EXHIBIT 10.5
TAX SHARING AGREEMENT
BY AND BETWEEN
COMMERCIAL INTERTECH CORP.
AND
CUNO INCORPORATED
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.................................... -2-
"1996 Fiscal Year"....................................... -2-
"AAA".................................................... -2-
"Affiliate".............................................. -2-
"Control"................................................ -2-
"Carryover" and "Carryback".............................. -2-
"Chairman"............................................... -2-
"Code"................................................... -2-
"Commercial Intertech"................................... -2-
"Commercial Intertech Group"............................. -2-
"Commercial Intertech Tax Reduction"..................... -2-
"Compromising Party"..................................... -2-
"CUNO"................................................... -2-
"CUNO 1996 Tax".......................................... -2-
"CUNO Carryback"......................................... -2-
"CUNO Group"............................................. -2-
"Cutoff Date"............................................ -2-
"Deemed Tax Reduction"................................... -3-
"Dispute Resolution Committee"........................... -3-
"Distribution"........................................... -3-
"Distribution Agreement"................................. -3-
"Distribution Date"...................................... -3-
"Foreign Taxes".......................................... -3-
"Gross-up Payment"....................................... -3-
"Group".................................................. -3-
"Indemnification Payment"................................ -3-
"Indemnified Party"...................................... -3-
"Indemnifying Party"..................................... -3-
"IRS".................................................... -3-
"Joint Contest".......................................... -3-
"Law".................................................... -3-
"Liable Party"........................................... -3-
"Non-Compromising Party"................................. -3-
"Officers' Certificate".................................. -3-
"Person"................................................. -3-
"Pre-Distribution Period"................................ -4-
"Preparing Party"........................................ -4-
"Prime Rate"............................................. -4-
"Post-Distribution Period"............................... -4-
"Restructuring Taxes".................................... -4-
"Return"................................................. -4-
"Separate Contest"....................................... -4-
"Spin-Off Taxes"......................................... -4-
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"State Taxes"............................................ -4-
"Straddle Period"........................................ -4-
"Taxes".................................................. -4-
"Tax Adjustment"......................................... -5-
"Tax Authority".......................................... -5-
"Tax Benefit"............................................ -5-
"Tax Contest"............................................ -5-
"Tax Period"............................................. -5-
"Tax Records"............................................ -5-
"Transaction Steps"...................................... -5-
"United States Federal Taxes"............................ -5-
ARTICLE II ALLOCATION OF TAX LIABILITIES................. -6-
2.01 United States Federal Tax Liabilities.............. -6-
2.02 State Tax Liabilities.............................. -7-
2.03 Foreign Tax Liabilities............................ -9-
2.04 Restructuring Taxes................................ -10-
2.05 Spin-Off Taxes..................................... -10-
2.06 Gross-up Payment................................... -10-
ARTICLE III PREPARATION AND FILING OF TAX RETURNS......... -11-
3.01 General............................................ -11-
3.02 Joint Returns...................................... -11-
3.03 Method of Pro Ration For Straddle Periods.......... -11-
3.04 Tax Accounting Practices........................... -12-
3.05 Right to Review Returns............................ -12-
ARTICLE IV TAX REFUNDS AND CARRYBACKS.................... -12-
4.01 Refunds............................................ -12-
4.02 Carrybacks......................................... -13-
ARTICLE V TAX PAYMENTS.................................. -14-
5.01 Payment of Consolidated Federal Income Tax for
Pre-Distribution Periods........................... -14-
5.02 Payment of State and Foreign Taxes for Which
Commercial Intertech has Filing Responsibility..... -14-
5.03 Payment of State and Foreign Taxes for Which
CUNO has Filing Responsibility..................... -14-
5.04 Indemnification Payments........................... -15-
ARTICLE VI TAX RECORDS: COOPERATION...................... -15-
6.01 Tax Records........................................ -15-
6.02 Cooperation........................................ -16-
ARTICLE VI TAX AUDITS AND APPEALS........................ -16-
7.01 Notice............................................. -16-
7.02 Control of Audits and Appeals...................... -16-
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7.03 Consent to Settlements in Joint Contests........... -17-
7.04 Expenses........................................... -18-
ARTICLE VIII DISPUTE RESOLUTION............................ -18-
8.01 Dispute Resolution Committee....................... -18-
8.02 Binding Arbitration................................ -18-
ARTICLE IX MISCELLANEOUS MATTERS......................... -19-
9.01 No Inconsistent Actions............................ -19-
9.02 Amendment and Waiver............................... -19-
9.03 Tax Allocation Agreements.......................... -20-
9.04 Entire Agreement; Inconsistent Provisions.......... -20-
9.05 Affiliate Obligations.............................. -20-
9.06 Further Action..................................... -20-
9.07 Time for Notice.................................... -20-
9.08 Notices............................................ -20-
9.09 Remedies........................................... -21-
9.10 Successors and Assigns............................. -21-
9.11 Severability....................................... -21-
9.12 Counterparts....................................... -21-
9.13 Descriptive Headings............................... -21-
9.14 No Third-Party Beneficiaries....................... -21-
9.15 Construction....................................... -22-
9.16 Form of Payments and Late Payments................. -22-
9.17 Treatment of Payments.............................. -22-
9.18 Governing Law...................................... -22-
9.19 Confidentiality.................................... -22-
SCHEDULE 1 PREPARATION AND FILING OF TAX RETURNS......... -23-
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TAX SHARING AGREEMENT
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THIS TAX SHARING AGREEMENT ("Agreement") is made and entered into as of
___________________________, 1996, by and between Commercial Intertech Corp.,
an Ohio corporation ("Commercial Intertech") and CUNO Incorporated, a Delaware
corporation ("CUNO"), on behalf of themselves and their respective Affiliates.
RECITALS
--------
WHEREAS, the Commercial Intertech Board of Directors has determined that it
is appropriate and desirable to distribute all outstanding shares of CUNO common
stock on a pro rata basis to the holders of the Commercial Intertech common
stock (the "Distribution") in a transaction intended to qualify as a tax-free
distribution for federal income tax purposes under Section 355 of the Code; and
WHEREAS, CUNO and its Affiliates will accordingly cease to be members of
the affiliated group (within the meaning of Section 1504(a) of the Code) of
which Commercial Intertech is the common parent, effective as of the
Distribution Date; and
WHEREAS, Commercial Intertech and CUNO have set forth the principal
corporate transactions required to effect such Distribution in the Distribution
and Interim Services Agreement between Commercial Intertech and CUNO dated as of
the date hereof, and to which this Agreement is attached as an exhibit (the
"Distribution Agreement"); and
WHEREAS, Commercial Intertech and CUNO desire to provide for and agree upon
the allocation of liabilities for Taxes with respect to the parties prior to,
arising out of, and subsequent to the Distribution; and
WHEREAS, the parties hereto also desire to provide for: (1) the preparation
and filing of Tax Returns along with the payment of Taxes thereon, (2) the
retention and maintenance of relevant records necessary to prepare and file
appropriate Tax Returns, as well as the provision for appropriate access to
those records, (3) the conduct of audits, examinations and proceedings by
appropriate governmental entities which could result in a redetermination of
Taxes of the parties to this Agreement, (4) the treatment of refunds of Taxes
and Carryovers and Carrybacks of the parties, (5) the cooperation of all parties
with one another in order to fulfill their duties and responsibilities under
this Agreement and under the Code and other applicable Law, and (6) any other
matters related to Taxes.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises, covenants and conditions hereinafter contained, the parties hereto
agree as follows:
ARTICLE I
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DEFINITIONS
-----------
As used in this Agreement, (including the recitals hereof), the following
terms shall have the following meanings:
"1996 Fiscal Year" has the meaning set forth in Section 5.01 below.
"AAA" has the meaning set forth in Section 8.02(b) below.
"Affiliate" means any Person that directly or indirectly controls, is under
the control of, or is under common control with, the Person in question.
"Control" of a Person means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through ownership or voting securities, by contract or
otherwise. Except as otherwise provided herein, the term "Affiliate" shall
refer to Affiliates of a Person determined immediately after the Distribution
Date.
"Carryover" and "Carryback" mean any net operating loss, net capital loss,
excess tax credit, or other similar Tax item which may or must be carried
forward or back, respectively, from one Tax Period to another under the Code or
other applicable Laws.
"Chairman" has the meaning set forth in Section 8.02(b) below.
"Code" means the U. S. Internal Revenue Code of 1986, as amended, or any
successor law.
"Commercial Intertech" has the meaning set forth in the Recitals above.
"Commercial Intertech Group" means Commercial Intertech and its Affiliates.
"Commercial Intertech Tax Reduction" has the meaning set forth in Section
4.02(b) below.
"Compromising Party" has the meaning set forth in Section 7.03(b) below.
"CUNO" has the meaning set forth in the Recitals above.
"CUNO 1996 Tax" has the meaning set forth in Section 5.01(a) below.
"CUNO Carryback" has the meaning set forth in Section 4.02(a) below.
"CUNO Group" means CUNO and its Affiliates.
"Cutoff Date" has the meaning set forth in Section 3.03 below.
"Deemed Tax Reduction" has the meaning set forth in Section 4.02(c) below.
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"Dispute Resolution Committee" has the meaning set forth in Section 8.01
below.
"Distribution" has the meaning set forth in the Recitals above.
"Distribution Agreement" has the meaning set forth in the Recitals above.
"Distribution Date" means the effective date of the Distribution as set
forth in the Distribution Agreement.
"Foreign Taxes" means any Taxes imposed or collected by any foreign
government, and the term "Foreign Tax" means any one of the foregoing Foreign
Taxes.
"Gross-up Payment" has the meaning set forth in Section 2.06 below.
"Group" means each of the Commercial Intertech Group and the CUNO Group
whenever no distinction is otherwise required between them.
"Indemnification Payment" means a payment subject to Section 5.05 below.
"Indemnified Party" has the meaning set forth in Section 5.05 below.
"Indemnifying Party" has the meaning set forth in Section 5.05 below.
"IRS" means the United States Internal Revenue Service and any successor
department, agency or organization of the United States.
"Joint Contest" means any Tax Contest seeking a redetermination of Taxes
which involves or could involve one or more members of both the Commercial
Intertech Group and the CUNO Group.
"Law" means the law of any governmental entity or political subdivision
thereof, other than the Code, relating to any Tax.
"Liable Party" has the meaning set forth in Section 2.01(c)(3) below.
"Non-Compromising Party" has the meaning set forth in Section 7.03(b)
below.
"Officers' Certificate" means the Officers' Certificate, dated July 29,
1996, of Commercial Intertech and CUNO issued in connection with the Tax
Opinion.
"Person" means any individual and any partnership, joint venture,
corporation, limited liability company, trust, unincorporated organization or
other business entity formed or operating under United States or foreign law.
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"Pre-Distribution Period" means any Tax Period ending on or before the
Distribution Date, and, in the case of any Tax Period that begins before and
ends after the Distribution Date, the portion of such Tax Period ending on the
Distribution Date.
"Preparing Party" has the meaning set forth in Section 3.04 below.
"Prime Rate" means the prime interest rate published in The Wall Street
Journal from time to time.
"Post-Distribution Period" means any Tax Period beginning after the
Distribution Date, and in the case of any Tax Period that begins before and ends
after the Distribution Date, the portion of such Tax Period ending after the
Distribution Date.
"Restructuring Taxes" means any Taxes (other than Spin-Off Taxes) incurred
by or imposed on either Commercial Intertech or CUNO (or their respective
Affiliates) resulting from any of the Transaction Steps (including, without
limitation, any United States federal income Taxes attributable to the
recognition of intercompany gains or any other deferred Taxes that must be taken
into account as a result of any of the Transaction Steps).
"Return" means any report of Taxes due, any information return with respect
to Taxes, or any other similar report, statement, declaration, or document
required to be filed under the Code or other laws, any claims for refund of
Taxes paid, and any amendments or supplements to any of the foregoing.
"Separate Contest" means a Tax Contest which involves (i) only Commercial
Intertech and members of the Commercial Intertech Group, or (ii) only CUNO and
members of the CUNO Group.
"Spin-Off Taxes" means any income taxes imposed on Commercial Intertech
solely as a result of the Distribution failing to qualify under Code Section
355.
"State Taxes" means all Taxes imposed or collected by any state or local
government in the United States (including possessions and territories of the
United States), and the term "State Tax" means any one of the foregoing State
Taxes.
"Straddle Period" means (i) any Tax Period that begins before and ends
after the Distribution Date, (ii) any Short Period that ends on the Distribution
Date and (iii) any Short Period that begins on the first day following the
Distribution Date. The term "Short Period" means any Tax Period which is based
on an accounting period which is shorter than the normal accounting period used
for determining such Tax (e.g., in the case of the United States federal income
Tax, any Tax Period of less than one year).
"Taxes" means all federal, state, territorial, local, foreign and other net
income, gross income, gross receipts, sales, use, value added, ad valorem,
transfer, franchise, profits, license, lease, service, service use, withholding,
payroll, employment, unemployment insurance, workers compensation, social
security, excise, severance, stamp, business license, occupation, premium,
property, environmental, windfall profits, customs, duties, alternative minimum,
estimated or other taxes, fees,
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premiums, assessments or charges of any kind whatever imposed or collected by
any governmental entity or political subdivision thereof, which any member of
the Commercial Intertech Group or the CUNO Group is required to pay, collect or
withhold, together with any interest and any penalties, additions to Tax or
additional amounts with respect thereto, and the term "Tax" means any one of the
foregoing Taxes.
"Tax Adjustment" has the meaning provided in Section 2.01(c) below.
"Tax Authority" means, with respect to any Tax, the governmental entity or
political subdivision thereof that imposes such Tax and the agency (if any)
charged with the determination or collection of such Taxes for such entity or
subdivision.
"Tax Benefit" means any refund, credit Carryover, Carryback or other
reduction in otherwise required Tax payments. Such term does not include a
decrease in any Tax in one Tax Period that results from a Tax Adjustment in
another Tax Period, such as an increase in a deduction for depreciation that
results from a determination that, in a previous Tax Period, an expenditure is
capitalized and not deducted, or an item of gain is recognized.
"Tax Contest" means an audit, review, examination, or any other
administrative or judicial proceeding (including any determination with respect
to a claim for refund) with the purpose or effect of redetermining Taxes of any
member of either the Commercial Intertech Group or the CUNO Group for
(1) any Pre-Distribution Period,
(2) any Straddle Period, or
(3) any Post-Distribution Period, if such proceeding could result in
any Tax Adjustment or Tax Benefit for any Pre-Distribution Period
or Straddle Period (without regard to whether such matter was
initiated by an appropriate Tax Authority or in response to a
claim for a refund of Taxes).
"Tax Period" means, with respect to any Tax, the period for which the Tax
is reported as provided under the Code or other applicable Laws,
"Tax Records" has the meaning set forth in Section 6.01(a) below.
"Transaction Steps" means the transaction steps as set forth in Sections
3.01 and 3.02 of the Distribution Agreement.
"United States Federal Taxes" means all Taxes imposed or collected by the
United States Federal Government, and the term "United States Federal Tax" means
any one of the foregoing United States Federal Taxes.
Any capitalized term not otherwise defined in this Agreement shall have the
meaning ascribed to it in the Distribution Agreement.
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ARTICLE II
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ALLOCATION OF TAX LIABILITIES
-----------------------------
2.01 United States Federal Tax Liabilities.
(a) Subject to Sections 2.04 and 2.05, Commercial Intertech and its
Affiliates shall be liable for, and shall indemnify and hold CUNO and the CUNO
Group harmless from:
(1) any United States Federal Taxes for any Pre-Distribution Period
imposed on Commercial Intertech, CUNO or their respective Affiliates, but
only to the extent such Taxes arise from the income, profits, or
transactions of, or are otherwise attributable to, Commercial Intertech or
any member of the Commercial Intertech Group; and
(2) all United States Federal Taxes imposed on, or with respect to,
Commercial Intertech and its Affiliates for any Post-Distribution Period.
(b) Subject to Sections 2.04 and 2.05, CUNO and its Affiliates shall
be liable for, and shall indemnify and hold Commercial Intertech and the
Commercial Intertech Group harmless from:
(1) any United States Federal Taxes for any Pre-Distribution Period
imposed on Commercial Intertech, CUNO or their respective Affiliates, but
only to the extent such Taxes arise from the income, profits, or
transactions of, or are otherwise attributable to, CUNO or any member of
the CUNO Group; and
(2) all United States Federal Taxes imposed on, or with respect to,
CUNO and its Affiliates for any Post-Distribution Period.
(c) For purposes of this Section 2.01, if, as a result of any Tax
Contest, there is any redetermination of United States Federal Taxes on a
consolidated basis for any Pre-Distribution Period, the determination of whether
additional United States Federal Taxes imposed on Commercial Intertech or CUNO
(or their respective Affiliates) for any Pre-Distribution Period shall be deemed
to arise from the income, profits or transactions of, or are otherwise
attributable to, Commercial Intertech or CUNO (or their respective Affiliates),
shall be made pursuant to the following principles:
(1) Each party shall compute the difference between (A) the recomputed
consolidated federal tax liability for each Pre-Distribution Period
affected, taking into account solely those adjustments which relate to or
arise out of the income, profits or activities of such party or its
Affiliates, and (B) the consolidated federal tax liability of the
consolidated group for such Tax Period based on the Tax Return as
originally filed (the difference between (A) and (B) shall be referred to
herein as a party's "Tax Adjustment").
(2) If one party's Tax Adjustment for the Tax Period is greater than
or equal to zero, that party shall then be liable for that portion of
additional Taxes equal to the amount
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obtained by multiplying the additional Taxes by a percentage equal to such
party's Tax Adjustment divided by the aggregate Tax Adjustment of the
parties.
(3) If one party's Tax Adjustment for the Tax Period is greater than
zero (the "Liable Party") and the other party's Tax Adjustment for the Tax
Period is less than zero (the "Other Party"), the Liable Party shall be
responsible for all of the additional Taxes owed for such Tax Period. In
addition, the Liable Party shall make an Indemnification Payment to the
Other Party equal to the Other Party's Tax Adjustment for such Tax Period
(for this purpose, the Tax Adjustment of the Other Party shall be deemed to
be positive); provided, however, that such Indemnification Payment shall
not exceed the amount by which the Liable Party's Tax Adjustment exceeds
the additional Taxes for the Tax Period. Further, the Other Party shall be
entitled to any refund received in respect of such Tax Period.
(4) If each party's Tax Adjustment for the Tax Period is less than or
equal to zero, each party shall be entitled to that portion of any refund
received in respect of such Tax Period equal to the amount obtained by
multiplying the amount of the refund by a percentage equal to such party's
Tax Adjustment divided by the aggregate Tax Adjustment of the parties.
(5) If a Tax Adjustment is due to an increase in the amount of
expenses or losses allocated under Reg. Section 1.861-8 against foreign
source income which decreases the consolidated foreign tax credit for the
applicable Tax Period, the Tax Adjustment shall be allocated to Commercial
Intertech and CUNO pro rata to the amount that each party contributed to
the foreign tax credit for the Tax Period.
2.02 State Tax Liabilities. Subject to Sections 2.04 and 2.05, each
party's liability for State Taxes shall be determined under this Section 2.02.
(a) Commercial Intertech and its Affiliates shall be liable for, and
shall indemnify and hold CUNO and the CUNO Group harmless from, the following
State Taxes:
(1) in the case of any Pre-Distribution Period: (A) any State
Taxes imposed with respect to a separate Tax Return of Commercial Intertech
or any member of the Commercial Intertech Group for such Tax Period, and
(B) with respect to any joint, combined, consolidated or unitary Tax Return
filed for such Tax Period, any State Taxes for such Tax Period, whether
imposed on Commercial Intertech or CUNO (or their respective Affiliates),
but only to the extent such Taxes arise from the income, profits, or
transactions of, or are otherwise attributable to, Commercial Intertech or
any member of the Commercial Intertech Group; and
(2) any State Taxes imposed on, or with respect to, Commercial
Intertech or any member of the Commercial Intertech Group for any Post-
Distribution Period.
(b) CUNO and its Affiliates shall be liable for, and shall indemnify
and hold Commercial Intertech and the Commercial Intertech Group harmless from,
the following State Taxes:
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(1) in the case of any Pre-Distribution Period: (A) any State
Taxes imposed with respect to a separate Tax Return of CUNO or any member
of the CUNO Group for such Tax Period, and (B) with respect any joint,
combined, consolidated or unitary Tax Return filed for such Tax Period, any
State Taxes for such Tax Period, whether imposed on Commercial Intertech or
CUNO (or their respective Affiliates), but only to the extent such Taxes
arise from the income, profits, or transactions of, or are otherwise
attributable to, CUNO or any member of the CUNO Group; and
(2) any State Taxes imposed on, or with respect to, CUNO or any
member of the CUNO Group for any Post-Distribution Period.
(c) For purposes of Section 2.02(a)(1)(B) and 2.02(b)(1)(B) hereof,
the determination of whether additional State Taxes for any Pre-Distribution
Period shall be deemed to arise from the income, profits or transactions of, or
to otherwise be attributable to, a party, shall be made pursuant to the
following principles:
(1) Each party shall compute the difference between (A) the
recomputed net taxable income (computed in accordance with the rules
applied by the state in question) for each Pre-Distribution Period
affected, and (B) the net taxable income of its Group for such Tax Period
based on the State Tax Return as originally filed (the difference between
(A) and (B) shall be referred to herein as a party's "State Tax
Adjustment").
(2) If one party's State Tax Adjustment for the Tax Period is
greater than or equal to zero, that party shall then be liable for that
portion of additional Taxes equal to the amount obtained by multiplying the
additional State Taxes by a percentage equal to such party's State Tax
Adjustment divided by the aggregate State Tax Adjustment of the parties.
(3) If one party's State Tax Adjustment for the Tax Period is
greater than zero and the other party's State Tax Adjustment for the Tax
Period is less than zero, the liable party shall be responsible for all of
the additional Taxes owed for such Tax Period (provided, however, that such
party shall not be liable for making any payment to the other party in
respect of such other party's negative State Tax Adjustment). In addition,
the other party shall be entitled to any refund received in respect of such
Tax Period.
(4) If each party's State Tax Adjustment for the Tax Period is
less than or equal to zero, each party shall be entitled to that portion of
any refund received in respect of such Tax Period equal to the amount
obtained by multiplying the amount of the refund by a percentage equal to
such party's State Tax Adjustment divided by the aggregate State Tax
Adjustment of the parties.
(5) If a Tax Adjustment is due to an increase in the amount of
expenses or losses allocated against any type of income which decreases the
utilization of any state or foreign tax credit for the applicable Tax
Period, the Tax Adjustment shall be allocated to Commercial Intertech and
CUNO pro rata to the amount that each party contributed to the state or
foreign tax credit for the Tax Period.
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(d) Notwithstanding anything to the contrary above, with respect to
any joint, combined, consolidated or unitary State Tax Return for any Pre-
Distribution Period, if Commercial Intertech or CUNO (or any of their respective
Affiliates) is required to file an amended Return (or Returns) on a separate
company basis, each Person filing such a separate Return shall be liable for,
and shall hold the other parties to this Agreement harmless from, any Taxes owed
with respect to such separate Return (or Returns).
2.03 Foreign Tax Liabilities.
(a) Subject to Sections 2.04 and 2.05, each party's liability for
Foreign Taxes shall be determined under this Section 2.03(a).
(1) Commercial Intertech and its Affiliates shall be liable for,
and shall indemnify and hold CUNO and the CUNO Group harmless from, the
following Foreign Taxes:
(A) in the case of any Pre-Distribution Period: (i) any
Foreign Taxes imposed with respect to a separate Tax Return filed by
Commercial Intertech or any member of the Commercial Intertech Group
for such Tax Period, and (ii) with respect to any joint, combined,
consolidated or unitary Tax Return filed for such Tax Period, any
Foreign Taxes for such Tax Period imposed on Commercial Intertech or
CUNO (or their respective Affiliates) but only to the extent such
Taxes arise from the income, profits, or transactions of, or are
otherwise attributable to, Commercial Intertech or any member of the
Commercial Intertech Group; and
(B) any Foreign Taxes imposed on, or with respect to,
Commercial Intertech or any member of the Commercial Intertech Group
for any Post-Distribution Period.
(2) CUNO and its Affiliates shall be liable for, and shall
indemnify and hold Commercial Intertech and the Commercial Intertech Group
harmless from, the following Foreign Taxes:
(A) in the case of any Pre-Distribution Period: (i) any
Foreign Taxes imposed with respect to a separate Tax Return filed by
CUNO or any member of the CUNO Group for such Tax Period, and (ii)
with respect to any joint, combined, consolidated or unitary Tax
Return filed for such Tax Period, any Foreign Taxes for such Tax
Period imposed on Commercial Intertech or CUNO (or their respective
Affiliates) but only to the extent such Taxes arise from the, income,
profits, or transactions of, or are otherwise attributable to, CUNO or
any member of the CUNO Group, and
(B) any Foreign Taxes imposed on, or with respect to CUNO or
any member of the CUNO Group for any Post-Distribution Period.
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(3) For purposes of Section 2.03(a)(1)(A)(ii) and
2.03(a)(2)(A)(ii) hereof, the determination of whether additional Foreign
Taxes for any Pre-Distribution Period shall be deemed to arise from the
income, profits or transactions of, or to otherwise be attributable to, a
party, shall be made in the same manner as provided in Section 2.01(c)
hereof.
2.04 Restructuring Taxes.
CUNO and its Affiliates shall be liable for, and shall indemnify and hold
Commercial Intertech and the Commercial Intertech Group harmless from, all
Restructuring Taxes.
2.05 Spin-Off Taxes.
If the Distribution is ultimately determined to not qualify under Code
Section 355, any Spin-Off Taxes shall be allocated as follows:
(i) If the Spin-Off Taxes are incurred in whole or in part due to a
change of control of Commercial Intertech pursuant to a tender offer,
Commercial Intertech shall pay, indemnify and hold the CUNO Group
harmless from all Spin-Off Taxes.
(ii) If the Spin-Off Taxes are incurred due to either party breaching
any of the representations or covenants in the Officers' Certificate,
any Spin-Off Taxes shall be paid by and be the responsibility of the
breaching party which shall indemnify and hold the non-breaching party
harmless from such Spin-Off Taxes.
(iii) If the Spin-Off Taxes are incurred for any reason other than
(i) or (ii) above, CUNO and Commercial Intertech will each pay 50% of
such taxes and indemnify and hold harmless the other party for the
other 50% of such taxes.
2.06 Gross-up Payment.
Commercial Intertech and CUNO acknowledge that in determining the proper
amount of working capital required by each Group after the Distribution, it is
assumed by the parties that the Distribution will qualify for tax-free treatment
under Code Section 355 and that such working capital would be allocated
differently if the Spin-Off Taxes, were anticipated. Therefore, it is agreed
that any payment or indemnification made relating to Spin-Off Taxes as well as
any Restructuring Taxes, shall, for income tax purposes, relate back and be
deemed to have been paid immediately prior to the Distribution. If the
Indemnified Party is required to pay Taxes on the receipt of indemnification for
the Spin-Off Taxes, the Indemnifying Party shall further compensate the
Indemnified Party by making an additional payment (a "Gross-up Payment") equal
to the income tax on the sum of (A) the indemnification for the Spin-Off Taxes
and (B) the Gross-up Payment, such that the Indemnified Party will be made whole
on an after-tax basis for the amounts received pursuant to this Section. For
purposes of calculating the required Gross-up Payment, the highest United States
federal marginal income tax rate in the year of payment plus 4% shall be used.
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ARTICLE III
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PREPARATION AND FILING OF TAX RETURNS
-------------------------------------
3.01 General. Except as otherwise provided in this Article III, Tax
Returns shall be prepared and filed by the Person liable for the Tax reported on
such Tax Return, or otherwise obligated to file such Return, under the Code or
other applicable Laws. Without limiting the foregoing, the party responsible
for filing such a Return shall also be responsible for filing and/or responding
to any revenue agent request or any other formal or informal request for
information or otherwise relating to such Return by the IRS or any other
applicable Tax Authority. The parties shall assist and cooperate with one
another in accordance with Section 6.02 hereof with respect to the preparation
and filing of Tax Returns.
3.02 Joint Returns.
(a) Any Tax Returns for United States Federal Taxes imposed for any Pre-
Distribution Period which reflect Taxes for which one or more members of both
the Commercial Intertech Group and the CUNO Group have liability under Article
II hereof (including, without limitation, Commercial Intertech's consolidated
federal income Tax Return for the Tax Period in which the Distribution occurs)
shall be prepared by and filed by Commercial Intertech.
(b) Any Tax Returns for State Taxes for any Pre-Distribution Period
which reflect Taxes for which one or more members of the Commercial Intertech
Group and the CUNO Group have liability under Article II hereof, shall be
prepared and filed by Commercial Intertech.
(c) Any Tax Returns for Foreign Taxes for any Pre-Distribution Period
which reflect Taxes for which one or more members of both the Commercial
Intertech Group and the CUNO Group have liability under Article II hereof, shall
be prepared and filed by Commercial Intertech.
3.03 Method of Pro Ration For Straddle Periods. In the case of any
Straddle Period relating to Commercial Intertech, CUNO or their respective
Affiliates, unless the books of such Person are closed on the Distribution Date,
Taxes shall be apportioned for purposes of Article II, between Pre-Distribution
and Post-Distribution Periods, as follows: First, Taxes for Tax Periods or
portions thereof ending on the last day of the calendar month preceding the
Distribution Date (such date is hereinafter referred to as the "Cutoff Date")
shall be based on actual events and activities through the Cutoff Date and in
accordance with past accounting practices. Second, Taxes for the Tax Period
from the Cutoff Date through the Distribution Date shall be computed by
prorating the activities of the calendar month which includes the Distribution
Date on a daily pro rata basis. Notwithstanding the foregoing provisions of this
Section 3.03, (i) depreciation, amortization and depletion for any Straddle
Period shall be apportioned on a daily pro rata basis and (ii) extraordinary
items not arising in the ordinary course of business shall be apportioned to the
Tax Period in which the event giving rise to such item occurs.
3.04 Tax Accounting Practices. Any Straddle Period Returns prepared by
one or more members of the Commercial Intertech Group or the CUNO Group, as the
case may be (the "Preparing Party"), shall be prepared in accordance with past
Tax accounting practices used with
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respect to the Returns in question (unless such past practices are no longer
permissible under the Code or other applicable Laws), and to the extent any
items are not covered by past practices (or in the event such past practices are
no longer permissible under the Code or other applicable Laws), in accordance
with reasonable Tax accounting practices selected by the Preparing Party (except
that accounting elections and determinations shall be made, where reasonably
possible, in a manner that minimizes the net Tax incurred by the other party and
its Affiliates). In the event the Preparing Party files Tax Returns for Straddle
Periods inconsistently with such past Tax accounting practices, then,
notwithstanding any provision of this Agreement to the contrary, in addition to
any other remedies available, the other party and its Affiliates shall only be
responsible for the amount of Taxes they would owe if such Tax Returns had been
filed consistently with such past Tax accounting practices.
3.05 Right to Review Returns. Upon the request of either party, the other
party shall make available for inspection and copying all Tax Returns (and
related workpapers) with respect to Taxes to the extent that (i) such Return
relates to Taxes for which the requesting party may be liable under this
Agreement, (ii) such Return relates to Taxes for which the requesting party may
have a claim for Tax Benefits hereunder, or (iii) the requesting party
reasonably determines that it must inspect such Return to confirm compliance
with the terms of this Agreement. Commercial Intertech and CUNO shall attempt
in good faith to resolve any issues arising out of the review of such Returns.
ARTICLE IV
----------
TAX REFUNDS AND CARRYBACKS
--------------------------
4.01 Refunds.
(a) In the case of any separate Tax Return filed by Commercial Intertech,
CUNO or their respective Affiliates for a Pre-Distribution Period, the
Person that filed such Tax Return shall be entitled to any refund of Taxes
with respect to such Return.
(b) Subject to Section 4.02, any refund of Taxes with respect to a joint,
combined, consolidated or unitary Tax Return for any Pre-Distribution
Period shall be allocated between the Commercial Intertech Group and the
CUNO Group in accordance with the principles in Section 2.01(c) or 2.02(c)
as applicable.
(c) Notwithstanding anything to the contrary above, with respect to any
refund or credit for overpayment of any estimated taxes for any Tax Period
ending in 1996, the Person that filed the Tax Return to which the refund or
credit for overpayment relates shall be entitled to the refund or credit
for overpayment.
(d) If any amounts become payable under this Section 4.01, the Person
obligated to make such payment shall notify the Person entitled to receive
such payment within 30 days after receipt of the refund or credit for
overpayment and shall remit the amount of the refund to such Person within
30 days after such receipt.
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4.02 Carrybacks.
(a) In the event CUNO or any member of the CUNO Group desires to carry back
a loss or other Tax attribute arising after the Distribution Date (the "CUNO
Carryback") to a Pre-Distribution Period with respect to a joint, combined,
consolidated or unitary Tax Return, CUNO shall notify Commercial Intertech in
writing of its intent to carry back such item (and to forego any election to
waive such Carryback). Such notification shall include a certification by an
appropriate officer of CUNO setting forth CUNO's belief, based on a thorough
examination of the facts and law relating to the tax treatment of such item,
that the tax treatment of such item is supported by "substantial authority"
within the meaning of Section 6662 of the Code (and the Treasury Regulations
promulgated thereunder). Promptly upon its receipt of such notification,
Commercial Intertech shall notify CUNO, in writing, as to whether Commercial
Intertech believes that the filing of the CUNO Carryback will result in any
Deemed Tax Reduction under Section 4.02(c) and if so, Commercial Intertech shall
provide information to CUNO pertaining to the amount of such Deemed Tax
Reduction and the computation thereof. Commercial Intertech shall cooperate with
CUNO in connection with the filing and processing of any CUNO Carryback and
shall provide CUNO with copies of all correspondence in connection therewith.
(b) Subject to Section 4.02(c), if, pursuant to the terms of Section
4.02(a) hereof, CUNO elects to carry back a loss or other Tax attribute to a
Pre-Distribution Period, Commercial Intertech shall be obligated to make a
payment to CUNO equal to the amount by which the Taxes imposed on the Commercial
Intertech Group for such Pre-Distribution Period have been reduced as a result
of utilization of the CUNO Carryback (the "Commercial Intertech Tax Reduction").
(c) For purposes of computing the amount of the Commercial Intertech Tax
Reduction, if, in the absence of the CUNO Carryback, losses or other Tax
attributes of Commercial Intertech or its Affiliates would have resulted in a
reduction of Taxes of the Commercial Intertech Group for such Period (the
"Deemed Tax Reduction"), the amount of the Commercial Intertech Tax Reduction
shall be reduced by the amount of the Deemed Tax Reduction. In the event any
losses or other Tax attributes of Commercial Intertech which are taken into
account in computing a Deemed Tax Reduction are subsequently utilized by the
Commercial Intertech Group to reduce Taxes in a future Tax Period, Commercial
Intertech shall be obligated to pay to CUNO the amount of such subsequent Tax
reduction (provided that the aggregate amount of payments to CUNO with respect
to any CUNO Carryback shall not exceed the Commercial Intertech Tax Reduction
computed without regard to the first sentence of this Section 4.02(c)).
(d) If Commercial Intertech is required to make a payment to CUNO with
respect to any CUNO Carryback under this Section 4.02(b), Commercial Intertech
shall have the option, in its sole discretion, of (i) making such payment within
30 days of receiving the Tax refund attributable to such CUNO Carryback, or (ii)
making such payment not later than 30 days of the date on which the statutory
period (under the Code of other applicable law) for examining the Return on
which such CUNO Carryback was claimed has expired (provided, such payment shall
bear interest at the Prime Rate for the period commencing 30 days from the date
of receipt of such refund and ending on the date of such payment).
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ARTICLE V
---------
TAX PAYMENTS
------------
5.01 Payment of Consolidated Federal Income Tax for Pre-Distribution
Periods. Commercial Intertech shall pay to the IRS all Taxes due (or shall
receive all refunds) in connection with the filing of Commercial Intertech's
consolidated federal income Tax Return for the Tax Period ending on October 31,
1996 (the "1996 Fiscal Year"). If the consolidated federal income Tax Return for
the 1996 Fiscal Year has not been filed on the Distribution Date, immediately
prior to the due date for filing Commercial Intertech's consolidated federal
income Tax Return for the 1996 Fiscal Year (taking into account any extension of
time for filing that Commercial Intertech requests and is granted), the parties
shall compute, based on the information contained in the federal consolidated
income Tax Return for the 1996 Fiscal Year, CUNO's share of the consolidated
federal income Tax liability for the 1996 Fiscal Year determined as if the CUNO
Group were a separate group of companies filing a consolidated federal income
Tax Return (the "CUNO 1996 Tax"). CUNO shall pay to Commercial Intertech the
CUNO 1996 Tax immediately prior to the due date for filing Commercial
Intertech's consolidated federal income Tax Return for the 1996 Fiscal Year.
5.02 Payment of State and Foreign Taxes for Which Commercial Intertech has
Filing Responsibility. Commercial Intertech shall pay to the appropriate Tax
Authority all State and Foreign Taxes for Tax Returns with respect to which
Commercial Intertech (or another member of the Commercial Intertech Group) has
filing responsibility pursuant to Article III of this Agreement. Immediately
prior to the Distribution and immediately before such Return is due (taking into
account any extension of time for filing that Commercial Intertech requests and
is granted), or immediately after receipt of any refund, CUNO shall make
payments to Commercial Intertech (or Commercial Intertech shall make payments to
CUNO) of amounts which shall, in each case, be determined in accordance with the
principles, applied mutatis mutandis, set forth in Section 5.01 of the
Agreement.
5.03 Payment of State and Foreign Taxes for Which CUNO has Filing
Responsibility. CUNO shall pay to the appropriate Tax Authority all State and
Foreign Taxes for Tax Returns with respect to which CUNO (or another member of
the CUNO Group) has filing responsibility pursuant to Article III of this
Agreement. Immediately prior to the Distribution and immediately before the
time such Return is due (taking into account any extension of time for filing
that CUNO requests and is granted), or immediately after receipt of any refund,
Commercial Intertech shall make payments to CUNO (or CUNO shall make payments to
Commercial Intertech) of amounts which shall, in each case, be determined in
accordance with the principles, applied mutatis mutandis, set forth in Section
5.01 of the Agreement.
5.04 Indemnification Payments.
(a) Upon payment of any Taxes with respect to which a party is entitled to
receive indemnification hereunder, such party (the "Indemnified Party") shall
send the other party (the "Indemnifying Party") an invoice accompanied by
evidence of payment and a statement detailing the Taxes paid and describing in
reasonable detail the particulars relating thereto. The Indemnifying Party (or
such one or more members of the Indemnifying Party's Group as it shall nominate)
shall remit payment for Taxes for which the Indemnifying Party is liable for
indemnification hereunder
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to the Indemnified Party (or such one or more members of the Indemnified Party's
Group as it shall nominate) within 30 days of receipt of such invoice, evidence
of payment and statement, or at any earlier time identified by the Indemnifying
Party.
(b) If any Indemnified Party realizes a Tax Benefit or a Tax detriment in
one or more Tax Periods by reason of having, incurred any Tax for which such
Indemnified Party receives indemnification hereunder, then such Indemnified
Party shall pay to such Indemnifying Party an amount equal to the Tax Benefit or
such Indemnifying Party shall pay to such Indemnified Party an additional amount
equal to the Tax detriment (taking into account any Tax detriment resulting from
the receipt of such additional amounts), as the case may be. The amount of any
Tax Benefit or any Tax detriment for a Tax Period realized by an Indemnified
Party by reason of having incurred a Tax for which such Indemnified Party
received indemnification hereunder shall be deemed to equal the product obtained
by multiplying (i) the amount of any deduction or inclusion in income for such
period resulting from such Tax or the payment thereof, as the case ma be, by
(ii) the highest applicable marginal Tax rate for such Period. Any payment due
under this Section 5.05(b) with respect to a Tax benefit or Tax detriment
realized by an Indemnified Party in a Tax Period shall be due and payable within
30 days from the time the Return for such Tax Period is due, without taking into
account any extension of time granted to the party filing such Return.
ARTICLE VI
----------
TAX RECORDS: COOPERATION
------------------------
6.01 Tax Records.
(a) Commercial Intertech and CUNO (and their respective Affiliates)
shall keep in their possession all Tax Records relating to Taxes for which the
other party may have liability under this Agreement, until the expiration of any
applicable statute of limitations and as otherwise required by law.
Notwithstanding the foregoing, CUNO shall retain all Tax Records relating to
Pre-Distribution Periods until such time as Commercial Intertech shall consent
to the disposition of such Tax Records, which consent shall not be unreasonably
withheld. For purposes of this Article VI, "Tax Records" shall include, inter
alia, journal vouchers, cash vouchers, general ledgers, material contracts and
authorizations for expenditures.
(b) Commercial Intertech and CUNO (and their respective Affiliates)
shall make available to each other for inspection and copying during normal
business hours all Tax Records in their possession, to the extent such Tax
Records are reasonably required by the other party in connection with the
preparation of Tax Returns, audits, litigation or the resolution of items under
this Agreement.
(c) Notwithstanding anything in this Agreement to the contrary, if
either party fails to comply with the requirements of this Section 6.01, the
party failing so to comply shall be liable for, and shall hold the other party
harmless from, any Taxes (including penalties for failure to comply with the
record retention requirements of the Code) and other costs resulting from such
party's failure to comply.
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6.02 Cooperation. Commercial Intertech and CUNO shall each provide the
other with such assistance as may reasonably be requested in connection with the
preparation of any Tax Return, audit or other examination by any Tax Authority
or judicial or administrative proceedings relating to liability for any Taxes.
ARTICLE VI
----------
TAX AUDITS AND APPEALS
----------------------
7.01 Notice. Commercial Intertech and CUNO shall provide prompt notice to
the other party of any pending or threatened Tax Contest that it becomes aware
of relating to Taxes for Tax Periods for which it is indemnified by, or is to
indemnify, the other party hereunder. Such notice shall contain factual
information (to the extent known) describing any asserted Tax liability in
reasonable detail and shall be accompanied by copies of any notice or other
document received from any Tax Authority in respect of any such matter. If any
party has knowledge of an asserted Tax liability with respect to a matter for
which it is to be indemnified hereunder and such party fails to give the
indemnifying party notice of such asserted Tax liability within 30 days after it
has received written notice thereof, then, unless such failure has no material
adverse effect upon the indemnifying party's ability to participate in the Tax
Contest, the indemnifying party shall have no obligation to indemnify the
indemnified party for any Taxes arising out of such asserted Tax liability.
7.02 Control of Audits and Appeals.
(a) Separate Contests. Any Separate Contest shall be controlled solely
by the party involved in the Tax Contest.
(b) Joint Contests.
(1) Commercial Intertech shall control any Joint Contest. The
personnel and outside advisers (including counsel) of CUNO may shall
participate, at CUNO's expense, in the proceeding to the extent such
proceeding relates to items or adjustments for which CUNO may incur
indemnity liability under this Agreement. Such participation shall
include: (i) participation in all conferences, meetings or proceedings
with any Tax Authority; (ii) participation in all appearances before any
court; (iii) with respect to matters described in the preceding clauses
(i) and (ii), participation in the submission and determination of
content of documentation, protests, memoranda of fact and law and
briefs, the conduct of oral arguments or presentations, the selection of
witnesses and the negotiation of stipulations of fact in such matters.
If CUNO fails to timely and fully participate in any proceeding to the
extent to which such proceeding relates to items or adjustments for
which CUNO has indemnity liability under this Agreement, CUNO shall be
liable for, in addition to all Taxes for which CUNO shall be liable
under this Agreement, any and all costs imposed on, or incurred by,
Commercial Intertech as a result of CUNO's failure to participate.
(2) Each of the parties hereto agrees to cooperate in seeking an
agreement with the IRS or any other Tax authority under which such
authority would conduct separate
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audits of Commercial Intertech and CUNO with respect to returns
including both parties. To the extent permitted by such an Agreement,
each party would control its separate audits in accordance with the
terms thereof, and the procedures provided in the remainder of this
Section 7.02(b) and in Section 7.03 hereof shall not apply.
7.03 Consent to Settlements in Joint Contests.
(a) With respect to any Joint Contest, neither party shall have the
right to accept or enter into the settlement of any Tax liability, or compromise
any Tax claim to the extent such liability or claim relates to an item for which
the other party has indemnity liability hereunder, without the prior written
consent of the other party (which consent shall not be unreasonably withheld).
(b) In the case of any Joint Contest, either party (the "Compromising
Party"), without the consent or permission of the other party (the "Non-
Compromising Party"), may, if permitted by the appropriate agency or tribunal,
accept or enter into the settlement of any Tax liability to the extent such
liability relates solely to items for which such party has indemnity liability
hereunder. In the event the Non-Compromising Party's refusal to settle its
portion of the contest prevents the Compromising Party from reaching a
settlement as to its portion of the contest, the Non-Compromising Party shall
indemnify the Compromising Party from and against any outcome less favorable
than the settlement which the Compromising Party was willing to accept. With
respect to any Joint Contest, each of CUNO and Commercial Intertech hereby
agrees that it shall not participate in the negotiation, settlement or other
resolution of any item at issue in such Joint Contest in a manner discriminating
against the other party's interests in such contest.
(c) Notwithstanding anything to the contrary in the foregoing, in the
event the judgment of the United States Tax Court or other court of competent
jurisdiction results in an adverse determination with respect to the liability
of either party hereunder, such party shall have the right (at its own expense)
to appeal such adverse determination; provided, however, that the second
sentence of Section 7.03(b) shall apply for purposes of determining the
liability of any non-appealing party hereunder.
7.04 Expenses.
(a) With respect to any Separate Contest, the party involved in such
contest shall bear all expenses related thereto.
(b) With respect to any Joint Contest, except as otherwise provided
herein, the parties shall share any and all costs and expenses incurred in
connection with such contest based on each party's potential liability with
respect to such contest as agreed to by the parties at the outset of such
contest.
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ARTICLE VIII
------------
DISPUTE RESOLUTION
------------------
8.01 Dispute Resolution Committee.
In the event of any dispute or disagreement relating to this Agreement or
the transactions contemplated by this Agreement, Commercial Intertech and CUNO
shall each appoint two members from their respective management staffs to serve
on a joint committee (the "Dispute Resolution Committee"). The Dispute
Resolution Committee shall meet at either Commercial Intertech or CUNO's
offices, whichever is more appropriate in view of the issues under
consideration, at such reasonable time as either party may notify the other in
writing, for the purpose of resolving any dispute arising under this Agreement.
No dispute arising under this Agreement shall be the subject of arbitration or
other formal proceedings until such dispute has been considered by the Dispute
Resolution Committee. If the Dispute Resolution Committee is unable to resolve
any dispute submitted to it within 30 days of such submission, the Dispute
Resolution Committee shall refer the issue to the Chief Executive Officers of
Commercial Intertech and CUNO for their resolution. If such officers are unable
to resolve such dispute within 15 days after referral, any member of the Dispute
Resolution Committee may refer such dispute to binding arbitration as provided
in Section 8.02 hereof.
8.02 Binding Arbitration.
(a) Any controversy, dispute or claim (whether in contract or tort)
between the parties arising out of or related to this Agreement or the
transactions contemplated hereby, shall, after the dispute resolution process
set forth in Section 8.01 has been completed, at the request of any party, be
submitted to arbitration in accordance with this Section 8.02.
(b) Each controversy, dispute or claim submitted by a party to
arbitration shall be heard by an arbitration panel composed of three
arbitrators. Commercial Intertech and CUNO shall each appoint one arbitrator
who shall be an independent tax attorney or accountant with at least ten years
professional experience in the matters subject to the arbitration and not be
related to the appointing party, within 15 days after the matter has been
submitted to arbitration. If any party fails to appoint its arbitrator within
such 15 day period, any party may apply to the American Arbitration Association
(the "AAA") to appoint an arbitrator on behalf of the party that has failed to
appoint its arbitrator. The two arbitrators appointed by, or on behalf of, the
parties shall jointly appoint a third arbitrator with similar background who
shall chair the arbitration panel (the "Chairman"). If the arbitrators appointed
by, or on behalf of, the parties do not succeed in appointing a Chairman within
15 days of the latter of the two arbitrators appointed by, or on behalf of, the
parties has been appointed, the Chairman shall, at the request of either party,
be appointed by the AAA. If for any reason an arbitrator is unable to perform
his or her function, he or she shall be replaced and a substitute shall be
appointed in the same manner as the arbitrator replaced.
(c) Except as otherwise specified herein, arbitration proceedings shall
be conducted in accordance with such rules as the parties mutually agree. In
any arbitration proceeding hereunder: (i) proceedings shall, unless otherwise
agreed by the parties, be held in Cleveland, Ohio;
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(ii) the arbitration panel shall have no power to award punitive damages and
shall be bound by all statutes of limitation which would otherwise be applicable
in a judicial action brought by a party; and (iii) the decision of a majority of
the arbitrators (or the Chairman if there is no such majority) shall be final
and binding on the parties to this Agreement and shall be enforceable in any
court of competent jurisdiction. The parties hereby waive any rights to appeal
or to review of such decision by any court or tribunal and also waive any
objections to such enforcement. THE PARTIES HEREBY AGREE TO WAIVE ALL RIGHTS TO
TRIAL BY JURY WITH RESPECT TO ANY CONTROVERSY, DISPUTE OR CLAIM SUBMIT TO
ARBITRATION UNDER THIS AGREEMENT.
(d) Notice preliminary to, in conjunction with, or incident to any
arbitration proceeding may be sent to the parties by registered or certified
mail (return receipt requested) at the address set forth in Section 9.08 hereof
and personal service is hereby waived. The arbitrators shall award recovery of
all costs and fees incurred in connection with the arbitration and the
proceeding, and obtaining any judgment related thereto, of each disputed matter
(including reasonable attorney's fees and expenses and arbitrator's fees and
expenses and court costs) in each case, with respect to such disputed matter, to
the party that substantially prevails in the arbitration proceeding with respect
to such disputed matter.
(e) No provision of this Section 8.02 shall limit the right of any party
to this Agreement to exercise self-help remedies such as set-off, or obtaining
provisional, equitable or ancillary remedies from a court of competent
jurisdiction before, after or during the pendency of any arbitration or other
proceeding. The exercise of a remedy does not waive the right of either party
to resort to arbitration.
ARTICLE IX
----------
MISCELLANEOUS MATTERS
---------------------
9.01 No Inconsistent Actions. Neither Commercial Intertech nor CUNO (nor
their respective Affiliates) shall take any action inconsistent with, nor fail
to take any action required by any representations covenants or other similar
conditions made in connection with the Officers' Certificate.
9.02 Amendment and Waiver. This Agreement shall not be amended or
modified in any manner whatsoever without the written consent of each of the
parties hereto. No failure by any party to insist upon the strict performance
of any covenant, duty, agreement or condition of this Agreement or to exercise
any right or remedy consequent upon a breach thereof shall constitute waiver of
any such breach or any other covenant, duty, agreement or condition.
9.03 Tax Allocation Agreements. Immediately prior to the Distribution,
Commercial Intertech shall cause any and all tax allocation, tax sharing and
similar agreements or arrangements existing between Commercial Intertech
(including its Affiliates) and CUNO (including its Affiliates) to be terminated
with respect to the CUNO Group, as of an effective date agreed to by the parties
prior to the Distribution Date, and shall cause any amounts due under such
agreements or arrangements to be settled in the manner agreed to by the parties
prior to the Distribution Date.
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Upon such termination and settlement, no further payments made by one party to
the other with respect to such agreements or arrangements shall be made, and all
other rights and obligations resulting from such agreements or arrangements
between the parties shall cease as of such time.
9.04 Entire Agreement; Inconsistent Provisions. The parties agree that
this Agreement constitutes the entire Agreement between them in respect of the
subject matter of this Agreement, and that, in the event of a conflict or other
inconsistency between any provision or term of this Agreement and any provision
or term of the Distribution Agreement or the Employee Benefits and Compensation
Allocation Agreement this Agreement shall prevail.
9.05 Affiliate Obligations. To the extent that the provisions of this
Agreement pertain to an Affiliate of Commercial Intertech or CUNO, Commercial
Intertech and CUNO hereby respectively agree that they will cause such Affiliate
to carry out the terms of this Agreement.
9.06 Further Action. The parties shall execute and deliver all documents,
provide all information, and take or refrain from taking any action as may be
necessary or appropriate to achieve the purposes of this Agreement. Without
limiting the preceding sentence, and subject to Section 7.02(b) hereof, each
party and its Affiliates shall provide the other party and its Affiliates with
such powers of attorney or other authorizing documentation as is reasonably
necessary to empower them to execute and file Tax Returns, refunds and
equivalent claims for Taxes for which they are responsible hereunder, and
contest, settle and resolve any Tax Contests that they control under Article VII
hereof.
9.07 Time for Notice. Notice of any indemnification claim under this
Agreement must be received by the party against whom such claim is made no later
than six months from the date on which the Taxes to which such claim relates
have been paid.
9.08 Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally to the
recipient or when sent to the recipient by telecopy (receipt confirmed), one
business day after the date when sent to the recipient by reputable express
courier service (charges prepaid) or two business days after the date when
mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid. Such notices, demands and other communications
will be sent to the parties at their addresses indicated below:
If to Commercial Intertech:
Commercial Intertech Corp.
1775 Logan Avenue
Youngstown, Ohio 44505
Attention: Director, Taxes
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If to CUNO Incorporated:
CUNO Incorporated
400 Research Parkway
Meriden, Connecticut 06450
Attention: President
Or to such other address or to the attention of such other Person as the
recipient party has specified by prior written notice to the sending party.
9.09 Remedies. Any party having any rights under any provision of this
Agreement will have all rights and remedies set forth in this Agreement and all
rights and remedies which such party may have been granted at any time under any
other agreement or contract and all of the rights which such party may have
under any law. Any such party will be entitled to enforce such rights
specifically, without posting a bond or other security, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.
9.10 Successors and Assigns. No party hereto may assign or delegate any
of such party's rights or obligations under or in connection with this Agreement
without the written consent of the other parties hereto. All covenants and
agreements contained in this Agreement by or on behalf of any of the parties
hereto will be binding upon and enforceable against the respective successors
and assigns of such party and will be enforceable by and will inure to the
benefit of the respective successors and permitted assigns of such party.
9.11 Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
9.12 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together will constitute one and
the same Agreement.
9.13 Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
9.14 No Third-Party Beneficiaries. This Agreement will not confer any
rights or remedies upon any Person other than the parties hereto and their
respective successors and permitted assigns.
9.15 Construction. The language used in this Agreement will be deemed to
be the language mutually chosen by the parties to express their mutual intent
and no rule of strict construction will
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be applied against any party. The use of the word "including" in this Agreement
means "including without limitation" and is intended by the parties to be by way
of example rather than limitation.
9.16 Form of Payments and Late Payments. Any payments owed by one party
to another under this Agreement shall be made in the currency in which the Tax
to which such payment relates is assessed by the Tax Authority, and shall be
paid in immediately available funds and in such other manner as the party to
whom such payment is owed may reasonably request. Any payments required by this
Agreement that are not made when due shall bear interest at the Prime Rate plus
six percent from the due date of the payment to the date paid.
9.17 Treatment of Payments. The parties agree that, in the absence of any
change in law or fact, any Indemnification Payments made under this agreement
shall be reported for tax purposes by the payor and the recipient as capital
contributions or dividends, as appropriate, relating back to the Tax Period
beginning before the Distribution Date.
9.18 Governing Law. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY
AND INTERPRETATION OF THIS AGREEMENT WILL BE GOVERNED BY THE INTERNAL LAW, AND
NOT THE LAW OF CONFLICTS, OF THE STATE OF OHIO.
9.19 Confidentiality. If, pursuant to the terms of this Agreement, either
Commercial Intertech or CUNO (or any of their respective Affiliates) is required
to provide or disclose any information to the other party to this Agreement (or
any Affiliate of such other party), the Person receiving such information shall
hold and keep such information confidential, and shall not disclose such
information (except as otherwise required by Law) without the prior written
consent of the Person from whom such information was received.
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IN WITNESS WHEREOF, the Agreement has been duly executed as of the day and
year first above written.
COMMERCIAL INTERTECH CORP.
By ________________________________________________________________________
Name: _____________________________________________________________________
Title: ____________________________________________________________________
CUNO INCORPORATED
By ________________________________________________________________________
Name: _____________________________________________________________________
Title: ____________________________________________________________________
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SCHEDULE 1
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PREPARATION AND FILING OF TAX RETURNS
This schedule lists the Tax Returns that Commercial Intertech will file
which includes members of both the Commercial Intertech Group and the CUNO
Group. The returns will include members of the CUNO Group through the
distribution date for 1996.
1996
- --------
TAX DUE
PERIOD DESCRIPTION DATE
- ------ ----------- ----
1996 U.S. Consolidated Corporation 01/15/97
Income Tax Return
1996 California Unitary Tax Return 02/15/97
1996 Illinois Combined Tax Return 02/15/97
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