EXHIBIT 10.6
EMPLOYEE BENEFITS AND COMPENSATION
ALLOCATION AGREEMENT
between
Commercial Intertech Corp.
and
CUNO Incorporated
TABLE OF CONTENTS
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ARTICLE I - DEFINITIONS ...................................... 1
SECTION 1.01 General .................................. 1
ARTICLE II - EMPLOYEE BENEFITS ............................ 4
SECTION 2.01 Base Retirement Plan ..................... 4
SECTION 2.02 The Retirement Savings Plans ............. 5
SECTION 2.03 Welfare Plans ............................ 6
SECTION 2.04 Stock Plans .............................. 6
SECTION 2.05 Nonqualified Plans and Programs .......... 8
SECTION 2.06 Severance Pay ............................ 9
SECTION 2.07 Employment Agreements .................... 9
SECTION 2.08 Other Liabilities and Obligations ........ 9
SECTION 2.09 Recognition of Commercial Intertech
Employment Service, etc. ................. 9
SECTION 2.10 Plan Audits .............................. 10
SECTION 2.11 Indemnification .......................... 10
SECTION 2.12 Special Provisions ....................... 10
ARTICLE III - MISCELLANEOUS .................................. 11
SECTION 3.01 Guarantee of Subsidiaries' Obligations ... 11
SECTION 3.02 Failure of Commercial Intertech and CUNO
To Agree on Certain Determinations ....... 11
SECTION 3.03 Sharing of Information ................... 11
SECTION 3.04 Governing Law ............................ 11
SECTION 3.05 Notices .................................. 11
SECTION 3.06 Amendments ............................... 12
SECTION 3.07 Successors and Assigns ................... 12
SECTION 3.08 Termination .............................. 12
SECTION 3.09 Rights to Amend or Terminate Plans; No
Third Party Beneficiaries ................ 12
SECTION 3.10 Titles and Headings ...................... 12
SECTION 3.11 Legal Enforceability ..................... 12
EMPLOYEE BENEFITS AND COMPENSATION
ALLOCATION AGREEMENT
EMPLOYEE BENEFITS AND COMPENSATION ALLOCATION AGREEMENT, dated as of
__________________, 1996, by and between COMMERCIAL INTERTECH CORP., an Ohio
corporation ("Commercial Intertech"), and CUNO INCORPORATED, a Delaware
corporation and, as of the date hereof, a wholly-owned subsidiary of Commercial
Intertech ("CUNO").
WHEREAS, the Commercial Intertech Board has determined that it is
appropriate and desirable to distribute all outstanding shares of CUNO Common
Stock (as defined herein) on a pro rata basis to the holders of Commercial
Intertech Common Stock (the "Distribution"); and
WHEREAS, Commercial Intertech and CUNO are entering into a Distribution and
Interim Services Agreement of even date herewith (the "Distribution Agreement"),
which, among other things, sets forth the principal corporate transactions
required to effect the Distribution and sets forth other agreements that will
govern certain other matters following the Distribution; and
WHEREAS, in connection with the Distribution, Commercial Intertech and CUNO
desire to provide for the allocation of assets and liabilities and other matters
relating to employee benefit plans and compensation arrangements.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties hereby agree as follows:
ARTICLE I - DEFINITIONS
-----------
SECTION 1.01 General. Any capitalized terms that are used in this
Agreement but not defined herein (other than the names of Commercial Intertech
employee benefit plans) shall have the meanings set forth in the Distribution
Agreement, and as used herein, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
Audit Liability: defined in Section 2.10(a).
---------------
Base Retirement Plan Assumption Date: defined in Section 2.01(a).
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Cash Incentive Plans: defined in Section 2.05(a).
--------------------
Common Non-Employee Director: defined in Section 2.04(c)(i).
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Commercial Intertech Base Retirement Plan: the Pension Plan for Salaried
-----------------------------------------
Employees of Commercial Intertech Corp.
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Commercial Intertech Director Option: an option to purchase from
Commercial Intertech shares of Commercial Intertech Common Stock granted to a
non-employee director of Commercial Intertech pursuant to the Commercial
Intertech Corp. Director Stock Plan.
Commercial Intertech Employee: any individual who is employed by
Commercial Intertech or any of its subsidiaries immediately before the Cut-off
Date and who is not a CUNO Employee.
Commercial Intertech Option: an option to purchase shares of Commercial
Intertech Common Stock granted pursuant to the Commercial Intertech Stock Plan.
Commercial Intertech Performance Shares: a right granted under a
Commercial Intertech Stock Plan to receive from Commercial Intertech a payment
in Commercial Intertech Common Stock based upon satisfaction of certain
performance criteria.
Commercial Intertech Ratio: the amount obtained by dividing the average of
the daily high and low trading prices on the New York Stock Exchange for the
Commercial Intertech Common Stock on each of the five trading days prior to the
ex-dividend date for the Distribution by the average of the daily high and low
trading prices on the New York Stock Exchange for the Commercial Intertech
Common Stock on each of the five trading days beginning with the ex-dividend
date for the Distribution.
Commercial Intertech Restricted Stock: restricted shares of Commercial
Intertech Common Stock granted pursuant to a Commercial Intertech Stock Plan.
Commercial Intertech Retirement Savings Plans: the Commercial Intertech
Retirement Stock Ownership and Savings Plan and the Commercial Intertech
Employee Stock Ownership Plan.
Commercial Intertech Stock Plan: the Commercial Intertech Corp. Stock
Option and Award Plan of 1989, the Commercial Intertech Corp. Stock Option and
Award Plan of 1993, and the Commercial Intertech Corp. Stock Option and Award
Plan of 1995.
Commercial Intertech Supplemental Plan: the Commercial Intertech
Supplemental Executive Retirement Plan and the Supplemental Executive Retirement
Plan for Michael Croft.
Commercial Intertech Welfare Plan: a Welfare Plan sponsored by Commercial
Intertech or a Commercial Intertech Subsidiary.
CUNO Base Retirement Plan: a Qualified Plan of CUNO established pursuant
to Section 2.01.
CUNO Director Option: an option to purchase from CUNO shares of CUNO
Common Stock provided to a Common Non-Employee Director or a CUNO Non-Employee
Director pursuant to Section 2.04(c).
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CUNO Employee: any individual who, immediately before the Cut-off Date,
was employed by Commercial Intertech or any of its subsidiaries (including CUNO
and the CUNO Subsidiaries) and who, on or immediately after the Cut-off Date, or
otherwise in connection with the Distribution, is employed by CUNO or a CUNO
Subsidiary.
CUNO Former Employee: any individual who was, at any time before the Cut-
off Date, employed by any member of the Pre-Distribution Group, who is not a
Commercial Intertech Employee or a CUNO Employee, and whose most recent active
employment with any such member was with a CUNO Business or a Former CUNO
Business.
CUNO Non-Employee Director: defined in Section 2.04(c)(i).
CUNO Option: an option to purchase from CUNO shares of CUNO Common Stock
provided to a CUNO Participant pursuant to Section 2.04(a).
CUNO Participants: CUNO Employees, CUNO Former Employees, and their
respective beneficiaries and dependents.
CUNO Performance Shares: a right to receive from CUNO payment in CUNO
Common Stock based upon the satisfaction of certain performance criteria.
CUNO Qualified Plan: a Qualified Plan sponsored by CUNO or a CUNO
Subsidiary.
CUNO Restricted Stock: restricted shares of CUNO Common Stock provided to
CUNO Participants pursuant to Section 2.04(b).
CUNO Retirement Savings Plan: a Qualified Plan of CUNO established
pursuant to Section 2.02.
CUNO Stock Plan: CUNO Incorporated 1996 Stock Incentive Plan.
CUNO Supplemental Plan: defined in Section 2.05(b).
CUNO Welfare Plan: a Welfare Plan sponsored by CUNO or a CUNO Subsidiary.
Cut-off Date: August 19, 1996
Distribution Date: the date determined by the Commercial Intertech Board
on which the Distribution shall be effected.
Enrolled Actuary: an enrolled actuary or other party making actuarial or
similar determinations pursuant to this Agreement with respect to assets or
liabilities relating to a particular employee benefit plan selected by
Commercial Intertech with the approval of CUNO, which approval shall not be
unreasonably withheld.
Pre-Distribution Group: Commercial Intertech and its present and former
subsidiaries, and their respective present and former affiliates (including
without limitation CUNO and its subsidiaries).
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Qualified Plan: an "employee pension benefit plan" as defined in Section
3(2) of ERISA which constitutes or is intended in good faith to constitute a
qualified plan under Section 401(a) of the Code.
Ratio: the amount obtained by dividing the average of the daily high and
low trading prices on the New York Stock Exchange for the Commercial Intertech
Common Stock on each of the five trading days prior to the ex-dividend date for
the Distribution by the average of the daily high and low trading prices on the
NASDAQ National Market for the CUNO Common Stock on each of the five trading
days beginning with the ex-dividend date for the Distribution.
Retirement Savings Plans Effective Date: defined in Section 2.02(a).
Transition Period: defined in Section 2.02(a).
Welfare Plan: an "employee welfare benefit plan" as defined in Section
3(l) of ERISA (whether or not such plan is subject to ERISA).
SECTION 1.02 Schedules, Etc. Reference to a "Schedule" are, unless
otherwise specified, to one of the Schedules attached to this Agreement, and
references to a "Section" are, unless otherwise specified, to one of the
Sections of this Agreement.
ARTICLE II - EMPLOYEE BENEFITS
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SECTION 2.01 Base Retirement Plan. (a) As soon as practicable after the
date hereof and effective as of a date (the "Base Retirement Plan Assumption
Date") on or before the Distribution Date, CUNO shall establish the CUNO Base
Retirement Plan and a related trust to assume liabilities of and receive the
offer of assets from the Commercial Intertech Base Retirement Plan provided for
in this Section 2.01. As of the Base Retirement Plan Assumption Date, the CUNO
Participants shall cease to be participants in the Commercial Intertech Base
Retirement Plan and shall become participants (to the extent they are eligible)
in the CUNO Base Retirement Plan.
(b) Commercial Intertech shall direct the trustee of the trust funding the
Commercial Intertech Base Retirement Plan to transfer to the trustee of the
trust funding the CUNO Base Retirement Plan, in cash, securities, other property
or a combination thereof, as agreed by Commercial Intertech and CUNO, an amount
equal to (X) less (Y), as adjusted by (Z); where (X) equals that portion of such
assets of the Commercial Intertech Base Retirement Plan which represents the
minimum amount of assets necessary to satisfy the requirements of Section 414(1)
of the Code and Section 4044 of ERISA; where (Y) equals the aggregate payments
made from the trust relating to the Commercial Intertech Base Retirement Plan in
respect of such participants who are CUNO Participants from the Base Retirement
Plan Assumption Date through the date the transfer occurs; and where (Z) equals
the amount of the net earnings or losses, as the case may be, from the Base
Retirement Plan Assumption Date through the date the transfer occurs, on the
average of the daily balances of the foregoing and based upon the actual rate of
return earned by the Commercial Intertech Base Retirement Plan during such
period. All of the foregoing calculations shall be determined by the Enrolled
Actuary.
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(c) CUNO and Commercial Intertech shall, in connection with the transfer
described in this Section 2.01, cooperate in making any and all appropriate
filings required under the Code or ERISA, and the regulations thereunder and any
applicable securities laws, implementing all appropriate communications with
participants, transferring appropriate records, and taking all such other
actions as may be necessary and appropriate to implement the provisions of this
Section 2.01 and to cause such transfer to take place as soon as practicable
after the Base Retirement Plan Assumption Date; provided, however, that such
transfer shall not take place until as soon as practicable after the receipt of
an opinion of CUNO's counsel satisfactory to Commercial Intertech's counsel to
the effect that the CUNO Base Retirement Plan is in form qualified under Section
401(a) of the Code and the related trust is in form exempt under Section 501(a)
of the Code. Commercial Intertech agrees to provide to CUNO's counsel such
information in the possession of Commercial Intertech or any Commercial
Intertech Subsidiary as may be reasonably requested by CUNO's counsel in
connection with the issuance of such opinion. Commercial Intertech agrees,
during the period ending with the date of the transfer of assets to the CUNO
Base Retirement Plan, to cause distributions in respect of participants who are
CUNO Participants to be made in the ordinary course from the trust funding the
Commercial Intertech Base Retirement Plan in accordance with applicable law and
pursuant to plan provisions.
(d) Except as specifically set forth in this Section 2.01 and Section 2.10,
upon the completion of the transfer of assets provided for herein, effective as
of the Base Retirement Plan Assumption Date, CUNO, the CUNO Subsidiaries and the
CUNO Base Retirement Plan shall assume, and shall be solely responsible for, all
Liabilities of the Pre-Distribution Group to or with respect to CUNO
Participants under the Commercial Intertech Base Retirement Plan. CUNO, the
CUNO Subsidiaries and the CUNO Base Retirement Plan shall be solely responsible
for all Liabilities arising out of or relating to the CUNO Base Retirement Plan.
SECTION 2.02 The Retirement Savings Plans. (a) As soon as practicable
after the date hereof and effective as of a date (the "Retirement Savings Plans
Effective Date") on or before the Distribution Date, CUNO shall establish the
CUNO Retirement Savings Plan and a related trust to receive any eligible
rollover distributions as defined in Section 402(c)(4) of the Internal Revenue
Code of 1986, as amended ("Eligible Transfer") from the Commercial Intertech
Retirement Savings Plans. On and after the Retirement Savings Plans Effective
Date, CUNO shall cause contributions by or in respect of CUNO Participants to
the CUNO Retirement Savings Plan to be held by the trustee of the CUNO
Retirement Savings Plan. On and after the Retirement Savings Plans Effective
Date, distributions in respect of CUNO Participants shall be made from the
Commercial Intertech Retirement Savings Plans in accordance with applicable law
and pursuant to plan provisions. As of the Retirement Savings Plans Effective
Date, CUNO Participants shall be treated as terminated participants under such
plan and cease to be participants in the Commercial Intertech Retirement Savings
Plans (except to the extent of an account balance) and shall, to the extent they
are eligible, become participants in the CUNO Retirement Savings Plan.
(b) CUNO shall deliver to Commercial Intertech, prior to the implementation
of an Eligible Transfer, an opinion of CUNO's counsel satisfactory to Commercial
Intertech's counsel to the effect that the CUNO Retirement Savings Plan is in
form qualified under Section 401(a) of the Code and the related trust is in
form exempt under Section 501(a) of the Code.
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(c) Except as specifically set forth in this Section 2.02 and Section 2.10,
upon the completion of each Eligible Transfers provided for herein, CUNO, the
CUNO Subsidiaries and the CUNO Retirement Savings Plan shall assume or retain,
as the case may be, and shall be solely responsible for, all Liabilities of the
Pre-Distribution Group to or with respect to CUNO Participants who have elected
an Eligible Transfer under the Commercial Intertech Retirement Savings Plans.
CUNO, the CUNO Subsidiaries and the CUNO Retirement Savings Plan shall be solely
responsible for all Liabilities arising out of or relating to the CUNO
Retirement Savings Plan.
SECTION 2.03 Welfare Plans. CUNO shall take, and shall cause the CUNO
Subsidiaries to take, all actions necessary or appropriate to establish, on or
before the Distribution Date, CUNO Welfare Plans to provide each CUNO
Participant with benefits without gain or loss which are substantially similar
to the benefits provided to him or her under the Commercial Intertech Welfare
Plans. From and after the Distribution Date, except as specifically set forth
in Section 2.10, the CUNO Welfare Plans, CUNO and the CUNO Subsidiaries shall
assume or retain, as the case may be, and shall be solely responsible for, all
Liabilities of the Pre-Distribution Group in connection with claims by or in
respect of CUNO Participants for benefits under the Commercial Intertech Welfare
Plans and the CUNO Welfare Plans, whether incurred before, on or after the
Distribution Date. Commercial Intertech agrees to provide CUNO or its
designated representative with such information (in the possession of Commercial
Intertech or a Commercial Intertech Subsidiary and not already in the possession
of CUNO or a CUNO Subsidiary) as may be reasonably requested by CUNO in order to
carry out the requirements of this Section 2.03. On and after the Distribution
Date, CUNO participants shall be treated as terminated participants under the
Commercial Intertech Welfare Plans and shall cease to be a participant under the
Commercial Intertech Welfare Plans.
SECTION 2.04 Stock Plans. (a) Commercial Intertech and CUNO shall take all
action necessary or appropriate (including obtaining the consent of the holders
of Commercial Intertech Options and Commercial Intertech Performance Shares, if
required) so that each Commercial Intertech Option and Commercial Intertech
Performance Share held by a CUNO Participant that is outstanding as of the
Distribution Date shall be replaced with a CUNO Option or a CUNO Performance
Share, as the case may be, with respect to a number of shares of CUNO Common
Stock equal to the number of shares subject to such Commercial Intertech Option
or Commercial Intertech Performance Share, as the case may be, immediately
before such replacement, times the Ratio, and then, if any resultant fractional
share of CUNO Common Stock exists, rounded [up] [down] to the nearest whole
share, and with a per-share exercise price equal to the per-share exercise price
of such Commercial Intertech Option immediately before such replacement, divided
by the Ratio. Such CUNO Option shall otherwise have the same terms and
conditions as the corresponding Commercial Intertech Option, except that
references to Commercial Intertech shall be changed to refer to CUNO. Such CUNO
Performance Share shall be subject to the performance standards as may be
established by the Committee pursuant to the terms of the CUNO Stock Plan.
(b) Commercial Intertech and CUNO shall take all action necessary
(including obtaining the consent of the holders of Commercial Intertech
Restricted Stock, if necessary) so that each award of Commercial Intertech
Restricted Stock held by a CUNO Participant (including any CUNO Common Stock
issued in the Distribution with respect thereto) that is
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outstanding as of the Distribution Date is converted into an award of a number
of shares of CUNO Restricted Stock such that the sum of such number and the
number of shares of CUNO Common Stock issued in the Distribution with respect to
such Commercial Intertech Restricted Stock equals the number of shares of
Commercial Intertech Restricted Stock comprising such award immediately before
the Distribution Date, times the Ratio, and then, if any resultant fractional
share of CUNO Common Stock exists, rounded [up] [down] to the nearest whole
share. Such converted award shall be subject to the same schedule with respect
to the lapse of restrictions and the same risks of forfeiture as the
corresponding Commercial Intertech Restricted Stock immediately before such
conversion, and shall otherwise have the same terms and conditions as the
corresponding Commercial Intertech Restricted Stock, except that references to
Commercial Intertech shall be changed to references to CUNO.
(c) (i) Commercial Intertech and CUNO shall take all action necessary or
appropriate (including obtaining the consent of the holders of Commercial
Intertech Director Options, if required) so that each Commercial Intertech
Director Option held by an individual who is a non-employee member of the Board
of Directors of both CUNO and Commercial Intertech (a "Common Non-Employee
Director") and each Commercial Intertech Director Option held by an individual
who is a nonemployee member of the Board of Directors of CUNO but is not a
member of the Board of Directors of Commercial Intertech (a "CUNO Non-Employee
Director") that is outstanding as of the Distribution Date shall be replaced as
set forth below.
(ii) Each such Commercial Intertech Director Option held by a Common Non-
Employee Director shall be replaced with (i) a CUNO Director Option and (ii) a
new Commercial Intertech Director Option, in each case as more fully described
below. Such CUNO Director Option shall constitute an option to purchase a
number of shares of CUNO Common Stock equal to one-half the number of shares
subject to such Commercial Intertech Director Option immediately before such
replacement, times the Ratio, and then, if any resultant fractional share of
CUNO Common Stock exists, rounded [up] [down] to the nearest whole share, and
with a per-share exercise price equal to the per-share exercise price of such
Commercial Intertech Director Option immediately before such replacement,
divided by the Ratio. Such CUNO Director Option shall otherwise have the same
terms and conditions as the Commercial Intertech Director Option it replaces in
part, except that references to Commercial Intertech shall be changed to refer
to CUNO. Such new Commercial Intertech Director Option shall constitute an
option to purchase a number of shares of Commercial Intertech Common Stock equal
to one-half the number of shares subject to such Commercial Intertech Director
Option immediately before such replacement, times the Commercial Intertech
Ratio, and then, if any resultant fractional share of Commercial Intertech
Common Stock exists, rounded [up] [down] to the nearest whole share, and with a
per-share exercise price equal to the per-share exercise price of such
Commercial Intertech Director Option immediately before such replacement,
divided by the Commercial Intertech Ratio.
(iii) Each such Commercial Intertech Director Option held by a CUNO Non-
Employee Director shall be replaced with a CUNO Director Option to purchase a
number of shares of CUNO Common Stock equal to the number of shares subject to
such Commercial Intertech Director Option immediately before such replacement,
times the Ratio, and then, if any resultant fractional share of CUNO Common
Stock exists, rounded [up] [down] to the nearest whole share, and with a per-
share exercise price of such Commercial Intertech Director Option
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immediately before such replacement, divided by the Ratio. Such CUNO Director
Option shall otherwise have the same terms and conditions as the Commercial
Intertech Director Option it replaces, except that references to Commercial
Intertech shall be changed to refer to CUNO.
(d) Effective as of the Distribution Date, except as specifically set
forth in Section 2.10, CUNO and the CUNO Subsidiaries shall assume and be solely
responsible for (i) all Liabilities of the Pre-Distribution Group to or with
respect to CUNO Participants arising out of or relating to Commercial Intertech
Options, Commercial Intertech Performance Shares and Commercial Intertech
Restricted Stock that are outstanding as of the Distribution Date, and (ii) all
Liabilities of the Pre-Distribution Group to or with respect to Common Non-
Employee Directors and CUNO Non-Employee Directors arising out of or relating to
Commercial Intertech Director Options to the extent they are to be replaced by
CUNO Director Options pursuant to Section 2.04(c). CUNO and the CUNO
Subsidiaries shall be solely responsible for all Liabilities arising out of or
relating to CUNO Options, CUNO Performance Shares, CUNO Restricted Stock and
CUNO Director Options.
SECTION 2.05 Nonqualified Plans and Programs. (a) Effective as of the
Distribution Date, CUNO and the CUNO Subsidiaries shall assume and be solely
responsible for all Liabilities of the Pre-Distribution Group to or relating to
CUNO Participants under all annual and long-term cash incentive compensation
plans of Commercial Intertech, the Commercial Intertech Subsidiaries, CUNO and
the CUNO Subsidiaries (the "Cash Incentive Plans"). CUNO and Commercial
Intertech shall cooperate in taking all actions necessary or appropriate to
adjust the performance goals and other terms and conditions of awards under the
Cash Incentive Plans for performance periods that begin before and end after the
Distribution Date as appropriate to reflect the Distribution, including, but not
limited to, amending any Cash Incentive Plan or grant thereunder and obtaining
any necessary consents of affected participants.
(b) Effective as of the Distribution Date: (i) CUNO and the CUNO
Subsidiaries shall establish a plan (the "CUNO Supplemental Plan") substantially
similar to the Commercial Intertech Supplemental Plan to provide supplemental
retirement benefits to certain management and highly compensated employees; (ii)
Commercial Intertech shall amend the Commercial Intertech Supplemental Plan, if
necessary, so that no CUNO Employee who is a participant therein shall be deemed
to have terminated employment as a result of the Distribution or as a result of
becoming a CUNO Employee in connection with the Distribution; and (iii) CUNO and
the CUNO Subsidiaries shall assume and be solely responsible for all Liabilities
of the Pre-Distribution Group to or relating to CUNO Participants under the
Commercial Intertech Supplemental Plan. All deferral elections and beneficiary
designations made by CUNO Participants under the Commercial Intertech
Supplemental Plan shall remain in effect with respect to the CUNO Supplemental
Plan from and after the Distribution Date, until changed in accordance with the
CUNO Supplemental Plan. CUNO and Commercial Intertech shall cooperate in taking
all actions necessary or appropriate to accomplish the foregoing and to ensure
that as of the Distribution Date, Commercial Intertech and the Commercial
Intertech Subsidiaries cease to have any Liabilities to or relating to the CUNO
Participants under the Commercial Intertech Supplemental Plan, including, but
not limited to, amending the Commercial Intertech Supplemental Plan or any grant
thereunder and obtaining any necessary consents of affected participants.
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SECTION 2.06 Severance Pay. (a) CUNO and Commercial Intertech agree that
individuals who, in connection with the Distribution, cease to be Commercial
Intertech Employees and become CUNO Employees shall not be deemed to have
experienced a termination or severance of employment from Commercial Intertech
and its subsidiaries for purposes of any policy, plan, program or agreement of
Commercial Intertech or any of its subsidiaries that provides for the payment of
severance, salary continuation or similar benefits.
(b) CUNO and the CUNO Subsidiaries shall assume and be solely responsible
for all Liabilities of the Pre-Distribution Group in connection with claims made
by or on behalf of CUNO Employees in respect of severance pay, salary
continuation and similar obligations relating to the termination or alleged
termination of any such person's employment on or after the Distribution Date.
SECTION 2.07 Employment Agreements. As of the Distribution Date, CUNO and
the CUNO Subsidiaries shall assume and be solely responsible for all Liabilities
of Commercial Intertech and its Subsidiaries pursuant to the employment
agreement(s) and termination and change of control agreement(s) listed on
Schedule A hereto.
SECTION 2.08 Other Liabilities and Obligations. As of the Distribution
Date, except as otherwise agreed by the parties hereto, CUNO and the CUNO
Subsidiaries shall assume and be solely responsible for all Liabilities of the
Pre-Distribution Group not otherwise provided for in this Agreement to or
relating to CUNO Participants arising out of or relating to employment by any of
Commercial Intertech, the Commercial Intertech Subsidiaries, CUNO or the CUNO
Subsidiaries, or any predecessors thereof.
SECTION 2.09 Recognition of Commercial Intertech Employment Service, etc.
The CUNO Qualified Plans, the CUNO Welfare Plans, and all other employee benefit
plans, programs and policies of CUNO shall recognize service before the
Distribution with the Pre-Distribution Group as service with CUNO and the CUNO
Subsidiaries. Each CUNO Welfare Plan shall provide benefits to CUNO
Participants without interruption or change solely as a result of the transition
from the corresponding Commercial Intertech Welfare Plans, and without limiting
the generality of the foregoing: (i) shall, to the extent applicable, recognize
all amounts applied to deductibles, out-of-pocket maximums and lifetime maximum
benefits with respect to CUNO Participants under the corresponding Commercial
Intertech Welfare Plan for the plan year that includes the Distribution Date and
for prior periods (if applicable); (ii) shall, to the extent applicable, not
impose any limitations on coverage of pre-existing conditions of CUNO
Participants except to the extent such limitations applied to such CUNO
Participants under the corresponding Commercial Intertech Welfare Plan
immediately before such CUNO Welfare Plan became effective; and (iii) shall not
impose any other conditions (such as proof of good health, evidence of
insurability or a requirement of a physical examination) upon the participation
by CUNO Participants who were participating in the corresponding Commercial
Intertech Welfare Plan immediately before such CUNO Welfare Plan became
effective.
SECTION 2.10 Plan Audits. (a) If any audit, examination or similar
proceeding with respect to any Commercial Intertech Qualified Plan or Commercial
Intertech Welfare Plan by the Internal Revenue Service, the U.S. Department of
Labor, or any other governmental authority, or any litigation arising out of
such an audit, examination or similar proceeding, that
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pertains (in whole or in part) to a period before the Distribution Date results
in the imposition of any Liability, then the portion of such Liability that
pertains to a period before the Distribution Date (an "Audit Liability") shall
be allocated between CUNO and Commercial Intertech as set forth in this Section
2.10; provided, that the term "Audit Liability" shall not include any portion of
such a Liability that results from the loss of any compensation deduction or any
related interest or penalties (which shall be governed by the Tax Sharing
Agreement).
(b) To the extent that an Audit Liability takes the form of a payment to
any CUNO Participant or of a benefit under a plan or a contribution to a trust
or other funding vehicle relating to a plan, or interest on such a payment or
contribution, there shall be allocated to CUNO the portion of such Audit
Liability that is attributable to CUNO Participants.
(c) Any Audit Liability that takes the form of a penalty, fine or other
liability imposed as a result of the manner in which a plan was administered
(including without limitation as a result of the failure to make a required
filing or participant communication) and that is not described in Section
2.10(b) above shall be allocated to CUNO if CUNO or a CUNO Subsidiary was
responsible for such administration; to Commercial Intertech if Commercial
Intertech or a Commercial Intertech Subsidiary, other than CUNO or a CUNO
Subsidiary, was responsible for such administration; and equally between CUNO
and Commercial Intertech if the responsibility for such administration was
shared or cannot be clearly determined.
(d) If an Audit Liability arises, the allocation of which is not addressed
in Section 2.10(b) or (c), or if there arises any other dispute concerning the
allocation of Audit Liabilities, such allocation or dispute shall be subject to
the dispute resolution and arbitration provisions of the Distribution Agreement.
SECTION 2.11 Indemnification. All Liabilities retained or assumed by or
allocated to CUNO or any CUNO Subsidiary pursuant to this Agreement shall be
deemed to be CUNO Liabilities, as defined in the Distribution Agreement, and all
Liabilities retained or assumed by or allocated to Commercial Intertech or any
Commercial Intertech Subsidiary pursuant to this Agreement shall be deemed to be
Commercial Intertech Liabilities, as defined in the Distribution Agreement and,
in each case, shall be subject to the indemnification provisions set forth in
Article IV thereof.
SECTION 2.12 Special Provisions. Notwithstanding any other provision of
this Agreement, the Chairman of Commercial Intertech shall not be treated as a
Commercial Intertech Employee or a CUNO Employee for purposes of this Agreement,
no provision of this Agreement shall apply to him, and all Liabilities relating
to or arising out of his employment with Commercial Intertech or CUNO shall be
dealt with as specifically determined by the Board of Directors of Commercial
Intertech before the Distribution Date.
ARTICLE III - MISCELLANEOUS
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SECTION 3.01 Guarantee of Subsidiaries' Obligations. Each of the parties
hereto shall cause to be performed, and hereby guarantees the performance and
payment of, all actions, agreements, obligations and liabilities set forth
herein to be performed or paid by any subsidiary of such party which is
contemplated by the Distribution Agreement to be a subsidiary of such party on
or after the Distribution Date.
SECTION 3.02 Failure of Commercial Intertech and CUNO To Agree on Certain
Determinations. (a) In any case in which CUNO or Commercial Intertech shall
disagree with the determination of an amount which this Agreement requires to be
made by the Enrolled Actuary, each such disagreeing party shall have the right
within 30 days after receipt of notice
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of such determination to engage at its own expense, an enrolled actuary to make
the determination of such amount. If the amount determined by such actuaries
should differ, such amount shall be determined by another enrolled actuary
selected by agreement between or among the Enrolled Actuary and the enrolled
actuary or enrolled actuaries.
(b) Any other dispute concerning the matters addressed by this Agreement
shall, except as specifically provided in Section 2.10, be subject to the
dispute resolution and arbitration provisions of the Distribution Agreement.
SECTION 3.03 Sharing of Information. Each of Commercial Intertech and CUNO
shall, and shall cause each of their respective Subsidiaries to, provide to the
other all such information in its possession as the other may reasonably request
to enable it to administer its employee benefit plans and programs, and to
determine the scope of, and fulfill, its obligations under this Agreement. Such
information shall, to the extent reasonably practicable, be provided in the
format and at the times and places requested, but in no event shall the party
providing such information be obligated to incur any direct expense not
reimbursed by the party making such request, nor to make such information
available outside its normal business hours and premises. The right of the
parties to receive information hereunder shall, without limiting the generality
of the foregoing, extend to any and all reports, and the data underlying such
reports, prepared by the Enrolled Actuary in making any determination under this
Agreement or by any third party engaged pursuant to Section 2.10.
SECTION 3.04 Governing Law. Subject to applicable federal law, this
Agreement shall be governed by and construed in accordance with the laws of the
State of Ohio, without regard to the principles of conflicts of laws thereof.
SECTION 3.05 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be delivered by hand,
mailed by registered or certified mail (return receipt requested), or sent by
cable, telegram, telex or telecopy (confirmed by regular, first-class mail), to
the parties at the following addresses (or at such other addresses for a party
as shall be specified by like notice) and shall be deemed given on the date on
which such notice is received:
if to Commercial Intertech: Commercial Intertech Corp.
1775 Logan Avenue
Youngstown, OH 44505
Attention: President
if to CUNO: CUNO Incorporated
400 Research Parkway
Meridien, CT 06450
Attention: President
SECTION 3.06 Amendments. This Agreement may not be modified or amended
except by an agreement in writing signed by the parties.
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SECTION 3.07 Successors and Assigns. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
and their respective successors and permitted assigns.
SECTION 3.08 Termination. This Agreement shall be terminated in the event
that the Distribution Agreement is terminated and the Distribution abandoned
prior to the Distribution Date. In the event of such termination, neither party
shall have any liability of any kind to the other party.
SECTION 3.09 Rights to Amend or Terminate Plans; No Third Party
Beneficiaries. No provision of this Agreement shall be construed (a) to limit
the right of Commercial Intertech, any Commercial Intertech Subsidiary, CUNO or
any CUNO Subsidiary to amend any plan or terminate any plan, or (b) to create
any right or entitlement whatsoever in any employee or beneficiary including,
without limitation, a right to continued employment or to any benefit under a
plan or any other benefit or compensation. This Agreement is solely for the
benefit of the parties hereto and their respective subsidiaries and should not
be deemed to confer upon third parties any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.
SECTION 3.10 Titles and Headings. Titles and headings to sections herein
are inserted for the convenience of reference only and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.
SECTION 3.11 Legal Enforceability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
COMMERCIAL INTERTECH CORP.
By:
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Paul J. Powers
President
CUNO INCORPORATED
By:
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Mark G. Kachur
President
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SCHEDULE A
EMPLOYMENT AGREEMENTS
TO BE ASSUMED BY
CUNO
Mark Kachur
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