (ii) for all other Products will be as specified in the applicable Product List and in accordance with Schedule 5.3. Producer will use commercially reasonable efforts to accommodate shorter Lead Times upon request by Buyer.

 

5.5

Producer shall Manufacture the Products in accordance with the Product Manufacturing procedures, methods, instructions, RM&I specifications, QC Procedures, regulatory certifications and related registrations in place as of the Effective Date of this Agreement (“Product Manufacturing Procedures”), including but not limited to skip lot testing, cleanout procedures, and the processes, certifications and registrations described on Schedule 5.5.

 

5.6

The Parties agree that Innovation shall be governed by the following provisions:

 

  5.6.1

If Buyer desires to modify any Product on a Product List (other than the Reseller List) or innovate any new product, in each case, in a manner requiring a new Manufacturer’s Identification Number (“MIN”) be setup in Producer’s SAP system for such Product (an “Innovation” and the process of developing such Innovation, to “Innovate”), then except as otherwise provided in Section 5.6, Producer will use commercially reasonable efforts to accommodate such request, and such Innovation will be a new product outside the scope of this Agreement. In the event of any Innovation, Producer


  shall, except as provided in Section 5.6.5 continue to supply the non-Innovated version of the Product unless otherwise mutually agreed in writing. For clarity, any change to a Product that does not require a new MIN is not an Innovation and such Product shall continue to be deemed the same Product, notwithstanding that it is no longer unique. For clarity, Innovations of Products (a) on the Reseller List shall not be subject to the terms of Sections 5.6.15.6.4, and shall instead be governed by Section 5.6.5 and (b) Manufactured at the Clearing Work Pilot Plant or Fresno Pilot Plant shall not be subject to the terms of this Section 5.6, and shall instead be governed by Schedule 2.5.1.

 

  5.6.2

Any of the Products on the Strategic List may be Innovated in accordance with the provisions of this Section 5.6.2 and Section 5.6.4. If Buyer desires to Innovate a Product on the Strategic List, Producer will use commercially reasonable efforts to Manufacture and supply such Innovation (as well as any Derivative Special Supply Innovation for a Product on the Strategic List) to Buyer pursuant to this Agreement on the same terms as other Products on the Strategic List, except that the Cross Selling Price will be the Current Standard Cost of that Product (as Innovated).

 

  5.6.3

The Products listed on the Special Supply List that have a “Yes” for “Major Innovation Allowed” on Schedule 2.5 may be Innovated in accordance with the provisions of this Section 5.6.3 and Section 5.6.4. If Buyer desires to Innovate such a Product on the Special Supply List (such an Innovation, a “Permitted Supply List Innovation), or in the case of a Derivative Special Supply Innovation (as defined below), Producer will use commercially reasonable efforts to Manufacture and supply such Permitted Supply List Innovation or Derivative Special Supply Innovation to Buyer pursuant to this Agreement on the same terms as the non-Innovated version of such Product, except that, with respect to Permitted Supply List Innovations, the Cross Selling Price shall be the Current Standard Cost of that Product (as Innovated) plus a five percent (5%) markup plus any applicable markup that is provided under any other applicable provision of this Agreement; provided, however, that no such markup will apply to a Permitted Supply List Innovation that is Manufactured at Ellwood City Furnace Rooms or Odessa TAZO Tea; provided, further, that the markup that would otherwise apply to Products on the Special Supply List beginning on the third anniversary of the Trigger Date in accordance with Schedule 2.5 shall not apply to any Permitted Supply List Innovations. Except for Special Supply Innovations that are Manufactured at Ellwood City Furnace Rooms or Odessa TAZO Tea, there will be no Absorption charges or credits associated with a Permitted Supply List Innovation during the Fiscal Year in which such Permitted Supply List Innovation is implemented, but such Permitted Supply List Innovation shall be included in the Annual Budget for the following Fiscal Year and then the applicable Party will receive any Absorption credit or charge applicable to such Permitted Supply List Innovation in accordance with Section 4.4.


  5.6.4

Notwithstanding the foregoing, any Innovation to a Product on the Strategic List or Special Supply List that consists only of a modification to the ratio of the materials of such Product but does not otherwise add to the bill of materials of such Product and does not require any new capital investment to support the Manufacture of such Product is considered a “Derivative Special Supply Innovation”. The Cross Selling Price for a Derivative Special Supply Innovation will be the Current Standard Cost of the Product as Innovated plus any markup that would apply to the non-Innovated Product pursuant to any other applicable provision of this Agreement (specifically excluding the five percent (5%) markup that applies to Permitted Supply List Innovations as provided in Section 5.6.3). Absorption charges or credits will apply to Derivative Special Supply Innovations, including during the Fiscal Year in which such Derivative Special Supply Innovation is implemented.

 

  5.6.5

For purposes of this Section 5.6.5, Everest is the Producer and Newco is the Buyer with respect to Products on Schedules 2.4.1, 2.4.2 and 2.4.3, and Newco is the Producer and Everest is the Buyer with respect to the Products on Schedule 2.4.4. If, in its discretion, Producer desires to modify the Specifications of a Product on the applicable subschedule to the Reseller List, Producer may, at its sole option, offer such Innovated product to Buyer as a new Product to be added to the applicable subschedule to Section 2.4 and supplied subject to the terms and conditions of this Agreement. Upon mutual written agreement by the Parties regarding Cross Selling Prices, Specifications and terms and conditions applicable to the supply of such Innovated Product, such Product will be deemed a Product on the Reseller List and become subject to the terms and conditions of this Agreement. With respect to any Product on the Reseller List, Producer shall be permitted to supersede such Product with an Innovated Product that results from the modification of the Specifications of such Product as described in this Section 5.6.5 and to cease Manufacturing and supplying such Product, provided that either of the following is true: (i) both the quality and applied functionality of such Innovated Product equal or exceed the relevant Product on the Reseller List, or (ii) Everest and Newco enter into a written agreement according to which Producer grants to Buyer the rights sufficient to allow Buyer to Manufacture such Product. Notwithstanding the foregoing, Producer shall not be permitted to supersede such Product if Buyer is unable to obtain, using commercially reasonable efforts, regulatory approval for such Product, in which case, Buyer may continue to resell the applicable Reseller List Product without such modification.

 

  5.6.6

As between the Parties (and their respective Affiliates), Buyer shall solely own all right, title and interest to any Innovations developed, created or made in accordance with this Agreement, and all Intellectual Property in such Innovations, subject to Producer’s ownership and other rights (if any) of Intellectual Property in the underlying Product and for greater certainty, Buyer’s rights to any such Innovations as provided in this Section 5.6.6 shall not include any rights to any Intellectual Property in the underlying Product.


  5.6.7

In addition to the terms set forth in this Section 5.6, the provisions of Schedule 5.6 shall apply to Innovations (other than Innovations to Products on the Reseller List).

 

5.7

Subject to Section 5.6, where indicated on the Transfer List, certain Products on the Transfer List are subject to “Management of Change procedures described on Schedule 5.7 regarding changes in the source of RM&I or adjustment to Product Manufacturing Procedures, even when such changes or adjustments do not result in the failure of a Product to meet applicable Specifications.

 

5.8

Producer warrants that each Product shall meet the applicable Final Batch Specifications at the time of delivery to Buyer’s designated carrier, where “Final Batch Specifications” means the specific parameters assigned to a Product within the global master data of the Producer’s ERP system (e.g., NSAP), which are evaluated before a Product is packaged for sale.

 

5.9

Except as otherwise set forth in Section 11 or on Schedule 2.1, Schedule 2.2, Schedule 2.3, Schedule 2.4, or Schedule 2.5, Buyer will acquire good and valid title to the Products, free and clear of any liens or encumbrances, when the Products are made available for pickup by Buyer by or Buyer’s designated carrier at Producer dock, at which time the Products will be deemed delivered. Risk of loss will transfer to Buyer upon Buyer or Buyer’s carrier being advised the Products are available for pick up.

 

5.10

No Party in its capacity as Buyer shall have the right to return any Product other than with respect to Product that the Parties mutually agree to return for rework due to failure to meet the requirements of the warranty in Section 5.8. If Producer is unable to rework a Product to meet the Specifications or to arrive at an accommodation based on past practices between Producer and Buyer, Producer will replace the Product or provide a credit for the purchase price.

 

5.11

Notwithstanding the foregoing, during the six (6) month period following the Trigger Date, with respect to those Products that are shipped in bulk to end customer sites and which Buyer or Buyer’s carrier is unable to deliver in full, Buyer shall be permitted to return the undelivered portion of such Product shipment for restocking to Producer’s Plant where such Products were Manufactured, in which case Producer shall issue a credit note to Buyer to reflect all Products returned to Producer, less a 10% restocking fee.

 

5.12

Buyer may order a sample of any in-stock Product from Producer (a “Product Sample”). The price per Product Sample is fifty dollars ($50) for a sample volume of up to one liter. For a Product Sample in excess of one liter, the cost is $50 per liter, with each partial liter rounded up to the nearest whole liter. The Product Sample cost does not include applicable freight and


  export cost, which will be borne by Buyer. Producer will arrange the shipment in alignment with its current sample shipping procedures. Producer is the exporter of record for a Product Sample. An order for a Product Sample shall not exceed 19 liters of a single Product and any larger order shall instead be processed as a Purchase Order for the applicable Product. Producer is responsible for any export (including documents, compliance and logistics) of Product Samples, at Buyer’s cost. Title and risk of loss for Product Sample orders will transfer to Buyer in accordance with Producer’s standard terms for Product Samples.

 

5.13

Buyer may order Producer test kits related to certain Products Manufactured by a Producer (each, a “Product Test Kit”). The price payable for a Product Test Kit shall be (i) the then-applicable catalogue price of such Product Test Kit, or (ii) for each chemical item in the Product Test Kit not listed in Producer’s catalogue on the date on which Producer receives such order, the price will be fifty dollars ($50) for a sample chemical volume of up to one liter, and for a chemical sample volume in excess of one liter, the cost is $50 per liter with each partial liter rounded up to the nearest whole liter. The price for a Product Test Kit does not include applicable freight and export cost, which will be borne by Buyer. Producer will arrange the shipment in alignment with its current test kit shipping procedures. Producer is the exporter of record for a Product Test Kit. Producer is responsible for any export (including documents, compliance and logistics) of Product Test Kits, at Buyer’s cost. Title and risk of loss for Product Sample orders will transfer to Buyer in accordance with Producer’s standard terms for Test Kits.

 

5.14

Except as expressly set forth herein, neither Party shall obtain from the other Party, whether impliedly or otherwise, any rights to the Intellectual Property of the other Party by operation of this Agreement, except that each Party will grant, and does hereby grant, a limited license to its Intellectual Property solely to the extent necessary for each Party to satisfy its respective performance obligations or exercise its rights under this Agreement, which license with respect to any particular Intellectual Property will automatically terminate at the same time as all applicable arrangements that require the use of such Intellectual Property by the licensed Party under this Agreement terminates. Nothing in this Agreement, including the delivery of a Transfer Package, shall be deemed to otherwise affect the transfer or license of Intellectual Property rights conferred in any other agreement, including the Separation and Distribution Agreement and the IPMA.

 

6.

Transfer of Products.

 

6.1

Each Product on the Transfer List will be the subject of a Product Transfer Package. A detailed statement of the content of the Transfer Package is attached as Schedule 6.1.

 

6.2

Upon delivery of the Transfer Package, which Producer shall deliver to Buyer not less than ninety (90) days prior to the Transfer Measurement Date, Buyer will have until the applicable Transfer Date specified in Schedule 2.1 to begin Manufacture. Prior to the date Buyer is to


  begin Manufacturing the transferred Product, Buyer will be allowed to observe and monitor up to three (3) batches being prepared, Manufactured, and tested at the Producer’s site. Buyer must prearrange such visits with the Producer. Within ninety (90) days after the Transfer Measurement Date, Producer will transfer the remaining Restricted Inventory and RM&I exclusive to such transferred Product and invoice Buyer for such materials and their packaging at cost. During the ninety (90) day period preceding the Transfer Measurement Date, Producer will provide Buyer with reasonable technical assistance at no cost to Buyer other than for agreed travel and incidental expenses incurred and documented according to Producer’s travel policy. Upon expiration of the included support period, Buyer may request additional technical assistance from Producer, which Producer and Buyer agree will be provided for a fee of $1500.00 per day (inclusive of per diem and incidental costs) and reasonable and pre-approved travel expenses incurred and documented according to Producer’s travel policy.

 

6.3

After the relevant Transfer Measurement Date, solely with respect to Products for which the scheduled delivery date is within twelve (12) months of the Transfer Measurement Date, Buyer may submit Purchase Orders to Producer for any Product on the Transfer List with respect to which Buyer has been unable to fully transition production of such Product. Producer shall undertake commercially reasonable efforts to supply Buyer such Products subject to its then current production capacity; provided, however, in no event shall Producer be obligated to Manufacture or supply any Product on the Transfer List after the twelve (12) month anniversary of the Transfer Measurement Date; further provided that in no event shall Producer be obligated to Manufacture or supply any Product on the Transfer List which would require the use of any Restricted Inventory or RM&I that Producer previously transferred to Buyer pursuant to the requirements of Section 6.2; and further provided that if Producer does not deliver the Transfer Package ninety days (90) or more prior to the Transfer Measurement Date, fails to meet an agreed upon transition schedule for the relevant Product, or otherwise impedes the ability of Buyer to effect the transfer or in-source of a Product on the Transfer List, then the date on which Producer would be entitled under this Agreement to discontinue the Manufacture or supply of such Product will be extended by one day for each day Producer has delayed or failed to meet such obligation. After Producer has discontinued supply of any Product so transferred following one year after the Transfer Measurement Date, Buyer may request that Producer resume the Manufacture of the transferred Product and that Producer sell such Product to Buyer and if Producer agrees to do so, the Parties hereto acknowledge and agree that the terms of this Agreement will not govern such subsequent Manufacture or sale of such Product and will be subject to a separate agreement between the Parties.

 

7.

Furnishing of Raw Materials and Intermediates.

 

7.1

Newco and Everest, each in their role as a Producer, will maintain at their Plants quantities of RM&I required to Manufacture MTS Products and, according to and, in reliance on the Demand Forecast as provided in Section 4.5, MTO Products.


7.2

Producer will use reasonable efforts to obtain RM&I for use in Products ordered by Buyer at reasonable market prices. Producer shall retain title to and possession of, and shall be wholly responsible for the loss of, damage to, spoilage or contamination of, such RM&I until such RM&I is consumed in the Manufacture of a Product or until Buyer is required to purchase or pay for RM&I pursuant to Section 3.1.2 or Section 4.5.

 

7.3

Where Everest and Newco combine volume in shared or pass through cost arrangements including the indirect purchases and RM&I, or where a Party is directed to purchase Target List RM&I as set forth on Schedule 7.7, each Party will share proportionally in any rebate or incentive provided by the relevant RM&I vendor. Each Party agrees to disclose to the other Party, to the extent permitted by Applicable Law and without violating any confidentiality obligations with a third party vendor, information related to such rebates and incentives and to permit the other Party to audit relevant records that support such rebates and incentives. The Parties agree to meet and confer to true-up such rebates and incentives within thirty (30) days of the end of each Fiscal Quarter during the term of this Agreement (the “Quarterly Rebate Meeting”), which true-up shall be considered part of the purchase price variance process set forth in Schedule 4.4.2. At the Quarterly Rebate Meeting the procurement managers for each Party will discuss anticipated changes in demand, market trends, upcoming shared vendor negotiations and other relevant planning topics.

 

7.4

Producer shall maintain testing and quality control procedures (at least equal to the testing and quality control procedures maintained by Producer during the twelve (12) months prior to the Effective Date) with respect to the quality of RM&I procured by Producer.

 

7.5

During the Term, Everest will, at the request of Newco, supply to Newco the requested quantities of the following Raw Materials but only up to the quantities consistent with the demand (as reflected in the Demand Forecast) for the underlying Products and then only to the extent Everest has the inventory or other capacity to do so: (i) Caustic (R155), (ii) Acrylic Acid (R2502), (iii) Low Odor Parafin Solvent (R4277), and (iv) DADMAC (PR4273) the (“Garyville Site RM&I”). Newco shall pay Everest for Garyville Site RM&I in an amount equal to Everest’s actual cost (with no markup) of such Garyville Site RM&I; provided that, to the extent Everest does not have the inventory or capacity to supply Newco the requested quantities of Garyville Site RM&I up to quantities consistent with the demand (as reflected in the Demand Forecast) for the underlying Products, such situation shall be treated as a Resource Constraint in accordance with Section 3.2. If Everest is unable or unwilling to provide the Garyville Site RM&I, Newco shall be permitted to purchase Garyville Site RM&I from a third party (including through Everest as the purchasing party), which purchases, up to the quantity that when added to purchases by Newco from Everest of Garyville Site RM&I would not exceed the demand (as reflected in the Demand Forecast) for the underlying Products (the “Maximum Price Protected Quantity”), shall be handled in accordance with the procedure for Newco’s ability to source RM&I pursuant to Schedule 2.3.1.


7.6

Subject to Section 7.5, from the Effective Date until December 31, 2020, each Party will, at the request of the other Party, sell to the requesting Party third-party sourced RM&I used in the Products (to the extent the Party to whom the request is made has a sufficient quantity to sell) at the selling Party’s cost of the same with no markup. Subject to Section 7.5, after December 31, 2020, a Party will have no obligation under this Agreement to sell any third-party sourced RM&I to the other Party but, if a Party makes a request to purchase third-party sourced RM&I after such date, the Parties will negotiate in good faith the arms’ length terms on which the other Party would agree to sell RM&I to the requesting Party at market rates. The Parties will cooperate, in accordance with all Applicable Law, to achieve low cost supply for certain RM&I that may be identified from time to time (which may include RM&I on the Target List) pursuant to an agreement to be negotiated in good faith by the Parties; provided that any such agreement shall obligate the Parties to share proportionally in any rebate or incentive provided by the relevant RM&I vendor in accordance with Section 7.3. This Section 7.6 shall not apply to RM&I associated with the Products on the Strategic List.

 

7.7

From time to time, Buyer may request that Producer consult with Buyer when arranging for the supply of any Buyer-Specific RM&I. The initial list of such Buyer-Specific RM&I is attached hereto as Schedule 7.7 (the “Target List”). Buyer may update the Target List from time to time. Following such request and so long as Buyer wishes to be consulted with respect to that Buyer-Specific RM&I, Producer will consult with Buyer whenever Producer arranges for the purchase of that Buyer-Specific RM&I. Without limiting the generality of the foregoing, if Buyer wishes to have Producer use a specific vendor to supply Buyer-Specific RM&I and such vendor agrees to sell that Buyer-Specific RM&I to Producer on the same terms on which that vendor is selling that same Buyer-Specific RM&I to Buyer, Producer will thereafter purchase that Buyer-Specific RM&I from the designated vendor until such time as either (i) Buyer may agree that Producer may purchase that Buyer-Specific RM&I from a different vendor or (ii) that vendor no longer agrees to sell that Buyer-Specific RM&I to Producer on the same terms at which the vendor is selling the same to Buyer. In the event that a Producer is using a vendor that is designated by Buyer to purchase Buyer-Specific RM&I, Producer will not have any liability to Buyer for any failure of Producer to fulfill its obligations under this Agreement to the extent such failure is attributable to the use of the designated vendor (e.g., a failure of the designated vendor to timely supply the applicable Buyer-Specific RM&I to Producer). For purposes of clarification, the foregoing will no longer apply to any RM&I that a Producer starts to purchase for its own use (i.e., it is no longer a Buyer-Specific RM&I).

 

8.

Packaging and Labels.

 

8.1

The Parties acknowledge that each Product is subject to regulatory requirements regarding labeling and packaging instructions (the “Packaging and Labeling Procedures”), including but not limited to those set forth in related Purchase Orders. Producer shall provide required


  packing materials in the Purchase Order for packaging and will package and label the Product according to the Packaging and Labeling Procedures. Buyer shall not obscure, alter or modify in any way any text for labels designated by Producer for use with Products.

 

8.2

All Products Manufactured, packaged and/or shipped pursuant to this Agreement shall bear the Trademarks, be rebranded, labeled, and have a bill of lading and certificate of authenticity consistent with the provisions of Schedule 8.2 and Producer and Buyer will have responsibilities for the same as provided on Schedule 8.2. Buyer and Producer agree that the provisions of Article 14 of this Agreement shall govern in the event of any third-party Claim arising in connection with the matters covered by this Section 8.2.

 

8.3

Other than claims arising pursuant to Section 8.2 hereof and subject to the provisions of Article 14 of this Agreement, Producer will be responsible for any violation of Applicable Laws or other Damages to which Buyer may be subject as a result of Producer’s failure to comply with Packaging and Labeling Procedures; provided, however, that Buyer retains responsibility for the compliance with Applicable Laws of the text of labelling provided to Producer by Buyer.

 

8.4

Porta-feed and Leased Totes.

 

  8.4.1

Everest and Newco previously conducted a physical inventory count of North America based assets, which was conducted more than thirty (30) days prior to the Effective Date and which was managed by Everest’s Porta-Feed team, of all serialized containers that were in Newco’s and Everest’s possession or control as of the date of the count. For clarity, such count was of the serialized containers included in the fleet of the Everest owned Porta- Feeds containers as well as the pool of leased totes managed by Everest Corporate Porta-Feed Team in Naperville. Such count, as adjusted and agreed by Parties and based on previously conducted counts of similar nature and the ensuing retrieval of units deemed missing, will serve as the baseline for determining: (i) the number of Porta-Feeds still being used at Newco accounts as of the Effective Date (e.g., Porta-Feeds used to support Newco Customers in Alaska or Canada) which are to be returned to Everest when the weather permits or when the applicable customer has been converted to a leased tote container but in no event later than December 31, 2020, (ii), the true-up amount for the reserve for a Porta-Feed asset’s write-off to be booked in Everest’s last closing balance sheet prior to the Effective Date (i.e., May 31st balance sheet for a June 3rd effective date), (iii) the true-up amount of the reserve to cover buy out value of net missing leased tote units for replacement value for the estimated number of lost leased totes managed by Everest Naperville Corporate Porta-Feeds team to be booked in Newco’s last closing balance sheet prior to the Effective Date (i.e., May 31st balance sheet assuming a June 3rd effective date), (iv) the portfolio of previously Everest-owned leased totes in Newco possession to be transferred to Newco as of the Effective Date. Any reserve on the books of Everest as of the Effective Date related to lost or missing Porta-Feed units will remain with Everest. Any reserve


  on the books of Newco as of the Effective Date for loss of missing leased totes will remain with Newco. In the event that Everest recovers or frees up any leased tote container unit belonging to Newco after the Effective Date Everest will notify Newco of such recovered or freed up leased tote container unit and then Everest will return such unit to Newco.

 

  8.4.2

After the Effective Date, based on the adjusted physical count as described in Section 8.4.1, Newco will return to Everest the quantity of transporter Porta-Feed units of like type (Junior or Senior, lined or unlined) utilized at Newco’s customers’ sites prior to December 31, 2020 (excluding the units provided for ongoing Product packaging and transport as described below). In the event that Newco has not returned the Porta-feed units described in clause (i) of Section 8.4.1 by December 31, 2020, then Newco will pay, by February 28, 2021, a replacement fee calculated according to the methodology set forth on Schedule 8.4.1 for each such unit not returned. In the event that Newco recovers or frees up any Porta-Feed unit after the Effective Date Newco will notify Everest of such recovered or freed up Porta-Feed unit and then Newco will return such unit to Everest.

 

  8.4.3

Everest and Newco previously conducted a physical inventory count all PAA red base totes, which was conducted more than thirty (30) days prior to the Effective Date. Prior to the Effective Date, Everest will have transferred all of its PAA red base totes to Newco at book value and made available to Newco at no charge to Newco, the molds and drawings required by the applicable tote producer to produce such totes. Newco will be responsible for the cleaning, repair and tracking process of PAA red base totes. Newco and Everest will work in good faith to develop and follow an agreed upon tracking procedure to ensure all PAA red base totes provided to Everest for filling with Product are accounted for and returned to Newco, unless needed at Everest’s PAA manufacturing Plant to load Product for Newco. Everest will only utilize Newco PAA red base totes for storage of Newco Product. PAA red base totes provided by Newco at Everest’s request that are not filled with PAA within sixty (60) days after receipt by Everest will incur a daily penalty as set forth on Schedule 8.5 until utilized to fill orders for PAA for Newco or picked up by Newco. In the event that Everest recovers or frees up any PAA red base tote after the Effective Date (other than a PAA red base tote delivered by Newco after the Effective Date), Everest will return such unit to Newco.

 

8.5

Upon receipt of a Purchase Order from Everest for Product which will be packaged or transported in Porta-feed units, Newco will request Everest deliver to the producing Plant a sufficient number of Porta-feed units prior to the scheduled date of Product Manufacture. If a sufficient number of Porta-feed units are not timely provided by Everest, Newco will be permitted to delay Manufacture of the Product until a sufficient number of Porta-feed units are delivered. Porta-feed units in excess of those required by Newco for current Purchase Orders


  will at Everest’s option be picked up by Everest or stored by Newco to be utilized for Everest’s next Product order (and will not be subject to the penalty below while in storage). Newco will only utilize Everest Porta-feed units for storage of Everest Product. In the event that Newco fails to utilize delivered Porta-feed units for the transportation or storage of Everest Product and fails to notify Everest that the Porta-feed unit is available for pick up by Everest, then beginning sixty (60) days after receipt of the Porta-feed, Newco will be charged a daily penalty as set forth on Schedule 8.5 until such Porta-feed is either utilized to contain Everest Products or Newco informs Everest that such Porta-feed is available for pick up by Everest. In the event that Everest provides evidence that a Porta-feed delivered to Newco after the Effective Date was lost while in the control of Newco, Newco will pay Everest a replacement fee calculated according to the methodology set forth on Schedule 8.4.1 for such a lost Porta-feed unit. All of the provisions of this Section 8.5 shall also apply with respect to Purchase Orders from a Buyer to Producer for Product which will be packaged or transported in a lease tote, mutatis mutandis, and for greater certainty, Buyer is responsible for providing a leased tote from its own fleet to Producer for such a Purchase Order.

 

8.6

Upon receipt of a Purchase Order from Newco for Product which will be transported in PAA red base totes, Everest will request Newco deliver to the producing Plant a sufficient number of PAA red base totes prior to the scheduled date of Product Manufacture. If a sufficient number of PAA red base totes are not timely provided by Newco, Everest will be permitted to delay Manufacture of the Product until a sufficient number of PAA red base totes are delivered. PAA red base totes in excess or those required by Everest for current Purchase Orders will at Newco’s option be picked up by Newco or stored by Everest to be utilized for Newco’s next Product order. If Everest notifies Newco that Everest has identified PAA red base totes that Everest believes are not suitable for safely transporting Products, then Newco will, at its own cost, pick up and take possession of such PAA red base totes. In the event that Everest fails to utilize delivered PAA red base tote units for the transportation or storage of Newco Product and fails to notify Newco that the PAA red base tote unit is available for pick up by Newco, then beginning the second calendar month after receipt of the PAA red base tote, Everest will be charged a daily penalty as set forth on Schedule 8.5 until such PAA red base tote is either utilized to contain Newco Products or Everest informs Newco that such PAA red base tote is available for pick up by Newco. In the event that Newco provides evidence that a PAA red base tote delivered to Everest after the Effective Date was lost while in the control of Everest, Everest will pay Newco a replacement fee calculated according to the methodology set forth on Schedule 8.4.1 for such a lost PAA red base tote.

 

8.7

All other non-bulk Products will be delivered in one-way Schutz-type totes drums or other packaging provided by Producer and invoiced to Buyer. All bulk Product tanks and containers will be provided by Buyer or its designated carriers.


8.8

For Preen Porta-feeds and Thyssen containers at the Fawley Plant, Newco will manage maintenance and repair in accordance with Schedule 8.8.

 

8.9

Provisions of this Article 8 will cease to apply after the date on which the last of the arrangements under this Agreement for Products that are transported in the container types described in this Article 8 expire or terminate, as applicable (e.g., provisions relating to Porta-Feeds will expire when all arrangements for Products transported using Porta-Feeds have expired or terminated); provided that applicable provisions will continue to apply until all of the applicable containers have been returned to the applicable Party or paid for as provided in this Article 8.

 

9.

Records, Reports and Audit.

 

9.1

Each Party shall maintain true and correct records in connection with all Services performed hereunder and all transactions related thereto and shall retain all such records for at least twenty-four (24) months from the date of performance of such Services. Such books and records shall include on a monthly basis: (i) volumes of Raw Materials used in such month in the Manufacture of Products, (ii) volumes of Intermediates used in such month in the Manufacture of Products, (iii) Raw Material and Intermediate costs, and (iv) volumes of Products Manufactured, packaged and shipped in such month.

 

9.2

A Party may, upon 30 days’ written notice to the other Party, designate a third-party auditor to conduct an on-site audit of all books, records, data, systems and accounts relating to Services or any other obligations pursuant to this Agreement during regular business hours and with minimal disruption to operations, to verify compliance with the other Parties obligations under this Agreement, including but not limited to its invoicing procedures, and to confirm and verify the accuracy of amounts charged including costs of Raw Materials. Any third-party auditor performing the audit shall be required to execute a standard confidentiality agreement before access is granted to third-party auditor. If it is determined that a Party overcharged the other Party by five percent (5%) or more for the period audited, then the cost of such audit shall be reimbursed by the other Party and all necessary corrections shall be promptly made but, in any event, shall be made within thirty (30) days following completion of such audit. If it is determined that a Party did not overcharge the other Party or overcharged the other Party by less than five percent (5%) for the period audited, then the cost of such audit shall be borne entirely by the Party requesting the audit. No third-party auditor is to be compensated on a commission or percentage basis. A Party shall not exercise its audit rights provided for in this Section 9.2 more than once annually per audit subject and any such audit will not cover a period that begins more than thirty-six (36) months prior to the date on which the audit request is made.


9.3

The Parties agree that Quality Management System audits conducted by Buyer at Producer’s location are not anticipated, and any request to conduct such an audit would be intended to investigate root cause failure of quality incidents and such audit request must be approved by the Steering Committee. Upon a request by a customer of Buyer to conduct an audit of the Quality Management System at Producer’s location, Buyer shall provide Producer with written notice at least five (5) Business Days in advance of such audit, and Producer shall cooperate with Buyer to allow such customer to conduct or have conducted such audit.

 

10.

Testing, Inspection and Off-Specification Product.

 

10.1

Producer will perform in its laboratory those quality tests of Product in accordance with the test procedures customarily performed during the Manufacturing, packaging, and shipping processes or as included in the Transfer Package as of the Effective Date (the “QC Procedures”) to ensure that Product meets the Final Batch Specifications. Producer will furnish Buyer with the results of such tests for each production batch Manufactured hereunder in the form of a Certificate of Analysis with each shipment or through electronic access to quality control results and will maintain all necessary production records for each batch for at least twelve (12) months after the date of Manufacture. Producer agrees to retain a sample of each batch and the test data relating thereto for such twelve (12) month period. In the event of a claim by Buyer that the batch does not meet Final Batch Specifications, Producer agrees to grant Buyer access to the relevant test data and sample, with respect to such batch in accordance with the procedures agreed to by the parties.

 

10.2

If Producer determines that any Manufactured Product does not meet the Final Batch Specifications prior to scheduled delivery to Buyer’s designated carrier, the reason(s) therefor will be established by such procedures as may be reasonably required. If the Manufactured Products fail to conform to Final Batch Specifications, Producer will, if unable to rework the Product or obtain a waiver from Buyer for the non-compliance, replace the Manufactured Products or refund the purchase price as paid by Buyer. If Producer obtains such a waiver from Buyer, Buyer will not charge Producer a fee or seek reimbursement of any kind for providing such waiver. The repair, replacement or refund remedy shall be the sole and exclusive remedy provided hereunder with respect to Manufactured Products that do not meet Final Batch Specifications.

 

10.3

If the Parties agree that any Product did not meet the Final Batch Specifications for such Product at the time of delivery to Buyer’s designated carrier, and Buyer has a right to return such Product pursuant to Section 5.10, all commercially reasonable direct costs including the return transportation charges, costs of rework, and shipment of replacement Products shall be the responsibility of Producer. Each Party agrees not to unreasonably withhold its agreement that a Product did not meet the Final Batch Specifications for such Product at the time of delivery to Buyer’s designated carrier.


10.4

The repair, replacement or refund for Products that do not meet Final Batch Specifications shall be the sole and exclusive remedy provided by Producer to Buyer for Products that do not meet Final Batch Specifications.

 

11.

Shipment.

 

11.1

Except as set forth in Schedule 2.3.1 or Section 11.6, all Product shipments will be Ex Works Producer’s shipping facility or dock (Incoterms 2010), and title and risk of loss shall pass pursuant to Section 5.9. Notwithstanding the foregoing, (i) packaged Products Manufactured by Newco for Everest in Saudi Arabia will be delivered DAP (Incoterms 2010) to Everest’s designated third-party logistics provider within Saudi Arabia and title and risk of loss for all such packaged Products manufactured by Newco for Everest in Saudi Arabia will transfer to Everest upon delivery of such Products to Everest’s designated third-party logistics provider; and (ii) packaged Products Manufactured by Newco for Everest in the United Arab Emirates will be delivered DAP (Incoterms 2010) to Everest’s designated third-party logistics provider within the United Arab Emirates and title and risk of loss for all such packaged Products Manufactured by Newco for Everest in the United Arab Emirates will transfer to Everest upon delivery of such Products to Everest’s designated third-party logistics provider.

 

11.2

Producer shall make all arrangements for shipment of Product utilizing those trucking and freight forwarding companies designated by Buyer. Shipping destinations may be included in a Purchase Order or in a subsequent written notice from Buyer to Producer. Producer will load the Products onto the trucks or into tankers or rail cars as required. Buyer will directly pay all third-party freight costs incurred to ship Products on behalf of Buyer, provided any demurrage or other costs solely resulting from the failure of Producer to make Products available for loading at the scheduled pick up time will be for the account of Producer. Notwithstanding the foregoing, (i) in the event that Everest’s Manufacture of Peracetic Acid or acrylamide monomer (PRM4218NMB.95 (non-MBIX) & PRM4218MB.95 (MBIX)) (“Acrylamide Monomer”) is moved from the Plant where it is Manufactured on the Effective Date, other than as a result of a Force Majeure event, Everest will provide advance notice of the circumstances requiring the move and Everest will be responsible for and hold Newco harmless from any increase in packaging and logistics costs resulting from such a move and (ii) in the event that Newco wishes to move production of Products from EHCP, other than as a result of a Force Majeure event, Newco will provide advance notice of the circumstances requiring the move and Newco will be responsible for and hold Everest harmless from any increases in packaging and logistics costs that result from such a move.

 

11.3

Producer shall ensure that each shipment is accompanied by a delivery note in the form of a Bill of Lading or other instrument mutually agreeable to Buyer which shows the order number, date of order, contents, quantity (including number of containers or packages) testing data and quality compliance certifications and safety, health and environmental product documents. Producer shall issue a certificate of analysis or provide access to electronic quality control results and provide other documentation necessary to support all Product sales to Buyer and Buyer’s designated purchasers if the Product is to be drop shipped.


11.4

All shipments by Producer to Buyer will be within the country of Manufacture. If Buyer intends to ship Products outside the country of Manufacture, Buyer shall be responsible for all export documents, compliance and logistics.

 

11.5

Any change in shipping date requested by Buyer in conformance with agreed Lead Times must be received not less than five (5) business days prior to the original shipping date and must be mutually agreed upon.

 

11.6

Producer will work cooperatively with Buyer regarding any order that Buyer or Buyer’s designated carriers cannot pickup when ready for delivery (as such term is used in Section 5.9). If after timely notice by Producer, Buyer’s own fleet or designated third-party carriers(s) cannot pickup an order within two (2) hours of the scheduled delivery time and such delay adversely impacts Producer’s production, Producer may make alternative arrangements to temporarily store Buyer’s order. Alternative arrangements may include (i) for bulk orders, placing Buyer’s order into a third-party bulk trailers or (ii) for packaged Products, sending the order to a third-party storage facility or warehouse. All charges related to alternative arrangements for temporary storage will be invoiced to Buyer but only with respect to the period that begins two (2) hours after the scheduled time for delivery on the delivery date specified by Buyer in the applicable order and ends at such time that Buyer’s fleet or designated carrier picks up the applicable order. Upon placement of Buyer’s Product order in a third-party bulk trailer or delivery to a third-party storage facility or warehouse, title and risk of loss will transfer to Buyer.

 

12.

Confidentiality.

The provisions of Section 5.6 of the Separation and Distribution Agreement, incorporated as though set forth herein, shall govern the confidentiality obligations of the Parties to this Agreement.

 

13.

Force Majeure.

 

13.1

Each Party hereto shall be absolved from any liability for any acts, omissions or circumstances occasioned by any cause whatsoever not within the control of the Party affected thereby and which such Party could not, by reasonable professional diligence, have avoided (any such acts, omissions or circumstances, a “Force Majeure”). Force Majeure, however, shall not release such Party of liability in the event of its failure to use reasonable diligence to remedy the situation and remove the cause in an adequate manner and with all reasonable dispatch and to give notice and full particulars of the same in writing to the other Party as soon as possible after the occurrence of the cause relied upon and in any event not later than three (3) Business


  Days. The requirement that any Force Majeure be remedied with all reasonable dispatch shall not require the settlement of strikes or labor controversies by acceding to the demands of the opposing party or parties.

 

13.2

In the event that a Force Majeure event restricts the supply of Raw Materials, the parties agree that Raw Materials of Producer shall be allocated between and among Producer’s Affiliates, customers, and Buyer in the same proportion as allocated during the preceding six (6) month period. In such event, Buyer may supply Producer with Raw Materials solely for use in the Manufacturing of Products for Buyer and Producer will acquire such Raw Materials directly from Buyer or from Buyer’s designated supplier. For purposes of this Agreement and Product invoicing, the cost of such Raw Materials acquired in accordance with the immediately preceding sentence in this Section 13 when used in the Manufacture of Product hereunder will be the actual cost at which such Raw Materials are purchased by Producer.

 

13.3

Notwithstanding anything to the contrary herein, the Parties agree that failure or degradation, as applicable, of the production assets set forth on Schedule 13 will, if they cannot be repaired without a capital expenditure, be deemed an event of Force Majeure excusing production of Products historically Manufactured in such assets; provided, however, that if Buyer promptly agrees to absorb the cost of the necessary capital expenditure to enable Producer to continue Manufacturing, such failure shall only constitute a Force Majeure until the applicable production assets are repaired. If Buyer agrees in writing to absorb the cost of the necessary capital expenditure to remediate a Force Majeure described in this Section 13.3, then Buyer will pay the entire amount of such cost as described in this Section 13.3. The amount of the applicable capital expenditure will be depreciated over a period mutually agreed by the Parties, and then the annual depreciation amount will be an amortization charge that is included as a component of the Standard Cost each year for the applicable Products. The mutually agreed upon depreciation period will not exceed the lesser of (i) 7 years or (ii) the sum of the remaining duration of the existing term of the arrangement under this Agreement for the applicable Product plus one full renewal term of such arrangement (if applicable). If the arrangement for the applicable Product terminates or expires for any reason prior to the end of the agreed upon depreciation period (including the expiration of the applicable term for the arrangement (whether the initial term or any renewal term), Buyer terminates the arrangement under Section 3.4 or any other reason), Buyer will be responsible for paying to Producer the unamortized portion of the total depreciation amount for the capital expenditure (i.e., the portion of the capital expenditure that was not paid for by Buyer through the inclusion of the amortization charge in the Standard Cost as described in this Section 13.3), with such amount payable in one lump sum upon termination.

 

13.4

The Parties acknowledge and agree that, to the extent that an event of Force Majeure adversely impacts a Producer’s capacity to supply one or more Products in a timely manner for more than one month or as mutually agreed, Buyer will not be responsible for or adversely affected through any resulting Absorption charge, reduced Absorption credit or “take or pay” obligations that would otherwise apply with respect to such Products under this Agreement.


14.

Indemnification; Disclaimer of Warranties.

 

14.1

Subject to the limitations set forth in Section 10.2, Section 14.2 and Section 14.7 of this Agreement, Producer agrees to defend, indemnify and hold Buyer harmless from and against all claims, losses, damages, demands, liabilities and causes of action for damages and expenses of every kind and character (including, without limitation, cost of suit, amounts paid in settlement and attorney’s fees and expenses) (“Damages”) arising out of a claim or proceeding brought by a third party (a third party excludes any Affiliate of a Party to this Agreement) (a “Third-Party Claim”) asserted against Buyer or its Affiliates or its and their agents, servants and employees, on account of: (a) death or bodily injury resulting from any Product failing to meet applicable Specifications, it being acknowledged by the Parties that any other Damages related to Products failing to meet Specifications shall be limited to replacement or refund, at Producer’s option, and in no event will Producer be liable for any amount in excess of any relevant cap on Buyer’s liability to the third party, (b) any violation of Applicable Laws by Producer, and (c) any breach by Producer of its obligations under this Agreement, except to the extent such Damage is the result of the gross negligence or willful misconduct of Buyer.

 

14.2

Buyer agrees to defend, indemnify and hold Producer harmless from and against all Damages arising out of a Third Party Claim asserted against Producer or its Affiliates and its or their agents, servants and employees on account of: (a) any violation of Applicable Laws by Buyer, (b) any use of Buyer’s Intellectual Property, as directed by Buyer pursuant to this Agreement including infringement claims upon any Copyrights, Trademarks, Patents, Know-How or trade secret of a third party, and (c) any breach by Buyer of its obligations under this Agreement, in each case except to the extent such Damage is the result of the gross negligence or willful misconduct of Producer provided, however, to the extent a Third Party Claim for indemnification solely pertains to any Intellectual Property that is covered by the IPMA, such Third Party Claim shall only be made under the IPMA.

 

14.3

Notice of Claim.

 

  (a)

As used herein, the term “Claim” means a claim for indemnification by Buyer with respect to Section 14.1, on the one hand, and by Producer with respect to Sections 8.2 and 14.2 on the other hand (each, an “Indemnified Party”). An Indemnified Party may give notice of a Claim under this Agreement, whether for its own Damages or for Damages incurred by any other Indemnified Party, as applicable, pursuant to written notice of such Claim executed by an officer or authorized Person of the Indemnified Party (a “Notice of Claim”), and delivered to Producer with respect to Section 14.1, on the one hand, and by Buyer with respect to Sections 8.2 and 14.2 (each, an “Indemnifying Party”) after such Indemnified Party becomes aware of the existence


  of any potential Claim by such Indemnified Party for indemnification under Section 8.2, 14.1 or 14.2, arising out of or resulting from any item indemnified pursuant to the terms of Section 8.2, 14.1 or 14.2.

 

  (b)

Each Notice of Claim by an Indemnified Party shall contain a brief description, in reasonable detail, of the facts, circumstances or events giving rise to the alleged Damages based on the Indemnified Party’s good faith belief thereof, including the identity of any third-party claimant and, if reasonably estimable, the amount of such Damages. Following delivery of the Notice of Claim (or at the same time if the Indemnified Party so elects) the Indemnified Party shall deliver copies of any demand or complaint it shall receive from any third party and, reasonably promptly after such information becomes available to it, the amount of Damages, the date each such item was incurred or paid, the basis for such liability and the specific nature of the breach to which such item is related.

 

14.4

Defense of Third-Party Claims.

 

  (a)

Subject to the provisions hereof, the Indemnifying Party on behalf of the Indemnified Party shall have the right, but not the obligation, to elect to defend any Third-Party Claim, and the costs and expenses incurred by the Indemnifying Party in connection with such defense (including attorneys’ fees, other professionals’ and experts’ fees and court or arbitration costs) shall be paid by the Indemnifying Party; provided, however, that an Indemnified Party may retain or assume the exclusive right to defend, settle or compromise a Third Party Claim if the Indemnified Party reasonably determines in good faith that (i) the claim relates to or arises in connection with any criminal or quasi-criminal matter; (ii) the claim seeks or is likely to seek an injunction or other equitable relief against the Indemnified Party; or (iii) there is or may be a conflict of interest between the Indemnifying Party and the Indemnified Party.

 

  (b)

The Indemnified Party shall give prompt written notice of any Third-Party Claim to the Indemnifying Party; provided that the failure to timely give the Notice of Claim shall not limit or reduce the Indemnified Party’s right to indemnity hereunder unless (and then only to the extent that) the Indemnifying Party is actually prejudiced thereby through the forfeiture by the Indemnifying Party of rights and defenses otherwise available to the Indemnifying Party with respect to such Third-Party Claim. The Indemnifying Party shall be entitled (subject to the exceptions provided for in Section 14.4(a)) to assume the defense thereof, including to settle such Third-Party Claim subject to the requirements of Section 14.4(d), utilizing legal counsel reasonably acceptable to the Indemnified Party.

 

  (c)

If the Indemnifying Party has the right to and does elect to defend any Third-Party Claim, the Indemnifying Party shall: (i) notify Indemnified Party within twenty (20)


  days of receipt of the Notice of Claim that it will defend such Third-Party Claim; (ii) conduct the defense of such Third-Party Claim with reasonable diligence and act affirmatively to keep the Indemnified Party reasonably informed of material developments in the Third-Party Claim at all stages thereof; (iii) promptly submit to the Indemnified Party copies of all pleadings, responsive pleadings, motions and other similar legal documents and papers received or filed in connection therewith; (iv) promptly respond to all reasonable requests by Indemnified Party relating thereto and otherwise permit the Indemnified Party and its counsel to participate in, but not control, the conduct of the defense thereof; and (v) to the extent practicable in the circumstances, permit the Indemnified Party and its counsel an opportunity to review and comment upon all legal papers to be submitted prior to their submission. Indemnifying Party and the Indemnified Party will make available to each other and each other’s counsel and accountants, without charge (other than any applicable third-party costs), all of its or their books and records (or portions thereof) relating to the Third-Party Claim, and each Party will render to the other Party such assistance as may be reasonably required in order to insure the proper and adequate defense thereof and shall furnish such records, information and testimony and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested by the other Party in connection therewith, with any expenses of Indemnified Party with respect thereto being included in Indemnified Party’s Damages. The Indemnifying Party and the Indemnified Party shall use their reasonable best efforts, at the sole cost and expense of Indemnifying Party, to avoid production of confidential information (consistent with Applicable Law and subject to a Party’s right to waive its own privilege), and seek to cause all communications among employees, counsel and others representing any party to a Third-Party Claim to be made so as to preserve any applicable attorney-client or work-product privileges. Once the Indemnifying Party has made the election to defend as set forth above, the Indemnified Party shall have the right to participate in any such defense and to employ separate counsel of its choosing at its sole cost and expense; provided that if (i) the Indemnified Party shall have been advised by counsel in writing that there are legal defenses available to the Indemnified Party that are not available to, or in conflict with, those of the Indemnifying Party, (ii) the Indemnifying Party authorizes the Indemnified Party in writing to employ separate counsel at the Indemnifying Party’s expense or (iii) the Indemnifying Party is not actively and reasonably diligently defending such Third Party Claim with legal counsel reasonably acceptable to Indemnified Party, then the expenses of such separate counsel shall be considered Damages. The assumption of a Third Party Claim by the Indemnifying Party will conclusively establish for purposes of this Agreement that the claims asserted in the Third Party Claim are within the scope of and subject to indemnification hereunder and the Indemnifying Party will be deemed to have agreed to the same. If the Indemnifying Party declines or fails to assume the defense of the Third-Party Claim on the terms provided above, in any case within twenty (20) days


  after receipt of a Notice of Claim, the Indemnified Party shall have the right to undertake the defense of such Claim with counsel of its own choosing and the reasonable attorneys’ fees and expenses incurred by the Indemnified Party for such counsel will be included in the Indemnified Party’s Damages; provided, however, that no such compromise or settlement shall be binding on the issue of whether, or the extent to which, the Indemnified Party may be entitled to indemnification hereunder.

 

  (d)

If the Indemnifying Party has the right to and does elect to defend any Third-Party Claim, the Indemnifying Party shall not have the right to enter into any settlement of a Third-Party Claim on the Indemnified Party’s behalf without the consent of the Indemnified Party, unless (i) such settlement does not involve any finding or admission suggesting any violation of law or other wrongdoing or any injunctive or other form of non-monetary relief binding upon the Indemnified Party or any of its Affiliates, officers, directors and agents, other than reasonable confidentiality obligations related to the terms of such settlement, and (ii) such settlement expressly and unconditionally releases the Indemnified Party and its Affiliates and such other Persons from all liabilities and obligations with respect to such Claim, and includes the giving by the claimant to the Indemnified Party of a release in respect thereof, in form and substance reasonably satisfactory to the Indemnified Party, of any further liability, at law, in equity or otherwise.

 

14.5

Resolution of Notice of Claim. Each Notice of Claim given by an Indemnified Party, other than with respect to Third-Party Claims resolved in accordance with Section 14.4, shall be resolved as follows:

 

  (a)

Admitted Claims. If, within twenty (20) Business Days after a Notice of Claim is delivered to the Indemnifying Party, the Indemnifying Party agrees in writing (i) that liability for such Claim is indemnified under this Agreement and (ii) to the full amount of the Damages specified in the Notice of Claim, the Indemnifying Party shall be conclusively deemed to have consented to the recovery by the Indemnified Party of the full amount of Damages specified in the Notice of Claim.

 

  (b)

Contested Claims. If the Indemnifying Party does not so agree in writing to such Notice of Claim or gives the Indemnified Party written notice contesting all or any portion of a Notice of Claim (a “Contested Claim”) within the twenty (20) Business Day period specified in Section 14.5(a), then such Contested Claim shall be resolved by either (i) a written settlement agreement executed by Indemnifying Party and the Indemnified Party or (ii) in the absence of such a written settlement agreement, by a proceeding brought in a court designated in Section 27. The resolution of any Contested Claim pursuant to this Section 14.5(b) is referred to as “finally resolved.”


  (c)

Payment. If any Indemnified Party is entitled to the recovery of Damages pursuant to any Claim that is agreed to pursuant to Section 14.5(a) or a Contested Claim that is finally resolved pursuant to Section 14.5 (b), no later than the fifth (5th) Business Day after the date on which the Claim is agreed to pursuant to Section 14.5 (a) or finally resolved pursuant to Section 14.5 (b), the Indemnifying Party shall pay, by wire transfer of immediately available funds to the account(s) designated by the Indemnified Party, an amount necessary to satisfy the Damages arising out of or resulting from such Claim or such Contested Claim as so determined.

 

14.6

Limited Warranties.

EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY IN ITS CAPACITY AS PRODUCER MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY PRODUCTS OR SERVICES, AND ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE, AND ALL OTHER WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.

 

14.7

Disclaimer of Consequential Damages.

 

  (a)

SUBJECT TO THE PROVISIONS OF SECTION 14.7(b) BELOW, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR INCIDENTAL, CONSEQUENTIAL, INDIRECT, SPECIAL OR PUNITIVE DAMAGES OR LOSSES (WHETHER FORESEEABLE OR NOT AT THE DATE OF THIS AGREEMENT), INCLUDING WITHOUT LIMITATION DAMAGES FOR LOST PRODUCTION, LOST REVENUE, LOST PRODUCT, LOST PROFIT, LOST BUSINESS OR LOST BUSINESS OPPORTUNITIES, EXCEPT TO THE EXTENT ANY OF THE FOREGOING ARE CONSIDERED DIRECT DAMAGES UNDER APPLICABLE LAW. THE EXCLUSIONS OF LIABILITY AND INDEMNITIES SET FORTH IN THIS SECTION 14 SHALL APPLY TO ANY CLAIM(S), LOSSES OR DAMAGES WITHOUT REGARD TO THE CAUSE(S) THEREOF INCLUDING BUT NOT LIMITED TO PRE-EXISTING CONDITIONS, WHETHER SUCH CONDITIONS BE PATENT OR LATENT, IMPERFECTION OF MATERIAL, DEFECT OR FAILURE OF PRODUCTS OR EQUIPMENT, BREACH OF REPRESENTATION OR WARRANTY (EXPRESS OR IMPLIED), ULTRAHAZARDOUS ACTIVITY, STRICT LIABILITY, TORT, BREACH OF CONTRACT, BREACH OF DUTY (STATUTORY OR OTHERWISE), BREACH OF ANY SAFETY REQUIREMENT OR REGULATIONS, OR THE NEGLIGENCE OR OTHER LEGAL FAULT OR RESPONSIBILITY OF ANY PERSON (INCLUDING THE INDEMNIFIED PARTY), WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, ACTIVE OR PASSIVE.


  (b)

Notwithstanding the foregoing, the provisions of Section 14.7(a) shall not be applicable to, or be construed or interpreted as limiting the liability of a Party for, any Damages arising out of, or resulting from, or in connection with, any breach under the Agreement, which breach was a willful or intentional breach or the result of the gross negligence of a Party.

 

14.8

Insurance. Each Party must maintain at all times with a reliable insurance carrier or carriers rated A-VII or better by A.M. Best Company, at the Party’s sole expense, insurance policies (a) that provide sufficient coverage and limits to cover the liabilities assumed under this Agreement, (b) that include coverages as set forth on Schedule 14.8 attached hereto irrespective of whether the indemnification provisions herein are enforceable, in whole or in part, in any state, and (c) that comply with the terms and conditions set forth on Schedule 14.8 attached hereto. All policies, excepting workers compensation, shall include the other Party, its owner, parent, subsidiary, and Affiliates and their respective officers, directors, employees, servants, agents, subcontractors, invitees, successors and assigns (collectively, the “Indemnitees”), as additional insureds to the extent of a Party’s indemnification obligation, and shall provide for a waiver of subrogation in favor of the Indemnitees to the extent of any of the obligations of indemnifying Party under this Agreement.

Each Party shall furnish certificates of insurance evidencing the coverages and endorsements as listed on Schedule 14.8. Acceptance of furnished evidence of insurance shall not modify the above insurance requirements. Without affecting, modifying, or limiting each Party’s obligation to maintain insurance pursuant to this Section 14.8, the certificates shall provide that the insurance coverage may be cancelled by the issuing insurance company only upon giving thirty (30) days advance notice. A Party is required to insert the substance of the insurance and indemnity provisions of this Agreement in any and all subcontracts with subcontractors and is to require and ensure that subcontractors have insurance commensurate with the services to be performed.

 

14.9

Laws, Regulations and Permits.

 

  14.9.1

The Parties acknowledge that the Manufacturing, packaging and/or shipping of Product hereunder may be regulated. As such, Producer shall observe, abide by and be responsible for material adherence to all Applicable Laws relating to the Manufacturing, packaging and/or shipping of Products and its performance under this Agreement, subject to the provisions of Section 8 above.

 

  14.9.2

Each Party currently has and will maintain in full force and effect during the term of this Agreement all permits, authorizations and the like required for the Manufacture, handling, storage and disposal of the Raw Materials and Products and the performance of its obligations hereunder and such activities will be performed in accordance with the terms of such permits, authorizations and other governmental requirements. Each


  Party will report to the other Party, as soon as possible, all occurrences and incidents caused by operations covered by this Agreement and for which are reportable to the environmental authorities, in each case if such occurrences or instances could reasonably be expected to materially and adversely impact a Party’s ability as Producer to provide Services hereunder.

 

  14.9.3

In the event a party believes that any change in Applicable Law would be reasonably expected to materially and adversely affect the Party’s ability to perform its obligations under this Agreement, such Party shall promptly notify the other Party in writing. Individuals designated by each Party shall meet in person or by telephone as frequently as may be necessary to determine any modifications that are necessary to resolve such compliance issues.

 

15.

Disposal of Wastes.

Each Party as Producer shall be responsible for handling and disposing of wastes generated by the Manufacturing of Products and shall ensure that all wastes or by-products that result from the Manufacture, handling, storage or packaging of the Product prior to delivery to Buyer, all third party Raw Materials and their shipping containers, and, where applicable, the cleaning of vessels, tanks, lines, pumps, or associated equipment, shall be disposed of in compliance with all Applicable Laws. Notwithstanding the foregoing, Buyer will have responsibility for waste or by-products related to Product shipping containers it receives from Producer and for E&O Products and RM&I transferred to Buyer or, at Buyer’s request, manifested for disposal under Buyer’s name.

 

16.

Changes in Applicable Law.

In the event there hereafter is a change in Applicable Laws specifically relating to the Manufacture, packaging or shipping of Products which would have the effect of increasing the cost of Manufacturing Services applicable to Products, then Producer and Buyer agree to meet to discuss whether any adjustments should be made to all or some of the Cross Selling Prices. In the event that the Parties do not agree with respect to the amount of any adjustment, then Producer and Buyer shall submit such amount to the Steering Committee for consideration. In the event the Steering Committee is unable to agree, Producer retains the right to incur such compliance cost and to bring a claim in the amount of such costs against Buyer pursuant to Section 27 below. The Parties acknowledge that a change in Applicable Law which impacts the general operation of the Plant (i.e., more stringent environmental omissions standards or safety standards) shall not be deemed to constitute a change in Applicable Laws relating to the Manufacture, packaging or shipping of Products.


17.

Termination.

 

17.1

This Agreement shall commence as of the Effective Date and, unless terminated in whole or in part pursuant to the provisions of Section 22 hereof, shall continue until the expiration or termination of all Manufacturing, product transfer and/or product supply arrangements described in the schedules and subschedules to Section 2 of this Agreement.

 

17.2

Unless otherwise set forth in any Schedule hereto:

 

  17.2.1

With respect to any Product on the Transfer List, the term of each such arrangement shall commence on the Effective Date and continue until Producer is no longer obligated to manufacture and supply the relevant Product pursuant to Section 2.1 and Section 6.3; provided, however, that the term of any such arrangement may be extended by mutual written consent expressly agreed by the Parties in an amendment entered into by the Parties in strict conformance with the provisions of Section 23 of this Agreement;

 

  17.2.2

With respect to any Product on the Elective Nonstrategic List, the term of each such arrangement shall commence on the Effective Date and expire on the fifth anniversary of the Trigger Date; provided, however, that either Party, whether in its capacity as Buyer or Producer, may terminate any such arrangement by providing, on or after the first anniversary of the Trigger Date, written notice to the other Party not less than twenty-four (24) months prior to the termination date specified in the written notice (i.e., a minimum term of approximately three years); and; further provided that the term of any such arrangement may be extended by mutual written consent expressly agreed by the Parties in an amendment entered into by the Parties in strict conformance with the provisions of Section 23 of this Agreement;

 

  17.2.3

With respect to any Product on the Strategic List, the term of each such arrangement shall commence on the Effective Date and expire on the tenth anniversary of the Trigger Date; provided, however, that Buyer (but not Producer), may terminate any such arrangement by providing, on or after the third anniversary of the Trigger Date, written notice to Producer not less than twenty-four (24) months prior to the termination date specified in the written notice (i.e., a minimum term of approximately five years) and by paying the related termination fee calculated according to the formula set forth on Schedule 17.2.3.1 for Acrylamide Monomer or Schedule 17.2.3.2 for Eastern Hemisphere Core Plant, as applicable; and, further provided that the term of any such arrangement may be extended by mutual written consent expressly agreed by the Parties in an amendment entered into by the Parties in strict conformance with the provisions of Section 23 of this Agreement.


  17.2.4

With respect to any Product on the Reseller List, the term of each such arrangement shall commence on the Effective Date and expire on the fifth anniversary of the Trigger Date; provided, however, (i) that Newco may request to renew the arrangement set forth on Schedule 2.4.2 or Schedule 2.4.3 for one additional five-year term (the “Reseller Renewal Term”) by providing written notice to Everest of Newco’s request to so renew not less than six (6) months prior to the anticipated expiration date; provided, however, that Everest may reject such request to renew only in the event of uncured material breach by Newco and (ii) that Everest may request to renew the arrangement set forth on Schedule 2.4.4 for one additional five-year term (also a Reseller Renewal Term) by providing written notice to Newco of Everest’s request to so renew not less than six (6) months prior to the anticipated expiration date; provided, however, that Newco may reject such request to renew only in the event of uncured material breach by Everest. The term of the arrangement related to the Reseller List may be extended by mutual written consent expressly agreed by the Parties in an amendment entered into by the Parties in strict conformance with the provisions of Section 23 of this Agreement. Notwithstanding the foregoing, Everest may terminate this Agreement with respect to any or all Products on the Reseller List pursuant to the provisions of Schedule 2.4.

 

  17.2.5

With respect to any Product described in any Special Supply Arrangement contained in Section 2.5, the term of each such arrangement shall commence on the Effective Date and expire on the fifth anniversary of the Trigger Date; provided that the term of any such arrangement may be extended by mutual written consent expressly agreed by the Parties in an amendment entered into by the Parties in strict conformance with the provisions of Section 23 of this Agreement. Either Party in its capacity as Buyer may terminate any such arrangement effective beginning on the second anniversary of the Trigger Date by providing written notice to the other Party in such Party’s capacity as Producer of Buyer’s intent to so terminate not less than one (1) year prior to the anticipated expiration date. Solely with respect to Products on the Special Supply List that are identified on Schedule 2.5 as containing sensitive Intellectual Property, either Party may terminate a Special Supply Arrangement solely with respect to such a Product upon a final, binding order or judgment by a court or other Governmental Body of competent jurisdiction or arbitral body that is unappealable or unappealed within the time permitted for appeal that the other Party used or practiced such Product outside of the scope of the applicable license grant under this Agreement which constitutes a material breach of the this Agreement.

 

17.3

Notwithstanding the foregoing, the Parties may by mutual agreement, or by including a provision in the Agreement or in any Schedule or subschedule, agree to termination of any individual Manufacturing arrangement described on any Product List or other obligation or right without the necessity of terminating this Agreement or the respective Product List in its entirety.


18.

Rights after Termination.

 

18.1

From and after the effective date of any termination or expiration of this Agreement, neither of the parties hereto shall have any further rights, privileges or obligations hereunder, except that, unless otherwise set forth in Section 22:

 

  18.1.1

such termination shall not relieve the parties of any liability accrued prior to the effective date of such termination;

 

  18.1.2

such termination or expiration shall not affect the continued operation or enforcement of any provision of this Agreement which survive termination including, but not limited to, the provisions contained in the following Sections of this Agreement: Sections 2.4, 2.5, 4.9, 4.10, 4.12, 5.6.6, 5.8, 5.9, 5.10, 5.11, 5.14, 8.3, 8.9, 9.1–9.3, 10.4, 12, 14 and 15-32.

 

  18.1.3

within 30 days of the termination or expiration of the Manufacturing portion of this Agreement with respect to any Product, each Party shall provide a final inventory listing of, among other things, all Buyer-Specific Raw Materials related to the Manufacturing of such Product, Products acquired or Manufactured for a Party as Buyer and proprietary packaging materials related to such Product as of the date of such termination or expiration. In the event that such final inventory for the relevant Product is inconsistent with those records maintained by a Party as Buyer in connection therewith and delivered to the other Party during the Term of this Agreement, then the Party as Producer shall bear the cost and expense of any inconsistency related to the Manufacturing of such Product and promptly reimburse Buyer for any cost or expense that Buyer may have actually incurred as a result of that inconsistency.

 

18.2

After termination or expiration of each Product Manufacturing obligation, Producer shall deliver to Buyer all of the Buyer-Specific Raw Materials, Buyer Unique Products produced or acquired for Buyer, or packaging materials stored therein at Buyer’s sole cost and expense. To the extent Buyer did not previously pay for any such items, Producer will invoice Buyer for the same at the price provided for herein or, if no price is otherwise provided for herein, then at Producer’s actual cost of the same, in each case, after giving effect to any applicable markup or other payments to be made by Buyer as contemplated by this Agreement. In addition, Producer shall prepare bills of lading in accordance with Buyer’s instructions and handle any other matters in connection with such shipment. Producer will forward to Buyer promptly all papers and other information which Buyer may require in connection with such shipment.


19.

Independent Contractor.

Each Party is, and shall perform this Agreement as, an independent contractor and, as such, shall have and maintain sole control over all of its employees, agents and operations. Neither Party nor anyone employed by a Party shall be, represent, act, purport to act or be deemed to be the agent, representative, employee or servant of the other Party. Neither Party shall contract with any subcontractor to perform any Services hereunder without the prior written consent of other Party. Subcontracting following receipt of consent shall not discharge the assigning Party from its obligations under this Agreement and such Party shall remain fully responsible for the acts and omissions of subcontractors, and of persons either directly or indirectly employed by them. Nothing in this Agreement will be construed as establishing a partnership or joint venture relationship between the parties hereto.

 

20.

Notices.

All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given or made as follows: (a) if sent by registered or certified mail in the U.S. return receipt requested, upon receipt; (b) if sent by nationally recognized overnight air courier (such as Federal Express), two (2) Business Days after mailing; (c) if sent by facsimile transmission or e-mail before 5:00 p.m. Eastern Time, when transmitted and receipt is confirmed; (d) if sent by facsimile transmission or e-mail after 5:00 p.m. Eastern Time and receipt is confirmed, on the following Business Day; or (e) if otherwise actually personally delivered, when delivered; provided that such notices, requests, demands and other communications are delivered to the physical address, e-mail address or facsimile number set forth below, or to such other address as any Party shall provide by like notice to the other Parties to this Agreement:

if to Everest:

c/o Ecolab Inc.

1 Ecolab Place

Saint Paul, MN 55102

Attn: General Counsel

Email: generalcounsel@ecolab.com

with a copy (which shall not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP

Attn: Charles W. Mulaney, Jr.

Richard C. Witzel, Jr.

155 N. Wacker Drive, Suite 2700

Chicago, IL 60606


Email: charles.mulaney@skadden.com

  rich.witzel@skadden.com

Fax: (312) 407-0411

if to Newco:

Apergy Corporation

2445 Technology Forest Blvd., 12th Floor

The Woodlands, TX 77381

Attn: General Counsel

Email: general.counsel@apergy.com

with a copy (which shall not constitute notice) to:

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Attn: Michael J. Aiello

Sachin Kohli

Email: michael.aiello@weil.com

  sachin.kohli@weil.com

Fax: (212) 310-8007

 

21.

Waiver.

No failure on the part of any Party to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of any Party in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy. The rights and remedies hereunder are cumulative and not exclusive of any rights or remedies that any Party would otherwise have. No Party shall be deemed to have waived any claim arising out of this Agreement, or any power, right, privilege or remedy under this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered on behalf of such Party; and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given.


22.

Assignment; Impact of a Change-in-Control.

 

22.1

Neither Party hereto may assign or transfer this Agreement or any rights or obligations hereunder, voluntarily or involuntarily, in the absence of the prior written consent of the other Party hereto and any attempted assignment without the required consent will be null and void, provided that either Party may transfer its rights and obligations hereunder to (i) an Affiliate, (ii) any joint venture, partnership or other entity in which the assigning Party is a participant; and, further provided that in the event of a Change-in-Control of a Party (such Party, the “Acquired Party” and the other Party, the “Notified Party”), the Notified Party will have the following termination rights as a result of the Change-in-Control:

 

  22.1.1

the Notified Party will have no termination rights for the arrangement under this Agreement with respect to Products on the Transfer List;

 

  22.1.2

the Notified Party may terminate the arrangement under this Agreement with respect to any or all of the Products on the Elective Nonstrategic List by providing the Acquired Party at least twelve (12) months’ written notice in advance of the termination date specified in such written notice in the event of an acquisition of the Acquired Party by a direct competitor of the Notified Party;

 

  22.1.3

the Notified Party may terminate the arrangement under this Agreement with respect to any or all of the Products on the Strategic List by providing the Acquired Party at least twelve (12) months’ written notice in advance of the termination date specified in such written notice in the event of an acquisition of the Acquired Party by a direct competitor of the Notified Party and in the event that the Notified Party did not give its consent to the Change-in-Control of the Acquired Party, no termination fee will be payable with respect to the termination of any such arrangement;

 

  22.1.4

the Notified Party may terminate the arrangement under this Agreement with respect to any or all of the arrangements described in the Special Supply List by providing the Acquired Party at least twelve (12) months’ written notice in advance of the termination date specified in such written notice in the event of an acquisition of the Acquired Party by a direct competitor of the Notified Party and in the event that the Notified Party did not give its consent to the Change-in-Control of the Acquired Party, no termination fee will be payable with respect to the termination of any such arrangement;

 

23.

Amendment.

Except as provided in Section 2.6 and Schedule 2.6, this Agreement may not be amended or modified except by an instrument in writing signed by an authorized Representative of each of the Parties. No amendments or modifications shall be effected by the acknowledgment or acceptance of any purchase orders, invoices, shipping documents or other forms of documents containing terms and/or conditions at variance with or in addition to those set forth herein.


24.

Headings.

The headings contained in this Agreement are for convenience of reference only, shall not be deemed to be a part of this Agreement and shall not be referred to in connection with the construction or interpretation of this Agreement.

 

25.

Entire Agreement.

This Agreement, together with the schedules and subschedules hereto, along with the IPMA, constitutes the entire understanding of the Parties in regard to the subject matter hereof and, as of the Effective Date, supersedes all prior agreements and all other arrangements, understandings, negotiations or communications, however given, regarding the subject matter hereof; provided, however, that (i) to the extent that any provision or provisions to another agreement are referenced to herein, such referenced provision will be given effect in the manner provided for herein and therein; and (ii) nothing herein shall be deemed to amend or supersede the provisions of the Separation and Distribution Agreement, including the provisions of Section 2.10 thereof (Athena Guarantee) and in the event of any conflict between the provisions of this Agreement and the Separation and Distribution Agreement, such conflict will be resolved pursuant to Section 8.2 of the Separation and Distribution Agreement.

 

26.

Successors.

Subject to Section 22, this Agreement shall be binding upon, and shall be enforceable by and inure solely to the benefit of, the Parties and their respective successors and permitted assigns.

 

27.

Applicable Law.

This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof. In any Legal Proceeding between any of the Parties arising out of or relating to this Agreement or any of the transactions contemplated hereby: (a) each of the Parties irrevocably and unconditionally consents and submits to the exclusive jurisdiction and venue of the Court of Chancery of the State of Delaware or, if under Applicable Law, exclusive jurisdiction over such matter is vested in the federal courts, any federal court in the State of Delaware and any appellate court from any thereof; (b) each of the Parties irrevocably waives the right to trial by jury; and (c) each of the Parties irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, any claim (i) that it is not personally subject to the jurisdiction of the courts in Delaware as described herein for any reason; (ii) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts; and (iii) that (x) the claim, action, suit or other Legal Proceeding in any such court is brought in an inconvenient forum; (y) the venue of such claim, action, suit or other Legal Proceeding is


improper; or (z) this Agreement or the subject matter hereof, may not be enforced in or by such courts. Each of the Parties further agrees that, to the fullest extent permitted by Applicable Law, service of any process, summons, notice or document by U.S. registered mail to such Entity’s respective address set forth in Section 20 will be effective service of process for any claim, action, suit or other Legal Proceeding in the Court of Chancery of the State of Delaware or, to the extent required by Legal Requirements, any federal court in the State of Delaware, with respect to any matters to which it has submitted to jurisdiction as set forth in this paragraph. The Parties hereby agree that a final judgment in any such claim, suit, action or other Legal Proceeding will be conclusive, subject to any appeal, and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Applicable Law. The Parties agree that irreparable damage would occur and that the Parties would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to specific performance and injunctive or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement without the requirement for the posting of any bond, this being in addition to any other remedy to which they are entitled at law or in equity. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

28.

Severability.

Any term or provision of this Agreement (or part thereof) that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions of this Agreement or the validity or enforceability of the offending term or provision (or part thereof) in any other situation or in any other jurisdiction. If a final judgment of a court of competent jurisdiction declares that any term or provision of this Agreement (or part thereof) is invalid or unenforceable, the Parties agree that the court making such determination shall have the power to limit such term or provision (or part thereof), to delete specific words or phrases or to replace such term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision (or part thereof), and this Agreement shall be valid and enforceable as so modified. In the event such court does not exercise the power granted to it in the prior sentence, the Parties agree to replace such invalid or unenforceable term or provision (or part thereof) with a valid and enforceable term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or unenforceable term or provision.


29.

No Third-Party Beneficiaries.

Except (i) as provided in Section 14.1 and 14.2 relating to indemnification of Affiliates of the Parties, and (ii) Athena, which is an intended third party beneficiary of the rights granted to Newco herein, this Agreement is solely for the benefit of the Parties and nothing in this Agreement, express or implied, is intended to or shall confer upon any Person (other than the Parties) any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

30.

Reference and Conflict.

In the event of a conflict between this Agreement and any Purchase Orders, the terms and conditions of this Agreement shall prevail. The Exhibits and Schedules shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein.

 

31.

Subsidiaries.

Each of the Parties shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary of such Party or by any entity that becomes a Subsidiary of such Party, to the extent such Subsidiary remains a Subsidiary of the applicable Party.

 

32.

Counterparts.

This Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which shall constitute one and the sameinstrument. The exchange of a fully executed Agreement (in counterparts or otherwise) by facsimile or electronic transmission shall be sufficient to bind the Parties to the terms and conditions of this Agreement.

[signature page follows]


IN WITNESS WHEREOF, the parties have entered into this Agreement as of the Effective Date.

 

ECOLAB INC.
By:  

/s/ Douglas M. Baker, Jr.

Name:   Douglas M. Baker, Jr.
Title:   Chairman of the Board and Chief
  Executive Officer
Date: June 3, 2020
CHAMPIONX LLC
By:  

/s/ Deric D. Bryant

Name:   Deric D. Bryant
Title:   Executive Vice President
Date: June 3, 2020


SCHEDULES:   
Schedule 2.1    Transfer List Products
Schedule 2.2    Elective Nonstrategic List Products
Schedule 2.3    Strategic List Products
Schedule 2.3.1    Garyville Product
Schedule 2.3.2    Eastern Hemisphere Core Plant Products
Schedule 2.4    Reseller List Products and Master Reseller Terms
Schedule 2.4.1    Proprietary Everest Water Chemical Products
Schedule 2.4.1.1    Proprietary Everest Water Equipment Reseller Products (PARETO, FLOCMASTER)
Schedule 2.4.2    3D Trasar Chemical Products
Schedule 2.4.2.1    3D Trasar Equipment Products
Schedule 2.4.3    Peracetic Acid Products
Schedule 2.4.4    Continued Products
Schedule 2.4.5    Continued Product Patents
Schedule 2.4.6    Newco Midstream Customers
Schedule 2.4.7    Everest Midstream Customers
Schedule 2.5    Special Supply List
Schedule 2.5.1    Pilot Plant Terms
Schedule 2.5.2    Ellwood City Furnace Rooms
Schedule 2.6    Steering Committee
Schedule 2.6(a)    Key Principles
Schedule 4.1.1    Accounting Principles


Schedule 4.1.2    Other Budgetary Principles
Schedule 4.4.2    Calculation of Purchase Price Variances
Schedule 4.4.3    Calculation of Absorption Credit/Debit Amount
Schedule 4.6    Hot List Products and Historic Losses and Example Calculation
Schedule 4.7    Small Business Country Agreement and Related Terms
Schedule 5.3    Minimum Order Quantity and Lead Time
Schedule 5.5    Processes, Certifications and Registrations
Schedule 5.6    Procedures Applicable to Innovations
Schedule 5.7    Management of Change
Schedule 6.1    Transfer Package
Schedule 7.7    Target List RM&I
Schedule 8.2    Packaging, Labeling, Bills of Lading and Certificates of Analysis
Schedule 8.4.1    Replacement Fee for Returnable Containers
Schedule 8.5    Daily Penalty for Returnable Containers
Schedule 8.8    Maintenance Fees for Preen Porta-feeds and Thyssen Containers
Schedule 13    Force Majeure Carve Out
Schedule 14.8    Insurance
Schedule 17.2.3.1    Garyville Termination Fee
Schedule 17.2.3.2    Eastern Hemisphere Core Plant Termination Fee
EX-3.1

Exhibit 3.1

CERTIFICATE OF AMENDMENT

OF THE

CERTIFICATE OF INCORPORATION

OF

APERGY CORPORATION

Apergy Corporation (the “Corporation”), a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the “DGCL”), does hereby certify as follows:

 

  1.

The present name of the Corporation is Apergy Corporation.

 

  2.

The Corporation was originally incorporated under the name Wellsite Corporation. The original Certificate of Incorporation of the Corporation was filed with the office of the Secretary of State of the State of Delaware on October 10, 2017, and a Certificate of Amendment thereto was filed with the office of the Secretary of State of the State of Delaware on February 2, 2018. The current Amended and Restated Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on May 8, 2019.

 

  3.

Article I of the Certificate of Incorporation is hereby amended and restated to read as follows:

FIRST. The name of the Corporation is ChampionX Corporation (the “Corporation”).”

 

  4.

This Certificate of Amendment to the Certificate of Incorporation was duly adopted in accordance with Section 242 of the DGCL.

 

  5.

This Certificate of Amendment shall become effective as of June 3, 2020.

[The remainder of this page is intentionally left blank]


IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed on this 3rd day of June, 2020.

 

By:  

/s/ Julia Wright

  Name:   Julia Wright
  Title:   Senior Vice President, General
    Counsel and Secretary

[CERTIFICATE OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION OF APERGY CORPORATION]

EX-3.2

Exhibit 3.2

AMENDED AND RESTATED

BY-LAWS

OF

CHAMPIONX CORPORATION

A Delaware Corporation

Effective June 3, 2020


TABLE OF CONTENTS

 

          Page  
Article I

 

OFFICES

 

Section 1.1

  

Registered Office

     1  

Section 1.2

  

Other Offices

     1  
Article II

 

MEETINGS OF STOCKHOLDERS

 

Section 2.1

  

Place of Meetings

     1  

Section 2.2

  

Annual Meetings

     1  

Section 2.3

  

Special Meetings

     1  

Section 2.4

  

Consent of Stockholders in Lieu of Meeting

     2  

Section 2.5

  

Notice

     2  

Section 2.6

  

Adjournments

     2  

Section 2.7

  

Quorum

     2  

Section 2.8

  

Voting

     3  

Section 2.9

  

Proxies

     3  

Section 2.10

  

List of Stockholders Entitled to Vote

     3  

Section 2.11

  

Record Date

     4  

Section 2.12

  

Stock Ledger

     4  

 

i


Section 2.13

  

Conduct of Meetings

     4  

Section 2.14

  

Inspectors of Election

     4  

Section 2.15

  

Nature of Business at Meetings of Stockholders

     5  

Section 2.16

  

Nomination of Directors

     7  
Article III

 

DIRECTORS

 

Section 3.1

  

Number and Election of Directors

     10  

Section 3.2

  

Vacancies

     11  

Section 3.3

  

Duties and Powers

     11  

Section 3.4

  

Meetings; Notice

     11  

Section 3.5

  

Organization

     12  

Section 3.6

  

Resignations and Removals of Directors

     12  

Section 3.7

  

Quorum

     12  

Section 3.8

  

Actions of the Board by Written Consent

     13  

Section 3.9

  

Meetings by Means of Conference Telephone

     13  

Section 3.10

  

Committees

     13  

Section 3.11

  

Executive Committee

     14  

Section 3.12

  

Compensation

     14  

Section 3.13

  

Interested Directors

     14  
Article IV

 

OFFICERS

 

Section 4.1

  

General

     15  

Section 4.2

  

Election

     15  

Section 4.3

  

Voting Securities Owned by the Corporation

     15  

Section 4.4

  

Chairman of the Board of Directors

     15  

Section 4.5

  

Chief Executive Officer

     16  

 

ii


Section 4.6

  

Vice Presidents

     16  

Section 4.7

  

Secretary

     16  

Section 4.8

  

Treasurer

     16  

Section 4.9

  

Assistant Secretaries

     17  

Section 4.10

  

Assistant Treasurers

     17  

Section 4.11

  

Other Officers

     17  
Article V

 

STOCK

 

Section 5.1

  

Uncertificated Shares

     17  

Section 5.2

  

Dividend Record Date

     17  

Section 5.3

  

Record Owners

     18  

Section 5.4

  

Transfer and Registry Agents

     18  
Article VI

 

NOTICES

 

Section 6.1

  

Notices

     18  

Section 6.2

  

Waivers of Notice

     18  
Article VII

 

GENERAL PROVISIONS

 

Section 7.1

  

Dividends

     18  

Section 7.2

  

Disbursements

     19  

Section 7.3

  

Fiscal Year

     19  

Section 7.4

  

Corporate Seal

     19  

Section 7.5

  

Contracts

     19  

 

iii


Article VIII

 

INDEMNIFICATION

 

Section 8.1

  

Power to Indemnify in Actions, Suits or Proceedings other than Those by or in the Right of the Corporation

     19  

Section 8.2

  

Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation

     20  

Section 8.3

  

Authorization of Indemnification

     20  

Section 8.4

  

Good Faith Defined

     20  

Section 8.5

  

Indemnification by a Court

     21  

Section 8.6

  

Expenses Payable in Advance

     21  

Section 8.7

  

Nonexclusivity of Indemnification and Advancement of Expenses

     21  

Section 8.8

  

Insurance

     21  

Section 8.9

  

Certain Definitions

     22  

Section 8.10

  

Survival of Indemnification and Advancement of Expenses

     23  

Section 8.11

  

Limitation on Indemnification

     23  

Section 8.12

  

Indemnification of Employees and Agents

     23  

Section 8.13

  

Amendment or Repeal

     23  
Article IX

 

AMENDMENTS

 

Section 9.1

  

Amendments

     23  
Article X

 

CONSTRUCTION

 

Section 10.1

  

Construction

     24  

Section 10.2

  

Entire Board of Directors

     24  

 

iv


AMENDED AND RESTATED

BY-LAWS

OF

CHAMPIONX CORPORATION

(hereinafter called the “Corporation”)

ARTICLE I

OFFICES

Section 1.1 Registered Office. The registered office of the Corporation shall be in the City of Wilmington, County of New Castle, State of Delaware.

Section 1.2 Other Offices. The Corporation may also have offices at such other places, both within and without the State of Delaware, as the Board of Directors may from time to time determine.

ARTICLE II

MEETINGS OF STOCKHOLDERS

Section 2.1 Place of Meetings. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place (if any), either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors.

Section 2.2 Annual Meetings. The Annual Meeting of Stockholders for the election of directors shall be held on such date and at such time as shall be designated from time to time by the Board of Directors. Any other proper business may be transacted at the Annual Meeting of Stockholders. The Board of Directors may postpone, reschedule or cancel any Annual Meeting of Stockholders previously scheduled by the Board.

Section 2.3 Special Meetings. Unless otherwise required by law or by the certificate of incorporation of the Corporation, as amended and restated from time to time (the “Certificate of Incorporation”), a Special Meeting of Stockholders, for any purpose or purposes, may be called by either (a) the Chairman of the Board of Directors or (b) the Chief Executive Officer of the Corporation, and shall be called by the Chief Executive Officer at the request in writing or electronic transmission made pursuant to a resolution of a majority of the members of the Board of Directors. Such request shall state the purpose or purposes of the proposed meeting. The ability of the stockholders to call a Special Meeting of Stockholders is hereby specifically denied. At a Special Meeting of Stockholders, only such business shall be conducted as shall be specified in the notice of meeting (or any supplement thereto). The Board of Directors may postpone, reschedule or cancel any Special Meeting of Stockholders previously scheduled by the Board.

 

1


Section 2.4 Consent of Stockholders in Lieu of Meeting. Except as otherwise expressly provided by the terms of any series of preferred stock permitting the holders of such series of preferred stock to act by written consent, any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called Annual Meeting of Stockholders or Special Meeting of Stockholders, and the ability of the stockholders to consent in writing to the taking of any action is hereby specifically denied.

Section 2.5 Notice. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place (if any), date and hour of the meeting, the record date for determining the stockholders entitled to vote at the meeting, if such date is different from the record date for determining stockholders entitled to notice of meeting, and, in the case of a Special Meeting, the purpose or purposes for which the meeting is called, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed present in person and vote at such meeting. Unless otherwise required by law, written notice of any meeting shall be given either personally, by mail or electronic transmission, (if permitted under the General Corporation Law of the State of Delaware (“DGCL”)) not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to notice of and to vote at such meeting. Any stockholder may waive notice of any meeting before or after the meeting. The attendance of a stockholder at any meeting shall constitute a waiver of notice at such meeting, except where the stockholder attends the 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.

Section 2.6 Adjournments. Any meeting of the stockholders may be adjourned from time to time to reconvene at the same or some other place by holders of a majority of the voting power of the Corporation’s capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, though less than a quorum, or by the chair of the meeting, and notice need not be given of any such adjourned meeting if the time and place thereof, and the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting, are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting in accordance with the requirements of Section 2.5 shall be given to each stockholder of record entitled to notice of and to vote at the meeting.

Section 2.7 Quorum. Unless otherwise required by applicable law or the Certificate of Incorporation, the holders of a majority of the voting power of the Corporation’s capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. Where a separate vote by a class or classes or series is required, a majority of the voting power of the shares of such class or classes or series present in person or represented by proxy shall constitute a quorum entitled to take action with respect to such vote. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, such quorum shall not be present or represented at any meeting of the stockholders, either the chair of the meeting or the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, in the manner provided in Section 2.6, until a quorum shall be present or represented.

 

2


Section 2.8 Voting. Unless otherwise required by law, the Certificate of Incorporation, these By-Laws, the rules or regulations of any stock exchange applicable to the Corporation, or any law or regulation applicable to the Corporation or its securities, in which case such other vote shall be the applicable vote on the question, any question brought before any meeting of the stockholders, other than the election of directors, shall be decided by the affirmative vote of the holders of a majority of the voting power of the Corporation’s capital stock present in person or represented by proxy at the meeting and entitled to vote on such question, voting as a single class. Unless otherwise provided in the Certificate of Incorporation, and subject to Section 2.11, each stockholder present in person or represented by proxy at a meeting of the stockholders shall be entitled to cast one (1) vote for each share of the capital stock entitled to vote thereat held by such stockholder. Such votes may be cast in person or by proxy as provided in Section 2.9. The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of the stockholders, in such officer’s discretion, may require that any votes cast at such meeting shall be cast by written ballot.

Shares of stock of the Corporation belonging to the Corporation, or to another corporation a majority of the shares entitled to vote in the election of directors of which are held by the Corporation, shall not be voted at any meeting of stockholders of the Corporation and shall not be counted in the total number of outstanding shares for the purpose of determining whether a quorum is present.

Section 2.9 Proxies. Each stockholder entitled to vote at a meeting of the stockholders may authorize another person or persons to act for such stockholder by proxy filed with the Secretary before or at the time of the meeting, but no such proxy shall be voted or acted upon after three (3) years from its date, unless such proxy provides for a longer period.

Section 2.10 List of Stockholders Entitled to Vote. The Corporation shall prepare, or have prepared, at least ten (10) days before every meeting of the stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting either (i) at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held or (ii) during ordinary business hours, at the principal place of business of the Corporation. If the meeting is to be held at a place, then the list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.

 

3


Section 2.11 Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of the stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of the stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of the stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

Section 2.12 Stock Ledger. The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 2.10 or the books of the Corporation, or to vote in person or by proxy at any meeting of the stockholders.

Section 2.13 Conduct of Meetings. The Board of Directors of the Corporation may adopt by resolution such rules and regulations for the conduct of any meeting of the stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chair of any meeting of the stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chair, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chair 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 of the Corporation, their duly authorized and constituted proxies or such other persons as the chair of the meeting shall determine; (v) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (vi) limitations on the time allotted to questions or comments by participants.

Section 2.14 Inspectors of Election. In advance of any meeting of the stockholders, the Board of Directors, by resolution, the Chairman of the Board or the Chief Executive Officer shall appoint one or more inspectors to act at the meeting and make a written report thereof. One or more other persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of the stockholders, the chair of the meeting shall appoint one or more inspectors to act at the meeting. Unless otherwise required by applicable law, inspectors may be officers, employees or agents of the Corporation. Each inspector, before entering upon the discharge of the duties of inspector, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such inspector’s ability. The inspector shall have the duties prescribed by law and, when the vote is completed, shall make a certificate of the result of the vote taken and of such other facts as may be required by applicable law.

 

4


Section 2.15 Nature of Business at Meetings of Stockholders. Only such business may be transacted at an Annual Meeting of Stockholders as is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the Annual Meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof), or (c) otherwise properly brought before the Annual Meeting by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.15 and on the record date for the determination of stockholders entitled to notice of and to vote at such Annual Meeting, (ii) who is entitled to vote at such Annual Meeting and (iii) who complies with the notice procedures set forth in this Section 2.15. Clause (c) of the preceding sentence shall be the exclusive means for a stockholder to bring business before an Annual Meeting.

In addition to any other applicable requirements, for business to be properly brought before an Annual Meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation and, in the case of business other than nominations of persons for election to the Board of Directors, such other business must be a proper matter for stockholder action. To be timely, a stockholder’s notice to the Secretary must be delivered to or be mailed and received at the principal executive offices of the Corporation not later than the close of business on the ninetieth (90th) day nor earlier than the close of business on the one hundred and twentieth (120th) day prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; provided, however, that in the event that the Annual Meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the Annual Meeting was mailed or such public disclosure of the date of the Annual Meeting was made, whichever first occurs; provided, further, that in the case of the Corporation’s first Annual Meeting following May 8, 2018, the effective date of these By-Laws (the “Effective Date”), the date of the preceding Annual Meeting shall be deemed to be May 1st of the prior year. In no event shall the adjournment or postponement of an Annual Meeting, or the public announcement of such an adjournment or postponement, commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

To be in proper written form, a stockholder’s notice to the Secretary must set forth the following information: (a) as to each matter such stockholder proposes to bring before the Annual Meeting, a brief description of the business desired to be brought before the Annual Meeting, the reasons for conducting such business at the Annual Meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and, in the event that such business includes a proposal to amend these By-Laws, the language of the proposed amendment), and (b) as to the stockholder giving notice and the beneficial owner, if any, on whose behalf the proposal is being made, (i) the name and address of such person; (ii) (A) the class or series and number of all shares of stock of the Corporation which are owned, directly or indirectly, beneficially or of record by such person and any affiliates or associates of such person, (B) the name of each nominee holder of shares of all stock of the Corporation owned beneficially but not of record by such person or any affiliates or associates of such person, and the number of such shares of stock of the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to stock of the

 

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Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to stock of the Corporation; (iii) a description of all agreements, arrangements, or understandings (whether written or oral) between or among such person, or any affiliates or associates of such person, and any other person or persons (including their names) in connection with the proposal of such business and any material interest of such person or any affiliates or associates of such person, in such business, including any anticipated benefit therefrom to such person, or any affiliates or associates of such person; (iv) a representation (a) that the stockholder giving notice is a holder of record of stock of the Corporation entitled to vote at the Annual Meeting and intends to appear in person or by proxy at the Annual Meeting to bring such business before the meeting and (b) whether the stockholder (and any beneficial owners on whose behalf the proposal is made) intends to continue to hold the shares through the date of the Annual Meeting; (v) a representation whether the stockholder or any of the beneficial owners intends or is part of a group which intends (a) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock which, together with the holdings of such stockholder and all such beneficial owners, is sufficient to approve or adopt the proposal, and/or (b) otherwise to solicit proxies from stockholders in support of such proposal; and (vi) any other information relating to such person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with the solicitation of proxies by such person with respect to the proposed business to be brought by such person before the Annual Meeting pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder.

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 2.15 shall be true and correct as of the record date for determining the stockholders entitled to receive notice of the Annual Meeting and such update and supplement shall be delivered to or be mailed and received by the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for determining the stockholders entitled to receive notice of the Annual Meeting.

No business shall be conducted at the Annual Meeting of Stockholders except business brought before the Annual Meeting in accordance with the procedures set forth in this Section 2.15; provided, however, that, once business has been properly brought before the Annual Meeting in accordance with such procedures, nothing in this Section 2.15 shall be deemed to preclude discussion by any stockholder of any such business. If the chair of an Annual Meeting determines that business was not properly brought before the Annual Meeting in accordance with the foregoing procedures, the chair shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

 

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Notwithstanding the foregoing provisions of this Section 2.15, unless otherwise required by law or expressly waived in writing by the Corporation, if the stockholder (or a qualified representative of the stockholder) does not appear at the Annual Meeting to present such proposed business, such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 2.15, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the Annual Meeting and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the Annual Meeting.

Notwithstanding the foregoing provisions of this Section 2.15, a stockholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations thereunder with respect to the matters set forth in this Section 2.15; provided however, that, to the fullest extent permitted by law, any references in these By-Laws to the Exchange Act or the rules and regulations promulgated thereunder are not intended to and shall not limit any requirements applicable to proposals as to any business to be considered pursuant to this Section 2.15, and compliance with this Section 2.15 shall be the exclusive means for a stockholder to bring business before an Annual Meeting.

Section 2.16 Nomination of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be otherwise provided in the Certificate of Incorporation with respect to the right, if any, of holders of preferred stock of the Corporation to nominate and elect a specified number of directors in certain circumstances. Nominations of persons for election to the Board of Directors may be made at any Annual Meeting of Stockholders or at any Special Meeting of Stockholders called for the purpose of electing directors (i) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (ii) by any stockholder of the Corporation (a) who is a stockholder of record on the date of the giving of the notice provided for in this Section 2.16 and on the record date for the determination of stockholders entitled to notice of and to vote at such Annual Meeting or Special Meeting, (b) who is entitled to vote at such Annual Meeting or Special Meeting and (c) who complies with the notice procedures set forth in this Section 2.16. Clause (ii) of the preceding sentence shall be the exclusive means for a stockholder to make nominations of persons for election to the Board of Directors.

In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation. To be timely, a stockholder’s notice to the Secretary must be delivered to or be mailed and received at the principal executive offices of the Corporation (a) in the case of an Annual Meeting, not later than the close of business on the ninetieth (90th) day nor earlier than the close of business on the one hundred and twentieth (120th) day prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders; provided, however, that in the event that the Annual Meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the Annual Meeting was mailed or such public disclosure of

 

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the date of the Annual Meeting was made, whichever first occurs; provided, further, that in the case of the Corporation’s first Annual Meeting following the Effective Date, the date of the preceding Annual Meeting shall be deemed to be May 1st of the prior year; and (b) in the case of a Special Meeting of Stockholders called for the purpose of electing directors, not later than the close of business on the tenth (10th) day following the day on which notice of the date of the Special Meeting was mailed or public disclosure of the date of the Special Meeting was made, whichever first occurs. In no event shall the adjournment or postponement of an Annual Meeting or a Special Meeting called for the purpose of electing directors, or the public announcement of such an adjournment or postponement, commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

To be in proper written form, a stockholder’s notice to the Secretary must set forth the following information: (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) (A) the class or series and number of all shares of stock of the Corporation which are owned, directly or indirectly, beneficially or of record by such person and any affiliates or associates of such person, (B) the name of each nominee holder of shares of all stock of the Corporation owned beneficially but not of record by such person or any affiliates or associates of such person, and the number of such shares of stock of the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to stock of the Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the foregoing being to mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or associates of such person, with respect to stock of the Corporation; and (iv) any other information relating to such person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice, and the beneficial owner, if any, on whose behalf the nomination is being made, (i) the name and record address of the stockholder giving the notice and the name and principal place of business of such beneficial owner; (ii) (A) the class or series and number of all shares of stock of the Corporation which are owned beneficially or of record by such person and any affiliates or associates of such person, (B) the name of each nominee holder of shares of the Corporation owned beneficially but not of record by such person or any affiliates or associates of such person, and the number of shares of stock of the Corporation held by each such nominee holder, (C) whether and the extent to which any derivative instrument, swap, option, warrant, short interest, hedge or profit interest or other transaction has been entered into by or on behalf of such person, or any affiliates or associates of such person, with respect to stock of the Corporation and (D) whether and the extent to which any other transaction, agreement, arrangement or understanding (including any short position or any borrowing or lending of shares of stock of the Corporation) has been made by or on behalf of such person, or any affiliates or associates of such person, the effect or intent of any of the foregoing being to

 

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mitigate loss to, or to manage risk or benefit of stock price changes for, such person, or any affiliates or associates of such person, or to increase or decrease the voting power or pecuniary or economic interest of such person, or any affiliates or asso