EXHIBIT 10.2
ALLOCATION AND CONTRIBUTION AGREEMENT
This ALLOCATION AND CONTRIBUTION AGREEMENT (this "Agreement") is
entered into as of August 25, 1997, by and among FMC Corporation ("FMC") and
Harsco Corporation and Harsco UDLP Corporation (collectively, the "Harsco
Indemnitors"). FMC and the Harsco Indemnitors are hereafter sometimes
collectively referred to as the "Indemnitors", and each individually as an
"Indemnitor," and FMC and the Harsco Indemnitors (collectively as one party) are
each referred to herein as a "Party". Capitalized terms used herein but not
defined herein shall have the respective meanings given to such terms in the
Purchase Agreement (defined below).
WHEREAS, FMC is the sole owner and holder of 100% of the outstanding
general partnership interests of United Defense, L.P., a Delaware limited
partnership ("UDLP") and Harsco UDLP Corporation is the sole owner and holder of
100% of the outstanding limited partnership interests of UDLP;
WHEREAS, as the general partner of UDLP, FMC has had the principal
responsibility for the management and operation of UDLP;
WHEREAS, the Indemnitors have determined that it is in their
respective best interests, and in the best interests of UDLP, to sell the
general partnership and limited partnership interests together and to give joint
and several representations, warranties and covenants to the buyer of such
interests in connection therewith;
WHEREAS, contemporaneously herewith the Indemnitors are entering into
a Purchase Agreement (the "Purchase Agreement") dated as of August 25, 1997 with
Iron Horse Acquisition Corp. (the "Buyer") pursuant to which the Buyer is
agreeing to acquire all of the partnership interests in UDLP;
WHEREAS, pursuant to certain provisions of the Purchase Agreement, the
Indemnitors are required to make certain payments to the Buyer and/or UDLP and
the Indemnitors have agreed, subject to the terms and conditions set forth
therein, to jointly and severally indemnify, defend and hold the Buyer
Indemnitees harmless from and in respect of certain Losses;
WHEREAS, to induce each Party to enter into the Purchase Agreement and
to consummate the transactions contemplated thereby, the other Party is making
herein certain representations, warranties and covenants, on which the Party
benefitting from such representations, warranties and covenants is and will be
relying in entering into the Purchase Agreement and consummating the
transactions contemplated thereby;
WHEREAS, without limiting the generality of the foregoing recital, the
Harsco Indemnitors are joining with FMC in certain joint and several
representations, warranties and
covenants in the Purchase Agreement and the other Ancillary Agreements in
reliance on the representations, warranties and covenants of FMC contained in
this Agreement;
WHEREAS, pursuant to certain provisions of the Purchase Agreement, the
Indemnitors make certain representations, warranties and covenants to the Buyer,
and the Indemnitors have agreed, subject to the terms and conditions set forth
therein, to indemnify, defend and hold the Buyer Indemnitees (as defined below)
harmless from and in respect of certain Losses;
WHEREAS, pursuant to certain provisions of the Purchase Agreement,
Buyer and/or UDLP is required to make certain payments to Sellers, and Buyer has
agreed, subject to the terms and conditions set forth therein, to indemnify,
defend and hold the Seller Indemnitees (as defined below) harmless from and in
respect of certain Losses; and
WHEREAS, in connection with the sale of UDLP pursuant to the Purchase
Agreement and the consequent termination of their relationship as partners of
UDLP, the Indemnitors wish to make certain agreements among themselves relating
to the past conduct of UDLP's business.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises made herein and for other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, the Indemnitors agree as follows:
1. Certain Definitions.
"Buyer Indemnitees" shall mean the Buyer Indemnified Parties.
"FMC Covenants" means the covenants contained in the following
Sections of the Purchase Agreement: Section 2(b)(iv), Section 5 (but excluding
Sections 5(c), 5(e), 5(f) and 5(j)), Sections 8(a), 8(d), 8(e), 8(h), 10(d),
10(i)(i), 10(j) and, except to the extent that the context otherwise clearly
requires and except to the extent that the performance of such covenant is
peculiarly within the control of Harsco (as opposed to FMC), all other covenants
in the Purchase Agreement (other than the Several Covenants) that make reference
to Sellers or a Seller but which do not identify either FMC or Harsco by name.
"FMC Representations" means (i) all representations and warranties
relating to FMC's Corporate Technology Center ("CTC") and (ii) the
representations and warranties contained in Sections 4A and 23 (as it relates to
FMC and its affiliates) and all other representations of a Seller in the
Purchase Agreement (other than the Shared Representations) that make reference
to Sellers or a Seller but which do not identify either FMC or Harsco by name.
"Harsco Representations" means the representations and warranties
contained in Sections 4B and 23 (as it relates to Harsco and its affiliates).
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"Pro Rata Portion" means 60% in the case of FMC and 40% in the case of
the Harsco Indemnitors.
"Seller Indemnitees" shall mean each Indemnitor, each of its
Affiliates and each of their respective officers, directors and employees.
"Several Covenants" means the covenants contained in the following
Sections of the Purchase Agreement: Sections 1(b), 1(c), 2(a), 2(b)(ii), 5(c),
5(e), 5(f), 5(j), 7(f), 8(b), 8(c), 8(f)(iii), 8(g)(ii), 8(i), 8(n), 8(p), 9,
10(a), 10(b), 10(e), 10(f), 10(h), 10(j)(ii), 10(k) (to the extent required in
the case of Harsco), 12, 16 and 29.
"Shared Representations" means the representations and warranties
contained in Section 4C(a)(i), 4C(b), 4C(d) (excluding those relating to the
Latest Financials), 4C(e), 4C(f), 4C(g), 4C(l) and 4C(n) (excluding those
matters subject to Section 8(f) of the Purchase Agreement) of the Purchase
Agreement.
2. Representations and Warranties of the Harsco Indemnitors. Each of the
Harsco Indemnitors jointly and severally represents and warrants to FMC as of
the date of this Agreement as follows:
2.1 Authorization. This Agreement constitutes the valid and legally
binding obligation of such Harsco Indemnitor, enforceable against such Harsco
Indemnitor in accordance with its terms and conditions, except as may be limited
by (a) applicable bankruptcy, reorganization, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights generally from time
to time in effect and (b) the effect of general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).
2.2 Non-contravention. Neither the execution and the delivery of this
Agreement by such Harsco Indemnitor, nor the performance by such Harsco
Indemnitor of its obligations hereunder, will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge
or other restriction of any government, governmental agency or court to which
the Harsco Indemnitor is subject or any provision of its organizational
documents or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, or create in any party the right to
accelerate, terminate, modify, cancel or require any notice under any agreement,
contract, lease, license, instrument or other arrangement to which the Harsco
Indemnitor is a party or by which such Harsco Indemnitor is bound or to which
any of such Harsco Indemnitor's assets are subject except for such conflicts,
breaches, defaults, or rights that would not, individually or in the aggregate,
be reasonably likely to have a material adverse effect upon the financial
condition of such Harsco Indemnitor.
2.3 Consents. No consent, authorization, approval, permit or license
of, or filing with, any governmental or public body or authority, any lender or
lessor or any other person or entity is required to be obtained or made by any
Harsco Indemnitor to authorize, or is required to be obtained or made by any
Harsco Indemnitor in connection with, the execution, delivery and
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performance of this Agreement or the agreements contemplated hereby on the part
of such Harsco Indemnitor (other than those that have been obtained or made).
3. Representations and Warranties of FMC. FMC represents and warrants to
the Harsco Indemnitors as of the date of this Agreement as follows:
3.1 Authorization. This Agreement constitutes the valid and legally
binding obligation of FMC, enforceable against FMC in accordance with its terms
and conditions, except as may be limited by (a) applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally from time to time in effect and (b)
the effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
3.2 Non-contravention. Neither the execution and the delivery of this
Agreement by FMC, nor the performance by FMC of its obligations hereunder, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency or court to which FMC is subject or any provision of its
organizational documents or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, or create in any
party the right to accelerate, terminate, modify, cancel or require any notice
under any agreement, contract, lease, license, instrument or other arrangement
to which FMC is a party or by which FMC is bound or to which any of FMC's assets
are subject except for such conflicts, breaches, defaults, or rights that would
not, individually or in the aggregate, be reasonably likely to have a material
adverse effect upon the financial condition of FMC.
3.3 Consents. No consent, authorization, approval, permit or license
of, or filing with, any governmental or public body or authority, any lender or
lessor or any other person or entity is required to be obtained or made by FMC
to authorize, or is required to be obtained or made by FMC in connection with,
the execution, delivery and performance of this Agreement or the agreements
contemplated hereby on the part of FMC (other than those that have been obtained
or made).
3.4 Purchase Agreement. FMC has provided to the Harsco Indemnitors
all agreements and understandings between or among the Buyer and FMC and UDLP
relating to the sale of UDLP.
3.5 Representations and Warranties Relating to the Purchase
Agreement. Certain of the representations and warranties contained in the
Purchase Agreement and other Ancillary Agreements are given jointly and
severally by the Sellers, including without limitation certain representations
and warranties relating to FMC's Corporate Technology Center. Notwithstanding
anything in the Purchase Agreement or in any Ancillary Agreement to the
contrary, the Parties agree that as an inducement to the Harsco Indemnitors to
enter into the Purchase Agreement and the Ancillary Agreements, FMC will be
solely responsible for the truth, correctness and completeness of the FMC
Representations and the Shared Representations except to the extent any Harsco
Indemnitor is responsible pursuant to Section 6.2(a) hereof and except to the
extent any Harsco
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Indemnitor had actual knowledge of the breach of such representation or warranty
prior to the date hereof.
4. Additional Covenants of FMC.
4.1 Covenants in the Purchase Agreement and Ancillary Agreements.
Certain of the covenants contained in the Purchase Agreement and other Ancillary
Agreements are given jointly and severally by the Sellers on behalf of UDLP.
Notwithstanding anything in the Purchase Agreement or in any Ancillary Agreement
to the contrary, it is the intention of the Parties, and is an inducement to the
Harsco Indemnitors to enter into the Purchase Agreement and the Ancillary
Agreements, that FMC be solely responsible for performing, satisfying,
discharging and complying with, or for causing UDLP to perform, satisfy,
discharge and comply with all of the FMC Covenants. FMC hereby agrees that it
will be solely responsible for performing, satisfying, discharging and complying
with, or for causing UDLP to perform, satisfy, discharge and comply with all of
the FMC Covenants.
4.2 Intercompany Loans. FMC shall repay in full all outstanding
intercompany obligations between it and UDLP or any of the Subsidiaries at or
prior to the Closing, except as otherwise provided in Section 5(h) of the
Purchase Agreement.
4.3 Representations and Warranties; Performance of Obligations. On
the Closing Date, FMC shall deliver a certificate to the Harsco Indemnitors to
the same effect as the certificate required to be delivered by FMC to the Buyer
pursuant to Section 3(a) of the Purchase Agreement (if such certificate is
delivered).
4.4 File Plan. FMC will include in any File Plan delivered pursuant
to Section 8(g)(ii) of the Purchase Agreement any items requested by Harsco.
5. Additional Covenants of the Harsco Indemnitors.
5.1 Representations and Warranties; Performance of Obligations. On
the Closing Date, the Harsco Indemnitors shall deliver a certificate to FMC to
the effect that all of the representations and warranties of the Harsco
Indemnitors contained in this Agreement are true, correct and complete on and as
of the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date and that all of the terms,
covenants, agreements and conditions of this Agreement to be complied with,
performed or satisfied by the Harsco Indemnitors on or before the Closing Date
have been duly complied with performed or satisfied in all material respects.
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6. Contribution.
6.1 Payments in Respect of San Jose/Santa Clara Remediation Costs,
Stock Options and Restricted Stock and CTC and Transferred Employees; Buyer
Note.
(a) At or before the Closing, FMC shall pay to the Harsco Indemnitors
$2,492,160 to pay certain Remediation Costs relating to the Sites covered
by the Settlement and Advance Agreement, which costs are likely to be
incurred and payable by FMC and reimbursable by the Buyer pursuant to the
terms of the Purchase Agreement.
(b) Within two business days after the Closing, the Harsco
Indemnitors shall pay FMC 40% of the Agreed Value of (i) the unexercised
FMC stock options issued to UDLP executives and employees in 1994 and 1995
which are either currently vested or scheduled to vest on or prior to
January 31, 1998 (all of which options are listed on Exhibit A hereto,
which listing includes as to each such option, the name of the optionee,
the year of grant, the exercise price and the number of Shares subject
thereto) and (ii) certain shares of the FMC restricted stock issued to UDLP
executives and employees subsequent to January 1, 1994 (which will become
unrestricted upon the Closing) (all of which shares are listed on Exhibit A
hereto, which listing includes as to each recipient, the name of the
recipient, the date of grant, the closing trading price of FMC common stock
on the date of grant, and the number of shares granted, and provided that
FMC represents that such listing does not include, as to Mr. Rabaut, any
shares granted on account of his position at FMC). For purposes of the
foregoing, "Agreed Value" means the market value of the shares of FMC
common stock issuable under such options less the aggregate exercise price
and the market value of the shares of restricted stock (without
restriction), in each case as calculated based on the closing trading price
of the FMC common stock on the Closing Date or, in the case of restricted
stock, on the date of grant as reported in the Wall Street Journal.
(c) The net effect upon the net worth adjustment contained in Section
2(b) of the Purchase Agreement of the impact of including CTC and the
Transferred Employees as part of the accounts reflected in the Adjusted Net
Worth Amount as of both June 30, 1997 and the Closing Date (the "CTC
Adjustment Amount") shall be separately calculated by FMC in connection
with the preparation of the Closing Statement and provided to Harsco with
the Closing Statement. Harsco shall have the right, with FMC's full
cooperation, to review and audit FMC's calculation of the CTC Adjustment
Amount. If the CTC Adjustment Amount is negative, FMC shall pay 40% of such
amount to Harsco. If the CTC Adjustment is positive, Harsco shall pay 40%
of such amount to FMC. Any such payments shall be made as soon as possible
after they are determined and shall be appropriately adjusted if the
relevant accounts are adjusted in connection with the finalization of the
Closing Statement. Amounts payable hereunder shall bear interest from the
Closing Date at the rate provided in Section 2(b)(ii) of the Purchase
Agreement.
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(d) FMC shall pay to the Harsco Indemnitors 40% of any amounts
collected in respect of the FNSS royalty dispute (as more specifically
described in Schedule 7(f) to the Purchase Agreement the "FNSS Royalty
Dispute"), to the extent such amounts are attributable to periods following
the formation of UDLP.
(e) Notwithstanding anything to the contrary in the Supplemental
Agreement No. 1 to Purchase Agreement, dated as of August 25, 1997, by and
among FMC Corporation, Harsco Corporation, Harsco UDLP Corporation and Iron
Horse Acquisition Corp. (the "Supplemental Agreement") or in the provisions
of the Special Note (as defined therein), as between the Harsco Indemnitors
and FMC, (i) the Harsco Indemnitors shall receive from the Buyer
$340,000,000 plus 40% of the Adjustment Amount (whether positive or
negative), in immediately available funds, at and upon the Closing and FMC
shall receive from the Buyer a total of $510,000,000 plus 60% of the
Adjustment Amount (whether positive or negative), in immediately available
funds, and, if issued, the Special Note and (ii) for all purposes of the
Supplemental Agreement, the term "Sellers" shall mean FMC, except in the
case of Section 5(a) thereof, in which "Sellers" shall mean FMC and the
Harsco Indemnitors. The Harsco Indemnitors shall pay to FMC in immediately
available funds, within three business days following the later of (A) the
maturity of the Special Note (whether at scheduled maturity or pursuant to
the mandatory prepayment provisions of Section 2 of the Supplemental
Agreement or pursuant to acceleration) or (B) the final determination of
any dispute regarding the amount to be finally paid to FMC under the
Special Note, 40% of the first $25,000,000 of any Payment Deficiency. For
purposes of this Section 6.1(e), "Payment Deficiency" means the difference
between (A) $50,000,000 and (B) the principal amount of the Special Note
actually paid to FMC after set-off, if any, by Buyer. For example, if the
amount collected by FMC on the Special Note is $40,000,000, then the amount
that the Harsco Indemnitors shall pay to FMC pursuant to this Section
6.1(e) shall be $4,000,000, and if the amount collected by FMC on the
Special Note is $20,000,000, then the amount that the Harsco Indemnitors
shall pay to FMC pursuant to this Section 6.1(e) shall be $10,000,000.
* * */1/, and the Harsco Indemnitors will have the right to participate in
such efforts led by FMC. In the event of any dispute between FMC and the
Buyer with respect to payment on the Special Note, FMC shall not agree to
any settlement of any such dispute that would have an adverse effect on the
Harsco Indemnitors without first consulting with the Harsco Indemnitors and
obtaining the written consent of the Harsco Indemnitors (which consent
shall not be unreasonably withheld or delayed). In addition, in the event
of any litigation concerning any such dispute, FMC will keep the Harsco
Indemnitors advised of all material developments in such litigation, and
the Harsco Indemnitors shall have the right to join with FMC in such
litigation at the sole expense of the Harsco Indemnitors.
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/1/ The omitted text is the subject of a Confidential Treatment Request filed
with the Securities and Exchange Commission (the "Commission"). The text
for which confidential treatment has been requested has been filed
separately with the Commission.
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6.2 Payments in Respect of Indemnification.
(a) Each Party will contribute its Pro Rata Portion of all joint
obligations under the Purchase Agreement, as defined in clauses (i) through
(ix) below, in accordance with the following sentence (the "Joint
Obligations"). Each Party's contribution obligations under this paragraph
6.2(a) shall be limited to such Party's Pro Rata Portion of the aggregate
Loss suffered or sustained by both Parties, after taking into account any
indemnifiable Loss suffered by such Party, in order that both Parties
ultimately bear their Pro Rata Portion of such aggregate Loss. Each Party
agrees to indemnify and hold harmless the other Party against the amount of
any Loss which the other Party may suffer, sustain or become subject to in
excess of such Party's Pro Rata Portion of such Loss, in the event that the
other Party becomes (or any third party asserts that such other Party is)
liable or otherwise responsible. For the purposes of this Agreement, Joint
Obligations means:
(i) any obligation of the Sellers under Section 8(f)(iii) of the
Purchase Agreement, to the extent that it relates to:
(A) post-1993 operation of UDLP,
(B) subject to clause (iii)(A) of Section 6.2(b) below,
environmental conditions which are discovered at York subsequent
to December 31, 1998 and not proven by FMC to have been a Harsco
Environmental Liability Event (as defined in the Participation
Agreement) or
(C) properties acquired or first used by UDLP subsequent to
its formation,
(ii) any indemnification obligation of Sellers:
(A) under Section 10(b) (tax indemnification) of the
Purchase Agreement or
(B) under Section 11(a)(i) of the Purchase Agreement which
is based on breach of a Shared Representation; provided that, any
indemnification obligation under Section 11(a)(i) of the Purchase
Agreement which is based on a Shared Representation shall be a
Joint Obligation only to the extent that the aggregate of all
Losses suffered and paid by FMC as a result of breaches of Shared
Representations on a cumulative basis as a result of the
indemnification obligations under Section 11(a)(i) of the
Purchase Agreement exceed $10,000,000.
(iii) any obligation of Sellers to pay their portion of the fees
and expenses of Ernst & Young L.L.P. and the Accounting Firm pursuant
to Section 2(b) of the Purchase Agreement or the escrow agent pursuant
to the Escrow Agreement,
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(iv) any obligation of Sellers under Section 2(b) of the
Purchase Agreement to pay any amount by which the Estimated Final
Purchase Price exceeds the Final Purchase Price,
(v) any obligation of Sellers to pay their portion of
intellectual property recordation costs pursuant to Section 8(o) of
the Purchase Agreement,
(vi) any obligation of Sellers to pay their portion of certain
taxes pursuant to Section 10(h) of the Purchase Agreement,
(vii) any obligation of Sellers to pay a portion of any
insurance recovery pursuant to Section 8(f)(v) of the Purchase
Agreement;
(viii) any obligation of Sellers to pay the amount of any
negative Cash Balance to the Buyer pursuant to Section 8(p) of the
Purchase Agreement, or
(ix) any obligation or liability relating to UDLP listed on
Schedule 7(f) to the Purchase Agreement which is retained or assumed
on a joint basis, except for amounts payable in connection with the
FNSS Royalty Dispute which are attributable to the period prior to
formation of UDLP.
(b) FMC agrees to indemnify and hold harmless the Harsco Indemnitors
against the amount of any Loss which Harsco may suffer, sustain or become
subject to in the event that Harsco becomes (or the Buyer or any third
party asserts that any Harsco Indemnitor is) liable or otherwise
responsible for:
(i) any Losses suffered or incurred by any Harsco Indemnitor to
the extent arising from:
(A) any breach of any representation or warranty of FMC
contained herein or of any FMC Representation, except to the
extent any Harsco Indemnitor is responsible pursuant to Section
6.2(a) hereof and except to the extent any Harsco Indemnitor had
actual knowledge of the breach of such representation or warranty
prior to the date hereof,
(B) any breach of any Shared Representation, but only to
the extent that the aggregate of all Losses suffered and paid by
FMC as a result of a breach of a Shared Representation on a
cumulative basis as a result of the indemnification obligation
under Section 11(a)(i) of the Purchase Agreement does not exceed
$10,000,000 or
(C) any breach of any covenant of FMC contained herein,
any breach of any FMC Covenant or any breach by FMC of any
Several Covenant,
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(ii) any Losses suffered or incurred by any Harsco Indemnitor
arising from:
(A) any wrongful, self-dealing, grossly negligent,
reckless or bad faith conduct by FMC in connection with its
conduct on behalf of UDLP or any Harsco Indemnitor, including in
connection with the sale of FMC's Partnership Interest in UDLP or
Harsco's Partnership Interest in UDLP pursuant to the Purchase
Agreement or
(B) any failure by FMC to observe any applicable duty or
obligation to UDLP or any Harsco Indemnitor arising out of any
wrongful, self-dealing, grossly negligent, reckless or bad faith
conduct by FMC;
provided that, in the event of any claim under this clause (ii)
relating to the consideration payable or the terms and conditions of
the sale of UDLP, FMC's conduct shall be reviewed on a comparable
basis to that provided to a Delaware corporation and its directors
under the business judgment rule,
(iii) subject to clause (i)(A) of Section 6.2(a) above, any
obligation of Sellers under Section 8(f)(iii) of the Purchase
Agreement to the extent that it relates to:
(A) the first $1,000,000 that relates to environmental
conditions at UDLP's York property that Harsco would otherwise be
responsible for under clause (i) of Section 6.2(c) below,
(B) the pre-1994 operation of FMC's defense business, or
(C) properties contributed by FMC to UDLP upon its
formation and
(iv) any obligation or liability relating to UDLP which is
retained or assumed by FMC as specifically set forth in the Purchase
Agreement, including those items listed on Schedule 7(f) thereto and
all amounts payable in connection with the FNSS Royalty Dispute which
are attributable to periods prior to formation of UDLP.
For purposes of this Agreement, the actual knowledge of the Harsco Indemnitors
shall be deemed to refer only to the actual present knowledge of Derek Hathaway
and Leonard Campanaro, without such individual having conducted any inquiry or
review.
(c) The Harsco Indemnitors agree to indemnify and hold harmless FMC
against the amount of any Loss which FMC may suffer, sustain or become
subject to in the event that FMC becomes (or Buyer or any third party
asserts that FMC is) liable or otherwise responsible for:
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(i) subject to clauses (i)(A) and (i)(B) of Section 6.2(a) above
and subject to clause (iii)(A) of Section 6.2(b) above, any obligation
of Sellers under Section 8(f)(iii) to the extent that it relates to:
(A) the pre-1994 operation of Harsco's defense business or
(B) properties contributed by Harsco to UDLP upon its
formation,
(ii) any Losses suffered or incurred by FMC to the extent
arising from:
(A) any breach of any Harsco Representation or any
representation or warranty of any Harsco entity contained herein or
(B) any breach by Harsco of any Several Covenant or any
covenant of any Harsco entity contained herein and
(iii) any obligation or liability relating to UDLP which is
retained or assumed by Harsco as specifically set forth in the
Purchase Agreement, including those items listed on Schedule 7(f)
thereto.
(d) Each Party further agrees to indemnify and hold harmless the
other Party against the amount of any Loss which the other Party may
suffer, sustain or become subject to in respect of any obligation of such
Party which is, pursuant to the terms of the Purchase Agreement, a several
obligation of such Party alone and not a joint and several obligation of
the Parties.
6.3 Indemnity Procedures.
(a) Indemnity Dispute Costs. Following the Closing, the Parties will
cooperate in a commercially reasonable manner in connection with any
indemnification or other claim made by the Buyer or any third party under
the Purchase Agreement or otherwise relating to UDLP, but subject to the
provisions of the Purchase Agreement, including the provisions contained in
Section 2(b), Section 10 and Section 11(f) of the Purchase Agreement
relating to the control of the defense and management of certain
indemnification and other claims and matters by FMC. In the event that FMC
determines to dispute, defend or otherwise manage any such claim or any
other claim made by the Buyer or any third party, then FMC shall be
responsible for all of the costs, fees and expenses incurred on behalf of
FMC in connection with such dispute, defense or management (the "Indemnity
Dispute Costs"). The Harsco Indemnitors shall be responsible for all of the
costs, fees and expenses of their participation in such dispute, defense or
management.
(b) Third Party Claims. With respect to any indemnification under
this Section 7 in respect of, arising out of or involving a claim by any
Person, including the Buyer (a "Third Party Claim"), against a Party hereto
(the "Indemnified Party"), FMC must notify the
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Harsco Indemnitors of the Third Party Claim within a reasonable time after
receipt by FMC of written notice of the Third Party Claim. Thereafter, FMC
shall, within ten days of receipt thereof, deliver copies of all notices
and documents (including court papers) received by them relating to the
Third Party Claim to the Harsco Indemnitors.
(c) Defense of Third Party Claims. If a Third Party Claim is
made against an FMC Indemnified Party for a claim relating to the breach of
a representation, warranty or covenant made jointly by the Parties in the
Purchase Agreement, the Harsco Indemnitors shall be entitled to participate
in the defense thereof (a "Joint Third Party Claim"). FMC shall cooperate
in all reasonable respects with the Harsco Indemnitors in connection with
such defense, including by permitting the Harsco Indemnitors to appoint
counsel and to have such counsel observe and participate in the defense of
the Joint Third Party Claim if the Harsco Indemnitors choose at the sole
expense of the Harsco Indemnitors. In connection with all such matters, FMC
shall be available to consult with the Harsco Indemnitors as reasonably
requested concerning the management of such matters and shall consider in
good faith any comments, suggestions or proposals made by the Harsco
Indemnitors in connection therewith. FMC shall not admit any liability with
respect to, or settle, compromise or discharge, any Joint Third Party Claim
without the prior written consent of the Harsco Indemnitors (which will not
be unreasonably withheld or delayed). The management of, and all decisions
regarding (including decisions regarding settlement of) any dispute or
defense of a claim for which either FMC or the Harsco Indemnitors are
solely responsible pursuant to the terms of the Purchase Agreement shall at
all times be at the direction of and otherwise made by the Party who bears
responsibility for the claim.
6.4 Survival of Representations. The representations and warranties
in this Agreement shall survive the Closing to the same extent set forth in the
Purchase Agreement.
7. Escrow Deposit. If and when the Escrow Deposit, referred to in
the Escrow Agreement attached as Exhibit 6(c) to the Purchase Agreement is to be
paid to FMC and Harsco, it shall be allocated on a Pro Rata Basis to the
Parties.
8. Prepayment of Intercompany Debt; Allocation of Cash Distributions
and Payments. Immediately prior to the Closing, FMC shall repay all intercompany
debt owed to UDLP, together with interest accrued through the date of repayment.
Promptly following the Closing Date, FMC shall pay to the Harsco Indemnitors (i)
100% of any amounts attributable to limited partner allocations that accrue
through the Closing (to the extent not directly distributed to Harsco) and (ii)
40% of any other distribution or payment made by UDLP to FMC at Closing for the
ratable benefit of both partners (to the extent not directly distributed to
Harsco). The Harsco Indemnitors hereby acknowledge and agree that any
distribution or payment made by UDLP to FMC at Closing in respect of "B" service
fees that accrue through the Closing shall be retained solely by FMC.
9. Limited Partner Consent. The Harsco Indemnitors hereby consent and
agree to the terms and provisions of the Transition Services Agreement, the
Technology and Environmental
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Services Agreement, the Amended and Restated FMC Intellectual Property
Agreement, the Amended and Restated Lease Agreement and the FMC Resource
Transfer.
10. Allocation of Expenses. Each Party hereby agrees to pay its Pro Rata
Portion of the following out-of-pocket expenses incurred by the Indemnitors in
connection with the transactions contemplated by the Purchase Agreement: (i)
costs of the preparation and filing of all UDLP Tax Returns relating to Taxes
incurred in connection with the pre-closing business and operations of UDLP or
the transactions contemplated by the Purchase Agreement and (ii) costs of the
preparation of financial statements of UDLP incurred in connection with the
transactions contemplated by the Purchase Agreement. Each Party hereby agrees to
pay its own respective costs for legal services, filing fees and regulatory
expenses incurred in order to comply with United States and foreign antitrust
and competition laws.
11. Miscellaneous.
11.1 No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Indemnitors and their
respective successors and permitted assigns.
11.2 Entire Agreement. This Agreement, together with the Purchase
Agreement (and the exhibits and schedules thereto) constitute the entire
agreement among the Indemnitors with respect to the subject matter hereof and
supersedes any prior understandings, agreements, or representations by or among
the Indemnitors, written or oral, to the extent they related in any way to the
subject matter hereof.
11.3 Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Indemnitors and their respective successors and
permitted assigns. No Indemnitor may assign either this Agreement or any of such
Indemnitor's rights, interest or obligations hereunder without the prior written
approval of the other Indemnitors.
11.4 Counterparts. This Agreement may be executed in one or more
counterparts (including by means of telecopied signature pages), each of which
shall be deemed an original but all of which together will constitute one and
the same instrument.
11.5 Headings. The section headings and captions contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.6 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given by a reputable
and recognized overnight delivery service (e.g. Federal Express, etc.), against
receipt thereof, by telex, by telecopier against a confirmed receipt therefor or
by mail (registered or certified mail, postage prepaid, return receipt
requested) to the respective parties as follows:
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if to FMC:
---------
FMC Corporation
200 East Randolph Drive
Chicago, Illinois 60601
Telecopy No.: (312) 861-6012
Attention: J. Paul McGrath
with a copy to:
--------------
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Telecopy No.: (312) 861-2200
Attention: Glen E. Hess, P.C.
if to the Harsco Indemnitors:
----------------------------
Harsco Corporation
350 Poplar Church Road
Camp Hill, PA 17011
Telecopy No.: (717) 763-6402
Attention: Paul C. Coppock
with a copy to:
--------------
Morgan, Lewis & Bockius LLP
1800 M Street, N.W.
Washington, D.C. 20036
Telecopy No.: (202) 467-7176
Attention: Lloyd H. Feller
or to such other address as any Indemnitor hereto may, from time to time,
designate in a written notice given in like manner. Any notice given in
accordance with the requirements of this Section 11.6 shall be deemed to have
been received when delivered in person or via telecopier against receipt
thereof, five business days after deposit in the U.S. mail against receipt
thereof, and one business day after deposit with a reputable express overnight
courier service against receipt therefor.
11.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Delaware.
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11.8 Amendments and Waivers. No amendment or waiver of any provision
of this Agreement shall be valid unless the same shall be in writing and signed
by all of the Indemnitors.
11.9 Severability. Any provision of this Agreement which is invalid,
illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Agreement invalid,
illegal or unenforceable in any other jurisdiction. Furthermore, in lieu of such
illegal, invalid or unenforceable provision, there shall be added automatically
as part of this Agreement a provision as similar in its terms to such illegal,
invalid or unenforceable provision as may be possible and be legal, valid and
enforceable.
11.10 Construction. The Indemnitors have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Indemnitors and no presumption or burden of proof
shall arise favoring or disfavoring any Indemnitor by virtue of the authorship
of any of the provisions of this Agreement. The word "including" shall mean
including without limitation. Section references used herein, unless otherwise
specified, refer to Sections of this Agreement.
11.11 Exclusive Remedy; Waiver. Subject to Section 11.2 above, the
indemnification and contribution arrangements set forth in this Agreeement
constitute the exclusive arrangement among the parties with respect to the
matters set forth herein and are in lieu of any common law rights or remedies
any party may have as a joint and several indemnitor or otherwise (except with
respect to claims for fraud). Accordingly, each party expressly waives any right
it may have, and agrees not to assert any claim for, contribution or indemnity
with respect to the matters set forth herein except as set forth herein.
* * * * *
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IN WITNESS WHEREOF, the undersigned have executed this Allocation and
Contribution Agreement as of the date first above written.
FMC CORPORATION
By: /s/ J. Paul McGrath
----------------------------------
Name: J. Paul McGrath
--------------------------------
Title: Senior Vice President
-------------------------------
HARSCO CORPORATION
By: /s/ Leonard A. Campanaro
--------------------------------
Name: L.A. Campanaro
---------------------------------
Title: Senior Vice President and CFO
-------------------------------
HARSCO UDLP CORPORATION
By: /s/ Leonard A. Campanaro
----------------------------------
Name: L.A. Campanaro
--------------------------------
Title: Treasurer
-------------------------------
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