Table of Contents
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
WASHINGTON, D.C. 20549
FORM 10-Q
| (Mark One) | ||
|
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended September 30, 2011 | ||
|
or
|
||
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the transition period from to | ||
Commission File Number:
1-5672
ITT CORPORATION
|
State of Indiana (State or Other Jurisdiction of Incorporation or Organization) |
13-5158950 (I.R.S. Employer Identification Number) |
1133 Westchester Avenue,
White Plains, NY 10604
(Principal Executive
Office)
Telephone Number:
(914) 641-2000
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months and (2) has been subject to such filing
requirements for the past
90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted
electronically and posted on its web site, if any, every
Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such
files). Yes þ No o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
“large accelerated filer,” “accelerated
filer” and “smaller reporting company” in
Rule 12b-2
of the Exchange Act. (Check one):
| Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act). Yes o No þ
As of October 20, 2011, there were outstanding
185.5 million shares of common stock ($1 par value per
share) of the registrant.
TABLE OF
CONTENTS
Table of Contents
ITT CORPORATION AND
SUBSIDIARIES
PART I. FINANCIAL
INFORMATION
Item 1. FINANCIAL
STATEMENTS
(IN MILLIONS, EXCEPT PER SHARE
AMOUNTS)
| Three Months | Nine Months | ||||||||||||||||
| FOR THE PERIODS ENDED SEPTEMBER 30 | 2011 | 2010 | 2011 | 2010 | |||||||||||||
|
Product revenue
|
$ | 2,159 | $ | 2,052 | $ | 6,360 | $ | 6,133 | |||||||||
|
Service revenue
|
822 | 591 | 2,405 | 1,827 | |||||||||||||
|
Total revenue
|
2,981 | 2,643 | 8,765 | 7,960 | |||||||||||||
|
Costs of product revenue
|
1,401 | 1,357 | 4,151 | 4,085 | |||||||||||||
|
Costs of service revenue
|
726 | 518 | 2,135 | 1,608 | |||||||||||||
|
Total costs of revenue
|
2,127 | 1,875 | 6,286 | 5,693 | |||||||||||||
|
Gross profit
|
854 | 768 | 2,479 | 2,267 | |||||||||||||
|
Selling, general and administrative expenses
|
445 | 396 | 1,304 | 1,149 | |||||||||||||
|
Research and development expenses
|
64 | 60 | 195 | 183 | |||||||||||||
|
Transformation costs
|
132 | — | 279 | — | |||||||||||||
|
Asbestos-related costs, net
|
59 | 341 | 91 | 368 | |||||||||||||
|
Restructuring and asset impairment charges, net
|
2 | 3 | 10 | 30 | |||||||||||||
|
Operating income (loss)
|
152 | (32 | ) | 600 | 537 | ||||||||||||
|
Interest and non-operating expenses, net
|
22 | 16 | 51 | 61 | |||||||||||||
|
Income (loss) from continuing operations before income tax
expense
|
130 | (48 | ) | 549 | 476 | ||||||||||||
|
Income tax expense (benefit)
|
59 | (60 | ) | 184 | 94 | ||||||||||||
|
Income from continuing operations
|
71 | 12 | 365 | 382 | |||||||||||||
|
Income from discontinued operations, net of tax expense
(benefit) of $4, $1, $2 and $(6), respectively
|
7 | 133 | 5 | 147 | |||||||||||||
|
Net income
|
$ | 78 | $ | 145 | $ | 370 | $ | 529 | |||||||||
|
Earnings Per Share:
|
|||||||||||||||||
|
Basic:
|
|||||||||||||||||
|
Continuing operations
|
$ | 0.38 | $ | 0.07 | $ | 1.97 | $ | 2.08 | |||||||||
|
Discontinued operations
|
0.04 | 0.72 | 0.03 | 0.80 | |||||||||||||
|
Net income
|
$ | 0.42 | $ | 0.79 | $ | 2.00 | $ | 2.88 | |||||||||
|
Diluted:
|
|||||||||||||||||
|
Continuing operations
|
$ | 0.38 | $ | 0.07 | $ | 1.96 | $ | 2.06 | |||||||||
|
Discontinued operations
|
0.04 | 0.71 | 0.02 | 0.80 | |||||||||||||
|
Net income
|
$ | 0.42 | $ | 0.78 | $ | 1.98 | $ | 2.86 | |||||||||
|
Weighted average common shares – basic
|
185.5 | 184.1 | 185.2 | 183.8 | |||||||||||||
|
Weighted average common shares – diluted
|
186.5 | 185.3 | 186.6 | 185.2 | |||||||||||||
|
Cash dividends declared per common share
|
$ | 0.25 | $ | 0.25 | $ | 0.75 | $ | 0.75 | |||||||||
The accompanying Notes to
Consolidated Condensed Financial Statements are an integral part
of the above income statements.
1
Table of Contents
ITT CORPORATION AND
SUBSIDIARIES
| Three Months | Nine Months | ||||||||||||||||
| FOR THE PERIODS ENDED SEPTEMBER 30 | 2011 | 2010 | 2011 | 2010 | |||||||||||||
|
Net income
|
$ | 78 | $ | 145 | $ | 370 | $ | 529 | |||||||||
|
Other comprehensive income (loss):
|
|||||||||||||||||
|
Net foreign currency translation adjustment
|
(180 | ) | 184 | (5 | ) | (27 | ) | ||||||||||
|
Net change in postretirement benefit plans, net of tax benefit
of $338, $9, $315 and $27, respectively
|
(585 | ) | 15 | (545 | ) | 46 | |||||||||||
|
Net change in unrealized gains on investment securities, net of
tax expense of $0, $3, $5 and $1, respectively
|
(1 | ) | (3 | ) | (12 | ) | (1 | ) | |||||||||
|
Other comprehensive income (loss)
|
(766 | ) | 196 | (562 | ) | 18 | |||||||||||
|
Total comprehensive (loss) income
|
$ | (688 | ) | $ | 341 | $ | (192 | ) | $ | 547 | |||||||
|
Disclosure of reclassification adjustment:
|
|||||||||||||||||
|
Net foreign currency translation adjustment:
|
|||||||||||||||||
|
Foreign currency translation loss
|
$ | (194 | ) | $ | 184 | $ | (19 | ) | $ | (27 | ) | ||||||
|
Foreign currency translation loss included in net income
|
14 | — | 14 | — | |||||||||||||
|
Net foreign currency translation adjustment
|
$ | (180 | ) | $ | 184 | $ | (5 | ) | $ | (27 | ) | ||||||
|
Net change in postretirement benefit plans, net of tax:
|
|||||||||||||||||
|
Amortization of prior service costs, net of tax benefit of less
than $1 for all periods presented
|
$ | — | $ | — | $ | 1 | $ | 1 | |||||||||
|
Amortization of net actuarial loss, net of tax benefit of $12,
$9, $36 and $27, respectively
|
20 | 15 | 58 | 45 | |||||||||||||
|
Prior service cost recognized from curtailment, net of tax
benefit of $1
|
2 | — | 2 | — | |||||||||||||
|
Net actuarial loss arising during the period, net of tax benefit
of $353
|
(606 | ) | — | (606 | ) | — | |||||||||||
|
Net change in postretirement benefit plans, net of tax
|
$ | (585 | ) | $ | 15 | $ | (545 | ) | $ | 46 | |||||||
|
Net change in unrealized gains on investment securities, net of
tax:
|
|||||||||||||||||
|
Unrealized (losses) gains arising during period, net of tax
benefit (expense) of $0, $0, $1 and $(2), respectively
|
$ | (1 | ) | $ | 1 | $ | (2 | ) | $ | 3 | |||||||
|
Gains realized during the period, net of tax expense of $0, $3,
$6 and $3, respectively
|
— | (4 | ) | (10 | ) | (4 | ) | ||||||||||
|
Net change in unrealized gains on investment securities, net of
tax
|
$ | (1 | ) | $ | (3 | ) | $ | (12 | ) | $ | (1 | ) | |||||
The accompanying Notes to
Consolidated Condensed Financial Statements are an integral part
of the above statements of comprehensive income.
2
Table of Contents
ITT CORPORATION AND
SUBSIDIARIES
CONSOLIDATED
CONDENSED BALANCE SHEETS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
|
September 30, |
December 31, |
|||||||
| 2011 | 2010 | |||||||
| (Unaudited) | ||||||||
|
Assets
|
||||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$ | 2,686 | $ | 1,032 | ||||
|
Receivables, net
|
2,198 | 1,944 | ||||||
|
Inventories, net
|
1,011 | 856 | ||||||
|
Other current assets
|
652 | 562 | ||||||
|
Total current assets
|
6,547 | 4,394 | ||||||
|
Plant, property and equipment, net
|
1,214 | 1,205 | ||||||
|
Goodwill
|
4,471 | 4,277 | ||||||
|
Other intangible assets, net
|
829 | 766 | ||||||
|
Asbestos-related assets
|
819 | 930 | ||||||
|
Other non-current assets
|
1,208 | 866 | ||||||
|
Total non-current assets
|
8,541 | 8,044 | ||||||
|
Total assets
|
$ | 15,088 | $ | 12,438 | ||||
|
Liabilities and Shareholders’ Equity
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable
|
$ | 1,116 | $ | 1,020 | ||||
|
Accrued and other current liabilities
|
1,755 | 1,714 | ||||||
|
Short-term borrowings and current maturities of long-term debt
|
1,305 | 11 | ||||||
|
Total current liabilities
|
4,176 | 2,745 | ||||||
|
Postretirement benefits
|
2,658 | 1,733 | ||||||
|
Long-term debt
|
1,868 | 1,354 | ||||||
|
Asbestos-related liabilities
|
1,522 | 1,559 | ||||||
|
Other non-current liabilities
|
619 | 542 | ||||||
|
Total non-current liabilities
|
6,667 | 5,188 | ||||||
|
Total liabilities
|
10,843 | 7,933 | ||||||
|
Shareholders’ Equity:
|
||||||||
|
Common stock:
|
||||||||
|
Authorized – 500.0 shares, $1 par value per
share Issued – 207.1 shares and
206.9 shares, respectively
Outstanding – 185.4 shares and 184.0 shares, respectively(a) |
185 | 183 | ||||||
|
Retained earnings
|
5,709 | 5,409 | ||||||
|
Total accumulated other comprehensive loss
|
(1,649 | ) | (1,087 | ) | ||||
|
Total shareholders’ equity
|
4,245 | 4,505 | ||||||
|
Total liabilities and shareholders’ equity
|
$ | 15,088 | $ | 12,438 | ||||
| (a) | Shares outstanding include unvested restricted common stock of 0.9 and 1.0 at September 30, 2011 and December 31, 2010, respectively. |
The accompanying Notes to
Consolidated Condensed Financial Statements are an integral part
of the above balance sheets.
3
Table of Contents
ITT CORPORATION AND
SUBSIDIARIES
CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN MILLIONS)
(IN MILLIONS)
| FOR THE NINE MONTHS ENDED SEPTEMBER 30 | 2011 | 2010 | ||||||
|
Operating Activities
|
||||||||
|
Net income
|
$ | 370 | $ | 529 | ||||
|
Less: Income from discontinued operations
|
5 | 147 | ||||||
|
Income from continuing operations
|
365 | 382 | ||||||
|
Non-cash adjustments to income from continuing operations:
|
||||||||
|
Depreciation and amortization
|
257 | 214 | ||||||
|
Stock-based compensation
|
22 | 23 | ||||||
|
Non-cash transformation costs
|
64 | — | ||||||
|
Changes in assets and liabilities (net of acquisitions):
|
||||||||
|
Change in receivables
|
(253 | ) | (105 | ) | ||||
|
Change in inventories
|
(146 | ) | (40 | ) | ||||
|
Change in accounts payable
|
137 | 39 | ||||||
|
Other, net
|
6 | 141 | ||||||
|
Net Cash – Operating activities
|
452 | 654 | ||||||
|
Investing Activities
|
||||||||
|
Capital expenditures
|
(186 | ) | (174 | ) | ||||
|
Acquisitions, net of cash acquired
|
(309 | ) | (994 | ) | ||||
|
Proceeds from sale of assets and businesses
|
34 | 250 | ||||||
|
Other, net
|
— | 1 | ||||||
|
Net Cash – Investing activities
|
(461 | ) | (917 | ) | ||||
|
Financing Activities
|
||||||||
|
Short-term debt, net
|
18 | 206 | ||||||
|
Long-term debt issued
|
1,849 | 1 | ||||||
|
Long-term debt repaid
|
(68 | ) | (71 | ) | ||||
|
Issuance of common stock
|
48 | 17 | ||||||
|
Dividends paid
|
(184 | ) | (176 | ) | ||||
|
Other, net
|
6 | 7 | ||||||
|
Net Cash – Financing activities
|
1,669 | (16 | ) | |||||
|
Exchange rate effects on cash and cash equivalents
|
(5 | ) | (27 | ) | ||||
|
Net cash from discontinued operations
|
(1 | ) | 2 | |||||
|
Net change in cash and cash equivalents
|
1,654 | (304 | ) | |||||
|
Cash and cash equivalents – beginning of year
|
1,032 | 1,216 | ||||||
|
Cash and Cash Equivalents – End of Period
|
$ | 2,686 | $ | 912 | ||||
|
Supplemental Disclosures of Cash Flow Information
|
||||||||
|
Cash paid during the year for:
|
||||||||
|
Interest
|
$ | 46 | $ | 46 | ||||
|
Income taxes (net of refunds received)
|
$ | 169 | $ | 289 | ||||
The accompanying Notes to
Consolidated Condensed Financial Statements are an integral part
of the above statements of cash flows.
4
Table of Contents
ITT CORPORATION AND
SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(DOLLARS AND SHARE AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of
Presentation
ITT Corporation is a global multi-industry leader in
high-technology engineering and manufacturing, operating through
three segments: Defense & Information Solutions
(Defense segment), Fluid Technology (Fluid segment) and
Motion & Flow Control (Motion & Flow
segment). Unless the context otherwise indicates, references
herein to “ITT,” “the Company,” and such
words as “we,” “us,” and “our”
include ITT Corporation and its subsidiaries.
The unaudited consolidated condensed financial statements have
been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission (SEC) and, in the opinion of
management, reflect all adjustments (which include normal
recurring adjustments) necessary for a fair presentation of the
financial position, results of operations, and cash flows for
the periods presented. Certain information and note disclosures
normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United
States of America (GAAP) have been condensed or omitted pursuant
to such SEC rules. We believe that the disclosures made are
adequate to make the information presented not misleading. We
consistently applied the accounting policies described in
ITT’s 2010 Annual Report on
Form 10-K
(2010 Annual Report) in preparing these unaudited financial
statements, with the exception of accounting standard updates,
described in Note 3, “Recent Accounting
Pronouncements,” adopted on January 1, 2011. Certain
prior year amounts have been reclassified to conform to current
year presentation, as described within these Notes to the
Consolidated Condensed Financial Statements. These financial
statements should be read in conjunction with the financial
statements and notes thereto included in our 2010 Annual Report.
Foreign Currency
Translation
The national currencies of our foreign companies are generally
the functional currencies. Balance sheet accounts are translated
at the exchange rate in effect at the end of each period; income
statement accounts are translated at the average rates of
exchange prevailing during the period. Gains and losses on
foreign currency translations are reflected in the cumulative
translation adjustments component of shareholders’ equity.
Net gains or losses from foreign currency transactions are
reported currently in selling, general and administrative
expenses, and in the third quarter of 2011 include $14 of losses
generally pertaining to legacy transactions.
Use of
Estimates
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenue
and expenses during the reporting period. Estimates are revised
as additional information becomes available. Estimates and
assumptions are used for, but not limited to, asbestos-related
liabilities and recoveries from insurers and other responsible
parties, postretirement obligations and assets, revenue
recognition, income tax contingency accruals and valuation
allowances, goodwill impairment testing and contingent
liabilities. Actual results could differ from these estimates.
Financial
Periods
ITT’s quarterly financial periods end on the Saturday
closest to the last day of the calendar quarter, except for the
last quarterly period of the fiscal year, which ends on
December 31st. For ease of presentation, the quarterly
financial statements included herein are described as ending on
the last day of the calendar quarter.
5
Table of Contents
NOTE 2
COMPANY TRANSFORMATION
COMPANY TRANSFORMATION
On January 12, 2011, the Company announced that its Board
of Directors had unanimously approved a plan to separate the
Company’s businesses into three independent, publicly
traded companies (the Transformation). Under the Transformation,
ITT will execute tax-free spinoffs to shareholders of its
water-related businesses (Xylem) and its Defense segment
(Exelis). Xylem will include the Water & Wastewater
division, including its analytical instrumentation component,
and the Residential & Commercial Water division, as
well as the Flow Control division that is currently reported
within the Motion & Flow segment. The Industrial
Process division, which is currently reported within the Fluid
segment, will continue to operate as a division of ITT. After
completion of the Transformation, ITT shareholders will own
shares in all three corporations. Following the Transformation,
ITT will continue to trade on the New York Stock Exchange as an
industrial company that supplies highly engineered solutions in
the aerospace, transportation, energy and industrial markets.
On September 9, 2011, we received a private letter ruling
from the Internal Revenue Service that ITT’s separation of
the assets and liabilities constituting each of the Exelis
business, the Xylem business and the new ITT business, as well
as the planned distribution of the shares of Exelis and Xylem
common stock to ITT shareholders, will qualify as a tax-free
transaction for U.S. federal income tax purposes.
On October 5, 2011, the ITT Board of Directors declared a
pro rata dividend of Exelis common stock and Xylem common stock
(the Distribution), to be made on October 31, 2011, or such
other date whereby conditions to the distribution are satisfied
or waived, to ITT’s shareholders of record as of the close
of business on October 17, 2011 (the Record Date). Each ITT
shareholder will receive a dividend of one share of Exelis
common stock and one share of Xylem common stock for every one
share of ITT common stock held on the Record Date.
As a result of the Transformation, upon consummation of the
spin, we will reorganize to a new management and segment
reporting structure. As part of these organizational changes, we
will assess new reporting units and perform valuations to
determine the assignment of goodwill to any new reporting units
based on their relative fair values. We will also test the
recoverability of goodwill based on the identification of any
new reporting units.
During the three and nine month periods ended September 30,
2011, we recognized pre-tax expenses of $132 and $279,
respectively, related to the Transformation. The components of
transformation costs incurred during these periods are presented
below.
|
Three |
Nine |
|||||||
| For the Periods Ended September 30, 2011 | Months | Months | ||||||
|
Transformation Costs:
|
||||||||
|
Non-cash asset impairment
|
$ | 9 | $ | 64 | ||||
|
Advisory fees
|
32 | 75 | ||||||
|
IT costs
|
36 | 58 | ||||||
|
Lease termination and other real estate costs
|
10 | 13 | ||||||
|
Loss on early extinguishment of debt
|
3 | 3 | ||||||
|
Employee retention and other compensation costs
|
23 | 36 | ||||||
|
Other costs
|
19 | 30 | ||||||
|
Transformation costs in operating income
|
132 | 279 | ||||||
|
Tax-related separation (benefit) costs(a)
|
(4 | ) | 10 | |||||
|
Total transformation costs before tax benefit
|
128 | 289 | ||||||
|
Income tax benefit
|
(35 | ) | (87 | ) | ||||
|
Total transformation costs, net of tax impact
|
$ | 93 | $ | 202 | ||||
6
Table of Contents
| (a) | In the third quarter of 2011, we revised our estimate of certain costs to be incurred related to tax-related separation costs. This adjustment resulted in a $4 net credit (income) for tax-related separation costs during the third quarter of 2011. |
The $64 million non-cash impairment charge includes a $55
impairment related to a decision to discontinue development of
an information technology consolidation initiative and $9 of
impairments to long-lived assets. The table included below
provides a rollforward of the Transformation-related accrual for
the nine months ended September 30, 2011.
|
Transformation accrual – 12/31
|
$ | 2 | ||
|
Charges actions during the period
|
289 | |||
|
Cash payments
|
(137 | ) | ||
|
Pension curtailment
|
(5 | ) | ||
|
Asset impairment
|
(64 | ) | ||
|
Transformation accrual – 9/30
|
$ | 85 | ||
To complete the Transformation, we expect major areas of
spending to include debt refinancing, tax-related separation
costs, information technology investments to build out
independent environments for the new companies, advisory fees,
and other Transformation activities. Our estimate of the
remaining after-tax expense for activities associated with the
Transformation is expected to be approximately $275, of which
$210 is expected to be incurred prior to completion of the
Transformation, primarily related to the extinguishment of debt.
In addition, the Company anticipates net after-tax cash outflows
of approximately $130 following the Transformation, primarily
consisting of additional tax impacts, employee-related costs,
capital expenditures for information systems investments, and
advisory fees.
NOTE 3
RECENT ACCOUNTING PRONOUNCEMENTS
RECENT ACCOUNTING PRONOUNCEMENTS
Recently Adopted
Accounting Pronouncements
In December 2010, the Financial Accounting Standards Board
(FASB) issued additional guidance applicable to the testing of
goodwill for potential impairment. Specifically, for reporting
units with zero or negative carrying amounts, an entity is
required to perform the second step of the goodwill impairment
test (a comparison between the carrying amount of a reporting
unit’s goodwill to its implied fair value) if it is more
likely than not that a goodwill impairment exists, considering
any adverse qualitative factors. This guidance is effective for
fiscal years, and interim periods within those years, beginning
after December 15, 2010. As of the date of our most recent
goodwill impairment test, none of our reporting units would have
been affected by the application of this guidance as each
reporting unit had a carrying amount that exceeded zero.
In April 2010, the FASB issued authoritative guidance permitting
use of the milestone method of revenue recognition for research
or development arrangements that contain payment provisions or
consideration contingent on the achievement of specified events.
On January 1, 2011, we adopted the new guidance on a
prospective basis. The adoption of this guidance did not have a
material impact on our financial condition, results of
operations or cash flows.
In October 2009, the FASB issued amended guidance on the
accounting for revenue arrangements that contain multiple
elements by eliminating the criteria that objective and reliable
evidence of fair value for undelivered products or services
needs to exist in order to be able to account separately for
deliverables and eliminating the use of the residual method of
allocating arrangement consideration. The amendments establish a
hierarchy for determining the selling price of a deliverable and
will allow for the separation of products and services in more
instances than previously permitted.
We adopted the new multiple element guidance effective
January 1, 2011 for new arrangements entered into or
arrangements materially modified on or after that date on a
prospective basis. In connection with the adoption of the
revised multiple element arrangement guidance, we revised our
revenue recognition accounting policies. For multiple
deliverable arrangements entered into or materially modified on
or after January 1, 2011, we recognize revenue for a
delivered element based on the relative selling
7
Table of Contents
price if the deliverable has stand-alone value to the customer
and, in arrangements that include a general right of return
relative to the delivered element, performance of the
undelivered element is considered probable and substantially in
the Company’s control. The selling price for a deliverable
is based on vendor-specific objective evidence of selling price
(VSOE), if available, third-party evidence of selling price
(TPE), if VSOE is not available, or best estimated selling price
(BESP), if neither VSOE nor TPE is available.
The deliverables in our arrangements with multiple elements
include various products and may include related services, such
as installation and
start-up
services. For multiple element arrangements entered into or
materially modified after adoption of the revised multiple
element arrangement guidance, we allocate arrangement
consideration based on the relative selling prices of the
separate units of accounting determined in accordance with the
hierarchy described above. For deliverables that are sold
separately, we establish VSOE based on the price when the
deliverable is sold separately. We establish TPE, generally for
services, based on prices similarly situated customers pay for
similar services from third party vendors. For those
deliverables for which we are unable to establish VSOE or TPE,
we estimate the selling price considering various factors
including market and pricing trends, geography, product
customization, and profit objectives. Revenue allocated to
products and services is generally recognized as the products
are delivered and the services are performed, provided all other
revenue recognition criteria have been satisfied. The adoption
of the new multiple element guidance did not result in a
material change in either the units of accounting or the pattern
or timing of revenue recognition. Additionally, the adoption of
the revised multiple element arrangement guidance did not have a
material impact on our financial condition, results of
operations or cash flows.
In October 2009, the FASB amended the accounting requirements
for software revenue recognition. The objective of this update
is to address the accounting for revenue arrangements that
contain tangible products and software. Specifically, products
that contain software that is “more than incidental”
to the product as a whole will be removed from the scope of the
software revenue recognition literature. The amendments align
the accounting for these revenue transaction types with the
amendments described for multiple element arrangements above. We
adopted the provisions of this guidance for new or materially
modified arrangements entered into on or after January 1,
2011 on a prospective basis. The adoption of this guidance did
not have a material impact on our financial condition, results
of operations or cash flows.
Accounting
Pronouncements Not Yet Adopted
In September 2011, the FASB provided companies with the option
to make an initial qualitative evaluation, based on the
entity’s events and circumstances, to determine the
likelihood of goodwill impairment. The result of this
qualitative assessment determines whether it is necessary to
perform the currently required two-step impairment test. If it
is more likely than not that the fair value of a reporting unit
is less than its carrying amount, a company would be required to
perform the two-step impairment test. This guidance is effective
for annual and interim goodwill impairment tests performed for
fiscal years beginning after December 15, 2011, with early
adoption permitted. The Company could elect to apply the option
to any goodwill impairment test performed after
December 31, 2011; however, the amendments are not expected
to have a material effect on the Company’s Consolidated
Condensed Financial Statements.
In May 2011, the FASB issued guidance intended to achieve common
fair value measurements and related disclosures between
U.S. GAAP and international accounting standards. The
amendments primarily clarify existing fair value guidance and
are not intended to change the application of existing fair
value measurement guidance. However, the amendments include
certain instances where a particular principle or requirement
for measuring fair value or disclosing information about fair
value measurements has changed. This guidance is effective for
the periods beginning after December 15, 2011 and early
application is prohibited. We will adopt these amendments on
January 1, 2012; however, the amendments are not expected
to have a material effect on the Company’s Consolidated
Condensed Financial Statements.
8
Table of Contents
NOTE 4
ACQUISITIONS & DIVESTITURES
ACQUISITIONS & DIVESTITURES
Acquisitions
On September 1, 2011, we acquired 100% of the outstanding
shares of YSI Incorporated (YSI) for a purchase price of $309,
net of cash acquired. YSI, which reported 2010 revenues of $101,
is a leading developer and manufacturer of sensors, instruments,
software, and data collection platforms for environmental water
monitoring. YSI employs 390 people at facilities in the
United States, Europe and Asia. Our financial statements
include YSI’s results of operations and cash flows
prospectively from September 1, 2011; however, these
results were not material for the three or nine months ended
September 30, 2011 and accordingly, pro forma results of
operations have not been presented.
The purchase price for YSI was allocated to the net tangible and
intangible assets acquired and liabilities assumed based on
their preliminary fair values as of September 1, 2011. The
excess of the purchase price over the preliminary assets
acquired and liabilities assumed was recorded as goodwill. The
purchase price allocation is based on a preliminary valuation
and our estimates and assumptions are subject to change within
the measurement period. The primary areas of the purchase price
allocation that are not yet finalized relate to the fair values
of certain environmental matters, intangible assets, income
taxes, working capital balances and residual goodwill. We expect
to obtain information to assist us in determining the fair value
of the net assets acquired at the acquisition date during the
measurement period.
Of the $309 purchase price, the aggregate fair value of
trademarks was $49, customer relationships was $40 and
proprietary technology was $35. Other assets acquired and
liabilities assumed as part of the acquisition were $56
primarily related to working capital balances and $61 primarily
related to deferred tax liabilities, respectively. The excess of
the preliminary purchase price over the fair value of net assets
acquired was $190 (which is not expected to be deductible for
income tax purposes). The goodwill arising from the acquisition
consists largely of the planned expansion of the YSI footprint
to new geographic markets, synergies and economies of scale. All
of the goodwill has been assigned to the Fluid segment.
During the first nine months of 2010, we spent $994 on
acquisitions, net of cash acquired, primarily due to the
acquisitions of Godwin Pumps of America, Inc. and Godwin
Holdings Limited (collectively referred to as Godwin) on
August 3, 2010 for $580, which expanded our Fluid
segment’s presence within the dewatering market in the
United States; and the acquisition of Nova Analytics Corporation
(Nova) on March 23, 2010 for $385 which broadened our Fluid
segment’s portfolio of analytical instrumentation tools.
The results of operations and cash flows from our 2010
acquisitions have been included in our Consolidated Condensed
Financial Statements prospectively from their date of
acquisition. Pro forma results of operations for acquisitions
completed in 2010 have not been presented because the assets,
liabilities and results of operations for each business are not
considered material to our Consolidated Condensed Financial
Statements, either individually or in the aggregate.
Divestitures
On September 8, 2010 we completed the sale of CAS, Inc.
(CAS), a component of our Defense segment that was engaged in
systems engineering and technical assistance for the
U.S. Government. The sale resulted in the recognition of a
$130 after-tax gain reported as a component of income from
discontinued operations within our Consolidated Condensed Income
Statements. This transaction resulted in a tax benefit of $4
primarily due to the difference in the book and tax bases of
CAS. Subsequent to this divestiture, we do not have any
significant continuing involvement in the operations of CAS, nor
do we expect significant continuing cash flows from CAS.
Accordingly, the financial position, results of operations and
cash flows from CAS are reported as a discontinued operation.
During the three and nine months ended September 30, 2010,
CAS provided third-party revenue of $46 and $160, and operating
income of $4 and $13, respectively, included within discontinued
operations.
9
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NOTE 5
RESTRUCTURING AND ASSET IMPAIRMENT CHARGES
RESTRUCTURING AND ASSET IMPAIRMENT CHARGES
During the three and nine months ended September 30, 2011,
we recognized restructuring and asset impairment charges of $2
and $16, respectively. The
year-to-date
charge primarily relates to various reduction in force
initiatives within our Defense segment. During the three and
nine months ended September 30, 2010, we recognized
restructuring charges of $6 and $42, respectively, primarily
related to a strategic realignment of our Defense segment to
enable better product portfolio integration, encourage a more
coordinated market approach and provide reductions in overhead
costs. The Defense segment was renamed ITT Defense &
Information Solutions and the previous organizational structure,
consisting of seven divisions, was consolidated into three
larger divisions. This initiative was substantially completed
during 2010.
The table provided below summarizes the presentation of
restructuring and asset impairment charges within our
Consolidated Condensed Income Statements for the three and nine
month periods ended September 30, 2011 and 2010.
| Three Months | Nine Months | |||||||||||||||
| For the Periods Ended September 30 | 2011 | 2010 | 2011 | 2010 | ||||||||||||
|
Restructuring costs presented in costs of revenue
|
$ | — | $ | 3 | $ | 6 | $ | 12 | ||||||||
|
Restructuring costs presented in operating expenses
|
— | 3 | 7 | 30 | ||||||||||||
|
Asset impairment
|
2 | — | 3 | — | ||||||||||||
|
Total restructuring and asset impairment costs
|
$ | 2 | $ | 6 | $ | 16 | $ | 42 | ||||||||
NOTE 6
INCOME TAXES
INCOME TAXES
Effective Tax
Rate
Our quarterly income tax expense is measured using an estimated
annual effective tax rate, adjusted for discrete items within
the period. The comparison of effective tax rates between
periods is significantly affected by discrete items recognized
during the periods, the level and mix of earnings by tax
jurisdiction and permanent differences. The estimated annual
effective tax rate for 2011 and 2010 was comparable before the
impact of discrete items.
For the quarter ended September 30, 2011, we recorded
income tax expense of $59, compared to an income tax benefit of
$60 for the comparable prior year period. The 2011 effective
rate of 45.4% was increased by approximately 4.1% for costs
related to the Transformation, 11.6% for deferred tax asset
write-offs and reduced by 3.7% related to the effective
settlement of a tax examination. The 2010 benefit is primarily
attributable to an additional tax benefit of $46 related to
change in mix of earnings by tax jurisdiction due to the
increase in asbestos-related costs . The third quarter 2010
income tax also reflects a $27 benefit from the reversal of
valuation allowances on certain capital loss carryforwards as it
became more likely than not that these deferred tax assets would
be realized.
Income tax expense for the nine months ended September 30,
2011 and 2010 was $184 and $94, respectively, resulting in
effective tax rates of 33.5% and 19.7%, respectively. The 2011
effective tax rate was increased by 0.8% for costs related to
the Transformation and 2.8% for the write-off of certain
historical deferred tax assets. The 2010 effective tax rate was
increased by 1.5% due to the impact of the Medicare Part D
subsidy reversal and reduced by 1.0% related to the closure of a
tax examination.
Uncertain Tax
Positions
As of September 30, 2011 and December 31, 2010, we had
$161 and $192, respectively, of total unrecognized tax benefits
recorded. The amount of unrecognized tax benefits that would
affect the effective tax rate was $80 and $90, at
September 30, 2011 and December 31, 2010,
respectively. Uncertain tax positions are related to tax years
that remain subject to examination by
10
Table of Contents
the relevant taxing authorities. We believe it is reasonably
possible that the total amount of unrecognized tax benefits at
September 30, 2011 could decrease by $8 within the next
12 months due to the reversal of a temporary difference.
Discussion of
Changes to Deferred Tax Assets
Net deferred tax assets reflected in the Consolidated Condensed
Balance Sheet at September 30, 2011 were $1,044, reflecting
a $275 increase from the $769 December 31, 2010 balance.
This increase primarily relates to the remeasurement of certain
postretirement benefit plans, including the U.S. Salaried
Retirement Plan (U.S. SRP), at September 30, 2011.
NOTE 7
EARNINGS PER SHARE
EARNINGS PER SHARE
The following table provides a reconciliation of the data used
in the calculation of basic and diluted earnings per share
computations for income from continuing operations for the three
and nine month periods ended September 30, 2011 and 2010.
| Three Months | Nine Months | |||||||||||||||
| For the Periods Ended September 30 | 2011 | 2010 | 2011 | 2010 | ||||||||||||
|
Income from continuing operations
|
$ | 71 | $ | 12 | $ | 365 | $ | 382 | ||||||||
|
Weighted average common shares outstanding
|
184.4 | 182.5 | 184.0 | 182.2 | ||||||||||||
|
Add: Weighted average restricted stock awards outstanding(a)
|
1.1 | 1.6 | 1.2 | 1.6 | ||||||||||||
|
Basic weighted average common shares outstanding
|
185.5 | 184.1 | 185.2 | 183.8 | ||||||||||||
|
Add: Dilutive impact of stock options
|
1.0 | 1.2 | 1.4 | 1.4 | ||||||||||||
|
Diluted weighted average common shares outstanding
|
186.5 | 185.3 | 186.6 | 185.2 | ||||||||||||
|
Basic earnings per share from continuing operations
|
$ | 0.38 | $ | 0.07 | $ | 1.97 | $ | 2.08 | ||||||||
|
Diluted earnings per share from continuing operations
|
$ | 0.38 | $ | 0.07 | $ | 1.96 | $ | 2.06 | ||||||||
| (a) | Restricted stock awards containing rights to non-forfeitable dividends which participate in undistributed earnings with common shareholders are considered participating securities for purposes of computing earnings per share. |
The following table provides the number of shares underlying
stock options excluded from the computation of diluted earnings
per share for the three and nine month periods ended
September 30, 2011 and 2010 because they were anti-dilutive.
| Three Months | Nine Months | |||||||||||||||
| For the Periods Ended September 30 | 2011 | 2010 | 2011 | 2010 | ||||||||||||
|
Anti-dilutive stock options
|
2.6 | 2.2 | 1.8 | 2.1 | ||||||||||||
|
Average exercise price
|
$ | 55.26 | $ | 54.30 | $ | 56.55 | $ | 54.42 | ||||||||
11
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NOTE 8
RECEIVABLES, NET
RECEIVABLES, NET
|
September 30, |
||||||||
| 2011 | December 31, 2010 | |||||||
|
Trade accounts receivable
|
$ | 1,662 | $ | 1,579 | ||||
|
Unbilled contract receivables
|
543 | 367 | ||||||
|
Other
|
43 | 47 | ||||||
|
Receivables, gross
|
2,248 | 1,993 | ||||||
|
Allowance for doubtful accounts
|
(43 | ) | (42 | ) | ||||
|
Allowance for cash discounts
|
(7 | ) | (7 | ) | ||||
|
Receivables, net
|
$ | 2,198 | $ | 1,944 | ||||
Unbilled contract receivables represent revenue recognized on
construction-type or production-type contracts that arise based
on performance attainment which, by contract, though
appropriately recognized, cannot be billed to the customer as of
the balance sheet date. We expect to bill and collect
substantially all of the September 30, 2011 unbilled
contract receivables during the next twelve months as billing
milestones are completed or units are delivered.
Our outstanding accounts receivable balance, including both
trade and unbilled contract receivables from the
U.S. Government, was $917 and $806 as of September 30,
2011 and December 31, 2010, respectively.
NOTE 9
INVENTORIES, NET
INVENTORIES, NET
|
September 30, |
||||||||
| 2011 | December 31, 2010 | |||||||
|
Finished goods
|
$ | 247 | $ | 231 | ||||
|
Work in process
|
122 | 88 | ||||||
|
Raw materials
|
386 | 317 | ||||||
|
Total product inventory
|
755 | 636 | ||||||
|
Production costs of contracts in process
|
325 | 296 | ||||||
|
Less – progress payments
|
(69 | ) | (76 | ) | ||||
|
Production costs of contracts in process, net
|
256 | 220 | ||||||
|
Inventories, net
|
$ | 1,011 | $ | 856 | ||||
12
Table of Contents
NOTE 10
OTHER CURRENT AND NON-CURRENT ASSETS
OTHER CURRENT AND NON-CURRENT ASSETS
|
September 30, |
||||||||
| 2011 | December 31, 2010 | |||||||
|
Current deferred income taxes
|
$ | 288 | $ | 280 | ||||
|
Asbestos-related current assets
|
131 | 105 | ||||||
|
Other
|
233 | 177 | ||||||
|
Other current assets
|
$ | 652 | $ | 562 | ||||
|
Deferred income tax
|
$ | 887 | $ | 554 | ||||
|
Other employee benefit-related assets
|
108 | 106 | ||||||
|
Capitalized software costs
|
72 | 118 | ||||||
|
Other
|
141 | 88 | ||||||
|
Other non-current assets
|
$ | 1,208 | $ | 866 | ||||
As described in Note 2, “Company Transformation,”
during the first quarter of 2011 we discontinued the development
of an information technology consolidation initiative and
recorded a capitalized software impairment charge of $55.
NOTE 11
PLANT, PROPERTY AND EQUIPMENT, NET
PLANT, PROPERTY AND EQUIPMENT, NET
|
September 30, |
||||||||
| 2011 | December 31, 2010 | |||||||
|
Land and improvements
|
$ | 60 | $ | 59 | ||||
|
Buildings and improvements
|
700 | 642 | ||||||
|
Machinery and equipment
|
1,897 | 1,809 | ||||||
|
Equipment held for lease or rental
|
149 | 132 | ||||||
|
Furniture, fixtures and office equipment
|
238 | 231 | ||||||
|
Construction work in progress
|
132 | 160 | ||||||
|
Other
|
49 | 29 | ||||||
|
Plant, property and equipment, gross
|
3,225 | 3,062 | ||||||
|
Less – accumulated depreciation
|
(2,011 | ) | (1,857 | ) | ||||
|
Plant, property and equipment, net
|
$ | 1,214 | $ | 1,205 | ||||
Depreciation expense of $59 and $174 was recognized in the three
and nine month periods ended September 30, 2011,
respectively, and $48 and $135 for the three and nine month
periods ended September 30, 2010, respectively.
13
Table of Contents
NOTE 12
GOODWILL AND OTHER INTANGIBLE ASSETS, NET
GOODWILL AND OTHER INTANGIBLE ASSETS, NET
Goodwill
The following table provides a rollforward of the carrying
amount of goodwill for the nine months ended September 30,
2011 by segment.
|
MOTION & |
||||||||||||||||
| DEFENSE | FLUID | FLOW | TOTAL | |||||||||||||
|
Goodwill — 12/31
|
$ | 2,156 | $ | 1,634 | $ | 487 | $ | 4,277 | ||||||||
|
Foreign currency
|
— | 2 | 1 | 3 | ||||||||||||
|
Acquisitions
|
— | 190 | 3 | 193 | ||||||||||||
|
Other
|
(2 | ) | — | — | (2 | ) | ||||||||||
|
Goodwill — 9/30
|
$ | 2,154 | $ | 1,826 | $ | 491 | $ | 4,471 | ||||||||
Other Intangible
Assets, Net
| SEPTEMBER 30, 2011 | DECEMBER 31, 2010 | |||||||||||||||||||||||
|
GROSS |
GROSS |
|||||||||||||||||||||||
|
CARRYING |
ACCUMULATED |
NET |
CARRYING |
ACCUMULATED |
NET |
|||||||||||||||||||
| AMOUNT | AMORTIZATION | INTANGIBLES | AMOUNT | AMORTIZATION | INTANGIBLES | |||||||||||||||||||
|
Customer and distributor relationships
|
$ | 903 | $ | (368 | ) | $ | 535 | $ | 855 | $ | (312 | ) | $ | 543 | ||||||||||
|
Proprietary technology
|
144 | (42 | ) | 102 | 109 | (35 | ) | 74 | ||||||||||||||||
|
Trademarks
|
36 | (13 | ) | 23 | 35 | (10 | ) | 25 | ||||||||||||||||
|
Patents and other
|
29 | (20 | ) | 9 | 32 | (18 | ) | 14 | ||||||||||||||||
|
Indefinite-lived intangibles
|
160 | — | 160 | 110 | — | 110 | ||||||||||||||||||
|
Other Intangible Assets
|
$ | 1,272 | $ | (443 | ) | $ | 829 | $ | 1,141 | $ | (375 | ) | $ | 766 | ||||||||||
Intangible assets related to the acquisition of YSI included $49
of trademarks, $40 of customer relationships and $35 of
proprietary technology. The customer relationships are expected
to be amortized over a weighted average period of 19 years
and the proprietary technology is expected to be amortized over
a weighted average period of 18 years. The trademarks have
been assigned an indefinite life.
Amortization expense related to finite-lived intangible assets
was $23 for both three month periods and $66 and $64 for the
nine month periods ended September 30, 2011 and 2010,
respectively. Estimated amortization expense for the remaining
three months of 2011 and each of the five succeeding years is as
follows:
|
Remaining 2011
|
$ | 23 | ||
|
2012
|
79 | |||
|
2013
|
64 | |||
|
2014
|
59 | |||
|
2015
|
55 | |||
|
2016
|
52 | |||
|
Total
|
$ | 332 | ||
14
Table of Contents
ACCRUED AND OTHER CURRENT
LIABILITIES AND OTHER NON-CURRENT LIABILITIES
|
September 30, |
December 31, |
|||||||
| 2011 | 2010 | |||||||
|
Compensation and other employee-related benefits
|
$ | 625 | $ | 625 | ||||
|
Customer advances and deferred revenue
|
470 | 478 | ||||||
|
Asbestos-related liability
|
139 | 117 | ||||||
|
Other accrued liabilities
|
521 | 494 | ||||||
|
Accrued and other current liabilities
|
$ | 1,755 | $ | 1,714 | ||||
|
Deferred income taxes and other tax-related accruals
|
$ | 250 | $ | 179 | ||||
|
Environmental
|
137 | 128 | ||||||
|
Compensation and other employee-related benefits
|
130 | 117 | ||||||
|
Product liability, guarantees and other legal matters
|
51 | 52 | ||||||
|
Other
|
51 | 66 | ||||||
|
Other non-current liabilities
|
$ | 619 | $ | 542 | ||||
During the first quarter of 2011, we corrected the presentation
of amounts in the accompanying Consolidated Condensed Balance
Sheets as of December 31, 2010, related to customer
advances and deferred revenue by reclassifying $452 from
accounts payable to accrued and other current liabilities. This
reclassification had no impact on amounts reported in the 2010
Annual Report’s Consolidated Income Statements or net cash
from operating activities within the Consolidated Statements of
Cash Flows.
NOTE 14
DEBT
|
September 30, |
December 31, |
|||||||
| 2011 | 2010 | |||||||
|
Short-term loans
|
$ | 17 | $ | 1 | ||||
|
Current maturities of long-term debt and other
|
1,251 | 10 | ||||||
|
Current deferred gain on interest rate swaps
|
43 | — | ||||||
|
Current unamortized discounts and debt issuance costs
|
(6 | ) | — | |||||
|
Short-term borrowings and current maturities of long-term debt
|
1,305 | 11 | ||||||
|
Non-current maturities of long-term debt
|
1,855 | 1,257 | ||||||
|
Non-current capital leases
|
16 | 60 | ||||||
|
Deferred gain on interest rate swaps
|
— | 45 | ||||||
|
Unamortized discounts and debt issuance costs(a)
|
(3 | ) | (8 | ) | ||||
|
Long-term debt
|
1,868 | 1,354 | ||||||
|
Total debt
|
$ | 3,173 | $ | 1,365 | ||||
| (a) | Debt issuance costs of $15 associated with the September 2011 issuance for Exelis and Xylem have been presented within Other Assets as of September 30, 2011. |
Principal payments required per year on our outstanding
long-term notes and debentures for the next five years and
thereafter are $0, $2, $500, $0, $850 and $1,754, respectively,
however we have classified $1,251 of the amounts due with
maturity dates in excess of one year as a current maturity of
long-term debt due to our extinguishment of this debt in October
2011.
The fair value of total debt, excluding the deferred gain on
interest rate swaps, was $3,360 and $1,483 as of
September 30, 2011 and December 31, 2010,
respectively. Fair value was primarily determined using prices
for the identical security obtained
15
Table of Contents
from an external pricing service. The table included below
provides a summary of outstanding debt with associated maturity
dates and interest rates.
|
September 30, |
December 31, |
|||||||||||||||||||
| 2011 | 2010 | |||||||||||||||||||
|
Interest |
Carrying |
Fair |
Carrying |
Fair |
||||||||||||||||
| Rate | Value | Value | Value | Value | ||||||||||||||||
|
MATURITY DATE:
|
||||||||||||||||||||
|
May 2014
|
4.90 | % | $ | 500 | $ | 534 | $ | 500 | $ | 538 | ||||||||||
|
September 2016 (Xylem)
|
3.55 | % | 600 | 611 | — | — | ||||||||||||||
|
October 2016 (Exelis)
|
4.25 | % | 250 | 254 | — | — | ||||||||||||||
|
May 2019
|
6.125 | % | 500 | 572 | 500 | 553 | ||||||||||||||
|
October 2021 (Xylem)
|
4.875 | % | 600 | 604 | — | — | ||||||||||||||
|
October 2021 (Exelis)
|
5.55 | % | 400 | 406 | — | — | ||||||||||||||
|
November 2025
|
7.40 | % | 250 | 338 | 250 | 311 | ||||||||||||||
|
August 2048
|
(b | ) | 1 | 1 | 1 | 1 | ||||||||||||||
|
December 2010 - 2014
|
4.70 | % | — | — | 66 | 69 | ||||||||||||||
|
Various 2011 - 2022
|
(c | ) | 38 | 40 | 11 | 11 | ||||||||||||||
| $ | 3,139 | $ | 3,360 | $ | 1,328 | $ | 1,483 | |||||||||||||
| (b) | Variable rate debt with an interest rate of 0.07% as of September 30, 2011 and 0.19% as of December 31, 2010. | |
| (c) | Includes individually immaterial short-term loans, notes, bonds and capital leases. The weighted average interest rate was 3.73% and 4.86% at September 30, 2011 and December 31, 2010, respectively. |
As of September 30, 2011, we were in compliance with all
covenants under outstanding debt instruments.
Third Quarter
2011 Issuance of Senior Notes
On September 20, 2011, Exelis Inc. (Exelis), a wholly-owned
subsidiary of the Company, issued $250 million aggregate
principal amount of 4.25% senior notes due 2016 (the Exelis
2016 Notes) and $400 million aggregate principal amount of
5.55% senior notes due 2021 (the Exelis 2021 Notes and,
together with the Exelis 2016 Notes, the Exelis Notes) in a
private placement to qualified institutional buyers pursuant to
Rule 144A under the U.S. Securities Act of 1933, as
amended (the “Securities Act”). Interest on the Exelis
Notes accrues from September 20, 2011 and is payable on
April 1 and October 1 of each year, commencing on April 1,
2012. Exelis capitalized debt issuance costs of $6, presented
within Other Assets, associated with the issuance of the Exelis
Notes. The public offering price of the Exelis Notes was 99.824%
of the principal amount of the Exelis 2016 Notes and 99.762% of
the principal amount of the Exelis 2021 Notes. Exelis used the
net proceeds received from the offering of the Exelis Notes to
pay a portion of a special cash dividend to the Company and for
general corporate purposes.
On September 20, 2011, Xylem Inc. (Xylem), a wholly-owned
subsidiary of the Company, issued $600 million aggregate
principal amount of 3.550% senior notes due 2016 (the Xylem
2016 Notes) and $600 million aggregate principal amount of
4.875% senior notes due 2021 (the Xylem 2021 Notes and,
together with the Xylem 2016 Notes, the Xylem Notes) in a
private placement to qualified institutional buyers pursuant to
Rule 144A under the Securities Act. Interest on the Xylem
Notes accrues from September 20, 2011. Interest on the
Xylem 2016 Notes is payable on March 20 and September 20 of each
year, commencing on March 20, 2012. Interest on the Xylem
2021 Notes is payable on April 1 and October 1 of each year,
commencing on April 1, 2012. Xylem capitalized debt
issuance costs of $9, presented within Other Assets, associated
with the issuance of the Xylem Notes. The public offering price
of the Xylem Notes was 99.809% of the principal amount of the
Xylem 2016 Notes and 99.935% of the principal amount of the
Xylem 2021 Notes. Xylem used the net proceeds received from the
offering of the Xylem Notes to pay a special cash dividend to
the Company, to repay indebtedness incurred to fund its
acquisition of YSI, and for general corporate purposes.
16
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The Exelis and Xylem Notes are initially guaranteed on a senior
unsecured basis by ITT. The guarantee will terminate and be
automatically and unconditionally released upon the distribution
of the common stock of Exelis and Xylem to the holders of the
Company’s common stock in connection with the spin-off of
each of Exelis and Xylem from the Company.
The Exelis and Xylem Notes include covenants which restrict the
ability of each of Exelis and Xylem, subject to exceptions, to
incur debt secured by liens and engage in sale and lease-back
transactions. The Exelis and Xylem Notes also provide for
customary events of default. Each of Exelis and Xylem, as the
case may be, may redeem each series of the Exelis Notes or the
Xylem Notes, as applicable, in whole or in part, at any time at
a redemption price equal to the principal amount of the Exelis
Notes or the Xylem Notes, as applicable, to be redeemed, plus a
make-whole premium. If a change of control triggering event
occurs (as defined in the Notes), each of Exelis or Xylem will
be required to make an offer to purchase the Exelis Notes or the
Xylem Notes, as applicable, at a price equal to 101% of their
principal amount plus accrued and unpaid interest to the date of
repurchase.
On September 20, 2011, the Company and Exelis entered into
a registration rights agreement with respect to the Exelis Notes
(the Exelis Registration Rights Agreement) and the Company and
Xylem entered into a registration rights agreement with respect
to the Xylem Notes (the Xylem Registration Rights Agreement).
The Company and Exelis agreed under the Exelis Registration
Rights Agreement, and the Company and Xylem agreed under the
Xylem Registration Rights Agreement, to (i) file a
registration statement on an appropriate registration form with
respect to a registered offer to exchange the Exelis Notes or
Xylem Notes, as applicable, for new notes, with terms
substantially identical in all material respects to the Exelis
Notes or Xylem Notes, as applicable, and (ii) cause the
registration statement to be declared effective under the
Securities Act.
If the exchange offer is not completed within 365 days
after the issue date of the Notes or, if required, Exelis and
Xylem, as applicable, will use its reasonable best efforts to
file and to have declared effective a shelf registration
statement relating to the resales of the Exelis Notes and Xylem
Notes, as applicable.
If Exelis or Xylem fails to satisfy this obligation (a
registration default) under the Exelis Registration Rights
Agreement or Xylem Registration Rights Agreement, respectively,
the annual interest rate on the Exelis Notes and Xylem Notes, as
applicable, will increase by 0.25%. The annual interest rate on
the Exelis Notes and Xylem Notes, as applicable, will increase
by an additional 0.25% for each subsequent
90-day
period during which the registration default continues, up to a
maximum additional interest rate of 1.00% per year. If the
registration default is corrected, the applicable interest rate
on such Exelis Notes or Xylem Notes, as applicable, will revert
to the original level.
If Exelis or Xylem must pay additional interest, Exelis or Xylem
will pay it to the holders of the Exelis Notes or the Xylem
Notes, as applicable, in cash on the same dates that it makes
other interest payments on the Exelis Notes and Xylem Notes, as
applicable, until the registration default is corrected.
Termination of
Capital Lease
During the second quarter of 2011, we notified the lessor of our
intent to terminate a sale leaseback agreement entered into in
2004 by repurchasing the leased property. The leased property
includes five manufacturing and office facilities. The
repurchase occurred on September 28, 2011 when ITT paid the
lessor $66 million related to the capital lease obligation.
The termination of the capital lease resulted in a third quarter
2011 charge of $5 which is presented within Transformation Costs
in our Consolidated Condensed Income Statements.
Call For
Redemption of 4.90% Senior Notes due 2014 and
6.125% Senior Notes due 2019
On September 20, 2011, ITT called all of its
4.90% Senior Notes due May 2014 (the 2014 Notes) and all of
its 6.125% Senior Notes due May 2019 (the 2019 Notes). The
2014 and 2019 Notes were redeemed on October 20, 2011. The
redemption price for the 2014 Notes was $1,098 per
$1,000 par value, plus accrued interest, and the redemption
price for the 2019 Notes was $1,235 per $1,000 par value,
plus accrued interest. The redemption will result in a loss on
extinguishment of $167, plus incidental fees, which will be
recorded in the fourth quarter as a Transformation Cost.
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Tender Offer for
7.40% Debentures due 2025
On September 20, 2011, we commenced a cash tender offer to
purchase up to $100 in principal of our 7.40% Debentures
due November 2025 (the 2025 Notes) pursuant to the satisfaction
and discharge provisions of the indenture relating to the 2025
Notes. On October 19, 2011, the tender period expired and,
$88 of principal was tendered. The tender offer resulted in a
loss on extinguishment of $51 which will be recorded in the
fourth quarter of 2011 as a Transformation Cost.
Following the completion of the tender offer, on
October 21, 2011, we defeased the remaining $162 of
principal on the 2025 Notes pursuant to the satisfaction and
discharge provisions in the indenture relating to the 2025
Notes. In order to defease the 2025 Notes, on October 20,
2011, we deposited $6 of cash and U.S. treasury securities with
a aggregate purchase price of $263 in a trust account. As a
result of the defeasance, the 2025 Notes have been extinguished
for accounting purposes and are no longer expected to be
presented in ITT’s consolidated financial statements. The
defeasance resulted in a loss on extinguishment of approximately
$107 which will be recorded in the fourth quarter of 2011 as a
Transformation Cost.
Third Quarter
2011 Interest Rate Derivatives
Beginning on September 19, 2011, we entered into three
forward-starting interest rate swaps and a treasury lock to
hedge certain exposure associated with the our plan to
extinguish the 2019 Notes and 2025 Notes. The aggregate notional
amount of the four contracts is $350 and the contracts mature in
October 2011. We did not attempt to qualify for hedge accounting
on the contracts. Accordingly, we recognized a $2 gain from the
change in fair value of the contracts from inception to
September 30, 2011. This gain was recorded as a gain on
extinguishment of debt within Transformation Costs. In October
2011, all four of the contracts matured and were settled in
cash, resulting in a fourth quarter loss of $5 and an overall
loss of $3 which will be recorded as a loss on extinguishment of
debt within Transformation Costs.
18
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NOTE 15
POSTRETIREMENT BENEFIT
PLANS
The following tables provide the components of net periodic
benefit cost for pension plans, disaggregated by U.S. and
international plans, and other employee-related benefit plans
for the three and nine month periods ended September 30,
2011 and 2010.
| 2011 | 2010 | |||||||||||||||||||||||||||||||||||||||
|
Total |
Other |
Total |
Other |
|||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30 | U.S. | Int’l | Pension | Benefits | Total | U.S. | Int’l | Pension | Benefits | Total | ||||||||||||||||||||||||||||||
|
Net periodic benefit cost:
|
||||||||||||||||||||||||||||||||||||||||
|
Service cost
|
$ | 30 | $ | 6 | $ | 36 | $ | 1 | $ | 37 | $ | 27 | $ | 4 | $ | 31 | $ | 1 | $ | 32 | ||||||||||||||||||||
|
Interest cost
|
76 | 8 | 84 | 10 | 94 | 77 | 7 | 84 | 10 | 94 | ||||||||||||||||||||||||||||||
|
Expected return on plan assets
|
(102 | ) | (7 | ) | (109 | ) | (6 | ) | (115 | ) | (104 | ) | (6 | ) | (110 | ) | (5 | ) | (115 | ) | ||||||||||||||||||||
|
Amortization of net actuarial loss
|
28 | 1 | 29 | 3 | 32 | 20 | 1 | 21 | 2 | 23 | ||||||||||||||||||||||||||||||
|
Amortization of prior service cost
|
1 | — | 1 | — | 1 | 1 | — | 1 | — | 1 | ||||||||||||||||||||||||||||||
|
Net periodic benefit cost
|
33 | 8 | 41 | 8 | 49 | 21 | 6 | 27 | 8 | 35 | ||||||||||||||||||||||||||||||
|
Loss from curtailment/special termination benefits
|
5 | — | 5 | — | 5 | — | — | — | — | — | ||||||||||||||||||||||||||||||
|
Total net periodic benefit cost
|
38 | 8 | 46 | 8 | 54 | 21 | 6 | 27 | 8 | 35 | ||||||||||||||||||||||||||||||
|
Other changes in plan assets and benefit obligations
recognized in other comprehensive income
|
||||||||||||||||||||||||||||||||||||||||
|
Net loss (gain)
|
949 | 10 | 959 | — | 959 | — | — | — | — | — | ||||||||||||||||||||||||||||||
|
Prior service cost recognized from curtailment
|
(3 | ) | — | (3 | ) | — | (3 | ) | — | — | — | — | — | |||||||||||||||||||||||||||
|
Amortization of net actuarial loss
|
(28 | ) | (1 | ) | (29 | ) | (3 | ) | (32 | ) | (20 | ) | (1 | ) | (21 | ) | (2 | ) | (23 | ) | ||||||||||||||||||||
|
Amortization of prior service cost
|
(1 | ) | — | (1 | ) | — | (1 | ) | (1 | ) | — | (1 | ) | — | (1 | ) | ||||||||||||||||||||||||
|
Total change recognized in other comprehensive income
|
917 | 9 | 926 | (3 | ) | 923 | (21 | ) | (1 | ) | (22 | ) | (2 | ) | (24 | ) | ||||||||||||||||||||||||
|
Total impact from net periodic benefit cost and changes in other
comprehensive income
|
$ | 955 | $ | 17 | $ | 972 | $ | 5 | $ | 977 | $ | — | $ | 5 | $ | 5 | $ | 6 | $ | 11 | ||||||||||||||||||||
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| 2011 | 2010 | |||||||||||||||||||||||||||||||||||||||
|
Total |
Other |
Total |
Other |
|||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30 | U.S. | Int’l | Pension | Benefits | Total | U.S. | Int’l | Pension | Benefits | Total | ||||||||||||||||||||||||||||||
|
Net periodic benefit cost:
|
||||||||||||||||||||||||||||||||||||||||
|
Service cost
|
$ | 87 | $ | 14 | $ | 101 | $ | 5 | $ | 106 | $ | 81 | $ | 12 | $ | 93 | $ | 5 | $ | 98 | ||||||||||||||||||||
|
Interest cost
|
225 | 24 | 249 | 28 | 277 | 230 | 21 | 251 | 30 | 281 | ||||||||||||||||||||||||||||||
|
Expected return on plan assets
|
(307 | ) | (20 | ) | (327 | ) | (17 | ) | (344 | ) | (311 | ) | (18 | ) | (329 | ) | (16 | ) | (345 | ) | ||||||||||||||||||||
|
Amortization of net actuarial loss
|
82 | 3 | 85 | 9 | 94 | 61 | 2 | 63 | 8 | 71 | ||||||||||||||||||||||||||||||
|
Amortization of prior service cost
|
3 | — | 3 | (1 | ) | 2 | 3 | — | 3 | (1 | ) | 2 | ||||||||||||||||||||||||||||
|
Net periodic benefit cost
|
90 | 21 | 111 | 24 | 135 | 64 | 17 | 81 | 26 | 107 | ||||||||||||||||||||||||||||||
|
Loss from curtailment/special termination benefits
|
5 | — | 5 | — | 5 | — | — | — | — | — | ||||||||||||||||||||||||||||||
|
Total net periodic benefit cost
|
95 | 21 | 116 | 24 | 140 | 64 | 17 | 81 | 26 | 107 | ||||||||||||||||||||||||||||||
|
Other changes in plan assets and benefit obligations
recognized in other comprehensive income
|
||||||||||||||||||||||||||||||||||||||||
|
Net loss (gain)
|
949 | 10 | 959 | — | 959 | — | — | — | — | — | ||||||||||||||||||||||||||||||
|
Prior service cost recognized from curtailment
|
(3 | ) | — | (3 | ) | — | (3 | ) | — | — | — | — | — | |||||||||||||||||||||||||||
|
Amortization of net actuarial loss
|
(82 | ) | (3 | ) | (85 | ) | (9 | ) | (94 | ) | (61 | ) | (2 | ) | (63 | ) | (8 | ) | (71 | ) | ||||||||||||||||||||
|
Amortization of prior service cost
|
(3 | ) | — | (3 | ) | 1 | (2 | ) | (3 | ) | — | (3 | ) | 1 | (2 | ) | ||||||||||||||||||||||||
|
Total change recognized in other comprehensive income
|
861 | 7 | 868 | (8 | ) | 860 | (64 | ) | (2 | ) | (66 | ) | (7 | ) | (73 | ) | ||||||||||||||||||||||||
|
Total impact from net periodic benefit cost and changes in other
comprehensive income
|
$ | 956 | $ | 28 | $ | 984 | $ | 16 | $ | 1,000 | $ | — | $ | 15 | $ | 15 | $ | 19 | $ | 34 | ||||||||||||||||||||
We contributed approximately $76 and $13 to our various plans
during the nine months ended September 30, 2011 and 2010,
respectively. Additional contributions ranging between $8 and
$10 are expected during the remainder of 2011.
Plan Design
Changes
Substantially all of ITT’s employees are covered under
various defined benefit pension plans, defined contribution
plans, or both, when they meet the eligibility requirements of
the plans. During the third quarter of 2011, the Compensation
Committee of ITT’s Board of Directors amended the
U.S. retirement programs to more closely align to industry
practice. The most significant amendment was to the
U.S. Salaried Retirement Plan (U.S. SRP) which will be
transferred to Exelis at the Distribution Date. These amendments
will be effective on completion of the Distribution of Xylem and
Exelis. The plan design changes include eliminating future
benefit accruals for a significant portion of employees who will
remain with ITT or who transfer to Xylem, accelerating vesting
for certain plan participants as of the Distribution Date, and
recognizing future services for eligibility purposes for a
defined period of time. In addition, the U.S. SRP will no
longer be offered to new U.S. hires. Employees remaining
with ITT or transferring to Xylem and new hires at each company
will be eligible for an enhanced employer contribution to their
401(k).
The Compensation Committee of ITT’s Board of Directors also
approved changes in the U.S. SRP for employees transferring
to Exelis. The plan design changes for employees transferring to
Exelis include providing an irrevocable one-time election to
either continue to participate in the U.S. SRP or to enroll
in an enhanced 401(k) with greater matching contributions.
In addition, unrelated to the spinoff, we froze one of our
international pension plans.
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As a result of the third quarter 2011 changes, ITT remeasured
its projected benefit obligations and plan assets for certain
U.S. and international pension plans, including the
U.S. SRP. These actions resulted in an increase to
ITT’s net pension liability of $661, primarily related to
the U.S. SRP. The deterioration in the funded status
resulted from a decrease in the discount rate used to measure
the projected benefit obligations and a decline in the fair
value of plan assets during the nine months ended
September 30, 2011. In addition, we recorded a curtailment
loss of $5 during the third quarter of 2011. Substantially all
of the deterioration in the funded status was recorded as an
after-tax adjustment of $606 to unrecognized actuarial loss
included in accumulated other comprehensive income. At
September 30, 2011, in the aggregate, ITT’s net
postretirement liability was $2,671.
The funded status at the end of 2011 will be remeasured for all
postretirement benefit plans using the actual return on assets
through December 31, 2011 and will utilize the discount
rate at December 31, 2011. Depending on this remeasurement
the funded status of our postretirement plans could change
materially.
NOTE 16
LONG-TERM INCENTIVE EMPLOYEE
COMPENSATION
Our long-term incentive awards program (LTIP) comprises three
components: non-qualified stock options (NQOs), restricted stock
(RS) and a target cash award (TSR). We account for NQOs and RS
as equity-based compensation awards. TSR awards are cash settled
and accounted for as liability-based compensation. LTIP employee
compensation costs are primarily recorded within Selling,
General and Administrative (SG&A) expenses, and are reduced
by an estimated forfeiture rate. The following table provides
the impact of these costs in our Consolidated Condensed Income
Statements for the three and nine month periods ended
September 30, 2011 and 2010.
| Three Months | Nine Months | |||||||||||||||||||
| For the Periods Ended September 30 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||
|
Compensation costs on equity-based awards
|
$ | 8 | $ | 7 | $ | 22 | $ | 23 | ||||||||||||
|
Compensation costs on liability-based awards
|
2 | (7 | ) | 7 | (7 | ) | ||||||||||||||
|
Total compensation costs, pre-tax
|
$ | 10 | $ | — | $ | 29 | $ | 16 | ||||||||||||
|
Future tax benefit
|
$ | 3 | $ | — | $ | 9 | $ | 4 | ||||||||||||
At September 30, 2011, there was $56 of unrecognized
compensation cost related to non-vested NQOs and RS. This cost
is expected to be recognized ratably over a weighted-average
period of 1.9 years.
Year-to-Date
2011 LTIP Activity
The majority of our LTIP activity occurs during the first
quarter of each year. On March 3, 2011, we granted the 2011
LTIP awards. The grants comprised 0.7 NQOs, 0.5 units of RS
and 10.8 TSR units with respective grant date fair values of
$14.86, $57.68 and $1.00, respectively. The NQOs vest either on
the completion of a three-year service period or annually in
three equal installments, as determined by employee level, and
have a ten-year expiration period. RS and TSR units vest on the
completion of a three-year service period.
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Table of Contents
The fair value of RS corresponds to the closing price of ITT
common stock on the date of grant. The fair value of each NQO
grant was estimated on the date of grant, using a binomial
lattice pricing model that incorporates multiple and variable
assumptions over time, including assumptions such as employee
exercise patterns, stock price volatility and changes in
dividends. The following table details the assumptions utilized
to measure fair value.
|
Dividend yield
|
1.73 | % | ||
|
Expected volatility
|
24.75 | % | ||
|
Expected life (in years)
|
7.0 | |||
|
Risk-free rates
|
3.06 | % | ||
|
Weighted-average grant date fair value
|
$ | 14.86 | ||
Expected volatilities are based on ITT’s realized
historical stock price volatility and implied volatility derived
from traded options on our stock. ITT uses historical data to
estimate employee option exercise behavior within the valuation
model. Employee groups and option characteristics are considered
separately for valuation purposes. The expected life represents
an estimate of the period of time options are expected to remain
outstanding. The expected life provided above represents the
weighted average of expected behavior for certain groups of
employees who have historically exhibited different behavior.
The risk-free rate is based on the U.S. Treasury yield
curve in effect at the time of option grant.
The fair value of TSR units is measured on a quarterly basis and
corresponds to ITT’s total shareholder return as compared
to the total shareholder return of other industrial companies
within the S&P 500 composite, subject to a multiplier which
includes a 200% maximum and 0% minimum payout. The relative
performance ranking calculated is adjusted to reflect expected
volatility over the remaining term of the award using a Monte
Carlo simulation.
During the first nine months of 2011, 1.3 stock options were
exercised resulting in proceeds of $49. Restrictions on
0.4 shares of RS lapsed during the first nine months of
2011 resulting in the issuance of 0.2 shares of common
stock. Typically, during the first quarter of each year, cash
payments are made to settle TSR awards that vested on
December 31st of the preceding year. However, no
payments were made during the first quarter of 2011 as the TSR
performance metric for the 2008 to 2010 performance period was
less than the minimum stipulated in the TSR Award Agreement.
During the first quarter of 2010, payments totaling $18 were
made to settle the vested 2007 TSR award.
NOTE 17
COMMITMENTS AND
CONTINGENCIES
From time to time, we are involved in legal proceedings that are
incidental to the operation of our businesses. Some of these
proceedings allege damages relating to environmental exposures,
intellectual property matters, copyright infringement, personal
injury claims, employment and pension matters, government
contract issues and commercial or contractual disputes,
sometimes related to acquisitions or divestitures. We will
continue to defend vigorously against all claims.
Although the ultimate outcome of any legal matter cannot be
predicted with certainty, based on present information,
including our assessment of the merits of the particular claim,
as well as our current reserves and insurance coverage, we do
not expect that any asserted or unasserted legal claims or
proceedings, individually or in the aggregate, will have a
material adverse effect on our cash flow, results of operations,
or financial condition, unless otherwise noted below.
Asbestos
Matters
Background
ITT, including its subsidiary Goulds Pumps, Inc. (Goulds), has
been joined as a defendant with numerous other companies in
product liability lawsuits alleging personal injury due to
asbestos exposure. These claims allege that certain products
sold by us or our subsidiaries prior to 1985 contained a part
manufactured by a third party (e.g., a gasket) which contained
asbestos. To the extent these third-party parts may have
contained asbestos, it was encapsulated in the gasket (or other)
material and was non-
22
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friable. In certain other cases, it is alleged that former ITT
companies were distributors for other manufacturers’
products that may have contained asbestos.
Activity related to open claims filed against ITT in various
state and federal courts alleging injury as a result of exposure
to asbestos during the nine-month period was as follows:
| 2011(a) | ||||
|
Pending claims – 12/31
|
103,575 | |||
|
New claims
|
4,220 | |||
|
Settlements
|
(1,009 | ) | ||
|
Dismissals
|
(2,071 | ) | ||
|
Pending claims – 9/30
|
104,715 | |||
| (a) | In September 2010, ITT executed an amended cost-sharing agreement related to a business we disposed of a number of years ago. The amended agreement provides for a sharing of costs for claims resolved between 2010 and 2019 naming ITT or the entity which acquired the disposed business. Claim activity associated with the amended cost-sharing agreement for claims that were not filed against ITT are excluded from the table above. |
Frequently, plaintiffs are unable to identify any ITT or Goulds
product as a source of asbestos exposure. In addition, in a
large majority of claims pending against the Company, plaintiffs
are unable to demonstrate any injury. Many of those claims have
been placed on inactive dockets (including 39,680 claims in
Mississippi). Our experience to date is that a substantial
portion of resolved claims have been dismissed without payment
by the Company. As a result, management believes that a large
majority of the pending claims have little or no settlement
value. Because claims are sometimes dismissed in large groups,
the average cost per resolved claim as well as the number of
open claims can fluctuate significantly from period to period.
The Company records an undiscounted asbestos liability,
including legal fees, for costs that the Company is estimated to
incur to resolve all pending claims, as well as unasserted
claims estimated to be filed over the next 10 years. The
Company has also recorded an asbestos asset, comprised
predominantly of an insurance asset and expected recoveries from
other responsible parties. The asbestos asset represents our
best estimate of probable recoveries from third parties for
pending claims, as well as unasserted claims estimated to be
filed over the next 10 years. The timing and amount of
reimbursements will vary due to differing policy terms and
certain gaps in coverage as a result of possible insurer
insolvencies.
The methodology used to estimate our total liability for pending
and unasserted future asbestos claims relies on and includes the
following key factors:
| n | interpretation of a widely accepted forecast of the population likely to have been occupationally exposed to asbestos; | |
| n | widely accepted epidemiological studies estimating the number of people likely to develop mesothelioma and lung cancer from exposure to asbestos; | |
| n | the Company’s historical experience with the filing of non-malignant claims against it and the historical relationship between non-malignant and malignant claims filed against the Company; | |
| n | analysis of the number of likely asbestos personal injury claims to be filed against the Company based on such epidemiological and historical data and the Company’s most recent claims experience history; | |
| n | an analysis of the Company’s pending cases, by disease type; | |
| n | an analysis of the Company’s most recent history to determine the average settlement and resolution value of claims, by disease type; |
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Table of Contents
| n | an analysis of the Company’s defense costs in relation to its settlement costs and resolved claims; | |
| n | an adjustment for inflation in the future average settlement value of claims and defense costs; and | |
| n | an analysis of the time over which the Company is likely to resolve asbestos claims. |
Our methodology determines a point estimate based upon our
assessment of the value of each underlying assumption, rather
than a range of estimates of reasonably possible outcomes.
Projecting future asbestos costs is subject to numerous
variables and uncertainties that are inherently difficult to
predict. In addition to the uncertainties surrounding the key
factors discussed above, other factors include the long latency
period prior to the manifestation of the asbestos-related
disease, costs of medical treatment, the impact of bankruptcies
of other companies that are co-defendants, uncertainties
surrounding the litigation process from jurisdiction to
jurisdiction and from case to case, and the impact of potential
legislative or judicial changes. Furthermore, any predictions
with respect to the variables impacting the estimate of the
asbestos liability are subject to even greater uncertainty as
the projection period lengthens. In light of the uncertainties
and variables inherent in the long-term projection of the
Company’s asbestos liability, although it is probable that
the Company will incur additional costs for asbestos claims
filed beyond the next 10 years, we do not believe there is
a reasonable basis for estimating those costs at this time.
We record an asset that represents our best estimate of probable
recoveries from insurers and other responsible parties for the
estimated asbestos liabilities. In developing this estimate, the
Company considers
coverage-in-place
and other settlement agreements with its insurers and
contractual agreements with other responsible parties, as well
as a number of additional factors. These additional factors
include current levels of recovery experience, the financial
viability of the insurance carriers or other responsible
parties, the method by which losses will be allocated to the
various insurance policies and the years covered by those
policies, and interpretation of the various policy and contract
terms and limits and their interrelationships. The timing and
amount of reimbursements will vary due to differing policy terms
and certain gaps in coverage as a result of some insurer
insolvencies. In addition, the Company retains an insurance
consulting firm to assist management in estimating probable
recoveries for pending asbestos claims and for claims estimated
to be filed over the next 10 years based on the analysis of
policy terms, the likelihood of recovery assuming the continued
viability of those insurance carriers and other responsible
parties which are currently solvent and incorporating risk
mitigation judgments where policy terms or other factors were
not certain.
In the third quarter each year, we conduct a detailed study with
the assistance of outside consultants to review and update, as
appropriate, the underlying assumptions used to estimate our
asbestos liability and related assets. As part of our ongoing
review of our net asbestos exposures, each quarter we assess
most recent data available for the key inputs and assumptions,
comparing the data to the expectations on which the most recent
annual liability and asset estimate were based. Additionally, we
periodically reassess the time horizon over which a reasonable
estimate of unasserted claims can be projected.
Results of
Operations
In the third quarter of 2011, we conducted our annual detailed
study with the assistance of outside consultants to review and
update the underlying assumptions used to estimate our asbestos
liability and related assets. During this study, the underlying
assumptions were updated based on our actual experience since
our last detailed review in the third quarter of 2010, a
reassessment of the appropriate reference period of years of
experience used in determining each assumption and our
expectations regarding future conditions, including inflation.
Based on the results of this study, we decreased our estimated
undiscounted asbestos liability, including legal fees, by $44 to
$1,660, reflecting costs that the Company is estimated to incur
to resolve all pending claims, as well as unasserted claims
estimated to be filed over the next 10 years. The decrease
in our estimated liability is a result of several developments,
including a reduction in the assumed rate of increase in future
average settlement costs and an expectation of lower defense
costs relative to indemnities paid. These favorable factors were
offset in part by increased activity in several higher-cost
jurisdictions, increasing the number of cases expected to be
adjudicated.
Further, in the third quarter of 2011, the Company reduced its
estimated asbestos-related assets by $76 to $950, based on the
results of this study. These assets comprise an insurance asset,
as well as receivables from other responsible parties. The
decrease in our asbestos-related assets is a result of the
decrease in the estimated liability and reductions in expected
recovery rates from
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certain insurers. See discontinued operations discussion below
for further information about receivables from parties other
than insurers.
The table provided below summarizes the pre-tax asbestos charge
for the three and nine month periods ended September 30,
2011 and 2010.
| Three Months | Nine Months | ||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||||
|
Continuing operations
|
$ | 59 | $ | 341 | $ | 91 | $ | 368 | |||||||||
|
Discontinued operations
|
(9 | ) | (10 | ) | (6 | ) | (10 | ) | |||||||||
|
Total
|
$ | 50 | $ | 331 | $ | 85 | $ | 358 | |||||||||
Changes in
Financial Position
The Company’s estimated asbestos exposure, net of expected
recoveries from insurers and other responsible parties, for the
resolution of all pending and unasserted asbestos claims
estimated to be filed in the next 10 years was $710 and
$641 as of September 30, 2011 and December 31, 2010,
respectively. The following table provides a rollforward of the
estimated total asbestos liability and related assets for the
nine months ended September 30, 2011.
| Liability | Asset | Net | ||||||||||
|
Balance — 12/31
|
$ | 1,676 | $ | 1,035 | $ | 641 | ||||||
|
Changes in estimate during the period:
|
||||||||||||
|
Continuing operations
|
102 | 11 | 91 | |||||||||
|
Discontinued operations
|
(62 | ) | (56 | ) | (6 | ) | ||||||
|
Net cash activity
|
(56 | ) | (40 | ) | (16 | ) | ||||||
|
Balance — 9/30
|
$ | 1,660 | $ | 950 | $ | 710 | ||||||
The total asbestos liability as of September 30, 2011 and
December 31, 2010 include $139 and $117 presented within
accrued liabilities, respectively and related assets of $131 and
$105 represented within other current assets for the respective
periods.
The asbestos liability and related receivables are based upon
current, known information. However, future events affecting the
key factors and other variables for either the asbestos
liability or related receivables could cause the actual costs
and recoveries to be materially higher or lower than currently
estimated. Due to these uncertainties, as well as our inability
to reasonably estimate any additional asbestos liability for
claims which may be filed beyond the next 10 years, it is
not possible to predict the ultimate outcome of the cost of
resolving the pending and all unasserted asbestos claims. We
believe it is possible that future events affecting the key
factors and other variables within the next 10 years, as
well as the cost of asbestos claims filed beyond the next
10 years, net of expected recoveries, could have a material
adverse effect on our financial position, results of operations
or cash flows.
Discontinued
Operations:
At September 30, 2011 and December 31, 2010, $230 and
$292 of the liability and $229 and $285 of the asset related to
a business which we disposed of a number of years ago that is
reported as a discontinued operation. In September 2010 we
executed an amended cost sharing agreement with the entity that
acquired the disposed business. The amended agreement provides
for a sharing of the claims settled between 2010 and 2019 naming
ITT or the entity which acquired the disposed business. In the
future years, the liability for sharing the claims gradually
transitions away from ITT such that ITT will have no
responsibility for claims in 8 to 9 years. The amended cost
sharing agreement also provides for the sharing of certain
insurance policies.
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Table of Contents
Future Cash
Flows:
We have estimated that we will be able to recover 65% of the
asbestos costs (defense and settlement costs) for pending claims
as well as unasserted claims estimated to be filed over the next
10 years from our insurers or other responsible parties.
However, because there are gaps in our insurance coverage,
reflecting the insolvency of certain insurers and prior
insurance settlements, and we expect that certain policies from
some of our insurers will exhaust within the next 10 years,
the recovery percentage is expected to decline for potential
additional asbestos liabilities. In the tenth year of our
estimate of the asbestos claims liability, our insurance
recoveries are currently projected to be approximately 20%.
Future recoverability rates may also be impacted by other
factors, such as future insurance settlements, insolvencies and
judicial determinations relevant to our coverage program, which
are difficult to predict. Subject to the qualifications
regarding uncertainties previously described, it is expected
that future annual cash payments, net of recoveries related to
pending claims and unasserted claims to be filed within the next
10 years, will extend through approximately 2025 due to the
time lag between the filing of a claim and its resolution. These
annual net cash outflows are projected to average $20 over the
next five years, as compared to an approximate average $10 per
year over the past three years, and increase to an average of
approximately $50 to $60 over the remainder of the projection
period.
Other
Matters
The Company is involved in coverage litigation with various
insurers seeking recovery of costs incurred in connection with
certain environmental and product liabilities. In a suit filed
in 1991, ITT Corporation, et al. v. Pacific Indemnity
Corporation et al, Sup. Ct., Los Angeles County, we are seeking
recovery of costs related to environmental losses. Discovery,
procedural matters, changes in California law, and various
appeals have prolonged this case. For several years, the case
was on appeal before the California Court of Appeals from a
decision by the California Superior Court dismissing certain
claims made by ITT. The case is now before the Superior Court,
which has scheduled several trials on dispositive issues for
early 2012.
On February 13, 2003, we commenced an action, Cannon
Electric, Inc. v. Affiliated FM Ins. Co., Sup. Ct., Los
Angeles County, seeking recovery of costs related to asbestos
product liability losses described above. During this coverage
litigation, we entered into
coverage-in-place
settlement agreements with ACE, Wausau and Utica Mutual dated
April 2004, September 2004, and February 2007, respectively.
These agreements provide specific coverage for the
Company’s legacy asbestos liabilities. A trial on several
insurers coverage obligations for Goulds Pumps, Inc., is
scheduled for November 2011. We continue to negotiate coverage
in place agreements with other insurers. Where those
negotiations are not productive, we will request that a trial be
scheduled.
On March 27, 2007, we reached a settlement relating to an
investigation of our ITT Night Vision Division’s compliance
with the International Traffic in Arms Regulations (ITAR)
pursuant to which we pled guilty to two violations, based on the
export of defense articles without a license and the omission of
material facts in required export reports. We were assessed a
total of $50 in fines, forfeitures and penalties. We also
entered into a Deferred Prosecution Agreement with the
U.S. Government which deferred action regarding a third
count of violations related to ITAR pending our implementation
of a remedial action plan, including the appointment of an
independent monitor. We were also assessed a deferred
prosecution monetary penalty of $50 which is being reduced for
monies spent, during the five-year period following the date of
the Plea Agreement, to accelerate and further the development
and fielding of advanced night vision technology. On
April 12, 2011, the Department of Justice dismissed the
deferred third count of the Deferred Prosecution Agreement. This
dismissal terminates any further obligation of the Company under
the Deferred Prosecution Agreement with the exception of our
obligation to pay $50 as identified above. Management believes
that this matter will not have a material adverse effect on our
consolidated condensed financial position, results of operations
or cash flows.
NOTE 18
GUARANTEES
We have a number of guarantees outstanding at September 30,
2011, the substantial majority of which pertain to our
performance under long-term sales contracts. We did not have any
recorded loss contingencies under these performance guarantees
as of September 30, 2011 or December 31, 2010 as the
likelihood of nonperformance by ITT or ITT’s subsidiaries
is considered remote. We also have certain third-party
guarantees that may be affected by various conditions and
external factors,
26
Table of Contents
some of which could require that payments be made under such
guarantees. We do not consider the maximum exposure or current
recorded liabilities under our third-party guarantees to be
material either individually or in the aggregate. We do not
believe such payments would have a material adverse impact on
the financial position, results of operations or cash flows on a
consolidated basis.
In December 2007, we entered into a sale leaseback agreement for
our corporate aircraft, with the aircraft leased to ITT under a
five-year operating lease and provided a residual value
guarantee to the lessor for the future value of the aircraft.
During the second quarter of 2011, we purchased the aircraft
from the lessor for $50, the price stated in the sale leaseback
agreement, and as such the sale leaseback agreement and the
associated residual value guarantee were terminated. In
connection with the second quarter purchase transaction we
settled the previously recorded $22 loss and recognized an
additional charge of $3, presented within SG&A expenses. In
the third quarter of 2011, we sold an aircraft that was
classified as held for sale as of June 30, 2011. The sale
resulted in proceeds of $26 and a pre-tax gain of $3 presented
within the SG&A expenses of our Consolidated Condensed
Income Statements.
NOTE 19
SEGMENT INFORMATION
The Company’s segments are reported on the same basis used
internally for evaluating performance and for allocating
resources. Our three reportable segments are referred to as:
Defense & Information Solutions (Defense segment),
Fluid Technology (Fluid segment), and Motion & Flow
Control (Motion & Flow segment). Corporate and Other
consists of corporate office expenses including compensation,
benefits, occupancy, depreciation, and other administrative
costs, as well as charges related to certain matters, such as
the planned spinoff transaction, and asbestos and environmental
matters, that are managed at a corporate level and are not
included in the business segments in evaluating performance or
allocating resources. Assets of the business segments exclude
general corporate assets, which principally consist of cash,
deferred tax assets, asbestos-related receivables, certain
property, plant and equipment, and certain other assets.
Defense – The businesses in this segment are
those that directly serve the military and government agencies
with products and services. Products include tactical
communications equipment, electronic warfare and force
protection equipment, radar systems, integrated structures
equipment and imaging and sensor equipment, which include night
vision goggles, as well as weather, location, surveillance and
other related technologies. Services include air traffic
management, information and cyber solutions, large-scale systems
engineering and integration and defense technologies. The
U.S. Government accounted for approximately 88% of Defense
segment revenue during the three and nine month periods ended
September 30, 2011 and 2010.
Fluid – Our Fluid segment is a provider of
water transport and wastewater treatment systems, pumps and
related technologies, and other water and fluid control products
with residential, commercial, and industrial applications.
Motion & Flow – Our
Motion & Flow segment comprises a group of businesses
providing products and services for the areas of transportation,
defense, aerospace, industrial, computer, telecommunications,
medical, marine, and food & beverage. The
Motion & Flow businesses primarily serve the high end
of their markets, with highly engineered products, high brand
recognition, a focus on new product development and operational
excellence.
| Three Months Ended September 30 | 2011 – Revenue | 2010 – Revenue | |||||||||||||||||||||||
| Product | Service | Total | Product | Service | Total | ||||||||||||||||||||
|
Defense
|
$ | 744 | $ | 785 | $ | 1,529 | $ | 810 | $ | 556 | $ | 1,366 | |||||||||||||
|
Fluid
|
1,034 | 35 | 1,069 | 884 | 33 | 917 | |||||||||||||||||||
|
Motion & Flow
|
384 | 2 | 386 | 361 | 2 | 363 | |||||||||||||||||||
|
Eliminations
|
(3 | ) | — | (3 | ) | (3 | ) | — | (3 | ) | |||||||||||||||
|
Total
|
$ | 2,159 | $ | 822 | $ | 2,981 | $ | 2,052 | $ | 591 | $ | 2,643 | |||||||||||||
27
Table of Contents
| Nine Months Ended September 30 | 2011 – Revenue | 2010 – Revenue | |||||||||||||||||||||||
| Product | Service | Total | Product | Service | Total | ||||||||||||||||||||
|
Defense
|
$ | 2,109 | $ | 2,265 | $ | 4,374 | $ | 2,538 | $ | 1,724 | $ | 4,262 | |||||||||||||
|
Fluid
|
3,035 | 134 | 3,169 | 2,498 | 96 | 2,594 | |||||||||||||||||||
|
Motion & Flow
|
1,224 | 6 | 1,230 | 1,106 | 7 | 1,113 | |||||||||||||||||||
|
Eliminations
|
(8 | ) | — | (8 | ) | (9 | ) | — | (9 | ) | |||||||||||||||
|
Total
|
$ | 6,360 | $ | 2,405 | $ | 8,765 | $ | 6,133 | $ | 1,827 | $ | 7,960 | |||||||||||||
| Operating Income | Operating Margin | ||||||||||||||||||||||||||||||||
| For the Periods Ended September 30 | 3M 2011 | 3M 2010 | 9M 2011 | 9M 2010 | 3M 2011 | 3M 2010 | 9M 2011 | 9M 2010 | |||||||||||||||||||||||||
|
Defense
|
$ | 178 | $ | 178 | $ | 456 | $ | 513 | 11.6 | % | 13.0 | % | 10.4 | % | 12.0 | % | |||||||||||||||||
|
Fluid
|
144 | 115 | 430 | 336 | 13.5 | % | 12.5 | % | 13.6 | % | 13.0 | % | |||||||||||||||||||||
|
Motion & Flow
|
49 | 46 | 170 | 144 | 12.7 | % | 12.7 | % | 13.8 | % | 12.9 | % | |||||||||||||||||||||
|
Corporate and Other
|
(219 | ) | (371 | ) | (456 | ) | (456 | ) | — | — | — | — | |||||||||||||||||||||
|
Total
|
$ | 152 | $ | (32 | ) | $ | 600 | $ | 537 | 5.1 | % | (1.2 | )% | 6.8 | % | 6.7 | % | ||||||||||||||||
|
Plant, Property & |
Capital |
Depreciation & |
|||||||||||||||||||||||||||||||
| Total Assets | Equipment, Net | Expenditures | Amortization | ||||||||||||||||||||||||||||||
| Nine Months Ended September 30 | 2011 | 2010(a) | 2011 | 2010(a) | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||
|
Defense
|
$ | 4,415 | $ | 4,149 | $ | 459 | $ | 434 | $ | 55 | $ | 73 | $ | 100 | $ | 99 | |||||||||||||||||
|
Fluid
|
4,763 | 4,055 | 502 | 518 | 83 | 50 | 109 | 69 | |||||||||||||||||||||||||
|
Motion & Flow
|
1,490 | 1,372 | 227 | 230 | 31 | 26 | 42 | 39 | |||||||||||||||||||||||||
|
Corporate and Other
|
4,420 | 2,862 | 26 | 23 | 17 | 25 | 6 | 7 | |||||||||||||||||||||||||
|
Total
|
$ | 15,088 | $ | 12,438 | $ | 1,214 | $ | 1,205 | $ | 186 | $ | 174 | $ | 257 | $ | 214 | |||||||||||||||||
| (a) | Amounts reflect balances as of December 31, 2010. |
The operations from one of our subsidiaries reported within the
Fluid segment as of December 31, 2010 was reclassified
during the first quarter of 2011 and is now reported within the
Motion & Flow segment. Prior periods presented in the
tables above have been retrospectively adjusted to reflect this
change.
NOTE 20
SUBSEQUENT EVENTS
Board Approval
for Distribution of Exelis Inc. and Xylem Inc. Common
Stock
On October 5, 2011, the ITT Board of Directors declared a
pro rata dividend of Exelis Common Stock and Xylem Common Stock,
to be made on October 31, 2011, or such other date whereby
conditions to the Distribution are satisfied or waived, to
ITT’s shareholders of record as of the close of business on
October 17, 2011. Each ITT stockholder will receive a
dividend of one share of Exelis Common Stock and one share of
Xylem Common Stock for every one share of ITT Common Stock that
they hold on the Record Date.
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Board Approval
for ITT Common Stock Reverse Stock Split
On October 5, 2011, the ITT Board of Directors approved a
reverse stock split of ITT Common Stock at a ratio of one share
for every two shares held. The reverse stock split will be
affected after market close on October 31,2011. The effect of
the reverse stock split has not been reflected in these
financial statements.
Board Declares
ITT Fourth Quarter 2011 Dividend
On October 5, 2011, the Board declared a quarterly dividend
in respect of the fourth quarter, after giving effect to the
reverse stock split, of 9.1 cents per share to shareholders of
record on November 11, 2011 (equivalent to 4.55 cents per
share on a pre-reverse stock split basis). The ITT cash dividend
will be payable December 31, 2011.
New Revolving
Credit Facilities
ITT Revolving
Credit Facility
On October 25, 2011, we entered into a competitive advance
and revolving credit facility agreement (the ITT 2011 Revolving
Credit Agreement) with a consortium of third party lenders
including JP Morgan Chase Bank, N.A., as administrative agent,
and Citibank, N.A. as syndication agent. Upon its effectiveness
at the Distribution, this agreement replaced our existing $1,500
three-year revolving credit facility due August 2013. The ITT
2011 Revolving Credit Agreement provides for a four-year
maturity with a one-year extension option upon satisfaction of
certain conditions, and comprises an aggregate principal amount
of up to $500 of (i) revolving extensions of credit (the
revolving loans) outstanding at any time, (ii) competitive
advance borrowing option which will be provided on an
uncommitted competitive advance basis through an auction
mechanism (the competitive advances), and (iii) letters of
credit in a face amount up to $100 at any time outstanding.
Subject to certain conditions, we are permitted to terminate
permanently the total commitments and reduce commitments in
minimum amounts of $10. We are also permitted, subject to
certain conditions, to request that lenders increase the
commitments under the facility by up to $200 for a maximum
aggregate principal amount of $700. Voluntary prepayments are
permitted in minimum amounts of $50.
At our election, the interest rate per annum applicable to the
competitive advances will be based on either (i) a
Eurodollar rate determined by reference to LIBOR, plus an
applicable margin offered by the lender making such loans and
accepted by us or (ii) a fixed percentage rate per annum
specified by the lender making such loans. At our election,
interest rate per annum applicable to the revolving loans will
be based on either (i) a Eurodollar rate determined by
reference to LIBOR, adjusted for statutory reserve requirements,
plus an applicable margin or (ii) a fluctuating rate of
interest determined by reference to the greatest of (a) the
prime rate of JPMorgan Chase Bank, N.A., (b) the federal
funds effective rate plus one-half of 1% or (c) the
1-month LIBO
rate, adjusted for statutory reserve requirements, plus 1%, in
each case, plus an applicable margin.
Our obligations under the credit facility will be
unconditionally guaranteed by each of our direct or indirect
domestic subsidiaries.
The credit facility contains customary affirmative and negative
covenants that, among other things, will limit or restrict our
ability to: incur additional debt or issue guarantees; create
liens; enter into certain sale and lease-back transactions;
merge or consolidate with another person; sell, transfer, lease
or otherwise dispose of assets; liquidate or dissolve; and enter
into restrictive covenants. Additionally, the credit facility
agreement requires us not to permit the ratio of consolidated
total indebtedness to consolidated earnings before interest,
taxes, depreciation and amortization (EBITDA) (leverage ratio)
to exceed 3.00 to 1.00 at any time, or the ratio of consolidated
EBITDA to consolidated interest expense (interest coverage
ratio) to be less than 3.00 to 1.00.
Exelis &
Xylem Revolving Credit Facilities
On October 25, 2011, both Exelis and Xylem entered into
separate four-year credit facility agreements with underlying
terms and conditions similar to the ITT 2011 Revolving Credit
Agreement described above. On its effectiveness, the Exelis
credit facility will provide for a four-year maturity, with
potential one year extension option, and comprises an aggregate
principal amount of up to $600 million and a maximum
principal amount of $800. On its effectiveness, the Xylem credit
facility will provide for a four-year
29
Table of Contents
maturity, with potential one year extension option, and
comprises an aggregate principal amount of up to
$600 million and a maximum principal amount of $800. The
Exelis and Xylem credit facilities require each company not to
permit the ratio of consolidated total indebtedness to
consolidated EBITDA (leverage ratio) to exceed 3.50 to 1.00 at
any time. On October 28, 2011, Exelis borrowed $240 under
the revolving credit facility.
Extinguishment
of Debt
On October 20, 2011, we completed the early retirement of
all debentures outstanding under the 4.90% May 2014 Senior Notes
and 6.125% May 2019 Senior Notes. In addition, on
October 19, 2011 we completed a tender offer for our 2025
Notes through which $88 of debentures was extinguished. In
addition, on October 21, 2011 we defeased the remaining
$162 of 2025 Notes that were not tendered pursuant to the
satisfaction and discharge provisions of the indenture relating
to the 2025 Notes. The early retirement of these debt
instruments will result in a fourth quarter 2011 loss on the
extinguishment of debt of $325, which will be offset in part by
the realization of a deferred gain on interest rate swaps. See
Note 14 to our Consolidated Condensed Financial Statements
for further information regarding the extinguishment of debt.
Agreements
with Exelis and Xylem Related to the
Transformation
On October 25, 2011, ITT, Exelis, and Xylem executed the various
agreements that will govern the ongoing relationships between
the three companies after the Distribution and provide for the
allocation of employee benefits, income taxes, and certain other
liabilities and obligations attributable to periods prior to the
Distribution. The executed agreements include the Distribution
Agreement, Benefits and Compensation Matters Agreement, Tax
Matters Agreement, and Master Transition Services Agreement and
a number of on-going commercial relationships. The Distribution
Agreement also provides for certain indemnifications and
cross-indemnifications among ITT, Exelis, and Xylem. The
indemnifications address a variety of subjects, including
asserted and unasserted product liability matters (e.g.,
asbestos claims, product warranties), which relate to products
sold prior to the Distribution Date. The indemnifications are
absolute and indefinite. The indemnification associated with
pending and future asbestos claims does not expire. Effective
upon the Distribution, we intend for certain intercompany work
orders and/or informal intercompany commercial arrangements to
be converted into third-party contracts based on ITT’s
standard terms and conditions.
30
Table of Contents
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
(In millions,
except per share amounts, unless otherwise stated)
OVERVIEW
ITT Corporation (references herein to “ITT,” “the
Company,” and such words as “we,” “us,”
and “our” include ITT Corporation and its
subsidiaries) is a global multi-industry high-technology
engineering and manufacturing organization. We generate revenue
through the design, manufacture, and sale of a wide range of
products that are engineered to deliver extraordinary solutions
to meet life’s most essential needs — more
livable environments, better protection and safety, and
breakthrough communications that connect our world. Our products
and services provide solutions in the following vital markets:
global defense and security, water and fluids management, and
motion and flow control. Our portfolio includes three core
businesses focused on making a difference in our communities and
the world. From climate change and water scarcity to population
growth, infrastructure modernization, critical communications
and security concerns, ITT is prepared to play a continuing role
in developing sustainable solutions to pressing global problems.
Our business is reported in three segments: Defense &
Information Solutions (Defense segment), Fluid Technology (Fluid
segment), and Motion & Flow Control
(Motion & Flow segment). Our Defense segment is a
major U.S. aerospace and defense contractor delivering
advanced systems and providing technical and operational
services. Our Fluid segment is a leading supplier of pumps and
systems to transport and control water and other fluids. Our
Motion and Flow segment is a manufacturer of highly engineered
critical components, such as brake friction materials,
electrical connectors and switch applications, used in multiple
growth markets.
On January 12, 2011, the Company announced that its Board
of Directors had unanimously approved a plan to separate the
Company’s businesses into three independent, publicly
traded companies (the Transformation). Under the Transformation
plan, ITT will execute tax-free spinoffs to shareholders of its
water-related businesses and its Defense segment. Following
completion of the Transformation, ITT will continue to trade on
the New York Stock Exchange as an industrial company that
supplies highly engineered solutions in the aerospace,
transportation, energy and industrial markets. Following the
completion of the Transformation, ITT shareholders will own
shares in all three corporations. The transaction is anticipated
to be completed on October, 31, 2011. As a result of the
Transformation, we will reorganize to a new management and
segment reporting structure.
Executive
Summary
ITT reported revenue of $3.0 billion for the quarter ended
September 30, 2011, an increase of 12.8% compared to the
corresponding 2010 period, led by significant growth from
defense operational services and positive results from each of
our Fluid segment divisions. Operating income for the third
quarter of 2011 was $152, reflecting an increase of $184 from
the prior year. These results primarily reflect a $282 decline
in asbestos-related costs as well as growth of 25.2% from our
Fluid segment operations, which were partially offset by $132 of
costs related to the Transformation. Income generated from
continuing operations during the third quarter of 2011 was $71
or $0.38 per diluted share, compared to $12 or $0.07 per diluted
share during the corresponding 2010 period.
Adjusted income from continuing operations was $218 for the
third quarter of 2011, reflecting an increase of $18, or 9.0%,
over the prior year adjusted amount. Our adjusted income from
continuing operations for the third quarter of 2011 translated
into $1.17 per diluted share as compared to $1.08 per diluted
share from the third quarter of 2010. See the “Key
Performance Indicators and Non-GAAP Measures,” section
included within Management’s Discussion and Analysis for a
reconciliation of the adjusted non-GAAP measures.
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Additional highlights for the third quarter of 2011 include the
following:
| n | Fluid segment organic revenue growth of 7.6%, reflecting growth at each division, driven by oil and gas, mining project business and global dewatering equipment needs with particular strength in emerging markets, and commercial building services growth. | |
| n | Revenue growth of 11.9% within the Defense segment, driven primarily by growth from operational services of $195, or 52.3%, was partially offset by declines in sales of surge-related equipment. Operating margin declined 140 basis points primarily due to the change in revenue composition. | |
| n | Mixed results in the Motion & Flow segment, as revenue growth in the Motion Technologies and Control Technologies divisions was partially offset by a decline in the Interconnect Solutions division, resulting in overall segment organic revenue growth of $7, or 1.9%, over the corresponding prior year period. | |
| n | Orders of approximately $3,239 were received during the quarter, a 14.5% total increase over the prior year, driven by the Defense and Fluid segments. | |
| n | Completion of the YSI Incorporated (YSI) acquisition, which contributed approximately $10 of revenue to the Fluid segment results. | |
| n | Continued progress and key milestones achieved in connection with ITT’s previously announced Transformation, expected to be completed on October 31, 2011. | |
| n | On August 22, 2011, Steven Loranger announced his intention to resign from the positions of Chairman, President and Chief Executive Officer of ITT Corporation. Following the completion of the Transformation, Mr. Loranger will hold a position on the Board of Directors for both Xylem and Exelis. |
Further details related to the quarter and
year-to-date
results are contained in the Results of Operations section.
Known Trends
and Uncertainties
The following represents an update of trends and uncertainties
from those included in our 2010 Annual Report on
Form 10-K
which could have a significant impact on our results of
operations, financial position
and/or cash
flows:
| n | The U.S. continues to face a complex and changing national security environment, and domestic economic challenges, such as unemployment, federal budget deficits and the growing national debt. Significant uncertainties exist due to the competing priorities to modernize and expand U.S. security capabilities and the efforts to reduce overall government spending, as evidenced by President Obama’s recent framework to reduce $4 trillion in deficit spending, including $400 billion in savings from “Security Spending” over the next twelve years. In addition, the Department of Defense (DoD) has announced several efficiency initiatives, projecting they will generate $100 billion in savings, as well as plans to reduce defense spending from its prior plans by $78 billion over the next five fiscal years. Although reductions to certain programs in which we participate or for which we expect to compete are always possible, we believe that spending on recapitalization, modernization and maintenance of defense and homeland security assets will continue to be a national priority. Based on the FY 2012 DoD budget submitted to Congress by President Obama, we believe that the U.S. Government will continue to place a high priority on the future challenges of modernization and transformation of forces and capabilities. Examples include intelligence, surveillance and reconnaissance, network communications, cyber warfare and security, unmanned aircraft and integrated logistics support. Our portfolio of defense solutions, which covers a broad range of air, sea and ground platforms and applications, aligns with the priorities outlined by the DoD. |
The known trends and uncertainties information provided above
and in our 2010 Annual Report on
Form 10-K
represents a list of known trends and uncertainties that could
impact our business in the foreseeable future. It should,
however, be considered
32
Table of Contents
along with the risk factors identified in Item 1A of our
2010 Annual Report on
Form 10-K
and our disclosure under the caption “Forward-Looking
Statements and Cautionary Statements” at the end of this
section.
Key
Performance Indicators and Non-GAAP Measures
Management reviews key performance indicators including revenue,
segment operating income and margins, earnings per share, orders
growth, and backlog, among others. In addition, we consider
certain measures to be useful to management and investors
evaluating our operating performance for the periods presented,
and provide a tool for evaluating our ongoing operations,
liquidity and management of assets. This information can assist
investors in assessing our financial performance and measures
our ability to generate capital for deployment among competing
strategic alternatives and initiatives, including, but not
limited to, dividends, acquisitions, share repurchases and debt
repayment. These metrics, however, are not measures of financial
performance under accounting principles generally accepted in
the United States of America (GAAP) and should not be considered
a substitute for revenue, operating income, income from
continuing operations, income from continuing operations per
diluted share or net cash from continuing operations as
determined in accordance with GAAP. We consider the following
non-GAAP measures, which may not be comparable to similarly
titled measures reported by other companies, to be key
performance indicators:
| n | “organic revenue” and “organic orders” defined as revenue and orders, respectively, excluding the impact of foreign currency fluctuations and contributions from acquisitions and divestitures. Divestitures include sales of insignificant portions of our business that did not meet the criteria for classification as a discontinued operation. The period-over-period change resulting from foreign currency fluctuations assumes no change in exchange rates from the prior period. | |
| n | “adjusted income from continuing operations” and “adjusted income from continuing operations per diluted share” defined as income from continuing operations and income from continuing operations per diluted share, adjusted to exclude items that may include, but are not limited to, unusual and infrequent non-operating items, such as transformation costs and non-operating tax settlements or adjustments related to prior periods. Special items represent significant charges or credits that impact current results, but may not be related to the Company’s ongoing operations and performance. The following table provides a reconciliation of adjusted income from continuing operations, including adjusted earnings per diluted share, for the three and nine months ended September 30, 2011 and 2010. |
| Three Months | Nine Months | |||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||
|
Income from continuing operations
|
$ | 71 | $ | 12 | $ | 365 | $ | 382 | ||||||||||||
|
Transformation costs, net of
tax(a)
|
93 | — | 202 | — | ||||||||||||||||
|
Asbestos-related costs, net of
tax(b)
|
26 | 205 | 26 | 205 | ||||||||||||||||
|
Foreign currency translation
write-off(c)
|
14 | — | 14 | — | ||||||||||||||||
|
Tax-related special
items(d)
|
14 | (17 | ) | 13 | (22 | ) | ||||||||||||||
|
Adjusted income from continuing operations
|
$ | 218 | $ | 200 | $ | 620 | $ | 565 | ||||||||||||
|
Income from continuing operations per diluted share
|
$ | 0.38 | $ | 0.07 | $ | 1.96 | $ | 2.06 | ||||||||||||
|
Adjusted income from continuing operations per diluted share
|
$ | 1.17 | $ | 1.08 | $ | 3.32 | $ | 3.05 | ||||||||||||
| (a) | See Note 2 to the Consolidated Condensed Financial Statements for further information. | |
| (b) | The net asbestos-related costs, net of tax, include costs related to an annual remeasurement of our asbestos assets and liabilities. Quarterly provisions for net asbestos-related costs, net of tax which relate to maintaining a rolling 10-year |
33
Table of Contents
| projection period are not included as a special item. The following table provides a reconciliation of net asbestos-related costs to adjusted net asbestos-related costs, net of tax, included as a special item. |
| Three Months | Nine Months | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
|
Net asbestos-related costs before taxes
|
$ | 59 | $ | 341 | $ | 91 | $ | 368 | ||||||||
|
Less: net asbestos-related costs incurred outside annual
remeasurement
|
(18 | ) | (11 | ) | (50 | ) | (38 | ) | ||||||||
|
Net asbestos-related costs related to annual remeasurement
before taxes
|
41 | 330 | 41 | 330 | ||||||||||||
|
Tax rate
|
38.0 | % | 38.0 | % | 38.0 | % | 38.0 | % | ||||||||
|
Adjusted net asbestos-related costs, net of tax
|
$ | 26 | $ | 205 | $ | 26 | $ | 205 | ||||||||
See Note 17 to the Consolidated Condensed Financial
Statements for further information.
| (c) | During the third quarter of 2011, $14 of foreign currency translation losses were recognized in earnings generally related to legacy transactions and are not related to ongoing operations or performance. | |
| (d) | The 2011 tax-related special items primarily relate to deferred tax asset write-offs of $15 recorded during the third quarter. The 2010 tax-related special items primarily include the reversal of certain valuation allowances and previously unrecognized tax benefits due to the completion of a tax audit during the second quarter of 2010 and a reduction of deferred tax assets associated with the U.S. Patient Protection and Affordable Care Act (the Healthcare Reform Act). See Note 6 to the Consolidated Condensed Financial Statements for further information. |
| n | “adjusted segment operating income” defined as segment operating income, adjusted to exclude costs incurred in connection with the Transformation and “adjusted segment operating margin” defined as adjusted segment operating income divided by total segment revenue. | |
| n | “free cash flow” defined as net cash provided by operating activities, as reported in the Statement of Cash Flows, less capital expenditures and other significant items that impact current results which management believes are not related to our ongoing operations and performance. Our definition of free cash flow does not consider certain non-discretionary cash payments, such as debt. The following table provides a reconciliation of free cash flow for the nine month periods ended September 30, 2011 and 2010. |
| 2011 | 2010 | |||||||
|
Net cash provided by operating activities
|
$ | 452 | $ | 654 | ||||
|
Capital
expenditures(a)
|
(163 | ) | (174 | ) | ||||
|
Transformation cash payments
|
137 | — | ||||||
|
Free cash flow
|
$ | 426 | $ | 480 | ||||
| (a) | Capital expenditures represents capital expenditures as reported in the Statement of Cash Flows, less capital expenditures associated with the Transformation of $23 and $0 for the nine month periods ended September 30, 2011 and 2010, respectively. |
34
Table of Contents
DISCUSSION
OF FINANCIAL RESULTS
Three and Nine Months Ended September 30
Three and Nine Months Ended September 30
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||||||||||||||||||||
|
Revenue
|
$ | 2,981 | $ | 2,643 | 12.8 | % | $ | 8,765 | $ | 7,960 | 10.1 | % | ||||||||||||||||||
|
Gross profit
|
854 | 768 | 11.2 | % | 2,479 | 2,267 | 9.4 | % | ||||||||||||||||||||||
|
Gross margin
|
28.6 | % | 29.1 | % | (50 | )bp | 28.3 | % | 28.5 | % | (20 | )bp | ||||||||||||||||||
|
Operating expenses
|
702 | 800 | (12.3 | )% | 1,879 | 1,730 | 8.6 | % | ||||||||||||||||||||||
|
Expense to revenue ratio
|
23.5 | % | 30.3 | % | (680 | )bp | 21.4 | % | 21.7 | % | (30 | )bp | ||||||||||||||||||
|
Operating income (loss)
|
152 | (32 | ) | 575.0 | % | 600 | 537 | 11.7 | % | |||||||||||||||||||||
|
Operating margin
|
5.1 | % | (1.2 | )% | 630 | bp | 6.8 | % | 6.7 | % | 10 | bp | ||||||||||||||||||
|
Interest and non-operating expenses, net
|
22 | 16 | 37.5 | % | 51 | 61 | (16.4 | )% | ||||||||||||||||||||||
|
Income tax expense (benefit)
|
59 | (60 | ) | 198.3 | % | 184 | 94 | 95.7 | % | |||||||||||||||||||||
|
Effective tax rate
|
45.4 | % | — | — | 33.5 | % | 19.7 | % | 1,380 | bp | ||||||||||||||||||||
|
Income from continuing operations
|
$ | 71 | $ | 12 | 491.7 | % | $ | 365 | $ | 382 | (4.5 | )% | ||||||||||||||||||
REVENUE
Revenue for the three and nine months ended September 30,
2011 increased $338, or 12.8%, and $805, or 10.1%, respectively.
The following table illustrates the impact from organic growth,
recent acquisitions, and fluctuations in foreign currency, in
relation to consolidated revenue for the three and nine month
periods ended September 30, 2011.
| Three Months | Nine Months | |||||||||||||||||||
| $ Change | % Change | $ Change | % Change | |||||||||||||||||
|
2010 Revenue
|
$ | 2,643 | $ | 7,960 | ||||||||||||||||
|
Organic growth
|
235 | 8.9 | % | 390 | 4.9 | % | ||||||||||||||
|
Acquisitions
|
47 | 1.8 | % | 251 | 3.2 | % | ||||||||||||||
|
Foreign currency translation
|
56 | 2.1 | % | 164 | 2.0 | % | ||||||||||||||
|
Total change in revenue
|
338 | 12.8 | % | 805 | 10.1 | % | ||||||||||||||
|
2011 Revenue
|
$ | 2,981 | $ | 8,765 | ||||||||||||||||
Revenue from acquisitions of $47 and $251 for the three and nine
months ended September 30, 2011, respectively, primarily
relates to our purchase of Godwin in August of 2010. The three
month revenue from acquisitions figure also include one month of
YSI activity and the nine month figure includes approximately
three months of activity from our Nova Analytics Corporation
(Nova) acquisition in March of 2010. The results from these
three acquisitions are reported within our Fluid segment. The
following table illustrates the three and nine month 2011 and
2010 revenue of our business segments, which is followed by a
discussion of revenue results at the segment level.
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||||||||||||||
|
Defense
|
$ | 1,529 | $ | 1,366 | 11.9 | % | $ | 4,374 | $ | 4,262 | 2.6 | % | ||||||||||||
|
Fluid
|
1,069 | 917 | 16.6 | % | 3,169 | 2,594 | 22.2 | % | ||||||||||||||||
|
Motion & Flow
|
386 | 363 | 6.3 | % | 1,230 | 1,113 | 10.5 | % | ||||||||||||||||
|
Eliminations
|
(3 | ) | (3 | ) | — | (8 | ) | (9 | ) | — | ||||||||||||||
|
Total
|
$ | 2,981 | $ | 2,643 | 12.8 | % | $ | 8,765 | $ | 7,960 | 10.1 | % | ||||||||||||
35
Table of Contents
Defense &
Information Solutions
Revenue generated within our Defense segment reflects both
positive and negative results, as benefits from recent service
contract awards were offset by revenue declines from
surge-related equipment. The higher concentration of service
revenue reflected in the
2011 year-to-date
results are in line with longer term expectations for revenue
mix.
The following table provides total revenue and
year-over-year
change by Defense segment division for the three and
nine months ended September 30, 2011 and comparable
prior year periods.
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||||||||||||||
|
Information Systems
|
$ | 794 | $ | 559 | 42.0 | % | $ | 2,282 | $ | 1,734 | 31.6 | % | ||||||||||||
|
Electronic Systems
|
438 | 559 | (21.6 | )% | 1,214 | 1,697 | (28.5 | )% | ||||||||||||||||
|
Geospatial Systems
|
308 | 257 | 19.8 | % | 902 | 852 | 5.9 | % | ||||||||||||||||
|
Eliminations
|
(11 | ) | (9 | ) | — | (24 | ) | (21 | ) | — | ||||||||||||||
|
Defense segment revenue
|
$ | 1,529 | $ | 1,366 | 11.9 | % | $ | 4,374 | $ | 4,262 | 2.6 | % | ||||||||||||
Revenue from the Information Systems division, our service-based
business, increased $235 and $548 for the three and nine months
ended September 30, 2011, respectively, primarily due to
new contract wins on K-BOSSS (Kuwait Base Operations and
Security Support Services), surge-related efforts for support of
the U.S. Armed Services in Kuwait and Afghanistan (APS-5),
SCNS (Space Communication and Networks Services) and other
classified programs. K-BOSSS provided revenue of approximately
$130 and $328 in the quarter and
year-to-date
periods, respectively, the APS-5 Kuwait and Afghanistan efforts
provided $51 and $296, respectively, SCNS provided $28 and $47,
respectively, while other classified programs contributed $41
and $80, respectively. The increase in revenue was partially
offset by lower sales on the GMASS (Global Maintenance and
Supply Services) contract of approximately $5 and $126 for the
quarter and
year-to-date
periods, respectively, as well as by the DACS (Data and Analysis
Center for Software) contract of approximately $13 and $84 for
the quarter and
year-to-date
periods, respectively, which ended in 2010.
Revenue from the Electronic Systems division, a product-based
business, decreased $121 and $483 for the three and nine months
ended September 30, 2011, respectively, primarily due to
volume declines in CREW 2.1 (Counter RCIED Electronic Warfare)
and special jammer products of approximately $57 and $242,
respectively, SINCGARS (Single Channel Ground and Airborne Radio
Systems) platforms of approximately $27 and $115, respectively,
and Special Operations — SIRFC Systems of
approximately $34 and $44, respectively. Our CREW 2.1, Special
Jammer products, and SINCGARS programs benefited from the urgent
and compelling needs in past years; however, sales volumes began
receding in 2009 due to reduced U.S. troop deployment and
programmatic timing. The CREW 2.1 program has reached maturity
and we do not expect significant sales to occur under this
program going forward.
Revenue from the Geospatial Systems division increased $51 and
$50 for the three and nine month ended September 30, 2011.
The increase in third quarter revenue is primarily due to volume
increase in the GPS OCX (Next Generation GPS Control Segment)
program, which is now at full production and Night Vision
goggles under Omni-7 contract of $4 and $36, respectively, and
other U.S. Government contracts of approximately $11. The
increase in revenue for the nine months period is due primarily
to $39 attributable to our GPS (Global Positioning System)
programs, $40 related to our NextView — Worldview3
contract, and Omni-7 contract, which was partially offset by
declines of approximately $30 related to other classified
programs.
Orders received during the third quarter of 2011 increased by
11.7% or $184 to $1,719 and increased 24.4% or $858 to $4,328
during the nine months ended September 30, 2011. The
increase in funding awards was primarily attributable to
K-BOSSS, SCNS, and AFNS contracts within our Information Systems
division, our Band C contract within our Electronic Systems
division as well as a combination of international and domestic
awards. The overall increase more than offset declines in order
input within the counter-IED product line, SINCGARS, Automated
Dependent Surveillance-Broadcast (ADS-B) system, GeoEye2, Night
Vision Goggles, and classified programs within our Geospatial
Systems division.
36
Table of Contents
On September 30, 2011, total backlog was $12.3 billion
compared to $11.5 billion at the end of 2010. The increase
relates to key contract wins for TAC-SWACAA (Total Army
Communications Southwest Asia, Central Asia and Africa), APS-5,
KBOSSS, GPS III EMD (Engineering, Manufacturing and Design), and
electronic warfare systems on the Special Operations Aircraft
(SOA) contract, partially offset by lower order input for Night
Vision goggles under Omni-7 contract and SINCGARS. Total backlog
includes both funded backlog (firm orders for which funding is
contractually obligated by the customer) and unfunded backlog
(firm orders for which funding is not currently contractually
obligated by the customer), which represents firm orders and
potential options on multi-year contracts, excluding protested
awards and potential orders under indefinite
delivery / indefinite quantity (IDIQ) contracts.
Backlog is converted into sales as work is performed or
deliveries are made. The level of order activity related to
Defense programs can be affected by the timing of government
funding authorizations and project evaluation cycles.
Year-over-year
comparisons could, at times, be impacted by these factors, among
others.
Fluid
Technology
Revenue generated with the Fluid segment reflects organic growth
across each division driven by significant mining and oil and
gas projects, global dewatering performance, public utility
strength in Latin America, and residential building services.
Our results also reflect growth from acquisitions of $42 or 4.6%
during the third quarter of 2011 and $240 or 9.3% during the
year-to-date
2011 period. Godwin, a dewatering business acquired in August
2010, has exceeded internal expectations driven by increasing
dewatering demands in the oil and gas markets. The following
table provides total organic revenue by division for the three
months and nine months ended September 30, 2011.
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||
|
Organic |
Organic |
|||||||||||||||||||||||
| 2011 | 2010 | Growth | 2011 | 2010 | Growth | |||||||||||||||||||
|
Water & Wastewater
|
$ | 513 | $ | 488 | 5.1 | % | $ | 1,408 | $ | 1,308 | 7.6 | % | ||||||||||||
|
Residential & Commercial Water
|
305 | 279 | 9.3 | % | 910 | 832 | 9.4 | % | ||||||||||||||||
|
Industrial Process
|
186 | 167 | 11.4 | % | 547 | 507 | 7.9 | % | ||||||||||||||||
|
Eliminations
|
(17 | ) | (17 | ) | — | (56 | ) | (53 | ) | — | ||||||||||||||
|
Fluid organic revenue
|
$ | 987 | $ | 917 | 7.6 | % | $ | 2,809 | $ | 2,594 | 8.3 | % | ||||||||||||
|
Impact from acquisitions
|
42 | — | 4.6 | % | 240 | — | 9.3 | % | ||||||||||||||||
|
Impact from foreign currency
|
40 | — | 4.4 | % | 120 | — | 4.6 | % | ||||||||||||||||
|
Fluid segment revenue
|
$ | 1,069 | $ | 917 | 16.6 | % | $ | 3,169 | $ | 2,594 | 22.2 | % | ||||||||||||
Revenue from the Water & Wastewater division grew $97,
or 19.9%, during the third quarter, including benefits of $42
from acquisitions and $30 from foreign currency translation
adjustments. Organic revenue growth of 5.1% generated during the
third quarter was driven by dewatering strength from
natural gas extraction projects and flood support within the
U.S. and the mining industry in Australia. The 2011
quarter-to-date
results also reflect an increased sales volume in Northern
Europe, and strong performance in Latin America from treatment
and transport sales into the public utility markets, partially
offset by decreased volume in Southern Europe. Revenue for the
year-to-date
period grew $429, or 32.8%, including benefits of $237
from acquisitions and $92 from foreign currency translation
adjustments. Organic revenue growth of 7.6% for the
year-to-date
period resulted from an increased volume of dewatering equipment
utilized in the Australian mining industry, and includes
benefits from a large Middle Eastern wastewater treatment
project and an Australian municipal treatment project, as well
as an overall increase in volume within the Northern European
region.
Revenue from the Residential & Commercial Water
division grew $35, or 12.5% during the third quarter and $103,
or 12.4% during the first nine months of 2011, which included a
$9 and $24 benefit from foreign currency translation
adjustments, respectively. The organic revenue growth of 9.3%
for the three months ended September 30, 2011 was provided
primarily by strong performance in the residential, industrial
and agriculture end markets in the U.S., as well as from pricing
initiatives. Organic revenue growth of 9.4% for the nine months
ended September 30, 2011 was driven by increased volume in
the commercial building services, light industrial and
agriculture markets and by pricing initiatives executed
throughout the period. A portion of the
37
Table of Contents
growth within the commercial building services market was
derived from new products such as
e-SV, a
high-efficiency vertical multi-stage pump.
Revenue from the Industrial Process division grew $21, or 12.6%,
during the third quarter, and $50, or 9.9%, during the first
nine months of 2011. The third quarter and
year-to-date
results reflect project growth in both the mining and oil and
gas markets, principally in Latin America and the Middle East.
Revenue from the mining and oil & gas markets was up
approximately 37% and 24%, respectively, which drove organic
growth in emerging markets of approximately 29%. The nine month
2011 results also reflect a solid
year-over-year
increase in our global aftermarket business.
Orders received during the third quarter of 2011 increased by
$204, or 21.9%, including benefits of $40 from acquisitions and
$44 from foreign currency translation adjustments. The
Industrial Process division generated order growth of $57 or
31.8%, driven primarily by key chemical, oil and gas and mining
project wins in both the Middle East and Latin America. The
Water & Wastewater division generated order growth of
$117, or 23.2%, including $40 and $33 from acquisitions and
favorable foreign currency, respectively, as well as significant
order performance in both transport and treatment in various
geographic markets, including emerging markets, however,
Southern Europe continues to present challenging conditions. The
Residential & Commercial Water division generated
order growth of $28 or 10.4%, including $9 from favorable
foreign currency translation, primarily due to increasing
activity in the U.S., Asia Pacific, Africa, Middle East and
Latin America regions, which more than offset softness in Europe.
Motion &
Flow Control
Revenue growth for the three and nine months ended
September 30, 2011 was primarily driven by increased sales
volume of friction and aerospace-related products, although
growth was experienced across the majority of our business and
markets. The following table provides total organic revenue by
division for the three months and nine months ended
September 30, 2011 and comparable prior year periods.
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||||||||||||||
|
Motion Technologies
|
$ | 140 | $ | 132 | 6.1 | % | $ | 471 | $ | 435 | 8.3 | % | ||||||||||||
|
Interconnect Solutions
|
98 | 109 | (10.1 | )% | 310 | 309 | 0.3 | % | ||||||||||||||||
|
Control Technologies
|
80 | 70 | 14.3 | % | 241 | 204 | 18.1 | % | ||||||||||||||||
|
Flow Control
|
53 | 53 | — | 169 | 169 | — | ||||||||||||||||||
|
Eliminations
|
(1 | ) | (1 | ) | — | (3 | ) | (4 | ) | — | ||||||||||||||
|
Motion & Flow organic revenue
|
370 | 363 | 1.9 | % | 1,188 | 1,113 | 6.7 | % | ||||||||||||||||
|
Impact from foreign currency
|
16 | — | 4.4 | % | 42 | — | 3.8 | % | ||||||||||||||||
|
Motion & Flow segment revenue
|
$ | 386 | $ | 363 | 6.3 | % | $ | 1,230 | $ | 1,113 | 10.5 | % | ||||||||||||
Revenue from the Motion Technologies division grew $19 during
the third quarter of 2011, including $11 from foreign currency
translation adjustments. Sales of brake pads increased 5.1%,
reflecting growth throughout the majority of Europe,
U.S. and emerging markets. Sales of shock absorbers
increased 12.5%, related to growth in railway equipment. Revenue
for the
year-to-date
period grew $64, including a $28 benefit from foreign currency
translation adjustments, primarily driven by growing emerging
market rail equipment activity and strong aftermarket brake pad
demand, as well as a growing share in the automotive original
equipment market. These results compare to strong first nine
months of 2010 results that benefited from a restocking of
automotive equipment driven by past European stimulus programs.
Revenue from the Interconnect Solutions division declined $8, or
7.1% during the third quarter of 2011, principally driven by
weakness in the communications market, reflecting a decline in
sales of smartphone and PC card products, and in the industrial
markets, driven by softer demand in Europe. This weakness was
partially offset by growth in heavy equipment driven by platform
wins in China and Europe and agricultural and construction
equipment strength. Sales within the rail and oil and gas
markets generated modest growth during the quarter. Revenue
performance for the
year-to-date
period was impacted by the factors
38
Table of Contents
discussed above, as strength in our markets earlier in the year
has been effectively offset by the weakness in certain end
markets described above.
Revenue from the Control Technologies division grew $11, or
15.7% during the third quarter of 2011, driven by high-speed
rail products, strength across our industrial market primarily
in control-related equipment, and sales of aerospace aftermarket
equipment. Growth within the aerospace market was primarily
driven by aftermarket sales of OPTO actuators, switches and seat
locks. Results within the industrial market reflect strength
across all product classes. Revenue growth of $39, or 19.1% for
the nine months ended September 30, 2011 was led by
aerospace-related aftermarket equipment and increased volume of
our advanced passenger seat technology utilized in China’s
expansion of high-speed rail infrastructure.
Revenue from the Flow Control division was relatively flat for
both the third quarter and nine month period ending
September 30, 2011. The division’s results were
impacted by a decline in the marine market and in volume of
specialty industrial equipment. The weakness in the marine and
specialty industrial markets was partially offset by an
increased sales volume of actuation valves and market share
growth within the food and beverage markets from new customer
relationships and increased distribution of beverage processing
equipment. During the first quarter of 2011, we launched
Rainperfect and Aquacharge and expect our new product pipeline
will yield several additional new product launches in the fourth
quarter and in 2012. Revenue derived from new product
introductions was $3 and $7 for the three and nine months of
2011.
GROSS
PROFIT
Gross profit for the third quarter 2011 increased $86, or 11.2%.
Increased volume and price impacts from our Fluid segment drove
the increase, while the Defense segment’s increased sales
volume was partially offset by an unfavorable change in sales
mix. For the nine months ended September 30,
2011 gross profit increased $212 or 9.4%, reflecting growth
from our Fluid and Motion & Flow segments driven by
positive volume/price increases and from the 2010 Fluid segment
acquisitions. The Defense segment was impacted by a significant
shift in its overall revenue composition, as higher-margin
equipment sales such as SINCGARS and CREW 2.1 were replaced by
lower-margin operational services. Similar factors impacted the
year-to-date
gross profit results. The following table provides gross profit
and margin by segment for the three and nine months ended
September 30, 2011.
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||||||||||||||
|
Defense
|
$ | 331 | $ | 315 | 5.1 | % | $ | 896 | $ | 965 | (7.2 | )% | ||||||||||||
|
Fluid
|
407 | 338 | 20.4 | % | 1,203 | 948 | 26.9 | % | ||||||||||||||||
|
Motion & Flow
|
116 | 115 | 0.9 | % | 380 | 354 | 7.3 | % | ||||||||||||||||
|
Total gross profit
|
$ | 854 | $ | 768 | 11.2 | % | $ | 2,479 | $ | 2,267 | 9.4 | % | ||||||||||||
|
Gross margin:
|
||||||||||||||||||||||||
|
Consolidated
|
28.6 | % | 29.1 | % | (50 | )bp | 28.3 | % | 28.5 | % | (20 | )bp | ||||||||||||
|
Defense
|
21.6 | % | 23.1 | % | (150 | )bp | 20.5 | % | 22.6 | % | (210 | )bp | ||||||||||||
|
Fluid
|
38.1 | % | 36.9 | % | 120 | bp | 37.8 | % | 36.5 | % | 130 | bp | ||||||||||||
|
Motion & Flow
|
30.1 | % | 31.7 | % | (160 | )bp | 30.9 | % | 31.8 | % | (90 | )bp | ||||||||||||
OPERATING
EXPENSES
Operating expenses decreased $98 during the three months ended
September 30, 2011. The
quarter-to-date
decrease primarily reflects a $282 decline in asbestos-related
costs, partially offset by $132 of Transformation-related costs.
Operating expenses increased $149 during the nine months ended
September 30, 2011. The
year-to-date
increase includes costs of $279 related to the Transformation
and incremental operating costs associated with the business
acquisitions completed during 2010,
39
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partially offset by a $277 decline in asbestos-related costs.
The following table provides further information by expense
type, as well as a breakdown of operating expense by segment.
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||||||||||||||
|
Selling, general and administrative expenses
|
$ | 445 | $ | 396 | 12.4 | % | $ | 1,304 | $ | 1,149 | 13.5 | % | ||||||||||||
|
Research and development expenses
|
64 | 60 | 6.7 | % | 195 | 183 | 6.6 | % | ||||||||||||||||
|
Transformation costs
|
132 | — | (a | ) | 279 | — | (a | ) | ||||||||||||||||
|
Asbestos-related costs, net
|
59 | 341 | (82.7 | )% | 91 | 368 | (75.3 | )% | ||||||||||||||||
|
Restructuring and asset impairment charges, net
|
2 | 3 | (33.3 | )% | 10 | 30 | (66.7 | )% | ||||||||||||||||
|
Total operating expenses
|
$ | 702 | $ | 800 | (12.3 | )% | $ | 1,879 | $ | 1,730 | 8.6 | % | ||||||||||||
|
By Segment:
|
||||||||||||||||||||||||
|
Defense
|
$ | 153 | $ | 136 | 12.5 | % | $ | 439 | $ | 452 | (2.9 | )% | ||||||||||||
|
Fluid
|
263 | 223 | 17.9 | % | 773 | 611 | 26.5 | % | ||||||||||||||||
|
Motion & Flow
|
67 | 69 | (2.9 | )% | 208 | 210 | (1.0 | )% | ||||||||||||||||
|
Corporate & Other
|
219 | 372 | (41.1 | )% | 459 | 457 | 0.4 | % | ||||||||||||||||
| (a) | Not meaningful |
Defense &
Information Solutions
Operating expenses incurred within our Defense segment increased
$17, or 12.5%, for the three months ended September 30,
2011, primarily related to a 17.5% increase in selling and
marketing expense related to international marketing efforts
which was partially offset by lower intangible amortization
expense of $3. Operating expenses for the nine months ended
September 30, 2011 decreased by $13 or 2.9%, primarily
related to a $15 decline in restructuring costs and $13
reduction in R&D spending. The decline in R&D spending
is primarily due to the completion of certain R&D projects
for integrated electronic warfare systems, other radio frequency
technologies and space systems. The
year-to-date
decline in restructuring and R&D costs was partially offset
by a $10 increase in SG&A expenses, primarily attributable
to additional program-related spending required to support
significant program growth and increase in selling and marketing
expense which is partially offset by a reduction in intangible
amortization expense of $9. The Defense segment incurred
transformation costs of $4 and $5 during the three and nine
months ended September 30, 2011.
Fluid
Technology
Operating expenses incurred within our Fluid segment increased
$40 or 17.9%, during the third quarter of 2011, primarily due to
transformation costs of $22 related to a long-lived asset
impairment and advisory fees. In addition, SG&A expenses
increased $14, or 6.8%, during the three months ended
September 30, 2011 primarily related to additional selling
and marketing costs. Operating expenses for the nine months
ended September 30, 2011 increased $162 or 26.5%, primarily
related to the additional costs associated with the operations
of 2010 acquisitions of Godwin and Nova, as well as our
September 2011 acquisition of YSI. Additionally, the Fluid
segment recognized transformation costs of $25 and an increase
in
year-to-date
R&D spending $18 related to an increase in investments
across a number of product lines, including analytical
instrumentation business.
Motion &
Flow Control
Operating expenses incurred within our Motion and Flow segment
were relatively flat for both the three and nine months ended
September 30, 2011, as rising costs from commodities were
offset by global strategic sourcing and other cost-saving
initiatives.
40
Table of Contents
Corporate &
Other
Corporate and other operating expenses decreased $153 or 41.1%
as a decline in asbestos-related costs of $282 was partially
offset by an increase of $106 of transformation costs. For the
year-to-date
period the increase of $2 or 0.4% reflects a $277 decline in
asbestos-related costs, offset by an additional $249 of
transformation costs. See further discussion of transformation
costs and asbestos-related costs below. In addition to the
asbestos and transformation impacts, Corporate & Other
operating expenses reflect increased SG&A expenses of $22
or 68.8%, for the third quarter of 2011, primarily resulting
from the recognition of foreign currency impacts previously
deferred in cumulative translation adjustment in equity, as well
as the recognition of additional environmental costs. Corporate
and other SG&A expenses increased $29, or 32.2%, during the
nine months ended September 30, 2011, primarily due to the
recognition of foreign currency impacts previously deferred in
cumulative translation adjustment in equity, increased
environmental costs and additional information technology costs.
Transformation
Costs
During the three and nine month periods ended September 30,
2011, we recognized pre-tax expenses of $132 and $279,
respectively, related to the Transformation. The components of
transformation costs incurred during these periods are presented
below.
|
Three |
Nine |
|||||||||
| For the Periods Ended September 30, 2011 | Months | Months | ||||||||
|
Transformation Costs:
|
||||||||||
|
Non-cash asset impairment(a)
|
$ | 9 | $ | 64 | ||||||
|
Advisory fees
|
32 | 75 | ||||||||
|
IT costs
|
36 | 58 | ||||||||
|
Lease termination and other real estate costs
|
10 | 13 | ||||||||
|
Loss on early extinguishment of debt
|
3 | 3 | ||||||||
|
Employee retention and other compensation costs
|
23 | 36 | ||||||||
|
Other costs
|
19 | 30 | ||||||||
|
Transformation costs in operating income
|
132 | 279 | ||||||||
|
Tax-related separation (benefit) costs(b)
|
(4 | ) | 10 | |||||||
|
Total transformation costs before tax benefit
|
128 | 289 | ||||||||
|
Income tax benefit
|
(35 | ) | (87 | ) | ||||||
|
Total transformation costs, net of tax impact
|
$ | 93 | $ | 202 | ||||||
| (a) | The $64 million non-cash impairment charge includes a $55 impairment related to a decision to discontinue development of an information technology consolidation initiative and $9 of impairments to long-lived assets. | |
| (b) | In the third quarter of 2011, we revised our estimate of certain costs to be incurred related to tax-related separation costs. This adjustment resulted in a $4 net credit (income) for tax-related separation costs during the third quarter of 2011. |
To complete the Transformation, we expect major areas of
spending to include debt refinancing, tax-related separation
costs, information technology investments to build out
independent environments for the new companies, advisory fees,
and other Transformation activities. Our estimate of the
remaining after-tax cash impact of activities associated with
the Transformation is expected to be approximately $275, of
which $210 is expected to be incurred prior to completion of the
Transformation, primarily related to the extinguishment of debt.
In addition, the Company anticipates net after-tax cash outflows
of approximately $130 following the Transformation, primarily
consisting of additional tax impacts, employee-related costs,
capital expenditures for information systems investments, and
advisory fees.
Asbestos-Related
Costs, Net
In the third quarter 2011, we recognized net asbestos related
costs of $59, reflecting a decrease of $282 as compared to the
prior year, primarily reflecting the impact of our annual update
to the underlying assumptions used in our liability and asset
41
Table of Contents
estimates. As part of the annual update, the underlying
assumptions used to estimate asbestos liabilities and potential
recoveries are estimated based on our experience since our last
detailed review, the appropriate reference period of years of
experience used in determining each assumption is reassessed,
and our expectations regarding future conditions are evaluated.
Based on the results of this annual update in 2011, we decreased
our estimated undiscounted asbestos liability, including legal
fees, by $44 to $1,660, reflecting costs that the Company is
estimated to incur to resolve all pending claims, as well as
unasserted claims estimated to be filed over the next
10 years. The decrease in our estimated liability is a
result of several developments, including a reduction in the
assumed rate of increase in future average settlement costs and
an expectation of lower defense costs relative to indemnities
paid. These favorable factors were offset in part by increased
activity in several higher-cost jurisdictions, increasing the
number of cases expected to be adjudicated. Our 2011 detailed
review of the asbestos-related assets, including estimated
recoveries from insurers and other responsible parties, resulted
in a $76 decrease in the recorded asset as a result of the
decrease in the estimated liability and reductions in expected
recovery rates from certain insurers.
The net asbestos expense is primarily recorded within Corporate
and Other; however, a portion of the expense is associated with
businesses that were disposed of a number of years ago, and is
reported within discontinued operations in our Consolidated
Condensed Income Statements. See Note 17 to the
Consolidated Condensed Financial Statements for further
information on our asbestos-related liability and assets.
Restructuring
and Asset Impairment Charges, Net
During the three and nine months ended September 30, 2011,
we recognized restructuring and asset impairment charges of $2
and $16, respectively. The
year-to-date
charge primarily relates to various reduction in force
initiatives within our Defense segment.
During the three and nine months ended September 30, 2010,
we recognized restructuring charges of $6 and $42, respectively,
primarily related to a strategic realignment of our Defense
segment to enable better product portfolio integration,
encourage a more coordinated market approach and provide
reductions in overhead costs. The Defense segment was renamed
ITT Defense & Information Solutions and the previous
organizational structure, consisting of seven divisions, was
consolidated into three larger divisions. This initiative was
substantially completed during 2010.
The table provided below summarizes the presentation of
restructuring and asset impairment charges within our
Consolidated Condensed Income Statements for the three and nine
month periods ended September 30, 2011 and 2010.
| Three Months | Nine Months | |||||||||||||||
| For the Periods Ended September 30 | 2011 | 2010 | 2011 | 2010 | ||||||||||||
|
Restructuring costs presented in costs of revenue
|
$ | — | $ | 3 | $ | 6 | $ | 12 | ||||||||
|
Restructuring costs presented in operating expenses
|
— | 3 | 7 | 30 | ||||||||||||
|
Asset impairment
|
2 | — | 3 | — | ||||||||||||
|
Total restructuring and asset impairment costs
|
$ | 2 | $ | 6 | $ | 16 | $ | 42 | ||||||||
OPERATING
INCOME
Operating income increased by $184 for the three months ended
September 30, 2011 driven primarily by the reduction in
asbestos-related costs which was partially offset by costs
incurred associated with transformation-related activities. In
addition, strong operating income performance at our Fluid
segment provided growth of $29 and $94 during the 2011 third
quarter and nine month periods ended. Operating margin increased
630 basis points to 5.1% during the third quarter of 2011,
and 10 basis points to 6.8% during the
year-to-date
period. Transformation costs equated to a 440 basis point
and 320 basis point impact to operating income,
respectively, for these periods. The following table illustrates
operating income results of our segments, including
42
Table of Contents
operating margin results for the three and nine month periods
ended September 30, 2011 and 2010. Further discussion on
operating income results is provided below.
| Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | ||||||||||||||||||||
|
Defense
|
$ | 178 | $ | 178 | — | $ | 456 | $ | 513 | (11.1 | )% | ||||||||||||||
|
Fluid
|
144 | 115 | 25.2 | % | 430 | 336 | 28.0 | % | |||||||||||||||||
|
Motion & Flow
|
49 | 46 | 6.5 | % | 170 | 144 | 18.1 | % | |||||||||||||||||
|
Segment operating income
|
371 | 339 | 9.4 | % | 1,056 | 993 | 6.3 | % | |||||||||||||||||
|
Corporate and Other
|
(219 | ) | (371 | ) | (41.0 | )% | (456 | ) | (456 | ) | — | ||||||||||||||
|
Total operating income (loss)
|
$ | 152 | $ | (32 | ) | 575.0 | % | $ | 600 | $ | 537 | 11.7 | % | ||||||||||||
|
Operating margin:
|
|||||||||||||||||||||||||
|
Consolidated
|
5.1 | % | (1.2 | )% | 630 | bp | 6.8 | % | 6.7 | % | 10 | bp | |||||||||||||
|
Defense
|
11.6 | % | 13.0 | % | (140 | )bp | 10.4 | % | 12.0 | % | (160 | )bp | |||||||||||||
|
Fluid
|
13.5 | % | 12.5 | % | 100 | bp | 13.6 | % | 13.0 | % | 60 | bp | |||||||||||||
|
Motion & Flow
|
12.7 | % | 12.7 | % | — | 13.8 | % | 12.9 | % | 90 | bp | ||||||||||||||
Defense &
Information Solutions
Operating income at the Defense segment was relatively
consistent for the third quarter of 2011 as compared to the same
prior year period, and declined $57 during the nine months ended
September 30, 2011, primarily due to lower demand of
surge-related equipment such as CREW 2.1 and SINCGARS and
increased volume in our operational services business on
contracts such as
K-BOSSS and
the U.S. Armed Services contracts in Kuwait and
Afghanistan. The higher concentration of service revenue is in
line with longer term revenue mix expectations and will provide
an unfavorable impact to operating margin percentages. The
unfavorable impact from change in revenue mix was partially
offset by net savings from productivity and other cost saving
initiatives.
Fluid
Technology
Operating income for our Fluid segment increased $29 for the
quarter and $94 for the nine months ended September 30,
2011. Organic revenue growth and productivity gains drove
operating income increases for both periods and contributions
from the Godwin and Nova acquisitions provided incremental
benefits of approximately $5 and $40, respectively. Operating
income was unfavorably impacted by $22 and $25 of transformation
costs incurred during the three and nine months ended
September 30, 2011. Operating income was also impacted by
incremental strategic growth investments which were made in the
business.
The table included below provides a reconciliation from Fluid
segment operating income to adjusted operating income, and a
calculation of the corresponding adjusted operating margin.
| Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | ||||||||||||||||||||
|
Fluid operating income
|
$ | 144 | $ | 115 | 25.2 | % | $ | 430 | $ | 336 | 28.0 | % | |||||||||||||
|
Transformation costs
|
22 | — | — | 25 | — | — | |||||||||||||||||||
|
Fluid adjusted operating income
|
166 | 115 | 44.3 | % | 455 | 336 | 35.4 | % | |||||||||||||||||
|
Fluid adjusted operating margin
|
15.5 | % | 12.5 | % | 300 | bp | 14.4 | % | 13.0 | % | 140 | bp | |||||||||||||
43
Table of Contents
Motion &
Flow Control
Operating income for our Motion & Flow segment
increased $3, or 6.5%, for the quarter ended September 30,
2011, primarily driven by strategic pricing actions and improved
productivity, which was partially offset by a $7 unfavorable
change in product mix, as well as increasing material and labor
costs. Additional impacts to operating income include
favorability from foreign currency fluctuations of $4. Operating
income for our Motion & Flow segment increased $26 or
18.1%, for the nine months ended September 30, 2011,
primarily driven by increased sales volume and strategic
pricing, partially offset by an unfavorable change in product
mix. In addition, foreign currency fluctuations provided a
benefit of $9.
Corporate and
Other
Corporate expenses during the third quarter of 2011 decreased
$152, primarily benefitting from the decline in net
asbestos-related costs, and were flat over the nine month
periods. During the quarter and nine month period, we recognized
transformation-related costs of $106 and $249, respectively,
within Corporate and Other expenses. The quarter and
year-to-date
periods were also unfavorably impacted by the recognition of
foreign currency impacts previously deferred in cumulative
translation adjustment in equity. The
year-to-date
period also reflects the recognition of additional environmental
costs and information technology costs incurred in connection
with various information technology initiatives.
INTEREST AND
NON-OPERATING EXPENSES, NET
| Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | ||||||||||||||||||||
|
Interest expense
|
$ | 23 | $ | 26 | (11.5 | )% | $ | 72 | $ | 74 | (2.7 | )% | |||||||||||||
|
Interest income
|
4 | 3 | 33.3 | % | 10 | 14 | (28.6 | )% | |||||||||||||||||
|
Miscellaneous (income) expense, net
|
3 | (7 | ) | (142.9 | )% | (11 | ) | 1 | (a | ) | |||||||||||||||
|
Total interest and non-operating expenses, net
|
$ | 22 | $ | 16 | 37.5 | % | $ | 51 | $ | 61 | (16.4 | )% | |||||||||||||
| (a) | Not meaningful. |
The change in total interest and non-operating expenses, net for
the quarter ended September 30, 2011, is primarily driven
by an $8 gain realized from the sale of investment securities
during the third quarter of 2010. The fluctuation for the nine
months ended September 30, 2011, is primarily driven by a
$16 gain realized from the sale of equity securities during the
first half of 2011.
INCOME TAX
EXPENSE
For the quarter ended September 30, 2011, we recorded
income tax expense of $59, compared to an income tax benefit of
$60 for the comparable prior year period. The 2011 effective
rate of 45.4% was increased by approximately 4.1% for costs
related to the Transformation, 11.6% for deferred tax asset
write-offs
and reduced by 3.7% related to the effective settlement of a tax
examination. The 2010 benefit is primarily attributable to an
additional tax benefit of $46 related to change in mix of
earnings by tax jurisdiction due to the increase in
asbestos-related
costs of $118. The third quarter 2010 income tax also reflects a
$27 benefit from the reversal of valuation allowances on certain
capital loss carryforwards as it became more likely than not
that these deferred tax assets would be realized.
Income tax expense for the nine months ended September 30,
2011 and 2010 was $184 and $94, respectively, resulting in
effective tax rates of 33.5% and 19.7%, respectively. The 2011
effective tax rate was increased by 0.8% for costs related to
the Transformation and 2.8% for the write-off of certain
historical deferred tax assets. The 2010 effective tax rate was
increased by 1.5% due to the impact of the Medicare Part D
subsidy reversal and reduced by 1.0% related to the closure of a
tax examination.
INCOME (LOSS)
FROM DISCONTINUED OPERATIONS, NET OF TAX
Income from discontinued operations, net of tax, was $7 and $5
for the three and nine months ended September 30, 2011,
related primarily to asbestos matters associated with a business
we disposed of a number of years ago that was reported as a
44
Table of Contents
discontinued operation.
Quarter-to-date
asbestos-related costs included in discontinued operations was
flat as compared to the same prior year period, and increased $4
in the
year-to-date
period.
Income from discontinued operations, net of tax, was $133 and
$147 during the third quarter and nine months ended
September 30, 2010, respectively. During the second quarter
of 2010 we classified CAS, Inc. (CAS), a component of our
Defense segment, as a discontinued operation. CAS was sold on
September 8, 2010 and resulted in an after-tax gain on sale
of $130, which includes a $4 tax benefit primarily resulting
from differences between book and tax bases. CAS generated
after-tax income from operations prior to its sale of $4 and $10
during the quarter and nine months ended September 30,
2010, respectively.
LIQUIDITY
Funding and
Liquidity Strategy
Our funding needs are monitored and strategies are executed to
meet overall liquidity requirements, including the management of
our capital structure on both a short- and long-term basis.
Historically, we have generated operating cash flow sufficient
to fund our working capital, capital expenditure and financing
requirements. Subsequent to the separation, while our ability to
forecast future cash flows is more limited, we expect to fund
our ongoing working capital, capital expenditure and financing
requirements through cash flows from operations via cash on
hand, utilizing our borrowing capacity under the revolving
credit facility and access to the commercial paper market. If
our access to the commercial paper market were adversely
affected, we believe that alternative sources of liquidity,
including our existing committed credit facility, as described
below, would be sufficient to meet our short-term funding
requirements.
On September 20, 2011, Exelis and Xylem, wholly-owned
subsidiaries of ITT, issued $1,850 aggregate principal amount of
senior notes, as further discussed in Note 14 to our
Consolidated Condensed Financial Statements. The Notes are
initially guaranteed on a senior unsecured basis by the Company.
The guarantee will terminate and be automatically and
unconditionally released upon the distribution of Exelis common
stock and Xylem common stock in connection with the
Transformation. Both Exelis and Xylem used the net proceeds from
the debt issuance to pay a special cash dividend to ITT, to fund
general corporate purposes and, for Xylem, to repay indebtedness
incurred to fund the $309 acquisition of YSI Incorporated, which
closed on September 1, 2011.
The proceeds received by ITT from the special cash dividend were
utilized during October 2011 to repay substantially all
outstanding ITT long-term debt and commercial paper at
September 30, 2011 with the remainder to be used for
general corporate purposes.
Our current available cash on hand is predominantly held by our
foreign subsidiaries in currencies where we have operations. We
manage our worldwide cash requirements considering available
funds among the many subsidiaries through which we conduct
business and the cost effectiveness with which those funds can
be accessed. We continue to look for opportunities to access
cash balances in excess of local operating requirements to meet
global liquidity needs in a cost-efficient manner. We have and
may continue to transfer cash from certain international
subsidiaries to the U.S. and other international
subsidiaries when it is cost effective to do so. Our intent is
to indefinitely reinvest these funds outside of the
U.S. However, with the pending distribution of Exelis and
Xylem, we expect to review our domestic and foreign cash
profile, expected future cash generation and investment
opportunities which support our current designation of these
funds as being indefinitely reinvested and reassess whether
there is a demonstrated need to repatriate funds held
internationally to support our U.S. operations. If, as a
result of the review, it is determined that all or a portion of
the funds are needed for our operations in the U.S., we would be
required to accrue and pay U.S. taxes to repatriate these
funds.
Significant factors that affect our overall management of
liquidity include our credit ratings, the adequacy of commercial
paper and supporting bank lines of credit, and the ability to
attract long-term capital on satisfactory terms. We assess these
factors along with current market conditions on a continuous
basis, and as a result, may alter the mix of our short- and
long-term financing when it is advantageous to do so.
45
Table of Contents
We access the commercial paper market to supplement the cash
flows generated internally to provide additional short-term
funding for strategic investments and other non-recurring
funding requirements. We manage our short-term liquidity through
the use of our commercial paper program by adjusting the level
of commercial paper borrowings as opportunities to deploy
additional capital arise, it is cost effective to do so and a
sufficient return on investment can be generated.
Credit
Facilities
As of September 30, 2011, we managed our commercial paper
program under a three-year revolving $1.5 billion credit
agreement (August 2010 Credit Facility) as disclosed in our 2010
Annual Report on
Form 10-K.
Effective October 31, 2011 we replaced the August 2010
credit facility with a new four-year revolving $500 credit
agreement (the ITT 2011 Revolving Credit Agreement). In
addition, Exelis and Xylem entered into four-year revolving
credit agreements which on their effectiveness provide each with
aggregate principle amounts of $600. The revolving credit
agreements are intended to provide access to additional
liquidity as a source of funding for the commercial paper
program, if needed. Our policy is to maintain unused committed
bank lines of credit in an amount greater than outstanding
commercial paper balances. The interest rate for borrowings
under the ITT 2011 Revolving Credit Agreement is generally based
on the London Interbank Offered Rate (LIBOR), plus a spread,
which reflects our debt rating. The provisions of the ITT 2011
Revolving Credit Agreement require that we maintain an interest
coverage ratio, as defined, of 3.0 times. At
September 30, 2010 and October 28, 2011, our interest
coverage ratio was well in excess of the minimum requirements.
On October 28, 2011, Exelis borrowed $240 from their
revolving credit facility. See Note 20 to the Consolidated
Condensed Financial Statements for further information on the
credit facilities.
Our credit ratings as of October 28, 2011 are as follows:
|
Short-Term |
Long-Term |
|||
| Rating Agency | Ratings | Ratings | ||
|
Standard & Poor’s
|
A-2 | BBB+ | ||
|
Moody’s Investors Service
|
P-3 | Baa3 | ||
|
Fitch Ratings
|
F2 | A− | ||
In connection with our September 2011 debt issuance our
long-term credit rating as published by Moody’s Investor
Service was adjusted from Baa1 to Baa2. Our credit rating was
again adjusted by Moody’s in October 2011 to
P-3 / Baa3
in connection with the pending distribution of Exelis and Xylem.
In addition, subsequent to our January 2011 announced plan to
separate ITT into three publicly traded entities, our short-and
long-term credit ratings were modified as follows:
| n | Standard & Poor’s — “CreditWatch Negative” | |
| n | Fitch Ratings — “Ratings Watch Evolving” |
The credit rating agencies continue to refine and update their
expectations for our credit ratings following the
Transformation. Please refer to the rating agency websites and
press releases for more information.
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Sources and
Uses of Liquidity
Our principal source of liquidity is our cash flow generated
from operating activities, which provides us with the ability to
meet the majority of our short-term funding requirements. The
following table summarizes net cash provided by or used in
operating, investing and financing activities for the nine
months ended September 30.
| 2011 | 2010 | |||||||
|
Operating Activities
|
$ | 452 | $ | 654 | ||||
|
Investing Activities
|
(461 | ) | (917 | ) | ||||
|
Financing Activities
|
1,669 | (16 | ) | |||||
|
Foreign Exchange
|
(5 | ) | (27 | ) | ||||
|
Total net cash flow from continuing operations
|
$ | 1,655 | $ | (306 | ) | |||
Net cash provided by operating activities was $452 for the nine
months ended September 30, 2011, representing a decrease of
$202 from the comparable prior year period. Benefits from
revenue and segment operating income growth during 2011 were
more than offset by an unfavorable change in working capital.
The primary drivers impacting working capital include additional
inventory purchases within the Fluid and Defense segments and an
increase in unbilled receivables from the U.S. government
which were partially offset by an increase in accounts payable.
The Fluid segment’s increased inventory level primarily
relates to
year-over-year
sales growth expectations based on recent order trends. The
increase in Defense segment inventory primarily relates to the
replenishment of inventory levels for various programs. The
increase in unbilled receivables and accounts payable primarily
relate to new service program starts, including K-BOSSS and
APS-5, which have yet to achieve specific billing milestones.
Achievement of billing milestones generally precedes the timing
of subcontractor payments. In addition to the above, cash
provided by operating activities was reduced by spending related
to the transformation of $137 and increased contributions of $63
to our postretirement benefit plans.
Net cash used in investing activities decreased by $456 in 2011
as compared to 2010, due to differing levels of acquisition
spending between the two periods. During 2011 we spent, $309 on
the acquisition of YSI, whereas in 2010 we spent a total of $994
primarily on the acquisitions of Nova and Godwin.
Net cash provided by financing activities increased by $1,685 in
2011 as compared to 2010, primarily related to the issuance of
Exelis and Xylem Notes in September 2011 that generated proceeds
of approximately $1,861. During 2011 we utilized $68 to
terminate a capital lease obligation. In 2010, we utilized $70
to retire two outstanding debentures. Cash from financing
activities also included additional inflow of $31 from the
exercise of employee stock options.
Our average daily outstanding commercial paper balance for the
three and nine months ended September 30, 2011 was $212 and
$159, respectively, and the maximum outstanding commercial paper
balance during the first nine months of 2011 was $408 on
September 1, 2011. As of September 30, 2011, we had no
outstanding commercial paper.
Postretirement
Benefit Plan Amendments
As a result of the plan design changes described in Note 15
to the Consolidated Condensed Financial Statements, ITT
remeasured its projected benefit obligations and plan assets for
certain U.S. and international pension plans, including the
U.S. Salaried Retirement Plan (U.S. SRP). These
actions resulted in an increase in ITT’s net pension
liability of $959, primarily related to the U.S. SRP. At
September 30, 2011, in the aggregate, ITT’s net
postretirement liability was $2,671.
Effective as of the distribution date, ITT expects to transfer
to Exelis and Xylem certain defined benefit pension and other
postretirement benefit plans, most significantly the SRP to
Exelis. Following the distribution, Exelis and Xylem will assume
all liabilities and assets associated with such plans and become
the plans’ sponsor. The net liabilities associated with
such plans to be assumed by Exelis and Xylem are approximately
$2,150 and $250, respectively, excluding net deferred tax assets
of $800 and $75 respectively.
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Table of Contents
Funding of
Postretirement Plans
Funding requirements under IRS rules are a major consideration
in making contributions to our U.S. postretirement benefit
plans. With respect to U.S. qualified postretirement
benefit plans, we intend to contribute annually not less than
the minimum required by applicable law and regulations. We
contributed $76 to our other postretirement benefit plans and
anticipate making further contributions in the range of $8 to
$10 during the remainder of 2011.
While the Company has significant discretion in making voluntary
contributions, the Employee Retirement Income Security Act of
1974, as amended by the Pension Protection Act of 2006 and
further amended by the Worker, Retiree, and Employer Recovery
Act of 2008 and applicable Internal Revenue Code regulations
mandate minimum funding thresholds. Failure to satisfy the
minimum funding thresholds could result in restrictions on our
ability to amend the plan or make benefit payments. In general,
certain benefit restrictions apply when the Adjusted Funding
Target Attainment Percentage (AFTAP) of a plan is less than 80%.
When the AFTAP is between 80% and 60%, there is a restriction on
plan amendments and a partial restriction on accelerated benefit
payments (i.e., lump sums cannot exceed 50% of the value of the
participants total benefit). Full benefit restrictions apply if
the plan’s AFTAP falls below 60%. Although mandatory
contributions to our U.S. Salaried Retirement Plan were not
required during 2011, we will continue to monitor the funded
status and minimum funding requirements.
As a result of the changes to our postretirement plans described
in Note 15 to the Consolidated Condensed Financial
Statements, certain plans were remeasured as of
September 30, 2011. As a result of the September 30,
2011 remeasurement, our most significant plan, the
U.S. SRP, was 66% funded. For purposes of determining
minimum funding thresholds pursuant to the Pension Protection
Act of 2006, as amended, the funded status will be determined
using a January 1, 2012 measurement. The 2011 AFTAP for the
U.S. SRP was 80%. If the funded status on January 1,
2012 was less then 80%, the Company could make additional
contributions during 2012 to the U.S. SRP to maintain a
funded status of at least 80% based on the January 1, 2012
AFTAP measurement in order to avoid benefit restrictions.
The funded status at January 1, 2012 and future statutory
minimum contributions will depend primarily on the return on
assets and discount rate, both determined using AFTAP
guidelines. Depending on these factors, and the resulting funded
status of our pension plans, the level of future statutory
minimum contributions could be material.
Capital
Resources
Long-term debt is raised through the offering of debt securities
primarily within the United States capital markets. Long-term
debt is generally defined as any debt with an original maturity
greater than 12 months. On September 20, 2011, Exelis
and Xylem, issued $1,850 aggregate principal amount. The Exelis
and Xylem Notes are initially guaranteed on a senior unsecured
basis by ITT. The guarantee will terminate and be automatically
and unconditionally released upon the distribution of the common
stock of Exelis and Xylem to the holders of the Company’s
common stock in connection with the spin-off of each of Exelis
and Xylem from the Company. See Note 14 to the Consolidated
Condensed Financial Statements for further detail on the debt
issuance transactions. In October 2011, we paid $1,340 and
deposited U.S. Treasury securities with an aggregate purchase
price of $263 to retire $1,251 of long-term debt that was
outstanding as of September 30, 2011. Subsequent to this
repayment our long-term debt was $1,855 substantially all of
which was issued by Exelis and Xylem in September 2011.
On October 31, 2011, we expect to have sources of long- and
short-term funding including access to the capital markets
through an unlimited 2009 Shelf Registration Statement, a $500
commercial paper program and unused credit lines. Our commercial
paper program is supported by a four-year revolving $500 credit
agreement. On its effectiveness, Exelis and Xylem will have
access to revolving credit facilities of $600 each. On
October 28, 2011, Exelis had debt of $240 outstanding under
their revolving credit facility.
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The table provided below has been included as an update to the
debt and interest payment obligations disclosed in the
contractual obligations table as provided in the 2010 Annual
Report on Form
10-K. The
amounts provided in the following tables are presented as of
September 30, 2011 and October 28, 2011.
| PAYMENTS DUE BY PERIOD | ||||||||||||||||||||
|
LESS THAN |
MORE THAN |
|||||||||||||||||||
| TOTAL | 1 YEAR | 1-3 YEARS | 3-5 YEARS | 5 YEARS | ||||||||||||||||
|
September 30, 2011:
|
||||||||||||||||||||
|
Debt(1)
|
$ | 3,106 | $ | — | $ | 502 | $ | 850 | $ | 1,754 | ||||||||||
|
Interest payments(2)
|
1,324 | 159 | 317 | 278 | 569 | |||||||||||||||
|
October 28, 2011:
|
||||||||||||||||||||
|
Debt(1)
|
$ | 1,855 | $ | — | $ | 2 | $ | 850 | $ | 1,003 | ||||||||||
|
Interest payments(2)
|
710 | 84 | 168 | 168 | 290 | |||||||||||||||
| (1) | During October 2011, we repaid the $500 of debt due within one to three years and $751 of debt due beyond five years. See Note 20 to the Consolidated Condensed Financial Statements for additional information on long-term debt transactions occurring after September 30, 2011. | |
| (2) | Amounts represent estimate of future interest payments on long-term debt outstanding as of the period end date. |
CRITICAL
ACCOUNTING ESTIMATES
The preparation of ITT’s financial statements, in
conformity with accounting principles generally accepted in the
United States of America, requires management to make estimates
and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses and the disclosure of
contingent assets and liabilities. ITT believes the most complex
and sensitive judgments, because of their significance to the
consolidated financial statements, result primarily from the
need to make estimates about the effects of matters that are
inherently uncertain. Management’s Discussion and Analysis
in the 2010 Annual Report describes the critical accounting
estimates used in preparation of the Consolidated Condensed
Financial Statements. Actual results in these areas could differ
from management’s estimates. There have been no significant
changes in the information concerning ITT’s critical
accounting estimates as stated in our 2010 Annual Report on
Form 10-K.
RECENT ACCOUNTING
PRONOUNCEMENTS
During the third quarter of 2011, the Financial Accounting
Standards Board provided companies with the option to make an
initial qualitative evaluation, based on the entity’s
events and circumstances, to determine the likelihood of
goodwill impairment. The results of this qualitative assessment
determine whether it is necessary to perform the currently
required two-step impairment test. If it is more likely than not
that the fair value of a reporting unit is less than its
carrying amount, a company would be required to perform the
two-step impairment test. This guidance is effective for annual
and interim goodwill impairment tests performed for fiscal years
beginning after December 15, 2011, with early adoption
permitted. The Company could elect to apply the option to any
goodwill impairment test performed after December 31, 2011;
however, the amendments are not expected to have a material
effect on the Company’s Consolidated Condensed Financial
Statements.
See Note 3 to the Consolidated Condensed Financial
Statements for information on recent accounting pronouncements
issued prior to the third quarter of 2011.
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Table of Contents
FORWARD-LOOKING
AND CAUTIONARY STATEMENTS
Some of the information included herein includes forward-looking
statements intended to qualify for the safe harbor from
liability established by the Private Securities Litigation
Reform Act of 1995 (the “Act”). These forward-looking
statements include, but are not limited to, statements about the
separation of ITT Corporation (the “Company”) into
three independent publicly traded companies (the
“companies”), the terms and the effect of the
separation, the nature and impact of such a separation,
capitalization of the companies, future strategic plans and
other statements that describe our business strategy, outlook,
objectives, plans, intentions or goals, and any discussion of
future operating or financial performance. Whenever used, words
such as “anticipate,” “estimate,”
“expect,” “project,” “intend,”
“plan,” “believe,” “target” and
other terms of similar meaning are intended to identify such
forward-looking statements. Forward-looking statements are
uncertain and to some extent unpredictable, and involve known
and unknown risks, uncertainties and other important factors
that could cause actual results to differ materially from those
expressed, implied in, or reasonably inferred from, such
forward-looking statements. Factors that could cause results to
differ materially from those anticipated include, but are not
limited to:
| n | Economic, political and social conditions in the countries in which we conduct our businesses; | |
| n | Changes in U.S. or International government defense budgets; | |
| n | Decline in consumer spending; | |
| n | Sales and revenue mix and pricing levels; | |
| n | Availability of adequate labor, commodities, supplies and raw materials; | |
| n | Interest and foreign currency exchange rate fluctuations and changes in local government regulations; | |
| n | Competition, industry capacity and production rates; | |
| n | Ability of third parties, including our commercial partners, counterparties, financial institutions and insurers, to comply with their commitments to us; | |
| n | Our ability to borrow or refinance our existing indebtedness and availability of liquidity sufficient to meet our needs; | |
| n | Changes in the value of goodwill or intangible assets; | |
| n | Our ability to achieve stated synergies or cost savings from acquisitions or divestitures; | |
| n | The number of personal injury claims filed against the company or the degree of liability; | |
| n | Uncertainties with respect to our estimation of asbestos liability exposures, third party recoveries and net cash flows; | |
| n | Our ability to affect restructuring and cost reduction programs and realize savings from such actions; | |
| n | Government regulations and compliance therewith, including compliance with and costs associated with new Dodd-Frank legislation; | |
| n | Changes in technology; | |
| n | Intellectual property matters; | |
| n | Governmental investigations; | |
| n | Potential future postretirement benefit plan contributions and other employment and pension matters; | |
| n | Contingencies related to actual or alleged environmental contamination, claims and concerns; | |
| n | Changes in generally accepted accounting principles; | |
| n | Other factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and our other filings with the Securities and Exchange Commission; and | |
| n | In addition, there are risks and uncertainties relating to the planned tax-free spinoffs of Exelis and Xylem, including, whether the transactions will result in any tax liability, the operational and financial profile of the Company or any of its businesses after giving effect to the spinoff transactions and the ability of each business to operate as an independent entity. |
The Company undertakes no obligation to update any
forward-looking statements, whether as a result of new
information, future events or otherwise.
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Table of Contents
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
There has been no material change in the information concerning
market risk as stated in our 2010 Annual Report.
| ITEM 4. | CONTROLS AND PROCEDURES |
The Chief Executive Officer and Chief Financial Officer of the
Company have evaluated the effectiveness of our disclosure
controls and procedures (as defined in
Rules 13a-15(e)
and
15d-15(e)
under the Exchange Act) as of the end of the period covered by
this report. Based on such evaluation, such officers have
concluded that, as of the end of the period covered by this
report the Company’s disclosure controls and procedures are
effective.
There have been no changes in our internal control over
financial reporting during the last fiscal quarter that have
materially affected or are reasonably likely to materially
affect the Company’s internal control over financial
reporting.
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Table of Contents
PART II. OTHER
INFORMATION
| ITEM 1. | LEGAL PROCEEDINGS |
From time to time, we are involved in legal proceedings that are
incidental to the operation of our businesses. Some of these
proceedings allege damages relating to environmental exposures,
intellectual property matters, copyright infringement, personal
injury claims, employment and pension matters, government
contract issues and commercial or contractual disputes,
sometimes related to acquisitions or divestitures. We will
continue to defend vigorously against all claims. See
information provided below and Note 17 to the Consolidated
Condensed Financial Statements for further information.
Asbestos
Proceedings
ITT, including its subsidiary Goulds Pumps, Inc. (Goulds), has
been joined as a defendant with numerous other companies in
product liability lawsuits alleging personal injury due to
asbestos exposure. These claims allege that certain of our
products sold prior to 1985 contained a part manufactured by a
third party (e.g., a gasket) which contained asbestos. To the
extent these third-party parts may have contained asbestos, it
was encapsulated in the gasket (or other) material and was
non-friable. In certain other cases, it is alleged that former
ITT companies were distributors for other manufacturers’
products that may have contained asbestos. Frequently, the
plaintiffs are unable to identify any ITT or Goulds product as a
source of asbestos exposure. In addition, in a large majority of
the claims against the Company, the plaintiffs are unable to
demonstrate any injury. Many of those claims have been placed on
inactive dockets. Our experience to date is that a substantial
portion of resolved claims have been dismissed without payment
by the Company.
We record a liability for pending asbestos claims and asbestos
claims estimated to be filed over the next 10 years. While
it is probable that we will incur additional costs for future
claims to be filed against the Company, a liability for
potential future claims beyond the next ten years is not
reasonably estimable due to a number of factors. As of
September 30, 2011, we have recorded an undiscounted
asbestos-related liability for pending claims and unasserted
claims estimated to be filed over the next 10 years of
$1,660, including expected legal fees, and an associated asset
of $950, which represents estimated recoveries from insurers and
other responsible parties, resulting in a net asbestos exposure
of $710.
| ITEM 1A. | RISK FACTORS |
There has been no material change in the information concerning
risk factors as disclosed in our 2010 Annual Report.
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| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
|
TOTAL |
MAXIMUM |
|||||||
|
NUMBER |
DOLLAR |
|||||||
|
OF SHARES |
VALUE OF |
|||||||
|
PURCHASED AS |
SHARES THAT |
|||||||
|
PART OF |
MAY YET BE |
|||||||
|
TOTAL |
AVERAGE |
PUBLICLY |
PURCHASED |
|||||
|
NUMBER |
PRICE |
ANNOUNCED |
UNDER THE |
|||||
|
(IN MILLIONS) |
OF SHARES |
PAID |
PLANS OR |
PLANS OR |
||||
| PERIOD | PURCHASED | PER SHARE(1) | PROGRAMS(2) | PROGRAMS(2) | ||||
|
7/1/11 - 7/31/11
|
— | — | — | $ 569 | ||||
|
8/1/11 - 8/31/11
|
— | — | — | $ 569 | ||||
|
9/1/11 - 9/30/11
|
— | — | — | $ 569 | ||||
| (1) | Average price paid per share is calculated on a settlement basis and excludes commission. | |
| (2) | On October 27, 2006, a three-year $1 billion share repurchase program was approved by our Board of Directors. On December 16, 2008, the provisions of the share repurchase program were modified by our Board of Directors to replace the original three-year term with an indefinite term. As of March 31, 2011, we had repurchased 7.1 million shares for $431, including commission fees, under the $1 billion share repurchase program. The program is consistent with our capital allocation process, which has centered on those investments necessary to grow our businesses organically and through acquisitions, while also providing cash returns to shareholders. Our strategy for cash flow utilization is to invest in our business, repay debt, pay dividends, execute strategic acquisitions, and repurchase common stock. |
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
None.
| ITEM 5. | OTHER INFORMATION |
Distribution
Agreement
On October 25, 2011, we entered into a Distribution
Agreement with Exelis and Xylem prior to the Distribution. The
Distribution Agreement sets forth our agreements with Exelis and
Xylem regarding the principal actions to be taken in connection
with the spin-off of Exelis and Xylem from ITT. It also sets
forth other agreements that govern certain aspects of our
relationship with Exelis and Xylem following the spin-off.
Transfer of Assets and Assumption of
Liabilities. The Distribution Agreement provides
for those transfers of assets and assumptions of liabilities
that are necessary in connection with the spin-off of Exelis and
Xylem from ITT so that each of Exelis, Xylem and ITT is
allocated the assets necessary to operate its respective
business and retains or assumes the liabilities allocated to it
in accordance with the distribution plan. The Distribution
Agreement also provides for the settlement or extinguishment of
certain liabilities and other obligations between and among
Exelis, Xylem and ITT. In particular, the Distribution Agreement
provides that, subject to the terms and conditions contained in
the Distribution Agreement:
| n | All of the assets and liabilities (including whether accrued, contingent or otherwise, and subject to certain exceptions) associated with the Defense business of ITT will be retained by or transferred to Exelis or one of its subsidiaries. | |
| n | All of the assets and liabilities (including whether accrued, contingent or otherwise, and subject to certain exceptions) associated with the Water business of ITT will be retained by or transferred to Xylem or one of Xylem’s subsidiaries. | |
| n | All other assets and liabilities (including whether accrued, contingent or otherwise, and subject to certain exceptions) of ITT will be retained by or transferred to ITT or one of its subsidiaries (other than Exelis and Exelis’s subsidiaries or Xylem and Xylem’s subsidiaries). |
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| n | Liabilities (including whether accrued, contingent or otherwise) related to, arising out of or resulting from businesses of ITT that were previously terminated or divested will be allocated among the parties to the extent formerly owned or managed by or associated with such parties or their respective businesses. | |
| n | Each of Exelis and Xylem, respectively, will assume or retain any liabilities (including under applicable federal and state securities laws) relating to, arising out of or resulting from the Form 10 registering its common stock to be distributed by ITT in the spin-off and from any disclosure documents that offer for sale its debt securities issued in connection with the spin-of, subject to exceptions for certain information for which ITT will retain liability. | |
| n | Except as otherwise provided in the Distribution Agreement or any ancillary agreement, each of Exelis and Xylem will be responsible for any costs or expenses incurred by each of Exelis and Xylem in connection with the distribution, including costs and expenses relating to legal counsel, financial advisors and accounting advisory work related to the distribution. | |
| n | In addition, notwithstanding the allocation described above, we, Exelis and Xylem have agreed that (i) ITT will be responsible for, and indemnify each of Exelis and Xylem against, losses related to all of the contingent liabilities (and related costs and expenses) arising out of litigation and claims alleging exposure to asbestos prior to the separation of Exelis and Xylem from ITT (including those that are described in ITT’s public filings with the Securities and Exchange Commission) and (ii) each party will, in accordance with each party’s designated percentage of responsibility, be responsible for losses related to certain contingent liabilities (and related costs and expenses) in accordance with the Distribution Agreement and any ancillary agreement. |
Further Assurances. To the extent that any
transfers of assets or assumptions of liabilities contemplated
by the Distribution Agreement have not been consummated on or
prior to the date of the distribution, the parties have agreed
to cooperate to effect such transfers or assumptions as promptly
as practicable following the Distribution Date and, in the
interim, to take reasonable actions to the extent permitted by
applicable law to place the parties in as near as the same
position as if such assets or liabilities had been transferred.
In addition, each of the parties has agreed to cooperate with
each other and use commercially reasonable efforts to take or to
cause to be taken all actions, and to do, or to cause to be
done, all things reasonably necessary under applicable law or
contractual obligations to consummate and make effective the
transactions contemplated by the Distribution Agreement and the
ancillary agreements.
Representations and Warranties. In general,
neither we, Exelis, nor Xylem make any representations or
warranties regarding any assets or liabilities transferred or
assumed, any consents or approvals that may be required in
connection with such transfers or assumptions, the value or
freedom from any lien or other security interest of any assets
transferred, the absence of any defenses relating to any claim
of either party or the legal sufficiency of any conveyance
documents, or any other matters. Except as expressly set forth
in the Distribution Agreement or in any ancillary agreement, all
assets will be transferred on an “as is,” “where
is” basis.
The Distribution. The Distribution Agreement
governs the rights and obligations of the parties regarding the
proposed distribution and certain actions that must occur prior
to the proposed distribution, such as the election of officers
and directors and the adoption of the amended and restated
articles of incorporation and amended and restated by-laws.
Conditions. The Distribution Agreement
provides that the distribution is subject to several conditions
that must be satisfied or waived by ITT in its sole discretion.
ITT may, in its sole discretion, at any time prior to the
completion of the distribution decide to abandon or modify the
distribution.
Termination. The Distribution Agreement
provides that it may be terminated by ITT at any time in its
sole discretion prior to the date of the distribution.
Release of Claims and Indemnification. We,
Exelis and Xylem agree to broad releases pursuant to which we
will each release the others and certain related persons
specified in the Distribution Agreement from any claims against
any of them that arise out of or relate to events, circumstances
or actions occurring or failing to occur or alleged to occur or
fail to occur or any conditions existing or alleged to exist at
or prior to the time of the distribution. These releases are
subject to certain exceptions set forth in the Distribution
Agreement and the ancillary agreements.
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The Distribution Agreement provides for cross-indemnities that,
except as otherwise provided in the Distribution Agreement, are
principally designed to place financial responsibility for the
obligations and liabilities of each of the Exelis and Xylem
businesses with Exelis and Xylem, respectively, and financial
responsibility for the obligations and liabilities of ITT’s
business with ITT. Specifically, each party will, and will cause
its subsidiaries and affiliates to, indemnify, defend and hold
harmless the other parties, their respective affiliates and
subsidiaries and each of their respective officers, directors,
employees and agents for any losses arising out of or otherwise
in connection with:
| n | the liabilities or alleged liabilities each such party assumed or retained pursuant to the Distribution Agreement; and | |
| n | any breach by such party of the Distribution Agreement or any ancillary agreement unless such ancillary agreement expressly provides for separate indemnification therein, in which case any such indemnification claims shall be made thereunder. |
The amount of each party’s indemnification obligations will
be subject to reduction by any insurance proceeds received by
the party being indemnified. The Distribution Agreement also
specifies procedures with respect to claims subject to
indemnification and related matters. Indemnification with
respect to taxes will be governed solely by the Tax Matters
Agreement described below.
Cash Adjustments: Prior to the Distribution,
each of Exelis and Xylem will transfer funds to ITT or ITT will
transfer funds to Exelis and Xylem so that each of the Exelis
and Xylem book cash and cash equivalents balances in their
accounts will be equal to $200 million. The Distribution
Agreement provides for a mechanism to adjust the book cash and
cash equivalents balance among us, Exelis and Xylem should each
of the Exelis and Xylem book cash and cash equivalents balance
be greater than or less than $200 million.
Insurance. Following the spin-off, each of
Exelis and Xylem will be responsible for obtaining and
maintaining their own insurance coverage, although Exelis and
Xylem will continue to have coverage under certain of ITT’s
pre-spinoff insurance policies for certain matters that occurred
prior to the spin-off.
Dispute Resolution. In the event of any
dispute arising out of the Distribution Agreement, the general
counsels of the parties and such other representatives as the
parties designate will negotiate to resolve any disputes among
the parties. If the parties are unable to resolve the dispute in
this manner within 45 days then, unless agreed otherwise by
the parties, the parties will submit the dispute to mediation
for an additional period of 45 days. If the parties are
unable to resolve the dispute in this manner, the dispute will
be resolved through binding arbitration.
Other Matters Governed by the Distribution
Agreement. Other matters governed by the
Distribution Agreement include access to financial and other
information, intellectual property, confidentiality, access to
and provision of records and treatment of outstanding guarantees
and similar credit support.
The foregoing description of the Distribution Agreement is not
complete and is qualified in its entirety by reference to the
Distribution Agreement, which is filed as Exhibit 10.1
hereto and incorporated herein by reference.
Benefits and
Compensation Matters Agreement
On October 25, 2011, we entered into a Benefits and
Compensation Matters Agreement with Exelis and Xylem that will
govern the respective rights, responsibilities and obligations
of Exelis, Xylem and us after the spin-off with respect to
transferred employees, defined benefit pension plans, defined
contribution pension plans, nonqualified pension plans, employee
health and welfare benefit plans, incentive plans,
corporate-owned life insurance, stock equity awards, foreign
benefit plans, director plans and collective bargaining
agreements. The Benefits and Compensation Matters Agreement
provides for the allocation and treatment of assets and
liabilities arising out of incentive plans, pension plans and
employee welfare benefit programs in which Exelis and Xylem
employees participated prior to the spin-off. Generally, Exelis
and Xylem will assume or retain sponsorship of, and liabilities
relating to, employee compensation and benefit programs relating
to Exelis and Xylem current employees. The Benefits and
Compensation Matters Agreement will also provide that
outstanding ITT equity awards will be equitably adjusted in
connection with the spin-off. We expect that all outstanding ITT
equity awards held by current employees of Exelis as of the
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distribution date will be substituted for Exelis equity awards
and all outstanding ITT equity awards held by current employees
of Xylem as of the distribution date will be substituted for
Xylem equity awards pursuant to the Benefits and Compensation
Matters Agreement. We expect that the substitution will preserve
the economic value of the cancelled ITT equity awards for
employees of Exelis and Xylem as of the distribution date.
Subject to the applicable transition periods with respect to
certain benefit plans or programs, after the spin-off, employees
of Exelis and Xylem will no longer participate in ITT’s
plans or programs, and Exelis and Xylem will establish plans or
programs for their employees as described in the Benefits and
Compensation Matters Agreement. Exelis and Xylem will also
establish or maintain plans and programs outside of the
U.S. as may be required under applicable law or pursuant to
the Benefits and Compensation Matters Agreement.
The foregoing description of the Benefits and Compensation
Matters Agreement is not complete and is qualified in its
entirety by reference to the Benefits and Compensation Matters
Agreement, which is filed as Exhibit 10.2 hereto and
incorporated herein by reference.
ITT
Transitional Trademark License Agreement —
Exelis
On October 25, 2011, a subsidiary of ITT entered into an
ITT Transitional Trademark License Agreement with Exelis
pursuant to which Exelis will license on a non-exclusive basis
the right to use the ITT name and trademark in the Defense
business for a transitional period while it phases out the use
of such trademark in the operation of its business and on
certain legacy products so long as they are in production.
The foregoing description of the ITT Transitional Trademark
License Agreement — Exelis is not complete and is
qualified in its entirety by reference to the ITT Transitional
Trademark License Agreement — Exelis, which is filed
as Exhibit 10.5 hereto and incorporated herein by reference.
Tax Matters
Agreement
On October 25, 2011, we entered into a Tax Matters
Agreement with Exelis and Xylem that govern the respective
rights, responsibilities and obligations of Exelis, Xylem and us
after the spin-off with respect to tax liabilities and benefits,
tax attributes, tax contests and other tax sharing regarding
U.S. Federal, state, local and foreign income taxes, other
tax matters and related tax returns. As subsidiaries of ITT,
Exelis and Xylem have (and will continue to have following the
spin-off) several liability with ITT to the IRS for the
consolidated U.S. Federal income taxes of the ITT
consolidated group relating to the taxable periods in which
Exelis and Xylem were part of that group. However, the Tax
Matters Agreement specifies the portion, if any, of this tax
liability for which ITT, Exelis and Xylem will bear
responsibility, and ITT, Exelis and Xylem agree to indemnify
each other against any amounts for which they are not
responsible. The Tax Matters Agreement also provides special
rules for allocating tax liabilities in the event that the
spin-off is not tax-free. The Tax Matters Agreement provides for
certain covenants that may restrict our ability to pursue
strategic or other transactions that otherwise could maximize
the value of our business and may discourage or delay a change
of control that may be considered favorable. Though valid as
between the parties, the Tax Matters Agreement will not be
binding on the IRS.
The foregoing description of the Tax Matters Agreement is not
complete and is qualified in its entirety by reference to the
Tax Matters Agreement, which is filed as Exhibit 10.3
hereto and incorporated herein by reference.
Real Estate
Matters — Xylem
On October 25, 2011, we entered into a Master Lease
Agreement pursuant to which ITT, or certain of its subsidiaries,
will lease certain real estate to or from Xylem, or certain of
its subsidiaries, that is currently owned by ITT, or certain of
its subsidiaries, but currently occupied and operated by one or
both parties, in each case for a limited term to help ensure an
orderly transition following the distribution.
On September 30, 2011, we entered into a Master Sublease
Agreement pursuant to which ITT, or certain of its subsidiaries,
will sublease certain real estate to or from Xylem, or certain
of its subsidiaries, that is currently leased by ITT, or certain
of its subsidiaries, but currently occupied and operated by one
or both parties, in each case for a limited term to help ensure
an orderly transition following distribution.
56
Table of Contents
The foregoing description of the Master Lease Agreement and
Master Sublease Agreement is not complete and is qualified in
its entirety by reference to the Master Lease Agreement and
Master Sublease Agreement, which are filed as Exhibit 10.6
hereto and incorporated herein by reference.
Transition
Services Agreement
On October 25, 2011, we entered into a Master Transition
Services Agreement with Exelis and Xylem, under which each of
Exelis and Xylem or their respective affiliates will provide us
with certain services, and we or certain of our affiliates will
provide each of Exelis and Xylem certain services, for a limited
time to help ensure an orderly transition for each of Exelis,
Xylem and ITT following the distribution.
Under the Master Transition Services Agreement, Exelis and Xylem
will receive certain services (including information technology,
financial, procurement and human resource services, benefits
support services and other specified services) from ITT, Exelis
and/or
Xylem, and ITT will provide certain services (including
information technology, human resources services and other
specified services) to Exelis
and/or
Xylem. We expect these services will be initially provided at
cost with scheduled, escalating increases to up to cost plus 10%
and are planned to extend for a period of 3 to 24 months in
most circumstances.
The foregoing description of the Master Transition Services
Agreement is not complete and is qualified in its entirety by
reference to the Master Transition Services Agreement, which is
filed as Exhibit 10.4 hereto and incorporated herein by
reference.
Competitive
Advance and Revolving Credit Facility Agreement
On October 25, 2011, ITT Corporation (the
“Company”), as borrower, entered into a Four-Year
Competitive Advance and Revolving Credit Facility Agreement (the
“2011 Credit Agreement”), a senior unsecured revolving
credit facility in an aggregate principal amount of up to
$500,000,000, effective as of October 31, 2011, with a
syndicate of lenders arranged by J.P. Morgan Securities
LLC, Citigroup Global Markets Inc., U.S. Bank National
Association and The Bank of Tokyo-Mitsubishi Ufj, Ltd., as Lead
Arrangers and Joint Bookrunners, JPMorgan Chase Bank, N.A., as
Administrative Agent, and Citibank, N.A., as Syndication Agent,
and Barclays Bank Plc, Société Générale, The
Royal Bank of Scotland Plc, U.S. Bank National Association,
The Bank of
Tokyo-Mitsubishi
Ufj, Ltd. and Wells Fargo Bank, N.A., as Documentation Agents.
The 2011 Credit Agreement provides for increases of up to
$200,000,000 for a possible maximum total of $700,000,000 in
aggregate principal amount at the request of the Company and
with the consent of the institutions providing such increased
commitments. The facility made available by the 2011 Credit
Agreement will be for working capital and other general
corporate purposes (including, without limitation, commercial
paper backup), and to repay any amounts outstanding under the
Three-Year Competitive Advance Revolving Credit Facility
Agreement, dated as of August 9, 2010, among the Company,
with a syndicate of lenders arranged by J.P. Morgan
Securities Inc. and Citigroup Global Markets Inc., as Joint Lead
Arrangers and Joint Bookrunners, JPMorgan Chase Bank, N.A., as
Administrative Agent, and Citigroup Global Markets Inc., as
Syndication Agent, and The Bank of Tokyo-Mitsubishi Ufj, Ltd.,
NY Branch, Société Générale, Wells Fargo
Bank, N.A., Barclays Bank Plc, The Royal Bank of Scotland
Plc and U.S. Bank National Association, as
Documentation Agents (the “Existing Credit Agreement”).
The 2011 Credit Agreement replaces the Existing Credit
Agreement. Two borrowing options are available under the 2011
Credit Agreement: (i) a competitive advance option and
(ii) a revolving credit option. The interest rates for the
competitive advance option will be obtained from bids in
accordance with competitive auction procedures. The interest
rates under the revolving credit option will be based either on
LIBOR plus spreads, which reflect the Company’s debt
ratings, or on the Administrative Agent’s Alternate Base
Rate. Borrowings under the 2011 Credit Agreement are available
upon customary terms and conditions for facilities of this type,
including a requirement to maintain a ratio of consolidated
EBITDA to consolidated interest expense to be not less than 3.00
to 1.00 and a requirement to maintain a leverage ratio to be not
greater than 3.00 to 1.00.
Amounts due under the 2011 Credit Facility may be accelerated,
among other things, upon an event of default such as a breach of
a covenant, material inaccuracy of a representation or the
occurrence of bankruptcy, if not otherwise waived or cured. The
lenders and the agents (and their respective subsidiaries or
affiliates) under the 2011 Credit Agreement have in the past
provided,
57
Table of Contents
and may in the future provide, investment banking, underwriting,
lending, commercial banking, trust and other advisory services
to the Company, its subsidiaries or affiliates. These parties
have received, and may in the future receive, customary
compensation from the Company, its subsidiaries or affiliates,
for such services.
The Company will guarantee the obligations of any of its
subsidiaries who become subsidiary borrowers. In addition,
significant domestic subsidiaries of the Company will jointly
and severally guarantee the obligations of the Company and any
subsidiary borrowers.
The foregoing description of the 2011 Credit Agreement is not
complete and is qualified in its entirety by reference to the
2011 Credit Agreement, which is filed as Exhibit 10.7
hereto and incorporated herein by reference.
Mine Safety
Disclosure
Pursuant to the reporting requirements under
Section 1503(a) of the Dodd-Frank Act, the Company is
providing the following information: one facility owned and
operated by ITT Water and Wastewater Leopold, Inc. is regulated
by the Federal Mine Health and Safety Act (MSHA). This facility
is a coal processing facility located in Watsontown,
Pennsylvania. In August 2011, the Watsontown facility was
inspected by the MSHA and was issued a minor citation.
Corrective actions have been taken and this citation has been
terminated by the MSHA inspector.
| ITEM 6. | EXHIBITS |
(a) See the Exhibit Index for a list of exhibits filed
herewith.
58
Table of Contents
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ITT Corporation
(Registrant)
| By: |
/s/ JANICE
M. KLETTNER
|
Janice M. Klettner
Vice President and Chief Accounting Officer
(Principal accounting officer)
October 28, 2011
59
Table of Contents
EXHIBIT INDEX
|
EXHIBIT |
||||||
| NUMBER | DESCRIPTION | LOCATION | ||||
| (3.1) | Amended and Restated By-laws of ITT Corporation | Incorporated by reference to Exhibit 3.1 of ITT Corporation’s Form 8-K Current Report dated October 5, 2011 (CIK No. 216228, File No. 1-5672. | ||||
| (4.1) | Indenture, dated as of September 20, 2011, between Exelis Inc., ITT Corporation, as guarantor, and Union Bank, N.A., as trustee | Incorporated by reference to Exhibit 4.1 of ITT Corporation’s Form 8-K Current Report dated September 21, 2011 (CIK No. 216228, File No. 1-5672. | ||||
| (4.2 ) | Indenture, dated as of September 20, 2011, between Xylem Inc., ITT Corporation, as guarantor, and Union Bank, N.A., as trustee | Incorporated by reference to Exhibit 4.2 of ITT Corporation’s Form 8-K Current Report dated September 21, 2011 (CIK No. 216228, File No. 1-5672. | ||||
| (4.3 ) | Form of Exelis Inc. 4.250% Senior Notes due 2016 | Incorporated by reference to Exhibit 4.3 of ITT Corporation’s Form 8-K Current Report dated September 21, 2011 (CIK No. 216228, File No. 1-5672. | ||||
| (4.4 ) | Form of Exelis Inc. 4.250% Senior Notes due 2021 | Incorporated by reference to Exhibit 4.4 of ITT Corporation’s Form 8-K Current Report dated September 21, 2011 (CIK No. 216228, File No. 1-5672. | ||||
| (4.5 ) | Form of Exelis Inc. 4.250% Senior Notes due 2016 | Incorporated by reference to Exhibit 4.5 of ITT Corporation’s Form 8-K Current Report dated September 21, 2011 (CIK No. 216228, File No. 1-5672. | ||||
| (4.6 ) | Form of Exelis Inc. 4.250% Senior Notes due 2021 | Incorporated by reference to Exhibit 4.6 of ITT Corporation’s Form 8-K Current Report dated September 21, 2011 (CIK No. 216228, File No. 1-5672. | ||||
| (4.7 ) |
Registration Rights Agreement, dated as of September 20, 2011, between Exelis Inc., ITT Corporation and Barclays Capital Inc., Citigroup Global Markets Inc. and J.P. Morgan Securities LLC, as representatives of the Initial Purchases |
Incorporated by reference to Exhibit 4.7 of ITT Corporation’s Form 8-K Current Report dated September 21, 2011 (CIK No. 216228, File No. 1-5672. | ||||
| (4.8 ) |
Registration Rights Agreement, dated as of September 20, 2011, between Xylem Inc., ITT Corporation and J.P. Morgan Securities LLC, RBS Securities Inc. and Wells Fargo Securities, LLC., as representatives of the Initial Purchasers. |
Incorporated by reference to Exhibit 4.8 of ITT Corporation’s Form 8-K Current Report dated September 21, 2011 (CIK No. 216228, File No. 1-5672. | ||||
| (10.1) | Distribution Agreement, dated as of October 25, 2011, among ITT Corporation, Xylem Inc. and Exelis Inc. | Filed herewith. | ||||
| (10.2) |
Benefits and Compensation Matters Agreement, dated as of
October 25, 2011, among ITT Corporation, Xylem Inc. and Exelis Inc. |
Filed herewith. | ||||
| (10.3) | Tax Matters Agreement, dated as of October 25, 2011, among ITT Corporation, Xylem Inc. and Exelis Inc. | Filed herewith. | ||||
| (10.4) | Master Transition Services Agreement, dated as of October 25, 2011, among ITT Corporation, Xylem Inc. and Exelis Inc. | Filed herewith. | ||||
| (10.5) | ITT Transitional Trademark License Agreement — Exelis, dated as of October 25, 2011, between ITT Manufacturing Enterprises LLC and Exelis Inc. | Filed herewith. | ||||
60
Table of Contents
|
EXHIBIT |
||||||
| NUMBER | DESCRIPTION | LOCATION | ||||
| (10.6) | Master Lease Agreement and Master Sublease Agreement, dated as of October 25, 2011 and September 30, 2011, respectively | Filed herewith. | ||||
| (10.7) | Four-Year Competitive Advance and Revolving Credit Facility Agreement, dated as of October 25, 2011 among ITT Corporation and Other Parties Signatory Thereto | Filed herewith. | ||||
| (31.1) | Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith. | ||||
| (31.2) | Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith. | ||||
| (32.1) | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | This Exhibit is intended to be furnished in accordance with Regulation S-K Item 601(b) (32) (ii) and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934 or incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference. | ||||
| (32.2) | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | This Exhibit is intended to be furnished in accordance with Regulation S-K Item 601(b) (32) (ii) and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934 or incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference. | ||||
| (101) | The following materials from ITT Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Condensed Income Statements, (ii) Consolidated Condensed Statements of Comprehensive Income, (iii) Consolidated Condensed Balance Sheets, (iv) Consolidated Condensed Statements of Cash Flows and (v) Notes to Consolidated Condensed Financial Statements | Submitted electronically with this report. | ||||
61
Exhibit 10.1
DISTRIBUTION AGREEMENT
by and among
ITT CORPORATION,
EXELIS INC.
and
XYLEM INC.
Dated as of October 25, 2011
TABLE OF CONTENTS
| Page | ||||
ARTICLE I DEFINITIONS AND INTERPRETATION |
2 | |||
Section 1.1. General |
2 | |||
Section 1.2. References; Interpretation |
25 | |||
ARTICLE II THE SEPARATION |
26 | |||
Section 2.1. General |
26 | |||
Section 2.2. Restructuring: Transfer of Assets; Assumption of Liabilities |
26 | |||
Section 2.3. Treatment of Shared Contracts |
27 | |||
Section 2.4. Intercompany Accounts |
28 | |||
Section 2.5. Limitation of Liability; Intercompany Contracts |
29 | |||
Section 2.6. Transfers Not Effected at or Prior to the Effective Time; Transfers
Deemed Effective as of the Effective Time |
29 | |||
Section 2.7. Conveyancing and Assumption Instruments |
31 | |||
Section 2.8. Further Assurances; Ancillary Agreements |
31 | |||
Section 2.9. Novation of Liabilities; Indemnification |
32 | |||
Section 2.10. Guarantees; Letters of Credit |
33 | |||
Section 2.11. Post Closing Exelis Contracts |
34 | |||
Section 2.12. Disclaimer of Representations and Warranties |
35 | |||
ARTICLE III CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTIONS |
35 | |||
Section 3.1. Articles of Incorporation; By-laws |
35 | |||
Section 3.2. Directors |
35 | |||
Section 3.3. Officers |
36 | |||
Section 3.4. Resignations and Removals |
36 | |||
Section 3.5. Cash Adjustments |
36 | |||
ARTICLE IV THE DISTRIBUTIONS |
39 | |||
Section 4.1. Stock Dividends to ITT Shareholders |
39 | |||
Section 4.2. Actions in Connection with the Distribution |
39 | |||
Section 4.3. Sole Discretion of ITT |
40 | |||
Section 4.4. Conditions to Distribution |
40 | |||
ARTICLE V CERTAIN COVENANTS |
41 | |||
Section 5.1. No Solicit; No Hire |
41 | |||
Section 5.2. Intellectual Property |
42 | |||
Section 5.3. Administration of Specified Shared Expenses |
42 | |||
Section 5.4. Cooperation |
42 | |||
Section 5.5. Periodic Meetings |
42 | |||
Section 5.6. Board of Directors |
43 | |||
Section 5.7. Office Space |
43 | |||
Section 5.8. Night Vision |
43 | |||
Section 5.9. SEC Settlement |
44 | |||
ARTICLE VI SHARED CONTINGENT LIABILITIES |
45 | |||
Section 6.1. Shared Contingent Liabilities |
45 | |||
| i |
||||
| Page | ||||
Section 6.2. Management of Shared Contingent Liabilities |
45 | |||
Section 6.3. Access to Information; Certain Services; Expenses |
46 | |||
Section 6.4. Notice Relating to Shared Contingent Liabilities; Disputes |
47 | |||
Section 6.5. Cooperation with Governmental Entity |
48 | |||
Section 6.6. Default |
48 | |||
ARTICLE VII INDEMNIFICATION |
48 | |||
Section 7.1. Release of Pre-Distribution Claims |
48 | |||
Section 7.2. Indemnification by ITT |
50 | |||
Section 7.3. Indemnification by Exelis |
50 | |||
Section 7.4. Indemnification by Xylem |
50 | |||
Section 7.5. Procedures for Indemnification |
50 | |||
Section 7.6. Cooperation in Defense and Settlement |
53 | |||
Section 7.7. Indemnification Payments |
53 | |||
Section 7.8. Indemnification Obligations Net of Insurance Proceeds and Other Amounts |
53 | |||
Section 7.9. Additional Matters; Survival of Indemnities |
54 | |||
ARTICLE VIII PRESERVATION OF RECORDS; ACCESS TO INFORMATION; CONFIDENTIALITY; PRIVILEGE |
54 | |||
Section 8.1. Preservation of Corporate Records |
54 | |||
Section 8.2. Financial Statements and Accounting |
55 | |||
Section 8.3. Provision of Corporate Records |
56 | |||
Section 8.4. Witness Services |
57 | |||
Section 8.5. Reimbursement; Other Matters |
57 | |||
Section 8.6. Confidentiality |
57 | |||
Section 8.7. Privilege Matters |
58 | |||
Section 8.8. Ownership of Information |
60 | |||
Section 8.9. Other Agreements |
60 | |||
ARTICLE IX DISPUTE RESOLUTION |
60 | |||
Section 9.1. Negotiation |
60 | |||
Section 9.2. Mediation |
61 | |||
Section 9.3. Arbitration |
61 | |||
Section 9.4. Arbitration Period |
61 | |||
Section 9.5. Treatment of Negotiations, Mediation and Arbitration |
62 | |||
Section 9.6. Continuity of Service and Performance |
62 | |||
Section 9.7. Consolidation |
62 | |||
ARTICLE X INSURANCE |
62 | |||
Section 10.1. Policies and Rights Included Within Assets |
62 | |||
Section 10.2. Post-Effective Time Claims |
63 | |||
Section 10.3. Administration; Other Matters |
64 | |||
Section 10.4. Agreement for Waiver of Conflict and Shared Defense |
64 | |||
Section 10.5. Agreement for Waiver of Conflict and Insurance Litigation and/or
Recovery Efforts |
64 | |||
Section 10.6. Directors and Officers Liability Insurance; Fiduciary Liability
Insurance; Employment Practices Liability Insurance; Employed Lawyers Liability
Insurance |
65 | |||
Section 10.7. No Coverage for Post-Effective Occurrences |
65 | |||
Section 10.8. Cooperation |
65 | |||
Section 10.9. Excluded Policies |
65 | |||
Section 10.10. ITT as General Agent and Attorney-In-Fact |
65 | |||
| ii |
||||
| Page | ||||
Section 10.11. Additional Premiums, Return Premiums and Pro Rata Cancellation
Premium Credits |
65 | |||
ARTICLE XI MISCELLANEOUS |
66 | |||
Section 11.1. Complete Agreement; Construction |
66 | |||
Section 11.2. Ancillary Agreements |
66 | |||
Section 11.3. Counterparts |
66 | |||
Section 11.4. Survival of Agreements |
66 | |||
Section 11.5. Expenses |
66 | |||
Section 11.6. Notices |
67 | |||
Section 11.7. Waivers |
67 | |||
Section 11.8. Assignment |
67 | |||
Section 11.9. Successors and Assigns |
67 | |||
Section 11.10. Termination and Amendment |
68 | |||
Section 11.11. Payment Terms |
68 | |||
Section 11.12. No Circumvention |
68 | |||
Section 11.13. Subsidiaries |
68 | |||
Section 11.14. Third Party Beneficiaries |
68 | |||
Section 11.15. Title and Headings |
68 | |||
Section 11.16. Exhibits and Schedules |
68 | |||
Section 11.17. Governing Law |
69 | |||
Section 11.18. Consent to Jurisdiction |
69 | |||
Section 11.19. Waiver of Jury Trial |
69 | |||
Section 11.20. Severability |
69 | |||
Section 11.21. Force Majeure |
70 | |||
Section 11.22. Interpretation |
70 | |||
Section 11.23. No Duplication; No Double Recovery |
70 | |||
Section 11.24. Tax Treatment of Payments |
70 | |||
Section 11.25. No Waiver |
70 | |||
Section 11.26. No Admission of Liability |
70 | |||
| iii |
||||
List of Schedules
Schedule 1.1(21)
|
Continuing Arrangements | |
Schedule 1.1(26)(ii)
|
Defense Divisions | |
Schedule 1.1(26)(iii)
|
Certain Specified Defense Assets | |
Schedule 1.1(26)(iv)
|
Defense Business Entities And Investments | |
Schedule 1.1(26)(v)
|
Defense Owned Real Property | |
Schedule 1.1(26)(vi)
|
Defense Leased Property | |
Schedule 1.1(26)(x)
|
Certain Defense Registered Intellectual Property | |
Schedule 1.1(31)(iv)
|
Specified Defense Liabilities | |
Schedule 1.1(31)(viii)
|
Sold, Transferred or Discontinued Defense Operations | |
Schedule 1.1(31)(xii)
|
Defense Litigation and Disputes | |
Schedule 1.1(63)
|
ITT Disclosure Sections | |
Schedule 1.1(66)(i)
|
ITT Retained Divisions | |
Schedule 1.1(66)(iii)
|
ITT Business Entities and Investments | |
Schedule 1.1(66)(iv)
|
ITT Owned Real Property | |
Schedule 1.1(66)(v)
|
ITT Leased Property | |
Schedule 1.1(66)(ix)
|
Certain ITT Registered Intellectual Property | |
Schedule 1.1(66)(xv)
|
Specified ITT Assets | |
Schedule 1.1(69)(iv)
|
Specified ITT Retained Liabilities | |
Schedule 1.1(69)(viii)
|
Sold, Transferred or Discontinued ITT Operations | |
Schedule 1.1(69)(xii)
|
ITT Retained Litigation and Disputes | |
Schedule 1.1(74)
|
License Agreements | |
Schedule 1.1(84)
|
Shared Contingent Liabilities | |
Schedule 1.1(85)
|
Specified Shared Expenses | |
Schedule 1.1(96)(ii)
|
Water Divisions | |
Schedule 1.1(96)(iii)
|
Certain Specified Water Assets | |
Schedule 1.1(96)(iv)
|
Water Business Entities And Investments | |
Schedule 1.1(96)(v)
|
Water Owned Real Property | |
Schedule 1.1(96)(vi)
|
Water Leased Property | |
Schedule 1.1(96)(x)
|
Certain Water Registered Intellectual Property | |
Schedule 1.1(101)(iv)
|
Specified Water Liabilities | |
Schedule 1.1(101)(viii)
|
Sold, Transferred, or Discontinued Water Operations | |
Schedule 1.1(101)(xii)
|
Water Litigation and Disputes | |
Schedule 2.2(a)
|
Transfers to Occur Post Distribution | |
Schedule 2.3(a)
|
Shared Contracts | |
Schedule 2.10(a)
|
Defense and Water Liabilities where ITT is to Remain as Guarantor | |
Schedule 2.10(a)(i)
|
Certain ITT Guarantees | |
Schedule 2.10(a)(ii)
|
Certain Defense Guarantees | |
Schedule 2.10(a)(iii)
|
Certain Water Guarantees | |
Schedule 3.2(a)
|
ITT Directors | |
Schedule 3.3(a)
|
ITT Officers | |
Schedule 3.5(g)
|
Statement of Cash Allocation Example | |
Schedule 5.1
|
No Solicit; No Hire | |
Schedule 5.6
|
Legacy Directors | |
Schedule 8.1(b)
|
Document Retention Policies | |
Schedule 8.2(c)
|
2011 Draft Report Date | |
Schedule 8.4
|
Witness Services | |
Schedule 10.1
|
Company Insurance Policies | |
Schedule 10.9(a)
|
Excluded Policies | |
| iv |
||
Schedule 10.9(b)
|
Transactions Involving the Acquisition of Certain Excluded Policies | |
Schedule 11.5
|
Separation Expenses | |
List of Exhibits |
||
Exhibit A
|
Benefits and Compensation Matters Agreement | |
Exhibit B
|
Tax Matters Agreement | |
Exhibit C
|
Transition Services Agreement | |
| v |
||
Index of Other Defined Terms
| Defined Term | Section | |
2013 Meetings
|
Section 5.6 | |
Accountant
|
Section 3.5(f) | |
ACA
|
Section 5.8(a) | |
Agreement Disputes
|
Section 9.1 | |
Annual Reports
|
Section 8.2(c) | |
Audited Party
|
Section 8.2(b) | |
Board
|
Recitals | |
Cash Allocation
|
Section 3.5(g) | |
Cash Detail Review Period
|
Section 3.5(e) | |
Code
|
Recitals | |
Consent Agreement
|
Section 5.8(a) | |
CPR
|
Section 9.2 | |
Defense Discontinued Operation
|
Section 1.1(31)(viii) | |
Defense Divisions
|
Section 1.1(26)(ii) | |
Defense Entities
|
Section 1.1(26)(iv) | |
Defense Leases
|
Section 1.1(26)(vi) | |
Dispute Notice
|
Section 9.1 | |
Disputed Item
|
Section 3.5(e) | |
Distribution Date Cash Balance
|
Section 3.5(d) | |
Exelis
|
Preamble | |
Final Judgment
|
Section 5.9(a) | |
Guaranty Release
|
Section 2.10(b) | |
Indemnifying Party
|
Section 7.5(a) | |
Indemnitee
|
Section 7.5(a) | |
Indemnity Payment
|
Section 7.8(a) | |
Internal Control Audit and Management Assessments
|
Section 8.2(a) | |
ITT
|
Preamble | |
ITT Discontinued Operation
|
Section 1.1(69)(viii) | |
ITT Retained Divisions
|
Section 1.1(66)(i) | |
ITT Retained Entities
|
Section 1.1(66)(iii) | |
ITT Retained Leases
|
Section 1.1(66)(v) | |
Legacy Director
|
Section 5.6 | |
Liable Party
|
Section 2.9(b) | |
Managing Party
|
Section 6.2(a) | |
Mediation Period
|
Section 9.2 | |
New York Courts
|
Section 11.18 | |
Nova
|
Section 8.1(a) | |
Nuclear Policies
|
Section 10.3(d) | |
Other Parties’ Auditors
|
Section 8.2(b) | |
Other Party
|
Section 2.9(a) | |
Outstanding Receivable
|
Section 2.6(d) | |
Party
|
Preamble | |
Petrobras
|
Section 2.6(d) | |
Petrobras Conversion Rate
|
Section 2.6(d) | |
Petrobras Time
|
Section 2.6(d) | |
Post Closing Exelis Contracts
|
Section 2.11 | |
Post Closing Exelis Contracts Transfer Time
|
Section 2.11 | |
| vi |
||
| Defined Term | Section | |
Privilege
|
Section 8.7(a) | |
Privileged Information
|
Section 8.7(a) | |
Reallocation Payments
|
Section 3.5(d) | |
Receivable
|
Section 2.6(d) | |
Response Letter
|
Section 3.5(e) | |
Restructuring
|
Section 2.2(a) | |
Rules
|
Section 9.3 | |
Separation Expenses
|
Section 11.5 | |
Shared Contract
|
Section 2.3(a) | |
Specified Ancillary Agreements
|
Section 1.1(3) | |
Specified Defense Liabilities
|
Section 1.1(31)(iv) | |
Specified ITT Retained Liabilities
|
Section 1.1(69)(iv) | |
Specified Water Liabilities
|
Section 1.1(101)(iv) | |
Statement of Cash Allocation
|
Section 3.5(g) | |
Statement of Cash Detail
|
Section 3.5(d) | |
Statement Completion Date
|
Section 3.5(d) | |
Third Party Claim
|
Section 7.5(b) | |
Third Party Proceeds
|
Section 7.8(a) | |
Trademarks
|
Section 1.1(59) | |
Water Brazil
|
Section 2.6(d) | |
Water Discontinued Operation
|
Section 1.1(101)(viii) | |
Water Divisions
|
Section 1.1(96)(ii) | |
Water Entities
|
Section 1.1(96)(iv) | |
Water Leases
|
Section 1.1(96)(vi) | |
White Plains Headquarters
|
Section 5.7(b) | |
Xylem
|
Preamble | |
| vii |
||
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT (this “Agreement”), dated as of October 25, 2011, by and among
ITT Corporation, an Indiana corporation (“ITT”), Exelis Inc., an Indiana corporation
(“Exelis”) and Xylem Inc., an Indiana corporation (“Xylem”). Each of ITT, Exelis
and Xylem is sometimes referred to herein as a “Party” and collectively, as the
“Parties”. Capitalized terms used and not defined herein shall have the meaning set forth
in Section 1.1.
W I T N E S S E T H:
WHEREAS, ITT, acting through its direct and indirect Subsidiaries, currently conducts a number
of businesses, including (i) the ITT Retained Business (as defined herein) , (ii) the Defense
Business (as defined herein) and (iii) the Water Business (as defined herein);
WHEREAS, the Board of Directors of ITT (the “Board”) has determined that it is
appropriate, desirable and in the best interests of ITT, its shareholders and its other
constituents, to separate ITT into three separate, publicly traded companies, one for each of (i)
the ITT Retained Business, which shall be owned and conducted, directly or indirectly, by ITT, (ii)
the Defense Business, which shall be owned and conducted, directly or indirectly, by Exelis and
(iii) the Water Business, which shall be owned and conducted, directly or indirectly, by Xylem;
WHEREAS, in order to effect such separation, the Board has determined that it is appropriate,
desirable and in the best interests of ITT, its shareholders and other constituents (i) to enter
into a series of transactions after giving effect to which (A) ITT and/or one or more of its
Subsidiaries will, collectively, own all of the ITT Retained Assets (as defined herein) and assume
(or retain) all of the ITT Retained Liabilities (as defined herein), (B) Exelis and/or one or more
of its Subsidiaries will, collectively, own all of the Defense Assets and assume (or retain) all of
the Defense Liabilities and (C) Xylem and/or one or more of its Subsidiaries will, collectively,
own all of the Water Assets and assume (or retain) all of the Water Liabilities and (ii) for ITT to
distribute to the holders of its common stock, par value $1 per share (“ITT Common Stock”),
on a pro rata basis (in each case without consideration being paid by such shareholders) (A) all of
the outstanding shares of common stock, par value $.01 per share, of Exelis (the “Exelis Common
Stock”) and (B) all of the outstanding shares of common stock, par value $.01 per share, of
Xylem (the “Xylem Common Stock”) (such transactions as they may be amended or modified from
time to time, collectively, the “Plan of Separation”);
WHEREAS, each of ITT, Exelis and Xylem has determined that it is necessary and desirable, on
or prior to the Effective Time (as defined herein), (i) to allocate and transfer to the applicable
Party or its Subsidiaries those Assets, and to allocate and assign to the applicable Party or its
Subsidiaries responsibility for those Liabilities, in respect of the activities of the applicable
Businesses of such entities and (ii) to allocate, transfer and assign, as applicable, those Assets
and Liabilities in respect of other current and former businesses and activities of ITT and its
current and former Subsidiaries;
WHEREAS, it is the intention of the Parties that each of the contributions of Assets to, and
the assumption of Liabilities by, Exelis and Xylem together with the corresponding distribution of
all of the Exelis Common Stock and the Xylem Common Stock, respectively, qualifies as a
reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Internal Revenue Code of
1986, as amended (the “Code”) and that this Agreement is, and is hereby adopted as, a “plan
of reorganization” under Section 368 of the Code;
WHEREAS, each of ITT, Exelis and Xylem has determined that it is necessary and desirable to
set forth the principal corporate transactions required to effect the Plan of Separation and each
1
Distribution and to set forth other agreements that will govern certain other matters
following the Effective Time.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, provisions and
covenants contained in this Agreement, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1. General. As used in this Agreement, the following terms shall have the following meanings:
(1) “Action” shall mean any demand, action, claim, suit, countersuit,
arbitration, inquiry, subpoena, case, litigation, proceeding or investigation (whether
civil, criminal, administrative or investigative) by or before any court or grand jury, any
Governmental Entity or any arbitration or mediation tribunal.
(2) “Affiliate” shall mean, when used with respect to a specified Person, a
Person that directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such specified Person. For the purposes of
this definition, “control”, when used with respect to any specified Person shall mean the
possession, directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting securities
or other interests, by Contract or otherwise. It is expressly agreed that no Party or
member of any Group shall be deemed to be an Affiliate of another Party or member of such
other Party’s Group by reason of having one or more directors in common or by reason of
having been under common control of ITT or ITT’s shareholders prior to or, in case of ITT’s
shareholders, after, the Effective Time.
(3) “Ancillary Agreements” shall mean all of the written Contracts,
instruments, assignments, licenses, guarantees, indemnities or other arrangements (other
than this Agreement) entered into in connection with the transactions contemplated hereby,
including the Conveyancing and Assumption Instruments, the Transition Services Agreement,
the Benefits and Compensation Matters Agreement, the Tax Matters Agreement, the License
Agreements, the IP Assignments, the Master Lease Agreement and the Master Sublease Agreement
(the Transition Services Agreement, the Benefits and Compensation Matters Agreement, the Tax
Matters Agreement, the License Agreements, the IP Assignments, the Master Lease Agreement
and the Master Sublease Agreement, collectively, the “Specified Ancillary
Agreements”) .
(4) “Applicable Exelis Percentage” shall mean thirty-nine percent (39%).
(5) “Applicable ITT Percentage” shall mean twenty-one percent (21%).
(6) “Applicable Percentage” shall mean (i) as to ITT, the Applicable ITT
Percentage, (ii) as to Exelis, the Applicable Exelis Percentage and (iii) as to Xylem, the
Applicable Xylem Percentage.
(7) “Applicable Xylem Percentage” shall mean forty percent (40%).
2
(8) “Asset Transferors” shall mean the entities transferring Assets to a
Defense Asset Transferee, an ITT Asset Transferee or a Water Asset Transferee in order to
consummate the transactions contemplated hereby or by the Plan of Separation.
(9) “Assets” shall mean assets, properties, claims, Intellectual Property and
other rights (including goodwill), wherever located (including in the possession of vendors
or other third parties or elsewhere), of every kind, character and description, whether
real, personal or mixed, tangible, intangible or contingent. Except as otherwise
specifically set forth herein or in the Tax Matters Agreement, the rights and obligations of
the Parties with respect to Taxes shall be governed by the Tax Matters Agreement and,
therefore, Taxes shall not be treated as Assets.
(10) “Assume” shall have the meaning set forth in Section 2.2(c); and
the terms “Assumed” and “Assumption” shall have their correlative meanings.
(11) “Benefits and Compensation Matters Agreement” shall mean the Benefits and
Compensation Matters Agreement by and among ITT, Exelis and Xylem, in the form attached
hereto as Exhibit A.
(12) “Business” shall mean the ITT Retained Business, the Water Business or the
Defense Business, as applicable.
(13) “Business Day” means any day that is not a Saturday, a Sunday or any other
day on which banks are required or authorized by Law to be closed in The City of New York.
(14) “Business Entity” shall mean any corporation, partnership, limited
liability company, joint venture or other entity which may legally hold title to Assets.
(15) “Change in Control” shall mean, with respect to any of ITT, Exelis or
Xylem, the occurrence of any one of the following after the Effective Time: (i) the direct
or indirect Transfer (other than by way of merger, amalgamation, arrangement or
consolidation), in one or a series of related transactions, of all or substantially all of
the properties or assets of ITT, Exelis or Xylem, as applicable, and those of such Party’s
Subsidiaries, taken as a whole, to one or more Persons, other than to such Party or one of
such Party’s Subsidiaries; (ii) the first day on which a majority of the members of the
board of directors of ITT, Exelis or Xylem, as applicable, is not composed of Continuing
Directors; (iii) the consummation of any transaction including any merger, amalgamation,
arrangement or consolidation the result of which is that any Person becomes the beneficial
owner, directly or indirectly, of more than 50% of the Voting Stock of ITT, Exelis or Xylem,
as applicable; (iv) any of ITT, Exelis or Xylem, as applicable, consolidate with, or merge
with or into, any Person, or any Person consolidates with, or merges with or into, any of
ITT, Exelis or Xylem, in any such event pursuant to a transaction in which any of the
outstanding Voting Stock of ITT, Exelis or Xylem, as applicable, or of such other Person is
converted into or exchanged for cash, securities or other property, other than any such
transaction where the shares of such Party’s Voting Stock outstanding immediately prior to
such transaction constitute, or are converted into or exchanged for, a majority of the
Voting Stock of the surviving Person immediately after giving effect to such transaction; or
(v) the adoption of a plan relating to the liquidation or dissolution (other than a
liquidation into a newly formed holding company) of ITT, Exelis or Xylem, as applicable.
Notwithstanding the foregoing, a transaction described in clause (iii) above will not be
deemed to involve a Change in Control if (a) ITT, Exelis or Xylem, as applicable, becomes a
direct or indirect wholly-owned subsidiary of a holding company (which shall include a
parent company) and (b)(A) the direct or indirect holders of the Voting Stock of such
holding company immediately following that transaction are substantially the same as, and
3
hold in substantially the same proportions as, the holders of such Party’s Voting Stock
immediately prior to that transaction or (B) immediately following that transaction no
Person (other than a holding company satisfying the requirements of this sentence) is the
beneficial owner, directly or indirectly of more than 50% of the then outstanding Voting
Stock, measured by voting power, of such holding company. Following any such transaction,
references in this definition to ITT, Exelis or Xylem, as applicable, shall be deemed to
refer to such holding company. For the purposes of this definition, “person” and “beneficial
owner” have the meanings used in Section 13(d) of the Securities Exchange Act of 1934.
(16) “Claims Administration” shall mean the processing of claims made under the
Company Policies, including the reporting of losses or claims to insurance carriers
(including as a result of reports provided to ITT by Exelis or Xylem), management and
defense of claims, the settlement of claims and providing for appropriate releases upon
settlement of claims.
(17) “Commission” shall mean the United States Securities and Exchange
Commission.
(18) “Company Policies” shall mean all Policies, current or past, which are or
at any time were maintained by or on behalf of or for the benefit or protection of ITT or
any of its predecessors which relate to the ITT Retained Business, the Water Business or the
Defense Business, or current or past directors, officers, employees or agents of any of the
foregoing Businesses, including the Policies identified on Schedule 10.1 hereto.
(19) “Confidential Information” shall mean all non-public, confidential or
proprietary Information concerning a Party and/or its Subsidiaries or their past, current or
future activities, businesses, finances, assets, liabilities or operations, including any
such Information that was acquired by any Party after the Effective Time pursuant to
Section 2.6(e), Article VIII or otherwise in accordance with this Agreement,
or that was provided to a Party by a third party in confidence, except for any Information
that is (i) in the public domain or known to the industry through no fault of the receiving
Party or its Subsidiaries, (ii) lawfully acquired after the Effective Time by such Party or
its Subsidiaries from other sources not known to be subject to confidentiality obligations
with respect to such Information or (iii) independently developed by the receiving Party
after the Effective Time without reference to any Confidential Information.
(20) “Consents” shall mean any consents, waivers or approvals from, or
notification requirements to, any Person other than a Governmental Entity.
(21) “Continuing Arrangements” shall mean those arrangements set forth on
Schedule 1.1(21) and such other commercial arrangements among the Parties that are
intended to survive and continue following the Effective Time as expressly set forth in the
Transition Services Agreement; provided, however, that for the avoidance of
doubt, Continuing Arrangements shall not apply to Third Party Agreements.
(22) “Continuing Directors” shall mean, as of any date of determination, any
member of the board of directors of ITT, Exelis or Xylem, as applicable, who (i) was a
member of such Party’s board of directors at the Effective Time; or (2) was nominated for
election, elected or appointed to such Party’s board of directors with the approval of a
majority of the Continuing Directors who were members of such Party’s board of directors at
the time of such nomination, election or appointment (either by a specific vote or by
approval by such directors of the proxy statement of such Party in which such member was
named as a nominee for election as a director).
4
(23) “Contract” shall mean any agreement, contract, subcontract, obligation,
binding understanding, note, indenture, instrument, option, lease, promise, arrangement,
release, warranty, license, sublicense, insurance policy, benefit plan, purchase order or
legally binding commitment or undertaking of any nature (whether written or oral and whether
express or implied).
(24) “Conveyancing and Assumption Instruments” shall mean, collectively, the
various Contracts, resolutions and other documents heretofore entered into and to be entered
into to effect the Transfer of Assets and the Assumption of Liabilities in the manner
contemplated by this Agreement and the Plan of Separation, or otherwise relating to, arising
out of or resulting from the transactions contemplated by this Agreement, in such form or
forms as the applicable Parties thereto agree.
(25) “Defense Asset Transferees” shall mean the Defense Entities to which
Defense Assets shall be or have been transferred by an Asset Transferor in order to
consummate the transactions contemplated hereby or by the Plan of Separation.
(26) “Defense Assets” shall mean those Assets that are owned, leased or
licensed at or prior to the Effective Time, by ITT and/or any of its Subsidiaries, relating
primarily to, used primarily in, or arising primarily from, the Defense Business;
provided that no Assets used by more than one Business shall be deemed to be Defense
Assets solely because the Defense Business represents the greatest percentage of ITT’s
revenues, profits or employees or otherwise is the primary user of such Assets on account
thereof, and shall include:
(i) any and all Assets reflected on the Exelis Balance Sheet or the accounting
records supporting such balance sheet and any Assets acquired by or for Exelis or
any member of the Defense Group subsequent to the date of the Exelis Balance Sheet
which, had they been so acquired on or before such date and owned as of such date,
would have been reflected on the Exelis Balance Sheet if prepared on a consistent
basis, subject to any dispositions of any of such Assets subsequent to the date of
the Exelis Balance Sheet;
(ii) all Assets of the divisions set forth on Schedule 1.1(26)(ii)
(such divisions, the “Defense Divisions”) relating primarily to, used
primarily in, or arising primarily from, the Defense Business;
(iii) the Assets set forth on Schedule 1.1(26)(iii) and any and all
other Assets that are expressly contemplated by this Agreement or any Ancillary
Agreement as Assets which have been or are to be Transferred to Exelis or any other
member of the Defense Group;
(iv) the ownership interests in those Business Entities set forth on
Schedule 1.1(26)(iv) (such entities, the “Defense
Entities”), other than Exelis;
(v) all rights, title and interest in and to the owned real property set forth
on Schedule 1.1(26)(v), including all land and land improvements,
structures, buildings and building improvements, other improvements, fixtures and
appurtenances located thereon;
(vi) all right, title and interest in, to and under the leases or subleases of
the real property set forth on Schedule 1.1(26)(vi) (the “Defense
Leases”), including, to the extent provided for in the Defense Leases, any land
and land improvements, structures,
5
buildings and building improvements, other improvements and appurtenances
located thereon;
(vii) to the extent not provided in clauses (v) and (vi) of this definition,
all fixtures, machinery, equipment, apparatuses, computer hardware and other
electronic data processing and communications equipment, tools, instruments,
furniture, office equipment, automobiles, trucks, aircraft and other transportation
equipment, special and general tools, test devices, molds, tooling, dies, prototypes
and models and other tangible personal property located at a physical site of which
the ownership or leasehold interest remains with or is being Transferred to a member
of the Defense Group, except as otherwise expressly provided in this Agreement or in
the Transition Services Agreement;
(viii) all inventories, including products, goods, materials, parts, raw
materials, work-in-process and supplies, relating primarily to, used primarily in,
or arising primarily from, the Defense Business;
(ix) all Defense Contracts and any rights or claims arising thereunder;
(x) all Intellectual Property relating primarily to, used primarily in, or
arising primarily from, the Defense Business, including the registrations and
applications set forth on Schedule 1.1(26)(x), subject, as applicable, to
any License Agreement;
(xi) all licenses, permits, approvals and authorizations which have been issued
by any Governmental Entity and which relate primarily to, are used primarily in, or
arise primarily from, the Defense Business;
(xii) all Information (including information used in creating the Exelis Form
10) relating primarily to, used primarily in, or arising primarily from, the Defense
Business; provided, however, that to the extent any Information used
in the Defense Business is (A) commingled with information used in the ITT Retained
Business or the Water Business or (B) recorded in the ITT Group’s or the Water
Group’s electronic systems, stored in facilities owned or leased by the ITT Group or
the Water Group or stored in third party storage facilities pursuant to storage
arrangements to which the ITT Group and/or the Water Group is party as of the
Effective Time, then (1) the original version of such Information: in the event of
clause (A) of this Section 1.1.26 (xii), shall be retained by ITT in
accordance with Schedule 8.1(b) hereto and all Parties shall have equal
rights to use such information and in the event of clause (B) of this Section
1.1.26(xii), shall remain in such electronic systems or storage facilities, as
applicable, and be retained in accordance with Schedule 8.1(b), (2) Exelis
shall have the right to access such Information and make reasonable copy thereof and
(3) any such copy shall be included in the Defense Assets; provided,
further, with respect to clauses (A) and (B) of this Section
1.1.26(xii), that to the extent such copy shall not have been made prior to the
Effective Time, subject to the reimbursement of the actual out-of-pocket expenses
(which shall not include the costs of salaries and benefits of employees of such
Party or any pro rata portion of overhead or other costs of employing such employees
which would have been incurred by such employees’ employer regardless of the
employees’ service with respect to the foregoing) incurred by the Party retaining
the original version of such Information in providing access to such Information and
to the provisions of this Agreement, Exelis shall have the right to access such
Information and make such copy at any time following the Effective Time and such
copy shall be included in the Defense Assets;
6
(xiii) all deposits, prepaid expenses, letters of credit and performance and
surety bonds relating primarily to, used primarily in, or arising primarily from,
the Defense Business;
(xiv) all bonds, notes, debentures or other debt securities issued by any
Person and held by any member of the Defense Group, all loans, advances or other
extensions of credit or capital contributions to any Person on the books of any
member of the Defense Group and all other investments in securities of any Person
held by any member of the Defense Group;
(xv) subject to Article X, any rights of any member of the Defense
Group under any Policies, including any rights thereunder arising after the
Effective Time in respect of any Policies that are occurrence policies and all
rights in the nature of insurance, indemnification or contribution;
provided, that ownership of the Company Policies shall remain with the ITT
Group; and
(xvi) any claims, counterclaims, setoffs, rights of recoupment, equity rights
or defenses, whether known or unknown, that ITT and/or any of its Subsidiaries may
have with respect to any Defense Assets or Defense Liabilities.
Notwithstanding the foregoing, the Defense Assets shall not include any Assets that are
expressly contemplated by this Agreement or by any Specified Ancillary Agreement (or the
Schedules hereto or thereto) as Assets to be retained by or Transferred to any member of the
ITT Group or the Water Group, as the case may be, including any Assets (A) specified in
clauses (i) through (xvi) of the definition of ITT Retained Assets, or (B) specified in
clauses (i) through (xvi) of the definition of Water Assets.
(27) “Defense Business” shall mean the businesses conducted through the
Electronic Systems, Geospatial Systems, Information Systems and Mission Systems segments of
ITT prior to the Effective Time, including, for the avoidance of doubt, the businesses of
(i) the Defense Entities and the Defense Divisions, (ii) any other division, Subsidiary,
line of business or investment of ITT or any of its Subsidiaries managed or operated prior
to the Effective Time by any Defense Entity, unless such other division, Subsidiary, line of
business or investment is an ITT Retained Entity, an ITT Retained Division, a Water Entity
or a Water Division and (iii) those business entities acquired or established by or for
Exelis or any of the Subsidiaries thereof after the Effective Time.
(28) “Defense Contracts” shall mean the following Contracts to which ITT or any
of its Subsidiaries is a party as of the date hereof or becomes a party prior to the
Effective Time or becomes a party after the Effective Time in respect of quotations,
proposals and bids that were pending as of the date hereof or by which it or any of its
Subsidiaries or any of their respective Assets is bound as of the date hereof or becomes
bound prior to the Effective Time, whether or not in writing, except for any such Contract
or part thereof (i) that is expressly contemplated not to be Transferred by any member of
the ITT Group or the Water Group to the Defense Group or (ii) that is expressly contemplated
to be Transferred to (or remain with) any member of the ITT Group or the Water Group, in
each case, pursuant to any provision of this Agreement or any Specified Ancillary Agreement:
(i) any Contract entered into in the name of, or expressly on behalf of, any
division, business unit or member of the Defense Group;
7
(ii) any Contract that relates primarily to the Defense Business, including any
contract providing for the acquisition or disposition of a Defense Entity or Defense
Assets;
(iii) any Contract that relates primarily to the Defense Business that was
awarded after the Effective Time and for which the quotation, proposal, or bid was
pending as of the date hereof;
(iv) any Contract that represents or underlies any Defense Assets or Defense
Liabilities;
(v) any Contract or part thereof that is otherwise expressly contemplated
pursuant to this Agreement (including pursuant to Section 2.2(b)) or any of
the Ancillary Agreements to be assigned to any member of the Defense Group; and
(vi) any guarantee, indemnity, representation or warranty of or in favor of any
member of the Defense Group.
(29) “Defense Group” shall mean Exelis and each Person that is a direct or
indirect Subsidiary of Exelis immediately after the Effective Time, and each Person that
becomes a Subsidiary of Exelis after the Effective Time, and shall include the Defense
Entities.
(30) “Defense Indemnitees” shall mean each member of the Defense Group and each
of their respective Affiliates from and after the Effective Time and each member of the
Defense Group’s and such respective Affiliates’ respective directors, officers, employees
and agents and each of the heirs, executors, successors and assigns of any of the foregoing.
(31) “Defense Liabilities” shall mean any and all Liabilities relating
primarily to, arising primarily out of or resulting primarily from: (a) the operation or
conduct of the Defense Business, as conducted at any time prior to, on or after the
Effective Time (including any Liability relating to, arising out of or resulting from any
act or failure to act by any director, officer, employee, agent or representative (whether
or not such act or failure to act is or was within such Person’s authority) of the Defense
Group); (b) the operation or conduct of any business conducted by any member of the Defense
Group at any time after the Effective Time (including any Liability relating to, arising out
of or resulting from any act or failure to act by any director, officer, employee, agent or
representative (whether or not such act or failure to act is or was within such Person’s
authority) of the Defense Group); or (c) any Defense Assets, whether arising prior to, on or
after the Effective Time, including:
(i) any and all Liabilities reflected on the Exelis Balance Sheet or the
accounting records supporting such balance sheet and any Liabilities incurred by or
for Exelis or any member of the Defense Group subsequent to the date of the Exelis
Balance Sheet which, had they been so incurred on or before such date, would have
been reflected on the Exelis Balance Sheet if prepared on a consistent basis,
subject to any discharge of any of such Liabilities subsequent to the date of the
Exelis Balance Sheet;
(ii) any Liabilities to the extent relating to, arising out of or resulting
from, the Defense Contracts;
(iii) the Applicable Exelis Percentage of any Shared Contingent Liability;
8
(iv) the liabilities set forth on Schedule 1.1(31)(iv) (the
“Specified Defense Liabilities”);
(v) any Liabilities assumed or retained by the Defense Group pursuant to this
Agreement or the Ancillary Agreements;
(vi) any Liabilities arising prior to, at or after the Effective Time for any
infringement by the Defense Business of the Intellectual Property of any other
Person or breach by the Defense Business of any Contract relating to Intellectual
Property;
(vii) all Liabilities arising prior to, at or after the Effective Time to the
extent resulting from any (A) violation prior to the Effective Time of any
Environmental Laws by the Defense Group, any Defense Discontinued Operation
or the conduct of the Defense Business, (B) use, treatment, or disposal prior
to the Effective Time of Materials of Environmental Concern by or on behalf of the
Defense Group, any Defense Discontinued Operation or in the conduct of the
Defense Business or (C) presence of Materials of Environmental Concern at, or
release of Materials of Environmental Concern from, any Defense Assets or any
Defense Discontinued Operation; provided that Liabilities of the type
described in this subsection (vii) relating to real estate that is an ITT Retained
Asset or a Water Asset pursuant to this Agreement, shall not be Defense Liabilities
but shall instead be, respectively, ITT Retained Liabilities and Water Liabilities;
(viii) any Liabilities relating to, arising out of or resulting from, any
division, Subsidiary, line of business or investment of ITT or any of its
Subsidiaries managed or operated at any time prior to the Effective Time by the
Defense Entities and sold, transferred or otherwise discontinued prior to the
Effective Time, including the divisions, Subsidiaries, lines of business or
investments set forth on Schedule 1.1(31)(viii), unless such division,
Subsidiary, line of business or investment is listed on Schedule
1.1(69)(viii) or Schedule 1.1(101)(viii) (each such division,
Subsidiary, line of business or investment, a “Defense Discontinued
Operation”);
(ix) for the avoidance of doubt, any Liabilities relating primarily to, arising
primarily out of or resulting primarily from, the operation or conduct of the
Defense Business by any Business Entity that is an ITT Retained Entity or a Water
Entity under this Agreement but has conducted the Defense Business at any time prior
to the Effective Time;
(x) any Liabilities relating to, arising out of or resulting from any untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact required to be stated in the Exelis Form 10 or the
Exelis Offering Memorandum, or necessary to make the statements therein not
misleading, with respect to all information contained in, or incorporated by
reference into, the Exelis Form 10, the Exelis Offering Memorandum and any other
Disclosure Documents filed by Exelis in connection with the Distribution or as
contemplated by this Agreement, other than with respect to the ITT Disclosure
Sections;
(xi) Specified Shared Expenses to the extent provided in Section 5.3;
9
(xii) for the avoidance of doubt, and without limiting any other matters that
may constitute Defense Liabilities, any Liabilities relating to, arising out of or
resulting from the claims, proceedings, litigation and disputes listed on
Schedule 1.1(31)(xii); and
(xiii) any Liabilities relating primarily to, arising primarily out of or
resulting primarily from, a workers compensation claim brought by or on behalf of an
employee employed at any time in the Defense Business or any Defense Discontinued
Operation, except in the case where such employee was employed in either the Water
Business or any Water Discontinued Operation or the ITT Retained Business or any ITT
Discontinued Operation subsequent to such employee’s final employment in the Defense
Business or Defense Discontinued Operations, as applicable, in which case the
Liability shall be retained by Xylem or ITT, respectively.
Notwithstanding the foregoing, the Defense Liabilities shall not include any
Liabilities that are expressly (A) contemplated by this Agreement or by any Specified
Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be Assumed by any
member of the ITT Group or the Water Group, as the case may be, including any Liabilities
specified (1) in the definition of ITT Retained Liabilities, including clauses (i) through
(xiii) thereof, or (2) in clauses (i) through (xiii) of the definition of Water Liabilities,
or (B) discharged pursuant to Section 2.4 of this Agreement.
(32) “Disclosure Documents” shall mean any registration statement (including
any registration statement on Form 10) or other document filed with the Commission by or on
behalf of any Party or any of its controlled Affiliates, and also includes any information
statement, prospectus, offering memorandum, offering circular or similar disclosure
document, whether or not filed with the Commission or any other Governmental Entity, which
offers for sale or registers the Transfer or distribution of any security of such Party or
any of its controlled Affiliates.
(33) “Distribution” shall mean, collectively, the Exelis Distribution and the
Xylem Distribution.
(34) “Distribution Agent” shall mean The Bank of New York Mellon.
(35) “Distribution Date” shall mean the date on which ITT distributes all of
the issued and outstanding shares of Exelis Common Stock and Xylem Common Stock to the
holders of ITT Common Stock.
(36) “Distribution Record Date” shall mean such date as may be determined by
ITT’s Board as the record date for the Distribution.
(37) “Effective Time” shall mean 12:01 a.m., New York time, on the Distribution
Date.
(38) “Environmental Laws” shall mean all Laws relating to pollution, protection
of the environment, or protection against harmful or deleterious substances.
(39) “Excluded Policies” shall mean (i) the Policies listed on Schedule
10.9(a) and (ii) the Policies issued prior to 1986 that insure the Business Entities or
Assets directly or indirectly acquired in the transactions set forth on Schedule
10.9(b).
10
(40) “Exelis Balance Sheet” shall mean the pro forma balance sheet of the
Defense Group, including the notes thereto, as of June 30, 2011, included in the Exelis Form
10.
(41) “Exelis Offering Memorandum” shall mean the offering memorandum, dated
September 15, 2011, relating to the private offering by Exelis Inc. of senior unsecured
notes.
(42) “Exelis Common Stock” shall have the meaning set forth in the recitals
hereto.
(43) “Exelis Distribution” shall mean the distribution on the Distribution Date
to holders of record of shares of ITT Common Stock as of the Distribution Record Date of the
Exelis Common Stock owned by ITT on the basis of one (1) share of Exelis Common Stock for
each outstanding share of ITT Common Stock.
(44) “Exelis Form 10” shall mean the registration statement on Form 10
(Registration No. 001-35228) filed by Exelis with the Commission under the Securities
Exchange Act of 1934, as amended, in connection with the Exelis Distribution, including any
amendment or supplement thereto.
(45) “Exelis Information Statement” shall mean the Information Statement
attached as an exhibit to the Exelis Form 10 to be sent to the holders of shares of ITT
Common Stock in connection with the Exelis Distribution, including any amendment or
supplement thereto.
(46) “Exelis Target Cash Balance” shall mean $200 million.
(47) “Final Determination” shall have the meaning set forth in the Tax Matters
Agreement.
(48) “Financing Arrangements” shall mean (i) the senior unsecured notes to be
issued by each of Exelis and Xylem on or prior to the Distribution Date and (ii) the
four-year unsecured senior revolving credit facilities to be entered into by each of Exelis
and Xylem on or prior to the Distribution Date.
(49) “Force Majeure” shall mean, with respect to a Party, an event beyond the
control of such Party (or any Person acting on its behalf), which by its nature could not
have been foreseen by such Party (or such Person), or, if it could have been foreseen, was
unavoidable, and includes acts of God, storms, floods, riots, labor unrest, pandemics,
nuclear incidents, fires, sabotage, civil commotion or civil unrest, interference by civil
or military authorities, acts of war (declared or undeclared) or armed hostilities or other
national or international calamity or one or more acts of terrorism or failure of energy
sources or distribution facilities.
(50) “Governmental Approvals” shall mean any notices or reports to be submitted
to, or other registrations or filings to be made with, or any consents, approvals, licenses,
permits or authorizations to be obtained from, any Governmental Entity.
(51) “Governmental Entity” shall mean any nation or government, any state,
municipality or other political subdivision thereof and any entity, body, agency,
commission, department, board, bureau or court, whether domestic, foreign or multinational,
exercising executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any executive official thereof.
11
(52) “Group” shall mean (i) with respect to ITT, the ITT Group, (ii) with
respect to Exelis, the Defense Group and (iii) with respect to Xylem, the Water Group.
(53) “Income Taxes” shall have the meaning set forth in the Tax Matters
Agreement.
(54) “Indebtedness” shall mean, with respect to any Person, (i) the principal
value, prepayment and redemption premiums and penalties (if any), unpaid fees and other
monetary obligations in respect of any indebtedness for borrowed money, whether short term
or long term, including all obligations evidenced by bonds, debentures, notes, other debt
securities or similar instruments, (ii) any indebtedness arising under any capital leases
(excluding, for the avoidance of doubt, any real estate leases), whether short term or long
term, (iii) all liabilities secured by any lien on any assets of such Person, (iv) all
liabilities under any interest rate protection agreement, interest rate future agreement,
interest rate option agreement, interest rate swap agreement or other similar agreement
designed to protect such Person against fluctuations in interest rates, (v) all interest
bearing indebtedness for the deferred purchase price of property or services, (vi) all
liabilities under any letters of credit, performance bonds, bankers acceptances or similar
obligations, (vii) all interest, fees and other expenses owed with respect to indebtedness
described in the foregoing clauses (i) through (vi), and (viii) without duplication, all
guarantees of indebtedness referred to in the foregoing clauses (i) through (vii).
(55) “Indemnifiable Loss” and “Indemnifiable Losses” shall mean any and
all damages, losses, deficiencies, Liabilities, obligations, penalties, judgments,
settlements, claims, payments, fines, interest, costs and expenses (including the costs and
expenses of any and all Actions and demands, assessments, judgments, settlements and
compromises relating thereto and the reasonable costs and expenses of attorneys’,
accountants’, consultants’ and other professionals’ fees and expenses incurred in the
investigation or defense thereof or the enforcement of rights hereunder), excluding special,
consequential, reputational, indirect or punitive damages (other than special,
consequential, indirect, reputational and/or punitive damages awarded by a court of
competent jurisdiction in connection with a Third Party Claim (and in such a case, only to
the extent awarded in such Third Party Claim)) and/or Liabilities or requirements related to
Taxes.
(56) “Information” shall mean information, content, and data in written, oral,
electronic, computerized, digital or other tangible or intangible media, including (i) books
and records, whether accounting, legal or otherwise, ledgers, studies, reports, surveys,
designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow
charts, marketing plans, customer names and information, communications, correspondence,
materials, product literature, artwork, files, documents, policies, procedures and manuals,
research and analyses of any nature, including operational, technical or legal and (ii)
financial and business information, including earnings reports and forecasts, macro-economic
reports and forecasts, all cost information, sales and pricing data, business plans, market
evaluations, surveys and credit-related information.
(57) “Insurance Proceeds” shall mean those monies (i) received by an insured
from an insurance carrier or (ii) paid by an insurance carrier on behalf of an insured, in
either case net of any applicable deductible or retention.
(58) “Insured Claims” shall mean those Liabilities that, individually or in the
aggregate, are covered within the terms and conditions of any of the Company Policies,
whether or not subject to deductibles, co-insurance, uncollectability or
retrospectively-rated premium
12
adjustments, but only to the extent that such Liabilities are within applicable Company
Policy limits, including aggregates.
(59) “Intellectual Property” shall mean all worldwide intellectual property,
proprietary and industrial property rights of any kind, including all (i) patents, patent
applications, inventions and invention disclosures and utility models, (ii) trademarks,
service marks, corporate names, trade names, domain names, logos, slogans, designs, trade
dress and other designations of source or origin, together with the goodwill symbolized by
any of the foregoing (“Trademarks”), (iii) copyrights and copyrightable subject
matter, including software, code, algorithms, databases, compilations and documentation,
(iv) technology, trade secrets, know-how, processes, formulae, models, methodologies,
discoveries, ideas, concepts, techniques, designs, specifications, drawings, blueprints,
diagrams, models and prototypes, (v) moral rights and rights of privacy and publicity, (vi)
all registrations, applications, continuations, continuations-in-part, divisionals,
reissues, re-examinations, substitutions, renewals, extensions and foreign counterparts
thereof and (vii) all rights and remedies against infringement, misappropriation, or other
violation of the foregoing prior to the Effective Time.
(60) “IP Assignments” shall mean the short-form assignment documents executed
for the purpose of recording the transfer of registered Intellectual Property with the
United States Patent and Trademark Office or any other applicable office in any applicable
foreign jurisdiction.
(61) “ITT Asset Transferee” shall mean the ITT Retained Entities to which ITT
Retained Assets shall be or have been transferred by an Asset Transferor in order to
consummate the transactions contemplated hereby or by the Plan of Separation.
(62) “ITT Common Stock” shall mean the issued and outstanding shares of common
stock of ITT, par value $1 per share.
(63) “ITT Disclosure Sections” shall mean all information set forth in, or
omitted from, the sections of the Exelis Form 10, the Xylem Form 10, the Exelis Offering
Memorandum or the Xylem Offering Memorandum, identified on Schedule 1.1(63).
(64) “ITT Group” shall mean ITT and each Person that is a direct or indirect
Subsidiary of ITT immediately after the Effective Time, and each Business Entity that
becomes a Subsidiary of ITT after the Effective Time, and shall include the ITT Retained
Entities.
(65) “ITT Indemnitees” shall mean each member of the ITT Group and each of
their respective Affiliates from and after the Effective Time and each member of the ITT
Group’s and such Affiliates’ respective directors, officers, employees and agents and each
of the heirs, executors, successors and assigns of any of the foregoing.
(66) “ITT Retained Assets” shall mean any and all Assets that are owned, leased
or licensed, at or prior to the Effective Time, by ITT and/or any of its Subsidiaries, that
are not Defense Assets or Water Assets, including:
(i) all Assets of the divisions of ITT set forth on Schedule 1.1(66)(i)
(such divisions, the “ITT Retained Divisions”);
(ii) any and all other Assets that are expressly contemplated by this Agreement
or any Ancillary Agreement as Assets which have been or are to be remain with ITT or
any other member of the ITT Group;
13
(iii) the ownership interests in those Business Entities that are set forth on
Schedule 1.1(66)(iii) (such entities, the “ITT
Retained Entities”), other than ITT;
(iv) all rights, title and interest in and to the owned real property set forth
on Schedule 1.1(66)(iv), including all land and land improvements,
structures, buildings and building improvements, other improvements and
appurtenances located thereon;
(v) all right, title and interest in, to and under the leases or subleases of
the real property set forth on Schedule 1.1(66)(v) (the “ITT Retained
Leases”), including, to the extent provided for in any ITT Retained Lease, any
land and land improvements, structures, buildings and building improvements, other
improvements and appurtenances located thereon;
(vi) to the extent not provided in clauses (iv) and (v) of this definition, all
fixtures, machinery, equipment, apparatuses, computer hardware and other electronic
data processing and communications equipment, tools, instruments, furniture, office
equipment, automobiles, trucks, aircraft and other transportation equipment, special
and general tools, test devices, molds, tooling, dies, prototypes and models and
other tangible personal property located at a physical site of which the ownership
or leasehold interest is not being Transferred to a member of the Defense Group or
the Water Group, except as otherwise expressly provided in this Agreement or in the
Transition Services Agreement;
(vii) all inventories, including products, goods, materials, parts, raw
materials, work in process and supplies;
(viii) all ITT Retained Contracts and any rights or claims arising thereunder;
(ix) all Intellectual Property, including the registrations and applications
set forth on Schedule 1.1(66)(ix), subject, as applicable, to any License
Agreement;
(x) all licenses, permits, approvals and authorizations which have been issued
by any Governmental Entity;
(xi) all Information; provided, however, that to the extent any
Information used in the ITT Retained Business is (A) commingled with information
used in the Defense Business or the Water Business, the original version of such
Information shall be retained by ITT in accordance with Schedule 8.1(b)
hereto, all Parties shall have equal rights to use such information and each of
Exelis and Xylem shall have the right to access such Information and make reasonable
copy thereof, which copy shall be included in the Defense Assets or Water Assets, as
the case may be or (B) stored in facilities owned or leased by the Defense Group or
the Water Group or stored in third party storage facilities pursuant to storage
arrangements with the Defense Group or the Water Group, the original version of such
Information shall remain in such storage facilities and be retained in accordance
with Schedule 8.1(b), ITT shall have the right to access such Information
and make reasonable copy thereof and any such copy shall be included in the ITT
Retained Assets; provided, further, with respect to clause (B) of
this Section 1.1.66(xi), that to the extent such copy shall not have been
made prior to the Effective Time, subject to the reimbursement of the actual
out-of-pocket expenses (which shall not include the costs of salaries and benefits
of employees of such Party or any pro rata portion of overhead or other costs of
employing such employees which would have been incurred by such employees’ employer
regardless of the employees’ service with respect to the
14
foregoing) incurred by the Party retaining the original version of
such Information in providing access to such Information and to the provisions of
this Agreement, ITT shall have the right to access such Information and make such
copy at any time following the Effective Time and such copy shall be included in the
ITT Retained Assets;
(xii) all deposits, prepaid expenses, letters of credit and performance and
surety bonds;
(xiii) all bonds, notes, debentures or other debt securities issued by any
Person and held by any member of the ITT Group, all loans, advances or other
extensions of credit or capital contributions to any Person on the books of any
member of the ITT Group and all other investments in securities of any Person held
by any member of the ITT Group;
(xiv) subject to Article X, any rights of any member of the ITT Group
under any Policies, including any rights thereunder arising after the Effective Time
in respect of any Policies that are occurrence policies and all rights in the nature
of insurance, indemnification or contribution;
(xv) the Assets set forth on Schedule 1.1(66)(xv); and
(xvi) any claims, counterclaims, setoffs, rights of recoupment, equity rights
or defenses, whether known or unknown, that ITT and/or any of its Subsidiaries may
have with respect to any ITT Retained Assets and ITT Retained Liabilities.
Notwithstanding the foregoing, the ITT Retained Assets shall not include any Assets
that are expressly contemplated by this Agreement or by any Specified Ancillary Agreement
(or the Schedules hereto or thereto) as Assets to be Transferred to any member of the
Defense Group or the Water Group, as the case may be, including any Assets (A) specified in
clauses (i) through (xvi) of the definition of Defense Assets or (B) specified in clauses
(i) through (xvi) of the definition of Water Assets.
(67) “ITT Retained Business” shall mean the businesses of (i) the ITT Retained
Entities and the ITT Retained Divisions, (ii) any other division, Subsidiary, line of
business or investment managed or operated by ITT or any of its Subsidiaries prior to the
Effective Time, including the businesses conducted through the Control Technologies,
Interconnect Solutions, Motion Technologies and Industrial Process segments of ITT prior to
the Effective Time, unless such other division, Subsidiary, line of business or investment
is included in the definitions of Defense Business or Water Business and (iii) those
business entities acquired or established by or for ITT or any of the Subsidiaries thereof
after the Effective Time.
(68) “ITT Retained Contracts” shall mean any Contracts to which ITT or any of
its Subsidiaries (other than members of the Defense Group or the Water Group) is a party as
of the date hereof or becomes a party prior to the Effective Time or by which it or any of
its Subsidiaries or any of their respective Assets is bound as of the date hereof or becomes
bound prior to the Effective Time, whether or not in writing, except for any such Contract
or part thereof that is a Defense Contract or a Water Contract, including:
(i) any Contract entered into in the name of, or expressly on behalf of, any
division, business unit or member of the ITT Group;
15
(ii) any Contract that relates primarily to the ITT Retained Business,
including any contract providing for the acquisition or disposition of an ITT
Retained Entity or any ITT Retained Assets;
(iii) any Contract that represents or underlies any ITT Retained Assets or ITT
Retained Liabilities;
(iv) any Contract or part thereof that is otherwise expressly contemplated
pursuant to this Agreement (including pursuant to Section 2.2(b)) or any of
the Ancillary Agreements to be assigned to any member of the ITT Group; and
(v) guarantee, indemnity, representation or warranty of or in favor of any
member of the ITT Group.
(69) “ITT Retained Liabilities” shall mean any and all Liabilities of the ITT
Group that are not Defense Liabilities or Water Liabilities, including:
(i) any and all Liabilities relating primarily to, arising primarily out of or
resulting primarily from: (a) the operation or conduct of the ITT Retained Business,
as conducted at any time prior to, at or after the Effective Time (including any
Liability relating to, arising out of or resulting from any act or failure to act by
any director, officer, employee, agent or representative (whether or not such act or
failure to act is or was within such Person’s authority) of the ITT Group); (b) the
operation or conduct of any business conducted by any member of the ITT Group at any
time prior to, on or after the Effective Time (including any Liability relating to,
arising out of or resulting from any act or failure to act by any director, officer,
employee, agent or representative (whether or not such act or failure to act is or
was within such Person’s authority) of the ITT Group); or (c) any ITT Retained
Assets, whether arising prior to, on or after the Effective Time;
(ii) any Liabilities to the extent relating to, arising out of or resulting
from, the ITT Retained Contracts;
(iii) the Applicable ITT Percentage of any Shared Contingent Liability;
(iv) the liabilities set forth on Schedule 1.1(69)(iv) (the
“Specified ITT Retained Liabilities”);
(v) any Liabilities assumed or retained by the ITT Group pursuant to this
Agreement or the Ancillary Agreements;
(vi) any Liabilities arising prior to, at or after the Effective Time for any
infringement by the ITT Retained Business of the Intellectual Property of any other
Person or breach by the ITT Retained Business of any Contract relating to
Intellectual Property;
(vii) all Liabilities arising prior to, at or after the Effective Time to the
extent resulting from any (A) violation prior to the Effective Time of any
Environmental Laws by the ITT Group, any ITT Discontinued Operation or
the conduct of the ITT Retained Business, (B) use, treatment, or disposal prior to
the Effective Time of Materials of Environmental Concern by or on behalf of the ITT
Group, any ITT Discontinued
16
Operation or in the conduct of the ITT Retained Business or (C)
presence of Materials of Environmental Concern at, or release of Materials of
Environmental Concern from, any ITT Retained Assets or any ITT Discontinued
Operation; provided that Liabilities of the type described in this
subsection (vii) relating to real estate that is a Defense Asset or a Water Asset
pursuant to this Agreement, shall not be ITT Retained Liabilities but shall instead
be, respectively, Defense Liabilities and Water Liabilities;
(viii) any Liabilities relating to, arising out of or resulting from, any
division, Subsidiary, line of business or investment managed or operated by ITT or
any of its Subsidiaries at any time prior to the Effective Time and sold,
transferred or otherwise discontinued prior to the Effective Time, including the
divisions, Subsidiaries, lines of business or investments set forth on Schedule
1.1(69)(viii), unless such division, Subsidiary, line of business or investment
is included in Schedule 1.1(31)(viii) or Schedule 1.1(101)(viii)
(each such division, Subsidiary, line of business or investment, an “ITT
Discontinued Operation”);
(ix) for the avoidance of doubt, any Liabilities relating primarily to, arising
primarily out of or resulting primarily from, the operation or conduct of the ITT
Retained Business by any Business Entity that is an Defense Entity or a Water Entity
under this Agreement but has conducted the ITT Retained Business at any time prior
to the Effective Time;
(x) any Liabilities relating to, arising out of or resulting from any untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, with respect to all information contained in,
or incorporated by reference into, the ITT Disclosure Sections;
(xi) Specified Shared Expenses to the extent provided in Section 5.3;
(xii) for the avoidance of doubt, and without limiting any other matters that
may constitute ITT Retained Liabilities, any Liabilities relating to, arising out of
or resulting from the claims, proceedings, litigation and disputes listed on
Schedule 1.1(69)(xii); and
(xiii) any Liabilities relating primarily to, arising primarily out of or
resulting primarily from, a workers compensation claim brought by or on behalf of an
employee employed at any time in the ITT Retained Business or any ITT Discontinued
Operation, except in the case where such employee was employed in either the Defense
Business or any Defense Discontinued Operation or the Water Business or any Water
Discontinued Operation subsequent to such employee’s final employment in the ITT
Retained Business or ITT Discontinued Operations in which case the Liability shall
be retained by Exelis or Xylem, respectively.
Notwithstanding the foregoing, the ITT Retained Liabilities shall not include any
Liabilities that are (A) expressly contemplated by this Agreement or by any Specified
Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be Assumed by any
member of the Defense Group or the Water Group, as the case may be, including any
Liabilities specified (1) in clauses (i) through (xiii) of the definition of Defense
Liabilities or (2) in clauses (i) through (xiii) of the definition of Water Liabilities or
(B) expressly discharged pursuant to Section 2.4 of this Agreement.
17
For the avoidance of doubt, no Liability shall be an ITT Retained Liability solely as a
result of ITT being named as party to or in any Action relating to any Defense Liability or
Water Liability due to ITT’s status as the remaining and legacy Business Entity, or as a
result of its status as the former direct or indirect stockholder of any Business Entity.
(70) “ITT Target Cash Balance” shall mean $600 million.
(71) “Law” shall mean any U.S. or non-U.S. federal, national, supranational,
state, provincial, local or similar statute, law, ordinance, regulation, rule, code, income
tax treaty, order, requirement or rule of law (including common law) or other binding
directives of any Governmental Entity.
(72) “Liabilities” shall mean any and all Indebtedness, liabilities, costs,
expenses, interest and obligations, whether accrued or fixed, absolute or contingent,
matured or unmatured, reserved or unreserved, or determined or determinable, including those
arising under any Law, claim, demand, Action, whether asserted or unasserted, or order,
writ, judgment, injunction, decree, stipulation, determination or award entered by or with
any Governmental Entity and those arising under any Contract or any fines, damages or
equitable relief which may be imposed and including all costs and expenses related
thereto. Except as otherwise specifically set forth herein or in the Tax Matters
Agreement, the rights and obligations of the Parties with respect to Taxes shall be governed
by the Tax Matters Agreement and, therefore, Taxes shall not be treated as Liabilities.
(73) “LIBOR” shall mean an interest rate per annum equal to the applicable
three-month London Interbank Offer Rate for deposits in United States dollars published in
the Wall Street Journal.
(74) “License Agreements” shall mean the agreements set forth on Schedule
1.1(74).
(75) “Master Lease Agreement” shall mean the Master Lease Agreement by and
among each of the landlords and tenants party thereto, dated as of October 25, 2011.
(76) “Master Sublease Agreement” shall mean the Master Sublease Agreement by
and between each of the sublessors and sublessees party thereto, dated as of September 30,
2011.
(77) “Materials of Environmental Concern” shall mean: any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products, polychlorinated
biphenyls, urea-formaldehyde insulation, asbestos, pollutants, contaminants, molds, and
radioactivity; any substance classified or regulated as hazardous or toxic (or words of
similar meaning); and any other substances regulated pursuant to or that could give rise to
liability under any applicable Environmental Law.
(78) “NYSE” shall mean the New York Stock Exchange.
(79) “Person” shall mean any natural person, firm, individual, corporation,
business trust, joint venture, association, company, limited liability company, partnership
or other organization or entity, whether incorporated or unincorporated, or any Governmental
Entity.
(80) “Plan of Separation” shall have the meaning set forth in the recitals.
(81) “Policies” shall mean insurance policies and insurance contracts of any
kind
18
(other than life and benefits policies or contracts), including primary, excess and
umbrella policies, commercial general liability policies, fiduciary liability, automobile,
aircraft, property and casualty, workers’ compensation and employee dishonesty insurance
policies and bonds, together with the rights, benefits and privileges thereunder.
(82) “Records” shall mean any Contracts, documents, books, records or files.
(83) “Security Interest” shall mean any mortgage, security interest, pledge,
lien, charge, claim, option, right to acquire, voting or other restriction, right-of-entry,
covenant, condition, easement, encroachment, restriction on transfer, or other encumbrance
of any nature whatsoever, excluding restrictions on transfer under securities Laws.
(84) “Shared Contingent Liabilities” shall mean any of the Liabilities set
forth on Schedule 1.1(84).
(85) “Specified Shared Expenses” shall mean any costs and expenses relating to
the items or categories set forth on Schedule 1.1(85) and shall be shared in the
manner specified in Section 5.3.
(86) “Subsidiary” shall mean with respect to any Person (i) a corporation,
fifty percent (50%) or more of the voting or capital stock of which is, as of the time in
question, directly or indirectly owned by such Person and (ii) any other Person in which
such Person, directly or indirectly, owns fifty percent (50%) or more of the equity or
economic interest thereof or has the power to elect or direct the election of fifty percent
(50%) or more of the members of the governing body of such entity.
(87) “Tax” shall have the meaning set forth in the Tax Matters Agreement.
(88) “Tax Contest” shall have the meaning of the definition of “Audit” as set
forth in the Tax Matters Agreement.
(89) “Tax Matters Agreement” shall mean the Tax Matters Agreement by and among
ITT, Exelis and Xylem, in the form attached hereto as Exhibit B.
(90) “Tax Return” shall have the meaning set forth in the Tax Matters
Agreement.
(91) “Third Party Agreements” shall mean any of the following Contracts,
arrangements, course of dealings or understandings:
(i) any agreements, arrangements, commitments or understandings to which any
Person other than the Parties and their respective Groups is a party hereto (it
being understood that to the extent that the rights and obligations of the Parties
and the members of their respective Groups under any such Contracts constitute Water
Assets or Water Liabilities, Defense Assets or Defense Liabilities or ITT Retained
Assets or ITT Retained Liabilities, such Contracts shall be assigned or retained
pursuant to Article II); and
(ii) any agreements, arrangements, commitments or understandings to which any
non-wholly-owned Subsidiary of ITT, Exelis or Xylem, as the case may be, is a Party.
19
(92) “Transfer” shall have the meaning set forth in Section 2.2(b)(i);
and the term “Transferred” shall have its correlative meaning.
(93) “Transition Services Agreement” shall mean the Master Transition Services
Agreement by and among ITT, Exelis and Xylem, in the form attached hereto as Exhibit
C.
(94) “Voting Stock” shall mean, as to a particular corporation or
other Person, outstanding shares of stock or other equity interests of any class of such
Person entitled to vote in the election of directors, or otherwise to participate in the
direction of the management and policies, of such Person, excluding shares or equity
interests entitled so to vote or participate only upon the happening of some
contingency.
(95) “Water Asset Transferee” shall mean the Water Entities to which Water
Assets shall be or have been transferred by an Asset Transferor in order to
consummate the transactions contemplated hereby or by the Plan of Separation.
(96) “Water Assets” shall mean those Assets that are owned, leased or licensed,
at or prior to the Effective Time, by ITT and/or any of its Subsidiaries, relating primarily
to, used primarily in, or arising primarily from, the Water Business, and shall include:
(i) any and all Assets reflected on the Xylem Balance Sheet or the accounting
records supporting such balance sheet and any Assets acquired by or for Xylem or any
member of the Water Group subsequent to the date of the Xylem Balance Sheet which,
had they been so acquired on or before such date and owned as of such date, would
have been reflected on the Xylem Balance Sheet if prepared on a consistent basis,
subject to any dispositions of any of such Assets subsequent to the date of the
Xylem Balance Sheet;
(ii) all Assets of the divisions of ITT set forth on Schedule
1.1(96)(ii) (such divisions, the “Water Divisions”) relating primarily
to, used primarily in, or arising primarily from, the Water Business;
(iii) the Assets set forth on Schedule 1.1(96)(iii) and any and all
other Assets that are expressly contemplated by this Agreement or any Ancillary
Agreement as Assets which have been or are to be Transferred to Xylem or any other
member of the Water Group;
(iv) the ownership interests in those Business Entities set forth on
Schedule 1.1(96)(iv) (such entities, the “Water
Entities”), other than Xylem;
(v) all rights, title and interest in and to the owned real property set forth
on Schedule 1.1(96)(v), including all land and land improvements,
structures, buildings and building improvements, other improvements and
appurtenances located thereon;
(vi) all rights, title and interest in, and to and under the leases or
subleases of the real property set forth on Schedule 1.1(96)(vi) (the
“Water Leases”) including, to the extent provided for in the Water Leases,
any land and land improvements, structures, buildings and building improvements,
other improvements and appurtenances;
(vii) to the extent not provided in clauses (v) and (vi) of this definition,
all fixtures, machinery, equipment, apparatuses, computer hardware and other
electronic
20
data processing and communications equipment, tools, instruments, furniture,
office equipment, automobiles, trucks, aircraft and other transportation equipment,
special and general tools, test devices, molds, tooling, dies, prototypes and models
and other tangible personal property located at a physical site of which the
ownership or leasehold interest remains with or is being Transferred to a member of
the Water Group, except as otherwise expressly provided in this Agreement or in the
Transition Services Agreement;
(viii) all inventories, including products, goods, materials, parts, raw
materials, work-in-process and supplies, relating primarily to, used primarily in,
or arising primarily from, the Water Business;
(ix) all Water Contracts and any rights or claims arising thereunder;
(x) all Intellectual Property relating primarily to, used primarily in, or
arising primarily from, the Water Business, including the registrations and
applications set forth on Schedule 1.1(96)(x), subject, as applicable, to
any License Agreement;
(xi) all licenses, permits, approvals and authorizations which have been issued
by any Governmental Entity and which relate primarily to, are used primarily in, or
arise primarily from, the Water Business;
(xii) all Information (including information used in creating the Xylem Form
10) relating primarily to, used primarily in, or arising primarily from, the Water
Business; provided, however, that to the extent any Information used
in the Water Business is (A) commingled with information used in the Water Business
or the ITT Retained Business or (B) recorded in the ITT Group’s or Defense Group’s
electronic systems, stored in facilities owned or leased by the Defense Group or the
ITT Group or stored in third party storage facilities pursuant to storage
arrangements with the Defense Group or the ITT Group, then (1) the original version
of such Information: in the event of clause (A) of this Section 1.1.96(xii),
shall be retained by ITT in accordance with Schedule 8.1(b) hereto and all
Parties shall have equal rights to use such information and in the event of clause
(B) of this Section 1.1.96(xii), shall remain in such electronic systems or
storage facilities, as applicable, and be retained in accordance with Schedule
8.1(b), (2) Xylem shall have the right to access such Information and make
reasonable copy thereof and (3) any such copy shall be included in the Water Assets;
provided, further, with respect to clauses (A) and (B) of this
Section 1.1.96(xii), that to the extent such copy shall not have been made
prior to the Effective Time, subject to the reimbursement of the actual
out-of-pocket expenses (which shall not include the costs of salaries and benefits
of employees of such Party or any pro rata portion of overhead or other costs of
employing such employees which would have been incurred by such employees’ employer
regardless of the employees’ service with respect to the foregoing) incurred by the
Party retaining the original version of such Information in providing access to such
Information and to the provisions of this Agreement, Xylem shall have the right to
access such Information and make such copy at any time following the Effective Time
and such copy shall be included in the Water Assets;
(xiii) all deposits, prepaid expenses, letters of credit and performance and
surety bonds relating primarily to, used primarily in, or arising primarily from,
the Water Business;
(xiv) all bonds, notes, debentures or other debt securities issued by any
Person
21
and held by any member of the Water Group, all loans, advances or other
extensions of credit or capital contributions to any Person on the books of any
member of the Water Group and all other investments in securities of any Person held
by any member of the Water Group;
(xv) subject to Article X, any rights of any member of the Water Group
under any Policies, including any rights thereunder arising after the Effective Time
in respect of any Policies that are occurrence policies and all rights in the nature
of insurance, indemnification or contribution; provided that ownership of
the Company Policies shall remain with the ITT Group; and
(xvi) any claims, counterclaims, setoffs, rights of recoupment, equity rights
or defenses, whether known or unknown, that ITT and/or any of its Subsidiaries may
have with respect to any Water Assets and Water Liabilities.
Notwithstanding the foregoing, the Water Assets shall not include any Assets that are
expressly contemplated by this Agreement or by any Specified Ancillary Agreement (or the
Schedules hereto or thereto) as Assets to be retained by or Transferred to any member of the
Defense Group or the ITT Group, as the case may be, including any Assets (A) specified in
clauses (i) through (xvi) of the definition of Defense Assets or (B) specified in clauses
(i) through (xvi) of the definition of ITT Retained Assets.
(97) Water Business” shall mean the businesses conducted through the
Residential & Commercial Water, Water & Wastewater, Analytics and Flow Control segments of
ITT prior to the Effective Time, including, for the avoidance of doubt, the businesses of
(i) the Water Entities and the Water Divisions, (ii) any other division, Subsidiary, line of
business or investment of ITT or any of its Subsidiaries managed or operated prior to the
Effective Time by any Water Entity, unless such other division, Subsidiary, line of business
or investment is a Defense Entity, a Defense Division an ITT Retained Entity or an ITT
Retained Division and (iii) those business entities acquired or established by or for Xylem
or any of the Subsidiaries thereof after the Effective Time.
(98) “Water Contracts” shall mean the following Contracts to which ITT or any
of its Subsidiaries is a party as of the date hereof or becomes a party prior to the
Effective Time or becomes a party after the Effective Time in respect of quotations,
proposals and bids that were pending as of the date hereof or by which it or any of its
Subsidiaries or any of their respective Assets is bound as of the date hereof or becomes
bound prior to the Effective Time, whether or not in writing, except for any such Contract
or part thereof (i) that is expressly contemplated not to be Transferred by any member of
the ITT Group or the Defense Group to the Water Group or (ii) that is expressly contemplated
to be Transferred to (or remain with) any member of the ITT Group or the Defense Group, in
each case, pursuant to any provision of this Agreement or any Specified Ancillary Agreement:
(i) any Contract entered into in the name of, or expressly on behalf of, any
division, business unit or member of the Water Group;
(ii) any Contract that relates primarily to the Water Business, including any
contract providing for the acquisition or disposition of a Water Entity or Water
Assets;
(iii) any Contract that relates primarily to the Water Business that was
awarded after the Effective Date and for which the quotation, proposal, or bid was
22
pending as of the date hereof;
(iv) any Contract that represents or underlies any Water Assets or Water
Liabilities;
(v) any Contract or part thereof that is otherwise expressly contemplated
pursuant to this Agreement (including pursuant to Section 2.2(b)) or any of
the Ancillary Agreements to be assigned to any member of the Water Group; and
(vi) any guarantee, indemnity, representation or warranty of or in favor of any
member of the Water Group.
(99) “Water Group” shall mean Xylem and each Person that is a direct or
indirect Subsidiary of Xylem immediately after the Effective Time, and each Person that
becomes a Subsidiary of Xylem after the Effective Time, and shall include the Water
Entities.
(100) “Water Indemnitees” shall mean each member of the Water Group and each of
their respective Affiliates from and after the Effective Time and each member of the Water
Group’s and such respective Affiliates’ respective directors, officers, employees and agents
and each of the heirs, executors, successors and assigns of any of the foregoing.
(101) “Water Liabilities” shall mean any and all Liabilities relating primarily
to, arising primarily out of or resulting primarily from: (a) the operation or conduct of
the Water Business, as conducted at any time prior to, at or after the Effective Time
(including any Liability relating to, arising out of or resulting from any act or failure to
act by any director, officer, employee, agent or representative (whether or not such act or
failure to act is or was within such Person’s authority) of the Water Group); (b) the
operation or conduct of any business conducted by any member of the Water Group at any time
after the Effective Time (including any Liability relating to, arising out of or resulting
from any act or failure to act by any director, officer, employee, agent or representative
(whether or not such act or failure to act is or was within such Person’s authority) of the
Water Group); or (c) any Water Assets, whether arising prior to, at or after the Effective
Time, including:
(i) any and all Liabilities reflected on the Xylem Balance Sheet or the
accounting records supporting such balance sheet and any Liabilities incurred by or
for Xylem or any member of the Water Group subsequent to the date of the Xylem
Balance Sheet which, had they been so incurred on or before such date, would have
been reflected on the Xylem Balance Sheet if prepared on a consistent basis, subject
to any discharge of any of such Liabilities subsequent to the date of the Xylem
Balance Sheet;
(ii) any Liabilities to the extent relating to, arising out of or resulting
from, the Water Contracts;
(iii) the Applicable Xylem Percentage of any Shared Contingent Liability;
(iv) The liabilities set forth on Schedule 1.1(101)(iv) (the
“Specified Water Liabilities”);
(v) any Liabilities assumed or retained by the Water Group pursuant to this
Agreement or the Ancillary Agreements;
23
(vi) any Liabilities arising prior to, at or after the Effective Time for any
infringement by the Water Business of the Intellectual Property of any other Person
or breach by the Water Business of any Contract relating to Intellectual Property;
(vii) all Liabilities arising prior to, at or after the Effective Time to the
extent resulting from any (A) violation prior to the Effective Time of any
Environmental Laws by the Water Group, any Water Discontinued Operation
or the conduct of the Water Business, (B) use, treatment, or disposal prior to the
Effective Time of Materials of Environmental Concern by or on behalf of the Water
Group, any Water Discontinued Operation or in the conduct of the Water Business or
(C) presence of Materials of Environmental Concern at, or release of Materials of
Environmental Concern from, any Water Assets or any Water Discontinued Operation;
provided that Liabilities of the type described in this subsection (vii)
relating to real estate that is a Defense Asset or an ITT Retained Asset pursuant to
this Agreement, shall not be Water Liabilities but shall instead be, respectively,
Defense Liabilities and ITT Retained Liabilities;
(viii) any Liabilities relating to, arising out of or resulting from, any
division, Subsidiary, line of business or investment of ITT or any of its
Subsidiaries managed or operated at any time prior to the Effective Time by the
Water Entities and sold, transferred or otherwise discontinued prior to the
Effective Time, including the divisions, Subsidiaries, lines of business or
investments set forth on Schedule 1.1(101)(viii), unless such division,
Subsidiary, line of business or investment is listed on Schedule
1.1(31)(viii) or Schedule 1.1(69)(viii) (each such division, Subsidiary,
line of business or investment, a “Water Discontinued Operation”);
(ix) for the avoidance of doubt, any Liabilities relating primarily to, arising
primarily out of or resulting primarily from, the operation or conduct of the Water
Business by any Business Entity that is an ITT Retained Entity or a Defense Entity
under this Agreement but has conducted the Water Business at any time prior to the
Effective Time;
(x) any Liabilities relating to, arising out of or resulting from any untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact required to be stated in the Xylem Form 10 or the
Xylem Offering Memorandum, or necessary to make the statements therein not
misleading, with respect to all information contained in, or incorporated by
reference into, the Xylem Form 10, the Xylem Offering Memorandum and any other
Disclosure Documents filed by Xylem in connection with the Distribution or as
contemplated by this Agreement, other than with respect to the ITT Disclosure
Sections;
(xi) Specified Shared Expenses to the extent provided in Section 5.3;
and
(xii) for the avoidance of doubt, and without limiting any other matters that
may constitute Water Liabilities, any Liabilities relating to, arising out of or
resulting from the claims, proceedings, litigation and disputes listed on
Schedule 1.1(101)(xii); and
(xiii) Any Liabilities relating primarily to, arising primarily out of or
resulting primarily from, a workers compensation claim brought by or on behalf of an
employee employed at any time in the Water Business or any Water Discontinued
Operation, except in the case where such employee was employed in either the Defense
Business or any Defense Discontinued Operation or the ITT Retained Business or any
ITT
24
Discontinued Operation subsequent to such employee’s final employment in the
Water Business or Water Discontinued Operations, as applicable, in which case the
Liability shall be retained by Exelis or ITT, respectively.
Notwithstanding the foregoing, the Water Liabilities shall not include any Liabilities
that are expressly (A) contemplated by this Agreement or by any Specified Ancillary
Agreement (or the Schedules hereto or thereto) as Liabilities to be Assumed by any member of
the Defense Group or the ITT Group, as the case may be, including any Liabilities specified
(1) in clauses (i) through (xiii) of the definition of Defense Liabilities or (2) in the
definition of ITT Retained Liabilities, including clauses (i) through (xiii) thereof, or (B)
discharged pursuant to Section 2.4 of this Agreement.
(102) “Xylem Balance Sheet” shall mean the pro forma balance sheet of the Water
Group, including the notes thereto, as of June 30, 2011, as filed with the Xylem Form 10.
(103) “Xylem Offering Memorandum” shall mean the offering memorandum, dated
September 15, 2011, relating to the private offering by Xylem Inc. of senior unsecured
notes.
(104) “Xylem Common Stock” shall have the meaning set forth in the recitals
hereto.
(105) “Xylem Distribution” shall mean the distribution on the Distribution Date
to holders of record of shares of ITT Common Stock as of the Distribution Record Date of the
Xylem Common Stock owned by ITT on the basis of one (1) share of Xylem Common Stock for each
outstanding share of ITT Common Stock.
(106) “Xylem Form 10” shall mean the registration statement on Form 10
(Registration No. 001-35229) filed by Water with the Commission under the Securities
Exchange Act of 1934, as amended, in connection with the Xylem Distribution, including any
amendment or supplement thereto.
(107) “Xylem Information Statement” shall mean the Information Statement
attached as an exhibit to the Xylem Form 10 to be sent to the holders of shares of ITT
Common Stock in connection with the Xylem Distribution, including any amendment or
supplement thereto
(108) “Xylem Target Cash Balance” shall mean $200 million.
Section 1.2. References; Interpretation. References in this Agreement to any gender include references to all genders, and
references to the singular include references to the plural and vice versa. Unless the context
otherwise requires, the words “include”, “includes” and “including” when used in this Agreement
shall be deemed to be followed by the phrase “without limitation”. Unless the context otherwise
requires, references in this Agreement to Articles, Sections, Annexes, Exhibits and Schedules shall
be deemed references to Articles and Sections of, and Annexes, Exhibits and Schedules to, this
Agreement. Unless the context otherwise requires, the words “hereof”, “hereby” and “herein” and
words of similar meaning when used in this Agreement refer to this Agreement in its entirety and
not to any particular Article, Section or provision of this Agreement. The words “written request”
when used in this Agreement shall include email. In the event of any inconsistency or conflict
which may arise in the application or interpretation of any of the definitions set forth in
Section 1.1, for the purpose of determining what is and is not included in such
definitions, any item explicitly included on a Schedule referred to in any such definition shall
take priority over any provision of the text thereof.
25
ARTICLE II
THE SEPARATION
Section 2.1. General. Subject to the terms and conditions of this Agreement, the Parties shall use, and shall
cause their respective Affiliates to use, their respective commercially reasonable efforts to
consummate the transactions contemplated hereby, a portion of which may have already been
implemented prior to the date hereof. It is the intent of the Parties that after consummation of
the transactions contemplated hereby ITT shall have been restructured, to the extent necessary,
such that following the consummation of such restructuring, subject to Section 2.6, (i) ITT
shall own the equity interests of all the ITT Retained Entities (other than ITT), all of ITT’s and
its Subsidiaries’ right, title and interest in and to the ITT Retained Assets shall be owned or
held by the ITT Group, the ITT Retained Business shall be conducted by the ITT Group and all of the
ITT Retained Liabilities shall be Assumed directly or indirectly by (or remain with) the ITT Group,
(ii) Exelis shall own the equity interests of all the Defense Entities (other than Exelis), all of
ITT’s and its Subsidiaries’ right, title and interest in and to the Defense Assets shall be owned
or held by the Defense Group, the Defense Business shall be conducted by the Defense Group and all
of the Defense Liabilities shall be Assumed directly or indirectly by (or remain with) the Defense
Group, and (iii) Xylem shall own the equity interests of all the Water Entities (other than Xylem),
all of ITT’s and its Subsidiaries’ right, title and interest in and to the Water Assets shall be
owned or held by the Water Group, the Water Business shall be conducted by the Water Group and all
of the Water Liabilities shall be Assumed directly or indirectly by (or remain with) the Water
Group.
Section 2.2. Restructuring: Transfer of Assets; Assumption of Liabilities.
(a) Restructuring. At or prior to the Effective Time, to the extent not already
completed and except for the Transfers set forth on Schedule 2.2(a), the costs of which
shall be shared equally by the parties to such Transfers, ITT will take such steps (which may
include transfer of shares or other equity interests, formation of new entities and/or declaration
of dividends) as may be necessary or desirable to cause (i) ITT to directly or indirectly own the
ITT Retained Entities (other than ITT), (ii) Exelis to directly or indirectly own the Defense
Entities (other than Exelis) and (iii) Xylem to directly or indirectly own the Water Entities
(other than Xylem); provided, that the Parties shall use their commercially reasonable
efforts to cause the transfers set forth on Schedule 2.2(a) to occur as soon as practicable
following the Effective Time.
(b) Transfer of Other Assets. At or prior to the Effective Time, to the extent not
already completed (and it being understood that some of such Transfers may occur following the
Effective Time in accordance with Section 2.2(a) or Section 2.6), pursuant to the
Conveyancing and Assumption Instruments:
(i) ITT shall, or shall cause the applicable Asset Transferors to, transfer,
contribute, distribute, assign and/or convey or cause to be transferred, contributed,
distributed, assigned and/or conveyed (“Transfer”) to (A) the respective ITT Asset
Transferees, all of the applicable Asset Transferors’ right, title and interest in and to
the ITT Retained Assets, (B) Exelis and/or the respective Defense Asset Transferees, all of
its and the applicable Asset Transferors’ right, title and interest in and to the Defense
Assets and (C) Xylem and/or the respective Water Asset Transferees, all of its and the
applicable Asset Transferors’ right, title and interest in and to the Water Assets.
(ii) Any costs and expenses incurred after the Effective Time and on or prior to the
second anniversary of the Distribution Date to effect any Transfer contemplated by this
Section 2.2(b) (including any transfer effected pursuant to Section 2.6)
shall be shared equally between the Asset Transferor and the applicable ITT Asset
Transferee, Defense Asset Transferee or Water
26
Asset Transferee, with any costs and expenses incurred following such second
anniversary to be the exclusive responsibility of the applicable ITT Asset Transferee,
Defense Asset Transferee or Water Asset Transferee. Other than costs and expenses incurred
and reimbursed in accordance with the foregoing, nothing in this Section 2.2(b)
shall require any member of any Group to incur any material obligation or grant any material
concession for the benefit of any member of any other Group in order to effect any
transaction contemplated by this Section 2.2(b).
(c) Assumption of Liabilities. Except as otherwise specifically set forth in any
Specified Ancillary Agreement, from and after the Effective Time (i) ITT shall, or shall cause a
member of the ITT Group to, accept, assume (or, as applicable, retain) and perform, discharge and
fulfill, in accordance with their respective terms (“Assume”), all of the ITT Retained
Liabilities, (ii) Exelis shall, or shall cause a member of the Defense Group to, Assume all the
Defense Liabilities and (iii) Xylem shall, or shall cause a member of the Water Group to, Assume
all the Water Liabilities, in each case, regardless of (A) when or where such Liabilities arose or
arise, (B) whether the facts upon which they are based occurred prior to, on or subsequent to the
Effective Time, (C) where or against whom such Liabilities are asserted or determined or (D)
whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or
misrepresentation by any member of the ITT Group, the Defense Group or the Water Group, as the case
may be, or any of their past or present respective directors, officers, employees, agents,
Subsidiaries or Affiliates.
(d) Consents. The Parties shall use their commercially reasonable efforts to obtain
the required Consents to Transfer any Assets, Contracts, licenses, permits and authorizations
issued by any Governmental Entity or parts thereof as contemplated by this Agreement.
(e) Notwithstanding anything herein to the contrary, no Contract or other asset shall be
transferred if it would violate applicable Law or, in the case of any Contract, the rights of any
third party to such Contract.
Section 2.3. Treatment of Shared Contracts. Without limiting the generality of the obligations set forth in Sections 2.2(a) and
(b):
(a) Unless the Parties otherwise agree or the benefits of any Contract described in this
Section are expressly conveyed to the applicable Party pursuant to an Ancillary Agreement, any
Contract that is (1) listed on Schedule 2.3(a), (2) an ITT Retained Asset but inures in
part to the benefit or burden of any member of the Water Group or the Defense Group, as the case
may be, (3) a Water Asset but inures in part to the benefit or burden of any member of the ITT
Group or the Defense Group, as the case may be or (4) a Defense Asset but inures in part to the
benefit or burden of any member of the ITT Group or the Water Group, as the case may be (each, a
“Shared Contract”), shall be assigned in part to the applicable member(s) of the applicable
Group, if so assignable, or appropriately amended prior to, on or after the Effective Time, so that
each Party or the members of their respective Groups as of the Effective Time shall be entitled to
the rights and benefits, and shall Assume the related portion of any Liabilities, inuring to their
respective Businesses; provided, however, that (x) in no event shall any member of
any Group be required to assign (or amend) any Shared Contract in its entirety or to assign a
portion of any Shared Contract (including any Policy) which is not assignable (or cannot be
amended) by its terms (including any terms imposing consents or conditions on an assignment where
such consents or conditions have not been obtained or fulfilled) and (y) if any Shared Contract
cannot be so partially assigned by its terms or otherwise, cannot be amended or has not for any
other reason been assigned or amended, or if such assignment or amendment would impair the benefit
the parties thereto derive from such Shared Contract, (I) at the reasonable request of the Party
(or the member of such Party’s Group) to which the benefit of such Shared Contract inures in part,
the Party for which such Shared Contract is, as applicable, an ITT Retained Asset, Defense Asset or
Water Asset shall, and shall cause each of its
27
respective Subsidiaries to, for a period ending not later than eighteen (18) months after the
Distribution Date (unless the term of such Shared Contract ends at a later date, in which case for
a period ending on such date), take such other reasonable and permissible actions to cause such
member of the Water Group, the Defense Group or the ITT Group, as the case may be, to receive the
benefit of that portion of each Shared Contract that relates to the Water Business, the Defense
Business or the ITT Retained Business, as the case may be (in each case, to the extent so related)
as if such Shared Contract had been assigned to (or amended to allow) a member of the applicable
Group pursuant to this Section 2.3 and to bear the burden of the corresponding Liabilities
(including any Liabilities that may arise by reason of such arrangement) as if such Liabilities had
been Assumed by a member of the applicable Group pursuant to this Section 2.3 and (II) the
Party to which the benefit of such Shared Contract inures in part shall use commercially reasonable
efforts to enter into a separate contract pursuant to which it procures such rights and obligations
as are necessary such that it no longer needs to avail itself of the arrangements provided pursuant
to this Section 2.3(a); provided that, other than in the event of gross negligence
or willful misconduct of the Party for which such Shared Contract is, as applicable, an ITT
Retained Asset, Defense Asset or Water Asset, such Party, and such Party’s applicable Subsidiaries
shall not be liable for any actions or omissions taken in accordance with clause (y) of this
Section 2.3(a).
(b) Each of ITT, Exelis and Xylem shall, and shall cause the members of its Group to, (A)
treat for all Income Tax purposes the portion of each Shared Contract inuring to its respective
Businesses as Assets owned by, and/or Liabilities of, as applicable, such Party as of the Effective
Time and (B) neither report nor take any Income Tax position (on a Tax Return or otherwise)
inconsistent with such treatment (unless required by a change in applicable Tax Law or good faith
resolution of a Tax Contest relating to Income Taxes).
Section 2.4. Intercompany Accounts.
(a) Except as set forth in Section 7.1(b), all (i) intercompany receivables, payables
and loans (other than receivables, payables and loans otherwise specifically provided for under
this Agreement, under any Ancillary Agreement or under any Continuing Arrangements as set forth on
Schedule 1.1(21), and other than payables created or required hereby or by any Ancillary
Agreement or any Continuing Arrangements), if any, and (ii) intercompany balances, including in
respect of any cash balances, any cash balances representing deposited checks or drafts or any cash
held in any centralized cash management system (A) between any member of the ITT Group, on the one
hand, and any member of the Defense Group or the Water Group, on the other hand or (B) between any
member of the Defense Group, on the one hand, and any member of the Water Group, on the other hand,
in each case, which exist and are reflected in the accounting records of the relevant Parties
immediately prior to the Effective Time, shall be settled or capitalized, in each case as of the
Effective Time, as may be agreed prior to the Effective Time by ITT, Exelis and/or Xylem, and their
respective subsidiaries, as applicable. Each of the Parties shall, and shall cause their respective
Subsidiaries to, take all actions and do all things reasonably necessary on its part, or such
Subsidiaries’ part, under applicable Law or contractual obligations to consummate and make
effective the transactions contemplated by such agreement or agreements in respect of such
settlements or capitalizations.
(b) As between any two Parties (and the members of their respective Group) all payments and
reimbursements received after the Effective Time by any Party (or member of its Group) that relate
to a Business, Asset or Liability of another Party (or member of its Group), shall be held by such
Party in trust for the use and benefit of the Party entitled thereto (at the expense of the Party
entitled thereto) and, promptly upon receipt by such Party of any such payment or reimbursement,
such Party shall pay or shall cause the applicable member of its Group to pay over to the Party
entitled thereto the amount of such payment or reimbursement without right of set-off.
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Section 2.5. Limitation of Liability; Intercompany Contracts.
(a) No Party shall have any Liability to any other Party in the event that any Information
exchanged or provided pursuant to this Agreement which is an estimate or forecast, or which is
based on an estimate or forecast, is found to be inaccurate, except for such estimates as may be
prepared in connection with Section 3.5, which shall be addressed as provided therein.
(b) No Party or any Subsidiary thereof shall be liable to any other Party or any Subsidiary of
any other Party based upon, arising out of or resulting from any Contract, arrangement, course of
dealing or understanding between or among it and any other Party existing at or prior to the
Effective Time (other than this Agreement, any Ancillary Agreement, any Continuing Arrangements,
any Third Party Agreements, as set forth in Section 7.1(b) or any Contract entered into in
connection herewith or in order to consummate the transactions contemplated hereby or thereby and
except as provided in any thereof) and each Party hereby terminates any and all Contracts,
arrangements, courses of dealing or understandings between or among it and any other Party
effective as of the Effective Time (other than this Agreement, any Ancillary Agreement, any
Continuing Arrangements, any Third Party Agreements, as set forth in Section 7.1(b) or any Contract
entered into in connection herewith or in order to consummate the transactions contemplated hereby
or thereby or by the Plan of Separation and except as provided in any thereof), provided,
however, that with respect to any Contract, arrangement, course of dealing or understanding
between or among the Parties or any Subsidiaries thereof discovered after the Effective Time, the
relevant Parties agree that such Contract, arrangement, course of dealing or understanding shall
nonetheless be deemed terminated as of the Effective Time with the only liability of the Parties in
respect thereof to be the obligations incurred between the Parties pursuant to such Contract,
arrangement, course of dealing or understanding between the Effective Time and the time of
discovery or later termination of any such Contract, arrangement, course of dealing or
understanding.
Section 2.6. Transfers Not Effected at or Prior to the Effective Time; Transfers Deemed
Effective as of the Effective Time.
(a) To the extent that any Transfers contemplated by this Article II shall not have
been consummated at or prior to the Effective Time, the Parties shall use commercially reasonable
efforts to effect such Transfers as promptly following the Effective Time as shall be practicable.
Nothing herein shall be deemed to require the Transfer of any Assets or the Assumption of any
Liabilities which by their terms or operation of Law cannot be Transferred; provided,
however, that the Parties and their respective Subsidiaries shall cooperate and use
commercially reasonable efforts to seek to obtain, in accordance with applicable Law, any necessary
Consents or Governmental Approvals for the Transfer of all Assets and Assumption of all Liabilities
to the fullest extent permitted by applicable Law contemplated to be Transferred and Assumed
pursuant to this Article II. In the event that any such Transfer of Assets or Assumption
of Liabilities has not been consummated, from and after the Effective Time (i) the Party retaining
such Asset shall thereafter hold such Asset in trust for the use and benefit of the Party entitled
thereto (at the expense of the Party entitled thereto) and (ii) the Party intended to Assume such
Liability shall, or shall cause the applicable member of its Group to, pay or reimburse the Party
retaining such Liability for all amounts paid or incurred in connection with the retention of such
Liability. To the extent the foregoing applies to any Contracts to be assigned for which any
necessary Consents or Governmental Approvals are not received prior to the Effective Time, the
treatment of such Contracts shall, for the avoidance of doubt, be subject to Sections 2.8 and 2.9,
to the extent applicable. In addition, the Party retaining such Asset or Liability shall, insofar
as reasonably possible and to the extent permitted by applicable Law, treat such Asset or Liability
in the ordinary course of business in accordance with past practice and take such other actions as
may be reasonably requested by the Party to which such Asset is to be Transferred or by the Party
Assuming such Liability in order to place such Party, insofar as reasonably possible, in the same
position as if such Asset or Liability had been Transferred or Assumed as
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contemplated hereby and so that all the benefits and burdens relating to such Asset or
Liability, including possession, use, risk of loss, potential for gain, and dominion, control and
command over such Asset or Liability, are to inure from and after the Effective Time to the member
or members of the ITT Group, the Water Group or the Defense Group entitled to the receipt of such
Asset or required to Assume such Liability. In furtherance of the foregoing, the Parties agree
that, as of the Effective Time, subject to Section 2.2(e) and Section 2.9(b), each
Party shall be deemed to have acquired complete and sole beneficial ownership over all of the
Assets, together with all rights, powers and privileges incident thereto, and shall be deemed to
have Assumed in accordance with the terms of this Agreement all of the Liabilities, and all duties,
obligations and responsibilities incident thereto, which such Party is entitled to acquire or
required to Assume pursuant to the terms of this Agreement.
(b) If and when the Consents, Governmental Approvals and/or conditions, the absence or
non-satisfaction of which caused the deferral of Transfer of any Asset or deferral of the
Assumption of any Liability pursuant to Section 2.6(a), are obtained or satisfied, the
Transfer, assignment, Assumption or novation of the applicable Asset or Liability shall be effected
in accordance with and subject to the terms of this Agreement (including Section 2.2)
and/or the applicable Ancillary Agreement, and shall, to the extent possible without the imposition
of any undue cost on any Party, be deemed to be effective as of the Effective Time.
(c) Following the second anniversary of the Distribution Date, the Party retaining any Asset
or Liability due to the deferral of the Transfer of such Asset or the deferral of the Assumption of
such Liability pursuant to Section 2.6(a) or otherwise shall not be obligated, in
connection with the foregoing, to expend any money unless the necessary funds are advanced,
assumed, or agreed in advance to be reimbursed by the Party entitled to such Asset or the Person
intended to be subject to such Liability, other than reasonable attorneys’ fees and recording or
similar or other incidental fees, all of which shall be promptly reimbursed by the Party entitled
to such Asset or the Person intended to be subject to such Liability.
(d) In furtherance of the foregoing, if prior to 12:01 a.m., New York time, on December 1,
2011 (the “Petrobras Time”), Petróleo Brasileiro S.A. (“Petrobras”) shall not have
paid any part of the amount of BRL 11,942,000 it owes to ITT Brasil Equipamentos para Bombeamento e
Tratamento de Aqua e Efiuentes Ltda. (such entity, “Water Brazil”, such amount the
“Receivable” and any such part not paid, the “Outstanding Receivable”), then,
subject to Section 3.5(h), promptly after Water Brazil receives all or any portion of the
Outstanding Receivable, Xylem shall pay and remit to ITT an amount in cash equal to the Outstanding
Receivable converted to United States dollars using ITT’s published accounting rate (the
“Petrobras Conversion Rate”) as of the most recent month end prior to the date on which
such payment is made; provided, however, that, in the event any part of the Outstanding
Receivable is received by Water Brazil after the Petrobras Time but before the date on which ITT
shall submit the Statement of Cash Allocation to Exelis and Xylem pursuant to Section
3.5(g), then (i) Xylem’s Cash Allocation shall be reduced by any such payment received and (ii)
ITT’s Cash Allocation shall be increased by the amount of such payment received. Notwithstanding
anything to the contrary in this Agreement or the Tax Matters Agreement, if any Taxes (determined
on a with and without basis) are incurred by ITT with respect to the receipt or accrual of any
payment made pursuant to this Section 2.6(d) (including any payment made pursuant to this
sentence), an additional payment shall be made by Xylem to ITT such that any such Taxes are borne
equally by ITT and Xylem.
(e) After the Effective Time, each Party (or any member of its Group) may receive mail,
packages and other communications properly belonging to another Party (or any member of its Group).
Accordingly, at all times after the Effective Time, each Party is hereby authorized to receive and
open all mail, packages and other communications received by such Party that belongs to such other
Party, and to the extent that they do not relate to the business of the receiving Party, the
receiving Party shall promptly
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deliver such mail, packages or other communications (or, in case the same also relates to the
business of the receiving Party or another Party, copies thereof) to such other Party as provided
for in Section 11.6. The provisions of this Section 2.6(e) are not intended to,
and shall not, be deemed to constitute an authorization by any Party to permit the other to accept
service of process on its behalf and no Party is or shall be deemed to be the agent of any other
Party for service of process purposes.
(f) With respect to Assets and Liabilities described in Section 2.6(a), each of ITT,
Exelis and Xylem shall, and shall cause the members of its respective Group to, (i) treat for all
Income Tax purposes (A) the deferred Assets as assets having been Transferred to and owned by the
Party entitled to such Assets not later than the Effective Time and (B) the deferred Liabilities as
liabilities having been Assumed and owned by the Person intended to be subject to such Liabilities
not later than the Effective Time and (ii) neither report nor take any Income Tax position (on a
Tax Return or otherwise) inconsistent with such treatment (unless required by a change in
applicable Tax Law or good faith resolution of a Tax Contest relating to Income Taxes).
Section 2.7. Conveyancing and Assumption Instruments. In connection with, and in furtherance of, the Transfers of Assets and the Assumptions of
Liabilities contemplated by this Agreement, the Parties shall execute or cause to be executed, on
or after the date hereof by the appropriate entities to the extent not executed prior to the date
hereof, any Conveyancing and Assumption Instruments necessary to evidence the valid Transfer to the
applicable Party or member of such Party’s Group of all right, title and interest in and to its
accepted Assets and the valid and effective Assumption by the applicable Party of its Assumed
Liabilities for Transfers and Assumptions to be effected pursuant to New York Law or the Laws of
one of the other states of the United States or, if not appropriate for a given Transfer or
Assumption, and for Transfers or Assumptions to be effected pursuant to non-U.S. Laws, in such form
as the Parties shall reasonably agree, including the Transfer of real property by mutually
acceptable conveyance deeds as may be appropriate and in form and substance as may be required by
the jurisdiction in which the real property is located. The Transfer of capital stock shall be
effected by means of executed stock powers and notation on the stock record books of the
corporation or other legal entities involved, or by such other means as may be required in any
non-U.S. jurisdiction to Transfer title to stock and, only to the extent required by applicable
Law, by notation on public registries.
Section 2.8. Further Assurances; Ancillary Agreements.
(a) In addition to and without limiting the actions specifically provided for elsewhere in
this Agreement, including Section 2.6, each of the Parties shall cooperate with each other
and use (and shall cause its respective Subsidiaries and Affiliates to use) commercially reasonable
efforts, at and after the Effective Time, to take, or to cause to be taken, all actions, and to do,
or to cause to be done, all things reasonably necessary on its part under applicable Law or
contractual obligations to consummate and make effective the transactions contemplated by this
Agreement and the Ancillary Agreements.
(b) Without limiting the foregoing, at and after the Effective Time, each Party shall
cooperate with the other Parties, and without any further consideration, but at the expense of the
requesting Party from and after the Effective Time, to execute and deliver, or use commercially
reasonable efforts to cause to be executed and delivered, all instruments, including instruments of
Transfer or title, and to make all filings with, and to obtain all Consents and/or Governmental
Approvals, any permit, license, Contract, indenture or other instrument (including any Consents or
Governmental Approvals), and to take all such other actions as such Party may reasonably be
requested to take by any other Party from time to time, consistent with the terms of this Agreement
and the Ancillary Agreements, in order to effectuate the provisions and purposes of this Agreement
and the Ancillary Agreements and the Transfers of the applicable Assets and the assignment and
Assumption of the applicable Liabilities and the other transactions contemplated hereby and
thereby. Without limiting the foregoing, each Party
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shall, at the reasonable request, cost and expense of any other Party, take such other actions
as may be reasonably necessary to vest in such other Party such title and such rights as possessed
by the transferring Party to the Assets allocated to such other Party under this Agreement or any
of the Ancillary Agreements, free and clear of any Security Interest, if and to the extent it is
practicable to do so.
(c) Without limiting the foregoing, in the event that any Party receives any Assets to be
transferred to another Party pursuant to this Agreement or the Ancillary Agreements, such Party
agrees to promptly return or cause the return of such Assets to the applicable Party at such latter
Party’s expense.
(d) At or prior to the Effective Time, each of ITT, Exelis and Xylem shall enter into, and/or
(where applicable) shall cause a member or members of their respective Group to enter into, the
Ancillary Agreements and any other Contracts in respect of the Distributions reasonably necessary
or appropriate in connection with the transactions contemplated hereby and thereby.
Section 2.9. Novation of Liabilities; Indemnification.
(a) Each Party, at the request of another Party, shall use commercially reasonable efforts to
obtain, or to cause to be obtained, any Consent, Governmental Approval, substitution or amendment
required to novate or assign to the fullest extent permitted by applicable Law all obligations
under Contracts and Liabilities for which a member of such requesting Party’s Group and a member of
such first Party’s Group (such first Party, the “Other Party”) are jointly or severally
liable and that do not constitute Liabilities of such Other Party hereunder, or, if permitted by
applicable Law, to obtain in writing the unconditional release of all parties to such arrangements
(other than any member of the Group who Assumed or retained such Liability as set forth in this
Agreement), so that, in any such case, the members of the applicable Group shall be solely
responsible for such Liabilities; provided, however, that no Party shall be
obligated to pay any consideration therefor to any third party from whom any such Consent,
Governmental Approval, substitution or amendment is requested (unless such Party is fully
reimbursed by the requesting Party).
(b) If the Parties are unable to obtain, or to cause to be obtained, any such required
Consent, Governmental Approval, release, substitution or amendment, the Other Party or a member of
such Other Party’s Group shall continue to be bound by such Contract, license or other obligation
that does not constitute a Liability of such Other Party and, unless not permitted by Law or the
terms thereof, as agent or subcontractor for such Party, the Party or member of such Party’s Group
who Assumed or retained such Liability as set forth in this Agreement (the “Liable Party”)
shall, or shall cause a member of its Group to, pay, perform and discharge fully all the
obligations or other Liabilities of such Other Party or member of such Other Party’s Group
thereunder from and after the Effective Time. For the avoidance of doubt, in furtherance of the
foregoing, the Liable Party or a member of such Liable Party’s Group, as agent or subcontractor of
the Other Party or a member of such Other Party’s Group, to the extent reasonably necessary to pay,
perform and discharge fully any Liabilities, or retain the benefits (including pursuant to
Section 2.6) associated with such Contract or license, is hereby granted the right to,
among other things, (i) prepare, execute and submit invoices under such Contract or license in the
name of ITT, (ii) send correspondence relating to matters under such Contract or license in the
name of ITT, (iii) file Actions in the name of ITT in connection with such Contract or license and
(iv) otherwise exercise all rights in respect of such Contract or license in the name of ITT;
provided that (y) such actions shall be taken in the name of ITT only to the extent
reasonably necessary or advisable in connection with the foregoing and (z) to the extent that there
shall be a conflict between the provisions of this Section 2.9(b) and the provisions of any
more specific arrangement between a member of such Liable Party’s Group and a member of such Other
Party’s Group, such more specific arrangement shall control. The Liable Party shall indemnify each
Other Party and hold each of them harmless against any Liabilities (other than Liabilities of such
Other Party) arising in connection therewith; provided, that the Liable Party shall have
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no obligation to indemnify any Other Party with respect to any matter to the extent that such
Liabilities arise from such Other Party’s willful breach, knowing violation of Law, fraud,
misrepresentation or gross negligence in connection therewith, in which case such Other Party shall
be responsible for such Liabilities. The Other Party shall, without further consideration,
promptly pay and remit, or cause to be promptly paid or remitted, to the Liable Party or, at the
direction of the Liable Party, to another member of the Liable Party’s Group, all money, rights and
other consideration received by it or any member of its Group in respect of such performance by the
Liable Party (unless any such consideration is an Asset of such Other Party pursuant to this
Agreement). If and when any such Consent, Governmental Approval, release, substitution or
amendment shall be obtained or such agreement, lease, license or other rights or obligations shall
otherwise become assignable or able to be novated, the Other Party shall, to the fullest extent
permitted by applicable Law, promptly Transfer or cause the Transfer of all rights, obligations and
other Liabilities thereunder of such Other Party or any member of such Other Party’s Group to the
Liable Party or to another member of the Liable Party’s Group without payment of any further
consideration and the Liable Party, or another member of such Liable Party’s Group, without the
payment of any further consideration, shall Assume such rights and Liabilities to the fullest
extent permitted by applicable Law. Each of the applicable Parties shall, and shall cause their
respective Subsidiaries to, take all actions and do all things reasonably necessary on its part, or
such Subsidiaries’ part, under applicable Law or contractual obligations to consummate and make
effective the transactions contemplated by this Section 2.9.
Section 2.10. Guarantees; Letters of Credit.
(a) Except for those guarantees and/or letters of credit set forth on Schedule 2.10(a)
where ITT shall remain as guarantor or obligor and the applicable Party shall indemnify and hold
harmless the ITT Indemnitees for any Indemnifiable Loss arising from or relating thereto (in
accordance with the provisions of Article VII) or as otherwise specified in any Ancillary
Agreement, at or prior to the Effective Time or as soon as practicable thereafter, (i) ITT shall
(with the reasonable cooperation of the applicable member of the Water Group or Defense Group) use
its commercially reasonable efforts to have any member of the Water Group and/or the Defense Group
removed as guarantor of or obligor for any ITT Retained Liability to the fullest extent permitted
by applicable Law, including in respect of those guarantees set forth on Schedule
2.10(a)(i), to the extent that they relate to ITT Retained Liabilities, (ii) Exelis shall (with
the reasonable cooperation of the applicable member of the ITT Group or any Defense Group) use
commercially reasonable efforts to have any member of the ITT Group and/or the Water Group removed
as guarantor of or obligor for any Defense Liability to the fullest extent permitted by applicable
Law, including in respect of those guarantees set forth on Schedule 2.10(a)(ii), to the
extent that they relate to Defense Liabilities and (iii) Xylem shall (with the reasonable
cooperation of the applicable member of the ITT Group or Defense Group) use commercially reasonably
efforts to have any member of the ITT Group and/or the Defense Group removed as guarantor of or
obligor for any Water Liability, to the fullest extent permitted by applicable Law, including in
respect of those guarantees set forth on Schedule 2.10(a)(iii), to the extent that they
relate to Water Liabilities.
(b) At or prior to the Effective Time, to the extent required to obtain a release from a
guaranty (a “Guaranty Release”):
(i) of any member of the ITT Group, Exelis and/or Xylem shall, as applicable, execute a
guaranty agreement substantially in the form of the existing guaranty or such other form as
is agreed to by the relevant parties to such guaranty agreement, except to the extent that
such existing guaranty contains representations, covenants or other terms or provisions
either (A) with which Exelis or Xylem, as the case may be, would be reasonably unable to
comply or (B) which would be reasonably expected to be breached;
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(ii) of any member of the Defense Group, ITT and/or Xylem shall, as applicable, execute
a guaranty agreement substantially in the form of the existing guaranty or such other form
as is agreed to by the relevant parties to such guaranty agreement, except to the extent
that such existing guaranty contains representations, covenants or other terms or provisions
either (A) with which ITT or Xylem, as the case may be, would be reasonably unable to comply
or (B) which would be reasonably expected to be breached; and
(iii) of any member of the Water Group, ITT and/or Exelis, shall, as applicable,
execute a guaranty agreement substantially in the form of the existing guaranty or such
other form as is agreed to by the relevant parties to such guaranty agreement, except to the
extent that such existing guaranty contains representations, covenants or other terms or
provisions either (A) with which ITT or Exelis, as the case may be, would be reasonably
unable to comply or (B) which would be reasonably expected to be breached.
(c) If ITT, Exelis or Xylem is unable to obtain, or to cause to be obtained, any such required
removal as set forth in clauses (a) and (b) of this Section 2.10, (i) the relevant member
of the ITT Group, Defense Group or Water Group, as applicable, that has assumed the underlying
Liability with respect to such guaranty shall indemnify and hold harmless the guarantor or obligor
for any Indemnifiable Loss arising from or relating thereto (in accordance with the provisions of
Article VII) and shall or shall cause one of its Subsidiaries, as agent or subcontractor
for such guarantor or obligor to pay, perform and discharge fully all the obligations or other
Liabilities of such guarantor or obligor thereunder and (ii) each of ITT, Exelis and Xylem, on
behalf of themselves and the members of their respective Groups, agree (except in the case of
Exelis as permitted in accordance with Section 2.9(b) or 2.11) not to renew or extend the term of,
increase its obligations under, or Transfer to a third party, any loan, guarantee, lease, contract
or other obligation for which another Party or member of such Party’s Group is or may be liable
without the prior written consent of such other Party, unless all obligations of such other Party
and the other members of such Party’s Group with respect thereto are thereupon terminated by
documentation reasonably satisfactory in form and substance to such Party; provided,
however, with respect to leases, in the event a Guaranty Release is not obtained and the
relevant beneficiary wishes to extend the term of such guaranteed lease, then such beneficiary
shall have the option of extending the term if it provides such security as is reasonably
satisfactory to the guarantor under such guaranteed lease.
Section 2.11. Post Closing Exelis Contracts. Following the Effective Time, in connection with Contracts that would otherwise be entered
into by Exelis following the Effective Time that are (a) the continuation, extension, renewal,
option exercise, follow-on, or work related, to Defense Contracts pending novation pursuant to
Section 2.9 and (b) Contracts, including quotations, proposals or bids for new
opportunities, in each case primarily relating to the Defense Business, including such Contracts
that are subject to security-related accreditation or facility security clearance requirements to
be eligible to bid or perform such Contracts (such Contracts set forth in clauses (a) and (b),
collectively, the “Post Closing Exelis Contracts”), ITT shall be, or shall continue to be,
the contracting party for such Contracts until such time when, after Exelis shall have obtained the
necessary novations , accreditations, clearances or assignments to enter into such Contracts and
submit such bids, such Contracts shall have been Transferred to Exelis (such time, the “Post
Closing Exelis Contracts Transfer Time”). In furtherance of the foregoing, Exelis shall use
commercially reasonable efforts to, as promptly as practicable following the Effective Time, (a)
obtain such necessary clearances, (ii) effect the Transfer of any such Post Closing Exelis
Contracts, including any Assets and Liabilities thereunder, to Exelis and (iii) procure the release
of ITT from any obligations or Liabilities thereunder to the fullest extent permitted by
applicable Law. For the avoidance of doubt, from and after the Effective Time and until the Post
Closing Exelis Contracts Transfer Time, such Post Closing Exelis Contracts, and any Assets and
Liabilities thereunder, shall be subject to the provisions of Sections 2.6, 2.8 and 2.9,
as applicable, including the Liable Party’s obligation to indemnify the Other Party in connection
with such Contracts or Liabilities pursuant to
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Section 2.9(b); it being understood that, with respect to Section 2.9, ITT
shall be the Other Party and Exelis shall be the Liable Party.
Section 2.12. Disclaimer of Representations and Warranties. EACH OF ITT (ON BEHALF OF ITSELF AND EACH MEMBER OF THE ITT GROUP), EXELIS (ON BEHALF OF
ITSELF AND EACH MEMBER OF THE DEFENSE GROUP), AND XYLEM (ON BEHALF OF ITSELF AND EACH MEMBER OF THE
WATER GROUP) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN, IN ANY ANCILLARY
AGREEMENT OR IN ANY CONTINUING ARRANGEMENT, NO PARTY TO THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR
ANY OTHER AGREEMENT OR DOCUMENT CONTEMPLATED BY THIS AGREEMENT, ANY ANCILLARY AGREEMENTS OR
OTHERWISE, IS REPRESENTING OR WARRANTING IN ANY WAY AS TO THE ASSETS, BUSINESSES OR LIABILITIES
CONTRIBUTED, TRANSFERRED OR ASSUMED AS CONTEMPLATED HEREBY OR THEREBY, AS TO ANY CONSENTS OR
GOVERNMENTAL APPROVALS REQUIRED IN CONNECTION HEREWITH OR THEREWITH, AS TO THE VALUE OR FREEDOM
FROM ANY SECURITY INTERESTS OF, OR ANY OTHER MATTER CONCERNING, ANY ASSETS OF SUCH PARTY, OR AS TO
THE ABSENCE OF ANY DEFENSES OR RIGHT OF SETOFF OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY
ACTION OR OTHER ASSET, INCLUDING ACCOUNTS RECEIVABLE, OF ANY PARTY, OR AS TO THE LEGAL SUFFICIENCY
OF ANY CONTRIBUTION, ASSIGNMENT, DOCUMENT, CERTIFICATE OR INSTRUMENT DELIVERED HEREUNDER TO CONVEY
TITLE TO ANY ASSET OR THING OF VALUE UPON THE EXECUTION, DELIVERY AND FILING HEREOF OR THEREOF.
EXCEPT AS MAY EXPRESSLY BE SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT, ALL SUCH ASSETS ARE
BEING TRANSFERRED ON AN “AS IS, WHERE IS” BASIS (AND, IN THE CASE OF ANY REAL PROPERTY, BY MEANS OF
A QUITCLAIM OR SIMILAR FORM DEED OR CONVEYANCE) AND THE RESPECTIVE TRANSFEREES SHALL BEAR THE
ECONOMIC AND LEGAL RISKS THAT (I) ANY CONVEYANCE SHALL PROVE TO BE INSUFFICIENT TO VEST IN THE
TRANSFEREE GOOD TITLE, FREE AND CLEAR OF ANY SECURITY INTEREST AND (II) ANY NECESSARY CONSENTS OR
GOVERNMENTAL APPROVALS ARE NOT OBTAINED OR THAT ANY REQUIREMENTS OF LAWS OR JUDGMENTS ARE NOT
COMPLIED WITH.
ARTICLE III
CERTAIN ACTIONS AT OR PRIOR TO THE DISTRIBUTIONS
Section 3.1. Articles of Incorporation; By-laws.
(a) Exelis. On or prior to the Distribution Date, all necessary actions shall be taken
to adopt the form of Articles of Incorporation and By-laws filed by Exelis with the Commission as
exhibits to the Exelis Form 10, to be effective as of the Effective Time.
(b) Xylem. On or prior to the Distribution Date, all necessary actions shall be taken
to adopt the form of Articles of Incorporation and By-laws filed by Xylem with the Commission as
exhibits to the Xylem Form 10, to be effective as of the Effective Time.
Section 3.2. Directors.
(a) ITT. On or prior to the Distribution Date, ITT shall take all necessary actions,
including procuring the resignations of the directors named on Schedule 3.2(a), such that,
at the Effective Time, its Board shall include the individuals named on Schedule 3.2(a)
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(b) Exelis. On or prior to the Distribution Date, ITT shall take all necessary action
to cause the Board of Directors of Exelis to include, at the Effective Time, the individuals
identified in the Exelis Information Statement as director nominees of Exelis.
(c) Xylem. On or prior to the Distribution Date, ITT shall take all necessary action
to cause the Board of Directors of Xylem to include, at the Effective Time, the individuals
identified in the Xylem Information Statement as director nominees of Xylem.
Section 3.3. Officers.
(a) ITT. On or prior to the Distribution Date, ITT shall take all necessary actions,
including procuring the resignations of its officers, such that at the Effective Time its officers
shall be the individuals named on Schedule 3.3(a).
(b) Exelis. On or prior to the Distribution Date, ITT shall take all necessary action
to cause the individuals identified as such in the Exelis Information Statement to be officers of
Exelis as of the Effective Time.
(c) Xylem. On or prior to the Distribution Date, ITT shall take all necessary action
to cause the individuals identified as such in the Xylem Information Statement to be officers of
Xylem as of the Effective Time.
Section 3.4. Resignations and Removals.
(a) Exelis. On or prior to the Distribution Date or as soon thereafter as practicable,
(i) ITT shall cause all its employees and any employees of its Subsidiaries (excluding any
employees of any member of the Defense Group) to resign or be removed, effective as of the
Effective Time, from all positions as officers or directors of any member of the Defense Group in
which they serve, and (ii) Exelis shall cause all its employees and any employees of its
Subsidiaries to resign, effective as of the Effective Time, from all positions as officers or
directors of any members of the ITT Group or the Water Group in which they serve.
(b) Xylem. On or prior to the Distribution Date or as soon thereafter as practicable,
(i) ITT shall cause all its employees and any employees of its Subsidiaries (excluding any
employees of any member of the Water Group) to resign or be removed, effective as of the Effective
Time, from all positions as officers or directors of any member of the Water Group in which they
serve, and (ii) Xylem shall cause all its employees and any employees of its Subsidiaries to
resign, effective as of the Effective Time, from all positions as officers or directors of any
members of the ITT Group or the Defense Group in which they serve.
(c) No Person shall be required by any Party to resign from any position or office with
another Party if such Person is disclosed in the applicable Information Statement as the Person who
is to hold such position or office following the applicable Distribution.
Section 3.5. Cash Adjustments.
(a) Exelis. Subject to Section 3.5(c), prior to the Distribution Date, either
(i) Exelis shall transfer funds to ITT or (ii) ITT shall transfer funds to Exelis, such that
Exelis’ book cash and cash equivalents balance in its accounts immediately prior to the Effective
Time shall equal the Exelis Target Cash Balance.
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(b) Xylem. Subject to Section 3.5(c), prior to the Distribution Date, either
(i) Xylem shall transfer funds to ITT or (ii) ITT shall transfer funds to Xylem, such that Xylem’s
book cash and cash equivalents balance in its accounts immediately prior to the Effective Time
shall equal the Xylem Target Cash Balance.
(c) ITT. Notwithstanding Sections 3.5(a) and (b), prior to the
Distribution Date, ITT shall retain funds or funds shall be transferred to ITT such that ITT’s book
cash and cash equivalents balance in its accounts immediately prior to the Effective Time shall
equal the ITT Target Cash Balance. If on the Business Day prior to the Distribution Date, after
making the adjustments contemplated in Sections 3.5(a) and (b), the actual
aggregate book cash and cash equivalents balance of the Parties is greater than or equal to the sum
of the Exelis Target Cash Balance, the Xylem Target Cash Balance and the ITT Target Cash Balance,
as calculated above, ITT shall retain funds or funds shall be transferred to ITT such that ITT’s
book cash and cash equivalents balance in its accounts immediately prior to the Effective Time
shall equal the sum of the ITT Target Cash Balance plus any excess above such sum.
(d) Promptly following the Distribution Date, and in any event not later than twenty (20) days
thereafter, ITT shall (i) prepare, as of 12:01 a.m., New York time, on the Distribution Date, an
exhibit (the “Statement of Cash Detail”) which includes, for each of ITT, Exelis and Xylem:
(A) the book cash and cash equivalents balance of such Party as of 12:01 a.m., New York time, on
the Distribution Date (each a “Distribution Date Cash Balance”) and (B) a proposal, which
shall not involve any repatriation of cash (but which may, for the avoidance of doubt, involve
either on or off-shore transfers), for the payment in a tax efficient manner by any applicable
Party to any other Party of such other amounts as are necessary so that each Party’s Distribution
Date Cash Balance equals the requisite amount pursuant to Sections 3.5(a), (b) and
(c) (“Reallocation Payments”) and (ii) deliver such Statement of Cash Detail to
each other Party for review (the day the Statement of Cash Detail is so delivered, the
“Statement Completion Date”). In preparing the Statements of Cash Detail, the elements
thereof shall be prepared (1) in accordance with GAAP applied on a consistent basis and with the
same accounting principles, practices, methodologies and policies historically used by ITT in
connection with the preparation of its audited financial statements, (2) subject to the foregoing
clause (1), in a statement calculated based on the example set forth in Schedule 3.5(d),
and (3) in a manner consistent with the terms of this Agreement.
(e) Each Party receiving the Statement of Cash Detail and their respective accountants shall
be entitled to make reasonable inquiries of ITT, the applicable other Party and/or their respective
accountants and senior officers, at reasonable times, upon reasonable advance notice, and without
unreasonable interference to such Parties’ operations, regarding the Statement of Cash Detail with
respect to such Parties. Within five (5) days of the Statement Completion Date (such 5-day period,
the “Cash Detail Review Period”), each Party shall (i) complete its review of the Statement
of Cash Detail and (ii) submit to ITT and the other applicable Party a letter stating its
concurrence or disagreement with the accuracy of the Statement of Cash Detail with respect to such
Party (“Response Letter”) and specifying any specific items on the Statement of Cash Detail
with which such Party disagrees (each, a “Disputed Item”), it being understood that all
other items in the Statement of Cash Detail other than the Disputed Items shall be deemed agreed to
by the Parties. Unless a Party delivers a Response Letter by the last day of the Cash Detail
Review Period, such Party shall be deemed to have accepted ITT’s Statement of Cash Detail and the
calculations therein shall become final and binding upon ITT and such Party.
(f) Following the delivery of the Response Letter, ITT and the applicable Party or Parties
shall in good faith attempt promptly to resolve all disagreements as to the computation of all
Disputed Items within a ten (10) day period (or longer, as mutually agreed by the Parties after
delivery of the Response Letter). Any items not in dispute or resolved during such period shall be
deemed to be final. Following such ten (10) day period, ITT and the applicable Party shall submit
any remaining Disputed Items (and only such remaining Disputed Items) to Ernst & Young, LLP or, if
such firm is unable or
37
unwilling
to act, such other Person as shall
be agreed upon by the parties hereto in writing (in any such case, the “Accountant”) for
determination. The determination of the Accountant with respect to all remaining Disputed Items
and the Reallocation Payments shall be completed within fifteen (15) days after the appointment of
the Accountant, shall be determined in accordance with this Agreement and shall be final and
binding upon ITT and the applicable Party. With respect to each Disputed Item subject to
resolution by the Accountant, the Accountant shall adopt a position that is either equal to the
applicable Party’s proposed position, equal to ITT’s proposed position, or any amount as so
determined by the Accountant between the positions proposed by such Party and ITT. The fees, costs
and expenses of the Accountant shall be allocated by the Accountant at the time the Accountant’s
determination is rendered with respect to all the remaining Disputed Items as follows: (A) if the
Accountant resolves all of the remaining Disputed Items in favor of one Party’s position, then all
such fees, costs and expenses (and the reasonable attorney’s fees and expenses of such Party) shall
be paid by the other Party or, if applicable, equally among the two other Parties maintaining
different positions; and (B) if the Accountant does not resolve all of the remaining Disputed Items
in favor of one Party’s position, then such fees, costs and expenses (and the reasonable attorney’s
fees and expenses of the applicable Parties) shall be paid in inverse proportion as the Parties may
prevail on matters resolved by the Accountant, based on the dollar amount of each Disputed Item
resolved in favor of each Party.
(g) Within seven (7) days of the final resolution of all Disputed Items as to Exelis and Xylem
in accordance with Sections 3.5(e) and (f) above, but in no event later than
December 29, 2011, ITT shall submit to Exelis and Xylem a statement calculated based on the example
in Schedule 3.5(d) (the “Statement of Cash Allocation”) indicating the final
allocation of cash to each Party as finally determined in accordance with this Section 3.5
(each, a “Cash Allocation”).
(h) Notwithstanding anything to the contrary herein, if prior to the Petrobras Time, Petrobras
shall not have paid the entire Receivable to Water Brazil, then (i) ITT’s Cash Allocation shall be
reduced by an amount equal to (A) the excess, if any, of the principal amount of BRL12,270,000
plus interest thereon, under the credit facility entered into between Citibank and Water Brazil in
May 2011, over any amount paid by Petrobras in respect of the Receivable, (B) converted to United
States dollars using the Petrobras Conversion Rate as of the most recent month end prior to the
date on which each Party’s Cash Allocation is finally determined and (ii) Xylem’s Cash Allocation
shall be increased by the same amount; provided, however, that, in the event any part of
the Outstanding Receivable is received by Water Brazil after the Petrobras Time but before the date
on which ITT shall submit the Statement of Cash Allocation to Exelis and Xylem pursuant to
Section 3.5(g), then ITT’s Cash Allocation shall be increased in accordance with
Section 2.6(d)(ii) and Xylem’s Cash Allocation shall be decreased by the same amount.
(i) The Statement of Cash Allocation shall provide for payments among the Parties in
accordance with the following principles:
(i) If the difference between any Party’s Cash Allocation and such Party’s Distribution
Date Cash Balance is less than $1,000,000, then such Party shall not be entitled to any
adjustment pursuant to this Section 3.5. If the difference between any Party’s Cash
Allocation and such Party’s Distribution Date Cash Balance is more than $1,000,000, then
such Party shall be entitled to receive payments, in a tax efficient manner and not
involving any repatriation of cash, from such other Party or Parties whose Distribution Date
Cash Balance exceeds its Cash Allocation such that after giving effect to such payments each
Party’s Distribution Date Cash Balance shall equal its Cash Allocation, and each such Party
shall be obligated to pay, or cause to be paid, to such other Party, or its designee, the
amount of such shortfall.
(j) Any
payments made pursuant to this Section 3.5 shall be made by wire transfer of
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immediately available funds to the account designated in writing by the relevant Parties.
ARTICLE IV
THE DISTRIBUTIONS
Section 4.1. Stock Dividends to ITT Shareholders.
(a) Exelis. On the Distribution Date, ITT shall cause the Distribution Agent to
distribute all of the outstanding shares of Exelis Common Stock then owned by ITT to holders of ITT
Common Stock on the Distribution Record Date, and to credit the appropriate number of such shares
of Exelis Common Stock to book entry accounts for each such holder or designated transferee or
transferees of such holder of Exelis Common Stock. For shareholders of ITT who own ITT Common
Stock through a broker or other nominee, their shares of Exelis Common Stock shall be credited to
their respective accounts by such broker or nominee. Each holder of ITT Common Stock on the
Distribution Record Date (or such holder’s designated transferee or transferees) shall be entitled
to receive in the Exelis Distribution one (1) share of Exelis Common Stock for every one (1) share
of ITT Common Stock held by such shareholder. No action by any such shareholder shall be necessary
for such shareholder (or such shareholder’s designated transferee or transferees) to receive the
applicable number of shares (and, if applicable, cash in lieu of any fractional shares) of Exelis
Common Stock such shareholder is entitled to in the Exelis Distribution.
(b) Xylem. On the Distribution Date, ITT shall cause the Distribution Agent to
distribute all of the outstanding shares of Xylem Common Stock then owned by ITT to holders of ITT
Common Stock on the Distribution Record Date, and to credit the appropriate number of such shares
of Xylem Common Stock to book entry accounts for each such holder or designated transferee or
transferees of such holder of Xylem Common Stock. For shareholders of ITT who own ITT Common Stock
through a broker or other nominee, their shares of Xylem Common Stock shall be credited to their
respective accounts by such broker or nominee. Each holder of ITT Common Stock on the Distribution
Record Date (or such holder’s designated transferee or transferees) shall be entitled to receive in
the Xylem Distribution one (1) share of Xylem Common Stock for every one (1) share of ITT Common
Stock held by such shareholder. No action by any such shareholder shall be necessary for such
shareholder (or such shareholder’s designated transferee or transferees) to receive the applicable
number of shares (and, if applicable, cash in lieu of any fractional shares) of Xylem Common Stock
such shareholder is entitled in the Xylem Distribution.
Section 4.2. Actions in Connection with the Distribution.
(a) Prior to the Distribution Date, each of Exelis and Xylem shall file such amendments and
supplements to their respective Form 10’s as ITT may reasonably request, and such amendments as may
be necessary in order to cause the same to become and remain effective as required by Law,
including filing such amendments and supplements to their respective Form 10’s as may be required
by the Commission or federal, state or foreign securities Laws. Each of Exelis and Xylem shall
mail to the holders of ITT Common Stock, at such time on or prior to the Distribution Date as ITT
shall determine, the Information Statement included in its Form 10, as well as any other
information concerning Exelis or Xylem, as applicable, their business, operations and management,
the Plan of Separation and such other matters as ITT shall reasonably determine are necessary and
as may be required by Law. Promptly after receiving a request from ITT, to the extent requested,
each of Exelis and Xylem shall prepare and, in accordance with applicable Law, file with the
Commission any such documentation that ITT reasonably determines is necessary or desirable to
effectuate the applicable Distribution, and ITT, Exelis and Xylem shall each use commercially
reasonable efforts to obtain all necessary approvals from the Commission with respect thereto as
soon as practicable.
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(b) Each of Exelis and Xylem shall use commercially reasonable efforts in preparing, filing
with the Commission and causing to become effective, as soon as reasonably practicable (but in any
case prior to the Effective Time), effective registration statements or amendments thereof which
are required in connection with the establishment of, or amendments to, any employee benefit plans
of such Party.
(c) To the extent not already approved and effective, each of Exelis and Xylem shall use
commercially reasonable efforts to have approved and made effective, the respective application for
the original listing of the Xylem Common Stock and Exelis Common Stock, as applicable, to be
distributed in the applicable Distribution on the NYSE, subject to official notice of distribution.
(d) Each Party shall provide all cooperation reasonably requested by the other Parties that is
necessary or desirable in connection with the Financing Arrangements.
(e) Nothing in this Section 4.2 shall be deemed to shift or otherwise impose Liability
for any portion of such Form 10’s or Information Statements to ITT.
Section 4.3. Sole Discretion of ITT. ITT shall, in its sole and absolute discretion, determine the Distribution Date, the
Effective Time and all other terms of the Distribution, including the form, structure and terms of
any transactions and/or offerings to effect the Distribution and the timing of and conditions to
the consummation thereof. In addition, ITT may, in accordance with Section 11.11, at any
time and from time to time until the completion of the Distribution decide to abandon the Xylem
Distribution and/or the Exelis Distribution or modify or change the terms of the Xylem Distribution
and/or the Exelis Distribution, including by accelerating or delaying the timing of the
consummation of all or part of the Distribution. Without limiting the foregoing, ITT shall have the
right not to complete the Distribution if, at any time prior to the Effective Time, the Board shall
have determined, in its sole discretion, that the Distribution is not in the best interests of ITT
or its shareholders or other constituents, that a sale or other alternative is in the best
interests of ITT or its shareholders or other constituents or that it is not advisable at that time
for Exelis or Xylem to separate from ITT.
Section 4.4. Conditions to Distribution. Subject to Section 4.3, the following are conditions to the consummation of the
Distribution. The conditions are for the sole benefit of ITT and shall not give rise to or create
any duty on the part of ITT or the Board to waive or not waive any such condition.
(a) The applicable Form 10 shall have been declared effective by the Commission, no stop order
suspending the effectiveness thereof shall be in effect, no proceedings for such purpose shall be
pending before or threatened by the Commission, and the applicable Information Statement shall have
been mailed to the holders of ITT Common Stock;
(b) With respect to the (i) Xylem Distribution, the Xylem Common Stock to be delivered in the
Xylem Distribution shall have been approved for listing on the NYSE, subject to official notice of
distribution and (ii) Exelis Distribution, the Exelis Common Stock to be delivered in the Exelis
Distribution shall have been approved for listing on the NYSE, subject to official notice of
distribution;
(c) Prior to the Distribution Date, ITT shall have obtained an opinion from Simpson Thacher &
Bartlett LLP, its tax counsel, in form and substance satisfactory to ITT (in its sole discretion),
as to the satisfaction of certain conditions necessary for such Distribution, together with certain
related transactions, to qualify as a reorganization under Sections 355 and 368(a)(1)(D) of the
Code;
(d) Prior to the Distribution Date, ITT shall have obtained a private letter ruling from the
Internal Revenue Service in form and substance satisfactory to ITT (in its sole discretion), and
such ruling shall remain in effect as of such Distribution Date, to the effect, among other things,
that such
40
Distribution, together with certain related transactions, will qualify as a reorganization
under Sections 355 and 368(a)(1)(D) of the Code;
(e) Prior to the Distribution Date, the Board shall have obtained opinions from a nationally
recognized valuation firm, in form and substance satisfactory to ITT, with respect to the capital
adequacy and solvency of each of ITT, Exelis and Xylem;
(f) Any material Governmental Approvals and other Consents necessary to consummate the
applicable Distribution or any portion thereof shall have been obtained and be in full force and
effect, it being understood that, for the avoidance of doubt, the Governmental Approvals and
Consents contemplated by Section 2.6 and Section 2.9 shall not be deemed necessary
to consummate any Distribution;
(g) No order, injunction or decree issued by any Governmental Entity of competent jurisdiction
or other legal restraint or prohibition preventing the consummation of all or any portion of the
applicable Distribution shall be pending, threatened, issued or in effect, and no other event
outside the control of ITT shall have occurred or failed to occur that prevents the consummation of
all or any portion of the applicable Distribution;
(h) No other events or developments shall have occurred or failed to occur prior to the
Distribution Date that, in the judgment of the Board, would result in the Distribution having a
material adverse effect on ITT or its shareholders;
(i) The Financing Arrangements described in the applicable Information Statements as having
occurred prior to an applicable Distribution shall have been consummated on or prior to the
applicable Distribution;
(j) The Restructuring shall have been completed, except for such steps as ITT in its sole
discretion shall have determined may be completed after the Effective Time;
(k) The actions and events set forth in Sections 3.1, 3.2, 3.3 and
3.4 shall have occurred;
(l) The Board shall have authorized the Distribution, which authorization may be given or
withheld at its absolute and sole discretion;
(m) In the event the Distribution is for any reason postponed more than one hundred twenty
(120) days after October 5, 2011, the Board shall have redetermined, as of such postponed
Distribution Date, that the Distribution satisfies the requirements of Indiana Business Corporation
Law governing distributions; and
(n) Each Ancillary Agreement shall have been executed by each party thereto.
ARTICLE V
CERTAIN COVENANTS
Section 5.1. No Solicit; No Hire. None of ITT, Exelis or Xylem or any member of their respective Groups shall, from
the Effective Time through and including the date set forth on Schedule 5.1, without the
prior written consent of the applicable Party, directly or indirectly, recruit, solicit, hire or
retain any person who is an employee specified on
Schedule 5.1 of any other Party or its
Subsidiaries as of the Effective Time or induce, or attempt to induce, any such employee to
terminate his or her
41
employment with, or otherwise cease his or her relationship with, any other Party or its
Subsidiaries; provided, however, that (i) nothing in this Section 5.1 shall
be deemed to prohibit any general solicitation for employment through advertisements and search
firms not specifically directed at employees of such other applicable Party or, except with respect
to employees defined as “CEOs” and “Directly Reporting Employees” on Schedule 5.1, any
hiring as a result thereof; provided, that the applicable Party has not encouraged or
advised such firm to approach any such employee or Party and (ii) the prohibitions of this
Section 5.1 shall not apply (A) with respect to employees who have been terminated by a
Party and (B) following a Change in Control of ITT, Exelis or Xylem, as applicable, with respect to
the employees of such Party. The Parties agree that irreparable damage may occur in the event that
the provisions of this Section 5.1 were not performed in accordance with their specific
terms. Accordingly, it is hereby agreed that the Parties shall be entitled to seek an injunction
or injunctions to enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
Section 5.2. Intellectual Property. Each Party shall not use or exploit the Intellectual Property of the other Parties after the
Effective Time, except (i) as permitted in the Ancillary Agreements, (ii) as required by applicable
Law; (iii) as permitted by the “fair use” doctrine or defense, or (iv) for neutral, non-trademark
use of the other Parties’ Trademarks to describe the history of each Party’s respective business.
Section 5.3. Administration of Specified Shared Expenses. ITT shall be responsible for administering each Specified Shared Expense. Each Party shall
be responsible for payment of its Applicable Percentage of any Specified Shared Expense, except
with respect to (i) certain Specified Shared Expenses that are otherwise allocated among the
Parties pursuant to the Tax Matters Agreement and (ii) certain Specified Shared Expenses otherwise
allocated among the parties as set forth on Schedule 1.1(85). ITT shall invoice each of
Exelis and Xylem on a quarterly basis, and Exelis and Xylem shall each promptly following invoice
reimburse ITT for its allocable share of such Specified Shared Expenses. In addition, ITT shall,
in connection with each invoice, provide a quarterly estimated budget (for informational and
planning purposes only) to Exelis and Xylem of Specified Shared Expenses for the following quarter.
Section 5.4. Cooperation. From and after the Effective Time, each Party shall, and shall cause each of its respective
Affiliates and employees to, (i) provide reasonable cooperation and assistance to each other Party
(and any member of their respective Groups) in connection with the completion of the Plan of
Separation (including assisting in the preparation of the Distributions), (ii) provide knowledge
transfer regarding its applicable Business or ITT’s historical business, (iii) reasonably assist
each other Party in the orderly and efficient transition in becoming an independent company to the
extent set forth in the Transition Services Agreement and (iv) reasonably assist each other Party
to which such Party is providing or has provided services, as applicable, pursuant to the
Transition Services Agreement, in connection with requests for information from, audits or other
examinations of, such other Party by a Governmental Entity; in each case, except as may otherwise
be agreed to by the Parties in writing, at no additional cost to the Party requesting such
assistance other than for the actual out-of-pocket costs (which shall not include the costs of
salaries and benefits of employees of such Party or any pro rata portion of overhead or other costs
of employing such employees which would have been incurred by such employees’ employer regardless
of the employees’ service with respect to the foregoing) incurred by any such Party, if applicable.
In furtherance of, and without limiting, the foregoing, each Party shall make reasonably available
those employees with particular knowledge of any function or service of which another Party was not
allocated the employees, agents or consultants involved in such function or service in connection
with the Plan of Separation (including, employee benefits functions, risk management, etc.).
Section 5.5. Periodic Meetings. Unless otherwise agreed to by the Parties, at least once
42
during each fiscal quarter during the two (2) year period following the Distribution Date, the
Parties shall hold a meeting for the purpose of sharing Information related to this Agreement, any
Shared Contingent Liabilities or the preparation of any Party’s financial statements. Each Party
shall designate between one (1) and three (3) persons as its standing representatives for such
meetings. The Managing Party shall be responsible for scheduling such meeting at reasonably
consistent and convenient times and on no less than thirty (30) days’ notice. The Parties’
standing representatives and others may participate in such meetings in person or other medium by
which all participants may hear each other.
Section 5.6. Board of Directors. Each of Exelis and Xylem agrees that, without the prior written consent of the two other
Parties, it shall not nominate a slate of directors to be elected at its shareholders meeting to be
held in 2013 (the “2013 Meetings”) as a result of which (i) 50% or more of the members of
its Board of Directors shall have served as directors or executive officers of ITT at any time
during the twelve-month period immediately preceding the Effective Time (each, a “Legacy
Director”) or (ii) any member of its Board of Directors shall be a Legacy Director who is also
a director of ITT following the Effective Time, including any Legacy Director who would be
nominated to serve as a director of ITT at its shareholders meeting to be held in 2013. In
furtherance of the foregoing, (x) in the absence of agreement as to which Legacy Directors shall
not be nominated for election at the 2013 Meetings to serve on Exelis’ and/or Xylem’s respective
Board of Directors, as the case may be, the individuals identified on Schedule 5.6 shall
not be nominated by the applicable Board of Directors to stand for re-election at such meetings,
and (y) ITT shall not nominate the individuals identified on Schedule 5.6 to serve on ITT’s
Board at such meeting, unless such individuals will not be nominated for election to the Board of
Directors of either Exelis or Xylem at such meeting.
Section 5.7. Office Space.
(a) Exelis Headquarters Office Space. Exelis’ corporate headquarters as of the
Effective Time will be located at 1650 Tysons Boulevard, Suite 1700, McLean, Virginia 22102.
(b) Xylem Headquarters Office Space. Xylem’s corporate headquarters as of the
Effective Time will be located at 1133 Westchester Avenue, Suite N200, White Plains, New York 10604
(the “White Plains Headquarters”) on a transitional basis.
(c) ITT Headquarters Office Space. ITT’s corporate headquarters as of the Effective
Time will be located at 1133 Westchester Avenue, Suite 3000, White Plains, New York 10604.
(d) Headquarters. From and after the Effective Time, ITT’s and Xylem’s headquarters
shall be located in physically segregated spaces on separate floors, with each of ITT and Xylem
having its own security systems. Xylem agrees that it shall vacate the White Plains Headquarters on
or before the second anniversary of the Distribution Date.
Section 5.8. Night Vision.
(a) Each Party acknowledges that it has read and is familiar with the Administrative
Compliance Agreement between the United States Army and ITT dated as of October 11, 2007 (the
“ACA”) and the Consent Agreement between the United States Department of State and ITT
dated as of December 21, 2007 (the “Consent Agreement”) and all of ITT’s obligations
thereunder.
(b) The Parties agree that from and after the Effective Time, Exelis shall, and shall cause
its Subsidiaries to, (A) satisfy and comply in all respects with ITT’s obligation to pay the
“Deferred Prosecution Monetary Penalty” (as defined in the ACA (as defined therein) and (B) pay all
out-of-pocket fees and expenses associated with the “Independent Monitor” (as defined in the ACA),
in each case as if
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Exelis were a party to the ACA.
(c) Subject to Section 5.8(b), from and after the Effective Time, each of ITT, Exelis
and Xylem (i) shall, and shall cause their respective Subsidiaries to, comply with the ACA and the
Consent Agreement in all respects as applicable to the ITT Retained Business, the Water Business
and the Defense Business, respectively, and (ii) shall indemnify and hold the other Parties’
Indemnitees harmless for any Indemnifiable Losses arising out of or resulting from or incurred in
connection with any violation (as determined in connection with any final judgment or settlement
agreement under which the relevant Party has Liability) of the ACA or the Consent Agreement by,
respectively, the ITT Group, the Water Group and/or the Defense Group, including, for the avoidance
of doubt, reasonable expenses incurred by any ITT Indemnitee, Defense Indemnitee or Water
Indemnitee, as applicable, in respect of any Action arising from such violation or alleged
violation.
(d) Each of ITT, Exelis and/or Xylem, as applicable, shall promptly notify the other Parties
in writing and in reasonable detail of any Action arising from any action or omission or alleged
action or omission of any member of the ITT Group, the Defense Group and/or the Water Group, as
applicable, in violation of Section 5.8(c)(i); provided, however, that no
such notification shall be required unless the applicable Party shall have received a written
notice or other written communication from a Governmental Entity in connection with such
Action. Each such Party shall cooperate with each other Party involved in any such Action in the
defense of such Action and make available to each other Party (i) its and its Subsidiaries’
officers, directors, employees, counsel and agents to assist in such defense, to the extent that
such Persons may reasonably be required in connection with such defense and (ii) all witnesses,
pertinent Information, materials and information in its Group’s possession or under its Group’s
control relating to such defense, as are reasonably required in connection with such defense. For
the avoidance of doubt, except as otherwise specifically set forth in this Section 5.8(d),
the provisions of clauses (b), (e), (f) and (g) of Section
7.5 shall apply, mutatis mutandis, to any Third Party Claims arising out of this Section
5.8.
Section 5.9. SEC Settlement.
(a) Each Party acknowledges that it has read and is familiar with the Consent and Final
Judgment entered in Securities and Exchange Commission v. ITT Corporation, Case No.
1:09-cv-00272-RJL, in the United States District Court for the District of Columbia the
(collectively, the “Final Judgment”) and all of ITT’s obligations thereunder.
(b) From and after the Effective Time, each of ITT, Exelis and Xylem shall, and shall cause
their respective Subsidiaries to, comply with the Final Judgment in all respects as applicable to
the ITT Retained Business, the Defense Business and the Water Business, respectively.
(c) Each of ITT, Exelis and/or Xylem, as applicable, shall promptly notify the other Parties
in writing and in reasonable detail of any Action arising from any action or omission or alleged
action or omission of any member of the ITT Group, the Defense Group and/or the Water Group, as
applicable, in violation of the Final Judgment; provided, however, that no such
notification shall be required unless the applicable Party shall have received a written
notice or other written communication from a Governmental Entity in connection with such
Action. Each such Party shall cooperate with each other Party involved in such Action in such
defense and make available to each other Party (i) its and its Subsidiaries’ officers, directors,
employees, counsel and agents to assist in such defense, to the extent that such Persons may
reasonably be required in connection with such defense and (ii) all witnesses, pertinent
Information, materials and information in its Group’s possession or under its Group’s control
relating to such defense, as are reasonably required in connection with such defense. For the
avoidance of doubt, except as otherwise specifically set forth in this Section 5.9(c), the
provisions of clauses (b), (e), (f) and
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(g) of Section 7.5 shall apply, mutatis mutandis, to any Third Party Claims
arising out of this Section 5.9.
(d) Each of ITT, Exelis and Xylem shall indemnify and hold the other Parties’ Indemnitees
harmless for any violation (as determined in connection with any final judgment or settlement
agreement under which the relevant Party has Liability) of the Final Judgment by, respectively, the
ITT Group, the Defense Group and/or the Water Group, including their respective officers,
employees, agents and attorneys and all Persons in active participation with the aforementioned who
received actual notice of the Final Judgment, including, for the avoidance of doubt, reasonable
expenses incurred by any ITT Indemnitee, Defense Indemnitee or Water Indemnitee, as applicable, in
respect of any Action arising from such violation or alleged violation.
ARTICLE VI
SHARED CONTINGENT LIABILITIES
Section 6.1. Shared Contingent Liabilities. From and after the Effective Time, except as otherwise expressly set forth in this
Article VI or the Tax Matters Agreement (with respect to Taxes) and without limiting the
indemnification provisions of Article VII, ITT, Exelis and Xylem shall each be responsible
for (i) its Applicable Percentage of any Shared Contingent Liabilities pursuant to and in
accordance with the relevant provisions of Article VII and, without duplication, (ii) its
Applicable Percentage of any Specified Shared Expenses related to or arising out of any Shared
Contingent Liability. Any amounts owed in respect of any Shared Contingent Liabilities other than
Specified Shared Expenses (which are addressed pursuant to Section 5.3) shall be remitted
promptly after the Party entitled to such amount provides an invoice (including reasonable
supporting Information with respect thereto and a calculation of the amounts owed by each Party
based on such Party’s Applicable Percentage) to the Party or Parties owing such amount and such
costs and expenses shall be included in the calculation of the amount of the applicable Shared
Contingent Liability in determining the reimbursement obligations of the other Parties with respect
thereto; provided, however, that if so directed by the Party providing the invoice,
in lieu of remitting amounts directly to the Party providing the invoice, the owing Party shall
remit the owed amount directly to the appropriate third party or parties or to an account
established by the invoicing Party for the benefit of the Parties, in which case each Party shall
contribute its Applicable Percentage of such amount to such account for the benefit of the Parties.
It shall not be a defense to any obligation by any Party to pay any amounts, whether pursuant to
this Article VI or in respect of Indemnifiable Losses pursuant to Article VII, in respect
of any Shared Contingent Liability that (i) such Party was not consulted in the defense or
management thereof, (ii) that such Party’s views or opinions as to the conduct of such defense were
not accepted or adopted, (iii) that such Party does not approve of the quality or manner of the
defense thereof or (iv) that such Shared Contingent Liability was incurred by reason of a
settlement rather than by a judgment or other determination of Liability (even if, subject in each
case to Section 7.5(f), such settlement was effected without the consent or over the
objection of such Party). Notwithstanding the foregoing, no Party shall be required to pay its
share of any final settlement in connection with any Shared Contingent Liability unless the final
settlement agreement in connection therewith shall provide for a full and unconditional release of
such Party.
Section 6.2. Management of Shared Contingent Liabilities.
(a) “Managing Party” shall initially mean ITT or such other Party as may be identified
on Schedule 1.1(84); provided, however, another Party may become the
Managing Party with respect to any Shared Contingent Liabilities or other matters set forth in this
Agreement upon the prior written agreement of each of the Parties.
(b) Except as provided in the Tax Matters Agreement (with respect to management of Tax
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Contests), the Managing Party shall, on behalf of the other Parties, have sole and exclusive
authority to, and shall actively and diligently, commence, prosecute, manage, control, conduct or
defend (or assume or conduct the defense of) or otherwise determine all matters whatsoever
(including, as applicable, litigation strategy and choice of legal counsel or other professionals)
with respect to, on behalf of the other Parties, any Action or Third Party Claim with respect to a
Shared Contingent Liability (including with respect to those Shared Contingent Liabilities set
forth on Schedule 1.1(84)). The Managing Party shall use its commercially reasonable
efforts to promptly notify the other Parties in the event that it receives notice of any Shared
Contingent Liability including any claim or demand relating thereto; provided, that the
failure to provide such notice shall not give rise to any rights on the part of the other Parties
against the Managing Party or affect any other provision of this Section 6.2, except to the
extent any Party is actually and materially prejudiced thereby in a manner different from any other
Party. No Party other than the Managing Party shall consent to the entry of any judgment or enter
into any settlement with respect to any Shared Contingent Liability without the prior written
consent of the Managing Party and the other Party. For the avoidance of doubt, any settlement by
the Managing Party shall be subject to Section 7.5(f).
(c) The Managing Party shall on a quarterly basis, or if a material development occurs as soon
as reasonably practicable thereafter, inform the other Parties of the status of and developments
relating to any matter involving a Shared Contingent Liability and provide copies of any material
document, notices or other materials related to such matters; provided, that the failure to
provide any such information shall not be a basis for liability of the Managing Party except and
solely to the extent the receiving Party shall have been actually and materially prejudiced thereby
in a manner different than any other Party. Each Party shall cooperate fully with the Managing
Party in its management of any of such Shared Contingent Liability and shall take such actions in
connection therewith that the Managing Party reasonably requests (including providing access to
such Party’s Records and other Information and employees as set forth in Section 6.3).
(d) In the event of any dispute as to whether any Liability is a Shared Contingent Liability
as set forth in Section 6.4(b), the Managing Party may, but shall not be obligated to,
commence prosecution or other assertion of such claim or right pending resolution of such dispute.
In the event that the Managing Party commences any such prosecution or assertion and, upon
resolution of the dispute (pursuant to Article IX or otherwise), it is determined that such
Liability is not a Shared Contingent Liability and that such Liability belongs to another Party,
pursuant to the provisions of this Agreement or any Ancillary Agreement, the Managing Party shall
cease the prosecution or assertion of such right or claim and the applicable Parties shall
cooperate to transfer the control thereof to the applicable other Party. In such event, the
applicable other Party shall promptly reimburse the Managing Party (or any other Party who has
fronted costs and expenses) for all out-of-pocket costs and expenses incurred to such date in
connection with the prosecution or assertion of such claim or right (which shall not include the
costs of salaries and benefits of employees of the Managing Party or any pro rata portion of
overhead or other costs of employing such employees which would have been incurred by such
employees’ employer regardless of the employees’ service with respect to the foregoing).
Section 6.3. Access to Information; Certain Services; Expenses.
(a) Access to Information and Employees by the Managing Party. Unless otherwise
prohibited by Law, in connection with the management and disposition of any Shared Contingent
Liability, each of the Parties shall make readily available to and afford to the Managing Party and
its authorized accountants, counsel and other designated representatives reasonable access, subject
to appropriate restrictions for classified Information, Confidential Information or Privileged
Information, to the employees, properties, Records and other Information of such Party and the
members of such Party’s Group insofar as such access relates to the relevant Shared Contingent
Liability; it being understood by the Parties that such access as well as any services provided
pursuant to Section 6.3(b) below may require
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a significant time commitment on the part of such Party’s employees and that any such
commitment shall not otherwise limit any of the rights or obligations set forth in this Article
VI; it also being understood that such access and such services provided shall not unreasonably
interfere with any of such Party’s employees’ normal functions. Nothing in this Section
6.3(a) shall require any Party to violate any agreement with any third party regarding the
confidentiality of confidential and proprietary information relating to that third party or its
business; provided, however, that in the event that a Party is required to disclose
any such Information, such Party shall use commercially reasonable efforts to seek to obtain such
third party’s written consent to the disclosure of such Information.
(b) Certain Services. Each of ITT, Exelis and Xylem shall make available to the
others, upon reasonable written request, its and its Subsidiaries’ officers, directors, employees,
counsel and agents to assist in the management (including, if applicable, as witnesses in any
Action) of any Shared Contingent Liabilities to the extent that such Persons may reasonably be
required in connection with the prosecution, defense or day-to-day management of any Shared
Contingent Liability. In respect of the foregoing, Schedule 1.1(84) sets forth certain
identified Shared Contingent Liabilities, respectively, and identify (but do not limit) those
employees and agents who shall assist the Managing Party in its management of such Shared
Contingent Liabilities.
(c) Costs and Expenses Relating to Access by the Managing Party. Except as otherwise
provided in any Ancillary Agreement, the provision of access and other services pursuant to this
Section 6.3 (including by the Managing Party) shall be borne by the Party providing such
access and services (other than for actual out-of-pocket costs and expenses, which shall constitute
Specified Shared Expenses) and shall be shared by the other Parties accordingly.
(d) Other Specified Shared Expenses. The Managing Party (and the Party or Parties
providing assistance to the Managing Party pursuant to Section 6.3(b)) shall be entitled,
upon presentation of reasonable supporting documentation thereof, to reimbursement by the other
Parties (in accordance with their Applicable Percentages) of any out-of-pocket costs and expenses
(which shall include, in the case of the Managing Party, the pro rata portion of the costs of
salaries and benefits of such employees with respect to whom at least 30% of their professional
time over period of one-month or greater is dedicated to the management or defense of such Shared
Contingent Liability) related to or arising out of defending or managing any such Shared Contingent
Liability from Exelis and Xylem, as applicable, from time to time when invoiced, but no more
frequently than quarterly, in advance of a final determination or resolution of any Action related
to a Shared Contingent Liability. Specified Shared Expenses in respect of Shared Contingent
Liabilities shall also include the reasonable out-of-pocket costs and expenses of defending,
managing or providing assistance to the Managing Party pursuant to Section 6.3(b) with
respect to any Third Party Claim that is a Shared Contingent Liability, which shall include any
amounts with respect to a bond, prepayment or similar security or obligation required (or
determined to be advisable by the Managing Party) to be posted by the Managing Party in respect of
any claim and shall not include the costs of salaries and benefits of employees or any pro rata
portion of overhead or other costs of employing such employees which would have been incurred by
such employees’ employer regardless of the employees’ service with respect to the foregoing).
Section 6.4. Notice Relating to Shared Contingent Liabilities; Disputes.
(a) In the event that any Party or any member of such Party’s Group or any of their respective
Affiliates, becomes aware of (i) any Liability that may be a Shared Contingent Liability, (ii) any
matter or occurrence that has given or could give rise to a Shared Contingent Liability or (iii)
any matter that is material and is reasonably relevant to the Managing Party’s ongoing or future
management, prosecution, defense and/or administration of any Shared Contingent Liability, such
Party shall promptly (but in any event within thirty (30) days of becoming aware, unless, by its
nature the subject matter of
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such notice would require earlier notice) notify each of the Managing Party and the other
Party of any such matter (setting forth in reasonable detail the subject matter thereof);
provided, however, that no Party shall be liable for the failure to provide such
notice except and solely to the extent the Managing Party and the other Party shall have been
actually prejudiced as a result of such failure in a manner different than any other Party.
(b) In the event that any Party disagrees whether a claim, obligation or Liability is a Shared
Contingent Liability or whether such claim, obligation or Liability is a Liability allocated to one
of the Parties pursuant to this Agreement or any Ancillary Agreement, then such matter shall be
resolved pursuant to and in accordance with the dispute resolution provisions set forth in
Article IX.
Section 6.5. Cooperation with Governmental Entity. If, in connection with any Shared Contingent Liability, a Party is required by Law to
respond to and/or cooperate with a Governmental Entity, such Party shall be entitled to cooperate
and respond to such Governmental Entity after, to the extent practicable under the specific
circumstances, consultation with the Managing Party with respect to such Shared Contingent
Liability; provided, that to the extent such consultation was not practicable such Party
shall promptly inform the Managing Party of such cooperation and/or response to the Governmental
Entity and the subject matter thereof. In the event that any Party is requested or required by any
Governmental Entity in connection with any Shared Contingent Liability pursuant to written or oral
question or request for Information or documents in any legal or administrative proceeding, review,
interrogatory, subpoena, investigation, demand, or similar process, such Party shall notify the
Managing Party promptly of the request or requirement and such Party’s response thereto, and shall
use commercially reasonable efforts to consult with the Managing Party with respect to the nature
of such Party’s response to the extent practicable and not in violation of any attorney-client
Privilege or legal process.
Section 6.6. Default. In the event that one or more of the Parties defaults in any full or partial payment in
respect of any Shared Contingent Liability (as provided in this Article VI and in
Article VII), including the payment of the costs and expenses of the Managing Party, then
each non-defaulting Party (including ITT) shall be required to pay its relative Applicable
Percentage of the amount in default; provided, however, that any such payment by a
non-defaulting Party shall in no way release the defaulting Party from its obligations to pay its
obligations in respect of such Shared Contingent Liability (both for past and future obligations)
and any non-defaulting Party may exercise any available legal remedies available against such
defaulting Party.
ARTICLE VII
INDEMNIFICATION
Section 7.1. Release of Pre-Distribution Claims.
(a) Except (i) as provided in Section 7.1(b), (ii) as may be otherwise expressly
provided in this Agreement or in any Ancillary Agreement and (iii) for any matter for which any
Party is entitled to indemnification pursuant to this Article VII, each Party (A) for
itself and each member of its respective Group, their respective Affiliates as of the Effective
Time and all Persons who at any time prior to the Effective Time were directors, officers, agents
or employees of any member of their Group (in their respective capacities as such), in each case,
together with their respective heirs, executors, administrators, successors and assigns, does
hereby remise, release and forever discharge the other Parties and the other members of such other
Parties’ Group, their respective Affiliates and all Persons who at any time prior to the Effective
Time were shareholders, directors, officers, agents or employees of any member of such other
Parties (in their respective capacities as such), in each case, together with their respective
heirs,
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executors, administrators, successors and assigns, from any and all Liabilities whatsoever,
whether at Law or in equity (including any right of contribution), whether arising under any
Contract, by operation of Law or otherwise, existing or arising from any acts or events occurring
or failing to occur or alleged to have occurred or to have failed to occur or any conditions
existing or alleged to have existed on or before the Effective Time, including in connection with
the Plan of Separation and all other activities to implement the Restructuring and the
Distributions and any of the other transactions contemplated hereunder and under the Ancillary
Agreements and (B) in any event will not, and will cause its respective Subsidiaries not to, bring
any Action or claim against any member of the other Groups in respect of any such Liabilities.
(b) Nothing contained in Section 7.1(a), Section 2.4(a) and Section
2.5(b) shall impair or otherwise affect any right of any Party and, as applicable, a member of
such Party’s Group, to enforce this Agreement, any Ancillary Agreement or any agreements,
arrangements, commitments or understandings contemplated in this Agreement or in any Ancillary
Agreement to continue in effect after the Effective Time. In addition, nothing contained in
Section 7.1(a) shall release any person from:
(i) any Liability Assumed, Transferred or allocated to a Party or a member of such
Party’s Group pursuant to or contemplated by, or any other Liability of any member of such
Group under, this Agreement or any Ancillary Agreement including (A) with respect to any
Shared Contingent Liability, (B) with respect to ITT, any ITT Retained Liability, (C) with
respect to Exelis, any Defense Liability and (D) with respect to Xylem, any Water Liability;
(ii) any Liability for the sale, lease, construction, manufacture or receipt of goods,
property or services purchased, obtained or used in the ordinary course of business by a
member of one Group from or on behalf of a member of any other Group prior to the Effective
Time;
(iii) any Liability provided in or resulting from any other Contract or understanding
that is entered into after the Effective Time between any Party (and/or a member of such
Party’s or Parties’ Group), on the one hand, and any other Party or Parties (and/or a member
of such Party’s or Parties’ Group), on the other hand;
(iv) any Liability with respect to any Continuing Arrangements set forth on
Schedule 1.1(21);
(v) any Liability that the Parties may have with respect to indemnification pursuant to
this Agreement or otherwise for claims brought against the Parties by third Persons, which
Liability shall be governed by the provisions of this Agreement and, in particular, this
Article VII and, if applicable, the appropriate provisions of the Ancillary
Agreements; and
(vi) any Liability of any Party in respect of third party claims involving products
manufactured or services provided by more than one of the Defense Business, Water Business
and ITT Retained Business (e.g. products sold by one Business including components
manufactured by another Business, or services provided by one Business using products
manufactured by another Business) prior to the Effective Time.
In addition, nothing contained in Section 7.1(a) shall release ITT from indemnifying
any director, officer or employee of Exelis and Xylem who was a director, officer or employee of
ITT or any of its Affiliates prior to the Effective Time or the Distribution Date, as the case may
be, to the extent such director, officer or employee is or becomes a named defendant in any Action
with respect to which he or she was entitled to such indemnification pursuant to then existing
obligations.
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(c) Each Party shall not, and shall not permit any member of its Group to, make any claim,
demand or offset, or commence any Action asserting any claim or demand, including any claim of
contribution or any indemnification, against any other Party or any member of any other Party’s
Group, or any other Person released pursuant to Section 7.1(a), with respect to any
Liabilities released pursuant to Section 7.1(a).
(d) It is the intent of each Party, by virtue of the provisions of this Section 7.1,
to provide, to the fullest extent permitted by applicable Law, for a full and complete release and
discharge of all Liabilities existing or arising from all acts and events occurring or failing to
occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged
to have existed at or before the Effective Time, whether known or unknown, between or among any
Party (and/or a member of such Party’s Group), on the one hand, and any other Party or Parties
(and/or a member of such Party’s or parties’ Group), on the other hand (including any contractual
agreements or arrangements existing or alleged to exist between or among any such members at or
before the Effective Time), except as specifically set forth in Sections 7.1(a) and
7.1(b). At any time, at the reasonable request of any other Party, each Party shall cause
each member of its respective Group and, to the extent practicable, each other Person on whose
behalf it released Liabilities pursuant to this Section 7.1 to execute and deliver
releases, to the fullest extent permitted by applicable Law, reflecting the provisions hereof.
Section 7.2. Indemnification by ITT. Except as otherwise specifically set forth in any provision of this Agreement or of any
Ancillary Agreement, following the Effective Time, ITT shall and shall cause the other members of
the ITT Group to indemnify, defend and hold harmless the Water Indemnitees and the Defense
Indemnitees from and against any and all Indemnifiable Losses of the Water Indemnitees and the
Defense Indemnitees, respectively, arising out of, by reason of or otherwise in connection with (a)
the ITT Retained Liabilities or alleged ITT Retained Liabilities or (b) any breach by ITT of any
provision of this Agreement or any Ancillary Agreement unless such Ancillary Agreement expressly
provides for separate indemnification therein, in which case any such indemnification claims shall
be made thereunder.
Section 7.3. Indemnification by Exelis. Except as otherwise specifically set forth in any provision of this Agreement or of any
Ancillary Agreement, following the Effective Time, Exelis shall and shall cause the other members
of the Defense Group to indemnify, defend and hold harmless the ITT Indemnitees and the Water
Indemnitees from and against any and all Indemnifiable Losses of the ITT Indemnitees and the Water
Indemnitees, respectively, arising out of, by reason of or otherwise in connection with (a) the
Defense Liabilities or alleged Defense Liabilities or (b) any breach by Exelis of any provision of
this Agreement or any Ancillary Agreement unless such Ancillary Agreement expressly provides for
separate indemnification therein, in which case any such indemnification claims shall be made
thereunder.
Section 7.4. Indemnification by Xylem. Except as otherwise specifically set forth in any provision of this Agreement or of any
Ancillary Agreement, following the Effective Time, Xylem shall and shall cause the other members of
the Water Group to indemnify, defend and hold harmless the ITT Indemnitees and the Defense
Indemnitees from and against any and all Indemnifiable Losses of the ITT Indemnitees and the
Defense Indemnitees, respectively, arising out of, by reason of or otherwise in connection with (a)
the Water Liabilities or alleged Water Liabilities or (b) any breach by Xylem of any provision of
this Agreement or any Ancillary Agreement unless such Ancillary Agreement expressly provides for
separate indemnification therein, in which case any such indemnification claims shall be made
thereunder.
Section 7.5. Procedures for Indemnification.
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(a) Other than with respect to Third Party Claims, which shall be governed by Section
7.5(b), and Shared Contingent Liabilities, which shall be governed by Section
6.4, each ITT Indemnitee, Defense Indemnitee and Water Indemnitee (each, an
“Indemnitee”) shall notify in writing, with respect to any matter that such Indemnitee has
determined has given or could give rise to a right of indemnification under this Agreement or any
Ancillary Agreement, the Party which is or may be required pursuant to this Article VII or
pursuant to any Ancillary Agreement to make such indemnification (the “Indemnifying
Party”), within thirty (30) days of such determination, stating the amount of the Indemnifiable
Loss claimed, if known, and method of computation thereof, and referring to the provisions of this
Agreement in respect of which such right of indemnification is claimed by such Indemnitee or
arises; provided, however, that the failure to provide such written notice shall
not release the Indemnifying Party from any of its obligations except and solely to the extent the
Indemnifying Party shall have been actually prejudiced as a result of such failure. Each such
Indemnitee shall provide the applicable Indemnifying Party with reasonable access, upon reasonable
prior written notice and during normal business hours, in a manner so as not to unreasonably
interfere in any material respect with the normal business operations of such Indemnitee, to its
books and records, properties and personnel relating to the claim the Indemnitee has determined has
given or could give rise to a right of indemnification under this Agreement or any Ancillary
Agreement.
(b) Third Party Claims. If a claim or demand is made against an Indemnitee by any
Person who is not a party to this Agreement (a “Third Party Claim”) as to which such
Indemnitee is or may be entitled to indemnification pursuant to this Agreement or any Ancillary
Agreement, such Indemnitee shall notify the Indemnifying Party in writing, and in reasonable
detail, of the Third Party Claim promptly (and in any event within thirty (30) days) after receipt
by such Indemnitee of written notice of the Third Party Claim; provided, however,
that the failure to provide notice of any such Third Party Claim pursuant to this or the preceding
sentence shall not release the Indemnifying Party from any of its obligations except and solely to
the extent the Indemnifying Party shall have been actually prejudiced as a result of such failure.
If any Party shall receive notice or otherwise learn of the assertion of a Third Party Claim which
may reasonably be determined to be a Shared Contingent Liability, such Party, as appropriate, shall
give the Managing Party written notice thereof within thirty (30) days after such Person becomes
aware of such Third Party Claim subject to and in compliance with Section 6.4. Thereafter,
the Indemnitee shall deliver to the Indemnifying Party (and, if applicable, to the Managing Party),
promptly (and in any event within five (5) Business Days) after the Indemnitee’s receipt thereof,
copies of all notices and documents (including court papers) received by the Indemnitee relating to
the Third Party Claim.
(c) Other than in the case of (i) a Shared Contingent Liability (the defense of which shall be
assumed and controlled by the Managing Party), (ii) Taxes addressed in the Tax Matters Agreement,
or (iii) claims in respect of the matters referred to in Sections 5.8 and 5.9,
which shall be addressed as set forth therein, an Indemnifying Party shall be entitled to
participate in the defense of any Third Party Claim and, if it so chooses, to assume the defense
thereof, at such Indemnifying Party’s own cost and expense and by such Indemnifying Party’s own
counsel, that is reasonably acceptable to the applicable Indemnitees, within thirty (30) days of
the receipt of such notice from such Indemnitees; provided, however, that the Indemnifying Party
shall not be entitled to assume the defense of any Third Party Claim to the extent such Third Party
Claim (x) is an allegation of a criminal violation or (ii) seeks injunctive relief against the
Indemnitee. In connection with the Indemnifying Party’s defense of a Third Party Claim, such
Indemnitee shall have the right to employ separate counsel and to participate in (but not control)
the defense, compromise, or settlement thereof, at its own expense and, in any event, shall
cooperate with the Indemnifying Party in such defense and make available to the Indemnifying Party,
at the Indemnifying Party’s expense, all witnesses, pertinent Information, materials and
information in such Indemnitee’s possession or under such Indemnitee’s control relating thereto as
are reasonably required by the Indemnifying Party; provided, however, that in the
event of a conflict of interest between the Indemnifying Party and the applicable Indemnitee(s),
such Indemnitee(s) shall be entitled to retain, at the
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Indemnifying Party’s expense, separate counsel as required by the applicable rules of
professional conduct with respect to such matter; provided, further, that if (i)
the Third Party Claim is not a Shared Contingent Liability and (ii) the Indemnifying Party has
assumed the defense of the Third Party Claim but has specified, and continues to assert, any
reservations or exceptions to such defense or to its liability therefor, then, in any such case,
the reasonable fees and expenses of one separate counsel for all Indemnitees shall be borne by the
Indemnifying Party.
(d) Notwithstanding any assumption of defense of a Third Party Claim by an Indemnifying Party
in accordance with Section 7.5(c), in the event that in the course of defending such Third
Party Claim the Indemnifying Party or another Party shall become aware that the subject matter of
such Third Party Claim relates to a Liability of another Party and not to a Liability of such
Indemnifying Party, then the Indemnifying Party shall, subject to the prior written consent of the
other Party to which such Liability belongs, use commercially reasonable efforts to transfer the
defense of such claim to such other Party, and shall thereafter cooperate fully with such other
Party in such defense and make available to such other Party, at such Party’s expense, all
witnesses, pertinent Information, materials and information in such Indemnifying Party’s possession
or under such Indemnifying Party’s control relating to such Third Party Claim as are reasonably
required by such other Party.
(e) Other than in the case of a Shared Contingent Liability, if an Indemnifying Party fails
for any reason to assume responsibility for defending a Third Party Claim within the time
specified, such Indemnitee may defend such Third Party Claim at the cost and expense of the
Indemnifying Party. If the Indemnitee is conducting the defense against any such Third Party
Claim, the Indemnifying Party shall cooperate with the Indemnitee in such defense and make
available to the Indemnitee, at the Indemnitee’s expense, all witnesses, pertinent Information, and
material in such Indemnifying Party’s possession or under such Indemnifying Party’s control
relating thereto as are reasonably required by the Indemnitee.
(f) Unless the Indemnifying Party has failed to assume the defense of the Third Party Claim in
accordance with the terms of this Agreement (including in respect of the matters referred to in
Sections 5.8 and 5.9), no Indemnitee may settle or compromise any Third Party Claim
(with any Shared Contingent Liability governed by Article VI) without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
(g) In the case of a Third Party Claim (including in respect of a Shared Contingent
Liability), no Indemnifying Party shall consent to entry of any judgment or enter into any
settlement of the Third Party Claim without the prior written consent of the Indemnitee (not to be
unreasonably withheld or delayed) if the effect thereof is to permit any injunction, declaratory
judgment, other order or other non-monetary relief, to be entered, directly or indirectly, against
any Indemnitee; it being understood that in the case of a Third Party Claim that is a Shared
Contingent Liability, the Managing Party shall be subject to the same requirement to seek the
consent of the other Parties in connection with any such judgment or settlement.
(h) Notwithstanding anything to the contrary in this Article VII, subject to
Article VI, the Managing Party shall, on behalf of the other Parties, have sole and
exclusive authority to, and shall actively and diligently, commence, prosecute, manage, control,
conduct or defend (or assume or conduct the defense of) or otherwise determine all matters
whatsoever (including, as applicable, litigation strategy and choice of legal counsel or other
professionals) with respect to any Action or Third Party Claim with respect to a Shared Contingent
Liability.
(i) Except as otherwise set forth in Sections 5.1, 5.8, 5.9,
Article VI and 8.6, or as set forth in any Ancillary Agreement, absent fraud or
willful misconduct by an Indemnifying Party, the indemnification provisions of this Article
VII shall be the sole and exclusive remedy of an Indemnitee for
52
any monetary or compensatory damages or losses resulting from any breach of this Agreement and
each Indemnitee expressly waives and relinquishes any and all rights, claims or remedies such
Person may have with respect to the foregoing other than under this Article VII against any
Indemnifying Party. For the avoidance of doubt, all disputes in respect of this Article
VII shall be resolved in accordance with Article IX.
Section 7.6. Cooperation in Defense and Settlement.
(a) With respect to any Third Party Claim that is not a Shared Contingent Liability and that
implicates two or more Parties in any material respect due to the allocation of Liabilities,
responsibilities for management of defense and related indemnities pursuant to this Agreement or
any of the Ancillary Agreements, the applicable Parties agree to use commercially reasonable
efforts to cooperate fully and maintain a joint defense (in a manner that will preserve for all
Parties any Privilege with respect thereto). The Party that is not responsible for managing the
defense of any such Third Party Claim shall, upon reasonable request, be consulted with respect to
significant matters relating thereto and may, if necessary or helpful, retain counsel to assist in
the defense of such claims.
(b) Each of ITT, Exelis and Xylem agrees that at all times from and after the Effective Time,
if an Action is commenced by a third party naming two (2) or more Parties (or any member of such
Parties’ respective Groups) as defendants and with respect to which one or more named Parties (or
any member of such Party’s respective Group) is a nominal defendant and/or such Action is otherwise
not a Liability allocated to such named Party under this Agreement or any Ancillary Agreement, then
the other Party or Parties shall use commercially reasonable efforts to cause such nominal
defendant to be removed from such Action, as soon as reasonably practicable.
Section 7.7. Indemnification Payments. Indemnification required by this Article VII shall be made by periodic payments of
the amount of Indemnifiable Losses in a timely fashion during the course of the investigation or
defense, as and when bills are received or an Indemnifiable Loss incurred.
Section 7.8. Indemnification Obligations Net of Insurance Proceeds and Other Amounts.
(a) Any Indemnifiable Loss subject to indemnification pursuant to this Article VII
including, for the avoidance of doubt, in respect of any Shared Contingent Liability, shall be
calculated (i) net of insurance proceeds that actually reduce the amount of the Indemnifiable Loss,
(ii) net of any proceeds received by the Indemnitee from any third party for indemnification for
such Liability that actually reduce the amount of the Indemnifiable Loss (“Third Party
Proceeds”) and (iii) net of any Tax benefits actually realized in accordance with, and subject
to, the principles set forth or referred to in Section 8.3 of the Tax Matters Agreement, and
increased in accordance with, and subject to, the principles set forth in Section 8.3 of the Tax
Matters Agreement. Accordingly, the amount which any Indemnifying Party is required to pay
pursuant to this Article VII to any Indemnitee pursuant to this Article VII shall be reduced by any
Insurance Proceeds or Third Party Proceeds theretofore actually recovered by or on behalf of the
Indemnitee in respect of the related Indemnifiable Loss. If an Indemnitee receives a payment
required by this Agreement from an Indemnifying Party in respect of any Indemnifiable Loss (an
“Indemnity Payment”) and subsequently receives Insurance Proceeds or Third Party Proceeds,
then the Indemnitee shall pay to the Indemnifying Party an amount equal to the excess of the
Indemnity Payment received over the amount of the Indemnity Payment that would have been due if the
Insurance Proceeds or Third Party Proceeds had been received, realized or recovered before the
Indemnity Payment was made.
(b) The Parties acknowledge that the indemnification provisions hereof do not relieve any
insurer who would otherwise be obligated to pay any claim to pay such claim. In furtherance of the
foregoing, the Indemnitee shall use commercially reasonable efforts to seek to collect or recover
any
53
Insurance Proceeds and any Third Party Proceeds (other than Insurance Proceeds under an
arrangement where future premiums are adjusted to reflect prior claims in excess of prior premiums
or Insurance Proceeds under the Excluded Policies) to which the Indemnitee is entitled in
connection with any Indemnifiable Loss for which the Indemnitee seeks indemnification pursuant to
this Article VII; provided, that the Indemnitee’s inability to collect or recover
any such Insurance Proceeds or Third Party Proceeds (despite having used commercially reasonable
efforts) shall not limit the Indemnifying Party’s obligations hereunder.
Section 7.9. Additional Matters; Survival of Indemnities.
(a) The indemnity agreements contained in this Article VII shall remain operative and
in full force and effect, regardless of (i) any investigation made by or on behalf of any
Indemnitee; (ii) the knowledge by the Indemnitee of Indemnifiable Losses for which it might be
entitled to indemnification hereunder; and (iii) any termination of this Agreement following the
Effective Time.
(b) The rights and obligations of each Party and their respective Indemnitees under this
Article VII shall survive the sale or other Transfer by any Party or its respective
Subsidiaries of any Assets or businesses or the assignment by it of any Liabilities, with respect
to any Indemnifiable Loss of any Indemnitee related to such Assets, businesses or Liabilities.
ARTICLE VIII
PRESERVATION OF RECORDS; ACCESS TO INFORMATION; CONFIDENTIALITY; PRIVILEGE
Section 8.1. Preservation of Corporate Records.
(a) Except to the extent otherwise contemplated by any Ancillary Agreement, a Party providing
Records or access to Information to another Party under this Article VIII shall be entitled
to receive from the recipient, upon the presentation of invoices therefor, payments for such
amounts, relating to supplies, disbursements and other out-of-pocket expenses (which shall not
include the costs of salaries and benefits of employees of such Party or any pro rata portion of
overhead or other costs of employing such employees which would have been incurred by such
employees’ employer regardless of the employees’ service with respect to the foregoing), as may be
reasonably incurred in providing such Records or access to Information. Without limiting the
foregoing, for a period of six (6) years following the Distribution Date, ITT shall be entitled to
receive from each of Exelis and Xylem, upon the presentation of invoices therefor, payments for one
third (1/3) of any amounts paid by any member of the ITT Group to Cornerstone Records Management
(“Nova”) in connection with any storage agreements entered into between Nova and any member
of the ITT Group to the extent covering periods ending on or prior to such six (6) year
anniversary; provided that no later than three (3) months prior to the end of such six (6)
year period, the Parties shall hold a meeting for the purpose of considering in good faith and
determining whether to continue to share such amounts beyond such six (6) year period.
(b) The Parties shall comply with those document retention policies as shall be set forth on
Schedule 8.1(b) hereto or otherwise established and agreed to in writing by their
respective authorized officers at or prior to the Effective Time in respect of Records and related
matters.
(c) Notwithstanding anything to the contrary herein and other than with respect to Tax Records
(in which event the provisions of the Tax Matters Agreement shall govern), if on or before the
sixth (6th) anniversary of the Distribution Date ITT (or any Affiliate of ITT) wishes to destroy
any Records that were in existence as of the Effective Date and are stored pursuant to storage
agreements with Nova, then ITT shall (or shall cause such Affiliate to) give sixty (60) days’ prior
written notice, including
54
a reasonable description of the Records it wishes to destroy, to the other Parties and (to the
extent permitted by applicable Law) each other Party shall have the right at its option and
expense, upon prior written notice given within such sixty (60) day period to the other two
Parties, to take possession or make copies of such Records within thirty (30) days after the date
such notice is given by such Party to the other Parties, it being understood that in the event both
other Parties wish to take possession of such Records, such Parties shall (i) agree on which Party
shall be entitled to retain such Records and (ii) share equally the reasonable costs incurred by
the other non-destroying Party in making copy of such Records within such thirty (30) day period.
Section 8.2. Financial Statements and Accounting. Each Party agrees to provide the following assistance and reasonable access to its
properties, Records, other Information and personnel set forth in this Section 8.2, (i) at
any time, with the consent of the other applicable Party (not to be unreasonably withheld or
delayed) for reasonable business purposes relating to financial reporting; (ii) from the
Effective Time until the completion of each Party’s audit for the fiscal year ending December 31,
2012, in connection with the preparation and audit of each Party’s financial statements for the
fiscal years ended December 31, 2011 and 2012, the printing, filing and public dissemination of
such financial statements and the audit of each Party’s internal controls over financial reporting
and management’s assessment thereof and management’s assessment of each Party’s disclosure controls
and procedures, if required; (iii) in the event that any Party changes its independent auditors
within two (2) years following the Distribution Date, then such Party may request reasonable access
on the terms set forth in this Section 8.2 for a period of up to one hundred and eighty
(180) days from such change; and (iv) to the extent reasonably necessary to respond (and for the
limited purpose of responding) to any written request or official comment from a Governmental
Entity, such as in connection with responding to a comment letter from the Commission. Without
limiting the foregoing, each Party agrees as follows:
(a) Financial Statements. Each Party shall provide reasonable access to the other
Party on a timely basis to all Information reasonably required to meet its schedule for the
preparation, printing, filing, and public dissemination of its quarterly and annual financial
statements and for management’s assessment of the effectiveness of its disclosure controls and
procedures and its internal controls over financial reporting in accordance with Items 307 and 308,
respectively, of Regulation S-K and, to the extent applicable to such Party, its auditor’s audit of
its internal controls over financial reporting and management’s assessment thereof in accordance
with Section 404 of the Sarbanes-Oxley Act of 2002 and the Commission’s and the Public Company
Accounting Oversight Board’s rules and auditing standards thereunder, if required (such assessments
and audit being referred to as the “Internal Control Audit and Management Assessments”).
Without limiting the generality of the foregoing, each Party shall provide all required financial
and other Information with respect to itself and its Subsidiaries to its auditors in a sufficient
and reasonable time and in sufficient detail to permit its auditors to take all steps and perform
all reviews necessary to provide sufficient assistance, if requested, to each other Party’s
auditors with respect to Information to be included or contained in such other Party’s annual
financial statements and to permit such other Party’s auditors and management to complete the
Internal Control Audit and Management Assessments, for 2011 and 2012.
(b) Access to Personnel and Records. Except to the extent otherwise contemplated by
the Ancillary Agreements, each Party shall authorize its respective auditors to make reasonably
available to each other Party’s auditors (each such other Party’s auditors, collectively, the
“Other Parties’ Auditors”) both the personnel who performed or are performing the annual
audits of such audited Party (each such Party with respect to its own audit, the “Audited
Party”) and work papers related to the annual audits of such Audited Party (subject
to the execution of any reasonable and customary access letters that such Audited Party’s auditors
may require in connection with the review of such work papers by such Other Parties’ Auditors), in
all cases within a reasonable time prior to such Audited Party’s auditors’ opinion date, so that
the Other Parties’ Auditors are able to perform the procedures they reasonably consider
55
necessary to take responsibility for the work of the Audited Party’s auditors as it relates to
their auditors’ report on such other Party’s financial statements, all within sufficient time to
enable such other Party to meet its timetable for the printing, filing and public dissemination of
its annual financial statements. Each Party shall make reasonably available to the Other Parties
and to such Other Parties’ Auditors and management its personnel and Records and other Information
in a reasonable time prior to the Other Parties’ Auditors’ opinion date and other Parties’
management’s assessment date so that the Other Parties’ Auditors and other Parties’ management are
able to perform the procedures they reasonably consider necessary to conduct the Internal Control
Audit and Management Assessments for 2011 and 2012.
(c) Annual Reports. Each Party shall deliver to the other Parties a reasonably
complete draft of the first report to be filed with the Commission (or otherwise) that includes its
respective financial statements (in the form expected to be covered by the audit report of such
Party’s independent auditors) for the year ended December 31, 2011 (such reports, collectively, the
“Annual Reports”), on or prior to the time set forth on Schedule 8.2(c);
provided, however, that each Party may continue to revise its respective Annual
Report prior to the filing thereof, which changes shall be delivered to the other Parties as soon
as reasonably practicable. Each Party shall notify the other Parties, as soon as
reasonably practicable after becoming aware thereof, of any material accounting differences between
the financial statements to be included in such Party’s Annual Report and the pro-forma financial
statements included, as applicable, in the Exelis Form 10 or the Xylem Form 10 or the Form 8-K to
be filed by ITT with the Commission on or about the time of the Distribution. If any such
differences are notified by any Party, the Parties shall confer and/or meet as soon as reasonably
practicable thereafter, and in any event prior to the filing of any Annual Report, to consult with
each other in respect of such differences and the effects thereof on the Parties’ Annual Reports.
(d) Nothing in this Article VIII shall require any Party to violate any agreement with
any third party regarding the confidentiality of confidential and proprietary Information relating
to that third party or its business; provided, however, that in the event that a
Party is required under this Section 8.2 to disclose any such Information, such Party shall
use commercially reasonable efforts to seek to obtain such third party’s written consent to the
disclosure of such Information.
Section 8.3. Provision of Corporate Records. Other than in circumstances in which indemnification is sought pursuant to Article
VII (in which event the provisions of such Article shall govern) or for matters related to
provision of Tax Records (in which event the provisions of the Tax Matters Agreement shall govern)
and without limiting the applicable provisions of Article VI, and subject to appropriate
restrictions for classified Information, Privileged Information or Confidential Information:
(a) after the Effective Time, upon the prior written request by Exelis or Xylem for specific
and identified Information which relates to (x) Exelis or Xylem or the conduct of the Defense
Business or the Water Business, as the case may be, prior to the Effective Time or (y) any
Ancillary Agreement to which ITT and one or more of Exelis and/or Xylem are parties, as applicable,
ITT shall provide, as soon as reasonably practicable following the receipt of such request,
appropriate copies of such Information (or the originals thereof if the Party making the request
has a reasonable need for such originals) in the possession or control of ITT or any of its
Affiliates or Subsidiaries, but only to the extent such items so relate and are not already in the
possession or control of the requesting Party;
(b) after the Effective Time, upon the prior written request by ITT or Xylem for specific and
identified Information which relates to (x) ITT or Xylem or the conduct of the ITT Retained
Business or Water Business, as the case may be, prior to the Effective Time or (y) any Ancillary
Agreement to which Exelis and one or more of ITT and/or Xylem are parties, as applicable, Exelis
shall provide, as soon as reasonably practicable following the receipt of such request, appropriate
copies of such Information (or the originals thereof if the Party making the request has a
reasonable need for such originals) in the
56
possession or control of Exelis or any of its Subsidiaries, but only to the extent such items
so relate and are not already in the possession or control of the requesting Party; and
(c) after the Effective Time, upon the prior written request by ITT or Exelis for specific and
identified Information which relates to (x) ITT or Exelis or the conduct of the ITT Retained
Business or Defense Business, as the case may be, prior to the Effective Time or (y) any Ancillary
Agreement to which Xylem and one or more of ITT and/or Exelis are parties, as applicable, Xylem
shall provide, as soon as reasonably practicable following the receipt of such request, appropriate
copies of such Information (or the originals thereof if the Party making the request has a
reasonable need for such originals) in the possession or control of Xylem or any of its
Subsidiaries, but only to the extent such items so relate and are not already in the possession or
control of the requesting Party;
provided that, to the extent any originals are delivered to any requesting Party pursuant
to this Agreement or the Ancillary Agreements, such Party shall, at its own expense, return them to
the Party having provided such originals within a reasonable time after the need to retain such
originals has ceased.
Section 8.4. Witness Services. Except in the event any Parties are opposing one another in an Action, in which case normal
discovery rules shall apply, at all times from and after the Effective Time, each of ITT, Exelis
and Xylem shall use its commercially reasonable efforts (including as described on Schedule
8.4) to make available to the others, upon reasonable written request, its and its
Subsidiaries’ former (to the extent practicable), current (to the extent practicable) and future
directors, officers, employees, other personnel and agents of such Party as witnesses and any
Records or other Information within its control or which it otherwise has the ability to make
available (other than materials covered by any Privilege) to the extent that such Persons (giving
consideration to business demands of such directors, officers, employees, other personnel and
agents) or Records or other Information may reasonably be required to testify, in the case of
Persons, or be provided, in the case of Records or Information, in connection with the prosecution
or defense of any Action in which the requesting Party may from time to time be involved (except
for claims, demands or Actions between members of each Group). A Party providing a witness to the
other Party under this Section shall be entitled to receive from the recipient of such witness
services, upon the presentation of invoices therefor, payments for such amounts, relating to
supplies, disbursements and other out-of-pocket expenses (which shall not include the costs of
salaries and benefits of employees who are witnesses or any pro rata portion of overhead or other
costs of employing such employees which would have been incurred by such employees’ employer
regardless of the employees’ service as witnesses), as may be reasonably incurred and properly paid
under applicable Law.
Section 8.5. Reimbursement; Other Matters. Except to the extent otherwise contemplated by this Agreement (including Section
6.3) or any Ancillary Agreement, a Party providing Information or access to Information to the
other Party under this Article VIII shall be entitled to receive from the recipient, upon
the presentation of invoices therefor, payments for such amounts, relating to supplies,
disbursements and other out-of-pocket expenses (which shall not include the costs of salaries and
benefits of employees of such Party or any pro rata portion of overhead or other costs of employing
such employees which would have been incurred by such employees’ employer regardless of the
employees’ service with respect to the foregoing), as may be reasonably incurred in providing such
Information or access to such Information.
Section 8.6. Confidentiality.
(a) Notwithstanding any termination of this Agreement, each Party shall hold, and shall cause
each of its respective Subsidiaries to hold, and shall cause its and their respective officers,
employees, agents, consultants and advisors to hold, in strict confidence, and not to disclose or
release or,
57
except as otherwise permitted by this Agreement or any Ancillary Agreement, use, without the
prior written consent of the Party to whom the Confidential Information relates (which may be
withheld in such Party’s sole and absolute discretion, except where disclosure is required by
applicable Law), any and all Confidential Information (as defined herein) concerning or belonging
to the other Parties; provided, that each Party may disclose, or may permit disclosure of,
Confidential Information (i) to its respective auditors, attorneys, financial advisors, bankers and
other appropriate consultants and advisors who have a need to know such Information and are
informed of the obligation to hold such Information confidential and in respect of whose failure to
comply with such obligations, the applicable Party will be responsible, (ii) if any Party or any of
its respective Subsidiaries is required or compelled to disclose any such Confidential Information
by judicial or administrative process or by other requirements of Law or stock exchange rule or is
advised by outside counsel in connection with a governmental proceeding that it is advisable to do
so, (iii) as required in connection with any legal or other proceeding by one Party against any
other Party, (iv) as necessary in order to permit a Party to prepare and disclose its financial
statements, Tax Returns or other required disclosures, (v) as necessary for a Party to enforce its
rights or perform its obligations under this Agreement (including pursuant to Section 2.3)
or an Ancillary Agreement, (vi) to Governmental Entities in accordance with applicable procurement
regulations and contract requirements or (vii) to other Persons in connection with their evaluation
of, and negotiating and consummating, a potential strategic transaction, to the extent reasonably
necessary in connection therewith, provided an appropriate and customary confidentiality agreement
has been entered into with the Person receiving such Confidential Information. Notwithstanding the
foregoing, in the event that any demand or request for disclosure of Confidential Information is
made pursuant to clause (ii), (iii), (iv), (v) or (vi) above, each Party, as applicable, shall
promptly notify (to the extent permissible by Law) the Party to whom the Confidential Information
relates of the existence of such request, demand or disclosure requirement and shall provide such
affected Party a reasonable opportunity to seek an appropriate protective order or other remedy,
which such Party will cooperate in obtaining to the extent reasonably practicable. In the event
that such appropriate protective order or other remedy is not obtained, the Party which faces the
disclosure requirement shall furnish only that portion of the Confidential Information that is
required to be disclosed and shall take commercially reasonable steps to ensure that confidential
treatment is accorded such Confidential Information.
(b) Each Party acknowledges that it and the other members of its Group may have in its or
their possession confidential or proprietary Information of third parties that was received under
confidentiality or non-disclosure agreements with such third party while such Party and/or members
of its Group were part of the ITT Group. Each Party shall comply, and shall cause the other
members of its Group to comply, and shall cause its and their respective officers, employees,
agents, consultants and advisors (or potential buyers) to comply, with all terms and conditions of
any such third-party agreements entered into prior to the Effective Time, with respect to any
confidential and proprietary Information of third parties to which it or any other member of its
Group has had access.
(c) The Parties agree that irreparable damage may occur in the event that the provisions of
this Section 8.6 were not performed in accordance with their specific terms. Accordingly,
it is hereby agreed that the Parties shall be entitled to seek an injunction or injunctions to
enforce specifically the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they are entitled at law
or in equity.
(d) For the avoidance of doubt, the disclosure and sharing of Privileged Information shall be
governed by Section 8.7 and not by this Section 8.6.
Section 8.7. Privilege Matters.
(a) Pre-Separation Services. The Parties recognize that legal and other professional
services
58
that have been and will be provided prior to the Effective Time have been and will be rendered
for the collective benefit of each of the members of the ITT Group, the Water Group and the Defense
Group, and that each of the members of the ITT Group, the Water Group and the Defense Group should
be deemed to be the client with respect to such pre-separation services for the purposes of
asserting all privileges, immunities, or other protections from disclosure which may be asserted
under applicable Law, including attorney-client privilege, business strategy privilege, joint
defense privilege, common interest privilege, and protection under the work-product doctrine
(“Privilege”). The Parties shall have a shared Privilege with respect to all Information
subject to Privilege (“Privileged Information”) which relates to such pre-separation
services. For the avoidance of doubt, Privileged Information within the scope of this Section
8.7 includes, but is not limited to, services rendered by legal counsel retained or employed by
any Party (or any member of such Party’s respective Group), including outside counsel and in-house
counsel.
(b) Post-Separation Services. The Parties recognize that legal and other professional
services will be provided following the Effective Time to each of ITT, Exelis and Xylem. The
Parties further recognize that certain of such post-separation services will be rendered solely for
the benefit of ITT, Exelis or Xylem, as the case may be, while other such post-separation services
may be rendered with respect to claims, proceedings, litigation, disputes, or other matters which
involve two or more of ITT, Exelis or Xylem. With respect to such post-separation services and
related Privileged Information, the Parties agree as follows:
(i) All Privileged Information relating to any claims, proceedings, litigation,
disputes, or other matters which involve two or more of ITT, Exelis or Xylem shall be
subject to a shared Privilege among the Parties involved in the claims, proceedings,
litigation, disputes, or other matters at issue; and
(ii) Except as otherwise provided in Section 8.7(b)(i), Privileged Information
relating to post-separation services provided solely to one of ITT, Exelis or Xylem shall
not be deemed shared between the Parties, provided, that the foregoing shall not be
construed or interpreted to restrict the right or authority of two or more Parties (x) to
enter into any further agreement, not otherwise inconsistent with the terms of this
Agreement, concerning the sharing of Privileged Information or (y) otherwise to share
Privileged Information without waiving any Privilege which could be asserted under
applicable Law.
(c) The Parties agree as follows regarding all Privileged Information with respect to which
the Parties shall have a shared Privilege under Section 8.7(a) or (b):
(i) Subject to Section 8.7(c)(iii) and (iv), no Party may waive any Privilege
which could be asserted under any applicable Law, and in which any other Party has a shared
Privilege, without the consent of the other Party, which shall not be unreasonably withheld
or delayed. Consent shall be in writing, or shall be deemed to be granted unless written
objection is made within ten (10) days after written notice by the requesting Party to the
Party whose consent is sought;
(ii) If a dispute arises between or among the Parties or their respective Subsidiaries
regarding whether a Privilege should be waived to protect or advance the interest of any
Party, each Party agrees that it shall negotiate in good faith, shall endeavor to minimize
any prejudice to the rights of the other Parties, and shall not unreasonably withhold
consent to any request for waiver by another Party. Each Party specifically agrees that it
shall not withhold consent to waive for any purpose except to protect its own legitimate
interests;
(iii) If, within ten (10) days of receipt by the requesting Party of written objection,
the
59
Parties have not succeeded in negotiating a resolution to any dispute regarding whether
a Privilege should be waived, and the requesting Party determines that a Privilege should
nonetheless be waived to protect or advance its interest, the requesting Party shall provide
the objecting Party ten (10) days written notice prior to effecting such waiver. Each Party
specifically agrees that failure within ten (10) days of receipt of such notice to commence
proceedings in a court of competent jurisdiction to enjoin such disclosure under applicable
Law shall be deemed full and effective consent to such disclosure; and
(iv) In the event of any litigation or dispute between or among any of the Parties, or
any members of their respective Groups, either such Party may waive a Privilege in which the
other Party or member of such Group has a shared Privilege, without obtaining the consent of
the other Party; provided, that such waiver of a shared Privilege shall be effective
only as to the use of Privileged Information with respect to the litigation or dispute
between the relevant Parties and/or the applicable members of their respective Groups, and
shall not operate as a waiver of the shared Privilege with respect to third parties.
(d) The transfer of all Information pursuant to this Agreement is made in reliance on the
agreement of ITT, Exelis or Xylem as set forth in Sections 8.6 and this Section
8.7, to maintain the confidentiality of Privileged Information and to assert and maintain any
applicable Privilege. The access to Information being granted pursuant to Sections 6.3,
7.6, 8.2 and 8.3 hereof, the agreement to provide witnesses and individuals
pursuant to Sections 6.3, 7.6 and 8.4 hereof, the furnishing of notices and
documents and other cooperative efforts contemplated by Sections 6.5 and 7.6
hereof, and the transfer of Privileged Information between and among the Parties and their
respective Subsidiaries pursuant to this Agreement shall not be deemed a waiver of any Privilege
that has been or may be asserted under this Agreement or otherwise.
(e) Notwithstanding any provision to the contrary in this Section 8.7, the Audit
Management Party (as defined in the Tax Matters Agreement) shall have the authority to disclose or
not disclose, in its sole discretion, any and all Privileged Information to (i) any Taxing
Authority (as defined in the Tax Matters Agreement) conducting a Tax Contest or (ii) to third
parties in connection with connection with the defense of a Tax Contest, including expert
witnesses, accountants and other advisors, potential witnesses and other parties whose assistance
is deemed, in the sole discretion of the Audit Management Party, to be necessary or beneficial to
representing the interests of the Parties hereunder.
Section 8.8. Ownership of Information. Any Information owned by one Party or any of its Subsidiaries that is provided to a
requesting Party pursuant to this Article VIII shall be deemed to remain the property of
the providing Party. Unless specifically set forth herein, nothing contained in this Agreement
shall be construed as granting or conferring rights of license or otherwise in any such
Information.
Section 8.9. Other Agreements. The rights and obligations granted under this Article VIII are subject to any
specific limitations, qualifications or additional provisions on the sharing, exchange or
confidential treatment of Information set forth in any Ancillary Agreement.
ARTICLE IX
DISPUTE RESOLUTION
Section 9.1. Negotiation. In the event of a controversy, dispute or claim arising out of, in connection with, or in
relation to the interpretation, performance, nonperformance, validity or breach of this Agreement
or the Ancillary Agreements or otherwise arising out of, or in any way related to, this
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Agreement or the Ancillary Agreements or the transactions contemplated hereby, including any
claim based on contract, tort, statute or constitution (collectively, “Agreement
Disputes”), the general counsels of the relevant Parties (or such other individuals designated
by the respective general counsels) and/or the executive officers designated by the relevant
Parties, shall negotiate for a reasonable period of time to settle such Agreement Dispute;
provided, that such reasonable period shall not, unless otherwise agreed by the relevant
Parties in writing, exceed forty-five (45) days from the time of receipt by a Party of written
notice of such Agreement Dispute (“Dispute Notice”); provided, further,
that in the event of any arbitration in accordance with Section 9.3 hereof, the relevant
Parties shall not assert the defenses of statute of limitations and laches arising during the
period beginning after the date of receipt of the Dispute Notice, and any contractual time period
or deadline under this Agreement or any Ancillary Agreement to which such Agreement Dispute relates
occurring after the Dispute Notice is received shall not be deemed to have passed until such
Agreement Dispute has been resolved; provided further, that the foregoing shall not apply to claims
under Section 3.5, which shall be governed by such Section.
Section 9.2. Mediation. If, within forty-five (45) days after receipt by a Party of a Dispute Notice, the Parties
have not succeeded in negotiating a resolution of the Agreement Dispute, the Parties agree to
submit the Agreement Dispute at the earliest possible date to mediation conducted in accordance
with the Mediation Procedure of the International Institute for Conflict Prevention and Resolution
(“CPR”), and to bear equally the costs of the mediation; provided, however,
that each Party shall bear its own attorneys fees and expenses and other costs in connection with
such mediation. The parties agree to participate in good faith in the mediation and negotiations
related thereto for a period of thirty (30) days or such longer period as they may mutually agree
following the initial mediation session (the “Mediation Period”).
Section 9.3. Arbitration. If the Agreement Dispute has not been resolved for any reason after the Mediation Period,
such Agreement Dispute shall be determined, at the request of any relevant Party, by arbitration
conducted in New York City, before and in accordance with the then-existing Rules for
Non-Administered Arbitration of the CPR, except as modified herein (the “Rules”). There
shall be one arbitrator, which shall be appointed by the Parties within twenty (20) days of receipt
by respondent of a copy of the demand for arbitration. If the arbitrator is not timely appointed
by the Parties under this Section 9.3, he or she shall be appointed by the CPR in
accordance with the Rules, and in any such procedure, each Party shall be given two strikes,
excluding strikes for cause. Any controversy concerning whether an Agreement Dispute is an
arbitrable Agreement Dispute, whether arbitration has been waived, whether an assignee of this
Agreement is bound to arbitrate, or as to the interpretation, validity or enforceability of this
Article IX shall be determined by the arbitrator. In resolving any Agreement Dispute, the
Parties intend that the arbitrator shall apply the substantive Laws of the State of New York,
without regard to any choice of law principles thereof that would mandate the application of the
laws of another jurisdiction. The Parties intend that the provisions to arbitrate set forth herein
be valid, enforceable and irrevocable, and any award rendered by the arbitrator shall be final and
binding on the Parties. The Parties agree to comply and cause the members of their applicable
Group to comply with any award made in any such arbitration proceedings and agree to enforcement of
or entry of judgment upon such award, in any court of competent jurisdiction, including (a) the
Supreme Court of the State of New York, New York County, or (b) the United States District Court
for the Southern District of New York. The arbitrator shall be entitled, if appropriate, to award
any remedy in such proceedings, including monetary damages, specific performance and all other
forms of legal and equitable relief; provided, however, the arbitrator shall not be
entitled to award special, consequential, reputational, indirect or punitive damages unless in
connection with indemnification for a Third Party Claim (and in such a case, only to the extent
awarded in such Third Party Claim).
Section 9.4. Arbitration Period. Any arbitration proceeding shall be concluded in a maximum of six (6) months from the
commencement of the arbitration or such other period as the arbitrator together
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with the Parties involved in such proceeding shall deem reasonable.
Section 9.5. Treatment of Negotiations, Mediation and Arbitration. Without limiting the provisions of the Rules, unless otherwise agreed in writing by or
among the relevant Parties or permitted by this Agreement, the relevant Parties shall keep, and
shall cause the members of their applicable Group to keep, confidential all matters relating to and
any negotiation, mediation, conference or discussion or otherwise pursuant to this Article IX,
all of which shall be treated as compromise and settlement negotiations for purposes of Rule
408 of the Federal Rules of Evidence and comparable state rules; provided, that such
matters may be disclosed (i) to the extent reasonably necessary in any proceeding ancillary to an
arbitration hereunder, including to enforce the award or for entry of a judgment upon the award and
(ii) to the extent otherwise required by Law or the rules of any stock exchange on which the
relevant Party’s securities may be listed. Nothing said or disclosed, nor any document produced,
in the course of any negotiations, conferences and discussions that is not otherwise independently
discoverable shall be offered or received as evidence or used for impeachment or for any other
purpose in any current or future arbitration. Nothing contained herein is intended to or shall be
construed to prevent any Party from applying to any court of competent jurisdiction for interim
measures or other provisional relief in connection with the subject matter of any Agreement
Disputes. Without prejudice to such provisional remedies as may be available under the
jurisdiction of a court, the arbitral tribunal shall have full authority to grant provisional
remedies and to direct the parties to request that any court modify or vacate any temporary or
preliminary relief issued by such court, and to award damages for the failure of any Party to
respect the arbitral tribunal’s orders to that effect.
Section 9.6. Continuity of Service and Performance. Unless otherwise agreed in writing, the Parties shall continue to provide service and honor
all other commitments under this Agreement and each Ancillary Agreement during the course of
dispute resolution pursuant to the provisions of this Article IX with respect to all
matters not subject to such dispute resolution.
Section 9.7. Consolidation. The arbitrator may consolidate an arbitration under this Agreement with any arbitration
arising under or relating to the Ancillary Agreements or any other agreement between the parties
entered into pursuant hereto, as the case may be, if the subject of the Agreement Disputes
thereunder arises out of or relates essentially to the same set of facts or transactions. Such
consolidated arbitration shall be determined by the arbitrator appointed for the arbitration
proceeding that was commenced first in time.
ARTICLE X
INSURANCE
Section 10.1. Policies and Rights Included Within Assets. (a) The ITT Retained Assets shall include any and all rights of an additional named
insured under Policies where ITT is an additional named insured, subject to the terms of such
Policies and any limitations or obligations of ITT contemplated by this Article X,
specifically including rights of indemnity and the right to be defended by or at the expense of the
insurer, with respect to all claims, suits, actions, proceedings, injuries, losses, liabilities,
damages and expenses incurred or claimed to have been incurred prior to the Effective Time by any
party in or in connection with the conduct of the ITT Retained Business or, to the extent any claim
is made against ITT or any of its Subsidiaries, the conduct of the Water Business or the Defense
Business, and which claims, suits, actions, proceedings, injuries, losses, liabilities, damages and
expenses may arise out of an insured or insurable occurrence under one or more of such Company
Policies; provided, however, that nothing in this Section 10.1 shall be
deemed to constitute (or to reflect) an assignment of such Policies by ITT.
(b) The Defense Assets shall include any and all rights of an insured party under each of the
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Company Policies, subject to Sections 10.9 and 10.10 and to the terms of such
Company Policies and any limitations or obligations of Exelis contemplated by this Article
X or Schedule 10.1, specifically including rights of indemnity and the right to be
defended by or at the expense of the insurer, with respect to all claims, suits, actions,
proceedings, injuries, losses, liabilities, damages and expenses incurred or claimed to have been
incurred prior to the Effective Time by any party in or in connection with the conduct of the
Defense Business or, to the extent any claim is made against Exelis or any of its Subsidiaries, the
conduct of the ITT Retained Business or the Water Business, and which claims, suits, actions,
proceedings, injuries, losses, liabilities, damages and expenses may arise out of an insured or
insurable occurrence under one or more of such Company Policies; provided, however,
that nothing in this clause shall be deemed to constitute (or to reflect) an assignment of such
Company Policies, or any of them, to Exelis.
(c) The Water Assets shall include any and all rights of an insured party under each of the
Company Policies, subject to Sections 10.9 and 10.10 and to the terms of such
Company Policies and any limitations or obligations of Xylem contemplated by this Article X
or Schedule 10.1, specifically including rights of indemnity and the right to be defended
by or at the expense of the insurer, with respect to all claims, suits, actions, proceedings,
injuries, losses, liabilities, damages and expenses incurred or claimed to have been incurred prior
to the Effective Time by any party in or in connection with the conduct of the Water Business or,
to the extent any claim is made against Xylem or any of its Subsidiaries, the conduct of the ITT
Retained Business or the Defense Business, and which claims, suits, actions, proceedings, injuries,
losses, liabilities, damages and expenses may arise out of an insured or insurable occurrence under
one or more of such Company Policies; provided, however, that nothing in this
clause shall be deemed to constitute (or to reflect) an assignment of such Company Policies, or any
of them, to Xylem.
Section 10.2. Post-Effective Time Claims. (a) If, subsequent to the Effective Time, any person shall assert a claim against
Exelis or any of its Subsidiaries (including where Exelis or its Subsidiaries are joint defendants
with other persons) with respect to any claim, suit, action, proceeding, injury, loss, liability,
damage or expense incurred or claimed to have been incurred prior to the Effective Time in or in
connection with the conduct of the Defense Business or, to the extent any claim is made against
Exelis or any of its Subsidiaries (including where Exelis or its Subsidiaries are joint defendants
with other persons), the conduct of the ITT Retained Business or the Water Business, and which
claim, suit, action, proceeding, injury, loss, liability, damage or expense may arise out of an
insured or insurable occurrence under one or more of the Company Policies, ITT shall, at the time
such claim is asserted, be deemed to designate, without need of further documentation, Exelis as
the agent and attorney-in-fact to assert and to collect any related Insurance Proceeds under such
Company Policy, and shall further be deemed to confer, without need of further documentation, but
subject to Section 10.10, upon Exelis any and all rights of an insured party under such
Company Policy with respect to such asserted claim, specifically including rights of indemnity and
the right to be defended by or at the expense of the insurer and the right to any applicable
Insurance Proceeds thereunder; provided, however, that nothing in this Section
10.2(a) shall be deemed to constitute (or to reflect) an assignment of the Company Policies, or
any of them, to Exelis.
(b) If, subsequent to the Effective Time, any person shall assert a claim against Xylem or any
of its Subsidiaries (including where Xylem or its Subsidiaries are joint defendants with other
persons) with respect to any claim, suit, action, proceeding, injury, loss, liability, damage or
expense incurred or claimed to have been incurred prior to the Effective Time in or in connection
with the conduct of the Water Business or, to the extent any claim is made against Xylem or any of
its Subsidiaries (including where Xylem or its Subsidiaries are joint defendants with other
persons), the conduct of the ITT Retained Business or the Defense Business, and which claim, suit,
action, proceeding, injury, loss, liability, damage or expense may arise out of an insured or
insurable occurrence under one or more of the
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Company Policies, ITT shall, at the time such claim is asserted, be deemed to designate,
without need of further documentation, Xylem as the agent and attorney-in-fact to assert and to
collect any related Insurance Proceeds under such Company Policy, and shall further be deemed to
confer, without need of further documentation, but subject to Section 10.10, upon Xylem any
and all rights of an insured party under such Company Policy with respect to such asserted claim,
specifically including rights of indemnity and the right to be defended by or at the expense of the
insurer and the right to any applicable Insurance Proceeds thereunder; provided,
however, that nothing in this Section 10.2(b) shall be deemed to constitute (or to
reflect) an assignment of the Company Policies, or any of them, to Xylem.
Section 10.3. Administration; Other Matters. (a) Administration. Subject to Section 10.10, from and after the
Effective Time, each Party shall be responsible for Claims Administration under Company Policies
with respect to its respective Insured Claims; provided, however, that each of Exelis and
Xylem shall provide prompt notice to ITT of any claims submitted by them or by their respective
Subsidiaries under the Company Policies and of any Insurance Proceeds related thereto. Each Party
shall administer and pay any costs relating to defending its respective Insured Claims under
Company Policies to the extent such defense costs are not covered under such Policies, shall be
responsible for any amounts of its respective Insured Claims under Company Policies that fall below
applicable deductibles or self-insured retentions, and shall be responsible for obtaining or
reviewing the appropriateness of releases upon settlement of its respective Insured Claims under
Company Policies. ITT shall, with the consent of the other Parties (not to be unreasonably
withheld or delayed), have the sole right to commute or otherwise terminate any Company Policies.
(b) Liability Limitation. ITT, Exelis and Xylem shall not be liable to one another
for claims not reimbursed by insurers for any reason not within the control of ITT, Exelis or
Xylem, as the case may be, including coinsurance provisions, deductibles, quota share deductibles,
exhaustion of aggregates, self-insured retentions, bankruptcy or insolvency of an insurance
carrier, Company Policy limitations or restrictions, any coverage disputes, any failure to timely
claim by ITT, Exelis or Xylem or any defect in such claim or its processing.
(c) Maximization of Insurance Proceeds. Each Party agrees to use commercially
reasonable efforts to maximize available coverage under those Company Policies applicable to it,
and to take all commercially reasonable steps to recover from all other responsible parties in
respect of an Insured Claim, including, as may be applicable, pursuing recoveries under other
insurance policies available to such Party.
(d) Nuclear Policies. ITT shall provide 90 days’ written notice to Exelis and Xylem of
its intention not to maintain in full force and effect the Company Policies identified as Nuclear
Energy Liability Insurance on Schedule 10.1 (the “Nuclear Policies”). Within 60
days of receipt of such notice, Exelis and Xylem, either individually or collectively, may, by
written notice to ITT, direct ITT to use commercially reasonable efforts to maintain the Nuclear
Policies; provided, that Exelis and/or Xylem, as the case may be, shall pay the full
premium for the Nuclear Policies; and, provided further, that ITT shall have no obligation to
commence a litigation against one or more insurers in order to maintain the Nuclear Policies.
Section 10.4. Agreement for Waiver of Conflict and Shared Defense. In the event that Insured Claims of more than one Party exist relating to the same
occurrence, the relevant Parties shall jointly defend and waive any conflict of interest to the
extent necessary to the conduct of the joint defense. Nothing in this Section 10.4 shall be
construed to limit or otherwise alter in any way the obligations of the Parties, including those
created by this Agreement, by operation of law or otherwise.
Section 10.5. Agreement for Waiver of Conflict and Insurance Litigation and/or Recovery
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Efforts. In the event of any Action by any Party (or all of the Parties) to recover or obtain
insurance proceeds, or to defend against any Action by an insurance carrier to deny any Policy
benefits, all Parties may join in any such Action and be represented by joint counsel and all
Parties shall waive any conflict of interest to the extent necessary to conduct any such Action.
Nothing in this Section 10.5 shall be construed to limit or otherwise alter in any way the
obligations of the Parties, including those created by this Agreement, by operation of Law, or
otherwise.
Section 10.6. Directors and Officers Liability Insurance; Fiduciary Liability Insurance;
Employment Practices Liability Insurance; Employed Lawyers Liability Insurance. ITT agrees that, from and after the Distribution Date to the sixth anniversary of the
Effective Time, it will maintain in full force and effect the Company Policies identified as
Directors & Officers Liability Insurance, Excess Directors & Officers Liability Insurance,
Fiduciary Liability Insurance, Employment Practices Liability Insurance and Employed Lawyers
Liability Insurance on Schedule 10.1 (or, through the purchase of extended discovery, the
full benefits and coverage of such Company Policies) and shall not amend the terms of such Policies
in a manner adverse to any persons covered by such insurance. The provisions of this Section
10.6 are intended for the benefit of, and shall be enforceable by, each of the persons covered
by those Company Policies referenced in the preceding sentence. For the avoidance of doubt, the
provisions of this Section 10.6 also apply to the Directors & Officers Liability Insurance
Policies listed under “Germany Casualty” and “United Kingdom Casualty” on Schedule 10.1.
Section 10.7. No Coverage for Post-Effective Occurrences. Each of Exelis and Xylem, on behalf of itself and its Subsidiaries, acknowledges and agrees
that it will have no coverage under the Company Policies for acts or events that occur after the
Effective Time.
Section 10.8. Cooperation. The Parties agree to use their commercially reasonable efforts to cooperate with respect to
the various insurance matters contemplated by this Agreement (including in connection with Policies
where ITT is an additional named insured).
Section 10.9. Excluded Policies. Each of Exelis and Xylem, on behalf of itself and its Subsidiaries, disclaims any rights that it
otherwise may have under the Excluded Policies and agrees not to submit any claim or to pursue any
recovery under any Excluded Policy, it being understood that the Excluded Policies are for the sole
benefit of ITT.
Section 10.10. ITT as General Agent and Attorney-In-Fact. Notwithstanding anything to the contrary contained herein, ITT remains the owner and holder
of all rights and claims in and to the Company Policies. Should the provisions of Sections
10.1 and 10.2 as they pertain to Exelis and/or Xylem be challenged and/or fail of their
purpose, ITT shall act as agent and attorney-in-fact for Exelis and Xylem and thereby effectuate,
on behalf of Exelis and Xylem, the provisions of Sections 10.2(a) and 10.2(b) of
this Agreement, provided that, Exelis or Xylem, as the case may be, shall pay ITT’s
reasonable out of pocket costs relating thereto.
Section 10.11. Additional Premiums, Return Premiums and Pro Rata Cancellation Premium
Credits. If additional premiums are payable, or return premiums are receivable, on any Company Policies
after the Effective Time as a result of an insurance carrier’s retrospective audit of insured
exposure, each of ITT, Exelis and Xylem shall be responsible for its respective share of any such
additional premiums, and shall be entitled to receive its respective share of any such return
premiums, that are attributable to a change in its or its Subsidiaries’ insured exposure. If
cancellation premium credits are received after the Effective Time in connection with the
cancellation of any Company Policies, each of ITT, Exelis and Xylem shall be entitled to receive
its Applicable Percentage of such cancellation premium credits.
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ARTICLE XI
MISCELLANEOUS
Section 11.1. Complete Agreement; Construction. This Agreement, including the Exhibits and Schedules, and the Ancillary Agreements shall
constitute the entire agreement between the Parties with respect to the subject matter hereof and
shall supersede all previous negotiations, commitments, course of dealings and writings with
respect to such subject matter. In the event of any inconsistency between this Agreement and any
Schedule hereto, the Schedule shall prevail. In the event and to the extent that there shall be a
conflict between the provisions of (a) this Agreement and the provisions of any Specified Ancillary
Agreement or Continuing Arrangement, such Specified Ancillary Agreement or Continuing Arrangement
shall control and (b) this Agreement and any Ancillary Agreement which is not not a Specified
Ancillary Agreement, this Agreement shall control unless specifically stated otherwise in such
Ancillary Agreement. Except as expressly set forth in this Agreement or any Ancillary Agreement:
(i) all matters relating to Taxes and Tax Returns of the Parties and their respective Subsidiaries
shall be governed exclusively by the Tax Matters Agreement; and (ii) for the avoidance of doubt, in
the event of any conflict between this Agreement or any Ancillary Agreement, on the one hand, and
the Tax Matters Agreement, on the other hand, with respect to such matters, the terms and
conditions of the Tax Matters Agreement shall govern.
Section 11.2. Ancillary Agreements. Except as expressly set forth herein, this Agreement is not intended to address, and should
not be interpreted to address, the matters specifically and expressly covered by the Ancillary
Agreements.
Section 11.3. Counterparts. This Agreement may be executed in more than one counterpart, all of which shall be
considered one and the same agreement, and shall become effective when one or more such
counterparts have been signed by each of the Parties and delivered to the other Parties.
Section 11.4. Survival of Agreements. Except as otherwise contemplated by this Agreement or any Ancillary Agreement, all
covenants and agreements of the Parties contained in this Agreement and each Ancillary Agreement
shall survive the Effective Time and remain in full force and effect in accordance with their
applicable terms.
Section 11.5. Expenses. Except as otherwise provided (i) in this Agreement (including with respect to Specified
Shared Expenses, responsibility for which is allocated pursuant to Section 5.3, or (ii) in
any Ancillary Agreement, the Parties agree that all out-of-pocket fees and expenses incurred, or to
be incurred and directly related to the Plan of Separation and the transactions contemplated hereby
(including third party professional fees, fees and expenses incurred in connection with the
execution and delivery of this Agreement and such other third party fees and expenses incurred on a
non-recurring basis directly as a result of the Plan of Separation, including expenses set forth on
Schedule 11.5, and excluding the costs of salaries and benefits of employees or any pro
rata portion of overhead or other costs of employing such employees which would have been incurred
by such employees’ employer regardless of the employees’ service with respect to the foregoing)
(collectively, “Separation Expenses”) shall (A) to the extent set forth on Schedule
11.5, be paid by ITT and (B) otherwise, be paid by the Party generating and/or incurring such
expenses. For the avoidance of doubt, except as expressly set forth in this Agreement or any
Ancillary Agreements, each Party shall be responsible for its own internal fees (and reimburse any
other Party to the extent such Party has paid such costs and expenses on behalf of the responsible
Party), costs and expenses (e.g., salaries of personnel working in its respective Business)
incurred following the Distribution Date in connection with the Plan of Separation, including any
costs and expenses relating to such Party’s (or any member of its Group’s) Disclosure Documents
filed following the Distribution Date in connection with the Plan of Separation (including,
printing, mailing and filing fees) or any costs and expenses incurred following the Distribution
Date with the continued
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listing of such Party’s common stock on the NYSE following the Distribution.
Section 11.6. Notices. All notices, requests, claims, demands and other communications under this Agreement and,
to the extent applicable and unless otherwise provided therein, under each of the Ancillary
Agreements shall be in English, shall be in writing and shall be given or made (and shall be deemed
to have been duly given or made upon receipt) by delivery in person, by overnight courier service,
by facsimile with receipt confirmed (followed by delivery of an original via overnight courier
service) or by registered or certified mail (postage prepaid, return receipt requested) to the
respective Parties at the following addresses (or at such other address for a Party as shall be
specified in a notice given in accordance with this Section 11.6):
To ITT:
ITT Corporation
1133 Westchester Avenue, Suite 3000
White Plains, NY 10604
Attn: General Counsel
Facsimile: (914) 696-2970
1133 Westchester Avenue, Suite 3000
White Plains, NY 10604
Attn: General Counsel
Facsimile: (914) 696-2970
To Exelis:
Exelis Inc.
1650 Tysons Boulevard, Suite 1700
McLean, VA 22102
Attn: General Counsel
Facsimile: (703) 790-6407
1650 Tysons Boulevard, Suite 1700
McLean, VA 22102
Attn: General Counsel
Facsimile: (703) 790-6407
To Xylem:
Xylem Inc.
1133 Westchester Avenue, Suite N200
White Plains, NY 10604
Attn: General Counsel
Facsimile: (914) 323-5800
1133 Westchester Avenue, Suite N200
White Plains, NY 10604
Attn: General Counsel
Facsimile: (914) 323-5800
Section 11.7. Waivers. Any consent required or permitted to be given by any Party to the other Parties under this
Agreement shall be in writing and signed by the Party giving such consent and shall be effective
only against such Party (and its Group).
Section 11.8. Assignment. This Agreement shall not be assignable, in whole or in part, directly or indirectly, by any
party hereto without the prior written consent of the other Parties (not to be unreasonably
withheld or delayed), and any attempt to assign any rights or obligations arising under this
Agreement without such consent shall be void. Notwithstanding the foregoing, this Agreement shall
be assignable in whole in connection with a merger or consolidation or the sale of all or
substantially all the assets of a party hereto so long as the resulting, surviving or transferee
entity assumes all the obligations of the relevant party hereto by operation of law or pursuant to
an agreement in form and substance reasonably satisfactory to the other parties to this Agreement.
No assignment permitted by this Section 11.8 shall release the assigning Party from
liability for the full performance of its obligations under this Agreement.
Section 11.9. Successors and Assigns. The provisions of this Agreement and the obligations
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and rights hereunder shall be binding upon, inure to the benefit of and be enforceable by (and
against) the Parties and their respective successors and permitted transferees and assigns.
Section 11.10. Termination and Amendment. This Agreement (including Article VII hereof) may be terminated, modified or
amended and the Distribution may be amended, modified or abandoned at any time prior to the
Effective Time by and in the sole discretion of ITT without the approval of Exelis, Xylem or the
shareholders of ITT. In the event of such termination, no Party shall have any liability of any
kind to any other Party or any other Person. After the Effective Time, this Agreement may not be
terminated, modified or amended except by an agreement in writing signed by ITT, Exelis and Xylem.
Section 11.11. Payment Terms.
(a) Except as expressly provided to the contrary in this Agreement or in any Ancillary
Agreement, any amount to be paid or reimbursed by any Party (and/or a member of such Party’s
Group), on the one hand, to any other Party or Parties (and/or a member of such Party’s or Parties’
Group), on the other hand, under this Agreement shall be paid or reimbursed hereunder within sixty
(60) days after presentation of an invoice or a written demand therefor and setting forth, or
accompanied by, reasonable documentation or other reasonable explanation supporting such amount.
(b) Except as expressly provided to the contrary in this Agreement or in any Ancillary
Agreement, any amount not paid when due pursuant to this Agreement (and any amount billed or
otherwise invoiced or demanded and properly payable that is not paid within sixty (60) days of such
bill, invoice or other demand) shall bear interest at a rate per annum equal to LIBOR, from time to
time in effect, calculated for the actual number of days elapsed, accrued from the date on which
such payment was due up to the date of the actual receipt of payment.
Section 11.12. No Circumvention. The Parties agree not to directly or indirectly take any actions, act in concert with any
Person who takes an action, or cause or allow any member of any such Party’s Group to take any
actions (including the failure to take a reasonable action) such that the resulting effect is to
materially undermine the effectiveness of any of the provisions of this Agreement or any Ancillary
Agreement (including adversely affecting the rights or ability of any Party to successfully pursue
indemnification or payment pursuant to Articles VI and VII).
Section 11.13. Subsidiaries. Each of the Parties shall cause to be performed, and hereby guarantees the performance of,
all actions, agreements and obligations set forth herein to be performed by any Subsidiary of such
Party or by any entity that becomes a Subsidiary of such Party at and after the Effective Time, to
the extent such Subsidiary remains a Subsidiary of the applicable Party.
Section 11.14. Third Party Beneficiaries. Except (i) as provided in Article VII relating to Indemnitees and for the release
under Section 7.1 of any Person provided therein, (ii) as provided in Section 10.6
relating to the directors, officers, employees, fiduciaries or agents provided therein and (iii) as
specifically provided in any Ancillary Agreement, this Agreement is solely for the benefit of the
Parties 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 11.15. Title 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 11.16. Exhibits and Schedules.
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(a) The Exhibits and Schedules shall be construed with and as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein. Nothing in the
Exhibits or Schedules constitutes an admission of any liability or obligation of any member of the
Defense Group, ITT Group or Water Group or any of their respective Affiliates to any third party,
nor, with respect to any third party, an admission against the interests of any member of the
Defense Group, ITT Group or Water Group or any of their respective Affiliates. The inclusion of any
item or liability or category of item or liability on any Exhibit or Schedule is made solely for
purposes of allocating potential liabilities among the Parties and shall not be deemed as or
construed to be an admission that any such liability exists.
(b) Subject to the prior written consent of the other Parties (not to be unreasonably withheld
or delayed), each Party shall be entitled to update the Schedules from and after the date hereof
until the Effective Time.
Section 11.17. Governing Law. This Agreement shall be governed by and construed in accordance with the Laws, but not the
Laws governing conflicts of Laws (other than Sections 5-1401 and 5-1402 of the New York
General Obligations Law), of the State of New York; provided that the Indiana Business
Corporation Law, including the provisions thereof governing the fiduciary duties of directors of a
Indiana corporation, shall govern, as applicable, the internal affairs of ITT, Exelis and
Xylem, as the case may be.
Section 11.18. Consent to Jurisdiction. Subject to the provisions of Article IX hereof, each of the Parties irrevocably
submits to the exclusive jurisdiction of (a) the Supreme Court of the State of New York, New York
County, or (b) the United States District Court for the Southern District of New York (the “New
York Courts”), for the purposes of any suit, action or other proceeding to compel arbitration
or for provisional relief in aid of arbitration in accordance with Article IX or to prevent
irreparable harm, and to the non-exclusive jurisdiction of the New York Courts for the enforcement
of any award issued thereunder. Each of the Parties further agrees that service of any process,
summons, notice or document by U.S. registered mail to such Party’s respective address set forth
above shall be effective service of process for any action, suit or proceeding in the New York
Courts with respect to any matters to which it has submitted to jurisdiction in this Section
11.18. Each of the Parties irrevocably and unconditionally waives any objection to the laying
of venue of any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the New York Courts, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
Section 11.19. Waiver of Jury Trial. EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
11.19.
Section 11.20. Severability. In the event any one or more of the provisions contained in this Agreement should be held
invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be affected or
69
impaired thereby. The Parties shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable provisions.
Section 11.21. Force Majeure. No Party (or any Person acting on its behalf) shall have any liability or responsibility
for failure to fulfill any obligation (other than a payment obligation) under this Agreement or,
unless otherwise expressly provided therein, any Ancillary Agreement, so long as and to the extent
to which the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a
consequence of circumstances of Force Majeure. A Party claiming the benefit of this provision
shall, as soon as reasonably practicable after the occurrence of any such event: (a) notify the
other applicable Parties of the nature and extent of any such Force Majeure condition and (b) use
due diligence to remove any such causes and resume performance under this Agreement as soon as
feasible.
Section 11.22. Interpretation. The Parties have participated jointly in the negotiation and drafting of this Agreement.
This Agreement shall be construed without regard to any presumption or rule requiring construction
or interpretation against the Party drafting or causing any instrument to be drafted.
Section 11.23. No Duplication; No Double Recovery. Nothing in this Agreement is intended to confer to or impose upon any Party a duplicative
right, entitlement, obligation or recovery with respect to any matter arising out of the same facts
and circumstances (including with respect to the rights, entitlements, obligations and recoveries
that may arise out of one or more of the following Sections: Section 3.5; Article
VI; Section 7.2; Section 7.3; Section 7.4; and Section 7.5).
Section 11.24. Tax Treatment of Payments. Unless otherwise required by a Final Determination, this Agreement or the Tax Matters Agreement
or otherwise agreed to among the Parties, for U.S. federal Tax purposes, any payment made pursuant
to this Agreement (other than any payment of interest pursuant to Section 11.11) by: (i)
Exelis or Xylem to ITT shall be treated for all Tax purposes as a distribution by Exelis or Xylem,
as applicable, to ITT with respect to stock of Exelis or Xylem, as applicable, occurring after
Exelis and Xylem, as applicable, is directly owned by ITT and immediately before the applicable
Distribution; (ii) ITT to Exelis or Xylem shall be treated for all Tax purposes as a tax-free
contribution by ITT to Exelis or Xylem, as applicable, with respect to its stock occurring after
Exelis or Xylem, as applicable, is directly owned by ITT and immediately before the applicable
Distribution; (iii) Exelis or Xylem to Xylem or Exelis, respectively, shall be treated for all Tax
purposes as a distribution by the first Party to ITT with respect to stock of such Party occurring
after such Party is directly owned by ITT and immediately before the applicable Distribution
followed by a tax-free contribution by ITT to the second Party with respect to its stock occurring
after such Party is directly owned by ITT and immediately before the applicable Distribution; and
in each case, none of the Parties shall take any position inconsistent with such treatment. In the
event that a Taxing Authority (as defined in the Tax Matters Agreement) asserts that a Party’s
treatment of a payment pursuant to this Agreement should be other than as required pursuant to this
Agreement (ignoring any potential inconsistent or adverse Final Determination), such Party shall
use its commercially reasonable efforts to contest such challenge.
Section 11.25. No Waiver. No failure to exercise and no delay in exercising, on the part of any Party, any right,
remedy, power or privilege hereunder or under the other Ancillary Agreements shall operate as a
waiver hereof or thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege.
Section 11.26. No Admission of Liability. The allocation of Assets and Liabilities herein (including on the Schedules hereto) is
solely for the purpose of allocating such Assets and Liabilities
70
among ITT, Exelis and Xylem and is not intended as an admission of liability or responsibility
for any alleged Liabilities vis-a-vis any third party, including with respect to the Liabilities of
any non-wholly owned subsidiary of ITT, Exelis or Xylem.
[Signature Page Follows]
71
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day
and year first above written.
| ITT CORPORATION |
||||
| By: | /s/ Aris C. Chicles | |||
| Name: | Aris C. Chicles | |||
| Title: | Senior Vice President | |||
| EXELIS INC. |
||||
| By: | /s/ Ann D. Davidson | |||
| Name: | Ann D. Davidson | |||
| Title: | Vice President, General Counsel & Secretary | |||
| XYLEM INC. |
||||
| By: | /s/ Frank R. Jimenez | |||
| Name: | Frank R. Jimenez | |||
| Title: | Vice President, General Counsel & Secretary | |||
72
Table of Contents
Exhibit 10.2
BENEFITS AND COMPENSATION MATTERS AGREEMENT
DATED AS OF OCTOBER 25, 2011,
AMONG
ITT CORPORATION,
XYLEM INC.
AND
EXELIS INC.
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Table of Contents
1
BENEFITS AND COMPENSATION MATTERS AGREEMENT dated as of October 25, 2011, among
ITT CORPORATION, an Indiana corporation (which, together with its subsidiaries, is
herein referred to as “ITT”), Xylem Inc., an Indiana corporation, (which,
together with its subsidiaries, is herein referred to as “Water”), and
Exelis Inc., an Indiana corporation (which, together with its subsidiaries, is
herein referred to as “Defense”).
WHEREAS, the Board of Directors of ITT (the “Board”) has determined that it is
appropriate, desirable and in the best interests of ITT, its shareholders and its other
constituents, to separate ITT into three separate, publicly traded companies, one for each of (i)
the ITT Retained Business, which shall be owned and conducted, directly or indirectly, by ITT, (ii)
the Defense Business, which shall be owned and conducted, directly or indirectly, by Defense and
(iii) the Water Business, which shall be owned and conducted, directly or indirectly, by Water;
WHEREAS, the Board of Directors of ITT has determined that it is appropriate and desirable to
distribute to the holders of shares of common stock, par value $1.00 per share, of ITT (the
“ITT Common Stock”), on a pro rata basis (in each case without consideration being paid by
such shareholders) (A) all of the outstanding shares of common stock, par value $.01 per share, of
Water (the “Water Common Stock”) and (B) all of the outstanding shares of common stock, par
value $.01 per share, of Defense (the “Defense Common Stock”) (such transactions as they
may be amended or modified from time to time, the “Distribution”);
WHEREAS, ITT, Water and Defense have executed a distribution agreement dated as of the date
hereof (the “Distribution Agreement”) to effectuate such Distribution and allocate and
assign certain responsibilities; and
WHEREAS, each of ITT, Water and Defense has determined that it is necessary and desirable to
allocate and assign responsibility for certain employee benefit liabilities in respect of the
activities of the businesses of such entities on the Distribution Date (as defined herein) and
those liabilities in respect of other businesses and activities of ITT and its former subsidiaries
and certain other matters.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, ITT,
Water and Defense agree as follows:
1. EMPLOYEES. (a) General. Effective as of the Distribution Date, ITT shall transfer
all employees listed on Schedule 1(a)(i) to Water and all such employees shall become Water
Employees. Effective as of the Distribution Date, ITT shall transfer all employees listed on
Schedule 1(a)(ii) to Defense and all such employees shall become Defense Employees. All
Preexisting ITT Employees employed by legal entities that became legal entities of ITT following
the Distribution Date shall be ITT Employees. All Preexisting ITT Employees employed by legal
entities that became legal entities of Water following the Distribution Date shall be Water
Employees. All Preexisting ITT Employees employed by legal entities that became legal entities of
Defense following the Distribution Date shall be Defense Employees. Except as expressly identified
in this Agreement, Defense shall be liable for all liabilities, claims or controversies involving
Defense Employees, Water shall be liable for all liabilities, claims or
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controversies involving Water Employees and ITT shall be liable for all liabilities, claims or
controversies involving ITT Employees and ITT Retirees.
(b) Schedule of Water Employees and Defense Employees. As of the date of this
Agreement, ITT, Water and Defense shall have in good faith determined which individuals who are
Preexisting ITT Employees shall become Water Employees and Defense Employees on no later than the
Distribution Date. Such lists may be modified only by written consent by each of ITT, Water and
Defense on or following the Distribution Date. Prior to the Distribution Date, ITT may modify such
lists without the consent of Water and Defense.
(c) Non-Termination of Employment. Except as otherwise expressly provided herein and
in compliance with Section 2(d) of this Agreement, no provision of, or event arising under, this
Agreement, the Distribution Agreement or any of the Ancillary Agreements shall be construed to
create any right, or accelerate entitlement, to any compensation or benefit whatsoever on the part
of any Preexisting ITT Employee or other future, present, or former employee of ITT, Water or
Defense and any of their respective Subsidiaries.
(d) Employment Agreements. As soon as practicable on or after the execution of this
Agreement, ITT, Water and Defense shall use their reasonable best efforts to enter into, or have in
place, an employment agreement with each of the Preexisting ITT Employees listed on Schedule 1(d)
attached hereto, which employment agreements shall become effective on the Close of the
Distribution Date. Water shall assume from ITT the employment agreement of Frank Jimenez, along
with the pension assets and liabilities identified in such agreement. Defense shall assume from
ITT the employment agreement of Chris Bernhardt. ITT shall continue to be bound by the employment
agreement of Denise Ramos.
(e) No Solicit; No Hire. As described in Section 5.1 of the Distribution Agreement and
agreed to by ITT, Defense and Water, none of ITT, Water or Defense shall solicit or hire
Preexisting ITT Employees for such period following the Effective Time as specified therein,
without receiving the written consent of the affected prior employer. In respect of countries
whose local laws declare as invalid or unenforceable or prohibit any agreement between employers
not to hire employees of the other, ITT, Defense and Water will not have an agreement not to hire
employees of the other but agree not to actively solicit the services of each other’s employees for
such period following the Effective Time as specified in the Distribution Agreement.
2. BENEFIT PROGRAM PARTICIPATION. (a) Except as specifically provided herein with respect to
particular compensation or benefit programs, all Water Employees and Defense Employees will cease
participation in all ITT benefit plans and programs no later than immediately prior to the
Distribution Date; provided that certain Water Employees who participate in the ITT Industries
Pension Plan for UK Expatriates, Godwin Pumps Limited Pension Scheme and ITT Retirement Savings
Plan, as identified as Items 23 and 24 on Schedule 3(a)(iii) and Item 14 of Schedule 4(a)(iii)
shall continue to participate in their respective plans following the Distribution Date, subject to
the terms of such plans. As soon as reasonably practicable, ITT will retain liability for all
incurred but not yet reported claims of Water Employees and Defense Employees who participate in
the ITT welfare benefit plans and programs through the earlier of (i) December 31, 2011 or (ii) the
date on which two separate
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3
liability accounts for Water and Defense are created. The separate liability accounts shall
correspond to the new bank accounts established by Water and by Defense for new incurred but not
yet reported claims. The balance of the new accounts shall be transferred as soon as reasonably
practicable following the Distribution Date.
(b) (i) Water shall cause to be recognized each Water Employee’s service with ITT for purposes
of determining (x) eligibility for vacation benefits, short-term disability and severance benefits
and (y) eligibility for vesting under all other employee benefit plans and policies of Water
applicable to such Water Employees, to the extent such service was recognized by ITT for such
purposes.
(ii) Defense shall cause to be recognized each Defense Employee’s service with ITT for purposes
of determining (x) eligibility for vacation benefits, short-term disability and severance benefits
and (y) eligibility for vesting under all other employee benefit plans and policies of Defense
applicable to such Defense Employees, to the extent such service was recognized by ITT for such
purposes.
(c) Nothing in this Agreement shall be construed or interpreted to restrict ITT’s, Water’s or
Defense’s right or authority to amend or terminate any of its employee benefit plans, policies or
programs effective as of a date following the Distribution Date, except neither Defense nor any
successor entity to Defense may amend or alter the eligibility schedule described for Preexisting
ITT Employees under Sections 3(b)(vii) and 3(c)(iv) or the requirement not to reduce or eliminate
health benefits under Section 5(b)(ix).
(d) Any Preexisting ITT Employee who, on the Distribution Date, is employed by ITT, Defense or
Water shall not be deemed either to have terminated employment or to be in retirement status under
any employee benefit plan operated by ITT, Water or Defense. Except to the extent required by law
and as otherwise stated in Section 3(b)(vii), any Preexisting ITT Employee who, on the Distribution
Date, is employed by ITT, Defense or Water shall not, solely as a result of the Distribution or
related transactions, be eligible to receive payment of, or exercise any portability rights in
respect of, his or her vested benefit or retirement allowance under any employee benefit plan
operated by ITT, Water or Defense; provided, that each Water Employee and each Defense Employee
shall receive credit for their service with ITT prior to the Distribution Date from Water or
Defense as provided in this Article II. As permitted by Final Treasury Regulation Section
1.409A-1(h)(4), ITT, Water and Defense agree that any employee and any other “service provider”
within the meaning of the term as defined in Section 409A of the Code who provides services to ITT
immediately before the transactions contemplated hereby and provides services to ITT, Water or
Defense after and in connection with such transactions shall not be treated as separating from
service for purposes of Section 409A of the Code.
(e) Except as otherwise specified on any of the Schedules, which are specifically incorporated
by reference to this Agreement, (i) any ITT Plan maintained by ITT prior to the Distribution Date
will continue to be maintained by ITT following the Distribution Date, (ii) any Defense Plan
maintained by Defense prior to the Distribution Date will continue to be maintained by Defense
following the Distribution Date and (iii) any Water Plan maintained by Water prior to the
Distribution Date will continue to be maintained by Water following the Distribution Date. Unless
otherwise specified in this Agreement, all assets and liabilities of any
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4
Plan, Defense Plan or Water Plan will remain with and be assumed by the entity maintaining
such plan.
3. DEFINED BENEFIT PLANS. (a) List of Defined Benefit Plans. (i) Certain current
and former employees of ITT, Water and Defense participate in ITT Group tax qualified defined
benefit pension plans made available for certain ITT Group employees in the United States. Schedule
3(a)(i) lists each defined benefit pension plan applicable to Preexisting ITT Employees (the
“US Qualified DB Plans”).
(ii) Certain current and former employees of ITT, Water and Defense participate in ITT Group
tax non-qualified defined benefit pension plans made available for certain ITT Group employees in
the United States. Schedule 3(a)(ii) lists each defined benefit pension plan applicable to
Preexisting ITT Employees (the “US Non-Qualified DB Plans”).
(iii) Certain current and former employees of ITT, Water and Defense participate in ITT Group
defined benefit pension plans made available for certain ITT Group employees outside of the United
States. Schedule 3(a)(iii) lists each defined benefit pension plan applicable to Preexisting ITT
Employees (the “Non-US DB Plans”).
(b) US Qualified DB Plans. (i) Continuation of US Qualified DB Plans.
Following the Distribution Date, ITT shall continue to sponsor the ITT US Qualified DB Plans as so
identified on Schedule 3(a)(i). Following the Distribution Date, Defense shall continue to sponsor
the Defense US Qualified DB Plans as so identified on Schedule 3(a)(i). Following the Distribution
Date, Water shall continue to sponsor the Water US DB Qualified Plans as so identified on Schedule
3(a)(i). Each of ITT, Defense and Water shall assume all liabilities associated with such plans
that it sponsors following the Distribution Date, whether incurred prior to, on or following the
Distribution Date; provided, that Defense shall recognize the additional service credit as
specified in Section 3(b)(v) of this Agreement. Each of ITT, Defense and Water shall retain all
accrued benefits associated with such plans that it sponsors following the Distribution Date,
whether accrued prior to, on or following the Distribution Date.
(ii) Adoption of US Qualified DB Plan. Effective as of the Distribution Date, Water
shall adopt New ITT Pension Plan for Bargaining Unit Employees, Seneca Falls, New York, which shall
have terms similar in all material respects to the ITT Pension Plan for Bargaining Unit Employees,
Seneca Falls, New York maintained by ITT and identified as Item 16 on Schedule 3(a)(i). As soon as
practicable on or after the Distribution Date, ITT shall transfer to Water the assets and
liabilities associated with Water Employees who participated in the ITT Pension Plan for Bargaining
Unit Employees, Seneca Falls, New York as identified as Item 16 on Schedule 3(a)(i). Such assets
will be transferred in kind to the maximum extent practicable. The plan actuary for such plan
shall be responsible for determining the appropriate amount of assets and liabilities to be
allocated per employee transferred, in each case in accordance with applicable law.
(iii) Adoption of New Master Trusts. As soon as practicable on or after the
Distribution Date, Water shall adopt a new trust that is substantially similar in all material
respects to the Master Trust (the “New Water Trust”). Effective as of the Distribution
Date, ITT
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shall adopt a new trust that is substantially similar in all material respects to the Master
Trust (the “New ITT Trust”).
(iv) Transfer of Master Trust and Assets. As soon as practicable on or after the
Distribution Date, ITT shall transfer to Defense the Master Trust, and Defense shall assume all
liabilities associated with such Master Trust. As soon as practicable on or after the Distribution
Date, the interests of the US Qualified DB Plans identified on Schedule 3(b)(iv) will be liquidated
and cash will be transferred from the Master Trust to the New Water Trust in the amount identified
on Schedule 3(b)(iv) and to the New ITT Trust in the amount identified on Schedule 3(b)(iv). All
other interests will remain in the Master Trust at Defense.
(v) Transfer of US Qualified DB Plans to Defense. Effective as of the Distribution
Date, ITT shall transfer to Defense the defined benefit pension plans identified as Items 1-7 on
Schedule 3(a)(i), and Defense shall assume all liabilities associated with such plans, including
with respect to accrued benefits thereof.
(vi) Transfer of US Qualified DB Plans to Water. Effective as of the Distribution
Date, ITT shall transfer to Water the ITT US Qualified DB Plans identified as Items 19-22 on
Schedule 3(a)(i), and Water shall assume all liabilities associated with such plans, including with
respect to accrued benefits thereof.
(vii) Additional Retirement Eligibility. (A) Effective as of the Distribution Date,
any ITT Employee or any Water Employee who has accrued benefits under the ITT Salaried Retirement
Plan as reflected on that plan’s records as of the Distribution Date and who is eligible to receive
retirement benefits thereunder may elect to commence receipt of that person’s retirement benefits
under the ITT Salaried Retirement Plan on or after the Distribution Date. Any ITT Employee or
Water Employee shall cease earning additional eligibility service at the earliest of the fifth
anniversary of the Distribution Date, the date on which the employee is terminated, the date on
which benefits attributable to the Traditional Pension Plan formula commence, the date of death or
a Change in Control of ITT or Water, respectively (the “Eligibility End Date”). Any ITT
Employee or any Water Employee who is eligible to begin retirement as of the Distribution Date who
elects to commence receipt of that person’s retirement benefits under the ITT Salaried Retirement
Plan shall not continue to earn eligibility service following the later of the Distribution Date
and the last month preceding the annuity start date. Following the Eligibility End Date, no ITT
Employee or Water Employee will receive credit toward the retirement criteria specified in the ITT
Salaried Retirement Plan. Except as provided in this Section 3(b)(vii), all accrued benefits under
the ITT Salaried Retirement Plan will be frozen with respect to any ITT Employee or any Water
Employee as of the Distribution Date.
(B) Effective as of the later of the Distribution Date and January 1, 2012, any Defense
Employee who has accrued benefits under the ITT Salaried Retirement Plan may make a one-time
irrevocable election either to (x) continue earning eligibility and benefit service under the
Traditional Pension Plan formula defined in the ITT Salaried Retirement Plan or (y) choose to begin
participation in the enhanced employer-contribution portion of the defined contribution plan
identified as Item 1 on Schedule 4(a)(i).
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6
(C) Following the Distribution Date, all unvested benefits accrued by Preexisting ITT
Employees under the ITT Salaried Retirement Plan who have at least one year of service credit as of
the Distribution Date, which are attributable to ITT Employees and Water Employees (other than the
ability to continue earning eligibility service for up to five years as described above) shall be
vested as of the Distribution Date. Unvested benefits attributable to Defense Employees shall
remain unchanged and Defense shall remain liable for all benefits (unvested or vested) attributable
to Defense Employees.
(c) US Non-Qualified DB Plans. (i) Continuation of US Non-Qualified DB Plans.
Following the Distribution Date, ITT shall continue to sponsor the ITT US Non-Qualified DB Plans as
so identified on Schedule 3(a)(ii). Following the Distribution Date, Defense shall sponsor the
Defense US Non-Qualified DB Plans as so identified on Schedule 3(a)(ii). Following the
Distribution Date, Water shall sponsor the Water US Non-Qualified DB Plans as so identified on
Schedule 3(a)(ii). Each of ITT, Defense and Water shall assume all liabilities associated with
such plans that it sponsors following the Distribution Date, whether incurred prior to, on or
following the Distribution Date; provided, that Defense shall recognize the additional service
credit as specified in Section 3(c)(iv) of this Agreement. Each of ITT, Defense and Water shall be
liable for all accrued benefits associated with such plans that it sponsors following the
Distribution Date, whether accrued prior to, on or following the Distribution Date.
(ii) Excess Pension Plans. Effective as of the Distribution Date, ITT shall cause the
transfer of the sponsorship of the ITT US Non-Qualified DB Plans identified as Items 1-7 on
Schedule 3(a)(ii) to Defense; provided, that Defense shall recognize the additional service credit
as specified in Section 3(c)(iv) of this Agreement.
Defense does hereby assume liability for all benefits accrued prior to the Distribution Date
under the ITT Excess Pension Plans, the ITT Enhanced Pension Plan, Federal Labs Unfunded 1, EDO
Excess Plan — SERP and the Retirement Plan for Non-Management Directors of ITT Corp. identified as
Items 1, 3-7 on Schedule 3(a)(ii) for all Preexisting ITT Employees, except as provided in the
Ancillary Agreements.
(iii) Ex Gratia Plan. Effective as of the Distribution Date, ITT shall cause the
transfer of the Ex Gratia Plan to Defense identified as Item 2 on Schedule 3(a)(ii) along with all
liabilities accrued under the plan with the exception of any liabilities identified on Schedule
3(a)(ii).
(iv) Additional Retirement Eligibility. Effective as of the Distribution Date, any
ITT Employee and any Water Employee who has accrued benefits under the ITT Excess Pension Plan
shall have his or her benefit accruals under the Excess Pension Plans cease as of the date
immediately preceding the Distribution Date; provided that, solely for purposes of determining the
amount of an employee’s Excess Pension Plans benefit under the Excess Pension Plans, such Water
Employee or ITT Employee shall be deemed to have incurred a Termination of Employment (as defined
in the Excess Pension Plans) as of the Distribution Date; provided however, that
for purposes of determining such employee’s eligibility for a benefit under the Excess Pension
Plans, such Water Employee or ITT Employee shall be credited with the same eligibility service he
or she is credited with under the ITT Salaried Retirement Plan as
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described in Section 3(b)(vii) herein. Notwithstanding the previous sentence, a Water
Employee shall not incur a Termination of Employment under the terms of the Excess Pension Plans
until such Water Employee incurs a Termination of Employment with Water and (b) an ITT Employee
shall not incur a Termination of Employment under the terms of the Excess Pension Plans until such
ITT Employee incurs a Termination of Employment with ITT.
Effective as of the Distribution Date, all accrued benefits under the Excess Pension Plans for
ITT Employees and Water Employees who have at least one year of service credit as of the
Distribution Date shall become 100 percent vested and nonforfeitable as of the Distribution Date.
Unvested benefits attributable to Defense Employees shall remain unchanged and Defense shall be
liable for all benefits (unvested or vested) attributable to Defense Employees.
(v) Springing Rabbi Trust. It is contemplated that Defense will enter into a rabbi
trust agreement following the Distribution Date that will, only in the event of a Change in Control
of Defense, be fully funded with the amounts payable under the US Non-Qualified DB Plans identified
as Items 1-7 on Schedule 3(a)(ii) and will pay to each participant the lump-sum amount payable
following a Change in Control in accordance with such plans.
(d) Non-US DB Plans. (i) Continuation of Non-US DB Plans. Following the
Distribution Date, ITT shall continue to sponsor the ITT Non-US DB Plans as so identified on
Schedule 3(a)(iii). Following the Distribution Date, Defense shall continue to sponsor the Defense
Non-US DB Plans as so identified on Schedule 3(a)(iii). Following the Distribution Date, Water
shall continue to sponsor the Water Non-US DB Plans as so identified on Schedule 3(a)(iii). Each
of ITT, Defense and Water shall assume all liabilities associated with such plans that it sponsors
following the Distribution Date, whether incurred prior to, on or following the Distribution Date.
Each of ITT, Defense and Water shall retain all accrued benefits associated with such plans that it
sponsors following the Distribution Date, whether accrued prior to, on or following the
Distribution Date. For any ITT Non-US DB Plan not identified on Schedule 3(a)(iii), the entity
that maintained such ITT Non-US DB Plan prior to the Distribution Date shall continue to maintain
such plan and assume all liabilities associated with such plan following the Distribution Date.
(ii) Adoption of Non-US DB Plan. Effective as of the Distribution Date, Water shall
adopt a benefits plan for Water Employees, which shall have terms similar in all material respects
to the benefit plan identified on Item 3 of Schedule 3(a)(iii). Each of ITT, Defense and Water
shall assume all liabilities associated with the plans that it sponsors following the Distribution
Date, whether incurred prior to, on or following the Distribution Date.
(iii) Transfer of Non-US DB Plans. Effective as of the Distribution Date, ITT shall
transfer to Water the Non-US DB Plan identified as Item 22 of Schedule 3(a)(iii) (the “British
DB Plan”), and Water shall assume all liabilities associated with such plan; provided that the
transfer of such plan will be made in accordance with a deed of substitution between Lowara UK
Limited, ITT Industries Limited and Pension Trustee Management Limited and a scheme apportionment
arrangement deed between the Trustee and the employers participating in such plan.
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8
(iv) Transfer of Non-US Assets and Liabilities. As soon as practicable on or after
the Distribution Date, ITT shall transfer to Water the assets and liabilities associated with Water
Employees who participated in the Non-US Pension Plans identified as Items 8, 23 and 24 of Schedule
3(a)(iii) prior to the Distribution. Such assets will be transferred in kind to the maximum extent
practicable. The plan actuary for each such transfer shall be responsible for determining the
appropriate amount of assets and liabilities to be allocated per employee transferred, in each case
in accordance with applicable local law.
(v) Transfer of Other Non-US Assets. Notwithstanding any other provision of this
Article III, the Plan Actuary for each such Non-US DB Plan shall be responsible for determining the
appropriate amount of assets and liabilities to be allocated to comparable plans to be established
and adopted by the companies as required pursuant to the provisions of this Article III, in each
case in accordance with applicable local law.
(vi) Canadian DB Plans. Effective as of the Distribution Date, any ITT Employee who
has accrued benefits under the Non-US DB Plans identified as Items 14 and 15 on Schedule 3(a)(iii)
(the “Canadian Salaried DB Plans”) will cease participation in the Canadian Salaried DB
Plans as of the Distribution Date, shall be vested as of the Distribution Date and shall cease to
accrue further benefits under the Canadian Salaried DB Plans following the Distribution Date.
Benefit entitlements of ITT Employees under the Canadian Salaried DB Plans shall be determined in
accordance with the terms of the plans and applicable local law.
(vii) Additional Retirement Eligibility for British DB Plan. Effective as of September
30, 2011 (or as soon as reasonably practicable after this date), any ITT Employee, Defense Employee
or any Water Employee who has accrued benefits under the Non-US DB Plan identified as the British
DB Plan as Item 22 on Schedule 3(a)(iii) shall be vested and will be credited for benefit service
through December 31, 2011. Such plan will be frozen as of September 30, 2011 (or as soon as
reasonably practicable after this date) and Water will continue to sponsor and administer the plan.
Effective as of the Distribution Date, all ITT Employees who participate in the Non-US DB Plan
identified as the British DB Plan as Item 22 on Schedule 3(a)(iii) will cease participation in the
British DB Plan as of the Distribution Date, shall be vested as of the Distribution Date and shall
not continue to earn eligibility service following the Distribution Date. Unvested benefits
attributable to Water Employees under the British DB Plan shall remain unchanged and Water shall
remain liable for all benefits (unvested or vested) attributable to Water Employees.
4. DEFINED CONTRIBUTION PLANS.
(a) List of Defined Contribution Plans. (i) Certain current and former employees of
ITT, Water and Defense participate in ITT Group tax qualified defined contribution plans made
available for certain ITT Group employees in the United States. Schedule 4(a)(i) lists each defined
contribution plan applicable to Preexisting ITT Employees (the “US Qualified DC Plans”).
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(ii) Certain current and former employees of ITT, Water and Defense participate in ITT Group
non-tax qualified defined contribution plans made available for certain ITT Group employees in the
United States. Schedule 4(a)(ii) lists each defined contribution plan applicable to Preexisting ITT
Employees (the “US Non-Qualified DC Plans”).
(iii) Certain current and former employees of ITT, Water and Defense participate in ITT Group
defined contribution plans made available for certain ITT Group employees outside of the United
States. Schedule 4(a)(iii) lists each defined contribution plan applicable to Preexisting ITT
Employees (the “Non-US DC Plans”).
(b) US Qualified DC Plans. (i) Continuation of Existing US Qualified DC
Plans. Following the Distribution Date, ITT shall continue to sponsor the US Qualified DC
Plans so identified on Schedule 4(a)(i). Following the Distribution Date, Defense shall continue
to sponsor the US Qualified DC Plans so identified on Schedule 4(a)(i). Following the Distribution
Date, Water shall sponsor the US Qualified DC Plans so identified on Schedule 4(a)(i). All
employees who participate in the ITT Salaried Investment and Savings Plan identified as Item 1 on
Schedule 4(a)(i) shall be vested immediately on the Distribution Date.
(ii) Adoption of New US Qualified DC Plans. Effective as of the Distribution Date, ITT
shall adopt a new defined contribution plan for ITT Employees who participated in the defined
contribution plan identified as Item 1 on Schedule 4(a)(i). Effective as of the Distribution Date,
Water shall adopt new defined contribution plans for Water Employees who participated in the
defined contribution plans identified as Items 1 and 14 on Schedule 4(a)(i).
(iii) Transfer of US Qualified DC Plans. As soon as practicable on or after the
Distribution Date, ITT shall cause the transfer of the sponsorship of the ITT Salaried Investment
and Savings Plan identified as Item 1 on Schedule 4(a)(i) to Defense and Defense shall cause the
transfer of the accounts of all ITT Employees and Water Employees from such plan to the defined
contribution plans adopted by ITT and Water, as applicable.
ITT shall cause the transfer of the accounts of all Water Employees from the Goulds Pumps,
Inc. Retirement Savings and Investment Plan identified as Item 14 on Schedule 4(a)(i) to a new
defined contribution plan maintained by Water. Assets attributable to the accounts identified in
this Section 4(b)(iii) will be transferred in kind to the maximum extent practicable. Each of ITT,
Defense and Water shall assume all liabilities associated with the plans that it sponsors following
the Distribution Date, whether incurred prior to, on or following the Distribution Date.
(iv) ITT Stock Funds. As soon as practicable on or after the Distribution Date, each
U.S. Qualified DC Plan identified on Schedule 4(a)(i) that invests in ITT Common Stock will
maintain stock funds for each of ITT Common Stock, Water Common Stock and Defense Common Stock
(each as adjusted for the Distribution) for a period as determined by the fiduciaries of each such
U.S. Qualified DC Plan. Following the Distribution Date, the applicable fiduciaries of each such
U.S. Qualified DC Plan shall determine the proper treatment of the stock funds maintained in such
U.S. Qualified DC Plans and shall determine the timing of the disposition of shares held in such
stock funds and the treatment of the proceeds of sale of such shares.
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(c) US Non-Qualified DC Plans. (i) Continuation of Existing US Non-Qualified DC
Plans. Following the Distribution Date, ITT shall continue to sponsor the defined contribution
plans so identified on Schedule 4(a)(ii). Following the Distribution Date, Defense shall sponsor
the defined contribution plans so identified on Schedule 4(a)(ii). Following the Distribution
Date, Water shall sponsor the defined contribution plans so identified on Schedule 4(a)(ii).
(ii) Deferred Compensation Plans. Effective as of the Distribution Date, ITT shall
remain liable for benefits accrued under the ITT Deferred Compensation Plan identified as Item 2 on
Schedule 4(a)(ii) prior to the Distribution Date with respect to ITT Employees and ITT Retirees.
Effective as of the Distribution Date, Water shall adopt the Water Deferred Compensation Plan
identified as Item 2 on Schedule 4(a)(ii), which shall be identical in all material respects to the
ITT Deferred Compensation Plan as in effect immediately prior to the Distribution Date. Effective
as of the Distribution Date, Defense shall adopt the Defense Deferred Compensation Plan, which
shall be identical in all material respects to the ITT Deferred Compensation Plan identified as
Item 2 on Schedule 4(a)(ii) as in effect immediately prior to the Distribution Date. ITT shall
cause the transfer of all liabilities for benefits accrued under the ITT Deferred Compensation Plan
for such Defense Employees and ITT Retirees listed on Schedule 4(c)(iii) to Defense and for such
Water Employees and ITT Retirees listed on Schedule 4(c)(iii) to Water as soon as practicable
following the Distribution Date.
Water does hereby assume liability for benefits accrued prior to the Distribution Date under
the ITT Deferred Compensation Plan with respect to Water Employees and specific ITT Retirees listed
on Schedule 4(c)(iii), including without limitation, such liabilities incurred prior to 1995
identified in the 1995 Employee Matters Agreement. Defense does hereby assume liability for
benefits accrued prior to the Distribution Date under the ITT Deferred Compensation Plan with
respect to Defense Employees and specific ITT Retirees listed on Schedule 4(c)(iii), including
without limitation, such liabilities incurred prior to 1995 identified in the 1995 Employee Matters
Agreement.
(iii) Excess Savings Plans. Effective as of the Distribution Date, ITT shall remain
liable for benefits accrued under the ITT Excess Savings Plan identified as Item 3 on Schedule
4(a)(ii) prior to the Distribution Date with respect to ITT Employees and ITT Retirees. Effective
as of the Distribution Date, Water shall adopt a new excess savings plan, which shall be identical
in all material respects to the ITT Excess Savings Plan identified as Item 3 on Schedule 4(a)(ii)
as in effect immediately prior to the Distribution Date. Effective as of the Distribution Date,
Defense shall adopt a new excess savings plan, which shall be identical in all material respects to
the ITT Excess Savings Plan identified as Item 3 on Schedule 4(a)(ii) as in effect immediately
prior to the Distribution Date. ITT shall cause the transfer of all liabilities for benefits
accrued under the ITT Excess Savings Plan for Defense Employees as reflected on the plan’s records
to Defense and for Water Employees as reflected on the plan’s records to Water as soon as
practicable following the Distribution Date. Water does hereby assume liability for benefits
accrued prior to the Distribution Date under the ITT Excess Savings Plan with respect to Water
Employees, and Defense does hereby assume liability for benefits accrued prior to the Distribution
Date under the ITT Excess Savings Plan with respect to Defense Employees.
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(d) Non-US DC Plans. (i) Continuation of Non-US DC Plans. Following the
Distribution Date, ITT shall continue to sponsor the ITT Non-US DC Plans as so identified on
Schedule 4(a)(iii). Following the Distribution Date, Defense shall continue to sponsor the Defense
Non-US DC Plans as so identified on Schedule 4(a)(iii). Following the Distribution Date, Water
shall continue to sponsor the Water Non-US DC Plans as so identified on Schedule 4(a)(iii). Each
of ITT, Defense and Water shall assume all liabilities associated with such plans that it sponsors
following the Distribution Date, whether incurred prior to, on or following the Distribution Date.
Each of ITT, Defense and Water shall retain all accrued benefits associated with such plans that it
sponsors following the Distribution Date, whether accrued prior to, on or following the
Distribution Date. For any ITT Non-US DC Plan not identified on Schedule 4(a)(iii), the entity
that maintained such ITT Non-US DC Plan prior to the Distribution Date shall continue to maintain
such plan and assume all liabilities associated with such plan following the Distribution Date.
(ii) Adoption of Non-US DC Plans. Effective as of the Distribution Date, ITT shall
adopt benefits plans for ITT Employees, which shall have terms similar in all material respects to
the benefit plans identified on Items 9, 10, 13 and 14 of Schedule 4(a)(iii). Effective as of the
Distribution Date, Defense shall adopt benefits plans for Defense Employees, which shall have terms
similar in all material respects to the benefit plan identified as the ITT Retirement Savings Plan
— ITT Industries (UK) on Item 14 of Schedule 4(a)(iii). Effective as of the Distribution Date,
Water shall adopt benefits plans for Water Employees, which shall have terms similar in all
material respects to the benefit plans identified on Items 2 and 3 of Schedule 4(a)(iii). Each of
ITT, Defense and Water shall assume all liabilities associated with the plans that it sponsors
following the Distribution Date, whether incurred prior to, on or following the Distribution Date.
(iii) Transfer of Non-US Assets and Liabilities. As soon as practicable on or after
the Distribution Date, ITT shall transfer to Defense the assets and liabilities associated with
Defense ITT Group employees who participated in the Non-US DC Plan identified as the ITT Retirement
Savings Plan — ITT Industries (UK) as Item 14 of Schedule 4(a)(iii) prior to the Distribution,
unless any such employee elects otherwise. As soon as practicable on or after the Distribution
Date, ITT shall transfer to Water the assets and liabilities associated with Water ITT Group
employees who participated in the Non-US DC Plans identified as Items 2 and 3 of Schedule 4(a)(iii)
prior to the Distribution, unless any such employee elects otherwise. As soon as practicable on or
after the Distribution Date, Water shall transfer to ITT the assets and liabilities associated with
ITT Employees who participated in the Non-US DC Plans identified as Items 7, 8, 13 and 14 of
Schedule 4(a)(iii) prior to the Distribution, unless any such employee elects otherwise. Such
assets will be transferred in kind to the maximum extent practicable.
5. EMPLOYEE HEALTH AND WELFARE BENEFIT PLANS.
(a) List of Health and Welfare Plans. (i) Certain current and former employees of
ITT, Water and Defense participate in ITT Group health and welfare plans made available for certain
ITT Group employees in the United States. Schedule 5(a)(i) lists each health and welfare plan
applicable to Preexisting ITT Employees (the “US H&W Plans”).
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(ii) Certain current and former employees of ITT, Water and Defense participate in ITT Group
health and welfare plans made available for certain ITT Group employees outside of the United
States. Schedule 5(a)(ii) lists each health and welfare plan applicable to Preexisting ITT
Employees (the “Non-US H&W Plans”).
(b) US H&W Plans. (i) Continuation of Existing US H&W Plans. Following the
Distribution Date, ITT shall continue to sponsor the health and welfare plans so identified on
Schedule 5(a)(i). Following the Distribution Date, Defense shall continue to sponsor the health
and welfare plans so identified on Schedule 5(a)(i). Following the Distribution Date, Water shall
continue to sponsor the health and welfare plans so identified on Schedule 5(a)(i). Each of ITT,
Defense and Water shall retain all accrued benefits associated with such plans that it sponsors
following the Distribution Date, whether accrued prior to, on or following the Distribution Date.
(ii) Adoption of New US H&W Plans. Effective on the earlier of the Distribution Date
and December 31, 2011, Defense shall adopt new health and welfare plans, which shall have terms
similar in all material respects to the health and welfare plans identified as Items 14, 21, 22,
23, 24, 26, 42, 43, 45 and 46 on Schedule 5(a)(i). Effective on the earlier of the Distribution
Date and December 31, 2011, Water shall adopt new health and welfare plans, which shall have terms
similar in all material respects to the health and welfare plans identified as Items 14, 21, 22,
23, 24, 26, 42, 43, 45, 46 and 47 on Schedule 5(a)(i).
(iii) Goulds Plans. Effective as of the Distribution Date, Water shall adopt new
health and welfare plans substantially similar in all material ways to the Goulds Postretirement
Medical Plan and the Goulds Postretirement Life Plan, identified as Items 33 and 39 on Schedule
5(a)(i), respectively. As soon as practicable following the Distribution Date, ITT shall transfer
to Water 25% of the assets and 25% of the liabilities of the Goulds Postretirement Medical Plan and
the Goulds Postretirement Life Plan, and Water shall be liable for such assets and liabilities as
of the date of such transfer.
(iv) Transfer of ITT Employee Benefit Trust. As soon as practicable on or after the
Distribution Date, ITT shall transfer to Defense the ITT Employee Benefit Trust, and Defense shall
assume all liabilities associated with such trust. As soon as practicable following the
Distribution Date, ITT shall transfer to Defense all of the assets and liabilities of the ITT
Employee Benefit Trust related to the retiree portion of the plan, and Defense shall be liable for
all such assets and liabilities as of the date of such transfer.
(v) ITT Salaried Retiree Health Plan. Effective as of the Distribution Date, the ITT
Salaried Retiree Health Plan identified as Item 13 on Schedule 5(a)(i) will provide that for
purposes of determining eligibility for post-retirement medical benefits under the ITT Salaried
Retiree Health Plan with respect to an eligible salaried Preexisting ITT Employee who on the
Distribution Date, becomes a Water Employee or remains an ITT Employee, such Water Employee or ITT
Employee shall be credited with the same eligibility service he or she is credited with under the
ITT Salaried Retirement Plan as described in Section 3(b)(vii) herein.
(vi) Severance. Effective as of the Distribution Date, each of ITT, Water and Defense
shall provide severance plans for all Preexisting ITT Employees which are substantially equivalent
to those ITT severance plans covering such employees immediately prior to the
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Distribution Date identified as Items 15-19 of Schedule 5(a)(i), with no restriction as to
modification by each of ITT, Water and Defense.
(vii) Long-Term Disability Insurance. Effective as of the Distribution Date, Water and
Defense shall each adopt long-term disability plans, identical in all material respects to the ITT
Long-Term Disability Plan and the ITT Corporation Excess Long-Term Disability Plan identified as
Items 23 and 24 of Schedule 5(a)(i), each as in effect on the Distribution Date, covering eligible
Water Employees and Defense Employees, respectively.
(viii) Liabilities. ITT shall transfer all liability to Defense with respect to, and
all Code Section 501(c)(9) assets attributable to, retiree life insurance and medical benefits
under the ITT employee welfare benefit plans, except that (x) ITT shall transfer to Water the
liability of ITT with respect to, and any assets attributable to, certain Preexisting ITT Employees
identified on Schedule 1(a)(i) whose employment is transferred to Water in connection with the
Distribution, and Water does hereby assume such liability, and (y) ITT shall transfer to Defense
the liability with respect to, and assets attributable to, certain Preexisting ITT Employees
identified on Schedule 1(a)(ii) whose employment is transferred to Defense in connection with the
Distribution, and Defense does hereby assume such liability.
(ix) Change in Control. If there is a Change in Control of ITT, Water or Defense
during the five-year period following the Distribution Date, then the company in which such Change
in Control occurred shall not, during the balance of such five-year period, reduce or eliminate
health benefits in effect immediately prior to such Change in Control provided to former employees
who retired from ITT or any of its Affiliates on or prior to the Distribution Date (or as set forth
in the next succeeding sentence), or increase associated retiree contributions, unless the other
companies consent in writing to such a reduction, elimination or cost increase; provided, however,
that the company in which the Change in Control occurred may, in its sole discretion, modify such
benefits in accordance with the changes contemplated in the assumptions in effect immediately prior
to the Change in Control that are used to establish such company’s Accumulated Postretirement
Benefit Obligation (as defined in Financial Accounting Standards Board ASC 715). Persons who are
receiving severance payments in connection with the Distribution and who are or become eligible to
retire on or before the end of such severance period shall be afforded the treatment of this
Section 5(b)(ix).
(x) Indemnity. In the event that any of ITT, Water or Defense is asked to
consent to a reduction, elimination or cost increase with respect to retiree health benefits after
a Change in Control as described in clause (iii) above, each such company shall determine whether
to provide such consent in its sole and absolute discretion. Each of ITT, Water and Defense does
hereby agree to indemnify any other company asked by it to provide such consent against any and all
liability that might arise with respect to the granting or withholding of such consent.
(c) Non-US H&W Plans. (i) Continuation of Non-US H&W Plans. Following the
Distribution Date, ITT shall continue to sponsor the ITT Non-US H&W Plans as so identified on
Schedule 5(a)(ii). Following the Distribution Date, Defense shall continue to sponsor the Defense
Non-US H&W Plans as so identified on Schedule 5(a)(ii). Following the Distribution Date, Water
shall continue to sponsor the Water Non-US H&W Plans as so identified on Schedule 5(a)(ii). Each
of ITT, Defense and Water shall assume all liabilities associated with
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such plans that it sponsors following the Distribution Date, whether incurred prior to, on or
following the Distribution Date. Each of ITT, Defense and Water shall retain all accrued benefits
associated with such plans that it sponsors following the Distribution Date, whether accrued prior
to, on or following the Distribution Date. For any ITT Non-US H&W Plan not identified on Schedule
5(a)(ii), the entity that maintained such ITT Non-US H&W Plan prior to the Distribution Date shall
continue to maintain such plan and assume all liabilities associated with such plan following the
Distribution Date.
(ii) Adoption of Non-US H&W Plans. Effective as of the Distribution Date, ITT shall
adopt benefits plans for ITT Employees, which shall have terms similar in all material respects to
the benefit plans identified on Items 27, 30-35 and 42 of Schedule 5(a)(ii). Effective as of the
Distribution Date, Defense shall adopt benefits plans for Defense Employees, which shall have terms
similar in all material respects to the benefit plans identified on Items 7, 8, 22 and 23 of
Schedule 5(a)(ii). Effective as of the Distribution Date, Water shall adopt benefits plans for
Water Employees, which shall have terms similar in all material respects to the benefit plans
identified on Items 7-11, 22 and 23 of Schedule 5(a)(ii). Each of ITT, Defense and Water shall
assume all liabilities associated with the plans that it sponsors following the Distribution Date,
whether incurred prior to, on or following the Distribution Date.
6. INCENTIVE PLANS. (a) ITT currently maintains certain annual incentive plans and certain
long-term performance plans, each as listed on Schedule 6(a) (the “Incentive Plans”),
pursuant to which certain Preexisting ITT Employees employed by ITT might become entitled to
payments after the Distribution Date with respect to their performance with ITT prior to the
Distribution Date.
(b) Effective as of the Distribution Date, ITT shall be and remain liable for all payments
accrued prior to the Distribution Date for ITT Employees under the Incentive Plans, including any
such payments to be made following the Distribution Date. Effective as of the Distribution Date,
Water shall be and remain liable for all payments accrued prior to the Distribution Date for Water
Employees under the Incentive Plans, including any such payments to be made following the
Distribution Date. Effective as of the Distribution Date, Defense shall be and remain liable for
all payments accrued prior to the Distribution Date for Defense Employees under the Incentive
Plans, including any such payments to be made following the Distribution Date. ITT, Water and
Defense shall cause any such payments under the Incentive Plans to be recognized as compensation
without regard to the source of such payments.
As soon as practicable following the Distribution Date, ITT shall transfer any amounts accrued
under the Incentive Plans for (i) Water Employees to Water and (ii) Defense Employees to Defense.
(c) All multi-year cash performance awards under the Incentive Plans (the “TSR
Awards”) shall be terminated effective as of the Distribution Date. ITT shall determine the
amount to be paid in cash, if any, to each eligible Preexisting ITT Employee under outstanding TSR
Awards as described in this Section 6(c). The amount to be paid under the TSR Awards shall be paid
in cash on the normal payment schedule of the original TSR Award. ITT shall be liable for and make
any such payments to ITT Employees, including any such payments to be made following the
Distribution Date. Water shall be liable for and make any such
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payments to Water Employees, including any such payments to be made following the Distribution
Date. Defense shall be liable for and make any such payments to Defense Employees, including any
such payments to be made following the Distribution Date.
For the TSR Awards granted in 2009, ITT shall pay such award in cash to the extent payment is
earned according to the original vesting and payment schedule to each eligible Preexisting ITT
Employee based on (i) actual performance for the pro rata percentage of the performance period
completed on the Distribution Date and (ii) target value for the remaining uncompleted performance
period following the Distribution Date.
For the TSR Awards granted in 2010, (i) ITT shall pay such award in cash to the extent payment
is earned to each eligible Preexisting ITT Employee based on actual performance for the pro rata
percentage of the performance period completed on the Distribution Date, which shall be paid
according to the original vesting and payment schedule, and (ii) following the Distribution Date,
ITT, Water or Defense shall award to such Preexisting ITT Employee (thereafter, an ITT Employee, a
Water Employee or Defense Employee, as applicable) a restricted stock unit (“RSU”) for the
remaining target value, which RSU shall vest on December 31, 2012 and shall be settled in ITT
shares, Water shares or Defense shares, as applicable.
For the TSR Awards granted in 2011, (i) ITT shall pay such award in cash to the extent payment
is earned to each eligible Preexisting ITT Employee based on actual performance for the pro rata
percentage of the performance period completed on the Distribution Date, which shall be paid
according to the original vesting and payment schedule, and (ii) following the Distribution Date,
ITT, Water or Defense will award to such Preexisting ITT Employee (thereafter, an ITT Employee, a
Water Employee or Defense Employee, as applicable) an RSU for the remaining target value, which RSU
shall vest on December 31, 2013 and shall be settled in ITT shares, Water shares or Defense shares,
as applicable.
(d) Effective as of the Distribution Date, ITT shall accrue, be and remain liable for all
payments for ITT Employees under the ITT Corporation Retention Program as identified on Item 4 of
Schedule 6(a). Effective as of the Distribution Date, Water shall accrue, be and remain liable for
all payments for Water Employees under the ITT Corporation Retention Program as identified on Item
4 of Schedule 6(a). Effective as of the Distribution Date, Defense shall accrue, be and remain
liable for all payments for Defense Employees under the ITT Corporation Retention Program as
identified on Item 4 of Schedule 6(a).
7. STOCK OPTIONS AND OTHER AWARDS. (a) Effective as of the day following the Distribution
Date, outstanding stock options (whether vested or unvested), stock appreciation rights, RSUs and
restricted stock awards (together, “ITT stock awards”) under the ITT stock plans listed on
Schedule 7(a), as each plan may have been amended from time to time (the “ITT Stock
Plans”), shall be treated as follows:
(i) ITT Employees; Retirees. ITT stock awards held by ITT Employees and ITT
Retirees shall be adjusted to reflect the Distribution, as provided pursuant to the terms of
the ITT Stock Plans, such that they retain ITT stock awards (but not stock awards payable in
Water or Defense shares) following the Distribution Date.
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(ii) Water Employees. Water Employees holding ITT stock awards shall receive
substitute stock awards in respect of Water Common Stock (but not in respect of ITT Common
Stock or Defense Common Stock) pursuant to the terms of a stock plan to be adopted by Water
as of the Distribution Date (the “Water Stock Plan”), which are deemed adjusted to
reflect the Distribution, as provided pursuant to the terms of the ITT Stock Plans and as
described in Section 7(a)(i).
(iii) Defense Employees. Defense Employees holding ITT stock awards shall
receive substitute stock awards in respect of Defense Common Stock (but not in respect of
ITT Common Stock or Water Common Stock) pursuant to the terms of a stock plan, to be adopted
by Defense as of the Distribution Date (the “Defense Stock Plan”), which are deemed
adjusted to reflect the Distribution, as provided pursuant to the terms of the ITT Stock
Plans and as described in Section 7(a)(i).
(iv) ITT Non-Employee Directors. The Compensation and Personnel Committee of
the Board of Directors of ITT has approved the adjustment of any ITT stock awards held by
such non-employee directors that have not been exercised as of the Distribution Date to
reflect the Distribution, as provided pursuant to the terms of the ITT Stock Plans following
the conversion formula used for common shareholders of ITT stock. Such ITT stock awards
held by a non-employee director will be adjusted on an “as distributed basis” such that each
ITT stock award will be converted into a like number of ITT stock awards based on shares of
each of ITT, Water and Defense following the Distribution Date. Generally, vesting and
exercisability terms will remain the same, although certain adjustments may be made as the
Board of Directors of ITT or the applicable committee thereof shall approve.
(v) Other Provisions. Effective as of the Distribution Date, Water Employees
and Defense Employees shall cease active participation in all ITT Stock Plans;
provided, however, that Water Employees and Defense Employees shall receive full
credit under any substitute stock awards in respect of Water Common Stock and Defense Common
Stock, respectively, for their service to ITT Group prior to the Distribution;
provided, further, that Water Employees and Defense Employees shall be deemed to
participate under the ITT Stock Plans through the day following the Distribution Date for
the purposes of any substitute stock awards they received in connection with the
Distribution. To the extent that any Preexisting ITT Employee continues to be entitled to
future ITT awards following the Distribution Date, such grants may be made in forms that are
acceptable to ITT, Water or Defense, as such entity deem adequate.
(b) Manner of Substitution. (i) With respect to each cancelled ITT stock award, the
number and exercise price of substitute stock awards granted under the Water Stock Plan or the
Defense Stock Plan with respect thereto, and the other terms and conditions of the substitute stock
awards, shall be equitably determined to preserve the economic value of the cancelled ITT stock
award.
(ii) Each holder of ITT Common Stock on the Distribution Record Date (or such holder’s
designated transferee or transferees) shall be entitled to receive in the Water
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Distribution a substitute stock award representing one (1) share of Water Common Stock granted
under the Water Stock Plan for every stock award representing one (1) share of ITT Common Stock
granted under the ITT Stock Plan held by such holder. No action by any such holder shall be
necessary for such holder to receive the applicable substitute stock award representing shares of
Water Common Stock such holder is entitled in the Water Distribution.
(iii) Each holder of ITT Common Stock on the Distribution Record Date (or such holder’s
designated transferee or transferees) shall be entitled to receive in the Defense Distribution a
substitute stock award representing ones (1) share of Defense Common Stock granted under the
Defense Stock Plan for every stock award representing one (1) share of ITT Common Stock granted
under the ITT Stock Plan held by such holder. No action by any such holder shall be necessary for
such holder to receive the applicable substitute stock award representing shares of Defense Common
Stock such holder is entitled in the Defense Distribution.
(c) Fractional Shares(d) . ITT holders of stock awards under ITT incentive plans on
the Distribution Record Date, which would entitle such holders to receive a substitute stock award
representing less than one whole share of Water Common Stock or Defense Common Stock, as the case
may be, in the applicable Distribution, shall receive (x) if such holders are entitled to receive a
substitute stock award representing less than one-half of a whole share of Water Common Stock or
Defense Common Stock, as the case may be, such number shall be rounded down to the next whole share
of Water Common Stock or Defense Common Stock, or (y) if such holders are entitled to receive a
substitute stock award representing at least one-half of a whole share of Water Common Stock or
Defense Common Stock, as the case may be, such number shall be rounded up to the next whole share
of Water Common Stock or Defense Common Stock, as the case may be. Fractional shares of Water
Common Stock or Defense Common Stock shall not be distributed in the Distribution nor credited to
book-entry accounts, provided however that fractional shares of ITT, Water or Defense held for the
benefit of employees in book-entry accounts with the Company’s external administrator may be
credited to such accounts. The Distribution Agent shall, as soon as practicable after the
Distribution Date distribute to each such holder, or for the benefit of each such beneficial owner,
such holder or owner’s ratable share of such stock awards, based upon the average gross selling
price per share of Water Common Stock or Defense Common Stock, as the case may be, after making
appropriate deductions for any amount required to be withheld for United States federal income tax
purposes. Notwithstanding the foregoing, in the event of any adjustment, stock split, reverse
stock split or other adjustment or change to the capitalization of shares of ITT, Water or Defense
that occurs at or following the Distribution, ITT, Water or Defense, as applicable, shall provide
for an adjustment of the applicable stock awards then held to reflect such adjustment, stock split,
reverse stock split or other adjustment or change to the capitalization of shares prior to the
subsequent distribution and the terms of the applicable equity incentive plans will continue to
apply to the applicable stock awards.
8. COLI. (a) Effective as of the Distribution Date, the COLI policies underwritten by
Northwestern Mutual Life Insurance Company and New York Life covering certain Preexisting ITT
Employees who are eligible for participation in the ITT Deferred Compensation Plan shall be
allocated among the three companies in accordance with Schedule 8(a).
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(b) Effective as of the Distribution Date, COLI policies underwritten by Penn Insurance and
Annuity Company as set forth in Schedule 8(b) purchased in connection with supplemental executive
life benefits known as “Options C and D” will remain with ITT.
9. DIRECTOR PLANS. (a) Treatment of Current Director Plans. (i) Effective as of
the Distribution Date, ITT shall continue the director plans identified on Schedule 9(a) (the
“ITT Director Plans”). With respect to any non-employee director of ITT immediately
following the Distribution who is not also a director of Water or Defense at such time and who has
an accrued benefit under the suspended ITT Directors Retirement Plan, ITT shall provide such
accrued benefit in accordance with the terms of such plan, but only to the extent such accrued
benefit is not duplicated under a plan maintained by Water or Defense.
(ii) Effective as of the Distribution Date, Defense shall adopt benefits plans for non-employee
directors of Defense, which shall have terms similar in all material respects to the ITT Director
Plans set forth on Schedule 9(a) (the “Defense Director Plans”), and Water shall adopt
benefits plans for non-employee directors of Defense, which shall have terms similar in all
material respects to the ITT Director Plans set forth on Schedule 9(a) (the “Water Director
Plans”).
(iii) As soon as practicable on or after the Distribution Date, ITT shall cause the transfer of
the accounts of all non-employee directors of Defense from the ITT Directors Plans to the Defense
Director Plans. As soon as practicable on or after the Distribution Date, ITT shall cause the
transfer of the accounts of all non-employee directors of Water from the ITT Directors Plans to the
Water Director Plans. Such assets will be transferred in kind to the maximum extent practicable.
(b) Adoption of Water Director Plans. Effective as of the Distribution Date, Water
shall adopt plans and programs for non-employee directors that are identical in all material
respects to the ITT Director Plans. With respect to any non-employee director of Water immediately
following the Distribution who has an accrued benefit under any ITT Director Plan, Water shall
provide such accrued benefit in accordance with the terms of such plan, but only to the extent such
accrued benefit is not duplicated under a plan maintained by ITT or Defense.
(c) Adoption of Defense Director Plans. Effective as of the Distribution Date, Defense
shall adopt plans and programs for non-employee directors that are identical in all material
respects to the ITT Director Plans(d) . With respect to any non-employee director of Defense
immediately following the Distribution who has an accrued benefit under any suspended ITT Director
Plan, Defense shall provide such accrued benefit in accordance with the terms of such plan, but
only to the extent such accrued benefit is not duplicated under a plan maintained by ITT or Water.
10. COLLECTIVE BARGAINING AGREEMENTS. (a) ITT Collective Bargaining Agreements. ITT
shall retain all collective bargaining agreements and associated liabilities so identified on
Schedule 10(a) and for each such collective bargaining agreement in effect as of the Distribution
Date. For each such collective bargaining agreement in effect as of the Distribution Date, ITT
shall continue to recognize the union which is a party to such
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collective bargaining agreement as the exclusive collective bargaining representative for the
ITT Employees covered under the terms of each such collective bargaining agreement.
(b) Water Collective Bargaining Agreements. Water shall expressly assume all
collective bargaining agreements and associated liabilities so identified on Schedule 10(a)
effective as of the Distribution Date. For each such collective bargaining agreement in effect as
of the Distribution Date, Water agrees to recognize the union which is a party to each such
collective bargaining agreement as the exclusive collective bargaining representative for the Water
Employees covered under the terms of each such collective bargaining agreement.
(c) Defense Collective Bargaining Agreements. Defense shall expressly assume all
collective bargaining agreements and associated liabilities so identified on Schedule 10(a)
effective as of the Distribution Date. For each such collective bargaining agreement in effect as
of the Distribution Date, Defense agrees to recognize the union which is a party to each such
collective bargaining agreement as the exclusive collective bargaining representative for the
Defense Employees covered under the terms of each such collective bargaining agreement.
(d) EU Directive. Notwithstanding anything to the contrary in this Section 10, in
countries in which the European Union Acquired Rights Directive applies, collective bargaining
agreements and any other agreements with employee representatives will continue to apply after the
Distribution Date to the extent and in the manner provided for by local law.
11. TRANSITION SERVICES. Each of ITT, Water and Defense shall provide such transition
services as required by the Transition Services Agreement.
12. ALLOCATION OF BALANCE SHEET ACCOUNTS. Effective as of the Distribution Date, certain
balance sheet accounts attributable to employee benefit plans for which responsibility is being
transferred from ITT to Water and/or Defense shall be allocated to the balance sheets of Water or
Defense, as appropriate, on the following basis:
(a) All accruals on the balance sheets of Water (including accruals on the balance sheet of
Water) and Defense (including accruals on the balance sheet of Defense) which relate to benefit
plans sponsored by the respective companies shall be unaffected by the provisions of this Section
12.
(b) With regard to the liabilities recorded by ITT with respect to the ITT Excess Savings Plan
that will, in accordance with Section 4(c)(iii), be assumed by Water and Defense, respectively, ITT
shall allocate to the respective new employing entity an amount equal to the sum of the plan
balances for such affected employees.
(c) For each category of balance sheet account enumerated in this Section 12, there has been
recorded a corresponding deferred tax debit or credit, as the case may be, which shall also be
allocated to the respective companies based on the amount allocated for the stated reason above.
(d) To the extent that a balance sheet account requiring allocation among the companies exists
that is not specifically included in this Section 12, ITT shall make the
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allocation on a reasonable basis, subject to the agreement of the party in whose favor the
allocation is being made.
13. ACCESS TO INFORMATION AND DATA EXCHANGE. (a) Provision of Corporate Records. (i)
Consistent with Section 6.3 of the Distribution Agreement, upon the prior written request by Water
or Defense for specific and identified agreements, documents, books, records or files including,
without limitation, computer files, microfiche, tape recordings and photographs (collectively,
“Records”), relating to or affecting Water or Defense, as applicable, ITT shall arrange, as
soon as reasonably practicable following the receipt of such request, for the provision of
appropriate copies of such Records (or the originals thereof if the party making the request has a
reasonable need for such originals) in the possession of ITT or any of its Subsidiaries, but only
to the extent such items are not already in the possession of the requesting party;
provided, however, that as soon as practicable following the Distribution Date, ITT
shall provide copies of all necessary employee documentation for the Water Employees listed on
Schedule 1(a)(i) to Water and shall provide copies of all necessary employee documentation for the
Water Employees listed on Schedule 1(a)(ii) to Defense.
(ii) After the Distribution Date, upon the prior written request by ITT or Defense for
specific and identified Records relating to or affecting ITT or Defense, as applicable,
Water shall arrange, as soon as reasonably practicable following the receipt of such
request, for the provision of appropriate copies of such Records (or the originals thereof
if the party making the request has a need for such originals) in the possession of Water or
any of its Subsidiaries, but only to the extent such items are not already in the possession
of the requesting party.
(iii) After the Distribution Date, upon the prior written request by ITT or Water for
specific and identified Records relating to or affecting ITT or Water, as applicable,
Defense shall arrange, as soon as reasonably practicable following the receipt of such
request, for the provision of appropriate copies of such Records (or the originals thereof
if the party making the request has a need for such originals) in the possession of Defense
or any of its Subsidiaries, but only to the extent such items are not already in the
possession of the requesting party.
(b) Access to Information. (i) From and after the Distribution Date and consistent
with Section 6.3 of the Distribution Agreement, each of ITT, Water and Defense shall afford to the
other and its authorized accountants, counsel and other designated representatives reasonable
access during normal business hours, subject to appropriate restrictions for classified, privileged
or confidential information, to the personnel, properties, books and Records of such party and its
Subsidiaries insofar as such access is reasonably required by the other party.
(ii) Without limiting the generality of the foregoing clause (i), except as otherwise
provided by law, each party hereto shall furnish, or shall cause to be furnished to the
other parties, a list of all benefit plan participants and employee data or information in
its possession which is necessary for such other parties to maintain and implement any
benefit plan or arrangement covered by this Agreement, or to comply with the provisions of
this Agreement, and which is not otherwise readily available to such other party.
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(c) Reimbursement; Other Matters. (i) Except to the extent otherwise specifically
identified by the Distribution Agreement or any Ancillary Agreement, a party providing Records or
access to information to the other party under this Section 13 shall be entitled to receive from
the recipient, upon the presentation of invoices therefore, payments for such amounts, relating to
supplies, disbursements and other out-of-pocket expenses, as may be reasonably incurred in
providing such Records or access to information.
(ii) The parties hereto shall comply with those document retention policies, cost
sharing arrangements, expense reimbursement procedures and request procedures as shall be
established and agreed to in writing by their respective authorized officers on or prior to
the Distribution Date in respect of Records and related matters.
(d) Confidentiality. Each of (i) ITT and its Subsidiaries, (ii) Water and its
Subsidiaries and (iii) Defense and its Subsidiaries shall not use or permit the use of (without the
prior written consent of the other) and shall hold, and shall cause its consultants and advisors to
hold, in strict confidence, all information concerning the other parties in its possession, its
custody or under its control (except to the extent that (A) such information has been in the public
domain through no fault of such party or (B) such information has been later lawfully acquired from
other sources by such party or (C) the Distribution Agreement, this Agreement or any other
Ancillary Agreement or any other agreement entered into pursuant hereto permits the use or
disclosure of such information or (D) as may be required under the USA Patriot Act) to the extent
such information (x) relates to the period up to the Effective Time, (y) relates to the
Distribution Agreement or any Ancillary Agreement or (z) is obtained in the course of performing
services for the other party pursuant to the Distribution Agreement or any Ancillary Agreement, and
each party shall not (without the prior written consent of the other) otherwise release or disclose
such information to any other person, except such party’s auditors and attorneys, unless compelled
to disclose such information by judicial or administrative process or unless such disclosure is
required by law and such party has used commercially reasonable efforts to consult with the other
affected party or parties prior to such disclosure. To the extent that a party hereto is compelled
by judicial or administrative process to disclose such information under circumstances in which any
evidentiary privilege would be available, such party agrees to assert such privilege in good faith
prior to making such disclosure. Each of the parties hereto agrees to consult with each relevant
other party in connection with any such judicial or administrative process, including, without
limitation, in determining whether any privilege is available, and further agrees to allow each
such relevant party and its counsel to participate in any hearing or other proceeding (including,
without limitation, any appeal of an initial order to disclose) in respect of such disclosure and
assertion of privilege. Notwithstanding anything to the contrary contained herein, each party shall
be entitled to use information disclosed pursuant to this Agreement to the extent reasonably
necessary for the administration of its employee benefit plans in accordance with applicable law.
14. NOTICES; COOPERATION. Notwithstanding anything in this Agreement to the contrary, all
actions contemplated herein with respect to benefit plans which are to be consummated pursuant to
this Agreement shall be subject to such notices to, and/or approvals by, the Internal Revenue
Service (or other governmental agency or entity) as are required or deemed appropriate by such
benefit plan’s sponsor. Each of ITT, Water and Defense agrees to use its commercially reasonable
efforts to cause all such notices and/or approvals to be
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filed or obtained, as the case may be, in a timely fashion. Each party hereto shall reasonably
cooperate with the other parties with respect to any government filings, employee notices or any
other actions reasonably necessary to maintain and implement the employee benefit arrangements
covered by this Agreement.
15. FURTHER ASSURANCES. From time to time, as and when reasonably requested by any other party
hereto, each party hereto shall execute and deliver, or cause to be executed and delivered, all
such documents and instruments and shall take, or cause to be taken, all such further or other
actions as such other party may reasonably deem necessary or desirable to effect the purposes of
this Agreement and the transactions contemplated hereunder.
16. INDEMNIFICATION. (a) Indemnification by ITT. Except as otherwise specifically
set forth in this Agreement or in Article VII of the Distribution Agreement, ITT shall indemnify,
defend and hold harmless the Water Indemnitees and the Defense Indemnitees from and against any and
all Indemnifiable Losses of the Water Indemnitees and the Defense Indemnitees, respectively,
arising out of, by reason of or otherwise in connection with (i) any employee benefit plan, policy,
program or arrangement established or adopted by ITT effective on or after the Distribution Date,
(ii) any and all liabilities relating primarily to, arising primarily out of or resulting primarily
from the operation or conduct of any ITT Plan or any individual identified as an ITT Employee,
(iii) any liability assumed or retained by ITT pursuant to the terms and conditions set forth on
Schedule 16(a) of this Agreement or (iv) the breach by ITT of any provision of this Agreement.
(b) Indemnification by Water. Except as otherwise specifically set forth in this
Agreement or in Article VII of the Distribution Agreement, Water shall indemnify, defend and hold
harmless the ITT Indemnitees and the Defense Indemnitees from and against any and all Indemnifiable
Losses of the ITT Indemnitees and the Defense Indemnitees, respectively, arising out of, by reason
of or otherwise in connection with (i) any employee benefit plan, policy, program or arrangement
established or adopted by Water effective on or after the Distribution Date, (ii) any and all
liabilities relating primarily to, arising primarily out of or resulting primarily from the
operation or conduct of any Water Plan or any individual identified as a Water Employee, (iii) any
liability assumed or retained by Water pursuant to the terms and conditions set forth on Schedule
16(b) of this Agreement or (iv) the breach by Water of any provision of this Agreement.
(c) Indemnification by Defense. Except as otherwise specifically set forth in this
Agreement or in Article VII of the Distribution Agreement, Defense shall indemnify, defend and hold
harmless the ITT Indemnitees and the Water Indemnitees from and against any and all Indemnifiable
Losses of the ITT Indemnitees and the Water Indemnitees, respectively, arising out of, by reason of
or otherwise in connection with (i) any employee benefit plan, policy, program or arrangement
established or adopted by Defense effective on or after the Distribution Date, (ii) any and all
liabilities relating primarily to, arising primarily out of or resulting primarily from the
operation or conduct of any Defense Plan or any individual identified as a Defense Employee, (iii)
any liability assumed or retained by Defense pursuant to the terms and conditions set forth on
Schedule 16(c) of this Agreement or (iv) the breach by Defense of any provision of this Agreement.
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(d) Limitations on Indemnification Obligations. (i) The amount that any party (an
“Indemnifying Party”) is or may be required to pay to any other person (an
“Indemnitee”) pursuant to paragraphs (a), (b) or (c) of this Section 16, as applicable,
shall be reduced (retroactively or prospectively) by any Insurance Proceeds or other amounts
actually recovered by or on behalf of such Indemnitee in respect of the related Indemnifiable Loss.
If an Indemnitee shall have received the payment required by this Agreement from an Indemnifying
Party in respect of an Indemnifiable Loss and shall subsequently actually receive Insurance
Proceeds or other amounts in respect of such Indemnifiable Loss, then such Indemnitee shall pay to
such Indemnifying Party a sum equal to the amount of such Insurance Proceeds or other amounts
actually received, up to the aggregate amount of any payments received from such Indemnifying Party
pursuant to this Agreement in respect of such Indemnifiable Loss.
(ii) An Indemnifying Party shall not be required to indemnify or pay an Indemnitee
pursuant to paragraphs (a), (b) or (c) of this Section 16, as applicable, for any
Indemnifiable Losses relating to or associated with any employee benefit plan, policy,
program or arrangement of the Indemnifying Party arising out of, by reason of or otherwise
in connection with any act or failure to act on the part of such Indemnitee (including for
this purpose any subsidiaries, businesses or operations which become associated with the
Indemnitee by virtue of or in connection with the Distribution) with respect to or in
connection with such employee benefit plan, policy, program or arrangement, including,
without limitation, any such act or failure to act in connection with the administration by
the Indemnitee of such employee benefit plan, policy, program or arrangement.
(e) Survival of Indemnities. The obligations of ITT, Water and Defense under this
Section 16 shall survive the sale or other transfer by any of them of any assets or businesses or
the assignment by any of them of any Liabilities, with respect to any Indemnifiable Loss of the
other related to such assets, businesses or Liabilities.
17. DISPUTE RESOLUTION. In the event of a controversy, dispute or claim arising out of, in
connection with, or in relation to the interpretation, performance, nonperformance, validity or
breach of this Agreement or otherwise arising out of, or in any way related to this Agreement,
including, without limitation, any claim based on contract, tort, statute or constitution, the
relevant parties shall adhere to the dispute resolution procedures as described in the Distribution
Agreement.
18. MISCELLANEOUS. (a) Complete Agreement; Construction. This Agreement, including
the Schedules and the Distribution Agreement, shall constitute the entire agreement between the
parties with respect to the subject matter hereof and shall supersede all previous negotiations,
commitments, course of dealings and writings with respect to such subject matter. In the event of
any inconsistency between this Agreement and any Schedule hereto, the Schedule shall prevail. In
the event and to the extent that there shall be a conflict between the provisions of this Agreement
and the provisions of the Distribution Agreement, this Agreement shall control unless specifically
stated otherwise in the Distribution Agreement.
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(b) Ancillary Agreements. Except as expressly set forth herein, this Agreement is not
intended to address, and should not be interpreted to address, the matters specifically and
expressly covered by the Ancillary Agreements.
(c) Counterparts. This Agreement may be executed in more than one counterpart, all of
which shall be considered one and the same agreement, and shall become effective when one or more
such counterparts have been signed by each of the parties and delivered to the other parties.
(d) Survival of Agreements. Except as otherwise contemplated by this Agreement, all
covenants and agreements of the parties contained in this Agreement shall survive the Effective
Time and remain in full force and effect in accordance with their applicable terms.
(e) Expenses. Except as specifically listed on Schedule 18(e), all out-of-pocket fees
and expenses incurred, or to be incurred and directly related to the transactions contemplated
hereby shall be paid as described in the Distribution Agreement.
(f) Notices. All notices, requests, claims, demands and other communications under
this Agreement shall be made as described in the Distribution Agreement.
(g) Waivers. Any consent required or permitted to be given by any party to the other
parties under this Agreement shall be in writing and signed by the party giving such consent and
shall be effective only against such party.
(h) Assignment. This Agreement shall not be assignable, in whole or in part, directly
or indirectly, by any party hereto without the prior written consent of the other parties, and any
attempt to assign any rights or obligations arising under this Agreement without such consent shall
be void. Notwithstanding the foregoing, this Agreement shall be assignable in whole in connection
with a merger or consolidation or the sale of all or substantially all the assets of a party hereto
so long as the resulting, surviving or transferee entity assumes all the obligations of the
relevant party hereto by operation of law or pursuant to an agreement in form and substance
reasonably satisfactory to the other parties to this Agreement.
(i) Successors and Assigns. The provisions of this Agreement and the obligations and
rights hereunder shall be binding upon, inure to the benefit of and be enforceable by (and against)
the parties and their respective successors and permitted transferees and assigns.
(j) Termination and Amendment. This Agreement may be terminated, amended, modified or
amended and the Distribution may be modified or abandoned at any time prior to the Effective Time
by and in the sole discretion of ITT without the approval of Water, Defense or the shareholders of
ITT. In the event of such termination, no party shall have any liability of any kind to any other
party or any other person. After the Effective Time, this Agreement may not be terminated, modified
or amended except by an agreement in writing signed by ITT, Water and Defense.
(k) Payment Terms. Except as expressly provided to the contrary in this Agreement,
any amount to be paid or reimbursed by any party, on the one hand, to any other
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25
party or parties, on the other hand, under this Agreement shall be paid or reimbursed
hereunder within sixty (60) days after presentation of an invoice or a written demand therefor and
setting forth, or accompanied by, reasonable documentation or other reasonable explanation
supporting such amount. Except as expressly provided to the contrary in this Agreement, any amount
not paid when due pursuant to this Agreement (and any amount billed or otherwise invoiced or
demanded and properly payable that is not paid within sixty (60) days of such bill, invoice or
other demand) shall bear interest at a rate per annum equal to LIBOR, from time to time in effect,
calculated for the actual number of days elapsed, accrued from the date on which such payment was
due up to the date of the actual receipt of payment.
(l) No Circumvention. The parties agree not to directly or indirectly take any
actions, act in concert with any person who takes an action, or cause (including the failure to
take a reasonable action) such that the resulting effect is to materially undermine the
effectiveness of any of the provisions of this Agreement.
(m) Subsidiaries. Each of the parties hereto shall cause to be performed, and hereby
guarantees the performance of, all actions, agreements and obligations set forth herein to be
performed by any Subsidiary of such party or by any entity that becomes a Subsidiary of such party
at the Effective Time, to the extent such Subsidiary remains a Subsidiary of the applicable party.
(n) Third Party Beneficiaries. This Agreement is solely for the benefit of the parties
hereto 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.
(o) Title 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.
(p) Schedules. The Schedules shall be construed with and as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein. Nothing in the
Schedules constitutes an admission of any liability or obligation of ITT, Water or Defense or any
of their respective Affiliates to any third party, nor, with respect to any third party, an
admission against the interests of ITT, Water or Defense or any of their respective Affiliates. The
inclusion of any item or liability or category of item or liability on any Schedule is made solely
for purposes of allocating potential liabilities among the parties and shall not be deemed as or
construed to be an admission that any such liability exists.
(q) Governing Law. This Agreement shall be governed by and construed in accordance
with the Laws, but not the Laws governing conflicts of Laws (other than Sections 5-1401 and 5-1402
of the New York General Obligations Law), of the State of New York; provided that the Indiana
Business Corporation Law, including the provisions thereof governing the fiduciary duties of
directors of a Indiana corporation, shall govern, as applicable, the internal affairs of ITT,
Defense and Water, as the case may be.
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(r) Consent to Jurisdiction. Subject to the provisions of Article XVI hereof, each of
the parties irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of the State
of New York, New York County, or (b) the United States District Court for the Southern District of
New York (the “New York Courts”), for the purposes of any suit, action or other proceeding
to compel arbitration or for provisional relief in aid of arbitration in accordance with Article IX
of the Distribution Agreement or to prevent irreparable harm, and to the non-exclusive jurisdiction
of the New York Courts for the enforcement of any award issued thereunder. Each of the parties
further agrees that service of any process, summons, notice or document by U.S. registered mail to
such party’s respective address set forth above shall be effective service of process for any
action, suit or proceeding in the New York Courts with respect to any matters to which it has
submitted to jurisdiction in this Section 18(r). Each of the parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated hereby in the New York Courts, and
hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such
court that any such action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.
(s) Waiver of Jury Trial. EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 18(S).
(t) Severability. In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable provisions.
(u) Force Majeure. No party (or any person acting on its behalf) shall have any
liability or responsibility for failure to fulfill any obligation (other than a payment obligation)
under this Agreement, so long as and to the extent to which the fulfillment of such obligation is
prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. A
party claiming the benefit of this provision shall, as soon as reasonably practicable after the
occurrence of any such event: (a) notify the other applicable parties of the nature and extent of
any such Force Majeure condition and (b) use due diligence to remove any such causes and resume
performance under this Agreement as soon as feasible.
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(v) Interpretation. The parties have participated jointly in the negotiation and
drafting of this Agreement. This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or causing any instrument
to be drafted.
(w) No Duplication; No Double Recovery. Nothing in this Agreement is intended to
confer to or impose upon any party a duplicative right, entitlement, obligation or recovery with
respect to any matter arising out of the same facts and circumstances.
(x) No Waiver. No failure to exercise and no delay in exercising, on the part of any
party, any right, remedy, power or privilege hereunder shall operate as a waiver hereof or thereof;
nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or
thereunder preclude any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege.
(y) No Admission of Liability. The allocation of assets and liabilities herein
(including on the Schedules hereto) is solely for the purpose of allocating such assets and
liabilities among ITT, Water and Defense and is not intended as an admission of liability or
responsibility for any alleged liabilities vis a vis any third party, including with respect to the
Liabilities of any non-wholly owned subsidiary of ITT, Water or Defense.
(z) Definitions. Capitalized terms used herein shall have the respective meanings
specified in the Appendix attached hereto unless otherwise herein defined or the context hereof
shall otherwise require.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have duly executed and entered into this Agreement, as of
the date first above written.
| ITT Corporation | ||||||
| By: | /s/ Aris C. Chicles | |||||
| Name: | ||||||
| Title: | Senior Vice President | |||||
| Xylem Inc. | ||||||
| By: | /s/ Frank R. Jimenez | |||||
| Name: | ||||||
| Title: | Vice President, General Counsel & Secretary | |||||
| Exelis Inc. | ||||||
| By: | /s/ Ann D. Davidson | |||||
| Name: | ||||||
| Title: | Vice President, General Counsel & Secretary | |||||
[Signature Page]
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19. DEFINITIONS.
As used in the Agreement, the following terms have the following meanings:
“1995 Employee Matters Agreement” means the Employee Benefit Services and Liability
Agreement dated as of November 1, 1995, among ITT Corporation, a Delaware corporation, ITT
Destinations, Inc., a Nevada corporation, and ITT Hartford Group, Inc., a Delaware corporation.
“Affiliate” has the meaning set forth in the Distribution Agreement.
“Ancillary Agreements” means all of the written agreements, instruments,
understandings, assignments or other written arrangements (other than this Agreement and the
Distribution Agreement) entered into in connection with the transactions contemplated hereby,
including, without limitation, the Conveyancing and Assumption Instruments, the Transition Services
Agreement, the Tax Matters Agreement, the License Agreements, the IP Assignments, the Supply
Agreement[s], the Master Lease Agreement and the Master Sublease Agreement.
“Board” has the meaning set forth in the recitals to this Agreement.
“British DB Plan” has the meaning set forth in Section 3 of this Agreement.
“Canadian Salaried DB Plans” has the meaning set forth in Section 3 of this Agreement.
“Change in Control” means (i) where reference is made to a particular ITT Plan
(including, without limitation, the 2003 ITT Equity Incentive Plan), the definition of “Change in
Control” or “Acceleration Event” in such ITT Plan and (ii) where no reference is made to a
particular ITT Plan, with respect to ITT, Defense or Water (each, a “Company” for the
purposes of this definition), the first day that any one or more of the following conditions have
been satisfied: (a) a report on Schedule 13D shall be filed with the Securities and Exchange
Commission pursuant to Section 13(d) of the Exchange Act disclosing that any person, other than the
Company or a Subsidiary or any employee benefit plan sponsored by the Company or a Subsidiary (or
related trust), is the beneficial owner directly or indirectly of twenty percent (20%) or more of
the outstanding shares of stock of the Company; (b) any person, other than the Company or a
Subsidiary, or any employee benefit plan sponsored by the Company or a Subsidiary (or related
trust), shall purchase shares pursuant to a tender offer or exchange offer to acquire any of the
shares of stock of the Company (or securities convertible into stock of the Company) for cash,
securities or any other consideration, provided that after consummation of the offer, the person in
question is the beneficial owner, directly or indirectly, of twenty percent (20%) or more of the
outstanding shares (calculated as provided in paragraph (d) of Rule 13d-3 under the Exchange Act in
the case of rights to acquire shares); (c) the consummation of (i) any consolidation, business
combination or merger involving the Company, other than a consolidation, business combination or
merger involving the Company in which holders of shares immediately prior to the consolidation,
business combination or merger (x) hold fifty percent (50%) or more of the combined voting power of
the Company (or the corporation resulting from the consolidation, business combination or merger or
the parent of such
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2
corporation) after the merger and (y) have the same proportionate ownership of common stock of
the Company (or the corporation resulting from the consolidation, business combination or merger or
the parent of such corporation), relative to other holders of shares immediately prior to the
consolidation, business combination or merger, immediately after the consolidation, business
combination or merger as immediately before; or (ii) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all or substantially all the assets of
the Company; (d) there shall have been a change in a majority of the members of the board of
directors of the Company within a 12-month period unless the election or nomination for election by
the Company’s shareholders of each new director during such 12-month period was approved by the
vote of two-thirds of the directors then still in office who (x) were directors at the beginning of
such 12-month period or (y) whose nomination for election or election as directors was recommended
or approved by a majority of the directors who were directors at the beginning of such 12-month
period; or (e) any person, other than the Company or a Subsidiary or any employee benefit plan
sponsored by the Company or a Subsidiary (or related trust), becomes the beneficial owner of twenty
percent (20%) or more of the shares.
“Conveyancing and Assumption Instruments” has the meaning set forth in the
Distribution Agreement.
“Defense” has the meaning set forth in the recitals to this Agreement.
“Defense Business” has the meaning set forth in the Distribution Agreement.
“Defense Common Stock” has the meaning set forth in the recitals to this Agreement.
“Defense Director Plans” has the meaning set forth in Article IX of this Agreement.
“Defense Employees” means persons who, immediately after the Distribution Date, are
employed by Defense, including such persons identified on Schedule 1(a)(ii) and such persons absent
from work at Defense by reason of layoff, leave of absence or disability.
“Defense Indemnitees” has the meaning set forth in the Distribution Agreement.
“Defense Plans” means such plans, programs and arrangements maintained for the benefit
of Defense Employees prior to the Distribution Date.
“Defense Stock Plan” has the meaning set forth in Article VII of this Agreement.
“Distribution” has the meaning set forth in the recitals to this Agreement.
“Distribution Agent” has the meaning set forth in the Distribution Agreement.
“Distribution Agreement” has the meaning set forth in the recitals to this Agreement.
“Distribution Date” has the meaning set forth in the Distribution Agreement.
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3
“Distribution Record Date” has the meaning set forth in the Distribution Agreement.
“Distribution” has the meaning set forth in the recitals to this Agreement.
“Effective Time” has the meaning set forth in the Distribution Agreement.
“Eligibility End Date” has the meaning set forth in Article III of this Agreement.
“Force Majeure” has the meaning set forth in the Distribution Agreement.
“Incentive Plan” has the meaning set forth in Article VI of this Agreement.
“Indemnifiable Losses” has the meaning set forth in the Distribution Agreement.
“Indemnifying Party” has the meaning set forth in Section 16(d) of this Agreement.
“Indemnitee” has the meaning set forth in Section 16(d) of this Agreement.
“Insurance Proceeds” has the meaning set forth in the Distribution Agreement.
“ITT” has the meaning set forth in the recitals to this Agreement.
“ITT Common Stock” has the meaning set forth in the recitals to this Agreement.
“ITT Director Plans” has the meaning set forth in Article IX of this Agreement.
“ITT Employees” means persons who, immediately after the Distribution Date, are
employed by ITT, including such persons absent from work at ITT by reason of layoff, leave of
absence or disability.
“ITT Group” means ITT and its affiliates prior to the Distribution.
“ITT Indemnitees” has the meaning set forth in the Distribution Agreement.
“ITT Plans” means the ITT Deferred Compensation Plan, the ITT Defined Benefit Plans,
the ITT Defined Contribution Plans, the ITT Director Plan, the ITT Excess Pension Plan, the ITT
Excess Savings Plan, the ITT Non-Qualified Plans, the ITT Non-US H&W Plans, the ITT Non-US Pension
Plans, the ITT Non-US Unfunded Plans, the ITT Long-Term Disability Plan, the ITT Stock Plans and
any other plan, program or arrangement maintained for the benefit of ITT Employees prior to the
Distribution Date.
“ITT Retained Business” has the meaning set forth in the Distribution Agreement.
“ITT Retiree” means any retired employee of ITT or any of its predecessors.
“ITT stock awards” has the meaning set forth in Section 7 of this Agreement.
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4
“ITT Stock Plans” has the meaning set forth in Section 7 of this Agreement.
“Laws” has the meaning set forth in the Distribution Agreement.
“Liabilities” has the meaning set forth in the Distribution Agreement.
“Master Trust” means the trust established by ITT and maintained by Northern Trust as
the trustee to hold the assets of all US Qualified DB Plans.
“New ITT Trust” has the meaning set forth in Section 3 of this Agreement.
“New Water Trust” has the meaning set forth in Section 3 of this Agreement.
“New York Courts” has the meaning set forth in Article XVIII of this Agreement.
“Non-US DB Plans” has the meaning set forth in Article III of this Agreement.
“Non-US DC Plans” has the meaning set forth in Article IV of this Agreement.
“Non-US H&W Plans” has the meaning set forth in Article V of this Agreement.
“party” means ITT, Water and Defense.
“person” means any natural person, corporation, business trust, joint venture,
association, company, partnership or government, or any agency or political subdivision thereof.
“Plan Actuary” means the plan actuary for each Non-US DB Plan, Non-US DC Plan or
Non-US H&W Plan prior to the Distribution Date or the third-party individual who determined the
liability under such plan prior to, on or after the Distribution Date.
“Preexisting ITT Employees” means persons actively employed by the ITT Group
immediately prior to the Distribution; and persons who are absent from work to the ITT Group
immediately prior to the Distribution by reason of layoff, leave of absence or disability.
“Records” has the meaning set forth in Article 13 of this Agreement.
“RSUs” has the meaning set forth in Article VII of this Agreement.
“Schedule” or “Schedules” means the Schedules Relating to Benefits and
Compensation Matters Agreement, dated as of October 25, 2011, among ITT Corporation, Exelis Inc.
and Xylem Inc., as they may be amended from time to time.
“Subsidiary” has the meaning set forth in the Distribution Agreement.
“Tax Matters Agreement” has the meaning set forth in the Distribution Agreement.
“Tax” has the meaning set forth in the Tax Matters Agreement.
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5
“Transition Services Agreement” has the meaning set forth in the Distribution
Agreement.
“TSR Awards” has the meaning set forth in Article VI of this Agreement.
“USA Patriot Act” means the Uniting and Strengthening America By Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act) Act of 2001, and any
amendments thereto.
“US H&W Plans” has the meaning set forth in Article V of this Agreement.
“US Non-Qualified DB Plans” has the meaning set forth in Article III of this
Agreement.
“US Non-Qualified DC Plans” has the meaning set forth in Article IV of this Agreement.
“US Qualified DB Plans” has the meaning set forth in Article III of this Agreement.
“US Qualified DC Plans” has the meaning set forth in Article IV of this Agreement.
“Water” has the meaning set forth in the recitals to this Agreement.
“Water Business” has the meaning set forth in the Distribution Agreement.
“Water Common Stock” has the meaning set forth in the recitals to this Agreement.
“Water Director Plan” has the meaning set forth in Article IX of this Agreement.
“Water Employees” means persons who, immediately after the Distribution Date, are
employed by Water, including such persons identified on Schedule 1(a)(i) and such persons absent
from work at Water by reason of layoff, leave of absence or disability.
“Water Indemnitees” has the meaning set forth in the Distribution Agreement.
“Water Plans” means such plans, programs and arrangements maintained for the benefit
of Water Employees prior to the Distribution Date.
Table of Contents
SCHEDULES RELATING TO
BENEFITS AND COMPENSATION MATTERS AGREEMENT
DATED AS OF OCTOBER 25, 2011,
AMONG
ITT CORPORATION,
XYLEM INC.
AND
EXELIS INC.
Table of Contents
TABLE OF CONTENTS
| Page | ||||
Schedule 1(a)(i): ITT Employees to Water |
1 | |||
Schedule 1(a)(ii): ITT Employees to Defense |
3 | |||
Schedule 1(d): Employment Agreements |
5 | |||
Schedule 3(a)(i): List of US Qualified Defined Benefit Plans |
6 | |||
Schedule 3(a)(ii): List of US Non-Qualified Defined Benefit Plans |
7 | |||
Schedule 3(a)(iii): List of Non-US Defined Benefit Plans |
8 | |||
Schedule 3(b)(iv): Master Trust Interest |
10 | |||
Schedule 4(a)(i): List of US Qualified Defined Contribution Plans |
11 | |||
Schedule 4(a)(ii): List of US Non-Qualified Defined Contribution Plans |
12 | |||
Schedule 4(a)(iii): List of Non-US Defined Contribution Plans |
13 | |||
Schedule 4(c)(iii): Employees Under Deferred Compensation Plan |
14 | |||
Schedule 4(c)(iv): Employees Under Excess Savings Plan |
15 | |||
Schedule 5(a)(i): List of US Health & Welfare Plans |
16 | |||
Schedule 5(a)(ii): List of Non-US Health & Welfare Plans |
18 | |||
Schedule 6(a): List of Incentive Plans |
20 | |||
Schedule 7(a): List of ITT Stock Plans |
21 | |||
Schedule 8(a): COLI Policies |
22 | |||
Schedule 8(b): Executive Life Policies |
23 | |||
Schedule 9(a): List of ITT Director Plans |
24 | |||
Schedule 10(a): List of Collective Bargaining Agreements |
25 | |||
Schedule 16(a): Liabilities Assumed by ITT |
27 | |||
Schedule 16(b): Liabilities Assumed by Water |
27 | |||
Schedule 16(c): Liabilities Assumed by Defense |
27 | |||
Schedule 18(e): Miscellaneous Expenses |
28 | |||
i
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1
Schedule 1(a)(i): ITT Employees to Water
Individuals listed on Schedule 1(a)(i) are listed as of 9/22/11, which will be adjusted to the date
coincident with, or the end of the month following, the Distribution Date.
1. Individuals employed by the following legal entities:
| CURRENT OFFICIAL LEGAL ENTITY | CURRENT | CYCLE | PAYROLL | NEWCO LEGAL | NEW | |||||||||||||||||||
| NAME | CURRENT FEIN | EMPLOYER NAME | INFINIUM | VC | CODE | NAME | ENTITY | NEWCO FEIN | INFINIUM | COUNTRY | ||||||||||||||
COMMON PARENT CORPORATION ITT CORPORATION |
13-5158950 | ITT FLUID TECHNOLOGY | 800 | FC | FLOBW | FLOJET Bl WEEKLY | Flow Control LLC | 45-2115170 | 891 | US | ||||||||||||||
COMMON PARENT CORPORATION ITT CORPORATION |
13-5158950 | ITT FLUID TECHNOLOGY | 800 | RCW | BGSAL | BELL & GOSSETT | Fluid Handling, LLC | 45-2237289 | 894 | US | ||||||||||||||
COMMON PARENT CORPORATION ITT CORPORATION |
13-5158950 | ITT FLUID TECHNOLOGY | 800 | RCW | BGUN | BELL& GOSSETT | Fluid Handling, LLC | 45-2237289 | 894 | US | ||||||||||||||
COMMON PARENT CORPORATION ITT CORPORATION |
13-5158950 | ITT FLUID TECHNOLOGY | 800 | RCW | HTSAL | HEAT TRANSFER | Fluid Handling, LLC | 45-2237289 | 893 | US | ||||||||||||||
COMMON PARENT CORPORATION ITT CORPORATION |
13-5158950 | ITT FLUID TECHNOLOGY | 800 | RCW | HTUN | HEAT TRANSFER |
Fluid Handling, LLC | 45-2237289 | 893 | US | ||||||||||||||
COMMON PARENT CORPORATION ITT CORPORATION |
13-5158950 | ITT FLUID TECHNOLOGY | 800 | RCW | RCSAL | R&CW HQ | Fluid Handling, LLC | 45-2237289 | 890 | US | ||||||||||||||
ITT WATER & WASTEWATER
USA INC. [FORMERLY WEDECO,
|
23-2914590 | ADVANCED WATER TREATMENT | 870 | RCW | WPC | WATER POLUTION | Water Co US, Inc. | 45-2080074 | 870 | US | ||||||||||||||
ITT WATER & WASTEWATER
USA INC. [FORMERLY WEDECO,
|
23-2914590 | ITT FLYGT CORPORATION | 850 | WWW | CPSAL | CUSTOM PUMPS | Water Co US, Inc. | 45-2080074 | 850 | US | ||||||||||||||
ITT WATER & WASTEWATER
USA, INC. [FQRMERLY WEDECO,
|
23-2914590 | ITT FLYGT CORPORATION | 850 | WWW | FLSAL | FLYGT SALARY | Water Co US, Inc. | 45-2080074 | 850 | US | ||||||||||||||
ITT WATER & WASTEWATER
USA, INC. [FORMERLY WEDECO,
|
23-2914590 | WEDECO INC | 874 | WWW | WEDBW | WEDECO BW |
Water Co US, Inc. | 45-2080074 | 874 | US | ||||||||||||||
RULE INDUSTRIES, INC.
|
04-2384630 | ITT FLOW CONTROL, AMERICAS/RULE | 860 | FC | RUSAL | RULE SALARY |
Flow Control LLC | 45-2115170 | 860 | US | ||||||||||||||
ITT
WATER TECHNOLOGY (TX), LP/LLC
|
75-2623429 | ITT GOULDS PUMPS TEXAS |
830 | RCW | H9WSA | TX TURBINE & |
Texas Turbine, LLC | 45-2116251 | 830 | US | ||||||||||||||
| Goulds Pumps Canada (IPG) | CGO | CANADA | ||||||||||||||||||||||
| Ontario Pro Service Center | CON | CANADA | ||||||||||||||||||||||
2. Individuals associated with the following entities that will transfer to Water:
Chile
|
1 | RCW | ||||||
India
|
120 | Water | ||||||
Mexico (Chihuahu
|
5 | FC | ||||||
Mexico (Nogales)
|
80 | FC | ||||||
Singapore
|
15 | RCW | ||||||
South Korea
|
3 | RCW | ||||||
Taiwan
|
1 | RCW | ||||||
Thailand
|
2 | RCW | ||||||
United Kingdom
|
15 | SS | ||||||
United Kingdom (Basingsto ke)
|
3 | IT | ||||||
United Kingdom (Whiteley, Letchwort
|
168 | FC |
ITT High Precision Manufactured
Products (Wuxi) Co., Ltd
|
63 | FC | ITT Water & Waste (Shenyang) Co., Ltd, Wuxi Branch - Assets will also transfer | |||||
ITT (China) Investment, Shanghai Branch
|
51 | Water HQ | ITT (Shanghai) Trading Co., Ltd — Assets will transfer | |||||
ITT (China) Investment
|
3 | ITT (Shanghai) Trading Co., Ltd, | ||||||
ITT (China) Investment
|
2 | ITT (Shanghai) Trading Co., Ltd, Beijing Branch | ||||||
ITT (China) Investment, Shanghai Branch
|
2 | ITT (Shanghai) Trading Co., Ltd Beijing Branch | ||||||
ITT (China) Investment, Shanghai Branch
|
1 | ITT (Nanjing) CO., Ltd | ||||||
ITT (China) Investment
|
1 | ITT (Shanghai) Trading Co., Ltd, |
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| 3. Individual employees identified below: |
Table of Contents
| 3. Individual employees identified below: |
Table of Contents
| Schedule 1(a)(ii): ITT Employees to Defense Individuals listed on Schedule 1 (a) (ii) are listed as of 9/22/11, which will be adjusted to the date coincident with, or the end of the month following, the Distribution Date. 1. Individuals employed by the following legal entities: 2. Individuals associated with the following entities that will transfer to defense: |
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5
Schedule 1(d): Employment Agreements
Defense Employment Agreements
| 1. | Christopher C. Bernhardt |
ITT Employment Agreements
| 2. | Denise Ramos |
Water Employment Agreements
| 3. | Frank Jimenez |
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6
Schedule 3(a)(i): List of US Qualified Defined Benefit Plans
The US Qualified DB Plans consist of the Defense US Qualified DB Plans, the ITT US Qualified DB
Plans and the Water US Qualified DB Plans.
Defense US Qualified DB Plans
| 1. | 357- ITT Systems Corporation Pension Plan for Hourly Employees at Pacific Missile Range Facility | |
| 2. | 501- ITT Salaried Retirement Plan | |
| 3. | 505- ITT Avionics Division & ITT Aerospace/Communications Division Pension Plan | |
| 4. | 591- ITT Gilfillan Pension Plan for Hourly Employees | |
| 5. | 611- ITT Electronic Systems Pension Plan for Employees in the Bargaining Unit | |
| 6. | 630- Pension Plan for the Roanoke Plant Hourly Employees of ITT Night Vision | |
| 7. | 758- EDO Corporation Employees Pension Plan (frozen plan for former EDO employees) |
ITT US Qualified DB Plans
| 8. | 346- Engineered Valves CA Pure Flo Solutions Group Pension Plan for Hourly Employees at Simi Valley, CA | |
| 9. | 521- ITT Cannon Employees Retirement Plan for Hourly Non-Bargaining Production and Maintenance Employees | |
| 10. | 571- ITT Aerospace Controls Pension Plan for Hourly Employees | |
| 11. | 577- ITT Consolidated Hourly Pension Plan | |
| 12. | 638- ITT Conoflow Pension Plan for Non-Clerical, Non-Rep. Hourly Employees | |
| 13. | 640- ITT Engineered Valves Pension Plan for Hourly Employees at Amory, MS | |
| 14. | 642- ITT Engineered Valves Pension Plan for Local 36 Hourly Employees at Lancaster, PA | |
| 15. | 698- ITT Control Technologies Pension Plan for Hourly Employees | |
| 16. | 724- ITT Pension Plan for Bargaining Unit Employees Seneca Falls, New York [Xylem to replicate] | |
| 17. | 727- ITT Pension Plan for Hourly Employees at Vertical Pump Division, City of Industry, California | |
| 18. | 730- ITT Pension Plan for Bargaining Unit Employees, Ashland Operations, Ashland, PA |
Water US Qualified DB Plans
| 19. | 520- ITT Bell & Gossett Hydonics Pension Plan for Hourly Employees | |
| 20. | 696- ITT Standard Hourly (Bargaining Unit) Pension Plan | |
| 21. | 728- ITT Pension Plan for Hourly Employees, Water Technologies Group-America, Turbine Division, Lubbock, TX | |
| 22. | 757- Retirement Plan for ITT Water & Wastewater Leopold Inc. For Hourly Paid Employees |
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7
Schedule 3(a)(ii): List of US Non-Qualified Defined Benefit Plans
The US Non-Qualified DB Plans consist of the Defense US Non-Qualified DB Plans, the ITT US
Non-Qualified DB Plans and the Water US Non-Qualified DB Plans.
Defense US Non-Qualified DB Plans
| 1. | 680- ITT Excess Plan, which includes the following plans: ITT Excess Pension Plan 1A, ITT Excess Pension Plan 1B, ITT Excess Pension Plan IIA and ITT Excess Pension Plan IIB | ||
| 2. | ITT Ex-Gratia Plan (with the exception of the liability accrued under the Plan for Steven R. Loranger, which shall remain with ITT) | ||
| 3. | 682- Federal Labs Unfunded 1 | ||
| 4. | 719- ITT Enhanced Pension Plan | ||
| 5. | 759- EDO Excess Plan — SERP | ||
| 6. | Retirement Plan for Non-Management Directors of ITT Corp. (frozen as of October 1, 1995) | ||
| 7. | 656- Expatriate |
ITT US Non-Qualified DB Plans
| 8. | 718- Cranston Unfunded | ||
| 9. | ITT Ex-Gratia Plan (only the liability accrued under the Plan for Steven R. Loranger, which shall remain with ITT) |
Water US Non-Qualified DB Plans
| 10. | None |
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8
Schedule 3(a)(iii): List of Non-US Defined Benefit Plans
The Non-US DB Plans consist of the Defense Non-US DB Plans, the ITT Non-US DB Plans and the Water
Non-US DB Plans.
Defense Non-US DB Plans
| 1. | None |
ITT Non-US DB Plans
| 2. | 325- ITT Belgium — Cannon (Belgium) | ||
| 3. | Gratuity Benefit Program (India)[Xylem to replicate] | ||
| 4. | 128- Cannon GmbH (Germany) [Unfunded] | ||
| 5. | 378- Cannon GmbH (Germany) [Unfunded] | ||
| 6. | 340- Cannon Japan (Japan) [Unfunded] | ||
| 7. | 735- Industries Management GmbH, Bad Camberg and former Fechenheim (Germany) [Unfunded] | ||
| 8. | Salary Sacrifice e.V Plan — ITTG (Germany) |
Water Non-US DB Plans
| 9. | 323- ITT Belgium — ITT Industries (Belgium) | ||
| 10. | 324- ITT Belgium Pension Plan (Belgium) | ||
| 11. | 166- Pension Plan for Union Employees of ITT Automotive, a division of ITT Industries of Canada Ltd. [Electrical Systems, North America] (Canada) | ||
| 12. | 200- Pension Plan for Hourly Employees of ITT Residential & Commercial Water (R&CW), a Division of ITT Industries of Canada L.P (Canada) | ||
| 13. | 203- Pension Plan for Hourly Employees of ITT Automotive, a division of ITT Industries of Canada Ltd. [Structural Systems and Components, North America (Toronto Stamping Plant)] (Canada) | ||
| 14. | 205- ITT Industries Canadian Pension Plan for Salaried Employees (Canada) | ||
| 15. | 350- ITT Canadian Excess Benefit Plan — Unregistered (Canada) | ||
| 16. | 209- Pension Plan for Hourly Employees of ITT Fabri-Valve, a Division of ITT Industries of Canada Ltd. (Canada) | ||
| 17. | 221- Pension Plan for Union Employees of Ontario Malleable Iron Company Limited (Canada) | ||
| 18. | 223- Pension Plan for Union Employees of ITT Cannon, a Division of ITT Industries of Canada Ltd.(Canada) | ||
| 19. | 744- Pension Plan of ITT Water & Wastewater, a Division of ITT Industries of Canada L.P.(Canada) | ||
| 20. | 369- Industries Management GmbH, Ebernhahn (Division KONI) (Germany) | ||
| 21. | 756- Flygt Ireland (Ireland) | ||
| 22. | 186- ITT Industries General Pension Plan (UK) | ||
| 23. | 189- ITT Industries Pension Plan for UK Expatriates (UK) | ||
| 24. | 190- Godwin Pumps Limited Pension Scheme (UK) | ||
| 25. | 125- Industriebeteiligungsgesellschaft mbH (Germany) [Unfunded] | ||
| 26. | 738- DITTHA GmbH, Kempen (Germany) [Unfunded] | ||
| 27. | 126- DITTHA GmbH. Kempen (Germany) [Unfunded] |
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9
| 28. | 366- Industries Management GmbH, Ebernhahn (Division KONI) (Germany)[Unfunded] | |
| 29. | 111- ITT Flygt Pumpen GmbH, Langenhagen, jetzt ITT Water & Wastewater (Germany) [Unfunded] | |
| 30. | Deutschland GmbH (Germany)[Unfunded] | |
| 31. | 116- ITT Industriebeteiligungsgesellschaft mbH (Germany)[Unfunded] | |
| 32. | 755- ITT Water & Wastewater, Herford (Germany)[Unfunded] | |
| 33. | 760- Jabsco GmbH (Germany)[Unfunded] | |
| 34. | 761- ebro Electronic GmbH & Co. KG (Germany)[Unfunded] | |
| 35. | 762- SI Analytics GmbH Mainz Deferred Comp (Germany)[Unfunded] | |
| 36. | 763- SI-FAS Pension Valuation (Germany)[Unfunded] | |
| 37. | 764- WTW FAS Pension Plan (Germany)[Unfunded] | |
| 38. | 765- ebro Electronics Instruments GmbH Ingolstadt Pension Plan (Germany) [Unfunded] | |
| 39. | 370- Industries Management GmbH,former Regelungstechnik (Germany)[Unfunded] | |
| 40. | 720- Industries Management GmbH,former Regelungstechnik (Germany)[Unfunded] | |
| 41. | 731- Industries Management GmbH (Germany)[Unfunded] | |
| 42. | 732- Industries Management GmbH (Germany)[Unfunded] | |
| 43. | 734- Industries Management GmbH (Germany)[Unfunded] | |
| 44. | 736- Industries Management GmbH, Bad Camberg and former Fechenheim (Germany) [Unfunded] | |
| 45. | 713- Flygt S.p.a. Flygt Italy Plan (Italy)[Unfunded] | |
| 46. | 766- ADIN Pension 28229 NOK (Norway)[Unfunded] | |
| 47. | 767- ADI Storebrand 27835 NOK (Norway)[Unfunded] | |
| 48. | 768- Storebrand 25000 NOK (Norway)[Unfunded] | |
| 49. | 118- Grindex AB (Sweden)[Unfunded] | |
| 50. | 120- Water & Wastewater AB General Pension Plan (ITP-Plan) (Sweden)[Unfunded] | |
| 51. | 121- Water & Wastewater AB Individual Contracts (Not FPG/PRI) (Sweden) [Unfunded] | |
| 52. | 754- Industries Holding AB General Pension Plan (ITP-Plan) (Sweden)[Unfunded] |
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10
Schedule 3(b)(iv): Master Trust Interest
Amounts listed on Schedule 3(b)(iv) are listed as of 7/31/11, which will be adjusted to the date
coincident with, or the end of the month following, the Distribution Date.
Water Interest
| Plan Name | Plan # | 7/31/2011 Balance | ||||||
ITT Bell
— Gossett |
520 | 26,179,521 | ||||||
ITT Standard Hourly |
696 | 14,215,802 | ||||||
Goulds Division Lubbock |
728 | 5,415,891 | ||||||
Leopold |
757 | 2,444,161 | ||||||
Total Xylem |
48,255,375 | |||||||
ITT Interest
| Plan Name | Plan # | 7/31/2011 Balance | ||||||
ITT Shertec Simi Valley |
346 | 376,902 | ||||||
ITT Cannon Electric |
521 | 25,380,063 | ||||||
ITT Aerospace Controls |
571 | 12,399,734 | ||||||
Consolidated Hourly Plans |
577 | 66,737,221 | ||||||
ITT Grinell — Non-clerical |
638 | 1,280,183 | ||||||
ITT Fluid Tech. — Lancaster |
642 | 5,743,973 | ||||||
ITT Fluid Tech. — Amory Hourly |
640 | 2,040,563 | ||||||
ITT Control Technologies |
698 | 289326.82 | ||||||
Goulds Beginning Unit Employees |
724 | 69,070,531 | ||||||
Goulds Vertical Pump Division |
727 | 4,191,936 | ||||||
Goulds Bargaining Unit Employees |
730 | 12,709,847 | ||||||
Total ITT |
200,220,281 | |||||||
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11
Schedule 4(a)(i): List of US Qualified Defined Contribution Plans
The US Qualified DC Plans consist of the Defense US Qualified DC Plans, the ITT US Qualified DC
Plans and the Water US Qualified DC Plans.
Defense US Qualified DC Plans
| 1. | 100- ITT Salaried Investment and Savings Plan | |
| 2. | 178- ITT Avionics Division & ITT Aerospace/Communications Division Bargaining Unit Savings Plan | |
| 3. | 209- ITT Night Vision Savings Plan for Hourly Employees | |
| 4. | 227- ITT Electronic Systems Savings Plan for Hourly Employees | |
| 5. | 013- ITT Systems Corporation Retirement/Savings Plan | |
| 6. | 235- ITT Systems Corporation Pacific Missile Range Facility Savings Plan for Hourly Employees | |
| 7. | ITT Research Systems Inc. Employees’ Savings Plan | |
| 8. | 237- ITT Advanced Engineering and Sciences Professional Benefits Employees’ Savings Plan | |
| 9. | 003- EDO Corporation Employee Investment Plan | |
| 10. | 200- ITT Gilfillan Savings Plan for Hourly Employees |
ITT US Qualified DC Plans
| 11. | 193- ITT Aerospace Controls Savings Plan for Hourly Employees | |
| 12. | 196- ITT Cannon Savings Plan for Hourly Employees | |
| 13. | 216- ITT Engineered Valves — Lancaster Savings Plan for Hourly Employees | |
| 14. | 009- Goulds Pumps, Inc. Retirement Savings and Investment Plan [Xylem to replicate] | |
| 15. | 201- ITT Conoflow Savings Plan for Hourly Employees | |
| 16. | 215- ITT Engineered Valves — Fabri Savings Plan for Hourly Emp. At Amory, MS | |
| 17. | 225- ITT Engineered Valves CA Pure Flo Solutions Group Savings Plan for Hourly Employees | |
| 18. | 236- ITT BIW Connector Systems Employees Savings Plan | |
| 19. | 010- Procast And Goulds Pump Service Center Employee Savings Plan | |
| 20. | 240- Pure-Flo Precision Savings Plan for Hourly Employees | |
| 21. | 239- ITT Koni Friction Products Savings Plan for Hourly Employees | |
| 22. | 238- ITT Control Technologies Savings Plan for Hourly Employees | |
| 23. | Evolutionary Concepts Profit Sharing Plan (YE 6/30/2010) | |
| 24. | ECI/Alcon 401(k) Plan |
Water US Qualified DC Plans
| 25. | 002- ITT Rule Savings Plan for Hourly Employees | |
| 26. | 203- ITT Bell & Gossett Savings Plan for Hourly Employees | |
| 27. | 226- ITT Heat Transfer Savings Plan for Hourly Employees | |
| 28. | 231- ITT Hydro Air Savings Plan for Hourly Employees | |
| 29. | 241- Flojet Corporation 401(k) Plan | |
| 30. | 001- F.B. Leopold Co., Inc. Savings Plan for Hourly Employees | |
| 31. | 001- F.B. Leopold Company, Inc. Retirement Savings Plan | |
| 32. | 001- Laing Thermotech, Inc. 401(k) Profit Sharing Plan | |
| 33. | Godwin Pumps of America, Inc. Profit Sharing Plan and Trust |
Table of Contents
12
Schedule 4(a)(ii): List of US Non-Qualified Defined Contribution Plans
The US Non-qualified DC Plans consist of the Defense US Non-qualified DC Plans, the ITT US
Non-qualified DC Plans and the Water US Non-qualified DC Plans.
Defense US Non-Qualified DC Plans
| 1. | EDO Deferred Compensation Plan |
ITT US Non-Qualified DC Plans
| 2. | ITT Deferred Compensation Plan [Water and Defense will replicate] | ||
| 3. | ITT Excess Savings Plan [Water and Defense will replicate] |
Water US Non-Qualified DC Plans
| 4. | None |
Table of Contents
13
Schedule 4(a)(iii): List of Non-US Defined Contribution Plans
The Non-US DC Plans consist of the Defense Non-US DC Plans, the ITT Non-US DC Plans and the Water
Non-US DC Plans.
Defense Non-US DC Plans
| 1. | None |
ITT Non-US DC Plans
| 2. | Superannuation Benefit Program — ITT India (India) [Xylem to replicate] | ||
| 3. | Provident Fund — ITT India (India) [Xylem to replicate] | ||
| 4. | Retirement — IP (Taiwan) | ||
| 5. | C&K Switches Limited Pension Plan (UK) | ||
| 6. | C&K Switches Executive Pension Plan (UK) | ||
| 7. | Direct Insurance — ITTG (Germany) [Exelis and Xylem to replicate] |
Water Non-US DC Plans
| 8. | Superannuation Fund — WWW (Australia) | ||
| 9. | ITT Industries Canadian Investment Savings Plan for Salaried Employees — ITT Canada (Canada) [ITT to replicate] | ||
| 10. | Insured Retirement- WWW (Denmark) [ITT to replicate] | ||
| 11. | Plan d’Epargne Enterprise (PEE) — ITT France (France) | ||
| 12. | Insured Retirement — WWW (Netherlands) | ||
| 13. | Retirement — WWW (South Africa) [ITT to replicate] | ||
| 14. | ITT Retirement Savings Plan — ITT Industries (UK) [Exelis and ITT to replicate] | ||
| 15. | Wedeco Executive Pension Plan (UK) | ||
| 16. | Direct Insurance — WWW (Germany) |
Table of Contents
14
Schedule 4(c)(iii): Employees Under Deferred Compensation Plan
Water Employees
| 1. | 15 individuals identified as Water Employees or ITT Retirees on the records of the ITT Deferred Compensation Plan |
Defense Employees
| 2. | 36 individuals identified as Defense Employees or ITT Retirees on the records of the ITT Deferred Compensation Plan |
Table of Contents
15
Schedule 4(c)(iv): Employees Under Excess Savings Plan
Participants listed on Schedule 4(c)(iv) are listed as of 7/31/11, which will be adjusted to the
date coincident with, or the end of the month following, the Distribution Date.
Water Employees
| 1. | 13 individuals identified as Water Employees on the records of the Excess Savings Plan |
Defense Employees
| 2. | 13 individuals identified as Defense Employees on the records of the Excess Savings Plan |
Table of Contents
16
Schedule 5(a)(i): List of US Health & Welfare Plans
The US H&W Plans consist of the Defense US H&W Plans, the ITT US H&W Plans and the Water US H&W
Plans.
Defense US H&W Plans
| 1. | 940- ITT Avionics Severance Plan for Exempt and Non-Exempt Salaried Employees | |
| 2. | 903- Avionics Postretirement Medical Plan | |
| 3. | 918- Avionics Postretirement Life Plan | |
| 4. | 942- ITT Night Vision Term. Pay for Salaried Exempt Employees | |
| 5. | 951- ITT A/CD Severance Pay Plan for Ex. And Non-Ex. Salaried Employees | |
| 6. | 502- EDO Corporation Medical, Dental, Vision and Salary Benefit Plan | |
| 7. | 503- EDO Corporation Life and Travel Accident Plan | |
| 8. | 506- EDO Corporation Sickness, STD, and LTD Plan | |
| 9. | 914- EDO Postretirement Medical & Life Plan | |
| 10. | 302- ITT Employee Benefit Trust | |
| 11. | 911- Space Systems Division Postretirement Medical | |
| 12. | 923- Space Systems Division Postretirement Life | |
| 13. | ITT Salaried Retiree Health Plan |
ITT US H&W Plans
| 14. | 594- ITT Salaried Medical and Dental Program [Exelis and Xylem to replicate] | |
| 15. | ITT Corporation Special Senior Executive Severance Pay Plan | |
| 16. | ITT Corporation Enhanced Severance Pay | |
| 17. | ITT Corporation Senior Executive Severance Pay Plan | |
| 18. | ITT Industries Corporate Policies- Severance Policy 30-08 | |
| 19. | ITT Corporation Severance Plan | |
| 20. | 529- ITT Cannon Severance Pay Plan for Exempt and Non-Exempt Salaried Employees | |
| 21. | 717- ITT Salaried Voluntary Accident Plan [Exelis and Xylem to replicate] | |
| 22. | 801- Group Accident Insurance Plan for Salaried Employees [Exelis and Xylem to replicate] | |
| 23. | 802- ITT Corporation Long-Term Disability Plan for Salaried Employees [Exelis and Xylem to replicate] | |
| 24. | ITT Corporation Excess Long-Term Disability Plan [Exelis and Xylem to replicate] | |
| 25. | 999- ITT Corporate Welfare Plan | |
| 26. | 717- ITT Salaried Voluntary Travel Accident Plan [Exelis and Xylem to replicate] | |
| 27. | 514- Kentucky Carbon Corporation Sickness and Accident Plan (YE 10/31/2009) | |
| 28. | 503- ITT Carbon Employee Benefit Trust (YE 10/31/2009) | |
| 29. | 503- Moog Controls Inc. Voluntary Employees Beneficiary Trust | |
| 30. | 902- AC Pump Postretirement Medical Plan | |
| 31. | 905- Cannon Postretirement Medical Plan | |
| 32. | 906- Carbon Postretirement Medical Plan | |
| 33. | 907- Goulds Postretirement Medical Plan | |
| 34. | 908- Higbie Postretirement Medical Plan | |
| 35. | 909- Jackson Postretirement Medical Plan |
Table of Contents
17
| 36. | 916- ITT Salaried Options C&D | |
| 37. | 917- AC Pump Postretirement Life Plan | |
| 38. | 920- Carbon Postretirement Life Plan | |
| 39. | 921- Goulds Postretirement Life plan | |
| 40. | 925- Engineered Products Postretirement Life Plan | |
| 41. | 926- Engineered Valve Postretirement Life Plan | |
| 42. | Active Salaried Life Insurance [Exelis and Xylem to replicate] | |
| 43. | Active Salaried Voluntary Plans [Exelis and Xylem to replicate] | |
| 44. | Active Salaried Long Term Care Plan | |
| 45. | Active Salaried United Healthcare/PacifiCare Plan [Exelis and Xylem to replicate] | |
| 46. | Active Salaried Kaiser Plan [Exelis and Xylem to replicate] | |
| 47. | Active Salaried Excellus BluePoint POS Plan [Xylem to replicate] |
Water US H&W Plans
| 48. | 520- ITT Water Technology, Inc. Health Reimbursement Arrangement | |
| 49. | 504- The F.B. Leopold Company, Inc. Welfare Benefits Plan | |
| 50. | 904- Bell & Gossett Postretirement Medical Plan | |
| 51. | 910- Leopold Postretirement Medical Plan | |
| 52. | 912- ITT Standard (Heat Transfer) Postretirement Medical Plan | |
| 53. | 918- Bell & Gossett Postretirement Life Plan | |
| 54. | 922- Leopold Postretirement Life Plan | |
| 55. | 924- ITT Standard (Heat Transfer) Postretirement Life Plan |
Table of Contents
18
Schedule 5(a)(ii): List of Non-US Health & Welfare Plans
The Non-US H&W Plans consist of the Defense Non-US H&W Plans, the ITT Non-US H&W Plans and the
Water Non-US H&W Plans.
Defense Non-US H&W Plans
| 1. | None |
ITT Non-US H&W Plans
| 2. | Medical — Cannon (Belgium) | |
| 3. | Life / AD&D — IP (Brazil) | |
| 4. | Medical — IP (Brazil) | |
| 5. | Life Insurance — IP (Chile) | |
| 6. | Medical — IP (Chile) | |
| 7. | Direct Insurance — ITTG (Germany) [Exelis and Xylem to replicate] | |
| 8. | Accidental Insurance — ITTG (Germany) [Exelis and Xylem to replicate] | |
| 9. | Employee Compensation Insurance — ITT India (India) [Xylem to replicate] | |
| 10. | Personal Accident — ITT India (India) [Xylem to replicate] | |
| 11. | Medical — ITT India (India) [Xylem to replicate] | |
| 12. | Life Insurance — ICS (Mexico) | |
| 13. | Medical — ICS (Mexico) | |
| 14. | Medical — IP (Mexico) | |
| 15. | AD&D — IP (Singapore) | |
| 16. | Medical — IP (Singapore) | |
| 17. | AD&D — IP (South Korea) | |
| 18. | AD&D — IP (Taiwan) | |
| 19. | Medical — IP (Taiwan) | |
| 20. | AD&D — IP (Thailand) | |
| 21. | Medical — IP (Thailand) | |
| 22. | ITT Life Assurance — ITT Industires (UK) [Exelis and Xylem to replicate] | |
| 23. | Medical — ITT Industries (UK) [Exelis and Xylem to replicate] |
Water Non-US H&W Plans
| 24. | Medical — WWW (Belgium) | |
| 25. | Life / AD&D — WWW (Brazil) | |
| 26. | Medical — WWW (Brazil) | |
| 27. | ITT Canadian Salaried Group Insurance Program — ITT Canada (Canada) [ITT to replicate] | |
| 28. | Life Insurance — WWW (Chile) | |
| 29. | Medical — WWW (Chile) | |
| 30. | Employer Liability Insurance — ITT China (China) [ITT to replicate] | |
| 31. | Life Insurance / AD&D — ITT China (China) [ITT to replicate] | |
| 32. | Medical/Dental — ITT China (China) [ITT to replicate] | |
| 33. | Medical — WWW (Denmark) [ITT to replicate] | |
| 34. | Life / AD&D / Disability (France) [ITT to replicate] | |
| 35. | Medical / Dental (France) [ITT to replicate] | |
| 36. | Direct Insurance — WWW (Germany) |
Table of Contents
19
| 37. | Accidental Insurance — WWW (Germany) | |
| 38. | Life Insurance — WWW (Mexico) | |
| 39. | Medical — WWW (Mexico) | |
| 40. | Medical — WWW (Russia) | |
| 41. | AD&D — WWW (Singapore) | |
| 42. | Life / AD&D — WWW (South Africa) [ITT to replicate] |
Table of Contents
20
Schedule 6(a): List of Incentive Plans
| 1. | 1997 ITT Industries Annual Incentive Plan | |
| 2. | 1997 Long-Term Incentive Plan | |
| 3. | ITT Corporation Annual Incentive Plan for Executive Officers | |
| 4. | ITT Corporation Retention Program |
Table of Contents
21
Schedule 7(a): List of ITT Stock Plans
| 1. | 1994 ITT Incentive Stock Plan | |
| 2. | ITT 1996 Restricted Stock Plan for Non-Employee Directors | |
| 3. | 2002 ITT Stock Option Plan for Non-Employee Directors | |
| 4. | 2003 ITT Equity Incentive Plan | |
| 5. | 2011 ITT Omnibus Incentive Plan | |
| 6. | Industries Ltd Share Incentive Plan (UK) | |
| 7. | ITT Flygt Ltd Share Incentive Plan (UK) |
Table of Contents
22
Schedule 8(a): COLI Policies
Individuals listed on Schedule 8(a) are listed as of 7/02/11, which will be adjusted to the date
coincident with, or the end of the month following, the Distribution Date.
ITT
| Policy | ||||
| Number | Carrier | |||
18395400
|
NM Life | |||
19127919
|
NM Life | |||
18395404
|
NM Life | |||
19127921
|
NM Life | |||
19127923
|
NM Life | |||
17448846
|
NM Life | |||
56906286
|
NYLife | |||
18696673
|
NM Life | |||
18395408
|
NM Life | |||
18696674
|
NM Life | |||
18395409
|
NM Life | |||
18395411
|
NM Life | |||
18395414
|
NM Life | |||
56906287
|
NYLife | |||
17448847
|
NM Life | |||
17448853
|
NM Life | |||
56906297
|
NYLife | |||
17961894
|
NM Life | |||
19127922
|
NM Life | |||
18696675
|
NM Life | |||
19127925
|
NM Life | |||
17448836
|
NM Life | |||
17616521
|
NM Life | |||
17448845
|
NM Life | |||
17961899
|
NM Life |
Water
| Policy Number | Carrier | |||
17961895
|
NM Life | |||
18395405
|
NM Life | |||
17616524
|
NM Life | |||
191279241
|
NM Life | |||
56906275
|
NYLife | |||
18395401
|
NM Life |
Defense
| Policy Number | Carrier | |||
17616519
|
NM Life | |||
56906274
|
NYLife | |||
17448842
|
NM Life | |||
56906282
|
NYLife | |||
19127920
|
NM Life | |||
56906285
|
NYLife | |||
18395406
|
NM Life | |||
18395407
|
NM Life | |||
56906292
|
NYLife | |||
17448852
|
NM Life | |||
56906294
|
NYLife | |||
18395412
|
NM Life | |||
19127926
|
NM Life | |||
56906301
|
NYLife | |||
17448856
|
NM Life | |||
56906273
|
NYLife | |||
56906276
|
NYLife | |||
56906283
|
NYLife | |||
56906290
|
NYLife | |||
56906291
|
NYLife |
Table of Contents
23
Schedule 8(b): Executive Life Policies
Amounts listed on Schedule 8(b) are listed as of 6/30/11, which will be adjusted to the date
coincident with, or the end of the month following, the Distribution Date.
ITT
| Block 1 | Policy | |||||
1
|
9061446 | |||||
2
|
9061445 | |||||
3
|
9061444 | |||||
4
|
9061438 | |||||
5
|
9061443 | |||||
6
|
9061452 | |||||
7
|
9061450 | |||||
8
|
9061440 | |||||
9
|
9061433 | |||||
10
|
9061434 | |||||
11
|
9061435 | |||||
12
|
9061447 | |||||
| Block 2 | Policy | |||||
1
|
9096216 | |||||
Table of Contents
24
Schedule 9(a): List of ITT Director Plans
| 1. | ITT Corporation Deferred Compensation Plan for Non-Employee Directors | |
| 2. | ITT Group Accident Program that provides 24 hour accidental death and dismemberment coverage |
Additionally, the ITT 1996 Restricted Stock Plan for Non-Employee Directors and the 2002 ITT Stock
Option Plan for Non-Employee Directors, each as listed on Schedule 7(a) apply to non-employee
directors of ITT.
Table of Contents
25
Schedule 10(a): List of Collective Bargaining Agreements
The Collective Bargaining Agreements consist of the Defense Collective Bargaining Agreements, the
ITT Collective Bargaining Agreements and the Water Collective Bargaining Agreements. Works
councils and collective bargaining agreements from jurisdictions other than the US and Canada are
expressly excluded from this schedule and will continue with their respective company by transfer
of law.
Defense Collective Bargaining Agreements
| 1. | Agreement dated August 28, 2010 between ITT Corporation, Electronic Systems, Fort Wayne, IN, a Division of ITT Corporation, Inc., and IUE, the industrial division of the Communication Workers of America, AFL CIO in behalf of and in conjunction with the IUE the industrial division of the Communication Workers of America, AFL CIO Local 84999 | |
| 2. | Agreement dated October 1, 2009 between ITT Electronics Systems/Integrated Electronic Warfare Systems and ITT Communications Systems and the I.U.E./CWA and its Local Union 81447 | |
| 3. | Agreement dated May 22, 2011 between ITT Corporation, Night Vision Roanoke Plant and IUE, the Industrial Division of the Communications Workers of America AFL-CIO and Local 82162 | |
| 4. | Agreement dated December 15, 2009 between Systems-Benning and Columbus Metal Trades Council | |
| 5. | Agreement dated December 15, 2009 between Systems-Benning and Sheet Metal Workers, Local 85 — Security Guards | |
| 6. | Agreement dated November 1, 2009 between Systems — DSN and IBEW Local 543 | |
| 7. | Agreement dated March 31, 2011 between Systems — K-Town and (Ver.di) Vereinte Dienstleistungsgewerkschaft | |
| 8. | Agreement dated December 1, 2010 between Systems — PMRF and IBEW Local 1260 Main | |
| 9. | Agreement dated December 1, 2010 between Systems — PMRF and IBEW Local 1260 Security | |
| 10. | Agreement dated December 1, 2010 between Systems — PMRF and IBU | |
| 11. | Agreement dated November 1, 2007 between Systems — SLRS and IBEW Local 2088 | |
| 12. | Agreement dated September 1, 2007 between Systems — SLRS and IAM Local 815 | |
| 13. | Agreement dated October 31, 2007 between Systems — SLRS and IBT Local 381 | |
| 14. | Agreement dated October 1, 2008 between Systems — TARS and CWA Local 3177 | |
| 15. | Agreement dated October 1, 2008 between Systems — TARS (Rio Grande City, TX) and IBEW Local 66 | |
| 16. | Agreement dated October 1, 2008 between Systems — TARS (Eagle Pass, TX) and IBEW Local 66 | |
| 17. | Agreement dated October 1, 2008 between Systems — TARS and IBEW Local 583 | |
| 18. | Agreement dated October 1, 2008 between Systems — TARS and IBEW Local 611 | |
| 19. | Agreement dated October 1, 2008 between Systems — TARS (Ft. Huachuca, AZ) and IBEW Local 570 | |
| 20. | Agreement dated October 1, 2008 between Systems — TARS (Yuma, AZ) and IBEW Local 570 | |
| 21. | Agreement dated December 1, 2010 between Systems — Maxwell and USW Local 13350 | |
| 22. | Agreement dated July 1, 2009 between Systems — Maxwell and USW Local 8405 |
Table of Contents
26
| 23. | Agreement dated August 27, 2010 between Systems — Wallops Island and IAM Local 2552 (Two units) | |
| 24. | Agreement dated April 9, 2011 between Systems — White Sands and IAM Local 2515 | |
| 25. | Agreement dated December 1, 2010 between Systems — TARS (Lajas, PR) and IUSW 6135 |
ITT Collective Bargaining Agreements
| 26. | Agreement dated March 1, 2011 between IP Pro shop and Steelworkers | |
| 27. | Agreement between IP/SFO and Steelworkers through July 28, 2012 | |
| 28. | Agreement dated May 16, 2009 between Industrial Process (Lancaster, Pennsylvania), a unit of ITT Corporation, and the Glass, Molders, Pottery and Plastics & Allied Workers International Union, Local No. 36, AFL-CIO, CLC. |
Water Collective Bargaining Agreements
| 29. | Agreement dated August 1, 2010, between WATER SYSTEMS OPERTIONS (WSO) a unit of ITT Water Technology, Inc.*, and its successors, and the UNITED STEELWORKERS on behalf of itself and members of LOCAL UNION No. 3298 | |
| 30. | Agreement dated August 15, 2010, by and between ITT Residential & Commercial Water located in the Village of Morton Grove, and INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA and its LOCAL UNION NO. 890 | |
| 31. | Agreement between ITT RCW Heat Transfer, Buffalo, New York, and UNITED STEELWORKERS, AFL-CIO-CLC Local Number 897, 2010-2013 | |
| 32. | Agreement dated September 23, 2010 between ITT R&CW, a division of ITT Industries of Canada L.P. (for hourly union employees in Guelph, ON) and United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (United Steelworkers) — Local 8614-05 | |
| 33. | Agreement dated April 22, 2010 between ITT W&WW, a division of ITT Industries of Canada L.P. (for hourly union shop employees in Pointe-Claire, QC) and National Automobile, Aerospace and Agricultural Implement Workers Union of Canada (CAW Canada) — Local 698 | |
| 34. | Agreement dated May 1, 2010 between ITT W&WW, a division of ITT Industries of Canada L.P. (for hourly union shop employees in Surrey, BC) and International Union of Operating Engineers (IUOE) — Local 115 | |
| 35. | Agreement dated May 1, 2008 between ITT W&WW, a division of ITT Industries of Canada L.P. (for salaried union office employees in Surrey, BC) and Canadian Office and Professional Employee’s Union (COPE) — Local 15 |
Table of Contents
27
Schedule 16(a): Liabilities Assumed by ITT
| 1. | None |
Schedule 16(b): Liabilities Assumed by Water
| 2. | None |
Schedule 16(c): Liabilities Assumed by Defense
| 3. | None |
Table of Contents
28
Schedule 18(e): Miscellaneous Expenses
| 1. | None |
Exhibit
10.3
TAX MATTERS AGREEMENT
by and among
ITT CORPORATION,
XYLEM INC.,
and
EXELIS INC.
Dated as of October 25, 2011
TABLE OF CONTENTS
| Page | ||||
ARTICLE I DEFINITIONS AND INTERPRETATION |
2 | |||
Section 1.1 Definitions |
2 | |||
Section 1.2 References; Interpretation |
11 | |||
Section 1.3 Effective Time |
11 | |||
ARTICLE II PREPARATION AND FILING OF TAX RETURNS |
12 | |||
Section 2.1 Responsibility of ITT to Prepare and File Tax Returns |
12 | |||
Section 2.2 Responsibility of Parties to Prepare and File Covered Water
Separate U.S. Income Tax Returns and Covered Defense Separate U.S. Income Tax
Returns |
12 | |||
Section 2.3 Responsibility of Parties to Prepare and File
Post-Distribution Income Tax Returns, Non-U.S. Income Tax Returns, and
Non-Income Tax Returns |
14 | |||
Section 2.4 Time of Filing Tax Returns; Manner of Tax Return Preparation |
14 | |||
Section 2.5 Costs and Expenses |
14 | |||
ARTICLE III RESPONSIBILITY FOR PAYMENT OF TAXES |
15 | |||
Section 3.1 Responsibility of ITT for Taxes |
15 | |||
Section 3.2 Responsibility of Defense for Taxes |
15 | |||
Section 3.3 Responsibility of Water for Taxes |
15 | |||
Section 3.4 Timing of Payments of Taxes |
16 | |||
ARTICLE IV REFUNDS, CARRYBACKS AND AMENDED TAX RETURNS |
16 | |||
Section 4.1 Refunds |
16 | |||
Section 4.2 Carrybacks |
16 | |||
Section 4.3 Amended Tax Returns |
16 | |||
ARTICLE V DISTRIBUTION TAXES |
17 | |||
Section 5.1 Liability for Distribution Taxes |
17 | |||
Section 5.2 Definition of Fault |
17 | |||
Section 5.3 Limits on Proposed Acquisition Transactions and Other
Transactions During Restricted Period |
18 | |||
Section 5.4 IRS Ruling, Tax Representation Letters, and Tax Opinions;
Consistency |
19 | |||
Section 5.5 Timing of Payment of Taxes |
19 | |||
ARTICLE VI GAIN RECOGNITION AGREEMENTS |
19 | |||
Section 6.1 Gain Recognition Agreement Compliance |
19 | |||
i
| Page | ||||
Section 6.2 Gain Recognition Agreement Taxes |
20 | |||
Section 6.3 Timing of Payment of Taxes |
20 | |||
ARTICLE VII INDEMNIFICATION |
20 | |||
Section 7.1 Indemnification Obligations of ITT |
20 | |||
Section 7.2 Indemnification Obligations of Water |
20 | |||
Section 7.3 Indemnification Obligations of Defense |
21 | |||
ARTICLE VIII PAYMENTS |
21 | |||
Section 8.1 Payments |
21 | |||
Section 8.2 Treatment of Payments made Pursuant to Tax Matters Agreement |
21 | |||
Section 8.3 Payments Net of Tax Benefit Actually Realized and Tax Cost |
22 | |||
ARTICLE IX AUDITS |
22 | |||
Section 9.1 Notice |
22 | |||
Section 9.2 Audits |
22 | |||
Section 9.3 Payment of Audit Amounts |
25 | |||
ARTICLE X COOPERATION AND EXCHANGE OF INFORMATION |
29 | |||
Section 10.1 Cooperation and Exchange of Information |
29 | |||
Section 10.2 Retention of Records |
30 | |||
ARTICLE XI ALLOCATION OF TAX ATTRIBUTES AND OTHER TAX MATTERS |
30 | |||
Section 11.1 Allocation of Tax Attributes |
30 | |||
Section 11.2 Allocation of Tax Items |
31 | |||
ARTICLE XII DEFAULTED AMOUNTS |
31 | |||
Section 12.1 General |
31 | |||
Section 12.2 Subsidiary Funding |
32 | |||
ARTICLE XIII DISPUTE RESOLUTION |
32 | |||
Section 13.1 Resolution in Accordance with Distribution Agreement |
32 | |||
ARTICLE XIV MISCELLANEOUS |
32 | |||
Section 14.1 Counterparts |
32 | |||
Section 14.2 Survival |
32 | |||
Section 14.3 Notices |
33 | |||
Section 14.4 Waivers |
33 | |||
Section 14.5 Assignment |
33 | |||
Section 14.6 Successors and Assigns |
33 | |||
Section 14.7 Termination and Amendment |
34 | |||
ii
| Page | ||||
Section 14.8 No Circumvention |
34 | |||
Section 14.9 Subsidiaries |
34 | |||
Section 14.10 Third Party Beneficiaries |
34 | |||
Section 14.11 Title and Headings |
34 | |||
Section 14.12 Exhibits and Schedules |
34 | |||
Section 14.13 Governing Law |
34 | |||
Section 14.14 Consent to Jurisdiction |
34 | |||
Section 14.15 Waiver of Jury Trial |
35 | |||
Section 14.16 Force Majeure |
35 | |||
Section 14.17 Interpretation |
35 | |||
Section 14.18 Changes in Law |
35 | |||
Section 14.19 Severability |
36 | |||
Section 14.20 Tax Sharing Agreements |
36 | |||
Section 14.21 Exclusivity |
36 | |||
Section 14.22 No Waiver |
36 | |||
Section 14.23 No Duplication; No Double Recovery |
36 | |||
Schedules
Schedule 1.1(6)
|
List of ATOB Entities | |
Schedule 1.1(27)
|
List of Distributions | |
Schedule 1.1(88)
|
List of Section 355 Entities | |
Schedule 6.1
|
List of GRAs |
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TAX MATTERS AGREEMENT
THIS TAX MATTERS AGREEMENT (this “Agreement”) is made and entered into as of the day of
October 25, 2011, by and among ITT Corporation, an Indiana corporation (“ITT”), Xylem
Inc., an Indiana corporation (“Water”), and Exelis Inc., an Indiana corporation
(“Defense”). Each of ITT, Water, and Defense is sometimes referred to herein as a “Party” and
collectively, as the “Parties”.
WITNESSETH:
WHEREAS, ITT, acting through its direct and indirect Subsidiaries, currently conducts a number
of businesses, including (i) the Water Business (as defined herein), (ii) the Defense Business (as
defined herein), and (iii) the ITT Retained Business (as defined herein);
WHEREAS, the Board of Directors of ITT has determined that it is appropriate, desirable and in
the best interests of ITT and its shareholders to separate ITT into three separate, publicly traded
companies, one for each of (i) the Water Business, which shall be owned and conducted, directly or
indirectly, by Water, (ii) the Defense Business, which shall be owned and conducted, directly or
indirectly, by Defense, and (iii) the ITT Retained Business which shall be owned and conducted,
directly or indirectly, by ITT;
WHEREAS, in order to effect such separation, the Board of Directors of ITT has determined that
it is appropriate, desirable and in the best interests of ITT and its shareholders (i) to enter
into a series of transactions whereby (A) ITT and/or one or more members of the ITT Group will,
collectively, own all of the ITT Retained Assets and assume (or retain) all of the ITT Retained
Liabilities, (B) Water and/or one or more members of the Water Group will, collectively, own all of
the Water Assets and assume (or retain) all of the Water Liabilities, and (C) Defense and/or one or
more members of the Defense Group will, collectively, own all of the Defense Assets and assume (or
retain) all of the Defense Liabilities and (ii) for ITT to distribute to the holders of ITT Common
Stock on a pro rata basis (in each case without consideration being paid by such shareholders) (A)
all of the outstanding shares of common stock, par value $.01 per share, of Water (the “Water
Common Stock”), and (B) all of the outstanding shares of common stock, par value $.01 per share, of
Defense (the “Defense Common Stock”) (such transactions as they may be amended or modified from
time to time, collectively, the “Plan of Separation”);
WHEREAS, it is the intention of the Parties that each of the contributions of assets to, and
the assumption of liabilities by, Water and Defense together with the corresponding distribution of
all of the Water Common Stock and the Defense Common Stock, respectively, shall qualify as a
reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Internal Revenue Code of
1986, as amended (the “Code”);
WHEREAS, it is the intention of the Parties that each of the distribution of Water Common
Stock and Defense Common Stock, respectively, to the shareholders of ITT will qualify as a tax-free
under Section 355(a) of the Code to such shareholders and as tax-free to ITT under Section 361(c)
of the Code;
WHEREAS, notwithstanding the implementation of certain internal transactions undertaken
preparatory to and in contemplation of aligning and properly capitalizing the Water Business, the
Defense Business, and the ITT Retained Business prior to the Distributions, it is the intention of
the Parties that the shared responsibility for certain Tax liabilities (including certain
Distribution Tax liabilities) be given effect no earlier than and only upon the Effective Time, all
as described more fully herein; and
WHEREAS, in connection with the Plan of Separation, the Parties desire to set forth their
agreement on the rights and obligations with respect to handling and allocating Taxes and related
matters.
NOW, THEREFORE, in consideration of the foregoing and the terms, conditions, covenants and
provisions of this Agreement, each of the Parties mutually covenant and agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1 Definitions. As used in this Agreement, the following terms shall have the following meanings:
(1) “Active Business” means the business conducted by each of the ATOB Entities as of
the applicable distribution date.
(2) “Affiliate” means a Person that directly, or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with, a specified Person.
A Person shall be deemed to control another Person if such first Person possesses, directly or
indirectly, the power to direct, or cause the direction of, the management and policies of such
other Person, whether through the ownership of voting securities, by contract or otherwise. For
purposes hereof, none of the Parties or their respective Subsidiaries shall be considered an
“Affiliate” of any of the other Parties or their respective Subsidiaries (determined on the same
basis).
(3) “Agreement” has the meaning set forth in the preamble hereto.
(4) “Ancillary Agreements” has the meaning set forth in the Distribution Agreement.
(5) “Assets” has the meaning set forth in the Distribution Agreement.
(6) “ATOB Entities” mean the entities listed on Schedule 1.1(6).
(7) “Audit” means any audit (including a determination of the status of qualified and
non-qualified employee benefit plans), assessment of Taxes, other examination by or on behalf of
any Taxing Authority (including notices), proceeding, or appeal of such a proceeding relating to
Taxes, whether administrative or judicial, including proceedings relating to competent authority
determinations initiated by a Party or any of its Subsidiaries.
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(8) “Audit Management Party” means the Party responsible for administering and
controlling an Audit pursuant to Section 9.2(a)(i) or (b)(ii).
(9) “Audit Representative” means the Chief Tax Officer of each Party (or such other
officer of a Party that may be designated by that Party’s Chief Financial Officer from time to
time).
(10) “Audit True-Up Date” means fifteen (15) days after the earlier of (i) the date
that is ten (10) years following the Distribution Date and (ii) the expiration of all applicable
statute of limitations periods for any ITT Federal Income Tax Returns, ITT U.S. State Income Tax
Returns, and ITT Non-U.S. Income Tax Returns.
(11) “Big Four Accounting Firm” means each of Deloitte & Touche LLP, Ernst & Young
LLP, KPMG LLP, and Pricewaterhouse Coopers LLP.
(12) “Business Day” means any day other than a Saturday, Sunday or a day on which
banks are required to be closed in New York, New York.
(13) “Change of Control” has the meaning set forth in the Joint Defense Agreement.
(14) “Claiming Party” has the meaning set forth in Section 11.2(b).
(15) “Code” has the meaning referred to in the recitals to this Agreement.
(16) “Covered Defense Separate U.S. Income Tax Returns” means any Defense Separate
U.S. Income Tax Return required to be filed (i) for a Pre-Distribution Tax Period, (ii) for a
Straddle Tax Period, or (iii) for a Stub Tax Period.
(17) “Covered Water Separate U.S. Income Tax Returns” means any Water Separate U.S.
Income Tax Return required to be filed (i) for a Pre-Distribution Tax Period, (ii) for a Straddle
Tax Period, or (iii) for a Stub Tax Period.
(18) “Defense” has the meaning set forth in the recitals hereto.
(19) “Defense Assets” has the meaning set forth in the Distribution Agreement.
(20) “Defense Business” has the meaning set forth in the Distribution Agreement.
(21) “Defense Common Stock” has the meaning set forth in the recitals hereto.
(22) “Defense Group” has the meaning set forth in the Distribution Agreement.
(23) “Defense Separate U.S. Income Tax Return” means any U.S. federal, state, or local
Income Tax Return (including any consolidated, combined, unitary, or similar return) (i) that is
not an ITT Combined U.S. Income Tax Return and (ii) that Defense or any member of the Defense Group
is responsible under applicable Law for filing.
(24) “Defense Federal Sharing Percentage” means thirty percent (30%).
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(25) “Defense U.S. State Sharing Percentage” means twenty-nine percent (29%).
(26) “Dispute” has the meaning set forth in Section 13.1.
(27) “Distribution” or “Distributions” means, individually or collectively:
(a) the distribution on the Distribution Date to holders of record of shares of ITT Common
Stock as of the Distribution Date of the Defense Common Stock and the Water Common Stock owned by
ITT, and
(b) the distributions listed on Schedule 1.1(27).
(28) “Distribution Agreement” means the Distribution Agreement by and among
ITT, Water, and Defense, dated as of October 25, 2011.
(29) “Distribution Date” means the date on which the Distributions to holders of
record of shares of ITT Common Stock of the Defense Common Stock and the Water Common Stock owned
by ITT are effectuated pursuant to the Distribution Agreement.
(30) “Distribution Sharing Percentages” means, with respect to ITT, twenty-one percent
(21%), with respect to Water, forty percent (40%), and with respect to Defense, thirty-nine percent
(39%).
(31) “Distribution Taxes” mean any and all Taxes (a) required to be paid by or imposed
on a Party or any of its Affiliates (determined on a “with and without” basis) resulting from, or
directly arising in connection with, the failure of the Distributions to qualify under Section
355(a) or (c) of the Code or, if applicable, Section 361(c) of the Code, or the application of
Section 355(d) or (e) of the Code to the Distributions (or the failure to qualify under or the
application of corresponding provisions of the Laws of U.S. state or local jurisdictions).
(32) “Due Date” means the date (taking into account all valid extensions) upon which a
Tax Return is required to be filed with or Taxes are required to be paid to a Taxing Authority,
whichever is applicable.
(33) “Effective Time” has the meaning set forth in the Distribution Agreement.
(34) “Fault” has the meaning set forth in Section 5.2.
(35) “Federal Sharing Percentages” means, with respect to ITT, the ITT Federal Sharing
Percentage, with respect to Water, the Water Federal Sharing Percentage, and with respect to
Defense, the Defense Federal Sharing Percentage.
(36) “Final Determination” means the final resolution of liability for any Tax for any
taxable period, by or as a result of:
(a) a final decision, judgment, decree or other order by any court of competent jurisdiction
that can no longer be appealed;
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(b) a final settlement with the IRS, a closing agreement or accepted offer in compromise under
Sections 7121 or 7122 of the Code, or a comparable agreement under the Laws of other jurisdictions,
which resolves the liability for the Taxes addressed in such agreement for any taxable period;
(c) any allowance of a refund or credit in respect of an overpayment of Tax, but only after
the expiration of all periods during which such refund may be recovered by the jurisdiction
imposing the Tax; or
(d) any other final disposition, including by reason of the expiration of the applicable
statute of limitations.
(37) “GRA” means any “gain recognition agreement” as such term is used in Treasury
Regulations Section 1.367(a)-8 or defined in Treasury Regulations Section 1.367(a)-8T(a)(1)(v), as
applicable.
(38) “Group” means the ITT Group, the Water Group, or the Defense Group.
(39) “Income Taxes” mean:
(a) all Taxes based upon, measured by, or calculated with respect to (i) net income or profits
(including, but not limited to, any capital gains, minimum tax or any Tax on items of tax
preference, but not including sales, use, real, or personal property, gross or net receipts, value
added, excise, leasing, transfer or similar Taxes), or (ii) multiple bases (including, but not
limited to, corporate franchise, doing business and occupation Taxes) if one or more bases upon
which such Tax is determined is described in clause (a)(i) above; and
(b) all U.S., state, local or non-U.S. franchise Taxes.
(40) “Income Tax Returns” mean all Tax Returns that relate to Income Taxes.
(41) “Indemnified Party” means the Party which is or may be entitled pursuant to this
Agreement to receive any payments (including reimbursement for Taxes or costs and expenses) from
another Party or Parties to this Agreement.
(42) “Indemnifying Party” means the Party which is or may be required pursuant to this
Agreement to make indemnification or other payments (including reimbursement for Taxes and costs
and expenses) to another Party to this Agreement.
(43) “IRS” means the United States Internal Revenue Service or any successor thereto,
including, but not limited to its agents, representatives, and attorneys.
(44) “IRS Ruling” means the requests submitted to the IRS for all private letter
rulings to be obtained by ITT from the IRS in connection with the Plan of Separation, and any
supplemental materials submitted to the IRS relating thereto, and the IRS private letter rulings
received by ITT with respect to the Plan of Separation.
(45) “ITT” has the meaning set forth in the preamble of this Agreement.
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(46) “ITT Combined or ITT Separate U.S. Income Tax Return” means (i) any ITT Combined
U.S. Income Tax Return and (ii) any ITT Separate U.S. Income Tax Return required to be filed for
any Pre-Distribution Tax Period or Straddle Tax Period.
(47) “ITT Combined U.S. Income Tax Return” means any U.S. federal, state, or local
consolidated, combined, unitary or similar Income Tax Return that actually includes, by election or
otherwise, one or more members of the ITT Group together with one or more members of either the
Water Group or the Defense Group.
(48) “ITT Common Stock” has the meaning set forth in the Distribution Agreement.
(49) “ITT Federal Income Tax Return” means any U.S. federal consolidated Income Tax
Return that actually includes, by election or otherwise, one or more members of the ITT Group
together with one or more members of either the Water Group or the Defense Group.
(50) “ITT Federal Income Tax Audit” means any Audit of any ITT Federal Income Tax
Return.
(51) “ITT Federal Income Tax Audit Amount” has the meaning set forth in Section
9.3(a).
(52) “ITT Federal Sharing Percentage” means nineteen percent (19%).
(53) “ITT Group” has the meaning set forth in the Distribution Agreement.
(54) “ITT Income Tax Audit Amount” means the sum of the ITT Federal Income Tax Audit
Amount, the ITT U.S. State Income Tax Audit Amount, and the ITT Non-U.S. Income Tax Audit Amount.
(55) “ITT Non-U.S. Income Tax Audit” means any Audit of any ITT Non-U.S. Income Tax
Return.
(56) “ITT Non-U.S. Income Tax Audit Amount” has the meaning set forth in Section
9.3(c).
(57) “ITT Non-U.S. Income Tax Return” means any Non-U.S. Income Tax Return (including
any consolidated, combined, unitary, or similar return) that includes, by election or otherwise,
one or more members of the ITT Group and that is required to be filed for any Pre-Distribution Tax
Period or Straddle Tax Period.
(58) “ITT Non-U.S. Sharing Percentage” means eighty-four percent (84%).
(59) “ITT Retained Assets” has the meaning set forth in the Distribution Agreement.
(60) “ITT Retained Business” has the meaning set forth in the Distribution Agreement.
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(61) “ITT Retained Liabilities” has the meaning set forth in the Distribution
Agreement.
(62) “ITT Separate U.S. Income Tax Return” means any U.S. federal, state, or local
Income Tax Return (including any consolidated, combined, unitary, or similar return) (i) that is
not an ITT Combined U.S. Income Tax Return and (ii) that ITT or any member of the ITT Group is
responsible under applicable Law for filing.
(63) “ITT U.S. State Income Tax Audit Amount” has the meaning set forth in Section
9.3(b).
(64) “ITT U.S. State Income Tax Return” means any U.S. state or local Income Tax
Return (including any consolidated, combined, unitary, or similar return) that includes, by
election or otherwise, one or more members of the ITT Group required to be filed for any
Pre-Distribution Tax Period or Straddle Tax Period.
(65) “ITT U.S. State Sharing Percentage” means sixty-five percent (65%).
(66) “Law” means any U.S. or non-U.S. federal, national, supranational, state,
provincial, local or similar statute, law, ordinance, regulation, rule, code, administrative
pronouncement, order, requirement or rule of law (including common law), or any income tax treaty.
(67) “LIBOR” has the meaning set forth in the Distribution Agreement.
(68) “Losses” has the meaning assigned to the term “Indemnifiable Losses” in the
Distribution Agreement.
(69) “Majority of the Parties” means the consent of at least two of the Parties.
(70) “New York Courts” has the meaning set forth in Section 14.14.
(71) “Non-Income Tax Returns” mean all Tax Returns other than Income Tax Returns.
(72) “Non-U.S. Income Tax Returns” means all Income Tax Returns required to be filed
with any Taxing Authority of any jurisdiction outside the U.S.
(73) “Non-U.S. Sharing Percentages” means, with respect to ITT, the ITT Non-U.S.
Sharing Percentage, and, with respect to Water, the Water Non-U.S. Sharing Percentage.
(74) “Participating Party” has the meaning set forth in Section 9.2(c)(i).
(75) “Party” has the meaning set forth in the preamble hereto.
(76) “Paying Party” has the meaning set forth in Section 11.2(b).
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(77) “Person” means any natural person, firm, individual, corporation, business trust,
joint venture, association, company, limited liability company, partnership, or other organization
or entity, whether incorporated or unincorporated, or any governmental entity.
(78) “Plan of Separation” has the meaning set forth in the recitals hereto.
(79) “Post-Distribution Income Tax Returns” mean, collectively, all Income Tax Returns
required to be filed by a Party or its Affiliates for a Post-Distribution Tax Period.
(80) “Post-Distribution Payment Tax Benefit” has the meaning set forth in Section
11.2(b).
(81) “Post-Distribution Ruling” has the meaning set forth in Section 5.3.
(82) “Post-Distribution Tax Period” means a Tax period beginning and ending after the
Distribution Date.
(83) “Pre-Distribution Tax Period” means a Tax period beginning and ending on or
before the Distribution Date.
(84) “Proposed Acquisition Transaction” means a transaction or series of transactions
(or any agreement, understanding, arrangement, or substantial negotiations within the meaning of
Section 355(e) of the Code and the Treasury Regulations promulgated thereunder, to enter into a
transaction or series of related transactions), (i) as a result of which any of the Parties or any
of the Section 355 Entities (or any successor thereto) would merge or consolidate with any other
Person, or (ii) as a result of which any Person or any group of Persons would (directly or
indirectly) acquire, or have the right to acquire (through an option or otherwise), from any of the
Parties or any of their Affiliates (or any successor thereto) and/or one or more holders of their
stock, respectively, any amount of stock of any of the Parties or any of the Section 355 Entities,
as the case may be, that would, when combined with any other changes in ownership of the stock of
such Party or any of the Section 355 Entities, result in a shift of more than thirty-five percent
(35%) of (a) the value of all outstanding stock of such Party or any of the Section 355 Entities as
of the date of such transaction, or in the case of a series of transactions, the date of the last
transaction of such series, or (b) the total combined voting power of all outstanding stock of such
Party or any of the Section 355 Entities as of the date of such transaction, or in the case of a
series of transactions, the date of the last transaction of such series. For purposes of
determining whether a transaction constitutes an indirect acquisition for purposes of the first
sentence of this definition, any recapitalization or other action resulting in a shift of voting
power or any redemption of shares of stock shall be treated as an indirect acquisition of shares of
stock by the non-exchanging shareholders. This definition and the application thereof is intended
to monitor compliance with Section 355(e) of the Code and the Treasury Regulations promulgated
thereunder and shall be interpreted accordingly by the Parties in good faith.
(85) “Qualified Tax Advisor” means any Big Four Accounting Firm or any law firm of
nationally recognized standing.
(86) “Requesting Party” shall have the meaning set forth in Section 5.3.
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(87) “Restricted Period” means the period beginning at the Effective Time and ending
on the two-year anniversary of the day after the Distribution Date.
(88) “Section 355 Entities” mean the entities listed on Schedule 1.1(88).
(89) “Simpson” means Simpson Thacher & Bartlett LLP.
(90) “Spinco Parties” mean, each individually and collectively, Water and Defense.
(91) “Straddle Tax Period” means a Tax period beginning before the Distribution Date
and ending after the Distribution Date.
(92) “Stub Tax Period” means a short Tax period beginning immediately following the
Distribution Date.
(93) “Subsidiary” has the meaning set forth in the Distribution Agreement.
(94) “Tax” or “Taxes” means (i) all taxes, charges, fees, imposts, levies or
other assessments, including all net income, gross receipts, capital, sales, use, gains, ad
valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property
and estimated taxes, custom duties, fees, assessments and charges of any kind whatsoever,
(ii) liability for the payment of any amount of the type described in clause (i) above arising
as a result of being (or having been) a member of any group or being (or having been) included or
required to be included in any Tax Return related thereto, and (iii) liability for the payment of
any amount of the type described in clauses (i) or (ii) above as a result of any express or implied
obligation to indemnify or otherwise assume or succeed to the liability of any other Person.
Whenever the term “Tax” or “Taxes” is used it shall include penalties, fines, additions to tax and
interest thereon.
(95) “Tax Attributes” mean for U.S. federal, state, local, and non-U.S. Income Tax
purposes, earnings and profits, tax basis, net operating and capital loss carryovers or carrybacks,
alternative minimum Tax credit carryovers or carrybacks, general business credit carryovers or
carrybacks, income tax credits or credits against income tax, disqualified interest and excess
limitation carryovers or carrybacks, overall foreign losses, research and experimentation credit
base periods, and all other items that are determined or computed on an affiliated group basis (as
defined in Section 1504(a) of the Code determined without regard to the exclusion contained in
Section 1504(b)(3) of the Code), or similar Tax items determined under applicable Tax law.
(96) “Tax Benefit Actually Realized” means with respect to a Party and its
Subsidiaries a reduction in the amount of Taxes that are required to be paid or an increase in
refund due, whether resulting from a deduction, from reduced gain or increased loss from
disposition of an asset, or otherwise, such reduction or increase in refund due determined on an
“actually realized” basis. For purposes of this definition, a Party or its Subsidiaries will be
deemed to have “actually realized” such reduction or increase in refund due at the time the amount
of Taxes such Party or any of its Subsidiaries is required to pay is reduced or the amount of any
refund due is increased. The amount of any Tax Benefit Actually Realized shall be computed on a
“with and without” basis.
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(97) “Tax-Free Status” means the qualification of a Distribution or any other
transaction contemplated by the IRS Ruling or any Tax Opinion as a transaction in which gain or
loss is not recognized, in whole or in part, and no amount is included in income, including by
reason of Distribution Taxes, for U.S. federal, state, and local income tax purposes (other than
intercompany items, excess loss accounts or other items required to be taken into account pursuant
to Treasury Regulations promulgated under Section 1502 of the Code).
(98) “Taxing Authority” means any governmental authority or any subdivision, agency,
commission, or authority thereof or any quasi-governmental or private body having jurisdiction over
the assessment, determination, collection, or imposition of any Tax (including the IRS).
(99) “Tax Opinions” mean certain Tax opinions and supporting memoranda rendered by
Simpson to ITT or any of its Affiliates in connection with the Plan of Separation.
(100) “Tax Package” means Tax data and information relating to the operations of a
Spinco Party and/or its Subsidiaries, the Water Business (in the case of Water), or the Defense
Business (in the case of Defense) that is reasonably necessary to prepare and file any ITT Combined
or ITT Separate U.S. Income Tax Return, Covered Water Separate U.S. Income Tax Return, or Covered
Defense Separate U.S. Income Tax Return, as applicable, and is consistent with the content and
format of Tax data and information submitted by Affiliates of Water or Water Business divisions (in
the case of Water) or Affiliates of Defense or Defense Business divisions (in the case of Defense)
to ITT for Tax Returns (both U.S. and non-U.S.) for Tax periods prior to 2011.
(101) “Tax Representation Letter” means any letter containing certain representations
and covenants issued by ITT or any of its Affiliates to Simpson in connection with the Tax
Opinions.
(102) “Tax Returns” mean any return, report, certificate, form or similar statement or
document (including any related or supporting information or schedule attached thereto and any
information return, amended tax return, claim for refund, or declaration of estimated tax) required
to be supplied to, or filed with, a Taxing Authority in connection with the determination,
assessment or collection of any Tax or the administration of any Laws, regulations, or
administrative requirements relating to any Taxes.
(103) “Transition Services Agreement” has the meaning set forth in the Distribution
Agreement.
(104) “Treasury Regulations” mean the income tax and administrative regulations
promulgated from time to time under the Code, as in effect for the relevant Tax Period.
(105) “Unqualified Tax Opinion” means an unqualified “will” opinion of a Qualified Tax
Advisor, which opinion is reasonably acceptable to each of the Parties and upon which each of the
Parties may rely to confirm that a transaction (or transactions) will not result in Distribution
Taxes.
(106) “U.S.” means the United States.
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(107) “U.S. State Sharing Percentages” means, with respect to ITT, the ITT U.S. State
Sharing Percentage, with respect to Water, the Water U.S. State Sharing Percentage, and with
respect to Defense, the Defense U.S. State Sharing Percentage.
(108) “Water” has the meaning set forth in the recitals to this Agreement.
(109) “Water Assets” has the meaning set forth in the Distribution Agreement.
(110) “Water Business” has the meaning set forth in the Distribution Agreement.
(111) “Water Common Stock” has the meaning set forth in the recitals hereto.
(112) “Water Federal Sharing Percentage” means fifty-one percent (51%).
(113) “Water Group” has the meaning set forth in the Distribution Agreement.
(114) “Water Liabilities” has the meaning set forth in the Distribution Agreement.
(115) “Water Non-U.S. Sharing Percentage” means sixteen percent (16%).
(116) “Water Separate U.S. Income Tax Return” means any U.S. federal, state, or local
Income Tax Return (including any consolidated, combined, unitary, or similar return) (i) that is
not an ITT Combined U.S. Income Tax Return and (ii) that Water or any member of the Water Group is
responsible under applicable Law for filing.
(117) “Water U.S. State Sharing Percentage” means six percent (6%).
Section 1.2 References; Interpretation.
(a) Terms not otherwise defined herein shall have the meaning ascribed to them in the
Distribution Agreement. References in this Agreement to any gender include references to all
genders, and references to the singular include references to the plural and vice versa. Unless the
context otherwise requires, the words “include”, “includes”, and “including” when used in this
Agreement shall be deemed to be followed by the phrase “without limitation”. Unless the context
otherwise requires, references in this Agreement to Articles, Sections, Exhibits and Schedules
shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this
Agreement. Unless the context otherwise requires, the words “hereof”, “hereby”, and “herein” and
words of similar meaning when used in this Agreement refer to this Agreement in its entirety and
not to any particular Article, Section or provision of this Agreement.
Section 1.3 Effective Time.
(a) The Parties acknowledge that the Plan of Separation contemplates a series of interrelated
and intermediate internal transactions undertaken preparatory to and in contemplation of the
Distributions that must be completed prior to the Effective Time in order to align and properly
capitalize the Water Business, the Defense Business, and the ITT Retained Business.
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(b) Notwithstanding that these interrelated and intermediate internal transactions must be
given effect prior to the Distributions, the agreements contained herein, including, but not
limited to, the manner in which Taxes are shared amongst the Parties, shall be effective no earlier
than and only upon the Effective Time.
ARTICLE II
PREPARATION AND FILING OF TAX RETURNS
Section 2.1 Responsibility of ITT to Prepare and File Tax Returns.
(a) General. To the extent not previously filed and subject to the rights and
obligations of each of the Parties set forth herein, ITT shall prepare or cause to be prepared all
(i) Tax Returns required to be filed (taking into account any applicable extensions) on or prior to
the Distribution Date, (ii) ITT Combined or ITT Separate U.S. Income Tax Returns, and (iii) ITT
Non-U.S. Income Tax Returns. ITT shall file or cause to be filed all such Tax Returns with the
applicable Taxing Authority. To the extent any member of the Water Group or the Defense Group could
be liable after the Distribution Date for Taxes with respect to such Tax Returns (taking into
account any provision under this Agreement), ITT shall be required to prepare such Tax Returns in a
manner consistent with the past practice of ITT and its Affiliates (unless otherwise modified by a
Final Determination or required by applicable Law). All Tax Returns filed under this Section 2.1
shall be filed in a manner consistent with (and the Parties and their Affiliates shall not take any
position inconsistent with) the IRS Ruling, the Tax Representation Letters, and the Tax Opinions.
Subject to the foregoing standards, ITT shall have the right with respect to any Tax Return filed
under this Section 2.1, to determine: (a) except as provided in Section 11.2(a), the manner in
which such Tax Return will be prepared and filed, including the elections, method of accounting,
positions, conventions, and principles of taxation to be used and the manner in which any Tax item
will be reported; (b) whether any extensions may be requested; and (c) except as provided in
Section 11.2(a), the elections that will be made by ITT, any member of the ITT Group, any member of
the Water Group, or any member of the Defense Group on such Tax Return.
(b) Tax Package. To the extent not previously provided, Water and Defense shall (at
their own cost and expense), to the extent that an ITT Combined or ITT Separate U.S. Income Tax
Return includes items of that Party or its Affiliates, the Water Business (in the case of Water),
or the Defense Business (in the case of Defense), prepare and provide or cause to be prepared and
provided to ITT a Tax Package relating to such Tax Return. Such Tax Package shall be provided in a
timely manner consistent with the past practices of the Parties and their Affiliates. In the event
a Party does not fulfill its obligations pursuant to this Section 2.1(b), ITT shall be entitled, at
the sole cost and expense of such Party, to prepare or cause to be prepared the information
required to be included in the Tax Package for purposes of preparing any such ITT Combined or ITT
Separate U.S. Income Tax Return.
Section 2.2 Responsibility of Parties to Prepare and File Covered Water Separate U.S.
Income Tax Returns and Covered Defense Separate U.S. Income Tax Returns.
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(a) General. Subject to the rights and obligations of each of the Parties set forth
herein, ITT shall prepare or cause to be prepared all Covered Water Separate U.S. Income Tax
Returns and all Covered Defense Separate U.S. Income Tax Returns required to be filed after the
Distribution Date. Water shall file or cause to be filed all such Covered Water Separate U.S.
Income Tax Returns with the applicable Taxing Authority, and Defense shall file or cause to be
filed all such Covered Defense Separate U.S. Income Tax Returns with the applicable Taxing
Authority. All such Tax Returns shall be prepared in a manner (i) consistent with the past practice
of the Parties and their Affiliates unless otherwise modified by a Final Determination or required
by applicable Law; (ii) consistent with (and the Parties and their Affiliates shall not take any
position inconsistent with) the IRS Ruling, the Tax Representation Letters, and the Tax Opinions;
and (iii) consistent with any ITT Combined U.S. Income Tax Returns.
(b) Tax Package. To the extent not previously provided, Water and Defense shall (at
their own cost and expense), prepare and provide or cause to be prepared and provided to ITT a Tax
Package relating to any Covered Water Separate U.S. Income Tax Return (in the case of Water) or
Covered Defense Separate U.S. Income Tax Return (in the case of Defense). Such Tax Package shall be
provided in a timely manner consistent with the past practices of the Parties and their Affiliates.
In the event a Party does not fulfill its obligations pursuant to this Section 2.2(b), ITT shall be
entitled, at the sole cost and expense of such Party, to prepare or cause to be prepared the
information required to be included in the Tax Package for purposes of preparing any such Covered
Water Separate U.S. Income Tax Return or Covered Defense Separate U.S. Income Tax Return.
(c) Procedures Relating to the Preparation and Filing of Covered Water Separate U.S.
Income Tax Returns and Covered Defense Separate U.S. Income Tax Returns.
(i) In the case of Covered Water Separate U.S. Income Tax Returns and Covered Defense Separate
U.S. Income Tax Returns required to be filed after the Distribution Date, no later than forty-five
(45) days prior to the Due Date of each such Tax Return (reduced to twenty (20) days for state or
local Tax Returns), ITT shall make available or cause to be made available drafts of such Tax
Returns to Water or Defense, respectively. Water or Defense (as the case may be) shall have access
to any and all data and information reasonably necessary for the preparation of all such Tax
Returns, and ITT and Water or Defense (as the case may be) shall cooperate fully in the preparation
and review of such Tax Returns. Subject to the preceding sentence, no later than fifteen (15) days
after receipt of such Tax Returns (reduced to five (5) days for state or local Tax Returns), Water
shall have a right to object to such Covered Water Separate U.S. Income Tax Return (or items with
respect thereto) by written notice to ITT and Defense shall have a right to object to such Covered
Defense Separate U.S. Income Tax Return (or items with respect thereto) by written notice to ITT;
such written notice shall contain such disputed item (or items) and the basis for its objection.
(ii) With respect to a Covered Water Separate U.S. Income Tax Return or Covered Defense
Separate U.S. Income Tax Return submitted by ITT to another Party pursuant to Section 2.2(c)(i), if
the other Party does not object by proper written notice within the time period described, such Tax
Return shall be deemed to have been accepted and agreed upon, and to be final and conclusive, for
purposes of this Section 2.2(c)(ii). If a Party does object by proper written notice within such
applicable time period, ITT shall reflect such Party’s comments
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on such Tax Return; provided, however, that ITT shall not be required to
reflect comments to the extent such comments are inconsistent with the standards set forth in
Section 2.2(a). The Parties shall act in good faith to resolve any such dispute as promptly as
practicable. If the Parties have not reached a final resolution with respect to all disputed items
for which proper written notice was given within ten (10) days (reduced to two (2) days for state
or local Tax Returns) prior to the Due Date for such Tax Return, such Tax Return shall be filed as
prepared pursuant to this Section 2.2 (revised to reflect all initially disputed items that the
Parties have agreed upon prior to such date).
(iii) In the event that a Covered Water Separate U.S. Income Tax Return or Covered Defense
Separate U.S. Income Tax Return required to be filed after the Distribution Date is filed that
includes any disputed item for which proper notice was given pursuant to this Section 2.2(c) that
was not finally resolved and agreed upon, such disputed item (or items) shall be resolved in
accordance with Article XIII. In the event that the resolution of such disputed item (or items) in
accordance with Article XIII with respect to a Covered Water Separate U.S. Income Tax Return or
Covered Defense Separate U.S. Income Tax Return is inconsistent with such Tax Return as filed, the
Party entitled under applicable Law to amend such Tax Return (with cooperation from the other
Parties) shall, as promptly as practicable, amend such Tax Return to properly reflect the final
resolution of the disputed item (or items). In the event that the amount of Taxes shown to be due
and owing on a Covered Water Separate U.S. Income Tax Return or Covered Defense Separate U.S.
Income Tax Return required to be filed after the Distribution Date is adjusted as a result of a
resolution pursuant to Article XIII, proper adjustment shall be made to the amounts previously paid
or required to be paid by the Parties in accordance with Article III in a manner that reflects such
resolution.
Section 2.3 Responsibility of Parties to Prepare and File Post-Distribution Income Tax
Returns, Non-U.S. Income Tax Returns, and Non-Income Tax Returns. The Party or its Affiliate responsible under applicable Law for filing a Post-Distribution
Income Tax Return (other than a Tax Return for a Stub Tax Period), a Non-U.S. Income Tax Return
(other than an ITT Non-U.S. Income Tax Return), or a Non-Income Tax Return (in each case required
to be filed after the Distribution Date) shall prepare and file or cause to be prepared and filed
that Tax Return (at that Party’s own cost and expense). All such Tax Returns shall be filed in a
manner (i) consistent with (and the Parties and their Affiliates shall not take any position
inconsistent with) the IRS Ruling, the Tax Representation Letters, and the Tax Opinions and (ii)
consistent with any ITT Combined U.S. Income Tax Returns.
Section 2.4 Time of Filing Tax Returns; Manner of Tax Return Preparation. Each Tax Return shall be filed on or prior to the Due Date for such Tax Return by the Party
responsible for filing such Tax Return hereunder. Unless otherwise required by a Taxing Authority
pursuant to a Final Determination, the Parties hereto shall prepare and file or cause to be
prepared and filed all Tax Returns and take all other actions in a manner consistent with (and
shall not take any position inconsistent with) any assumptions, representations, warranties,
covenants, and conclusions provided by the Parties in connection with the Plan of Separation.
Section 2.5 Costs and Expenses. Unless otherwise provided in this Agreement, the party responsible for preparing any Tax Return
under Section 2.1, 2.2, or 2.3 shall be responsible for the costs and expenses associated with
preparing such Tax Returns.
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Notwithstanding the foregoing, the external costs and expenses associated with preparing all ITT
Combined or ITT Separate U.S. Income Tax Returns, Covered Water Separate U.S. Income Tax Returns,
and Covered Defense Separate U.S. Income Tax Returns shall be shared on an equal one-third (1/3)
basis by each of the Parties; provided, however, if ITT determines that such shared
external costs and expenses are reasonably expected to exceed $1,500,000, then at such time the
Chief Executive Officer of ITT shall notify the Chief Executive Officers of each of Xylem and
Exelis of such expected overage, and the Parties shall use their good faith efforts to determine
within thirty (30) days the amount of the additional shared external costs and expenses that are
reasonably necessary for the preparation of such Tax Returns.
ARTICLE III
RESPONSIBILITY FOR PAYMENT OF TAXES
Section 3.1 Responsibility of ITT for Taxes. Except as otherwise provided in this Agreement, ITT shall be liable for and shall pay or
cause to be paid the following Taxes to the applicable Taxing Authority:
(a) any Taxes due and payable on all Tax Returns required to be filed (taking into account any
applicable extensions) on or prior to the Distribution Date;
(b) any Taxes due and payable on all ITT Combined or ITT Separate U.S. Income Tax Returns;
(c) any Taxes due and payable on all ITT Non-U.S. Income Tax Returns; and
(d) any Taxes due and payable on all Post-Distribution Income Tax Returns, Non-U.S. Income Tax
Returns, and Non-Income Tax Returns that ITT is required to file or cause to be filed with such
Taxing Authority pursuant to Section 2.3.
Section 3.2 Responsibility of Defense for Taxes. Except as otherwise provided in this Agreement, Defense shall be liable for and shall pay
or cause to be paid the following Taxes to the applicable Taxing Authority:
(a) any Taxes due and payable on all Covered Defense Separate U.S. Income Tax Returns required
to be filed after the Distribution Date; and
(b) any Taxes due and payable on all Post-Distribution Income Tax Returns, Non-U.S. Income Tax
Returns, and Non-Income Tax Returns that Defense is required to file or cause to be filed with such
Taxing Authority pursuant to Section 2.3.
Section 3.3 Responsibility of Water for Taxes. Except as otherwise provided in this agreement, Water shall be liable for and shall pay or
cause to be paid the following Taxes to the applicable Taxing Authority:
(a) any Taxes due and payable on all Covered Water Separate U.S. Income Tax Returns required
to be filed after the Distribution Date; and
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(b) any Taxes due and payable on all Post-Distribution Income Tax Returns, Non-U.S. Income Tax
Returns, and Non-Income Tax Returns that Water is required to file or cause to be filed with such
Taxing Authority pursuant to Section 2.3.
Section 3.4 Timing of Payments of Taxes. All Taxes required to be paid or caused to be paid by a Party to a Taxing Authority
pursuant to this Article III shall be paid or caused to be paid by such Party on or prior to the
Due Date of such Taxes. All amounts required to be paid by one Party to another Party (including
obligations arising under Article VII) pursuant to this Article III shall be paid or caused to be
paid by such first Party to such other Party in accordance with Article VIII.
ARTICLE IV
REFUNDS, CARRYBACKS AND AMENDED TAX RETURNS
Section 4.1 Refunds.
(a) Each Party shall be entitled to refunds (including any similar credit or offset of Taxes)
that relate to Taxes for which it is liable hereunder in accordance with Article III, Article V, or
Article VI; provided, however, that (i) any refunds of Taxes (other than Taxes for
which a Party is responsible pursuant to Article V or Article VI) received in connection with any
ITT Federal Income Tax Audit, an ITT U.S. State Income Tax Audit, or ITT Non-U.S. Income Tax Audit
by a member of the ITT Group for a Pre-Distribution Tax Period or that relate to the portion of a
Straddle Tax Period ending on the Distribution Date (as determined under Section 11.2(a)) shall be
treated as reducing the ITT Federal Income Tax Audit Amount, ITT U.S. State Income Tax Audit
Amount, or ITT Non-U.S. Income Tax Audit Amount, as applicable (but only to the extent that a
member of the ITT Group is entitled to retain such refund after application of clause (ii) below or
otherwise) and (ii) the Party that receives such refund shall make payments to the other Parties in
accordance with their Federal Sharing Percentages, U.S. State Sharing Percentages, or Non-U.S.
Sharing Percentages, as applicable, to reflect the their prior liability, if any, for additional
Taxes under Section 9.3.
(b) Any refund or portion thereof to which a Party is entitled pursuant to this Section 4.1
that is received or deemed to have been received as described herein by another Party, shall be
paid by such other Party to such first Party in immediately available funds in accordance with
Article VIII.
Section 4.2 Carrybacks. The Spinco Parties agree and will cause their Subsidiaries not to carry back any Tax
Attribute for any taxable period ending after the Distribution Date to an ITT Combined U.S. Income
Tax Return, except as is required by applicable Law.
Section 4.3 Amended Tax Returns.
(a) Notwithstanding Sections 2.1 and 2.2, a Party or its Subsidiary that is entitled to file
an amended Tax Return for a Pre-Distribution Tax Period or a Straddle Tax Period for members of its
Group shall be permitted to prepare and file an amended Tax Return at its own cost and expense;
provided, however, that (i) such amended Tax Return shall be prepared in
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a manner (x) consistent with the past practice of the Parties and their Affiliates unless
otherwise modified by a Final Determination or required by applicable Law; (y) consistent with (and
the Parties and their Affiliates shall not take any position inconsistent with) the IRS Ruling, the
Tax Representation Letters, and the Tax Opinions; and (z) consistent with any ITT Combined U.S.
Income Tax Returns; and (ii) if such amended Tax Return could result in one or more other Parties
becoming responsible for a payment of Taxes pursuant to Article III or a payment to a Party
pursuant to Article IX, such amended Tax Return shall be permitted only if the consent of such
other Parties is obtained. The consent of such other Parties shall not be withheld unreasonably and
shall be deemed to be obtained in the event that a Party or its Subsidiary is required to file an
amended Tax Return as a result of an Audit adjustment that arose in accordance with Article IX.
(b) A Party or its Subsidiary that is entitled to file an amended Tax Return for a
Post-Distribution Tax Period shall be permitted to do so without the consent of any Party.
(c) A Party that is permitted (or whose Subsidiary is permitted) to file an amended Tax Return
shall not be relieved of any liability for payments pursuant to this Agreement notwithstanding that
another Party consented thereto.
ARTICLE V
DISTRIBUTION TAXES
Section 5.1 Liability for Distribution Taxes. In the event that Distribution Taxes become due and payable to a Taxing Authority pursuant
to a Final Determination, then, notwithstanding anything to the contrary in this Agreement:
(a) No Fault. If such Distribution Taxes are not attributable to the Fault of any
Party or any of its Affiliates, the responsibility for such Distribution Taxes shall be shared by
the Parties in accordance with their Distribution Sharing Percentages. Notwithstanding anything to
the contrary in this Agreement, such Distribution Taxes shall not be subject to Section 9.3
(including for purposes of determining the ITT Federal Income Tax Audit Amount or ITT U.S. State
Income Tax Audit Amount).
(b) Fault. If such Distribution Taxes are attributable to the Fault of one or more
Parties or any of their Affiliates, the responsibility for such Distribution Taxes shall reside
with the Party or Parties at Fault. If more than one Party is at Fault, the responsibility for the
Distribution Taxes shall be allocated equally among all of the Parties at Fault. Notwithstanding
anything to the contrary in this Agreement, such Distribution Taxes shall not be subject to Article
III or Section 9.3 (including for purposes of determining the ITT Federal Income Tax Audit Amount
or ITT U.S. State Income Tax Audit Amount).
Section 5.2 Definition of Fault. For purposes of this Agreement, Distribution Taxes shall be deemed to result from the fault
(“Fault”) of a Party if such Distribution Taxes are directly attributable to, or result from:
(a) any act, or failure or omission to act, by such Party or any of such Party’s Affiliates
following the Distributions that results in one or more Parties (or any of their
17
Affiliates) being responsible for such Distribution Taxes pursuant to a Final Determination,
regardless of whether such act or failure to act (i) is covered by a Post-Distribution Ruling,
Unqualified Tax Opinion, or waiver in accordance with Section 5.3, or (ii) occurs during or after
the Restricted Period, or
(b) the direct or indirect acquisition of all or a portion of the stock of such Party or of
any of the Section 355 Entities (or any transaction or series of related transactions that is
deemed to be such an acquisition for purposes of Section 355(e) of the Code and the Treasury
Regulations promulgated thereunder) by any means whatsoever by any person including pursuant to an
issuance of stock by such Party or any of its Affiliates.
Section 5.3 Limits on Proposed Acquisition Transactions and Other Transactions During
Restricted Period. During the Restricted Period, no Party shall:
(a) enter into any Proposed Acquisition Transaction, approve any Proposed Acquisition
Transaction for any purpose, or allow any Proposed Acquisition Transaction to occur with respect to
any of the Section 355 Entities;
(b) merge or consolidate with any other Person or liquidate or partially liquidate; or approve
or allow any merger, consolidation, liquidation, or partial liquidation of any of the Section 355
Entities or the ATOB Entities;
(c) approve or allow the discontinuance, cessation, or sale or other transfer (to an Affiliate
or otherwise) of any Active Business;
(d) approve or allow the sale, issuance, or other disposition (to an Affiliate or otherwise),
directly or indirectly, of any share of, or other equity interest or an instrument convertible into
an equity interest in, any of the ATOB Entities;
(e) sell or otherwise dispose of more than 35 percent (35%) of its consolidated gross or net
assets, or approve or allow the sale or other disposition (to an Affiliate or otherwise) of more
than 35 percent (35%) of the consolidated gross or net assets of any of the Section 355 Entities
(in each case, excluding sales in the ordinary course of business and measured based on fair market
values as of the date of the applicable Distribution or other transaction);
(f) amend its certificate of incorporation (or other organizational documents), or take any
other action or approve or allow the taking of any action, whether through a stockholder vote or
otherwise, affecting the voting rights of the stock of such Party or any of the Section 355
Entities;
(g) purchase, directly or through any Affiliate, any of its outstanding stock after the
Distributions, other than through stock purchases meeting the requirements of Section 4.05(1)(b) of
Revenue Procedure 96-30;
(h) take any action or fail to take any action, or permit any of its Affiliates to take any
action or fail to take any action, that is inconsistent with the representations and covenants made
in the IRS Ruling or in the Tax Representation Letters, or that is inconsistent with any rulings or
opinions in the IRS Ruling or any Tax Opinion; or
18
(i) take any action or permit any of its Affiliates to take any action that, in the aggregate
(taking into account other transactions described in this Section 5.3) would be reasonably likely
to jeopardize Tax-Free Status;
provided, however, that a Party (the “Requesting Party”) shall be permitted to take
such action or one or more actions set forth in the foregoing clauses (a) through (g) if, prior to
taking any such actions: (1) such Requesting Party or ITT shall have received a favorable private
letter ruling from the IRS, or a ruling from another Taxing Authority (a “Post-Distribution
Ruling”), in form and substance reasonably satisfactory to the other Parties that confirms that
such action or actions will not result in Distribution Taxes, taking into account such actions and
any other relevant transactions in the aggregate; (2) such Requesting Party shall have received an
Unqualified Tax Opinion in form and substance reasonably satisfactory to the other Parties that
confirms that such action or actions will not result in Distribution Taxes, taking into account
such actions and any other relevant transactions in the aggregate; or (3) such Requesting Party
shall have received a written statement from each of the other Parties that provides that such
other Party waives the requirement to obtain a Post-Distribution Ruling or Unqualified Tax Opinion
described in this paragraph. The Requesting Party shall bear all costs and expenses of securing any
such Post-Distribution Ruling or Unqualified Tax Opinion.
Section 5.4 IRS Ruling, Tax Representation Letters, and Tax Opinions; Consistency. Each Party represents that the information and representations furnished by it in or with
respect to the IRS Ruling, the Tax Representation Letters, or the Tax Opinions are accurate and
complete as of the Effective Time. Each Party covenants that if, after the Effective Time, it or
any of its Affiliates obtains information indicating, or otherwise becomes aware, that any such
information or representations is or may be inaccurate or incomplete, to promptly inform the other
Parties. The Parties shall not take any action or fail to take any action, or permit any of their
Affiliates to take any action or fail to take any action, that is or is reasonably likely to be
inconsistent with the IRS Ruling, the Tax Representation Letters, or the Tax Opinions.
Section 5.5 Timing of Payment of Taxes. All Distribution Taxes required to be paid or caused to be paid by a Party to a Taxing
Authority under applicable Law shall be paid or caused to be paid by such Party on or prior to the
Due Date of such Distribution Taxes. All amounts required to be paid by one Party to another Party
(including obligations arising under Article VII) pursuant to this Article V shall be paid or
caused to be paid by such first Party to such other Party in accordance with Article VIII.
ARTICLE VI
GAIN RECOGNITION AGREEMENTS
Section 6.1 Gain Recognition Agreement Compliance. Each Party and its Affiliates shall take any action reasonably necessary to prevent the
transactions that are part of the Plan of Separation from constituting “triggering events” with
respect to the GRAs listed in Schedule 6.1 or any related new or amended GRAs (including amending
existing GRAs or entering into new GRAs as well as complying with any related requirements).
19
Section 6.2 Gain Recognition Agreement Taxes. In the event that any Taxes become due and payable to a Taxing Authority with respect to the
GRAs listed in Schedule 6.1 or any related new or amended GRAs, then, notwithstanding anything to
the contrary in this Agreement:
(a) Non-Compliance. If such Taxes are attributable to one or more Parties’ or any of
their Affiliates’ failure to comply with Section 6.1, the responsibility for such Taxes shall
reside with such Party or Parties. If more than one Party or any of its Affiliates has failed to
comply to with Section 6.1, the responsibility for such Taxes shall be allocated equally among all
such Parties. Notwithstanding anything to the contrary in this Agreement, such Taxes shall not be
subject to Article III or Section 9.3 (including for purposes of determining the ITT Federal Income
Tax Audit Amount or ITT U.S. State Income Tax Audit Amount).
(b) Post-Distribution Actions. If such Taxes are not covered by Section 6.2(a) and
are attributable to any action of a Party or any of its Affiliates after the Distributions, the
responsibility for such Taxes shall reside with such Party. Notwithstanding anything to the
contrary in this Agreement, such Taxes shall not be subject to Article III or Section 9.3
(including for purposes of determining the ITT Federal Income Tax Audit Amount or ITT U.S. State
Income Tax Audit Amount).
Section 6.3 Timing of Payment of Taxes. All Taxes subject to Section 6.2 required to be paid or caused to be paid by a Party to a
Taxing Authority under applicable Law shall be paid or caused to be paid by such Party on or prior
to the Due Date of such Taxes. All amounts required to be paid by one Party to another Party
(including obligations arising under Article VII) pursuant to this Article VI shall be paid or
caused to be paid by such first Party to such other Party in accordance with Article VIII.
ARTICLE VII
INDEMNIFICATION
Section 7.1 Indemnification Obligations of ITT. ITT shall indemnify Water and Defense and hold them harmless from and against (without
duplication):
(a) all Taxes and other amounts for which the ITT Group is responsible under this Agreement;
and
(b) all Taxes and Losses attributable to a breach of any representation, covenant, or
obligation of ITT under this Agreement.
Section 7.2 Indemnification Obligations of Water. Water shall indemnify ITT and Defense and hold them harmless from and against (without
duplication):
(a) all Taxes and other amounts for which the Water Group is responsible under this Agreement;
and
(b) all Taxes and Losses attributable to a breach of any representation, covenant, or
obligation of Water under this Agreement.
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Section 7.3 Indemnification Obligations of Defense. Defense shall indemnify ITT and Water and hold them harmless from and against (without
duplication):
(a) all Taxes and other amounts for which the Defense Group is responsible under this
Agreement; and
(b) all Taxes and Losses attributable to a breach of any representation, covenant or
obligation of Defense under this Agreement.
ARTICLE VIII
PAYMENTS
Section 8.1 Payments.
(a) General. In the event that an Indemnifying Party is required to make a payment to
an Indemnified Party pursuant to this Agreement, such payment shall be made to the Indemnified
Party within the time prescribed for payment in this Agreement, or if no period is prescribed,
within twenty (20) days after delivery of written notice of payment owing together with a
computation of the amounts due. If the Indemnifying Party fails to make a payment to the
Indemnified Party within the time period set forth in this Section 8.1 or as otherwise provided in
this Agreement, such Indemnifying Party shall pay to the Indemnified Party interest that accrues
(at a rate equal to LIBOR) on the amount of such payment from the time that such payment was due to
the Indemnified Party until the date that payment is actually made to the Indemnified Party;
provided, however, that this provision for interest shall not be construed to give the
Indemnifying Party the right to defer payment beyond the due date hereunder.
(b) Right of Setoff. It is expressly understood that an Indemnifying Party is hereby
authorized to set off and apply any and all amounts required to be paid to an Indemnified Party
pursuant to this Section 8.1 against any and all of the obligations of the Indemnified Party to the
Indemnifying Party arising under Section 8.1 of this Agreement that are then either due and payable
or past due, irrespective of whether such Indemnifying Party has made any demand for payment with
respect to such obligations.
Section 8.2 Treatment of Payments made Pursuant to Tax Matters Agreement. Unless otherwise required by a Final Determination or this Agreement or otherwise agreed to
among the Parties, for U.S. federal Tax purposes, any payment (other than payments of interest
pursuant to Section 8.1(a)) made pursuant to this Agreement by:
(a) a Spinco Party to ITT shall be treated for all Tax purposes as a distribution by such
Spinco Party to ITT with respect to stock of the Spinco Party occurring after the Spinco Party is
directly owned by ITT and immediately before the applicable Distribution;
(b) ITT to either of the Spinco Parties shall be treated for all Tax purposes as a tax-free
contribution by ITT to the appropriate Spinco Party with respect to its stock occurring after the
Spinco Party is directly owned by ITT and immediately before the applicable Distribution;
21
(c) a Spinco Party to another Spinco Party shall be treated for all Tax purposes as a
distribution by the first Spinco Party to ITT with respect to stock of that Spinco Party occurring
after the Spinco Party is directly owned by ITT and immediately before the applicable Distribution
followed by a tax-free contribution by ITT to the recipient Spinco Party with respect to its stock
occurring after the Spinco Party is directly owned by ITT and immediately before the applicable
Distribution; and
(d) in each case, none of the Parties shall take any position inconsistent with such
treatment. In the event that a Taxing Authority asserts that a Party’s treatment of a payment
pursuant to this Agreement should be other than as required pursuant to this Agreement (ignoring
any potential inconsistent or adverse Final Determination), such Party shall use its commercially
reasonable efforts to contest such challenge.
Section 8.3 Payments Net of Tax Benefit Actually Realized and Tax Cost. All amounts required to be paid by one Party to another pursuant to this Agreement or the
Distribution Agreement shall be reduced by the Tax Benefit Actually Realized by the Indemnified
Party or its Subsidiaries in the taxable year the payment is made or any prior taxable year as a
result of the claim giving rise to the payment. If the receipt or accrual of any such payment
(other than payments of interest pursuant to Section 8.1(a) or Section 11.11 of the Distribution
Agreement) results in taxable income to the Indemnified Party or its Subsidiaries, such payment
shall be increased so that, after the payment of any Taxes with respect to the payment, the
Indemnified Party or its Subsidiaries shall have realized the same net amount it would have
realized had the payment not resulted in taxable income.
ARTICLE IX
AUDITS
Section 9.1 Notice. Within fifteen (15) Business Days after a Party or any of its Affiliates receives a written
notice from a Taxing Authority (reduced to five (5) Business Days for written notices received from
a state or local Taxing Authority) of the existence of an Audit that may require indemnification
pursuant to this Agreement, that Party shall notify the other Parties of such receipt and send such
notice to the other Parties via overnight mail. The failure of one Party to notify the other
Parties of an Audit shall not relieve such other Party of any liability and/or obligation that it
may have under this Agreement, except to the extent that the Indemnifying Party’s rights under this
Agreement are materially prejudiced by such failure.
Section 9.2 Audits.
(a) Determination of Administering Party.
(i) Subject to Sections 9.2(b) and 9.2(c), ITT and its Subsidiaries shall administer and
control all ITT Federal Income Tax Audits, ITT U.S. State Income Tax Audits, and ITT Non-U.S.
Income Tax Audits.
(ii) Audits of Water Separate U.S. Income Tax Returns, Defense Separate U.S. Income Tax
Returns, Post-Distribution Income Tax Returns, Non-U.S. Income Tax Returns (other than ITT Non-U.S.
Income Tax Returns), and Non-Income Tax Returns shall
22
be administered and controlled by the Party and its Subsidiaries that would be primarily
liable under applicable Law to pay to the applicable Taxing Authority the Taxes resulting from such
Audits. Such Audits shall not be subject to Sections 9.2(b) and 9.2(c).
(b) Administration and Control; Cooperation.
(i) Subject to Sections 9.2(b)(ii) and 9.2(c), the Audit Management Party shall have absolute
authority to make all decisions (determined in its sole discretion) with respect to the
administration and control of such Audit, including the selection of all external advisors. In that
regard, the Audit Management Party (a) may in its sole discretion settle or otherwise determine not
to continue to contest any issue related to such Audit without the consent of the other Parties,
and (b) shall, as soon as reasonably practicable and prior to settlement of an issue that could
cause one or more other Parties to become responsible for Taxes under Section 9.3, notify the Audit
Representatives of such other Parties of such settlement. The other Parties shall (and shall cause
their Affiliates to) undertake all actions and execute all documents (including an extension of the
applicable statute of limitations) that are determined in the sole discretion of the Audit
Management Party to be necessary to effectuate such administration and control. The Parties shall
act in good faith and use their reasonable best efforts to cooperate fully with each other Party
(and their Affiliates) in connection with such Audit and shall provide or cause their Subsidiaries
to provide such information to each other as may be necessary or useful with respect to such Audit
in a timely manner, identify and provide access to potential witnesses, and other persons with
knowledge and other information within its control and reasonably necessary to the resolution of
the Audit.
(ii) In the case of any Audit in respect of Distribution Taxes for which a Party could be
liable pursuant to Section 5.1(b) or Taxes for which a Party could be liable pursuant to Section
6.2, such Party shall have the right to administer and control such Audit (and shall have any
rights, and be subject to any limitations or obligations, set forth in Section 9.2 applicable to
the Audit Management Party); provided, however, that such Audit Management Party
shall not settle such Audit without the prior written consent of any other Party if such settlement
could have a material adverse impact on such Party or any of its Affiliates. In event more than
one Party would be liable under Section 5.1(b) or Section 6.2, such Parties shall each have the
right to jointly act as Audit Management Party with respect to such Audit in accordance with this
Section 9.2(b)(ii), and such Parties may agree upon additional terms to govern such joint
responsibility.
(c) Participation Rights of Parties and Information Sharing with respect to Audits.
(i) Each Party that would be responsible under Section 9.3 for Taxes resulting from an Audit
(other than the Audit Management Party) (a “Participating Party”) shall have limited participation
rights as set forth in this Section 9.2(c) with respect to such Audit. Upon the reasonable request
of a Participating Party, the Audit Management Party shall make available relevant personnel and
external advisors to meet with the Participating Party and its independent auditor in order to
review the status of the Audits. The Participating Parties shall provide the Audit Management Party
with reasonable notice of such requested meetings or information.
23
(ii) Each Participating Party shall have access to any written documentation in the possession
of the Audit Management Party that pertains to the Audit (including any written summaries of issues
that the Audit Management Party has developed in the context of evaluating the financial reporting
of the Audit); provided, however, that if documentation was prepared solely by or
on behalf of a Party, then the documentation must relate to the joint defense of the Audit. Copies
of the documentation will be made available to the Participating Parties at their sole cost and
expense.
(iii) The Participating Parties are encouraged to provide consultation to the Audit Management
Party in regards to Audit strategy and shall, upon request of the Audit Management Party, provide
such consultation. The Participating Party may elect to employ separate counsel to advise the
Participating Party as additional counsel in or in connection with an Audit, but in that event, the
fees and expenses of the separate counsel shall be paid solely by the Participating Party. The
Audit Management Party shall in good faith consider all advice and other input received from the
Participating Parties in connection with their consultations with respect to an Audit. However, the
Audit Management Party shall retain the sole authority to make all Audit decisions. In that regard,
the Participating Parties and their separate counsels shall not be allowed to participate in any
Audit-related meetings other than those described in (i) or (ii) above (unless such a meeting is
attended by the personnel of a Participating Party, in which case that Participating Party may
attend the meeting but may not actively participate), respond directly to a Taxing Authority
conducting the Audit, or in any manner control resolution of the Audit.
(d) Sharing of Certain Audit-related Internal and External Costs and Expenses.
(i) External Costs and Expenses. All external costs and expenses (including all costs
and expenses of calculating Taxes and other amounts payable hereunder) that are incurred by the
Audit Management Party with respect to any ITT Federal Income Tax Audit, ITT U.S. State Income Tax
Audit, or ITT Non-U.S. Income Tax Audit (including any external costs and expenses incurred as a
result of any reporting obligations that arise out of an Audit, such as the reporting of any Audit
adjustments to the various U.S. states) shall (a) if incurred in 2012, be borne by the Audit
Management Party to the extent such external costs and expenses do not exceed $500,000 and
thereafter be shared on an equal one-third (1/3) basis by each of the Parties, (b) if incurred in
2013, be borne by the Audit Management Party to the extent such external costs and expenses do not
exceed $600,000 and thereafter be shared on an equal one-third (1/3) basis by each of the Parties,
(c) if incurred in 2014, be borne by the Audit Management Party to the extent such external costs
and expenses do not exceed $600,000 and thereafter be shared on an equal one-third (1/3) basis by
each of the Parties, and (d) if incurred after 2014, be shared on an equal one-third (1/3) basis
by each of the Parties; provided, however, that any external costs and expenses
incurred by any Party in respect of an Audit in respect of Distribution Taxes for which a Party
could be liable pursuant to Section 5.1(b) or Taxes for which a Party could be liable pursuant to
Section 6.2 shall be borne by the Party incurring such external costs and expenses and shall not be
subject to the foregoing arrangements. The Audit Management Party shall provide to the other
Parties at the end of each calendar year an invoice for each other Party’s share of the external
costs (along with supporting invoices received from the external service providers), and each other
Party shall remit, within sixty (60) days after
24
receipt of the invoice, payment of their share of the external costs to the Audit Management
Party.
(ii) Internal Costs and Expenses. All internal costs and expenses incurred by any
Party with respect to any ITT Federal Income Tax Audit, ITT U.S. State Income Tax Audit, or ITT
Non-U.S. Income Tax Audit shall be borne by such Party.
(e) Power of Attorney/Officer Signature. Each Party hereby appoints (and shall cause
its Subsidiaries to appoint) the Audit Management Party (and its designated representatives) as its
agent and attorney-in-fact to take the actions the Audit Management Party deems necessary or
appropriate to implement the responsibilities of the Audit Management Party under this Agreement.
Each Party also shall (or shall cause its Subsidiaries to) execute and deliver to the Audit
Management Party a power of attorney, and such other documents as are reasonably requested from
time to time by the Audit Management Party (or its designee).
Section 9.3 Payment of Audit Amounts.
(a) ITT Federal Income Tax Audits. In connection with any ITT Federal Income Tax
Audit:
(i) ITT shall pay all additional Taxes due and payable as a result of such Audit that relate
to the portion of a Straddle Tax Period (as determined under Section 11.2(a)) beginning after the
Distribution Date.
(ii) To the extent that the aggregate amount of additional Taxes due and payable with respect
to all ITT Federal Income Tax Audits for a Pre-Distribution Tax Period or that relate to the
portion of a Straddle Tax Period ending on the Distribution Date (as determined under Section
11.2(a)) (the “ITT Federal Income Tax Audit Amount”) does not exceed $27,100,000, ITT shall be
liable for and shall pay or cause to be paid to the applicable Taxing Authority all additional
Taxes due and payable as a result of such Audit for a Pre-Distribution Tax Period or that relate to
the portion of a Straddle Tax Period ending on the Distribution Date (as determined under Section
11.2(a)).
(iii) To the extent that the ITT Federal Income Tax Audit Amount exceeds $27,100,000:
| 1) | ITT shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority an amount equal to the ITT Federal Sharing Percentage of the additional Taxes due and payable as a result of such Audit for a Pre-Distribution Tax Period or that relate to the portion of a Straddle Tax Period ending on the Distribution Date (as determined under Section 11.2(a)). | ||
| 2) | Defense shall be liable for and shall pay or cause to be paid to ITT an amount equal to the Defense Federal Sharing Percentage of the additional Taxes |
25
| due and payable as a result of such Audit for a Pre-Distribution Tax Period or that relate to the portion of a Straddle Tax Period ending on the Distribution Date, as determined under Section 11.2(a) (and ITT shall pay or cause to be paid such amounts to the applicable Taxing Authority). | |||
| 3) | Water shall be liable for and shall pay or cause to be paid to ITT an amount equal to the Water Federal Sharing Percentage of the additional Taxes due and payable as a result of such Audit for a Pre-Distribution Tax Period or that relate to the portion of a Straddle Tax Period ending on the Distribution Date, as determined under Section 11.2(a) (and ITT shall pay or cause to be paid such amounts to the applicable Taxing Authority). |
(b) ITT U.S. State Income Tax Audits. In connection with any ITT U.S. State Income
Tax Audit:
(i) ITT shall pay all additional Taxes due and payable as a result of such Audit that relate
to the portion of a Straddle Tax Period (as determined under Section 11.2(a)) beginning after the
Distribution Date.
(ii) To the extent that the aggregate amount of additional Taxes due and payable with respect
to all ITT U.S. State Income Tax Audits for a Pre-Distribution Tax Period or that relate to the
portion of a Straddle Tax Period ending on the Distribution Date (as determined under Section
11.2(a)) (the “ITT U.S. State Income Tax Audit Amount”) does not exceed $8,600,000, ITT shall be
liable for and shall pay or cause to be paid to the applicable Taxing Authority all additional
Taxes due and payable as a result of such Audit for a Pre-Distribution Tax Period or that relate to
the portion of a Straddle Tax Period ending on the Distribution Date (as determined under Section
11.2(a)).
(iii) To the extent that the ITT U.S. State Income Tax Audit Amount exceeds $8,600,000:
| 1) | ITT shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority an amount equal to the ITT U.S. State Sharing Percentage of the additional Taxes due and payable as a result of such Audit for a Pre-Distribution Tax Period or that relate to the portion of a Straddle Tax Period ending on the Distribution Date (as determined under Section 11.2(a)). | ||
| 2) | Defense shall be liable for and shall pay or cause to be paid to ITT an amount equal to the Defense U.S. |
26
| State Sharing Percentage of the additional Taxes due and payable as a result of such Audit for a Pre-Distribution Tax Period or that relate to the portion of a Straddle Tax Period ending on the Distribution Date, as determined under Section 11.2(a) (and ITT shall pay or cause to be paid such amounts to the applicable Taxing Authority). | |||
| 3) | Water shall be liable for and shall pay or cause to be paid to ITT an amount equal to the Water U.S. State Sharing Percentage of the additional Taxes due and payable as a result of such Audit for a Pre-Distribution Tax Period or that relate to the portion of a Straddle Tax Period ending on the Distribution Date, as determined under Section 11.2(a) (and ITT shall pay or cause to be paid such amounts to the applicable Taxing Authority). |
(c) ITT Non-U.S. Income Tax Audits. In connection with any ITT Non-U.S. Income Tax
Audit:
(i) ITT shall pay all additional Taxes due and payable as a result of such Audit that relate
to the portion of a Straddle Tax Period (as determined under Section 11.2(a)) beginning after the
Distribution Date.
(ii) To the extent that the aggregate amount of additional Taxes due and payable with respect
to all ITT Non-U.S. Income Tax Audits for a Pre-Distribution Tax Period or that relate to the
portion of a Straddle Tax Period ending on the Distribution Date (as determined under Section
11.2(a)) (the “ITT Non-U.S. Income Tax Audit Amount”) does not exceed $10,600,000, ITT shall be
liable for and shall pay or cause to be paid to the applicable Taxing Authority all additional
Taxes due and payable as a result of such Audit for a Pre-Distribution Tax Period or that relate to
the portion of a Straddle Tax Period ending on the Distribution Date (as determined under Section
11.2(a)).
(iii) To the extent that the ITT Non-U.S. Income Tax Audit Amount exceeds $10,600,000:
| 1) | ITT shall be liable for and shall pay or cause to be paid to the applicable Taxing Authority an amount equal to the ITT Non-U.S. Sharing Percentage of the additional Taxes due and payable as a result of such Audit for a Pre-Distribution Tax Period or that relate to the portion of a Straddle Tax Period ending on the Distribution Date (as determined under Section 11.2(a)). |
27
| 2) | Water shall be liable for and shall pay or cause to be paid to ITT an amount equal to the Water Non-U.S. Sharing Percentage of the additional Taxes due and payable as a result of such Audit for a Pre-Distribution Tax Period or that relate to the portion of a Straddle Tax Period ending on the Distribution Date, as determined under Section 11.2(a) (and ITT shall pay or cause to be paid such amounts to the applicable Taxing Authority). |
(d) Audit True-Up Payment. If on the Audit True-Up Date the ITT Income Tax Audit
Amount is below $46,300,000, then ITT shall pay or cause to be paid (i) to Water an amount equal to
(a) thirty-five percent (35%) multiplied by (b) the amount of the difference between the ITT Income
Tax Audit Amount and $46,300,000 and (ii) to Defense an amount equal to (a) twenty-three percent
(23%) multiplied by (b) the amount of the difference between the ITT Income Tax Audit Amount and
$46,300,000. Any additional Taxes in connection with an ITT Federal Income Tax Audit, ITT U.S.
State Income Tax Audit, or ITT Non-U.S. Income Tax Audit that are due and payable after the Audit
True-Up Date shall be subject to Section 9.3(a)(iii), Section 9.3(b)(iii), or Section 9.3(c)(iii),
as the case may be.
(e) Audits of Water Separate U.S. Income Tax Returns, Defense Separate U.S. Income Tax
Returns, Post-Distribution Income Tax Returns, Non-U.S. Income Tax Returns, and Non-Income Tax
Returns. In connection with any Audits of ITT Separate U.S. Income Tax Returns, Water Separate
U.S. Income Tax Returns, Defense Separate U.S. Income Tax Returns, Post-Distribution Income Tax
Returns, Non-U.S. Income Tax Returns (other than ITT Non-U.S. Income Tax Returns), and Non-Income
Tax Returns, the Party whose Group contains the entity that is primarily liable under applicable
Law for the relevant Taxes shall be liable for and shall pay or cause to be paid to the applicable
Taxing Authority the amounts due and payable as a result of such Final Determination.
(f) Payment Procedures. In connection with any Audit or the determination of the ITT
Income Tax Audit Amount pursuant to Section 9.3(d) that results in an amount to be paid pursuant to
Section 9.3, (b), (c), or (d), the Audit Management Party shall, within thirty (30) Business Days
following a final resolution of such Audit or such determination pursuant to Section 9.3(d), submit
in writing to the other Parties a preliminary determination (calculated and explained in detail
reasonably sufficient to enable the Parties to fully understand the basis for such determination
and to permit such Parties and their Affiliates to satisfy their financial reporting requirements)
of the portion of such amount to be paid by each of the Parties pursuant to Section 9.3(a), (b),
(c), or (d), as applicable. Each of the Parties and its Affiliates shall have access to all data
and information necessary to calculate such amounts and the Parties and their Affiliates shall
cooperate fully in the determination of such amounts. Within twenty (20) Business Days following
the receipt by a Party of the information described in this Section 9.3(f), such Party shall have
the right to object only to the calculation of the amount of the payment (but not the basis for the
payment) by written notice to the other Parties; such written notice shall contain such disputed
item or items and the basis for its objection. If no Party objects by proper written notice to the
other Parties within the time period described in this Section 9.3(f), the calculation of the
amounts due and owing from each Party shall be deemed to have
28
been accepted and agreed upon, and final and conclusive, for purposes of this Section 9.3(f).
If any Party objects by proper written notice to the other Parties within such time period, the
Parties shall act in good faith to resolve any such dispute as promptly as practicable in
accordance with Article XIII. The Party or its Affiliate responsible for paying to the applicable
Taxing Authority under applicable Law amounts owed shall make such payments to such Taxing
Authority prior to the Due Date for such payments. The other Parties shall reimburse the paying
Party in accordance with Article VIII for the portion of such payments for which such other Parties
are liable pursuant to this Section 9.3. The time periods specified above for submitting a
preliminary determination and objecting may be shortened to a time period determined by a Majority
of the Parties if these Parties ascertain that such shortened time period is necessary to meet the
Audit obligations of the Parties and their Affiliates.
(g) Third Party Indemnity Payments. For the avoidance of doubt, any amounts in
respect of Taxes covered by this Article IX that are received by any of the Parties (or their
Subsidiaries) from third parties pursuant to any contractual indemnity agreement entered into prior
to the Distribution Date shall be for the account of the Party responsible for such Taxes hereunder
and shall reduce the amount of the Taxes treated as paid by such Party for purposes of this
Agreement.
ARTICLE X
COOPERATION AND EXCHANGE OF INFORMATION
Section 10.1 Cooperation and Exchange of Information. The Parties shall each cooperate fully (and each shall cause its respective Affiliates to
cooperate fully) and in a timely manner (considering the other Party’s normal internal processing
or reporting requirements) with all reasonable requests from another Party hereto, or from an
agent, representative, or advisor to such Party, in connection with the preparation and filing of
Tax Returns, claims for refund, Audits, determinations of Tax Attributes and the calculation of
Taxes or other amounts required to be paid hereunder, and any applicable financial reporting
requirements of a Party or its Affiliates, in each case, related or attributable to or arising in
connection with Taxes or Tax Attributes of any of the Parties or their respective Subsidiaries
covered by this Agreement. Such cooperation shall include, without limitation:
(a) the retention until the expiration of the applicable statute of limitations or, if later,
until the expiration of all relevant Tax Attributes (in each case taking into account all waivers
and extensions), and the provision upon request, of Tax Returns of the Parties and their respective
Subsidiaries for periods up to and including the Distribution Date, books, records (including
information regarding ownership and Tax basis of property), documentation, and other information
relating to such Tax Returns, including accompanying schedules, related work papers, and documents
relating to rulings or other determinations by Taxing Authorities;
(b) the execution of any document that may be necessary or reasonably helpful in connection
with any Audit of any of the Parties or their respective Subsidiaries, or the filing of a Tax
Return or refund claim of the Parties or any of their respective Subsidiaries (including the
signature of an officer of a Party or its Subsidiary);
29
(c) the use of the Party’s reasonable best efforts to obtain any documentation and provide
additional facts, insights or views as requested by another Party that may be necessary or
reasonably helpful in connection with any of the foregoing (including without limitation any
information contained in Tax or other financial information databases); and
(d) the use of the Party’s reasonable best efforts to obtain any Tax Returns (including
accompanying schedules, related work papers, and documents), documents, books, records, or other
information that may be necessary or helpful in connection with any Tax Returns of any of the
Parties or their Affiliates.
Each Party shall make its and its Subsidiaries’ employees and facilities available on a
reasonable and mutually convenient basis in connection with the foregoing matters. Except for costs
and expenses otherwise allocated among the Parties pursuant to this Agreement, including costs
incurred under Article II and Article IX, no reimbursement shall be made for costs and expenses
incurred by the Parties as a result of cooperating pursuant to this Section 10.1.
Water and Defense shall have the right to access, retrieve, and utilize any and all Tax data
and information as it relates to members of the Water Group and Defense Group, respectively, from
ITT’s existing Tax data and information systems until the time each establishes its own Tax data
and information systems.
Section 10.2 Retention of Records. Subject to Section 10.1, if any of the Parties or their respective Subsidiaries intends to
dispose of any documentation relating to the Taxes of the Parties or their respective Subsidiaries
for which another Party to this Agreement may be responsible pursuant to the terms of this
Agreement (including, without limitation, Tax Returns, books, records, documentation, and other
information, accompanying schedules, related work papers, and documents relating to rulings or
other determinations by Taxing Authorities), such Party shall or shall cause written notice to the
other Parties describing the documentation to be destroyed or disposed of sixty (60) Business Days
prior to taking such action. The other Parties may arrange to take delivery of the documentation
described in the notice at their expense during the succeeding sixty (60) day period.
ARTICLE XI
ALLOCATION OF TAX ATTRIBUTES
AND OTHER TAX MATTERS
AND OTHER TAX MATTERS
Section 11.1 Allocation of Tax Attributes. ITT shall in good faith advise each Spinco in writing of the portion, if any, of any Tax
Attributes, earnings and profits, or other consolidated, combined or unitary attribute that ITT
determines shall be allocated or apportioned to each Group under applicable Law; provided, however,
that such determination shall be made in a manner that is (a) reasonably consistent with the past
practices of the Parties; (b) in accordance with the rules prescribed by applicable Law, including
the Code and the Treasury Regulations; and (c) consistent with the IRS Ruling, the Tax
Representation Letters, and the Tax Opinions. ITT agrees to provide the other Parties with all of
the information supporting the Tax Attribute and other determinations made by ITT pursuant to this
Section 11.1.
30
Section 11.2 Allocation of Tax Items.
(a) All determinations for purposes of Section 4.1 and Section 9.3 regarding the allocation of
Tax items (other than Tax items arising after the Distribution Date outside the ordinary course of
business) between the portion of a Straddle Tax Period that ends on the Distribution Date and the
portion that begins the day after the Distribution Date shall be made based on a closing of the
books method unless the Parties unanimously agree otherwise. Any such allocation of Tax items shall
initially be made by ITT. To the extent that Defense or Water disagrees with such determination,
the dispute shall be resolved pursuant to the provisions of Article XIII. For purposes of
preparing any Income Tax Returns for the year of the Distributions that require an allocation of
Tax items between a Pre-Distribution Tax Period and a Post-Distribution Tax Period, Tax items shall
be allocated based on a closing of the books method unless the Parties unanimously agree otherwise.
(b) Notwithstanding anything to the contrary in this Agreement, if any Party or any of its
Affiliates is responsible for and pays any amount after the Distribution Date but on or before
September 15, 2012 (the “Paying Party”) that gives rise to a Tax Benefit Actually Realized for
another Party or any of its Affiliates (the “Claiming Party”), then the Claiming Party shall be
required to promptly pay to the Paying Party an amount equal to such Tax Benefit Actually Realized
(a “Post-Distribution Payment Tax Benefit”). Such payment shall only be required to be paid with
respect to a given item if and when the Tax Benefit Actually Realized attributable to such item
exceeds $10,000,000 in the aggregate, provided that an amount equal to the entire Tax
Benefit Actually Realized (and not merely the excess over $10,000,000) shall be required to be paid
in such event. Subsequent payments shall be made between the Parties if necessary to reflect any
subsequent increase or decrease in the amount of the Post-Distribution Payment Tax Benefit realized
by the Claiming Party. The Paying Party and the Claiming Party agree to consult with each other
regarding the determination and calculation of any Post-Distribution Payment Tax Benefit. In the
event such Parties are unable to agree on the amount of any Post-Distribution Payment Tax Benefit,
then any disputed issues shall be submitted to an independent Big Four Accounting Firm for a final
binding resolution. The fees and expenses of such Big Four Accounting Firm shall be shared equally
between the Paying Party and the Claiming Party.
ARTICLE XII
DEFAULTED AMOUNTS
Section 12.1 General. In the event that one or more Parties defaults on its obligation to pay Distribution Taxes
for which it is liable pursuant to Article V to another Party, then each non-defaulting Party shall
be required to pay an equal portion of such Distribution Taxes to such other Party;
provided, however, that no payment obligation shall exist under this Section 12.1
with respect to Distribution Taxes that are attributable to the Fault of one or more Parties;
provided, further, that any payment of Distribution Taxes by a non-defaulting Party pursuant to
this Section 12.1 shall in no way release the defaulting Party from its obligations to pay such
Distribution Taxes and any non-defaulting Party may exercise any available legal remedies available
against such defaulting Party; provided, further, that interest shall accrue on any such payment by
a non-defaulting Party at a rate per annum equal to the then applicable
31
LIBOR. In connection with the foregoing, it is expressly understood that any defaulting
Party’s rights to any amounts to be received by such defaulting Party hereunder may be used via a
right of offset to satisfy, in whole or in part, the obligations of such defaulting Party to pay
the Distribution Taxes that are borne by the non-defaulting Parties; such rights of offset shall be
applied in favor of the non-defaulting Party or Parties in proportion to the additional amounts
paid by any such non-defaulting Party or Parties.
Section 12.2 Subsidiary Funding. Without limitation of the Parties’ rights and obligations otherwise set forth in this
Agreement and provided that no other Party has defaulted on any of its obligations pursuant to this
Agreement, each Party agrees to provide or cause to be provided such funding as is necessary to
ensure that its respective Subsidiaries are able to satisfy their respective Tax liabilities to a
Taxing Authority that arise as a result of a Final Determination under Section 9.3 of this
Agreement, including any such Tax liabilities that, upon default by a Party’s Subsidiary, may
result in another Party’s Subsidiary paying or being required to pay the defaulted Tax liabilities
to a Taxing Authority.
ARTICLE XIII
DISPUTE RESOLUTION
Section 13.1 Resolution in Accordance with Distribution Agreement. In the event of a controversy, dispute or claim arising out of, in connection with, or in
relation to the interpretation, performance, nonperformance, validity or breach of this Agreement
or otherwise arising out of, or in any way related to this Agreement or the transactions
contemplated hereby, including any claim based on contract, tort, statute or constitution
(“Dispute”), such Dispute shall be subject to the provisions of Article IX of the Distribution
Agreement.
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Counterparts. This Agreement may be executed in more than one counterpart, all of which shall be
considered one and the same agreement, and shall become effective when one or more such
counterparts have been signed by each of the Parties and delivered to the other Parties.
Section 14.2 Survival. Except as otherwise contemplated by this Agreement or the Distribution Agreement, all
covenants and agreements of the Parties contained in this Agreement shall survive the Distribution
Date and remain in full force and effect in accordance with their applicable terms;
provided, however, that all indemnification for Taxes shall survive until ninety
(90) days following the expiration of the applicable statute of limitations (taking into account
all extensions thereof), if any, of the Tax that gave rise to the indemnification; provided,
further, that, in the event that notice for indemnification has been given within the applicable
survival period, such indemnification shall survive until such time as such claim is finally
resolved.
32
Section 14.3 Notices. All notices, requests, claims, demands, and other communications under this Agreement shall
be in English, shall be in writing and shall be given or made (and shall be deemed to have been
duly given or made upon receipt) by delivery in person, by overnight courier service, by facsimile
with receipt confirmed (followed by delivery of an original via overnight courier service), or by
registered or certified mail (postage prepaid, return receipt requested) to the respective Parties
at the following addresses (or at such other address for a Party as shall be specified in a notice
given in accordance with this Section 14.3):
To ITT:
ITT Corporation
1133 Westchester Avenue, Suite 3000
White Plains, NY 10604
Attn: General Counsel
Facsimile: (914) 696-2970
1133 Westchester Avenue, Suite 3000
White Plains, NY 10604
Attn: General Counsel
Facsimile: (914) 696-2970
To Water:
Xylem Inc.
1133 Westchester Avenue, Suite 2000
White Plains, NY 10604
Attn: General Counsel
Facsimile: (914) 323-5800
1133 Westchester Avenue, Suite 2000
White Plains, NY 10604
Attn: General Counsel
Facsimile: (914) 323-5800
To Defense:
Exelis Inc.
1650 Tysons Boulevard, Suite 200
McLean, VA 22102
Attn: General Counsel
Facsimile: (703) 790-6407
1650 Tysons Boulevard, Suite 200
McLean, VA 22102
Attn: General Counsel
Facsimile: (703) 790-6407
Section 14.4 Waivers. Any consent required or permitted to be given by any Party to the other Parties under this
Agreement shall be in writing and signed by the Party giving such consent and shall be effective
only against such Party (and its Group).
Section 14.5 Assignment. This Agreement shall not be assignable, in whole or in part, directly or indirectly, by any
Party hereto without the prior written consent of the other Parties, and any attempt to assign any
rights or obligations arising under this Agreement without such consent shall be void.
Notwithstanding the foregoing, this Agreement shall be assignable in whole in connection with a
merger or consolidation or the sale of all or substantially all the assets of a Party hereto so
long as the resulting, surviving or transferee entity assumes all the obligations of the relevant
Party hereto by operation of law or pursuant to an agreement in form and substance reasonably
satisfactory to the other Parties to this Agreement.
Section 14.6 Successors and Assigns. The provisions of this Agreement and the obligations and rights hereunder shall be binding
upon, inure to the benefit of and be enforceable by (and against) the Parties and their respective
successors and permitted transferees and assigns.
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Section 14.7 Termination and Amendment. This Agreement (including indemnification obligations hereunder) may be terminated, modified
or amended and each Distribution may be amended, modified or abandoned at any time prior to the
Effective Time by and in the sole discretion of ITT without the approval of Water or Defense or the
shareholders of ITT. In the event of such termination, no Party shall have any liability of any
kind to any other Party or any other Person. After the Effective Time, this Agreement may not be
terminated except by an agreement in writing signed by a duly authorized representative of each of
ITT, Water, and Defense.
Section 14.8 No Circumvention. The Parties agree not to directly or indirectly take any actions, act in concert with any
Person who takes an action, or cause or allow any member of any such Party’s Group to take any
actions (including the failure to take a reasonable action) such that the resulting effect is to
materially undermine the effectiveness of any of the provisions of this Agreement, the Distribution
Agreement or any other Ancillary Agreement (including adversely affecting the rights or ability of
any Party to successfully pursue indemnification or payment pursuant to the provisions of this
Agreement).
Section 14.9 Subsidiaries. Each of the Parties shall cause to be performed, and hereby guarantees the performance of,
all actions, agreements and obligations set forth herein to be performed by any Subsidiary of such
Party or by any entity that becomes a Subsidiary of such Party on and after the Effective Time, to
the extent such Subsidiary remains a Subsidiary of the applicable Party.
Section 14.10 Third Party Beneficiaries. This Agreement is solely for the benefit of the Parties 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 14.11 Title 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 14.12 Exhibits and Schedules. The Exhibits and Schedules shall be construed with and as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein.
Section 14.13 Governing Law. This Agreement shall be governed by and construed in accordance with the Laws, but not the
Laws governing conflicts of Laws (other than Sections 5-1401 and 5-1402 of the New York General
Obligations Law), of the State of New York; provided that the Indiana Business Corporation
Law, including the provisions thereof governing the fiduciary duties of directors of a Indiana
corporation, shall govern, as applicable, the internal affairs of ITT, Exelis and Xylem, as the
case may be.
Section 14.14 Consent to Jurisdiction. Subject to the provisions of Article XIII, each of the Parties irrevocably submits to the
exclusive jurisdiction of (a) the Supreme Court of the State of New York, New York County, or (b)
the United States District Court for the Southern District of New York (the “New York Courts”), for
the purposes of any suit, action, or
34
other proceeding to compel arbitration or for provisional relief in aid of arbitration in
accordance with Article XIII or to prevent irreparable harm, and to the non-exclusive jurisdiction
of the New York Courts for the enforcement of any award issued thereunder. Each of the Parties
further agrees that service of any process, summons, notice, or document by U.S. registered mail to
such Party’s respective address set forth above shall be effective service of process for any
action, suit, or proceeding in the New York Courts with respect to any matters to which it has
submitted to jurisdiction in this Section 14.14. Each of the Parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit, or proceeding
arising out of this Agreement or the transactions contemplated hereby in the New York Courts, and
hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such
court that any such action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.
Section 14.15 Waiver of Jury Trial. EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 14.15.
Section 14.16 Force Majeure. No Party (or any Person acting on its behalf) shall have any liability or responsibility
for failure to fulfill any obligation (other than a payment obligation) under this Agreement so
long as and to the extent to which the fulfillment of such obligation is prevented, frustrated,
hindered, or delayed as a consequence of circumstances of Force Majeure (as defined in the
Distribution Agreement). A Party claiming the benefit of this provision shall, as soon as
reasonably practicable after the occurrence of any such event: (a) notify the other applicable
Parties of the nature and extent of any such Force Majeure condition and (b) use due diligence to
remove any such causes and resume performance under this Agreement as soon as feasible.
Section 14.17 Interpretation. The Parties have participated jointly in the negotiation and drafting of this Agreement.
This Agreement shall be construed without regard to any presumption or rule requiring construction
or interpretation against the party drafting or causing any instrument to be drafted.
Section 14.18 Changes in Law.
(a) Any reference to a provision of the Code, Treasury Regulations, or a Law of another
jurisdiction shall include a reference to any applicable successor provision or Law.
35
(b) If, due to any change in applicable Law or regulations or their interpretation by any
court of Law or other governing body having jurisdiction subsequent to the date hereof, performance
of any provision of this Agreement or any transaction contemplated hereby shall become
impracticable or impossible, the Parties hereto shall use their commercially reasonable best
efforts to find and employ an alternative means to achieve the same or substantially the same
result as that contemplated by such provision.
Section 14.19 Severability. In the event any one or more of the provisions contained in this Agreement should be held
invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be affected or impaired
thereby. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions, the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
Section 14.20 Tax Sharing Agreements. All Tax sharing, indemnification and similar agreements, written or unwritten, as between
any of the Parties or their respective Subsidiaries, on the one hand, and any other Party or its
respective Subsidiaries, on the other hand (other than this Agreement or in any other Ancillary
Agreement), shall be or shall have been terminated as of the Distribution Date and, after the
Distribution Date, none of such Parties (or their Subsidiaries) to any such Tax sharing,
indemnification or similar agreement shall have any further rights or obligations under any such
agreement.
Section 14.21 Exclusivity. Except as specifically set forth herein or in the Distribution Agreement or any other
Ancillary Agreement, all matters related to Taxes or Tax Returns of the Parties and their
respective Subsidiaries shall be governed exclusively by this Agreement; provided, all
contractual obligations to make payments to, or contractual rights to receive payments from, third
parties in respect of Taxes that relate to a business or entity disposed of by ITT (or any of its
Subsidiaries, without giving effect to the Distributions) prior to the Distribution Date shall not
be treated as “Taxes” for purposes of this Agreement or the Distribution Agreement and shall
instead be treated as other Assets or Liabilities (each as defined in the Distribution Agreement),
as applicable, governed by the Distribution Agreement. In the event of a conflict between this
Agreement, the Distribution Agreement or any Ancillary Agreement with respect to such matters, this
Agreement shall govern and control.
Section 14.22 No Waiver. No failure to exercise and no delay in exercising, on the part of any Party, any right,
remedy, power or privilege hereunder shall operate as a waiver hereof or thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or privilege.
Section 14.23 No Duplication; No Double Recovery. Nothing in this Agreement is intended to confer to or impose upon any Party a duplicative right,
entitlement, obligation, or recovery with respect to any matter arising out of the same facts and
circumstances.
36
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed the day and
year first above written.
| ITT CORPORATION |
||||
| /s/ Aris C. Chicles | ||||
| Name: | Aris C. Chicles | |||
| Title: | Senior Vice President | |||
| EXELIS INC. |
||||
| /s/ Ann D. Davidson | ||||
| Name: | Ann D. Davidson | |||
| Title: | Vice President, General Counsel & Secretary | |||
| XYLEM INC. |
||||
| /s/ Frank R. Jimenez | ||||
| Name: | Frank R. Jimenez | |||
| Title: | Vice President, General Counsel & Secretary | |||
Schedules to the
TAX MATTERS AGREEMENT
by and among
ITT CORPORATION,
XYLEM INC.,
and
EXELIS INC.
Dated as of October 25, 2011
Schedule 1.1(6)
List of ATOB Entities
List of ATOB Entities
1. ITT Italia Srl
2. ITT Water & Wastewater AB
3. ITT Defence Ltd.
4. Goulds Pumps (Philippines), Inc.
5. Goulds Pumps, Inc.
6. Evolutionary Concepts, Inc.
7. ITT Enidine, Inc.
2. ITT Water & Wastewater AB
3. ITT Defence Ltd.
4. Goulds Pumps (Philippines), Inc.
5. Goulds Pumps, Inc.
6. Evolutionary Concepts, Inc.
7. ITT Enidine, Inc.
Schedule 1.1(27)
List of Distributions
List of Distributions
| Equity Distributed | Distributing Entity | Distributee(s) | ||
Common stock and convertible preferred equity certificates of Remainco International Sàrl
|
ITT Industries Sàrl | ITT International Sàrl | ||
Common stock and convertible preferred equity certificates of Missions Systems International Sàrl
|
ITT Industries Sàrl | ITT International Sàrl | ||
Common stock and convertible preferred equity certificates of Remainco International Sàrl
|
ITT International Sàrl | ITT Water Technology Delaware, Inc. | ||
Common stock and convertible preferred equity certificates of Missions Systems International Sàrl
|
ITT International Sàrl | ITT Water Technology Delaware, Inc. | ||
Common stock of ITT International Holdings, Inc.
|
ITT Water Technology Delaware, Inc. | ITT Industries Holdings, Inc. | ||
Common stock of ITT Water Technology Delaware, Inc.
|
ITT Industries Holdings, Inc. | ITT Corporation | ||
Common stock of Exelis Inc.
|
ITT Water Technology Delaware, Inc. | ITT Corporation | ||
Common stock of Xylem Inc.
|
ITT Corporation | ITT Corporation shareholders | ||
Common stock of Exelis Inc.
|
ITT Corporation | ITT Corporation shareholders | ||
Common stock of Water Technology Philippines Holding, Inc.
|
Goulds Pumps, Inc. | GP Holding Company, Inc. | ||
Common stock of Water Technology Philippines Holding, Inc.
|
GP Holding Company, Inc. | ITT Corporation | ||
Common stock of Evolutionary Concepts, Inc.
|
International Motion Control, Inc. | ITT Corporation |
Schedule 1.1(88)
List of Section 355 Entities
List of Section 355 Entities
1. ITT Corporation
2. Xylem Inc.
3. Exelis Inc.
4. Remainco International Sàrl
5. Missions Systems International Sàrl
6. ITT Industries Sàrl
7. ITT International Sàrl
8. ITT International Holdings, Inc.
9. ITT Water Technology Delaware, Inc.
10. ITT Industries Holdings, Inc.
11. Water Technology Philippines Holding, Inc.
12. Goulds Pumps, Inc.
13. GP Holding Company, Inc.
14. Evolutionary Concepts, Inc.
15. International Motion Control, Inc.
2. Xylem Inc.
3. Exelis Inc.
4. Remainco International Sàrl
5. Missions Systems International Sàrl
6. ITT Industries Sàrl
7. ITT International Sàrl
8. ITT International Holdings, Inc.
9. ITT Water Technology Delaware, Inc.
10. ITT Industries Holdings, Inc.
11. Water Technology Philippines Holding, Inc.
12. Goulds Pumps, Inc.
13. GP Holding Company, Inc.
14. Evolutionary Concepts, Inc.
15. International Motion Control, Inc.
Schedule 6.1
List of GRAs
List of GRAs
| Name of Transferred | ||||||
| Date of Transfer | Name of Transferor | Name of Transferee | Entity | |||
January 5, 2009
|
ITT Corporation | ITT International Sàrl | ITT Canada Company | |||
January 7, 2009, and December 21, 2009
|
ITT Water Technology Delaware, Inc. | ITT International Sàrl | ITT Industries Sàrl | |||
July 23, 2009
|
ITT Water Technology Delaware, Inc. | ITT Germany GmbH | BVE Controls GmbH | |||
July 23, 2009
|
ITT Water Technology Delaware, Inc. | ITT Germany GmbH | Enidine Trading Company GmbH (later merged with BVE Controls GmbH) | |||
July 23, 2009
|
ITT Water Technology Delaware, Inc. | ITT Germany GmbH | ITT Control Technologies GmbH (f/k/a Cleveland Motion Controls GmbH) | |||
July 30, 2009
|
ITT Water Technology Delaware, Inc. | ITT International Sàrl | ITT Germany GmbH (f/k/a Enidine GmbH) | |||
December 12, 2010
|
Nova Analytics Corporation | ITT International Sàrl | ITT Analytics Deutschland GmbH |
Exhibit 10.4
MASTER TRANSITION SERVICES AGREEMENT
This Master Transition Services Agreement (this “Agreement”) is entered into as of
October 25, 2011, by and among ITT Corporation, an Indiana corporation (“ITT”), Exelis
Inc., an Indiana corporation (“Exelis”) and Xylem Inc., an Indiana corporation
(“Xylem”). Each of ITT, Exelis and Xylem is sometimes referred to herein as a “Party” and
collectively as the “Parties.” Capitalized terms used herein and not otherwise defined herein have
the meanings given to such terms in the Distribution Agreement of even date herewith, by and among
ITT, Exelis and Xylem (as such may be amended from time to time, the “Distribution
Agreement”).
W I T N E S S E T H :
WHEREAS, the Board of Directors of ITT has determined that it is appropriate, desirable and in
the best interests of ITT, ITT’s shareholders and ITT’s other constituents, to separate, pursuant
to and in accordance with the Distribution Agreement, ITT into three separate, publicly traded
companies, one for each of (i) the ITT Retained Business, which shall be owned and conducted,
directly or indirectly, by ITT, (ii) the Defense Business, which shall be owned and conducted,
directly or indirectly, by Exelis and (iii) the Water Business, which shall be owned and conducted,
directly or indirectly, by Xylem.
WHEREAS, in order to provide for an orderly transition under the Distribution Agreement, each
of ITT, Exelis and Xylem desire to provide to the other certain services for specified periods
following the Distribution Date, all in accordance with and subject to the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of the Parties
contained herein, the Parties agree as follows:
1. Services Provided.
(a) With respect to each Service (as defined in Section 1(b)), the Party required to
provide such Service is the “Service Provider” and the other Party is the “Service
Recipient”. In performing the Services, Service Provider and each of its Affiliates shall use
commercially reasonable efforts to provide, or to ensure that any Third Party Provider (as defined
in Section 1(b)) shall provide, the Services in the same manner, within the same amount of
time and at the same level of service (including, as applicable, with respect to type, frequency,
quality, and quantity), with the same degree of reasonable skill and care and with the same level
of security and control as provided and used in providing the Services during the twelve month
period prior to the Distribution Date (excluding any actions taken in contemplation of the
Distribution). Notwithstanding the foregoing, if there is an increase in the complexity of a
Service (whether as a result of increased quantity or quality, changing frequency or regulatory
requirements or otherwise), Service Recipient acknowledges and agrees that such Service may not be
provided within the same amount of time as it had previously taken during such period, and, in
such a case, Service Provider and each of its Affiliates shall use commercially reasonable efforts
to provide, or to ensure that any Third Party Provider shall provide, such Service in a timely
manner. Notwithstanding anything herein to the contrary, the Services are to be provided
in a manner that does not disparately treat Service Recipient (or its Subsidiaries or its or
their
personnel or business) as compared to Service Provider’s treatment of itself (or its
Affiliates or its or their personnel or business) in connection with the provision of a
Self-Service (as defined in Section 2(a)(v)).
(b) During the period commencing on the Distribution Date and ending on the date that is two
(2) years from the date hereof, unless an earlier or later date is otherwise specified for a
Service on Schedule A, Schedule B or Schedule C hereto (for each such Service, such end date being
herein referred to as the “Termination Date”, with Schedule A, Schedule B and Schedule C
being herein referred to as the “Services Schedules”), Service Provider shall provide, or
shall cause one or more of its Affiliates or a contractor, subcontractor, vendor or other
third-party service provider (each, a “Third Party Provider”) to provide, upon the terms
and subject to the conditions set forth herein, the services described on the Services Schedules,
including under the headings “General Services Description” and “Scope of Services” (the
“Services”); provided, Service Provider shall obtain the consent of Service
Recipient (not to be unreasonably withheld, delayed or conditioned) in the event any such Service
is to be provided by a Third Party Provider or Affiliate if such Services were not provided by such
Third Party Provider or Affiliate to Service Recipient during the twelve month period prior to the
Distribution Date; provided further, Service Provider shall remain primarily
responsible for the performance by any such Affiliate or Third Party Provider of its obligations
hereunder. Irrespective of whether Service Provider, an Affiliate or a Third Party Provider is
providing a Service, Service Recipient may direct that any such Service be provided directly to
Service Recipient or any other member of such Party’s Group.
(c) Each Service provided hereunder shall be terminated on its applicable Termination Date (as
defined in Section 1(b)), unless otherwise terminated earlier by Service Recipient pursuant
to Section 11. Service Provider shall be under no obligation to provide a Service to
Service Recipient after the Termination Date applicable to such Service, except to the extent
otherwise agreed in writing by Service Provider and Service Recipient.
2. Consideration.
(a) Costs and Fees.
(i) For each Service, Service Recipient shall pay (in accordance with Section
2(b)) Service Provider an amount equal to the Monthly Costs (as defined in Section
2(a)(i)(1)); provided that (i) for any Service performed from and after January
1, 2012 through and including the day before the expiration date of the Minimum Service
Period (as defined in Section 11(b)) for such Service, Service Recipient shall pay,
along with and in addition to such Monthly Costs, an amount equal to 2% of such Monthly
Costs and (ii) for any Service performed from and after the expiration date of the Minimum
Service Period for such Service through and including the date as of which the provision of
such Service hereunder has been terminated, Service Recipient shall pay, along with and in
addition to the Monthly Costs, an amount equal to 10% of such Monthly Costs, unless, upon
request by Service Recipient to terminate a Service, Service Provider is unable to
transition the Service to Service Recipient or its designated Subsidiary in a commercially
reasonable manner which does not unduly disrupt the Service and as a result, Service
Recipient is unable to terminate such Service on or after the date on which
2
the Minimum
Service Period expires (in which case any third party, out-of-pocket costs resulting to
Service Recipient shall be shared in accordance with Section 11(b)).
(1) The “Monthly Costs” for each Service shall be an amount equal to the sum of
(A) the costs or expenses incurred as set forth on the applicable Services Schedule;
provided that if a Services Schedule is silent regarding costs and expenses,
the amount under this subsection (A) shall be equal to Service Provider’s allocated
costs (including salary, wages and benefits, but excluding severance and retention
costs, which shall be handled pursuant to Section 2(a)(ii)) for any of its
(or its Affiliates’) employees involved in providing Services, plus (B) any
reasonable out-of-pocket costs and expenses incurred in connection with retaining
Third Party Providers, including any fees for any Third Party Consent or Alternate
Method, or pursuing any warranty or indemnity against a Third Party Provider in
accordance with Section 3(d); provided that Service Recipient shall only be
responsible for 50% of the fees for any Third Party License, with Service Provider
responsible for the other 50%, plus (C) any sales, transfer, goods,
services, value added, gross receipts or similar taxes, fees, charges or assessments
(including any such taxes that are required to be withheld); provided that
the Parties agree to use commercially reasonable efforts to minimize any such tax
with respect to the Services, plus (D) other reasonable miscellaneous
out-of-pocket costs and expenses; provided, however, that any such
expenses exceeding $5,000 per month for each Service (other than routine business
travel and related expenses) shall require advance approval of Service Recipient.
The Monthly Costs for a Service shall not include any severance and retention costs
incurred by Service Provider as a result of retaining the necessary employees to
supply such Service to Service Recipient in accordance with the terms of this
Agreement, which costs shall be handled pursuant to Section 2(a)(ii) below.
(2) Any costs and expenses provided for on a Services Schedule shall be subject
to an increase of 4.5% per annum beginning on January 1, 2012 in order to adjust for
inflation.
(3) Service Provider shall notify Service Recipient of any event that may
reasonably be expected to increase the Monthly Costs by more than 5%.
(ii) Subject to the terms of this Section 2(a)(ii), Service Provider shall use
commercially reasonable efforts to retain its workforce required to provide the Services
and, consistent with its severance and retention policies then in effect, may make severance
and retention payments to employees providing the Services. As provided for on Annex
A (the “Severance and Retention Schedule”), Service Recipient shall be
responsible for the percentage as therein provided of Service Provider’s actual severance
and retention costs (which are estimated in the Severance and Retention Schedule) for those
individuals or job descriptions as set forth therein; provided that Service
Recipient shall only be so responsible for its portion of severance costs if such costs were
incurred as a result of terminating such an employee in connection with the termination of a
Service; provided further that (a) if the severance and retention costs
change from the
3
estimates provided in the Severance and Retention Schedule, Service
Recipient shall be responsible for its percentage of such costs so long as such change in
costs is consistent with the Service Provider’s severance and retention policies as then in
effect and (b) any such employee is actually terminated and not rehired for at least ninety
(90) days following such termination. Service Provider shall prepare and deliver, within
thirty (30) days following the end of each quarterly period ending each March 31, June 30,
September 30 and December 31 (it being understood that the first such period shall be
shorter than one quarter), to Service Recipient an invoice setting forth the amount of
severance and retention costs to be paid by Service Recipient in accordance with the
foregoing provisions of this Section 2(a)(ii), which invoice Service Recipient shall
pay pursuant to the terms of Section 2(b).
(iii) Unless the Parties otherwise agree in writing, (i) where Services are provided in
a country outside of the United States by a Person located in the same country, amounts
shall be invoiced and paid in the local currency of the entity providing the Services and
(ii) if payments are to be made between legal entities not within the same country, such
amounts shall be invoiced and paid in U.S. Dollars. To the extent necessary, local currency
conversion on any such invoice shall be based on Service Provider’s internal exchange rate
for the then-current month, based upon the average for such month, as calculated
consistently with how such local currency conversion was calculated in the twelve month
period prior to the Distribution Date.
(iv) All charges based on a monthly or other time basis will be pro-rated based on
actual calendar days elapsed during the period of service.
(v) With respect to any service that a Service Provider provides or causes an Affiliate
to provide to itself or its Affiliates that is the same or substantially similar to a
Service provided to Service Recipient or its Subsidiaries hereunder (such service, a
“Self-Service”), if Service Provider determines to no longer provide such Self
—Service to itself or its Affiliates, Service Provider shall notify Service Recipient of
such termination no later than the number of days prior to such termination as is provided
in Section 11(b) for terminating the corresponding Service. If Service Provider
terminates a Self-Service prior to the end of the Minimum Service Period applicable for the
corresponding Service, the Monthly Costs of such Service following any such termination and
up to but not including date on which the Minimum Service Period expires shall be calculated
as if Service Provider had not terminated such Self-Service. Notwithstanding the foregoing,
Service Provider shall continue to provide the Service in accordance with the provisions of
this Agreement, unless such Service is otherwise terminated pursuant to Section 11,
and Service Provider shall not be permitted to terminate any Self-Service prior to the
Termination Date for the applicable Service if such termination would adversely affect the
level of service, security or control of such Service or the scope or content thereof
required pursuant to Sections 1(a) and 4(a).
(vi) With respect to the Third Party Provider listed on Annex B (the “Vendor
Cost Schedule”), in the event (i) (x) ITT’s allocation of the Estimated Vendor Fee, which
shall be the same allocation for ITT as finally determined in accordance with Schedule
4
1.1
(84) of the Distribution Agreement (“Actual ITT Allocation”) is greater or less than ITT’s
Estimated Allocation of the Estimated Vendor Fee (as set forth in the Vendor Cost Schedule)
and/or (y) the actual amount invoiced by such Third Party Provider individually to Service
Provider (as measured either as a monthly or annual fee or a one-time fee) (the “Actual
Vendor Fee”) is greater or less than the total estimated price listed therein for such
Third Party Provider (“Estimated Vendor Fee”), Service Recipient shall pay to Service
Provider (if such amount is positive) or Service Provider shall pay Service Receiver (if
such amount is negative), an amount equal to the Actual ITT Allocation multiplied by such
Service Recipient’s Applicable Percentage of ITT Costs (as set forth on Annex B) multiplied
by the Actual Vendor Fee less the Service Recipient’s total amount of TSA Pass Through
Amounts (as set forth on Annex B) in each case, with Service Provider to provide Service
Recipient documentation regarding the Actual Vendor Fee, and the applicable Party shall make
any payment under this Section 2(a)(vi): (A) within thirty (30) days after of the
date of the applicable invoice if the fee is a one-time fee and (B) with respect to anything
other than a one-time fee, the applicable Party shall make payments on a quarterly basis
within thirty (30) days after receipt of the applicable invoice (with the last payment to
relate to the quarterly period ending eighteen (18) months from the Distribution Date). In
the event a quarterly payment is required under this under this Section 2(a)(vi) and
first determined more than 90 days after the Distribution Date, it is understood that the
first quarterly payment will be adjusted to reflect such longer period
(b) Invoices and Payment.
(i) Service Provider shall invoice Service Recipient for the amounts owed hereunder in
arrears on a calendar monthly basis or, in the case of Section 2(a)(ii), as provided
therein, and shall provide reasonable documentation supporting such amounts owed pursuant to
Section 2(a), except to the extent such amounts are set forth on the Services
Schedules. Service Recipient shall pay the amount of such invoice by electronic transfer of
immediately available funds not later than thirty (30) days after of the date of such
invoice. Neither Party nor any of its respective Subsidiaries shall have a right of set-off
against the other Party or its Subsidiaries, except in connection with any amounts billed
hereunder. In the event Service Recipient does not pay Service Provider in accordance with
the terms hereof (i) all amounts so payable and past due shall accrue interest from the
31st day after the date of the invoice to the receipt of payment at a rate per
annum equal to the six (6)-month LIBOR rate (as quoted in the “Money Rates” section of The
Wall Street Journal or any other similarly reputable published source on the 31st
day after the date of the invoice, or the next Business Day, if such day is not a Business
Day) plus 3% (the “Interest Rate”, with the applicable rate to be
recalculated every six months), until such amounts, together with all accrued and unpaid
interest thereon, are paid in full, and (ii) Service Recipient shall pay, as additional
fees, all reasonable out-of-pocket costs and expenses incurred by Service Provider in
attempting
to collect and collecting amounts due under this Section 3, including all
reasonable attorneys fees and expenses.
5
(ii) In the event that Service Recipient in good faith disputes an invoice submitted by
Service Provider, Service Recipient may withhold payment of any amount subject to the
dispute; provided, however, that (x) Service Recipient shall continue to pay
all undisputed amounts in accordance with the terms hereof, (y) Service Recipient shall
notify Service Provider, in writing, of any disputed amounts and the reason for any dispute
by the due date for payment of the invoice containing any disputed charges and (z) in the
event any dispute is resolved in the Service Provider’s favor, any amount that the Service
Recipient should have paid shall be deemed to have accrued interest at the Interest Rate
from the date such payment should have been made. In the event of a dispute regarding the
amount of any invoice, the Parties shall use all reasonable efforts to resolve such dispute
within thirty (30) days after Service Recipient provides written notification of such
dispute to Service Provider. Each Party shall provide full supporting documentation
concerning any disputed amount or invoice within thirty (30) days after written notification
of the dispute. Unpaid fees that are under good faith dispute shall not be considered a
basis for default hereunder. To the extent that a dispute regarding the amount of any
invoice cannot be resolved pursuant to this Section 2(b)(ii), the dispute resolution
procedures set forth in Section 9 herein shall apply.
3. Cooperation.
(a) Service Recipient and Service Provider shall cooperate and work together in good faith to
develop a global transition plan in order to facilitate a smooth and orderly termination of a
Service by its applicable Termination Date or at such earlier time as Service Recipient terminates
Service Provider’s performance of the Services in accordance with Section 11. In
furtherance of the foregoing, Service Provider will, if requested and at Service Recipient’s
expense, provide Service Recipient with reasonable support necessary to transition or migrate the
services to Service Recipient or any third party or parties chosen by the Service Recipient, which
may include consulting and training and providing reasonable access to data and other information
and to Service Provider’s employees; provided, however, that such activities shall
not unduly burden or interfere with Service Provider’s business and operations.
(b) It is understood that it will require significant efforts by the Parties to implement this
Agreement and ensure performance hereunder. Service Recipient shall (i) cooperate with and provide
Service Provider with such information and documentation as is reasonably necessary for Service
Provider to perform the Services; and (ii) perform such other duties and tasks as may be reasonably
required to permit Service Provider to perform the Services, including (x) cooperating in obtaining
any consents or approvals from third parties necessary to facilitate Service Provider’s ability to
provide the Services and (y) upon thirty (30) days prior written notice by the Service Provider,
conducting such testing as may be reasonably required by Service Provider in connection with any
updates or changes to the applicable systems or processes involved in providing a Service. A
Service Provider shall not be deemed to be in breach of its obligations to provide or make
available any Service to the extent that Service
Recipient has not provided information and access to appropriate personnel that is reasonably
necessary for the performance of such Service.
6
(c) Service Recipient shall use commercially reasonable efforts to make or obtain any
approvals, permits and licenses and implement any systems as may be necessary for it to perform the
Services independently in each country and applicable jurisdiction as soon as practicable following
the Distribution Date.
(d) Upon Service Recipient’s written request and without prejudice to Service Recipient’s
direct rights against a Third Party Provider, Service Provider shall use commercially reasonable
efforts to pursue any warranty or indemnity under any contract Service Provider or its Subsidiaries
may have with a Third Party Provider with respect to any Service provided to Service Recipient by
such Third Party Service Provider.
(e) Service Provider shall use commercially reasonable efforts to obtain, if required, the
consent of any relevant Third Party Provider (a “Third Party Consent”) or a license from
any relevant Third Party Provider (a “Third Party License”), and Service Recipient shall,
as necessary, cooperate with Service Provider in obtaining any such Third Party Consent or Third
Party License. If a Third Party Consent or Third Party License cannot be obtained on reasonable
terms, the Parties will use commercially reasonable efforts to arrange for an alternative method of
obtaining any such Service on Service Recipient’s behalf (“Alternative Method”), which may
include Service Provider providing such Service itself. If there is any Third Party Consent or
Third Party License which was not required as of the date hereof but will subsequently be required
before the Minimum Service Period expires for a particular Service, Service Provider shall identify
in writing to Service Recipient such Third Party Consent or Third Party License within sixty (60)
days of the date hereof.
(f) The Parties shall use the fiscal month, quarter and year ends as set forth in Schedule D
in connection with the provision and receipt of applicable Services hereunder, for so long as such
Services are being provided.
(g) In connection with the provision of Services hereunder, except as provided pursuant to
Section 2(a)(iii)for local currency conversion for invoices, the Parties shall use the
same methodology to determine the appropriate foreign exchange conversion rate as used in the
twelve month period prior to the Distribution Date, which may be determined or based upon the
average for the month or other applicable period or the spot rate at the end of such month or
period or otherwise.
4. Performance Standard; Reports; Personnel.
(a) Except as otherwise provided in the Services Schedule and Section 1(a) herein,
nothing in this Agreement shall require or be interpreted to require Service Provider to provide a
Service to Service Recipient beyond the scope and content of such Service as provided by Service
Provider to the ITT Retained Business, Water Business or Defense Business, as the case may be,
during the twelve month period prior to the Distribution Date, excluding any actions taken in
contemplation of the Distribution.
(b) Service Provider shall not make changes in the manner of providing a Service
unless (i) Service Provider is making similar changes in a Self-Service being performed for
itself or its Subsidiaries or such changes are de minimus, in each case so long as such changes
7
do
not adversely affect the level of service, security or control of such Service or the scope or
content thereof required pursuant to Sections 1(a) and 4(a) above, (ii) such
changes are required by Service Provider or Service Recipient pursuant to applicable Law (including
changes required by Service Provider or Service Recipient in connection with the provision of the
Services to the other Party) or (iii) Service Recipient provides its prior written consent (which
shall not be unreasonably withheld, conditioned or delayed) to such changes (in each case, for the
avoidance of doubt, with the costs of any such change to be included in the calculation of Monthly
Costs). In the event Service Provider determines to change the location of delivery of any
Service, Service Provider shall provide Service Recipient with thirty (30) days prior written
notice. All Services shall be performed in compliance with applicable Law, including all
applicable U.S. and non-U.S. laws and regulations relating to export controls, sanctions, and
imports, including without limitation those regulations maintained by the U.S. Department of the
Treasury’s Office of Foreign Assets Control, the Export Administration Regulations maintained by
the U.S. Department of Commerce, Bureau of Industry and Security, and the International Traffic in
Arms Regulations maintained by the U.S. Department of State, Directorate of Defense Trade Controls.
(c) In performing the Services, Service Provider shall prepare and furnish to Service
Recipient reports concerning the Services with such reports to contain substantially the same data,
in substantially the same format, and prepared and delivered on substantially the same timetable,
as reports prepared during the twelve month period prior to the Distribution Date (excluding any
reports solely prepared in contemplation of the Distribution), except as may be otherwise required
by Service Recipient or Service Provider pursuant to applicable Law. Upon Service Recipient’s
written request for modifications to the reporting and data transfer practices reasonably required
to assist Service Recipient in transitioning off the Service, Service Provider shall cooperate and
consult in good faith with Service Recipient to make such modifications; provided that if
Service Provider reasonably determines in its sole discretion that any such modification may cause
Service Provider to be in breach of its obligations to the other Party hereunder (including as a
result of breaching its obligations as a Service Provider to the other Party as Service Recipient),
then Service Provider shall not be under any obligation to make such modifications.
(d) Service Provider shall use commercially reasonable efforts consistent with past practice
to make available such personnel as may be required to provide the Services. Service Provider shall
have the right to designate which personnel it will assign to perform the Services. Service
Provider also shall have the right to remove and replace any such personnel at any time or
designate any of its Subsidiaries or a Third Party Provider (subject to Section 1(a)
herein) at any time to perform the Transition Services; provided, however, that
Service Provider shall use its commercially reasonable efforts consistent with past practice to
limit the disruption to Service Recipient in the transition of the Services to different personnel.
Subject to and consistent with Section 2(a)(ii), Service Provider shall have no obligation
to retain any individual employee for the sole purpose of providing a particular Transition
Service.
(e) In the event Service Recipient or any of it Subsidiaries hires away an employee of Service
Provider or its Subsidiaries, and such employee was providing Services to Service Recipient and
will not continue to provide such Service, Service Provider shall have the
8
option, in its sole
discretion (in addition to any other remedies available to it under the Distribution Agreement or
otherwise), upon ten (10) Business Days written notice to Service Recipient to reduce its
obligations with respect to such Service (with a proportionate reduction in the applicable Monthly
Costs) effective on the date of such employee’s termination of employment with Service Provider.
Any provision of Service thereafter pursuant to such a reduction in Service Provider’s obligations
shall be deemed to be consistent with Service Provider’s obligations under this Agreement, so long
as Service Provider satisfies the other obligations contained in this Section 4 with
respect to such Service.
(f) Each Party agrees that it shall take appropriate action by instruction of or agreement
with its personnel (including any Third Party Provider) to ensure that all such personnel
performing or otherwise involved with Services shall be bound by and comply with all of the terms
and conditions of this Agreement.
(g) In the event Service Provider has received a notice of default or breach in the
performance of a Service hereunder (including as a result of substantial errors in the performance
of such Service), it will use its commercially reasonable efforts to cure such default or breach.
In the event Service Provider is unable to cure such default within thirty (30) days from receipt
of notice thereof, in addition to the rights available under Section 11, there shall be an
adjustment to Monthly Costs to reflect the costs to Service Recipient associated with such default,
breach or error, including any reasonable out-of-pocket costs and expenses incurred by Service
Recipient in retaining any Third Party Provider to provide such Service or in providing the such
Service itself.
(h) Each Party shall notify the applicable other Party as promptly as practicable after
becoming aware of any breach of this Agreement committed by either it or the applicable other
Party. Service Provider shall notify Service Recipient of any event that may reasonably be
expected to materially impact a Service provided hereunder, which may include a Termination Notice (as defined in Section 11(b)) provided by the other Party as
Service Recipient hereunder or a notice of termination of a Self-Service, issued pursuant and in
accordance with, Section 2(a)(v).
(i) In the event of any conflict, as reasonably determined by Service Provider in its sole
discretion, between requests for modification or termination of Services made by the two other
Parties and each properly delivered hereunder, Service Provider shall determine which request it
received first and, subject to the other terms and conditions of this Agreement, make such
modifications or terminations pursuant to the request that was first received before making any
modifications or terminations pursuant to any requests received afterwards.
5. New Services.
If, after the date hereof and on or prior to March 31, 2012, or, with respect to Services
provided in connection with any Transfer that, pursuant to Section 2.6(a) of the
Distribution Agreement, is not consummated at or prior to the Effective Time, one hundred
(100) days following the actual date of such Transfer (notwithstanding that under Section 2.6(b) of
the Distribution Agreement such Transfer may be deemed to have occurred on the Effective Time) the
Parties determine that a service required by Service Recipient and provided by Service
9
Provider or
one of its Subsidiaries prior to the Distribution Date was inadvertently omitted from the Services
Schedules, Service Recipient may request that Service Provider perform such service (“New
Service”) in addition to the Services being provided hereunder. Service Provider shall
promptly begin performing any New Service consistent with past practice upon a timely written
request from Service Recipient (which request may be in the form of email) including (i) a
description of the work Service Recipient anticipates being performed by Service Provider in
connection with such New Service and (ii) a schedule for commencing and completing such New
Service, and Service Provider and Service Recipient shall enter into good faith negotiations to
agree to an amendment to the Services Schedules providing for such New Service; provided
that if no agreement for an Additional Service Schedule Amendment has been reached in writing in
thirty (30) days, such New Service shall be deemed to have a Minimum Service Period expiring on
June 30, 2012 and a Termination Date of two years from the Distribution Date, with Monthly Costs as
provided for in Section 2(a)(i), calculated as if the amendment to the Services Schedule
for such New Service were silent regarding costs and expenses (such amendment or deemed amendment
pursuant to the foregoing proviso, an “Additional Service Schedule Amendment”). Any New
Service shall be considered a Service hereunder and the Services Schedules shall incorporate, and
be deemed to be duly amended by, such Additional Service Schedule Amendment.
6. Intellectual Property; IT Security.
(a) Except as provided in the Services Schedules, the Monthly Costs shall include the
allocable portion of any amounts that are required to be paid by Service Provider to any third
party licensors of software that is used by Service Provider in connection with the provision of
any Services hereunder, including (i) license, right-to-use and royalty fees and (ii) any amounts
required to obtain the consent of such licensors to allow Service Provider to provide any of the
Services hereunder. Service Recipient agrees to comply and cause its Subsidiaries to comply with
the terms of any license or other agreement of Service Provider or any of its Subsidiaries relating
to software that is provided to Service Recipient and is used in connection with the provision of
any Services hereunder; provided that in the event that Service Provider enters into new
software licenses after the Distribution Date, Service Recipient shall have the prior opportunity
to review and confirm its ability to comply therewith, which it shall do in good faith. In the
event that Service Recipient provides notice of its inability to comply therewith, Service Provider
may at its sole discretion discontinue its provision of any Services under such new software
licenses effective after thirty (30) days notice of the same, and Service Recipient shall indemnify
Service Provider for any claims by third parties arising out of or in connection with Service
Recipient’s noncompliance or violation of such software licenses. Subject to the foregoing, Service
Provider shall use commercially reasonable efforts to obtain any consent that may be required from
such licensors in order to provide any of the Services hereunder and the Parties shall cooperate to
identify any material licenses or consents necessary for such provision and shall use commercially
reasonable efforts to minimize the costs associated therewith.
(b) If the receipt or provision of any Service hereunder requires the use by a Party of the
Intellectual Property (other than Trademarks) of the other Party, then such Party and its
Subsidiaries shall have the non-exclusive, royalty-free, non-sublicensable (except as required
10
for
its and its Subsidiaries’ receipt or provision of Services) right and license to use such
Intellectual Property for the sole purpose of, and only to the extent necessary for, the receipt or
provision of such Services hereunder, pursuant to the terms and conditions of this Agreement. This
license does not permit a Party to access, possess, or modify the source code of the other Party or
to reverse engineer the software of the other Party. Upon the Termination Date applicable to such
Service, or the earlier termination of any Services in accordance with Section 11, the license
herein to the applicable Intellectual Property will terminate; and the applicable Service Recipient
and/or Service Provider shall cease all use of the Intellectual Property licensed hereunder.
Nothing in this Section 6(b) shall be deemed to limit, modify or terminate any License
Agreement between the Parties.
(c) Subject to the limited licenses granted in Section 6(b), each Party shall
exclusively own any Intellectual Property that it creates, develops or invents in connection with
the provision of any Services hereunder.
(d) While using or accessing any computers, systems, software, networks, information
technology or related infrastructure or equipment (including any data stored thereon or transmitted
thereby) (“Systems”) of the other Party (whether or not a Service), each Party shall and
shall cause each of its Subsidiaries to, adhere in all respects to the other Party’s controlled
processes, policies and procedures (including any of the foregoing with respect to Confidential
Information, data, communications and system privacy, operation, security and proper use) as in
effect on the Distribution Date or as communicated to such Party from time to time in writing.
(e) Those employees of Service Recipient and Service Provider (or their respective Affiliates)
having access to the other Party’s Systems may be required by Service Provider or Service
Recipient, as the case may be, to enter into a customary non-disclosure agreement in connection
with, and as a condition to, such access.
7. Records.
Service Provider shall provide to Service Recipient, taking into consideration the financial
reporting, internal controls and other public company requirements of Service Recipient, all
information and records reasonably required to maintain full and accurate books relating to the
provision of Services to the extent any such information and/or records were provided or maintained
during the twelve month period prior to the Distribution Date, excluding any actions taken in
contemplation of the Distribution. Upon reasonable notice and reasonable request from the Service
Receiver, and at the Service Receiver’s cost, Service Provider shall (a) make available for
inspection and copying by Service Receiver’s agents or representatives such information, books and
records relating to the Services during reasonable business hours and (b) certify that the controls
in effect prior to the Distribution Date continue to be in effect, or if Service Provider is aware
of any instances where such controls are not so in effect, in lieu of certification for such
instances, provide a list of such instances and descriptions of the change in such controls
thereof.
11
8. Force Majeure; Reduction of Services.
No Party (or any Person acting on its behalf) shall have any liability or responsibility for
failure to fulfill any obligation (other than a payment obligation) under this Agreement so long as
and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered or
delayed as a consequence of circumstances of Force Majeure. A Party claiming the benefit of this
provision shall, as soon as reasonably practicable after the occurrence of any such event: (a)
notify the other applicable Parties of the nature and extent of any such Force Majeure condition
and (b) use due diligence to remove any such causes and resume performance under this Agreement as
soon as feasible. Notwithstanding the foregoing, Service Recipient shall be entitled to terminate
Services so affected by a Force Majeure upon fifteen (15) day prior written notice in respect of
any such delay or failure resulting from any such Force Majeure without any penalty or obligation
to pay for Services not performed; provided that, for the avoidance of doubt, Service Recipient
shall remain responsible, pursuant to and in accordance Section 2(a)(ii), for its portion
of any severance and retention costs for any such Services.
9. TSA Managers; Dispute Resolution.
(a) Each Party shall nominate in writing one representative to act as the primary contact with
respect to the provision and receipt of Services (a “TSA Manager”), with the initial TSA
Managers as listed on Schedule E. Each Party may, at its discretion, from time to time
select another individual to serve in these capacities during the term of this Agreement;
provided, however, each Party shall notify the other Party promptly (and in any
event within five (5) Business Days) of any change in an individual serving in this capacity,
setting forth the name and contact information of the replacement, and stating that such
replacement is authorized to act for such Party in accordance with this Section 9(a).
(b) The TSA Managers shall meet as expeditiously as possible to resolve any dispute hereunder,
and notwithstanding anything in Article IX (Dispute Resolution) of the Distribution Agreement to
the contrary, in the event any dispute is not so resolved within thirty (30) days, a TSA Manager
may provide written notice of such dispute to the Chief Financial Officer of each Party (or such
other executive as designated by the Chief Executive Officer of such Party), who shall attempt
within a period of fifteen (15) days following the end of such previous thirty (30) day period to
conclusively resolve any such issue, and in the event the dispute remains unresolved following such
fifteen (15) day period, either Party may submit the dispute to mediation in accordance with
Section 9.2 (Mediation) of the Distribution Agreement (provided that, for the avoidance
of doubt, the forty-five (45) day waiting period referenced therein shall be inapplicable), and if
any dispute remains unresolved after the Mediation Period (as defined in the Distribution
Agreement), such dispute shall be determined, at the request of either Party, by arbitration in
accordance with Section 9.3 (Arbitration) of the Distribution Agreement and the other
applicable provisions of Article IX (Dispute Resolution) of the Distribution Agreement. Each Party
may treat an act of any other Party’s TSA Manager or Chief Financial Officer (or such other
executive as designated by the Chief Executive Officer of such
other Party), in each case that is consistent with the provisions of this Agreement, as being
authorized by such other Party to resolve such dispute without inquiring behind such act or
12
ascertaining whether such TSA Manager or Chief Financial Officer (or such other executive as
designated by the Chief Executive Officer of such other Party) had authority to so act; provided,
however, that none of the TSA Managers or Chief Financial Officer or other executives so designated
shall have authority to amend this Agreement, except as otherwise provided pursuant to Section
16.
(c) In the event of any dispute between the Parties regarding a Service, prior to the
applicable Termination Date, Service Provider shall not discontinue the supply of any such Service,
unless so provided for in a settlement agreement between the Parties or arbitral determination
pursuant to and in accordance with Section 9(b) herein and Article IX of the
Distribution Agreement or as requested by Service Recipient pursuant to a Termination Notice.
10. Disclaimer; Limited Liability.
(a) Service Recipient acknowledges that Service Provider is not in the business of providing
the Services and that the Services being provided pursuant to this Agreement are provided as an
accommodation to Service Recipient. Other than in the event of Service Provider’s gross negligence
or willful misconduct, Service Provider will not be liable for any error or omission in rendering
Services under this Agreement, or for any defect in Services so rendered; provided that if
there is a substantial error in any of the Services, Service Provider shall use commercially
reasonable efforts to attempt to correct the error, or if Service Provider is unable to so correct
such error, to provide an adjustment to the Monthly Cost for such Service in reasonable proportion
to that which the error bears to the Service provided for such month, which adjustment may,
pursuant to Section 4(g), include any reasonable out-of-pocket costs and expenses incurred
by Service Recipient in retaining a Third Party Provider to provide such Service or in providing
such service itself. Other than in the event of Service Recipient’s gross negligence or willful
misconduct, and other than for the Monthly Costs, severance and retention costs owed under
Section 2(a)(ii) and other amounts expressly owed hereunder, Service Recipient will not be
liable for any damages caused in connection with the Services provided under this Agreement.
(b) Service Provider shall have no responsibility to maintain insurance to cover any loss or
damage to goods or equipment to which Service Recipient has title that are in the possession or
control of Service Provider, its Subsidiaries or a Third Party Provider as a result of this
Agreement and the risk of loss with respect to such goods or equipment shall be solely with Service
Recipient. Service Recipient shall obtain from its insurance company a waiver of subrogation on
behalf of Service Provider and its Subsidiaries effective as of Distribution Date. Service
Recipient shall have no responsibility to maintain insurance to cover any loss or damage to goods
or equipment to which Service Provider has title that are in the possession or control of Service
Recipient or its Subsidiaries as a result of this Agreement and the risk of loss with respect to
such goods or equipment shall be solely with Service Provider. Service Provider shall obtain from
its insurance company a waiver of subrogation on behalf of Service Recipient and its Subsidiaries
effective as of the Distribution Date.
13
(c) NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESSED OR IMPLIED (INCLUDING WARRANTIES
OF NON-INFRINGEMENT, MERCHANTIBILITY, ACCURACY, SATISFACTORY QUALITY, FITNESS FOR A PARTICULAR
PURPOSE OR CONFORMITY TO ANY REPRESENTATION OR DESCRIPTION), ARE MADE BY SERVICE PROVIDER OR ANY OF
ITS AFFILIATES WITH RESPECT TO THE PROVISION OF SERVICES UNDER THIS AGREEMENT AND, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ALL SUCH REPRESENTATIONS OR WARRANTIES ARE HEREBY WAIVED AND
DISCLAIMED. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, UNDER NO CIRCUMSTANCES, INCLUDING THE
FAILURE OF THE ESSENTIAL PURPOSE OF ANY REMEDY, SHALL SERVICE PROVIDER BE LIABLE FOR, INCLUDING BUT
NOT LIMITED TO, ANY LOST PROFITS, REMITTANCES, COLLECTIONS, INVOICES, PENALITIES, INTEREST OR
SPECIAL, INCIDENTIAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES CAUSE BY THE PERFORMANCE OF, ANY DELAY IN
THE PERFORMING, FAILURE TO PERFORM OR DEFECTS IN THE PERFORMANCE OF, THE SERVICES CONTEMPLATED TO
BE PERFORMED BY SERVICE PROVIDER PURSUANT TO THIS AGREEMENT, REGARDLESS OF WHETHER A PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
11. Term and Service Termination Dates.
(a) This Agreement (other than Sections 9, 10, 11 and 13)
shall terminate upon the last of the Termination Dates in respect of all Services to be provided
hereunder; provided that the rights of the parties in respect of any claims that have
accrued prior to such termination shall survive such termination.
(b) For each Service, the minimum service period (“Minimum Service Period”) during
which Service Provider is obligated to provide such Service to Service Recipient is set forth on
the Services Schedule. The Parties agree to cooperate if necessary to adjust such Minimum Service
Period (and the applicable Termination Date) to end on a date that is the end of a calendar or
fiscal month, as deemed appropriate. Service Recipient may terminate any Service prior to its
Termination Date by providing to Service Provider written notice of termination, which shall be
deemed irrevocable upon delivery (a “Termination Notice”), not less than (i) thirty (30)
days before the date of such earlier termination if the Service is to be terminated on or before
December 31, 2011, (ii) sixty (60) days before the date of such earlier termination if the Service
is to be terminated after December 31, 2011 but on or before June 30, 2012, (iii) ninety (90) days
before the date of such earlier termination if Service is to be terminated after June 30, 2012 but
on or before December 31, 2012 and (iv) one hundred and twenty (120) days before the date of such
earlier termination if Service is to be terminated on or after January 1, 2013; provided
that if the Services Schedule indicates that any Service is dependent on one or more other
Services, then each such Service must be terminated together; provided further that
any termination may be on a location by location basis if so indicated on the Services Schedules.
In the event a Service is terminated prior to the end of its Minimum Service Period pursuant to
Service Recipient’s Termination Notice, Service Recipient shall pay a make-
whole fee equal to the actual out-of-pocket costs and any additional costs that would have
been incurred by Service Provider if such Service had not been terminated (which costs, for
14
the
avoidance of doubt, exclude the 2% and 10% increases described in Section 2(a)(i)) between
the actual date of termination of the Service and the applicable date on which the Minimum Service
Period expires (subject to Service Provider exercising commercially reasonable efforts to mitigate
such costs). Notwithstanding the foregoing, upon the receipt of a Termination Notice, if Service
Provider is unable to transition the applicable Service to the Service Recipient or its designee in
a commercially reasonable manner which does not unduly disrupt the Service on the requested
termination date, Service Provider shall use commercially reasonable efforts consistent with past
practice to transition such Service as soon as possible, and any resulting third party,
out-of-pocket costs to Service Recipient shall be shared equally between Service Provider and
Service Recipient.
(c) In the event either Party defaults in the performance of any of its obligations under this
Agreement, and if such default is not excused and not cured within thirty (30) days after written
notice from the other Party specifying such default, then the non-defaulting Party may at any time
thereafter terminate, at its option, any such Service that is the subject of such default by giving
five (5) days prior written notice; provided that if no such termination notice is given
within fifteen (15) days after the end of the thirty (30) day cure period, then the non-defaulting
Party waives all rights to terminate such Service with respect to such default; provided
further, that such fifteen (15) day period referred to in the immediately foregoing proviso
shall be extended if (x) the Parties dispute whether there has been a default hereunder or (y)
agree that there has been a default hereunder and have a dispute related to such default, and in
either case are attempting to resolve such dispute pursuant to Section 9(b) until ten (10)
days after there has been a final determination pursuant to the procedures in Section 9(b).
(d) Any Service can be terminated prior to the Distribution Date, with no fee, penalty or
ongoing obligation, if Service Recipient provides a Termination Notice to Service Provider (which
may be via email) prior to the Distribution Date.
12. Independent Contractor.
The Parties hereto understand and agree that this Agreement does not make either of them an
agent or legal representative of the other for any purpose whatsoever. No Party is granted, by
this Agreement or otherwise, any right or authority to assume or create any obligation or
responsibilities, express or implied, on behalf of or in the name of any other Party, or to bind
any other Party in any manner whatsoever. The Parties expressly acknowledge (i) that Service
Provider is an independent contractor with respect to Service Recipient in all respects, including
the provision of the Services, and (ii) that the parties are not partners, joint venturers,
employees or agents of or with each other.
13. Confidentiality.
(a) Any Confidential Information of either Party shall be subject to Section 8.6 of
the Distribution Agreement. With respect to any information disclosed by one Party to
another Party for the purpose of this Agreement or otherwise accessible to such other Party
during the performance hereunder (“Confidential Information”), the Party receiving such
Confidential Information agrees that it will use the same skill and care as set forth in
Section 4(a)
15
to prevent the disclosure or accessibility to others of the disclosing Party’s
Confidential Information and will use such Confidential Information only for the purposes of this
Agreement, the Distribution Agreement and the Ancillary Agreements. The receiving Party and its
employees, representatives and agents (including any Third Party Provider) (collectively, the
“Recipient Parties”) shall only disclose and permit access to the other’s Party’s
Confidential Information to such Recipient Parties who have a need to know such Confidential
Information for the purposes of this Agreement, the Distribution Agreement and the Ancillary
Agreements. For Confidential Information provided with respect to any Service, the obligations of
the Recipient Parties pursuant to this Section 13 shall expire on the date that is five (5)
years from the termination of such Service. Each Party shall provide prompt written notice of any
breach of the obligations under this Section 13 by such Party or its Recipient Parties and
shall use commercially reasonable efforts to assist the other Party in remedying any such breach.
(b) Specifically excluded from the definition of Confidential Information is any and all
information that:
(i) is independently developed by or on behalf of a Recipient Party without use of or
reference to Confidential Information;
(ii) is or becomes available to the public, other than as the result of a breach by a
Recipient Party of the confidentiality obligations under this Agreement; or
(iii) is rightfully received from a third party not known by the Recipient Party to be
bound by an obligation of confidentiality to the disclosing Party.
(c) If the Recipient Party is required to disclose Confidential Information by law, process or
regulation, to the extent legally permissible, such Recipient Party shall promptly notify the
disclosing Party, reasonably cooperate with the disclosing Party to the extent it may seek to limit
such disclosure and, insofar as a protective order or waiver from the disclosing Party is not
obtained, only disclose such Confidential Information as is required to be disclosed.
(d) In connection with any permitted disclosure of this Agreement to any third party, each
Party shall redact the portions of the Services Schedules that are not relevant to such third
party’s inquiry.
(e) It is further understood and agreed that money damages may not be a sufficient remedy for
any breach of this Section 13 and that each Party shall be entitled to seek equitable relief,
including injunction and specific performance, as remedy for any such breach. Such remedies shall
not be deemed to be the exclusive remedies for a breach, but shall be in addition to all other
remedies herein described available at law or equity.
16
14. Beneficiary of Services; No Third Party Beneficiaries.
This Agreement is for the sole benefit of the Parties hereto, and nothing expressed or implied
shall give or be construed to give any person any legal or equitable rights hereunder, whether as a
third-party beneficiary or otherwise. Each Party agrees, and each Party in its capacity as a
Service Recipient represents and warrants, that the Services shall be provided solely to, and shall
be used solely by, Service Recipient and its Subsidiaries. Service Recipient shall not resell or
provide the Services to any other Person, or permit the use of the Services by any Person other
than Service Recipient and its Subsidiaries.
15. Entire Agreement.
This Agreement, together with the Distribution Agreement and the other Ancillary Agreements,
constitutes the entire agreement of the Parties with respect to the subject matter hereof, and
supersedes all prior agreements, understandings and negotiations, both written and oral, between
the Parties with respect to the subject matter hereof. In the event and to the extent that there
shall be a conflict between the provisions of this Agreement and the provisions of the Distribution
Agreement or any other Ancillary Agreement, the Parties agree that this Agreement shall govern. The
Parties agree that, in the event of an express conflict between the terms of this Agreement and a
Services Schedule, the terms of the Services Schedule shall govern.
16. Amendment; Waiver.
This Agreement and the Services Schedules may be amended, and any provision of this Agreement
may be waived, if but only if such amendment or waiver is in writing and signed, in the case of an
amendment, by each of the Parties, or in the case of a waiver, by the Party against whom the waiver
is effective. No failure or delay by either Party in exercising any right, power or privilege
under this Agreement shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any other right, power or
privilege.
17. Notices.
All notices, requests and other communications to any Party hereunder shall be in writing
(including telecopy or similar writing) and shall be given as follows:
if to ITT or to any of its Affiliates:
ITT Corporation
1133 Westchester Avenue
Suite 3000
White Plains, NY 10604
Attn: General Counsel
Facsimile: (914) 696-2970
1133 Westchester Avenue
Suite 3000
White Plains, NY 10604
Attn: General Counsel
Facsimile: (914) 696-2970
17
if to Exelis or to any of its Affiliates:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attn: Chief Legal Officer
Facsimile: 703-790-6407
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attn: Chief Legal Officer
Facsimile: 703-790-6407
if to Xylem or to any of its Affiliates:
Xylem Inc.
1133 Westchester Avenue
Suite 2000
White Plains, NY 10604
Attn: General Counsel
Facsimile: 914-323-5997
1133 Westchester Avenue
Suite 2000
White Plains, NY 10604
Attn: General Counsel
Facsimile: 914-323-5997
or to such other address or telecopy number and with such other copies, as such
Party may hereafter specify for the purpose of notice to the other parties. Each such notice,
request or other communication shall be effective (i) if given by fax, when such fax is transmitted
to the fax number specified in this Section 17 and evidence of receipt is received or (ii)
if given by any other means, upon delivery or refusal of delivery at the address specified in this
Section 17.
18. Non-Assignability.
Neither this Agreement nor any of the rights, interests or obligations of either Party
hereunder may be assigned or transferred by any such Party without the prior written consent of the
other Party (not to be unreasonably withheld, delayed or conditioned), and any purported
assignment, without such prior written consent shall be null and void; provided a Party may
assign or transfer all its rights hereunder without such consent to an acquirer in connection with
a sale of all or substantially all of its assets or other similar change in control of such Party.
19. Further Assurances.
From time to time after the date hereof, without further consideration, each Party shall use
commercially reasonable efforts to take, or cause to be taken, all appropriate action, do or cause
to be done all things reasonably proper or advisable under applicable Law, and execute and deliver
such documents as may be required or appropriate to carry out the provisions of this Agreement and
to consummate, perform and make effective the transition contemplated hereby.
20. Definitions and Rules of Construction.
(a) Defined terms used in this Agreement have the meanings ascribed to them by
definition in this Agreement or in the Distribution Agreement.
18
(b) This Agreement shall be construed without regard to any presumption or rule
requiring construction or interpretation against the Party drafting or causing any
instrument to be drafted.
(c) Whenever the words “include”, “including”, or “includes” appear in this Agreement,
they shall be read to be followed by the words “without limitation” or words having similar
import.
(d) As used in this Agreement, the plural shall include the singular and the singular
shall include the plural.
21. Counterparts; Effectiveness.
This Agreement may be executed in two or more counterparts, each of which shall be deemed to
be an original and all of which together shall be deemed to be one and the same instrument. Copies
of executed counterparts transmitted by telecopy, telefax or other electronic transmission service
shall be considered original executed counterparts for purposes of this Section 21,
provided that receipt of copies of such counterparts is confirmed. This Agreement shall become
effective when each Party has received a counterpart hereof signed by the other Party hereto.
22. Section Headings.
The section headings contained in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.
23. Severability.
If any provision of this Agreement shall be declared by any court of competent jurisdiction to
be illegal, void or unenforceable, all other provisions of this Agreement shall not be affected and
shall remain in full force and effect, and the Parties shall negotiate in good faith to replace
such illegal, void or unenforceable provision with a provision that corresponds as closely as
possible to the intentions of the parties as expressed by such illegal, void, or unenforceable
provision.
24. Governing Law.
This Agreement shall be governed by and construed in accordance with the Laws, but not the
Laws governing conflicts of Laws (other than Sections 5-1401 and 5-1402 of the New York General
Obligations Law), of the State of New York.
19
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.
| ITT CORPORATION |
||||
| By: | /s/ Aris C. Chicles | |||
| Name: | Aris C. Chicles | |||
| Title: | Senior Vice President | |||
| EXELIS INC. |
||||
| By: | /s/ Ann D. Davidson | |||
| Name: | Ann D. Davidson | |||
| Title: | V.P., General Counsel and Secretary | |||
| XYLEM INC. |
||||
| By: | /s/ Frank R. Jimenez | |||
| Name: | Frank R. Jimenez | |||
| Title: | V.P., General Counsel and Secretary | |||
20
Annex A
Severance and Retention Schedule
| 1. | Payroll TSA = , ITT 33.3%, Exelis 33.3%, Xylem 33.3%. | |
| 2. | Payroll TSA = , ITT 33.3%, Exelis 33.3%, Xylem 33.3%. | |
| 3. | AP TSA = , 100% Exelis. | |
| 4. | AP TSA, PRMS TSA, PAYROLL TSA, eBUYITT TSA, TELECOM TSA, PCARD TSA = , ITT 33.3%, Exelis 33.3%, Xylem 33.3%. | |
| 5. | DATA CUSTODIAN TSA = , 100% Exelis. | |
| 6. | DATA CUSTODIAN TSA = , 100% Exelis. | |
| 7. | AP TSA, PRMS TSA, PAYROLL TSA, eBUYITT TSA, TELECOM TSA, PCARD TSA = , ITT 33.3%, Exelis 33.3%, Xylem 33.3%. | |
| 8. | AP TSA, PRMS TSA, PAYROLL TSA, eBUYITT TSA, TELECOM TSA, PCARD TSA = , ITT 33.3%, Exelis 33.3%, Xylem 33.3%. | |
| 9. | Nogales Services TSA = , Xylem 100% | |
| 10. | Nogales Services TSA = , Xylem 100% |
Annex B
Vendor Cost Schedule
(000’s) |
$ | 5,000 | ||||||
| $ | 2,000 | |||||||
Estimated Vendor Fee |
$ | 7,000 | ||||||
ITT’s Estimated Allocation of the Estimated Vendor Fee |
40.0 | % | ||
Xylem’s Applicable Percentage of ITT’s Costs = |
30.0 | % | ||
Exelis’ Applicable Percentage of ITT’s Costs = |
25.0 | % |
The Parties agree that they have estimated a total cost of . Based upon the percentages above, the following costs have been included
in TSAs provided by ITT to each of Xylem and Exelis
TSA Pass Through Amounts:
| ($ in 000’s) | Y1 | Y2 | Total | |||||||||
Xylem |
$ | $ | $ | |||||||||
Exelis |
$ | $ | $ | |||||||||
The amount paid by or to ITT Corporation pursuant to Section 2(a)(vi) of the Agreement
with respect shall not be increased or decreased by the 2% or 10%
profit margin or the 4.5% inflation rate contemplated by Section 2 of the Agreement
2
SCHEDULE A
Service Provider: ITT Corporation
Service Recipient: Exelis Inc. and Xylem Inc.
Service to be provided:
3
Schedule AB1
eBuyITT INVOICE PROCESSING
SERVICES
eBuyITT INVOICE PROCESSING
SERVICES
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, expect where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
| Philip Galluzzi | Manager, TDS Business | (386) 446-6160 | phil.galluzzi@itt.com | |||
| ITT Corporation | Relationships & Corporate Travel |
|||||
| Mary Marts | Sr. Financial Analyst, | (914) 323-5791 | mary.marts@xyleminc.com | |||
| Xylem Inc. | Fluid and Motion Control |
GENERAL SERVICE DESCRIPTION
Service Provider will perform eBuyITT Invoice Processing Services for Service Receiver.
Service Receiver and its Subsidiaries will utilize the Service Provider’s resources based on the
functionality, processes, input and output screens and documents that support the Service
Provider’s business and business processes in the twelve months prior to the Distribution Date.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement, the
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
1
| Minimum Service | ||||||||||||
| BAU Transaction | Period | Service | ||||||||||
| Service # | Service Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Provide eBuyITT Invoice Processing Services: | ||||||||||||
| • eBuyITT Invoice Review — The
Service Provider will receive designated
invoice submissions from the Service
Receiver’s eBuyITT enabled Suppliers (via
EDI transaction or manual entry) and prep
invoices and feed the submitted invoices to
Perfect Commerce. The Service Provider will
use the daily invoice feeds from Perfect
Commerce to prep invoices for financial
back office operations.
|
4,174 Hard Copy Invoices Annually*/ 16,501 Invoices Annually |
|||||||||||
| • eBuyITT Exception Handling and
Resolution — The Service Provider will
reconcile and re-validate invoices flagged
with validation errors. Once the invoice
is validated, the Service Provider will
process it as stated above. Mismatched
invoices will not be paid without
resolution.
|
1,300 Transactions Annually | |||||||||||
| • Invoice Recording & Payment
Processing — Service Provider will send the
balanced invoices to an internal business
unit within the Service Provider, on a
daily basis, for additional Accounts
Payable recording and payment processing
for the Service Receiver.
|
4,174 Hard Copy Invoices Annually* / 16,501 Invoices Annually |
|||||||||||
SS-eBuyITT- -01
|
eBuyITT Invoice Processing Services | • Vendor File Maintenance — The
Service Provider will receive vendor master
data for new vendor setup from an internal
business unit to perform Vendor File
Maintenance.
|
As Needed Basis | 18 | Cost plus 2% - 10% per month | |||||||
| • Tax Exempt Certificate File
Maintenance — The Service Provider will
receive Service Receiver Supplier’s tax
exempt vendor certificates from an internal
business unit to maintain tax exempt master
file.
|
4,174 Hard Copy Invoices Annually* / 16,501 Invoices Annually |
|||||||||||
| • Cost Distribution Services —
Service Provider will use validated
invoices as documented above to provide
Service Receiver a cost distribution file
transmitted via FTP and/or email, or
transmitted to an internal business unit
data and centralized tax services via the
current Purchase to pay distribution
process to all Service Receiver’s business
units that are currently on Purchase to
Pay. The Service Provider will provide cost
distribution and taxability indicators, per
agreed frequency to the Service Receiver’s
business units that are not currently
supported by the Shared Services Accounts
Payable (P2P) process).
|
As Needed Basis | |||||||||||
| • eBuyITT Aged-Invoice Workflow
Notification — Service Provider will
perform routine communication of aged open
invoices requiring Service Receiver triage
and action.
|
As Needed Basis | |||||||||||
2
* Note: The BAU transaction volume for hard copy invoices, and not the total invoice volume
(i.e., both electronic and hard copy), will be used as the pre-distribution date baseline to
calculate changes in service volumes (plus or minus 10%) as defined in the next section.
Service Volumes Greater or Less Than Observed Pre-Distribution Date
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 10% (such activity, including any such 10% deviation,
“Business as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will
accommodate Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities on a
time and materials basis with respect to the one-time set-up fees. The table below will then apply
following the completion of the one-time set-up activities
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume within
BAU [Note: BAU
already includes +/-
10% of
pre-distribution date
volumes]
|
No incremental one-time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady-State fee structure for requisite service as documented below | ||
Service Volume
greater or less than
BAU
|
Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service |
Ad-Hoc development/services or processing of reports consistent with what was provided prior
to the distribution date will be supported as part of this agreement. Service Provider will use
commercially reasonable efforts based on provider’s current abilities to accommodate regulatory or
legal ad-hoc requests. Ad-hoc requests which may need to be performed to assist Service Receiver
in meeting new legal obligations will be provided on a time and materials basis as described in the
Additional Pricing section of this agreement. Any changes to 3rd party relationships
which require interface modifications or re-writes (e.g., Benefits provider change) are not
included as part of the scope of this agreement. Should the Service Receiver require such changes,
Parties agree to negotiate in good faith with regard to such modification. In the event
modifications to the services provided are required by law for only the Service Recipient and such
modifications increase the cost for Service Provider, Service Recipient that requires the
modifications shall pay all the additional costs including the costs for the other Service
Recipients.
3
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
SS-eBuyITT-02
|
eBuyITT Invoice Processing Services Migration |
Service Provider will
make commercially
reasonable efforts to
assist Service
Receiver in exiting
of this agreement.
These efforts
include: |
Time and Materials
Based on Additional Pricing Section |
|||
• Support of
data extraction
requests from the
Service Receiver |
||||||
• Providing
Subject Matter
Expertise in helping
the Service Receiver
understand current
state business
processes, and
current state
functional data
mapping
|
||||||
SS-eBuyITT-03
|
eBuyITT Invoice Processing Services Knowledge Transfer |
Service Provider will
provide the following
knowledge transfer
services: |
Time and Materials
Based on Additional Pricing Section |
|||
• Existing
non-sensitive
documentation
maintained by the
Service Provider will
be given to the
Service Receiver as
it relates to eBuyITT
services
|
Supplemental Services
For requests for supplemental services relating to eBuyITT Invoice Processing by Service Receiver
not mentioned in this Schedule or not included within the costs documented in this agreement,
Service Receiver will provide a discreet project request and submit such request to Service
Provider using the formalized Change Request attached as Annex A for consideration by Service
Provider.
Where notice is required a number of business days prior to some required action by Service
Provider, notice must be received by 12 noon Eastern Time to be counted as received during such
business day. Service Provider shall, within a commercially reasonable period, provide a price
quote to be commercially reasonable based on the current cost of the Services to Service Receiver
taking into account, such items as the specific time the request was made, service delivery
volumes, exit planning activities, and other activities Service Provider is currently engaged in at
the time of the request, but not later than 30 days after the request was made. If Service
Provider, in its sole discretion determines (i) such request would increase the ongoing
operating costs for Service Provider (as a service recipient) or any other service receiver or (ii)
that it is not capable of making such changes with its current staff during the time period
requested without interrupting the Services provided to itself or any other service receiver.
Service Provider need not provide a price quote or perform the services. Where a price quote is
provided, Service Provider shall provide the service requested upon acceptance of the price.
4
LOCATIONS
Services are initially provided from Palm Coast, FL USA to other USA locations.
PREREQUISITES/DEPENDENCIES
| • | Service Receiver will maintain current Cost Distribution data delivery methodologies (e.g., FTP drop site/email attachment receipt). | ||
| • | If Service Receiver or their suppliers provides inaccurate information to Service Provider it will be the responsibility of the Service Receiver to rectify any problems and bear any costs incurred to rectify the issue. | ||
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. | ||
| • | Service Receiver must actively be engaged on the GSCS Service Agreement from Global Supply Chain Services (GSCS) and utilize Perfect Commerce as the eProcurement platform for the duration this agreement is in effect. |
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the following
addresses (with an email copy to the Service Owners set forth above):
If to the Service Provider:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
If to the Service Receiver:
Xylem Inc.
2881 E Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
Xylem Inc.
2881 E Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
5
SERVICE LEVEL
Service Provider will classify incidents at its own discretion. Such
classifications shall be consistent with the priorities Service Provider set for
itself as a recipient of services.
In the event incidents cannot be resolved, Service Provider shall promptly notify
Service Receiver and work together to try and resolve such incidents.
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year. These
rates apply to internal Service Provider employees only, and should external resources be required,
the costs for those external resources will be reviewed with the Service Receiver prior to
execution of the project.
Additional Pricing Rates (All in USD)
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
6
SCHEDULE AB2
P-CARD TRANSACTION PROCESSING
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
Philip Galluzzi ITT Corporation |
Manager, TDS Business Relationships & Corporate Travel |
(386) 446-6160 | phil.galluzzi@itt.com | |||
Mary Marts
Xylem Inc.
|
Sr. Financial Analyst, Fluid and Motion Control | (914) 323-5791 | mary.marts@xyleminc.com |
GENERAL SERVICE DESCRIPTION
Service Provider will perform P-Card Transaction Processing Services for Service Receiver.
Service Receiver and its Subsidiaries will utilize the Service Provider’s resources based on the
functionality, processes, input and output screens, and documents that support the Service
Provider’s business and business processes in the twelve months prior to the Distribution Date.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement, the
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
| Minimum Service | ||||||||||||
| BAU Transaction | Period | |||||||||||
| Service # | Service Name | Description of Service | Volume | (in mo.) | Service Charge | |||||||
| Provide P-Card Transaction Processing Services: | ||||||||||||
• P-Card Invoice Review — The Service
Provider will receive a notification and data
file from US Bank once monthly containing
transaction details and Company information
for Service Receiver’s P-Card holders. In
addition, the Service Provider will receive
from an internal business unit an
authorization to proceed with the P-Card File
download. The Service Provider will review
the file, format data for financial
processing, and validate invoices for
completeness and accuracy. The Service
Provider will flag invoices with validation
errors. The Service Provider will use booked
AP invoices to generate proprietary data files
to be sent via email to Service Receiver’s
Treasury Department for payment settlement.
|
125 Transactions Annually |
|||||||||||
SS-PCard Processing-01 |
P-Card Transaction Processing Services |
• P-Card Exception Handling and
Resolution — The Service Provider will
reconcile and re-validate invoices flagged
with validation errors. Once the invoice is
validated, the Service Provider will process
it as stated above. Mismatched invoices will
not be paid without resolution. For
processing credits, the Service Provider will
insure that management accounts have monthly
debit balances prior to transmission to
Service Receiver’s Treasury Department. If a
management account is received as a zero or
credit balance, the Service Provider will
remove credit transactions from being
processed in ascending order until the
management account reflects a debit balance.
The Service Provider will communicate the
removed credits to the internal business unit
for resolution.
|
40 Transactions Annually |
18 | Cost plus 2% - 10% per month | |||||||
• P-Card Cost Distribution — The
Service Provider will use validated invoices
as documented above to provide Service
Receiver a Cost Distribution file transmitted
via File Transfer Protocol (FTP) and/or email.
|
15 Transactions per Month |
|||||||||||
• P-Card File Maintenance — The Service
Provider will perform file maintenance based
on internal business unit approval for new
and/or changes to P-Card holders. Only valid,
internal business unit-approved cardholder
transactions are processed. Three (3)
business days prior notice is required to
maintain P-Card file.
|
As Needed Basis | |||||||||||
2
Service Volumes Greater or Less Than Observed Pre-Distribution Date
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 10% (such activity, including any such 10% deviation,
“Business as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will
accommodate Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities on a
time and materials basis with respect to the one-time set-up fees. The table below will then apply
following the completion of the one-time set-up activities
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume within
BAU [Note: BAU
already includes +/-
10% of
pre-distribution date
volumes]
|
No incremental one-time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady-State fee structure for requisite service as documented below | ||
Service Volume
greater or less than
BAU
|
Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service |
Ad-Hoc development/services or processing of reports consistent with what was provided prior
to the distribution date will be supported as part of this agreement. Service Provider will use
commercially reasonable efforts based on provider’s current abilities to accommodate regulatory or
legal ad-hoc requests. Ad-hoc requests which may need to be performed to assist Service Receiver
in meeting new legal obligations will be provided on a time and materials basis as described in the
Additional Pricing section of this agreement. Any changes to 3rd party relationships which require
interface modifications or re-writes are not included as part of the scope of this agreement.
Should the Service Receiver require such changes, Parties agree to negotiate in good faith with
regard to such modification. In the event modifications to the services provided are required by
law for only the Service Recipient and such modifications increase the cost for Service Provider,
Service Recipient that requires the modifications shall pay all the additional costs including the
costs for the other Service Recipients.
3
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
| Service Provider will make commercially reasonable efforts to assist Service Receiver in exiting of this agreement. These efforts include: | ||||||
SS-PCard Processing-02 |
P-Card Transaction Processing Migration |
• Support of
data extraction
requests from the
Service Receiver • Providing
Subject Matter
Expertise in helping
the Service Receiver
understand current
state business
processes, and
functional data
mapping
|
Time and Materials
Based on Additional Pricing Section |
|||
SS-PCard Processing-03 |
P-Card Transaction Processing Knowledge Transfer |
Service Provider will provide the following knowledge transfer services: • Existing
non-sensitive
documentation
maintained by the
Service Provider will
be given to the
Service Receiver as
it relates to P-Card
Transaction
Processing services
|
Time and Materials Based on Additional Pricing Section |
Supplemental Services
For requests for supplemental services relating to P-Card Transaction Processing by Service
Receiver not mentioned in this Schedule or not included within the costs documented in this
agreement, Service Receiver will provide a discreet project request and submit such request to
Service Provider using the formalized Change Request attached as Annex A for consideration by
Service Provider.
Where notice is required a number of business days prior to some required action by Service
Provider, notice must be received by 12 noon Eastern Time to be counted as received during such
business day. Service Provider shall, within a commercially reasonable period, provide a price
quote to be commercially reasonable based on the current cost of the Services to Service Receiver
taking into account, such items as the specific time the request was made, service delivery
volumes, exit planning activities, and other activities Service Provider is currently engaged in at
the time of the request, but not later than 30 days after the request was made. If Service
Provider, in its sole discretion determines (i) such request would increase the ongoing operating
costs for Service Provider (as a service recipient) or any other service receiver or (ii) that it
is not capable of making such changes with its current staff during the time period requested
without interrupting the Services provided to itself or any other service receiver. Service
Provider need not provide a price quote or perform the services. Where a price quote is provided,
Service Provider shall provide the service requested upon acceptance of the price.
4
LOCATIONS
Services are initially provided from Palm Coast, FL, USA to other USA locations.
PREREQUISITES/DEPENDENCIES
| • | If Service Receiver, or their Supplier(s), provides inaccurate information to Service Provider it will be the responsibility of the Service Receiver to rectify any problems and bear any costs incurred to rectify the issue. | ||
| • | Service Receiver, in a separate and independent agreement, must utilize US Bank as the P-Card supplier for the duration this agreement is in effect. | ||
| • | Service Receiver must actively be engaged on the GSCS Service Agreement from Global Supply Chain Services (GSCS) for the duration this agreement is in effect. | ||
| • | Service Receiver must maintain current Cost Distribution data delivery methodologies (e.g., FTP drop site/email attachment receipt) and payment settlement interface (Treasury) for the duration this agreement is in effect. | ||
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. |
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the following
addresses (with an email copy to the Service Owners set forth above):
If to the Service Provider:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
If to the Service Receiver:
Xylem Inc.
2881 E Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
Xylem Inc.
2881 E Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
5
SERVICE LEVEL
Service Provider will classify incidents at its own discretion. Such
classifications shall be consistent with the priorities Service Provider set for
itself as a recipient of services.
In the event incidents cannot be resolved, Service Provider shall promptly notify
Service Receiver and work together to try and resolve such incidents.
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year. These
rates apply to internal Service Provider employees only, and should external resources be required,
the costs for those external resources will be reviewed with the Service Receiver prior to
execution of the project.
Additional Pricing Rates (All in USD)
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
6
SCHEDULE AB3
TELECOM INVOICE PROCESSING
SERVICES (TAPS)
TELECOM INVOICE PROCESSING
SERVICES (TAPS)
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
Philip Galluzzi ITT Corporation |
Manager, TDS Business Relationships & Corporate Travel |
(386) 446-6160 | phil.galluzzi@itt.com | |||
Mary Marts Xylem Inc. |
Sr. Financial Analyst, Fluid and Motion Control |
(914) 323-5791 | mary.marts@xyleminc.com |
GENERAL SERVICE DESCRIPTION
Service Provider will perform Telecom Invoice Processing Services (TAPS), for Long Distance
Voice and Data Circuitry, for Service Receiver.
Service Receiver and its Subsidiaries will utilize the Service Provider’s resources based on the
functionality, processes, input and output screens and documents that support the Service
Provider’s business and business processes in the twelve months prior to the Distribution date.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement,
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
1
| Minimum | ||||||||||||
| BAU | Service | |||||||||||
| Transaction | Period | Service | ||||||||||
| Service # | Service Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Provide Telecom Invoice Processing (TAPS) Services: | ||||||||||||
• TAPS supplier
statements — The
Service Provider will
receive Service
Receiver’s current
Primary Telecom
Service Supplier
statements monthly.
The statements are
transmitted via EDI,
or entered manually
via paper statements,
to the Service
Provider. To produce
balanced TAPS
statements, the
Service Provider will
perform various
validation and
duplication
protection routines
with criteria
including Master
Control Number,
Account number, and
AT&T Statement
numbers. Only total
current charges are
recognized in the
TAPS system for
processing each
month.
|
2,100 Transactions Annually | |||||||||||
SS-TAPS-01 |
Telecom Invoice Processing Services (TAPS) | • TAPS
Exception Handling
and Resolution —
Service Provider will
reconcile accounts
that failed
validation. The
Service Provider will
make commercially
reasonable efforts to
gain resolution from
the Service Receiver,
to produce resolved
accounts that are
ready for financial
processing. Accounts
that fail validation
are not paid without
resolution.
|
60 Transactions Annually | 9 | Cost plus 2% - 10% per month | |||||||
• Invoice
Recording & Payment
Processing — Service
Provider will send
the balanced invoices
to an internal
business unit within
the Service Provider,
on a monthly basis,
for additional
Accounts Payable
recording and payment
processing for the
Service Receiver.
|
2,100 Transactions Annually | |||||||||||
• TAPS Cost
Distribution — The
Service Provider will
transmit to the
Service Receiver a
Cost Distribution
file from the
processed validated
Statements, Service
Provider will
transmit this file
via FTP and/or email
to the Service
Receiver.
|
15 Transactions per Month | |||||||||||
• TAPS Customer
File Maintenance —
The Service Provider
will perform Customer
File Maintenance
after receiving a
Change Request from
the Service Receiver.
Only valid, ITT
Customer accounts and
Statements are
processed. Three (3)
business days prior
notice are required
to maintain the
Customer file.
|
30 Transactions Annually | |||||||||||
2
Service Volumes Greater or Less Than Observed Pre-Distribution
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 10% (such activity, including any such 10% deviation,
“Business as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will
accommodate Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities on a
time and materials basis with respect to the one-time set-up fees. The table below will then apply
following the completion of the one-time set-up activities
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume within
BAU [Note: BAU
already includes +/-
10% of
pre-distribution
volumes]
|
No incremental one-time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady-State fee structure for requisite service as documented in this agreement | ||
Service Volume
greater or less than
BAU
|
Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service |
Ad-Hoc development/services or processing of reports consistent with what was provided prior
to the distribution date will be supported as part of this agreement. Service Provider will use
commercially reasonable efforts based on provider’s current abilities to accommodate regulatory or
legal ad-hoc requests. Ad-hoc requests which may need to be performed to assist Service Receiver
in meeting new legal obligations will be provided on a time and materials basis as described in the
Additional Pricing section of this agreement. Any changes to 3rd party relationships which require
interface modifications or re-writes are not included as part of the scope of this agreement.
Should the Service Receiver require such changes, Parties agree to negotiate in good faith with
regard to such modification. In the event modifications to the services provided are required by
law for only the Service Recipient and such modifications increase the cost for Service Provider,
Service Recipient that requires the modifications shall pay all the additional costs including the
costs for the other Service Recipients.
3
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
SS-TAPS-02
|
Telecom Invoice
Processing (TAPS)
Migration
|
Service Provider will make commercially reasonable efforts to assist Service Receiver in exiting of this agreement. These efforts include: | Time and Materials Based on Additional Pricing Section | |||
• Support of
data extraction
requests from the
Service Receiver |
||||||
• Providing
Subject Matter
Expertise in helping
the Service Receiver
understand current
state business
processes and
functional data
mapping |
||||||
| Service Provider will provide the following knowledge transfer services: | ||||||
SS-TAPS-03
|
Telcom Invoice Processing (TAPS) Knowledge Transfer |
• Existing
non-sensitive
documentation
maintained by the
Service Provider will
be given to the
Service Receiver as
it relates to Telecom
Invoice Processing
(TAPS) services
|
Time and Materials Based on Additional Pricing Section |
Supplemental Services
For requests for supplemental services relating to Telecom Invoice Processing Services (TAPS) by
Service Receiver not mentioned in this Schedule or not included within the costs documented in this
agreement, Service Receiver will provide a discreet project request and submit such request to
Service Provider using the formalized Change Request attached as Annex A for consideration by
Service Provider.
Where notice is required a number of business days prior to some required action by Service
Provider, notice must be received by 12 noon Eastern Time to be counted as received during such
business day. Service Provider shall, within a commercially reasonable period, provide a price
quote to be commercially reasonable based on the current cost of the Services to Service Receiver
taking into account, such items as the specific time the request was made, service delivery
volumes, exit planning activities, and other activities Service Provider is currently engaged in at
the time of the request, but not later than 30 days after the request was made. If Service
Provider, in its sole discretion determines (i) such request would increase the ongoing operating
costs for Service Provider (as a service recipient) or any other service receiver or (ii) that it
is not capable of making such changes with its current staff during the time period requested
without interrupting the Services provided to itself or any other service receiver. Service
Provider need not provide a price quote or perform the services. Where a price quote is provided,
Service Provider shall provide the service requested upon acceptance of the price.
4
LOCATIONS
Services are initially provided from Palm Coast, FL, USA to other USA locations and select EU
and Asia locations.
PREREQUISITES/DEPENDENCIES
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. | |
| • | If Service Receiver, or their Supplier(s), sends inaccurate data to Service Provider it will be the responsibility of the Service Receiver to rectify any problems and bear any costs incurred to rectify the issue. | |
| • | Service Receiver must actively be engaged in the circuitry configuration and inventory control of their networks and have Subject Matter Experts (SME) available to assist with statement processing discrepancies. | |
| • | Service Receiver, in a separate and independent agreement, must utilize AT&T as the telecommunication data vendor. | |
| • | Service Receiver will maintain current Cost Distribution data delivery methodologies (e.g., FTP drop site/email attachment receipt). |
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the following addresses (with
an email copy to the Service Owners set forth above):
If to the Service Provider:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
If to the Service Receiver:
Xylem Inc.
2881 E Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
Xylem Inc.
2881 E Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
5
SERVICE LEVEL
Service Provider will classify incidents at its own discretion. Such classifications shall be
consistent with the priorities Service Provider set for itself as a recipient of services.
In the event incidents cannot be resolved, Service Provider shall promptly notify Service Receiver
and work together to try and resolve such incidents.
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year. These
rates apply to internal Service Provider employees only, and should external resources be required,
the costs for those external resources will be reviewed with the Service Receiver prior to
execution of the project.
Additional Pricing Rates (All in USD)
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
6
SCHEDULE AB4
U.S
ACTIVE SALARIED ELIGIBLE
EMPLOYEES MEDICAL, PHARMACY
AND DENTAL PROGRAM
U.S
ACTIVE SALARIED ELIGIBLE
EMPLOYEES MEDICAL, PHARMACY
AND DENTAL PROGRAM
Capitalized terms used herein and not otherwise defined shall have the meaning assigned such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters and general inquiries regarding this Service should be directed to:
| Name | Title | Phone | ||||
Service
Provider’s
Contact |
||||||
ITT Corporation Deborah Macchia
|
Mgr, Benefits Planning and Administration | (914) 304-1729 | Deb.macchia@itt.com | |||
Lisa Munoz
|
Benefits Analyst | (914) 304-2026 | Lisa.munoz@itt.com | |||
Thomas Hickey
|
Manager, Benefits Financial Reporting and Administration | (914) 641-2077 | Thomas.hickey@itt.com | |||
Service
Recipient’s
Contact |
||||||
Xylem Inc. |
||||||
Keith Dick
|
Director, Global Benefits | (914) 323-5964 | Keith.dick@xyleminc.com |
1
PARTIES TO THE AGREEMENT
Service Provider: ITT Corporation — White Plains, NY
Service Recipient: Xylem Inc. — White Plains, NY
Service Recipient: Xylem Inc. — White Plains, NY
TERM
Services provided hereunder shall terminate December 31, 2013; provided that for the
avoidance of doubt the coverages provided hereunder and described below only apply to
Claims (as defined herein) made by Service Recipient’s Covered Employees (as defined
herein) and incurred on or before December 31, 2011.
GENERAL SERVICE DESCRIPTION
Service Provider currently provides active medical, pharmacy(Rx) and dental administration for
coverages provided through Empire and Anthem (medical), Medco(Rx), MetLife(dental) and SHPS (FSA)
(Empire, Anthem, Medco, MetLife and SHPS collectively, the “Vendors”) for its U.S. Active,
Salaried, Eligible Employees (“Covered Employees”). Service Provider shall keep the current
contracts with the Vendors and the ITT CORPORATION SALARIED MEDICAL AND DENTAL PLAN (PLAN NUMBER
502 EIN 13-5158950) and the ITT Salaried Medical Plan and Salaried Dental Plan General Plan Terms
(collectively, the “Plans”) and all coverage thereunder in full force through December 31, 2011 for
Service Recipient’s Covered Employees. All claims of Service Recipient’s Covered Employees made
under the Plans and incurred on or prior to December 31, 2011 the (“2011 Plan Year”) will be
adjudicated in accordance with the current contract and Service Provider will continue to take such
actions on behalf of Service Recipient’s Covered Employees as if such employees are employees of
Service Provider.
All medical, dental, pharmacy and FSA claims of Service Recipient’s Covered Employees made under
the Plans (the “Claims”) will be paid by the Vendors on behalf of the Service Provider. Service
Recipient will pay Service Provider for coverage based on 2011 budget premium rates previously set
for the calendar year 2011 and described in the “Pricing” section below. Service Recipient will
pay Service Provider monthly premium payments for this service, for any full or partial months,
based on actual enrollment for the months covered post-spin using enrollments as of the first
(1st) calendar day of the month, commencing on the day after the Distribution Date.
Service Recipient will prepare and deliver to Service Provider a monthly self bill containing cost
breakdown by business unit and plan tier as set forth on Attachment A, within five (5) Business
Days after the beginning of each calendar month. The Service Recipient will be required to pay the
Service Provider the monthly premium payments within ten (10) Business Days after the beginning of
each calendar month. A detailed listing of Service Recipient’s employees covered, including the
Plans and enrollment tier in which they are enrolled, will be made available to Service Provider
upon its reasonable request.
Service Provider will retain responsibility for executing funding of Claim payments and eligibility
management with Vendors through December 31, 2013.
2
Service Provider will conduct a Headcount True-Up (as defined below) of the monthly premiums and
establish an Incurred But Not Reported (“IBNR”) claims reserve for Claims incurred prior to
December 31, 2011 date, but paid after that date, and conduct a reconciliation of such reserve. See
“Headcount True-Up” and “IBNR Reconciliation” sections under Additional Pricing for details.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement,
Service Provider shall provide to Service Recipient the services identified below or described
above (collectively, the “Services”).
| • | Monthly Premium billing. | ||
| • | Monthly administrative services billing (for administrative services billed on an hourly basis. See Additional Pricing section for Hourly Rates). | ||
| • | See General Service Description for a description of payments and billing hereunder. See Pricing for a description of the Headcount True-Up (as defined below) and reconciliation for IBNR (as defined below) Claims. | ||
| • | Claims processing |
| • | All Vendor Claims process will remain unchanged from the process as used during the 12-month period prior to the Distribution Date. | ||
| • | The Claims appeal process will not change from the process as used during the 12-month period prior to the Distribution Date. Empire/Anthem/Medco, MetLife and SHPS will handle all appeals as provided under the Employee Retirement Income Security Act. Once all such appeals have been exhausted, escalations will be handled by Service Provider. | ||
| • | Service Provider will pay all Claims incurred during the 2011 Plan Year. |
| • | Eligibility |
| o | All eligibility adjustments (adding dependents, new hires, ect.) will be handled by local Service Recipient HR through the Infinium interface. | ||
| o | The Service Recipient may add or remove employees/dependants to coverage in accordance with the terms of the Plans, generally upon a qualifying event, new hire or termination. These rules will be the same rules in effect immediately prior to Distribution Date and will remain in effect until January 31, 2012. | ||
| o | Manual adjustments to eligibility will be handled directly with the Vendors by authorized Service Recipient local HR. These adjustments will be one off type adjustments that cannot be made through Infinium due to timing. | ||
| o | All file transmissions to Vendors will be handled by the Exelis Inc. Fort Wayne Shared Service team under the HR/Payroll/Benefits Transition Services Agreement. |
3
| o | All files normally maintained manually by the Service Recipient local HR departments during the twelve (12) month period prior to the Distribution Date will remain unchanged. | ||
| o | COBRA qualifying events notices will be handled by SHPS. Service Recipient Local HR department will notify SHPS of termination of employment (as is the current practice in the twelve (12) months prior to Distribution Date). SHPS will provide election notice to Covered Employees with appropriate coverages. There is a separate Letter of Intent with SHPS, attached as Attachment B. |
| • | Claims payment |
| o | All Covered Employee Claims made under the Plans and incurred for the 2011 Plan Year will be paid by Service Provider. | ||
| o | Vendor administrative service charges for the 2011 Plan Year will be paid by Service Provider. | ||
| o | Empire and MetLife maintain bank accounts which Service Provider funds daily to pay claims. Each Vendor will separate claims paid by claims incurred date. | ||
| o | Service Provider will pay all Medical and Dental Claims incurred for the 2011 Plan Year, but submitted for payment after the end of the 2011 Plan Year but no later than allowed under the terms of the applicable Plan. | ||
| o | MEDCO invoices bi-weekly for claims paid. Service Provider will pay for all MEDCO claims incurred for the 2011 Plan Year. |
PREREQUISITES/DEPENDENCIES
Service Recipient Responsibilities
| • | Service Recipient will provide accurate and timely employee enrollments via Infinium. | ||
| • | Service Recipient will research eligibility issues as needed. | ||
| • | In case of inaccurate data sent to Service Provider it will be the responsibility of the Service Recipient to rectify any problems and assessments incurred. | ||
| • | Local Human Resources/Benefits departments will support Covered Employees. |
4
BILLING LOCATION
Service Recipient will provide Service Provider a self billed invoice and payment
to their address set forth below. The bill will cover all charges for Services under
this Schedule provided by Service Provider. The invoice will contain the number of
enrolled employees per tier per coverage, as set forth in Schedule A. A detailed list
of Covered Employees will be provided by the Service Provider upon reasonable request
of the Service Recipient. All administrative functions handled by the Service
Provider in the twelve (12) month period prior to the Distribution Date are contained
in the fee structure set forth below. The Service Provider and Service Recipient
agree to negotiate in good faith for any additional services related to the Service
provided hereunder that are outside the normal course of business.
SERVICE LEVEL
The Service Provider will provide the same service level to the Service Recipient
as it provides to its Covered Employees.
NOTICE REQUIREMENTS
Official Notices and Bills under this Schedule should be sent to the following addresses (with
an email copy to the Service Owners set forth above):
If to the Service Provider:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
If to the Service Receiver:
Xylem Inc.
2881 E. Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
Xylem Inc.
2881 E. Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
Termination notices are not required. Service Provider will pay Claims incurred during the 2011
Plan Year, during the period from November 1, 2011 through December 31, 2013 with no further
premium billed to the Service Recipient. Pursuant to the terms of the Plans there is a twenty-four
(24) month Claim filing limit.
5
PRICING
In addition to the costs specifically set forth below, Service Recipient shall also pay all
routine business travel expenses relating to such Services. The below table contains the monthly
premium rates the Service Provider shall charge. The Service Recipient will be required to pay the
Service Provider the monthly premium payments within ten (10) Business Days after the beginning of
each calendar month. A detailed listing of Service Recipient’s Covered Employees, including the
Plans and enrollment tier in which they are enrolled, will be made available to Service Provider
upon its reasonable request. Each business unit has been banded 1 through 5. Depending on the
assigned band the appropriate budget amount is charged to that business unit. The amounts in the
table are per employee per month, by plan and coverage tier. See “General Service Description” for
further detail on payment and billing for the monthly premium payments.
6
Medical and Pharmacy Premium
Basic
| Rating | Employee | Employee | ||||||||||
| Band | Only | + 1 | Family | |||||||||
Band 1 |
||||||||||||
Band 2 |
||||||||||||
Band 3 |
||||||||||||
Band 4 |
||||||||||||
Band 5 |
||||||||||||
Enhanced
| Rating | Employee | Employee | ||||||||||
| Band | Only | + 1 | Family | |||||||||
Band 1 |
||||||||||||
Band 2 |
||||||||||||
Band 3 |
||||||||||||
Band 4 |
||||||||||||
Band 5 |
||||||||||||
EPO
| Rating | Employee | Employee | ||||||||||
| Band | Only | + 1 | Family | |||||||||
Band 1 |
||||||||||||
Band 2 |
||||||||||||
Band 3 |
||||||||||||
Band 4 |
||||||||||||
Band 5 |
||||||||||||
HDHP
| Rating | Employee | Employee | ||||||||||
| Band | Only | + 1 | Family | |||||||||
Band 1 |
||||||||||||
Band 2 |
||||||||||||
Band 3 |
||||||||||||
Band 4 |
||||||||||||
Band 5 |
||||||||||||
7
Dental Premium
MetLife Dental
| EE | EE+1 | Family | ||||||||||
| $ | 35 | $ | 73 | $ | 104 | |||||||
FSA Pricing
| New | ASO | Total ASO | ||||||||||||||
| Coloc | Participating Location | Company | PartCount | Fee | per Month | |||||||||||
203010 |
FTC-HQ | Xylem | 35 | |||||||||||||
371010 |
Heat Transfer | Xylem | 28 | |||||||||||||
371030 |
Bell & Gossett Division | Xylem | 67 | |||||||||||||
371070 |
RCW | Xylem | 16 | |||||||||||||
375010 |
AC Custom Pump | Xylem | 18 | |||||||||||||
503010 |
Rule Industries | Xylem | 13 | |||||||||||||
504010 |
Sanitaire (WPCC) | Xylem | 30 | |||||||||||||
512001 |
Flo - Jet | Xylem | 8 | |||||||||||||
515010 |
Motion and Flow Controls HQ | Xylem | 1 | |||||||||||||
549010 |
Flowtronex | Xylem | 33 | |||||||||||||
583010 |
WEDECO | Xylem | 16 | |||||||||||||
584010 |
Water Technology, Inc. | Xylem | 70 | |||||||||||||
584020 |
Texas Turbine Operations-Lubbock | Xylem | 30 | |||||||||||||
600010 |
Leopold Salary | Xylem | 41 | |||||||||||||
683003 |
Flygt-lndiana | Xylem | 2 | |||||||||||||
683010 |
FlygtCorp. | Xylem | 105 | |||||||||||||
683020 |
Flygt Florida | Xylem | 10 | |||||||||||||
786010 |
Laing | Xylem | 1 | |||||||||||||
808010 |
Nova Analytics | Xylem | 3 | |||||||||||||
809010 |
Global Water Instruments | Xylem | 1 | |||||||||||||
Additional Pricing
Hourly Rates
Hourly Rates for Services not specified or normally provided by Service Provider in the twelve (12)
month period prior to the Distribute Date but otherwise provided by Service Provider employees
(including but not limited to modification, consulting, exit strategy development,
transition, etc.) are documented below. The employee category is defined by Service Provider. The
rates documented below apply to Service Provider employees only, should external
8
resources be
required, the costs for those external resources will be reviewed with the Service Recipient prior
to execution of the project.
Notwithstanding anything in the Agreement to the contrary, the following rates shall not be subject
to (a) the 4.5% increase for inflation in 2012 described in Section 2(a)(3) (but such rates shall
be subject to such increase in 2013) or (b) the 2% or 10% increases described in the proviso to
Section 2(a)(i) of the Agreement.
| General Category of Employee | Hourly Rate | |||
1. Secretarial/Administrative |
$ | 50.00 | ||
2. Non-Executive |
$ | 100.00 | ||
3. Executive |
$ | 150.00 | ||
Headcount True-Up
Service Provider shall conduct a “headcount” true-up by March 31, 2012 (the “Headcount True-Up”),
based on actual enrollment during the period beginning on the day after the Distribution Date and
ending on December 31, 2011. The Headcount True-Up will be based on reviewing the actual monthly
Infinium enrollment by Plan and coverage tier, by unit, but, for the avoidance of doubt, no true-up
of actual Claims will be conducted. The Service Provider shall promptly provide the results of the
Headcount True-Up to Service Recipient together with any supporting data reasonably requested by
Service Recipient. Within ten (10) Business Days after the parties reach agreement on the amount of
the Headcount True-Up, the appropriate party shall pay to the other the amount so due.
IBNR Reconciliation
| • | Reconciliation for Incurred But Not Reported (“IBNR”) Claims |
| o | The premiums collected from Service Recipient hereunder will be credited to Service Provider’s active medical ledger. | ||
| o | The amount that Service Provider should hold in reserve to cover payment for all IBNR Claims incurred for the 2011 Plan Year shall be calculated in accordance with the following procedures: |
| • | This calculation will be made by June 30, 2012 using the same methods, assumptions, processes, etc. as used during the 12-month period prior to the Distribution Date to calculate the IBNR Claim reserve remaining to pay Claims incurred before January 1, 2012, but paid after June 30, 2012. | ||
| • | Service Provider and Service Recipient will engage Towers Watson, or such other person as the parties may agree to engage (the “Calculation Agent”), to calculate the target level of the IBNR claim reserve, whose determination shall be binding and conclusive on the Service Provider and Service Recipient. |
9
| • | The IBNR Claim reserve will have its final reconciliation calculated the Calculation Agent by June 30, 2012. |
| o | If the amount held for the IBNR Claim reserve is greater than the target level of the IBNR Claim reserve, as determined herein, within ten (10) Business Days of Service Provider being notified of such determination by the Calculation Agent, Service Provider shall pay its proportionate amount to Service Recipient (based upon Service Recipient’s number of Covered Employees (as of December 31, 2011) in relation to the total number of Covered Employees (for all of the Parties to the Agreement) in the IBNR Claim reserve pool (as of December 31, 2011) (the “Proportionate Amount”)), required, when included with the Proportionate Amounts to be paid to the other Parties to the Agreement, required to bring the amount held for the IBNR Claim reserve to its targeted level, as determined by the Calculation Agent. | ||
| o | If the amount held for the IBNR Claim reserve is less than the target level of the IBNR claim reserve, as determined herein, within ten (10) Business Days of Service Recipient being notified of such determination by the Calculation Agent and its Proportionate Amount by the Service Provider, Service Recipient shall pay its Proportionate Amount to Service Provider, required, when included with the Proportionate Amounts to be paid by the other Parties to the Agreement, necessary to bring the amount held for the IBNR Claim reserve to its targeted level, as determined by the Calculation Agent. |
10
Attachment A
(Monthly self bill example)
| Unit | Value Center | Grand Total | ||
FTC-HQ
|
HQ | |||
Motion and Flow Controls HQ
|
HQ | |||
ITT Heat Transfer
|
RCW | |||
ITT Bell & Gossett Division
|
RCW | |||
Rule Industries
|
Flow Controls | |||
Sanitaire (WPCC)
|
WWW | |||
AC Custom Pump
|
IP | |||
Flo-Jet
|
Flow Controls | |||
Sanitaire — Royce
|
WWW | |||
Sanitaire WET
|
RCW | |||
Flowtronex
|
RCW | |||
RCW
|
RCW | |||
ITT Water Technology, Inc.
|
RCW | |||
Texas Turbine Operations-Lubbock
|
RCW | |||
Flygt Florida
|
WWW | |||
Leopold Salary
|
WWW | |||
WEDECO
|
WWW | |||
ITT Flygt Corp.
|
WWW | |||
Flygt-Indiana
|
WWW | |||
Laing
|
RCW | |||
Nova Analytics
|
ITT Analytics | |||
Global Water Instruments
|
ITT Analytics | |||
Bellingham and Stanley
|
ITT Analytics | |||
Aanderaa Data Instruments
|
ITT Analytics |
11
Attachment B
May 20, 2011
Ms. Deb Macchia
Manager, Benefits Planning and Communication
ITT Corporation
1133 Westchester Avenue
White Plains, NY 10604
Manager, Benefits Planning and Communication
ITT Corporation
1133 Westchester Avenue
White Plains, NY 10604
RE: Trivestiture of ITT Corporation
Dear Ms. Macchia:
As yon know, SHPS Human Resource Solutions, Inc. (“Company”) currently provides ITT Corporation
(“Client”) spending account administration (“SAM”) and COBRA services (collectively “Services”)
pursuant to a Service Agreement dated January 1, 2008 (“the Service Agreement”). This letter
acknowledges the intent of Client to separate into three different entities; namely, Defense Co.
(“Defense”), ITT Co. (“ITT”) and Water Co. (“Water”). As part of this restructuring, you have
requested we perform certain implementation services in order to set up ITT and Water as separate
entities. It is the intent of the parties that Defense will assume the Service Agreement and that
ITT and Water will enter into a transition services agreement with Defense through December 31,
2011. Existing services provided by the Company to Defense, ITT and Water will continue through
December 31, 2011. Effective January 1, 2012, ITT and Water will enter into separate agreements
with the Company. The Company agrees to (i) continue performing ongoing Service and (ii) provide
implementation services, pursuant to terms and conditions of the Service Agreement and the
following:
1. Services
|
Beginning on or about June 1, 2011, Company will begin implementation services to set up ITT and Water. Company will continue providing ongoing Services to the Client, including Defense, ITT and Water populations, until the Separation Date. | |
2. Termination Fee
|
Company agrees to defer implementation Fees in an amount of . Of this amount, shall be with respect to ITT ( for COBRA and for FSA, respectively) and shall be with respect to Water ( for COBRA and for FSA, respectively) (the “Deferred Implementation Fees”) over the period between January 1, 2012 and December 31, 2012, which will be included in the new agreements. In the event the Service Agreement is terminated for any reason prior to the expiration the Separation Date the Client shall pay Company the Deferred Implementation Fees in accordance with the payment terms set forth in the Service Agreement. |
If the foregoing correctly sets forth the understanding of the parties, please acknowledge
your acceptance of this Agreement by signing both copies of this letter at the place provided below
and return one to my attention.
12
If you have any questions or concerns, please do not
hesitate to call.
Very truly yours,
Mike Ciarroccki, Client Relationship Executive
SHPS Human Resource Solutions, Inc.
SHPS Human Resource Solutions, Inc.
| ACCEPTED by: ITT Corporation | ||||
| Deborah R. Macchia | ||||
Name: |
Deborah R. Macchia | |||
Title: |
Manager, Benefits Planning & Communications | |||
Date: |
8/23/11 | |||
SCHEDULE AB5
XYLEM RETIREE MEDICAL AND
FINANCIAL SHARED SERVICES (FSS)
ACTIVE MEDICAL AND DENTAL
ADMINISTRATION
XYLEM RETIREE MEDICAL AND
FINANCIAL SHARED SERVICES (FSS)
ACTIVE MEDICAL AND DENTAL
ADMINISTRATION
Capitalized terms used herein and not otherwise defined shall have the meaning assigned such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters and general inquiries regarding this Service should be directed to:
| Name | Title | Phone | ||||
| Service Provider’s Contact |
||||||
| ITT Corporation Conrad Arnold |
Director Human Resources |
(315) 568-7280 | Conrad.arnold@itt.com | |||
| Service Recipient’s Contact |
||||||
| Xylem Inc. Dawn DeRue |
Human Resources Mgr. | (315) 258-4830 | Dawn.derue@Xyleminc.com |
PARTIES TO THE AGREEMENT
Service Provider: ITT Corporation— Seneca Falls, NY (IP)
Service Recipient: Xylem Inc. — Auburn, NY and ITT Water Technologies, Inc. — Seneca
Falls, NY (Financial Shared Services)) (collectively, “Service Recipients”)
TERM
Services provided hereunder shall terminate June 30, 2012; provided that for the
avoidance of doubt the coverages provided hereunder and described below only apply to
Claims (as defined herein) made by Service Recipient’s Covered Employees (as defined
herein) and incurred on or before December 31, 2011.
1
GENERAL SERVICE DESCRIPTION
Service Provider currently provides
administration for the Financial Shared Services and ITT
Water Technology, Inc. active medical through Excellus Blue Cross\Blue Shield BluePoint2 E Plan,
Group and active Dental through Excellus Dental plan,
Group
and Retiree medical (pre 65 MVP), Group (collectively, the
“Benefit Plans”) for Service Recipients’ employees covered under such Benefit Plans (such
employees, the “Covered Employees”). Service Provider shall keep the Benefit Plans and all coverage
thereunder in full force through December 31, 2011 for Service Recipient’s Covered Employees. Each
Service Recipient may add or remove Covered Employees to or from coverage under the Benefit Plans
as outlined under the terms of the Benefit Plans. All claims of Service Recipient’s Covered
Employees made under the Benefit Plans (the “Claims”) and incurred on or prior to December 31, 2011
the (“2011 Plan Year”) will be adjudicated in accordance with the current contract and Service
Provider will continue to take such actions on behalf of Service Recipients’ Covered Employees as
if such employees are employees of Service Provider.
All Claims of Service Recipients’ Covered Employees made under the Benefit Plans will be paid on
behalf of the Service Provider.
Service Recipients will pay Service Provider for coverage based on 2011 budget premium rates
previously set for the calendar year 2011 and described in the “Pricing” section below. Service
Recipients will pay Service Provider monthly premium payments for this service, for any full or
partial months, based on actual enrollment for the months covered post-spin using enrollments as of
the first (1st) calendar day of the month, commencing on the day after the Distribution
Date.
The Service Recipients will be required to pay the Service Provider the monthly premium payments
within ten (10) Business Days after the beginning of each calendar month. A detailed listing of
Service Recipient’s employees covered, including the Plans and enrollment tier in which they are
enrolled, will be made available to Service Provider upon its reasonable request.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement,
Service Provider shall provide to Service Recipient the services identified below or described
above (collectively, the “Services”).
| • | Monthly premium billing. | ||
| • | Monthly administrative services billing (for administrative services billed on an hourly basis. See Additional Pricing section for Hourly Rates). |
See General Service Description for a description of payments and billing hereunder
The following services listed below will be provided by “experts”, who are employees of Service
Provider, (the “Experts”) with the following persons the initial Experts: Cindy Jansen, Porzia
Quinn and Conrad Arnold.
2
| • | Administration as needed on daily basis for the Benefit Plans. The Service Provider will provide all services that were provided during the twelve (12) months prior to the Distribution Date. The Service Provider will maintain the same level of service provided during the twelve (12) months prior to the Distribution Date. |
| o | Answer any questions pertaining to medical coverage. | ||
| o | Assist in resolving any issues that may arise regarding, medical coverage, ex. Claims, Medicare questions, etc. | ||
| o | Add employees/dependents to the Medical coverage as needed. | ||
| o | Reconcile and pay premiums from Medical carriers pertaining to the Exelis employees. |
| • | Should the Service Recipient need services not provided during the twelve (12) months prior to the Distribution Date, the parties will negotiate in good faith to determine any additional cost involved in the services |
PREREQUISITES/DEPENDENCIES
The Experts remain employees of Service Provider. Service Recipients
acknowledge and agree that Service Provider has discretion to terminate the
Experts and the Experts have the ability to terminate their employment with
Service Provider. In the event the initially named Experts are no longer
employed by Service Provider, Service Provider’s then current benefit manager
(or such other person as has the skill and knowledge to so provide such
Services) will, at the request of the Service Recipients, provide such Service
as described herein.
The Service Recipients’ human resources department shall cooperate with the
Service Provider, including the Experts, in order for the Service Provider and
Experts to provide such Service under this Schedule.
BILLING LOCATION
Service Provider will provide ITT Water Technologies, Inc. and Xylem, Inc.
FSS each with separate invoices to their address set forth below. The bill
will cover all charges for services under this Schedule provided by Service
Provider to both Service Recipients and, to the extent reasonably feasible,
will be itemized between the two Service Recipients. The invoice will contain
the number of Covered Employees per tier per coverage. A detailed list of
Covered Employees and dependents covered will be provided by the Service
Provider upon reasonable request of the Service Recipient. All
administrative functions handled by the Service Provider
3
in the twelve (12)
month period prior to the Distribution Date are contained in the fee structure
set forth below. The Service Provider and Service Recipients agree to
negotiate in good faith for any additional services related to the Service
provided hereunder that are outside the normal course of business.
SERVICE LEVEL
The Service Provider, including the Experts, will provide the same service
level to the Service Recipients as it provides to its own Covered Employees.
NOTICE REQUIREMENTS
Official Notices and Bills under this Schedule should be sent to the following addresses (with
an email copy to the Service Owners set forth above):
If to the Service Provider:
ITT Corporation
240 Falls Street
Seneca Falls, NY 13148
Attention: Daryl Bowker and Conrad Arnold
Daryl.bowker@itt.com
ITT Corporation
240 Falls Street
Seneca Falls, NY 13148
Attention: Daryl Bowker and Conrad Arnold
Daryl.bowker@itt.com
If to the Service Receiver:
Xylem Inc.
2881 E. Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
Xylem Inc.
2881 E. Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
PRICING
In addition to the costs specifically set forth below, Service Recipients shall also pay all
routine business travel expenses relating to the Services. The Service Recipients shall pay the
Service Provider based on the number of Covered Employees as of the first (1st) calendar day of the
month. The Service Recipient will be required to pay the Service Provider the monthly premium
payments within ten (10) Business Days after the beginning of each calendar month. A detailed
listing of Service Recipient’s Covered Employees, including the Plans and enrollment tier in which
they are enrolled, will be made available to Service Provider upon its reasonable request.
See “General Service Description” for further detail on payment and billing for the monthly
premium payments. The below table are the rates the Service Provider shall charge.
4
| Coverage | Employee | |||
(Invoicing for medical/dental premiums
Only as noted below): |
||||
BluePoint POS (FSS) Active |
||||
Employee |
||||
Employee + 1 |
||||
Employee + Child(ren) |
||||
Family |
||||
Dental (FSS) Active |
||||
Employee |
||||
Employee + 1 |
||||
Family |
||||
MVP (Retirees Pre 65) |
||||
Employee |
||||
Employee + 1 |
||||
Family |
||||
Additional Pricing
Hourly Rates for Services not specified or normally provided by Service Provider in the twelve
(12) month period prior to the Distribute Date but otherwise provided by Service Provider employees
(including but not limited to modification, consulting, exit strategy development, transition,
etc.) are documented below. The employee category is defined by Service Provider. The rates
documented below apply to Service Provider employees only, should external resources be required,
the costs for those external resources will be reviewed with the Service Recipient prior to
execution of the project.
Notwithstanding anything in the Agreement to the contrary, the following rates shall not be subject
to (a) the 4.5% increase for inflation in 2012 described in Section 2(a)(3) (but such rates shall
be subject to such increase in 2013) or (b) the 2% or 10% increases described in the proviso to
Section 2(a)(i) of the Agreement.
| General Category of Employee | Hourly Rate | |||
1. Secretarial/Administrative |
$ | 50.00 | ||
2. Non-Executive |
$ | 100.00 | ||
3. Executive |
$ | 150.00 | ||
5
SCHEDULE AB6
EPICOR 9 AND MFG PRO
EPICOR 9 AND MFG PRO
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
| Service Provider | ||||||
| Kevin Loucks ITT Corporation |
Manager, Transition Management Office |
(315) 568-7770 | kevin.loucks@itt.com | |||
| Service Receiver | ||||||
| Eva Jakubowska Xylem Inc. |
RCW IT Director | (847) 513-2762 | eva.jakubowska@xyleminc.com |
GENERAL SERVICE DESCRIPTION
Service Provider will perform Epicor 9 and MFG Pro Application Support Services for the
Service Receiver.
Service Receiver and its Subsidiaries will utilize Service Provider’s resources based on the
functionality, processes, input and output screens and documents that support Service Provider’s
business and business processes in the twelve months prior to the Distribution Date.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement,
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
1
| Minimum | ||||||||||||
| BAU | Service | |||||||||||
| Service | Transaction | Period | Service | |||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Provide Epicor 9 Application support required to support Enterprise Resource Planning (ERP) services: | ||||||||||||
• Access to
Epicor 9 Application
— Service Provider
will provide access
to application for
authorized service
receiver users per
the security
guidelines outlined
in the Master
Services Agreement.
Service Provider
after receiving an
emailed Access
Request Form from the
Service Receiver,
will create new
application and
database users
pre-approved by
Service Recipient,
maintain application
and database
passwords, maintain
application and
database security to
meet security and
controls guidelines
identified in Master
Services Agreement,
as well as monitor
and restrict
unauthorized access
to source code and
data. Service
Provider will
maintain production
batch schedule,
production
Interfaces, execute
batch jobs, assess
impact of failed
batch jobs, and
adjust schedule to
account for batch job
failures and delays.
Service Provider will
execute web server
and application
server configuration
changes, monitor and
maintain application
administration. The
lead-time required
for these activities
is one day.
|
Three Requests per Month | |||||||||||
IT-Epicor9-01
|
Epicor 9 Application Support Services |
• Epicor 9
Application Support &
Maintenance —
Service Provider will
monitor incident
resolution requests,
and recommend and
implement incident
resolution per the
SLA outlined in the
Service Level section
of this agreement.
Service Provider will
identify and
communicate breaks in
application
discovered by
automated or
monitoring system,
develop solution and
approach to address
break in application,
and implement fixes
to resolve break in
application.
|
12 | Cost plus 2% - 10% per month | ||||||||
o The Service
Provider after
receiving an emailed
Epicor 9 Modification
Request Form from the
Service Receiver,
will create or modify
for the Service
Receiver Crystal
Reports, Business
Process Management
(BPM) procedures,
Business Activity
Queries (BAQ),
Dashboard, User
Defined fields, and
or propose and create
an alternate solution
as necessary. A
lead-time of 4 days
is required for these
Program Change
Requests.
|
40 Hours per Month | |||||||||||
o The Service
Provider after
receiving an emailed
request will provide
training and
consulting on process
and Epicor 9 modules,
to the Service
Receivers users, as
needed and requested.
|
Two sessions per year, for 8 hours per session | |||||||||||
2
| Minimum | ||||||||||||
| BAU | Service | |||||||||||
| Service | Transaction | Period | Service | |||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
• Epicor 9
Application Database
Support — Service
Provider on receipt
of an emailed Service
Request Form, will
trouble shoot
database related
incidents, maintain
database schema if
necessary, bounce
databases as
required, perform
data cleanup
activities as needed,
monitor and maintain,
and provide support
for all database
issues in test/dev
environments, archive
and truncate database
tables as required,
compact databases as
required, backup,
restore, compress,
and delete old log
files as needed, and
conduct scheduled
maintenance
activities.
|
Daily Backups are performed One Restore per week |
|||||||||||
o The Service
Provider, after
receiving an emailed
Service Request Form
from the Service
Receiver, will create
or modify the
following: Progress
SQL database
interfaces,
Electronic Invoice
process, SQL
Reporting, and
Application tuning.
The lead-time for
these services will
be three weeks.
|
2 Service Requests per Month | |||||||||||
• Access to
SICAF Electronic
Invoicing for Epicor
9 Application —
Service Provider will
provide access to
application for
authorized service
receiver users per
the security
guidelines outlined
in the Master
Services Agreement.
Service Provider
after receiving an
emailed Access
Request Form from the
Service Receiver,
will create new
application and
database users
pre-approved by
Service Recipient,
maintain application
and database
passwords, maintain
application and
database security to
meet security and
controls guidelines
identified in Master
Services Agreement,
as well as monitor
and restrict
unauthorized access
to source code and
data. Service
Provider will
maintain production
batch schedule,
execute batch jobs,
assess impact of
failed batch jobs,
and adjust schedule
to account for batch
job failures and
delays.
|
2 Service Requests per Month | |||||||||||
• SICAF
Electronic Invoicing
Application Support &
Maintenance —
Service Provider will
monitor incident
resolution requests,
and recommend and
implement incident
resolution per the
SLA outlined in the
Service Level section
of this agreement.
Service Provider will
identify and
communicate breaks in
application
discovered by
automated or
monitoring system.
The Service Provider
will utilize the
SICAF Vendor for all
activities to develop
solutions and
approach to address
break in application.
The SICAF Vendor will
implement fixes to
resolve break in
application. |
||||||||||||
3
| Minimum | ||||||||||||
| BAU | Service | |||||||||||
| Service | Transaction | Period | Service | |||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Provide MFG Pro Application support required to support Enterprise Resource Planning (ERP) services: | ||||||||||||
• Access to MFG
Pro Application —
Service Provider will
provide access to
application for
authorized service
receiver users per
the security
guidelines outlined
in the Master
Services Agreement.
Service Provider
after receiving an
emailed Access
Request Form from the
Service Receiver,
will create new
application and
database users
pre-approved by
Service Recipient,
maintain application
and database
passwords, maintain
application and
database security to
meet security and
controls guidelines
identified in Master
Services Agreement,
as well as monitor
and restrict
unauthorized access
to source code and
data. Service
Provider will
maintain production
batch schedule,
production
Interfaces, execute
batch jobs, assess
impact of failed
batch jobs, and
adjust schedule to
account for batch job
failures and delays.
Service Provider will
execute web server
and application
server configuration
changes, monitor and
maintain application
administration. The
lead-time required
for these activities
is one day.
|
One Request per Month | 3 | Cost plus 2% - 10% per month | |||||||||
IT-MFG Pro-01
|
MFG Pro Application Support Services |
• MFG Pro
Application Support &
Maintenance —
Service Provider will
monitor incident
resolution requests,
and recommend and
implement incident
resolution per the
SLA outlined in the
Service Level section
of this agreement.
Service Provider will
identify and
communicate breaks in
application
discovered by
automated or
monitoring system,
develop solution and
approach to address
break in application,
and implement fixes
to resolve break in
application. |
||||||||||
• MFG Pro
Application Database
Support — Service
Provider on receipt
of an emailed Service
Request Form, will
trouble shoot
database related
incidents, maintain
database schema if
necessary, bounce
databases as
required, perform
data cleanup
activities as needed,
monitor and maintain,
and provide support
for all database
issues in test/dev
environments, archive
and truncate database
tables as required,
compact databases as
required, backup,
restore, compress,
and delete old log
files as needed, and
conduct scheduled
maintenance
activities.
|
Daily Backups are performed One Restore per Month |
|||||||||||
Note: The costs incurred by the Service Provider from a 3rd Party necessary to
troubleshoot, maintain or resolve failures in the systems environment for Epicor 9 will be
allocated evenly between the Service Provider and Service Receiver as an additional charge. All of
the costs incurred by the Service Provider from a 3rd Party necessary to troubleshoot,
maintain or resolve failures in the systems environment for MFG Pro will be passed on to the
Service Receiver as an additional charge.
4
Service Volumes Greater Than or Less Than Observed Pre-Distribution Date
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 10% (such activity, including any such 10% deviation,
“Business as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will
accommodate Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities on a
time and materials basis with respect to the one-time set-up fees. The table below will then apply
following the completion of the one-time set-up activities
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume within
BAU [Note: BAU
already includes +/-
10% of
pre-distribution date
volumes]
|
No incremental one-time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady-State fee structure for requisite service as documented below | ||
Service Volume
greater or less than
BAU
|
Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service |
Ad-Hoc development/services or processing of reports consistent with what was provided prior
to the distribution date will be supported as part of this agreement. Service Provider will use
commercially reasonable efforts based on provider’s current abilities to accommodate regulatory or
legal ad-hoc requests. Ad-hoc requests which may need to be performed to assist Service Receiver
in meeting new legal obligations will be provided on a time and materials basis as described in the
Additional Pricing section of this agreement. Any changes to 3rd party relationships
which require interface modifications or re-writes are not included as part of the scope of this
agreement. Should the Service Receiver require such changes, Parties agree to negotiate in good
faith with regard to such modification. In the event modifications to the services provided are
required by law for only the Service Recipient and such modifications increase the cost for Service
Provider, Service Recipient that requires the modifications shall pay all the additional costs
including the costs for the other Service Recipients.
5
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
| Service Provider will make commercially reasonable efforts to assist Service Receiver in exiting of this agreement. These efforts include: | ||||||
IT-Epicor9-03
|
Epicor 9 and MFG Pro Application Migration | •
Support of
data extraction
requests from the
Service Receiver
•
Providing
Subject Matter
Expertise in helping
the Service Receiver
understand current
state data schema and
configuration
details
|
Time and Materials Based on Additional Pricing Section | |||
IT-Epicor9-04
|
Epicor 9 and MFG Pro Application Knowledge Transfer | Service Provider will
provide the following
knowledge transfer
services: •
Existing
non-sensitive
documentation
maintained by the
Service Provider will
be given to the
Service Receiver as
it relates to the
Epicor 9 and MFG Pro
Application and
related interfaces
|
Time and Materials Based on Additional Pricing Section |
Supplemental Services
For requests for supplemental services relating to Epicor 9 and MFG Pro by Service Receiver not
mentioned in this Schedule or not included within the costs documented in this agreement, Service
Receiver will provide a discreet project request and submit such request to Service Provider using
the formalized Change Request attached as Annex A for consideration by Service Provider.
Where notice is required a number of business days prior to some required action by Service
Provider, notice must be received by 12 noon Eastern Time to be counted as received during such
business day. Service Provider shall, within a commercially reasonable period, provide a price
quote to be commercially reasonable based on the current cost of the Services to Service Receiver
taking into account, such items as the specific time the request was made, service delivery
volumes, exit planning activities, and other activities Service Provider is currently engaged in at
the time of the request, but not later than 30 days after the request was made. If Service
Provider, in its sole discretion determines (i) such request would increase the ongoing operating
costs for Service Provider (as a service recipient) or any other service receiver or (ii) that it
is not capable of making such changes with its current staff during the time period requested
without interrupting the Services provided to itself or any other service receiver.
Service Provider need not provide a price quote or perform the services. Where a price quote is
provided, Service Provider shall provide the service requested upon acceptance of the price.
6
LOCATIONS
Services are initially provided from Tizayuca, Mexico, to sites in
Queteretaro and Mexico City, Mexico.
PREREQUISITES/DEPENDENCIES
| • | Service Receiver will maintain the applications and interfaces documented in Attachment A. | |
| • | Service Receiver will maintain the current data delivery methodologies (e.g., FTP drop site/email) ensuring they are accessible and reachable to the Service Provider for the period of this TSA. | |
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. | |
| • | Service Provider must keep the TSA Gateway active and accessible to the Service Receiver as needed for the period of this TSA. | |
| • | If Service Receiver provides inaccurate information to Service Provider, it will be the responsibility of the Service Receiver to rectify any problems and bear any costs incurred to rectify the issue. |
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the
following addresses (with an email copy to the Service Owners set forth above):
If to the Service Provider:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
If to the Service Receiver:
Xylem Inc.
2881 E. Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
Xylem Inc.
2881 E. Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
7
SERVICE LEVEL
Service Provider will classify incidents at its own discretion. Such classifications shall be
consistent with the priorities Service Provider set for itself as a recipient of services.
Support for Epicor 9 and MFG Pro will be provided Monday through Friday, 8:30am to 5:30pm Mexico
time. For emergencies Epicor 9 and MFG Pro support staff is available by contacting Manuel Moreno,
via his mobile phone .
All incidents will be handled and responded to as they have been during the 12 months prior to the
Distribution Date. In the event incidents cannot be resolved, Service Provider shall promptly
notify Service Receiver and work together to try and resolve such incidents.
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year. These
rates apply to internal Service Provider employees only, and should external resources be required,
the costs for those external resources will be reviewed with the Service Receiver prior to
execution of the project.
Additional Pricing Rates (All in USD)
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
8
ATTACHMENT A
| Source | Destination | |||||
| Interface Name | Business Purpose | System | System | |||
Sales Orders
|
Service Provider’s
Epicor 9
application will
create 2 flat
files, one
containing Sales
Order header and
one with Sales
Order detail
information. This interface is executed from a daily Batch schedule, and runs at 3am Daily. The flat files are transmitted with FTP to a Service Receiver’s FTP site. |
Epicor 9 | Service Receiver | |||
Invoicing
|
Service Provider’s
Epicor 9
application will
generate 2 flat
files, one
containing Invoice
header and one with
Invoice detail
information. This interface is executed from a daily Batch schedule, and runs at 3am Daily. The flat files are transmitted with FTP to a Service Receiver’s FTP site. |
Epicor 9 | Service Receiver |
9
Annex A
TSA Change Request Form
TSA Change Request Form
TSA Schedule:
|
||
Receiver TSA Owner:
|
||
Date of Request: |
||
Completed By: |
Requested Service Change:
| Already agreed | ||||||||
| Item | Service Description | Monthly | to with Service | |||||
| Number | (Listed on schedule in the TSA) | Charge | Requested Change | Provider (Y/N) | ||||
1
|
||||||||
2 |
||||||||
3 |
||||||||
4 |
||||||||
5 |
Outcome:
| Item | Outcome | |||
| Number | (Approved, Denied) | Specific Action to be taken | ||
1 |
||||
2
|
||||
3 |
||||
4 |
||||
5 |
Approvals
Approved By:
|
Approved By: | |
Provider TSA Functional Lead
|
Receiver TSA Functional Lead | |
Executive Representative:
|
Executive Representative: | |
Provider TSA Manager
|
Receiver TSA Manager |
10
Schedule AB7
ePrism
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
| Service Provider | ||||||
| Vassilis Gerardos ITT Corporation |
Knowledge Management Supervisor, Athens Group |
+302106770805 | vasilis.gerardos@itt.com | |||
| Service Receiver Doug Olson Xylem Inc. |
eBusiness Manager ITT Residential & Commercial Water |
(847) 983-5747 | doug.olson@xyleminc.com |
GENERAL SERVICE DESCRIPTION
Service Provider will perform ePrism Application Support Services for the Service Receiver.
Service Receiver and its Subsidiaries will utilize Service Provider’s resources based on the
functionality, processes, input and output screens and documents that support Service Provider’s
business and business processes in the twelve months prior to the Distribution Date.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement,
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
1
| Minimum | ||||||||||
| BAU | Service | |||||||||
| Service | Service | Transaction | Period | Service | ||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||
| Provide ePrism
Application support
services required to
support Integrated
Sales and
Manufacturing,
including a WEB based
Sales and
Manufacturing
configuration
capability set of
services: • ePrism
Knowledge Engineering
— Service Provider,
after receiving a
service request from
the Service Receiver,
will update the
appropriate
information within
ePrism. • ePrism Data
and Curve Management
— Service Provider,
after receiving a
service request,
validated data, and
specifications will
maintain the
information within
ePrism.
|
350 Knowledge Engineer Hours per Month |
|||||||||
IT-ePrism-01
|
ePrism Application Support Services |
• ePrism
Application Support &
Maintenance —
Service Provider will
provide System
Administration
services to the
Service Receiver’s
ePrism application.
Service Provider will
provide Break/Fix
support and monitor
incident resolution
requests, and
recommend and
implement incident
resolution per the
Service Level
Agreement (SLA)
outlined in the
Service Level section
of this agreement.
Service Provider will
identify and
communicate breaks in
application
discovered by
automated or
monitoring system,
develop solution and
approach to address
break in application,
and implement fixes
to resolve break in
application.
|
24* | Cost plus 2% - 10% per month | ||||||
The Service Provider
will only provide
modifications to the
Service Receiver’s
ePrism code in the
following situations
for the redesign and
modification of
existing products, as
listed in Attachment
A. • The Service
Provider will perform
code changes to the
Service Receiver’s
ePrism code stream if
the Service Provider
determines it is
appropriate and
necessary to address
with Product Specific
Requests that have
been approved by the
Joint ePrism
Committee. The Service Provider
will deliver these
changes to the
Service Receiver in a
Quarterly release
cycle.
|
305 Programmer Hours per Month |
| * | Beyond the minimum service period this agreement can be extended for another 12 months on a month-to-month basis |
Service Volumes Greater Than or Less Than Observed Pre-Distribution Date
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 10% (such activity, including any such 10% deviation,
“Business as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will
accommodate Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities
2
on a time and materials basis with respect to the one-time set-up fees. The table below will then
apply following the completion of the one-time set-up activities
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume within
BAU [Note: BAU
already includes +/-
10% of
pre-distribution date
volumes]
|
No incremental one-time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady-State fee structure for requisite service as documented below | ||
Service Volume
greater or less than
BAU
|
Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service |
Ad-Hoc development/services or processing of reports consistent with what was provided prior
to the distribution date will be supported as part of this agreement. Service Provider will use
commercially reasonable efforts based on provider’s current abilities to accommodate regulatory or
legal ad-hoc requests. Ad-hoc requests which may need to be performed to assist Service Receiver
in meeting new legal obligations will be provided on a time and materials basis as described in the
Additional Pricing section of this agreement. Any changes to 3rd party relationships
which require interface modifications or re-writes are not included as part of the scope of this
agreement. Should the Service Receiver require such changes, Parties agree to negotiate in good
faith with regard to such modification. In the event modifications to the services provided are
required by law for only the Service Recipient and such modifications increase the cost for Service
Provider, Service Recipient that requires the modifications shall pay all the additional costs
including the costs for the other Service Recipients.
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
| Service Provider will make commercially reasonable efforts to assist Service Receiver in exiting of this agreement. These efforts include: | ||||||
IT-ePrism-02
|
ePrism Application Migration |
• Providing
Subject Matter
Expertise in helping
the Service Receiver
understand current
state data schema and
configuration details
|
Time and Materials Based on Additional Pricing Section | |||
IT-ePrism-03
|
ePrism Application Data Migration |
Service Provider will provide data and rule extraction services in a common understandable format to assist the Service Receiver to migrate from the ePrism application. | No Charge |
3
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
| Service Provider will provide the following knowledge transfer services: | ||||||
IT-ePrism-04
|
ePrism Application Knowledge Transfer |
• Existing
non-sensitive
documentation
maintained by the
Service Provider will
be given to the
Service Receiver as
it relates to the
ePrism application
support services and
related interfaces
|
Time and Materials Based on Additional Pricing Section |
Supplemental Services
For requests for supplemental services relating to ePrism by Service Receiver not mentioned in this
Schedule or not included within the costs documented in this agreement, Service Receiver will
provide a discreet project request and submit such request to Service Provider using the formalized
Change Request attached as Annex A for consideration by Service Provider.
Where notice is required a number of business days prior to some required action by Service
Provider, notice must be received by 12 noon Eastern Time to be counted as received during such
business day. Service Provider shall, within a commercially reasonable period, provide a price
quote to be commercially reasonable based on the current cost of the Services to Service Receiver
taking into account, such items as the specific time the request was made, service delivery
volumes, exit planning activities, and other activities Service Provider is currently engaged in at
the time of the request, but not later than 30 days after the request was made. If Service
Provider, in its sole discretion determines (i) such request would increase the ongoing operating
costs for Service Provider (as a service recipient) or any other service receiver or (ii) that it
is not capable of making such changes with its current staff during the time period requested
without interrupting the Services provided to itself or any other service receiver. Service
Provider need not provide a price quote or perform the services. Where a price quote is provided,
Service Provider shall provide the service requested upon acceptance of the price.
LOCATIONS
Services are initially provided from Athens, Greece to global locations.
PREREQUISITES/DEPENDENCIES
| • | Service Receiver will maintain applications and interfaces required for the services documented in this agreement. | |
| • | If Service Receiver sends inaccurate data to Service Provider, it will be the responsibility of the Service Receiver to rectify any problems and bear any costs incurred to rectify the issue. |
4
| • | Service Receiver must provide access to secure VPN for the Service Provider’s staff, required at all times, for the period of this TSA. | |
| • | Service Receiver must implement the necessary hardware and have the appropriate support personnel in place. | |
| • | Service Provider must complete the in-process ePrism enhancements and projects as specified in Attachment B, prior to the Distribution Date, or as determined by the Joint ePrism Committee. | |
| • | Service Receiver, on termination of this TSA, must and will remove all versions of the ePrism executable code from the Service Receiver’s environment, located on online or offline storage. Service Receiver will provide appropriate notification upon removal completion to Service Provider. | |
| • | Service Provider, on termination of this TSA, must and will remove all versions and copies of the Service Receiver’s versions of the ePrism executable code, data and rule information, located online or offline storage. Service Provider will provide appropriate notification upon removal completion to the Service Receiver. | |
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. |
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the
following addresses (with an email copy to the Service Owners set forth above):
If to the Service Provider:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
If to the Service Receiver:
Xylem Inc.
2881 E. Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
Xylem Inc.
2881 E. Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
5
SERVICE LEVEL
Service Provider will classify incidents at its own discretion. Such classifications shall be
consistent with the priorities Service Provider set for itself as a recipient of services.
The Service Provider will provide support to the Service Receiver, 12 hours per day, 8:30 am to
8:30 pm Greece time, Monday through Friday except on Greek and U.S. holidays as appropriate.
In the event incidents cannot be resolved, Service Provider shall promptly notify Service Receiver
and work together to try and resolve such incidents.
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year. These
rates apply to internal Service Provider employees only, and should external resources be required,
the costs for those external resources will be reviewed with the Service Receiver prior to
execution of the project.
Additional Pricing Rates (All in USD)
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
6
ATTACHMENT A
List of Existing Products/Models to be supported:
| 1. | Building Services |
| a. | Waste Water Products |
| i. | Sump (clear water) | ||
| ii. | Effluent (screened, up to 3/4” solids) | ||
| iii. | Sewage (unscreened) | ||
| iv. | Grinder (Pressurized sewage — grinders and high head pumps) |
| b. | Water Supply |
| i. | Multistage | ||
| ii. | Pressure Booster Packages |
| 1. | AquaBoost | ||
| 2. | TechnoForce |
| 2. | Vertical Turbine Products |
| a. | All Vertical Turbine Products for Water and Industrial Applications |
7
ATTACHMENT B
This is the list of ePrism Enhancements and Projects that will be completed by October 3,
2011, unless specifically noted otherwise. The actual release schedule for these enhancements will
be determined by the joint ePrism steering committee:
| 1. | Add the VPO product line, change branding (WWW) | ||
| 2. | Match ESP-PLUS functionality for Cost Analysis and Life Cycle | ||
| 3. | Optimize the curve based on the RPM | ||
| 4. | ESP-DESIGN Plus vs. Goulds Selection Software in Lite Version (right top) | ||
| 5. | When the focus is on the text box users need to click on Next button twice. As it is set up right now there are actions that run based on the focus out that need to be run before we can continue. This change will be completed after October 3, 2011. | ||
| 6. | Add Help section under Lite with eBusiness Support contacts for technical issues | ||
| 7. | Disable the Compatibility Button when the item is not fully configured. For example, on Step 1 for Complete Package when you click on Compatibility it throws all kinds of errors | ||
| 8. | Run Compatibility automatically when switching between Basic Features and Worksheet or when clicking Create Documents | ||
| 9. | Vertical Layout Module. Create detail drawings / order documents for TTO. This change will be completed after October 3, 2011. | ||
| 10. | Show/Hide columns on Selection Results Grid based on user preferences and let them set the order in which the columns will show up. Just like in the full version | ||
| 11. | Link from ePrism to our 3D Models hosted by CDS. We should go directly to the specific model that we are working with in ePrism. This change will be completed after October 3, 2011. | ||
| 12. | Work out the process for new user registrations for Consulting Engineers on both sides B&G and Goulds. We first need to come up with the process and then utilize existing pages and adjust ePrism accordingly | ||
| 13. | TTO — Add SMVT, Pre-engineered Subs, Fire Pump with Panels. This change will be completed after October 3, 2011 as requirements have not be defined. | ||
| 14. | Easily changeable branding in Specs, descriptions, documents, etc. | ||
| 15. | Boosters — In the selection results allow the selections that meet CTO specifications even if the specific pump/size is not the best fit based on the criteria. We should be able to guide the user to pick the CTO pumps early in the selection process rather than after they’re done with selection/configuration and click compatibility. This change may not be possible, and the business requirements are not clear. | ||
| 16. | Match ESP-REP. Add Freight calculations and Profit Factor. This change will be completed after October 3, 2011. | ||
| 17. | Worksheet — If multiple items selected combine into one worksheet. Requirements need clarification, and may require extensive development. | ||
| 18. | Liquid Properties — Let them modify existing items and let them save as a new one. Similar to ESP-PLUS functionality |
8
Annex A
TSA Change Request Form
TSA Change Request Form
TSA Schedule:
|
||
Receiver TSA Owner: |
||
Date of Request: |
||
Completed By: |
Requested Service Change:
| Already agreed | ||||||||
| Item | Service Description | to with Service | ||||||
| Number | (Listed on schedule in the TSA) | Monthly Charge | Requested Change | Provider (Y/N) | ||||
| 1 | ||||||||
| 2 | ||||||||
| 3 | ||||||||
| 4 | ||||||||
| 5 |
Outcome:
| Item | Outcome | |||
| Number | (Approved, Denied) | Specific Action to be taken | ||
| 1 | ||||
| 2 | ||||
| 3 | ||||
| 4 | ||||
| 5 |
Approvals
Approved By:
|
Approved By: | |
Provider TSA Functional Lead
|
Receiver TSA Functional Lead | |
Executive Representative:
|
Executive Representative: | |
Provider TSA Manager
|
Receiver TSA Manager |
9
SCHEDULE AB8
ERP-LX & TANGO APPLICATION
INDIA
ERP-LX & TANGO APPLICATION
INDIA
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
Kevin Loucks
|
Manager, Transition | (315) 568-7770 | kevin.loucks@itt.com | |||
ITT Corporation
|
Management Office | |||||
Eva Jakubowska
|
RCW IT Director | (847) 983-5905 | eva.jakubowska@xyleminc.com | |||
Xylem Inc. |
GENERAL SERVICE DESCRIPTION
Service Provider will perform ERP-LX & Tango Application Support Services for Baroda, India
and Hong Kong for Service Receiver.
Service Receiver and its Subsidiaries will utilize Service Provider’s resources based on the
functionality, processes, input and output screens, and documents that support the Service
Provider’s business and business processes in the twelve months prior to the Distribution date.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement,
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
1
| Minimum | ||||||||||||
| BAU | Service | |||||||||||
| Service | Transaction | Period | Service | |||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| IT-ERP- LX & Tango India -01 | ERP-LX & Tango Application Support Services | Provide hosting and
ongoing application
support for ERP-LX
and Tango
(Sarbanes-Oxley
Auditing) for Baroda,
India and the Hong
Kong Trading Company:
|
38 ERP-LX named users | 3 | Cost plus 2% - 10% per month | |||||||
• Access to
ERP-LX & Tango
Applications —
Service Provider will
provide access to the
application for
authorized service
receiver users per
the security
guidelines outlined
in the Master
Services Agreement.
Service Provider will
create new
application and
database users
pre-approved by
Service Recipient,
maintain application
and database
passwords, maintain
application and
database security to
meet security and
controls guidelines
identified in Master
Services Agreement,
as well as monitor
and restrict
unauthorized access
to source code and
data. Service
Provider will
maintain production
batch schedule,
execute batch jobs,
assess impact of
failed batch jobs,
and adjust schedule
to account for batch
job failures and
delays. Service
Provider will execute
web server and
application server
configuration
changes; and monitor
and maintain
application
administration. |
||||||||||||
• ERP-LX &Tango
Support & Maintenance
— Service Provider
will monitor incident
resolution requests,
and recommend and
implement incident
resolution per the
SLA outlined in the
Service Level section
of this agreement.
Service Provider will
identify and
communicate breaks in
application
discovered by
automated or
monitoring system,
develop solution and
approach to address
break in application,
and implement fixes
to resolve break in
application. |
||||||||||||
• ERP-LX &
Tango Database
Support — Service
Provider will trouble
shoot database
related incidents,
maintain database
schema if necessary,
bounce databases as
required, perform
data cleanup
activities as needed,
monitor and provide
support for all
database issues in
test/dev
environments, archive
and truncate database
tables as required,
compact databases as
required, backup,
compress, and delete
old log files as
needed, and conduct
scheduled maintenance
activities. |
||||||||||||
• ERP-LX &
Tango Hosting
Services — Service
Provider will provide
hosting for ERP-LX
environment from
Seneca Falls Data
Center (SFDC). |
||||||||||||
2
Service Volumes Greater or Less Than Observed Pre-Distribution Date
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 10% (such activity, including any such 10% deviation,
“Business as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will
accommodate Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities on a
time and materials basis with respect to the one-time set-up fees. The table below will then apply
following the completion of the one-time set-up activities.
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume within
BAU [Note: BAU
already includes +/-
10% of
pre-distribution date
volumes]
|
No incremental one-time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady-State fee structure for requisite service as documented below | ||
Service Volume
greater or less than
BAU
|
Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service |
Ad-Hoc development/services or processing of reports consistent with what was provided prior
to the distribution date will be supported as part of this agreement. Service Provider will use
commercially reasonable efforts based on provider’s current abilities to accommodate regulatory or
legal ad-hoc requests. Ad-hoc requests which may need to be performed to assist Service Receiver
in meeting new legal obligations will be provided on a time and materials basis as described in the
Additional Pricing section of this agreement. Any changes to 3rd party relationships
which require interface modifications or re-writes are not included as part of the scope of this
agreement. Should the Service Receiver require such changes, Parties agree to negotiate in good
faith with regard to such modification. In the event modifications to the services provided are
required by law for only the Service Recipient and such modifications increase the cost for Service
Provider, Service Recipient that requires the modifications shall pay all the additional costs
including the costs for the other Service Recipients.
3
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
| Service Provider will make commercially reasonable efforts to assist Service Receiver in exiting of this agreement. These efforts include: | ||||||
• Support of
data extraction
requests from the
Service Receiver |
Time and Materials Based on Additional Pricing Section | |||||
IT-ERP- LX & Tango
India -02
|
ERP-LX & Tango Application Migration | • Providing
Subject Matter
Expertise in helping
the Service Receiver
understand current
state data schema and
configuration details
|
||||
| Service Provider will provide the following knowledge transfer services: | ||||||
IT-ERP- LX & Tango
India -03
|
ERP-LX & Tango Application Knowledge Transfer | • Existing
non-sensitive
documentation
maintained by the
Service Provider will
be given to the
Service Receiver as
it relates to the
ERP-LX and Tango
applications and
related interfaces |
Time and Materials Based on Additional Pricing Section |
Supplemental Services
For requests for supplemental services relating to ERP-LX & Tango Applications by Service Receiver
not mentioned in this Schedule or not included within the costs documented in this agreement,
Service Receiver will provide a discreet project request and submit such request to Service
Provider using the formalized Change Request attached as Annex A for consideration by Service
Provider.
Where notice is required a number of business days prior to some required action by Service
Provider, notice must be received by 12 noon Eastern Time to be counted as received during such
business day. Service Provider shall, within a commercially reasonable period, provide a price
quote to be commercially reasonable based on the current cost of the Services to Service Receiver
taking into account, such items as the specific time the request was made, service delivery
volumes, exit planning activities, and other activities Service Provider is currently engaged in at
the time of the request, but not later than 30 days after the request was made. If Service
Provider, in its sole discretion determines (i) such request would increase the ongoing operating
costs for Service Provider (as a service recipient) or any other service receiver or (ii) that it
is not capable of making such changes with its current staff during the time period requested
without interrupting the Services provided to itself or any other service receiver.
Service Provider need not provide a price quote or perform the services. Where a price quote is
provided, Service Provider shall provide the service requested upon acceptance of the price.
4
LOCATIONS
Services are initially provided from Seneca Falls, NY, USA to Baroda,
India and Hong Kong.
PREREQUISITES/DEPENDENCIES
| • | Service Receiver will maintain the applications and interfaces documented in Attachment A. | ||
| • | If Service Receiver provides inaccurate information to Service Provider, it will be the responsibility of the Service Receiver to rectify any problems and bear any costs incurred to rectify the issue. | ||
| • | Service Receiver must have eLogia System active and maintained for the duration this agreement is in effect. | ||
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. |
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the
following addresses (with an email copy to the Service Owners set forth above):
If to the
Service Provider:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
If to the Service Receiver:
Xylem Inc.
2881 E. Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
Xylem Inc.
2881 E. Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
5
SERVICE LEVEL
Service Provider will classify incidents at its own discretion. Such
classifications shall be consistent with the priorities Service Provider set
for itself as a recipient of services. Incidents classified using this
methodology will be triaged as documented in Attachment B.
In the event incidents cannot be resolved, Service Provider shall promptly
notify Service Receiver and work together to try and resolve such incidents.
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year. These
rates apply to internal Service Provider employees only, and should external resources be required,
the costs for those external resources will be reviewed with the Service Receiver prior to
execution of the project.
Additional Pricing Rates (All in USD)
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
6
ATTACHMENT A
| Interface | Program | |||||||||||
| Name | Name | Business Purpose | Owner | Source | Destination | Frequency | ||||||
eLogia
|
ORDZ761C | Perform product configuration | Water Co. | Wintel Emmaboda | iSeries Emmaboda | Continuous | ||||||
ePrism
|
ORD789 | Perform product configuration | ITT Co. | Wintel ITT Co. | iSeries Emmaboda | Continuous | ||||||
Supplier Portal
|
PUR500 | Issue Purchase Orders via a Portal | Water Co. | Wintel Emmaboda | iSeries Emmaboda | Continuous | ||||||
Supplier Portal
|
PUR500 | Issue Purchase Orders via a Portal | Water Co. | iSeries Emmaboda | Wintel Emmaboda | Continuous |
7
ATTACHMENT B
Production Support Break Fix Service Level Agreement
A Remedy help desk request must be entered for each incident. For Urgent incidents, a phone call
may also be initiated directly to the Service Provider’s Support Team. The primary support number
for North America is +1-219-405-9459 (available 24 hours/day) and the secondary support number is
+1-847-983-5862 (available 8:00 AM — 5:00 PM Eastern Time, Monday through Friday). All support
calls will be returned within 15 minutes.
| Severity | Description | Resolution | ||
Urgent
|
Service Receiver is unable to enter orders or ship product. No work around is available for the issue. | Service Provider will provide a work around or permanent solution within four (4) hours for 95% of these incidents. | ||
High
|
Service Receiver is able to enter orders and ship product, but in a degraded mode and productivity is seriously impacted. | Service Provider will provide a work around or permanent solution within two (2) working days for 95% of these incidents. | ||
Medium
|
Service Receiver is able to function normally with minor impact from problem. | Service Provider will provide a permanent solution within five (5) working days for 95% of these incidents. | ||
Low
|
Service Receiver is able to function normally. Issue is an inconvenience. | Service Provider will provide a permanent solution within 30 working days for 95% of these issues. |
8
Annex A
TSA Change Request Form
TSA Schedule:
Receiver TSA Owner:
Date of Request:
Completed By:
Requested Service Change:
| Already agreed | ||||||||||
| Item | Service Description | Monthly | to with Service | |||||||
| Number | (Listed on schedule in the TSA) | Charge | Requested Change | Provider (Y/N) | ||||||
| 1 | ||||||||||
| 2 | ||||||||||
| 3 | ||||||||||
| 4 | ||||||||||
| 5 | ||||||||||
Outcome:
| Item | Outcome | |||||
| Number | (Approved, Denied) | Specific Action to be taken | ||||
| 1 | ||||||
| 2 | ||||||
| 3 | ||||||
| 4 | ||||||
| 5 | ||||||
Approvals
| Approved By: | Approved By: | |
Provider TSA Functional Lead
|
Receiver TSA Functional Lead | |
Executive Representative:
|
Executive Representative: | |
Provider TSA Manager
|
Receiver TSA Manager |
9
SCHEDULE AB9
MyITT.COM APPLICATION
MyITT.COM APPLICATION
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
| Ken Gill ITT Corporation |
Manager , Web, Social
Media & Collaboration Solutions |
(315) 568-7861 | ken.gill@itt.com | |||
| Beth Davidovich Xylem Inc. |
Director, Corporate IT & Collaboration COE |
(914) 323-5975 | beth.davidovich@xyleminc.com |
GENERAL SERVICE DESCRIPTION
Service Provider will perform myITT.com Portal Application Support Services for Service
Receiver.
Service Receiver and its Subsidiaries will utilize the Service Provider’s resources based on the
functionality, processes, input and output screens and documents that support the Service
Provider’s business and business processes in the twelve months prior to the Distribution date.
The Service Receiver may request changes or enhancements to such systems and the Service Provider
shall implement those changes provided (i) such changes or enhancements do not materially and
negatively impact the Service Provider (acting as a service recipient) or any other service
receiver, (ii) Service Receiver agrees to pay for such changes or enhancements in accordance with
the pricing schedule below, (iii) such changes do not increase the ongoing operating costs for the
Service Provider (as a service recipient) or any other service receiver and (iv) Service Provider,
in its discretion, deems that it is capable of making such changes with its current staff during
the time period requested without interrupting the Services provided to itself or any other service
receiver. Notwithstanding the forgoing, Service Provider is required to make any changes required
by law.
1
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement, the
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
| Minimum | ||||||||||||
| Service | ||||||||||||
| Service | Transaction | Period | Service | |||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Provide hosting and ongoing myITT.com application support: | ||||||||||||
• Access to
myITT.com Application
- Service Provider
will use help desk
tickets from Service
Receiver and provide
access to myITT.com
application for an
unlimited number of
authorized Service
Receiver users per
the security
guidelines outlined
in the Master
Services Agreement.
One business day is
required to respond
to the ticket after
receiving the
request. |
||||||||||||
IT- myITT.com
Portal-01
|
myITT.com Maintenance Support Services | • myITT.com
Support & Maintenance
— Service Provider
will use help desk
tickets from Service
Receiver to support
closing the help
ticket within 1
business day of
request. Service
Provider will monitor
incident resolution
requests, and
recommend and
implement incident
resolution per the
SLA outlined in the
Service Level section
of this agreement.
Service Provider will
identify and
communicate breaks in
application
discovered by
automated or
monitoring system,
develop solution and
approach to address
break in application,
and implement fixes
to resolve break in
application.
|
40calls/ month | 3 | Cost plus 2% - 10% per month | |||||||
Services that will not be provided as part of this agreement are:
| • | Creating new sites (on myITT.com) |
| • | Updating functionality in existing sites |
| • | Updating functionality or providing support on sites migrated to Connect beyond initial functionally ported over from myITT.com |
Service Volumes Greater or Less Than Observed Pre-Distribution Date
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 10% (such activity, including any such 10% deviation,
“Business as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will
accommodate Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities
2
on a time and materials basis with respect to the one-time set-up fees. The table below will then
apply following the completion of the one-time set-up activities.
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume within
BAU [Note: BAU
already includes +/-
10% of
pre-distribution date
volumes]
|
No incremental one-time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady-State fee structure for requisite service as documented in this agreement | ||
Service Volume
greater or less than
BAU
|
Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service |
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
| Service Provider will make commercially reasonable efforts to assist Service Receiver in exiting of this agreement. These efforts include: | ||||||
• Support of
data extraction
requests from the
Service Receiver or
third parties
authorized to act on
behalf of the Service
Receiver |
||||||
• Providing
Subject Matter
Expertise in helping
the Service Receiver
understand current
state business
processes, functional
data mapping, and
impacts of design
decisions |
Time and Materials Based on Additional Pricing Section | |||||
IT- myITT.com
Portal-02
|
myITT.com Migration | • Service
Provider will support
Service Receiver or
third parties
authorized to act on
behalf of Service
Receiver in project
managing the
myITT.com site
migration |
||||
| Service Provider will
provide the following
knowledge transfer
services: |
||||||
IT- myITT.com
Portal-03
|
myITT.com Knowledge Transfer | • Existing
non-sensitive
documentation
maintained by the
Service Provider will
be given to the
Service Receiver as
it relates to myITT
services
|
Time and Materials Based on Additional Pricing Section |
3
Supplemental Services
For requests for supplemental services relating to myITT Applications by Service Receiver not
mentioned in this Schedule or not included within the costs documented in this agreement, Service
Receiver will provide a discreet project request and submit such request to Service Provider using
the formalized Change Request attached as Annex A for consideration by Service Provider.
Where notice is required a number of business days prior to some required action by Service
Provider, notice must be received by 12 noon Eastern Time to be counted as received during such
business day. Service Provider shall, within a commercially reasonable period, provide a price
quote to be commercially reasonable based on the current cost of the Services to Service Receiver
taking into account, such items as the specific time the request was made, service delivery
volumes, exit planning activities, and other activities Service Provider is currently engaged in at
the time of the request, but not later than 30 days after the request was made. If Service
Provider, in its sole discretion determines (i) such request would increase the ongoing operating
costs for Service Provider (as a service recipient) or any other service receiver or (ii) that it
is not capable of making such changes with its current staff during the time period requested
without interrupting the Services provided to itself or any other service receiver. Service
Provider need not provide a price quote or perform the services. Where a price quote is provided,
Service Provider shall provide the service requested upon acceptance of the price.
LOCATIONS
Services are initially provided from Seneca Falls, NY, USA and White
Plains, NY, USA and by on-shore and off-shore consultants to global
participants.
PREREQUISITES/DEPENDENCIES
| • | Service Receiver will maintain site, content and applications within the Oracle Webcenter Interaction Suite (formerly Plumtree) and interfaces to AD domains. | ||
| • | Service Receiver, in a separate independent agreement, must have project management, migration architect, developer etc. services active with Avanade for the period of time to complete the migration project. | ||
| • | Service Receiver will use its resources to support migration services for data clean up, testing and cleaning in a timely manner. | ||
| • | If Service Receiver sends inaccurate data to Service Provider it will be the responsibility of the Service Receiver to rectify any problems and bear any costs incurred to rectify the issue. |
4
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. |
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the
following addresses (with an email copy to the Service Owners set forth above):
If to the Service Provider:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
If to the Service Receiver:
Xylem Inc.
2881 E. Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
Xylem Inc.
2881 E. Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
SERVICE LEVEL
Service Provider will classify incidents at its own discretion. Such
classifications shall be consistent with the priorities Service Provider set
for itself as a recipient of services. Incidents classified using this
methodology will be triaged as documented in Attachment A.
In the event incidents cannot be resolve in the time outlined in Attachment A,
Service Provider shall promptly notify Service Receiver and work together to
try and resolve such incidents.
ADDITIONAL PRICING
In addition to the costs specifically set forth above, Service Receiver shall also pay
commercially reasonable business travel expenses relating to the Services.
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including but
not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
5
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year. These
rates apply to internal Service Provider employees only, and should external resources be required,
the costs for those external resources will be reviewed with the Service Receiver prior to
execution of the project.
Additional Pricing Rates (All in USD)
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
6
ATTACHMENT A
| Scenario | Response Time |
Description | ||
Non-Critical Remedy
ticket assignment on
Weekdays during Business
hours
|
3 Hrs. | Ticket will be picked-up or assigned to one of the team members within 3 hrs. | ||
Critical Remedy ticket
assignment on Weekdays
during Business hours
|
1 Hr. | Ticket will be picked-up or assigned to one of the team members within 1 hr. | ||
Non-Critical Remedy
ticket assignment on
Weekdays during
off-hours
|
Next Business Day | Ticket will be picked-up or assigned to one of the team members on Next Business Day | ||
Critical Remedy ticket
assignment on Weekdays
during off-hours
|
2 Hr. | Ticket will be picked-up or assigned to one of the team members within 2 hr. | ||
Non-Critical Remedy
ticket assignment on
Weekends and Holidays
|
Next Business Day | Ticket will be picked-up or assigned to one of the team members on Next Business Day | ||
Critical Remedy ticket
assignment on Weekends
and Holidays
|
2 Hr. | Ticket will be picked-up or assigned to one of the team members within 2 hr. |
| Note: | ||
| 1. | Business hours are 8:00 am — 5:00 pm ET | |
| 2. | Critical Incident — The portal is completely down or inaccessible | |
| 3. | Non-Critical Incident — All incidents which are not classified as critical as defined in this agreement | |
7
Annex A
TSA Change Request Form
TSA Schedule:
Receiver TSA Owner:
Date of Request:
Completed By:
Receiver TSA Owner:
Date of Request:
Completed By:
Requested Service Change:
| Already agreed | ||||||||||
| Item | Service Description | Monthly | to with Service | |||||||
| Number | (Listed on schedule in the TSA) | Charge | Requested Change | Provider (Y/N) | ||||||
| 1 | ||||||||||
| 2 | ||||||||||
| 3 | ||||||||||
| 4 | ||||||||||
| 5 | ||||||||||
Outcome:
| Item | Outcome | |||||
| Number | (Approved, Denied) | Specific Action to be taken | ||||
| 1 | ||||||
| 2 | ||||||
| 3 | ||||||
| 4 | ||||||
| 5 | ||||||
Approvals
| Approved By: | Approved By: | |
Provider TSA Functional Lead
|
Receiver TSA Functional Lead | |
Executive Representative:
|
Executive Representative: | |
Provider TSA Manager
|
Receiver TSA Manager |
8
SCHEDULE AB10
P2P DELIVERY ENVIRONMENT
P2P DELIVERY ENVIRONMENT
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
| Tom Restaino | Director, Information | (315) 568-7884 | tom.restaino@itt.com | |||
| ITT Corporation | Technology | |||||
| Financial Shared Services | ||||||
| Eva Jakubowska | RCW IT Director | (847) 513-2762 | eva.jakubowska@xyleminc.com | |||
| Xylem Inc. |
GENERAL SERVICE DESCRIPTION
Service Provider will perform Purchase-to-Pay (P2P) Delivery Environment Application Support
Services for the Service Receiver.
Service Receiver and its Subsidiaries will utilize Service Provider’s resources based on the
functionality, processes, input and output screens and documents that support Service Provider’s
business and business processes in the twelve months prior to the Distribution Date.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement,
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
1
| Minimum | ||||||||||||
| BAU | Service | |||||||||||
| Service | Transaction | Period | Service | |||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Provide application support services for P2P Delivery Environment, which consists of SAP, Vendor Portal, Taxware, OpenText, and Interface Infrastructure MQ and XI (MQ support is only on Provider’s MQ): | ||||||||||||
• Access to P2P Delivery
Environment — Service Provider
will provide access to applications
through user request form(s)
submitted by Service Receiver via
Service Provider P2P Help Desk
tickets for authorized service
receiver users. Service Provider
will maintain and reset SAP user
passwords and application security
through Provider P2P Help Desk
requests. , Service Provider will
monitor and restrict unauthorized
access to source code and data.
User add/update/delete requests
will be completed within three (3)
business days of receipt of
complete, approved form.
|
Cost plus 2% - 10% per month for services and |
|||||||||||
IT-P2P-01
|
P2P Delivery Environment Application Support Services |
• P2P Delivery Environment
Support & Maintenance — Service
Provider will monitor incident
resolution requests; and recommend
and implement incident resolution.
Service Provider will identify and
communicate breaks in application,
develop solution to address break,
and implement fixes to resolve
break. Service Provide reserves
the right to charge time and
material for a Service Receiver
initiated break which requires
greater than 8 hours to resolve.
Service Provider will maintain
production batch schedule, assess
impact of failed batch jobs, and
adjust schedule to account for
batch job failures and delays.
Service Provider will execute web
server and application server
configuration changes; and monitor
and maintain application
administration. Service Provider
will provide SAP Basis support,
development support for the P2P
Delivery Environment, and
configuration management in support
of business as usual activities
(excludes enhancement requests by
Service Receiver). Requests for
support and maintenance will be
submitted and tracked via Service
Provider Help Desk ticket.
|
219 SAP Users 122,741 Invoice Postings per Year 64,008 New Purchase Orders Created per Year |
18 |
Cost plus 2% - 10%* per month
for Vendor Cost (*Includes 4.5% inflation for 2012 and 2013. Vendor Cost Charges cease after 18 months) |
|||||||
Service Provider will
publish scheduled down time which will
allow for normal maintenance of the
P2P environment including operating
system upgrades; database
maintenance, and other tasks
required in order to keep
environment running efficiently.
Ad-Hoc down time will be
communicated to Service Receiver
with 72 hours advance notice where
possible. |
||||||||||||
• P2P Delivery Environment
Testing Support — Support of Receiver
requested testing cycles are included in
services during the TSA with the
following exceptions to be treated as
supplemental services and charged via
Time and Materials Based on Additional
Pricing Section: |
||||||||||||
2
| Minimum | ||||||||||||
| BAU | Service | |||||||||||
| Service | Transaction | Period | Service | |||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
o Testing requiring
a client refresh more than twice
a year. |
||||||||||||
o Testing requiring
run and verification of a full month-end
close where Provider and Receiver aren’t
in consensus that the change has an impact to
month-end close. |
||||||||||||
• SAP Shared Services Application
Master Programs, Tables and Data
Maintenance — The Service Provider reserves
the right to be the sole owner
and administrator of Master Programs, Tables,
Data, and Application Security
and Access controls will as necessary get
joint approval from all Service
Receivers for those proposed changes
that will impact another Service
Receiver. |
||||||||||||
In addition, the Provider
will provide the following services: Complete
SAP Month End jobs and reports to support
postings (Vendor Banking Approvals). |
||||||||||||
Service Volumes Greater Than or Less Than Observed Pre-Distribution Date
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 3% (such activity, including any such 3% deviation, “Business
as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will accommodate
Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities on a time and
materials basis with respect to the one-time set-up fees. The table below will then apply
following the completion of the one-time set-up activities.
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume within
BAU [Note: BAU
already includes +/-
10% of
pre-distribution date
volumes]
|
No incremental one-time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady-State fee structure for requisite service as documented below | ||
Service Volume greater or less than BAU
|
Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service |
Ad-Hoc development/services or processing of reports consistent with what was provided prior
to the distribution date will be supported as part of this agreement. Service Provider will use
commercially reasonable efforts based on provider’s current abilities to accommodate regulatory or
legal ad-hoc requests. Ad-hoc requests which may need to be performed to assist Service Receiver
in meeting new legal obligations will be provided on a time and materials basis as described in the
Additional Pricing section of this agreement. Any changes to 3rd party relationships
which require interface modifications or re-writes are not included as part of the scope of this
agreement. Should the Service Receiver require such changes, Parties agree to
3
negotiate in good faith with regard to such modification. In the event modifications to the
services provided are required by law for only the Service Recipient and such modifications
increase the cost for Service Provider, Service Recipient that requires the modifications shall pay
all the additional costs including the costs for the other Service Recipients.
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
| Service Provider will make commercially reasonable efforts to assist Service Receiver in exiting of this agreement. These efforts include: | ||||||
IT-P2P-02
|
P2P Delivery Environment Migration |
• Support
of data extraction
requests from the
Service Receiver
|
Time and Materials Based on Additional Pricing Section | |||
• Providing
Subject Matter
Expertise in helping
the Service Receiver
understand current
state data schema and
configuration
details |
||||||
| Service Provider will provide the following knowledge transfer services: | ||||||
IT-P2P-03
|
P2P Delivery Environment Knowledge Transfer |
• Existing
non-sensitive
documentation
maintained by the
Service Provider will
be given to the
Service Receiver as
it relates to the P2P
Delivery Environment
and related
interfaces
|
Time and Materials Based on Additional Pricing Section |
Supplemental Services
For requests for supplemental services relating to P2P Delivery Environment by Service Receiver not
mentioned in this Schedule or not included within the costs documented in this agreement, Service
Receiver will provide a discreet project request and submit such request to Service Provider using
the formalized Change Request attached as Annex A for consideration by Service Provider.
Where notice is required a number of business days prior to some required action by Service
Provider, notice must be received by 12 noon Eastern Time to be counted as received during such
business day. Service Provider shall, within a commercially reasonable period, provide a price
quote to be commercially reasonable based on the current cost of the Services to Service Receiver
taking into account, such items as the specific time the request was made, service delivery
volumes, exit planning activities, and other activities Service Provider is currently engaged in at
the time of the request, but not later than 30 days after the request was made. If Service
Provider, in its sole discretion determines (i) such request would increase the ongoing operating
costs for Service Provider (as a service recipient) or any other service receiver or (ii) that it
is not capable of making such changes with its current staff during the time period requested
without interrupting the Services provided to itself or any other service receiver.
4
Service Provider need not provide a price quote or perform the services. Where a price quote is
provided, Service Provider shall provide the service requested upon acceptance of the price.
LOCATIONS
Services are initially provided from Seneca Falls, NY, USA to other USA and Canada locations.
PREREQUISITES/DEPENDENCIES
| • | Service Receiver will maintain the interfaces documented in Attachment A. | |
| • | If Service Receiver, or the Service Receiver’s Supplier(s), provides inaccurate information to Service Provider, it will be the responsibility of the Service Receiver to rectify any problems and bear any costs incurred to rectify the issue. | |
| • | Service Receiver must have one of following the ERP systems active and maintained along with associated interfaces for the duration this agreement is in effect: Business Planning and Control System (BPCS), and PRMS. | |
| • | Service Receiver must have MQ Series active and maintained for the duration this agreement is in effect. | |
| • | Service Receiver must submit requests, into the Service Provider’s P2P Help Desk system. | |
| • | Service Receiver will support testing as required for changes implemented by Service Provider. | |
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. |
NOTICE REQUIREMENT
5
Official Notices and Bills under this Schedule should be sent to the following addresses (with
an email copy to the Service Owners set forth above):
If to the Service Provider:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
If to the Service Receiver:
Xylem Inc.
2881 E Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
Xylem Inc.
2881 E Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
SERVICE LEVEL
| Service Provider will classify incidents at its own discretion. Such classifications shall be consistent with the priorities Service Provider set for itself as a recipient of services. |
| The P2P Delivery Environment scheduled downtime will be Mondays and Tuesdays from 10:00 PM to 3:30 AM ET and Sundays from 1:00 AM to 8:00 AM ET. |
Service Provider P2P Help Desk support is available 8:00 AM — 5:00 PM ET Monday through Friday
except for holidays. Items are assessed for priority within one (1) hour of receipt. Barring
circumstances outside of Service Provider’s control, urgent priority items are addressed within one
(1) hour. High priority items will be responded to within one (1) business day and medium priority
within two (2) business days. Priority is assessed by the helpdesk staff with direction from
Service Receiver.
In the event incidents cannot be resolved, Service Provider shall promptly notify Service Receiver
and work together to try and resolve such incidents.
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
6
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year. These
rates apply to internal Service Provider employees only, and should external resources be required,
the costs for those external resources will be reviewed with the Service Receiver prior to
execution of the project.
Additional Pricing Rates (All in USD)
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
7
ATTACHMENT A
| Interface Name | Business Purpose | Source | Destination | Frequency | ||||
| Central Vendor Master Maintenance | Service Provider | Service Receiver | Real-time | |||||
| Purchase Order add, change, delete | Service Receiver | Service Provider | Real-time | |||||
| Receipt posting and reversals | Service Receiver | Service Provider | Real-time | |||||
| Invoice posting and reversals | Service Provider | Service Receiver | Real-time | |||||
| Payment posting and reversals | Service Provider | Service Receiver | Real-time | |||||
| ME A/P trade reclass | Service Provider | Service Receiver | Month End | |||||
| ME Foreign Currency revaluation | Service Provider | Service Receiver | Month End | |||||
| ME Headquarter cash reclearing | Service Provider | Service Receiver | Month End | |||||
| MW Intercompany FX reclass | Service Provider | Service Receiver | Month End | |||||
| ME Intercompany Payables reclass | Service Provider | Service Receiver | Month End | |||||
| ME Uncleared Cash reclass | Service Provider | Service Receiver | Month End | |||||
| ME Small Difference balancing | Service Provider | Service Receiver | Month End | |||||
| ME Shared Service Fee — P2P | Service Provider | Service Receiver | Month End | |||||
| ME Shared Service Fee — eBuyITT | Service Provider | Service Receiver | Month End | |||||
| ME Sales & Use tax reclass (for self-assessed tax) | Service Provider | Service Receiver | Month End | |||||
| MW Vendor down payment | Service Provider | Service Receiver | Month End | |||||
8
Annex A
TSA Change Request Form
TSA Change Request Form
TSA Schedule:
|
||
Receiver TSA Owner:
|
||
Date of Request:
|
||
Completed By:
|
Requested Service Change:
| Already agreed | ||||||||
| Item | Service Description | Monthly | to with Service | |||||
| Number | (Listed on schedule in the TSA) | Charge | Requested Change | Provider (Y/N) | ||||
1
|
||||||||
2
|
||||||||
3
|
||||||||
4
|
||||||||
5
|
Outcome:
| Item | Outcome | |||
| Number | (Approved, Denied) | Specific Action to be taken | ||
1
|
||||
2
|
||||
3
|
||||
4
|
||||
5
|
Approvals
Approved By:
|
Approved By: | |
Provider TSA Functional Lead
|
Receiver TSA Functional Lead | |
Executive Representative:
|
Executive Representative: | |
Provider TSA Manager
|
Receiver TSA Manager |
9
SCHEDULE AB11
PRMS SHARED SERVICES AND ERP
APPLICATION SUPPORT
PRMS SHARED SERVICES AND ERP
APPLICATION SUPPORT
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
PRMS Shared Services |
||||||
Tom Restaino ITT Corporation |
Director, Information Technology Financial Shared Services |
(315) 568-7884 | tom.restaino@itt.com | |||
Shashank Patel Xylem Inc. |
RCW Controller | (847) 983-5856 | shashank.patel@xyleminc.com | |||
PRMS ERP Services |
||||||
Kevin Loucks ITT Corporation |
Manager, Transition Management Office |
(315) 568-7770 | kevin.loucks@itt.com | |||
Eva Jakubowska Xylem Inc. |
RCW IT Director | (847) 513-2762 | eva.jakubowska@xyleminc.com |
GENERAL SERVICE DESCRIPTION
Service Provider will provide PRMS Shared Services and ERP Application Support Services for Service
Receiver.
Service Receiver and its Subsidiaries will utilize Service Provider’s resources based on the
functionality, processes, input and output screens, and documents that support the Service
Provider’s business and business processes in the twelve months prior to the Distribution date.
1
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement,
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
| Minimum | ||||||||||||
| BAU | Service | |||||||||||
| Service | Transaction | Period | Service | |||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Provide PRMS Shared Services Application Support services e.g., Customer Master, Accounts Receivable (AR), General Ledger (GL), Cash Application, and Order Release: | ||||||||||||
IT-PRMS-01
|
PRMS Shared Services Application Support Services |
• Access to
PRMS Shared Services
Application —
Service Provider will
provide access to
application for
authorized Service
Receiver per the
security guidelines
outlined in the
Master Services
Agreement. Service
Provider will receive
the PRMS Shared
Services Application
User Access forms and
menu sets from
Service Receiver to
update menu sets and
user profiles;
Service Provider will
provide periodic SOX
access reports to
allow Service
Receiver to conduct
internal SOX user
access compliance
certifications.
Service Provider will
create new
application and
database users
pre-approved by
Service Recipient,
maintain application
and database
passwords, maintain
application and
database security to
meet security and
controls guidelines
identified in Master
Services Agreement,
as well as monitor
and restrict
unauthorized access
to source code and
data. Security
access will need a
five day lead time,
and the SOX access
reports will be
performed no more
than twice a year.
|
15 new or modified Users per Month |
Cost plus 2% - 10% per month for services and Cost plus 2% - 10%* per month for Vendor Cost |
||||||||
• Access to
PRMS Shared Services
AutoClear — Service
Provider will provide
access to application
for authorized
Service Receiver per
the security
guidelines outlined
in the Master
Services Agreement.
Service Provider will
use the PRMS Shared
Services AutoClear
user access forms and
menu sets from
Service Receiver to
update menu sets and
user profiles;
Service Provider will
provide periodic SOX
access reports to
allow Service
Receiver to conduct
internal SOX user
access compliance
certifications.
Service Provider will
create new
application and
database users
pre-approved by
Service Recipient,
maintain application
and database
passwords, maintain
application and
database security to
meet security and
controls guidelines
identified in Master
Services Agreement,
as well as monitor
and restrict
unauthorized access
to source code and
data. Security
access will need a
five day lead time,
and the SOX access
reports will be
performed no more
than twice a year.
|
18 | (*Includes 4.5% inflation for 2012 and 2013. Vendor Cost Charges cease after 18 months) | ||||||||||
2
| Minimum | ||||||||||||
| BAU | Service | |||||||||||
| Service | Transaction | Period | Service | |||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
• PRMS
Shared
Services Application
Support & Maintenance
— Service Provider
will monitor Help
Desk incident
resolution requests
from the Service
Receiver, and
recommend and
implement incident
resolution per the
SLA outlined in the
Service Level section
of this agreement.
Service Provider will
receive Help Desk
ticket from Service
Receiver to update
applications and
ensure regulatory and
security compliance.
Service Provider will
identify and
communicate breaks in
application
discovered by
automated or
monitoring system,
develop solution and
approach to address
break in application,
and implement fixes
to resolve break in
application. Service
Provider will
maintain production
batch schedule,
execute batch jobs,
assess impact of
failed batch jobs,
and adjust schedule
to account for batch
job failures and
delays. Service
Provider will execute
web server and
application server
configuration
changes, monitor and
maintain application
administration Robot
and CL programs. |
||||||||||||
• PRMS
Shared
Services Application
Master Programs,
Tables and Data
Maintenance — The
Service Provider
reserves the right to
be the sole owner and
modifier of PRMS
Master Programs,
Tables and Data. The
Service Provider on
receiving a Help Desk
Master Data change
ticket form from the
Service Receiver will
as necessary get
joint approval from
all Service Receivers
for those proposed
changes that will
impact another
Service Receiver, and
then maintain the
PRMS Master Programs,
Tables and Data
appropriately. |
||||||||||||
• PRMS
Shared
Services Database
Support — Service
Provider’s IT staff
and data center will
monitor incident
resolution requests,
and recommend and
implement incident
resolution per the
SLA outlined in the
Service Level section
of this agreement.
Service Provider will
identify and
communicate breaks in
application
discovered by
automated or
monitoring system,
develop solution and
approach to address
break in application,
and implement fixes
to resolve break in
application. |
||||||||||||
• PRMS Shared
Service Application
Capacity Management -
The Service Provider
will monitor the
environment and make
recommendations for
capacity changes to
the Service Receiver
as necessary. |
||||||||||||
IT-PRMS-02
|
PRMS ERP Application Support Services |
Provide PRMS ERP Support services e.g. Materials Resource Planning (MRP), Enterprise Resource Planning (ERP), Order Processing and Invoicing, Debit and Credit Memo, Inventory, Forecasting, Purchasing and Receiving, Costing and Shipping and Manufacturing Operations: | ||||||||||
• Access to PRMS ERP Application —
Service Provider will provide access to application
for
|
25 new or modified | 9 | Cost plus 2% - 10% per month |
3
| Minimum | ||||||||||||
| BAU | Service | |||||||||||
| Service | Transaction | Period | Service | |||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
authorized Service Receiver per the security
guidelines outlined in the Master Services
Agreement. Service Provider will use the PRMS Shared
Services Application user access forms and menu sets
from Service Receiver to update menu sets and user
profiles; Service Provider will provide periodic SOX
access reports to allow Service Receiver to conduct
internal SOX user access compliance certifications.
Service Provider will create new application and
database users pre-approved by Service Recipient,
maintain application and database passwords,
maintain application and database security to meet
security and controls guidelines identified in
Master Services Agreement, as well as monitor and
restrict unauthorized access to source code and
data. Security access will need a five day lead
time, and the SOX access reports will be performed
no more than twice a year. |
User per Month | |||||||||||
• PRMS ERP Support & Maintenance — Service
Provider will monitor Help Desk incident resolution
requests from the Service Receiver, and recommend
and implement incident resolution per the SLA
outlined in the Service Level section of this
agreement. Service Provider will address all things
other than Applications incidents, identify and
communicate breaks in application discovered by
automated or monitoring system, develop solution and
approach to address break in application, and
implement fixes to resolve break in application.
Service Provider will maintain production batch
schedule, execute batch jobs, notification of failed
batch jobs, and adjust schedule to account for batch
job failures and delays. Service Provider will
execute web server and application server
configuration changes, monitor and maintain
application administration Robot and CL programs. |
||||||||||||
o The Service Provider after receiving
Help Desk production control requests and tested objects from
the Service Receiver will move the tested objects
into the PRMS ERP production environment. Should
the object fail in the process of being moved into
production, the Service Provider will work with the
Service Receiver to triage and troubleshoot the
issues, and move the corrected objects into the PRMS
ERP production environment.
|
||||||||||||
• PRMS ERP Operating System and Database
Support — Service Provider will monitor
incident resolution requests, and recommend and
implement incident resolution per the SLA outlined
in the Service Level section of this agreement.
Service Provider will identify and communicate
breaks in OS
discovered by automated or monitoring system,
develop solution and approach to address break in
OS, and implement fixes to resolve break in OS. |
||||||||||||
4
The Service Provider on receiving Help Desk service
requests from the Service Receiver will perform the
following: |
||||||||||||
o Create, add files to and
Manage Journals |
||||||||||||
o Perform program and database backups |
||||||||||||
o Perform program and database restores |
||||||||||||
o Reorganize Files |
||||||||||||
o Create and add to Data Mirrors |
||||||||||||
• PRMS ERP Capacity Management -
The Service Provider will monitor the environment
and make recommendations for capacity changes to the
Service Receiver as necessary. |
Service Volumes Greater Than or Less Than Observed Pre-Distribution Date
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 10% (such activity, including any such 10% deviation,
“Business as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will
accommodate Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities on a
time and materials basis with respect to the one-time set-up fees. The table below will then apply
following the completion of the one-time set-up activities.
Service Provider will actively monitor CPU and storage utilization of AS400 based applications in
the Seneca Falls Data Center. Costs associated with increasing capacity of CPU and Storage within
the AS400 environment will be split and allocated to each AS400 based applications by the Service
Provider and an applicable portion of costs borne by the Service Receiver. Service Provider is
required to provide Service Receiver with 30 days prior notice in advance of any increases in costs
related to incremental allocation of CPU and storage costs.
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume within
BAU [Note: BAU
already includes +/-
10% of
pre-distribution date
volumes]
|
No incremental one-time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady-State fee structure for requisite service as documented below | ||
Service Volume greater or less than BAU |
Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service |
Ad-Hoc development/services or processing of reports consistent with what was provided prior
to the distribution date will be supported as part of this agreement. Service Provider will use
commercially reasonable efforts based on provider’s current abilities to accommodate regulatory or
legal ad-hoc requests. Ad-hoc requests which may need to be performed to assist Service Receiver
in meeting legal obligations will be provided on a time and materials basis as described in the
Additional Pricing section of this agreement. Any changes to 3rd party relationships which require
interface modifications or re-writes are not included as part of the scope of this
5
agreement. Should the Service Receiver require such changes, Parties agree to negotiate in good
faith with regard to such modification. In the event modifications to the services provided are
required by law for only the Service Recipient and such modifications increase the cost for Service
Provider, Service Recipient that requires the modifications shall pay all the additional costs
including the costs for the other Service Recipients.
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
| Service Provider will make commercially reasonable efforts to assist Service Receiver in exiting of this agreement. These efforts include: | ||||||
IT-PRMS-03
|
PRMS Application Migration |
• Support of
data extraction
requests from the
Service Receiver
|
Time and Materials Based on Additional Pricing Section | |||
• Providing
Subject Matter
Expertise in helping
the Service Receiver
understand current
state data schema and
configuration details |
||||||
| Service Provider will provide the following knowledge transfer services: | ||||||
IT-PRMS-04
|
PRMS Application Knowledge Transfer |
• Existing
non-sensitive
documentation
maintained by the
Service Provider will
be given to the
Service Receiver as
it relates to the
PRMS Shared Services
Application and
related interfaces
|
Time and Materials Based on Additional Pricing Section |
Supplemental Services
For requests for supplemental services relating to PRMS Application by Service Receiver not
mentioned in this Schedule, Service Receiver will provide a discreet project request and submit
such request to Service Provider using the formalized Change Request attached as Annex A for
consideration by Service Provider.
Where notice is required a number of business days prior to some required action by Service
Provider, notice must be received by 12 noon Eastern Time to be counted as received during such
business day. Service Provider shall, within a commercially reasonable period, provide a price
quote to be commercially reasonable based on the current cost of the Services to Service Receiver
taking into account, such items as the specific time the request was made, service delivery
volumes, exit planning activities, and other activities Service Provider is currently engaged in at
the time of the request, but not later than 30 days after the request was made. If
6
Service Provider, in its sole discretion determines (i) such request would increase the ongoing
operating costs for Service Provider (as a service recipient) or any other service receiver or (ii)
that it is not capable of making such changes with its current staff during the time period
requested without interrupting the Services provided to itself or any other service receiver.
Service Provider need not provide a price quote or perform the services. Where a price quote is
provided, Service Provider shall provide the service requested upon acceptance of the price.
LOCATIONS
Services are initially provided from Seneca Falls, NY, USA to global locations.
PREREQUISITES/DEPENDENCIES
| • | Service Receiver will for the period of this TSA, maintain and have active the applications and interfaces documented in Attachment A. | |
| • | If Service Receiver, or the Service Receiver’s Supplier(s), sends inaccurate information to Service Provider, it will be the responsibility of the Service Receiver to rectify any problems and bear any costs incurred to rectify the issue. | |
| • | Service Receiver must have bank accounts in place prior to the Distribution Date. Changes or new bank accounts must be communicated to Service Provider and completed on a time and materials basis. | |
| • | Service Receiver must have DDM, FTP, GetPaid and Custom.net Applications active and maintained for the duration this agreement is in effect. | |
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. | |
| • | Service Receiver, in a separate and independent agreement, must have Websphere MQ systems active and maintained with the correct interfaces and data feeds to the Supplier Portal by the Service Receiver for the period of time in which this agreement is in effect. | |
| • | Service Receiver must have Elogia, system active and maintained for the duration this agreement is in effect. | |
| • | Service Receiver must have Electronic Data Interchange (EDI) active and maintained during the period in which this agreement is in effect. |
7
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the following
addresses (with an email copy to the Service Owners set forth above):
If to the Service Provider:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
If to the Service Receiver:
Xylem Inc.
2881 E Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
Xylem Inc.
2881 E Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
SERVICE LEVEL
Service Provider will classify incidents at its own discretion. Such
classifications shall be consistent with the priorities Service Provider set for
itself as a recipient of services. Incidents classified using this methodology
will be triaged as documented in Attachment B.
In the event incidents cannot be resolved in the time outlined in Attachment B,
Service Provider shall promptly notify Service Receiver and work together to try
and resolve such incidents.
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year. These
rates apply to internal Service Provider employees only, and should external resources be
8
required, the costs for those external resources will be reviewed with the Service Receiver prior
to execution of the project.
Additional Pricing Rates (All in USD)
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
9
ATTACHMENT A
| Interface Name | Business Purpose | Source | Destination | Frequency | ||||
Credit Held Orders
|
Credit held orders for review and release (approval) by FSS | VC ERP System(s) |
PRMS Shared Services Application |
Real-Time | ||||
Order Value Synchronization |
Weekly open order value synchronization with VC’s to re-compute credit values | VC ERP System(s) |
PRMS Shared Services Application |
Real-Time Weekly |
||||
Invoices
|
Invoice posting and reversals | VC ERP System(s) |
PRMS Shared Services Application |
Daily | ||||
Customer
|
Central customer master administration |
PRMS Shared Services Application |
VC ERP System(s) |
Real-Time | ||||
Credit Values
|
Central credit administration (gross$, open orders, net available$) | PRMS Shared Services Application |
VC ERP System(s) |
Real-Time | ||||
Credit Held Orders Released |
Release (approval) to ship previously credit held order | PRMS Shared Services Application |
VC ERP System(s) |
Real-Time |
10
ATTACHMENT B
| COST & SERVICE METRICS | TARGET PERFORMANCE | |
System Availability — Percentage of hours the Seneca
Falls (SFDC) administered AS/400 processors were available
during production workdays for both batch and interactive
utilization, Monday through Saturday, 24 hours per day.
|
99.90% |
|
Interactive Service Availability — Percentage of hours
the Seneca Falls (SFDC) administered AS/400 processors were
available during production workdays for interactive
utilization; Monday through Friday ( 20 hours per day ) and
Saturday ( 14 hours per day ).
|
99.90% |
|
iSeries Service Requests — 1) Running Robot Jobs 2) Requesting a Restore 3) Running Batch Jobs 4) Requesting a File Copy 5) Printing/ Re-Printing Reports 6) Permission to use EZVIEW and Query Commands 7) Requesting a Back Up 8) New printer configurations |
85.0% < 1 Day 90.0% < 3 Days 95.0% < 5 Days Service Commitment: Service requests are processed Monday through Friday between the hours of 6:00 AM to 9:00 PM (EST). Response Time is measured from the time the request is received and logged in at the Seneca Falls Data Center (SFDC). Turn around for ROBOT jobs is 2 weeks. No production changes will be made from the Wednesday before M/E until M/E processing is complete. No production changes will be made in December. |
|
iSeries User Profile Requests — 1) Create new user accounts or 2) Change a current user account or 3) Deactivate a user account on the Seneca Falls AS/400’s. |
98.0% < 2 Days 99.0% < 3 Days 100.0% < 5 Days |
|
| Service Commitment: Service requests are processed Monday through Friday between the hours of 6:00 AM to 9:00 PM (EST). Response Time is measured from the time the request is received and logged in at the Seneca Falls Data Center (SFDC). Turn around time for user profiles is 3 business days |
Note: Service Level Objectives/Targets are measured during the following service window:
6:00 AM to 2:00 AM (EST) ; Monday through Friday 6:00 AM to 8:00 PM (EST) ; Saturday
11
Need More Information?
Points of Contact
| Jean Lindsley, | ||||||
| Datacenter Services, Chief | ||||||
| Name | of Technology | Supervisor Name | TBD | |||
Telephone Number
|
315-568-4774 | Telephone Number | ||||
Email Address
|
jean.lindsley@itt.com | Email Address | ||||
Customer Info Link |
12
Annex A
TSA Change Request Form
TSA Change Request Form
TSA Schedule:
|
|||||
Receiver TSA Owner: |
|||||
Date of Request: |
|||||
Completed By: |
|||||
Requested Service Change:
| Already agreed | ||||||||||||||
| Item | Service Description | Monthly | to with Service | |||||||||||
| Number | (Listed on schedule in the TSA) | Charge | Requested Change | Provider (Y/N) | ||||||||||
1
|
||||||||||||||
2
|
||||||||||||||
3
|
||||||||||||||
4
|
||||||||||||||
5
|
||||||||||||||
Outcome:
| Item | Outcome | |||||||
| Number | (Approved, Denied) | Specific Action to be taken | ||||||
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2
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3
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Approvals
Approved By:
|
Approved By: | |
Provider TSA Functional Lead
|
Receiver TSA Functional Lead | |
Executive Representative:
|
Executive Representative: | |
Provider TSA Manager
|
Receiver TSA Manager |
13
SCHEDULE AB12
POST SPIN HYPERCARE
POST SPIN HYPERCARE
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
| Karla Viglasky ITT Corporation |
Chief Information Officer | (315) 568-7069 | karla.viglasky@itt.com | |||
| Peter Olive Xylem Inc. |
Chief Information Officer | +44 (1256) 353946 | peter.olive@xyleminc.com |
GENERAL SERVICE DESCRIPTION
Service Provider will perform Post Spin Hypercare Support Services for Service Receiver.
Service Receiver and its Subsidiaries will utilize Service Provider’s resources based on the
functionality, processes, input and output screens, and documents that support the Service
Provider’s business and business processes in the twelve months prior to the Distribution date.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement,
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
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| Minimum | ||||||||||
| BAU | Service | |||||||||
| Service | Transaction | Period | Service | |||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Charge | |||||
| Provide Post Spin Hypercare support services: | ||||||||||
| Facility Shutdown Services — Service Provider will provide Service Receiver with Facility Shutdown services that include: | ||||||||||
• Disposition of network and computer assets |
||||||||||
• Disposition of furniture and miscellaneous
equipment; boxing of HR files, ITT logo, posters, etc. |
||||||||||
• Maintain working environment for remaining employees |
||||||||||
• Control the activation and deactivation of
access cards |
||||||||||
• Close all third party contracts with vendors,
such as food, vending machines, cable, printers, cleaning, etc. |
||||||||||
| Program Shutdown Services — Service Provider will provide Service Receiver with Program Shutdown services that include: | ||||||||||
IT-Hypercare-01
|
Hypercare Support Services |
• Crisis management for final cutover, to ensure all
projects go live on spin date • Command center support and ramp down • Access to TPMO and IT-SS Connect sites through ITT Co.
Active Directory and VPN accounts for up to 20 people
|
3* | Cost plus 2% - 10% per month |
||||||
| Financial Support Services —Service Provider will provide Service Receiver with financial support services that include: | ||||||||||
• Purchase Order (invoice payment) and Contract
management for suppliers assisting with separation |
||||||||||
| Miscellaneous Support Services — Service Provider will provide Service Receiver with supplemental and miscellaneous project support services that include: | ||||||||||
• Project management, strategy development,
infrastructure consulting, etc. Prioritization and resource
allocation for these services will be jointly agreed to by
CIOs. |
||||||||||
| All requests for support will be directed to and coordinated through Cindy Hoots. |
| * | TSA duration will end on 12/31/2011 regardless of actual spin-date. | |
| ** | Costs represent salary expense (no retention or severance) and additional facility charges for the Hanover location. |
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LOCATIONS
Services are initially provided from Hanover, MD, USA to other USA locations.
PREREQUISITES/DEPENDENCIES
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. | ||
| • | Travel and expenses will be paid by the requesting organization. |
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the
following addresses (with an email copy to the Service Owners set forth above):
If to the Service Provider:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
If to the Service Receiver:
Xylem Inc.
2881 E Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
Xylem Inc.
2881 E Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
SERVICE LEVEL
Service Provider will classify incidents at its own discretion. Such
classifications shall be consistent with the priorities Service Provider set
for itself as a recipient of services.
In the event incidents cannot be resolved, Service Provider shall promptly
notify Service Receiver and work together to try and resolve such incidents.
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SCHEDULE AB13
SERVICES TSA SCHEDULE FOR
MEXICO
SERVICES TSA SCHEDULE FOR
MEXICO
SERVICE OWNER
All service matters and general inquiries regarding this service should be directed to:
| Name | Title | Phone | ||||
| Service ProviderAracili Europa |
Controller IP Mexico Bombas Goulds de Mèxico , S. de R.L. de C.V |
01-779-79-69-535 | Araceli.europa@itt.com | |||
| Service Recipient Anna Guerrero |
Controller, WWW Mexico ITT Water Technology Mexico, S. de R.L. de C.V. |
52 442 192 67 18 x231 |
Anna.Guerrero@xyleminc.com |
PARTIES TO THE AGREEMENT
| 1. | Service Provider — Bombas Goulds de Mèxico , S. de R.L. de C.V | ||
| 2. | Service Recipient — ITT Water Technology Mexico, S. de R.L. de C.V. |
GENERAL SERVICE DESCRIPTION
| 1. | Finance & Accounting Services | ||
| 2. | Payroll Services | ||
| 3. | Accounts Payables Services | ||
| 4. | Billing and Accounts Receivables Services | ||
| 5. | Cost Accounting Services |
TERM AND OPTION
| 1. | Minimum Service Period — 9 months — Commencing on the Distribution Date | ||
| 2. | The Monthly Costs are set forth below under Pricing & Payment Terms. The Service Recipient and Service Provider agree that, except as set forth in this Services TSA Schedule for Mexico (“this TSA”) no additional 2%, 10% or 4.5% increase in such pricing should be applied as set forth in Section 2 of the Agreement. | ||
| 3. | Service Recipient shall have the option to renew at 1.10 times the monthly fixed charge as noted below for an additional 3 months if written notice is provided 60 days prior to the end of the Minimum Service Period. | ||
| 4. | Service Recipient will have the option to terminate this agreement at any time, with no additional make-whole fee as required by Section 11(b) of the Agreement, after the 1st 3 months with 2 months advance written notice to the Service Provider |
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SERVICES TO BE PROVIDED
| 1. | Finance and accounting services |
| a. | Maintain general ledger and chart of accounts | ||
| b. | Reconcile balance sheet accounts at a minimum of once per quarter | ||
| c. | Reconcile Service Recipient legal entity bank accounts a minimum of once a month | ||
| d. | Close books and prepare local financial statements monthly on a timely basis |
| i. | US GAAP financial statements will be prepared as required by the Mexican Government | ||
| ii. | Prepare all required JV’s required to close the books on a monthly basis | ||
| iii. | File required local statutory financial statements with the authorities in a timely manner | ||
| iv. | File required US GAAP financial statements (P&L and Balance Sheet) in both local currency and on a US FAS 52 basis with the Service Recipient’s parent company by the 1st Monday after the closing date |
| e. | Request cash when needed from the Service Recipient’s parent company in order to support business activities | ||
| f. | Analyze cash requirements at a minimum of once per month and allocate funds to bank accounts (vendor invoices / purchase orders, payroll, tax payments, customer receipts, special unusual items) | ||
| g. | Perform all bank account related maintenance (signatory changes, relationship management etc) | ||
| h. | Prepare, file and pay (provided Service Recipient has made available to Service Provider sufficient funds) all required local statutory tax returns (including but not limited to income tax, sales tax, VAT, GST, payroll related, social security, housing, property taxes). Provide information to Service Recipient’ tax advisor in this regard. | ||
| i. | Prepare and file all required statutory reports with the appropriate governmental authorities on a timely basis | ||
| j. | Fixed Asset accounting |
| i. | Maintain detailed fixed asset subsidiary ledger and reconcile to general ledger |
| k. | Provide required support to Service Recipient’s internal & external auditors | ||
| l. | Provide required support for government audits | ||
| m. | Respond to special requests from service recipients legal advisors | ||
| n. | Prepare monthly financial forecasts | ||
| o. | Prepare annual budget, strategic plan, and operating plan financial statements | ||
| p. | Prepare required business review meeting materials on a monthly basis | ||
| q. | Respond to Service Recipient’s ad hoc requests for financial data in a timely manner within reason |
| 2. | Payroll Services |
| a. | Process payroll on a bi weekly basis (provided Service Recipient has made available to Service Provider sufficient funds) | ||
| b. | Download employee time clock information | ||
| c. | Input employee information obtained from Service Recipient’s HR function |
| i. | New Hires |
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| ii. | Terminations | ||
| iii. | Vacations | ||
| iv. | Salary changes | ||
| v. | Validate approvals |
| d. | Maintain and update payroll related files |
| i. | Vacations | ||
| ii. | Salary advances | ||
| iii. | Child support | ||
| iv. | Housing withholdings | ||
| v. | Employee savings | ||
| vi. | Leaving indemnity |
| e. | Provide employees with bank cards | ||
| f. | Calculate payroll via payroll software | ||
| g. | Review printed payroll reports for accuracy | ||
| h. | Make net pay file and submit to bank & validate deposits to employee bank accounts on a timely basis | ||
| i. | Print and distribute pay stubs / advices to employees on a timely basis | ||
| j. | File copies of pay stubs and file payroll booklet |
| 3. | Accounts Payable Services |
| a. | Process vendor invoices for payment twice per week (provided Service Recipient has made available to Service Provider sufficient funds) | ||
| b. | Perform 3 way match in Accounts payable system | ||
| c. | Review invoice approvals | ||
| d. | Maintain PO balance when partial shipments | ||
| e. | Maintain form control over purchase orders (Note: all other purchasing department activities to be performed by the Service Recipient) | ||
| f. | Invoice coding to general ledger account | ||
| g. | Process vendor check run once per week | ||
| h. | Process vendor wire transfers twice per week | ||
| i. | Review and process travel expense reports and travel advances twice per week | ||
| j. | Process payroll child support withholding payments on a weekly basis | ||
| k. | Process employee savings fund withdrawal requests twice per week |
| 4. | Billing and Accounts Receivables Services |
| a. | Generate customer invoices from ERP system on a daily basis | ||
| b. | Review invoices for accuracy | ||
| c. | Charge taxes (VAT, Sales) as required by law | ||
| d. | Update and control customer master file based on information provided by Service Recipient | ||
| e. | Recommend customer credit terms. | ||
| f. | Maintain accounts receivable subsidiary ledger and reconcile to general ledger | ||
| g. | Post billings to accounts receivable ledger on a daily basis | ||
| h. | Post cash receipts to open accounts receivable ledger on a timely basis and follow up with customers when unable to identify cash received to open accounts receivables | ||
| i. | Follow up as required with customers via telephone and email on past due receivables to ensure cash is collected as quickly as possible | ||
| j. | Travel to customers in special circumstances only to facilitate collection of open accounts receivables | ||
| k. | Recommend customers be places on credit hold or shipping hold when appropriate. Service Recipient must approve Service Provider’s recommendation |
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| l. | Prepare and analyze aged accounts receivables report and review monthly with Service Recipient | ||
| m. | Recommend write offs of overdue accounts receivables |
| 5. | Cost Accounting Services |
| a. | Prepare and review all plant inventory and manufacturing variance journal entries on a monthly basis | ||
| b. | Reconciliation of perpetual inventory to general ledger | ||
| c. | Prepare instructions and oversee annual physical inventory including test count audits | ||
| d. | Reconcile physical inventory and record appropriate book to physical adjustment to general ledger | ||
| e. | Coordination and oversight of cycle count program | ||
| f. | Review of cycle count program adjustments and record adjustments in general ledger | ||
| g. | Review and analysis of manufacturing variances on a monthly basis | ||
| h. | Review of financial statement inventory balances on a monthly basis with comparison to prior month balances | ||
| i. | Establish and substantiate appropriate inventory reserves (Excess and Obsolete, Lower of Cost or Market, Inventory revaluation) | ||
| j. | Develop new standard costs once per year in Q4 of each year | ||
| k. | Prepare annual cost of production statement for the Mexico Government in Q1-Q2 of each year | ||
| l. | Prepare annual transfer price analysis in support of annual statutory audit in Q1-Q2 of each year |
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LOCATIONS
| 1. | IP facility located at the following address; |
Bombas Goulds de Mèxico , S. de R.L. de C.V
Avenida eje Oriente Poniente Lote 4 Manzana 9
Ciudad Industrial Tizayuca ,Hidalgo
Mexico
Z.C 43800
Avenida eje Oriente Poniente Lote 4 Manzana 9
Ciudad Industrial Tizayuca ,Hidalgo
Mexico
Z.C 43800
PREREQUISITES/DEPENDENCIES
| 1. | Power of Attorney is granted to the IP Mexico Controller to execute banking transactions, and access RCW IT systems only. If approval is required from Service Recipient in advance of any filing with any governmental agency and approval is not obtained in a timely manner, the Service Recipient, in addition to its waiver of liability as set forth in Section 10 of the Agreement, waives all rights to make any claim for damages resulting from the late filing and agrees to pay and fines or penalties that result from the late filing(s).The Power of Attorney that is granted to the IP Mexico Controller will cease the date that this agreement is terminated | |
| 2. | Both the Service Provider and the Service Recipient agree to the month end closing dates for the 3 month period of this agreement | |
| 3. | If US GAAP compliant reporting is required by the Service Recipient, then the Service Recipient agrees to provide the Service Provider with the software to facilitate this reporting and to install the software and train Service Provider’s employees at Service Recipient’s cost prior to the commencement date of this agreement | |
| 4. | After the termination of this agreement, it may be necessary from time to time for the Service Provider, on behalf of the Service Recipient, to respond to inquiries made by government authorities about Service Recipient’s financial statements and tax filings, including providing support for audits. In this event, the Service Provider will contact the Service Recipient and agree on an appropriate course of action and response. To the extent that Service Provider’s resources are to be used to respond to the inquiries, the Service Provider will be entitled to invoice the Service Recipient at the following rates per hour provided if assistance is needed under this section after 2012, the parties will renegotiate such rates in good faith; |
| a. | Clerical — US Cost plus 2% - 10% | ||
| b. | Professional — US Cost plus 2% - 10% | ||
| c. | Management — US Cost plus 2% - 10% |
| 5. | To the extent that the Service Provider is required to terminate any of its employees who are providing services solely to the Service Recipient (and not supporting any other aspect of the Service Provider’s business) under this agreement at the end of this agreement because of lack of work, the Service Recipient agrees to reimburse the Service Provider for any one time termination costs that are required to be paid as per government regulation or company policy. | |
| 6. | At the termination of this agreement, the Service Recipient will provide the necessary support at its own expense to transfer data to its own systems. The Service Provider will agree to provide training to the Service Recipient’s employees on the Service Provider’s premises or via conference call / web ex prior to the termination of the agreement. The Service Provider will not be required to send any of its employees to any other Service Recipient location. |
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| 7. | Service Recipient is precluded from hiring Service Provider’s employees that provide the services under this agreement for the duration of this agreement plus for an additional two years after the agreement is terminated. | |
| 8. | In the event of 3rd party claims against the Service Recipient which are unrelated to this agreement, the Service Recipient agrees to indemnify the Service Provider for any costs that the Service Provider may incur in the event that the 3rd party elects to also claim damages against the Service Provider because of their relationship with the Service Recipient. The Service Recipient also agrees to defend the Service Provider at its sole cost to the extent permitted to do so under Mexican Law |
TAX STATUS
| 1. | Service Provider — Payments received under the terms of this agreement will be considered taxable income in Mexico | |
| 2. | Service Recipient — Payments made under the terms of this agreement will be tax deductible in Mexico | |
| 3. | Applicable VAT estimated to be 16% of the invoice amount will be charged by the service provider to the service recipient as required by law |
BILLING LOCATION
NOTICES
NOTICES
| All correspondence with respect to this TSA should be sent to the Service Owners listed above with copies to the following; |
| 1. | Service Provider — Joanne Scalard | ||
| 1133 Westchester Ave, Suite 3000 | |||
| White Plains, NY 10605 | |||
| Joane.scalard@itt.com |
| 2. | Service Recipient — Dan Kelly | ||
| 1133 Westchester Avenue, Suite 2000 | |||
| White Plains, NY 10605 | |||
| Dan.kelly@xyleminc.com |
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NOTICE REQUIREMENTS
| Prior Notice Requirement to | ||||
| No. | Third Party Provider | Terminate Service | ||
| None required | See Term and Option above |
PRICING & PAYMENT TERMS
| 1. | The monthly fixed charge for all services provided under this TSA will be $13,000 for the 1st 9 months of this agreement — Payable in US Dollars |
| 2. | Invoices will be prepared monthly and mailed to the service provider via email. |
| 3. | There will be no additional backup attached to these invoices |
| 4. | The 1st invoice will be dated the Commencement Date |
| 5. | Invoice payment terms are net 30 days from invoice date. |
| 6. | Subsequent invoices will follow every 30 days |
| 7. | Exit costs as well as costs incurred to respond to inquiries by the authorities by the Service Provider on behalf of the Service Recipient will be billed by the Service Provider as soon as practicable with appropriate backup documentation |
7
SCHEDULE AB14
SERVICES TSA SCHEDULE FOR
NOGALES
SERVICES TSA SCHEDULE FOR
NOGALES
SERVICE OWNER
All service matters and general inquiries regarding this service should be directed to:
| Name | Title | Phone | ||||
| Service | ||||||
| Provider Arnulfo Soto |
Controller ICS Nogales Mexico |
1-800-854-7639 X5300 | Arnulfo.soto@itt.com | |||
| Service | ||||||
| Recipient John Sullivan |
Controller, Flow Control | (978) 281-0440 x284 | John.sullivan@xyleminc.com |
PARTIES TO THE AGREEMENT
| 1. | Service Provider — ITT Cannon de Mexico, S.A. de C.V. | ||
| 2. | Service Recipient — Jabsco Sociedad de Responsabilidad Limitada de Capital Variable |
GENERAL SERVICE DESCRIPTION
| 1. | Finance & Accounting Services | ||
| 2. | Payroll Services | ||
| 3. | Accounts Payables Services | ||
| 4. | Import / Export Services (excluding PROSEC-Related Services) | ||
| 5. | IT Services | ||
| 6. | PROSEC-Related Services |
TERM AND OPTION
| 1. | Minimum Service Period — 12 months — Commencing on the Distribution Date | ||
| 2. | The Monthly Costs are set forth below under Pricing & Payment Terms. The Service Recipient and Service Provider agree that, except as set forth in this Services TSA Schedule for Nogales (“this TSA”) no additional 2%, 10% or 4.5% increase in such pricing should be applied as set forth in Section 2(a) of the Agreement. | ||
| 3. | Service Recipient shall have the option to renew at 1.15 times the monthly fixed charge as noted below for an additional 3 months if written notice is provided 60 days prior to the end of the Minimum Service Period. Service Recipient will have the option to terminate this agreement at any time, with no additional make-whole fee as required by Section 11(b) of the Agreement, after the 1st 6 months with 6 months advance written notice to the Service Provider |
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| 4. | Notwithstanding the above, the Service Period for the PROSEC-Related Services (described below) shall commence on the Distribution Date and terminate on the business day following the day Service Recipient obtains a PROSEC license from the Mexican Ministry of Economy (the “PROSEC License”); provided, however, that if Service Recipient obtains the PROSEC License on or before the business day prior to the Distribution Date, Service Provider will not provide PROSEC-Related Services to Service Recipient. In any event, the term of the Service Period for the PROSEC-Related Services shall not be longer than three months, commencing on the Distribution Date. |
SERVICES TO BE PROVIDED
| 1. | Finance and accounting services |
| a. | Maintain general ledger and chart of accounts | ||
| b. | Reconcile balance sheet accounts at a minimum of once per quarter | ||
| c. | Reconcile banks accounts a minimum of once a month | ||
| d. | Close books and prepare local financial statements monthly on a timely basis |
| i. | US GAAP financial statements will be prepared as required by the Mexican Government | ||
| ii. | Prepare all required JV’s required to close the books on a monthly basis | ||
| iii. | File required local statutory financial statements with the authorities in a timely manner | ||
| iv. | File required US GAAP financial statements (P&L and Balance Sheet) in both local currency and on a US FAS 52 basis with the Flow Control USA LLC parent company by the 1st Monday after the closing date |
| e. | Request cash when needed from the Flow Control USA LLC parent company in order to support business activities via creation of maquilladora services invoice on a monthly basis | ||
| f. | Analyze cash requirements at a minimum of once per month and allocate funds to bank accounts (vendor invoices / purchase orders, payroll, tax payments, customer receipts, special unusual items) | ||
| g. | Perform all bank account related maintenance (signatory changes, relationship management etc) | ||
| h. | Prepare, file and pay (provided Service Recipient has made available to Service Provider sufficient funds) all required local statutory tax returns (including but not limited to income tax, sales tax, VAT, GST, payroll related, social security, housing, property taxes). Provide information to Service Recipient’ tax advisor in this regard. | ||
| i. | Prepare and file all required statutory reports with the appropriate governmental authorities on a timely basis | ||
| j. | Fixed Asset accounting (leasehold improvements only) |
| i. | Maintain detailed fixed asset subsidiary ledger and reconcile to general ledger |
| k. | Provide required support to Tenant’s internal & external auditors | ||
| l. | Provide required support for government audits |
| 2. | Payroll Services |
| a. | Process payroll on a weekly basis (provided Service Recipient has made available to Service Provider sufficient funds) |
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| b. | Download employee time clock information | ||
| c. | Input employee information obtained from Service Recipient’s on site HR manager |
| i. | New Hires | ||
| ii. | Terminations | ||
| iii. | Vacations | ||
| iv. | Salary changes | ||
| v. | Validate approvals |
| d. | Prepare and print weekly hours report | ||
| e. | Distribute weekly hours report to employee supervisors and obtain |
| i. | Employee signature | ||
| ii. | Supervisor approvals |
| f. | Maintain and update payroll related files |
| i. | Vacations | ||
| ii. | Salary advances | ||
| iii. | Child support | ||
| iv. | Housing withholdings | ||
| v. | Employee savings | ||
| vi. | Leaving indemnity |
| g. | Provide employees with bank cards | ||
| h. | Calculate payroll via payroll software | ||
| i. | Review printed payroll reports for accuracy | ||
| j. | Review time clocked vs. payroll report and resolve differences | ||
| k. | Make net pay file and submit to bank & validate deposits to employee bank accounts on a timely basis | ||
| l. | Print and distribute pay stubs / advices to employees on a timely basis | ||
| m. | File copies of pay stubs and file payroll booklet |
| 3. | Accounts Payable Services |
| a. | Process vendor invoices for payment, twice per month on the 10th and 25th of each month through the Peso ledger (provided Service Recipient has made available to Service Provider sufficient funds) | ||
| b. | Perform 3 way match in Accounts payable system | ||
| c. | Review invoice approvals | ||
| d. | Maintain PO balance when partial shipments | ||
| e. | Maintain form control over purchase orders and assignment of PO numbers (Note: all other purchasing department activities to be performed by the Service Recipient) | ||
| f. | Invoice coding to general ledger account | ||
| g. | Process vendor check run twice per month on the 10th and 25th of each month | ||
| h. | Process vendor wire transfers | ||
| i. | Review and process travel expense reports and travel advances as required | ||
| j. | Review and process employee salary advances once per week | ||
| k. | Process payroll child support withholding payments on a weekly basis |
| 4. | Import / Export Services (excluding PROSEC-Related Services, described below) |
| a. | Supervise activities of Service Recipient’s personnel (Service Recipient’s personnel are required to perform the following activities) |
| i. | Exports |
| 1. | Classify merchandise | ||
| 2. | Input parts and data to CAM system | ||
| 3. | Process pro forma invoice, packing list, pedimento |
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| 4. | Review above for accuracy | ||
| 5. | Dispatch truck |
| ii. | Imports |
| 1. | Review list of goods | ||
| 2. | Classify merchandise | ||
| 3. | Input parts and data to CAM system | ||
| 4. | Coordinate with counterpart broker | ||
| 5. | Process pro forma invoice, packing list, pedimento | ||
| 6. | Review above for accuracy | ||
| 7. | Dispatch truck |
| iii. | Other Shipments (Chihuahua, Durango, Guadalajara) |
| 1. | Review list of goods | ||
| 2. | Classify merchandise | ||
| 3. | Input parts and data to CAM system | ||
| 4. | Coordinate with counterpart broker | ||
| 5. | Process pro forma invoice, packing list, pedimento | ||
| 6. | Review above for accuracy | ||
| 7. | Dispatch truck |
| iv. | Virtual imports exports |
| 1. | Review list of goods | ||
| 2. | Classify merchandise | ||
| 3. | Input parts and data to CAM system | ||
| 4. | Coordinate with counterpart broker | ||
| 5. | Process pro forma invoice, packing list, pedimento | ||
| 6. | Review above for accuracy | ||
| 7. | Dispatch truck |
| v. | In cases of customs inspection, coordinate with inspector for clearance of goods | ||
| vi. | Tracking of open and close Pedimentos | ||
| vii. | Process complimentary Pedimentos to pay duties | ||
| viii. | Prepare paperwork required to comply with Anexo 24 | ||
| ix. | Import / export record keeping |
| b. | Provide support for classification of merchandise for US & Mexico customs purposes | ||
| c. | Review import export shipment information for accuracy | ||
| d. | Coordinate shipments and carriers to Service Recipient factories/customers in Mexico (Chihuahua, Durango, Guadalajara) | ||
| e. | Coordinate virtual import/exports |
| i. | Coordinate with counterpart broker | ||
| ii. | Review documentation for accuracy | ||
| iii. | Agree with data to be submitted |
| f. | Coordination of customs shipment inspection activities to ensure timely resolution and clearance of goods | ||
| g. | Record keeping |
| i. | Ensure customs related documents are filed on a timely basis | ||
| ii. | Assure easy access to customs documentation when needed |
| h. | Coordinate with broker to ensure timely opening and closing of Mexican Pedimentos | ||
| i. | Ensure Mexican Pedimento duties are paid on a timely basis | ||
| j. | Maintain relationship with the Mexico Secretary of the Economy. Provide information as required. |
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| k. | Insure timely compliance with Anexo 24 | ||
| l. | Completion and filing of annual report of Foreign Business Transactions | ||
| m. | Process and file amendment applications for the Maquila Program | ||
| n. | Provide information to the tax authorities as required or requested | ||
| o. | Support D&T audits of customs activities |
| i. | Attend meetings | ||
| ii. | Provide information | ||
| iii. | Maintain control over audits |
| p. | Support customs audits |
| i. | Attend meetings | ||
| ii. | Provide information & review audit findings and comments |
| 5. | IT Services |
| a. | CAM applications support | ||
| b. | Qualisys applications support | ||
| c. | Timekeeping system support |
| 6. | PROSEC-Related Services |
Perform the following services with respect to certain inventory relating to the Water Business,
legal title to which is held, or will be held, by Flow Control US, LLC, a limited liability company
organized and existing under the laws of Delaware, United States of America.
Import and Export:
| — | Determine tariff classification of components and materials to be imported | |
| — | Act as importer of record to import components and materials on a temporary basis under Service Provider’s IMMEX Program | |
| — | Claim PROSEC preferential duty rates under Service Provider’s PROSEC Program at the time of importation of components and materials | |
| — | Export finished goods incorporating components and materials that were imported under Service Provider’s IMMEX and PROSEC Program, within the legal timeframes. |
Manufacturing/Assembly:
| — | Receipt of components | |
| — | Warehousing of components for inventory availability | |
| — | Sourcing of components to product-line based on demand | |
| — | Manual assembly of components | |
| — | Visual inspection of components |
Services:
| — | Packing of components to be delivered to customers | |
| — | Repacking | |
| — | Packaging | |
| — | Repackaging | |
| — | Marking | |
| — | Labeling |
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LOCATIONS
| 1. | ICS Nogales Mexico facility located at the following address; |
ITT Cannon de Mexico, S.A. de C.V.
Avenida del Libre Comercio S/N
Entre Calzada Industrial Nuevo Nogales y
Calzeda del Raquet Club
Col. Parque Industrial Nuevo Nogales
Nogales, Sonora C.P. 84093
Avenida del Libre Comercio S/N
Entre Calzada Industrial Nuevo Nogales y
Calzeda del Raquet Club
Col. Parque Industrial Nuevo Nogales
Nogales, Sonora C.P. 84093
PREREQUISITES/DEPENDENCIES
| 1. | New Flow Control Mexico legal entity is established and fully capable of legally conducting business by the commencement date of this agreement; provided, however, that the parties acknowledge that this Schedule shall be effective even if Service Recipient does not obtain the PROSEC License prior to the Distribution Date. | |
| 2. | New Flow Control Mexico legal entity has registered with all of the appropriate governmental agencies and secured required permits (including but not limited to US and Mexico customs permits); provided, however, that the parties acknowledge that this Schedule shall be effective even if Service Recipient does not obtain the PROSEC License prior to the Distribution Date. | |
| 3. | New Flow Control Mexico legal entity Bank account(s) are established by the commencement date of this agreement | |
| 4. | Nogales Mexico Financial, HR/Payroll, and Import export hardware and software platforms are separated by the commencement date of this agreement. | |
| 5. | Power of Attorney is granted to the ICS Nogales Controller to execute banking transactions and access Flow Control IT systems for the purpose of providing all services contained in this agreement. The ICS Nogales Controller will not be granted Power of Attorney to file appropriate reports and tax returns with governmental authorities. If approval is required from Service Recipient in advance of any filing with any governmental agency and approval is not obtained in a timely manner, the Service Recipient, in addition to its waiver of liability as set forth in Section 10 of the Agreement, waives all rights to make any claim for damages resulting from the late filing and agrees to pay and fines or penalties that result from the late filing(s) The Power of Attorney that is granted to the ICS Nogales Controller under this provision will cease on the date that this agreement is terminated | |
| 6. | The Service Recipient agrees to provide Power of Attorney privileges to 2 of its employees as of the commencement date of this TSA, for the purpose of reviewing, authorizing and signing, tax returns and other statutory reports which are prepared by the Service Provider as per the services described in this agreement | |
| 7. | Both the Service Provider and the Service Recipient agree to the month end closing dates for the 1 year period of this agreement | |
| 8. | If US GAAP compliant reporting is required by the Service Recipient, then the Service Recipient agrees to provide the Service Provider with the software to facilitate this reporting and to install the software and train Service Provider’s employees at Service Recipient’s cost prior to the commencement date of this agreement | |
| 9. | Service Recipient contracts with a tax advisor prior to the commencement of this agreement | |
| 10. | The Service Recipient will hire its own local Nogales HR Manager and Import Export |
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| Broker prior to the commencement date of this TSA. The Service Provider will assist in the proper training of these individuals prior to the commencement date of this TSA. If the Service Recipient fails to hire these employees by the commencement date of this agreement, the monthly fixed charge will increase based upon good faith negotiations between the parties, until such time as the positions are filled and Service Provider agrees to provide the services that would have been performed by these individuals during the time that the positions are vacant. | ||
| 11. | If during the term of this agreement, the Service Recipient’s HR Manager or Import Export clerical positions become vacant, the monthly fixed charge will increase based upon good faith negotiations between the parties, until such time as both positions are filled and Service Provider agrees to provide the services that would have been performed by these individuals during the time that the positions are vacant. 12. After the termination of this agreement, it may be necessary from time to time for the Service Provider, on behalf of the Service Recipient, to respond to inquiries made by government authorities about Service Recipient’s financial statements and tax filings, including providing support for audits. In this event, the Service Provider will contact the Service Recipient and agree on an appropriate course of action and response. To the extent that Service Provider’s resources are to be used to respond to the inquiries, the Service Provider will be entitled to invoice the Service Recipient at the following rates per hour, provided if assistance is needed under this section 12. After 2012, the parties will renegotiate such rates in good faith; |
| a. | Clerical — Cost plus 2% - 10% Mexico Pesos ( notional US$) | ||
| b. | Professional — Cost plus 2% - 10% Mexico Pesos ( notional US$) | ||
| c. | Management — Cost plus 2% - 10% Mexico Pesos ( notional US$) |
| 13. | To the extent that the Service Provider terminates any of its employees who are providing services solely to the Service Recipient (and not supporting any other aspect of the Service Provider’s business) under this TSA at the end of this agreement because of lack of work, the Service Recipient agrees to reimburse the Service Provider for any one time termination costs that are required to be paid as per government regulation or company policy. | |
| 14. | At the termination of this agreement, the Service Recipient will provide the necessary support at its own expense to transfer data to its own systems. The Service Provider will agree to provide training to the Service Recipient’s employees on the Nogales premises or via conference call / web ex prior to the termination of the agreement. The Service Provider will not be required to send any of its employees to any other Service Recipient location. | |
| 15. | Service Recipient is precluded from hiring Service Provider’s employees that provide the services under this TSA for the duration of this TSA plus for an additional one year after the TSA is terminated. Notwithstanding the above, the Service Recipient will have the right to hire the ICS 2 import export clerks that are providing services to the Service Recipient under the terms of this agreement, upon termination of this agreement | |
| 16. | The Service Provider’s IT department will be allowed access to tenant’s designated areas as per the floor plan that forms a part of the Nogales facility rental TSA for purposes of providing the services that are included in this agreement. The landlord’s IT department will have the right to access the tenant’s IT data in order to provide the services that are included in this agreement The Service Recipient will hire an onsite IT support to oversee all of the Service Recipient’s IT operations. To the extent that the IT services listed in the services provided section of this TSA are required from the Service Provider, for whatever reason including but not limited to the inexperience of the Service Recipient’s IT Manager or the failure to the Service Recipient to hire an IT Manager by the |
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| commencement date of this agreement, the Service Recipient agrees that they will accept charges for services provided in accordance with the Pricing and Payment Terms provision #3 as shown in this agreement. |
TAX STATUS
| 1. | Service Provider — Payments received under the terms of this agreement will be considered taxable income in Mexico | |
| 2. | Service Recipient — Payments made under the terms of this agreement will be tax deductible in Mexico |
BILLING LOCATION
| 1. | Nogales, Sonora, Mexico |
NOTICES
| All correspondence with respect to this agreement should be sent to the Service Owners listed above with copies to the following; |
| 1. | Service Provider — Suzy Lee | ||
| 666 East Dyer Road | |||
| Santa Ana, Ca. 92705 | |||
| 2. | Service Recipient — Dan Kelly | ||
| Xylem Inc. | |||
| Suite 2000 | |||
| 1133 Westchester Avenue | |||
| White Plains, NY 10605 |
NOTICE REQUIREMENTS
| Prior Notice Requirement to | ||||
| No. | Third Party Provider | Terminate Service | ||
| None required | See Term and Option above |
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PRICING & PAYMENT TERMS
| 1. | The monthly fixed charge for finance, accounting, accounts payable and payroll services will be Cost plus 2% - 10% Mexico Pesos (notional US$) for the term of this agreement — Payable in Mexico Pesos | |
| 2. | The monthly fixed charge for import and export services will be Cost plus 2% - 10% Mexico Pesos (notional US$) for the term of this agreement — Payable in Mexico Pesos | |
| 3. | IT Services, as defined in this agreement, will be charged on a time and materials basis. Materials will be charged at Service Provider’s cost and required labor will be charged at a rate of Cost plus 2% - 10% Mexico Pesos (notional US$) per hour. Invoices will be prepared monthly and mailed to the Service Recipient via email. | |
| 4. | There will be no additional backup attached to these invoices for items 1 and 2 above. For item 3 copies of vendor invoices will be attached to the invoice to support the materials charges and timesheets showing the number of hours and dates worked by person will be attached to support labor charges | |
| 5. | VAT of 11% will be added to all invoices | |
| 6. | All invoices must be issued in accordance with the applicable tax regulations. | |
| 7. | The 1st invoice will be dated the same date as the Distribution Date | |
| 8. | Invoice payment terms are net 30 days from invoice date. | |
| 9. | Subsequent invoices will follow every 30 days | |
| 10. | Exit costs as well as costs incurred to respond to inquiries by the authorities by the Service Provider on behalf of the Service Recipient will be invoiced & billed by the Service Provider as soon as practicable with appropriate backup documentation. |
OBLIGATIONS OF SERVICE RECIPIENT
Service Recipient hereby expressly agrees to indemnify Service Provider for any
liabilities, damages, costs, expenses, settlement amounts, duties, or fines, including court costs
and reasonable attorney fees, arising from Service Provider providing the PROSEC-Related Services
to the Service Recipient; provided, however, that Service Provider shall not be entitled to be
indemnified for any such liabilities, damages, costs, expenses, settlement amounts, duties, or
fines, including court costs and reasonable attorney fees arising as a result of Service Provider’s
negligence or willful misconduct in providing the PROSEC-Related Services.
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SCHEDULE AB15
SUBCONTRACT ARRANGEMENT IN WUXI
SUBCONTRACT ARRANGEMENT IN WUXI
SERVICE OWNER
All service matters and general inquiries regarding this service should be directed to:
| Name | Title | Phone | ||||
Service |
||||||
Provider |
||||||
Paul Chen
|
Finance Controller — Motion | +86 (510) 8855 6108 | paul.chen@itt.com | |||
and
|
Tech Wuxi | |||||
Stephen Chan
|
China Share Service Manager | +852 2732 2720 | stephen.chan@itt.com | |||
Service Recipient |
||||||
Meng Hing Chua
|
Vice President and Director of Finance | +86 (021) 2208 2888 Ext. 1333 |
menghing.chua@xyleminc.com |
PARTIES TO THE AGREEMENT
Service Provider: ITT High Precision Manufactured Products (Wuxi) Co.,
Ltd. of No. 570 Yangda Road, Meicun, New District, Wuxi City, the PRC
Service Recipient: ITT (Shanghai) Trading Co. Ltd. of Suite 3011-3014, Floor
30, Tower A, Hongqiao Shanghai City, 100 Zunyi Road, Changning District,
Shanghai, the PRC
GENERAL SERVICE DESCRIPTION
Service Provider will operate and manage (the “Service”) Service
Recipient’s flow control business at the premises (the “Business”) currently
located in the Premises during the term of this transition services agreement in a
substantially similar manner, with the same level of customer service and response time
with the same degree of reasonable skill and care and with the same level of security and
control as the Business was operated and managed during the twelve month period prior to
the Distribution Date. Service Provider will provide various services in connection with
the operation and management of the Business including but not limited to the services set
forth in “Services to be Provided”.
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TERM AND OPTION
| 1. | Term. The Minimum Service Period for this Schedule commences on the Distribution Date to March 31, 2012 and, if Service Recipient has not served a notice on Service Provider to terminate the Service, shall be further extended to May 31, 2012 (the term of Service is hereinafter referred as the “Term”). Service Recipient may terminate the Service at any time prior to the end of the Term by providing thirty (30) days prior written notice without any additional make-whole fee as required by Section 11(b) of the Agreement. | |
| 2. | Surviving clause. The following provisions of this Schedule shall survive the termination of this Schedule: (a) “Indemnification”, (b) paragraphs 6 and 7 of “Pricing, Payment Terms” (Audit, Post-termination Revenues and Expenses), (c) paragraph 4 of “Term and Option” (Access to Business Records After the Term), (d) “Insurance” with respect to managing post Term claims and (e) “Tax Status”. | |
| 3. | Access to the Premises and Business Records during the Term. In addition to the right of access given to Service Recipient pursuant to Section 3(a) of the Agreement, during the Term, Representatives of Service Recipient (or its designee) shall be given access to the Premises during regular business hours if and to the extent reasonably necessary to: |
| 3.1 | provide or receive any of the Services; | ||
| 3.2 | examine, copy or photocopy, at Service Recipient’s expense, the Business Records, the Business Contracts and the purchase orders, customer invoices and any other contracts and/or agreements signed with the relevant customers, suppliers, distributors and agents relating to or in connection with the Business, during business hours and on reasonable prior written notice, to enable Service Recipient to verify the information contained in the monthly balance sheet and the monthly profit and loss accounts that Service Provider furnishes to Service Recipient in accordance with “Services to be Provided” and to determine the amount of the Monthly Costs payable by Service Provider or Service Recipient, as the case may be; and | ||
| 3.3 | to inspect or examine the Assets, or otherwise transfer the Assets out of the Premises, as the case may be. |
| 4. | Access to Business Records after the Term. For a period of seven (7) years from the expiration date of the Term: |
| 4.1 | Service Provider shall make available, and allow Service Recipient (or its designee) to make copy of at Service Recipient’s expense, any books, accounts, returns and records (not delivered to Service Recipient (or its designee) prior to the expiration date of the Term (including, without limitation, Service Provider’s statutory books and accounting records, tax records, and all other records relating to the Business) which contain information which should be provided to Service Recipient (or its designee) or which is required for the purpose of the Business, any annual, tax or other returns, audits in connection with it for inspection by Representatives of Service Recipient (or its designee) during working hours on reasonable advance notice being given; | ||
| 4.2 | If any Business Information is not in the possession of Service Recipient (or its designee) or readily discoverable by Service Recipient (or its designee) but is in the possession or under the control of or available to Service Provider or any other member of its Group, Service |
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| Provider shall deliver copies of such Business Information to the Service Recipient promptly on request. |
SERVICES TO BE PROVIDED
| 1. | Export/Import | |
| 2. | Materials Planner | |
| 3. | Material and Logistics | |
| 4. | Plant Purchasing | |
| 5. | Warehouse (excluding bonded material) | |
| 6. | Shipment | |
| 7. | Logistics | |
| 8. | IT Support | |
| 9. | Customers Support | |
| 10. | Accounts Payable Invoice Processing including bank disbursements and reconciliations | |
| 11. | Accounts Receivable Invoice processing and collection | |
| 12. | Manufacturing and assembly of the products the Business produces | |
| 13. | Certain administrative and tax preparation/filing services | |
| 14. | Facility and related services that enable to the Business to continue operations | |
| 15. | Payroll and all HR services, for the employees Service Provider utilizes to operate and manage the Business | |
| 16. | Foreign exchange verification | |
| 17. | External audit and relating consulting services | |
| 18. | Vendor and customer data maintenance | |
| 19. | Accounting services to maintain accounting records | |
| 20. | Security | |
| 21. | Environmental, health and safety services | |
| 22. | Administrative services, including office supplies and equipment, location assistant, reception and shuttle bus/car service | |
| 23. | All other services which were provided to Service Recipient in the last twelve months | |
| 24. | Invoice and payment. Service Provider shall maintain separate accounts for the Business during the Term. As promptly as practicable and in any event within ten (10) Business Days after the beginning of each calendar month, Service Provider shall prepare and deliver to Service Recipient a balance |
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| sheet as at the end of the preceding calendar month and the profit and loss account in respect of the preceding calendar month (including separate line items for the Monthly Costs, Monthly Expenses and Monthly Revenues) in respect of the Business, prepared in accordance with the Generally Accepted Accounting Principles of the PRC and certified by the Finance Manager of Service Provider. |
| 25. | Affixation of company chop. To the extent that any documents of Service Recipient (or its designee) need to be affixed with the company chop of Service Provider, Service Provider shall render all assistance to execute or affix its company chop on all such documents as Service Recipient (or its designee) may from time to time reasonably request for the purpose of vesting in it the full benefit of the Business, provided such request has been approved by the General Manager of Wuxi Flow Control Business and the Legal Counsel of Service Recipient (or its designee). |
EMPLOYEES
| 1. | In addition to the Services to be provided by Service Provider to Service Recipient above, during the Term Service Provider shall supervise the Employees in accordance with the terms in this section. | |
| 2. | Service Provider shall: |
| 2.1 | continue the employment of the Employees with Service Provider to ensure that the Business shall be carried on in the ordinary course of business; and | ||
| 2.2 | allow the Employees to perform their duties under the supervision of, fully comply with directions and instructions received from, and promptly carry out orders and assignments given by, any of the Representative of Service Recipient. Notwithstanding the forgoing, the Parties acknowledge and agree that the Employees shall comply with or otherwise subject to the policy (including compensation and benefits policy), handbook or guidelines as applicable to other employees of Service Provider. |
| 3. | Service Recipient and Service Provider acknowledge the importance of Employees to the ongoing success of the Business subsequent to the Distribution Date. In order to maintain continuity of their employment with Service Provider, Service Recipient shall request that Service Provider provide long term incentives to those Employees who continue their employment with Service Provider during the Term and Service Recipient shall be responsible for any and all costs associated with these long term incentives. | |
| 4. | Upon Service Recipient’s request, Service Provider shall terminate, or procure its staffing agency to terminate, any of the Employees during the Term. Notwithstanding the foregoing, Service Provider may, without the prior approval of Service Recipient, terminate the employment of any Employee in good faith on reasonable grounds pursuant to the employment laws and regulations of the PRC provided that Service Provider shall notify Service Recipient forthwith its decision of termination. |
TRANSFER OF EMPLOYEES
| 1. | Service Provider acknowledges and confirms that each of the Employees working in the Business, a list of whom appears in the Annex (the “Employees”), has signed a confirmation letter with Service Provider on or prior to the date of this Agreement, pursuant to which: |
4
| 1.1 | the relevant Employee agrees to terminate the employment relation with Service Provider and establish a new employment relationship with Service Recipient (or its designee), on the expiration date of the Term or on a date to be agreed between Service Provider and Service Recipient (or its designee) (“Employee Transfer Date”); | ||
| 1.2 | such Employee shall, upon entering into a new employment contract with Service Recipient (or its designee), be entitled to a long term incentive for continuing his or her employment with Service Provider during the Term at the costs and expenses of Service Recipient (or its designee); and | ||
| 1.3 | the Service Provider shall procure Service Recipient (or its designee) to recognize such Employee’s years of service with Service Provider and any annual leave that such Employee accrued but did not take while employed by Service Provider as of the Employee Transfer Date, and the Employee shall waive any claim against Service Provider for statutory severance pay or compensation for accrued but unused annual leave. |
| 2. | Service Provider and Service Recipient (or its designee) shall within fifteen (15) Business Days before the end of the Term jointly issue a written notice to all Employees, confirming the Employee Transfer Date and enclosing the new employment contract to be signed by Service Recipient (or its designee) with each of the Employees. | |
| 3. | Service Provider shall pay Employees wages, bonuses, overtime pay, social insurance, statutory severance and housing fund contributions and other payments and benefits of such Employee in relation to his or her employment with Service Provider in accordance with the employment laws and regulations of the PRC during the Term up to and including the expiration date of the Term, provided that Service Recipient shall reimburse Service Provider all such payment incurred during the Term in accordance with “Pricing and Payment Terms”. | |
| 4. | Notwithstanding the provisions of Section 2(a)(ii) of the Agreement, with regard to any Employee who fails to enter into the new employment contract with Service Recipient (or its designee) effective on the Employee Transfer Date, Service Recipient shall bear all responsibilities to each such Employee for statutory severance pay related to the termination of the employment relationship between such Employee and Service Provider and compensation for accrued but unused annual leave calculated in accordance with the laws and regulations of the PRC from the date such employment relationship began until the Employee Transfer Date. |
INSURANCE
| 1. | Notwithstanding the provisions of Section 10(b) of the Agreement and without prejudice to its express obligations under this Schedule, Service Provider agrees that during the Term, it will maintain, at Service Recipient’s expenses, insurance policies covering the Business similar in scope, amount and coverage as Service Provider maintained during the twelve month period prior to the Distribution Date. In the event any claim needs to be made under these insurance policies, Service Provider will make such claim on Service Recipient’s behalf and transfer to Service Recipient all funds received less any out of pocket costs incurred in collection of such funds. |
5
INDEMNIFICATION
| 1. | Notwithstanding anything in the Agreement to the contrary, the indemnification obligations and procedures set forth in Article VII of the Distribution Agreement shall apply to any Indemnifiable Losses (as defined in the Distribution Agreement) Service Provider or any member of its Group incurs as a result of or in connection with providing the Services described in this Schedule. For the avoidance of doubt, Service Provider (or such member of its Group that has suffered an Indemnifiable Loss) shall be the “Indemnitee” and Service Recipient the “Indemnifying Party”, as such terms are defined in the Distribution Agreement. Notwithstanding the foregoing or anything in the Distribution Agreement to the contrary, Service Provider shall be permitted to consent to entry of judgment or settle any claim without the consent of Service Recipient and remain entitled to indemnification from Service Recipient; provided, that any such judgment or settlement is for a monetary amount under USD5,000; provided further that any such consent, judgment or settlement does not permit or provide for any injunction, declaratory relief, other order or other non-monetary relief to be entered against Service Recipient or any member of its Group. | |
| 2. | For the period of seven (7) years from the expiration date of the Term, upon any claim being made against Service Provider, Service Recipient shall give such information and assistance to Service Provider for the purpose of avoiding, disputing, resisting, compromising, defending or contesting any such claim and liability, including: |
| 2.1 | assignment of a legal advisor or a Representative appointed by Service Recipient to work with Service Provider or its professional advisors in avoiding, disputing, resisting, compromising, defending or contesting any such claim and liability; and | ||
| 2.2 | access (during business hours and on reasonable prior written notice) such access to its personnel and to any relevant records and information in relation to the Business as Service Provider or its professional advisers reasonably request. |
LOCATIONS
The premises of Service Provider located at Building 3, No.
570 Yangda Road, Meicun, New District, Wuxi City, the PRC
(“Premises”).
PREREQUISITES/DEPENDENCIES
| 1. | Service Provider and Service Recipient shall enter into an Asset Purchase Agreement (“APA”) pursuant to which Service Recipient shall agree to purchase from Service Provider all of the Assets and assume all of the liabilities related to the Business. | ||
| 2. | Each Employee signs a letter confirming his or her agreement to be retained by Service Provider during the Term and to be transferred to Service Recipient (or its designee) with effect from the expiration date of the Term (or a date agreed by the Parties) in accordance with the section “Transfer of Employees. |
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TAX STATUS
| 1. | Monthly Costs received by Service Provider under this Schedule during the Term shall be considered taxable income in China. Service Provider shall: |
| 1.1 | duly file all tax returns and provided all information required or requested to be delivered to any tax authority. All such returns and information remain correct and complete and none is, or is likely to become, the subject of any investigation or dispute by or with any tax authority; | ||
| 1.2 | prepare, keep and preserve complete, accurate and up-to-date records both as required by law and to enable it to deliver correct and complete tax returns and to calculate any present or, so far as possible, future tax liability of Business or the entitlement of the Business to claim any relief. |
| 2. | Notwithstanding the foregoing, any tax payable by Service Provider arising from the provision of Service or the operation of the Business shall be borne by Service Recipient (or its designee) in accordance with “Pricing and Payment Terms”. |
BILLING LOCATION
NOTICES
NOTICES
| All correspondence with respect to this agreement should be sent to the Service Owners listed above with copies to the following: |
NOTICE REQUIREMENTS
SERVICE PROVIDER:
Address:
2405-6, 24/F, ING tower, 308 Dec Voeux Road Central, Hong Kong
2405-6, 24/F, ING tower, 308 Dec Voeux Road Central, Hong Kong
Fax: +852 2732 2919
For the attention of: Mr. Stephen Chan, China Share Service Manager
SERVICE RECIPIENT:
Address:
Suite 3011-3014, Floor 30, Tower A, Hongqiao Shanghai City, 100 Zunyi Road, Changning District, Shanghai, the People’s Republic of China
Suite 3011-3014, Floor 30, Tower A, Hongqiao Shanghai City, 100 Zunyi Road, Changning District, Shanghai, the People’s Republic of China
Fax: +86 (21) 2208 2999
For the attention of: Mr. Meng Hing Chua, Vice President and Director of Finance
7
PRICING & PAYMENT TERMS
| 1. | The Parties agree that, notwithstanding the provisions of Section 2(a) of the Agreement, Service Recipient (or its designee) shall be entitled to all economic rights and benefits, and shall assume all economic loss, arising from and in connection with the conduct of the Business by Service Provider during the Term. |
| 2. | During the Term, Service Recipient or Service Provider, as the case may be, shall pay an amount equal to the Monthly Costs (“Monthly Costs”) to the other Party calculated in accordance with the following formula: |
Monthly Costs = Monthly Expenses plus RMB minus Monthly Revenues
where:
Monthly Expenses means the aggregate of:
| (a) | all documented, reasonable out-of-pocket costs and expenses incurred by Service Provider which are necessary to provide Services, provided, however, that any such expenses exceeding USD5,000 per month for each Service shall require advance approval of Service Recipient; plus | ||
| (b) | all wages, bonuses, overtime pay, social insurance and housing fund contributions, and other payments, benefits, retention and severance payments due to any of the Employees retained by Service Provider for the purpose of providing the Services; plus | ||
| (c) | all rents, rates, gas, water, electricity and other outgoings (including management fees) relating to or payable in respect of the Premises; plus | ||
| (d) | any sales, services, value added or similar taxes, fees, charges, assessments, or income taxes (including any such taxes that are required to be withheld) arising from or in connection with the provision of Services; and |
Monthly Revenues means the aggregate of:
| (a) | all revenues, rebates, refunds or otherwise payments collected or received by Service Provider arising from or in connection with the Business, as the case may be, during the Term; plus | ||
| (b) | all rents, rates, gas, water, electricity and other outgoings (including management fees) relating to the premises located at Room 902, E3 Building, Oriental Plaza, No.1 Chang’an Avenue, Beijing 100738, PRC and payable by ITT (China) Investment Company Limited in the amount of RMB per calendar month for the period from 31 October 2011 to 31 December 2011 and RMB per calendar month for the period from 1 January 2012 to the expiration date of the Term. In the event a total of RMB is not added to Monthly Revenue over the life of the Term by the month prior to the end of the Term, the last month of the Term shall include that amount such that the total amount included in Monthly Revenue under this subsection (b) during the whole Term will equal RMB . |
8
| 3. | An amount equal to the Monthly Costs shall be paid by Service Recipient or Service Provider, as the case may be, to the other Party in the following manner: |
| 3.1 | If the Monthly Costs is a positive number, then Service Recipient shall pay to Service Provider the Monthly Costs in accordance with section 2(b) of the Agreement | ||
| 3.2 | If the Monthly Costs is zero, then no payment is due from Service Recipient or Service Provider to the other Party. | ||
| 3.3 | If the Monthly Costs is a negative number, then Service Provider shall pay to Service Recipient the Monthly Costs in accordance with Section 2(b) of the Agreement. |
| 4. | For the avoidance of doubt, no additional mark-up or inflation rate, as specified in Section 2(a)(i) of the Agreement, shall apply to any sum payable by Service Recipient to Service Provider under this Schedule. | |
| 5. | Taxes related to sums payable. Each Party shall pay all sums payable by it under this Schedule free and clear of all deductions or withholdings unless the law requires a deduction or withholding to be made. If a deduction or withholding is so required, the relevant Party shall pay such additional amount as will ensure that the net amount the payee receives equals the full amount which it would have received had the deduction or withholding not been required. | |
| 6. | Audit. Service Provider and Service Recipient shall, as promptly as practicable and in any event within fifteen (15) Business Days following the expiration date of the Term, jointly appoint Deloitte & Touche, or such other accounting firm as may be agreed to (“Auditors”) to conduct an audit of the accounts of the Business. The auditor shall, within thirty (30) days from its engagement, prepare and deliver to the Parties an audited balance sheet to be made up as at the expiration date of the Term and an audited profit and loss account for the period from the Distribution Date to the expiration date of the Term in respect of the Business, in accordance with the Generally Accepted Accounting Principles of the PRC. The costs and expenses of engaging the Auditors shall be borne by Service Recipient (or its designee). The balance sheet and profit and loss account prepared by the Auditors shall, in the absence of manifest error, be final and binding on the Parties. The Auditors shall be deemed to act as an expert and not as an arbitrator. | |
| 7. | Post-termination Revenues and Expenses. To the extent that any payment, rebate or refund is made to Service Provider in respect of the Business after the expiration date of the Term, Service Provider shall receive the same as trustee, place the same in a separate bank account, record the payment separately in its books, and account to Service Provider for the same within five (5) Business Days after the end of each calendar month for all funds collected during such calendar month. To the extent that any cost or expense is paid by Service Provider after the expiration date of the Term in connection with the Business arising from an act, event or circumstance that occurs during the Term, Service Provider shall provide Service Recipient with all relevant invoices, receipts and contracts, as the case may be, and Service Recipient shall, upon verifying the documents provided, pay to Service Provider within five (5) Business Days after the end of each calendar month for all payments made by Service Provider arising from or in connection with the Business during such calendar month. | |
| 8. | At the expiration date of the Term, the Service Provider will assist the Service Recipient to physically transfer to Service Recipient (at Service Recipient’s cost) all Assets and liabilities within Service Provider’s possession or control and associated with the Business to Service Recipient’s facilities. In |
9
| addition, within thirty (30) Business Days after the expiration date of the Term, the Service Provider and Service Recipient shall work together in good faith to identify the Assets and liabilities of the Business that shall be transferred to Service Provider at the end of the Term and that were not paid for or accounted for under the Pricing and Payment Terms section of this Agreement or the APA (the “Specified Assets and Liabilities”). The Service Provider and Service Recipient shall, within such thirty (30) Business Days agree on the amount of the Specified Assets and Liabilities and the Service Provider or Service Recipient, as appropriate shall, pay to the other, the agreed to amount such that Service Provider is reimbursed for its costs or expenses associated with the Specified Assets and Liabilities after the Term and Service Recipient has obtained the economic benefit of the Specified Assets and Liabilities and the Business during the Term. |
Definitions
| 1. | Definitions and interpretation of words and expressions used in this Schedule shall be as set forth below: | |
| “APA” has the meaning set out in “Prerequisites/Dependencies”. | ||
| “Assets” means the assets of Service Provider relating primarily to, used primarily in, or arising primarily from, the Business, to be transferred to Service Recipient pursuant to the APA and the assets purchased during the Term relating primarily to, used primarily in, or arising primarily from the Business. | ||
| “Auditors” has the meaning set out in “Pricing and Payment Terms”. | ||
| “Business” has the meaning set out in “General Service Description”. | ||
| “Business Contracts” means customer contracts, supplier contracts, and all other contracts and engagements entered into and orders placed or received (a) on or before the Distribution Date by or on behalf of Service Provider in connection with the Business and which at Distribution Date remain (in whole or in part) to be performed; and (b) during the Term. | ||
| “Business Days” means, for the purpose of this Schedule, a day (excluding Saturdays, Sundays and public holidays) on which banks generally are open in the PRC for the transaction of normal banking business. | ||
| “Business Information” means all information relating to the Business, existing at the Distribution Date or otherwise arising during the Term, including but not limited to details of customers, suppliers, distributors and agents, sales targets, sales statistics, market share statistics, market surveys and information relating to future business development or planning, information relating to discounts, commissions and rebates received and/or paid and litigation or legal advice, in whatever form (including computer disks or tapes) that information may be recorded or stored. | ||
| “Business Records” means all books and records in whatever form (including computer disks or tapes) containing or relating to Business Information or on which Business Information is recorded or stored. |
10
“Employees” means the employees physically located at the Premises, employed by Service
Provider to support the Business immediately prior to the Distribution Date, a list of whom is
stated in the Annex.
“Employees Transfer Date” has the meaning set out in “Transfer of Employees”.
“Monthly Costs” has the meaning set out in “Pricing and Payment Terms”.
“Parties” mean collectively, Service Provider and Service Recipient of this Schedule,
and a “Party” means either of them.
“PRC” means the People’s Republic of China excluding, for the purpose of this Agreement,
Hong Kong Special Administrative Region, Macau Special Administrative Region, and Taiwan.
“Premises” has the meanings set out in “Locations”.
“Representatives” means, the Service Owners identified under the section entitled
“Service Owner” or such other person(s) designated by Service Recipient (or its designee) from
time to time.
“RMB” means Renminbi, the lawful currency of the PRC.
“Service” has the meaning set out in “General Service Description”.
“Term” has the meaning set out in “Term and Option”.
“USD” means United States Dollars, the lawful currency of the United States of America.
11
Annex
List of Flow Control Employees in Wuxi
The employees who are retained by Service Provider to provide the Services are set forth below:
| Employee | Candidate (Chinese | Candidate (English | ||||
| No | Name) | Name) | Position | |||
0200301
|
GM, Flow Control | |||||
0868003
|
Black Belt | |||||
0820040
|
Finance Manager | |||||
0820022
|
Sr. Cashier & Bank Accountant | |||||
0820008
|
Finance Supervisor | |||||
0820032
|
AR Accountant | |||||
0830002
|
IT Supervisor | |||||
0863003
|
ESH Officer | |||||
0840020
|
HR Supervisor | |||||
0840003
|
HR & Adm. Assistant | |||||
0200312
|
P&P Supervisor | |||||
0200318
|
Purchasing Engineer | |||||
0870008
|
Sr. Sourcing Engineer | |||||
0870013
|
Sourcing Engineer | |||||
0860013
|
Warehouse Keeper | |||||
0860017
|
Forklift Worker | |||||
0860042
|
Forklift Worker | |||||
0860048
|
Forklift Worker | |||||
0860059
|
Forklift Worker | |||||
0860038
|
CSR Supervisor | |||||
0200311
|
Customer Service Representative | |||||
0200313
|
Customer Service Representative | |||||
0200304
|
Customer Service Representative | |||||
0200314
|
Customer Service Representative | |||||
0200310
|
Customer Service Representative | |||||
0100336
|
Customer Service Representative |
12
| Employee | Candidate (Chinese | Candidate (English | ||||
| No | Name) | Name) | Position | |||
0200315
|
Customer Service Representative | |||||
0860004
|
Customs Assistant | |||||
0860047
|
Customs Declarant | |||||
0865022
|
Incoming Inspector | |||||
0865009
|
QA Inspector | |||||
0100303
|
QA Inspector | |||||
0200303
|
Assistant Production Manager | |||||
0200209
|
Manufacturing Engineer | |||||
0100312
|
Manufacturing Engineer | |||||
0100306
|
Foreman | |||||
0100302
|
Assembler | |||||
0100307
|
Assembler | |||||
0100308
|
Assembler | |||||
0100313
|
Assembler | |||||
0100315
|
Assembler | |||||
0100316
|
Assembler | |||||
0100322
|
Assembler | |||||
0100325
|
Assembler | |||||
0100327
|
Assembler | |||||
0100328
|
Assembler | |||||
0100339
|
Assembler | |||||
0100340
|
Assembler | |||||
0100342
|
Assembler | |||||
0100344
|
Assembler | |||||
0100345
|
Assembler | |||||
0100218
|
Assembler | |||||
0100222
|
Assembler | |||||
0100227
|
Assembler | |||||
0100229
|
Assembler | |||||
0100230
|
Assembler |
13
| Employee | Candidate (Chinese | Candidate (English | ||||
| No | Name) | Name) | Position | |||
0100351
|
Assembler | |||||
0100363
|
Assembler | |||||
0680002
|
Assistant Marketing Communication Manager |
|||||
0680003
|
Product Manager | |||||
0680004
|
Sales Manager | |||||
0680005
|
Sales Manager | |||||
0680007
|
Sales Engineer | |||||
0680008
|
National Sales Manager Flow Control |
|||||
0680015
|
Sales Manager-Hygienic Business | |||||
0680018
|
Product Manager, AP | |||||
0680023
|
Product Manager, AP | |||||
0680030
|
Sales Engineer | |||||
0680031
|
Development Engineer |
14
SCHEDULE AB16
BASIC TIME AND MATERIALS SUPPORT
BASIC TIME AND MATERIALS SUPPORT
Capitalized terms used herein and not otherwise defined shall have the meaning assigned to
such term in the Agreement. The Services provided hereunder are subject in all respects to the
terms and conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this Service should be directed
to:
| Name | Title | Phone | ||||
Service Provider’s Contact |
||||||
ITT Corporation Daryl Bowker |
TSA Manager | Office:315-568-7676 | Daryl.bowker@ittcorp.com | |||
Service Receiver’s Contact |
||||||
Xylem Inc. Tim Coogan |
TSA Manager | Office 914 323-5790 | Tim.Coogan@xyleminc.com |
PARTIES TO THE AGREEMENT
Service Provider: ITT Corporation
Service Receiver: Xylem Inc.
GENERAL SERVICE DESCRIPTION
Service Receiver may need assistance after the Distribution Date from the Service Provider for
miscellaneous services, including but not limited to consulting, advisory, knowledge transfer and
1
other similar services in various areas including, but not limited to finance, tax, accounting,
insurance, treasury, human resources and communications, which are not already provided for under
all of the other TSAs between ITT Corporation, Xylem Inc., and Exelis Inc.
The Service Provider hereby agrees to cause its and its affiliates employees (collectively,
“Experts”) to provide a reasonable amount of services, including specifically the services listed
in Annex A, upon reasonable notice and request from the Service Receiver on a time and materials
basis from the Distribution Date through April 30, 2013 (the “Minimum Term” and the “Maximum
Term”).
To utilize this TSA Schedule, employees of Service Receiver should request such services via email
or telephonically where both parties have a clear expectation of the estimated number of hours of
assistance being requested. For projects that are expected to require more than 5 to 10 hours of
assistance a one or two paragraph project plan should be agreed to in order to avoid
misunderstandings. The project plan should be put together by the Service Provider’s “Expert “with
respect to the requested services.
Employees of Service Receiver should advise their TSA manager that a request for services has been
made together with a description of such services requested and the estimated number of hours
requested.
The “Expert” should advise their TSA manager that a request for services has been made and the
estimated number of hours requested.
SCOPE OF SERVICES
The scope of services will depend on the needs of the Service Recipient and the capabilities
and availability of the Experts.
LOCATIONS
All locations around the world
PREREQUISITES/DEPENDENCIES
The Experts remain employees of Service Provider. Service Receivers acknowledge and agree
that Service Provider has discretion to terminate the Experts and the Experts have the ability to
terminate their employment with Service Provider. In the event the Experts are no longer employed
by Service Provider, Service Provider will, at the request of the Service Receiver, use
commercially reasonable efforts to provide similar services. However, if Service Receivers or an
affiliate employ any of the Experts, the specific service requested under this
2
Schedule can be terminated by the Service Provider, at the Service Provider’s sole discretion on 5
business days notice to the Service Receiver.
TAX STATUS
Sales tax will be charged as determined by the Service Provider and the Service Receiver
shall pay such tax along with the payment for the service provided.
BILLING LOCATION
Service Provider will provide Service Receiver with an invoice to its address set forth
below under Notice Requirements, except in cases where services are provided outside of the United
States, in which case invoices will be created by the Service Provider’s legal entity in the
country where the services are being performed and invoiced to the Service Receiver’s legal entity
that requested the services in the Service Provider’s local currency. The bill will cover all
charges for services under this Schedule from Service Provider and, to the extent reasonably
feasible, will be itemized among Service Receiver’s legal entities if identified by the Service
Receiver when requesting the service. The invoice will contain the number of hours each Expert
worked, a short paragraph describing the services and the US dollar amount per Expert.
The Experts shall track their time on either a time sheet or any other proper method such
as the utilizing the time sheet attached hereto and Service Provider agrees that the time sheets
will accompany the invoice that is sent to the Service Recipient for payment. In cases where the
requested services are expected to take longer than 30 days to complete, the Service Provider will
be allowed to invoice the Service Receiver once per month for all costs incurred to date.
NOTICE REQUIREMENTS
No notice of Termination is required under this Schedule and there shall be no make-whole fee
under this Schedule.
Notices and bills to the Service Provider should be sent to:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
3
Notices and bills to the Service Receiver should be sent to:
Xylem Inc.
1133 Westchester Avenue
Suite 2000
White Plains, NY 10604
Attention: Tim Coogan
1133 Westchester Avenue
Suite 2000
White Plains, NY 10604
Attention: Tim Coogan
PRICING
In addition to the costs specifically set forth below, Service Receivers shall also pay all
business travel expenses relating to the Services in accordance with Service Providers documented
travel policies and any incremental out of pocket costs incurred by the Service Provider in order
to provide the requested services that are invoiced by unaffiliated 3rd parties. Service
Provider agrees to provide vendor invoices as backup to the Service Receiver when invoicing the
Service Receiver under the terms of this TSA.
The hourly rates below include a 4.5% increase for inflation and the 2% profit margin and
shall be applicable in 2011 and 2012. The rates shall increase by 4.5% in 2013. There shall be no
make whole fee due under Section 11 of the Agreement upon early termination of this TSA.
| Service | Hourly Rate* | |
Hourly Rate Administrative/Secretarial.
|
$50 per hour | |
Hourly Rate for a Non Executive
|
$100 per hour | |
Hourly Rate for an Executive
|
$150 per hour |
| * | Note: In cases where invoicing is done outside the United States, the above rates should be converted to local currency based on the exchange rate on the date the invoice is prepared. |
The pricing for the services described in Annex A will be as set forth in Annex A unless no
pricing is provided in which case if services are provided on an hourly basis the rates
above will apply.
4
Annex A
Annex A-1 Master Black Belt Training
Service Provider: ITT Corporation
Service Owner: Mary Gerstner, mary.gerstner@itt.com (914) 641-2002
Service Receiver: Xylem Inc.
Service Owner: Rod Smith, rod.smith@xyleminc.com (806) 252-4692
Service Receiver: Exelis Inc.
Service Owner: Vince Thomas, vince.thomas@exelisinc.com phone (702) 790-6351
The Service Provider will invoice the Service Receivers to equally share in out of pocket expenses
incurred to deliver a joint Master Black Belt training class and subsequent Train the Trainer
classes. Out of pocket expenses include but are not limited to Consultant expense, curriculum
binders, CDs, books, meals, and various classroom supplies. All time, travel, and related expenses
will be the responsibility of each company.
Master Black Belt training consists of 4 weeks. It will be led by one employee from each company
and supplemented with consulting expertise as needed. The curriculum delivered will be the 2011
enhanced Master Black Belt content developed jointly with the University of Michigan. Certification
will be the responsibility of each company.
5
Annex A-2
Management Reporting (HFM/Planning) Post Separation Support Requirements
Management Reporting (HFM/Planning) Post Separation Support Requirements
Following the separation of ITT into 3 companies, key management reporting resources will be
required to provide post separation support and knowledge transfer between the NewCos. High level
areas of support and knowledge transfer include:
| • | Month-end close | |
| • | Year-end close | |
| • | New Year setup and rollforward | |
| • | OpPlan, Forecast, and Budget | |
| • | Metadata Management | |
| • | Ledger Mapping | |
| • | Break/Fix Support |
Listed below are the key HFM and Planning resources whose post separation support will be required
during the period 11/1/2011 through the 2012 March Close (approximately 4/20/2012).
| November | December | January | February | March | April | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Future | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Resource | NewCo | Executive | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ITTCo | No | n/a | 48 | 48 | n/a | 48 | 24 | n/a | 48 | 24 | n/a | 36 | 12 | n/a | 36 | 12 | n/a | 12 | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Xylem | No | 48 | n/a | 48 | 24 | n/a | 24 | 24 | n/a | 24 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exelis | No | 48 | 48 | n/a | 24 | 24 | n/a | 24 | 24 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ITTCo | No | n/a | 48 | 0 | n/a | 24 | 0 | n/a | 24 | 0 | n/a | 12 | 0 | n/a | 12 | 0 | n/a | 12 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ITTCo | Yes | n/a | 48 | 48 | n/a | 24 | 24 | n/a | 24 | 24 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Xylem | No | 48 | n/a | 48 | 24 | n/a | 24 | 24 | n/a | 24 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Service Provider Owners and Service Receiver Owners are set forth under “Service Owner” above
6
SCHEDULE AB17
MANUFACTURING SERVICES TSA
SCHEDULE FOR VADODARA INDIA
MANUFACTURING SERVICES TSA
SCHEDULE FOR VADODARA INDIA
SERVICE OWNER
All service matters and general inquiries regarding this service should be directed to:
| Name | Title | Phone | ||||
Service Provider
Rabi Burman |
General Manager, ITT Corporation India Pvt Ltd. Plot No 731A, GIDC Savli, Manjusar, Savli Road. Vadodara, Gujarat 391 770 |
+91 976 633 4443 | Rabi.Burman@itt.com | |||
Service Recipient
Sam Yamdagni |
President, Xylem Water Solutions India Pvt Ltd. Plot No 731B, GIDC Savli, Manjusar, Savli Road. Vadodara, Gujarat 391 770 |
+91 22 67843080 | Sam.Yamdagni@xyleminc.com |
PARTIES TO THE AGREEMENT
| 1. | Service Provider — ITT Corporation India Pvt. Ltd. | ||
| 2. | Service Recipient — Xylem Water Solutions India Pvt. Ltd. |
GENERAL SERVICE DESCRIPTION
| 1. | Manufacturing of Xylem products | ||
| 2. | Finance & Accounting Services | ||
| 3. | Accounts Payables Services |
TERM AND OPTION
| 1. | Minimum Service Period — 2 months — Commencing on the Distribution Date. The Term can be extended through June 30, 2012 with the mutual consent of both parties. | ||
| 2. | The Monthly Costs are set forth below under Pricing & Payment Terms. The Service Recipient and Service Provider agree that, except as set forth in this Manufacturing Services TSA Schedule for Vadodara India (“this TSA”) no additional 2%, 10% or 4.5% increase in such pricing should be applied as set forth in Section 2 of the Agreement. | ||
| 3. | Service Recipient shall have the option to terminate this Agreement at any time, with no additional make-whole fee as required in Section 11(b) of the Agreement, after the 1st 3 months with 1 month advance written notice to the Service Provider. |
1
SERVICES TO BE PROVIDED
| 1. | Manufacturing of Xylem products |
| a. | Provide order acknowledgement to Xylem India for the orders placed | ||
| b. | Manufacture Xylem products based on orders placed by Xylem India and supervised by Xylem India employees seconded to ITT | ||
| c. | Use Xylem assets and processes currently employed in Baroda and manufacture products per SOPs | ||
| d. | Manage the factory employees seconded to ITT by Xylem | ||
| e. | Place orders to suppliers on a timely manner and manage inventories in order to properly supply & fulfill customer orders | ||
| f. | Ship finished goods directly to Xylem customers as requested in the purchase order | ||
| g. | Maintain records of purchase cost based on latest purchase price as per BOM, stores and spares and packing material purchased for products manufactured by Xylem Water Solutions India Private Limited | ||
| h. | Invoice Xylem for the manufacturing services on a monthly basis |
| 2. | Finance and accounting services |
| a. | Maintain general ledger and chart of accounts | ||
| b. | Reconcile balance sheet accounts at a minimum of once per quarter with respect to accounts payable, inventory, loans and advances, current liabilities and fixed assets | ||
| c. | Prepare and file all required statutory reports with the appropriate governmental authorities on a timely basis | ||
| d. | Fixed Asset accounting and reconciliation of Fixed Assets register to GL | ||
| e. | Respond to special requests from service recipients legal advisors | ||
| f. | Respond to Service Recipient’s ad hoc requests for financial data in a timely manner within reason | ||
| g. | Respond to Service Recipient’s ad hoc requests for financial data with respect to Service Recipient’s business in a timely manner within reason | ||
| h. | Provide auditable information with respect to Debit notes raised on Service Recipient |
| 3. | Accounts Payable Services |
| a. | Process vendor invoices for payment as per payment terms approved by the Service Recipient. Any advance payment exceeding INR 200K shall require to be funded by Service Recipient | ||
| b. | Perform 3 way match in Accounts payable system | ||
| c. | Review invoice approvals | ||
| d. | Maintain PO balance when partial shipments | ||
| e. | Maintain firm control over purchase orders (Note: all other purchasing department activities to be performed by the Service Recipient) |
| 4. | Administrative Services |
| a. | Security | ||
| b. | Nurse Station | ||
| c. | Horticulture | ||
| d. | Water |
2
| e. | Electricity | ||
| f. | Housekeeping | ||
| g. | Pantry | ||
| h. | Telephone | ||
| i. | DG Set |
LOCATIONS
IP facility located at the following address;
Plot No 731A, GIDC Savli, Manjusar, Savli Road.
Vadodara, Gujarat 391 770, India
Vadodara, Gujarat 391 770, India
3
PREREQUISITES/DEPENDENCIES
| 1. | After the termination of this agreement, it may be necessary from time to time for the Service Provider, on behalf of the Service Recipient, to respond to inquiries made by government authorities about Service Recipient’s financial statements and tax filings, including providing support for audits. In this event, the Service Provider will contact the Service Recipient and agree on an appropriate course of action and response. To the extent that Service Provider’s resources are to be used to respond to the inquiries, the Service Provider will be entitled to invoice the Service Recipient at the following rates per hour provided if assistance is needed under this section after 2012, the parties will renegotiate such rates in good faith; |
| a. | Clerical — US Cost plus 2% - 10% | ||
| b. | Professional — US Cost plus 2% - 10% | ||
| c. | Management — US Cost plus 2% - 10% |
| 2. | At the termination of this agreement, the Service Recipient will provide the necessary support at its own expense to transfer data to its own systems. The Service Provider will agree to provide training to the Service Recipient’s employees on the Service Provider’s premises or via conference call / web ex prior to the termination of the agreement. The Service Provider will not be required to send any of its employees to any other Service Recipient location. | |
| 3. | In the event of 3rd party claims against the Service Recipient which are unrelated to this agreement, the Service Recipient agrees to indemnify the Service Provider for any costs that the Service Provider may incur in the event that the 3rd party elects to also claim damages against the Service Provider because of their relationship with the Service Recipient. The Service Recipient also agrees to defend the Service Provider at its sole cost to the extent permitted to do so under Indian Law. | |
| 4. | All inventories and open purchase orders made on behalf of Service Recipient therein will be transferred to Service Recipient at the actual cost on completion of this TSA. | |
| 5. | The Service Recipient shall accept all invoices pertaining to the manufacturing activities of the Service Recipient during the TSA period even if the same are paid after the TSA period. |
TAX STATUS
| 1. | Service Provider — Payments received under the terms of this agreement will be considered taxable income in India | |
| 2. | Service Recipient — Payments made under the terms of this agreement will be tax deductible in India | |
| 3. | Service Provider takes credit of service tax paid on employee secondment |
4
BILLING LOCATION
NOTICES
All correspondence with respect to this agreement should be sent to the Service Owners
listed above with copies to the following;
| 1. | Service Provider — Joanne Scalard |
1133 Westchester Ave, Suite 2000
White Plains, NY 10605
| 2. | Service Recipient — Dan Kelly |
1133 Westchester Avenue, Suite 3000
White Plains, NY 10605
NOTICE REQUIREMENTS
| Prior Notice Requirement to | ||||
| No. | Third Party Provider | Terminate Service | ||
| None required | See Term and Option above |
5
PRICING & PAYMENT TERMS
| 1. | The monthly charges for contract manufacturing services provided under this TSA will be INR Cost plus 2% - 10% to the actual costs incurred. |
| a. | Service Recipient has an option to extend the TSA for another 3 months at the same monthly rate | ||
| b. | Service provider calculates all variable costs monthly — direct material and other costs (PPV, packaging, stores & spares, freight, customs, related to the manufacturing activity) and invoices the Service Recipient. | ||
| c. | Service Provider, to the extent possible, will use the inventories and other material available to it and which are a part of the Transferred Physical Assets to execute the purchase orders placed by the Service Recipient. | ||
| d. | Service Recipient will charge as service fee 5% of the cost of Direct Labor and Indirect Labor being supplied (seconded) to the Service Provider. |
| 2. | The monthly charges described above will be adjusted as follows: |
| a. | Service Provider and Service Recipient agree that the Line Items (defined later) pertaining to the Water Business (as that term is defined in the Slump Sale Agreement executed by and between the Service Provider and the Service Recipient on even date) of the Seller on 1 October 2011 are: (i) Accounts Receivable: INR [•]; (ii) Accounts Payable: INR [•]; and (iii) Inventories: INR [•]; | ||
| b. | Service Provider and Service Recipient estimate that the Line Items pertaining to the Water Business (as that term is defined in the Slump Sale Agreement executed by and between the Service Provider and the Service Recipient on even date) of the Seller on 30 October 2011 (Estimated Accounts) will be: (i) Accounts Receivable: INR [•]; (ii) Accounts Payable: INR [•]; and (iii) Inventories: INR [•]; | ||
| c. | Service Provider and Service Recipient will: (i) calculate the Line Items pertaining to the Water Business (as that term is defined in the Slump Sale Agreement executed by and between the Service Provider and the Service Recipient on even date) of the Seller on 30 October 2011 (Completion Accounts); (ii) if the value of the Line Items in the Completion Accounts Differ is greater than the value of the Line Items set out in the Estimated Accounts, Service Receiver will pay Service Provider the difference together with the monthly charges for October 2011 as calculated at 1 above; and (iii) if the value of the Line Items in the Completion Accounts is lesser than the value of the Line Items set out in the Estimated Accounts, Service Recipient will deduct that difference from the monthly charges payable for October 2011 as calculated at 1 above difference |
For this purpose Line Items means the value of Accounts Payable, Accounts Receivable, and
Inventories of the Water Business of the Seller as set out in the unaudited [management] accounts
on each relevant date.
6
| 3. | All Invoices are payable in Indian Rupees (INR). | ||
| 4. | Invoices will be prepared monthly and mailed to the service recipient via email or regular mail. | ||
| 5. | Service Provider to attach additional backup of all variable costs (direct materials, attached to these invoices). | ||
| 6. | The 1st invoice will be dated on the last day of the financial closing in November | ||
| 7. | Invoice payment terms are net 30 days from invoice date. | ||
| 8. | Subsequent invoices will follow every 30 days |
7
SCHEDULE AB18
SERVICES TSA ANNEX FOR
AXMINSTER
SERVICES TSA ANNEX FOR
AXMINSTER
SERVICE OWNER
All service matters and general inquiries regarding this service should be directed to: John
Veness
| Name | Title | Phone | ||||
Service Provider
John Veness |
General Manager | +44(0) 1297 630247 | John.Veness@itt.com | |||
Service Recipient
Duncan Lewis |
General Manager | +44 1297 630209 | Duncan.Lewis@itt.com |
PARTIES TO THE AGREEMENT
| 1. | Service Provider: ITT Industries Ltd. | ||
| 2. | Service Recipient: Lowara UK Ltd. |
GENERAL SERVICE DESCRIPTION
| 1. | Operations Services | ||
| 2. | Import/Export Services | ||
| 3. | INTRASTAT Compliance Services |
TERM AND OPTION
| 1. | 24 months — Commencing on the date of the separation into 3 companies | ||
| 2. | The 24 month Term shall not be extended. Service Recipient will have the option to terminate this agreement at any time after the 1st 12 months with 6 months advance written notice to the Service Provider. |
SERVICES TO BE PROVIDED
| 1. | Operations Services |
| a. | Lowara may need the services of ITT’s personnel for assistance with operations reporting. | ||
| b. | Lowara may need the services of ITT’s personnel for assistance with operational processes including quality control. |
| 2. | Import/Export Services |
1
| a. | Lowara may require the assistance of ITT personnel in the matters of export and import processes. | ||
| b. | Lowara may require the assistance of ITT personnel in the matters of export and import regulatory compliance. |
| 3. | INTRASTAT Services |
| a. | Lowara may require the assistance of ITT personnel for collecting information for INTRASTAT. | ||
| b. | Lowara may require the assistance of ITT personnel for reporting information to the governmental authorities for INTRASTAT. |
2
LOCATIONS
| 1. | Lowara facility located at the following address: |
Lowara UK Ltd.
Millwey Rise Industrial Estate
Axminster EX13 5HU, United Kingdom
Millwey Rise Industrial Estate
Axminster EX13 5HU, United Kingdom
PREREQUISITES/DEPENDENCIES
| 1. | Real Estate Sublease is in effect. | |
| 2. | Service Recipient will follow all of Service Provider’s Environmental, Safety, & Health (ES&H) policies and procedures while using the pump testing facilities. Service Provider will provide its ES&H written policies to Service Recipient at the outset of this agreement and agrees to provide overview training prior to the Service Recipient’s use of the pump testing facilities. | |
| 3. | Service Recipient’s customers will be granted access to the test facility along with Service Recipient’s representatives for a customer witnessed pump test. | |
| 4. | Service recipient is precluded from hiring Service Provider’s employees that may provide these services under this agreement for the duration of this agreement plus an additional 1 year after the agreement is terminated. | |
| 5. | In the event of 3rd party claims against Service Recipient which are unrelated to this agreement, the Service Recipient agrees to indemnify the Service Provider for any costs that the Service Provider may incur in the event that the 3rd party elects to also claim damages against the Service Provider because of their relationship with the Service Recipient. The Service Recipient also agrees to defend the Service Provider at is sole cost the extent permitted to do so under United Kingdom law. |
TAX STATUS
| 1. | Service Provider — Payments received under the terms of this agreement will be considered taxable income in the United Kingdom | |
| 2. | Service Recipient — Payments made under the terms of this agreement will be tax deductible in the United Kingdom | |
| 3. | VAT of the current rate % of the invoice amount will be charged by the service provider to the service recipient |
BILLING LOCATION
| Lowara UK Ltd. Millwey Rise Industrial Estate Axminster EX13 5HU, United Kingdom |
3
SERVICE LEVEL
| 1. | Service Provider agrees to use reasonable care and diligence in the fulfillment of all services described above. Service Provider also agrees that it will promptly carry out services based on reasonable business practices and judgment. |
NOTICES
| All correspondence with respect to this agreement should be sent to the Service Owners listed above. |
NOTICE REQUIREMENTS
| Prior Notice Requirement to | ||||
| No. | Third Party Provider | Terminate Service | ||
N/A
|
None required | See Term and Option above |
PRICING & PAYMENT TERMS
| 1. | The hourly fixed charge for Operations services, Import/Export services, and INTERSTAT Compliance services will be Cost plus 2% - 10% per hour for the term of this agreement — Payable in British Pounds. | |
| 2. | The fixed hourly rate of Cost plus 2% - 10% per hour shall be the minimum charge. Partial hour charges will be rounded up to include the entire hour. For example, a service provided in 2 hours and 20 minutes will be charged at 3 hours or Cost plus 2% - 10%. | |
| 3. | Invoices will be prepared monthly and mailed to the service provider via email. Invoices shall include the date services were provided, the name(s) of the person(s) who provided the service, and the number of hours spent providing the service. | |
| 4. | There will be no additional backup attached to these invoices. | |
| 5. | Invoice payment terms are net 30 days from invoice date. | |
| 6. | During the term of this TSA Schedule, no additional 2%, 10% or 4.5% increase in the pricing as set forth above should be applied pursuant to Section 2(a)(i) of the Agreement. |
4
SCHEDULE AB19
TESTING SERVICES TSA SCHEDULE
FOR INDIA
TESTING SERVICES TSA SCHEDULE
FOR INDIA
SERVICE OWNER
All service matters and general inquiries regarding this service should be directed to:
| Name | Title | Phone | ||||
Service Provider
Rabi Burman |
General Manager, ITT Corporation India Pvt Ltd. Plot No 731A, GIDC Savli, Manjusar, Savli Road. Vadodara, Gujarat 391 770 |
+91 976 633 4443 | Rabi.Burman@itt.com | |||
Service Recipient
Tangellapalli Venugopalakrishna |
Controller, Xylem Water Solutions India Pvt Ltd. Plot No 731B, GIDC Savli, Manjusar, Savli Road. Vadodara, Gujarat 391 770 |
+91 22 67843080 | Tangellapalli.Venugopalakrishna@xyleminc.com |
PARTIES TO THE AGREEMENT
| 1. | Service Provider — ITT Corporation India Pvt. Ltd. | ||
| 2. | Service Recipient — Xylem Water Solutions India Pvt. Ltd. |
GENERAL SERVICE DESCRIPTION
| 1. | Testing services for Xylem products using IP test bed infrastructure in the Baroda plant |
TERM AND OPTION
| 1. | Maximum Service Period — 23 months — Commencing on the Date of physical separation of Service Provider and Service Recipient. TSA starts when Xylem manufacturing operations move in to the new Service Recipient plant. Minimum service: As needed by Xylem India. | ||
| 2. | The Hourly Costs are set forth below under Pricing & Payment Terms. | ||
| 3. | Service Recipient will have the option to terminate this agreement at any time, with no additional make-whole fee as required by Section 11(b) of the Agreement, after the 1st 12 months with 1 month advance written notice to the Service Provider | ||
| 4. | This agreement cannot be extended beyond the maximum service period of 24 months after the Distribution date of Oct 31, 2011. |
1
SERVICES TO BE PROVIDED
| 1. | Testing of Xylem products |
| a. | Service Provider provides Service Recipient full access to the test bed and infrastructure to fully test pumps and other related products | ||
| b. | Service Provider also provides tools, equipment and personnel to fully validate a product | ||
| c. | Service Provider also fully tests the products per instructions from Service Recipient or its customers or its agents | ||
| d. | Service Provider provides full report(s) on the results of the test and performance of the products | ||
| e. | Service Provider personnel will take control of the products at the loading dock and transfer the products to the test bed, install them on the test bed, fully test the products, remove the products and package them and return as required by Service Recipient | ||
| f. | Service Recipient or its agents or its customers will have access to the products while they are being prepared for testing, while products are being tested and while the products are being processed for return to Xylem | ||
| g. | Service Recipient or its agents or its customers will have access to the control room in order to witness the test. | ||
| h. | Only Service Provider personnel are allowed to run the test and operate all tools, machinery and controls related to the testing of these products |
| 2. | For any possible later delivery, the Service Provider shall notify Xylem in advance and both parties shall agree on an Extended Schedule for such delivery. If the delivery is still not made according to the Extended Schedule, the Service Provider shall pay $50/day as late delivery penalty, but not exceed the total test value. |
2
LOCATIONS
| 1. | IP facility located at the following address; |
Plot No 731A, GIDC Savli, Manjusar, Savli Road.
Vadodara, Gujarat 391 770, India
Vadodara, Gujarat 391 770, India
PREREQUISITES/DEPENDENCIES
| 1. | After the termination of this agreement, it may be necessary from time to time for the Service Provider, on behalf of the Service Recipient, to respond to inquiries made by customers or government authorities about Service Recipient’s financial statements and tax filings, including providing support for audits. In this event, the Service Provider will contact the Service Recipient and agree on an appropriate course of action and response. To the extent that Service Provider’s resources are to be used to respond to the inquiries, after the TSA ends, the Service Provider will be entitled to invoice the Service Recipient at the following rates per hour provided if assistance is needed under this section after 2012, the parties will renegotiate such rates in good faith; |
| a. | Clerical — US Cost plus 2% - 10% | ||
| b. | Professional — US Cost plus 2% - 10% | ||
| c. | Management — US Cost plus 2% - 10% |
| 2. | At the termination of this agreement, the Service Recipient will provide the necessary support at its own expense to transfer data to its own systems. The Service Provider will agree to provide training to the Service Recipient’s employees on the Service Provider’s premises or via conference call / web ex prior to the termination of the agreement. The Service Provider will not be required to send any of its employees to any other Service Recipient location. | |
| 3. | In the event of 3rd party claims against the Service Recipient which are unrelated to this agreement, the Service Recipient agrees to indemnify the Service Provider for any costs that the Service Provider may incur in the event that the 3rd party elects to also claim damages against the Service Provider because of their relationship with the Service Recipient. The Service Recipient also agrees to defend the Service Provider at its sole cost to the extent permitted to do so under Indian Law. |
TAX STATUS
| 1. | Service Provider — Payments received under the terms of this agreement will be considered taxable income in India | |
| 2. | Service Recipient — Payments made under the terms of this agreement will be tax deductible in India |
3
BILLING LOCATION
NOTICES
NOTICES
All correspondence with respect to this agreement should be sent to the Service Owners
listed above with copies to the following;
| 1. | Service Provider — Joanne Scalard |
1133 Westchester Ave, Suite 3000
White Plains, NY 10605
| 2. | Service Recipient — Dan Kelly |
1133 Westchester Avenue, Suite 2000
White Plains, NY 10605
NOTICE REQUIREMENTS
| Prior Notice Requirement to | ||||
| No. | Third Party Provider | Terminate Service | ||
| None required | See Term and Option above |
4
PRICING & PAYMENT TERMS
| 1. | The hourly fixed charge for testing services provided under this TSA will be INR Cost plus 2% - 10%. |
| a. | Year 1 (2011) handling charges: 2% | ||
| b. | Year 2 (2012) handling charges: 5% | ||
| c. | Year 3 (2013) handling charges: 10% |
| 2. | See attached spreadsheet for estimation of hours per pump model and types of tests required. | |
| 3. | The agreed lead time for testing will need to be mutually agreed between both parties prior to acceptance of the Purchase Orders placed by Xylem India | |
| 4. | All Invoices are payable in Indian Rupees (INR). | |
| 5. | Invoices will be prepared monthly and mailed to the service recipient via email or regular mail. | |
| 6. | The 1st invoice will be dated on the last day of the financial closing in December 2011 | |
| 7. | Invoice payment terms are net 30 days from invoice date. | |
| 8. | Subsequent invoices will follow every 30 days as long as there is activity. If Service Recipient doesn’t use any testing services in any given month, Service Provider doesn’t have to provide an invoice. |
Xylem India — Baroda Testing Requirements
| IP Test Bed | XylemProduction Line Testing | |||||||||||||||||||||
| Performance Test for 1 hour | Set-up & | NPSH Test | Blue Tank | Impeller | Electical panel | |||||||||||||||||
| Product | per testing standards | Removal | Test | (optional) | Test Bed | Balancing | Hydro Test | logic test | ||||||||||||||
| Sampling method(eg 1 in 10) as decided by QA or Customer Request | 1 | 45M | 30M / Point | NA | 100 | % | 100 | % | ||||||||||||||
| Sampling method(eg 1 in 10) as decided by QA or Customer Request | 2 hours total | 1H | N/A | NA | 1 | 100 | % | NA | ||||||||||||||
| Sampling method(eg 1 in 10) as decided by QA or Customer Request | 1 | 45M | 30M / Point | NA | 100 | % | 100 | % | NA | |||||||||||||
| Sampling method(eg 1 in 10) as decided by QA or Customer Request | 2 hours total | 1H | N/A | NA | NA | 100 | % | NA | ||||||||||||||
| As required by Xylem (# of hours to be listed in the PO) | 2 hours total | per PO | per PO | NA | NA | NA | NA | |||||||||||||||
| NA | NA | NA | Sampling | NA | 100 | % | NA | |||||||||||||||
| NA | NA | NA | Sampling | NA | 100 | % | NA | |||||||||||||||
| NA | NA | NA | NA | NA | 100 | % | NA | |||||||||||||||
| NA | NA | NA | NA | NA | 100 | % | NA | |||||||||||||||
| NA | NA | NA | NA | NA | NA | 100 | ||||||||||||||||
| NA | NA | NA | NA | NA | NA | NA | ||||||||||||||||
| NA | NA | NA | NA | NA | 100 | % | 100 | % | ||||||||||||||
| NA | NA | NA | NA | NA | 100 | % | 100 | % | ||||||||||||||
| NA | NA | NA | NA | NA | 100 | % | 100 | % | ||||||||||||||
| NA | NA | NA | NA | NA | 100 | % | 100 | % | ||||||||||||||
Comments (General) |
||||||||||||||||||||||
1. Standard test setups (e.g. basic couplings) |
||||||||||||||||||||||
2. No advanced testing (vibration, temperature, run-time, etc...) |
||||||||||||||||||||||
3. Assummes no problems that require tear-down and retest |
||||||||||||||||||||||
4. Assumes no special test-setup (e.g. seal pots, etc...) |
2.00 | 1 | ||||||||||||||||||||
5. Special testing / teardown and rebuild / etc...billed at shop (TSA) rate |
||||||||||||||||||||||
5
Schedule AC1
ACCOUNTS PAYABLE, SUPPLIER
PAYMENT AND SALES & USE TAX
SERVICES
ACCOUNTS PAYABLE, SUPPLIER
PAYMENT AND SALES & USE TAX
SERVICES
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, expect where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
| Kim Acker ITT Corporation |
ITT Shared Service Working Capital Manager |
(315) 568-7258 | kim.acker@itt.com | |||
| Elizabeth Webster Exelis Inc. |
Senior Business Analyst | (315) 568-7850 | elizabeth.webster@exelisinc.com |
GENERAL SERVICE DESCRIPTION
Service Provider will perform Accounts Payable, Supplier Payment and Sales and Use Tax
Services for Service Receiver.
Service Receiver and its Subsidiaries will utilize the Service Provider’s resources based on the
functionality, processes, input and output screens and documents that support the Service
Provider’s business and business processes in the twelve months prior to the Distribution Date.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement, the
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
1
| Minimum | ||||||||||||
| BAU | Service | |||||||||||
| Service | Transaction | Period | Service | |||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Provide Accounts Payable, Supplier Payment and Sales and Use Tax Services: | ||||||||||||
| Sales and Use Tax Services — The Service Provider will provide: | ||||||||||||
• The Service Provider based on Sales and Use
tax data received in a predefined form from the
Service Receiver’s Business Units, will prepare the
Sales and Use Tax Returns. A list of all valid
Service Receiver Business Units is found in
Attachment A.
|
720 Returns per Year | |||||||||||
• The Service Provider will file all required
Sales and Use Tax Returns together with payments
that are required. The Service Provider will send
copies of the Returns to the appropriate Service
Receiver Business Units.
|
720 Returns per Year | Cost plus 2% - 10% per month for services and | ||||||||||
• The Service Provider, on receipt of phone
calls and emails, will respond to routine inquiries
and correspondence from the various jurisdictions.
|
Cost plus 2% - 10%* per month for Vendor Cost | |||||||||||
• Taxware Configuration Support — The
Service Provider on receiving Jurisdiction Change
information from the Service Receiver will
configure jurisdictional tax obligations. The
Service Provider on receipt of a request from the
Service Receiver will provide Use Tax information
(via the ZUSE_TAX report) to the Service Receiver.
|
||||||||||||
SS-AP-SP -01
|
Accounts Payable and Supplier Payment Processing Services | • Value Added Tax (VAT) Recovery Support —
The Service Provider will review vendor invoices
for VAT charges, and submit VAT included invoices
to 3rd party (Meridian) for submission
to VAT Taxing Authorities. Upon receipt of a VAT refund check
from the Service Receiver’s
3rd party (Meridian), Service Provider
will provide the funds to the Service Receiver’s
Business Unit.
|
18 | (*Includes 4.5% inflation for 2012 and 2013. Vendor Cost Charges cease after 18 months) | ||||||||
| Accounts Payable and Supplier Payment Vendor Master Data Maintenance: | ||||||||||||
• The Service Provider on receiving Service
Receiver approved remit-to vendor set-ups and
update requests submitted via the vendor portal,
will utilize address standardization and duplicate
checking to review and approve or reject the vendor
request. If approved, the add/changed Vendor
information will be updated in the vendor master
within 1 hour between the hours of 8:00am and
5:00pm EST. |
||||||||||||
• The Service Provider on receiving a Credit
Reference Request form, will forward the request to
the Service Provider’s Banking partner (Citibank)
where they process the request. |
||||||||||||
• The Service Provider after receiving
electronic banking details from the Service
Receiver or their Vendor, adds all Banking Details.
The Service Provider requires complete (per
banking requirement |
||||||||||||
2
| Minimum | ||||||||||||
| Service | ||||||||||||
| Service | BAU Transaction | Period | Service | |||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
instructions) electronic
banking details be sent to the Vendor
Administrator, and will be processed within 48
hours. |
||||||||||||
• The Service Provider reserves the right to
be the sole owner and administrator of Master
Programs, Tables, Data, and Application Security
and Access controls will as necessary get joint
approval from all Service Receivers for those
proposed changes that will impact another Service
Receiver. |
||||||||||||
In addition, the Provider will provide the
following services: Complete SAP Month End jobs and
reports to support postings. |
||||||||||||
| Accounts Payable and Supplier Payment Document Management and Processing: | ||||||||||||
• The Service Provider will pick up mail from
the Service Receiver’s Seneca Falls Post Office
Box.
|
159,878 Documents per Year | |||||||||||
• The Service Provider on receiving incoming
documents (e.g., mail, fax, non-Service Receiver
email) from the Service Receiver or Service
Receiver’s Suppliers, are opened, reviewed, and
scanned into SAP within 1 business day, and are
indexed within 2 business days. Priority documents
are indexed within 1 business day. The Service
Provider’s Document Processing and Help Desk Teams
determine priority. Upon completion of indexing,
the documents route to either the Check Request
portal for further input by the Service Receiver or
on to Document Processing for matching by the
Service Provider. |
||||||||||||
• Non-compliant workflow handling — Accounts
Payable document received by the Service Provider,
which does not contain sufficient information to be
indexed, is routed to the Service Receiver for
Non-Compliant Workflow review. The Service
Receiver must provide direction to the Service
Provider prior to any additional processing. |
||||||||||||
• Duplicate Checking — The Service Provider
for each Accounts Payable document received
compares it to previously received and processed
documents to ensure no duplicate invoices are
processed, and will delete duplicate as necessary. |
||||||||||||
• The Service Provider will store all Service
Receiver’s Invoices and attachment information
onsite and off-site with an external document
storage vendor (Iron Mountain). |
||||||||||||
| Accounts Payable and Supplier Payment Document Processing: | ||||||||||||
• The Service Provider will for all Purchase
Order related invoices either 2 or 3 way match
them. Any
|
241,547 Documents | |||||||||||
3
| Minimum | ||||||||||||
| Service | ||||||||||||
| Service | BAU Transaction | Period | Service | |||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
documents found by the Service Provider
having exceptions or needing approvals, are parked
for review by the Service Receiver, all matched
documents are posted.
|
per Year | |||||||||||
• The Service Provider receives electronic
documents via interface from the Service Receiver
or an internal business group within Provider.
Documents are received and posted automatically
unless an exception exists. A combination of one
or more of these components: PO, tax review, and an
Accounts Payable document can be received from the
Service Receiver or an internal business group
within Provider. The Service Provider will retain
all hard copy invoices for DCAA audit requirements.
|
84,587 Documents per Year | |||||||||||
• For Service Receiver’s Business Units that
cannot support foreign currency payments through
Receiver’s Purchase Order systems, the Service
Provider requires additional processing prior to
payment. Invoices received in a currency other
than USD and CAD require an update to the Purchase
Order prior to invoice posting. The Service
Provider will provide the Service Receiver the
converted USD or CAD value, so that the Purchase
Order can be updated to match the provided amount. |
||||||||||||
• The Service Provider determining any
Accounts Payable document that does not pass the 2
or 3 way match or requires approval, must be parked
for review by the Service Receiver. |
||||||||||||
• The Service Provider on receiving returned
‘parked’ documents from the Service Receiver, will: |
||||||||||||
|
• Process the returned corrective actions for
each ‘parked’ document, specified by the Service
Receiver. The Service Receiver must review each
‘parked’ document. |
||||||||||||
|
• Review the directions provided by the
Service Receiver and either post, delete, delete
and recreate, or re-park the document based on the
comments provided by the Service Receiver and the
ability to match the document |
||||||||||||
• No item in the processing queue should
remain in the queue greater than 5 business days.
On a daily basis the processing team will also work
priorities based on status and due date. |
||||||||||||
• The Service Provider will review upon
receipt of a One-Time Vendor check request
submitted via the check request portal from the
Service Receiver, will be reviewed by the Service
Provider, and sent to the Service Receiver’s
approver regardless of approval limit. |
||||||||||||
• The Service Provider on receiving Stop
Payment and Void notifications from the Service
Receiver’s bank, will process Stop payments and
voids within SAP (in conjunction with Treasury
processing with the bank) and Invoice reversals
when necessary.
|
521 Requests per Year | |||||||||||
4
| Minimum | ||||||||||||
| Service | ||||||||||||
| Service | BAU Transaction | Period | Service | |||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Accounts Payable and Supplier Payment Vendor Payment Processing: | 1,368 Payment Runs per Year | |||||||||||
• The Service Provider will execute Payment
runs on Mondays, Wednesdays, and Fridays (excluding
USA and Canadian holidays) at 8:00am EST, for those
invoices, which have reached to their Due Dates,
and transmit Payment file to the Service Receiver’s
Bank. |
||||||||||||
• The Service Provider will review any
exceptions from the payment process, and will
update the system accordingly. |
||||||||||||
• The Service Provider on receipt of a Vendor
Refund request from the Service Receiver, or a
returned payment from the Post Office, will process
them appropriately |
||||||||||||
• The Service Provider on receipt of an
Emergency request, will provide to the Service
Receiver Emergency payment services. These
services are processed from Seneca Falls, between
1:00pm and 2:00pm EST daily excluding USA/Canadian
Holidays. All overnight instructions are to be
provided in advance. This service should be
reserved for true emergencies only based on the
urgency of the transaction (shut-offs which
severely impact business operations) subject to
approval by Service Provider. Emergency Check
requests received by the Service Provider after
2:00pm EST are subject to additional charges. |
||||||||||||
• The Service Provider will process
Intercompany Payments twice each month. |
||||||||||||
| Accounts Payable and Supplier Payment Help Desk Processing — The Service Provider will provide Help Desk services to the Service Receiver: | ||||||||||||
• The Service Provider will receive inquiries
via Issuetrak from the Service Receiver or their
Vendors are received and recorded centrally. The
Service Provider will create Tickets, assign
priority and will be resolved by the Service
Provider Help Desk staff or appropriate resources.
|
4,376 Internal User Inquiries per Year | |||||||||||
• The Service Provider will receive approved
User ID requests through Issuetrak from the Service
Receiver, and will update the appropriate user
access information necessary to provide user
access. |
||||||||||||
• The Service Provider will provide access to
applications through user request form(s) submitted
by Service Receiver via Service Provider P2P Help
Desk tickets for authorized service receiver users.
Service Provider will maintain and reset SAP user
passwords and application security through Provider
P2P Help Desk requests. Service Provider will
monitor and restrict unauthorized access to source
code and data. User add/update/delete requests will
be completed within three (3) business days of
receipt of complete, approved form. |
176 Requests (Adds, Deletes, and Updates) per Year | |||||||||||
• Tickets are assigned a priority of High,
Medium and |
||||||||||||
5
| Minimum | ||||||||||||
| Service | ||||||||||||
| Service | BAU Transaction | Period | Service | |||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
Urgent. High tickets are resolved
within 1 business day, and Medium tickets are
resolved within 2 business Days. Urgent priority
tickets are responded to within 1 hour, during
normal Service Provider business day. Tickets
classified as User set-ups and others are completed
within 3 days.
The Service Provider will receive approved User ID
requests through Issuetrak from the Service
Receiver and will update the appropriate user. |
||||||||||||
| Accounts Payable and Supplier Payment Reporting and Processing: | ||||||||||||
• Daily Reporting — The Service Provider will
continue to provide any daily reports currently
provided to the Service Receiver automatically
through email or SAP inbox.
|
11 Postings per
Business Unit per Month (month-end processing) |
|||||||||||
• Month-End Processing — All transactions
posted throughout the month are accounted for at
month end and updates sent to the Service
Receiver’s Business Units for posting on their
ledger. Reports are sent to Service receiver via
an email or SAP inbox. |
||||||||||||
• Year-End Processing — All parked documents
as of 12/31 are completed and recreated in the new
fiscal year via an electronic message. |
||||||||||||
• 1099’s — Service Provider will consolidate
all transactions posted against vendors labeled as
1099 vendors throughout the year for 1099 issuance
and filing. Service Receiver must continue to
provide any non SAP 1099 data to the Service
Provider and review and obtain W-9 for all One Time
Vendor requests for 1099 compliance. |
||||||||||||
| Accounts Payable and Supplier Payment Audit Support: | ||||||||||||
• The Service Provider will continue to
provide existing reporting, invoice copies, and
payment information (in conjunction with Treasury)
upon audit request. Service Receiver will be
responsible for transactions for which Service
Provider systems are not the system of record. |
||||||||||||
| Provide application support services for P2P Delivery Environment, which consists of SAP, Vendor Portal, Taxware, OpenText, and Interface Infrastructure MQ and XI (MQ support is only on Provider’s MQ): | ||||||||||||
SS-AP-SP -02 |
P2P Delivery Environment Application Support Services | • P2P Delivery Environment Support &
Maintenance — Service Provider will monitor
incident resolution requests; and recommend and
implement incident resolution. Service Provider
will identify and communicate breaks in
application, develop solution to address break, and
implement fixes to resolve |
534 SAP Users 241,547 Invoice Postings per Year |
|||||||||
6
| Minimum | ||||||||||||
| Service | ||||||||||||
| Service | BAU Transaction | Period | Service | |||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| break. Service Provide reserves the right to charge time and material for a Service Receiver initiated break which requires greater than 8 hours to resolve. Service Provider will maintain production batch schedule, assess impact of failed batch jobs, and adjust schedule to account for batch job failures and delays. Service Provider will execute web server and application server configuration changes; and monitor and maintain application administration. Service Provider will provide SAP Basis support, development support for the P2P Delivery Environment, and configuration management in support of business as usual activities (excludes enhancement requests by Service Receiver). Requests for support and maintenance will be submitted and tracked via Service Provider Help Desk ticket. Service Provider will publish scheduled down time which will allow for normal maintenance of the P2P environment including operating system upgrades; database maintenance, and other tasks required in order to keep environment running efficiently. Ad-Hoc down time will be communicated to Service Receiver with 3 business days advance notice where possible. | 44,022 New Purchase Orders Created per Year | |||||||||||
• P2P Delivery Environment Testing Support -
Support of Receiver requested testing cycles are
included in services during the TSA with the
following exceptions to be treated as supplemental
services and charged via Time and Materials Based
on Additional Pricing Section: |
||||||||||||
• Testing requiring a client refresh more
than twice a year.
|
||||||||||||
• Test requiring run and verification of a
full month-end close where Provider and Receiver
are not in consensus that the change has an impact
to month-end close.
|
||||||||||||
7
Service Volumes Greater or Less Than Observed Pre-Distribution Date
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 3% (such activity, including any such 3% deviation, “Business
as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will accommodate
Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities on a time and
materials basis with respect to the one-time set-up fees. The table below will then apply
following the completion of the one-time set-up activities.
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume within
BAU [Note: BAU
already includes +/-
10% of
pre-distribution date
volumes]
|
No incremental one-time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady-State fee structure for requisite service as documented below | ||
Service Volume
greater or less than
BAU
|
Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service |
Ad-Hoc development/services or processing of reports consistent with what was provided prior
to the distribution date will be supported as part of this agreement. Service Provider will use
commercially reasonable efforts based on provider’s current abilities to accommodate regulatory or
legal ad-hoc requests. Ad-hoc requests which may need to be performed to assist Service Receiver
in meeting new legal obligations will be provided on a time and materials basis as described in the
Additional Pricing section of this agreement. Any changes to 3rd party relationships
which require interface modifications or re-writes are not included as part of the scope of this
agreement. Should the Service Receiver require such changes, Parties agree to negotiate in good
faith with regard to such modification. In the event modifications to the services provided are
required by law for only the Service Recipient and such modifications increase the cost for Service
Provider, Service Recipient that requires the modifications shall pay all the additional costs
including the costs for the other Service Recipients.
8
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
| Service Provider will make commercially reasonable efforts to assist Service Receiver in exiting of this agreement. These efforts include: | ||||||
SS-AP-SP -03
|
Accounts Payable and Supplier Payment & P2P Delivery Environment Migration | • Support of
data extraction
requests from the
Service Receiver
• Providing
Subject Matter
Expertise in helping
the Service Receiver
understand current
state business
processes, and
current state
functional data
mapping
|
Time and Materials Based on Additional Pricing Section | |||
| Service Provider will provide the following knowledge transfer services: | ||||||
SS-AP-SP -04
|
Accounts Payable and Supplier Payment & P2P Delivery Environment Knowledge Transfer | • Existing
non-sensitive
documentation
maintained by the
Service Provider will
be given to the
Service Receiver as
it relates to
Accounts Payable and
Supplier Payment;
Sales and Use Tax;
and P2P Delivery
Environment services
|
Time and Materials Based on Additional Pricing Section |
Supplemental Services
For requests for supplemental services relating to Accounts Payable and Supplier Payment Processing
by Service Receiver not mentioned in this Schedule or not included within the costs documented in
this agreement, Service Receiver will provide a discreet project request and submit such request to
Service Provider using the formalized Change Request attached as Annex A for consideration by
Service Provider.
Where notice is required a number of business days prior to some required action by Service
Provider, notice must be received by 12 noon Eastern Time to be counted as received during such
business day. Service Provider shall, within a commercially reasonable period, provide a price
quote to be commercially reasonable based on the current cost of the Services to Service Receiver
taking into account, such items as the specific time the request was made, service delivery
volumes, exit planning activities, and other activities Service Provider is currently engaged in at
the time of the request, but not later than 30 days after the request was made. If Service
Provider, in its sole discretion determines (i) such request would increase the ongoing operating
costs for Service Provider (as a service recipient) or any other service receiver or (ii) that it
is not capable of making such changes with its current staff during the time period requested
without interrupting the Services provided to itself or any other service receiver.
Service Provider need not provide a price quote or perform the services. Where a price quote is
provided, Service Provider shall provide the service requested upon acceptance of the price.
9
LOCATIONS
Services are initially provided from Seneca Falls, USA to other USA and Canada locations.
PREREQUISITES/DEPENDENCIES
| • | If Service Receiver or their Supplier(s) provides inaccurate information to Service Provider it will be the responsibility of the Service Receiver to rectify any problems and bear extraordinary cost and external fees incurred to rectify the issue. | |
| • | The Service Receiver, will strive to see that all invoices sent by their Suppliers are sent directly to Seneca Falls and must reference a valid Purchase Order number (where applicable), in order for the Service Provider to meet existing Service Levels. | |
| • | Any external fees associated with late returns due to the Service Receiver missing these requirements (3 bullets below) is the responsibility of the Service Receiver | |
| • | The Service Receiver will furnish to the Service Provider relevant and accurate Sales and Use tax data by the end of the second week after each month end closing or the 10th of the month, whichever comes first. | |
| • | The Service Receiver will be responsible to register with appropriate Taxing Authorities for any new locations (Business Units). The Service Receiver will ensure that the applicable tax registration information will be provided to the Service Provider in a timely fashion. | |
| • | The Service Receiver will be responsible for updating and maintaining any changes with existing registrations with Taxing Authorities. Notification of changes will be provided to the Service Provider, if applicable. | |
| • | The Service Receiver is required to ensure accuracy of the vendor master records used in the transactions including: address, and terms from the vendor master or Purchase Order. The Service Provider is responsible for vendor remit to maintenance and accuracy. | |
| • | The Service Receiver is responsible for the cost and outstanding liabilities of any additional Service Receiver location, not found in Attachment A, prior to the Service Provider providing services. | |
| • | Service Receiver will maintain the interfaces documented in Attachment B. | |
| • | Service Receiver must have one of following the ERP systems active and maintained along with associated interfaces for the duration this agreement is in effect: Order Management System (OMS) and Infinium. |
10
| • | Service Receiver must have MQ Series active and maintained for the duration this agreement is in effect. | |
| • | Service Receiver will support testing as required for changes implemented by Service Provider for BAU enhancements or where mandated by any 3rd party vendor support, e.g. SAP. Where enhancements require extensive testing by the Service Receiver, Service Provider will get approval from Service Receiver. | |
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. |
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the following addresses
(with an email copy to the Service Owners set forth above):
If to the Service Provider:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
If to the Service Receiver:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
11
SERVICE LEVEL
Service Provider will classify incidents at its own discretion. Such classifications
shall be consistent with the priorities Service Provider set for itself as a recipient of
services.
The P2P Delivery Environment scheduled downtime will be Mondays and Tuesdays from 10:00 PM to
3:30 AM ET and Sundays from 1:00 AM to 8:00 AM ET.
Service Provider P2P Help Desk support is available 8:00 AM — 5:00 PM ET Monday through
Friday except for holidays. Items are assessed for priority within one (1) hour of receipt.
Barring circumstances outside of Service Provider’s control, urgent priority items are
addressed within one (1) hour. High priority items will be responded to within one (1)
business day and medium priority within two (2) business days. Priority is assessed by the
helpdesk staff with direction from Service Receiver.
In the event incidents cannot be resolved, Service Provider shall promptly notify Service
Receiver and work together to try and resolve such incidents.
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year. These
rates apply to internal Service Provider employees only, and should external resources be required,
the costs for those external resources will be reviewed with the Service Receiver prior to
execution of the project.
Additional Pricing Rates (All in USD)
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
12
Attachment A
The Service Provider will perform services on behalf of the Service Receiver, to the following
Service Receiver Business Units:
| Pre-day 1 | ||||
| Company Codes | Company name | City | ||
1005
|
Fort Wayne | |||
1010
|
Clifton | |||
1018
|
Seneca Falls | |||
1160
|
Reston | |||
1165
|
Van Nuys | |||
1170
|
McLean | |||
1180
|
Roanoke | |||
1185
|
Rochester | |||
1186
|
Rochester | |||
1190
|
Colorado Springs | |||
1191
|
Colorado Springs | |||
1195
|
Colorado Springs | |||
1198
|
Colorado Springs | |||
1199
|
Colorado Springs | |||
1200
|
Charleston |
NOTES:
| 1) | All times noted are U.S. Eastern Time Zone | |
| 2) | Hours quoted are business hours (i.e. Monday — Friday excluding local Holidays) only, excludes Saturday and Sunday | |
| 3) | A “business day” equals 24 hours |
13
ATTACHMENT B
| Interface Name | Business Purpose | Source | Destination | Frequency | ||||
Vendor
|
Central Vendor Master Maintenance |
Service Provider | Service Receiver | Real-time | ||||
Purchase Order
|
Purchase Order add, change, delete |
Service Receiver | Service Provider | Real-time | ||||
Receipts
|
Receipt posting and reversals | Service Receiver | Service Provider | Real-time | ||||
Invoice Posting
|
Invoice posting and reversals | Service Provider | Service Receiver | Real-time | ||||
Invoice Payment
|
Payment posting and reversals | Service Provider | Service Receiver | Real-time | ||||
| Month End Reconciliation: | ||||||||
ME_APRECLS
|
ME A/P trade reclass | Service Provider | Service Receiver | Month End | ||||
ME_FCREVAL
|
ME Foreign Currency revaluation |
Service Provider | Service Receiver | Month End | ||||
ME_HCR
|
ME Headquarter cash reclearing |
Service Provider | Service Receiver | Month End | ||||
ME_ICRECFX
|
MW Intercompany FX reclass |
Service Provider | Service Receiver | Month End | ||||
ME_ICRECLS
|
ME Intercompany Payables reclass |
Service Provider | Service Receiver | Month End | ||||
ME_OCR
|
ME Uncleared Cash reclass | Service Provider | Service Receiver | Month End | ||||
ME_SMLDIFF
|
ME Small Difference balancing |
Service Provider | Service Receiver | Month End | ||||
ME_SSF
|
ME Shared Service Fee — P2P | Service Provider | Service Receiver | Month End | ||||
ME_SSFEBUY
|
ME Shared Service Fee — eBuyITT | Service Provider | Service Receiver | Month End | ||||
ME_TAXRCLS
|
ME Sales & Use tax reclass (for self-assessed tax) | Service Provider | Service Receiver | Month End | ||||
ME_VDPFX
|
MW Vendor down payment | Service Provider | Service Receiver | Month End | ||||
14
Schedule AC2
eBuyITT INVOICE PROCESSING
SERVICES
eBuyITT INVOICE PROCESSING
SERVICES
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, expect where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
| Philip Galluzzi ITT Corporation |
Manager, TDS Business Relationships & Corporate Travel |
(386) 446-6160 | phil.galluzzi@itt.com | |||
| Joe Daniel Exelis Inc. |
TSA Manager | (703) 338-3405 | joe.daniel@exelisinc.com |
GENERAL SERVICE DESCRIPTION
Service Provider will perform eBuyITT Invoice Processing Services for Service Receiver.
Service Receiver and its Subsidiaries will utilize the Service Provider’s resources based on the
functionality, processes, input and output screens and documents that support the Service
Provider’s business and business processes in the twelve months prior to the Distribution Date.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement, the
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
1
| Minimum | ||||||||||||
| BAU | Service | |||||||||||
| Service | Transaction | Period | Service | |||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Provide eBuyITT Invoice Processing Services: | ||||||||||||
• eBuyITT Invoice Review — The
Service Provider will receive designated
invoice submissions from the Service
Receiver’s eBuyITT enabled Suppliers (via
EDI transaction or manual entry) and prep
invoices and feed the submitted invoices to
Perfect Commerce. The Service Provider will
use the daily invoice feeds from Perfect
Commerce to prep invoices for financial
back office operations.
|
8,418 Hard Copy Invoices Annually* / 34,693 Invoices Annually | |||||||||||
• eBuyITT Exception Handling and
Resolution — The Service Provider will
reconcile and re-validate invoices flagged
with validation errors. Once the invoice
is validated, the Service Provider will
process it as stated above. Mismatched
invoices will not be paid without
resolution.
|
2,800 Transactions Annually |
|||||||||||
• Invoice Recording & Payment
Processing — Service Provider will send the
balanced invoices to an internal business
unit within the Service Provider, on a
daily basis, for additional Accounts
Payable recording and payment processing
for the Service Receiver.
|
8,418 Hard Copy Invoices Annually* / 34,693 Invoices Annually |
|||||||||||
SS-eBuyITT- -01
|
eBuyITT Invoice Processing Services |
• Vendor File Maintenance — The
Service Provider will receive vendor master
data for new vendor setup from an internal
business unit to perform Vendor File
Maintenance.
|
As Needed Basis |
18 |
Cost plus 2% - 10% per month |
|||||||
• Tax Exempt Certificate File Tax Exempt Certificate File
Maintenance — The Service Provider will
receive Service Receiver Supplier’s tax
exempt vendor certificates from an internal
business unit to maintain tax exempt master
file.
|
8,418 Hard Copy Invoices Annually* / 34,693 Invoices Annually |
|||||||||||
• Cost Distribution Services —
Service Provider will use validated
invoices as documented above to provide
Service Receiver a cost distribution file
transmitted via FTP and/or email, or
transmitted to an internal business unit
data and centralized tax services via the
current Purchase to pay distribution
process to all Service Receiver’s business
units that are currently on Purchase to
Pay. The Service Provider will provide cost
distribution and taxability indicators, per
agreed frequency to the Service Receiver’s
business units that are not currently
supported by the Shared Services Accounts
Payable (P2P) process).
|
As Needed Basis | |||||||||||
• eBuyITT Aged-Invoice Workflow
Notification — Service Provider will
perform routine communication of aged open
invoices requiring Service Receiver triage
and action.
|
As Needed Basis |
|||||||||||
2
| * Note: | The BAU transaction volume for hard copy invoices, and not the total invoice volume (i.e., both electronic and hard copy), will be used as the pre-distribution date baseline to calculate changes in service volumes (plus or minus 10%) as defined in the next section. |
Service Volumes Greater or Less Than Observed Pre-Distribution Date
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 10% (such activity, including any such 10% deviation,
“Business as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will
accommodate Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities on a
time and materials basis with respect to the one-time set-up fees. The table below will then apply
following the completion of the one-time set-up activities.
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume within
BAU [Note: BAU
already includes +/-
10% of
pre-distribution date
volumes]
|
No incremental one-time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady-State fee structure for requisite service as documented below | ||
Service Volume
greater or less than
BAU
|
Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service |
Ad-Hoc development/services or processing of reports consistent with what was provided prior
to the distribution date will be supported as part of this agreement. Service Provider will use
commercially reasonable efforts based on provider’s current abilities to accommodate regulatory or
legal ad-hoc requests. Ad-hoc requests which may need to be performed to assist Service Receiver
in meeting new legal obligations will be provided on a time and materials basis as described in the
Additional Pricing section of this agreement. Any changes to 3rd party relationships
which require interface modifications or re-writes (e.g., Benefits provider change) are not
included as part of the scope of this agreement. Should the Service Receiver require such changes,
Parties agree to negotiate in good faith with regard to such modification. In the event
modifications to the services provided are required by law for only the Service Recipient and such
modifications increase the cost for Service Provider, Service Recipient that requires the
modifications shall pay all the additional costs including the costs for the other Service
Recipients.
3
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
SS-eBuyITT-02
|
eBuyITT Invoice Processing Services Migration |
Service Provider will make commercially reasonable efforts to assist Service Receiver in exiting of this agreement. These efforts include: | Time and Materials Based on Additional Pricing Section | |||
• Support of
data extraction
requests from the
Service Receiver |
||||||
• Providing
Subject Matter
Expertise in helping
the Service Receiver
understand current
state business
processes, and
current state
functional data
mapping
|
||||||
SS-eBuyITT-03
|
eBuyITT Invoice Processing Services Knowledge Transfer |
Service Provider will provide the following knowledge transfer services: | Time and Materials Based on Additional Pricing Section | |||
• Existing
non-sensitive
documentation
maintained by the
Service Provider will
be given to the
Service Receiver as
it relates to eBuyITT
services
|
Supplemental Services
For requests for supplemental services relating to eBuyITT Invoice Processing by Service Receiver
not mentioned in this Schedule or not included within the costs documented in this agreement,
Service Receiver will provide a discreet project request and submit such request to Service
Provider using the formalized Change Request attached as Annex A for consideration by Service
Provider.
Where notice is required a number of business days prior to some required action by Service
Provider, notice must be received by 12 noon Eastern Time to be counted as received during such
business day. Service Provider shall, within a commercially reasonable period, provide a price
quote to be commercially reasonable based on the current cost of the Services to Service Receiver
taking into account, such items as the specific time the request was made, service delivery
volumes, exit planning activities, and other activities Service Provider is currently engaged in at
the time of the request, but not later than 30 days after the request was made. If Service
Provider, in its sole discretion determines (i) such request would increase the ongoing
operating costs for Service Provider (as a service recipient) or any other service receiver or (ii)
that it is not capable of making such changes with its current staff during the time period
requested without interrupting the Services provided to itself or any other service receiver.
Service Provider need not provide a price quote or perform the services. Where a price quote is
provided, Service Provider shall provide the service requested upon acceptance of the price.
4
LOCATIONS
Services are initially provided from Palm Coast, FL USA to other USA locations.
PREREQUISITES/DEPENDENCIES
| • | Service Receiver will maintain current Cost Distribution data delivery methodologies (e.g., FTP drop site/email attachment receipt). | ||
| • | If Service Receiver or their suppliers provides inaccurate information to Service Provider it will be the responsibility of the Service Receiver to rectify any problems and bear any costs incurred to rectify the issue. | ||
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. | ||
| • | Service Receiver must actively be engaged on the GSCS Service Agreement from Global Supply Chain Services (GSCS) and utilize Perfect Commerce as the eProcurement platform for the duration this agreement is in effect. |
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the following
addresses (with an email copy to the Service Owners set forth above):
If to the Service Provider:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
If to the Service Receiver:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
5
SERVICE LEVEL
Service Provider will classify incidents at its own discretion. Such
classifications shall be consistent with the priorities Service Provider set for
itself as a recipient of services.
In the event incidents cannot be resolved, Service Provider shall promptly notify
Service Receiver and work together to try and resolve such incidents.
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year. These
rates apply to internal Service Provider employees only, and should external resources be required,
the costs for those external resources will be reviewed with the Service Receiver prior to
execution of the project.
Additional Pricing Rates (All in USD)
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
6
SCHEDULE AC3
P-CARD TRANSACTION PROCESSING
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
Philip Galluzzi
|
Manager, TDS Business | (386) 446-6160 | phil.galluzzi@itt.com | |||
ITT Corporation
|
Relationships & Corporate Travel | |||||
Joe Daniel
|
TSA Manager | (703) 338-3405 | joe.daniel@exelisinc.com | |||
Exelis Inc. |
GENERAL SERVICE DESCRIPTION
Service Provider will perform P-Card Transaction Processing Services for Service Receiver.
Service Receiver and its Subsidiaries will utilize the Service Provider’s resources based on the
functionality, processes, input and output screens, and documents that support the Service
Provider’s business and business processes in the twelve months prior to the Distribution Date.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement, the
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
1
| Minimum Service | ||||||||||||
| BAU Transaction | Period | |||||||||||
| Service # | Service Name | Description of Service | Volume | (in mo.) | Service Charge | |||||||
| Provide P-Card Transaction Processing Services: | ||||||||||||
• P-Card Invoice Review — The Service
Provider will receive a notification and data
file from US Bank once monthly containing
transaction details and Company information
for Service Receiver’s P-Card holders. In
addition, the Service Provider will receive
from an internal business unit an
authorization to proceed with the P-Card File
download. The Service Provider will review
the file, format data for financial
processing, and validate invoices for
completeness and accuracy. The Service
Provider will flag invoices with validation
errors. The Service Provider will use booked
AP invoices to generate proprietary data files
to be sent via email to Service Receiver’s
Treasury Department for payment settlement.
|
410 Transactions Annually |
|||||||||||
SS-PCard Processing-01
|
P-Card Transaction Processing Services | • P-Card Exception Handling and
Resolution — The Service Provider will
reconcile and re-validate invoices flagged
with validation errors. Once the invoice is
validated, the Service Provider will process
it as stated above. Mismatched invoices will
not be paid without resolution. For
processing credits, the Service Provider will
insure that management accounts have monthly
debit balances prior to transmission to
Service Receiver’s Treasury Department. If a
management account is received as a zero or
credit balance, the Service Provider will
remove credit transactions from being
processed in ascending order until the
management account reflects a debit balance.
The Service Provider will communicate the
removed credits to the internal business unit
for resolution.
|
130 Transactions Annually |
18 | Cost plus 2% - 10% per month | |||||||
• P-Card Cost Distribution — The
Service Provider will use validated invoices
as documented above to provide Service
Receiver a Cost Distribution file transmitted
via File Transfer Protocol (FTP) and/or email.
|
21 Transactions per Month |
|||||||||||
• P-Card File Maintenance — The Service
Provider will perform file maintenance based
on internal business unit approval for new
and/or changes to P-Card holders. Only valid,
internal business unit-approved cardholder
transactions are processed. Three (3)
business days prior notice is required to
maintain P-Card file.
|
As Needed Basis | |||||||||||
2
Service Volumes Greater or Less Than Observed Pre-Distribution Date
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 10% (such activity, including any such 10% deviation,
“Business as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will
accommodate Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities on a
time and materials basis with respect to the one-time set-up fees. The table below will then apply
following the completion of the one-time set-up activities
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume within
BAU [Note: BAU
already includes +/-
10% of
pre-distribution date
volumes]
|
No incremental one-time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady-State fee structure for requisite service as documented below | ||
Service Volume
greater or less than
BAU
|
Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service |
Ad-Hoc development/services or processing of reports consistent with what was provided prior
to the distribution date will be supported as part of this agreement. Service Provider will use
commercially reasonable efforts based on provider’s current abilities to accommodate regulatory or
legal ad-hoc requests. Ad-hoc requests which may need to be performed to assist Service Receiver
in meeting new legal obligations will be provided on a time and materials basis as described in the
Additional Pricing section of this agreement. Any changes to 3rd party relationships which require
interface modifications or re-writes are not included as part of the scope of this agreement.
Should the Service Receiver require such changes, Parties agree to negotiate in good faith with
regard to such modification. In the event modifications to the services provided are required by
law for only the Service Recipient and such modifications increase the cost for Service Provider,
Service Recipient that requires the modifications shall pay all the additional costs including the
costs for the other Service Recipients.
3
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
| Service Provider will make commercially reasonable efforts to assist Service Receiver in exiting of this agreement. These efforts include: | ||||||
• Support of
data extraction
requests from the
Service Receiver |
||||||
SS-PCard Processing-02 |
P-Card Transaction Processing Migration |
• Providing
Subject Matter
Expertise in helping
the Service Receiver
understand current
state business
processes, and
functional data
mapping
|
Time and Materials
Based on Additional Pricing Section |
|||
| Service Provider will provide the following knowledge transfer services: | ||||||
SS-PCard Processing-03 |
P-Card Transaction Processing Knowledge Transfer |
• Existing
non-sensitive
documentation
maintained by the
Service Provider will
be given to the
Service Receiver as
it relates to P-Card
Transaction
Processing services
|
Time and Materials Based on Additional Pricing Section | |||
Supplemental Services
For requests for supplemental services relating to P-Card Transaction Processing by Service
Receiver not mentioned in this Schedule or not included within the costs documented in this
agreement, Service Receiver will provide a discreet project request and submit such request to
Service Provider using the formalized Change Request attached as Annex A for consideration by
Service Provider.
Where notice is required a number of business days prior to some required action by Service
Provider, notice must be received by 12 noon Eastern Time to be counted as received during such
business day. Service Provider shall, within a commercially reasonable period, provide a price
quote to be commercially reasonable based on the current cost of the Services to Service Receiver
taking into account, such items as the specific time the request was made, service delivery
volumes, exit planning activities, and other activities Service Provider is currently engaged in at
the time of the request, but not later than 30 days after the request was made. If Service
Provider, in its sole discretion determines (i) such request would increase the ongoing operating
costs for Service Provider (as a service recipient) or any other service receiver or (ii) that it
is not capable of making such changes with its current staff during the time period requested
without interrupting the Services provided to itself or any other service receiver. Service
Provider need not provide a price quote or perform the services. Where a price quote is provided,
Service Provider shall provide the service requested upon acceptance of the price.
4
LOCATIONS
Services are initially provided from Palm Coast, FL, USA to other USA locations.
PREREQUISITES/DEPENDENCIES
| • | If Service Receiver, or their Supplier(s), provides inaccurate information to Service Provider it will be the responsibility of the Service Receiver to rectify any problems and bear any costs incurred to rectify the issue. | ||
| • | Service Receiver, in a separate and independent agreement, must utilize US Bank as the P-Card supplier for the duration this agreement is in effect. | ||
| • | Service Receiver must actively be engaged on the GSCS Service Agreement from Global Supply Chain Services (GSCS) for the duration this agreement is in effect. | ||
| • | Service Receiver must maintain current Cost Distribution data delivery methodologies (e.g., FTP drop site/email attachment receipt) and payment settlement interface (Treasury) for the duration this agreement is in effect. | ||
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. |
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the following
addresses (with an email copy to the Service Owners set forth above):
If to the Service Provider:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
If to the Service Receiver:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
5
SERVICE LEVEL
Service Provider will classify incidents at its own discretion. Such
classifications shall be consistent with the priorities Service Provider set for
itself as a recipient of services.
In the event incidents cannot be resolved, Service Provider shall promptly notify
Service Receiver and work together to try and resolve such incidents.
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year. These
rates apply to internal Service Provider employees only, and should external resources be required,
the costs for those external resources will be reviewed with the Service Receiver prior to
execution of the project.
| Additional Pricing Rates (All in USD) | ||||||||||||
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
6
SCHEDULE AC4
TELECOM INVOICE PROCESSING
SERVICES (TAPS)
TELECOM INVOICE PROCESSING
SERVICES (TAPS)
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
| Philip Galluzzi ITT Corporation |
Manager, TDS Business Relationships & Corporate Travel |
(386) 446-6160 | phil.galluzzi@itt.com | |||
| Randy McElvain Exelis Inc. |
Director, Enterprise Infrastructure Operations |
(260) 451-1353 | randy.mcelvain@exelisinc.com |
GENERAL SERVICE DESCRIPTION
Service Provider will perform Telecom Invoice Processing Services (TAPS), for Long Distance
Voice and Data Circuitry, for Service Receiver.
Service Receiver and its Subsidiaries will utilize the Service Provider’s resources based on the
functionality, processes, input and output screens and documents that support the Service
Provider’s business and business processes in the twelve months prior to the Distribution date.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement,
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
1
| Minimum | ||||||||||||
| BAU | Service | |||||||||||
| Service | Transaction | Period | Service | |||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Provide Telecom Invoice Processing (TAPS) Services: | ||||||||||||
• TAPS supplier
statements — The
Service Provider will
receive Service
Receiver’s current
Primary Telecom
Service Supplier
statements monthly.
The statements are
transmitted via EDI,
or entered manually
via paper statements,
to the Service
Provider. To produce
balanced TAPS
statements, the
Service Provider
will perform various
validation and
duplication
protection routines
with criteria
including Master
Control Number,
Account number, and
AT&T Statement
numbers. Only total
current charges are
recognized in the
TAPS system for
processing each
month.
|
2,700 Transactions Annually |
|||||||||||
SS-TAPS-01
|
Telecom Invoice Processing Services (TAPS) |
• TAPS
Exception Handling
and Resolution -
Service Provider will
reconcile accounts
that failed
validation. The
Service Provider will
make commercially
reasonable efforts to
gain resolution from
the Service Receiver,
to produce resolved
accounts that are
ready for financial
processing. Accounts
that fail validation
are not paid without
resolution.
|
90 Transactions Annually |
9 | Cost plus 2% - 10% per month |
|||||||
• Invoice
Recording & Payment
Processing — Service
Provider will send
the balanced invoices
to an internal
business unit within
the Service Provider,
on a monthly basis,
for additional
Accounts Payable
recording and payment
processing for the
Service Receiver.
|
2,700 Transactions Annually |
|||||||||||
• TAPS Cost
Distribution — The
Service Provider will
transmit to the
Service Receiver a
Cost Distribution
file from the
processed validated
Statements, Service
Provider will
transmit this file
via FTP and/or email
to the Service
Receiver.
|
27 Transactions per Month | |||||||||||
• TAPS Customer
File Maintenance —
The Service Provider
will perform Customer
File Maintenance
after receiving a
Change Request from
the Service Receiver.
Only valid, ITT
Customer accounts and
Statements are
processed. Three (3)
business days prior
notice are required
to maintain the
Customer file.
|
45 Transactions Annually |
|||||||||||
2
Service Volumes Greater or Less Than Observed Pre-Distribution
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 10% (such activity, including any such 10% deviation,
“Business as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will
accommodate Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities on a
time and materials basis with respect to the one-time set-up fees. The table below will then apply
following the completion of the one-time set-up activities
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume within
BAU [Note: BAU
already includes +/-
10% of
pre-distribution
volumes]
|
No incremental one-time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady-State fee structure for requisite service as documented in this agreement | ||
Service Volume
greater or less than
BAU
|
Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service |
Ad-Hoc development/services or processing of reports consistent with what was provided prior
to the distribution date will be supported as part of this agreement. Service Provider will use
commercially reasonable efforts based on provider’s current abilities to accommodate regulatory or
legal ad-hoc requests. Ad-hoc requests which may need to be performed to assist Service Receiver
in meeting new legal obligations will be provided on a time and materials basis as described in the
Additional Pricing section of this agreement. Any changes to 3rd party relationships which require
interface modifications or re-writes are not included as part of the scope of this agreement.
Should the Service Receiver require such changes, Parties agree to negotiate in good faith with
regard to such modification. In the event modifications to the services provided are required by
law for only the Service Recipient and such modifications increase the cost for Service Provider,
Service Recipient that requires the modifications shall pay all the additional costs including the
costs for the other Service Recipients.
3
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
SS-TAPS-02
|
Telecom Invoice Processing (TAPS) Migration |
Service Provider will
make commercially
reasonable efforts to
assist Service
Receiver in exiting
of this agreement.
These efforts
include: |
Time and Materials Based on Additional Pricing Section | |||
• Support of
data extraction
requests from the
Service Receiver
|
||||||
• Providing
Subject Matter
Expertise in helping
the Service Receiver
understand current
state business
processes and
functional data
mapping |
||||||
SS-TAPS-03
|
Telcom Invoice Processing (TAPS) Knowledge Transfer |
Service Provider will
provide the following
knowledge transfer
services: |
Time and Materials Based on Additional Pricing Section | |||
• Existing
non-sensitive
documentation
maintained by the
Service Provider will
be given to the
Service Receiver as
it relates to Telecom
Invoice Processing
(TAPS) services
|
Supplemental Services
For requests for supplemental services relating to Telecom Invoice Processing Services (TAPS) by
Service Receiver not mentioned in this Schedule or not included within the costs documented in this
agreement, Service Receiver will provide a discreet project request and submit such request to
Service Provider using the formalized Change Request attached as Annex A for consideration by
Service Provider.
Where notice is required a number of business days prior to some required action by Service
Provider, notice must be received by 12 noon Eastern Time to be counted as received during such
business day. Service Provider shall, within a commercially reasonable period, provide a price
quote to be commercially reasonable based on the current cost of the Services to Service Receiver
taking into account, such items as the specific time the request was made, service delivery
volumes, exit planning activities, and other activities Service Provider is currently engaged in at
the time of the request, but not later than 30 days after the request was made. If Service
Provider, in its sole discretion determines (i) such request would increase the ongoing operating
costs for Service Provider (as a service recipient) or any other service receiver or (ii) that it
is not capable of making such changes with its current staff during the time period requested
without interrupting the Services provided to itself or any other service receiver. Service
Provider need not provide a price quote or perform the services. Where a price quote is provided,
Service Provider shall provide the service requested upon acceptance of the price.
4
LOCATIONS
Services are initially provided from Palm Coast, FL, USA to other USA
locations and select EU and Asia locations.
PREREQUISITES/DEPENDENCIES
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. | |
| • | If Service Receiver, or their Supplier(s), sends inaccurate data to Service Provider it will be the responsibility of the Service Receiver to rectify any problems and bear any costs incurred to rectify the issue. | |
| • | Service Receiver must actively be engaged on the Accounts Payable and Supplier Payment TSA for the duration this agreement is in effect. | |
| • | Service Receiver must actively be engaged in the circuitry configuration and inventory control of their networks and have Subject Matter Experts (SME) available to assist with statement processing discrepancies. | |
| • | Service Receiver, in a separate and independent agreement, must utilize AT&T as the telecommunication data vendor. | |
| • | Service Receiver will maintain current Cost Distribution data delivery methodologies (e.g., FTP drop site/email attachment receipt). |
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the
following addresses (with an email copy to the Service Owners set forth above):
If to the Service Provider:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
5
If to the Service Receiver:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
SERVICE LEVEL
Service Provider will classify incidents at its own
discretion. Such classifications shall be consistent with the
priorities Service Provider set for itself as a recipient of
services.
In the event incidents cannot be resolved, Service Provider shall promptly
notify Service Receiver and work together to try and resolve such incidents.
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year. These
rates apply to internal Service Provider employees only, and should external resources be required,
the costs for those external resources will be reviewed with the Service Receiver prior to
execution of the project.
Additional Pricing Rates (All in USD)
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
6
SCHEDULE AC5
U.S
ACTIVE SALARIED ELIGIBLE
EMPLOYEES MEDICAL, PHARMACY
AND DENTAL PROGRAM
U.S
ACTIVE SALARIED ELIGIBLE
EMPLOYEES MEDICAL, PHARMACY
AND DENTAL PROGRAM
Capitalized terms used herein and not otherwise defined shall have the meaning assigned such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters and general inquiries regarding this Service should be directed to:
| Name | Title | Phone | ||||
Service
Provider’s Contact |
||||||
ITT Corporation |
Mgr, Benefits | |||||
Deborah Macchia |
Planning and | |||||
| Administration | (914) 304-1729 | Deb.macchia@itt.com | ||||
Lisa Munoz |
Benefits Analyst | (914) 304-2026 | Lisa.munoz@itt.com | |||
Thomas Hickey |
Manager, Benefits, | |||||
| Financial Reporting | ||||||
| And Administration | (914) 641-2077 | Thomas.hickey@itt.com | ||||
Service Recipient’s
Contact |
||||||
Exelis Inc. |
Director of Global | (703) 790-6385 | Bill.bonk@exelisinc.com | |||
Bill Bonk |
Benefits | |||||
John Brown |
Manager of Benefits | |||||
| Administration | (631) 630-5071 | John.Brown@exelisinc.com |
PARTIES TO THE AGREEMENT
Service Provider: ITT Corporation — White Plains, NY
Service Recipient: Exelis Inc. — White Plains
Service Recipient: Exelis Inc. — White Plains
TERM
Services provided hereunder shall terminate December 31, 2013; provided that for the
avoidance of doubt the coverages provided hereunder and described below only apply to
Claims (as defined herein) made by Service Recipient’s Covered Employees (as defined
herein) and incurred on or before December 31, 2011.
GENERAL SERVICE DESCRIPTION
Service Provider currently provides active medical, pharmacy(Rx) and dental administration for
coverages provided through Empire and Anthem (medical), Medco(Rx), MetLife(dental) and SHPS (FSA)
(Empire, Anthem, Medco, MetLife and SHPS collectively, the “Vendors”) for its U.S. Active,
Salaried, Eligible Employees (“Covered Employees”). Service Provider shall keep the current
contracts with the Vendors and the ITT CORPORATION SALARIED MEDICAL AND DENTAL PLAN ( ) and the ITT Salaried Medical Plan and Salaried Dental Plan General Plan Terms
(collectively, the “Plans”) and all coverage thereunder in full force through December 31, 2011 for
Service Recipient’s Covered Employees. All claims of Service Recipient’s Covered Employees made
under the Plans and incurred on or prior to December 31, 2011 the (“2011 Plan Year”) will be
adjudicated in accordance with the current contract and Service Provider will continue to take such
actions on behalf of Service Recipient’s Covered Employees as if such employees are employees of
Service Provider.
All medical, dental, pharmacy and FSA claims of Service Recipient’s Covered Employees made under
the Plans (the “Claims”) will be paid by the Vendors on behalf of the Service Provider. Service
Recipient will pay Service Provider for coverage based on 2011 budget premium rates previously set
for the calendar year 2011 and described in the “Pricing” section below. Service Recipient will
pay Service Provider monthly premium payments for this service, for any full or partial months,
based on actual enrollment for the months covered post-spin using enrollments as of the first
(1st) calendar day of the month, commencing on the day after the Distribution Date.
Service Recipient will prepare and deliver to Service Provider a monthly self bill containing cost
breakdown by business unit and plan tier as set forth on Attachment A, within five (5) Business
Days after the beginning of each calendar month. The Service Recipient will be required to pay the
Service Provider the monthly premium payments within ten (10) Business Days after the beginning of
each calendar month. A detailed listing of Service Recipient’s employees covered, including the
Plans and enrollment tier in which they are enrolled, will be made available to Service Provider
upon its reasonable request.
2
Service Provider will retain responsibility for executing funding of Claim payments and eligibility
management with Vendors through December 31, 2013.
Service Provider will conduct a Headcount True-Up (as defined below) of the monthly premiums and
establish an Incurred But Not Reported (“IBNR”) claims reserve for Claims incurred prior to
December 31, 2011 date, but paid after that date, and conduct a reconciliation of such reserve. See
“Headcount True-Up” and “IBNR Reconciliation” sections under Additional Pricing for details.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement,
Service Provider shall provide to Service Recipient the services identified below or described
above (collectively, the “Services”).
| • | Monthly Premium billing. | ||
| • | Monthly administrative services billing (for administrative services billed on an hourly basis. See Additional Pricing section for Hourly Rates). | ||
| • | See General Service Description for a description of payments and billing hereunder. See Pricing for a description of the Headcount True-Up (as defined below) and reconciliation for IBNR (as defined below) Claims. | ||
| • | Claims processing |
| • | All Vendor Claims process will remain unchanged from the process as used during the 12-month period prior to the Distribution Date. | ||
| • | The Claims appeal process will not change from the process as used during the 12-month period prior to the Distribution Date. Empire/Anthem/Medco, MetLife and SHPS will handle all appeals as provided under the Employee Retirement Income Security Act. Once all such appeals have been exhausted, escalations will be handled by Service Provider. | ||
| • | Service Provider will pay all Claims incurred during the 2011 Plan Year. |
| • | Eligibility |
| • | All eligibility adjustments (adding dependents, new hires, ect.) will be handled by local Service Recipient HR through the Infinium interface. | ||
| • | The Service Recipient may add or remove employees/dependants to coverage in accordance with the terms of the Plans, generally upon a qualifying event, new hire or termination. These rules will be the same rules in effect immediately prior to Distribution Date and will remain in effect until January 31, 2012. | ||
| • | Manual adjustments to eligibility will be handled directly with the Vendors by authorized Service Recipient local HR. These adjustments will be one off type adjustments that cannot be made through Infinium due to timing. |
3
| • | All file transmissions to Vendors will be handled by the Exelis Inc. Fort Wayne Shared Service team under the HR/Payroll/Benefits Transition Services Agreement. | ||
| • | All files normally maintained manually by the Service Recipient local HR departments during the twelve (12) month period prior to the Distribution Date will remain unchanged. | ||
| • | COBRA qualifying events notices will be handled by SHPS. Service Recipient Local HR department will notify SHPS of termination of employment (as is the current practice in the twelve (12) months prior to Distribution Date). SHPS will provide election notice to Covered Employees with appropriate coverages. There is a separate Letter of Intent with SHPS, attached as Attachment B. |
| • | Claims payment |
| • | All Covered Employee Claims made under the Plans and incurred for the 2011 Plan Year will be paid by Service Provider. | ||
| • | Vendor administrative service charges for the 2011 Plan Year will be paid by Service Provider. | ||
| • | Empire and MetLife maintain bank accounts which Service Provider funds daily to pay claims. Each Vendor will separate claims paid by claims incurred date. | ||
| • | Service Provider will pay all Medical and Dental Claims incurred for the 2011 Plan Year, but submitted for payment after the end of the 2011 Plan Year but no later than allowed under the terms of the applicable Plan. | ||
| • | MEDCO invoices bi-weekly for claims paid. Service Provider will pay for all MEDCO claims incurred for the 2011 Plan Year. |
PREREQUISITES/DEPENDENCIES
Service Recipient Responsibilities
| • | Service Recipient will provide accurate and timely employee enrollments via Infinium. | ||
| • | Service Recipient will research eligibility issues as needed. | ||
| • | In case of inaccurate data sent to Service Provider it will be the responsibility of the Service Recipient to rectify any problems and assessments incurred. | ||
| • | Local Human Resources/Benefits departments will support Covered Employees. |
4
BILLING LOCATION
Service Recipient will provide Service Provider a self billed invoice and payment
to their address set forth below. The bill will cover all charges for Services under
this Schedule provided by Service Provider. The invoice will contain the number of
enrolled employees per tier per coverage, as set forth in Schedule A. A detailed list
of Covered Employees will be provided by the Service Provider upon reasonable request
of the Service Recipient. All administrative functions handled by the Service
Provider in the twelve (12) month period prior to the Distribution Date are contained
in the fee structure set forth below. The Service Provider and Service Recipient
agree to negotiate in good faith for any additional services related to the Service
provided hereunder that are outside the normal course of business.
SERVICE LEVEL
The Service Provider will provide the same service level to the Service Recipient
as it provides to its Covered Employees.
NOTICE REQUIREMENTS
Official Notices and Bills under this Schedule should be sent to the following addresses (with
an email copy to the Service Owners set forth above):
If to the Service Provider:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
If to the Service Recipient:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
Termination notices are not required. Service Provider will pay Claims incurred during the 2011
Plan Year, during the period from November 1, 2011 through December 31, 2013 with no
5
further
premium billed to the Service Recipient. Pursuant to the terms of the Plans there is a twenty-four
(24) month Claim filing limit.
PRICING
In addition to the costs specifically set forth below, Service Recipient shall also pay all routine business travel expenses relating to such Services. The below table contains the monthly
premium rates the Service Provider shall charge. The Service Recipient will be required to pay the Service Provider the monthly premium payments within ten (10) Business Days after the
beginning of each calendar month. A detailed listing of Service Recipient’s Covered Employees, including the Plans and enrollment tier in which they are enrolled, will be made available to
Service Provider upon its reasonable request. Each business unit has been banded 1 through 5. Depending on the assigned band the appropriate budget amount is charged to that business unit.
The amounts in the table are per employee per month, by plan and coverage tier. See “General Service Description” for further detail on payment and billing for the monthly premium payments.
6
Medical and Pharmacy Premium
| Basic | ||||||||||||
| Rating | Employee | Employee | ||||||||||
| Band | Only | +1 | Family | |||||||||
Band 1
|
||||||||||||
Band 2
|
||||||||||||
Band 3
|
||||||||||||
Band 4
|
||||||||||||
Band 5
|
||||||||||||
| Enhanced | ||||||||||||
| Rating | Employee | Employee | ||||||||||
| Band | Only | + 1 | Family | |||||||||
Band 1
|
||||||||||||
Band 2
|
||||||||||||
Band 3
|
||||||||||||
Band 4
|
||||||||||||
Band 5
|
||||||||||||
| EPO | ||||||||||||
| Rating | Employee | Employee | ||||||||||
| Band | Only | +1 | Family | |||||||||
Band 1
|
||||||||||||
Band 2
|
||||||||||||
Band 3
|
||||||||||||
Band 4
|
||||||||||||
Band 5
|
||||||||||||
| HDHP | ||||||||||||
| Rating | Employee | Employee | ||||||||||
| Band | Only | + 1 | Family | |||||||||
Band 1
|
||||||||||||
Band 2
|
||||||||||||
Band 3
|
||||||||||||
Band 4
|
||||||||||||
Band 5
|
||||||||||||
7
Dental Premium
| MetLife Dental | ||||||||
| EE | EE+1 | Family | ||||||
FSA Pricing
| New | ASO | Total ASO | ||||||||||||||||||
| Coloc | Participating Location | Company | PartCount | Fee | per Month | |||||||||||||||
| 205010 | Electronic Warfare |
Exelis | ||||||||||||||||||
| 213010 | Communications System Division — Ft Wayne |
Exelis | ||||||||||||||||||
| 213020 | Communications System Division — Nutley |
Exelis | ||||||||||||||||||
| 213030 | Defense Division HQ |
Exelis | ||||||||||||||||||
| 261010 | Night Vision |
Exelis | ||||||||||||||||||
| 374010 | Gilfillan Division |
Exelis | ||||||||||||||||||
| 400010 | Systems |
Exelis | ||||||||||||||||||
| 400011 | Communications Systems-CS |
Exelis | ||||||||||||||||||
| 510001 | Power Solutions |
Exelis | ||||||||||||||||||
| 510002 | Power Solutions — Hourly |
Exelis | ||||||||||||||||||
| 513010 | Advanced Engineering & Sciences |
Exelis | ||||||||||||||||||
| 513010 | Advanced Engineering & Sciences — AGT |
Exelis | ||||||||||||||||||
| 513020 | Systems Division — SGS |
Exelis | ||||||||||||||||||
| 579010 | Geospatial
Systems — Rochester |
Exelis | ||||||||||||||||||
| 579020 | Geospatial
Systems — Ft Wayne |
Exelis | ||||||||||||||||||
| 579030 | Geospatial Systems — New Jersey |
Exelis | ||||||||||||||||||
| 717010 | Antenna Products and Networking Systems |
Exelis | ||||||||||||||||||
| 718010 | EDO |
Exelis | ||||||||||||||||||
| 720010 | ALM |
Exelis | ||||||||||||||||||
| 721010 | Communications and Countermeasures Systems |
Exelis | ||||||||||||||||||
| 722010 | Reconnaissance and Surveillance Systems |
Exelis | ||||||||||||||||||
| 727010 | Naval Command and Sonar Systems |
Exelis | ||||||||||||||||||
| 728010 | Mine Defense Systems |
Exelis | ||||||||||||||||||
| 729010 | Electro-Ceramic Products |
Exelis | ||||||||||||||||||
| 730010 | EVI |
Exelis | ||||||||||||||||||
| 731010 | Impact Science and Technology |
Exelis | ||||||||||||||||||
| 732010 | NextGen |
Exelis | ||||||||||||||||||
| 736010 | Fiber Science |
Exelis | ||||||||||||||||||
| 737010 | Speciality Plastics |
Exelis | ||||||||||||||||||
| 740010 | Defense Systems |
Exelis | ||||||||||||||||||
| Exelis | ||||||||||||||||||||
8
Additional Pricing
Hourly Rates
Hourly Rates for Services not specified or normally provided by Service Provider in the twelve (12)
month period prior to the Distribute Date but otherwise provided by Service Provider employees
(including but not limited to modification, consulting, exit strategy development, transition,
etc.) are documented below. The employee category is defined by Service Provider. The rates
documented below apply to Service Provider employees only, should external resources be required,
the costs for those external resources will be reviewed with the Service Recipient prior to
execution of the project.
Notwithstanding anything in the Agreement to the contrary, the following rates shall not be subject
to (a) the 4.5% increase for inflation in 2012 described in Section 2(a)(3) (but such rates shall
be subject to such increase in 2013) or (b) the 2% or 10% increases described in the proviso to
Section 2(a)(i) of the Agreement.
| General Category of Employee | Hourly Rate | |||
1. Secretarial/Administrative |
$ | 50.00 | ||
2. Non-Executive |
$ | 100.00 | ||
3. Executive |
$ | 150.00 | ||
Headcount True-Up
Service Provider shall conduct a “headcount” true-up by March 31, 2012 (the “Headcount True-Up”),
based on actual enrollment during the period beginning on the day after the Distribution Date and
ending on December 31, 2011. The Headcount True-Up will be based on reviewing the actual monthly
Infinium enrollment by Plan and coverage tier, by unit, but, for the avoidance of doubt, no true-up
of actual Claims will be conducted. The Service Provider shall promptly provide the results of the
Headcount True-Up to Service Recipient together with any supporting data reasonably requested by
Service Recipient. Within ten (10) Business Days after the parties reach agreement on the amount of
the Headcount True-Up, the appropriate party shall pay to the other the amount so due.
IBNR Reconciliation
| • | Reconciliation for Incurred But Not Reported (“IBNR”) Claims |
| • | The premiums collected from Service Recipient hereunder will be credited to Service Provider’s active medical ledger. | ||
| • | The amount that Service Provider should hold in reserve to cover payment for all IBNR Claims incurred for the 2011 Plan Year shall be calculated in accordance with the following procedures: |
9
| • | This calculation will be made by June 30, 2012 using the same methods, assumptions, processes, etc. as used during the 12-month period prior to the Distribution Date to calculate the IBNR Claim reserve remaining to pay Claims incurred before January 1, 2012, but paid after June 30, 2012. | ||
| • | Service Provider and Service Recipient will engage Towers Watson, or such other person as the parties may agree to engage (the “Calculation Agent”), to calculate the target level of the IBNR claim reserve, whose determination shall be binding and conclusive on the Service Provider and Service Recipient. | ||
| • | The IBNR Claim reserve will have its final reconciliation calculated the Calculation Agent by June 30, 2012. |
| • | If the amount held for the IBNR Claim reserve is greater than the target level of the IBNR Claim reserve, as determined herein, within ten (10) Business Days of Service Provider being notified of such determination by the Calculation Agent, Service Provider shall pay its proportionate amount to Service Recipient (based upon Service Recipient’s number of Covered Employees (as of December 31, 2011) in relation to the total number of Covered Employees (for all of the Parties to the Agreement) in the IBNR Claim reserve pool (as of December 31, 2011) (the “Proportionate Amount”)), required, when included with the Proportionate Amounts to be paid to the other Parties to the Agreement, required to bring the amount held for the IBNR Claim reserve to its targeted level, as determined by the Calculation Agent. | ||
| • | If the amount held for the IBNR Claim reserve is less than the target level of the IBNR claim reserve, as determined herein, within ten (10) Business Days of Service Recipient being notified of such determination by the Calculation Agent and its Proportionate Amount by the Service Provider, Service Recipient shall pay its Proportionate Amount to Service Provider, required, when included with the Proportionate Amounts to be paid by the other Parties to the Agreement, necessary to bring the amount held for the IBNR Claim reserve to its targeted level, as determined by the Calculation Agent. |
10
Attachment A
Monthly self bill Example
| Unit | Value Center | Grand Total | ||
| HQ | ||||
| HQ | ||||
| RCW | ||||
| RCW | ||||
| Flow Controls | ||||
| WWW | ||||
| IP | ||||
| Flow Controls | ||||
| WWW | ||||
| RCW | ||||
| RCW | ||||
| RCW | ||||
| RCW | ||||
| RCW | ||||
| WWW | ||||
| WWW | ||||
| WWW | ||||
| WWW | ||||
| WWW | ||||
| RCW | ||||
| ITT Analytics | ||||
| ITT Analytics | ||||
| ITT Analytics | ||||
| ITT Analytics |
11
Attachment B
May 20, 2011
Ms. Deb Macchia
Manager, Benefits Planning and Communication
ITT Corporation
1133 Westchester Avenue
White Plains, NY 10604
Manager, Benefits Planning and Communication
ITT Corporation
1133 Westchester Avenue
White Plains, NY 10604
RE: Trivestiture of ITT Corporation
Dear Ms. Macchia:
As you
know, SHPS Human Resource Solutions, Inc. (“Company”) currently providus ITT Corporation
(“Client”) spending account administration (“SAM”) and COBRA services (collectively “Services”)
pursuant to a Service Agreement dated January 1, 2008 (“the Service Agreement”). This letter
acknowledges the intent of Client to separate into three different entities; namely, Defense Co.
(“Defense”), ITT Co. (“ITT”) and ‘Water Co. (“Water”). As part of this restructuring, you have
requested we perform certain implementation services in order to set up ITT and Water as separate
entities. It is the intent of the parties that Defense will assume the Service Agreement and that
ITT and Water will enter into a transition services agreement with Defense through December 31,
2011. Existing services provided by the Company to Defense, ITT and Water will continue through
December 31, 2011. Effective January 1, 2012, ITT and Water will enter into separate agreements
with the Company. The Company agrees to (i) continue performing ongoing Service and (ii) provide
implementation services, pursuant to terms and conditions of the Service Agreement and the
following:
1. Services
|
Beginning on or about June 1, 2011, Company will begin implementation services to set up ITT and Water. Company will continue providing ongoing Services to the Client, including Defense, ITT and Water populations, until the Separation Date. | |
2. Termination Fee
|
Company agrees to defer implementation Fees in an amount of $ . or this amount, $ shall be with respect to ITT ($ for COBRA and $ for FSA, respectively) and $ shall be with respect to Water ($ for COBRA and $ for FSA, respectively) (the “Deferred Implementation Fees”) over the period between January 1, 2012 and December 31, 2012, which will be included in the new agreements. In the event the Service Agreement is terminated for any reason prior to the expiration the Separation Date the Client shall pay Company the Deferred Implementation Fees in accordance with the payment terms set forth in the Service Agreement. |
lf the foregoing correctly sets forth the understanding of the parties, please acknowledge your
acceptance of this Agreement by signing both copies of this letter at the place provided below and
return one to my attention.
12
SCHEDULE AC6
FINANCIAL SHARED SERVICES (FSS)
ACTIVE MEDICAL AND DENTAL
ADMINISTRATION
ACTIVE MEDICAL AND DENTAL
ADMINISTRATION
Capitalized terms used herein and not otherwise defined shall have the meaning assigned such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters and general inquiries regarding this Service should be directed to:
| Name | Title | Phone | ||||
Service
Provider’s Contact
|
||||||
ITT Corporation Conrad Arnold |
Director Human Resources | (315) 568-7280 | Conrad.arnold@itt.com | |||
Service Recipient’s Contact |
||||||
Exelis Inc. |
||||||
Caroline Hunt
|
Sr. Mgr., Benefits. | (260) 451-6063 | Caroline.hunt@exelisinc.com |
PARTIES TO THE AGREEMENT
Service Provider: ITT Corporation — Seneca Falls, NY (IP)
Service Recipient: Exelis Inc. — Ft. Wayne, IN and Financial Shared Services, Rochester, NY) (collectively, “Service Recipients”)
Service Recipient: Exelis Inc. — Ft. Wayne, IN and Financial Shared Services, Rochester, NY) (collectively, “Service Recipients”)
TERM
Services provided hereunder shall terminate June 30, 2012; provided that for the
avoidance of doubt the coverages provided hereunder and described below only apply to
Claims (as defined herein) made by Service Recipient’s Covered Employees (as defined
herein) and incurred on or before December 31, 2011.
1
GENERAL SERVICE DESCRIPTION
Service Provider currently provides administration for the Financial Shared Services active
medical through Excellus Blue Cross\Blue Shield BluePoint2 E Plan,
,
dept. 0007 and active Dental through Excellus Dental plan,
(collectively, the “Benefit Plans”) for Service Recipients’ U.S. active, eligible employees covered
under such Benefit Plans (such employees, the “Covered Employees”). Service Provider shall keep the
Benefit Plans and all coverage thereunder in full force through December 31, 2011 for Service
Recipient’s Covered Employees. Each Service Recipient may add or remove Covered Employees to or
from coverage under the Benefit Plans as outlined under the terms of the Benefit Plans. All claims
of Service Recipient’s Covered Employees made under the Benefit Plans (the “Claims”) and incurred
on or prior to December 31, 2011 the (“2011 Plan Year”) will be adjudicated in accordance with the
current contract and Service Provider will continue to take such actions on behalf of Service
Recipients’ Covered Employees as if such employees are employees of Service Provider.
All Claims of Service Recipients’ Covered Employees made under the Benefit Plans will be paid on
behalf of the Service Provider.
Service Recipients will pay Service Provider for coverage based on 2011 budget premium rates
previously set for the calendar year 2011 and described in the “Pricing” section below. Service
Recipients will pay Service Provider monthly premium payments for this service, for any full or
partial months, based on actual enrollment for the months covered post-spin using enrollments as of
the first (1st) calendar day of the month, commencing on the day after the Distribution
Date.
The Service Recipients will be required to pay the Service Provider the monthly premium payments
within ten (10) Business Days after the beginning of each calendar month. A detailed listing of
Service Recipient’s employees covered, including the Plans and enrollment tier in which they are
enrolled, will be made available to Service Provider upon its reasonable request.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement,
Service Provider shall provide to Service Recipient the services identified below or described
above (collectively, the “Services”).
| • | Monthly premium billing. | ||
| • | Monthly administrative services billing (for administrative services billed on an hourly basis. See Additional Pricing section for Hourly Rates). |
See General Service Description for a description of payments and billing hereunder
2
The following services listed below will be provided by “experts”, who are employees of Service
Provider, (the “Experts”) with the following persons the initial Experts: Cindy Jansen, Porzia
Quinn and Conrad Arnold.
| • | Administration as needed on daily basis for the Benefit Plans. The Service Provider will provide all services that were provided during the twelve (12) months prior to the Distribution Date. The Service Provider will maintain the same level of service provided during the twelve (12) months prior to the Distribution Date. |
| • | Answer any questions pertaining to medical coverage. | ||
| • | Assist in resolving any issues that may arise regarding, medical coverage, ex. Claims, Medicare questions, etc. | ||
| • | Add employees/dependents to the Medical coverage as needed. | ||
| • | Reconcile and pay premiums from Medical carriers pertaining to the Exelis employees. |
| • | Should the Service Recipient need services not provided during the twelve (12) months prior to the Distribution Date, the parties will negotiate in good faith to determine any additional cost involved in the services |
PREREQUISITES/DEPENDENCIES
The Experts remain employees of Service Provider. Service Recipients
acknowledge and agree that Service Provider has discretion to terminate the
Experts and the Experts have the ability to terminate their employment with
Service Provider. In the event the initially named Experts are no longer
employed by Service Provider, Service Provider’s then current benefit manager
(or such other person as has the skill and knowledge to so provide such
Services) will, at the request of the Service Recipients, provide such Service
as described herein.
The Service Recipients’ human resources department shall cooperate with the
Service Provider, including the Experts, in order for the Service Provider and
Experts to provide such Service under this Schedule.
BILLING LOCATION
Service Provider will provide Service Recipients a monthly invoice to
their addresses set forth below through December 31, 2011. The bill will cover
all charges for Services under this Schedule provided by Service Provider to
Service Recipients. The invoice will contain the number of Covered Employees
per tier per coverage. A detailed list of Covered Employees
3
and dependents covered will be provided by the Service Provider upon reasonable request of the
Service Recipient. All administrative functions handled by the
Service Provider in the twelve (12) month period prior to the Distribution Date
are contained in the fee structure set forth below. The Service Provider and
Service Recipients agree to negotiate in good faith for any additional services
related to the Service provided hereunder that are outside the normal course of
business.
SERVICE LEVEL
The Service Provider, including the Experts, will provide the same service
level to the Service Recipients as it provides to its own Covered Employees.
NOTICE REQUIREMENTS
Official Notices and Bills under this Schedule should be sent to the following addresses (with
an email copy to the Service Owners set forth above):
If to the Service Provider:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
If to the Service Receiver:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
PRICING
In addition to the costs specifically set forth below, Service Recipients shall also pay all
routine business travel expenses relating to the Services. The Service Recipients shall pay the
Service Provider based on the number of Covered Employees as of the first (1st) calendar day of the
month. The Service Recipient will be required to pay the Service Provider the monthly premium
payments within ten (10) Business Days after the beginning of each calendar month. A detailed
listing of Service Recipient’s Covered Employees, including the Plans and enrollment tier in
which they are enrolled, will be made available to Service Provider upon its reasonable request.
4
See “General Service Description” for further detail on payment and billing for the
monthly premium payments. The below table are the rates the Service Provider shall charge.
| Coverage | Employee | |||||
(Invoicing for medical/dental premiums Only as noted below): |
||||||
BluePoint POS (FSS) Active |
||||||
| Employee | $ | |||||
| Employee + 1 | $ | |||||
| Employee + Child(ren) | $ | |||||
| Family | $ | |||||
Dental (FSS) Active |
||||||
| Employee | $ | |||||
| Employee + 1 | $ | |||||
| Family | $ | |||||
Additional Pricing
Hourly Rates for Services not specified or normally provided by Service Provider in the twelve
(12) month period prior to the Distribute Date but otherwise provided by Service Provider employees
(including but not limited to modification, consulting, exit strategy development, transition,
etc.) are documented below. The employee category is defined by Service Provider. The rates
documented below apply to Service Provider employees only, should external resources be required,
the costs for those external resources will be reviewed with the Service Recipient prior to
execution of the project.
Notwithstanding anything in the Agreement to the contrary, the following rates shall not be subject
to (a) the 4.5% increase for inflation in 2012 described in Section 2(a)(3) (but such rates shall
be subject to such increase in 2013) or (b) the 2% or 10% increases described in the proviso to
Section 2(a)(i) of the Agreement.
General Category of Employee |
Hourly Rate | |||
1. Secretarial/Administrative |
$ | 50.00 | ||
2. Non-Executive |
$ | 100.00 | ||
3. Executive |
$ | 150.00 | ||
5
SCHEDULE AC7
POST SPIN HYPERCARE
POST SPIN HYPERCARE
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
Karla Viglasky
|
Chief Information Officer | (315) 568-7069 | karla.viglasky@itt.com | |||
ITT Corporation |
||||||
Ray DeLuke |
||||||
Exelis Inc.
|
Chief Information Officer | (703) 790-6356 | ray.deluke@exelisinc.com |
GENERAL SERVICE DESCRIPTION
Service Provider will perform Post Spin Hypercare Support Services for Service Receiver.
Service Receiver and its Subsidiaries will utilize Service Provider’s resources based on the
functionality, processes, input and output screens, and documents that support the Service
Provider’s business and business processes in the twelve months prior to the Distribution date.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement,
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
1
| Minimum | ||||||||||
| BAU | Service | |||||||||
| Service | Transaction | Period | Service | |||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Charge | |||||
| Provide Post Spin Hypercare support services: | ||||||||||
| Facility Shutdown Services — Service Provider will provide Service Receiver with Facility Shutdown services that include: | ||||||||||
| • Disposition of network and computer assets |
||||||||||
| • Disposition of furniture and miscellaneous
equipment; boxing of HR files, ITT logo, posters, etc. |
||||||||||
| • Maintain working environment for remaining employees |
||||||||||
| • Control the activation and deactivation of
access cards |
||||||||||
| • Close all third party contracts with vendors,
such as food, vending machines, cable, printers,
cleaning, etc. |
||||||||||
| Program Shutdown Services — Service Provider will provide Service Receiver with Program Shutdown services that include: | ||||||||||
IT-Hypercare-01
|
Hypercare Support Services |
• Crisis management for final cutover, to ensure
all projects go live on spin date
|
3* | Cost plus 2% - 10% per month | ||||||
| • Command center support and ramp down |
||||||||||
| • Access to TPMO and IT-SS Connect sites through
ITT Co. Active Directory and VPN accounts for up to 20
people |
||||||||||
| Financial Support Services —Service Provider will provide Service Receiver with financial support services that include: | ||||||||||
| • Purchase Order (invoice payment) and Contract
management for suppliers assisting with separation |
||||||||||
| Miscellaneous Support Services — Service Provider will provide Service Receiver with supplemental and miscellaneous project support services that include: | ||||||||||
| • Project management, strategy development,
infrastructure consulting, etc. Prioritization and
resource allocation for these services will be jointly
agreed to by CIOs. |
||||||||||
| All requests for support will be directed to and coordinated through Cindy Hoots. |
| * | TSA duration will end on 12/31/2011 regardless of actual spin-date. | |
| ** | Costs represent salary expense (no retention or severance) and additional facility charges for the Hanover location. |
2
LOCATIONS
Services are initially provided from Hanover, MD, USA to other USA locations.
PREREQUISITES/DEPENDENCIES
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. | |
| • | Travel and expenses will be paid by the requesting organization. |
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the
following addresses (with an email copy to the Service Owners set forth above):
If to the Service Provider:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
If to the Service Receiver:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
SERVICE LEVEL
Service Provider will classify incidents at its own discretion. Such
classifications shall be consistent with the priorities Service Provider set for
itself as a recipient of services.
In the event incidents cannot be resolved, Service Provider shall promptly notify
Service Receiver and work together to try and resolve such incidents.
3
SCHEDULE AC8
FINANCIAL & SYSTEM
DOCUMENTATION REQUIREMENTS TO
SUPPORT DCAA AUDITS OF ITT HQ
AND ITT SHARED SERVICES
(2006 — 2011)
FINANCIAL & SYSTEM
DOCUMENTATION REQUIREMENTS TO
SUPPORT DCAA AUDITS OF ITT HQ
AND ITT SHARED SERVICES
(2006 — 2011)
SERVICE OWNER
All service matters, general inquiries and notices regarding this Service should be directed
to:
| Name | Title | Phone | ||||
Service Provider’s
Contact |
||||||
ITT Corporation |
||||||
Daryl Bowker
|
Director, ITT Shared Services | (315) 568-7676 | Daryl.Bowker@itt.com | |||
William Feher
|
VP, ITT Internal Audit | (914) 641-2020 | William.Feher@itt.com | |||
Service Recipient’s
Contact |
||||||
Exelis Inc.
|
ITT Exelis, Asst Controller | (703) 790-6309 | Joe.Daniel@exelisinc.com | |||
Joe Daniel
|
ITT Exelis, Senior | (914) 641-2047 | Mark.Quirk@exelisinc.com | |||
Mark Quirk
|
Compliance Mgr |
PARTIES TO THE AGREEMENT
Service Provider: ITT Corporation
Service Receiver: Exelis Inc.
Service Receiver: Exelis Inc.
GENERAL SERVICE DESCRIPTION
As a government contractor, the Service Receiver has a requirement to support future DCAA
audits of open audit years 2006 through 2011. In order for Service Receiver to support DCAA’s
future audits of ITT Corporation’s (including its Shared Service) Residual and Directly-
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Allocated Incurred Costs, Service Receiver needs copies of ITT Corporation’s (including its Shared
Service) records, as defined by FAR 4.703
Service Receiver needs assistance from Service Provider to provide compliance services similar to
those provided to the Service Receiver during the four years prior to October 1, 2011, for 24
months (“Minimum Term”), but not longer than 36 months from the date hereof (“Maximum Term.
In addition, to the other services provided above, Service Provider will provide office space for
three Service Receiver employees (“SREEs”) to its facilities at 1133 Westchester Avenue, White
Plains, NY (the “Premises”) for a minimum term of three months (the “Minimum Occupancy Term”) and a
maximum term of nine months (the “Maximum Occupancy Term”). Service Provider will attempt to
accommodate the Service Provider and the SREEs needs but the space provided at the Premises and the
miscellaneous services described below under “1133 Premises” will not be similar to the space or
services provided to such employees prior to October 1, 2011.
SCOPE OF SERVICES
The following services will be provided on a time and materials basis by Service Provider.
| • | Related to the Service Provider Head Quarters (White Plains) records: |
| • | The attached work plan (Schedule XX.xls) has been developed to ensure all required records are copied prior to the separation of the Company. Continued access to these records are required after the split. |
| • | Access to the above identified Service Provider (White Plains NY) records is to enable Service Receiver personnel to retrieve, copy, and scan these records (2006 through 2011) to support future DCAA/DCMA audits. |
| • | In addition, the Service Provider agrees to provide supporting documentation in cases where the aforementioned work plan did not meet the needs of future DCAA/DCMA audit scope (i.e. DCAA asks for a consulting agreement or journal entry support that was not part of the scope the Service Receiver Data Retention Work Plan). See attached worksheet called “DCAA Audit Records Work Plan”. |
| • | The Service Provider agrees to retain, to the maximum extent possible, the contracts/consultant agreements that have been booked to the ITTHQ Incurred Cost General Ledger for the open audit years 2006 through 2011, as these documents as part of the DCAA audit universe. |
| • | The SREEs require a copier/scanner in order that the records can be copied and scanned. The ability to electronically scan records to an ITTCo archive location will also be required. |
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| • | Related to the ITT Shared Services data and records, the following has been agreed upon: |
| 1. | Service Provider (ITT Shared Services which includes ITT Transportation and Distribution Services (“TDS”), ITT Financial Shared Services (“FRC”), ITT Enterprise Infrastructure (“EI”), and ITT Global Strategic Sourcing (“GSS”)) to provide the following system-generated General Ledgers in PDF format to Service Receiver, within 36 months after the Distribution Date: |
| • | Company 20 (TDS) GL Summary by Account CYs 2006 — 2011 | ||
| • | Company 30 (FRC) GL Summary by Account CYs 2006 — 2011 | ||
| • | Company 50 (EI) GL Summary by Account CYs 2006 — 2011 | ||
| • | Company 40 (GSS) GL Summary by Account CYs 2006-2011 (where applicable). |
| The Service Provider and Service Receiver will work together to investigate the commercial feasibility of replicating and licensing an instance of PRMS to enable Service Receiver to obtain a soft copy of the General Ledgers by Account for the Shared Service Companies noted in 1 above (Companies 20. 30 50, and 40). All costs, including but not limited to, third party costs, costs for licensing, costs for pruning the data of IP & WTG data which also resides in the shared files, and costs incurred by the Provider for this effort shall be born 100% by the Service Receiver. |
| 2. | The Service Provider (ITT Shared Services) will provide the mapping and supporting documentation to the Service Receiver, as described in this Schedule for CYs 2008 through 2011. | ||
| 3. | Service Provider (ITT Shared Services) will provide Data Custodian Audit Support (supporting the DCAA audit without mapping and copying the supporting documentation for all applicable costs) for CYs 2006 — 2007. Service Provider will provide supporting documentation on a DCAA audit “as required” basis for CYs 2006 — 2007. | ||
| 4. | The Service Provider will provide the Service Receiver “Knowledge Transfer” as it relates to research, retrieval, explanation, and replication of the items listed in Section #’s 6 through # 8 below for CYs 2008 through 2011. The Service Provider will use commercially reasonable efforts to transfer the knowledge held by its employees as it relates to research, retrieval, explanation and replication of the items listed in Sections 6 through 8 below for calendar years 2008 through 2011. The knowledge transfer shall take place through multiple meetings at the Service Provider’s location at mutually convenient times over the term of this Schedule. | ||
| 5. | The following items related to the Shared Service GLs listed above will be delivered in hardcopy or scanned format to Service Provider, within 36 months after the Distribution Date: |
| a. | Company 20/30/40/50 Intercompany Statements for each year CY 2008 — 2011 for allocations to ITTHQ, DEHQ, and Defense Business Units. |
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| b. | Allocations process mapping, which includes the budgeted allocations, interim preliminary true up allocations, Final Year-end true ups, and adjustments throughout the year. | ||
| c. | Both Parties will work together to jointly determine the items that make up the significant portion of the allocation (which shall not be less than 80% of the actual annual cost) in order that those items be copied/scanned and provided to the Service Receiver. This effort will be a Best Efforts Level of Effort, which means the Service Provider would be empowered to hire additional employees or temporary workers and contract for significant overtime to accomplish the effort and all such costs would be born 100% by the Service Receiver, but in no case is the Service Provider required to focus so much effort on this task that it’s business is disrupted. In addition, the Service Provider will provide supporting documentation in cases where the aforementioned work plan did not meet the needs of future DCAA/DCMA audit scope (i.e. DCAA asks for a consulting agreement or journal entry support that was not part of the scope the ITT Exelis Data Retention Work Plan). | ||
| d. | Supporting Journal Entries (JE) and JE Source data for the Intercompany Statements listed in 6.a. above for those units that submit annual incurred cost submissions to the US Government. |
| i. | This list of units is identified in the attachment called “List of Defense Units for DCAA TSA.” |
| e. | Mapping of how the Annual GL amounts relate to the True-ups performed and allocated to ITTHQ, DEHQ, and the Defense BUs. | ||
| f. | Related to the GL Summaries listed in 1 above, the Service Provider will provide the following JEs and documentation that supports the annual GLs for the respective Shared Service companies, the following is also required to be provided by the Service Provider: |
| i. | Mapping and documenting the process of how the JEs were booked into each GL. | ||
| ii. | Supporting JEs for each Cost Center’s costs that were allocated to ITTHQ, DEHQ, and the Defense BUs. This list of Cost Centers is included in this TSA as an attachment called “List of Defense Units for DCAA TSA.xls” in Section 6.d.i. above. |
| 6. | Related to P2P and SAP invoices, for the years 2006-2011: |
| a. | Service Provider will provide electronic SAP P2P Annual Reports of AP Detail by business unit to include such detail as SAP Document #, Invoice #, Account, Vendor, Date, Amount, et al. | ||
| b. | Service Receiver will provide these SAP P2P reports, as needed, for the units in the attachment called “Defense-SAP.xls”, which will not include any additional units other than those supported in similar efforts in the past. | ||
| c. | Service Receiver will develop at its own cost a process that will enable Service Receiver to retrieve the PDF version of the Invoice that is attributable to the specific SAP Document Number. These PDF invoices will be |
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| electronically copied from the FRC P2P System and maintained on a Service Receiver server for future use. | |||
| d. | Service Provider will retain the original invoices (prior to scanning) for potential DCAA audits of the SAP P2P Imaging system and process until such time that those open audit years are closed., as required by FAR regulations. | ||
| e. | A report will be developed jointly by Service Receiver and Service Provider to enable an audit trail linking the aforementioned SAP Document Number to the Citibank ACH for proof of payment to the DCAA auditors. | ||
| f. | Service Provider will copy and provide Bank Statements to Service Receiver for use as 3rd party proof of payment for the DCAA auditors. |
| 7. | Related to Program BEST: |
| a. | Service Provider will provide the basis of allocation of Program BEST CY 2008 through 2010 actuals to the 4 Defense Value Centers. |
| i. | Service Provider will provide copies of GL ledger details (and supporting JEs and source documentation) to support the future DCAA audit of these Program BEST costs. |
| b. | Service Provider to provide details and support for the disposition of Program BEST |
1133 Westchester Avenue Premises
In addition to the services provided above, Service Provider will provide office space for the SREEs at the
Premises. Access will include approximately 150 square feet of work space, 2 desks and access to the internet,
and phone. Included within the rental rate will be electrical, housekeeping, and pantry, however, a if a
printer or scanner needs to be separately leased, Service Receiver will pay the extra charge. Mail and
reception service will not be provided.
The Service Provider will also provide office space for the Government auditors (DCAA) until such time the
Government auditors have completed their open audits. Access will include approximately 150 square feet of
work space, desks and access to the internet, phone, and a printer, as is currently provided to the Government
auditors, until such time that its ongoing audits are complete, tentatively scheduled audit completion date is
December 31, 2011. Such amounts will be billed to Service Receiver as set forth below.
General
| • | Fixed assets on the books of the Service Provider as of the date of the Distribution Date will remain the property of the Service Provider during and at the end of the term. | ||
| • | Fixed assets on the books of the Service Receiver as of the Distribution Date will remain the property of the Service Receiver during and at the end of the term. | ||
| • | Service Receiver shall have the reasonable right to use, and Service Provider shall at all times have exclusive control of, and operate and maintain, the common areas including the pantry in the manner Service Provider may reasonably determine to be appropriate. |
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| • | SREEs will be permitted in the common areas and the specific location assigned to them. They will be provided with ID badges which they must wear at all times. | ||
| Prohibitions |
Service Receiver is prohibited from the following without the Service Provider’s consent:
| • | Making any changes to the physical layout of the Premises or any capital improvements. | ||
| • | Inviting or permitting any other employee or agent or guest of Service Recipient to enter the Premises, other than employees who were former Service Provider employees.- Why would that make a difference? I would think they could not bring any additional folks on site without express written approval from Provider. Service Receiver assumes all responsibility for actions of its employees, agents and guests on the Premises. | ||
| • | Service Receiver will not be allowed to access the ITT computer network, except where is has been agreed that the Service Receiver will have a Guest ID in order to retrieve audit data/documents scanned to secure archive folders on the ITTCo network. This will be accomplished through the Service Receiver Employees having access to the aforementioned secure archive folder via an ITTCo laptop, setup for these purposes only. The SREEs will also be allowed to access Service Receiver’s own computer network via wireless or landline data connections on the Premises. | ||
| • | Service Receiver has no right to sublease, assign or transfer their space, except upon a change of control of Service Receiver in which case only former Service Provider employees will be permitted access to the Premises. | ||
| • | Service Receiver agrees not to put up any external or internal signs during the term of the agreement. |
Service Receiver’s Responsibilities
| • | Service Receiver will be required to provide and pay for all support and services required to move out of the Premises at the end of the term. If Service Receiver requires contractors to assist them in moving out of the Premises, Service Receiver agrees to provide Service Provider with proof of adequate contractor insurance coverage prior to contractor entering into the facility and to perform such moves at a mutually agreeable time to the Service Provider. | ||
| • | Service Receiver agrees to remove all of their personal property from the Premises at the end of the term. Service Receiver must return rented space to pre move in condition, with the exception of the offices, which should be left in an “as is” condition. | ||
| • | Service Receiver agrees to abide by all rules and regulations of the 1133 building set by the landlord including but not limited to those included in the lease between the landlord of the Premises and the Service Provider. |
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| • | Service Receiver agrees that all cabling that is used to attach Service Receiver’s PC’s to the IT infrastructure will remain the property of the Service Provider and will not be removed by the Service Receiver at the end of the term. | ||
| • | The SREEs will be required to show proper identification to enter the Premises as determined by the Service Provider | ||
| • | Service Receiver will enter into its own contract for phone service at the Premises and all costs associated with this contract will be paid for by Service Receiver. |
Pricing for Space at the Premises
During 2011 |
Cost plus 2% - 10% per month for SREE’s | |||
space During 2011 |
Cost plus 2% - 10% per month for DCAA | |||
From January 1, 2012 through the |
Cost plus 2% - 10% per month for SREEs | |||
Maximum Occupancy Term |
Cost plus 2% - 10% per month for DCAA | |||
The monthly rates above include the 4.5% increase for inflation and the 2% profit margin.
NO EARLY TERMINATION FEE OR MAKE-WHOLE FEE WILL BE DUE IF THE SERVICE RECEIPIENT OR THE DCAA DETERMINES
TO LEAVE THE PREMISES EARLY. THE AFOREMENTIONED PRICING DOES NOT INCLUDE THE COST OF A SEPARATE PRINTER OR
SCANNER THAT MAY NEED TO BE SEPARATELY LEASED.
LOCATIONS
White Plains, NY
Seneca Falls, NY
Palm Coast, FL
BILLING
Service Provider will provide Service Receiver with an invoice to its address set forth above.
The invoice provided must contain the following detail:
| • | Direct hours billed by level | ||
| • | T&M Billing rate | ||
| • | Detail of other direct reimbursable charges | ||
| • | Scope of work performed |
In addition, upon request, the Service Provider must provide supporting documentation for the
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invoiced costs
and rates in order to support a DCAA audit.
SERVICE LEVEL
Service Provider will provide the same service level to the Service Receiver as they provide to their
employer and the same service level as provided during the 12 month period prior to the Distribution Date.
NOTICE REQUIREMENTS
Service Receiver shall notify Service Provider at least 90 days in advance of the Minimum Term
if it wants to extend or terminate this Schedule, other than for the Premises, but such extension
shall not be for longer than the Maximum Term. If notification is not received by the Service
Provider, the service will terminate at the end of the Minimum Term. Service Receiver shall notify
Service Provider at least 30 days in advance of the date it desires to vacate the Premises.
Service Receiver must vacate the Premises no later than the date of the Maximum Occupancy Term.
Official Notices and Bills under this Schedule should be sent to the following addresses (with an
email copy to the Service Owners set forth above):
If to the Service Provider:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
If to the Service Receiver:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
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PRICING
In addition to the costs specifically set forth below, Service Receivers shall also pay all
business travel expenses incurred by the Service Provider relating to the Services.
“Total” and “Annual Total” costs as set forth below do not include various hourly costs, which will
be assessed on an as-needed basis.
Shared Service “Data Custodial” Support for CYs 2006 though 2007:
One (1) Staff-level Individual T&M Rate |
Cost plus 2% - 10% | |||
One (1) Management-level Individual T&M Rate |
Cost plus 2% - 10% |
Shared Service “Data Duplication”: Support for CYs 2008 though 2011:
One (1) Staff-level Individual T&M Rate |
Cost plus 2% - 10% | |||
One (1) Management-level Individual T&M Rate |
Cost plus 2% - 10% |
The Service Receiver will pay a minimum charge monthly for support of the Provider’s cost to retain
staffing who are available to fulfill all requests on a timely basis as calculated below:
One (1) Staff-level Individual at a rate of 50% of monthly salary -
Cost plus 2% - 10%/hr X 1040 hours / 12 = Cost plus 2% - 10%/month
One (1) Management-level Individual at a rate of 50% of monthly salary -
Cost plus 2% - 10%/hr X 1040 hours / 12 = Cost plus 2% - 10%/month
Any additional service performed over and above the minimum number of hours will be charged on a
T&M basis according to the calculations noted above for 2006 through 2011.
The hourly and monthly rates above include the 4.5% increase for inflation for 2012.
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DCAA Audit Records Work Plan
Financial & System Documentation Requirements to Support DCAA Audits of ITT HQ and ITT Shared Services (2006 — 2011)
Work Plan with Tasks/Activities and time phasing
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
1
|
Provide PMO (Gerstner) with1!st Draft of Work Plan | N/A | DEHQ | Y | ||||||||||
2
|
Send mass eMail to all affected parties, stating general overview | N/A | ALL | Y | ||||||||||
3
|
Meet with FRC to discuss scope | N/A | Seneca Falls Shared Services (FRC/EI/TDS) | Y | ||||||||||
4
|
Meet with FWSS (Acctg) to discuss scope | N/A | FWSS Acctg | |||||||||||
5
|
Meet withFWSS (Payroll)to discuss scope | N/A | FWSS Payroll | |||||||||||
6
|
Meet with FWSS (Travel)to discuss scope | N/A | FWSS Travel | |||||||||||
7
|
Meet with HQ Controllers to discuss scope | N/A | HQ Controllers | Y | ||||||||||
8
|
Meet withHQ Corp Responsibility to discuss scope | N/A | HQ Corp Responsibility | Y | ||||||||||
9
|
Meet with HQ Flight Ops Dept to discuss scope | N/A | HQ Flight Ops Dept | |||||||||||
10
|
Meet with HQ Human Resources to discuss scope | N/A | HQ Human Resources | Y | ||||||||||
11
|
Meet with Hq Internal Audit to discuss scope | N/A | HQ Internal Audit | Y | ||||||||||
12
|
Meet with HQ Legal Dept l to discuss scope | N/A | HQ Legal | Y | ||||||||||
10
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
13
|
Meet with HQ Pension/Benefits Dept to discuss scope | N/A | HQ Pension Dept | Y | ||||||||||
14
|
Meet with HQ Tax Dept to discuss scope | N/A | HQ Tax | Y | ||||||||||
15
|
Meet with HQ Treasury Dept to discuss scope | N/A | HQ Treasury | Y | ||||||||||
16
|
Initiate contract with Interns to copy “in-house” ITT Records | N/A | HQ Human Resources | Y | ||||||||||
18
|
Initiate contract with NOVA to copy “Archived” ITT Records | N/A | GSS | |||||||||||
19
|
Download ITT HQ General Ledger (Company 600) (.PDF & .txt formats) | 2006 | HQ Controllers | |||||||||||
20
|
Download ITT HQ General Ledger (Company 600) (.PDF & .txt formats) | 2007 | HQ Controllers | |||||||||||
21
|
Download ITT HQ General Ledger (Company 600) (.PDF & .txt formats) | 2008 | HQ Controllers | |||||||||||
22
|
Download ITT HQ General Ledger (Company 600) (.PDF & .txt formats) | 2009 | HQ Controllers | |||||||||||
23
|
Download ITT HQ General Ledger (Company 600) (.PDF & .txt formats) | 2010 | HQ Controllers | |||||||||||
24
|
Download ITT HQ General Ledger (Company 600) (.PDF & .txt formats) | 2011 | HQ Controllers | |||||||||||
11
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
25
|
Download ITT HQ A&G Summary Report (Company 600)(.PDF & .txt formats) | 2006 | HQ Controllers | |||||||||||
26
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Download ITT HQ A&G Summary Report (Company 600)(.PDF & .txt formats) | 2007 | HQ Controllers | |||||||||||
27
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Download ITT HQ A&G Summary Report (Company 600)(.PDF & .txt formats) | 2008 | HQ Controllers | |||||||||||
28
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Download ITT HQ A&G Summary Report (Company 600)(.PDF & .txt formats) | 2009 | HQ Controllers | |||||||||||
29
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Download ITT HQ A&G Summary Report (Company 600)(.PDF & .txt formats) | 2010 | HQ Controllers | |||||||||||
30
|
Download ITT HQ A&G Summary Report (Company 600)(.PDF & .txt formats) | 2011 | HQ Controllers | |||||||||||
31
|
Download ITT HQ A&G Detail Report (Company 600)(.PDF & .txt formats) | 2006 | HQ Controllers | |||||||||||
32
|
Download ITT HQ A&G Detail Report (Company 600)(.PDF & .txt formats) | 2007 | HQ Controllers | |||||||||||
33
|
Download ITT HQ A&G Detail Report (Company 600)(.PDF & .txt formats) | 2008 | HQ Controllers | |||||||||||
34
|
Download ITT HQ A&G Detail Report (Company 600)(.PDF & .txt formats) | 2009 | HQ Controllers | |||||||||||
35
|
Download ITT HQ A&G Detail Report (Company 600)(.PDF & .txt formats) | 2010 | HQ Controllers | |||||||||||
12
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
36
|
Download ITT HQ A&G Detail Report (Company 600)(.PDF & .txt formats) | 2011 | HQ Controllers | |||||||||||
37
|
Copy ITT HQ Infinuim Voucher Registers (Hardcopy) | 2006 | HQ Controllers | |||||||||||
38
|
Copy ITT HQ Infinuim Voucher Registers (Hardcopy) | 2007 | HQ Controllers | |||||||||||
39
|
Original Hardcopy Invoices/Checks to support ITTHQ Infinium Voucher Registers (and .txt or .xls version, if available) | 2006 | HQ Controllers | |||||||||||
40
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Original Hardcopy Invoices/Checks to support ITTHQ Infinium Voucher Registers (and .txt or .xls version, if available) | 2007 | HQ Controllers | |||||||||||
41
|
SAP P2P Voucher Register Invoice Listings for ITTHQ (CY 2007 -2011?) | 2007 | HQ Controllers | |||||||||||
42
|
SAP P2P Voucher Register Invoice Listings for ITTHQ (CY 2007 -2011?) | 2008 | HQ Controllers | |||||||||||
43
|
SAP P2P Voucher Register Invoice Listings for ITTHQ (CY 2007 -2011?) | 2009 | HQ Controllers | |||||||||||
44
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SAP P2P Voucher Register Invoice Listings for ITTHQ (CY 2007 -2011?) | 2010 | HQ Controllers | |||||||||||
45
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SAP P2P Voucher Register Invoice Listings for ITTHQ (CY 2007 -2011?) | 2011 | HQ Controllers | |||||||||||
13
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
46
|
Original SAP Hardcopy and PDF Invoices for ITTHQ Co # 600 | 2007 | HQ Controllers | |||||||||||
47
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Original SAP Hardcopy and PDF Invoices for ITTHQ Co # 600 | 2008 | HQ Controllers | |||||||||||
48
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Original SAP Hardcopy and PDF Invoices for ITTHQ Co # 600 | 2009 | HQ Controllers | |||||||||||
49
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Original SAP Hardcopy and PDF Invoices for ITTHQ Co # 600 | 2010 | HQ Controllers | |||||||||||
50
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Original SAP Hardcopy and PDF Invoices for ITTHQ Co # 600 | 2011 | HQ Controllers | |||||||||||
51
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ITT HQ Co 600 Voucher Reg Invoice Proof of Payment (check, EFT, etc) in SAP system | 2007 | HQ Controllers | |||||||||||
52
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ITT HQ Co 600 Voucher Reg Invoice Proof of Payment (check, EFT, etc) in SAP system | 2008 | HQ Controllers | |||||||||||
53
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ITT HQ Co 600 Voucher Reg Invoice Proof of Payment (check, EFT, etc) in SAP system | 2009 | HQ Controllers | |||||||||||
54
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ITT HQ Co 600 Voucher Reg Invoice Proof of Payment (check, EFT, etc) in SAP system | 2010 | HQ Controllers | |||||||||||
55
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ITT HQ Co 600 Voucher Reg Invoice Proof of Payment (check, EFT, etc) in SAP system | 2011 | HQ Controllers | |||||||||||
14
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
56
|
All Journal Entries for ITTHQ General Ledger (Co # 600) | 2006 | HQ Controllers | |||||||||||
57
|
All Journal Entries for ITTHQ General Ledger (Co # 600) | 2007 | HQ Controllers | |||||||||||
58
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All Journal Entries for ITTHQ General Ledger (Co # 600) | 2008 | HQ Controllers | |||||||||||
59
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All Journal Entries for ITTHQ General Ledger (Co # 600) | 2009 | HQ Controllers | |||||||||||
60
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All Journal Entries for ITTHQ General Ledger (Co # 600) | 2010 | HQ Controllers | |||||||||||
61
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All Journal Entries for ITTHQ General Ledger (Co # 600) | 2011 | HQ Controllers | |||||||||||
62
|
All Supporting Source Documentss for the ITTHQ JEs | 2006 | HQ Controllers | |||||||||||
63
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All Supporting Source Documentss for the ITTHQ JEs | 2007 | HQ Controllers | |||||||||||
64
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All Supporting Source Documentss for the ITTHQ JEs | 2008 | HQ Controllers | |||||||||||
65
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All Supporting Source Documentss for the ITTHQ JEs | 2009 | HQ Controllers | |||||||||||
66
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All Supporting Source Documentss for the ITTHQ JEs | 2010 | HQ Controllers | |||||||||||
67
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All Supporting Source Documentss for the ITTHQ JEs | 2011 | HQ Controllers | |||||||||||
68
|
ITT HQ Co # 600 “INTERCOMPANY STATEMENT OFF ACCOUNT” — ALL Defense Sites(Group, VCs, BUs), Entire Year (System-generated PDF & .xls formats) | 2006 | HQ Controllers | |||||||||||
15
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
69
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ITT HQ Co # 600 “INTERCOMPANY STATEMENT OFF ACCOUNT” — ALL Defense Sites(Group, VCs, BUs), Entire Year (System-generated PDF & .xls formats) | 2007 | HQ Controllers | |||||||||||
70
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ITT HQ Co # 600 “INTERCOMPANY STATEMENT OFF ACCOUNT” — ALL Defense Sites(Group, VCs, BUs), Entire Year (System-generated PDF & .xls formats) | 2008 | HQ Controllers | |||||||||||
71
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ITT HQ Co # 600 “INTERCOMPANY STATEMENT OFF ACCOUNT” — ALL Defense Sites(Group, VCs, BUs), Entire Year (System-generated PDF & .xls formats) | 2009 | HQ Controllers | |||||||||||
72
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ITT HQ Co # 600 “INTERCOMPANY STATEMENT OFF ACCOUNT” — ALL Defense Sites(Group, VCs, BUs), Entire Year (System-generated PDF & .xls formats) | 2010 | HQ Controllers | |||||||||||
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ITT HQ Co # 600 “INTERCOMPANY STATEMENT OFF ACCOUNT” — ALL Defense Sites(Group, VCs, BUs), Entire Year (System-generated PDF & .xls formats) | 2011 | HQ Controllers | |||||||||||
16
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
74
|
All Supporting Journal Entries for ITTHQ Intercompany Statement of Account | 2006 | HQ Controllers | |||||||||||
75
|
All Supporting Journal Entries for ITTHQ Intercompany Statement of Account | 2007 | HQ Controllers | |||||||||||
76
|
All Supporting Journal Entries for ITTHQ Intercompany Statement of Account | 2008 | HQ Controllers | |||||||||||
77
|
All Supporting Journal Entries for ITTHQ Intercompany Statement of Account | 2009 | HQ Controllers | |||||||||||
78
|
All Supporting Journal Entries for ITTHQ Intercompany Statement of Account | 2010 | HQ Controllers | |||||||||||
79
|
All Supporting Journal Entries for ITTHQ Intercompany Statement of Account | 2011 | HQ Controllers | |||||||||||
80
|
All supporting Source Docs and DC Advices for the ITTHQ I/C Statement JEs | 2006 | HQ Controllers | |||||||||||
81
|
All supporting Source Docs and DC Advices for the ITTHQ I/C Statement JEs | 2007 | HQ Controllers | |||||||||||
82
|
All supporting Source Docs and DC Advices for the ITTHQ I/C Statement JEs | 2008 | HQ Controllers | |||||||||||
17
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
83
|
All supporting Source Docs and DC Advices for the ITTHQ I/C Statement JEs | 2009 | HQ Controllers | |||||||||||
84
|
All supporting Source Docs and DC Advices for the ITTHQ I/C Statement JEs | 2010 | HQ Controllers | |||||||||||
85
|
All supporting Source Docs and DC Advices for the ITTHQ I/C Statement JEs | 2011 | HQ Controllers | |||||||||||
86
|
Internal Audit Plans /Schedules (ALL) | 2006 | HQ Internal Audit | |||||||||||
87
|
Internal Audit Plans /Schedules (ALL) | 2007 | HQ Internal Audit | |||||||||||
88
|
Internal Audit Plans /Schedules (ALL) | 2008 | HQ Internal Audit | |||||||||||
89
|
Internal Audit Plans /Schedules (ALL) | 2009 | HQ Internal Audit | |||||||||||
90
|
Internal Audit Plans /Schedules (ALL) | 2010 | HQ Internal Audit | |||||||||||
91
|
Internal Audit Plans /Schedules (ALL) | 2011 | HQ Internal Audit | |||||||||||
92
|
Internal Audit Reports, Including COSO | 2006 | HQ Internal Audit | |||||||||||
93
|
Internal Audit Reports, Including COSO | 2007 | HQ Internal Audit | |||||||||||
94
|
Internal Audit Reports, Including COSO | 2008 | HQ Internal Audit | |||||||||||
95
|
Internal Audit Reports, Including COSO | 2009 | HQ Internal Audit | |||||||||||
96
|
Internal Audit Reports, Including COSO | 2010 | HQ Internal Audit | |||||||||||
18
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
97
|
Internal Audit Reports, Including COSO | 2011 | HQ Internal Audit | |||||||||||
98
|
Internal Audit Generic WPs, including COSO | 2006 | HQ Internal Audit | |||||||||||
99
|
Internal Audit Generic WPs, including COSO | 2007 | HQ Internal Audit | |||||||||||
100
|
Internal Audit Generic WPs, including COSO | 2008 | HQ Internal Audit | |||||||||||
101
|
Internal Audit Generic WPs, including COSO | 2009 | HQ Internal Audit | |||||||||||
102
|
Internal Audit Generic WPs, including COSO | 2010 | HQ Internal Audit | |||||||||||
103
|
Internal Audit Generic WPs, including COSO | 2011 | HQ Internal Audit | |||||||||||
104
|
Internal Audit Completed WPs, including COSO for all Defense, HQ, & FRC sites | 2006 | HQ Internal Audit | |||||||||||
105
|
Internal Audit Completed WPs, including COSO for all Defense, HQ, & FRC sites | 2007 | HQ Internal Audit | |||||||||||
106
|
Internal Audit Completed WPs, including COSO for all Defense, HQ, & FRC sites | 2008 | HQ Internal Audit | |||||||||||
107
|
Internal Audit Completed WPs, including COSO for all Defense, HQ, & FRC sites | 2009 | HQ Internal Audit | |||||||||||
108
|
Internal Audit Completed WPs, including COSO for all Defense, HQ, & FRC sites | 2010 | HQ Internal Audit | |||||||||||
109
|
Internal Audit Completed WPs, including COSO for all Defense, HQ, & FRC sites | 2011 | HQ Internal Audit | |||||||||||
19
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
110
|
Binders that support the COSO Audit Reports | 2006 | HQ Internal Audit | |||||||||||
111
|
Binders that support the COSO Audit Reports | 2007 | HQ Internal Audit | |||||||||||
112
|
Binders that support the COSO Audit Reports | 2008 | HQ Internal Audit | |||||||||||
113
|
Binders that support the COSO Audit Reports | 2009 | HQ Internal Audit | |||||||||||
114
|
Binders that support the COSO Audit Reports | 2010 | HQ Internal Audit | |||||||||||
115
|
Binders that support the COSO Audit Reports | 2011 | HQ Internal Audit | |||||||||||
116
|
Internal Audit Risk Assessments | 2006 | HQ Internal Audit | |||||||||||
117
|
Internal Audit Risk Assessments | 2007 | HQ Internal Audit | |||||||||||
118
|
Internal Audit Risk Assessments | 2008 | HQ Internal Audit | |||||||||||
119
|
Internal Audit Risk Assessments | 2009 | HQ Internal Audit | |||||||||||
120
|
Internal Audit Risk Assessments | 2010 | HQ Internal Audit | |||||||||||
121
|
Internal Audit Risk Assessments | 2011 | HQ Internal Audit | |||||||||||
122
|
Internal Audit Year-end Mgmt Testing Memos | 2006 | HQ Internal Audit | |||||||||||
123
|
Internal Audit Year-end Mgmt Testing Memos | 2007 | HQ Internal Audit | |||||||||||
124
|
Internal Audit Year-end Mgmt Testing Memos | 2008 | HQ Internal Audit | |||||||||||
125
|
Internal Audit Year-end Mgmt Testing Memos | 2009 | HQ Internal Audit | |||||||||||
126
|
Internal Audit Year-end Mgmt Testing Memos | 2010 | HQ Internal Audit | |||||||||||
20
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
127
|
Internal Audit Year-end Mgmt Testing Memos | 2011 | HQ Internal Audit | |||||||||||
128
|
Binders that support the IA Year-end Mgmt Testing Memos | 2006 | HQ Internal Audit | |||||||||||
129
|
Binders that support the IA Year-end Mgmt Testing Memos | 2007 | HQ Internal Audit | |||||||||||
130
|
Binders that support the IA Year-end Mgmt Testing Memos | 2008 | HQ Internal Audit | |||||||||||
131
|
Binders that support the IA Year-end Mgmt Testing Memos | 2009 | HQ Internal Audit | |||||||||||
132
|
Binders that support the IA Year-end Mgmt Testing Memos | 2010 | HQ Internal Audit | |||||||||||
133
|
Binders that support the IA Year-end Mgmt Testing Memos | 2011 | HQ Internal Audit | |||||||||||
134
|
internal Audit Year-end Fraud Testing Memos | 2006 | HQ Internal Audit | |||||||||||
135
|
internal Audit Year-end Fraud Testing Memos | 2007 | HQ Internal Audit | |||||||||||
136
|
internal Audit Year-end Fraud Testing Memos | 2008 | HQ Internal Audit | |||||||||||
137
|
internal Audit Year-end Fraud Testing Memos | 2009 | HQ Internal Audit | |||||||||||
138
|
internal Audit Year-end Fraud Testing Memos | 2010 | HQ Internal Audit | |||||||||||
139
|
internal Audit Year-end Fraud Testing Memos | 2011 | HQ Internal Audit | |||||||||||
140
|
Binders that support the IA Year-end Fraud Testing Memos | 2006 | HQ Internal Audit | |||||||||||
141
|
Binders that support the IA Year-end Fraud Testing Memos | 2007 | HQ Internal Audit | |||||||||||
21
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
142
|
Binders that support the IA Year-end Fraud Testing Memos | 2008 | HQ Internal Audit | |||||||||||
143
|
Binders that support the IA Year-end Fraud Testing Memos | 2009 | HQ Internal Audit | |||||||||||
144
|
Binders that support the IA Year-end Fraud Testing Memos | 2010 | HQ Internal Audit | |||||||||||
145
|
Binders that support the IA Year-end Fraud Testing Memos | 2011 | HQ Internal Audit | |||||||||||
146
|
ITTHQ Generic SOX Templates | 2006 | HQ Internal Audit | |||||||||||
147
|
ITTHQ Generic SOX Templates | 2007 | HQ Internal Audit | |||||||||||
148
|
ITTHQ Generic SOX Templates | 2008 | HQ Internal Audit | |||||||||||
149
|
ITTHQ Generic SOX Templates | 2009 | HQ Internal Audit | |||||||||||
150
|
ITTHQ Generic SOX Templates | 2010 | HQ Internal Audit | |||||||||||
151
|
ITTHQ Generic SOX Templates | 2011 | HQ Internal Audit | |||||||||||
152
|
ITTHQ Code of Conduct — 2006 (PDF version) | 2006 | HQ Corp Responsibility | Y | ||||||||||
153
|
ITTHQ Code of Conduct — 2009 (PDF version) | 2009 | HQ Corp Responsibility | Y | ||||||||||
154
|
ITTHQ Code of Conduct — 2011 (PDF version) | 2011 | HQ Corp Responsibility | |||||||||||
155
|
A copy of the Annual Code of Conduct Training Material | 2006 | HQ Corp Responsibility | |||||||||||
156
|
A copy of the Annual Code of Conduct Training Material | 2007 | HQ Corp Responsibility | |||||||||||
157
|
A copy of the Annual Code of Conduct Training Material | 2008 | HQ Corp Responsibility | |||||||||||
158
|
A copy of the Annual Code of Conduct Training Material | 2009 | HQ Corp Responsibility | |||||||||||
22
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
159
|
A copy of the Annual Code of Conduct Training Material | 2010 | HQ Corp Responsibility | |||||||||||
160
|
A copy of the Annual Code of Conduct Training Material | 2011 | HQ Corp Responsibility | |||||||||||
161
|
Training Records to support that every ITT Employee has taken the Code of Conduct Training each year. | 2006 | HQ Corp Responsibility | |||||||||||
162
|
Training Records to support that every ITT Employee has taken the Code of Conduct Training each year. | 2007 | HQ Corp Responsibility | |||||||||||
163
|
Training Records to support that every ITT Employee has taken the Code of Conduct Training each year. | 2008 | HQ Corp Responsibility | |||||||||||
164
|
Training Records to support that every ITT Employee has taken the Code of Conduct Training each year. | 2009 | HQ Corp Responsibility | |||||||||||
165
|
Training Records to support that every ITT Employee has taken the Code of Conduct Training each year. | 2010 | HQ Corp Responsibility | |||||||||||
166
|
Training Records to support that every ITT Employee has taken the Code of Conduct Training each year. | 2011 | HQ Corp Responsibility | |||||||||||
23
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
167
|
Evidence of CCRB Meetings (i.e. Agenda & Signed Roster of Attendees) | 2006 | HQ Corp Responsibility | |||||||||||
168
|
Evidence of CCRB Meetings (i.e. Agenda & Signed Roster of Attendees) | 2007 | HQ Corp Responsibility | |||||||||||
169
|
Evidence of CCRB Meetings (i.e. Agenda & Signed Roster of Attendees) | 2008 | HQ Corp Responsibility | |||||||||||
170
|
Evidence of CCRB Meetings (i.e. Agenda & Signed Roster of Attendees) | 2009 | HQ Corp Responsibility | |||||||||||
171
|
Evidence of CCRB Meetings (i.e. Agenda & Signed Roster of Attendees) | 2010 | HQ Corp Responsibility | |||||||||||
172
|
Evidence of CCRB Meetings (i.e. Agenda & Signed Roster of Attendees) | 2011 | HQ Corp Responsibility | |||||||||||
173
|
All Quarterly E&C Metrics Reports (Raven/Longo) | 2006 | HQ Corp Responsibility | |||||||||||
174
|
All Quarterly E&C Metrics Reports (Raven/Longo) | 2007 | HQ Corp Responsibility | |||||||||||
175
|
All Quarterly E&C Metrics Reports (Raven/Longo) | 2008 | HQ Corp Responsibility | |||||||||||
176
|
All Quarterly E&C Metrics Reports (Raven/Longo) | 2009 | HQ Corp Responsibility | |||||||||||
177
|
All Quarterly E&C Metrics Reports (Raven/Longo) | 2010 | HQ Corp Responsibility | |||||||||||
24
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
178
|
All Quarterly E&C Metrics Reports (Raven/Longo) | 2011 | HQ Corp Responsibility | |||||||||||
179
|
Evidence of Hotline Posters & Ombudsman Info, and EthicsPoiint Mechanisms (i.e. Policy, Memo, & actual posters) | 2006 | HQ Corp Responsibility | |||||||||||
180
|
Evidence of Hotline Posters & Ombudsman Info, and EthicsPoiint Mechanisms (i.e. Policy, Memo, & actual posters) | 2007 | HQ Corp Responsibility | |||||||||||
181
|
Evidence of Hotline Posters & Ombudsman Info, and EthicsPoiint Mechanisms (i.e. Policy, Memo, & actual posters) | 2008 | HQ Corp Responsibility | |||||||||||
182
|
Evidence of Hotline Posters & Ombudsman Info, and EthicsPoiint Mechanisms (i.e. Policy, Memo, & actual posters) | 2009 | HQ Corp Responsibility | |||||||||||
183
|
Evidence of Hotline Posters & Ombudsman Info, and EthicsPoiint Mechanisms (i.e. Policy, Memo, & actual posters) | 2010 | HQ Corp Responsibility | |||||||||||
184
|
Evidence of Hotline Posters & Ombudsman Info, and EthicsPoiint Mechanisms (i.e. Policy, Memo, & actual posters) | 2011 | HQ Corp Responsibility | |||||||||||
25
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
185
|
E&C Policies & Procedures/ “Thud” Book | 2006 | HQ Corp Responsibility | |||||||||||
186
|
E&C Policies & Procedures/ “Thud” Book | 2007 | HQ Corp Responsibility | |||||||||||
187
|
E&C Policies & Procedures/ “Thud” Book | 2008 | HQ Corp Responsibility | |||||||||||
188
|
E&C Policies & Procedures/ “Thud” Book | 2009 | HQ Corp Responsibility | |||||||||||
189
|
E&C Policies & Procedures/ “Thud” Book | 2010 | HQ Corp Responsibility | |||||||||||
190
|
E&C Policies & Procedures/ “Thud” Book | 2011 | HQ Corp Responsibility | |||||||||||
191
|
Listing of All ITT Board of Directors and their affiliations | 2006 | HQ Legal | |||||||||||
192
|
Listing of All ITT Board of Directors and their affiliations | 2007 | HQ Legal | |||||||||||
193
|
Listing of All ITT Board of Directors and their affiliations | 2008 | HQ Legal | |||||||||||
194
|
Listing of All ITT Board of Directors and their affiliations | 2009 | HQ Legal | |||||||||||
195
|
Listing of All ITT Board of Directors and their affiliations | 2010 | HQ Legal | |||||||||||
196
|
Listing of All ITT Board of Directors and their affiliations | 2011 | HQ Legal | |||||||||||
26
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
197
|
ITT Board of Director Minutes (See Comments) | 2006 | HQ Legal | |||||||||||
198
|
ITT Board of Director Minutes (See Comments) | 2007 | HQ Legal | |||||||||||
199
|
ITT Board of Director Minutes (See Comments) | 2008 | HQ Legal | |||||||||||
200
|
ITT Board of Director Minutes (See Comments) | 2009 | HQ Legal | |||||||||||
201
|
ITT Board of Director Minutes (See Comments) | 2010 | HQ Legal | |||||||||||
202
|
ITT Board of Director Minutes (See Comments) | 2011 | HQ Legal | |||||||||||
203
|
ITT Board of Director Audit Committee Minutes (See Comments) | 2006 | HQ Legal | |||||||||||
204
|
ITT Board of Director Audit Committee Minutes (See Comments) | 2007 | HQ Legal | |||||||||||
205
|
ITT Board of Director Audit Committee Minutes (See Comments) | 2008 | HQ Legal | |||||||||||
206
|
ITT Board of Director Audit Committee Minutes (See Comments) | 2009 | HQ Legal | |||||||||||
207
|
ITT Board of Director Audit Committee Minutes (See Comments) | 2010 | HQ Legal | |||||||||||
208
|
ITT Board of Director Audit Committee Minutes (See Comments) | 2011 | HQ Legal | |||||||||||
209
|
ITT Year-end Financial Report, including 10K & Proxy (4 copies) | 2006 | HQ Controllers | |||||||||||
27
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
210
|
ITT Year-end Financial Report, including 10K & Proxy (4 copies) | 2007 | HQ Controllers | |||||||||||
211
|
ITT Year-end Financial Report, including 10K & Proxy (4 copies) | 2008 | HQ Controllers | |||||||||||
212
|
ITT Year-end Financial Report, including 10K & Proxy (4 copies) | 2009 | HQ Controllers | |||||||||||
213
|
ITT Year-end Financial Report, including 10K & Proxy (4 copies) | 2010 | HQ Controllers | |||||||||||
214
|
ITT Year-end Financial Report, including 10K & Proxy (4 copies) | 2011 | HQ Controllers | |||||||||||
215
|
Federal Income Tax Returns (2 copies) | 2006 | HQ Tax | Y | ||||||||||
216
|
Federal Income Tax Returns (2 copies) | 2007 | HQ Tax | Y | ||||||||||
217
|
Federal Income Tax Returns (2 copies) | 2008 | HQ Tax | Y | ||||||||||
218
|
Federal Income Tax Returns (2 copies) | 2009 | HQ Tax | Y | ||||||||||
219
|
Federal Income Tax Returns (2 copies) | 2010 | HQ Tax | |||||||||||
220
|
Federal Income Tax Returns (2 copies) | 2011 | HQ Tax | |||||||||||
221
|
IRS Form 8109 (Federal Tax Deposit Coupon), Electronic Federal Tax Payment System (EFTPS), or other information to support ITT’s timely payment of payroll taxes. | 2006 | HQ Tax | |||||||||||
28
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
222
|
IRS Form 8109 (Federal Tax Deposit Coupon), Electronic Federal Tax Payment System (EFTPS), or other information to support ITT’s timely payment of payroll taxes. | 2007 | HQ Tax | |||||||||||
223
|
IRS Form 8109 (Federal Tax Deposit Coupon), Electronic Federal Tax Payment System (EFTPS), or other information to support ITT’s timely payment of payroll taxes. | 2008 | HQ Tax | |||||||||||
224
|
IRS Form 8109 (Federal Tax Deposit Coupon), Electronic Federal Tax Payment System (EFTPS), or other information to support ITT’s timely payment of payroll taxes. | 2009 | HQ Tax | |||||||||||
225
|
IRS Form 8109 (Federal Tax Deposit Coupon), Electronic Federal Tax Payment System (EFTPS), or other information to support ITT’s timely payment of payroll taxes. | 2010 | HQ Tax | |||||||||||
226
|
IRS Form 8109 (Federal Tax Deposit Coupon), Electronic Federal Tax Payment System (EFTPS), or other information to support ITT’s timely payment of payroll taxes. | 2011 | HQ Tax | |||||||||||
29
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
227
|
ITT Contract with Deloitte & Touche (External Auditors) | 2006 | HQ Controllers | |||||||||||
228
|
ITT Contract with Deloitte & Touche (External Auditors) | 2007 | HQ Controllers | |||||||||||
229
|
ITT Contract with Deloitte & Touche (External Auditors) | 2008 | HQ Controllers | |||||||||||
230
|
ITT Contract with Deloitte & Touche (External Auditors) | 2009 | HQ Controllers | |||||||||||
231
|
ITT Contract with Deloitte & Touche (External Auditors) | 2010 | HQ Controllers | |||||||||||
232
|
ITT Contract with Deloitte & Touche (External Auditors) | 2011 | HQ Controllers | |||||||||||
233
|
ITT Contract with Ernst & Young (Internal Auditors) | 2006 | HQ Internal Audit | |||||||||||
234
|
ITT Contract with Ernst & Young (Internal Auditors) | 2007 | HQ Internal Audit | |||||||||||
235
|
ITT Contract with Ernst & Young (Internal Auditors) | 2008 | HQ Internal Audit | |||||||||||
236
|
ITT Contract with Ernst & Young (Internal Auditors) | 2009 | HQ Internal Audit | |||||||||||
237
|
ITT Contract with Ernst & Young (Internal Auditors) | 2010 | HQ Internal Audit | |||||||||||
238
|
ITT Contract with Ernst & Young (Internal Auditors) | 2011 | HQ Internal Audit | |||||||||||
30
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
239
|
Organization Charts for ALL ITTHQ Departments | 2006 | HQ Human Resources | |||||||||||
240
|
Organization Charts for ALL ITTHQ Departments | 2007 | HQ Human Resources | |||||||||||
241
|
Organization Charts for ALL ITTHQ Departments | 2008 | HQ Human Resources | |||||||||||
242
|
Organization Charts for ALL ITTHQ Departments | 2009 | HQ Human Resources | |||||||||||
243
|
Organization Charts for ALL ITTHQ Departments | 2010 | HQ Human Resources | |||||||||||
244
|
Organization Charts for ALL ITTHQ Departments | 2011 | HQ Human Resources | |||||||||||
245
|
Listing of All IITT HQ Employees by Department | 2006 | HQ Human Resources | |||||||||||
246
|
Listing of All IITT HQ Employees by Department | 2007 | HQ Human Resources | |||||||||||
247
|
Listing of All IITT HQ Employees by Department | 2008 | HQ Human Resources | |||||||||||
248
|
Listing of All IITT HQ Employees by Department | 2009 | HQ Human Resources | |||||||||||
249
|
Listing of All IITT HQ Employees by Department | 2010 | HQ Human Resources | |||||||||||
250
|
Listing of All IITT HQ Employees by Department | 2011 | HQ Human Resources | |||||||||||
251
|
Floor/Office Layout of ITTHQ Office | 2006 | HQ Human Resources | |||||||||||
252
|
Floor/Office Layout of ITTHQ Office | 2007 | HQ Human Resources | |||||||||||
253
|
Floor/Office Layout of ITTHQ Office | 2008 | HQ Human Resources | |||||||||||
31
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
254
|
Floor/Office Layout of ITTHQ Office | 2009 | HQ Human Resources | |||||||||||
255
|
Floor/Office Layout of ITTHQ Office | 2010 | HQ Human Resources | |||||||||||
256
|
Floor/Office Layout of ITTHQ Office | 2011 | HQ Human Resources | |||||||||||
257
|
ITT Lease for 4 Red Oak Lane, White Plains NY | 2006 | HQ Controllers | |||||||||||
258
|
ITT Lease for 1133 Wesrchester Ave, White Plains NY | 2008 | HQ Controllers | |||||||||||
259
|
ITT HQ W-2s fpr All ITTHQ Executives (19 & above) | 2006 | FWSS Payroll | |||||||||||
260
|
ITT HQ W-2s fpr All ITTHQ Executives (19 & above) | 2007 | FWSS Payroll | |||||||||||
261
|
ITT HQ W-2s fpr All ITTHQ Executives (19 & above) | 2008 | FWSS Payroll | |||||||||||
262
|
ITT HQ W-2s fpr All ITTHQ Executives (19 & above) | 2009 | FWSS Payroll | |||||||||||
263
|
ITT HQ W-2s fpr All ITTHQ Executives (19 & above) | 2010 | FWSS Payroll | |||||||||||
264
|
ITT HQ W-2s fpr All ITTHQ Executives (19 & above) | 2011 | FWSS Payroll | |||||||||||
265
|
ITT HQ W-2s fpr All Remaining ITTHQ Employees (18 & below) | 2006 | FWSS Payroll | |||||||||||
266
|
ITT HQ W-2s fpr All Remaining ITTHQ Employees (18 & below) | 2007 | FWSS Payroll | |||||||||||
267
|
ITT HQ W-2s fpr All Remaining ITTHQ Employees (18 & below) | 2008 | FWSS Payroll | |||||||||||
32
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
268
|
ITT HQ W-2s fpr All Remaining ITTHQ Employees (18 & below) | 2009 | FWSS Payroll | |||||||||||
269
|
ITT HQ W-2s fpr All Remaining ITTHQ Employees (18 & below) | 2010 | FWSS Payroll | |||||||||||
270
|
ITT HQ W-2s fpr All Remaining ITTHQ Employees (18 & below) | 2011 | FWSS Payroll | |||||||||||
271
|
ITTHQ Co 600 Payroll Register (System-generated PDF format) | 2006 | FWSS Payroll | |||||||||||
272
|
ITTHQ Co 600 Payroll Register (System-generated PDF format) | 2007 | FWSS Payroll | |||||||||||
273
|
ITTHQ Co 600 Payroll Register (System-generated PDF format) | 2008 | FWSS Payroll | |||||||||||
274
|
ITTHQ Co 600 Payroll Register (System-generated PDF format) | 2009 | FWSS Payroll | |||||||||||
275
|
ITTHQ Co 600 Payroll Register (System-generated PDF format) | 2010 | FWSS Payroll | |||||||||||
276
|
ITTHQ Co 600 Payroll Register (System-generated PDF format) | 2011 | FWSS Payroll | |||||||||||
277
|
ITT Executive Compensation Surveys, Bencharking, Analyses performed by ITT, and any other data used used to justify the rreasonableness of Executive Compensation (L. Thumen) | 2006 | HQ Human Resources | |||||||||||
33
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
278
|
ITT Executive Compensation Surveys, Bencharking, Analyses performed by ITT, and any other data used used to justify the rreasonableness of Executive Compensation (L. Thumen) | 2007 | HQ Human Resources | |||||||||||
279
|
ITT Executive Compensation Surveys, Bencharking, Analyses performed by ITT, and any other data used used to justify the rreasonableness of Executive Compensation (L. Thumen) | 2008 | HQ Human Resources | |||||||||||
280
|
ITT Executive Compensation Surveys, Bencharking, Analyses performed by ITT, and any other data used used to justify the rreasonableness of Executive Compensation (L. Thumen) | 2009 | HQ Human Resources | |||||||||||
281
|
ITT Executive Compensation Surveys, Bencharking, Analyses performed by ITT, and any other data used used to justify the rreasonableness of Executive Compensation (L. Thumen) | 2010 | HQ Human Resources | |||||||||||
34
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
282
|
ITT Executive Compensation Surveys, Bencharking, Analyses performed by ITT, and any other data used used to justify the rreasonableness of Executive Compensation (L. Thumen) | 2011 | HQ Human Resources | |||||||||||
283
|
ITTHQ Corporate Policies & Procedures (ALL) | 2006 | HQ Corp Responsibility | |||||||||||
284
|
ITTHQ Corporate Policies & Procedures (ALL) | 2007 | HQ Corp Responsibility | |||||||||||
285
|
ITTHQ Corporate Policies & Procedures (ALL) | 2008 | HQ Corp Responsibility | |||||||||||
286
|
ITTHQ Corporate Policies & Procedures (ALL) | 2009 | HQ Corp Responsibility | |||||||||||
287
|
ITTHQ Corporate Policies & Procedures (ALL) | 2010 | HQ Corp Responsibility | |||||||||||
288
|
ITTHQ Corporate Policies & Procedures (ALL) | 2011 | HQ Corp Responsibility | |||||||||||
289
|
SAS 70 Reports & Contract/Agreements for all 3rd Party Service Providers that ITTHQ uses. | 2006 | Mulitple HQ Depts | |||||||||||
290
|
SAS 70 Reports & Contract/Agreements for all 3rd Party Service Providers that ITTHQ uses. | 2007 | Mulitple HQ Depts | |||||||||||
35
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
291
|
SAS 70 Reports & Contract/Agreements for all 3rd Party Service Providers that ITTHQ uses. | 2008 | Mulitple HQ Depts | |||||||||||
292
|
SAS 70 Reports & Contract/Agreements for all 3rd Party Service Providers that ITTHQ uses. | 2009 | Mulitple HQ Depts | |||||||||||
293
|
SAS 70 Reports & Contract/Agreements for all 3rd Party Service Providers that ITTHQ uses. | 2010 | Mulitple HQ Depts | |||||||||||
294
|
SAS 70 Reports & Contract/Agreements for all 3rd Party Service Providers that ITTHQ uses. | 2011 | Mulitple HQ Depts | |||||||||||
295
|
HFM Data Suppiort for 3 Factor Formala Calculations (System-generated PDF format) | 2006 | HQ Controllers | |||||||||||
296
|
HFM Data Suppiort for 3 Factor Formala Calculations (System-generated PDF format) | 2007 | HQ Controllers | |||||||||||
297
|
HFM Data Suppiort for 3 Factor Formala Calculations (System-generated PDF format) | 2008 | HQ Controllers | |||||||||||
298
|
HFM Data Suppiort for 3 Factor Formala Calculations (System-generated PDF format) | 2009 | HQ Controllers | |||||||||||
36
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
299
|
HFM Data Suppiort for 3 Factor Formala Calculations (System-generated PDF format) | 2010 | HQ Controllers | |||||||||||
300
|
HFM Data Suppiort for 3 Factor Formala Calculations (System-generated PDF format) | 2011 | HQ Controllers | |||||||||||
301
|
Bonus Agreements/Approvals for ALL ITTHQ Employess (Non-Execs) | 2006 | HQ Human Resources | |||||||||||
302
|
Bonus Agreements/Approvals for ALL ITTHQ Employess (Non-Execs) | 2007 | HQ Human Resources | |||||||||||
303
|
Bonus Agreements/Approvals for ALL ITTHQ Employess (Non-Execs) | 2008 | HQ Human Resources | |||||||||||
304
|
Bonus Agreements/Approvals for ALL ITTHQ Employess (Non-Execs) | 2009 | HQ Human Resources | |||||||||||
305
|
Bonus Agreements/Approvals for ALL ITTHQ Employess (Non-Execs) | 2010 | HQ Human Resources | |||||||||||
306
|
Bonus Agreements/Approvals for ALL ITTHQ Employess (Non-Execs) | 2011 | HQ Human Resources | |||||||||||
307
|
Bonus Agreements/Approvals for All ITT Executives (HQ, SS, DEF) | 2006 | HQ Human Resources | |||||||||||
308
|
Bonus Agreements/Approvals for All ITT Executives (HQ, SS, DEF) | 2007 | HQ Human Resources | |||||||||||
37
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
309
|
Bonus Agreements/Approvals for All ITT Executives (HQ, SS, DEF) | 2008 | HQ Human Resources | |||||||||||
310
|
Bonus Agreements/Approvals for All ITT Executives (HQ, SS, DEF) | 2009 | HQ Human Resources | |||||||||||
311
|
Bonus Agreements/Approvals for All ITT Executives (HQ, SS, DEF) | 2010 | HQ Human Resources | |||||||||||
312
|
Bonus Agreements/Approvals for All ITT Executives (HQ, SS, DEF) | 2011 | HQ Human Resources | |||||||||||
313
|
TSR Statements for ALL ITT HQ, SS, & DEFENSE Employees | 2006 | HQ Human Resources | |||||||||||
314
|
TSR Statements for ALL ITT HQ, SS, & DEFENSE Employees | 2007 | HQ Human Resources | |||||||||||
315
|
TSR Statements for ALL ITT HQ, SS, & DEFENSE Employees | 2008 | HQ Human Resources | |||||||||||
316
|
TSR Statements for ALL ITT HQ, SS, & DEFENSE Employees | 2009 | HQ Human Resources | |||||||||||
317
|
TSR Statements for ALL ITT HQ, SS, & DEFENSE Employees | 2010 | HQ Human Resources | |||||||||||
318
|
TSR Statements for ALL ITT HQ, SS, & DEFENSE Employees | 2011 | HQ Human Resources | |||||||||||
319
|
LTIP Calculations (M Hahn) w/supporting source documentation | 2006 | HQ Controllers | |||||||||||
38
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
320
|
LTIP Calculations (M Hahn) w/supporting source documentation | 2007 | HQ Controllers | |||||||||||
321
|
LTIP Calculations (M Hahn) w/supporting source documentation | 2008 | HQ Controllers | |||||||||||
322
|
LTIP Calculations (M Hahn) w/supporting source documentation | 2009 | HQ Controllers | |||||||||||
323
|
LTIP Calculations (M Hahn) w/supporting source documentation | 2010 | HQ Controllers | |||||||||||
324
|
LTIP Calculations (M Hahn) w/supporting source documentation | 2011 | HQ Controllers | |||||||||||
325
|
Approvals/Supporting Docs for ALL ITTHQ Service Recognition Awards (To support expense booked in Co 600 A&G) | 2006 | HQ Controllers | |||||||||||
326
|
Approvals/Supporting Docs for ALL ITTHQ Service Recognition Awards (To support expense booked in Co 600 A&G) | 2007 | HQ Controllers | |||||||||||
327
|
Approvals/Supporting Docs for ALL ITTHQ Service Recognition Awards (To support expense booked in Co 600 A&G) | 2008 | HQ Controllers | |||||||||||
328
|
Approvals/Supporting Docs for ALL ITTHQ Service Recognition Awards (To support expense booked in Co 600 A&G) | 2009 | HQ Controllers | |||||||||||
39
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
329
|
Approvals/Supporting Docs for ALL ITTHQ Service Recognition Awards (To support expense booked in Co 600 A&G) | 2010 | HQ Controllers | |||||||||||
330
|
Approvals/Supporting Docs for ALL ITTHQ Service Recognition Awards (To support expense booked in Co 600 A&G) | 2011 | HQ Controllers | |||||||||||
331
|
Approvals/Supporting Docs for ALL ITTHQ Tuition Reimburesments (To support expense booked in Co 600 A&G) | 2006 | HQ Controllers | |||||||||||
332
|
Approvals/Supporting Docs for ALL ITTHQ Tuition Reimburesments (To support expense booked in Co 600 A&G) | 2007 | HQ Controllers | |||||||||||
333
|
Approvals/Supporting Docs for ALL ITTHQ Tuition Reimburesments (To support expense booked in Co 600 A&G) | 2008 | HQ Controllers | |||||||||||
334
|
Approvals/Supporting Docs for ALL ITTHQ Tuition Reimburesments (To support expense booked in Co 600 A&G) | 2009 | HQ Controllers | |||||||||||
335
|
Approvals/Supporting Docs for ALL ITTHQ Tuition Reimburesments (To support expense booked in Co 600 A&G) | 2010 | HQ Controllers | |||||||||||
40
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
336
|
Approvals/Supporting Docs for ALL ITTHQ Tuition Reimburesments (To support expense booked in Co 600 A&G) | 2011 | HQ Controllers | |||||||||||
337
|
PARs/Approvals for ALL Software Acquisiitions at ITTHQ Co # 600 | 2006 | HQ Controllers | |||||||||||
338
|
PARs/Approvals for ALL Software Acquisiitions at ITTHQ Co # 601 | 2007 | HQ Controllers | |||||||||||
339
|
PARs/Approvals for ALL Software Acquisiitions at ITTHQ Co # 602 | 2008 | HQ Controllers | |||||||||||
340
|
PARs/Approvals for ALL Software Acquisiitions at ITTHQ Co # 603 | 2009 | HQ Controllers | |||||||||||
341
|
PARs/Approvals for ALL Software Acquisiitions at ITTHQ Co # 604 | 2010 | HQ Controllers | |||||||||||
342
|
PARs/Approvals for ALL Software Acquisiitions at ITTHQ Co # 605 | 2011 | HQ Controllers | |||||||||||
343
|
PARs/Approvals for ALL Capital Expebdiures/Acquisiitions at ITT HQ Co 600 Locations | 2006 | HQ Controllers | |||||||||||
344
|
PARs/Approvals for ALL Capital Expebdiures/Acquisiitions at ITT HQ Co 600 Locations | 2007 | HQ Controllers | |||||||||||
345
|
PARs/Approvals for ALL Capital Expebdiures/Acquisiitions at ITT HQ Co 600 Locations | 2008 | HQ Controllers | |||||||||||
41
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
346
|
PARs/Approvals for ALL Capital Expebdiures/Acquisiitions at ITT HQ Co 600 Locations | 2009 | HQ Controllers | |||||||||||
347
|
PARs/Approvals for ALL Capital Expebdiures/Acquisiitions at ITT HQ Co 600 Locations | 2010 | HQ Controllers | |||||||||||
348
|
PARs/Approvals for ALL Capital Expebdiures/Acquisiitions at ITT HQ Co 600 Locations | 2011 | HQ Controllers | |||||||||||
349
|
Fixed Assets Register for all ITT HQ Co 600 Fixed Assets | 2006 | HQ Controllers | |||||||||||
350
|
Fixed Assets Register for all ITT HQ Co 600 Fixed Assets | 2007 | HQ Controllers | |||||||||||
351
|
Fixed Assets Register for all ITT HQ Co 600 Fixed Assets | 2008 | HQ Controllers | |||||||||||
352
|
Fixed Assets Register for all ITT HQ Co 600 Fixed Assets | 2009 | HQ Controllers | |||||||||||
353
|
Fixed Assets Register for all ITT HQ Co 600 Fixed Assets | 2010 | HQ Controllers | |||||||||||
354
|
Fixed Assets Register for all ITT HQ Co 600 Fixed Assets | 2011 | HQ Controllers | |||||||||||
355
|
Depreciation Basis for ALL ITTHQ Co 600 Fixed Assets | 2006 | HQ Controllers | |||||||||||
356
|
Depreciation Basis for ALL ITTHQ Co 600 Fixed Assets | 2007 | HQ Controllers | |||||||||||
42
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
357
|
Depreciation Basis for ALL ITTHQ Co 600 Fixed Assets | 2008 | HQ Controllers | |||||||||||
358
|
Depreciation Basis for ALL ITTHQ Co 600 Fixed Assets | 2009 | HQ Controllers | |||||||||||
359
|
Depreciation Basis for ALL ITTHQ Co 600 Fixed Assets | 2010 | HQ Controllers | |||||||||||
360
|
Depreciation Basis for ALL ITTHQ Co 600 Fixed Assets | 2011 | HQ Controllers | |||||||||||
361
|
Invoices for All Fixed Assers at ITTHQ Co 600 | 2006 | HQ Controllers | |||||||||||
362
|
Invoices for All Fixed Assers at ITTHQ Co 601 | 2007 | HQ Controllers | |||||||||||
363
|
Invoices for All Fixed Assers at ITTHQ Co 602 | 2008 | HQ Controllers | |||||||||||
364
|
Invoices for All Fixed Assers at ITTHQ Co 603 | 2009 | HQ Controllers | |||||||||||
365
|
Invoices for All Fixed Assers at ITTHQ Co 604 | 2010 | HQ Controllers | |||||||||||
366
|
Invoices for All Fixed Assers at ITTHQ Co 605 | 2011 | HQ Controllers | |||||||||||
367
|
Leasehold Improvememt Register for all ITT HQ Co 600 Leasehold Imps | 2006 | HQ Controllers | |||||||||||
368
|
Leasehold Improvememt Register for all ITT HQ Co 600 Leasehold Imps | 2007 | HQ Controllers | |||||||||||
369
|
Leasehold Improvememt Register for all ITT HQ Co 600 Leasehold Imps | 2008 | HQ Controllers | |||||||||||
370
|
Leasehold Improvememt Register for all ITT HQ Co 600 Leasehold Imps | 2009 | HQ Controllers | |||||||||||
43
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
371
|
Leasehold Improvememt Register for all ITT HQ Co 600 Leasehold Imps | 2010 | HQ Controllers | |||||||||||
372
|
Leasehold Improvememt Register for all ITT HQ Co 600 Leasehold Imps | 2011 | HQ Controllers | |||||||||||
373
|
Amortization Basis for ALL ITTHQ Co 600 Leasehold Improvs | 2006 | HQ Controllers | |||||||||||
374
|
Amortization Basis for ALL ITTHQ Co 600 Leasehold Improvs | 2007 | HQ Controllers | |||||||||||
375
|
Amortization Basis for ALL ITTHQ Co 600 Leasehold Improvs | 2008 | HQ Controllers | |||||||||||
376
|
Amortization Basis for ALL ITTHQ Co 600 Leasehold Improvs | 2009 | HQ Controllers | |||||||||||
377
|
Amortization Basis for ALL ITTHQ Co 600 Leasehold Improvs | 2010 | HQ Controllers | |||||||||||
378
|
Amortization Basis for ALL ITTHQ Co 600 Leasehold Improvs | 2011 | HQ Controllers | |||||||||||
379
|
Invoices for All Leasehold Improvs at ITTHQ Co 600 | 2006 | HQ Controllers | |||||||||||
380
|
Invoices for All Leasehold Improvs at ITTHQ Co 600 | 2007 | HQ Controllers | |||||||||||
381
|
Invoices for All Leasehold Improvs at ITTHQ Co 600 | 2008 | HQ Controllers | |||||||||||
44
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
382
|
Invoices for All Leasehold Improvs at ITTHQ Co 600 | 2009 | HQ Controllers | |||||||||||
383
|
Invoices for All Leasehold Improvs at ITTHQ Co 600 | 2010 | HQ Controllers | |||||||||||
384
|
Invoices for All Leasehold Improvs at ITTHQ Co 600 | 2011 | HQ Controllers | |||||||||||
385
|
Rental Agreements that support all Acct 451/455 Rental Expenses | 2006 | HQ Controllers | |||||||||||
386
|
Rental Agreements that support all Acct 451/455 Rental Expenses | 2007 | HQ Controllers | |||||||||||
387
|
Rental Agreements that support all Acct 451/455 Rental Expenses | 2008 | HQ Controllers | |||||||||||
388
|
Rental Agreements that support all Acct 451/455 Rental Expenses | 2009 | HQ Controllers | |||||||||||
389
|
Rental Agreements that support all Acct 451/455 Rental Expenses | 2010 | HQ Controllers | |||||||||||
390
|
Rental Agreements that support all Acct 451/455 Rental Expenses | 2011 | HQ Controllers | |||||||||||
391
|
Agreements/Contracts with Temporary Help & Temp Agencies (Acct 738) | 2006 | HQ Human Resources | |||||||||||
392
|
Agreements/Contracts with Temporary Help & Temp Agencies (Acct 738) | 2007 | HQ Human Resources | |||||||||||
45
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
393
|
Agreements/Contracts with Temporary Help & Temp Agencies (Acct 738) | 2008 | HQ Human Resources | |||||||||||
394
|
Agreements/Contracts with Temporary Help & Temp Agencies (Acct 738) | 2009 | HQ Human Resources | |||||||||||
395
|
Agreements/Contracts with Temporary Help & Temp Agencies (Acct 738) | 2010 | HQ Human Resources | |||||||||||
396
|
Agreements/Contracts with Temporary Help & Temp Agencies (Acct 738) | 2011 | HQ Human Resources | |||||||||||
397
|
Agreements/Contracts with Employment Agencies, Search Agencies, and Executive Searches (i.e. Acct 741), for ALL employment searches | 2006 | HQ Human Resources | |||||||||||
398
|
Agreements/Contracts with Employment Agencies, Search Agencies, and Executive Searches (i.e. Acct 741), for ALL employment searches | 2007 | HQ Human Resources | |||||||||||
399
|
Agreements/Contracts with Employment Agencies, Search Agencies, and Executive Searches (i.e. Acct 741), for ALL employment searches | 2008 | HQ Human Resources | |||||||||||
46
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
400
|
Agreements/Contracts with Employment Agencies, Search Agencies, and Executive Searches (i.e. Acct 741), for ALL employment searches | 2009 | HQ Human Resources | |||||||||||
401
|
Agreements/Contracts with Employment Agencies, Search Agencies, and Executive Searches (i.e. Acct 741), for ALL employment searches | 2010 | HQ Human Resources | |||||||||||
402
|
Agreements/Contracts with Employment Agencies, Search Agencies, and Executive Searches (i.e. Acct 741), for ALL employment searches | 2011 | HQ Human Resources | |||||||||||
403
|
Relocation Expense Supprting Docs (Acct 744) | 2006 | HQ Human Resources | |||||||||||
404
|
Relocation Expense Supprting Docs (Acct 744) | 2007 | HQ Human Resources | |||||||||||
405
|
Relocation Expense Supprting Docs (Acct 744) | 2008 | HQ Human Resources | |||||||||||
406
|
Relocation Expense Supprting Docs (Acct 744) | 2009 | HQ Human Resources | |||||||||||
407
|
Relocation Expense Supprting Docs (Acct 744) | 2010 | HQ Human Resources | |||||||||||
408
|
Relocation Expense Supprting Docs (Acct 744) | 2011 | HQ Human Resources | |||||||||||
47
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
409
|
Contracts/Agreements for ALL ITT BOARD OF DIRECTORS (Acct 750) | 2006 | HQ Legal | |||||||||||
410
|
Contracts/Agreements for ALL ITT BOARD OF DIRECTORS (Acct 750) | 2007 | HQ Legal | |||||||||||
411
|
Contracts/Agreements for ALL ITT BOARD OF DIRECTORS (Acct 750) | 2008 | HQ Legal | |||||||||||
412
|
Contracts/Agreements for ALL ITT BOARD OF DIRECTORS (Acct 750) | 2009 | HQ Legal | |||||||||||
413
|
Contracts/Agreements for ALL ITT BOARD OF DIRECTORS (Acct 750) | 2010 | HQ Legal | |||||||||||
414
|
Contracts/Agreements for ALL ITT BOARD OF DIRECTORS (Acct 750) | 2011 | HQ Legal | |||||||||||
415
|
Supporting Docs for ALL ITT BOARD OF DIRECTORS FEES (Acct 750) | 2006 | HQ Legal | |||||||||||
416
|
Supporting Docs for ALL ITT BOARD OF DIRECTORS FEES (Acct 750) | 2007 | HQ Legal | |||||||||||
417
|
Supporting Docs for ALL ITT BOARD OF DIRECTORS FEES (Acct 750) | 2008 | HQ Legal | |||||||||||
418
|
Supporting Docs for ALL ITT BOARD OF DIRECTORS FEES (Acct 750) | 2009 | HQ Legal | |||||||||||
48
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
419
|
Supporting Docs for ALL ITT BOARD OF DIRECTORS FEES (Acct 750) | 2010 | HQ Legal | |||||||||||
420
|
Supporting Docs for ALL ITT BOARD OF DIRECTORS FEES (Acct 750) | 2011 | HQ Legal | |||||||||||
421
|
G/L Support for ALL ITTHQ Co 600 Severance Expense (System-generated PDF and xls format) | 2006 | FWSS Payroll | |||||||||||
422
|
G/L Support for ALL ITTHQ Co 600 Severance Expense (System-generated PDF and xls format) | 2007 | FWSS Payroll | |||||||||||
423
|
G/L Support for ALL ITTHQ Co 600 Severance Expense (System-generated PDF and xls format) | 2008 | FWSS Payroll | |||||||||||
424
|
G/L Support for ALL ITTHQ Co 600 Severance Expense (System-generated PDF and xls format) | 2009 | FWSS Payroll | |||||||||||
425
|
G/L Support for ALL ITTHQ Co 600 Severance Expense (System-generated PDF and xls format) | 2010 | FWSS Payroll | |||||||||||
426
|
G/L Support for ALL ITTHQ Co 600 Severance Expense (System-generated PDF and xls format) | 2011 | FWSS Payroll | |||||||||||
427
|
Termination Agreements for ALL ITTHQ Co 600 Severed Employees | 2006 | HQ Human Resources | |||||||||||
428
|
Termination Agreements for ALL ITTHQ Co 600 Severed Employees | 2007 | HQ Human Resources | |||||||||||
49
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
429
|
Termination Agreements for ALL ITTHQ Co 600 Severed Employees | 2008 | HQ Human Resources | |||||||||||
430
|
Termination Agreements for ALL ITTHQ Co 600 Severed Employees | 2009 | HQ Human Resources | |||||||||||
431
|
Termination Agreements for ALL ITTHQ Co 600 Severed Employees | 2010 | HQ Human Resources | |||||||||||
432
|
Termination Agreements for ALL ITTHQ Co 600 Severed Employees | 2011 | HQ Human Resources | |||||||||||
433
|
Concur Reports for ALL EXPENSES that are charged through Concur at ITTHQ (System-generated?) See Comments) | 2006 | FWSS Travel | |||||||||||
434
|
Concur Reports for ALL EXPENSES that are charged through Concur at ITTHQ (System-generated?) See Comments) | 2007 | FWSS Travel | |||||||||||
435
|
Concur Reports for ALL EXPENSES that are charged through Concur at ITTHQ (System-generated?) See Comments) | 2008 | FWSS Travel | |||||||||||
50
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
436
|
Concur Reports for ALL EXPENSES that are charged through Concur at ITTHQ (System-generated?) See Comments) | 2009 | FWSS Travel | |||||||||||
437
|
Concur Reports for ALL EXPENSES that are charged through Concur at ITTHQ (System-generated?) See Comments) | 2010 | FWSS Travel | |||||||||||
438
|
Concur Reports for ALL EXPENSES that are charged through Concur at ITTHQ (System-generated?) See Comments) | 2011 | FWSS Travel | |||||||||||
439
|
Supporting Docs/Receipts fo ALL EXPENSES that are charged through Concur at ITTHQ | 2006 | FWSS Travel | |||||||||||
440
|
Supporting Docs/Receipts fo ALL EXPENSES that are charged through Concur at ITTHQ | 2007 | FWSS Travel | |||||||||||
441
|
Supporting Docs/Receipts fo ALL EXPENSES that are charged through Concur at ITTHQ | 2008 | FWSS Travel | |||||||||||
442
|
Supporting Docs/Receipts fo ALL EXPENSES that are charged through Concur at ITTHQ | 2009 | FWSS Travel | |||||||||||
51
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
443
|
Supporting Docs/Receipts fo ALL EXPENSES that are charged through Concur at ITTHQ | 2010 | FWSS Travel | |||||||||||
444
|
Supporting Docs/Receipts fo ALL EXPENSES that are charged through Concur at ITTHQ | 2011 | FWSS Travel | |||||||||||
445
|
ALL Consultant Agreements/Contracts at ITTHQ Co 600 (Acct 734 & 735) | 2006 | Mulitple HQ Depts | |||||||||||
446
|
ALL Consultant Agreements/Contracts at ITTHQ Co 600 (Acct 734 & 735) | 2007 | Mulitple HQ Depts | |||||||||||
447
|
ALL Consultant Agreements/Contracts at ITTHQ Co 600 (Acct 734 & 735) | 2008 | Mulitple HQ Depts | |||||||||||
448
|
ALL Consultant Agreements/Contracts at ITTHQ Co 600 (Acct 734 & 735) | 2009 | Mulitple HQ Depts | |||||||||||
449
|
ALL Consultant Agreements/Contracts at ITTHQ Co 600 (Acct 734 & 735) | 2010 | Mulitple HQ Depts | |||||||||||
450
|
ALL Consultant Agreements/Contracts at ITTHQ Co 600 (Acct 734 & 735) | 2011 | Mulitple HQ Depts | |||||||||||
451
|
Pension Buck Reports | 2006 | HQ Pension Dept | |||||||||||
452
|
Pension Buck Reports | 2007 | HQ Pension Dept | |||||||||||
453
|
Pension Buck Reports | 2008 | HQ Pension Dept | |||||||||||
454
|
Pension Buck Reports | 2009 | HQ Pension Dept | |||||||||||
455
|
Pension Buck Reports | 2010 | HQ Pension Dept | |||||||||||
52
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
456
|
Pension Buck Reports | 2011 | HQ Pension Dept | |||||||||||
457
|
Supporting Data that ITTHQ sent to Buck for the actualials to calculate CAS Complaint Pension Expenses & Contributions | 2006 | HQ Pension Dept | |||||||||||
458
|
Supporting Data that ITTHQ sent to Buck for the actualials to calculate CAS Complaint Pension Expenses & Contributions | 2007 | HQ Pension Dept | |||||||||||
459
|
Supporting Data that ITTHQ sent to Buck for the actualials to calculate CAS Complaint Pension Expenses & Contributions | 2008 | HQ Pension Dept | |||||||||||
460
|
Supporting Data that ITTHQ sent to Buck for the actualials to calculate CAS Complaint Pension Expenses & Contributions | 2009 | HQ Pension Dept | |||||||||||
461
|
Supporting Data that ITTHQ sent to Buck for the actualials to calculate CAS Complaint Pension Expenses & Contributions | 2010 | HQ Pension Dept | |||||||||||
462
|
Supporting Data that ITTHQ sent to Buck for the actualials to calculate CAS Complaint Pension Expenses & Contributions | 2011 | HQ Pension Dept | |||||||||||
463
|
IRS Form 5500 | 2006 | HQ Pension Dept | |||||||||||
53
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
464
|
IRS Form 5500 | 2007 | HQ Pension Dept | |||||||||||
465
|
IRS Form 5500 | 2008 | HQ Pension Dept | |||||||||||
466
|
IRS Form 5500 | 2009 | HQ Pension Dept | |||||||||||
467
|
IRS Form 5500 | 2010 | HQ Pension Dept | |||||||||||
468
|
IRS Form 5500 | 2011 | HQ Pension Dept | |||||||||||
469
|
Trustee Report (Northern Master Trust?) and explanations for any significant withdrawals of pension assets. Need to ensure that Government contributed pension assets are protected. | 2006 | HQ Pension Dept | |||||||||||
470
|
Trustee Report (Northern Master Trust?) and explanations for any significant withdrawals of pension assets. Need to ensure that Government contributed pension assets are protected. | 2007 | HQ Pension Dept | |||||||||||
471
|
Trustee Report (Northern Master Trust?) and explanations for any significant withdrawals of pension assets. Need to ensure that Government contributed pension assets are protected. | 2008 | HQ Pension Dept | |||||||||||
472
|
Trustee Report (Northern Master Trust?) and explanations for any significant withdrawals of pension assets. Need to ensure that Government contributed pension assets are protected. | 2009 | HQ Pension Dept | |||||||||||
54
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
473
|
Trustee Report (Northern Master Trust?) and explanations for any significant withdrawals of pension assets. Need to ensure that Government contributed pension assets are protected. | 2010 | HQ Pension Dept | |||||||||||
474
|
Trustee Report (Northern Master Trust?) and explanations for any significant withdrawals of pension assets. Need to ensure that Government contributed pension assets are protected. | 2011 | HQ Pension Dept | |||||||||||
475
|
Calculations of Post-Retirement Benefits (PRB) Allocation to HQ, DEHQ, Defense BUs. | 2006 | HQ Pension Dept | |||||||||||
476
|
Calculations of Post-Retirement Benefits (PRB) Allocation to HQ, DEHQ, Defense BUs. | 2007 | HQ Pension Dept | |||||||||||
477
|
Calculations of Post-Retirement Benefits (PRB) Allocation to HQ, DEHQ, Defense BUs. | 2008 | HQ Pension Dept | |||||||||||
478
|
Calculations of Post-Retirement Benefits (PRB) Allocation to HQ, DEHQ, Defense BUs. | 2009 | HQ Pension Dept | |||||||||||
55
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
479
|
Calculations of Post-Retirement Benefits (PRB) Allocation to HQ, DEHQ, Defense BUs. | 2010 | HQ Pension Dept | |||||||||||
480
|
Calculations of Post-Retirement Benefits (PRB) Allocation to HQ, DEHQ, Defense BUs. | 2011 | HQ Pension Dept | |||||||||||
481
|
Supporting Source Docs for each element of the Calculations of PRBs Alllocation to HQ, DEHQ, Defense BUs. | 2006 | HQ Pension Dept | |||||||||||
482
|
Supporting Source Docs for each element of the Calculations of PRBs Alllocation to HQ, DEHQ, Defense BUs. | 2007 | HQ Pension Dept | |||||||||||
483
|
Supporting Source Docs for each element of the Calculations of PRBs Alllocation to HQ, DEHQ, Defense BUs. | 2008 | HQ Pension Dept | |||||||||||
484
|
Supporting Source Docs for each element of the Calculations of PRBs Alllocation to HQ, DEHQ, Defense BUs. | 2009 | HQ Pension Dept | |||||||||||
485
|
Supporting Source Docs for each element of the Calculations of PRBs Alllocation to HQ, DEHQ, Defense BUs. | 2010 | HQ Pension Dept | |||||||||||
56
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
486
|
Supporting Source Docs for each element of the Calculations of PRBs Alllocation to HQ, DEHQ, Defense BUs. | 2011 | HQ Pension Dept | |||||||||||
487
|
Support for the Medical & Dental Cost (i.e. Statements from the Trust and Proof of ITT Payment to fund the trust,, etc) | 2006 | HQ Pension Dept | |||||||||||
488
|
Support for the Medical & Dental Cost (i.e. Statements from the Trust and Proof of ITT Payment to fund the trust,, etc) | 2007 | HQ Pension Dept | |||||||||||
489
|
Support for the Medical & Dental Cost (i.e. Statements from the Trust and Proof of ITT Payment to fund the trust,, etc) | 2008 | HQ Pension Dept | |||||||||||
490
|
Support for the Medical & Dental Cost (i.e. Statements from the Trust and Proof of ITT Payment to fund the trust,, etc) | 2009 | HQ Pension Dept | |||||||||||
491
|
Support for the Medical & Dental Cost (i.e. Statements from the Trust and Proof of ITT Payment to fund the trust,, etc) | 2010 | HQ Pension Dept | |||||||||||
57
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
492
|
Support for the Medical & Dental Cost (i.e. Statements from the Trust and Proof of ITT Payment to fund the trust,, etc) | 2011 | HQ Pension Dept | |||||||||||
493
|
Listing of Participants in the PRBs to support PRB eligibility | 2006 | HQ Pension Dept | Y | ||||||||||
494
|
Listing of Participants in the PRBs to support PRB eligibility | 2007 | HQ Pension Dept | |||||||||||
495
|
Listing of Participants in the PRBs to support PRB eligibility | 2008 | HQ Pension Dept | |||||||||||
496
|
Listing of Participants in the PRBs to support PRB eligibility | 2009 | HQ Pension Dept | Y | ||||||||||
497
|
Listing of Participants in the PRBs to support PRB eligibility | 2010 | HQ Pension Dept | Y | ||||||||||
498
|
Listing of Participants in the PRBs to support PRB eligibility | 2011 | HQ Pension Dept | |||||||||||
499
|
Acturial Reports for EDO Frozen Pension Costs | 2008 | HQ Pension Dept | Y | ||||||||||
500
|
Acturial Reports for EDO Frozen Pension Costs | 2009 | HQ Pension Dept | Y | ||||||||||
501
|
Acturial Reports for EDO Frozen Pension Costs | 2010 | HQ Pension Dept | Y | ||||||||||
502
|
Acturial Reports for EDO Frozen Pension Costs | 2011 | HQ Pension Dept | Y | ||||||||||
58
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
503
|
Acturial Reports for EDO Frozen Pension Costs | 2012 | HQ Pension Dept | Y | ||||||||||
504
|
Supporting Data that ITT sent to Actuariials to calculate CAS Complaint EDO Frozen Pension Expenses & Contributions | 2008 | HQ Pension Dept | Y | ||||||||||
505
|
Supporting Data that ITT sent to Actuariials to calculate CAS Complaint EDO Frozen Pension Expenses & Contributions | 2009 | HQ Pension Dept | Y | ||||||||||
506
|
Supporting Data that ITT sent to Actuariials to calculate CAS Complaint EDO Frozen Pension Expenses & Contributions | 2010 | HQ Pension Dept | Y | ||||||||||
507
|
Supporting Data that ITT sent to Actuariials to calculate CAS Complaint EDO Frozen Pension Expenses & Contributions | 2011 | HQ Pension Dept | Y | ||||||||||
508
|
Supporting Data that ITT sent to Actuariials to calculate CAS Complaint EDO Frozen Pension Expenses & Contributions | 2012 | HQ Pension Dept | Y | ||||||||||
509
|
Agreements with Empire for the Administrtion of ITT Healthcare Costs | 2006 | HQ Pension Dept | |||||||||||
510
|
Agreements with Empire for the Administrtion of ITT Healthcare Costs | 2007 | HQ Pension Dept | |||||||||||
59
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
511
|
Agreements with Empire for the Administrtion of ITT Healthcare Costs | 2008 | HQ Pension Dept | |||||||||||
512
|
Agreements with Empire for the Administrtion of ITT Healthcare Costs | 2009 | HQ Pension Dept | |||||||||||
513
|
Agreements with Empire for the Administrtion of ITT Healthcare Costs | 2010 | HQ Pension Dept | |||||||||||
514
|
Agreements with Empire for the Administrtion of ITT Healthcare Costs | 2011 | HQ Pension Dept | |||||||||||
515
|
Calculations of Healthcare Allocation to HQ, DEHQ, Defense BUs. | 2006 | HQ Pension Dept | |||||||||||
516
|
Calculations of Healthcare Allocation to HQ, DEHQ, Defense BUs. | 2007 | HQ Pension Dept | |||||||||||
517
|
Calculations of Healthcare Allocation to HQ, DEHQ, Defense BUs. | 2008 | HQ Pension Dept | |||||||||||
518
|
Calculations of Healthcare Allocation to HQ, DEHQ, Defense BUs. | 2009 | HQ Pension Dept | |||||||||||
519
|
Calculations of Healthcare Allocation to HQ, DEHQ, Defense BUs. | 2010 | HQ Pension Dept | |||||||||||
520
|
Calculations of Healthcare Allocation to HQ, DEHQ, Defense BUs. | 2011 | HQ Pension Dept | |||||||||||
60
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
521
|
Calculations of Healthcare Rates (ii.e. EE, EE +1, EE +Family) for all types of H/C types | 2006 | HQ Pension Dept | |||||||||||
522
|
Calculations of Healthcare Rates (ii.e. EE, EE +1, EE +Family) for all types of H/C types | 2007 | HQ Pension Dept | |||||||||||
523
|
Calculations of Healthcare Rates (ii.e. EE, EE +1, EE +Family) for all types of H/C types | 2008 | HQ Pension Dept | |||||||||||
524
|
Calculations of Healthcare Rates (ii.e. EE, EE +1, EE +Family) for all types of H/C types | 2009 | HQ Pension Dept | |||||||||||
525
|
Calculations of Healthcare Rates (ii.e. EE, EE +1, EE +Family) for all types of H/C types | 2010 | HQ Pension Dept | |||||||||||
526
|
Calculations of Healthcare Rates (ii.e. EE, EE +1, EE +Family) for all types of H/C types | 2011 | HQ Pension Dept | |||||||||||
527
|
Supporting Source Docs for each element of the Calculations of IHealthcare Alllocation to HQ, DEHQ, Defense BUs. | 2006 | HQ Pension Dept | |||||||||||
528
|
Supporting Source Docs for each element of the Calculations of IHealthcare Alllocation to HQ, DEHQ, Defense BUs. | 2007 | HQ Pension Dept | |||||||||||
61
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
529
|
Supporting Source Docs for each element of the Calculations of IHealthcare Alllocation to HQ, DEHQ, Defense BUs. | 2008 | HQ Pension Dept | |||||||||||
530
|
Supporting Source Docs for each element of the Calculations of IHealthcare Alllocation to HQ, DEHQ, Defense BUs. | 2009 | HQ Pension Dept | |||||||||||
531
|
Supporting Source Docs for each element of the Calculations of IHealthcare Alllocation to HQ, DEHQ, Defense BUs. | 2010 | HQ Pension Dept | |||||||||||
532
|
Supporting Source Docs for each element of the Calculations of IHealthcare Alllocation to HQ, DEHQ, Defense BUs. | 2011 | HQ Pension Dept | |||||||||||
533
|
Support for the Healthcare Partipants by BU. | 2006 | HQ Pension Dept | |||||||||||
534
|
Support for the Healthcare Partipants by BU. | 2007 | HQ Pension Dept | |||||||||||
535
|
Support for the Healthcare Partipants by BU. | 2008 | HQ Pension Dept | |||||||||||
536
|
Support for the Healthcare Partipants by BU. | 2009 | HQ Pension Dept | |||||||||||
537
|
Support for the Healthcare Partipants by BU. | 2010 | HQ Pension Dept | |||||||||||
538
|
Support for the Healthcare Partipants by BU. | 2011 | HQ Pension Dept | |||||||||||
539
|
Dependant Eligilbility Healthcare 3rd Party Audit and Results | 2011 | HQ Pension Dept | |||||||||||
62
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
540
|
Agreements with Met Life for the Administrtion of ITT Healthcare Costs | 2006 | HQ Pension Dept | |||||||||||
541
|
Agreements with Met Life for the Administrtion of ITT Healthcare Costs | 2007 | HQ Pension Dept | |||||||||||
542
|
Agreements with Met Life for the Administrtion of ITT Healthcare Costs | 2008 | HQ Pension Dept | |||||||||||
543
|
Agreements with Met Life for the Administrtion of ITT Healthcare Costs | 2009 | HQ Pension Dept | |||||||||||
544
|
Agreements with Met Life for the Administrtion of ITT Healthcare Costs | 2010 | HQ Pension Dept | |||||||||||
545
|
Agreements with Met Life for the Administrtion of ITT Healthcare Costs | 2011 | HQ Pension Dept | |||||||||||
546
|
Calculations of Met Life Allocation to HQ, DEHQ, Defense BUs. | 2006 | HQ Pension Dept | |||||||||||
547
|
Calculations of Met Life Allocation to HQ, DEHQ, Defense BUs. | 2007 | HQ Pension Dept | |||||||||||
548
|
Calculations of Met Life Allocation to HQ, DEHQ, Defense BUs. | 2008 | HQ Pension Dept | |||||||||||
549
|
Calculations of Met Life Allocation to HQ, DEHQ, Defense BUs. | 2009 | HQ Pension Dept | |||||||||||
63
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
550
|
Calculations of Met Life Allocation to HQ, DEHQ, Defense BUs. | 2010 | HQ Pension Dept | |||||||||||
551
|
Calculations of Met Life Allocation to HQ, DEHQ, Defense BUs. | 2011 | HQ Pension Dept | |||||||||||
552
|
Calculations of Met Life Rates (ii.e. EE, EE +1, EE +Family) for all types of H/C types | 2006 | HQ Pension Dept | |||||||||||
553
|
Calculations of Met Life Rates (ii.e. EE, EE +1, EE +Family) for all types of H/C types | 2007 | HQ Pension Dept | |||||||||||
554
|
Calculations of Met Life Rates (ii.e. EE, EE +1, EE +Family) for all types of H/C types | 2008 | HQ Pension Dept | |||||||||||
555
|
Calculations of Met Life Rates (ii.e. EE, EE +1, EE +Family) for all types of H/C types | 2009 | HQ Pension Dept | |||||||||||
556
|
Calculations of Met Life Rates (ii.e. EE, EE +1, EE +Family) for all types of H/C types | 2010 | HQ Pension Dept | |||||||||||
557
|
Calculations of Met Life Rates (ii.e. EE, EE +1, EE +Family) for all types of H/C types | 2011 | HQ Pension Dept | |||||||||||
558
|
Supporting Source Docs for each element of the Calculations of MetLife Dental Alllocation to HQ, DEHQ, Defense BUs. | 2006 | HQ Pension Dept | |||||||||||
64
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
559
|
Supporting Source Docs for each element of the Calculations of MetLife Dental Alllocation to HQ, DEHQ, Defense BUs. | 2007 | HQ Pension Dept | |||||||||||
560
|
Supporting Source Docs for each element of the Calculations of MetLife Dental Alllocation to HQ, DEHQ, Defense BUs. | 2008 | HQ Pension Dept | |||||||||||
561
|
Supporting Source Docs for each element of the Calculations of MetLife Dental Alllocation to HQ, DEHQ, Defense BUs. | 2009 | HQ Pension Dept | |||||||||||
562
|
Supporting Source Docs for each element of the Calculations of MetLife Dental Alllocation to HQ, DEHQ, Defense BUs. | 2010 | HQ Pension Dept | |||||||||||
563
|
Supporting Source Docs for each element of the Calculations of MetLife Dental Alllocation to HQ, DEHQ, Defense BUs. | 2011 | HQ Pension Dept | |||||||||||
564
|
Support for the Met Life Partipants by BU. | 2006 | HQ Pension Dept | |||||||||||
565
|
Support for the Met Life Partipants by BU. | 2007 | HQ Pension Dept | |||||||||||
566
|
Support for the Met Life Partipants by BU. | 2008 | HQ Pension Dept | |||||||||||
65
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
567
|
Support for the Met Life Partipants by BU. | 2009 | HQ Pension Dept | |||||||||||
568
|
Support for the Met Life Partipants by BU. | 2010 | HQ Pension Dept | |||||||||||
569
|
Support for the Met Life Partipants by BU. | 2011 | HQ Pension Dept | |||||||||||
570
|
Dependant Eligilbility Dental 3rd Party Audit and Results | 2011 | HQ Pension Dept | |||||||||||
571
|
ISP/401k Allocation Worksheets | 2006 | FWSS Acctg | |||||||||||
572
|
ISP/401k Allocation Worksheets | 2007 | FWSS Acctg | |||||||||||
573
|
ISP/401k Allocation Worksheets | 2008 | FWSS Acctg | |||||||||||
574
|
ISP/401k Allocation Worksheets | 2009 | FWSS Acctg | |||||||||||
575
|
ISP/401k Allocation Worksheets | 2010 | FWSS Acctg | |||||||||||
576
|
ISP/401k Allocation Worksheets | 2011 | FWSS Acctg | |||||||||||
577
|
Supporting Source Docs for each element of the Calculations of ISP/401k Alllocation to HQ, DEHQ, Defense BUs. | 2006 | FWSS Acctg | |||||||||||
578
|
Supporting Source Docs for each element of the Calculations of ISP/401k Alllocation to HQ, DEHQ, Defense BUs. | 2007 | FWSS Acctg | |||||||||||
579
|
Supporting Source Docs for each element of the Calculations of ISP/401k Alllocation to HQ, DEHQ, Defense BUs. | 2008 | FWSS Acctg | |||||||||||
66
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
580
|
Supporting Source Docs for each element of the Calculations of ISP/401k Alllocation to HQ, DEHQ, Defense BUs. | 2009 | FWSS Acctg | |||||||||||
581
|
Supporting Source Docs for each element of the Calculations of ISP/401k Alllocation to HQ, DEHQ, Defense BUs. | 2010 | FWSS Acctg | |||||||||||
582
|
Supporting Source Docs for each element of the Calculations of ISP/401k Alllocation to HQ, DEHQ, Defense BUs. | 2011 | FWSS Acctg | |||||||||||
583
|
Support for the ISP/401k Partipants by BU. | 2006 | FWSS Acctg | |||||||||||
584
|
Support for the ISP/401k Partipants by BU. | 2007 | FWSS Acctg | |||||||||||
585
|
Support for the ISP/401k Partipants by BU. | 2008 | FWSS Acctg | |||||||||||
586
|
Support for the ISP/401k Partipants by BU. | 2009 | FWSS Acctg | |||||||||||
587
|
Support for the ISP/401k Partipants by BU. | 2010 | FWSS Acctg | |||||||||||
588
|
Support for the ISP/401k Partipants by BU. | 2011 | FWSS Acctg | |||||||||||
589
|
Support for the ISP/401k ITT Matching Payments (proof of payment) | 2006 | FWSS Acctg | |||||||||||
590
|
Support for the ISP/401k ITT Matching Payments (proof of payment) | 2007 | FWSS Acctg | |||||||||||
67
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
591
|
Support for the ISP/401k ITT Matching Payments (proof of payment) | 2008 | FWSS Acctg | |||||||||||
592
|
Support for the ISP/401k ITT Matching Payments (proof of payment) | 2009 | FWSS Acctg | |||||||||||
593
|
Support for the ISP/401k ITT Matching Payments (proof of payment) | 2010 | FWSS Acctg | |||||||||||
594
|
Support for the ISP/401k ITT Matching Payments (proof of payment) | 2011 | FWSS Acctg | |||||||||||
595
|
3rd Party Provider agreements/contracts related to the Administration of ITT ISP/401k costs. | 2006 | HQ Pension Dept | |||||||||||
596
|
3rd Party Provider agreements/contracts related to the Administration of ITT ISP/401k costs. | 2007 | HQ Pension Dept | |||||||||||
597
|
3rd Party Provider agreements/contracts related to the Administration of ITT ISP/401k costs. | 2008 | HQ Pension Dept | |||||||||||
598
|
3rd Party Provider agreements/contracts related to the Administration of ITT ISP/401k costs. | 2009 | HQ Pension Dept | |||||||||||
68
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
599
|
3rd Party Provider agreements/contracts related to the Administration of ITT ISP/401k costs. | 2010 | HQ Pension Dept | |||||||||||
600
|
3rd Party Provider agreements/contracts related to the Administration of ITT ISP/401k costs. | 2011 | HQ Pension Dept | |||||||||||
601
|
Copy of the Recurring Jourmal Entry Binders (S. Agustin) | 2006 | HQ Controllers | |||||||||||
602
|
Copy of the Recurring Jourmal Entry Binders (S. Agustin) | 2007 | HQ Controllers | |||||||||||
603
|
Copy of the Recurring Jourmal Entry Binders (S. Agustin) | 2008 | HQ Controllers | |||||||||||
604
|
Copy of the Recurring Jourmal Entry Binders (S. Agustin) | 2009 | HQ Controllers | |||||||||||
605
|
Copy of the Recurring Jourmal Entry Binders (S. Agustin) | 2010 | HQ Controllers | |||||||||||
606
|
Copy of the Recurring Jourmal Entry Binders (S. Agustin) | 2011 | HQ Controllers | |||||||||||
607
|
Excel Spreadshhet that supports the Recurring Jourmal Entry Binders (C. Lupincci)), including Y/E Trueups | 2006 | HQ Controllers | |||||||||||
69
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
608
|
Excel Spreadshhet that supports the Recurring Jourmal Entry Binders (C. Lupincci)), including Y/E Trueups | 2007 | HQ Controllers | |||||||||||
609
|
Excel Spreadshhet that supports the Recurring Jourmal Entry Binders (C. Lupincci)), including Y/E Trueups | 2008 | HQ Controllers | |||||||||||
610
|
Excel Spreadshhet that supports the Recurring Jourmal Entry Binders (C. Lupincci)), including Y/E Trueups | 2009 | HQ Controllers | |||||||||||
611
|
Excel Spreadshhet that supports the Recurring Jourmal Entry Binders (C. Lupincci)), including Y/E Trueups | 2010 | HQ Controllers | |||||||||||
612
|
Excel Spreadshhet that supports the Recurring Jourmal Entry Binders (C. Lupincci)), including Y/E Trueups | 2011 | HQ Controllers | |||||||||||
70
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
613
|
Executive Forum. HR Conference, Geneen Award, et al Charge-outs to ITTHQ, DEHQ, & Defense BUs | 2006 | HQ Controllers | |||||||||||
614
|
Executive Forum. HR Conference, Geneen Award, et al Charge-outs to ITTHQ, DEHQ, & Defense BUs | 2007 | HQ Controllers | |||||||||||
615
|
Executive Forum. HR Conference, Geneen Award, et al Charge-outs to ITTHQ, DEHQ, & Defense BUs | 2008 | HQ Controllers | |||||||||||
616
|
Executive Forum. HR Conference, Geneen Award, et al Charge-outs to ITTHQ, DEHQ, & Defense BUs | 2009 | HQ Controllers | |||||||||||
617
|
Executive Forum. HR Conference, Geneen Award, et al Charge-outs to ITTHQ, DEHQ, & Defense BUs | 2010 | HQ Controllers | |||||||||||
618
|
Executive Forum. HR Conference, Geneen Award, et al Charge-outs to ITTHQ, DEHQ, & Defense BUs | 2011 | HQ Controllers | |||||||||||
619
|
Supporting Source Docs for each element of the respectiuve traning expenses incurred and allocated to HQ, DEHQ, Defense BUs. | 2006 | HQ Controllers | |||||||||||
620
|
Supporting Source Docs for each element of the respectiuve traning expenses incurred and allocated to HQ, DEHQ, Defense BUs. | 2007 | HQ Controllers | |||||||||||
71
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
621
|
Supporting Source Docs for each element of the respectiuve traning expenses incurred and allocated to HQ, DEHQ, Defense BUs. | 2008 | HQ Controllers | |||||||||||
622
|
Supporting Source Docs for each element of the respectiuve traning expenses incurred and allocated to HQ, DEHQ, Defense BUs. | 2009 | HQ Controllers | |||||||||||
623
|
Supporting Source Docs for each element of the respectiuve traning expenses incurred and allocated to HQ, DEHQ, Defense BUs. | 2010 | HQ Controllers | |||||||||||
624
|
Supporting Source Docs for each element of the respectiuve traning expenses incurred and allocated to HQ, DEHQ, Defense BUs. | 2011 | HQ Controllers | |||||||||||
625
|
Supporting Source Docs for each element of the Basis of Allocation for each Recurring JE Alllocation to HQ, DEHQ, Defense BUs. | 2006 | HQ Controllers | |||||||||||
626
|
Supporting Source Docs for each element of the Basis of Allocation for each Recurring JE Alllocation to HQ, DEHQ, Defense BUs. | 2007 | HQ Controllers | |||||||||||
72
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
627
|
Supporting Source Docs for each element of the Basis of Allocation for each Recurring JE Alllocation to HQ, DEHQ, Defense BUs. | 2008 | HQ Controllers | |||||||||||
628
|
Supporting Source Docs for each element of the Basis of Allocation for each Recurring JE Alllocation to HQ, DEHQ, Defense BUs. | 2009 | HQ Controllers | |||||||||||
629
|
Supporting Source Docs for each element of the Basis of Allocation for each Recurring JE Alllocation to HQ, DEHQ, Defense BUs. | 2010 | HQ Controllers | |||||||||||
630
|
Supporting Source Docs for each element of the Basis of Allocation for each Recurring JE Alllocation to HQ, DEHQ, Defense BUs. | 2011 | HQ Controllers | |||||||||||
631
|
Clayton Young Spreadsheets detailing the calculatioan and alloction of the BIG 5 INSURANCE CATEGORIES (WAG/DBA,, Aircraft Products Lability, Property, Umbrella, Fiduciary/Other) | 2006 | HQ Treasury | |||||||||||
73
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
632
|
Clayton Young Spreadsheets detailing the calculatioan and alloction of the BIG 5 INSURANCE CATEGORIES (WAG/DBA,, Aircraft Products Lability, Property, Umbrella, Fiduciary/Other) | 2007 | HQ Treasury | |||||||||||
633
|
Clayton Young Spreadsheets detailing the calculatioan and alloction of the BIG 5 INSURANCE CATEGORIES (WAG/DBA,, Aircraft Products Lability, Property, Umbrella, Fiduciary/Other) | 2008 | HQ Treasury | |||||||||||
634
|
Clayton Young Spreadsheets detailing the calculatioan and alloction of the BIG 5 INSURANCE CATEGORIES (WAG/DBA,, Aircraft Products Lability, Property, Umbrella, Fiduciary/Other) | 2009 | HQ Treasury | |||||||||||
635
|
Clayton Young Spreadsheets detailing the calculatioan and alloction of the BIG 5 INSURANCE CATEGORIES (WAG/DBA,, Aircraft Products Lability, Property, Umbrella, Fiduciary/Other) | 2010 | HQ Treasury | |||||||||||
74
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
636
|
Clayton Young Spreadsheets detailing the calculatioan and alloction of the BIG 5 INSURANCE CATEGORIES (WAG/DBA,, Aircraft Products Lability, Property, Umbrella, Fiduciary/Other) | 2011 | HQ Treasury | 5/25: Norrine to provide | ||||||||||
637
|
Allocation Basis and Experience Support for each element of the Big 5 Insurance Allocations to ITTHQ, DEHQ, & Defense VCs & BUs. | 2006 | HQ Treasury | |||||||||||
638
|
Allocation Basis and Experience Support for each element of the Big 5 Insurance Allocations to ITTHQ, DEHQ, & Defense VCs & BUs. | 2007 | HQ Treasury | |||||||||||
639
|
Allocation Basis and Experience Support for each element of the Big 5 Insurance Allocations to ITTHQ, DEHQ, & Defense VCs & BUs. | 2008 | HQ Treasury | |||||||||||
640
|
Allocation Basis and Experience Support for each element of the Big 5 Insurance Allocations to ITTHQ, DEHQ, & Defense VCs & BUs. | 2009 | HQ Treasury | |||||||||||
641
|
Allocation Basis and Experience Support for each element of the Big 5 Insurance Allocations to ITTHQ, DEHQ, & Defense VCs & BUs. | 2010 | HQ Treasury | |||||||||||
75
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
642
|
Allocation Basis and Experience Support for each element of the Big 5 Insurance Allocations to ITTHQ, DEHQ, & Defense VCs & BUs. | 2011 | HQ Treasury | |||||||||||
643
|
Copies of Big 5 Insurance Policies | 2006 | HQ Treasury | |||||||||||
644
|
Copies of Big 5 Insurance Policies | 2007 | HQ Treasury | |||||||||||
645
|
Copies of Big 5 Insurance Policies | 2008 | HQ Treasury | |||||||||||
646
|
Copies of Big 5 Insurance Policies | 2009 | HQ Treasury | |||||||||||
647
|
Copies of Big 5 Insurance Policies | 2010 | HQ Treasury | |||||||||||
648
|
Copies of Big 5 Insurance Policies | 2011 | HQ Treasury | |||||||||||
649
|
Copies of Big 5 Broker Agreements | 2006 | HQ Treasury | |||||||||||
650
|
Copies of Big 5 Broker Agreements | 2007 | HQ Treasury | |||||||||||
651
|
Copies of Big 5 Broker Agreements | 2008 | HQ Treasury | |||||||||||
652
|
Copies of Big 5 Broker Agreements | 2009 | HQ Treasury | |||||||||||
653
|
Copies of Big 5 Broker Agreements | 2010 | HQ Treasury | |||||||||||
654
|
Copies of Big 5 Broker Agreements | 2011 | HQ Treasury | |||||||||||
655
|
ITT HQ General Ledger Print-outs of the Insurance Charges (Big 5) and allocations to Def BUs (System-generated) (Fullan) | 2006 | HQ Controllers | |||||||||||
76
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
656
|
ITT HQ General Ledger Print-outs of the Insurance Charges (Big 5) and allocations to Def BUs (System-generated) (Fullan) | 2007 | HQ Controllers | |||||||||||
657
|
ITT HQ General Ledger Print-outs of the Insurance Charges (Big 5) and allocations to Def BUs (System-generated) (Fullan) | 2008 | HQ Controllers | |||||||||||
658
|
ITT HQ General Ledger Print-outs of the Insurance Charges (Big 5) and allocations to Def BUs (System-generated) (Fullan) | 2009 | HQ Controllers | |||||||||||
659
|
ITT HQ General Ledger Print-outs of the Insurance Charges (Big 5) and allocations to Def BUs (System-generated) (Fullan) | 2010 | HQ Controllers | |||||||||||
660
|
ITT HQ General Ledger Print-outs of the Insurance Charges (Big 5) and allocations to Def BUs (System-generated) (Fullan) | 2011 | HQ Controllers | |||||||||||
661
|
JEs and Support for all Big 5 Insrance Charges on the GL and allocations to Defense | 2006 | HQ Controllers | |||||||||||
662
|
JEs and Support for all Big 5 Insrance Charges on the GL and allocations to Defense | 2007 | HQ Controllers | |||||||||||
77
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
663
|
JEs and Support for all Big 5 Insrance Charges on the GL and allocations to Defense | 2008 | HQ Controllers | |||||||||||
664
|
JEs and Support for all Big 5 Insrance Charges on the GL and allocations to Defense | 2009 | HQ Controllers | |||||||||||
665
|
JEs and Support for all Big 5 Insrance Charges on the GL and allocations to Defense | 2010 | HQ Controllers | |||||||||||
666
|
JEs and Support for all Big 5 Insrance Charges on the GL and allocations to Defense | 2011 | HQ Controllers | |||||||||||
667
|
Documentation that shows that the Big 5 Insurance Polcies that ITT chose was a sound busniess decision (i.e. was it competed, analyses performed, etc) | 2006 | HQ Treasury | |||||||||||
668
|
Documentation that shows that the Big 5 Insurance Polcies that ITT chose was a sound busniess decision (i.e. was it competed, analyses performed, etc) | 2007 | HQ Treasury | |||||||||||
669
|
Documentation that shows that the Big 5 Insurance Polcies that ITT chose was a sound busniess decision (i.e. was it competed, analyses performed, etc) | 2008 | HQ Treasury | |||||||||||
78
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
670
|
Documentation that shows that the Big 5 Insurance Polcies that ITT chose was a sound busniess decision (i.e. was it competed, analyses performed, etc) | 2009 | HQ Treasury | |||||||||||
671
|
Documentation that shows that the Big 5 Insurance Polcies that ITT chose was a sound busniess decision (i.e. was it competed, analyses performed, etc) | 2010 | HQ Treasury | |||||||||||
672
|
Documentation that shows that the Big 5 Insurance Polcies that ITT chose was a sound busniess decision (i.e. was it competed, analyses performed, etc) | 2011 | HQ Treasury | |||||||||||
673
|
FICA/FUTA/SUI Allocations to ITTHQ, DEHQ, and Defense BUs | 2006 | HQ Tax | |||||||||||
674
|
FICA/FUTA/SUI Allocations to ITTHQ, DEHQ, and Defense BUs | 2007 | HQ Tax | |||||||||||
675
|
FICA/FUTA/SUI Allocations to ITTHQ, DEHQ, and Defense BUs | 2008 | HQ Tax | |||||||||||
676
|
FICA/FUTA/SUI Allocations to ITTHQ, DEHQ, and Defense BUs | 2009 | HQ Tax | |||||||||||
79
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
677
|
FICA/FUTA/SUI Allocations to ITTHQ, DEHQ, and Defense BUs | 2010 | HQ Tax | |||||||||||
678
|
FICA/FUTA/SUI Allocations to ITTHQ, DEHQ, and Defense BUs | 2011 | HQ Tax | |||||||||||
679
|
Supporting Source Docs for each element of the Calculations of FICA/FUTA/SUI Alllocation to HQ, DEHQ, Defense BUs. | 2006 | HQ Tax | |||||||||||
680
|
Supporting Source Docs for each element of the Calculations of FICA/FUTA/SUI Alllocation to HQ, DEHQ, Defense BUs. | 2007 | HQ Tax | |||||||||||
681
|
Supporting Source Docs for each element of the Calculations of FICA/FUTA/SUI Alllocation to HQ, DEHQ, Defense BUs. | 2008 | HQ Tax | |||||||||||
682
|
Supporting Source Docs for each element of the Calculations of FICA/FUTA/SUI Alllocation to HQ, DEHQ, Defense BUs. | 2009 | HQ Tax | |||||||||||
683
|
Supporting Source Docs for each element of the Calculations of FICA/FUTA/SUI Alllocation to HQ, DEHQ, Defense BUs. | 2010 | HQ Tax | |||||||||||
80
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
684
|
Supporting Source Docs for each element of the Calculations of FICA/FUTA/SUI Alllocation to HQ, DEHQ, Defense BUs. | 2011 | HQ Tax | |||||||||||
685
|
FICA/FUTA/SUI tax returns that support the expense | 2006 | HQ Tax | |||||||||||
686
|
FICA/FUTA/SUI tax returns that support the expense | 2007 | HQ Tax | |||||||||||
687
|
FICA/FUTA/SUI tax returns that support the expense | 2008 | HQ Tax | |||||||||||
688
|
FICA/FUTA/SUI tax returns that support the expense | 2009 | HQ Tax | |||||||||||
689
|
FICA/FUTA/SUI tax returns that support the expense | 2010 | HQ Tax | |||||||||||
690
|
FICA/FUTA/SUI tax returns that support the expense | 2011 | HQ Tax | |||||||||||
691
|
Supporting Source Doumentation that supports the FICA/FUTA/SUI Tax Retruns | 2006 | HQ Tax | |||||||||||
692
|
Supporting Source Doumentation that supports the FICA/FUTA/SUI Tax Retruns | 2007 | HQ Tax | |||||||||||
693
|
Supporting Source Doumentation that supports the FICA/FUTA/SUI Tax Retruns | 2008 | HQ Tax | |||||||||||
694
|
Supporting Source Doumentation that supports the FICA/FUTA/SUI Tax Retruns | 2009 | HQ Tax | |||||||||||
81
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
695
|
Supporting Source Doumentation that supports the FICA/FUTA/SUI Tax Retruns | 2010 | HQ Tax | |||||||||||
696
|
Supporting Source Doumentation that supports the FICA/FUTA/SUI Tax Retruns | 2011 | HQ Tax | |||||||||||
697
|
Proof of Payment to support the respective FICA?FUTA/SUI Tax expense | 2006 | HQ Tax | |||||||||||
698
|
Proof of Payment to support the respective FICA?FUTA/SUI Tax expense | 2007 | HQ Tax | |||||||||||
699
|
Proof of Payment to support the respective FICA?FUTA/SUI Tax expense | 2008 | HQ Tax | |||||||||||
700
|
Proof of Payment to support the respective FICA?FUTA/SUI Tax expense | 2009 | HQ Tax | |||||||||||
701
|
Proof of Payment to support the respective FICA?FUTA/SUI Tax expense | 2010 | HQ Tax | |||||||||||
702
|
Proof of Payment to support the respective FICA?FUTA/SUI Tax expense | 2011 | HQ Tax | |||||||||||
703
|
State Income & Franchise TaxI Allocations to ITTHQ, DEHQ, and Defense BUs | 2006 | HQ Tax | |||||||||||
82
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
704
|
State Income & Franchise TaxI Allocations to ITTHQ, DEHQ, and Defense BUs | 2007 | HQ Tax | |||||||||||
705
|
State Income & Franchise TaxI Allocations to ITTHQ, DEHQ, and Defense BUs | 2008 | HQ Tax | |||||||||||
706
|
State Income & Franchise TaxI Allocations to ITTHQ, DEHQ, and Defense BUs | 2009 | HQ Tax | |||||||||||
707
|
State Income & Franchise TaxI Allocations to ITTHQ, DEHQ, and Defense BUs | 2010 | HQ Tax | |||||||||||
708
|
State Income & Franchise TaxI Allocations to ITTHQ, DEHQ, and Defense BUs | 2011 | HQ Tax | |||||||||||
709
|
Supporting Source Docs for each element of the Calculations of State Income & Franchine Tax Alllocations to HQ, DEHQ, Defense BUs. | 2006 | HQ Tax | |||||||||||
710
|
Supporting Source Docs for each element of the Calculations of State Income & Franchine Tax Alllocations to HQ, DEHQ, Defense BUs. | 2007 | HQ Tax | |||||||||||
711
|
Supporting Source Docs for each element of the Calculations of State Income & Franchine Tax Alllocations to HQ, DEHQ, Defense BUs. | 2008 | HQ Tax | |||||||||||
83
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
712
|
Supporting Source Docs for each element of the Calculations of State Income & Franchine Tax Alllocations to HQ, DEHQ, Defense BUs. | 2009 | HQ Tax | |||||||||||
713
|
Supporting Source Docs for each element of the Calculations of State Income & Franchine Tax Alllocations to HQ, DEHQ, Defense BUs. | 2010 | HQ Tax | |||||||||||
714
|
Supporting Source Docs for each element of the Calculations of State Income & Franchine Tax Alllocations to HQ, DEHQ, Defense BUs. | 2011 | HQ Tax | |||||||||||
715
|
State Income & Franchise tax returns that support the expense, with Supporting Source Doumentation that supports the respective State Income & Franchise Tax Retruns |
2006 | HQ Tax | |||||||||||
716
|
State Income & Franchise tax returns that support the expense, with Supporting Source Doumentation that supports the respective State Income & Franchise Tax Retruns |
2007 | HQ Tax | |||||||||||
84
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
717
|
State Income & Franchise tax returns that support the expense, with Supporting Source Doumentation that supports the respective State Income & Franchise Tax Retruns |
2008 | HQ Tax | |||||||||||
718
|
State Income & Franchise tax returns that support the expense, with Supporting Source Doumentation that supports the respective State Income & Franchise Tax Retruns |
2009 | HQ Tax | |||||||||||
719
|
State Income & Franchise tax returns that support the expense, with Supporting Source Doumentation that supports the respective State Income & Franchise Tax Retruns |
2010 | HQ Tax | |||||||||||
720
|
State Income & Franchise tax returns that support the expense, with Supporting Source Doumentation that supports the respective State Income & Franchise Tax Retruns |
2011 | HQ Tax | |||||||||||
85
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
721
|
Proof of Payment to support the respective State Income & Franchise Tax expense | 2006 | HQ Tax | |||||||||||
722
|
Proof of Payment to support the respective State Income & Franchise Tax expense | 2007 | HQ Tax | |||||||||||
723
|
Proof of Payment to support the respective State Income & Franchise Tax expense | 2008 | HQ Tax | |||||||||||
724
|
Proof of Payment to support the respective State Income & Franchise Tax expense | 2009 | HQ Tax | |||||||||||
725
|
Proof of Payment to support the respective State Income & Franchise Tax expense | 2010 | HQ Tax | |||||||||||
726
|
Proof of Payment to support the respective State Income & Franchise Tax expense | 2011 | HQ Tax | |||||||||||
727
|
Environmental Database that supports the Enviromental Chargeouts to Defense BUs, including actual invoices, proof of payment, and any documentation that describes the requirement that this remediaiton is necessary | 2006 | HQ Controllers | |||||||||||
86
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
728
|
Environmental Database that supports the Enviromental Chargeouts to Defense BUs, including actual invoices, proof of payment, and any documentation that describes the requirement that this remediaiton is necessary | 2007 | HQ Controllers | |||||||||||
729
|
Environmental Database that supports the Enviromental Chargeouts to Defense BUs, including actual invoices, proof of payment, and any documentation that describes the requirement that this remediaiton is necessary | 2008 | HQ Controllers | |||||||||||
730
|
Environmental Database that supports the Enviromental Chargeouts to Defense BUs, including actual invoices, proof of payment, and any documentation that describes the requirement that this remediaiton is necessary | 2009 | HQ Controllers | |||||||||||
87
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
731
|
Environmental Database that supports the Enviromental Chargeouts to Defense BUs, including actual invoices, proof of payment, and any documentation that describes the requirement that this remediaiton is necessary | 2010 | HQ Controllers | |||||||||||
732
|
Environmental Database that supports the Enviromental Chargeouts to Defense BUs, including actual invoices, proof of payment, and any documentation that describes the requirement that this remediaiton is necessary | 2011 | HQ Controllers | |||||||||||
733
|
Flight Logs — 2 Corporare Jets | 2006 | HQ Flight Ops Dept | |||||||||||
734
|
Flight Logs — 2 Corporare Jets | 2007 | HQ Flight Ops Dept | |||||||||||
735
|
Flight Logs — 2 Corporare Jets | 2008 | HQ Flight Ops Dept | |||||||||||
736
|
Flight Logs — 2 Corporare Jets | 2009 | HQ Flight Ops Dept | |||||||||||
737
|
Flight Logs — 2 Corporare Jets | 2010 | HQ Flight Ops Dept | |||||||||||
738
|
Flight Logs — 2 Corporare Jets | 2011 | HQ Flight Ops Dept | |||||||||||
739
|
Lease Agreements for each Corporate Jet (assumption — same jets since 2006), with lease amirization schedule & justification | 2011 | HQ Flight Ops Dept | |||||||||||
88
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
740
|
Supporting Source Documents for Major CC 85100 (Aviation) expense accts (>$50k) | 2006 | HQ Flight Ops Dept | |||||||||||
741
|
Supporting Source Documents for Major CC 85100 (Aviation) expense accts (>$50k) | 2007 | HQ Flight Ops Dept | |||||||||||
742
|
Supporting Source Documents for Major CC 85100 (Aviation) expense accts (>$50k) | 2008 | HQ Flight Ops Dept | |||||||||||
743
|
Supporting Source Documents for Major CC 85100 (Aviation) expense accts (>$50k) | 2009 | HQ Flight Ops Dept | |||||||||||
744
|
Supporting Source Documents for Major CC 85100 (Aviation) expense accts (>$50k) | 2010 | HQ Flight Ops Dept | |||||||||||
745
|
Supporting Source Documents for Major CC 85100 (Aviation) expense accts (>$50k) | 2011 | HQ Flight Ops Dept | |||||||||||
746
|
Source Data related to # of miles flown by each Corporate Jet (K Donnelly) |
2006 | HQ Flight Ops Dept | |||||||||||
747
|
Source Data related to # of miles flown by each Corporate Jet (K Donnelly) |
2007 | HQ Flight Ops Dept | |||||||||||
89
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
748
|
Source Data related to # of miles flown by each Corporate Jet (K Donnelly) |
2008 | HQ Flight Ops Dept | |||||||||||
749
|
Source Data related to # of miles flown by each Corporate Jet (K Donnelly) |
2009 | HQ Flight Ops Dept | |||||||||||
750
|
Source Data related to # of miles flown by each Corporate Jet (K Donnelly) |
2010 | HQ Flight Ops Dept | |||||||||||
751
|
Source Data related to # of miles flown by each Corporate Jet (K Donnelly) | 2011 | HQ Flight Ops Dept | |||||||||||
752
|
Fort Wayne Shared Service (FWSS) General Ledgers for all costs incurred by Cost Center/Department (System-generated PDF & xls format) | 2006 | FWSS Acctg | |||||||||||
753
|
Fort Wayne Shared Service (FWSS) General Ledgers for all costs incurred by Cost Center/Department (System-generated PDF & xls format) | 2007 | FWSS Acctg | |||||||||||
754
|
Fort Wayne Shared Service (FWSS) General Ledgers for all costs incurred by Cost Center/Department (System-generated PDF & xls format) | 2008 | FWSS Acctg | |||||||||||
90
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
755
|
Fort Wayne Shared Service (FWSS) General Ledgers for all costs incurred by Cost Center/Department (System-generated PDF & xls format) | 2009 | FWSS Acctg | |||||||||||
756
|
Fort Wayne Shared Service (FWSS) General Ledgers for all costs incurred by Cost Center/Department (System-generated PDF & xls format) | 2010 | FWSS Acctg | |||||||||||
757
|
Fort Wayne Shared Service (FWSS) General Ledgers for all costs incurred by Cost Center/Department (System-generated PDF & xls format) | 2011 | FWSS Acctg | |||||||||||
758
|
All Journal Entries for FWSS Location Operations | 2006 | FWSS Acctg | |||||||||||
759
|
All Journal Entries for FWSS Location Operations | 2007 | FWSS Acctg | |||||||||||
760
|
All Journal Entries for FWSS Location Operations | 2008 | FWSS Acctg | |||||||||||
761
|
All Journal Entries for FWSS Location Operations | 2009 | FWSS Acctg | |||||||||||
762
|
All Journal Entries for FWSS Location Operations | 2010 | FWSS Acctg | |||||||||||
91
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
763
|
All Journal Entries for FWSS Location Operations | 2011 | FWSS Acctg | |||||||||||
764
|
All Supporting Docs for the FWSS JEs | 2006 | FWSS Acctg | |||||||||||
765
|
All Supporting Docs for the FWSS JEs | 2007 | FWSS Acctg | |||||||||||
766
|
All Supporting Docs for the FWSS JEs | 2008 | FWSS Acctg | |||||||||||
767
|
All Supporting Docs for the FWSS JEs | 2009 | FWSS Acctg | |||||||||||
768
|
All Supporting Docs for the FWSS JEs | 2010 | FWSS Acctg | |||||||||||
769
|
All Supporting Docs for the FWSS JEs | 2011 | FWSS Acctg | |||||||||||
770
|
FWSS Infinuim Voucher Registers (CY 2006-2007?) | 2006 | FWSS Acctg | |||||||||||
771
|
FWSS Infinuim Voucher Registers (CY 2006-2007?) | 2007 | FWSS Acctg | |||||||||||
772
|
SAP P2P Voucher Register Invoice Listings for FWSS (CY 2007 -2011?) | 2007 | FWSS Acctg | |||||||||||
773
|
SAP P2P Voucher Register Invoice Listings for FWSS (CY 2007 -2011?) | 2008 | FWSS Acctg | |||||||||||
774
|
SAP P2P Voucher Register Invoice Listings for FWSS (CY 2007 -2011?) | 2009 | FWSS Acctg | |||||||||||
775
|
SAP P2P Voucher Register Invoice Listings for FWSS (CY 2007 -2011?) | 2010 | FWSS Acctg | |||||||||||
776
|
SAP P2P Voucher Register Invoice Listings for FWSS (CY 2007 -2011?) | 2011 | FWSS Acctg | |||||||||||
92
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
777
|
FWSS SAP & Infinium Hardcopy Invoices & Invoice Proof of Payment (check, EFT, etc) | 2006 | FWSS Acctg | |||||||||||
778
|
FWSS SAP & Infinium Hardcopy Invoices & Invoice Proof of Payment (check, EFT, etc) | 2007 | FWSS Acctg | |||||||||||
779
|
FWSS SAP & Infinium Hardcopy Invoices & Invoice Proof of Payment (check, EFT, etc) | 2008 | FWSS Acctg | |||||||||||
780
|
FWSS SAP & Infinium Hardcopy Invoices & Invoice Proof of Payment (check, EFT, etc) | 2009 | FWSS Acctg | |||||||||||
781
|
FWSS SAP & Infinium Hardcopy Invoices & Invoice Proof of Payment (check, EFT, etc) | 2010 | FWSS Acctg | |||||||||||
782
|
FWSS SAP & Infinium Hardcopy Invoices & Invoice Proof of Payment (check, EFT, etc) | 2011 | FWSS Acctg | |||||||||||
783
|
Agreements/Contracts with Consultants, 3rd Part Service Providers, S/W & H/W Contracts, etc | 2006 | FWSS Acctg | |||||||||||
784
|
Agreements/Contracts with Consultants, 3rd Part Service Providers, S/W & H/W Contracts, etc | 2007 | FWSS Acctg | |||||||||||
93
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
785
|
Agreements/Contracts with Consultants, 3rd Part Service Providers, S/W & H/W Contracts, etc | 2008 | FWSS Acctg | |||||||||||
786
|
Agreements/Contracts with Consultants, 3rd Part Service Providers, S/W & H/W Contracts, etc | 2009 | FWSS Acctg | |||||||||||
787
|
Agreements/Contracts with Consultants, 3rd Part Service Providers, S/W & H/W Contracts, etc | 2010 | FWSS Acctg | |||||||||||
788
|
Agreements/Contracts with Consultants, 3rd Part Service Providers, S/W & H/W Contracts, etc | 2011 | FWSS Acctg | |||||||||||
789
|
PARs/Approvals for ALL Software/Hardware Acquisiitions amd ALL Capital Expenditures/Acquisitions at All FWSS Locations | 2006 | FWSS Acctg | |||||||||||
790
|
PARs/Approvals for ALL Software/Hardware Acquisiitions amd ALL Capital Expenditures/Acquisitions at All FWSS Locations | 2007 | FWSS Acctg | |||||||||||
791
|
PARs/Approvals for ALL Software/Hardware Acquisiitions amd ALL Capital Expenditures/Acquisitions at All FWSS Locations | 2008 | FWSS Acctg | |||||||||||
94
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
792
|
PARs/Approvals for ALL Software/Hardware Acquisiitions amd ALL Capital Expenditures/Acquisitions at All FWSS Locations | 2009 | FWSS Acctg | |||||||||||
793
|
PARs/Approvals for ALL Software/Hardware Acquisiitions amd ALL Capital Expenditures/Acquisitions at All FWSS Locations | 2010 | FWSS Acctg | |||||||||||
794
|
PARs/Approvals for ALL Software/Hardware Acquisiitions amd ALL Capital Expenditures/Acquisitions at All FWSS Locations | 2011 | FWSS Acctg | |||||||||||
795
|
Fixed Assets & Lease Register (incl Amortization sched), including any Leasehold Improvements, for all FWSS Locations’ Fixed Assets | 2006 | FWSS Acctg | |||||||||||
796
|
Fixed Assets & Lease Register (incl Amortization sched), including any Leasehold Improvements, for all FWSS Locations’ Fixed Assets | 2007 | FWSS Acctg | |||||||||||
797
|
Fixed Assets & Lease Register (incl Amortization sched), including any Leasehold Improvements, for all FWSS Locations’ Fixed Assets | 2008 | FWSS Acctg | |||||||||||
95
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
798
|
Fixed Assets & Lease Register (incl Amortization sched), including any Leasehold Improvements, for all FWSS Locations’ Fixed Assets | 2009 | FWSS Acctg | |||||||||||
799
|
Fixed Assets & Lease Register (incl Amortization sched), including any Leasehold Improvements, for all FWSS Locations’ Fixed Assets | 2010 | FWSS Acctg | |||||||||||
800
|
Fixed Assets & Lease Register (incl Amortization sched), including any Leasehold Improvements, for all FWSS Locations’ Fixed Assets | 2011 | FWSS Acctg | |||||||||||
801
|
Depreciation Schedule and Basis for All FWSS Fixed Assets | 2006 | FWSS Acctg | |||||||||||
802
|
Depreciation Schedule and Basis for All FWSS Fixed Assets | 2007 | FWSS Acctg | |||||||||||
803
|
Depreciation Schedule and Basis for All FWSS Fixed Assets | 2008 | FWSS Acctg | |||||||||||
804
|
Depreciation Schedule and Basis for All FWSS Fixed Assets | 2009 | FWSS Acctg | |||||||||||
805
|
Depreciation Schedule and Basis for All FWSS Fixed Assets | 2010 | FWSS Acctg | |||||||||||
806
|
Depreciation Schedule and Basis for All FWSS Fixed Assets | 2011 | FWSS Acctg | |||||||||||
96
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
807
|
Invoices for All Fixed Assers & Leasehold Improvements at All FW Shared Service Locations | 2006 | FWSS Acctg | |||||||||||
808
|
Invoices for All Fixed Assers & Leasehold Improvements at All FW Shared Service Locations | 2007 | FWSS Acctg | |||||||||||
809
|
Invoices for All Fixed Assers & Leasehold Improvements at All FW Shared Service Locations | 2008 | FWSS Acctg | |||||||||||
810
|
Invoices for All Fixed Assers & Leasehold Improvements at All FW Shared Service Locations | 2009 | FWSS Acctg | |||||||||||
811
|
Invoices for All Fixed Assers & Leasehold Improvements at All FW Shared Service Locations | 2010 | FWSS Acctg | |||||||||||
812
|
Invoices for All Fixed Assers & Leasehold Improvements at All FW Shared Service Locations | 2011 | FWSS Acctg | |||||||||||
813
|
Rental Agreements that support all FW Shared Service Rental Expenses | 2006 | FWSS Acctg | |||||||||||
814
|
Rental Agreements that support all FW Shared Service Rental Expenses | 2007 | FWSS Acctg | |||||||||||
815
|
Rental Agreements that support all FW Shared Service Rental Expenses | 2008 | FWSS Acctg | |||||||||||
97
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
816
|
Rental Agreements that support all FW Shared Service Rental Expenses | 2009 | FWSS Acctg | |||||||||||
817
|
Rental Agreements that support all FW Shared Service Rental Expenses | 2010 | FWSS Acctg | |||||||||||
818
|
Rental Agreements that support all FW Shared Service Rental Expenses | 2011 | FWSS Acctg | |||||||||||
819
|
Payroll Registers for All FWSS Locations | 2006 | FWSS Acctg | |||||||||||
820
|
Payroll Registers for All FWSS Locations | 2007 | FWSS Acctg | |||||||||||
821
|
Payroll Registers for All FWSS Locations | 2008 | FWSS Acctg | |||||||||||
822
|
Payroll Registers for All FWSS Locations | 2009 | FWSS Acctg | |||||||||||
823
|
Payroll Registers for All FWSS Locations | 2010 | FWSS Acctg | |||||||||||
824
|
Payroll Registers for All FWSS Locations | 2011 | FWSS Acctg | |||||||||||
825
|
Concur Reports (with receiipts) related to all FW Shared Service Locations | 2006 | FWSS Acctg | |||||||||||
826
|
Concur Reports (with receiipts) related to all FW Shared Service Locations | 2007 | FWSS Acctg | |||||||||||
827
|
Concur Reports (with receiipts) related to all FW Shared Service Locations | 2008 | FWSS Acctg | |||||||||||
828
|
Concur Reports (with receiipts) related to all FW Shared Service Locations | 2009 | FWSS Acctg | |||||||||||
98
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
829
|
Concur Reports (with receiipts) related to all FW Shared Service Locations | 2010 | FWSS Acctg | |||||||||||
830
|
Concur Reports (with receiipts) related to all FW Shared Service Locations | 2011 | FWSS Acctg | |||||||||||
831
|
FWSS “INTERCOMPANY STATEMENT OFF ACCOUNT” -to ITTHQ and ALL Defense Sites(Group, VCs, BUs), Entire Year (Syste,-generated PDF & XLS format) | 2006 | FWSS Acctg | |||||||||||
832
|
FWSS “INTERCOMPANY STATEMENT OFF ACCOUNT” -to ITTHQ and ALL Defense Sites(Group, VCs, BUs), Entire Year (Syste,-generated PDF & XLS format) | 2007 | FWSS Acctg | |||||||||||
833
|
FWSS “INTERCOMPANY STATEMENT OFF ACCOUNT” -to ITTHQ and ALL Defense Sites(Group, VCs, BUs), Entire Year (Syste,-generated PDF & XLS format) | 2008 | FWSS Acctg | |||||||||||
834
|
FWSS “INTERCOMPANY STATEMENT OFF ACCOUNT” -to ITTHQ and ALL Defense Sites(Group, VCs, BUs), Entire Year (Syste,-generated PDF & XLS format) | 2009 | FWSS Acctg | |||||||||||
99
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
835
|
FWSS “INTERCOMPANY STATEMENT OFF ACCOUNT” -to ITTHQ and ALL Defense Sites(Group, VCs, BUs), Entire Year (Syste,-generated PDF & XLS format) | 2010 | FWSS Acctg | |||||||||||
836
|
FWSS “INTERCOMPANY STATEMENT OFF ACCOUNT” -to ITTHQ and ALL Defense Sites(Group, VCs, BUs), Entire Year (Syste,-generated PDF & XLS format) | 2011 | FWSS Acctg | |||||||||||
837
|
All Supporting Journal Entries for FWSS Intercompany Statement of Account, including ALL supporting Source Docs and DC Advices for the FWSS I/C Statement JEs | 2006 | FWSS Acctg | |||||||||||
838
|
All Supporting Journal Entries for FWSS Intercompany Statement of Account, including ALL supporting Source Docs and DC Advices for the FWSS I/C Statement JEs | 2007 | FWSS Acctg | |||||||||||
100
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
839
|
All Supporting Journal Entries for FWSS Intercompany Statement of Account, including ALL supporting Source Docs and DC Advices for the FWSS I/C Statement JEs | 2008 | FWSS Acctg | |||||||||||
840
|
All Supporting Journal Entries for FWSS Intercompany Statement of Account, including ALL supporting Source Docs and DC Advices for the FWSS I/C Statement JEs | 2009 | FWSS Acctg | |||||||||||
841
|
All Supporting Journal Entries for FWSS Intercompany Statement of Account, including ALL supporting Source Docs and DC Advices for the FWSS I/C Statement JEs | 2010 | FWSS Acctg | |||||||||||
842
|
All Supporting Journal Entries for FWSS Intercompany Statement of Account, including ALL supporting Source Docs and DC Advices for the FWSS I/C Statement JEs | 2011 | FWSS Acctg | |||||||||||
101
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
843
|
Supporting Allocation Calculations (with references to JEs/DCs by month) to all FWSS allocations and True-ups to ITTHQ, DEHQ, and the Defense VCs/BUs, including the following FWSS allocations: | 2006 | FWSS Acctg | |||||||||||
| FWSS AP Allocation, Concur Travel User Fees, Defense Apps, Enterprise Apps, Payroll Alloc, 401(k) Hourly, ISP Salaried, ISP Salaried Excess, Metlife (STD & LIFE) Salaried, FICA/FMHI, FUTA, SUI |
||||||||||||||
844
|
Supporting Allocation Calculations (with references to JEs/DCs by month) to all FWSS allocations and True-ups to ITTHQ, DEHQ, and the Defense VCs/BUs, including the following FWSS allocations: | 2007 | FWSS Acctg | |||||||||||
| FWSS AP Allocation, Concur Travel User Fees, Defense Apps, Enterprise Apps, Payroll Alloc, 401(k) Hourly, ISP Salaried, ISP Salaried Excess, Metlife (STD & LIFE) Salaried, FICA/FMHI, FUTA, SUI |
||||||||||||||
102
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
845
|
Supporting Allocation Calculations (with references to JEs/DCs by month) to all FWSS allocations and True-ups to ITTHQ, DEHQ, and the Defense VCs/BUs, including the following FWSS allocations: | 2008 | FWSS Acctg | |||||||||||
| FWSS AP Allocation, Concur Travel User Fees, Defense Apps, Enterprise Apps, Payroll Alloc, 401(k) Hourly, ISP Salaried, ISP Salaried Excess, Metlife (STD & LIFE) Salaried, FICA/FMHI, FUTA, SUI |
||||||||||||||
846
|
Supporting Allocation Calculations (with references to JEs/DCs by month) to all FWSS allocations and True-ups to ITTHQ, DEHQ, and the Defense VCs/BUs, including the following FWSS allocations: | 2009 | FWSS Acctg | |||||||||||
| FWSS AP Allocation, Concur Travel User Fees, Defense Apps, Enterprise Apps, Payroll Alloc, 401(k) Hourly, ISP Salaried, ISP Salaried Excess, Metlife (STD & LIFE) Salaried, FICA/FMHI, FUTA, SUI |
||||||||||||||
103
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
847
|
Supporting Allocation Calculations (with references to JEs/DCs by month) to all FWSS allocations and True-ups to ITTHQ, DEHQ, and the Defense VCs/BUs, including the following FWSS allocations: | 2010 | FWSS Acctg | |||||||||||
| FWSS AP Allocation, Concur Travel User Fees, Defense Apps, Enterprise Apps, Payroll Alloc, 401(k) Hourly, ISP Salaried, ISP Salaried Excess, Metlife (STD & LIFE) Salaried, FICA/FMHI, FUTA, SUI |
||||||||||||||
848
|
Supporting Allocation Calculations (with references to JEs/DCs by month) to all FWSS allocations and True-ups to ITTHQ, DEHQ, and the Defense VCs/BUs, including the following FWSS allocations: | 2011 | FWSS Acctg | |||||||||||
| FWSS AP Allocation, Concur Travel User Fees, Defense Apps, Enterprise Apps, Payroll Alloc, 401(k) Hourly, ISP Salaried, ISP Salaried Excess, Metlife (STD & LIFE) Salaried, FICA/FMHI, FUTA, SUI |
||||||||||||||
104
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
849
|
Supporting Source Docs for each element of the Basis of Allocation for each FWSS Alllocation to HQ, DEHQ, Defense BUs listed above (i.e. System-generated Active Directory Listing, et al) | 2006 | FWSS Acctg | |||||||||||
850
|
Supporting Source Docs for each element of the Basis of Allocation for each FWSS Alllocation to HQ, DEHQ, Defense BUs listed above (i.e. System-generated Active Directory Listing, et al) | 2007 | FWSS Acctg | |||||||||||
851
|
Supporting Source Docs for each element of the Basis of Allocation for each FWSS Alllocation to HQ, DEHQ, Defense BUs listed above (i.e. System-generated Active Directory Listing, et al) | 2008 | FWSS Acctg | |||||||||||
105
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
852
|
Supporting Source Docs for each element of the Basis of Allocation for each FWSS Alllocation to HQ, DEHQ, Defense BUs listed above (i.e. System-generated Active Directory Listing, et al) | 2009 | FWSS Acctg | |||||||||||
853
|
Supporting Source Docs for each element of the Basis of Allocation for each FWSS Alllocation to HQ, DEHQ, Defense BUs listed above (i.e. System-generated Active Directory Listing, et al) | 2010 | FWSS Acctg | |||||||||||
854
|
Supporting Source Docs for each element of the Basis of Allocation for each FWSS Alllocation to HQ, DEHQ, Defense BUs listed above (i.e. System-generated Active Directory Listing, et al) | 2011 | FWSS Acctg | |||||||||||
855
|
Seneca Falls Shared Service (FRC/EI/TDS) General Ledgers for all costs incurred by Cost Center/Department (System-generated PDF & xls format) | 2006 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
106
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
856
|
Seneca Falls Shared Service (FRC/EI/TDS) General Ledgers for all costs incurred by Cost Center/Department (System-generated PDF & xls format) | 2007 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
857
|
Seneca Falls Shared Service (FRC/EI/TDS) General Ledgers for all costs incurred by Cost Center/Department (System-generated PDF & xls format) | 2008 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
858
|
Seneca Falls Shared Service (FRC/EI/TDS) General Ledgers for all costs incurred by Cost Center/Department (System-generated PDF & xls format) | 2009 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
859
|
Seneca Falls Shared Service (FRC/EI/TDS) General Ledgers for all costs incurred by Cost Center/Department (System-generated PDF & xls format) | 2010 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
860
|
Seneca Falls Shared Service (FRC/EI/TDS) General Ledgers for all costs incurred by Cost Center/Department (System-generated PDF & xls format) | 2011 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
107
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
861
|
All Journal Entries for FRC/EI/TDS Location Operations | 2006 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
862
|
All Journal Entries for FRC/EI/TDS Location Operations | 2007 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
863
|
All Journal Entries for FRC/EI/TDS Location Operations | 2008 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
864
|
All Journal Entries for FRC/EI/TDS Location Operations | 2009 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
865
|
All Journal Entries for FRC/EI/TDS Location Operations | 2010 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
866
|
All Journal Entries for FRC/EI/TDS Location Operations | 2011 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
867
|
All Supporting Docs for the FRC/EI/TDS JEs | 2006 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
868
|
All Supporting Docs for the FRC/EI/TDS JEs | 2007 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
869
|
All Supporting Docs for the FRC/EI/TDS JEs | 2008 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
870
|
All Supporting Docs for the FRC/EI/TDS JEs | 2009 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
871
|
All Supporting Docs for the FRC/EI/TDS JEs | 2010 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
872
|
All Supporting Docs for the FRC/EI/TDS JEs | 2011 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
108
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
873
|
SAP P2P Voucher Register Invoice Listings for FRC/EI/TDS (CY 2006 -2011?) | 2006 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
874
|
SAP P2P Voucher Register Invoice Listings for FRC/EI/TDS (CY 2006 -2011?) | 2007 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
875
|
SAP P2P Voucher Register Invoice Listings for FRC/EI/TDS (CY 2006 -2011?) | 2008 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
876
|
SAP P2P Voucher Register Invoice Listings for FRC/EI/TDS (CY 2006 -2011?) | 2009 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
877
|
SAP P2P Voucher Register Invoice Listings for FRC/EI/TDS (CY 2006 -2011?) | 2010 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
878
|
SAP P2P Voucher Register Invoice Listings for FRC/EI/TDS (CY 2006 -2011?) | 2011 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
879
|
FRC/EI/TDS SAP & Infinium Hardcopy Invoices & Invoice Proof of Payment (check, EFT, etc) | 2006 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
880
|
FRC/EI/TDS SAP & Infinium Hardcopy Invoices & Invoice Proof of Payment (check, EFT, etc) | 2007 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
881
|
FRC/EI/TDS SAP & Infinium Hardcopy Invoices & Invoice Proof of Payment (check, EFT, etc) | 2008 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
109
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
882
|
FRC/EI/TDS SAP & Infinium Hardcopy Invoices & Invoice Proof of Payment (check, EFT, etc) | 2009 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
883
|
FRC/EI/TDS SAP & Infinium Hardcopy Invoices & Invoice Proof of Payment (check, EFT, etc) | 2010 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
884
|
FRC/EI/TDS SAP & Infinium Hardcopy Invoices & Invoice Proof of Payment (check, EFT, etc) | 2011 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
885
|
Agreements/Contracts with Consultants, 3rd Part Service Providers, S/W & H/W Contracts, etc | 2006 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
886
|
Agreements/Contracts with Consultants, 3rd Part Service Providers, S/W & H/W Contracts, etc | 2007 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
887
|
Agreements/Contracts with Consultants, 3rd Part Service Providers, S/W & H/W Contracts, etc | 2008 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
888
|
Agreements/Contracts with Consultants, 3rd Part Service Providers, S/W & H/W Contracts, etc | 2009 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
889
|
Agreements/Contracts with Consultants, 3rd Part Service Providers, S/W & H/W Contracts, etc | 2010 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
110
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
890
|
Agreements/Contracts with Consultants, 3rd Part Service Providers, S/W & H/W Contracts, etc | 2011 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
891
|
PARs/Approvals for ALL Software/Hardware Acquisiitions amd ALL Capital Expenditures/Acquisitions at All FRC/EI/TDS Locations | 2006 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
892
|
PARs/Approvals for ALL Software/Hardware Acquisiitions amd ALL Capital Expenditures/Acquisitions at All FRC/EI/TDS Locations | 2007 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
893
|
PARs/Approvals for ALL Software/Hardware Acquisiitions amd ALL Capital Expenditures/Acquisitions at All FRC/EI/TDS Locations | 2008 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
894
|
PARs/Approvals for ALL Software/Hardware Acquisiitions amd ALL Capital Expenditures/Acquisitions at All FRC/EI/TDS Locations | 2009 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
895
|
PARs/Approvals for ALL Software/Hardware Acquisiitions amd ALL Capital Expenditures/Acquisitions at All FRC/EI/TDS Locations | 2010 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
111
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
896
|
PARs/Approvals for ALL Software/Hardware Acquisiitions amd ALL Capital Expenditures/Acquisitions at All FRC/EI/TDS Locations | 2011 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
897
|
Fixed Assets & Lease Register (incl Amortization sched), including any Leasehold Improvements, for all FRC/EI/TDS Locations’ Fixed Assets | 2006 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
898
|
Fixed Assets & Lease Register (incl Amortization sched), including any Leasehold Improvements, for all FRC/EI/TDS Locations’ Fixed Assets | 2007 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
899
|
Fixed Assets & Lease Register (incl Amortization sched), including any Leasehold Improvements, for all FRC/EI/TDS Locations’ Fixed Assets | 2008 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
900
|
Fixed Assets & Lease Register (incl Amortization sched), including any Leasehold Improvements, for all FRC/EI/TDS Locations’ Fixed Assets | 2009 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
112
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
901
|
Fixed Assets & Lease Register (incl Amortization sched), including any Leasehold Improvements, for all FRC/EI/TDS Locations’ Fixed Assets | 2010 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
902
|
Fixed Assets & Lease Register (incl Amortization sched), including any Leasehold Improvements, for all FRC/EI/TDS Locations’ Fixed Assets | 2011 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
903
|
Depreciation Schedule and Basis for All FRC/EI/TDS Fixed Assets | 2006 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
904
|
Depreciation Schedule and Basis for All FRC/EI/TDS Fixed Assets | 2007 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
905
|
Depreciation Schedule and Basis for All FRC/EI/TDS Fixed Assets | 2008 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
906
|
Depreciation Schedule and Basis for All FRC/EI/TDS Fixed Assets | 2009 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
907
|
Depreciation Schedule and Basis for All FRC/EI/TDS Fixed Assets | 2010 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
908
|
Depreciation Schedule and Basis for All FRC/EI/TDS Fixed Assets | 2011 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
909
|
Invoices for All Fixed Assers & Leasehold Improvements at All FW Shared Service Locations | 2006 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
113
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
910
|
Invoices for All Fixed Assers & Leasehold Improvements at All FW Shared Service Locations | 2007 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
911
|
Invoices for All Fixed Assers & Leasehold Improvements at All FW Shared Service Locations | 2008 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
912
|
Invoices for All Fixed Assers & Leasehold Improvements at All FW Shared Service Locations | 2009 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
913
|
Invoices for All Fixed Assers & Leasehold Improvements at All FW Shared Service Locations | 2010 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
914
|
Invoices for All Fixed Assers & Leasehold Improvements at All FW Shared Service Locations | 2011 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
915
|
Rental Agreements that support all FW Shared Service Rental Expenses | 2006 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
916
|
Rental Agreements that support all FW Shared Service Rental Expenses | 2007 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
917
|
Rental Agreements that support all FW Shared Service Rental Expenses | 2008 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
918
|
Rental Agreements that support all FW Shared Service Rental Expenses | 2009 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
919
|
Rental Agreements that support all FW Shared Service Rental Expenses | 2010 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
114
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
920
|
Rental Agreements that support all FW Shared Service Rental Expenses | 2011 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
921
|
Payroll Registers for All FRC/EI/TDS Locations | 2006 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
922
|
Payroll Registers for All FRC/EI/TDS Locations | 2007 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
923
|
Payroll Registers for All FRC/EI/TDS Locations | 2008 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
924
|
Payroll Registers for All FRC/EI/TDS Locations | 2009 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
925
|
Payroll Registers for All FRC/EI/TDS Locations | 2010 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
926
|
Payroll Registers for All FRC/EI/TDS Locations | 2011 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
927
|
Concur Reports (with receiipts) related to all FW Shared Service Locations | 2006 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
928
|
Concur Reports (with receiipts) related to all FW Shared Service Locations | 2007 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
929
|
Concur Reports (with receiipts) related to all FW Shared Service Locations | 2008 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
930
|
Concur Reports (with receiipts) related to all FW Shared Service Locations | 2009 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
115
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
931
|
Concur Reports (with receiipts) related to all FW Shared Service Locations | 2010 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
932
|
Concur Reports (with receiipts) related to all FW Shared Service Locations | 2011 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
933
|
FRC/EI/TDS “INTERCOMPANY STATEMENT OFF ACCOUNT” -to ITTHQ and ALL Defense Sites(Group, VCs, BUs), Entire Year (Syste,-generated PDF & XLS format) | 2006 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
934
|
FRC/EI/TDS “INTERCOMPANY STATEMENT OFF ACCOUNT” -to ITTHQ and ALL Defense Sites(Group, VCs, BUs), Entire Year (Syste,-generated PDF & XLS format) | 2007 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
935
|
FRC/EI/TDS “INTERCOMPANY STATEMENT OFF ACCOUNT” -to ITTHQ and ALL Defense Sites(Group, VCs, BUs), Entire Year (Syste,-generated PDF & XLS format) | 2008 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
936
|
FRC/EI/TDS “INTERCOMPANY STATEMENT OFF ACCOUNT” -to ITTHQ and ALL Defense Sites(Group, VCs, BUs), Entire Year (Syste,-generated PDF & XLS format) | 2009 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
116
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
937
|
FRC/EI/TDS “INTERCOMPANY STATEMENT OFF ACCOUNT” -to ITTHQ and ALL Defense Sites(Group, VCs, BUs), Entire Year (Syste,-generated PDF & XLS format) | 2010 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
938
|
FRC/EI/TDS “INTERCOMPANY STATEMENT OFF ACCOUNT” -to ITTHQ and ALL Defense Sites(Group, VCs, BUs), Entire Year (Syste,-generated PDF & XLS format) | 2011 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
939
|
All Supporting Journal Entries for FRC/EI/TDS Intercompany Statement of Account, including ALL supporting Source Docs and DC Advices for the FRC/EI/TDS I/C Statement JEs | 2006 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
940
|
All Supporting Journal Entries for FRC/EI/TDS Intercompany Statement of Account, including ALL supporting Source Docs and DC Advices for the FRC/EI/TDS I/C Statement JEs | 2007 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
117
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
941
|
All Supporting Journal Entries for FRC/EI/TDS Intercompany Statement of Account, including ALL supporting Source Docs and DC Advices for the FRC/EI/TDS I/C Statement JEs | 2008 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
942
|
All Supporting Journal Entries for FRC/EI/TDS Intercompany Statement of Account, including ALL supporting Source Docs and DC Advices for the FRC/EI/TDS I/C Statement JEs | 2009 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
943
|
All Supporting Journal Entries for FRC/EI/TDS Intercompany Statement of Account, including ALL supporting Source Docs and DC Advices for the FRC/EI/TDS I/C Statement JEs | 2010 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
944
|
All Supporting Journal Entries for FRC/EI/TDS Intercompany Statement of Account, including ALL supporting Source Docs and DC Advices for the FRC/EI/TDS I/C Statement JEs | 2011 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
118
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
945
|
Supporting Allocation Calculations (with references to JEs/DCs by month) to all FRC/EI/TDS allocations and True-ups to ITTHQ, DEHQ, and the Defense
VCs/BUs, including the following FRC/EI/TDS allocations: Freight, Corp Incentives (net any expense for entire TDS), Household Goods, TAPS/Telecom, Travel, EbuyITT, Collections, Credit, Cash Applications, Treasury Svces (Cash Mgmt), Acct Payable (P2P Fees), AP Special Projects, Mgmt Reporting, Unclaimed Prop, Sales & Use Tax, Data Center Midwest, Wintell (Midwest), Network Mgmt, Svc Center (Help Desk/Remedy System, Ent Sys/Svcs (email/MS), GSS, Network VPN, Global Directory Svcs, Voice Telecom, Collaborative System, InfoSec (EI & GIS Portion) |
2006 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
119
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
946
|
Supporting Allocation Calculations (with references to JEs/DCs by month) to all FRC/EI/TDS allocations and True-ups to ITTHQ, DEHQ, and the Defense
VCs/BUs, including the following FRC/EI/TDS allocations: Freight, Corp Incentives (net any expense for entire TDS), Household Goods, TAPS/Telecom, Travel, EbuyITT, Collections, Credit, Cash Applications, Treasury Svces (Cash Mgmt), Acct Payable (P2P Fees), AP Special Projects, Mgmt Reporting, Unclaimed Prop, Sales & Use Tax, Data Center Midwest, Wintell (Midwest), Network Mgmt, Svc Center (Help Desk/Remedy System, Ent Sys/Svcs (email/MS), GSS, Network VPN, Global Directory Svcs, Voice Telecom, Collaborative System, InfoSec (EI & GIS Portion) |
2007 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
120
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
947
|
Supporting Allocation Calculations (with references to JEs/DCs by month) to all FRC/EI/TDS allocations and True-ups to ITTHQ, DEHQ, and the Defense
VCs/BUs, including the following FRC/EI/TDS allocations: Freight, Corp Incentives (net any expense for entire TDS), Household Goods, TAPS/Telecom, Travel, EbuyITT, Collections, Credit, Cash Applications, Treasury Svces (Cash Mgmt), Acct Payable (P2P Fees), AP Special Projects, Mgmt Reporting, Unclaimed Prop, Sales & Use Tax, Data Center Midwest, Wintell (Midwest), Network Mgmt, Svc Center (Help Desk/Remedy System, Ent Sys/Svcs (email/MS), GSS, Network VPN, Global Directory Svcs, Voice Telecom, Collaborative System, InfoSec (EI & GIS Portion) |
2008 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
121
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
948
|
Supporting Allocation Calculations (with references to JEs/DCs by month) to all FRC/EI/TDS allocations and True-ups to ITTHQ, DEHQ, and the Defense VCs/BUs, including the following FRC/EI/TDS allocations: Freight, Corp Incentives (net any expense for entire TDS), Household Goods, TAPS/Telecom, Travel, EbuyITT, Collections, Credit, Cash Applications, Treasury Svces (Cash Mgmt), Acct Payable (P2P Fees), AP Special Projects, Mgmt Reporting, Unclaimed Prop, Sales & Use Tax, Data Center Midwest, Wintell (Midwest), Network Mgmt, Svc Center (Help Desk/Remedy System, Ent Sys/Svcs (email/MS), GSS, Network VPN, Global Directory Svcs, Voice Telecom, Collaborative System, InfoSec (EI & GIS Portion) | 2009 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
122
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
949
|
Supporting Allocation Calculations (with references to JEs/DCs by month) to all FRC/EI/TDS allocations and True-ups to ITTHQ, DEHQ, and the Defense
VCs/BUs, including the following FRC/EI/TDS allocations: Freight, Corp Incentives (net any expense for entire TDS), Household Goods, TAPS/Telecom, Travel, EbuyITT, Collections, Credit, Cash Applications, Treasury Svces (Cash Mgmt), Acct Payable (P2P Fees), AP Special Projects, Mgmt Reporting, Unclaimed Prop, Sales & Use Tax, Data Center Midwest, Wintell (Midwest), Network Mgmt, Svc Center (Help Desk/Remedy System, Ent Sys/Svcs (email/MS), GSS, Network VPN, Global Directory Svcs, Voice Telecom, Collaborative System, InfoSec (EI & GIS Portion) |
2010 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
123
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
950
|
Supporting Allocation Calculations (with references to JEs/DCs by month) to all FRC/EI/TDS allocations and True-ups to ITTHQ, DEHQ, and the Defense
VCs/BUs, including the following FRC/EI/TDS allocations: Freight, Corp Incentives (net any expense for entire TDS), Household Goods, TAPS/Telecom, Travel, EbuyITT, Collections, Credit, Cash Applications, Treasury Svces (Cash Mgmt), Acct Payable (P2P Fees), AP Special Projects, Mgmt Reporting, Unclaimed Prop, Sales & Use Tax, Data Center Midwest, Wintell (Midwest), Network Mgmt, Svc Center (Help Desk/Remedy System, Ent Sys/Svcs (email/MS), GSS, Network VPN, Global Directory Svcs, Voice Telecom, Collaborative System, InfoSec (EI & GIS Portion) |
2011 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
124
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
951
|
Supporting Source Docs for each element of the Basis of Allocation for each FRC/EI/TDS Alllocation to HQ, DEHQ, Defense BUs listed above (i.e. System-generated Active Directory Listing, et al) | 2006 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
952
|
Supporting Source Docs for each element of the Basis of Allocation for each FRC/EI/TDS Alllocation to HQ, DEHQ, Defense BUs listed above (i.e. System-generated Active Directory Listing, et al) | 2007 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
953
|
Supporting Source Docs for each element of the Basis of Allocation for each FRC/EI/TDS Alllocation to HQ, DEHQ, Defense BUs listed above (i.e. System-generated Active Directory Listing, et al) | 2008 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
954
|
Supporting Source Docs for each element of the Basis of Allocation for each FRC/EI/TDS Alllocation to HQ, DEHQ, Defense BUs listed above (i.e. System-generated Active Directory Listing, et al) | 2009 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
125
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
955
|
Supporting Source Docs for each element of the Basis of Allocation for each FRC/EI/TDS Alllocation to HQ, DEHQ, Defense BUs listed above (i.e. System-generated Active Directory Listing, et al) | 2010 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
956
|
Supporting Source Docs for each element of the Basis of Allocation for each FRC/EI/TDS Alllocation to HQ, DEHQ, Defense BUs listed above (i.e. System-generated Active Directory Listing, et al) | 2011 | Seneca Falls Shared Services (FRC/EI/TDS) | |||||||||||
957
|
Program BEST (GL, Approved PARs, Consultants Contracts/Agreements, SAP Agreements/Contracts/Invoices, Due Dilligence Reports, AP Docs, Travel Docs, Org Chart, Time Keeping Records, et al) | 2009 | FRC (Prog Best) | |||||||||||
958
|
Program BEST (GL, Approved PARs, Consultants Contracts/Agreements, SAP Agreements/Contracts/Invoices, Due Dilligence Reports, AP Docs, Travel Docs, Org Chart, Time Keeping Records, et al) | 2010 | FRC (Prog Best) | |||||||||||
126
| Year, if | Dept | Complete | ||||||||||||
| # | Description | applicable | Affected | POCs | (Y/N) | Comments | ||||||||
959
|
Program BEST (GL, Approved PARs, Consultants Contracts/Agreements, SAP Agreements/Contracts/Invoices, Due Dilligence Reports, AP Docs, Travel Docs, Org Chart, Time Keeping Records, et al) | 2011 | FRC (Prog Best) | |||||||||||
| Summary of Tasks/Activities | ||
| Count of | ||
| Department Affected | Tasks/Activities | |
ALL |
1 | |
DEHQ |
1 | |
FWSS Acctg |
104 | |
FWSS Payroll |
25 | |
FWSS Travel |
13 | |
GSS |
1 | |
HQ Controllers |
208 | |
HQ Corp Responsibility |
46 | |
HQ Flight Ops Dept |
20 | |
HQ Human Resources |
68 | |
HQ Internal Audit |
73 | |
HQ Legal |
31 | |
HQ Pension Dept |
151 | |
HQ Tax |
67 | |
HQ Treasury |
31 | |
Mulitple HQ Depts |
12 | |
Seneca Falls Shared Serv |
104 | |
FRC (Prog Best) |
3 | |
Grand Total |
959 | |
127
| Department Affected | Count of Tasks/Acti vities |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Count of Dept Affected | Column Labels |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Seneca | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Falls | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| HQ | Shared | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| HQ | HQ | HQ | Hum | HQ | Service | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FWSS | Con | Corp | Flight | an | HQ | Pens | HQ | Mulitpl | s | FRC | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FWSS | Payro | FWSS | troll | Respon | Ops | Reso | Internal | HQ | ion | Treasu | e HQ | (FRC/EI | (Prog | Grand | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Row Labels | Acctg | ll | Travel | GSS | ers | sibility | Dept | urces | Audit | Legal | Dept | HQ Tax | ry | Depts | /TDS) | Best) | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 40 | 40 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 31 | 31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 34 | 34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 25 | 25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 31 | 31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5 | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 13 | 13 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 116 | 116 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 20 | 20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 19 | 19 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 43 | 43 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 104 | 104 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 73 | 73 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 50 | 50 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 104 | 104 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 141 | 6 | 147 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6 | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 67 | 67 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 104 | 25 | 13 | 1 | 208 | 46 | 20 | 68 | 73 | 31 | 151 | 67 | 31 | 12 | 104 | 3 | 959 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
128
List of Defense Units for DCAA TSA
Cost Centers
| FRC co. 30 | ||
300216
|
Collections | |
300217
|
Credit | |
300215
|
Cash Application | |
300220
|
Corporate Services | |
300230
|
Operations Management | |
300222
|
Treasury Services (Cash Management) | |
300226
|
Accounts Payable (P2P Service Fees) | |
300512
|
AP Special Projects | |
300225
|
Management Reporting | |
300235
|
Unclaimed Property | |
300214
|
Sales and Use tax Compliance | |
| TDS co. 20 | ||
200101
|
Freight | |
200101
|
Corporate Incentives net Expenses for entire TDS | |
200101
|
Household Goods | |
200101
|
Taps/Telecom | |
200101
|
Travel | |
200101
|
EbuyIT | |
| EI — co. 50 | ||
CC 500201
|
Data Center East | |
CC 500202
|
Wintel Hosting East | |
CC 500203
|
Data Center Midwest | |
CC 500204
|
Wintel Hosting Midwest | |
CC501251
|
Voice Comm | |
CC 501201
|
Network — Americas | |
CC 501211
|
Network — EMEA | |
CC 501221
|
Network — ASPAC | |
CC501261
|
Directory Services | |
CC 502241
|
Enterprise Systems | |
CC 503201
|
Global Help Desk | |
CC 501231
|
Enterprise Infrastructure | |
CC 83000
|
Global Info. Services | |
CC 83400
|
Connect | |
| GSS — co. 40 | ||
400201 —
|
GSS Leadership | |
400301 —
|
GSS Americas | |
400302 —
|
GSS Brazil | |
400305 —
|
GSS China | |
400306 —
|
GSS Poland | |
400307 —
|
GSS India | |
400308 —
|
GSS Italy | |
400401 —
|
GSS indirect | |
400407 —
|
GSS Buying Channel Support | |
400409 —
|
GSS Global Logistics | |
400413 —
|
GSS Supplier Quality |
129
Defense Units
130
Defense -SAP
| Defense vs. | ||||||
| Co # | Commercial | New Company | ||||
1005
|
DEF | Defense | CS | |||
1009
|
DEF | Defense | Defense — Custodials | |||
1010
|
DEF | Defense | ES — EWS | |||
1101
|
CM | Defense | GIS | |||
1160
|
DEF | Defense | AES | |||
1165
|
DEF | Defense | ES/RDR — Gil | |||
1170
|
DEF | Defense | Defense HQ | |||
1185
|
DEF | Defense | SSD — Old | |||
1186
|
DEF | Defense | SSD | |||
1190
|
DEF | Defense | CIS | |||
1191
|
DEF | Defense | Systems HQ | |||
1195
|
DEF | Defense | SSI | |||
1198
|
DEF | Defense | Systems FSIC | |||
1199
|
DEF | Defense | CIS_CS | |||
1200
|
DEF | Defense | CNS |
| Co # | ITT HQ & FSS | New Company | ||
1003
|
FSS | ITT | ||
1001
|
ITT HQ | ITT |
131
SCHEDULE AC9
BASIC TIME AND MATERIALS SUPPORT
BASIC TIME AND MATERIALS SUPPORT
Capitalized terms used herein and not otherwise defined shall have the meaning assigned to
such term in the Agreement. The Services provided hereunder are subject in all respects to the
terms and conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this Service should be directed
to:
| Name | Title | Phone | ||||
Service
Provider’s Contact |
||||||
ITT Corporation Daryl Bowker |
TSA Manager | Office:315-568-7676 | Daryl.bowker@ittcorp.com | |||
Service Receiver’s
Contact |
||||||
Exelis Inc. Joe Daniel |
TSA Manager |
Office: (703) 790-6309 |
Joe.daniel@itt.com |
PARTIES TO THE AGREEMENT
Service Provider: ITT Corporation
Service Receiver: Exelis Inc.
GENERAL SERVICE DESCRIPTION
Service Receiver may need assistance after the Distribution Date from the Service Provider for
miscellaneous services, including but not limited to consulting, advisory, knowledge transfer and
other similar services in various areas including, but not limited to finance, tax, accounting,
insurance, treasury, human resources and communications, which are not already provided for under
all of the other TSAs between ITT Corporation, Xylem Inc., and Exelis Inc.
The Service Provider hereby agrees to cause its and its affiliates employees (collectively,
“Experts”) to provide a reasonable amount of services, including specifically the services listed
in Annex A, upon reasonable notice and request from the Service Receiver on a time and materials
basis from the Distribution Date through April 30, 2013 (the “Minimum Term” and the “Maximum
Term”).
To utilize this TSA Schedule, employees of Service Receiver should request such services via email
or telephonically where both parties have a clear expectation of the estimated number of hours of
assistance being requested. For projects that are expected to require more than 5 to 10 hours of
assistance a one or two paragraph project plan should be agreed to in order to avoid
misunderstandings. The project plan should be put together by the Service Provider’s “Expert “with
respect to the requested services.
Employees of Service Receiver should advise their TSA manager that a request for services has been
made together with a description of such services requested and the estimated number of hours
requested.
The “Expert” should advise their TSA manager that a request for services has been made and the
estimated number of hours requested.
SCOPE OF SERVICES
The scope of services will depend on the needs of the Service Recipient and the capabilities
and availability of the Experts.
LOCATIONS
All locations around the world
PREREQUISITES/DEPENDENCIES
The Experts remain employees of Service Provider. Service Receivers
acknowledge and agree that Service Provider has discretion to terminate the
Experts and the Experts have the ability to terminate their employment with
Service Provider. In the event the Experts are no longer employed by Service
Provider, Service Provider will, at the request of the Service Receiver, use
commercially reasonable efforts to provide similar services. However, if
Service Receivers or an affiliate employ any of the Experts, the specific
service requested under this
2
Schedule can be terminated by the Service
Provider, at the Service Provider’s sole discretion on 5 business days notice
to the Service Receiver.
TAX STATUS
Sales tax will be charged as determined by the Service Provider and the
Service Receiver shall pay such tax along with the payment for the service
provided.
BILLING LOCATION
Service Provider will provide Service Receiver with an invoice to its
address set forth below under Notice Requirements, except in cases where
services are provided outside of the United States, in which case invoices will
be created by the Service Provider’s legal entity in the country where the
services are being performed and invoiced to the Service Receiver’s legal
entity that requested the services in the Service Provider’s local currency.
The bill will cover all charges for services under this Schedule from Service
Provider and, to the extent reasonably feasible, will be itemized among
Service Receiver’s legal entities if identified by the Service Receiver when
requesting the service. The invoice will contain the number of hours each
Expert worked, a short paragraph describing the services and the US dollar
amount per Expert.
The Experts shall track their time on either a time sheet or any other
proper method such as the utilizing the time sheet attached hereto and Service
Provider agrees that the time sheets will accompany the invoice that is sent to
the Service Recipient for payment. In cases where the requested services are
expected to take longer than 30 days to complete, the Service Provider will be
allowed to invoice the Service Receiver once per month for all costs incurred
to date.
NOTICE REQUIREMENTS
No notice of Termination is required under this Schedule and there shall be no make-whole fee
under this Schedule
Notices and bills to the Service Provider should be sent to:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
3
Notices and bills to the Service Receiver should be sent to:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
PRICING
In addition to the costs specifically set forth below, Service Receivers shall also pay all
business travel expenses relating to the Services in accordance with Service Providers documented
travel policies and any incremental out of pocket costs incurred by the Service Provider in order
to provide the requested services that are invoiced by unaffiliated 3rd parties. Service
Provider agrees to provide vendor invoices as backup to the Service Receiver when invoicing the
Service Receiver under the terms of this TSA.
The hourly rates below include a 4.5% increase for inflation and the 2% profit margin and
shall be applicable in 2011 and 2012. The rates shall increase by 4.5% in 2013. There shall be no
make whole fee due under Section 11 of the Agreement upon early termination of this TSA.
| Service | Hourly Rate* | |
| Hourly Rate Administrative/Secretarial. | $50 per hour | |
| Hourly Rate for a Non Executive | $100 per hour | |
| Hourly Rate for an Executive | $150 per hour |
* Note: In cases where invoicing is done outside the United States, the above rates
should be converted to local currency based on the exchange rate on the date the invoice is
prepared.
The pricing for the services described in Annex A will be as set forth in Annex A unless no
pricing is provided in which case if services are provided on an hourly basis the rates
above will apply.
4
Annex A
Annex A-1 —Individual Employee Services
Service Provider (ITT) will provide Service Receiver (Defense) with
the services of
during the period from the Distribution Date through December 31, 2011. Defense will pay ITT
Cost plus 2% - 10%
per month for
services and expect that will dedicate 50% of his time
to the needs of the Service Receiver. Defense will continue to
provide with his current
office and access to a phone, though his computer connectivity will be
terminated. will
have access to the common areas in Fort Wayne and to his office and well as other areas if invited
by Defense personnel. Defense will not charge ITT for space rental (build it into his monthly rate
to make things simpler so you only need one bill). In the event can no longer or chooses
not to provide services, this Annex A-1 and the services of will be terminated and will no longer have access to the Fort Wayne facility. No make-whole fee will be paid under
this Annex A-1.
will provide the following services:
Serve as a confidant/advisor and provide guidance and assistance to the ITT Exelis labor relations
and human resources staff on the delivery of a broad range of proactive human resources and labor
relations activities and initiatives. Specifically:
Provides assistance with HR functional strategic/operations planning
Draft and vet HR policies as requested
Conducting and or mentoring staff on training activities including conducting needs assessments to
identify training needs, formulates recommendations and executes training program development as
requested
Provide consulting support to ITT Exelis management on matters of policy development, contract
administration and negotiation, maintenance of union free operations, and negotiation objectives
development
Provide assistance with the development of timely and strategically aligned prep documents and the
development of bargaining proposals
5
Annex A-2 Master Black Belt Training
Service Provider: ITT Corporation
Service Owner: Mary Gerstner, mary.gerstner@itt.com (914) 641-2002
Service Owner: Mary Gerstner, mary.gerstner@itt.com (914) 641-2002
Service Receiver: Xylem Inc.
Service Owner: Rod Smith, rod.smith@xyleminc.com (806) 252-4692
Service Owner: Rod Smith, rod.smith@xyleminc.com (806) 252-4692
Service Receiver: Exelis Inc.
Service Owner: Vince Thomas, vince.thomas@exelisinc.com phone (702) 790-6351
Service Owner: Vince Thomas, vince.thomas@exelisinc.com phone (702) 790-6351
The Service Provider will invoice the Service Receivers to equally share in out of pocket expenses
incurred to deliver a joint Master Black Belt training class and subsequent Train the Trainer
classes. Out of pocket expenses include but are not limited to Consultant expense, curriculum
binders, CDs, books, meals, and various classroom supplies. All time, travel, and related expenses
will be the responsibility of each company.
Master Black Belt training consists of 4 weeks. It will be led by one employee from each company
and supplemented with consulting expertise as needed. The curriculum delivered will be the 2011
enhanced Master Black Belt content developed jointly with the University of Michigan. Certification
will be the responsibility of each company.
Annex A-3 Furniture Storage in Dubai
Service provider/Remit to: Camil George Shuggi, General Manager of IP Dubai branch.
Address: Office 504; Deira Twin towers; Baniyas Street; Deira; Dubai ; UAE
Service receiver/Bill to: Bernard Joseph Dunn, General Manager of Defense Dubai branch.
Address: Office #1102; Crystal tower; Business Bay; Downtown Dubai ; Dubai ;UAE
Services: The ITT Dubai office will store existing furniture for the Exelis Dubai office
for up to three months commencing on the Distribution Date. The maximum term expires on January
31, 2012. 5 days advance notice is required to terminate this service.
Pricing: The storage charge for the furniture will b
e billed on a monthly basis. The cost
per month will be AED Cost plus 2% - 10%/- This charge is based on a daily rate of AED Cost plus 2% - 10%/-. Partial month
billing will be based on the daily rate. The rate above includes the 2%, 10% or 4.5% increase that
should be applied as set forth in Section 2(a) of the Agreement. There will be no make-whole fee
for early termination.
6
Annex A-4
Management Reporting (HFM/Planning) Post Separation Support Requirements
Following the separation of ITT into 3 companies, key management reporting resources will be
required to provide post separation support and knowledge transfer between the NewCos. High level
areas of support and knowledge transfer include:
| • | Month-end close | |
| • | Year-end close | |
| • | New Year setup and rollforward | |
| • | OpPlan, Forecast, and Budget | |
| • | Metadata Management | |
| • | Ledger Mapping | |
| • | Break/Fix Support |
Listed below are the key HFM and Planning resources whose post separation support will be required
during the period 11/1/2011 through the 2012 March Close (approximately 4/20/2012).
| November | December | January | February | March | April | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Future | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Resource | NewCo | Executive | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ITTCo | No | n/a | 48 | 48 | n/a | 48 | 24 | n/a | 48 | 24 | n/a | 36 | 12 | n/a | 36 | 12 | n/a | 12 | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Xylem | No | 48 | n/a | 48 | 24 | n/a | 24 | 24 | n/a | 24 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exelis | No | 48 | 48 | n/a | 24 | 24 | n/a | 24 | 24 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ITTCo | No | n/a | 48 | 0 | n/a | 24 | 0 | n/a | 24 | 0 | n/a | 12 | 0 | n/a | 12 | 0 | n/a | 12 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ITTCo | Yes | n/a | 48 | 48 | n/a | 24 | 24 | n/a | 24 | 24 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Xylem | No | 48 | n/a | 48 | 24 | n/a | 24 | 24 | n/a | 24 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Service Provider Owners and Service Receiver Owners are set forth under “Service Owner” above
Annex A-5 —Individual Employee Services
Service Receiver (Exelis)
will reimburse Service Provider for all its costs and expenses, including
but not limited to wages, bonus, retention fees (mutually agreed to between Service Provider and
Service Receiver) benefits, leave liabilities and taxes, but specifically excluding any severance
obligations which shall be paid for by Service Provider in connection with employing
and an employee to be identified later (individually and collectively, the “Employees”) on a part
time basis during the period from the Distribution Date through September 30, 2012 (the “end
date”). Service Receiver shall have no control or authority over the Employees and the Employees
shall act on behalf of and at the discretion of the Service Provider. Service Provider will
continue to provide the Employees with the same service and support (medical and dental benefits,
payroll, access to the Service Provider’s facility (without a full time desk), etc.) as provided
prior to the Distribution Date. Nothing contained herein shall
prevent Service Provider from terminating Employees’ employment “for cause” at Service Provider’s
discretion.
7
Service Receiver acknowledges that at the end date, the employee’s employment will be
terminated. This TSA may be terminated by Service Receiver early by providing 5 business days
prior notice. There shall be no penalty or make whole if Service Receiver exits this TSA earlier
than the stated end date.
Service Receiver hereby expressly agrees to indemnify Service Provider for any liabilities,
damages, costs, expenses, settlement amounts, duties, or fines, including court costs and
reasonable attorney fees, arising from this Annex A-5 provided, however, that Service Provider
shall not be entitled to be indemnified for any such liabilities, damages, costs, expenses,
settlement amounts, duties, or fines, including court costs and reasonable attorney fees arising as
a result of Service Provider’s negligence or willful misconduct in providing the services under
this Annex A-5 or in connection with any severance obligations.
In the event the Employees’ employment with Service Provider is terminated, Service Provider shall
use commercially reasonable efforts to hire another person and Service Receiver shall pay any and
all costs associated with the new hire.
Service Provider: ITT Corporation
Service Provider Owner:
Burt Fealing
1133 Westchester Avenue, Suite 3000
White Plains, NY 10604
Burt.Fealing@itt.com
Burt Fealing
1133 Westchester Avenue, Suite 3000
White Plains, NY 10604
Burt.Fealing@itt.com
Service Receiver: Exelis Inc.
Service Receiver Owner:
Vince Thomas
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Vince.Thomas@exelisinc.com
Service Receiver Owner:
Vince Thomas
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Vince.Thomas@exelisinc.com
8
SCHEDULE B
Service Provider: Xylem Inc.
Service Recipient: ITT Corporation and/or Exelis Inc.
Service to be Provided:
4
SCHEDULE BA1
UK BENEFITS SUPPORT
UK BENEFITS SUPPORT
Capitalized terms used herein and not otherwise defined shall have the meaning assigned to
such term in the Agreement. The Services provided hereunder are subject in all respects to the
terms and conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters and general inquiries regarding this Service should be directed to:
| Name | Title | Phone | ||||
Service Provider’s
Contact |
||||||
Water Process Ltd Barbara West |
UK Benefits Manager | 44- 1256-311-801 | barbara.west@xyleminc.com | |||
Service Recipient’s
Contact |
||||||
ITT Industries Limited Roger Wearn |
Shared Services Manager | 44-1256 3111767 | roger.wearn@itt.com |
PARTIES TO THE AGREEMENT
Service Provider: Water Process Ltd
Service Receiver: ITT Industries Limited
GENERAL SERVICE DESCRIPTION
Benefits for Service Receivers in England have been managed pre-spin by Service Provider based
in Basingstoke. Service Receivers need assistance from Barbara West and/or Linda Frawley
(collectively, the “Experts”) on a time and materials basis to provide services similar to those
provided to the Service Receiver or its affiliates during the 12 month period prior to October 1,
2011, including continuity of Benefits Administration, training and advice for 18 months (“Minimum
Term”), but not longer than 24 months from the date hereof (“Maximum Term”).
1
SCOPE OF SERVICES
The following services will be provided on a time and materials basis by the Experts.
| • | Launch Flexible Benefits Package for Service Receivers’ United Kingdom locations including administration, communications, etc. | ||
| • | Assistance in establishing Service Receiver’s policy for enrollment in Private Medical | ||
| • | Assistance with administering the share incentive plan for the Service Receiver. | ||
| • | Assistance with the administration and preparation for cessation of Service Receiver’s Defined Benefit Plan (General Pension Plan) and movement to a Defined Contribution Plan (ITT Retirement Savings Plan). | ||
| • | Provide guidance in negotiating premiums with various Benefit Brokers to include interfacing with appropriate Benefits Vendors on behalf of Service Receiver, but not executing agreements on Service Receiver’s behalf. | ||
| • | Facilitate the transition of the Benefits Vendor relationship to designated Service Receiver’s HR Benefits Manager | ||
| • | Facilitate the transition of the daily benefit activities to the HR staff of Service Receiver in the United Kingdom | ||
| • | Provide guidance on applicable British Laws versus Benefits provided, but not legal advice. | ||
| • | All communications initially prepared by the Experts to Service Receiver’s employees will be reviewed by the Service Receiver’s Sr. Manager of Benefits and Service Receivers’ Vice President, Human Resources, or such other person as may be designated by Service Receiver | ||
| • | The Experts will provide employees designated by the Service Receiver with monthly status reports. The Experts will work under a schedule mutually agreed to prior to October 1, 2011 which will average approximately four (4) hours per week during the first three (3) to six (6) months and then two (2) to four (4) hours thereafter. The Experts will utilize their current office and equipment at Service Provider, Basingstoke, England, unless Service Provider moves such employees, at its discretion. | ||
| • | Such other services as the Experts have provided to ITT Corporation’s commercial business during the twelve (12) month period prior to October 1, 2011 and requested by Service Receiver, which shall not include legal or tax advice or the execution of any documentation for any governmental authority. |
2
LOCATIONS
United Kingdom
PREREQUISITES/DEPENDENCIES
The Experts remain employees of Service Provider. Service Receiver
acknowledges and agrees that Service Provider has discretion to terminate the
Experts and the Experts have the ability to terminate their employment with
Service Provider. In the event the Experts are no longer employed by Service
Provider, Service Provider’s then current benefit manager will, at the request
of the Service Receiver, provide similar services at an agreed to hourly rate,
based on such benefit manager’s all in cost to the Service Provider (total
compensation plus allocated overhead). However, if Service Receiver or an
affiliate employs any of the Experts, this Schedule can be terminated by the
Service Provider, at the Service Provider’s sole discretion on 5 business days
notice to the Service Receiver. In the event the Experts are no longer
employed by Service Provider or no longer capable of providing services due to
disability, and the Experts are not replaced by another benefits leader, this
Schedule shall terminate with no further obligations of either party.
The Service Receivers’ human resources department shall cooperate with the
Experts as the Experts provide service under this Schedule.
TAX STATUS
VAT will be charged as determined by the Service Provider
BILLING LOCATION
Service Provider will provide ITT Industries Limited with an invoice to
its address set forth below. The bill will cover all charges for services
under this Schedule from Service Provider to Service Receiver and, to the
extent reasonably feasible. The invoice will contain the number of hours each
Expert worked, a short paragraph describing the services and the British Pound
amount per Expert.
3
NOTICE REQUIREMENTS
Service Receiver shall notify Service Provider at least 90 days in advance of the Minimum Term
if it wants to extend or terminate this Schedule, but such extension shall not be for longer than
the Maximum Term. If notification is not received by the Service Provider, the service will
terminate at the end of the Minimum Term. There shall be no make-whole fee in the event of an
early termination under this Schedule.
Notices to the Service Provider should be sent to
Water Process Ltd, Jays Close,
Viables Estate, Basingstoke, Hampshire RG22 4BA
Attention: Barbara West
Water Process Ltd, Jays Close,
Viables Estate, Basingstoke, Hampshire RG22 4BA
Attention: Barbara West
Notices to the Service Receiver should be sent to
ITT Industries Limited
Jays Close, Viables Estate,
Basingstoke, Hampshire RG22 4BA
Attention: Roger Wearn
ITT Industries Limited
Jays Close, Viables Estate,
Basingstoke, Hampshire RG22 4BA
Attention: Roger Wearn
PRICING
In addition to the costs specifically set forth below, Service Receivers shall also pay all
business travel expenses relating to the Services.
The hourly rates below include a 4.5% increase each year for inflation and a 2% increase for a
profit margin. In the event the service continues past the Minimum Term, the rate will increase by
8%
| Service | Hourly Rate | |
Hourly Rate for Ms. West.
|
Cost plus 2% - 10% during 2011 Cost plus 2% - 10% during 2012 Cost plus 2% - 10% during 2013 |
|
Hourly Rate for Ms. Frawley
|
Cost plus 2% - 10% during 2011 | |
| Cost plus 2% - 10% during 2012 | ||
| Cost plus 2% - 10% during 2013 |
4
SCHEDULE BA2
ERP-LX & TANGO APPLICATION
NANJING
ERP-LX & TANGO APPLICATION
NANJING
Schedule Intentionally Deleted Prior to Distribution Date
1
SCHEDULE BA3
GLOBAL ENTERPRISE
CONTENT MANAGEMENT
Schedule Intentionally Deleted
Prior to Distribution Date
GLOBAL ENTERPRISE
CONTENT MANAGEMENT
Schedule Intentionally Deleted
Prior to Distribution Date
1
SCHEDULE BA4
GLOBAL VAULT PROFESSIONAL
SERVICES
GLOBAL VAULT PROFESSIONAL
SERVICES
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
| Service Provider | ||||||
| Jason Pratt Xylem Inc. |
(717) 509-2310 | jason.pratt@xyleminc.com | ||||
| Service Receiver Ray Schussler ITT Corporation |
Global Engineering Systems Manager |
(315) 568-7287 |
ray.schussler@itt.com |
GENERAL SERVICE DESCRIPTION
Service Provider will provide Global Vault Professional Services for Service Receiver.
Service Receiver and its Subsidiaries will utilize Service Provider’s resources based on the
functionality, processes, input and output screens, and documents that support the Service
Provider’s business and business processes in the twelve months prior to the Distribution date.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement,
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
1
| Minimum Service | ||||||||||||
| BAU Transaction | Period | |||||||||||
| Service # | Service Name | Description of Service | Volume | (in mo.) | Service Charge | |||||||
IT-Global Vault-01
|
Global Vault Professional Services |
Provide Global Vault Professional Services to support the Windchill/PDMLink, ProjectLink, and MPMLink FMC Standard Product Data Lifecycle Management (PDLM) Platform: | 12 | Time and Materials based on the Additional Pricing Section | ||||||||
•
Windchill/PDMLink,
ProjectLink and
MPMLink FMC Standard
Product Data
Lifecycle Management
(PDLM) Platform
Support & Maintenance
— Service Provider
will receive ticket
requests from Service
Receiver, monitor
incident resolution
requests, and
recommend and
implement incident
resolution per the
SLA outlined in the
Service Level section
of this agreement.
Service Provider will
identify and
communicate breaks in
application
discovered by
automated or
monitoring system,
develop solution and
approach to address
break in application,
and implement fixes
to resolve break in
application. |
Up to 30 hours per Month | |||||||||||
•
Windchill/PDMLink,
ProjectLink and
MPMLink Standard
Product Data
Lifecycle Management
(PDLM) Platform
Database Support —
Service Provider will
receive ticket
requests from Service
Receiver and will
trouble shoot
database related
incidents, maintain
database schema if
necessary, bounce
databases as
required, perform
data cleanup
activities as needed,
monitor and maintain,
provide support for
all database issues
in test/dev
environments, archive
and truncate database
tables as required,
compact databases as
required, compress,
and delete old log
files as needed, and
conduct scheduled
maintenance
activities.
|
||||||||||||
•
Training/Mentoring -
The Service Provider
after receiving a
request from the
Service Receiver,
will provide
Training, Mentoring,
and knowledge about
the ITT
implementation of
Windchill/ PDMLink to
the Service Receiver
|
Up to 20 hours per Month | |||||||||||
Service Provider will be required to:
| • | Maintain staff of United States persons only |
2
Service Volumes Greater Than or Less Than Observed Pre-Distribution Date
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 10% (such activity, including any such 10% deviation,
“Business as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will
accommodate Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities on a
time and materials basis with respect to the one-time set-up fees. The table below will then apply
following the completion of the one-time set-up activities.
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume within
BAU [Note: BAU
already includes +/-
10% of
pre-distribution date
volumes]
|
No incremental one-time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady-State fee structure for requisite service as documented below | ||
Service Volume
greater or less than
BAU
|
Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service |
Ad-Hoc development/services or processing of reports consistent with what was provided prior
to the distribution date will be supported as part of this agreement. Service Provider will use
commercially reasonable efforts based on provider’s current abilities to accommodate regulatory or
legal ad-hoc requests. Ad-hoc requests which may need to be performed to assist Service Receiver
in meeting new legal obligations will be provided on a time and materials basis as described in the
Additional Pricing section of this agreement. Any changes to 3rd party relationships which require
interface modifications or re-writes are not included as part of the scope of this agreement.
Should the Service Receiver require such changes, Parties agree to negotiate in good faith with
regard to such modification. In the event modifications to the services provided are required by
law for only the Service Recipient and such modifications increase the cost for Service Provider,
Service Recipient that requires the modifications shall pay all the additional costs including the
costs for the other Service Recipients.
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
IT-Global Vault-02
|
Global Vault Professional Services Migration |
Service Provider will
make commercially
reasonable efforts to
assist Service
Receiver in exiting
of this agreement.
These efforts
include: |
Time and Materials Based on Additional Pricing Section | |||
• Support of
data extraction
requests from the
Service Receiver |
||||||
• Providing
Subject Matter
Expertise in helping
the Service Receiver
understand current
state data schema and
configuration details
|
3
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
IT-Global Vault-03
|
Global Vault Professional Services Knowledge Transfer |
Service Provider will
provide the following
knowledge transfer
services: |
Time and Materials Based on Additional Pricing Section | |||
• Existing
non-sensitive
documentation
maintained by the
Service Provider will
be given to the
Service Receiver as
it relates to the
Global Vault
Application and
related interfaces
|
Supplemental Services
For requests for supplemental services relating to Global Vault Professional Services by Service
Receiver not mentioned in this Schedule or not included within the costs documented in this
agreement, Service Receiver will provide a discreet project request and submit such request to
Service Provider using the formalized Change Request attached as Annex A for consideration by
Service Provider.
Where notice is required a number of business days prior to some required action by Service
Provider, notice must be received by 12 noon Eastern Time to be counted as received during such
business day. Service Provider shall, within a commercially reasonable period, provide a price
quote to be commercially reasonable based on the current cost of the Services to Service Receiver
taking into account, such items as the specific time the request was made, service delivery
volumes, exit planning activities, and other activities Service Provider is currently engaged in at
the time of the request, but not later than 30 days after the request was made. If Service
Provider, in its sole discretion determines (i) such request would increase the ongoing operating
costs for Service Provider (as a service recipient) or any other service receiver or (ii) that it
is not capable of making such changes with its current staff during the time period requested
without interrupting the Services provided to itself or any other service receiver. Service
Provider need not provide a price quote or perform the services. Where a price quote is provided,
Service Provider shall provide the service requested upon acceptance of the price.
PREREQUISITES/DEPENDENCIES
| • | If Service Receiver, or the Service Receiver’s Supplier(s), sends inaccurate information to Service Provider, it will be the responsibility of the Service Receiver to rectify any problems and bear any costs incurred to rectify the issue. | ||
| • | Service Receiver will remove all Service Receiver data from the Service Provider’s Global Vault instance. These services are included at $0 cost. | ||
| • | Service Provider will remove all Service Provider data from the Service Receiver’s Global Vault instance. These services are included at $0 cost. | ||
| • | Service Receiver must provide VPN access for specific Service Provider users to the Service Receiver’s servers. Service Provider must provide VPN access for specific Service Receiver users to the Service Provider’s servers. VPN access will be provided to allow data cleanup and removal. |
4
| • | Service Receiver must provide access, via secure VPN at all times or additional ports, to allow up to 10 Service Provider staff members to gain access to the Global Vault environment. The Service Receiver will need to provide these Service Provider staff members with the appropriate elevated privileges needed to complete the services requested, this will be required for the period of this TSA and should be consistent with the policies and procedures set forth by Service Receivers Service Delivery organization. | ||
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. |
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the
following addresses (with an email copy to the Service Owners set forth above):
If to the Service Provider:
Xylem Inc.
240 Fall Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
Xylem Inc.
240 Fall Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
If to the Service Receiver:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
SERVICE LEVEL
Service Provider will classify incidents at its own discretion. Such
classifications shall be consistent with the priorities Service Provider set
for itself as a recipient of services.
In the event incidents cannot be resolved, Service Provider shall promptly
notify Service Receiver and work together to try and resolve such incidents.
5
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year. These
rates apply to internal Service Provider employees only, and should external resources be required,
the costs for those external resources will be reviewed with the Service Receiver prior to
execution of the project.
Additional Pricing Rates (All in USD)
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
6
Annex A
TSA Change Request Form
TSA Change Request Form
TSA Schedule:
|
||
Receiver TSA Owner: |
||
Date of Request: |
||
Completed By: |
Requested Service Change:
| Already agreed to | ||||||||||
| Service Description | with Service | |||||||||
| Item Number | (Listed on schedule in the TSA) | Monthly Charge | Requested Change | Provider (Y/N) | ||||||
1
|
||||||||||
2 |
||||||||||
3 |
||||||||||
4 |
||||||||||
5 |
Outcome:
| Outcome | ||||
| Item Number | (Approved, Denied) | Specific Action to be taken | ||
1
|
||||
2 |
||||
3 |
||||
4 |
||||
5 |
Approvals
Approved By:
|
Approved By: | |
Provider TSA Functional Lead
|
Receiver TSA Functional Lead | |
Executive Representative:
|
Executive Representative: | |
Provider TSA Manager
|
Receiver TSA Manager |
7
SCHEDULE BA5
SUPPLIER PORTAL
SUPPLIER PORTAL
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
| Cecilia Akesson Xylem Inc. |
Team Leader | +46 471 247994 | cecilia.akesson@xyleminc.com | |||
| Kevin Loucks ITT Corporation |
Manager, Transition Management Office |
(315) 568-7770 | kevin.loucks@itt.com |
GENERAL SERVICE DESCRIPTION
Service Provider will perform Supplier Portal Support Services for Service Receiver.
Service Receiver and its Subsidiaries will utilize Service Provider’s resources based on the
functionality, processes, input and output screens, and documents that support the Service
Provider’s business and business processes in the twelve months prior to the Distribution date.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement,
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
1
| Minimum Service | ||||||||||
| BAU Transaction | Period | |||||||||
| Service # | Service Name | Description of Service | Volume | (in mo.) | Service Charge | |||||
IT-Supplier
Portal-01
|
Supplier Portal Application Support Services | Provide ongoing Supplier Portal service and application support: | 93,000 Purchase Orders Annually | 18 | Cost plus 2% - 10% per mon | |||||
• Supplier
Portal Processing —
The Service Provider
will operate the
Supplier Portal such
that the Service
Receiver’s staff and
Suppliers can access
the Supplier Portal
via the Web. The
Service Receiver’s
Suppliers access the
Supplier Portal to
review, create and
update various types
of Purchasing and
Shipping information
necessary to review
Purchase Orders;
create and send Order
Response, receive
Order Changes, review
Order
Acknowledgements,
review Supplier Data,
create Dispatch
Advice, and review
Goods Received
messages that
transmit to and from
the Service
Receiver’s ERP/MRP
system. |
||||||||||
• The Service
Provider’s Supplier
Portal will receive
Supplier Data
messages from the
Service Receiver’s
ERP/MRP system, and
create or update
Supplier Information
within the Supplier
Portal. An email is
sent back to the
Service Receiver
acknowledging the
updates. |
||||||||||
• The Service
Provider’s Supplier
Portal will receive
Purchase Order
Register, Change and
Cancel messages from
the Service
Receiver’s ERP/MRP
system, to create or
change Purchase Order
information within
the Supplier Portal.
The Service
Provider’s Supplier
Portal sends an email
notification to the
designated Service
Receiver’s Supplier.
• The Service
Provider’s Portal
will allow the
Service Receiver’s
Suppliers to
acknowledge the
Orders on the
Supplier Portal, and
will send Order
Response messages to
the Service
Receiver’s ERP/MRP
system. |
||||||||||
• The Service
Provider’s Portal
will receive Order
Acknowledgement
messages from the
Service Receiver’s
ERP/MRP system, and
update and reflect
this on the Supplier
Portal. |
||||||||||
• The Service
Provider’s Supplier
Portal allows the
Receiver’s Suppliers
to create and update
Dispatch Advice
information in the
Supplier Portal, the
Supplier Portal sends
Dispatch Advice
messages to the
Service Receiver’s
ERP/MRP system. The
Supplier Portal, for
Bookings with ‘No
Invoice Control’,
will generate a PDF
report file, and
print it to a
designated default
printer at the
Service Receiver’s
Supplier’s Forwarder.
In |
2
| Minimum Service | ||||||||||
| BAU Transaction | Period | |||||||||
| Service # | Service Name | Description of Service | Volume | (in mo.) | Service Charge | |||||
addition, the
Supplier Portal will,
once a Supplier has
created a shipment
and dispatched it,
create a packing
information
(Flag/Label) PDF
report and print it
on the designated
default printer that
the Supplier has set
up within the
Supplier Portal. |
||||||||||
• The Service
Provider’s Supplier
Portal will receive
Goods Received
messages and create
and update this
information in the
Supplier Portal. |
||||||||||
• The Service
Provider’s Supplier
Portal allows the
Service Receiver’s
Supplier to create
and update an Invoice
within the Service
Provider’s Supplier
Portal, the Supplier
Portal transmitts the
Invoice to the
Service Receiver’s
ERP/MRP system. |
||||||||||
• When the Service
Provider’s Supplier
Portal identifies a
corrupt message or
one with invalid or
bad data, the Service
Provider’s Supplier
Portal will generate
and send an email to
the designated
Service Receiver
contact. The Service
Receiver determines
how best to correct
the invalid message. |
1,700 emails Monthly | |||||||||
• Access to
Supplier Portal
Application —
Service Provider will
provide access to
application for
authorized Service
Receiver Suppliers
and staff per the
security guidelines
outlined in the
Master Services
Agreement. Service
Provider will create
new application and
database users
pre-approved by
Service Recipient,
maintain application
and database
passwords, maintain
application and
database security to
meet security and
controls guidelines
identified in Master
Services Agreement,
as well as monitor
and restrict
unauthorized access
to source code and
data. Service
Provider will
maintain production
batch schedule,
execute batch jobs,
assess impact of
failed batch jobs,
and adjust schedule
to account for batch
job failures and
delays. Service
Provider will execute
web server and
application server
configuration
changes, monitor and
maintain application
administration Cron
jobs and shell
scripts. |
||||||||||
• Supplier
Portal Support &
Maintenance —
Service Provider will
monitor incident
resolution requests
from the Service
Receiver’s Superusers
and Staff, and
recommend and
implement incident
resolution per the
SLA outlined in the
Service Level section
of this agreement.
Service Provider will
identify and
communicate breaks in
application
discovered by
automated or
monitoring system,
develop solution and
approach to address
break in application,
and implement fixes
to resolve break in
application. |
150 Incidents Annually | |||||||||
• Supplier
Portal Database
Support — Service
Provider will monitor
incident resolution requests, and
recommend and
implement incident
resolution |
3
| Minimum Service | ||||||||||||
| BAU Transaction | Period | |||||||||||
| Service # | Service Name | Description of Service | Volume | (in mo.) | Service Charge | |||||||
| per the SLA outlined in the Service Level section of this agreement. Service Provider will identify and communicate breaks in application discovered by automated or monitoring system, develop solution and approach to address break in application, and implement fixes to resolve break in application. | ||||||||||||
Service Volumes Greater Than or Less Than Observed Pre-Distribution Date
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 10% (such activity, including any such 10% deviation,
“Business as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will
accommodate Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities on a
time and materials basis with respect to the one-time set-up fees. The table below will then apply
following the completion of the one-time set-up activities.
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume within
BAU [Note: BAU
already includes +/-
10% of
pre-distribution date
volumes]
|
No incremental one-time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady-State fee structure for requisite service as documented below | ||
Service Volume
greater or less than
BAU
|
Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service |
Ad-Hoc development/services or processing of reports consistent with what was provided prior
to the distribution date will be supported as part of this agreement. Service Provider will use
commercially reasonable efforts based on provider’s current abilities to accommodate regulatory or
legal ad-hoc requests. Ad-hoc requests which may need to be performed to assist Service Receiver
in meeting new legal obligations will be provided on a time and materials basis as described in the
Additional Pricing section of this agreement. Any changes to 3rd party relationships which require
interface modifications or re-writes are not included as part of the scope of this agreement.
Should the Service Receiver require such changes, Parties agree to negotiate in good faith with
regard to such modification. In the event modifications to the services provided are required by
law for only the Service Recipient and such modifications increase the cost for Service Provider,
Service Recipient that requires the modifications shall pay all the additional costs including the
costs for the other Service Recipients.
4
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
IT-Supplier Portal-03 |
Supplier Portal Migration |
Service Provider will
make commercially
reasonable efforts to
assist Service
Receiver in exiting
of this agreement.
These efforts
include: |
Time and Materials Based on Additional Pricing Section | |||
• Support of
data extraction
requests from the
Service Receiver |
||||||
• Providing
Subject Matter
Expertise in helping
the Service Receiver
understand current
state data schema and
configuration details
|
||||||
IT-Supplier Portal-04 |
Supplier Portal Training |
Service Provider will
provide the following
education and
training services: |
Time and Materials Based on Additional Pricing Section | |||
• Provide
training and
education to the
Service Receiver’s
staff to enhance
their capability to
stand alone and
manage a Portal
|
||||||
IT-Supplier Portal-05 |
Supplier Portal Knowledge Transfer |
Service Provider will
provide the following
knowledge transfer
services: |
Time and Materials Based on Additional Pricing Section | |||
• Existing
non-sensitive
documentation
maintained by the
Service Provider will
be given to the
Service Receiver as
it relates to the
Supplier Portal
Application and
related interfaces
|
Supplemental Services
For requests for supplemental services relating to Supplier Portal Applications by Service Receiver
not mentioned in this Schedule or not included within the costs documented in this
agreement, Service Receiver will provide a discreet project request and submit such request to
Service Provider using the formalized Change Request attached as Annex A for consideration by
Service Provider.
Where notice is required a number of business days prior to some required action by Service
Provider, notice must be received by 12 noon Eastern Time to be counted as received during such
business day. Service Provider shall, within a commercially reasonable period, provide a price
quote to be commercially reasonable based on the current cost of the Services to Service Receiver
taking into account, such items as the specific time the request was made, service delivery
volumes, exit planning activities, and other activities Service Provider is currently engaged in at
the time of the request, but not later than 30 days after the request was made. If
Service Provider, in its sole discretion determines (i) such request would increase the ongoing
5
operating costs for Service Provider (as a service recipient) or any other service receiver or (ii)
that it is not capable of making such changes with its current staff during the time period
requested without interrupting the Services provided to itself or any other service receiver.
Service Provider need not provide a price quote or perform the services. Where a price quote is
provided, Service Provider shall provide the service requested upon acceptance of the price.
LOCATIONS
Services are initially provided from Emmaboda, Sweden to ITT co. global locations.
PREREQUISITES/DEPENDENCIES
| • | Service Receiver will maintain the applications and interfaces documented in Attachment A, within the Service Receiver’s systems and applications. | ||
| • | If Service Receiver, or the Service Receiver’s Supplier(s), sends inaccurate data to Service Provider, it will be the responsibility of the Service Receiver to rectify any problems and bear any costs incurred to rectify the issue. | ||
| • | The Service Receiver will continue to utilize and have available a Supplier Portal Superuser (senior buyer and business expert) to provide first line support for the Supplier Portal. | ||
| • | The Service Receiver’s Staff will need to have the Citrix client installed on their PC devices. | ||
| • | The Service Receiver’s must have one of the following ERP/MRP systems active in order to utilize the Service Provider’s Supplier Portal: Business Planning and Control System (BPCS), Planning Resource Management System (PRMS) or IDMS B&G systems. | ||
| • | Service Receiver, in a separate and independent agreement, must have Websphere MQ systems active and maintained with the correct interfaces and data feeds to Supplier Portal by the Service Receiver for the period of time in which this agreement is in effect. | ||
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. |
6
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the following addresses (with an email copy to the Service Owners set forth above):
If to the Service Provider:
Xylem Inc.
2881 E Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
Xylem Inc.
2881 E Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
If to the Service Receiver:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
SERVICE LEVEL
Service Provider will classify incidents at its own discretion. Such
classifications shall be consistent with the priorities Service Provider set
for itself as a recipient of services.
The Service Provider will provide support services during Swedish Office Hours,
Monday through Thursday from 7:30am to 4:30pm, and on Friday from 7:30am to
1:30pm Swedish time. Incidents logged after Swedish Office Hours will be
addressed on the start of the next support day.
In the event incidents cannot be resolved, Service Provider shall promptly
notify Service Receiver and work together to try and resolve such incidents.
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year. These
rates apply to internal Service Provider employees only, and should external resources be
7
required, the costs for those external resources will be reviewed with the Service Receiver prior to
execution of the project.
Additional Pricing Rates (All in USD)
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
8
ATTACHMENT A
| Destination | ||||||
| Message Name | Business Purpose | Source System | System | |||
Supplier
|
Service Receiver Creates and Maintain Supplier data in the Supplier Portal | Service Receiver MRP/ERP |
Supplier Portal | |||
Orders
|
Service Receiver submits Purchase Orders to their Suppliers, via the Supplier Portal | Service Receiver MRP/ERP |
Supplier Portal | |||
Order Response
|
Supplier communicates to Service Receiver that the Order has been acknowledged | Supplier Portal | Service Receiver MRP/ERP |
|||
Order Response Acknowledgement |
Service Provide communicates to their Supplier that the Service Provider acknowledges the Response from their Supplier | Service Receiver MRP/ERP |
Supplier Portal | |||
Dispatch advice
|
Supplier communicates to the Service Receiver when the Purchase Order has been fulfilled, manufactured and/or Packed. Supplier communicates to the Service Receiver Pickup Orders, Ship Dates, and VMI Goods collection notifications | Supplier Portal | Service Receiver ERP/MRP |
|||
Good Received
|
Service Receiver communicates to their Supplier that the Shipment has been received | Service Receiver ERP/MRP |
Supplier Portal | |||
Invoice
|
Supplier communicates to the Service Receiver a Invoice for payment | Supplier Portal | Service Receiver ERP/MRP |
9
Annex A
TSA Change Request Form
TSA Change Request Form
TSA Schedule:
|
||
Receiver TSA Owner: |
||
Date of Request: |
||
Completed By: |
Requested Service Change:
| Already agreed to | ||||||||
| Service Description | with Service | |||||||
| Item Number | (Listed on schedule in the TSA) | Monthly Charge | Requested Change | Provider (Y/N) | ||||
1
|
||||||||
2 |
||||||||
3 |
||||||||
4 |
||||||||
5 |
Outcome:
| Outcome | ||||
| Item Number | (Approved, Denied) | Specific Action to be taken | ||
1
|
||||
2 |
||||
3 |
||||
4 |
||||
5 |
Approvals
Approved By:
|
Approved By: | |
Provider TSA Functional Lead
|
Receiver TSA Functional Lead | |
Executive Representative:
|
Executive Representative: | |
Provider TSA Manager
|
Receiver TSA Manager |
10
SCHEDULE BA6
SERVICES TSA ANNEX FOR
AXMINSTER
SERVICES TSA ANNEX FOR
AXMINSTER
SERVICE OWNER
All service matters and general inquiries regarding this service should be directed to the
following service owners:
| Name | Title | Phone | ||||
| Service Provider Lowara UK Ltd. Duncan Lewis |
General Manager | +44(0) 1297 630209 | Duncan.Lewis@xyleminc.com | |||
| Service Recipient ITT Industries Ltd. John Veness |
General Manager | +44(0) 1297 630247 | John.Veness@itt.com |
PARTIES TO THE AGREEMENT
| 1. | Service Provider: Lowara UK Ltd. | |
| 2. | Service Recipient: ITT Industries Ltd. |
GENERAL SERVICE DESCRIPTION
| 1. | Pump Testing Services | |
| 2. | Information Technology Services | |
| 3. | Finance Support Services |
TERM AND OPTION
| 1. | 24 months — Commencing on the date of the separation into 3 companies | |
| 2. | Service Recipient will have the option to terminate this agreement at any time after the 1st 12 months with 6 months advance written notice to the Service Provider. |
1
SERVICES TO BE PROVIDED
| 1. | Pump Testing Services |
| a. | ITT personnel shall follow Lowara’s written pump test procedures when conducting tests. | ||
| b. | ITT personnel who will use the test area must regularly attend an induction course on Lowara’s environmental, safety & health (ESH) procedures. | ||
| c. | Only the ITT personnel who have been trained in these regular ESH induction courses shall be eligible to carry out pump tests. | ||
| d. | All ITT personnel and items/pumps that will use the test area must be logged into and out of the Lowara facility in accordance with Lowara’s entrance and exit policies for non Lowara personnel. | ||
| e. | Service recipient shall carry out a risk assessment in accordance with service provider’s on each occasion that recipient utilizes the test area. | ||
| f. | The test area must be left in the same condition post testing as it was prior to the testing. | ||
| g. | Lowara personnel working near the test area will not oversee or assist in the pump testing. |
| 2. | Information Technology Services. |
Primary IT support for ITT will come from the ITT IT organization which will have a
representative in Basingstoke. In addition, the ITT Technical Assistance Center (TAC)
resources (telephonic) will also be available to ITT. If emergency local support is
required for ITT personnel at the Axminster site, Lowara may provide assistance under the terms
of the “Reasonable Cooperation” clause found in the Master Services Agreement.
The procedure for ITT to engage local support from Lowara shall be to contact the ITT IT
resource in Basingstoke or the ITT TAC. The Basingstoke representative or the ITT TAC will then
contact Lowara’s IT resource center in order to request this assistance. On-site assistance
will be provided if local resources are available. The hourly charge for this support shall be
Cost plus 2% - 10% as described below in the “Pricing & Payment Terms” section of this document.
| 3. | Finance Services |
ITT may require assistance from the Lowara, UK and/or the Montecchio, Italy Finance department
which will be available to provide additional training on the BPCS system. In the event that
ITT encounters issues, the Lowara finance dept will have the support of the RCW Lowara IT
resources in Axminster, UK and Montecchio, Italy to provide troubleshooting and support to the
ITT BPCS group.
2
LOCATIONS
1. Lowara facility located at the following address:
Lowara UK Ltd.
Millwey Rise Industrial Estate
Axminster EX13 5HU, United Kingdom
Millwey Rise Industrial Estate
Axminster EX13 5HU, United Kingdom
PREREQUISITES/DEPENDENCIES
| 1. | Real Estate Sublease is in effect. | |
| 2. | Service Recipient will follow all of Service Provider’s Environmental, Safety, & Health (ES&H) policies and procedures while using the pump testing facilities. Service Provider will provide its ES&H written policies to Service Recipient at the outset of this agreement and agrees to provide overview training prior to the Service Recipient’s use of the pump testing facilities. | |
| 3. | Service Recipient’s customers will be granted access to the test facility along with Service Recipient’s representatives for a customer witnessed pump test. | |
| 4. | Service recipient is precluded from hiring Service Provider’s employees that may provide these services under this agreement for the duration of this agreement plus an additional 1 year after the agreement is terminated. | |
| 5. | In the event of 3rd party claims against Service Recipient which are unrelated to this agreement, the Service Recipient agrees to indemnify the Service Provider for any costs that the Service Provider may incur in the event that the 3rd party elects to also claim damages against the Service Provider because of their relationship with the Service Recipient. The Service Recipient also agrees to defend the Service Provider at is sole cost the extent permitted to do so under United Kingdom law. |
TAX STATUS
| 1. | Service Provider — Payments received under the terms of this agreement will be considered taxable income in the United Kingdom | |
| 2. | Service Recipient — Payments made under the terms of this agreement will be tax deductible in the United Kingdom | |
| 3. | VAT of the current rate % of the invoice amount will be charged by the service provider to the service recipient |
3
BILLING LOCATION
| Lowara UK Ltd. Millwey Rise Industrial Estate Axminster EX13 5HU, United Kingdom |
SERVICE LEVEL
| 1. | Service Provider agrees to use reasonable care and diligence in the fulfillment of all services described above. Service Provider also agrees that it will promptly carry out services based on reasonable business practices and judgment. |
NOTICES
All correspondence with respect to this agreement should be sent to the Service Owners
listed above.
NOTICE REQUIREMENTS
| Prior Notice Requirement to | ||||
| No. | Third Party Provider | Terminate Service | ||
| N/A | None required | See Term and Option above | ||
PRICING & PAYMENT TERMS
| 1. | The hourly fixed charge for use of the pump testing area shall be Cost plus 2% - 10% per hour for the term of this agreement — payable in British Pounds. The Cost plus 2% - 10% per hour rate is subject to increase up to 6.0% per year if Service Provider deems this necessary to support the testing needs of the Service Recipient. |
4
| 2. | The hourly fixed charge for Information Technology services and Finance Support services will be Cost plus 2% - 10% per hour for the term of this agreement — Payable in British Pounds. | |
| 3. | The fixed hourly rate of Cost plus 2% - 10% per hour shall be the minimum charge. Partial hour charges will be rounded up to include the entire hour. For example, a service provided in 2 hours and 20 minutes will be charged at 3 hours or Cost plus 2% - 10%. | |
| 4. | Invoices will be prepared monthly and mailed to the service provider via email. Invoices shall include the date services were provided, the name(s) of the person(s) who provided the service, the number of hours spent providing the service, and the description of the product that was tested where applicable. | |
| 5. | There will be no additional backup attached to these invoices. | |
| 6. | Invoice payment terms are net 30 days from invoice date. | |
| 7. | During the term of this TSA Schedule, no additional 2%, 10% or 4.5% increase in the pricing as set forth above should be applied pursuant to Section 2(a)(i) of the Agreement. |
5
SCHEDULE BA7
TEST AND PAINT SERVICES TSA IN
NANJING
TEST AND PAINT SERVICES TSA IN
NANJING
SERVICE OWNER
All service matters and general inquiries regarding this service should be directed to:
| Name | Title | Phone | ||||
Service Provider’s Contact ITT Nanjing Co, Ltd (Xylem Nanjing) Harald Rach |
General Manager ITT Nanjing Co., Ltd. (Xylem Nanjing) Longyang Road, Luhe Economic Development Area, Luhe District, Nanjing, Jiangsu Province, China |
+86 25 5719 5050 |
Harald.rach@xyleminc.com |
|||
Service Recipient’s Contact IP China/Shanghai Goulds Pumps Carter Chan |
General Manager, IP China ITT (China) Investment Company Limited 30F Tower A, City Center of Shanghai, 100 Zunyi Road Shanghai 200051 |
+86 21 22082888 x6188 |
Carter.Chan@itt.com |
PARTIES TO THE AGREEMENT
| 1. | Service Provider — ITT Nanjing Co., Ltd (Xylem Nanjing) | ||
| 2. | Service Recipient — IP China / Shanghai Goulds Pump |
1
GENERAL SERVICE DESCRIPTION
Service Provider to provide pump testing and pump painting services to Service Recipient.
Pumping testing and pump painting; Agreement to last until October 31, 2013
Testing service for VIT pumps and other pumps; Painting service for all pumps
TERM AND OPTION
| 1. | Maximum Service Period — 24 months — Commencing on the Distribution date. | ||
| 2. | The Hourly rates are set forth below under Pricing & Payment Terms. There is an escalation in price after the 1st 12 months, as set forth in the pricing terms. | ||
| 3. | Service Recipient will have the option to terminate this agreement, with no additional make-whole fee as required by Section 11(b) of the Agreement, after the 1st 12 months with 1 month advance written notice to the Service Provider | ||
| 4. | This agreement cannot be extended beyond the term of 24 months. |
SERVICES TO BE PROVIDED
| 1. | Testing of IP China / SGP products |
| a. | Service Provider provides Service Recipient full access to the test bed and infrastructure to fully test pumps and other related products | ||
| b. | Service Provider also provides tools, equipment and personnel to fully validate a product as required by Service Recipient. | ||
| c. | Service Provider also fully tests the products per instructions from Service Recipient or its customers or its agents | ||
| d. | Service Provider provides full report(s) on the results of the test and performance of the products | ||
| e. | Service Provider personnel will take control of the products at the loading dock and transfer the products to the test bed, install them on the test bed, fully test the products, remove the products and package them and return as required by Service Recipient | ||
| f. | Service Recipient or its agents or its customers will have access to the products while they are being prepared for testing, while products are being tested and while the products are being processed for return to Service Recipient | ||
| g. | Service Recipient or its agents or its customers will have access to the control room in order to witness the test. | ||
| h. | Only Service Provider personnel are allowed to run the test and operate all tools, machinery and controls related to the testing of these products |
| 2. | Painting of IP China / SGP products |
| a. | Service Provider provides paint services to Service Recipient utilizing existing paint booths at the Nanjing factory | ||
| b. | Service Provider provides paint services according to Service Recipient requirements as agreed in the individual orders placed by Service Recipient |
2
| c. | Service Provider personnel will take control of the products at the loading dock and transfer the products to the paint booth, prep the products properly before installing them in the paint booth, fully paint the products, remove the products from the paint booth and package them and return as required by Service Recipient | ||
| d. | Service Recipient or its agents will have access to the products before and after the painting process in order to witness and accept the painted product. |
| 3. | Service Provider and Service Recipient agree on lead-times for testing and painting of each product at the time of placing of the order. Service Provider will make reasonable efforts to comply with the agreed lead-time and will communicate with the Service Recipient if there are any delays in fulfilling the order. | ||
| 4. | For any possible later delivery, the Service Provider shall notify IP in advance and both parties shall agree on an Extended Schedule for such delivery. If the delivery is still not made according to the Extended Schedule, the Service Provider shall pay $50/day as later delivery penalty, but not exceed the total test value. |
LOCATIONS
Service Provider factory is located at the following address:
Longyang Road, Luhe Economic Development Area, Luhe District, Nanjing, Jiangsu
Province, China
TAX STATUS
| 1. | Service Provider — Payments received under the terms of this agreement will be considered taxable income in China | ||
| 2. | Service Recipient — Payments made under the terms of this agreement will be tax deductible in China |
3
PREREQUISITES/DEPENDENCIES
| 1. | After the termination of this agreement, it may be necessary from time to time for the Service Provider, on behalf of the Service Recipient, to respond to inquiries made by customers or government authorities about Service Recipient’s financial statements and tax filings, including providing support for audits. In this event, the Service Provider will contact the Service Recipient and agree on an appropriate course of action and response. To the extent that Service Provider’s resources are to be used to respond to the inquiries, after the TSA ends, the Service Provider will be entitled to invoice the Service Recipient at the following rates per hour provided if assistance is needed under this section after 2012, the parties will renegotiate such rates in good faith; |
| a. | Clerical — US$ Cost plus 2% - 10% | ||
| b. | Professional — US$ Cost plus 2% - 10% | ||
| c. | Management — US$ Cost plus 2% - 10% |
| 2. | At the termination of this agreement, the Service Recipient will provide the necessary support at its own expense to transfer data to its own systems. The Service Provider will agree to provide training to the Service Recipient’s employees on the Service Provider’s premises or via conference call / web ex prior to the termination of the agreement. The Service Provider will not be required to send any of its employees to any other Service Recipient location. | |
| 3. | In the event of 3rd party claims against the Service Recipient which are unrelated to this agreement, the Service Recipient agrees to indemnify the Service Provider for any costs that the Service Provider may incur in the event that the 3rd party elects to also claim damages against the Service Provider because of their relationship with the Service Recipient. The Service Recipient also agrees to defend the Service Provider at its sole cost to the extent permitted to do so under Chinese Law. |
BILLING LOCATION
NOTICES
NOTICES
All correspondence with respect to this agreement should be sent to the Service Owners
listed above with copies to the following;
Service Provider — Dan Kelly
1133 Westchester Avenue
Suite 2000
White Plains, NY 10605
1133 Westchester Avenue
Suite 2000
White Plains, NY 10605
Service Recipient — Joanne Scalard
1133 Westchester Ave
Suite 3000
White Plains, NY 10605
1133 Westchester Ave
Suite 3000
White Plains, NY 10605
4
NOTICE REQUIREMENTS
| Prior Notice Requirement to | ||||
| No. | Third Party Provider | Terminate Service | ||
PRICING & PAYMENT TERMS
| 1. | The hourly fixed charge for testing services provided under this TSA |
| a. | Specified by model as described in the attached table | ||
| b. | The hourly rate has an escalation as described in the table |
| 2. | The hourly fixed charge for painting services provided under this TSA |
| a. | Specified by model as described in the attached table | ||
| b. | The hourly rate has an escalation as described in the table |
| 3. | Refer to the attached MS-Excel pricing document for the pricing details | |
| 4. | All Invoices are payable in Chinese Yuan (RMB). | |
| 5. | Invoices will be prepared monthly and mailed to the service recipient via email or regular mail. | |
| 6. | The 1st invoice will be dated on the last day of the financial closing in November 2011 | |
| 7. | Invoice payment terms are net 30 days from invoice date. | |
| 8. | Subsequent invoices will follow every 30 days as long as there is activity. If Service Recipient don’t use any testing services in any given month, Service Provider doesn’t have to provide an invoice. |
5
Performance test routing time for IP products
| Need | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| hoisting | Final | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| machine | Final TSA | TSA | Final TSA | TSA | TSA | |||||||||||||||||||||||||||||||||||||||||||||||||||
| outside, 1 | TSA Rate | TSA | Price | TSA Rate | Testing | Price | TSA Rate | Testing | Price | |||||||||||||||||||||||||||||||||||||||||||||||
| work day | Total time | 2011 | Testing | S&H | (USD) | 2012 | Price | S&H | (USD) | 2013 | Price | S&H | (USD) | |||||||||||||||||||||||||||||||||||||||||||
| Model | per unit | (Hr.s) | (USD/hr) | Price (USD) | Rate | 2011 | (USD/hr) | (USD) | Rate | 2012 | (USD/hr) | (USD) | Rate | 2012 | ||||||||||||||||||||||||||||||||||||||||||
| No | 1.67 | Cost plus 2% - 10% |
Cost plus 2% - 10% |
Cost plus 2% - 10% |
Cost plus 2% - 10% |
Cost plus 2% - 10% |
Cost plus 2% - 10% |
Cost plus 2% - 10% |
Cost plus 2% - 10% |
Cost plus 2% - 10% |
Cost plus 2% - 10% |
Cost plus 2% - 10% |
Cost plus 2% - 10% |
|||||||||||||||||||||||||||||||||||||||||||
| 1.67 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||||||||||||||||||||||||
| 1.67 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||||||||||||||||||||||||
| No | 1.87 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | |||||||||||||||||||||||||||||||||||||||||||
| 1.87 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||||||||||||||||||||||||
| 1.87 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||||||||||||||||||||||||
| 1.87 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||||||||||||||||||||||||
| No | 1.87 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | |||||||||||||||||||||||||||||||||||||||||||
| 1.87 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||||||||||||||||||||||||
| 1.87 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||||||||||||||||||||||||
| 1.87 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||||||||||||||||||||||||
| No | 2.07 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | |||||||||||||||||||||||||||||||||||||||||||
| 2.07 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||||||||||||||||||||||||
| No | 2.07 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | |||||||||||||||||||||||||||||||||||||||||||
| 2.07 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||||||||||||||||||||||||
| 2.07 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||||||||||||||||||||||||
| No | 2.07 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | |||||||||||||||||||||||||||||||||||||||||||
| 2.07 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NO | 4.67 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | |||||||||||||||||||||||||||||||||||||||||||
| No | 4.67 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | |||||||||||||||||||||||||||||||||||||||||||
| yes, when the length from bowl bottom to up discharge head is over 5.5m | 7.87 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | |||||||||||||||||||||||||||||||||||||||||||
Note:
| l. | Hydro-test by IP supplier and seal test by IP operators so the list | |
| 2. | The test cost is only for performance test not including noise . | |
| 3. | Special flushing pipe of outside should be assembled by IP | |
| 4. | For big VIT pumps, need large equipment and needs outsourcing. To be considered case by case |
6
Painting routing time for IP products
| Painting Time | TSA Rate 2011 | TSA Painting | TSA Rate 2012 | TSA Painting | TSA Rate 2012 | TSA Painting | ||||||||||||||||||||||
| Model | (Hr.s) | (USD/hr) | Price (USD) | (USD/hr) | Price (USD) | (USD/hr) | Price(USD) | |||||||||||||||||||||
| 0.6 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||
| 0.7 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||
| 0.8 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||
| 0.7 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||
| 0.8 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||
| 0.9 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||
| 1.2 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||
| 0.7 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||
| 0.8 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||
| 0.9 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||
| 1.2 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||
| 1 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||
| 1.5 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||
| 0.8 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||
| 1 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||
| 1.2 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||
| 0.6 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||
| 0.8 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||
| 3 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||
| 4 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||
| 4.5 | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | Cost plus 2% - 10% | ||||||||||||||||||||||
7
SCHEDULE BA8
SERVICES TSA SCHEDULE FOR
CHIHUAHUA
SERVICES TSA SCHEDULE FOR
CHIHUAHUA
SERVICE OWNER
All service matters and general inquiries regarding this service should be directed to:
| Name | Title | Phone | ||||
Service Provider Kacy Litzy |
VP Director Global Operations | (661) 714 6295 | Kacy.litzy@xyleminc.com | |||
| Service Recipient Alan Gilden |
Valencia Director of Operations | (661) 295 4003 | Alan.gilden@itt.com |
PARTIES TO THE AGREEMENT
| 1. | Service Provider — Flow Control LLC | |
| 2. | Service Recipient — Aerospace Controls LLC |
GENERAL SERVICE DESCRIPTION
| 1. | Pass through of American Industries shelter plan expenses | |
| 2. | IT Services | |
| 3. | Environmental Health and Safety Services |
TERM AND OPTION
| 1. | Minimum Service Period — 6 months — Commencing on the Distribution Date | |
| 2. | The Monthly Costs are set forth below under Pricing & Payment Terms. The Service Recipient and Service Provider agree that, except as set forth in this Services TSA Schedule for Chihuahua (“this TSA”) no additional 2%, 10% or 4.5% increase in such pricing should be applied as set forth in Section 2(a)(i) of the Agreement. | |
| 3. | Service Recipient shall have the option to renew at 1.15 times the monthly fixed charge as noted below for an additional 3 months if written notice is provided 60 days prior to the end of the Minimum Service Period. Service Recipient will have the option to terminate this agreement at any time, with no additional make-whole fee as required by Section 11(b) of the Agreement with 1 months advance written notice to the Service Provider |
1
SERVICES TO BE PROVIDED
| 1. | Pass through of American Industries (the Shelter Plan Company) expenses including but not limited to the following; |
| a. | Manage relationships with all Mexico government agencies | ||
| b. | Human Resources |
| i. | Recruit, selection and hiring of required personnel | ||
| ii. | Labor administration |
| 1. | Employee contracts | ||
| 2. | Employee badge administration | ||
| 3. | Compensation package | ||
| 4. | Promotion policies & employee transfers | ||
| 5. | Maintain employee records | ||
| 6. | Employee conflict resolution | ||
| 7. | Manage relationship with Labor Board | ||
| 8. | Instruct personnel supervisors | ||
| 9. | Develop and manage collective work agreement | ||
| 10. | Ensure compliance with labor laws | ||
| 11. | Negotiate with labor union | ||
| 12. | Xpat support and administration |
| iii. | Conduct required personnel training | ||
| iv. | Payroll Services |
| 1. | Collect weekly payroll and timekeeping data | ||
| 2. | Gather supervisor approvals | ||
| 3. | Process payroll | ||
| 4. | Input of new hires into payroll system | ||
| 5. | Process employee terminations | ||
| 6. | Manage savings fund program | ||
| 7. | Administer food coupons | ||
| 8. | Make required payroll tax payments | ||
| 9. | Provide cost per hour reports on line | ||
| 10. | Timely payments to employees | ||
| 11. | Maintain payroll and HR software |
| v. | Employee retention programs |
| 1. | Administer all employee retention programs (cafeteria, social security, medical, loans, day care etc) |
| vi. | Infirmary Coordination |
| 1. | Manage dispensary services | ||
| 2. | Manage disability cases | ||
| 3. | Maintain medical records | ||
| 4. | Inspect cafeteria services |
| vii. | General Services |
| 1. | Hire and manage cafeteria services |
2
| 2. | Hire and manage transportation services | ||
| 3. | Control access to facility through time and attendance system | ||
| 4. | Address maintenance and cleanliness concerns | ||
| 5. | Address any employee related issues with government agencies |
| c. | Procurement, Accounting and Fiscal |
| i. | Payment of all required Mexico corporate taxes | ||
| ii. | Payment of all required payroll taxes | ||
| iii. | Calculation and administration of employee profit sharing program | ||
| iv. | Maintain fixed asset records | ||
| v. | Process accounts payables (MR0) invoices on a timely basis and pay suppliers | ||
| vi. | Obtain bids and proposals from suppliers and evaluate in a timely manner | ||
| vii. | Manage vendor relationships viii. Issue Purchase Orders to suppliers ix. Track open purchase orders | ||
| x. | Obtain required invoice approvals | ||
| xi. | Code vendor invoices to proper account numbers | ||
| xii. | Process and administrate employee travel expenses | ||
| xiii. | Provide budget and actual spending reports | ||
| xiv. | Maintain relationship with banks and bank account administration | ||
| xv. | Prepare Shelter plan invoices that are sent to the service provider and pro rate expenses if necessary between the service provider and the service recipient | ||
| xvi. | Resolve issues with government auditors | ||
| xvii. | Keep required backup for statutory and audit purposes | ||
| xviii. | Prepare required statutory financial statements and file on a timely basis | ||
| xix. | Maintain general ledger software |
| d. | Freight forwarding activities |
| i. | Southbound |
| 1. | Receive and unload goods in port of entry | ||
| 2. | Verify identification data | ||
| 3. | Prepare wrap and weigh pallets | ||
| 4. | Forward documentation to Mexico customs broker | ||
| 5. | Prepare detailed reports on quantity of bundles on each truck | ||
| 6. | Ensure efficient customs clearance |
| ii. | Northbound |
| 1. | Coordinate with service recipient for disposal of waste material returned from Mexico |
| e. | Import and Export |
| i-Exports |
| 1. | Process pro forma invoice, packing list, pedimento | ||
| 2. | Review above for accuracy | ||
| 3. | Dispatch truck | ||
| 4. | Traffic (Follow of the truck) | ||
| 5. | Invoice review for carriers and Customs brokerage | ||
| 6. | Payment requisitions for services |
| ii-Imports |
| 1. | Review list of goods | ||
| 2. | Classify merchandise |
3
| 3. | Coordinate with counterpart broker | ||
| 4. | Process pro forma invoice, packing list, pedimento | ||
| 5. | Review above for accuracy | ||
| 6. | Dispatch truck |
| iii. | Other Shipments (Valencia) |
| 1. | Review list of goods | ||
| 2. | Classify merchandise | ||
| 3. | Input parts and data to SOE system | ||
| 4. | Coordinate with counterpart broker | ||
| 5. | Process pro forma invoice, packing list, pedimento | ||
| 6. | Review above for accuracy | ||
| 7. | Dispatch truck |
| iv. | Virtual imports exports |
| 1. | Review list of goods | ||
| 2. | Classify merchandise | ||
| 3. | Input parts and data to SOE system | ||
| 4. | Coordinate with counterpart broker | ||
| 5. | Process pro forma invoice, packing list, pedimento | ||
| 6. | Review above for accuracy | ||
| 7. | Dispatch truck |
| v. | In cases of customs inspection, coordinate with inspector for clearance of goods | ||
| vi. | Tracking of open and close Pedimentos | ||
| vii. | Process complimentary Pedimentos to pay duties | ||
| viii. | Prepare paperwork required to comply with Anexo 24 | ||
| ix. | Import / export record keeping | ||
| b. | Provide support for classification of merchandise for US & Mexico customs purposes | ||
| c. | Review import export shipment information for accuracy | ||
| d. | Coordinate shipments and carriers to Service Recipient factories/customers in Mexico | ||
| e. | Coordinate virtual import/exports |
| i. | Coordinate with counterpart broker | ||
| ii. | Review documentation for accuracy | ||
| iii. | Agree with data to be submitted |
| f. | Coordination of customs shipment inspection activities to ensure timely resolution and clearance of goods | ||
| g. | Record keeping | ||
| i. | Ensure customs related documents are filed on a timely basis | ||
| ii. | Assure easy access to customs documentation when needed | ||
| h. | Coordinate with broker to ensure timely opening and closing of Mexican Pedimentos | ||
| i. | Ensure Mexican Pedimento duties are paid on a timely basis | ||
| j. | Maintain relationship with the Mexico Secretary of the Economy. Provide information as required. | ||
| k. | Insure timely compliance with Anexo 24 |
4
| l. | Completion and filing of annual report of Foreign Business Transactions | ||
| m. | Process and file amendment applications for the Maquila Program | ||
| n. | Provide information to the tax authorities as required or requested | ||
| o. | Support D&T audits of customs activities |
| i. | Attend meetings | ||
| ii. | Provide information | ||
| iii. | Maintain control over audits | ||
| p. | Support customs audits | ||
| i. | Attend meetings | ||
| ii. | Provide information & review audit findings and comments |
| Note: For a complete list of pass through services to be provided by the service provider to the service recipient please refer to the service provider’s contract with the Shelter Plan Provider- Scope of Shelter Services section of the contract |
| 2. | IT Services |
| a. | Technical on site support for PC’s, software and services as requested by Service Recipient |
| 3. | Environment Health and Safety Services (EH&S) |
| a. | Water Management services | ||
| b. | Reporting to government agencies in a timely and accurate manner | ||
| c. | Obtain required permits | ||
| d. | Chemical handling process | ||
| e. | Sale of scrap handling | ||
| f. | Ensure compliance with statutory legislation |
5
LOCATIONS
| 1. | Flow Control Chihuahua Mexico facility located at the following address; |
Av. Washington # 3701, Edificio 8
Parque Industrial las Americas
C.P. 31114
Chihuahua, Chihuahua. Mexico 31200
Parque Industrial las Americas
C.P. 31114
Chihuahua, Chihuahua. Mexico 31200
PREREQUISITES/DEPENDENCIES
| 1. | The service provider will enter into a new shelter plan agreement with American Industries (the Shelter Plan Company) prior to the Distribution Date | |
| 2. | Service Recipient will sign all required EHS filings, permits etc. NO POA will be provided to the Service Provider | |
| 3. | Service Recipient is precluded from hiring Service Provider’s employees that provide the services under this TSA for the duration of this TSA plus for an additional one year after the TSA is terminated. | |
| 4. | At the expiration of this agreement, the Service Provider may hire any of the Service Recipient’s shelter plan (American Industries) employees, if it chooses to do so. | |
| 5. | The Service Provider’s IT department will be allowed access to service recipient’s designated areas as per the floor plan that forms a part of the Chihuahua facility rental TSA for purposes of providing the services that are included in this agreement. The Service Provider’s IT department will have the right to access the Service Recipient’s IT data in order to provide the services that are included in this agreement | |
| 6. | To the extent that the Shelter Plan Company does not fulfill its obligations to the service provider under the terms of its agreement with the service provider, the service provider will have a reasonable period of time to prepare and to implement an alternative action plan to provide the services as described in this TSA. Both parties will make good faith efforts to cooperate with each other in the foregoing process and will mutually agree on the alternative approach with regard to the provision of services, due to the nonperformance of the Shelter Plan Company. The failure of the Shelter Plan Company to fulfill its obligations will not excuse the service provider from providing the services that are being passed through to the service recipient under the terms of this TSA. | |
| 7. | Service recipient agrees to continue to pay any pass through expenses as per the Services To be Provided — Item 1 section of this agreement that may be presented for payment by the service provider after this agreement is terminated due to logistical or other issues, provided appropriate backup documentation is sent with the service provider invoice | |
| 8. | To the extent that the Service Provider or the Shelter Plan Company terminates any of its employees who are providing services solely to the Service Recipient (and not supporting any other aspect of the Service Provider’s business) under this TSA at the end of this agreement because of lack of work, the Service Recipient agrees to reimburse the Service Provider for any one time termination costs that are required to be paid as per government regulation or company policy. |
TAX STATUS
| 1. | Service Provider — Payments received under the terms of this agreement will be considered taxable income in the United States | |
| 2. | Service Recipient — Payments made under the terms of this agreement will be tax |
6
deductible in the United States
BILLING LOCATION
1. Flow Control LLC — Glouchester, Mass.USA
NOTICES
All correspondence with respect to this agreement should be sent to the Service Owners
listed above with copies to the following;
| 1. | Service Provider — Dan Kelly | |
| 1133 Westchester Avenue, Suite 2000 | ||
| White Plains, NY 10605 |
| 2. | Service Recipient — Alan Gilden | |
| 28150 Industry Drive | ||
| Valencia, Ca. 91355 |
NOTICE REQUIREMENTS
| Prior Notice Requirement to | ||||
| No. | Third Party Provider | Terminate Service | ||
| American Industries | See Term and Option above | |||
7
PRICING & PAYMENT TERMS
| 1. | American Industries (the Shelter Plan Company) pass through expenses |
| a. | Service Provider will invoice Service Recipient once a month immediately following receipt of invoices from the Shelter Plan Company and obtaining timely invoice approval from both the service provider and service recipient Mexico General Mangers. The monthly invoice from the service provider will be accompanied by all of the Shelter Plan Company invoices as substantiation for the invoice. All invoices will be payable in US Dollars. | ||
| b. | There will be no changes to proration percentages used by the Shelter Plan Company to allocate pass through expenses between the service provider and service recipient during term of this agreement. The proration percentages used by the Shelter Plan Company immediately prior to the Distribution Date will be used for the term of this agreement. | ||
| c. | The Service Recipient’s Mexico General Manager agrees that invoice approval must be completed within 5 days of receipt of the invoices from the Service Provider or reasons for non approval disclosed to the Service Provider. |
| 2. | IT Services, as defined in this agreement, will be charged on a time and materials basis. Materials will be charged at Service Provider’s cost and required labor will be charged at a rate of Cost plus 2% - 10% per hour, payable in US Dollars. Invoices will be prepared monthly. Copies of vendor invoices will be attached to the invoice to support the materials charges and timesheets showing the number of hours and dates worked by person will be attached to support labor charges | |
| 3. | EH&S Services, as defined in this agreement, will be charged on a time and materials basis. Materials (example — permit fees) will be charged at Service Provider’s cost and required labor will be charged at a rate of Cost plus 2% - 10% per hour, payable in US Dollars. Invoices will be prepared monthly. Copies of vendor invoices will be attached to the invoice to support the materials charges and timesheets showing the number of hours and dates worked by person will be attached to support labor charges | |
| 4. | Invoices as per items 1-3 above and the associated backup will be physically mailed in one package once a month by the service provider to the service recipient. | |
| 5. | There will be no additional backup attached to these invoices for items 1 and 2 above. For item 3 copies of vendor invoices will be attached to the invoice to support the materials charges and timesheets showing the number of hours and dates worked by person will be attached to support labor charges | |
| 6. | Sales taxes will be charged if required by USA state law | |
| 7. | Invoice payment terms are net 30 days from invoice date. | |
| 8. | Payments over 10 days late will be charged interest at a rate of 10% per annum | |
| 9. | Exit costs as well as costs incurred to respond to inquiries by the authorities by the Service Provider on behalf of the Service Recipient which occur after this agreement has been terminated will be invoiced & billed by the Service Provider as soon as practicable with appropriate backup documentation. |
8
SCHEDULE BA9
BASIC TIME AND MATERIALS SUPPORT
BASIC TIME AND MATERIALS SUPPORT
Capitalized terms used herein and not otherwise defined shall have the meaning assigned to
such term in the Agreement. The Services provided hereunder are subject in all respects to the
terms and conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this Service should be directed
to:
| Name | Title | Phone | ||||
Service Provider’s |
||||||
Contact |
||||||
Xylem Inc. |
||||||
Tim Coogan
|
TSA Manager | ( 914) 323-5790 | Tim.Coogan@xyleminc.com | |||
Linda Lynch
|
Director, FSS | (315) 239-2371 | Linda.lynch@xyleminc.com | |||
Service Receiver’s |
||||||
Contact |
||||||
ITT Corporation |
||||||
Daryl Bowker
|
TSA Manager | (315) 568-7676 | Daryl.bowker@itt.com |
PARTIES TO THE AGREEMENT
Service Provider: Xylem Inc.
Service Receiver: ITT Corporation
GENERAL SERVICE DESCRIPTION
Service Receiver may need assistance after the Distribution Date from the Service Provider for
miscellaneous services, including but not limited to consulting, advisory, knowledge transfer and
other similar services in various areas including, but not limited to finance, tax, accounting,
1
insurance, treasury, human resources and communications, which are not already provided for under
all of the other TSAs between ITT Corporation, Xylem Inc., and Exelis Inc.
The Service Provider hereby agrees to cause its and its affiliates employees (collectively,
“Experts”) to provide a reasonable amount of services, including specifically the services listed
in Annex A, upon reasonable notice and request from the Service Receiver on a time and materials
basis from the Distribution Date through April 30, 2013 (the “Minimum Term” and the “Maximum
Term”).
To utilize this TSA Schedule, employees of Service Receiver should request such services via email
or telephonically where both parties have a clear expectation of the estimated number of hours of
assistance being requested. For projects that are expected to require more than 5 to 10 hours of
assistance a one or two paragraph project plan should be agreed to in order to avoid
misunderstandings. The project plan should be put together by the Service Provider’s “Expert “with
respect to the requested services.
Employees of Service Receiver should advise their TSA manager that a request for services has been
made together with a description of such services requested and the estimated number of hours
requested.
The “Expert” should advise their TSA manager that a request for services has been made and the
estimated number of hours requested.
SCOPE OF SERVICES
The scope of services will depend on the needs of the Service Recipient and the capabilities
and availability of the Experts.
LOCATIONS
All locations around the world.
PREREQUISITES/DEPENDENCIES
The Experts remain employees of Service Provider. Service Receivers
acknowledge and agree that Service Provider has discretion to terminate the
Experts and the Experts have the ability to terminate their employment with
Service Provider. In the event the Experts are no longer employed by Service
Provider, Service Provider will, at the request of the Service Receiver, use
commercially reasonable efforts to provide similar services. However, if
Service Receivers or an affiliate employ any of the Experts, the specific
service requested under this Schedule can be terminated by the Service
Provider, at the Service Provider’s sole discretion on 5 business days notice
to the Service Receiver.
TAX STATUS
Sales tax will be charged as determined by the Service Provider and the
Service Receiver shall pay such tax along with the payment for the service
provided.
BILLING LOCATION
Service Provider will provide Service Receiver with an invoice to its
address set forth below under Notice Requirements, except in cases where
services are provided outside of the United States, in which case invoices will
be created by the Service Provider’s legal entity in the country where the
services are being performed and invoiced to the Service Receiver’s legal
entity that requested the services in the Service Provider’s local currency.
The bill will cover all charges for services under this Schedule from Service
Provider and, to the extent reasonably feasible, will be itemized among
Service Receiver’s legal entities if identified by the Service Receiver when
requesting the service. The invoice will contain the number of hours each
Expert worked, a short paragraph describing the services and the US dollar
amount per Expert.
The Experts shall track their time on either a time sheet or any other
proper method such as the utilizing the time sheet attached hereto and Service
Provider agrees that the time sheets will accompany the invoice that is sent to
the Service Recipient for payment. In cases where the requested services are
expected to take longer than 30 days to complete, the Service Provider will be
allowed to invoice the Service Receiver once per month for all costs incurred
to date.
NOTICE REQUIREMENTS
No notice of Termination is required under this Schedule and there shall be no make-whole fee
under this Schedule
Notices and bills to the Service Provider should be sent to:
Xylem Inc.
1133 Westchester Avenue
Suite 2000
White Plains, NY 10604
Attention: Tim Coogan
1133 Westchester Avenue
Suite 2000
White Plains, NY 10604
Attention: Tim Coogan
Notices and bills to the Service Receiver should be sent to:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
PRICING
In addition to the costs specifically set forth below, Service Receivers shall also pay all
business travel expenses relating to the Services in accordance with Service Providers documented
travel policies and any incremental out of pocket costs incurred by the Service Provider in order
to provide the requested services that are invoiced by unaffiliated 3rd parties. Service
Provider agrees to provide vendor invoices as backup to the Service Receiver when invoicing the
Service Receiver under the terms of this TSA.
The hourly rates below include a 4.5% increase for inflation and the 2% profit margin and
shall be applicable in 2011 and 2012. The rates shall increase by 4.5% in 2013. There shall be no
make whole fee due under Section 11 of the Agreement upon early termination of this TSA.
| Service | Hourly Rate* | |||
Hourly Rate Administrative/Secretarial. |
$50 per hour | |||
Hourly Rate for a Non Executive |
$100 per hour | |||
Hourly Rate for an Executive |
$150 per hour | |||
| * Note: | In cases where invoicing is done outside the United States, the above rates should be converted to local currency based on the exchange rate on the date the invoice is prepared. |
The pricing for the services described in Annex A will be as set forth in Annex A unless no
pricing is provided in which case if services are provided on an hourly basis the rates
above will apply.
Annex
A
Annex A-1
Annex A-1
| Employee, Month and | Approx | |||||||||
| Approx Percent of Time | Description of Service and Prerequisites | Hours* | Hourly Rate | |||||||
| System Access Required: Infinium G/L & HFM | ||||||||||
November, 2011 (50%) |
Oversee Staff Activities for October month end close | 80 | $ | Cost plus 2% - 10% | ||||||
| Perform / Review Month End Analysis | ||||||||||
| Perform / Review Journal Entries | ||||||||||
| Perform / Review Account Reconciliations | ||||||||||
| Oversee HQ Domestic Intercompany Clearing Process | ||||||||||
| Coordinate & Reconcile HQ Legal Org. Entries | ||||||||||
| Assist with D&T Audit Requests | ||||||||||
| Assist with E&Y Opening Balance Sheet Adjustment Requests | ||||||||||
December, 2011(25%) |
Oversee HQ Domestic Intercompany Clearing Process | 50 | $ | Cost plus 2% - 10% | ||||||
| Coordinate & Reconcile HQ Legal Org. Entries | ||||||||||
| Assist with D&T Audit Requests | ||||||||||
| Assist with E&Y Opening Balance Sheet Adjustment Requests | ||||||||||
| System Access Required: Infinium G/L & HFM | ||||||||||
November, 2011 (50%) |
Perform Month End Analysis | 80 | $ | Cost plus 2% - 10% | ||||||
| Perform Journal Entries | ||||||||||
| Perform Account Reconciliations | ||||||||||
| Reconcile HQ Legal Org. Entries | ||||||||||
| Assist with D&T Audit Requests | ||||||||||
| Assist with E&Y Opening Balance Sheet Adjustment Requests | ||||||||||
| System Access Required: Infinium G/L | ||||||||||
November, 2011 (25%) |
Perform Month End Analysis | 40 | $ | Cost plus 2% - 10% | ||||||
| Perform Journal Entries | ||||||||||
| Perform Account Reconciliations | ||||||||||
| Total | 250 | |||||||||
| * | Approx hours are a guideline. The employees will spend as much time as they are able supporting ITT so long as it does not unduly burden or interfere with Service Provider’s business and operations. |
Annex A-2
Management Reporting (HFM/Planning) Post Separation Support Requirements
Following the separation of ITT into 3 companies, key management reporting resources will be
required to provide post separation support and knowledge transfer between the NewCos. High level
areas of support and knowledge transfer include:
| • | Month-end close | |
| • | Year-end close | |
| • | New Year setup and rollforward | |
| • | OpPlan, Forecast, and Budget | |
| • | Metadata Management | |
| • | Ledger Mapping | |
| • | Break/Fix Support |
Listed below are the key HFM and Planning resources whose post separation support will be required
during the period 11/1/2011 through the 2012 March Close (approximately 4/20/2012).
| November | December | January | February | March | April | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Future | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Resource | NewCo | Executive | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ITTCo | No | n/a | 48 | 48 | n/a | 48 | 24 | n/a | 48 | 24 | n/a | 36 | 12 | n/a | 36 | 12 | n/a | 12 | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Xylem | No | 48 | n/a | 48 | 24 | n/a | 24 | 24 | n/a | 24 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exelis | No | 48 | 48 | n/a | 24 | 24 | n/a | 24 | 24 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ITTCo | No | n/a | 48 | 0 | n/a | 24 | 0 | n/a | 24 | 0 | n/a | 12 | 0 | n/a | 12 | 0 | n/a | 12 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ITTCo | Yes | n/a | 48 | 48 | n/a | 24 | 24 | n/a | 24 | 24 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Xylem | No | 48 | n/a | 48 | 24 | n/a | 24 | 24 | n/a | 24 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Service Provider Owners and Service Receiver Owners are set forth under “Service Owner” above
Annex A-3
HR Services in Australia
Service Provider: ITT Water & Wastewater Australia Limited
Service Provider Owner:
Gary Jollow, Director Human Resources Asia Pacific
Unit 2, 2 Capicure Drive
Eastern Creek NSW 2766
P: +61 2 9832 6381
F: +61 2 9832 6480
E: gary.jollow@itt.com
Gary Jollow, Director Human Resources Asia Pacific
Unit 2, 2 Capicure Drive
Eastern Creek NSW 2766
P: +61 2 9832 6381
F: +61 2 9832 6480
E: gary.jollow@itt.com
Service Receiver: ITT Corporation
Service Receiver Owner: Donna Luning
1133 Westchester Avenue
White Plains, NY 10604
914-584-0073
Donna.Luning@itt.com
Service Receiver Owner: Donna Luning
1133 Westchester Avenue
White Plains, NY 10604
914-584-0073
Donna.Luning@itt.com
Description of Services
Service Provider will continue to employ (“Employee”) through December 31, 2011
(“end date”) , provided however, that nothing contained herein shall prevent Service Provider from
terminating Employee’s employment “for cause” at Service Provider’s discretion. Service Provider
will continue to provide similar services to Employee as provided during the 12 month period prior
to the Distribution Date, including but not limited to paying and processing Employee’s payroll and
providing the same set of benefits (medical, dental etc:).
Service Receiver shall pay any and all costs associated with Employee’s employment, including
but not limited to wages, benefits, leave liabilities and taxes. In the event of a termination of
employment, Service Receiver shall pay all associated costs with such severance. Service Receiver
acknowledges that at the end date, the employee’s employment will be terminated. This TSA may be
terminated early by providing 5 business days prior notice. There shall be no penalty if Service
Receiver exits this TSA earlier than the stated end date.
Service Receiver hereby expressly agrees to indemnify Service Provider for any liabilities,
damages, costs, expenses, settlement amounts, duties, or fines, including court costs and
reasonable attorney fees, arising from Service Provider providing the services under this Annex A-3
to the Service Receiver; provided, however, that Service Provider shall not be entitled to be
indemnified for any such liabilities, damages, costs, expenses, settlement amounts, duties, or
fines, including court costs and reasonable attorney fees arising as a result of Service Provider’s
negligence or willful misconduct in providing the services under this Annex A-3.
SCHEDULE BC1
UK BENEFITS SUPPORT
UK BENEFITS SUPPORT
Capitalized terms used herein and not otherwise defined shall have the meaning assigned to
such term in the Agreement. The Services provided hereunder are subject in all respects to the
terms and conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters and general inquiries regarding this Service should be directed to:
| Name | Title | Phone | ||||
Service Provider’s
Contact |
||||||
Barbara West
|
UK Benefits Manager | 44- 1256-311-801 | barbara.west@xyleminc.com | |||
Service Recipient’s
Contact |
||||||
Caroline Hunt
|
Senior Benefits Manager | (260) 451-6063 | Caroline.hunt@exelis.com | |||
PARTIES TO THE AGREEMENT
Service Provider: Water Process Ltd
Service Receivers: collectively, ITT Defense, Ltd and EDO MBM Technology Ltd.
GENERAL SERVICE DESCRIPTION
Service Receivers have two business locations in England — Brighton and Basingstoke.
Benefits for Service Receivers in England have been managed pre-spin by Service Provider based in
Basingstoke. Service Receivers need assistance from Barbara West and/or Linda Frawley
(collectively, the “Experts”) on a time and materials basis to provide services similar to those
provided to the Service Receivers during the 12 month period prior to October 1, 2011, including
continuity of Benefits Administration, training and advice for 18 months (“Minimum Term”), but not
longer than 24 months from the date hereof (“Maximum Term”).
1
SCOPE OF SERVICES
The following services will be provided on a time and materials basis by the Experts.
| • | Completion of Harmonization of Benefits for Service Receivers’ Brighton location | ||
| • | Launch Flexible Benefits Package for Service Receivers’ Brighton and Basingstoke locations including administration, communications, etc. | ||
| • | Assistance in establishing Service Receivers’ policy for enrollment in Private Medical | ||
| • | Assistance with establishing, implementing and administering a share incentive plan for the Service Receivers. | ||
| • | Assistance with the administration and preparation for cessation of Service Receivers’ Defined Benefit Plan (General Pension Plan) and movement to a Defined Contribution Plan (ITT Retirement Savings Plan) | ||
| • | Provide guidance in negotiating premiums with various Benefit Brokers to include interfacing with appropriate Benefits Vendors on behalf of Service Receivers, but not executing agreements on Service Receivers’ behalf. | ||
| • | Facilitate the transition of the Benefits Vendor relationship to designated Service Receivers’ HR Benefits Manager | ||
| • | Facilitate the transition of the daily benefit activities to the HR staff of both Service Receivers in Basingstoke, UK and Brighton, UK | ||
| • | Provide guidance on applicable British Laws versus Benefits provided, but not legal advice. | ||
| • | All communications initially prepared by the Experts to Service Receivers’ employees will be reviewed by the Service Receiver’s Sr. Manager of Benefits and Service Receivers’ Vice President, Human Resources, or such other person as may be designated by Service Receivers | ||
| • | The Experts will provide employees designated by the Service Receivers with monthly status reports. The Experts will work under a schedule mutually agreed to prior to October 1, 2011 which will average approximately eight (8) hours per week during the first three (3) to six (6) months and then two (2) to four (4) hours thereafter. The Experts will utilize their current office and equipment at Service Provider, Basingstoke, England, unless Service Provider moves such employees, at its discretion. | ||
| • | Such other services as the Experts have provided to ITT Corporation’s Defense business during the twelve (12) month period prior to October 1, 2011 and requested by Service Receiver, which shall not include legal or tax advice or the execution of any documentation for any governmental authority. |
2
LOCATIONS
Basingstoke, UK
Brighton, UK
PREREQUISITES/DEPENDENCIES
The Experts remain employees of Service Provider. Service Receivers
acknowledge and agree that Service Provider has discretion to terminate the
Experts and the Experts have the ability to terminate their employment with
Service Provider. In the event the Experts are no longer employed by Service
Provider, Service Provider’s then current benefit manager will, at the request
of the Service Receivers, provide similar services at an agreed to hourly rate,
based on such benefit manager’s all in cost to the Service Provider (total
compensation plus allocated overhead). However, if Service Receivers or an
affiliate employ any of the Experts, this Schedule can be terminated by the
Service Provider, at the Service Provider’s sole discretion on 5 business days
notice to the Service Receiver. In the event the Experts are no longer
employed by Service Provider or no longer capable of providing services due to
disability, and the Experts are not replaced by another benefits leader, this
Schedule shall terminate with no further obligations of either party.
The Service Receivers’ human resources department shall cooperate with the
Experts as the Experts provide service under this Schedule.
TAX STATUS
VAT will be charged as determined by the Service Provider
BILLING LOCATION
Service Provider will provide ITT Defense, Ltd. with an invoice to its
address set forth above. The bill will cover all charges for services under
this Schedule from Service Provider to both Service Receivers and, to the
extent reasonably feasible, will be itemized between the two Service Receivers.
The invoice will contain the number of hours each Expert worked, a short
paragraph describing the services and the British Pound amount per Expert.
3
SERVICE LEVEL
To the extent necessary data is available after the date hereof, the
Experts will provide the same service level to the Service Receiver as they
provide to their employer.
NOTICE REQUIREMENTS
Service Receiver shall notify Service Provider at least 90 days in advance of the Minimum Term
if it wants to extend or terminate this Schedule, but such extension shall not be for longer than
the Maximum Term. If notification is not received by the Service Provider, the service will
terminate at the end of the Minimum Term. There shall be no make-whole fee in the event of an
early termination under this Schedule.
Notices to the Service Provider should be sent to
Water Process Ltd, Jays Close,
Viables Estate, Basingstoke, Hampshire RG22 4BA
Attention: Barbara West
Water Process Ltd, Jays Close,
Viables Estate, Basingstoke, Hampshire RG22 4BA
Attention: Barbara West
Notices to the Service Receiver should be sent to
ITT Defense, Ltd and EDO MBM Technology Ltd.
C/O Exelis Inc.
1919 W Cook Rd
Fort Wayne, Indiana 46818
Attention: Caroline Hunt
ITT Defense, Ltd and EDO MBM Technology Ltd.
C/O Exelis Inc.
1919 W Cook Rd
Fort Wayne, Indiana 46818
Attention: Caroline Hunt
PRICING
In addition to the costs specifically set forth below, Service Receivers shall also pay all
business travel expenses relating to the Services.
The hourly rates below include a 4.5% increase each year for inflation and a 2% increase for a
profit margin. In the event the service continues past the Minimum Term, the rate will increase by
8%
| Service | Hourly Rate | |
Hourly Rate for Ms. West.
|
Cost plus 2% - 10% during 2011 | |
| Cost plus 2% - 10% during 2012 | ||
| Cost plus 2% - 10% during 2013 | ||
Hourly Rate for Ms. Frawley
|
Cost plus 2% - 10% during 2011 | |
| Cost plus 2% - 10% during 2012 | ||
| Cost plus 2% - 10% during 2013 |
4
SCHEDULE BC2
BASIC TIME AND MATERIALS SUPPORT
BASIC TIME AND MATERIALS SUPPORT
Capitalized terms used herein and not otherwise defined shall have the meaning assigned to
such term in the Agreement. The Services provided hereunder are subject in all respects to the
terms and conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this Service should be directed
to:
| Name | Title | Phone | ||||
| Service Provider’s Contact | ||||||
| Xylem Inc. | ||||||
| Tim Coogan | TSA Manager | (914) 323-5790 | Tim.Coogan@xyleminc.com | |||
| Linda Lynch | Director, Financial Shared Services |
(315) 239-2371 | Linda.lynch@xyleminc.com | |||
| Service Receiver’s Contact | ||||||
| Exelis Inc. | ||||||
| Joe Daniel | ||||||
| TSA Manager | (703) 790-6309 | Joe.daniel@exelisinc.com | ||||
PARTIES TO THE AGREEMENT
Service Provider: Xylem Inc.
Service Receiver: Exelis Inc.
GENERAL SERVICE DESCRIPTION
Service Receiver may need assistance after the Distribution Date from the Service Provider for
miscellaneous services, including but not limited to consulting, advisory, knowledge transfer and
other similar services in various areas including, but not limited to finance, tax, accounting,
1
insurance, treasury, human resources and communications, which are not already provided for under
all of the other TSAs between ITT Corporation, Xylem Inc., and Exelis Inc.
The Service Provider hereby agrees to cause its and its affiliates employees (collectively,
“Experts”) to provide a reasonable amount of services, including specifically the services listed
in Annex A, upon reasonable notice and request from the Service Receiver on a time and materials
basis from the Distribution Date through April 30, 2013 (the “Minimum Term” and the “Maximum
Term”).
To utilize this TSA Schedule, employees of Service Receiver should request such services via email
or telephonically where both parties have a clear expectation of the estimated number of hours of
assistance being requested. For projects that are expected to require more than 5 to 10 hours of
assistance a one or two paragraph project plan should be agreed to in order to avoid
misunderstandings. The project plan should be put together by the Service Provider’s “Expert “with
respect to the requested services.
Employees of Service Receiver should advise their TSA manager that a request for services has been
made together with a description of such services requested and the estimated number of hours
requested.
The “Expert” should advise their TSA manager that a request for services has been made and the
estimated number of hours requested.
SCOPE OF SERVICES
The scope of services will depend on the needs of the Service Recipient and the capabilities
and availability of the Experts.
2
LOCATIONS
All locations around the world
PREREQUISITES/DEPENDENCIES
The Experts remain employees of Service Provider. Service Receivers
acknowledge and agree that Service Provider has discretion to terminate the
Experts and the Experts have the ability to terminate their employment with
Service Provider. In the event the Experts are no longer employed by Service
Provider, Service Provider will, at the request of the Service Receiver, use
commercially reasonable efforts to provide similar services. However, if
Service Receivers or an affiliate employ any of the Experts, the specific
service requested under this Schedule can be terminated by the Service
Provider, at the Service Provider’s sole discretion on 5 business days notice
to the Service Receiver.
TAX STATUS
Sales tax will be charged as determined by the Service Provider and the
Service Receiver shall pay such tax along with the payment for the service
provided.
BILLING LOCATION
Service Provider will provide Service Receiver with an invoice to its
address set forth below under Notice Requirements, except in cases where
services are provided outside of the United States, in which case invoices will
be created by the Service Provider’s legal entity in the country where the
services are being performed and invoiced to the Service Receiver’s legal
entity that requested the services in the Service Provider’s local currency.
The bill will cover all charges for services under this Schedule from Service
Provider and, to the extent reasonably feasible, will be itemized among
Service Receiver’s legal entities if identified by the Service Receiver when
requesting the service. The invoice will contain the number of hours each
Expert worked, a short paragraph describing the services and the US dollar
amount per Expert.
The Experts shall track their time on either a time sheet or any other
proper method such as the utilizing the time sheet attached hereto and Service
Provider agrees that the time sheets will accompany the invoice that is sent to
the Service Recipient for payment. In cases where the requested services are
expected to take longer than 30 days to complete, the Service Provider will be
allowed to invoice the Service Receiver once per month for all costs incurred
to date.
3
NOTICE REQUIREMENTS
No notice of Termination is required under this Schedule and there shall be no make-whole fee
under this Schedule
Notices and bills to the Service Provider should be sent to:
Xylem Inc.
1133 Westchester Avenue
Suite 2000
White Plains, NY 10604
Attention: Tim Coogan
1133 Westchester Avenue
Suite 2000
White Plains, NY 10604
Attention: Tim Coogan
Notices and bills to the Service Receiver should be sent to:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
PRICING
In addition to the costs specifically set forth below, Service Receivers shall also pay all
business travel expenses relating to the Services in accordance with Service Providers documented
travel policies and any incremental out of pocket costs incurred by the Service Provider in order
to provide the requested services that are invoiced by unaffiliated 3rd parties. Service
Provider agrees to provide vendor invoices as backup to the Service Receiver when invoicing the
Service Receiver under the terms of this TSA.
The hourly rates below include a 4.5% increase for inflation and the 2% profit margin and shall be
applicable in 2011 and 2012. The rates shall increase by 4.5% in 2013. There shall be no make whole
fee due under Section 11 of the Agreement upon early termination of this TSA.
| Service | Hourly Rate* | |
Hourly Rate Administrative/Secretarial.
|
$50 per hour | |
Hourly Rate for a Non Executive
|
$100 per hour | |
Hourly Rate for an Executive
|
$150 per hour |
4
| * | Note: In cases where invoicing is done outside the United States, the above rates should be converted to local currency based on the exchange rate on the date the invoice is prepared. |
The pricing for the services described in Annex A will be as set forth in Annex A unless no
pricing is provided in which case if services are provided on an hourly basis the rates
above will apply.
Annex A
Annex A-1
Management Reporting (HFM/Planning) Post Separation Support Requirements
Following the separation of ITT into 3 companies, key management reporting resources will be
required to provide post separation support and knowledge transfer between the NewCos. High level
areas of support and knowledge transfer include:
| • | Month-end close | |
| • | Year-end close | |
| • | New Year setup and rollforward | |
| • | OpPlan, Forecast, and Budget | |
| • | Metadata Management | |
| • | Ledger Mapping | |
| • | Break/Fix Support |
Listed below are the key HFM and Planning resources whose post separation support will be required
during the period 11/1/2011 through the 2012 March Close (approximately 4/20/2012).
| Future | November | December | January | February | March | April | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Resource | NewCo | Executive | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ITTCo | No | n/a | 48 | 48 | n/a | 48 | 24 | n/a | 48 | 24 | n/a | 36 | 12 | n/a | 36 | 12 | n/a | 12 | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Xylem | No | 48 | n/a | 48 | 24 | n/a | 24 | 24 | n/a | 24 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exelis | No | 48 | 48 | n/a | 24 | 24 | n/a | 24 | 24 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ITTCo | No | n/a | 48 | 0 | n/a | 24 | 0 | n/a | 24 | 0 | n/a | 12 | 0 | n/a | 12 | 0 | n/a | 12 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ITTCo | Yes | n/a | 48 | 48 | n/a | 24 | 24 | n/a | 24 | 24 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Xylem | No | 48 | n/a | 48 | 24 | n/a | 24 | 24 | n/a | 24 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Service Provider Owners and Service Receiver Owners are set forth under “Service Owner” above
5
Annex A-2
Payroll Post Separation Support Requirements
Following the separation of ITT into 3 companies, a key payroll resource of Xylem will be required
to provide post separation support and knowledge transfer to Exelis. High level areas of support
and knowledge transfer include:
| • | Month-end close | ||
| • | Year-end close | ||
| • | ADP year-end balancing and W2 generation |
Listed below is the key payroll resource whose post separation support will be required as
indicated during the period 11/1/2011 through the 2011 year end close (approximately 1/31/12).
Estimated hours per month* allocated to post-spin payroll support:
| Nov-11 | Dec-11 | Jan-12 | ||||||||||
| 20 | 20 | 40 | ||||||||||
* Amount shown is an “up to” amount of hours, the actual required amount may be less.
Service receiver must provide written notice of requested schedule. Service provider will respond
within 48 hours as to the availability which shall not duly be withheld.
Annex A-3 Assistance with Legal Proceedings
Hyman Buchwald will provide assistance with certain legal proceedings involving Exelis.
6
SCHEDULE BC3
SINGAPORE PERSONNEL SERVICES
SINGAPORE PERSONNEL SERVICES
SERVICE OWNER
All service matters and general inquiries regarding this Service should be directed to:
| Name | Title | Phone | ||||
| Service Provider’s Contact | ||||||
| Gary Jollow | HR Director Water and Wastewater Singapore | 61 2 9832 6381 | Gary.Jollow@xyleminc.com | |||
| Service Receiver’s Contact | ||||||
| Douglas Parks | Geospacial Systems, HR Director | 571 203 7363 | Douglas.Parks@exelisinc.com | |||
PARTIES TO THE AGREEMENT
Service Provider: ITT Water and Wastewater Singapore PTE LTD
Service Receiver: Exelis Inc.
Service Receiver: Exelis Inc.
GENERAL SERVICE DESCRIPTION
ITT Water and Wastewater Singapore PTE LTD (“WWW”), entered into a Tenancy Agreement (the
“Tenancy Agreement”), commencing on April 27th 2011 with (“Landlord”)
with respect to an apartment located at
(the “Premises”) for the benefit of employee and his family (collectively, the
“Tenants”) to be transferred to Service Receiver. The Service Receiver and Tenants desire to
terminate the Tenancy Agreement effective as of November 20, 2011 (the “Termination Date”) pursuant
to an agreement between the Service Provider and the Landlord (the “Buy-out Agreement”).
The negotiations of the Buy-out Agreement were led by the Service Receiver. Pursuant to the
Buy-Out Agreement, the Service Provider agreed to pay the landlord a certain sum of money that
would cover all known obligations of Service Provider to the Landlord (the “Buy-out Amount”). In
addition, the Buy-out Agreement also provides that the Landlord is directed to pay the Deposit, as
defined in the Tenancy Agreement, directly to the Service Receiver.
1
SCOPE OF SERVICES
Service Provider shall not do anything to disrupt or terminate the Tenancy
Agreement prior to the Termination Date. Service Provider shall, within 30
days of receipt, deliver to the Service Receiver any and all amounts received
from the Landlord with respect to the Premises.
Service Receiver shall indemnify and hold the Service Provider harmless for any
and all actual costs or expenses incurred by Service Provider or paid by
Service Provider to the Landlord in connection with the Premises, any remaining
tax claims/issues associated with the sponsorship of or any claims
may have with respect to his sponsorship by Service Provider or with
respect to termination of his sponsorship by Service Provider. (the
“Indemnified Amounts”). Service Receiver shall pay the Indemnified Amounts
within 30 days of receipt of a notice describing the amount and reason Service
Provider paid Landlord or any third party any amount in connection with the
Premises. If such amount is greater than $5,000, Service Provider shall notify
Service Receiver 5 business days in advance of such payment to the Landlord or
third party in connection with the Premises and shall allow the Service
Receiver to contest the payment or the claim. Service Receiver will be liable
for any and all actual damages, costs or expenses incurred by Service Provider
in the event Service Provider contests the payment or the claim.
LOCATIONS
Singapore
PREREQUISITES/DEPENDENCIES
None
BILLING LOCATION
Service Provider will provide Service Receiver with an invoice to its
address set forth below.
NOTICE REQUIREMENTS
Notices under this Schedule should be sent to the following addresses (with an email copy to
the Service Owners set forth above):
If to Service Provider:
Xylem Inc.
1133 Westchester Avenue
Suite 2000
White Plains, NY 10604
Attention: Dan Kelly
Xylem Inc.
1133 Westchester Avenue
Suite 2000
White Plains, NY 10604
Attention: Dan Kelly
2
If to Service Receiver
Exelis Inc.
1650 Tysons Blvd #1700
McLean, VA 22102-4827
Attention: Rachel Semanchik
Exelis Inc.
1650 Tysons Blvd #1700
McLean, VA 22102-4827
Attention: Rachel Semanchik
PRICING
Service Receiver shall pay all miscellaneous expenses (telephone, broadband, utilities)
charged to and paid by Service Provider with respect to and his family. Service Provider
shall provide Service Receiver with an invoice detailing such amounts and Service Receiver shall
pay such amounts within 30 days of the date of such invoice.
3
SCHEDULE C
Service Provider: Exelis Inc.
Service Recipient: ITT Corporation and/or Xylem Inc.
Service to be Provided:
2
SCHEDULE CA1
GENERAL LEDGER ACCOUNTING
ITT HQ
GENERAL LEDGER ACCOUNTING
ITT HQ
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
| Misty Markle | Accounting Manager | (260) 451-6104 | misty.markle@exelisinc.com | |||
| Exelis Inc. | ||||||
| Catherine Lupinacci | Manager of Corporate Accounting & Planning | (914) 641-2095 | catherine.lupinacci@itt.com | |||
| ITT Corporation | ||||||
GENERAL SERVICE DESCRIPTION
Service Provider will perform General Ledger Accounting Services for ITT Corp Headquarters for
Service Receiver.
Service Receiver and its Subsidiaries will utilize the Service Provider’s resources based on the
functionality, processes, input and output screens, and documents that support the Service
Provider’s business and business processes in the twelve months prior to the Distribution Date.
1
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement, the
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
| Minimum | ||||||||||||
| BAU | Service | |||||||||||
| Service | Transaction | Period | ||||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Service Charge | |||||||
| Provide General Ledger Accounting Services to ITT Corp Headquarters: | ||||||||||||
• Balance and
Post Payroll Journal
Entries — The
Service Provider will
use the Completed
Payroll Cycles from
the Service Receiver
to post the Journal
on ITT Co. HQ ledger.
This will occur
three (3) business
days after the
payroll cycle
completes.
|
155 Annually | |||||||||||
• Prepare
Payroll Accrual
Report — The Service
Provider will receive
a notification from
Service Receiver to
produce the Payroll
Accrual Report in PDF
format from Infinium
for Service Receiver.
The report will be
completed one (1)
business day after
notification is
received.
|
4 Annually | |||||||||||
• Prepare
Journal Entries for
Infinium Enterprise
Application and
Payroll Service
Charges — The
Service Provider will
use the TSA Costs
from Service Receiver
to post the Journal
on ITT Co. HQ ledger.
This will be
completed prior to
month end close.
|
50 Annually | |||||||||||
SS-GLHQ-01
|
General Ledger Accounting Services ITT Co. HQ | • Prepare
Journal Entries for
Fringe — The Service
Provider will use the
Payroll Month End
Close from Service
Receiver to post the
Journal on ITT Co. HQ
ledger. This will be
completed prior to
month end close.
|
24 Annually | 14 | Cost plus 2% - 10% per month | |||||||
• Prepare
Journal Entries for
Environmental Reserve
— The Service
Provider will use the
Payroll Month End
Close from Service
Receiver to post the
Journal on ITT Co. HQ
ledger. This will be
completed prior to
month end close.
|
12 Annually | |||||||||||
• Prepare
Journal Entries for
Medical Insurance and
Investment Savings
Plan — The Service
Provider will use the
interface files as
documented in
Attachment A to remit
payment to Vendor and
post the Journal on
ITT Co. HQ ledger.
This will be
completed prior to
month end close.
|
68 Annually | |||||||||||
• Journalize
ISP Surcharges — The
Service Provider will
use the interface
files as documented
in Attachment A to
remit payment to
Vendor and post the
Journal on ITT Co. HQ
ledger. This will be
completed prior to
month end close.
|
52 Annually | |||||||||||
2
| Minimum | ||||||||||||
| BAU | Service | |||||||||||
| Service | Transaction | Period | ||||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Service Charge | |||||||
• Prepare
Flexible Spending
Account Report and
Create Journal Entry
— The Service
Provider will use the
Payroll Month End
Close to post the
Journal on ITT Co. HQ
ledger and provide
Service Receiver with
the report. This
will be completed 15
days after the
calendar month.
|
12 Annually | |||||||||||
• Journalize
CELCO Medical Premium
Checks — The Service
Provider will use a
copy of Medical
Checks related to
retirees paying their
premium from an
internal business
unit within Service
Provider which
in-turn receives the
actual check from the
retiree for Service
Provider to post the
Journal on ITT Co. HQ
ledger. This will be
completed prior to
month end close.
|
12 Annually | |||||||||||
• Assist in
Payroll Salaries
Account
Reconciliation — The
Service Provider will
use the “(Month,
Year) Payroll
Reconciliation”
spreadsheet from
Service Receiver to
create queries to
support general
ledger account
reconciliation. This
will be completed one
(1) business day
after the request is
received.
|
12 Annually | |||||||||||
• Liability
Calculation for Short
Term Disability —
The Service Provider
will use a query
provided from an
internal business
unit within Service
Provider to calculate
the liability for
short term disability
and provide a report
in spreadsheet
format.
|
1 Annually | |||||||||||
• Prepare
Clearing Journal
Entries for Entities
within ITT Co. —
The Service Provider
will use the final
month end
intercompany balances
provided from an
internal business
unit within Service
Provider to prepare
the clearing journal
entries for ITT Co.
HQ ledger. This will
be posted before the
last day of fiscal
month.
|
12 Annually | |||||||||||
Service Volumes Greater or Less Than Observed Pre-Distribution Date
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 10% (such activity, including any such 10% deviation,
“Business as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will
accommodate Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities on a
time and materials basis with respect to the one-time set-up fees. The table below will then apply
following the completion of the one-time set-up activities.
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume within
BAU [Note: BAU
already includes +/-
10% of
pre-distribution date
volumes]
|
No incremental one-time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady-State fee structure for requisite service as documented in this agreement | ||
3
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume
greater or less than
BAU
|
Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service |
Ad-Hoc development/services or processing of reports consistent with what was provided prior
to the distribution date will be supported as part of this agreement. Service Provider will use
commercially reasonable efforts based on provider’s current abilities to accommodate regulatory or
legal ad-hoc requests. Ad-hoc requests which may need to be performed to assist Service Receiver
in meeting new legal obligations will be provided on a time and materials basis as described in the
Additional Pricing section of this agreement. Any changes to 3rd party relationships which require
interface modifications or re-writes are not included as part of the scope of this agreement.
Should the Service Receiver require such changes, Parties agree to negotiate in good faith with
regard to such modification. In the event modifications to the services provided are required by
law for only the Service Recipient and such modifications increase the cost for Service Provider,
Service Recipient that requires the modifications shall pay all the additional costs including the
costs for the other Service Recipients.
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
SS-GLHQ-02
|
General Ledger Accounting Support Services ITT Co. HQ Migration | Service Provider will make commercially reasonable efforts to assist Service Receiver in exiting of this agreement. These efforts include: | Time and Materials Based on Additional Pricing Section | |||
• Support of
data extraction
requests from the
Service Receiver |
||||||
• Providing
Subject Matter
Expertise in helping
the Service Receiver
understand current
state business
processes, functional
data mapping, and
impacts of design
decisions
|
||||||
SS-GLHQ-03
|
General Ledger Accounting ITT Co. HQ Knowledge Transfer | Service Provider will provide the following knowledge transfer services: | Time and Materials Based on Additional Pricing Section | |||
• Existing
non-sensitive
documentation
maintained by the
Service Provider will
be given to the
Service Receiver as
it relates to this
agreement
|
||||||
Supplemental Services
For requests for supplemental services relating to General Ledger Accounting by Service Receiver
not mentioned in this Schedule or not included within the costs documented in this
4
agreement,
Service Receiver will provide a discreet project request and submit such request to Service
Provider using the formalized Change Request attached as Annex A for consideration by Service
Provider.
Where notice is required a number of business days prior to some required action by Service
Provider, notice must be received by 12 noon Eastern Time to be counted as received during such
business day. Service Provider shall, within a commercially reasonable period, provide a price
quote to be commercially reasonable based on the current cost of the Services to Service Receiver
taking into account, such items as the specific time the request was made, service delivery
volumes, exit planning activities, and other activities Service Provider is currently engaged in at
the time of the request, but not later than 30 days after the request was made. If Service
Provider, in its sole discretion determines (i) such request would increase the ongoing operating
costs for Service Provider (as a service recipient) or any other service receiver or (ii) that it
is not capable of making such changes with its current staff during the time period requested
without interrupting the Services provided to itself or any other service receiver. Service
Provider need not provide a price quote or perform the services. Where a price quote is provided,
Service Provider shall provide the service requested upon acceptance of the price.
LOCATIONS
Services are initially provided from Fort Wayne, IN, USA to White Plains, NY, USA.
PREREQUISITES/DEPENDENCIES
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. | ||
| • | If Service Receiver provides inaccurate information to Service Provider it will be the responsibility of the Service Receiver to rectify any problems and bear any costs incurred to rectify the issue. | ||
| • | Service Receiver must actively be engaged on the Infinium Application TSA for the duration this agreement is in effect. | ||
| • | Service Receiver must actively be engaged on the HR/Payroll/Benefits TSA for the duration this agreement is in effect. | ||
| • | Service Receiver (ITT HQ) general ledger must be in the current reporting period in order for the Service Provider to complete the services documented within this agreement. Service Receiver and Service Provider will work together to ensure that the current period is open to process transaction(s). |
5
NOTICE REQUIREMENT
| Official Notices and Bills under this Schedule should be sent to the following addresses (with an email copy to the Service Owners set forth above): |
If to the Service Provider:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
If to the Service Receiver:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
SERVICE LEVEL
Service Provider will classify incidents at its own discretion. Such
classifications shall be consistent with the priorities Service Provider set for
itself as a recipient of services.
In the event incidents cannot be resolved, Service Provider shall promptly notify
Service Receiver and work together to try and resolve such incidents.
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year.
These rates apply to internal Service Provider employees only, and should external resources be
6
required, the costs for those external resources will be reviewed with the Service Receiver prior
to execution of the project.
Additional Pricing Rates (All in USD)
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
7
ATTACHMENT A
| Journal Entry Type | Interface Name | Business Purpose | Vendor | Source | Frequency | ||||||
Medical Insurance —
MetLife
|
XPRGMSASUM | Report withholdings and premiums to the record keeper | JP MORGAN CHASE | Infinium | Monthly | ||||||
Medical Insurance
— Health Savings
Account (HSA)
|
XPYGHSAO | Report withholdings and premiums to the record keeper | Mellon | Infinium | Weekly | ||||||
Investment Plan
Savings (ISP) and
ISP Surcharges
|
XRTDCD, XRTDC | Report withholdings and premiums to the record keeper | Wells Fargo / ACS | Infinium | Weekly |
8
SCHEDULE CA2
HR/PAYROLL/BENEFITS
HR/PAYROLL/BENEFITS
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, expect where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
| Joe Daniel Exelis Inc. |
TSA Manager | (703) 338-3405 | joe.daniel@exelisinc.com | |||
| Daryl Bowker ITT Corporation |
Director, Shared Services | (315) 568-7676 | daryl.bowker@itt.com |
GENERAL SERVICE DESCRIPTION
Service Provider will perform Payroll, Payroll Tax, HR, Garnishment and Benefit Services for
Service Receiver.
Service Receiver and its Subsidiaries will utilize Service Provider’s resources based on the
functionality, processes, input and output screens and documents that support Service Provider’s
business and business processes in the twelve months prior to the Distribution Date.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement,
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
SS-Payroll-01
|
Payroll Services | Provide payroll and tax configuration support required to support payroll services: | ||||||||||
• Income Codes —Service Provider will use the
Income Request Form from the Service Receiver to
update tax, garnishment, eligibility, pension, and
401K with the provided income codes. 5 business
days prior notice are required to make the income
code changes. |
||||||||||||
• Deduction Codes —Service Provider will use
the Deduction Request Form from the Service Receiver
to update tax, Group Term Life (GTL), and other
accumulator requirements with the provided deduction
codes. 5 business days prior notice are required to
make the deduction code changes. |
||||||||||||
• Paid Time Off (PTO) Accrual Controls
—Service Provider will use the PTO Policy document
from the Service Receiver to accrual code and
schedule setups requested by the Service Receiver.
10 business days prior notice are required to make
the requested PTO Accrual Controls changes. |
||||||||||||
• Federal/State/Local Tax Table —Service
Provider will use the Notification of
Federal/State/Local Tax Change provided by the
Service Receiver to update the local tax setup
within systems managed by Service Provider within 5
business days of the request.
|
100/month for all SS-Payroll-01 |
14 | Cost plus 2% - 10% per month | |||||||||
• Federal/State/Local Tax —Service Provider
will use the Request for Level Control provided by
automated systems to update the level control setup
within systems managed by Service Provider within 5
business days of the request. |
||||||||||||
• Employer Codes — Service Provider will use
the Request for New Employer Codes from the Service
Receiver to update employer codes in systems managed
by Service Provider within 5 business days of the
request. |
||||||||||||
• User Defined Field — Service Provider will
use the Request for User Defined Field provided by
the Service Receiver to update the necessary fields
within 5 business days of the request. |
||||||||||||
• Level Control — Service Provider will use
the Request for Level Control provided by the
Service Receiver to update the level control setup
within systems managed by Service Provider within 5
business days of the request. |
||||||||||||
• Pay Cycle — Service Provider will use the
Request Pay Cycle from the Service Receiver to setup
the pay cycle with the pay calendar where
applicable. 5 business days are |
||||||||||||
2
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
required to make
the pay cycle changes. Pre-distribution date pay
cycle configuration is defined in Attachment B. |
||||||||||||
• Employer Group — Service Provider will use
the Request for Employer Group provided by the
Service Receiver to update the Employer Group within
systems managed by Service Provider within 5
business days of the request. |
||||||||||||
• Cycle Group — Service Provider will use the
Request for Cycle Group provided by the Service
Receiver to update the cycle group setup within
systems managed by Service Provider within 5
business days of the request. |
||||||||||||
• Payroll Authorization Group — Service
Provider will use the Request for Payroll
Authorization Group provided by the Service Receiver
to update the Payroll Authorization Group setup
within systems managed by Service Provider within 5
business days of the request. |
||||||||||||
• Income Authorization Group — Service
Provider will use the Request for Income
Authorization Group provided by the Service Receiver
to update the income authorization group setup
within systems managed by Service Provider within 5
business days of the request. |
||||||||||||
• Deduction Authorization Group — Service
Provider will use the Request for Deduction
Authorization Group provided by the Service Receiver
to update the deduction authorization group setup
within systems managed by Service Provider within 5
business days of the request. |
||||||||||||
• Auto Pay Groups — Service Provider will use
the Request for Auto Pay Groups provided by the
Service Receiver to update the auto pay groups setup
within systems managed by Service Provider within 5
business days of the request. |
||||||||||||
• Labor/Income Cross Reference Table —
Service Provider will use the Request for
Labor/Income Cross Reference Table Maintenance
provided by the Service Receiver to update the
Labor/Income Cross Reference Table setup within
systems managed by Service Provider within 5
business days of the request. |
||||||||||||
• General Ledger Cross Reference Table —
Service Provider will use the Request for General
Ledger Cross Reference Table maintenance provided by
the Service Receiver to update the general ledger
cross reference table setup within systems managed
by Service Provider within 5 business days of the
request. |
||||||||||||
3
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Provide garnishment, child support, tax levy, interrogatory correspondence, withholding and payments support required for payroll services: | ||||||||||||
• Garnishment Letter — Service Provider will
use the Garnishment Notification to provide a
garnishment letter to the garnishing agency during
the latter of 7 days after notification and the next
applicable payment cycle. |
||||||||||||
• Garnishment Withholding — Service Provider
will use the Garnishment Notification to adjust the
employee garnishment deduction setup during the
latter of 7 days after notification and the next
applicable payment cycle.
|
New Transactions 200, Monthly Payments 700 |
|||||||||||
• Garnishment Payments — Service Provider
will use the Garnishment Notification to update the
garnishment payments to agency during the latter of
7 days after notification and the next applicable
payment cycle.. |
||||||||||||
• Stop Garnishments — Service Provider will
use the Garnishment Stop Notification to deactivate
the employee garnishment deduction and process
refund of any over-withholding during the latter of
7 days after notification and the next applicable
payment cycle. |
||||||||||||
| Provide employee maintenance support where appropriate to support payroll processing: | ||||||||||||
• W-4 — Service Provider will use the W-4
Form from the Service Receiver to update employee
W-4 information with the provided information.
Service Receiver must provide such information at
least 2 business days prior to processing of payroll
to ensure inclusion in the current payroll run. |
||||||||||||
• Home/Work State Update — Service Provider
will use the employee change request for home/work
state maintenance from the Service Receiver to make
requested updates. Service Receiver must provide
such information at least 2 business days prior to
processing of payroll to ensure inclusion in the
current payroll run.
|
600/month | |||||||||||
• Direct Deposit — Service Provider will use
the Direct Deposit Form from the Service Receiver to
update employee direct deposit information with the
provided information. Service Receiver must provide
such information at least 2 business days prior to
processing of payroll to ensure inclusion in the
next payroll run. |
||||||||||||
4
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Provide college fund employee direct deposit maintenance required to support payroll processing upon receipt of notification of enrollment or change via email. Request will be processed within 7 days of notification in the next applicable payment cycle. | 30/month | |||||||||||
| Provide executive excess savings plan updates to employee deduction code maintenance required to support payroll processing upon receipt of Service Receiver notification of employee. Request will be processed within 7 days of notification in the next applicable payment cycle. | 30/month | |||||||||||
| Provide ACS 401k Interface Processing required to support payroll processing: | ||||||||||||
• Saving Plan Deferral & Loan — Service
Provider will use the ACS ISP Feedback File from the
Service Receiver’s 3rd party to update
employee deduction code information with the
provided information. Service Receiver’s
3rd party must provide such information
by Friday evening the week prior to requested
update. |
||||||||||||
• Saving Plan Deferral & Loan — Service
Provider will use the ACS ISP Feedback File from the
Service Receiver’s 3rd party to update
employee deduction code information with the
provided information. Service Receiver’s
3rd party must provide such information
by Friday evening the week prior to requested
update. |
||||||||||||
• ACS Error Report Review — Service Provider
will review the ACS ISP Feedback File from the
Service Receivers 3rd party provider to
review any fallout which may have occurred. Upon
fallout Service Provider will notify ACS to conduct
maintenance to rectify documented fallouts.
|
10 Monthly Interfaces Files & Reports |
|||||||||||
• ACS New Hire — Service Provider will use a
report created from the ACS Interface File from the
Service Receiver’s 3rd party to validate
new hire processing. Service Receiver’s
3rd party must provide such information
by Friday evening the week prior to requested
validation. |
||||||||||||
• ACS ISEV — Service Provider will use the
ACS ISEV Status Change from the Service Receiver’s
3rd party to update employee deduction
code information with the provided information.
Service Receiver’s 3rd party must provide
such information by Friday evening the week prior to
requested update. |
||||||||||||
5
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Provide JPMorgan 401k Interface Processing required to support payroll processing | ||||||||||||
• Saving Plan Deferral & Loan — Service
Provider will use the JP Morgan ISP Feedback File
from the Service Receiver’s 3rd party to
update employee deduction code information with the
provided information. Service Receiver’s
3rd party must provide such information
by Friday evening the week prior to requested
update. |
||||||||||||
• Saving Plan Deferral & Loan — Service
Provider will use the JP Morgan ISP Feedback File
from the Service Receiver’s 3rd party to
update employee deduction code information with the
provided information. Service Receiver’s
3rd party must provide such information
by Friday evening the week prior to requested
update. |
||||||||||||
• JP Morgan Error Report Review — Service
Provider will review the JP Morgan ISP Feedback File
from the Service Receivers 3rd party
provider to review any errors which may have
occurred. Upon fallout Service Provider will notify
ACS to conduct maintenance to rectify documented
fallouts.
|
10 Monthly Interfaces Files & Reports |
|||||||||||
• JP Morgan New Hire — Service Provider will
use a report created from the JP Morgan Interface
File from the Service Receiver’s 3rd
party to validate new hire processing. Service
Receiver’s 3rd party must provide such
information by Friday 5 pm EST or Thursday 5 pm EST
if Friday is not a business day the week prior to
requested validation. |
||||||||||||
• JP Morgan ISEV — Service Provider will use
the JP Morgan ISEV Status Change from the Service
Receiver’s 3rd party to update employee
deduction code information with the provided
information. Service Receiver’s 3rd
party must provide such information by Friday
evening the week prior to requested update. |
||||||||||||
| Provide Principal Loan Processing required to support payroll processing upon receipt of notification by secured email and make the required employee deduction code changes. | Weekly Interface Files |
|||||||||||
| Provide Marsh Benefit Processing required to support payroll processing upon receipt of interface file and make deduction code changes. Files must be received by the 17th of the month for processing by the end of the month. | Two Interface Files Per Month |
|||||||||||
6
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Provide John Hancock LTC Processing required to support payroll processing upon receipt of interface file and make deduction code changes. Files must be received by the 17th of the month for processing by the end of the month. | Two Interface Files Per Month |
|||||||||||
| Provide Runzheimer Fix and Variable Auto Processing required to support payroll processing upon receipt of interface file and make employee negative deduction transactions for payroll Files must be received by the 9th of the month. | One Interface File Per Month |
|||||||||||
| Provide Concur Travel Expense Reimbursement required to support payroll processing upon receipt of interface file and make employee negative deduction transactions. Files must be received by Thursday morning at 6 am EST to be processed in the next applicable pay cycle. | Weekly Interface Files |
|||||||||||
| Provide executive deferral payment upon receipt of notification from Service Receiver for payout and make employee deferral payment. Files must be received by the 9th of the month. | One Monthly Deferral Processing |
|||||||||||
| Provide excess group term life calculations upon receipt of notification from Service Receiver for payout and make employee deferral payment. Files must be received by the 9th of the month. | 240 Batch Processing Runs |
|||||||||||
| Complete nightly Infinium Benefit Deduction updates. | 240 Batch Processing Runs |
|||||||||||
| Provide payroll processing. | ||||||||||||
• Automated Labor Upload — Service Provider
will use the interface from the Service Receiver’s
labor system and create the Infinium labor file for
payroll processing. Labor Code to Infinium Income
code cross reference file updated as required. |
||||||||||||
• Labor Interface Validation — Service
Provider will use the interface from the Service
Receiver’s labor system to get totals. Service
Provider will then match the Infinium and Service
Receiver’s Labor System file. Should discrepancies
exist, Service Provider will work with Service
Receiver to resolve the issue.
|
240 Pay Processing Cycles |
|||||||||||
• Payroll Cycle Processing — Service Provider
will then create Employee Processing Cycle |
||||||||||||
7
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
File,
listing of employees with pay, benefit, leave of
absence and terminations. A review of employee
changes will be conducted by Service Receiver and
corrections made if applicable. Employee changes
will be added to cycle validation routine for
balancing. Delays in Service Receiver
responsibilities will delay payroll processing.
Service Provider will not be liable for such Service
Receiver caused delays. |
||||||||||||
• Close Upload Labor to Payroll Cycle —
Service Provider will upload employee labor to
payroll cycle. |
||||||||||||
• Gross to Net Calculation — Once Infinium
releases time sheet data Service Provider will
produce the payroll trial balance. |
||||||||||||
• Payroll Adjustments — Service Provider will
update employee pay information and add adjustments
to validation routine for balancing as required. |
||||||||||||
• Print Trial Balance/Approve Payroll — Using
the Infinium trial balance Service Provider will
create a trial balance report to post payroll and
print pay stubs. If Trial Balance does not balance
or has errors it must be corrected via update checks
and Trial Balance Reran until error free and
balanced. |
||||||||||||
| Provide on-demand payroll processing of off-cycle check requests upon receipt of on-demand check request form from Service Provider. Form must be received by 5 pm for next day direct deposit or check delivery. | 570 Transactions Annually |
|||||||||||
| Provide bonus cycle payroll processing of off-cycle bonus payments upon receipt of bonus specification from Service Recipient. Form must be received 5 business days prior to date of required bonus payment. | 7000 Transactions Annually |
|||||||||||
| Provide manual W-2 earnings and deductions updates upon receipt of written notice and tax detail from Service Provider | 325 Transactions Annually |
|||||||||||
| Provide stock option manual payroll upon receipt of Smith Barney stock transaction file using the daily interface from Service Provider | 80 Transactions Annually |
|||||||||||
| Provide restricted stock manual payroll upon receipt of Smith Barney restricted stock transaction file using the daily interface from Service Provider | 110 Transactions Annually |
|||||||||||
| Provide quarterly tax dividend payment upon receipt of Smith Barney dividend transaction file using the quarterly interface from Service Provider | 440 Transactions Annually |
|||||||||||
| Provide Cartus quarterly relocation manual payroll upon receipt of Cartus Relocation Transaction file using the quarterly interface from Service Provider | 140 Transactions Annually |
|||||||||||
8
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Process payment for unused PTO time upon receipt of notification from systems during year-end | 1700 Transactions Annually |
|||||||||||
| Void or re-issue employee checks upon receipt of notification from Service Receiver. May be processed with current payroll or via separate check processing. For inclusion with regular payroll request must be received two business days prior to start of payroll processing. Five business days notice is required for issuing as separate payroll process. [Service Provider will not be liable if funds have been disbursed prior to voidance.] | 850 Transactions Annually |
|||||||||||
| Make adjustments to employee pay upon receipt of notification from Service Receiver. Notification must be received 2 business days prior to the next pay cycle. | 325 Transactions Annually |
|||||||||||
| Process retro-active payments for delayed merit increase processing after receipt of notification from Service Receiver. May be processed with current payroll or via separate check processing. For inclusion with regular payroll request must be received Two business days prior to start of payroll processing. Five business day notice required for issuing as separate payroll process. | 350 Transactions Annually |
|||||||||||
| Process special employee payments upon receipt of notification from Service Receiver. May be processed with current payroll or via separate check processing. For inclusion with regular payroll request must be received 2 days prior to start of payroll processing. Five day notice required for issuing as separate payroll process. | 900 Transactions Annually |
|||||||||||
| Process relocation payment from employee paycheck upon receipt of notification from Service Receiver Processed with normal payroll. May be repaid over multiple payrolls or from one payroll per specification of Service Receiver. | 200 Transactions Annually |
|||||||||||
| Provide executive excess savings plan distribution upon receipt of notification from Service Receiver May be processed with current payroll or via separate check processing. For inclusion with regular payroll request must be received 2 days prior to start of payroll processing. Five day notice required for issuing as separate payroll process. | 50 Transactions Annually |
|||||||||||
| Service Provider will use commercially reasonable efforts to provide post-payroll | ||||||||||||
• Print/Distribute Check, Vouchers, & Reports
— Printed Checks and Vouchers sealed and prepared
for shipping distribution per business units
instructions.
|
250 Cycles Per Month | |||||||||||
• ACH Processing — ACH transmitted to clearing
house using the Infinium ACH extraction process |
||||||||||||
9
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
• Bank Funding — Wire Transfer to cover
payroll using the bank funding report option |
||||||||||||
• Credit Union Processing — File Transmission
to Credit Union using the Infinium direct deposit
extract |
||||||||||||
• Union Reporting — Union report transmitted
using the Union employees and Union dues report |
||||||||||||
• Canadian Bond Processing — Transmission of
Canadian Bond File to Royal Bank of Canada using the
Canadian bond extract |
||||||||||||
• Positive Pay — Positive pay file transmitted
to Wells Fargo using the positive pay extract file |
||||||||||||
• Direct Deposit Fund Pullback — Employee
funds pulled back or error report with insufficient
funds upon Service Receiver’s request to pull back
employee direct deposit. Service Provider will use
the Shared Service form submission to Wells Fargo to
pull back employee direct deposit. Insufficient
funds notices are communicated to employees HR
administrator for review of how to recover money
|
||||||||||||
| Provide Infinium month end close once a month rolling month totals, update monthly benefits (Marsh & John Hancock), and update monthly limit processing. This service will be performed after final payroll for month and prior to first payroll of new month. | 20 Companies Per Month |
|||||||||||
| Process Infinium quarter end close once a quarter rolling quarter totals, update quarterly limit | 20 Companies Per Month |
|||||||||||
| Provide Infinium year-end processing. | 20 Companies Per Month | |||||||||||
• Wage & Tax Balancing — Using the wage Base
Report balance Employee Earnings and Taxes |
||||||||||||
• United Way Deduction — Infinium United Way
Deduction Change for deduction codes 00800 & 0805
clearing the United Way deduction for the new year |
||||||||||||
• 401K Limit Update -Deduction limit updated with values for year |
||||||||||||
• Year End Payroll Register — Use the
Infinium Year End Payroll Register to archive
historical payroll registers
|
||||||||||||
• Hartford-JP Morgan Year End — Use the
Infinium Save File to archive Hartford-JP Morgan
year end 401K values |
||||||||||||
• ACS — Use the Infinium Save File to archive
ACS year end 401K values |
||||||||||||
• Infinium W2 Box Updates — Use the Infinium
Income & Deduction Reporting Groups to make W2 Box
Reporting Reports |
||||||||||||
• Infinium ADP W2 Box Update — Use the ADP
interface for W2 Reporting to create the ADP W2 Box
Interface File |
||||||||||||
• Local Tax Update — Use the notification
from locality or Service Receiver to update the
local tax table |
||||||||||||
10
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
• Transfers — Clear Q1 Information captured
for tax & 401K Limit processing for use in the W2
tax report |
||||||||||||
• Vinny 1st day report — Use the Infinium Day
1 Report for forecasting |
||||||||||||
• Payroll Calendar — Use the Infinium Cycle
Maintenance to create Service Receiver Payroll
Calendars |
||||||||||||
• W2 — Pension for Group Term Life (GTL) —
Service Receiver provides files from ACS & Hartford
and Service Provider updates Pensioner’s W2’s |
||||||||||||
• Highly Compensated Employee Listing — Using
an AS400 Query, employees meeting IRS Highly
Compensated Listing are found and 401K providers
updated with list of highly compensated employees |
||||||||||||
• Executive Excess Saving Plan Employee Update
— Service Receiver provides list of eligible
employees for executive excess saving plan which
Service Provider uses to update the Executive Excess
Saving Plan Employee List provided for roll over
into Excess Savings Plan |
||||||||||||
• New Jersey Disability Year End Update —
Using the New Jersey Final Disability Report;
Service Provider will update the New Jersey year end
payroll entries to record New Jersey final
disability entries. |
||||||||||||
• Infinium Year End Close — Year end close
rolls year to day information to previous year and
clear year-to-date dollars |
||||||||||||
• ADP 4th Quarter & Year End Extract — Using
the ADP Extract Program an ADP Year End Interface
File is created |
||||||||||||
• ADP — Balance Year — Using the ADP Year End
Reports Year End Statutory Reports & W2 are output |
||||||||||||
• W2C’s — Using the value center post
year-end close entries to update the W2C |
||||||||||||
• Amended Year End — Use the ADP Extract
Program to amended statutory reporting |
||||||||||||
| Provide US Tax Processing. | Registrations — 10 per month | |||||||||||
• ADP Company Profile Update — Use the ADP
Tax Header Spreadsheet to update ADP tax reporting
set up |
||||||||||||
• ADP Code Mapping — Use the ADP Mapping
Document to map ADP Tax Code to Infinium Tax Code
|
Interfaces — daily | |||||||||||
• Infinium ADP Deduction Table Maintenance —
Use the Infinium ADP Tax Code file to output ADP
Interface File including the new tax code
|
Tax Payments — Daily & Quarterly Per Requirements | |||||||||||
• ADP Daily Interface File — Use the ADP
Infinium Payroll Tax Extract to create the ADP
Receipt of Tax Payment Detail
|
Cobra Reporting — Quarterly | |||||||||||
11
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
• Daily Tax Audit Report — Use the Query: ADP
Tax Audit Report to validate ADP Daily Tax Interface
File
|
Quarterly Reporting | |||||||||||
• ADP Daily Tax Funding — Use the ADP
Invoice to create ADP Wire Payment
|
Tracer Transactions 20 Monthly | |||||||||||
• ADP Unemployment Rate Change — Use the ADP
Tax Header Spreadsheet to calculate ADP -
Unemployment Payments with New Rate
|
Amendments 10 Monthly | |||||||||||
• ADP Monthly Charges — Use the ADP Invoice
to process ADP Payment |
||||||||||||
• Barnett Monthly Charges — Use the Barnett
Invoice to process Barnett Payment |
||||||||||||
• ADP Quarterly Communication — Use the ADP
Quarterly Updates to update the Quarterly Calendar
Close Schedule |
||||||||||||
• Cobra Quarterly Tax Credit Entry — Use the
SHPS Cobra Detail summarized and entered into ADP
Payroll Tax Input to update the 941 Cobra Credit |
||||||||||||
• Quarterly Interface File — Use the ADP
Infinium Quarterly Tax Extract to create the ADP
Quarterly Tax Reporting File |
||||||||||||
• ADP TAX Reconciliation — Use the Infinium
Quarterly Tax Report to reconcile ADP Quarterly Tax
Reports |
||||||||||||
• Quarter Close & Statutory Reporting — Use
Service Receiver approval to ADP for Quarterly
Processing to make quarterly statutory payments and
reporting |
||||||||||||
• Quarterly Report Distribution ADP — Use the
Quarterly Reports Posted to Web Site to distribute
Statement of Deposits, 941Cobra Credit, State &
Local Wage Detail |
||||||||||||
• Quarterly Invoice Payments — Use ADP
Invoice to make ADP Wire Payments |
||||||||||||
• Quarterly Federal & State Tax Amendments —
Use Quarterly Amendment Filing to amended reporting |
||||||||||||
• Amendment Payment — Use the invoice to
create ADP Wire Payment |
||||||||||||
• Tracers — Use agency notices to conduct ADP
research |
||||||||||||
• Tracer Payments — ADP agency notice research
to make payment of Agency Notices |
||||||||||||
• Close Tax ID — Use ADP header to close
company so no future reporting in ADP |
||||||||||||
• Close Tax ID — Use the Agency notification
of account closed to conduct final reconciliation |
||||||||||||
| Provide Canadian Tax Processing. | ||||||||||||
• Canadian Tax Withholding — Using Canadian
Tax Deductions provided by Service Receiver input
Service Provider will complete Employee/Employer Tax
Withholding/Liability
|
Weekly Tax Payments | |||||||||||
• Canadian Tax Payments — Using Payroll
Registers provided by Service Receiver, Service
Provider will make Canadian Tax Payment
|
Annually T4, T4A & RL Reporting | |||||||||||
12
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
• Year End Pension Calculation — Using the
Canadian Pension Plan Policy provided by Service
Receiver, Service Provider will compute Pension Plan
Calculation |
||||||||||||
• RL1 & T4 Reporting — Using the Infinium
Canadian Year End Process, Service Provider will
complete T4 & RL1 Forms & XML Reporting |
||||||||||||
| Provide Puerto Rico Tax Processing. | Weekly Tax Payments | |||||||||||
• Puerto Rico Tax Withholding — Using Tax
Deductions Service Provider will calculate tax
withholding for Service Receiver
|
||||||||||||
• Puerto Rico Tax Payments — Using Payroll
Registers provided by Service Receiver, Service
Provider will make Puerto Rico Tax Payments
|
Annual W2P & W3P Reporting |
|||||||||||
• Puerto Rico Year End Reporting — Using W2 &
W3 Reporting Service Provider will make Employee &
Employer Year End Tax Reporting |
||||||||||||
| Support the legal/regulatory audits documented below. | ||||||||||||
• ACE — Worker Compensation Audit |
||||||||||||
• Tax Audits |
||||||||||||
• D&T Benefit Audit |
||||||||||||
• SOX Audit
|
4 Audits/Month | |||||||||||
• Disaster Recovery |
||||||||||||
• ACS — 401K Compliance Testing |
||||||||||||
• JP Morgan — 401K Compliance Testing |
||||||||||||
• Data Mining — Payroll |
||||||||||||
• Service Provider will run the custom queries
documented in Attachment C once a month |
Monthly | |||||||||||
| Provide Guam Tax Processing. | ||||||||||||
• GUAM Tax Withholding — Using Tax Deductions
provided by Service Receiver, Service Provider will
calculate Tax withholding |
||||||||||||
• GUAM Tax Payments — Using the payroll
registers Service Provider will make GUAM tax
payments
|
Annual W2G & W3G Reporting |
|||||||||||
• GUAM Year End Reporting — Using W2 & W3
Reporting, Service Provider will make Employee &
Employer Year End Tax Reporting |
||||||||||||
| Infinium and HRSS Support/Communication for handling of Service Receiver questions: | ||||||||||||
HR-Benefits-02
|
Human Resources, Benefits, Training, & Compliance |
• Daily Service Receiver Issue Handling -
Service Receiver users can make a phone call or send
an email to ask questions related to
employee data and/or transactional history
stored in Infinium/HRSS; M-F 8-5pm EST except U.S.
holidays; |
||||||||||
• Data Input Questions Covered in User Manual
|
201/month | 14 | Cost plus 2% - 10% per month | |||||||||
• System Requirements-Upgrades/System Changes
Maintenance (Federal/State/Local) |
||||||||||||
• Infinium Canned Reports are available for
the service receiver to access and review. Service
Provider will be responsible for ensuring that
reports required for legal or regulatory
requirements run. |
||||||||||||
13
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
• Coordinate issue resolution as needed with
IT, Payroll, SS Accounting, HQ Benefits and/or third
party vendors. |
||||||||||||
• Anything not covered above is
considered a special request to be handled using on
a Time & Materials basis as outlined in the
Support Additional Pricing Section of this document. |
||||||||||||
| Benefit Administration and Reporting Internal/External: | ||||||||||||
• Weekly vendor file feed resolution to
national carriers - Service Provider will accept
phone or email from Service Receiver or external
benefits provider and resubmit corrected file feed
or corrected actual employee record based on
request. |
||||||||||||
• Salaried Pension Eligibility file feed
questions from field Service Receiver HR staff will
be triaged by Service Provider and assist Service
Receiver in data correction.
|
327/month | |||||||||||
• Validation Reports from Health & Welfare and
Pension - Service Provider will receive reports
from 3rd party providers listing errors
related to health & welfare data and Service
Provider will assist Service Receiver HR field staff
to make appropriate changes |
||||||||||||
| Services for Service Receiver supervisors on payrolls that are not administered via the Fort Wayne Infinium System: | ||||||||||||
• Service Provider will create and/or update
Job/Position Codes upon request from the Service
Receiver |
||||||||||||
• Service Provider will add an international
supervisor as a new hire upon request from the
Service Receiver |
||||||||||||
• Service Provider will attach an
international supervisor to an Infinium Employee
record upon request from the Service Receiver |
||||||||||||
• Service Provider will add an international
supervisors’ Concur ID to the appropriate record
upon request from the Service Receiver |
||||||||||||
| Services for Service Receiver Business Units and/or Infinium Companies that are not supported by local HR staff but administered by HRMS staff in Fort Wayne: | 50/month | |||||||||||
• Service Provider will create and or update
Job/Position Code upon request from the Service
Receiver |
||||||||||||
• Service Provider will enter new hires on
personnel side as well as on payroll side upon
request from the Service Receiver |
||||||||||||
• Service Provider will enter salary
changes/address changes/title
changes/transfers/terminations upon request from the
Service Receiver |
||||||||||||
• Service Provider will perform annual merit
increase uploads upon request from the Service
Receiver |
||||||||||||
14
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
• Service Provider will communicate with
Service Receiver HR contacts from other Service
Receiver business units to coordinate both
transferring in and out of employees upon request
from the Service Receiver |
||||||||||||
• Service Provider will enter payroll changes
including withholding changes/benefit deductions and
catch-ups upon request from the Service Receiver |
||||||||||||
• Service Provider will enter benefit updates
including urgent updates upon request from the
Service Receiver
Service Provider will make Address & Phone number
changes upon request from the Service Receiver |
||||||||||||
• Service Provider will make Benefit Changes
due to qualifying event & Annual Open Enrollment
upon request from the Service Receiver |
||||||||||||
• Service Provider will make Annual Salary
Merit Increases upon request from the Service
Receiver |
||||||||||||
• Service Provider will make Annual Reviews
(if applicable) upon request from the Service
Receiver |
||||||||||||
• Service Provider will make inquiries
relating to benefits and/or personnel information
upon request from the Service Receiver |
||||||||||||
• Service Provider will produce Infinium
Canned Reports upon request from the Service
Receiver |
||||||||||||
• Year-end Standard Benefit Enrollment Copy to
New Plan Year |
||||||||||||
• Year-end Vendor Meetings for open enrollment
file feeds |
||||||||||||
• Data Input Questions Covered in User Manual |
||||||||||||
• Support Special Year End File Feeds to
National H&W Vendors |
||||||||||||
• Standard Communication regarding Annual
Enrollment & Year End Dates |
||||||||||||
• Collaborate with Payroll, Finance and IT for
Year End Closing Processes using all input from
year’s changes and develop project plan to prepare
system for enrollment and year-end processing.
Project will then be started in July, and meetings
with vendors conducted as needed depending on data
from customers. ** Changing benefits providers in
2011 will be a special project using Time &
Materials rates with specific notification on
change.
|
Each item in this table will be completed once a year | |||||||||||
HR-Benefits-03
|
Training | Service Provider will take requests from Service Receiver HR manager to conduct periodic WebEx training of how to use Infinium systems and conduct the training for the Service Receiver. | 1/month | 14 | Time and Materials | |||||||
SS-Payroll Acct-04
|
Payroll Accounting | Provide Payroll Accounting services. | 1972 annually | Cost plus 2% - 10% per month |
||||||||
• Payroll Journals — Service Provider will use
the payroll register summary from the Service
Receiver to balance and post payroll journals for
each payroll cycle for the Service Receiver
|
3060 annually | 14 | ||||||||||
15
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
• Payroll Balance Sheet Accounts — Service
Provider will use the payroll month end close
document from the Service Receiver to reconcile the
payroll balance sheet accounts for the Service
Receiver
|
||||||||||||
• Employee Deductions — Service Provider will
use completed payroll cycles document from Service
Receiver to remit employee deductions for the
Service Receiver
|
364 annually | |||||||||||
• Employee Benefits for ISP,401 (K) and
Insurances — Service Provider will use completed
payroll cycles document and payroll queries from
Service Receiver to validate, reconcile and remit
employee benefits for ISP, 401(k) and insurances for
the Service Receiver |
205 annually | |||||||||||
• ADP Payroll Taxes — Service Provider will
use completed payroll cycles, payroll queries, and
ADP invoices from the Service Receiver to validate,
reconcile, and remit all Payroll Taxes to ADP
|
240 annually | |||||||||||
• Interface File Transmission - Service
Provider will use completed payroll cycles and
payroll queries from the Service Receiver to
transmit interface files to 3rd party vendors on
behalf of the Service Receiver
|
195 annually | |||||||||||
• Benefits Reporting — Service Provider will
use the year end close information from the Service
Receiver to provide annual reporting of benefits to
the Service Receiver
|
10 annually | |||||||||||
• ADP Federal and State Taxes — Service
Provider will use tax extract and file feed from ADP
from Service Receiver to journalize ADP Federal and
State Tax Activity for the Service Receiver
|
240 annually 5 annually |
|||||||||||
• ADP Mid Year Conversions — Service Provider
will use YTD tax amounts information from Service
Receiver to perform ADP midyear conversions for the
Service Receiver |
||||||||||||
• Non-supported ADP — Service Provider will
use completed payroll cycles information from
Service Receiver to remit non-supported ADP taxes
for the Service Receiver
|
12 annually | |||||||||||
• Control Files for 401(k) and ISP- Service
Provider will use information from business units or
HQs from the Service Receiver to maintain and
control files for 401(k) and ISP for the Service
Receiver
|
30 annually | |||||||||||
• Payroll Bank Account — Service Provider will
use bank account statements from the Service
Receiver to reconcile payroll bank accounts for the
Service Receiver
|
24 annually | |||||||||||
• Unclaimed Payroll Property- Service Provider
will use bank account statements from Service
Receiver to manage unclaimed payroll property for
the Service Receiver
|
200 annually | |||||||||||
16
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
• Automated Bank Functions- Service Provider
will use cleared bank files from the Service
Receiver to process post cleared checks in the
Infinium payroll
|
12 annually | |||||||||||
• Year to Date Analysis for 401k— The Service
Provider will use the Year End Payroll Close from an
internal business unit within the Service Provider
to calculate 401k Year to Date totals for employee,
employer, and loans and provide report by vendor to
the Service Receiver.
|
3 annually | |||||||||||
Service Volumes Greater or Less Than Observed Pre-Distribution Date
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 10% (such activity, including any such 10% deviation,
“Business as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will
accommodate Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities on a
time and materials basis with respect to the one-time set-up fees. The table below will then apply
following the completion of the one-time set-up activities.
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume within
BAU [Note: BAU
already includes +/-
10% of
pre-distribution date
volumes]
|
No incremental one-time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady-State fee structure for requisite service as documented below | ||
Service Volume greater or less than BAU |
Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service |
Ad-Hoc development/services or processing of reports consistent with what was provided prior
to the distribution date will be supported as part of this agreement. Service Provider will use
commercially reasonable efforts based on provider’s current abilities to accommodate regulatory or
legal ad-hoc requests. Ad-hoc requests which may need to be performed to assist Service Receiver
in meeting new legal obligations will be provided on a time and materials basis as described in the
Additional Pricing section of this agreement. Any changes to 3rd party relationships which require
interface modifications or re-writes are not included as part of the scope of this agreement.
Should the Service Receiver require such changes, Parties agree to negotiate in good faith with
regard to such modification. In the event modifications to the services provided are required by
law for only the Service Recipient and such modifications increase the cost for Service Provider,
Service Recipient that requires the modifications shall pay all the additional costs including the
costs for the other Service Recipients.
17
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
| Service Provider will make commercially reasonable best efforts to assist Service Receiver in exiting of this agreement. These efforts include: | ||||||
SS-Payroll-05
|
HR/Payroll/Benefits Migration |
• Support of
data extraction
requests from the
Service Receiver |
||||
• Providing
Subject Matter
Expertise in helping
the Service Receiver
understand current
state business
processes, functional
data mapping, and
impacts of design
decisions
|
Time and Materials Based on Additional Pricing Section | |||||
| Service Provider will provide the following knowledge transfer services: | ||||||
SS-Payroll-06
|
HR/Payroll/Benefits Knowledge Transfer |
• Existing
non-sensitive
documentation
maintained by Service
Provider will be
given to the Service
Receiver as it
relates to
Payroll/HR/Benefit
services
|
Time and Materials Based on Additional Pricing Section |
Supplemental Services
For requests for supplemental services relating to HR, Benefits and Payroll by Service
Receiver not mentioned in this Schedule or not included within the costs documented in
this agreement, Service Receiver will provide a discreet project request and submit such
request to Service Provider using the formalized Change Request attached as Annex A for
consideration by Service Provider.
Where notice is required a number of business days prior to some required action by
Service Provider, notice must be received by 12 noon Eastern Time to be counted as
received during such business day. Service Provider shall, within a commercially
reasonable period, provide a price quote to be commercially reasonable based on the
current cost of the Services to Service Receiver taking into account, such items as the
specific time the request was made, service delivery volumes, exit planning activities,
and other activities Service Provider is currently engaged in at the time of the request,
but not later than 30 days after the request was made. If Service Provider, in its sole
discretion determines (i) such request would increase the ongoing operating costs for
Service Provider (as a service recipient) or any other service receiver or (ii) that it
is not capable of making such changes with its current staff during the time period
requested without interrupting the Services provided to itself or any other service
receiver. Service Provider need not provide a price quote or perform the services.
Where a price quote is provided, Service Provider shall provide the service requested
upon acceptance of the price.
18
LOCATIONS
Services are initially provided from Fort Wayne, IN, USA to Canada and USA locations.
PREREQUISITES/DEPENDENCIES
| • | Service Receiver will provide accurate and timely employee maintenance, time and attendance data and payroll adjustments required to produce pay checks. In conjunction with the preceding, Service Receiver will maintain the applications and interfaces documented in Attachment A. | ||
| • | Service Receiver will be responsible for providing new tax registration requirements to Service Provider. Applicable tax registration information will be provided to Service Provider as required to complete tax registration. | ||
| • | Service Receiver will be responsible for providing configuration changes to Service Provider including taxes, income, deductions, banking and benefits using the change request process and forms provided by Service Provider. | ||
| • | If Service Receiver sends inaccurate data to Service Provider it will be the responsibility of the Service Receiver to rectify any problems and bear any costs incurred to rectify the issue. | ||
| • | Service Receiver will setup and make available to Service Provider a disbursement account from which Service Provider utilizes draft authorization to process payroll. Service provider will request funding for payroll checks, payroll direct deposits, payroll taxes, and other benefit remittances from the Service Receiver Treasury Headquarter location. Service Provider will open and own payroll bank accounts for the payroll transactions. Funding is required in the bank account one day prior to the value date. Late funding of the payroll account by the Service Receiver may result in delay of payroll checks, applied 401(k) funds, and benefit payments. Any outstanding liabilities associated to payroll tax and benefits will remain on Service Provider’s general ledger at month end. Service Provider will retain interest earned, if any, on residual account balances and will pay all standard account related service fees. Any service fee associated with Non Sufficient Funds due to the Service Receiver will be the responsibility of the Service Receiver. Service provider will remit employee deductions from the Service Provider Accounts Payable bank account. Service Provider will collect the funds from the Service Receiver thru a 3rd party invoice. |
Dependencies
| • | Service Receiver must actively be engaged on the Infinium Application TSA and related Business Objects Universe for the duration this agreement is in effect. |
19
| • | Service Receiver, in a separate and independent agreement, must have the ADP application and interface active for the period of time in which this agreement is in effect. | ||
| • | Service receiver, in a separate and independent agreement, must have Concur and other Time and Attendance systems listed in Attachment A active and maintained with the correct interfaces and data feeds to Infinium by the Service Receiver for the period of time in which this agreement is in effect. | ||
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. | ||
| • | The services documented within this agreement must be exited at the same time and as such cannot be exited in parts. |
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the following
addresses (with an email copy to the Service Owners set forth above):
If to the Service Provider:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
If to the Service Receiver:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
20
SERVICE LEVEL
Service Provider will classify incidents at its own discretion which are received
using High, Medium, or Low. Such classifications shall be consistent with the priorities
Service Provider set for itself as a recipient of services. Incidents classified using
this methodology will be triaged as documented below for SS-Payroll-01, HR-Benefits-02,
and HR-Benefits-03:
| SLA | Response Time | Resolution | ||
High
|
Within 24 hours of receiving notification during normal business hours | Within 24 — 48 hours of response during normal business hours | ||
Medium
|
Within 48 hours of receiving notification during normal business hours | Within 48 — 120 hours of response during normal business hours | ||
Low
|
Within 120 or more hours of receiving notification or as scheduled during normal business hours | Within 120 hours of response during normal business hours |
In the event incidents cannot be resolved, Service Provider shall promptly notify Service Receiver
and work together to try and resolve such incidents.
21
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year. These
rates apply to internal Service Provider employees only, and should external resources be required,
the costs for those external resources will be reviewed with the Service Receiver prior to
execution of the project.
Additional Pricing Rates (All in USD)
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
22
ATTACHMENT A
Inbound Interfaces:
| Interface Name | Program Name | Business Purpose | Vendor | Source System | Destination System |
|||||
| Dependents | ACS | Infinium | ACS | |||||||
| ACS Salary ISP and Pension | ACS | Infinium | ACS | |||||||
| Create ADP Tax Journal | ADP | Infinium | ADP | |||||||
| Maintain ADP Tax Controls | ADP | Infinium | ADP | |||||||
| ADP Periodic & Qtrly File Downld | ADP | Infinium | ADP | |||||||
| ADP Balance Report | ADP | Infinium | ADP | |||||||
| Refresh ADP Employee Number | ADP | Infinium | ADP | |||||||
| Unemployement emps | Barnett | Infinium | Barnett | |||||||
| US_RELOWAGE_UPDATE.CARTUS | CARTUS | Infinium | CARTUS | |||||||
| Send Cartus Receipt of gr | CARTUS | Infinium | CARTUS | |||||||
| Concur — Employee Master File Feed | Concur | Infinium | Concur | |||||||
| Employee information | Concur | Infinium | Concur Expense | |||||||
| FTP Employee information | Concur | Infinium | Concur | |||||||
| Export Employees to Concur | Concur | Infinium | Concur | |||||||
| US Bank — Concur Travel | Concur | Infinum | Concur | |||||||
| Garnishments | County Government | Infinium | County Government | |||||||
| Empire Eligbility and HDHP Mellon pass thru | Empire/Blue | Infinium | Empire/Blue | |||||||
| 800 EVHR employee Infinium Data feed to (800)(Kronos) System | ITT | Infinium | Kronos | |||||||
| Employee feed 500 | ITT | Infinium | Cannon | |||||||
| Cannon’s Full Employee Master Update To Cim | ITT | Infinium | Cannon | |||||||
| Download Employee Date to IPG -Daily ( ER 810 92SHR) | ITT | Infinium | Goulds |
23
| Interface Name | Program Name | Business Purpose | Vendor | Source System | Destination System |
|||||
| Prudential Demographics 880 | Prudential | Infinium | Prudential | |||||||
| Prudential Demographics 881 | Prudential | Infinium | Prudential | |||||||
| Send Prudential Demographics Systems | Prudential | Infinium | Prudential | |||||||
| Prudential Systems Demographics(ENI, CAP, CMC. ECI) | Prudential | Infinium | Prudential | |||||||
| Cobra — New Hire | SHPS | Infinium | SHPS | |||||||
| FSA — Deduction feed to SHPS | SHPS | Infinium | SHPS | |||||||
| Stock Options Eligibility | Smith Barney | Infinium | Smith Barney | |||||||
| Smith Barney CODES FILE | Smith Barney | Infinium | Smith Barney | |||||||
| Smith Barney EMAIL ADDRESSES | Smith Barney | Infinium | Smith Barney | |||||||
| Smith Barney PARTICIPANTS | Smith Barney | Infinium | Smith Barney | |||||||
| New Hire | State of Indiana | Infinium | State of Indiana | |||||||
| WebMD ELIGIBILITY | WebMD | Infinium | WebMD | |||||||
| FTP CCUSECHD2 — Well Fargo password change | Wells Fargo | Infinium | Wells Fargo | |||||||
| CLP to send payroll ACH file to Wells Fargo | Wells Fargo | Infinium | Wells Fargo | |||||||
| CLP to run entire Wells Fargo pos pay process | Wells Fargo | Infinium | Wells Fargo | |||||||
| modified International ACH file for ALL of CANADA | Wells Fargo | Infinium | Wells Fargo | |||||||
| Direct deposit transmission | Wells Fargo | Infinium | Wells Fargo | |||||||
| Send Check Recon to bank | Wells Fargo | Infinium | Wells Fargo | |||||||
| Re-send check recon to bank | Wells Fargo | Infinium | Wells Fargo | |||||||
| Payroll ACH | Wells Fargo | Infinium | Wells Fargo |
24
| Interface Name | Program Name | Business Purpose | Vendor | Source System | Destination System |
|||||
| Active Directory | ITT | Infinium | ITT | |||||||
| HM Update Health Mast — Defense Companies | ITT — HM | Infinium | HM | |||||||
| Hyperion Planning — Build Transmission file | ITT Hyperion | Infinium | Hyperion | |||||||
| SAP AUTO PAY Benefit Deductions sent to Seneca Fall SAP system | ITT SAP | Infinium | SAP P2P | |||||||
| Send file to Hancock | John Hancock | Infinium | John Hancock | |||||||
| John Hancock Eligbility | John Hancock | Infinium | John Hancock | |||||||
| 401K Feedback file from JP Morgan | JP Morgan | Infinum | JP Morgan | |||||||
| KAISER ELIGIBILITY | Kaiser Permanete | Infinium | Kaiser Permanete | |||||||
| Transmit file to Life Plus for Marsh | Marsh | Infinium | Marsh | |||||||
| Upload Life Plus file | Marsh | Infinium | Marsh | |||||||
| LifePlus Eligibility | Marsh | Infinium | Marsh | |||||||
| HSA Send Extract File From Robot Job | Mellon | Infinium | Mellon | |||||||
| Medco Prescription | Merck Medco | Infinium | Merck Medco | |||||||
| Metlife ltd/std mth — GL Advices | Metlife Advices | Infinium | Metlife | |||||||
| Metlife LTD/STD (Menu option) | Metlife Advices | Infinium | Metlife | |||||||
| Metlife Dental | Metlife Dental | Infinium | Metlife Dental | |||||||
| Print Voluntary Accident Monthly report data | National Union Fire | Infinum | National Union Fire | |||||||
| PACIFICARE ELIG | PACIFICARE | Infinium | PACIFICARE | |||||||
| Prudential Loans Systems | Prudential | Infinium | Prudential | |||||||
| ENI Prudential Dollar Send — 800 | Prudential | Infinium | Prudential | |||||||
| CAP Prudential Dollar Send — 881 | Prudential | Infinium | Prudential | |||||||
| ECI Prudential Dollar Send — 883 | Prudential | Infinium | Prudential |
25
ATTACHMENT B
The following table documents the process day for the in-scope pay cycles:
| EMPLOYER | CYCLE CODE | NAME | FREQ | Paid Lag |
Paid Current |
Process Day | NEWCO | Required By | ||||||||
GOULDS PUMPS CANADA (IPG)
|
CGOBW | BI WEEKLY CGO | B | X | Pay Week - Monday | ITTCO | Mon - 2pm | |||||||||
ONTARIO PRO SERVICES CENTER
|
CONBW | BI WEEKLY CON | B | X | Pay Week - Monday | ITTCO | Mon - 2pm | |||||||||
ITT CANNON
|
BIWBW | BIW BI WEEKLY | B | X | Pay Week - Tuesday | ITTCO | Tues - 2pm | |||||||||
ITT CANNON
|
BIWHR | BIW HOURLY | B | X | Pay Week - Tuesday | ITTCO | Tues - 2pm | |||||||||
ITT CANNON
|
BWCAN | BI WEEKLY CANNON | B | X | Pay Week - Monday | ITTCO | Tues - 2pm | |||||||||
ITT CANNON
|
HRCAN | CANNON HOURLY EMPLOYEES |
B | X | Pay Week - Tuesday | ITTCO | Tues - 2pm | |||||||||
ITT VEAM, LLC
|
BWVEA | VEAM SALARY | B | X | Pay Week - Monday | ITTCO | Tues - 2pm | |||||||||
ITT VEAM, LLC
|
HRVEA | HOURLY VEAM | B | X | Pay Week - Monday | ITTCO | Tues - 2pm | |||||||||
ITT CORPORATION
|
BWIND | ITT INDUSTRIES BI-WEEKLY |
B | X | Pay Week - Tuesday | Unknown | Tues - 2pm | |||||||||
COMPUTER & EQUIP LEASING CORP
|
CELBW | COMPUTER & EQUIP LEASING |
B | X | Non Pay Week - Friday | Unknown | Tues - 2pm | |||||||||
ITT TRANSPORTATION DIST SVCS
|
BWGRP | TDS BW | B | X | Non Pay Week - Friday | Unknown | Tues - 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
AERHR | AEROSPACE HOURLY AH | W | X | Pay Week - Monday | ITTCO | Tues - 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
AESAL | AEROSPACE SALARY AP | B | X | Pay Week - Monday | ITTCO | Tues - 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
AMOHR | AMORY HOURLY FH | W | X | Pay Week - Monday | ITTCO | Tues - 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
AMSAL | AMORY SALARY FS | B | X | Pay Week - Tuesday | ITTCO | Tues - 2pm |
26
| EMPLOYER | CYCLE CODE | NAME | FREQ | Paid Lag |
Paid Current |
Process Day | NEWCO | Required By | ||||||||
ITT FLUID TECHNOLOGY
|
CTBW | C’TREAT BW | B | X | Non Pay Week -Friday | ITTCO | Tues -2pm | |||||||||
ITT FLUID TECHNOLOGY
|
EVHR | ENG VALVES HOURLY | W | X | Pay Week -Monday | ITTCO | Tues -2pm | |||||||||
ITT FLUID TECHNOLOGY
|
EVSAL | ENG VALVES SALARY EV | B | X | Non Pay Week -Friday | ITTCO | Tues -2pm | |||||||||
ITT FLUID TECHNOLOGY
|
GRSAL | GRINDEX SALARY GR | B | X | Non Pay Week -Friday | Unknown | Tues -2pm | |||||||||
ITT FLUID TECHNOLOGY
|
MFCBW | MOTION FLOW CONTROL SALARY |
B | X | Pay Week -Tuesday | ITTCO | Tues -2pm | |||||||||
ITT FLUID TECHNOLOGY
|
SHBW | SHEROTEC BW | B | X | Non Pay Week -Friday | Unknown | Tues -2pm | |||||||||
ITT FLUID TECHNOLOGY
|
SHHR | SHEROTEC HOURLY ST | W | X | Pay Week -Monday | Unknown | Tues -2pm | |||||||||
ITT FLUID TECHNOLOGY
|
WTBW | WET | B | X | Pay Week -Monday | Unknown | Tues -2pm | |||||||||
ITT GOULDS PUMPS
|
CARBN | CARBON INDUSTRIES | B | X | Non Pay Week -Friday | ITTCO | Tues -2pm | |||||||||
ITT GOULDS PUMPS
|
EVZHR | DIV-IPG, UNITS VU,PJ,QU WEEKLY |
W | X | Pay Week -Monday | ITTCO | Tues -2pm | |||||||||
ITT GOULDS PUMPS
|
H9WPS | PRO SHOP SALARY TX-BI-WEEKLY |
B | X | Pay Week -Monday | ITTCO | Tues -2pm | |||||||||
ITT GOULDS PUMPS
|
PROBW | BI WEEKLY CYCLE | B | X | Non Pay Week -Friday | ITTCO | Tues -2pm | |||||||||
ITT GOULDS PUMPS
|
9XLCS | CITY OF INDUSTRY SALARY |
B | X | Non Pay Week -Friday | ITTCO | Tues -2pm | |||||||||
ITT GOULDS PUMPS
|
9XLSA | GOULD’S IPG BIWEEKLY SALARY | B | X | Non Pay Week -Friday | ITTCO | Tues -2pm | |||||||||
ITT GOULDS PUMPS
|
92SHR | SF UNION -IPG-SU, CPG-WU WKLY | W | X | Pay Week -Monday | ITTCO | Tues -2pm |
27
| EMPLOYER | CYCLE CODE | NAME | FREQ | Paid Lag |
Paid Current |
Process Day | NEWCO | Required By | ||||||||
ITT
CORPORATION (FRC)
|
FRCSA | GOULD SHARED SERVICES |
B | X | Non Pay Week -Thursday | Unknown | Tues -2pm | |||||||||
ITT GOULDS PUMPS PA
|
H9XSA | ASHLAND SALARY | B | X | Non Pay Week -Friday | Unknown | Tues -2pm | |||||||||
ITT GOULDS PUMPS IPG
|
H9YSA | IPG SALARY | B | X | Non Pay Week -Thursday | ITTCO | Tues -2pm | |||||||||
ITT ENERGY ABSORPTION(ENIDINE)
|
EAHR | ENIDINE WEEKLY HOURLY EA |
W | X | Pay Week -Tuesday | ITTCO | Tues -2pm | |||||||||
ITT ENERGY ABSORPTION(ENIDINE)
|
EASAL | ENIDINE BIWEEKLY SALARY EA |
B | X | Pay Week -Tuesday | ITTCO | Tues -2pm | |||||||||
ITT ENERGY ABSORPTION (CAP)
|
CAHR | CAP WEEKLY HOURLY CA | W | X | Pay Week -Monday | ITTCO | Tues -2pm | |||||||||
ITT ENERGY ABSORPTION (CAP)
|
CASAL | CAP BIWEEKLY SALARY CA |
B | X | Non Pay Week -Friday | ITTCO | Tues -2pm | |||||||||
ITT CONTROLS (CMC)
|
BIHR | BILLERICA HOURLY CM | B | X | Pay Week -Tuesday | ITTCO | Tues -2pm | |||||||||
ITT CONTROLS (CMC)
|
BISAL | BILLERICA BI WEEKLY SALARY CM |
B | X | Pay Week -Tuesday | ITTCO | Tues -2pm | |||||||||
ITT CONTROLS (CMC)
|
CMHR | CMC BIWEEKLY HOURLY CM |
B | X | Pay Week -Tuesday | ITTCO | Tues -2pm | |||||||||
ITT CONTROLS (CMC)
|
CMSAL | CMC BIWEEKLY SALARY CM |
B | X | Pay Week -Tuesday | ITTCO | Tues -2pm | |||||||||
ITT-KALIBURN INC.
|
KBHR | KALIBURN HOURLY (BIWEEKLY) |
B | X | Pay Week -Tuesday | ITTCO | Tues -2pm | |||||||||
ITT-KALIBURN INC.
|
KBSAL | KALIBURN SALARY (BIWEEKLY |
B | X | Pay Week -Tuesday | ITTCO | Tues -2pm | |||||||||
ITT KONI
|
BWFRI | KONI FRICTION SALARIED |
B | X | Non Pay Week -Thursday | ITTCO | Tues -2pm | |||||||||
ITT KONI
|
BWKON | BI WEEKLY KONI | B | X | Non Pay Week -Thursday | ITTCO | Tues -2pm |
28
ATTACHMENT C
Custom Queries to be run once a month by service provider:
| Query/Report Name | Application Used to Produce Information |
Provider | Information Supplied | Frequency of Request | ||||
DWA87200_MonthYear
|
Infinium Query | Debbie Weeks | Salaries Information of employees on Severance (Income Codes 00140 and 00270) | Monthly | ||||
Payroll by Individual
|
Business Objects | Carol Whisler | Payroll information of HQ Employees with names and cost centers | Monthly | ||||
Headcount
|
Business Objects | Idania Miro | Payroll information of HQ Employees with names and cost centers | Monthly |
29
SCHEDULE CA3
SECURITY OPERATIONS CENTER
SECURITY OPERATIONS CENTER
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters and general inquiries regarding this service should be directed to:
| Name | Title | Phone | ||||
Phil Zaleski Exelis Inc. |
Business Area
Manager, Cyber Security Programs |
(315) 838-7114 | phil.zaleski@exelisinc.com | |||
Bill Lavalette ITT Corporation |
Chief Information Security Officer | (315) 568-7155 | bill.lavalette@itt.com |
GENERAL SERVICE DESCRIPTION
Service Provider will perform Information Technology — Security Operations Center (IT-SOC)
Support Services for Service Receiver.
Service Receiver and its Subsidiaries will utilize Service Provider’s resources based on the
functionality, processes, input and output screens, and documents that support the Service
Provider’s business and business processes in the twelve months prior to the Distribution date.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement,
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
1
| Minimum Service | ||||||||||||
| BAU Transaction | Period | |||||||||||
| Service # | Service Name | Description of Service | Volume | (in mo.) | Service Charge | |||||||
IT-SOC-01
|
Security Operations Center Support Services |
Provide IT Security event monitoring and intrusion
detection; and serves as a single point for information
security related issues: • Environmental Awareness — Service Provider
will provide environmental awareness activities,
including Risk/Threat Analysis • Management and Administration of Global IDS/IDP
Security Devices — Service Provider will manage and
administer Global IDS/IDP Security Devices. • Network Data Aggregation, Normalization, and
Correlation —.Service Provider will provide network
data aggregation, normalization, and correlation for
the Service Receiver. Service Provider will provide
centralized management of network and security event
logs collected from multiple sources. Log and/or event
monitoring sources will include, but not limited to,
technologies such as: • Firewalls • VPN concentrators • Intrusion Detection/Prevention appliances • Content filters • As well as other approved and agreed upon controlled
points that can provide insight and/or generate alerts
that detect real time threats to the enterprise Service Provider will also leverage multiple levels of alerting and threat identification to include: • Predefined alerts • Network anomaly detection rules • Emerging cyber threat monitoring Service Provider will ensure compliance with legal, regulatory, and internal policies regarding records management, incident documentation, and data retention requirements for data within Service Provider’s control. • Help Desk — Service Provider will make
available the IT-SOC Help Desk, via phone or email, to
provide assistance for security-related issues or
concerns to the Service Receiver’s IT and/or Management
staff. • Metrics/KPIs Reporting — Service Provider will
provide metrics to communicate overall effectiveness of
IT-SOC activities and investigations. Service Provider
is able to organize, manage, and visualize data, as
well as produce reports that identify baselines and
projected targets; trending; and standardized key
metrics tailored to Service Receiver’s business needs.
|
1 Analysis per Month 40 Modifications per Month 1500 Security Events per Second 30 Contacts per Month 1 Status Report per Week |
3 | Cost plus 2% - 10% per month | |||||||
2
Service Provider will have the necessary United States Government security clearances to
enable and leverage interaction with Federal/State/Local Government and Department of Defense
Agencies in support of investigations, compliance issues, and/or threat related activity and
information sharing at the request of Service Receiver. Such interaction can include, but not
limited to, agencies such as:
| • | Federal/State/Local Law Enforcement (Investigations) | ||
| • | Department of State / Department of Commerce (Compliance) | ||
| • | Department of Defense | ||
| • | The Defense Industrial Base (DIBNet-U and DIBNet-S) Interaction and Information Sharing |
Service Volumes Greater or Less Than Observed Pre-Distribution Date
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 10% (such activity, including any such 10% deviation,
“Business as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will
accommodate Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities on a
time and materials basis with respect to the one-time set-up fees. The table below will then apply
following the completion of the one-time set-up activities
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume within
BAU [Note: BAU
already includes +/-
10% of
pre-distribution date
volumes]
|
No incremental one-time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady-State fee structure for requisite service as documented below | ||
Service Volume
greater or less than
BAU
|
Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service |
Ad-Hoc development/services or processing of reports consistent with what was provided prior
to the distribution date will be supported as part of this agreement. Service Provider will use
commercially reasonable efforts based on provider’s current abilities to accommodate regulatory or
legal ad-hoc requests. Ad-hoc requests which may need to be performed to assist Service Receiver
in meeting new legal obligations will be provided on a time and materials basis as described in the
Additional Pricing section of this agreement. Any changes to 3rd party relationships which require
interface modifications or re-writes are not included as part of the scope of this agreement.
Should the Service Receiver require such changes, Parties agree to negotiate in good faith with
regard to such modification. In the event modifications to the services provided are required by
law for only the Service Recipient and such modifications
3
increase the cost for Service Provider, Service Recipient that requires the modifications shall pay
all the additional costs including the costs for the other Service Recipients.
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
| Service Provider will make commercially reasonable efforts to assist Service Receiver in exiting of this agreement. These efforts include: | ||||||
• Support of
data extraction
requests from the
Service Receiver |
||||||
IT-SOC-02
|
Security Operations Center Migration |
• Providing
Subject Matter
Expertise in helping
the Service Receiver
understand current
state of the Security
Operations Center
|
Time and Materials Based on Additional Pricing Section | |||
| Service Provider will provide the following knowledge transfer services: | ||||||
IT-SOC-03
|
Security Operations Center Knowledge Transfer |
• Existing
non-sensitive
documentation
maintained by the
Service Provider will
be given to the
Service Receiver as
it relates to the
Security Operations
Center
|
Time and Materials Based on Additional Pricing Section |
Supplemental Services
For requests for supplemental services relating to Information Technology — Security Operations
Center by Service Receiver not mentioned in this Schedule or not included within the costs
documented in this agreement, Service Receiver will provide a discreet project request and submit
such request to Service Provider using the formalized Change Request attached as Annex A for
consideration by Service Provider.
Where notice is required a number of business days prior to some required action by Service
Provider, notice must be received by 12 noon Eastern Time to be counted as received during such
business day. Service Provider shall, within a commercially reasonable period, provide a price
quote to be commercially reasonable based on the current cost of the Services to Service Receiver
taking into account, such items as the specific time the request was made, service delivery
volumes, exit planning activities, and other activities Service Provider is currently engaged in at
the time of the request, but not later than 30 days after the request was made. If Service
Provider, in its sole discretion determines (i) such request would increase the ongoing operating
costs for Service Provider (as a service recipient) or any other service receiver or (ii) that it
is not capable of making such changes with its current staff during the time period
4
requested without interrupting the Services provided to itself or any other service receiver.
Service Provider need not provide a price quote or perform the services. Where a price quote is
provided, Service Provider shall provide the service requested upon acceptance of the price.
LOCATIONS
Services are initially provided from Rome, NY, USA to global locations.
PREREQUISITES/DEPENDENCIES
| • | If Service Receiver provides inaccurate information to Service Provider, it will be the responsibility of the Service Receiver to rectify any problems and bear any costs incurred to rectify the issue. | ||
| • | Service Receiver must coordinate with Service Provider to ensure that either direct access to Receiver’s network is available, or access to a data collector in Receiver’s network is available for the period of this TSA. | ||
| • | Service Receiver must configure its appliances in order to forward data logs to Service Provider. | ||
| • | Service Receiver must provide appropriate global administrative credentials to Service Provider in order to manage intrusion prevention system. | ||
| • | Service Receiver must provide a list of appropriate contacts and points of escalation. | ||
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. |
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the following addresses
(with an email copy to the Service Owners set forth above):
If to the Service Provider:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
5
If to the Service Receiver:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
SERVICE LEVEL
Service Provider will classify incidents at its own discretion. Such classifications shall
be consistent with the priorities Service Provider set for itself as a recipient of services.
Incidents classified using this methodology will be triaged as documented in Attachment A.
In the event incidents cannot be resolved, Service Provider shall promptly notify Service Receiver
and work together to try and resolve such incidents.
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year. These
rates apply to internal Service Provider employees only, and should external resources be required,
the costs for those external resources will be reviewed with the Service Receiver prior to
execution of the project.
Additional Pricing Rates (All in USD)
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
6
ATTACHMENT A
The IT-SOC staff is accessible, based on need and criticality, 24 hours a day, 7 days a week,
365 days a year, through the usage of on-call staff to assist with any IT Security related
incident.
The IT-SOC Help Desk can be reached by phone or email and is ready to provide assistance for any
information security related and concerns. Depending on the urgency, severity, and scope of the
problem, there are two recommended contact methods:
| 1. | ITT IT Security Operations Center: | ||
| Phone: (Mondays — Fridays; 7 am—5 pm ET) | |||
| Email: ITT-SOC@exelisinc.com (24/7) | |||
| 2. | In instances where there is an emergency or suspected situation occurring, please contact the IT-SOC Director and/or Assistant Director directly, 24/7, utilizing the contact information below: |
| • | Director | ITT IT Security Operations Center | ||
| • |
Assistant Director | ITT IT Security Operations Center
Office: | Cell: |
7
Annex A
TSA Change Request Form
TSA Change Request Form
TSA Schedule: |
Receiver TSA Owner: |
Date of Request: |
Completed By: |
Requested Service Change:
| Already agreed to | ||||||||||||||||
| Service Description | with Service | |||||||||||||||
| Item Number | (Listed on schedule in the TSA) | Monthly Charge | Requested Change | Provider (Y/N) | ||||||||||||
1 |
||||||||||||||||
2 |
||||||||||||||||
3 |
||||||||||||||||
4 |
||||||||||||||||
5 |
||||||||||||||||
Outcome:
| Outcome | ||||||||
| Item Number | (Approved, Denied) | Specific Action to be taken | ||||||
1 |
||||||||
2 |
||||||||
3 |
||||||||
4 |
||||||||
5 |
||||||||
| Approvals | ||
Approved By:
|
Approved By: | |
Provider TSA Functional Lead
|
Receiver TSA Functional Lead | |
Executive Representative:
|
Executive Representative: | |
Provider TSA Manager
|
Receiver TSA Manager | |
8
SCHEDULE CA4
BUSINESS OBJECTS PROFESSIONAL
SERVICES
BUSINESS OBJECTS PROFESSIONAL
SERVICES
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
Chris Westrick Exelis Inc. |
Senior Systems Analyst | (260) 451—6529 | chris.westrick@exelisinc.com | |||
Mike Salvatore ITT Corporation |
Global Data and Reporting Services Manager | (410) 340—5632 | michael.salvatore@itt.com |
GENERAL SERVICE DESCRIPTION
Service Provider will perform Business Objects Professional Services for Service Receiver.
Service Receiver and its Subsidiaries will utilize Service Provider’s resources based on the
functionality, processes, input and output screens and documents that support Service Provider’s
business and business processes in the twelve months prior to the Distribution Date.
1
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement,
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
| Minimum Service |
||||||||||||
| BAU | Period | Service | ||||||||||
| Service # | Service Name | Description of Service | Transaction Volume | (in mo.) | Charge | |||||||
| Provide Business Objects Professional Services to support Business Intelligence and Extract Transform Load (ETL) toolset support: | ||||||||||||
IT-BO-01
|
Business Objects Support Services |
• Universe
Design & Architecture
— The Service
Provider, on receipt
of a Universe Design
& Architecture
request initiated by
phone or email from
the Service Receiver,
will record and track
the request in the
Service Provider’s
ticketing (ISR)
system. Included
with a request, the
Service Provider will
provide to the
Service Provider
source database
schema, end user
participation input
and other reporting
requirements in order
for the Service
Provider to provide
the Service Receiver
with a document
outlining best
practices and
recommendations for a
universe design,
given the provided
criteria. The
Service Receiver will
implement any and all
changes that they
deem necessary.
Note: Universe Design
& Architecture
service for one
Universe may take
between two weeks and
three months of
effort, depending on
complexity.
|
Unlimited | 12 | Time and Materials Based on Additional Pricing Section | |||||||
• Security
Administration — The
Service Provider, on
receipt of a Security
Administration
request initiated by
phone or email from
the Service Receiver,
will record and track
the request in the
Service Provider’s
ticketing (ISR)
system. The Service
Receiver will provide
to the Service
Provider access to
the CMC or a Service
Receiver BOE Admin,
with detailed
knowledge of current
security
configuration. Using
this access, resource
and information,
Service Provider will
analyze and trouble
shoot the Service
Receiver’s issue, and
provide a document
with recommendations
for security
configurations to the
Service Receiver.
The Service Receiver
will implement any
and all changes that
they deem necessary.
|
10-15/month | |||||||||||
2
| Minimum Service |
||||||||||||
| BAU | Period | Service | ||||||||||
| Service # | Service Name | Description of Service | Transaction Volume | (in mo.) | Charge | |||||||
• Database
Utilization Analysis
— The Service
Provider, on receipt
of a Database
Analysis request
initiated by phone or
email from the
Service Receiver,
will record and track
the request in the
Service Provider’s
ticketing (ISR)
system. Service
Receiver will provide
source database
schema, end user
participation input
and other reporting
requirements with
Source Database
Administrator
participation. Using
this information, the
Service Provider will
provide the Service
Receiver a document
detailing possible
adjustments to
improve performance
or accuracy if any
are able to be
determined.
|
1/month | |||||||||||
• Connectivity
Troubleshooting —
The Service Provider,
on receipt of a
Connectivity
Troubleshooting
request initiated by
phone or email from
the Service Receiver,
will record and track
the request in the
Service Provider’s
ticketing (ISR)
system. The Service
Receiver will provide
to the Service
Provider access and
use of Source
Database
Administrator,
Service Receiver BOE
Admin and possible
Network Administrator
participation to
exhaust all known
troubleshooting steps
and document
resolution of Service
Receiver’s complaint.
The Service Receiver
will implement any
and all changes that
they deem necessary.
|
1—3/month | |||||||||||
• Business
Objects
Administration — The
Service Provider, on
receipt of a Business
Objects
Administration
request, initiated by
phone or email from
the Service Receiver,
will record and track
the request in the
Service Provider’s
ticketing (ISR)
system. The Service
Provider will work
with any applicable
policy or standard
procedures and
reporting
expectations with
Service Receiver BOE
Admin or Server Admin
participation, to
provide the Service
Receiver with a
document detailing
recommendations for
settings,
configurations and
the set-up for
Business Objects
Enterprise. The
Service Receiver will
implement any and all
changes that they
deem necessary.
|
1—5/month | |||||||||||
3
Service Volumes Greater Than Observed Pre—Distribution Date
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 10% (such activity, including any such 10% deviation,
“Business as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will
accommodate Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities on a
time and materials basis with respect to the one-time set-up fees. The table below will then apply
following the completion of the one-time set-up activities.
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service
Volume within
BAU [Note: BAU
already includes +/-10% of
pre-distribution date
volumes]
|
No incremental one—time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady—State fee structure for requisite service as documented in this agreement | ||
Service Volume greater or less than BAU
|
Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service |
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
| Service Provider will provide the following knowledge transfer services: | ||||||
IT—BO—02
|
Business Objects Knowledge Transfer |
• Existing
non-sensitive
documentation
maintained by the
Service Provider will
be given to the
Service Receiver as
it relates to the
Business Objects
|
Time and Materials Based on Additional Pricing Section |
Supplemental Services
For requests for supplemental services relating to Business Objects Professional services support
by Service Receiver not mentioned in this Schedule or not included within the costs documented in
this agreement, Service Receiver will provide a discreet project request and submit such request to
Service Provider using the formalized Change Request attached as Annex A for consideration by
Service Provider.
Where notice is required a number of business days prior to some required action by Service
Provider, notice must be received by 12 noon Eastern Time to be counted as received during such
business day. Service Provider shall, within a commercially reasonable period, provide a price
quote to be commercially reasonable based on the current cost of the Services to Service
Receiver taking into account, such items as the specific time the request was made, service
delivery volumes, exit planning activities, and other activities Service Provider is currently
4
engaged in at the time of the request, but not later than 30 days after the request was made. If
Service Provider, in its sole discretion determines (i) such request would increase the ongoing
operating costs for Service Provider (as a service recipient) or any other service receiver or (ii)
that it is not capable of making such changes with its current staff during the time period
requested without interrupting the Services provided to itself or any other service receiver.
Service Provider need not provide a price quote or perform the services. Where a price quote is
provided, Service Provider shall provide the service requested upon acceptance of the price.
LOCATIONS
Services are initially provided from Fort Wayne, IN, USA, to USA locations.
PREREQUISITES/DEPENDENCIES
| • | Service Receiver will maintain the Business Objects application. | ||
| • | If Service Receiver provides inaccurate information to Service Provider it will be the responsibility of the Service Receiver to rectify any problems and bear any costs incurred to rectify the issue. | ||
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. | ||
| • | Service Receiver must provide admin level rights to Service Provider as needed to Service Receiver’s maintained Business Objects application server. | ||
| • | Service Receiver must keep the TSA Gateway active and accessible to the Service Provider as needed for the period of this TSA. |
5
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the
following addresses (with an email copy to the Service Owners set forth above):
If to the Service Provider:
If to the Service Provider:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
If to the Service Receiver:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
SERVICE LEVEL
Service Provider will classify incidents at its own discretion. Such
classifications shall be consistent with the priorities Service Provider set for
itself as a recipient of services.
In the event incidents cannot be resolved, Service Provider shall promptly notify
Service Receiver and work together to try and resolve such incidents.
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year. These
rates apply to internal Service Provider employees only, and should external resources be
6
required, the costs for those external resources will be reviewed with the Service Receiver prior to
execution of the project.
| Additional Pricing Rates (All in USD) | ||||||||||||
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
7
Annex A
TSA Change Request Form
TSA Change Request Form
TSA Schedule:
Receiver TSA Owner:
Date of Request:
Completed By:
Receiver TSA Owner:
Date of Request:
Completed By:
Requested Service Change:
| Already agreed to | ||||||||
| Item | Service Description | with Service | ||||||
| Number | (Listed on schedule in the TSA) | Monthly Charge | Requested Change | Provider (Y/N) | ||||
1 |
||||||||
2 |
||||||||
3 |
||||||||
4 |
||||||||
5 |
Outcome:
| Item | Outcome | |||
| Number | (Approved, Denied) | Specific Action to be taken | ||
1 |
||||
2 |
||||
3 |
||||
4 |
||||
5 |
Approvals
| Approved By: | Approved By: | |
Provider TSA Functional Lead
|
Receiver TSA Functional Lead | |
Executive Representative:
|
Executive Representative: | |
Provider TSA Manager
|
Receiver TSA Manager |
8
SCHEDULE CA5
INFINIUM APPLICATION SERVICES
INFINIUM APPLICATION SERVICES
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
Dan Johnston Exelis Inc. |
Enterprise Applications Manager | (260) 451—6042 | dan.johnston@exelisinc.com | |||
Ron DeBoer ITT Corporation |
Application Services Manager | (410) 689—1351 | ron.deboer@itt.com |
GENERAL SERVICE DESCRIPTION
Service Provider will provide Infinium Application Support Services for Service Receiver.
Service Receiver and its Subsidiaries will utilize Service Provider’s resources based on the
functionality, processes, input and output screens, and documents that support the Service
Provider’s business and business processes in the twelve months prior to the Distribution date.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement,
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
| Minimum Service | ||||||||||||
| BAU Transaction | Period | |||||||||||
| Service # | Service Name | Description of Service | Volume | (in mo.) | Service Charge | |||||||
| Provide Infinium Application HR, Payroll, and General Ledger Related Support Services: | ||||||||||||
IT-Infinium-01
|
Infinium Application HR, Payroll and related GL Support Services |
• Access to
Infinium Application
— Service Provider
will provide access
to application
through form(s)
signed off by the
appropriate signing
authority or
designated Executive
per the Master
Services Agreement,
and submitted through
Remedy tickets.
Service Provider will
give access to the
requested menu
options. Service
Provider will provide
access to application
for authorized
service receiver
users per the
security guidelines
outlined in the
Master Services
Agreement. Service
Provider will create
new application and
database users
pre-approved by
Service Recipient,
maintain application
and database
passwords, maintain
application and
database security to
meet security and
controls guidelines
identified in Master
Services Agreement,
as well as monitor
and restrict
unauthorized access
to source code and
data. Service
Provider will
maintain production
batch schedule,
execute batch jobs,
assess impact of
failed batch jobs,
and adjust schedule
to account for batch
job failures and
delays. Service
Provider will execute
web server and
application server
configuration
changes, monitor and
maintain application
administration Cron
jobs and shell
scripts. Time
required to provide
access to the
application will be
within (5) five
business days. |
18 | Cost will be passed through as part of the HR/Payroll/Benefits TSA | ||||||||
• Infinium
Support & Maintenance
— Service Provider
will monitor incident
resolution requests
as reported via
Remedy tickets,
recommend and notify
Service Receiver, and
implement incident
resolution or
expected fix from
vendor per the SLA
outlined in the
Service Level section
of this agreement.
Service Provider will
identify and
communicate breaks in
application
discovered by
automated or
monitoring system,
develop solution and
approach to address
break in application,
and implement fixes
to resolve break in
application.
|
65 calls/ month | |||||||||||
• Infinium
Database Support —
Service Provider will
trouble shoot
database related
incidents as reported
via Remedy tickets.
These activities
include maintaining
database schemas if
necessary, performing
data cleanup
activities as well as
scheduled maintenance
activities,
requesting
database/file
restores, and
providing support for
all database issues
in production and
test/development
environments.
|
6 calls/ month | |||||||||||
• Custom
reports and data
extracts will be
provided as necessary
to support legal,
audit and |
||||||||||||
2
| Minimum Service | ||||||||||||
| BAU Transaction | Period | |||||||||||
| Service # | Service Name | Description of Service | Volume | (in mo.) | Service Charge | |||||||
compliance
tasks when requested
by authorized
individuals. |
||||||||||||
• Ad-Hoc
development/services
or processing of
reports consistent
with what was
provided in the 12
months prior to the
distribution date
will be supported as
part of this
agreement. Any new
Ad-Hoc reporting
requirements will be
considered
out-of-scope and will
be provided on a time
and materials basis
as described in the
Additional Pricing
section of this
agreement. |
||||||||||||
• Any
modification of
3rd Party
Interfaces consistent
with support of BAU
or seasonal business
processes which were
provided with
existing internal
resources in the 12
months prior to the
distribution date
will be supported as
part of this
agreement. Any
changes to 3rd party
relationships which
require new interface
modifications or
re-writes are not
included as part of
the scope of this
agreement and will be
provided on a time
and materials basis
as described in the
Additional Pricing
section of this
agreement. |
||||||||||||
Provide Infinium
Application General
Ledger Support for
Enterprise Accounting
Function: |
||||||||||||
IT—Infinium—02
|
Infinium Application GL Services for Enterprise Accounting Function Support Services | • Access to
Infinium Application
— Service Provider
will provide access
to application
through form(s)
signed off by the
appropriate signing
authority or
designated Executive
per the Master
Services Agreement,
and submitted through
Remedy tickets.
Service Provider will
give access to the
requested menu
options. Service
Provider will provide
access to application
for authorized
service receiver
users per the
security guidelines
outlined in the
Master Services
Agreement. Service
Provider will create
new application and
database users
pre-approved by
Service Recipient,
maintain application
and database
passwords, maintain
application and
database security to
meet security and
controls guidelines
identified in Master
Services Agreement,
as well as monitor
and restrict
unauthorized access
to source code and
data. Service
Provider will
maintain production
batch schedule,
execute batch jobs,
assess impact of
failed batch jobs,
and adjust schedule
to account for batch
job failures and
delays. Service
Provider will execute
web server and
application server
configuration
changes, monitor and
maintain application
administration Cron
jobs and shell
scripts. Time
required to provide
access to the
application will be
within (5) five
business days. |
18 | Cost will be passed through as part of General Ledger Accounting — ITT HQ TSA | ||||||||
• Infinium
Support & Maintenance
— Service Provider
will monitor incident
resolution |
||||||||||||
3
| Minimum Service | ||||||||||||
| Service | BAU Transaction | Period | ||||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Service Charge | |||||||
| requests as reported via Remedy tickets, recommend and notify Service Receiver, and implement incident resolution or expected fix from vendor per the SLA outlined in the Service Level section of this agreement. Service Provider will identify and communicate breaks in application discovered by automated or monitoring system, develop solution and approach to address break in application, and implement fixes to resolve break in application. | 65 calls/ month | |||||||||||
• Infinium
Database Support —
Service Provider will
trouble shoot
database related
incidents as reported
via Remedy tickets.
These activities
include maintaining
database schemas if
necessary, performing
data cleanup
activities as well as
scheduled maintenance
activities,
requesting
database/file
restores, and
providing support for
all database issues
in production and
test/development
environments.
|
6 calls/ month | |||||||||||
• Custom
reports and data
extracts will be
provided as necessary
to support legal,
audit and compliance
tasks when requested
by authorized
individuals.
|
||||||||||||
• Ad-Hoc
development/services
or processing of
reports consistent
with what was
provided in the 12
months prior to the
distribution date
will be supported as
part of this
agreement. Any new
Ad-Hoc reporting
requirements will be
considered
out-of-scope and will
be provided on a time
and materials basis
as described in the
Additional Pricing
section of this
agreement. |
||||||||||||
• Any
modification of
3rd Party
Interfaces consistent
with support of BAU
or seasonal business
processes which were
provided with
existing internal
resources in the 12
months prior to the
distribution date
will be supported as
part of this
agreement. Any
changes to 3rd party
relationships which
require new interface
modifications or
re-writes are not
included as part of
the scope of this
agreement and will be
provided on a time
and materials basis
as described in the
Additional Pricing
section of this
agreement. |
||||||||||||
| Provide Infinium Accounts Payable and Currency Management Support for Enterprise Accounting Function: | ||||||||||||
IT-Infinium-03
|
Infinium Application AP and CM Support Services | • Access to
Infinium Application
— Service Provider
will provide access
to application
through form(s)
signed off by the
appropriate signing
authority or
designated Executive
per the Master
Services Agreement,
and submitted through
Remedy tickets.
Service Provider will
give access to the
requested menu
options. Service
Provider will provide
access to
|
18 | Cost will be passed through as part of General Ledger Accounting — ITT HQ TSA | ||||||||
4
| BAU | Minimum Service | |||||||||||
| Service | Transaction | Period | Service | |||||||||
| Service # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| application for authorized service receiver users per the security guidelines outlined in the Master Services Agreement. Service Provider will create new application and database users pre-approved by Service Recipient, maintain application and database passwords, maintain application and database security to meet security and controls guidelines identified in Master Services Agreement, as well as monitor and restrict unauthorized access to source code and data. Service Provider will maintain production batch schedule, execute batch jobs, assess impact of failed batch jobs, and adjust schedule to account for batch job failures and delays. Service Provider will execute web server and application server configuration changes, monitor and maintain application administration Cron jobs and shell scripts. Time required to provide access to the application will be within (5) five business days. | ||||||||||||
• Infinium
Support & Maintenance
— Service Provider
will monitor incident
resolution requests
as reported via
Remedy tickets,
recommend and notify
Service Receiver, and
implement incident
resolution or
expected fix from
vendor per the SLA
outlined in the
Service Level section
of this agreement.
Service Provider will
identify and
communicate breaks in
application
discovered by
automated or
monitoring system,
develop solution and
approach to address
break in application,
and implement fixes
to resolve break in
application.
|
20 calls/ month | |||||||||||
• Infinium
Database Support —
Service Provider will
trouble shoot
database related
incidents as reported
via Remedy tickets.
These activities
include maintaining
database schemas if
necessary, performing
data cleanup
activities as well as
scheduled maintenance
activities,
requesting
database/file
restores, and
providing support for
all database issues
in production and
test/development
environments. |
6 calls/ month | |||||||||||
| * | BAU volumes will be calculated on a rolling 12-month average to account for seasonal fluctuations and any temporary spike in service volumes post-spin. | |
| * | For BAU volumes, one incident will be considered the equivalent of one call (regardless of the number of phone conversations related to the same issue). |
Services that will not be provided as part of this agreement are:
| • | Employee Self Service Module (including Online Benefits Enrollment) |
5
Service Volumes Greater Than or Less Than Observed Pre-Distribution Date
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 10% (such activity, including any such 10% deviation,
“Business as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will
accommodate Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities on a
time and materials basis with respect to the one-time set-up fees. The table below will then apply
following the completion of the one-time set-up activities.
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume within
BAU [Note: BAU
already includes +/-
10% of
pre-distribution date
volumes]
|
No incremental one-time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady-State fee
structure for requisite service as documented below |
||
Service Volume
greater or less than
BAU
|
Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service |
Ad-Hoc development/services or processing of reports consistent with what was provided prior
to the distribution date will be supported as part of this agreement. Service Provider will use
commercially reasonable efforts based on provider’s current abilities to accommodate regulatory or
legal ad-hoc requests. Ad-hoc requests which may need to be performed to assist Service Receiver
in meeting new legal obligations will be provided on a time and materials basis as described in the
Additional Pricing section of this agreement. Any changes to 3rd party relationships which require
interface modifications or re-writes are not included as part of the scope of this agreement.
Should the Service Receiver require such changes, Parties agree to negotiate in good faith with
regard to such modification. In the event modifications to the services provided are required by
law for only the Service Recipient and such modifications increase the cost for Service Provider,
Service Recipient that requires the modifications shall pay all the additional costs including the
costs for the other Service Recipients.
6
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
IT-Infinium-04
|
Infinium Migration | Service Provider will make commercially reasonable best efforts to assist Service Receiver in exiting of this agreement. These efforts include: | ||||
• Support of
data extraction
requests from the
Service Receiver • Providing
Subject Matter
Expertise in helping
the Service Receiver
understand current
state data schema and
configuration details
|
Time and Materials Based on Additional Pricing Section |
|||||
IT-Infinium-05
|
Infinium Knowledge Transfer |
Service Provider will provide the following knowledge transfer services: | ||||
• Existing
non-sensitive
documentation
maintained by the
Service Provider will
be given to the
Service Receiver as
it relates to the
Infinium Application
and related
interfaces
|
Time and Materials Based on Additional Pricing Section |
Supplemental Services
For requests for supplemental services relating to Infinium Application support services by Service
Receiver not mentioned in this Schedule or not included within the costs documented in this
agreement, Service Receiver will provide a discreet project request and submit such request to
Service Provider using the formalized Change Request attached as Annex A for consideration by
Service Provider.
Where notice is required a number of business days prior to some required action by Service
Provider, notice must be received by 12 noon Eastern Time to be counted as received during such
business day. Service Provider shall, within a commercially reasonable period, provide a price
quote to be commercially reasonable based on the current cost of the Services to Service Receiver
taking into account, such items as the specific time the request was made, service delivery
volumes, exit planning activities, and other activities Service Provider is currently engaged in at
the time of the request, but not later than 30 days after the request was made. If Service
Provider, in its sole discretion determines (i) such request would increase the ongoing operating
costs for Service Provider (as a service recipient) or any other service receiver or (ii) that it
is not capable of making such changes with its current staff during the time period requested
without interrupting the Services provided to itself or any other service receiver. Service
Provider need not provide a price quote or perform the services. Where a price quote is provided,
Service Provider shall provide the service requested upon acceptance of the price.
7
LOCATIONS
Services are initially provided from Fort Wayne, IN, USA to Canada and USA
locations for HR and payroll, and White Plains, NY for GL, AP, and CM.
PREREQUISITES/DEPENDENCIES
| • | Service Receiver will maintain the applications and interfaces documented in Attachment A. | ||
| • | Any IT services required to support business services outlined in the HR/Payroll/Benefits TSA and which were provided in the 12 months prior to the distribution date will be supported as part of this agreement. | ||
| • | If Service Receiver sends inaccurate data to Service Provider it will be the responsibility of the Service Receiver to rectify any problems and bear any costs incurred to rectify the issue. | ||
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. |
8
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the
following addresses (with an email copy to the Service Owners set forth above):
If to the Service Provider:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
If to the Service Receiver:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
SERVICE LEVEL
Service Provider will classify incidents at its own discretion. Such
classifications shall be consistent with the priorities Service Provider set
for itself as a recipient of services. Incidents classified using this
methodology will be triaged as documented in Attachment B.
In the event incidents cannot be resolved in the time outlined in Attachment B,
Service Provider shall promptly notify Service Receiver and work together to
try and resolve such incidents.
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year. These
rates apply to internal Service Provider employees only, and should external resources be
9
required, the costs for those external resources will be reviewed with the Service Receiver prior
to execution of the project.
| Additional Pricing Rates (All in USD) | ||||||||||||
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
10
ATTACHMENT A
| Interface | Program | Source | Destination | |||||||
| Name | Name | Business Purpose | Vendor | System | System | |||||
| AC ISP Rate change file | ACS | ACS | Infinium | |||||||
| Load and List wage request file from Cartus | CARTUS | CARTUS | Infinium | |||||||
| Load Cartus file and process-batch job | CARTUS | CARTUS | Infinium | |||||||
| Bring in Cartus Wage Request file | CARTUS | CARTUS | Infinium | |||||||
| Load Cartus Gross Ups | CARTUS | CARTUS | Infinium | |||||||
| Re — Apply Concur (PYPME History) to Payroll | Concur | Concur | Infinium | |||||||
| Concur — Load Employees from INFIN | Concur | Concur | Infinium | |||||||
| Expense transations | Concur | Concur | Infinium | |||||||
| CONCUR travel process expense records | Concur | Concur | Infinium | |||||||
| Labor feed 800 | Infinium | Aerospace | Infinium | |||||||
| Labor feed 800 | Infinium | Amory | Infinium | |||||||
| Labor feed 500 | Infinium | Cannon | Infinium | |||||||
| Cannon Salary Non — Exempt Employees | Infinium | Cannon | Infinium | |||||||
| Load Labor to Daily Time (CAP) | Infinium | CAP | Infinium | |||||||
| Load Labor to Daily Time (CMC — BWS) | Infinium | CMC | Infinium | |||||||
| Load Labor to Daily Time(CMC — Ft8) | Infinium | CMC | Infinium | |||||||
| Labor feed 800 | Infinium | Engvl | Infinium | |||||||
| Load Labor to Daily Time (ENI) | Infinium | ENI | Infinium | |||||||
| Labor Feed to Infinium — Gould Pumps 3 — | Infinium | Gould | Infinium | |||||||
| Labor feed | Infinium | Gould | Infinium |
11
| Interface | Program | Source | Destination | |||||||
| Name | Name | Business Purpose | Vendor | System | System | |||||
| Labor feed 810 | Infinium | Gould Pumps 92S | Infinium | |||||||
| Labor feed 810 | Infinium | Gould Pumps 9 XL | Infinium | |||||||
| Labor feed 810 | Infinium | Gould Pumps EVZ | Infinium | |||||||
| KAL hourly payroll feed | Infinium | Kalburn | Infinium | |||||||
| Labor feed 905 | Infinium | Koni Hr | Infinium | |||||||
| Labor feed 905 | Infinium | Koni Sal | Infinium | |||||||
| Promotions | Infinium | Excel | Infinium | |||||||
| Labor Load (BIWBW) | Infinium | BIWBW | Infinium | |||||||
| Labor Load (BIWHR) | Infinium | BIWHR | Infinium | |||||||
| Salary Changes | Infinium | Excel | Infinium | |||||||
| 401K Hourly to JP Morgan | JP Morgan | JP Morgan | Infinium | |||||||
| Receive Long Term Care file | John Hancock | John Hancock | Infinium | |||||||
| Receive Long Term Care Billing file | John Hancock | John Hancock | Infinium | |||||||
| Copy from Tape J&HKVI data to file XPYPJHI | John Hancock | John Hancock | Infinium | |||||||
| Receive life plus file | John Hancock | John Hancock | Infinium | |||||||
| Receive Life Plus Input File | Marsh | Marsh | Infinium |
12
| Program | Source | Destination | ||||||||
| Interface Name | Name | Business Purpose | Vendor | System | System | |||||
| Infinum HR Data to Payroll Vendor | Payroll Vendor | Infinium /SAP | Payroll Vendor | |||||||
| Defense Labor feed to Payroll Vendor | Payroll Vendor | iSeries | Payroll Vendor | |||||||
| ITT Labor Feed to Payroll Vendor | Payroll Vendor | iSeries | Payroll Vendor | |||||||
| Water Labor Feed to Payroll Vendor | Payroll Vendor | iSeries | Payroll Vendor | |||||||
| Receive and process autotime — car allowance | Runzheimer | Runzheimer | Infinium | |||||||
| Receive and process Can AT — car allowance | Runzheimer | Runzheimer | Infinium | |||||||
| Re-Apply Runzheimer (PYPME History) to Payroll | Runzheimer | Runzheimer | Infinium | |||||||
| Receive Smith Barney Options | Smith Barney | Smith Barney | Infinium | |||||||
| Receive Smith Barney Restricted | Smith Barney | Smith Barney | Infinium | |||||||
| United Way Upload to PYPDE | United Way | United Way | Infinium | |||||||
| CLP to receive check recon file from Wells F | Wells Fargo | Wells Fargo | Infinium | |||||||
| Receive Check recon | Wells Fargo | Wells Fargo | Infinium |
13
ATTACHMENT B
Following are the incident priorities and expected resolution target times:
| Priority | Accept | Resolve Incidents | ||
| Urgent | 30 mins | 1 hr | ||
| High | 1 hr | 4 hrs | ||
| Medium | 2 hrs | 8 hrs | ||
| Low | 4 hrs | 48 hrs |
Priority of Incidents
Urgent: System/Component or Program is inoperable, Multiple users effected. No alternatives
or backup is available.
High: Single user with a System/Component or Program that is inoperable. Component degraded with
limited access or functionality. A Workaround is available.
Medium: Job functions can be performed with some restricted functionality. Training, questions or
concerns need to be addressed but production is not affected.
Low: Attention is needed to assist in non-critical situations. A workaround is available.
Recovery Times
In the event of a hardware failure, the hardware vendor will be engaged for repair or replacement.
The anticipated outage period for an event of this nature is 16 hours.
In the event of a failure which results in the database having to be restored, the anticipated
outage would be 6+ hours.
14
Annex A
TSA Change Request Form
TSA Change Request Form
TSA Schedule:
Receiver TSA Owner:
Date of Request:
Completed By:
Receiver TSA Owner:
Date of Request:
Completed By:
Requested Service Change:
| Already agreed to | ||||||||
| Service Description | with Service | |||||||
| Item Number | (Listed on schedule in the TSA) | Monthly Charge | Requested Change | Provider (Y/N) | ||||
| 1 | ||||||||
| 2 | ||||||||
| 3 | ||||||||
| 4 | ||||||||
| 5 | ||||||||
Outcome:
| Outcome | ||||
| Item Number | (Approved, Denied) | Specific Action to be taken | ||
| 1 | ||||
| 2 | ||||
| 3 | ||||
| 4 | ||||
| 5 | ||||
Approvals
| Approved By: | Approved By: | |
Provider TSA Functional Lead
|
Receiver TSA Functional Lead |
| Executive Representative: | Executive Representative: | |
Provider TSA Manager
|
Receiver TSA Manager |
15
SCHEDULE CA6
ITT.COM EMAIL FORWARDING
INFRASTRUCTURE
INFRASTRUCTURE
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
| Suleiman Walker Exelis Inc. |
Messaging Manager | 719-591-3626 | suleiman.walker@exelisinc.com | |||
| Larry Gremaux ITT Corporation |
Senior Technical Support Specialist |
843-375-1896 | larry.gremaux@itt.com |
GENERAL SERVICE DESCRIPTION
Service Provider will perform ITT.com Email Forwarding Services for Service Receiver.
The primary service is to provide a computer processing platform that supports the business
applications of the Business, which includes IT support for technology infrastructure.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement, the
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
1
| Service | Transaction | Service | ||||||||||
| Service # | Name | Description of Service | Volume | Duration | Charge | |||||||
| Provide Email
Forwarding services
for email messages
sent to ITT.com.
Service Provider will
forward messages to
new Service Receiver
domain addresses. |
||||||||||||
IT-Email Forwarding -01 |
Email Forwarding Support Services |
Service Provider will
maintain Exchange
contact objects in
their Active
Directory for all
legacy ITT.com SMTP
addresses. The Service Provider will add additional contact objects within 48 hours of receiving the request from the Service Receiver. Escalations for 4 hour turnaround will be allowed for high profile users and accounts. Each escalation will require Exelis and ITT Corp Messaging Manager agreement before the committed 4 hour turnaround can be processed. |
Unlimited number of emails forwarded | 12 | Cost plus 2% - 10% per month |
|||||||
Services that will not be provided as part of this agreement are:
| • | Filtering of spam beyond SenderBase reputation level | ||
| • | Legal holds — Emails will not be saved as they will be forwarded to the Service Receiver, and it is the Service Receiver’s obligation to save emails if required by their legal counsel | ||
| • | Updating of Service Receiver’s domain changes |
Service Provider reserves the right to temporary halt the service, provided notification is given
to Service Receiver using commercially reasonable efforts, due to:
| • | Unusual increase in volume of emails | ||
| • | Threats to security | ||
| • | Constraints to network resources |
Should the Service Receiver require changes to the documented services, Parties agree to negotiate
in good faith with regard to such modification.
Exit Services
No exit services will be provided under this agreement.
2
LOCATIONS
Services are initially provided from Fort Wayne, IN, USA to global locations.
PREREQUISITES/DEPENDENCIES
| • | The Service Receiver will provide a list of obsolete contact objects that can be removed by the Service Provider on a monthly basis. | ||
| • | Service Provider’s Exchange Organization must be authoritative for the ITT.com (Simple Mail Transfer Protocol) SMTP address space and the Service Receiver’s Exchange Organization must not add itt.com to its Email Address Policy for the period of time which this agreement is in effect. | ||
| • | Service Receiver must continue to allow Service Provider to remain the mail exchanger (MX) and entry point for all ITT.com email for the period of time which this agreement is in effect. | ||
| • | The Service Receiver will not use the domain email.itt.com for the period of time which this agreement is in effect | ||
| • | The Service Receiver will coordinate all legacy messaging DNS record changes with the Service Provider. | ||
| • | Service Receiver must have Cisco Iron Port hardware and software licenses active and maintained for the period of time in which this agreement is in effect. | ||
| • | Service Receiver must have Transport Layer Security (TLS) enabled and maintained for the period of time in which this agreement is in effect. | ||
| • | Service Receiver must have Microsoft Exchange active and maintained for the period of time in which this agreement is in effect. | ||
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. | ||
| • | Service Receiver must have a Technical Assistance Agreement in place with the U.S. Government for the period of time in which this TSA agreement is in effect for any non-US citizens who are Exchange Org Administrators and Enterprise Administrators administrating (or give themselves permission to) the Americas site from outside the US. |
3
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the
following addresses (with an email copy to the Service Owners set forth above):
If to the Service Provider:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
If to the Service Receiver:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
Daryl.bowker@itt.com
SERVICE LEVEL
Service Provider will classify incidents at its own discretion and will
make commercially reasonable efforts to resolve incidents with service
delivery.
In the event incidents cannot be resolved, Service Provider shall promptly
notify Service Receiver and work together to try and resolve such incidents.
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year.
These rates apply to internal Service Provider employees only, and should external resources be
4
required, the costs for those external resources will be reviewed with the Service Receiver prior
to execution of the project.
Additional Pricing Rates (All in USD)
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
5
Annex A
TSA Change Request Form
TSA Change Request Form
TSA Schedule:
Receiver TSA Owner:
Date of Request:
Completed By:
Receiver TSA Owner:
Date of Request:
Completed By:
Requested Service Change:
| Already agreed to | ||||||||
| Service Description | with Service | |||||||
| Item Number | (Listed on schedule in the TSA) | Monthly Charge | Requested Change | Provider (Y/N) | ||||
1
|
||||||||
| 2 | ||||||||
| 3 | ||||||||
| 4 | ||||||||
| 5 |
Outcome:
| Outcome | ||||
| Item Number | (Approved, Denied) | Specific Action to be taken | ||
| 1 | ||||
| 2 | ||||
| 3 | ||||
| 4 | ||||
| 5 |
Approvals
| Approved By: | Approved By: | |
Provider TSA Functional Lead
|
Receiver TSA Functional Lead | |
| Executive Representative: | Executive Representative: | |
Provider TSA Manager
|
Receiver TSA Manager |
6
SCHEDULE CA7
BASIC TIME AND MATERIALS SUPPORT
BASIC TIME AND MATERIALS SUPPORT
Capitalized terms used herein and not otherwise defined shall have the meaning assigned to
such term in the Agreement. The Services provided hereunder are subject in all respects to the
terms and conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this Service should be directed
to:
| Name | Title | Phone | ||||
Service Provider’s
Contact |
||||||
Exelis Inc. Joe Daniel |
TSA Manager | office: (703) 790-6309 | Joe.daniel@itt.com | |||
Service Receiver’s
Contact |
||||||
ITT Corporation Daryl Bowker |
TSA Manager | Office: (315) 568-7676 | Daryl.bowker@ittcorp.com |
PARTIES TO THE AGREEMENT
Service Receiver: Exelis Inc.
Service Receiver: ITT Corporation
GENERAL SERVICE DESCRIPTION
Service Receiver may need assistance after the Distribution Date from the Service Provider for
miscellaneous services, including but not limited to consulting, advisory, knowledge transfer and
other similar services in various areas including, but not limited to finance, tax, accounting,
insurance, treasury, human resources and communications, which are not already provided for under
all of the other TSAs between ITT Corporation, Xylem Inc., and Exelis Inc.
The Service Provider hereby agrees to cause its and its affiliates employees (collectively,
“Experts”) to provide a reasonable amount of services, including specifically the services listed
in Appendix A, upon reasonable notice and request from the Service Receiver on a time and materials
basis from the Distribution Date through April 30, 2013 (the “Minimum Term” and the “Maximum
Term”).
To utilize this TSA Schedule, employees of Service Receiver should request such services via email
or telephonically where both parties have a clear expectation of the estimated number of hours of
assistance being requested. For projects that are expected to require more than 5 to 10 hours of
assistance a one or two paragraph project plan should be agreed to in order to avoid
misunderstandings. The project plan should be put together by the Service Provider’s “Expert “with
respect to the requested services.
Employees of Service Receiver should advise their TSA manager that a request for services has been
made together with a description of such services requested and the estimated number of hours
requested.
The “Expert” should advise their TSA manager that a request for services has been made and the
estimated number of hours requested.
SCOPE OF SERVICES
The scope of services will depend on the needs of the Service Recipient and the capabilities
and availability of the Experts.
LOCATIONS
All locations around the world
2
PREREQUISITES/DEPENDENCIES
The Experts remain employees of Service Provider. Service Receivers
acknowledge and agree that Service Provider has discretion to terminate the
Experts and the Experts have the ability to terminate their employment with
Service Provider. In the event the Experts are no longer employed by Service
Provider, Service Provider will, at the request of the Service Receiver, use
commercially reasonable efforts to provide similar services. However, if
Service Receivers or an affiliate employ any of the Experts, the specific
service requested under this Schedule can be terminated by the Service
Provider, at the Service Provider’s sole discretion on 5 business days notice
to the Service Receiver.
TAX STATUS
Sales tax will be charged as determined by the Service Provider and the
Service Receiver shall pay such tax along with the payment for the service
provided.
BILLING LOCATION
Service Provider will provide Service Receiver with an invoice to its
address set forth below under Notice Requirements, except in cases where
services are provided outside of the United States, in which case invoices will
be created by the Service Provider’s legal entity in the country where the
services are being performed and invoiced to the Service Receiver’s legal
entity that requested the services in the Service Provider’s local currency.
The bill will cover all charges for services under this Schedule from Service
Provider and, to the extent reasonably feasible, will be itemized among
Service Receiver’s legal entities if identified by the Service Receiver when
requesting the service. The invoice will contain the number of hours each
Expert worked, a short paragraph describing the services and the US dollar
amount per Expert.
The Experts shall track their time on either a time sheet or any other
proper method such as the utilizing the time sheet attached hereto and Service
Provider agrees that the time sheets will accompany the invoice that is sent to
the Service Recipient for payment. In cases where the requested services are
expected to take longer than 30 days to complete, the Service Provider will be
allowed to invoice the Service Receiver once per month for all costs incurred
to date.
3
NOTICE REQUIREMENTS
No notice of Termination is required under this Schedule and there shall be no make-whole fee
under this Schedule
Notices and bills to the Service Provider should be sent to:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Notices and bills to the Service Provider should be sent to:
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
ITT Corporation
240 Fall Street
Seneca Falls, NY 13148
Attention: Daryl R. Bowker
PRICING
In addition to the costs specifically set forth below, Service Receivers shall also pay all
business travel expenses relating to the Services in accordance with Service Providers documented
travel policies and any incremental out of pocket costs incurred by the Service Provider in order
to provide the requested services that are invoiced by unaffiliated 3rd parties. Service
Provider agrees to provide vendor invoices as backup to the Service Receiver when invoicing the
Service Receiver under the terms of this TSA.
The hourly rates below include a 4.5% increase for inflation and the 2% profit margin and
shall be applicable in 2011 and 2012. The rates shall increase by 4.5% in 2013. There shall be no
make whole fee due under Section 11 of the Agreement upon early termination of this TSA.
| Service | Hourly Rate* | |||
Hourly Rate Administrative/Secretarial. |
$50 per hour | |||
Hourly Rate for a Non Executive |
$100 per hour | |||
Hourly Rate for an Executive |
$150 per hour | |||
| * | Note: In cases where invoicing is done outside the United States, the above rates should be converted to local currency based on the exchange rate on the date the invoice is prepared. |
4
The pricing for the services described in Appendix A will be as set forth in Appendix A
unless no pricing is provided in which case if services are provided on an hourly basis the
rates above will apply.
5
Appendix A
Due Diligence Manager Software Application
Draft Base Statement of Work
Version 1.0 Draft
September 20, 2011
6
Draft Base Statement of Work
Table of Contents
1 Scope |
3 | |||
2 Technical Support Requirements |
3 | |||
2.1 Routine Application Maintenance |
3 | |||
2.1.1 Routine Tasks |
3 | |||
2.1.2 Outages |
3 | |||
2.2 Change and Improvement Process |
4 | |||
2.2.1 Change Request Analysis |
4 | |||
2.2.2 Change Request Processing |
4 | |||
2.3 Testing |
4 | |||
3 Deliverables |
4 | |||
4 Training and Support |
4 | |||
5 Place of Performance |
5 | |||
6 Period of Performance |
5 | |||
7 Project Management |
5 | |||
8 Labor Categories and Rates |
5 |
ITT Proprietary Information
|
Page ii |
7
Draft Base Statement of Work
| 1 | Scope | |
| The software application — Due Diligence Manager (DDM) — is a web-based, data-driven software application that provides the ITT Due Diligence staff with the capabilities that directly support the due diligence process. The SOW describes approach for identifying, scoping, estimating, developing, testing, deploying, and maintaining the software and application operation of the DDM application. | ||
| This document describes the requirements for maintaining and modifying the ITT Due Diligence Manager software application, including the underlying database. | ||
| 2 | Technical Support Requirements | |
| 2.1 | Routine Application Maintenance | |
| ITT AIS Development Staff will perform all routine application sofware maintenance tasks to ensure that the DDM software application is available to the user community on an continuous basis. | ||
| 2.1.1 | Routine Tasks | |
| ITT AIS Development Staff will periodically identify and correct latent issues discovered during normal operations. These tasks include Application Server settings, configuration, software upgrades and patches. These tasks are typically background and housekeeping tasks that should not affect active users. | ||
| 2.1.2 | Outages | |
| In the event of a failure (outage, defined as non-availability of DDM application software functionality), the develop staff will make every attempt to restore software availability. | ||
| For software-related outages. ITT AIS Development Staff will investigate the reported issue, determine the cause, correct the issue source, deploy a corrective update, verify the correction, and notify the issue initiator of the resolution. | ||
| Outages that are not immediately identifiable as due to a DDM software issue, must be directed to the ITT organization’s IT data center help desk, who will initiate a support ticket and process that ticket to resolve the issue based on internal processes defined by that organization. ITT AIS Development Staff will support that effort to determine the source of the outage. |
| ITT Proprietary Information | Page 3 |
Draft Base Statement of Work
| 2.2 | Change and Improvement Process | |
| Requests for modifying the design, functionality or configuration of the DDM software application shall be presented to the development staff by the user community through a change request document. | ||
| 2.2.1 | Change Request Analysis | |
| The ITT AIS development staff will review each request and develop an estimate for the level of effort required to implement the requested change. This activity may include dialogue with the initiating organization in order to ensure understanding of the objectives and outcomes of the requested change. | ||
| 2.2.2 | Change Request Processing | |
| ITT AIS staff will process the final RFC proposal through internal contracting offices, ultimately to be released to the requesting activity as a proposal for implementing the final change request. Once the requesting organization approves a proposal and the requisite contractual documentation is finalized, ITT AIS development staff will schedule and execute the finalized change request. Once the change is completed. ITT AIS will deploy the change to the live DDM server for review by the requesting organization. After completing a comprehensive review of the deployed application software change, and after providing ITT AIS Development Staff with approval, ITT AIS Development Staff will close the change request by initiating a contract closure letter to the requesting organization. | ||
| 2.3 | Testing | |
| Prior to deployment of all requested and approved changes. DDM software changes will be thoroughly tested using ITT AIS Development Staff’s internal test process. The test objectives, steps, and results will be documented in an appropriate format to ensure that testing has been conducted and that any resultant software bugs have been resolved. | ||
| 3 | Deliverables | |
| For Change Requests that impact the DDM User Guide or DDM Administrator Guide ITT AIS Development Staff will update the affected documentation and release to the requesting organization an update in pdf format. | ||
| 4 | Training and Support | |
| For Change Requests that include signification changes where training on new fieatures and functionality are requested as part of the Change Request, ITT AIS Development Staff will schedule and conduct an on-line training course to cover the |
| ITT Proprietary Information | Page 4 |
Draft Base Statement of Work
| areas affected. Training will be addressed and included in the proposal for each Change Request as needed. | ||
| If requested, the ITT AIS Development Staff will provide technical training to ITT’s IT staff for further support and build-out the DDM application source code and application web server. This support will be estimated and quoted through the same process desciribed above for change requests. | ||
| 5 | Place of Performance | |
| All development tasks will be performed at ITT AIS site in Chesapeake, VA. | ||
| 6 | Period of Performance | |
| The proposed project schedule will be provided on a case by case basis. The final schedule will be updated once the project is accepted by the requesting organization. | ||
| 7 | Project Management | |
| ITT AIS Development Staff will identify DDM project manager who will be responsible for ensuring that the agreed-upon tasks identified in the final accepted proposal are scheduled, tracked, and completed in accordance with the project schedule. Any issues affecting cost, schedule, or technical performance will be brought to the attention of the client as soon as possible for resolution. | ||
| 8 | Labor Categories and Rates | |
| Labor categories to be applied to tasks under this SOW are listed below. These rates are estimates. Each task order will require a formal quote issued by ITT AIS Contracts Office based on the level of effort estimates as described in paragraph 2.2. |
| Labor Category | Estimated Labor Rate | |||
Project Manager |
Cost plus 2% - 10% | |||
Sr. Software Engineer |
Cost plus 2% - 10% | |||
Software Engineer |
Cost plus 2% - 10% | |||
ITT Proprietary Information
|
Page 5 |
Appendix A-l Public Relations Officer
Service provider/Remit to: Bernard Joseph Dunn, General Manager of Defense Dubai branch.
Address: Office #1102; Crystal tower; Business Bay; Downtown Dubai; Dubai ;UAE
Service receiver/Bill to: Camil George Shuggi, General Manager of IP Dubai branch. Address:
Office 504; Deira Twin towers; Baniyas Street; Deira; Dubai; UAE
Service: The Exelis Dubai office will provide Public Relations Officer and courier services
to the ITT Dubai office for a period of time not to exceed two months or until ITT has hired,
trained and registered their new employee that will be assuming these services for ITT in Dubai. 5
days advance notice is required to terminate this service.
Pricing: The services charge for PRO/courier services will be paid on a monthly basis. The
charge per month will be AED Cost plus 2% - 10%. The rate above includes the 2%, 10% or 4.5% increase that
should be applied as set forth in Section 2(a) of the Agreement. There will be no make-whole fee
for early termination.
Appendix A-2
Management Reporting (HFM/Planning) Post Separation Support Requirements
Following the separation of ITT into 3 companies, key management reporting resources will be
required to provide post separation support and knowledge transfer between the NewCos. High level
areas of support and knowledge transfer include:
| • | Month-end close | |
| • | Year-end close | |
| • | New Year setup and rollforward | |
| • | OpPlan, Forecast, and Budget | |
| • | Metadata Management | |
| • | Ledger Mapping | |
| • | Break/Fix Support |
Listed below are the key HFM and Planning resources whose post separation support will be required
during the period 11/1/2011 through the 2012 March Close (approximately 4/20/2012).
| November | December | January | February | March | April | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Future | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Resource | NewCo | Executive | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| No | n/a | 48 | 48 | n/a | 48 | 24 | n/a | 48 | 24 | n/a | 36 | 12 | n/a | 36 | 12 | n/a | 12 | 12 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| No | 48 | n/a | 48 | 24 | n/a | 24 | 24 | n/a | 24 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| No | 48 | 48 | n/a | 24 | 24 | n/a | 24 | 24 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| No | n/a | 48 | 0 | n/a | 24 | 0 | n/a | 24 | 0 | n/a | 12 | 0 | n/a | 12 | 0 | n/a | 12 | 0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Yes | n/a | 48 | 48 | n/a | 24 | 24 | n/a | 24 | 24 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| No | 48 | n/a | 48 | 24 | n/a | 24 | 24 | n/a | 24 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Service Provider Owners and Service Receiver Owners are set forth under “Service Owner” above.
SCHEDULE CB1
HR/PAYROLL/BENEFITS
HR/PAYROLL/BENEFITS
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, expect where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
| Joe Daniel | TSA Manager | (703) 338-3405 | joe.daniel@itt.com | |||
| Exelis Inc. | ||||||
| John Connolly | Director, Technical | (914) 323-5795 | john.connolly@xyleminc.com | |||
| Xylem Inc. | Accounting |
GENERAL SERVICE DESCRIPTION
Service Provider will perform Payroll, Payroll Tax, HR, Garnishment and Benefit Services for
Service Receiver.
Service Receiver and its Subsidiaries will utilize Service Provider’s resources based on the
functionality, processes, input and output screens and documents that support Service Provider’s
business and business processes in the twelve months prior to the Distribution Date.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement,
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
1
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Provide payroll and tax configuration support required to support payroll services: | ||||||||||||
SS-Payroll-01
|
Payroll Services | • Income Codes —Service Provider will use the
Income Request Form from the Service Receiver to
update tax, garnishment, eligibility, pension, and
401K with the provided income codes. 5 business
days prior notice are required to make the income
code changes.
• Deduction Codes —Service Provider will use
the Deduction Request Form from the Service Receiver
to update tax, Group Term Life (GTL), and other
accumulator requirements with the provided deduction
codes. 5 business days prior notice are required to
make the deduction code changes.
• Paid Time Off (PTO) Accrual Controls
—Service Provider will use the PTO Policy document
from the Service Receiver to accrual code and
schedule setups requested by the Service Receiver.
10 business days prior notice are required to make
the requested PTO Accrual Controls changes.
• Federal/State/Local Tax Table —Service
Provider will use the Notification of
Federal/State/Local Tax Change provided by the
Service Receiver to update the local tax setup
within systems managed by Service Provider within 5
business days of the request.
• Federal/State/Local Tax —Service Provider
will use the Request for Level Control provided by
automated systems to update the level control setup
within systems managed by Service Provider within 5
business days of the request.
• Employer Codes — Service Provider will use
the Request for New Employer Codes from the Service
Receiver to update employer codes in systems managed
by Service Provider within 5 business days of the
request.
• User Defined Field — Service Provider will
use the Request for User Defined Field provided by
the Service Receiver to update the necessary fields
within 5 business days of the request.
• Level Control — Service Provider will use
the Request for Level Control provided by the
Service Receiver to update the level control setup
within systems managed by Service Provider within 5
business days of the request.
• Pay Cycle — Service Provider will use the
Request Pay Cycle from the Service Receiver to setup
the pay cycle with the pay calendar where
applicable. 5 business days are required to make
the pay cycle changes. Pre-distribution date pay
cycle configuration is defined in Attachment B.
|
100/month for all SS-Payroll-01 |
14 | Cost plus 2% - 10% per month | |||||||
2
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
• Employer Group — Service Provider will use
the Request for Employer Group provided by the
Service Receiver to update the Employer Group within
systems managed by Service Provider within 5
business days of the request.
• Cycle Group — Service Provider will use the
Request for Cycle Group provided by the Service
Receiver to update the cycle group setup within
systems managed by Service Provider within 5
business days of the request.
• Payroll Authorization Group — Service
Provider will use the Request for Payroll
Authorization Group provided by the Service Receiver
to update the Payroll Authorization Group setup
within systems managed by Service Provider within 5
business days of the request.
• Income Authorization Group — Service
Provider will use the Request for Income
Authorization Group provided by the Service Receiver
to update the income authorization group setup
within systems managed by Service Provider within 5
business days of the request.
• Deduction Authorization Group — Service
Provider will use the Request for Deduction
Authorization Group provided by the Service Receiver
to update the deduction authorization group setup
within systems managed by Service Provider within 5
business days of the request.
• Auto Pay Groups — Service Provider will use
the Request for Auto Pay Groups provided by the
Service Receiver to update the auto pay groups setup
within systems managed by Service Provider within 5
business days of the request.
• Labor/Income Cross Reference Table —
Service Provider will use the Request for
Labor/Income Cross Reference Table Maintenance
provided by the Service Receiver to update the
Labor/Income Cross Reference Table setup within
systems managed by Service Provider within 5
business days of the request.
• General Ledger Cross Reference Table —
Service Provider will use the Request for General
Ledger Cross Reference Table maintenance provided by
the Service Receiver to update the general ledger
cross reference table setup within systems managed
by Service Provider within 5 business days of the
request. |
||||||||||||
Provide garnishment, child support, tax levy, interrogatory correspondence, withholding and payments support required for payroll services: |
New Transactions 200, Monthly Payments 700 |
|||||||||||
• Garnishment Letter — Service Provider will
use the Garnishment Notification to provide a
garnishment letter to the garnishing agency during
the latter of 7 days after notification and the next
applicable payment cycle.
|
||||||||||||
3
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
• Garnishment Withholding — Service Provider
will use the Garnishment Notification to adjust the
employee garnishment deduction setup during the
latter of 7 days after notification and the next
applicable payment cycle.
• Garnishment Payments — Service Provider
will use the Garnishment Notification to update the
garnishment payments to agency during the latter of
7 days after notification and the next applicable
payment cycle.
• Stop Garnishments — Service Provider will
use the Garnishment Stop Notification to deactivate
the employee garnishment deduction and process
refund of any over-withholding during the latter of
7 days after notification and the next applicable
payment cycle. |
||||||||||||
Provide employee maintenance support where appropriate to support payroll processing • W-4 — Service Provider will use the W-4
Form from the Service Receiver to update employee
W-4 information with the provided information.
Service Receiver must provide such information at
least 2 business days prior to processing of payroll
to ensure inclusion in the current payroll run.
• Home/Work State Update — Service Provider
will use the employee change request for home/work
state maintenance from the Service Receiver to make
requested updates. Service Receiver must provide
such information at least 2 business days prior to
processing of payroll to ensure inclusion in the
current payroll run.
• Direct Deposit — Service Provider will use
the Direct Deposit Form from the Service Receiver to
update employee direct deposit information with the
provided information. Service Receiver must provide
such information at least 2 business days prior to
processing of payroll to ensure inclusion in the
next payroll run.
|
600/month | |||||||||||
Provide college fund employee direct deposit maintenance required to support payroll processing upon receipt of notification of enrollment or change via email. Request will be processed within 7 days of notification in the next applicable payment cycle. |
30/month | |||||||||||
Provide executive excess savings plan updates to employee deduction code maintenance required to support payroll processing upon receipt of Service Receiver notification of employee. Request will be processed within 7 days of notification in the next applicable payment cycle. |
30/month | |||||||||||
4
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Provide ACS 401k Interface Processing required to
support payroll processing
• Saving Plan Deferral & Loan — Service
Provider will use the ACS ISP Feedback File from the
Service Receiver’s 3rd party to update
employee deduction code information with the
provided information. Service Receiver’s
3rd party must provide such information
by Friday evening the week prior to requested
update.
• Saving Plan Deferral & Loan — Service
Provider will use the ACS ISP Feedback File from the
Service Receiver’s 3rd party to update
employee deduction code information with the
provided information. Service Receiver’s
3rd party must provide such information
by Friday evening the week prior to requested
update.
• ACS Error Report Review — Service Provider
will review the ACS ISP Feedback File from the
Service Receivers 3rd party provider to
review any fallout which may have occurred. Upon
fallout Service Provider will notify ACS to conduct
maintenance to rectify documented fallouts.
• ACS New Hire — Service Provider will use a
report created from the ACS Interface File from the
Service Receiver’s 3rd party to validate
new hire processing. Service Receiver’s
3rd party must provide such information
by Friday evening the week prior to requested
validation.
• ACS ISEV — Service Provider will use the
ACS ISEV Status Change from the Service Receiver’s
3rd party to update employee deduction
code information with the provided information.
Service Receiver’s 3rd party must provide
such information by Friday evening the week prior to
requested update.
|
10 Monthly Interfaces Files & Reports |
|||||||||||
Provide JPMorgan 401k Interface Processing required to support payroll processing • Saving Plan Deferral & Loan — Service
Provider will use the JP Morgan ISP Feedback File
from the Service Receiver’s 3rd party to
update employee deduction code information with the
provided information. Service Receiver’s
3rd party must provide such information
by Friday evening the week prior to requested
update.
• Saving Plan Deferral & Loan — Service
Provider will use the JP Morgan ISP Feedback File
from the Service Receiver’s 3rd party to
update employee deduction code information with the
provided information. Service Receiver’s
3rd party must provide such information
by Friday evening the week prior to requested
update.
|
10 Monthly Interfaces Files & Reports |
|||||||||||
5
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
• JP Morgan Error Report Review — Service
Provider will review the JP Morgan ISP Feedback File
from the Service Receivers 3rd party
provider to review any errors which may have
occurred. Upon fallout Service Provider will notify
ACS to conduct maintenance to rectify documented
fallouts.
• JP Morgan New Hire — Service Provider will
use a report created from the JP Morgan Interface
File from the Service Receiver’s 3rd
party to validate new hire processing. Service
Receiver’s 3rd party must provide such
information by Friday 5 pm EST or Thursday 5 pm EST
if Friday is not a business day the week prior to
requested validation.
• JP Morgan ISEV — Service Provider will use
the JP Morgan ISEV Status Change from the Service
Receiver’s 3rd party to update employee
deduction code information with the provided
information. Service Receiver’s 3rd
party must provide such information by Friday
evening the week prior to requested update. |
||||||||||||
Provide Principal Loan Processing required to support payroll processing upon receipt of notification by secured email and make the required employee deduction code changes |
Weekly Interface Files |
|||||||||||
Provide Marsh Benefit Processing required to support payroll processing upon receipt of interface file and make deduction code changes. Files must be received by the 17th of the month for processing by the end of the month. |
Two Interface Files Per Month |
|||||||||||
Provide John Hancock LTC Processing required to support payroll processing upon receipt of interface file and make deduction code changes. Files must be received by the 17th of the month for processing by the end of the month. |
Two Interface Files Per Month |
|||||||||||
Provide Runzheimer Fix and Variable Auto Processing required to support payroll processing upon receipt of interface file and make employee negative deduction transactions for payroll Files must be received by the 9th of the month. |
One Interface File Per Month |
|||||||||||
Provide Concur Travel Expense Reimbursement required to support payroll processing upon receipt of interface file and make employee negative deduction transactions. Files must be received by Thursday morning at 6 am EST to be processed in the next applicable pay cycle. |
Weekly Interface Files |
|||||||||||
Provide executive deferral payment upon receipt of notification from Service Receiver for payout and make employee deferral payment. Files must be received by the 9th of the month. |
One Monthly Deferral Processing |
|||||||||||
6
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Provide excess group term life calculations upon receipt of notification from Service Receiver for payout and make employee deferral payment. Files must be received by the 9th of the month. | 240 Batch Processing Runs |
|||||||||||
Complete nightly Infinium Benefit Deduction updates. |
240 Batch Processing Runs |
|||||||||||
| Provide payroll processing.
• Automated Labor Upload — Service Provider
will use the interface from the Service Receiver’s
labor system and create the Infinium labor file for
payroll processing. Labor Code to Infinium Income
code cross reference file updated as required.
• Labor Interface Validation — Service
Provider will use the interface from the Service
Receiver’s labor system to get totals. Service
Provider will then match the Infinium and Service
Receiver’s Labor System file. Should discrepancies
exist, Service Provider will work with Service
Receiver to resolve the issue.
• Payroll Cycle Processing — Service Provider
will then create Employee Processing Cycle File,
listing of employees with pay, benefit, leave of
absence and terminations. A review of employee
changes will be conducted by Service Receiver and
corrections made if applicable. Employee changes
will be added to cycle validation routine for
balancing. Delays in Service Receiver
responsibilities will delay payroll processing.
Service Provider will not be liable for such Service
Receiver caused delays.
• Close Upload Labor to Payroll Cycle —
Service Provider will upload employee labor to
payroll cycle.
• Gross to Net Calculation — Once Infinium
releases time sheet data Service Provider will
produce the payroll trial balance.
• Payroll Adjustments — Service Provider will
update employee pay information and add adjustments
to validation routine for balancing as required.
• Print Trial Balance/Approve Payroll — Using
the Infinium trial balance Service Provider will
create a trial balance report to post payroll and
print pay stubs. If Trial Balance does not balance
or has errors it must be corrected via update checks
and Trial Balance Reran until error free and
balanced.
|
240 Pay Processing Cycles |
|||||||||||
Provide on-demand payroll processing of off-cycle check requests upon receipt of on-demand check request form from Service Provider. Form must be received by 5 pm for next day direct deposit or check delivery. |
570 Transactions Annually |
|||||||||||
7
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Provide bonus cycle payroll processing of off-cycle bonus payments upon receipt of bonus specification from Service Recipient. Form must be received 5 business days prior to date of required bonus payment. | 7000 Transactions Annually |
|||||||||||
Provide manual W-2 earnings and deductions updates upon receipt of written notice and tax detail from Service Provider |
325 Transactions Annually |
|||||||||||
Provide stock option manual payroll upon receipt of Smith Barney stock transaction file using the daily interface from Service Provider |
80 Transactions Annually |
|||||||||||
Provide restricted stock manual payroll upon receipt of Smith Barney restricted stock transaction file using the daily interface from Service Provider |
110 Transactions Annually |
|||||||||||
Provide quarterly tax dividend payment upon receipt of Smith Barney dividend transaction file using the quarterly interface from Service Provider |
440 Transactions Annually |
|||||||||||
Provide Cartus quarterly relocation manual payroll upon receipt of Cartus Relocation Transaction file using the quarterly interface from Service Provider |
140 Transactions Annually |
|||||||||||
Process payment for unused PTO time upon receipt of notification from systems during year-end |
1700 Transactions Annually |
|||||||||||
Void or re-issue employee checks upon receipt of notification from Service Receiver. May be processed with current payroll or via separate check processing. For inclusion with regular payroll request must be received two business days prior to start of payroll processing. Five business days notice is required for issuing as separate payroll process. [Service Provider will not be liable if funds have been disbursed prior to voidance.] |
850 Transactions Annually |
|||||||||||
Make adjustments to employee pay upon receipt of notification from Service Receiver. Notification must be received 2 business days prior to the next pay cycle. |
325 Transactions Annually |
|||||||||||
Process retro-active payments for delayed merit increase processing after receipt of notification from Service Receiver. May be processed with current payroll or via separate check processing. For inclusion with regular payroll request must be received Two business days prior to start of payroll processing. Five business day notice required for issuing as separate payroll process. |
350 Transactions Annually |
|||||||||||
Process special employee payments upon receipt of notification from Service Receiver. May be processed with current payroll or via separate check processing. For inclusion with regular payroll request must be received 2 days prior to start of payroll processing. Five day notice required for issuing as separate payroll process. |
900 Transactions Annually |
|||||||||||
8
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Process relocation payment from employee paycheck upon receipt of notification from Service Receiver Processed with normal payroll. May be repaid over multiple payrolls or from one payroll per specification of Service Receiver. | 200 Transactions Annually |
|||||||||||
Provide executive excess savings plan distribution upon receipt of notification from Service Receiver May be processed with current payroll or via separate check processing. For inclusion with regular payroll request must be received 2 days prior to start of payroll processing. Five day notice required for issuing as separate payroll process. |
50 Transactions Annually |
|||||||||||
Service Provider will use commercially reasonable efforts to provide post-payroll • Print/Distribute Check, Vouchers, & Reports
— Printed Checks and Vouchers sealed and prepared
for shipping distribution per business units
instructions.
• ACH Processing — ACH transmitted to clearing
house using the Infinium ACH extraction process
• Bank Funding — Wire Transfer to cover
payroll using the bank funding report option
• Credit Union Processing — File Transmission
to Credit Union using the Infinium direct deposit
extract
• Union Reporting — Union report transmitted
using the Union employees and Union dues report
• Canadian Bond Processing — Transmission of
Canadian Bond File to Royal Bank of Canada using the
Canadian bond extract
• Positive Pay — Positive pay file transmitted
to Wells Fargo using the positive pay extract file
• Direct Deposit Fund Pullback — Employee
funds pulled back or error report with insufficient
funds upon Service Receiver’s request to pull back
employee direct deposit. Service Provider will use
the Shared Service form submission to Wells Fargo to
pull back employee direct deposit. Insufficient
funds notices are communicated to employees HR
administrator for review of how to recover money
|
250 Cycles Per Month |
|||||||||||
Provide Infinium month end close once a month rolling month totals, update monthly benefits (Marsh & John Hancock), and update monthly limit processing. This service will be performed after final payroll for month and prior to first payroll of new month. |
20 Companies Per Month | |||||||||||
Process Infinium quarter end close once a quarter rolling quarter totals, update quarterly limit |
20 Companies Per Month | |||||||||||
9
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Provide Infinium year-end processing.
• Wage & Tax Balancing — Using the wage Base
Report balance Employee Earnings and Taxes
• United Way Deduction — Infinium United Way
Deduction Change for deduction codes 00800 & 0805
clearing the United Way deduction for the new year
• 401K Limit Update -Deduction limit updated
with values for year
• Year End Payroll Register — Use the
Infinium Year End Payroll Register to archive
historical payroll registers
• Hartford-JP Morgan Year End — Use the
Infinium Save File to archive Hartford-JP Morgan
year end 401K values
• ACS — Use the Infinium Save File to archive
ACS year end 401K values
• Infinium W2 Box Updates — Use the Infinium
Income & Deduction Reporting Groups to make W2 Box
Reporting Reports
• Infinium ADP W2 Box Update — Use the ADP
interface for W2 Reporting to create the ADP W2 Box
Interface File
• Local Tax Update — Use the notification
from locality or Service Receiver to update the
local tax table
• Transfers — Clear Q1 Information captured
for tax & 401K Limit processing for use in the W2
tax report
• Vinny 1st day report — Use the Infinium Day
1 Report for forecasting
• Payroll Calendar — Use the Infinium Cycle
Maintenance to create Service Receiver Payroll
Calendars
• W2 — Pension for Group Term Life (GTL) —
Service Receiver provides files from ACS & Hartford
and Service Provider updates Pensioner’s W2’s
• Highly Compensated Employee Listing — Using
an AS400 Query, employees meeting IRS Highly
Compensated Listing are found and 401K providers
updated with list of highly compensated employees
• Executive Excess Saving Plan Employee Update
— Service Receiver provides list of eligible
employees for executive excess saving plan which
Service Provider uses to update the Executive Excess
Saving Plan Employee List provided for roll over
into Excess Savings Plan
• New Jersey Disability Year End Update —
Using the New Jersey Final Disability Report;
Service Provider will update the New Jersey year end
payroll entries to record New Jersey final
disability entries.
• Infinium Year End Close — Year end close
rolls year to day information to previous year and
clear year-to-date dollars
|
20 Companies Per Month | |||||||||||
10
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
• ADP 4th Quarter & Year End Extract — Using
the ADP Extract Program an ADP Year End Interface
File is created
• ADP — Balance Year — Using the ADP Year End
Reports Year End Statutory Reports & W2 are output
• W2C’s — Using the value center post
year-end close entries to update the W2C
• Amended Year End — Use the ADP Extract
Program to amended statutory reporting |
||||||||||||
Provide US Tax Processing. • ADP Company Profile Update — Use the ADP
Tax Header Spreadsheet to update ADP tax reporting
set up
• ADP Code Mapping — Use the ADP Mapping
Document to map ADP Tax Code to Infinium Tax Code
• Infinium ADP Deduction Table Maintenance —
Use the Infinium ADP Tax Code file to output ADP
Interface File including the new tax code
• ADP Daily Interface File — Use the ADP
Infinium Payroll Tax Extract to create the ADP
Receipt of Tax Payment Detail
• Daily Tax Audit Report — Use the Query: ADP
Tax Audit Report to validate ADP Daily Tax Interface
File
• ADP Daily Tax Funding — Use the ADP
Invoice to create ADP Wire Payment
• ADP Unemployment Rate Change — Use the ADP
Tax Header Spreadsheet to calculate ADP -
Unemployment Payments with New Rate
• ADP Monthly Charges — Use the ADP Invoice
to process ADP Payment
• Barnett Monthly Charges — Use the Barnett
Invoice to process Barnett Payment
• ADP Quarterly Communication — Use the ADP
Quarterly Updates to update the Quarterly Calendar
Close Schedule
• Cobra Quarterly Tax Credit Entry — Use the
SHPS Cobra Detail summarized and entered into ADP
Payroll Tax Input to update the 941 Cobra Credit
• Quarterly Interface File — Use the ADP
Infinium Quarterly Tax Extract to create the ADP
Quarterly Tax Reporting File
• ADP TAX Reconciliation — Use the Infinium
Quarterly Tax Report to reconcile ADP Quarterly Tax
Reports
• Quarter Close & Statutory Reporting — Use
Service Receiver approval to ADP for Quarterly
Processing to make quarterly statutory payments and
reporting
• Quarterly Report Distribution ADP — Use the
Quarterly Reports Posted to Web Site to distribute
Statement of Deposits, 941Cobra Credit, State &
Local Wage Detail
|
Registrations — 10 per month Interfaces — daily Tax Payments — Daily & Quarterly Per Requirements Cobra Reporting — Quarterly Quarterly Reporting Tracer Transactions 20 Monthly Amendments 10 Monthly |
|||||||||||
11
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
• Quarterly Invoice Payments — Use ADP
Invoice to make ADP Wire Payments
• Quarterly Federal & State Tax Amendments —
Use Quarterly Amendment Filing to amended reporting
• Amendment Payment — Use the invoice to
create ADP Wire Payment
• Tracers — Use agency notices to conduct ADP
research
• Tracer Payments — ADP agency notice research
to make payment of Agency Notices
• Close Tax ID — Use ADP header to close
company so no future reporting in ADP
• Close Tax ID — Use the Agency notification
of account closed to conduct final reconciliation |
||||||||||||
Provide Canadian Tax Processing. • Canadian Tax Withholding — Using Canadian
Tax Deductions provided by Service Receiver input
Service Provider will complete Employee/Employer Tax
Withholding/Liability
• Canadian Tax Payments — Using Payroll
Registers provided by Service Receiver, Service
Provider will make Canadian Tax Payment
• Year End Pension Calculation — Using the
Canadian Pension Plan Policy provided by Service
Receiver, Service Provider will compute Pension Plan
Calculation
• RL1 & T4 Reporting — Using the Infinium
Canadian Year End Process, Service Provider will
complete T4 & RL1 Forms & XML Reporting
|
Weekly Tax Payments Annually T4, T4A & RL Reporting |
|||||||||||
Provide Puerto Rico Tax Processing. • Puerto Rico Tax Withholding — Using Tax
Deductions Service Provider will calculate tax
withholding for Service Receiver
• Puerto Rico Tax Payments — Using Payroll
Registers provided by Service Receiver, Service
Provider will make Puerto Rico Tax Payments
• Puerto Rico Year End Reporting — Using W2 &
W3 Reporting Service Provider will make Employee &
Employer Year End Tax Reporting
|
Weekly Tax Payments Annual W2P & W3P Reporting |
|||||||||||
Support the legal/regulatory audits documented below. • ACE — Worker Compensation Audit
• Tax Audits
• D&T Benefit Audit
• SOX Audit
• Disaster Recovery
• ACS — 401K Compliance Testing
• JP Morgan — 401K Compliance Testing
• Data Mining — Payroll
|
4 Audits/Month | |||||||||||
• Service Provider will run the custom queries documented in Attachment C once a month |
Monthly | |||||||||||
12
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
| Provide Guam Tax Processing.
• GUAM Tax Withholding — Using Tax Deductions
provided by Service Receiver, Service Provider will
calculate Tax withholding
• GUAM Tax Payments — Using the payroll
registers Service Provider will make
GUAM tax payments • GUAM Year End Reporting — Using W2 & W3
Reporting, Service Provider will make Employee &
Employer Year End Tax Reporting
|
Annual W2G & W3G Reporting |
|||||||||||
Infinium and HRSS Support/Communication for handling of Service Receiver questions: |
||||||||||||
HR-Benefits-02
|
Human Resources, Benefits, Training, & Compliance Support |
• Daily Service Receiver Issue Handling -
Service Receiver users can make a phone call or send
an email to ask questions related to
employee data and/or transactional history
stored in Infinium/HRSS; M-F 8-5pm EST except U.S.
holidays;
• Data Input Questions Covered in User Manual
• System Requirements-Upgrades/System Changes
Maintenance (Federal/State/Local)
• Infinium Canned Reports are available for
the service receiver to access and review. Service
Provider will be responsible for ensuring that
reports required for legal or regulatory
requirements run. .
• Coordinate issue resolution as needed with
IT, Payroll, SS Accounting, HQ Benefits and/or third
party vendors.
• Anything not covered above is considered a
special request to be handled using on a Time &
Materials basis as outlined in the Additional
Pricing Section of this document.
|
201/month | 14 | Cost plus 2% - 10% per month | |||||||
Benefit Administration and Reporting Internal/External: |
||||||||||||
• Weekly vendor file feed resolution to
national carriers - Service Provider will accept
phone or email from Service Receiver or external
benefits provider and resubmit corrected file feed
or corrected actual employee record based on
request.
• Salaried Pension Eligibility file feed
questions from field Service Receiver HR staff will
be triaged by Service Provider and assist Service
Receiver in data correction.
• Validation Reports from Health & Welfare and
Pension - Service Provider will receive reports
from 3rd party providers listing errors
related to health & welfare data and Service
Provider will assist Service Receiver HR field staff
to make appropriate changes
|
327/month | |||||||||||
Services for Service Receiver supervisors on payrolls that are not administered via the Fort Wayne Infinium System: |
||||||||||||
• Service Provider will create and/or update Job/Position Codes upon request from the Service Receiver |
50/month | |||||||||||
13
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
• Service Provider will add an international
supervisor as a new hire upon request from the
Service Receiver
• Service Provider will attach an
international supervisor to an Infinium Employee
record upon request from the Service Receiver
• Service Provider will add an international
supervisors’ Concur ID to the appropriate record
upon request from the Service Receiver
Services for Service Receiver Business Units and/or Infinium Companies that are not supported by local HR staff but administered by HRMS staff in Fort Wayne: |
||||||||||||
• Service Provider will create and or update
Job/Position Code upon request from the Service
Receiver
• Service Provider will enter new hires on
personnel side as well as on payroll side upon
request from the Service Receiver
• Service Provider will enter salary
changes/address changes/title
changes/transfers/terminations upon request from the
Service Receiver
• Service Provider will perform annual merit
increase uploads upon request from the Service
Receiver
• Service Provider will communicate with
Service Receiver HR contacts from other Service
Receiver business units to coordinate both
transferring in and out of employees upon request
from the Service Receiver
• Service Provider will enter payroll changes
including withholding changes/benefit deductions and
catch-ups upon request from the Service Receiver
• Service Provider will enter benefit updates
including urgent updates upon request from the
Service Receiver
Service Provider will make Address & Phone number
changes upon request from the Service Receiver
• Service Provider will make Benefit Changes
due to qualifying event & Annual Open Enrollment
upon request from the Service Receiver
• Service Provider will make Annual Salary
Merit Increases upon request from the Service
Receiver
• Service Provider will make Annual Reviews
(if applicable) upon request from the Service
Receiver
• Service Provider will make inquiries
relating to benefits and/or personnel information
upon request from the Service Receiver
• Service Provider will produce Infinium
Canned Reports upon request from the Service
Receiver |
||||||||||||
14
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
• Year-end Standard Benefit Enrollment Copy to
New Plan Year
• Year-end Vendor Meetings for open enrollment
file feeds
• Data Input Questions Covered in User Manual
• Support Special Year End File Feeds to
National H&W Vendors
• Standard Communication regarding Annual
Enrollment & Year End Dates
• Collaborate with Payroll, Finance and IT for
Year End Closing Processes using all input from
year’s changes and develop project plan to prepare
system for enrollment and year-end processing.
Project will then be started in July, and meetings
with vendors conducted as needed depending on data
from customers. ** Changing benefits providers in
2011 will be a special project using Time &
Materials rates with specific notification on
change.
|
Each item in this table will be completed once a year |
|||||||||||
HR-Benefits-03
|
Training | Service Provider will take requests from Service Receiver HR manager to conduct periodic WebEx training of how to use Infinium systems and conduct the training for the Service Receiver. |
1/month | 14 | Time and Materials | |||||||
SS-PayrollAcct-04
|
Payroll Accounting | Provide Payroll Accounting services. • Payroll Journals — Service Provider will use
the payroll register summary from the Service
Receiver to balance and post payroll journals for
each payroll cycle for the Service Receiver
• Payroll Balance Sheet Accounts — Service
Provider will use the payroll month end close
document from the Service Receiver to reconcile the
payroll balance sheet accounts for the Service
Receiver
• Employee Deductions — Service Provider will
use completed payroll cycles document from Service
Receiver to remit employee deductions for the
Service Receiver
• Employee Benefits for ISP,401 (K) and
Insurances — Service Provider will use completed
payroll cycles document and payroll queries from
Service Receiver to validate, reconcile and remit
employee benefits for ISP, 401(k) and insurances for
the Service Receiver
• ADP Payroll Taxes — Service Provider will
use completed payroll cycles, payroll queries, and
ADP invoices from the Service Receiver to validate,
reconcile, and remit all Payroll Taxes to ADP
• Interface File Transmission - Service
Provider will use completed payroll cycles and
payroll queries from the Service Receiver to
transmit interface files to 3rd party vendors on
behalf of the Service Receiver
• Benefits Reporting — Service Provider will
use the year end close information from the Service
Receiver to provide annual reporting of benefits to
the Service Receiver
|
1616 annually 3060 annually 220 annually 205 annually 240 annually 195 annually 10 annually |
14 | Cost plus 2% - 10% per month | |||||||
15
| BAU | Minimum | |||||||||||
| Service | Service | Transaction | Service Period | Service | ||||||||
| # | Name | Description of Service | Volume | (in mo.) | Charge | |||||||
• ADP Federal and State Taxes — Service
Provider will use tax extract and file feed from ADP
from Service Receiver to journalize ADP Federal and
State Tax Activity for the Service Receiver
• ADP Mid Year Conversions — Service Provider
will use YTD tax amounts information from Service
Receiver to perform ADP midyear conversions for the
Service Receiver
• Non-supported ADP — Service Provider will
use completed payroll cycles information from
Service Receiver to remit non-supported ADP taxes
for the Service Receiver
• Control Files for 401(k) and ISP- Service
Provider will use information from business units or
HQs from the Service Receiver to maintain and
control files for 401(k) and ISP for the Service
Receiver
• Payroll Bank Account — Service Provider will
use bank account statements from the Service
Receiver to reconcile payroll bank accounts for the
Service Receiver
• Unclaimed Payroll Property- Service Provider
will use bank account statements from Service
Receiver to manage unclaimed payroll property for
the Service Receiver
• Automated Bank Functions- Service Provider
will use cleared bank files from the Service
Receiver to process post cleared checks in the
Infinium payroll
• Year to Date Analysis for 401k— The Service
Provider will use the Year End Payroll Close from an
internal business unit within the Service Provider
to calculate 401k Year to Date totals for employee,
employer, and loans and provide report by vendor to
the Service Receiver.
|
240 annually 5 annually 12 annually 30 annually 24 annually 200 annually 12 annually 3 annually |
|||||||||||
Service Volumes Greater or Less Than Observed Pre-Distribution Date
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 10% (such activity, including any such 10% deviation,
“Business as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will
accommodate Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities
on a time and materials basis with respect to the one-time set-up fees. The table below will then
apply following the completion of the one-time set-up activities
| Scenario | One-Time Setup Fees | Monthly Fees | ||
| Service Volume within BAU [Note: BAU already includes +/- 10% of pre-distribution date volumes] | No incremental one-time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady-State fee structure for requisite service as documented below | ||
16
| Scenario | One-Time Setup Fees | Monthly Fees | ||
| Service Volume greater or less than BAU | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service |
Ad-Hoc development/services or processing of reports consistent with what was provided prior
to the distribution date will be supported as part of this agreement. Service Provider will use
commercially reasonable efforts based on provider’s current abilities to accommodate regulatory or
legal ad-hoc requests. Ad-hoc requests which may need to be performed to assist Service Receiver
in meeting new legal obligations will be provided on a time and materials basis as described in the
Additional Pricing section of this agreement. Any changes to 3rd party relationships which require
interface modifications or re-writes are not included as part of the scope of this agreement.
Should the Service Receiver require such changes, Parties agree to negotiate in good faith with
regard to such modification. In the event modifications to the services provided are required by
law for only the Service Recipient and such modifications increase the cost for Service Provider,
Service Recipient that requires the modifications shall pay all the additional costs including the
costs for the other Service Recipients.
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
SS-Payroll-05
|
HR/Payroll/Benefits Migration |
Service Provider will make commercially reasonable best efforts to assist Service Receiver in exiting of this agreement. These efforts include: | Time and Materials Based on Additional Pricing Section | |||
• Support of
data extraction
requests from the
Service Receiver
• Providing
Subject Matter
Expertise in helping
the Service Receiver
understand current
state business
processes, functional
data mapping, and
impacts of design
decisions
|
||||||
Service Provider will provide the following knowledge transfer services: |
||||||
SS-Payroll-06
|
HR/Payroll/Benefits Knowledge Transfer |
• Existing
non-sensitive
documentation
maintained by Service
Provider will be
given to the Service
Receiver as it
relates to
Payroll/HR/Benefit
services
|
Time and Materials Based on Additional Pricing Section |
17
Supplemental Services
For requests for supplemental services relating to HR, Benefits and Payroll by Service Receiver not
mentioned in this Schedule or not included within the costs documented in this agreement, Service
Receiver will provide a discreet project request and submit such request to Service Provider using
the formalized Change Request attached as Annex A for consideration by Service Provider.
Where notice is required a number of business days prior to some required action by Service
Provider, notice must be received by 12 noon Eastern Time to be counted as received during such
business day. Service Provider shall, within a commercially reasonable period, provide a price
quote to be commercially reasonable based on the current cost of the Services to Service Receiver
taking into account, such items as the specific time the request was made, service delivery
volumes, exit planning activities, and other activities Service Provider is currently engaged in at
the time of the request, but not later than 30 days after the request was made. If Service
Provider, in its sole discretion determines (i) such request would increase the ongoing operating
costs for Service Provider (as a service recipient) or any other service receiver or (ii) that it
is not capable of making such changes with its current staff during the time period requested
without interrupting the Services provided to itself or any other service receiver. Service
Provider need not provide a price quote or perform the services. Where a price quote is provided,
Service Provider shall provide the service requested upon acceptance of the price.
LOCATIONS
Services are initially provided from Fort Wayne, IN, USA to Canada and USA locations.
PREREQUISITES/DEPENDENCIES
| • | Service Receiver will provide accurate and timely employee maintenance, time and attendance data and payroll adjustments required to produce pay checks. In conjunction with the preceding, Service Receiver will maintain the applications and interfaces documented in Attachment A. | |
| • | Service Receiver will be responsible for providing new tax registration requirements to Service Provider. Applicable tax registration information will be provided to Service Provider as required to complete tax registration. | |
| • | Service Receiver will be responsible for providing configuration changes to Service Provider including taxes, income, deductions, banking and benefits using the change request process and forms provided by Service Provider. | |
| • | If Service Receiver sends inaccurate data to Service Provider it will be the responsibility of the Service Receiver to rectify any problems and bear any costs incurred to rectify the issue. |
18
| • | Service Receiver will setup and make available to Service Provider a disbursement account from which Service Provider utilizes draft authorization to process payroll. Service provider will request funding for payroll checks, payroll direct deposits, payroll taxes, and other benefit remittances from the Service Receiver Treasury Headquarter location. Service Provider will open and own payroll bank accounts for the payroll transactions. Funding is required in the bank account one day prior to the value date. Late funding of the payroll account by the Service Receiver may result in delay of payroll checks, applied 401(k) funds, and benefit payments. Any outstanding liabilities associated to payroll tax and benefits will remain on Service Provider’s general ledger at month end. Service Provider will retain interest earned, if any, on residual account balances and will pay all standard account related service fees. Any service fee associated with Non Sufficient Funds due to the Service Receiver will be the responsibility of the Service Receiver. Service provider will remit employee deductions from the Service Provider Accounts Payable bank account. Service Provider will collect the funds from the Service Receiver thru a 3rd party invoice. |
Dependencies
| • | Service Receiver must actively be engaged on the Infinium Application TSA and related Business Objects Universe for the duration this agreement is in effect. | |
| • | Service Receiver, in a separate and independent agreement, must have the ADP application and interface active for the period of time in which this agreement is in effect. | |
| • | Service receiver, in a separate and independent agreement, must have Concur and other Time and Attendance systems listed in Attachment A active and maintained with the correct interfaces and data feeds to Infinium by the Service Receiver for the period of time in which this agreement is in effect. | |
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. | |
| • | The services documented within this agreement must be exited at the same time and as such cannot be exited in parts. |
19
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the following
addresses (with an email copy to the Service Owners set forth above):
If to the Service Provider:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
If to the Service Receiver:
Xylem Inc.
2881 E Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
Xylem Inc.
2881 E Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
SERVICE LEVEL
Service Provider will classify incidents at its own discretion which are received
using High, Medium, or Low. Such classifications shall be consistent with the priorities
Service Provider set for itself as a recipient of services. Incidents classified using
this methodology will be triaged as documented below for SS-Payroll-01, HR-Benefits-02,
and HR-Benefits-03:
| SLA | Response Time | Resolution | ||
High
|
Within 24 hours of receiving notification during normal business hours | Within 24 — 48 hours of response during normal business hours | ||
Medium
|
Within 48 hours of receiving notification during normal business hours | Within 48 — 120 hours of response during normal business hours | ||
Low
|
Within 120 or more hours of receiving notification or as scheduled during normal business hours | Within 120 hours of response during normal business hours |
In the event incidents cannot be resolved, Service Provider shall promptly notify Service Receiver
and work together to try and resolve such incidents.
20
Premises at Fort Wayne
In addition to the services provided above, Service Provider will provide office space for two
Service Receiver employees (“SREEs”) to its facilities at 1950 West Cook road, Fort Wayne, IN 46818 (the
“Premises”). Access will include approximately 200 square feet of work space, and 2 desks located at
the Premises and access to the internet, phone, and a printer. Included within the rental rate will be
electrical, housekeeping, and pantry. Mail and reception service will not be provided.
General
| • | Fixed assets on the books of the Service Provider as of the date of the ITT separation will remain the property of the Service Provider during and at the end of the term. | |
| • | Fixed assets on the books of the Service Receiver as of the date of the ITT separation will remain the property of the Service Receiver during and at the end of the term. | |
| • | Service Receiver shall have the reasonable right to use, and Service Provider shall at all times have exclusive control of, and operate and maintain, the common areas including the pantry in the manner Service Provider may reasonably determine to be appropriate. | |
| • | SREEs will be permitted in the common areas and the specific location assigned to them. They will be provided with ID badges which they must wear at all times. |
Prohibitions
Service Receiver is prohibited from the following without the Service Provider’s consent:
| • | Making any changes to the physical layout of the Premises or any capital improvements | |
| • | Inviting or permitting any other employee or agent or guest of Service Recipient to enter the Premises, other than employees who were former ITT Corporation employees. Service Receiver assumes all responsibility for actions of its employees, agents and guests on the Premises. SREEs and their visitors must adhere to the facility’s access requirements at all times. | |
| • | Service Receiver will not be allowed to access Service Provider’s computer network. The SREEs will be allowed to access Service Receiver’s own computer network via wireless or landline data connections on the Premises. | |
| • | Service Receiver has no right to sublease, assign or transfer their space, except upon a change of control of Service Receiver in which case only former ITT Corporation employees will be permitted access to the Premises. Assignment of this agreement requires landlord approval in writing. | |
| • | Service Receiver agrees not to put up any external or internal signs during the term of the agreement. |
21
Service Receiver’s Responsibilities
| • | Service Receiver will be required to provide and pay for all support and services required to move out of the facility at the end of the term. If Service Receiver requires contractors to assist them in moving out of the facility, Service Receiver agrees to provide Service Provider with proof of adequate contractor insurance coverage prior to contractor entering into the facility. | |
| • | Service Receiver agrees to remove all of their personal property from the Premises at the end of the term. Tenant must return rented space to pre move in condition, with the exception of the offices, which should be left in an “as is” condition. | |
| • | Service Receiver agrees to abide by all rules and regulations set by the landlord including but not limited to those included in the lease between the landlord of the Premises and the Service Provider | |
| • | Service Receiver agrees that all cabling that is used to attached Service Receiver’s PC’s to the IT infrastructure will remain the property of the Service Provider and will not be removed by the Service Receiver at the end of the term. | |
| • | The SREEs will be required to show proper identification to enter the Premises as determined by the Service Provider |
Term
| • | The TSA for the Premises shall automatically expire 3 months after this TSA for Payroll Services, unless terminated earlier by notice to the Service Provider at least 90 days in advance of the date Service Receiver desires to terminate this portion of the TSA for space at the Premises. There shall be no make-whole or other fee due to Service Provider for early termination. |
Pricing for Space at the Premises
During 2011 |
Cost plus 2% - 10% per month | |||
From January 1, 2012 through December 31, 2012 |
Cost plus 2% - 10% per month | |||
From January 1, 2013 through the end of the Term |
Cost plus 2% - 10% per month | |||
The prices set forth above solely with respect to space at the Premises include the 2% or 10% increase
for profit and the 4.5% annual increase for inflation. Sales and use or other taxes are not included in
the above mentioned pricing.
22
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year. These
rates apply to internal Service Provider employees only, and should external resources be required,
the costs for those external resources will be reviewed with the Service Receiver prior to
execution of the project.
Additional Pricing Rates (All in USD)
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
23
ATTACHMENT A
Inbound Interfaces:
| Interface Name | Program Name | Business Purpose | Vendor | Source System | Destination System | |||||
Dependents
|
ACS | Infinium | ACS | |||||||
ACS Salary ISP and Pension
|
ACS | Infinium | ACS | |||||||
Create ADP Tax Journal
|
ADP | Infinium | ADP | |||||||
Maintain ADP Tax Controls
|
ADP | Infinium | ADP | |||||||
ADP Periodic & Qtrly File Downld
|
ADP | Infinium | ADP | |||||||
ADP Balance Report
|
ADP | Infinium | ADP | |||||||
Refresh ADP Employee Number
|
ADP | Infinium | ADP | |||||||
Unemployement emps
|
Barnett | Infinium | Barnett | |||||||
US_RELOWAGE_UPDATE.CARTUS
|
CARTUS | Infinium | CARTUS | |||||||
Send Cartus Receipt of gr
|
CARTUS | Infinium | CARTUS | |||||||
Concur — Employee Master File Feed
|
Concur | Infinium | Concur | |||||||
Employee information
|
Concur | Infinium | Concur Expense | |||||||
FTP Employee information
|
Concur | Infinium | Concur | |||||||
Export Employees to Concur
|
Concur | Infinium | Concur | |||||||
US Bank — Concur Travel
|
Concur | Infinum | Concur | |||||||
Garnishments
|
County Government | Infinium | County Government | |||||||
Empire Eligbility and HDHP Mellon pass thru
|
Empire/Blue | Infinium | Empire/Blue | |||||||
800 EVHR employee Infinium Data feed to (800)(Kronos) System
|
ITT | Infinium | Kronos | |||||||
Employee feed 500
|
ITT | Infinium | Cannon | |||||||
Cannon’s Full Employee Master Update To Cim
|
ITT | Infinium | Cannon | |||||||
Download Employee Date to IPG -Daily (ER 810 92SHR)
|
ITT | Infinium | Goulds |
24
| Interface Name | Program Name | Business Purpose | Vendor | Source System | Destination System | |||||
Prudential Demographics 880
|
Prudential | Infinium | Prudential | |||||||
Prudential Demographics 881
|
Prudential | Infinium | Prudential | |||||||
Send Prudential Demographics Systems
|
Prudential | Infinium | Prudential | |||||||
Prudential Systems Demographics(ENI, CAP,
CMC, ECI)
|
Prudential | Infinium | Prudential | |||||||
Cobra — New Hire
|
SHPS | Infinium | SHPS | |||||||
FSA — Deduction feed to SHPS
|
SHPS | Infinium | SHPS | |||||||
Stock Options Eligibility
|
Smith Barney | Infinium | Smith Barney | |||||||
Smith Barney CODES FILE
|
Smith Barney | Infinium | Smith Barney | |||||||
Smith Barney EMAIL ADDRESSES
|
Smith Barney | Infinium | Smith Barney | |||||||
Smith Barney PARTICIPANTS
|
Smith Barney | Infinium | Smith Barney | |||||||
New Hire
|
State of Indiana | Infinium | State of Indiana | |||||||
WebMD ELIGIBILITY
|
WebMD | Infinium | WebMD | |||||||
FTP CCUSECHD2 — Well Fargo password change
|
Wells Fargo | Infinium | Wells Fargo | |||||||
CLP to send payroll ACH file to Wells Fargo
|
Wells Fargo | Infinium | Wells Fargo | |||||||
CLP to run entire Wells Fargo pos pay process
|
Wells Fargo | Infinium | Wells Fargo | |||||||
modified International ACH file for ALL of
CANADA
|
Wells Fargo | Infinium | Wells Fargo | |||||||
Direct deposit transmission
|
Wells Fargo | Infinium | Wells Fargo | |||||||
Send Check Recon to bank
|
Wells Fargo | Infinium | Wells Fargo | |||||||
Re-send check recon to bank
|
Wells Fargo | Infinium | Wells Fargo | |||||||
Payroll ACH
|
Wells Fargo | Infinium | Wells Fargo |
25
| Interface Name | Program Name | Business Purpose | Vendor | Source System | Destination System | |||||
Active Directory
|
ITT | Infinium | ITT | |||||||
HM Update Health Mast — Defense Companies
|
ITT — HM | Infinium | HM | |||||||
Hyperion Planning — Build Transmission file
|
ITT Hyperion | Infinium | Hyperion | |||||||
SAP AUTO PAY Benefit Deductions sent to
Seneca Fall SAP system
|
ITT SAP | Infinium | SAP P2P | |||||||
Send file to Hancock
|
John Hancock | Infinium | John Hancock | |||||||
John Hancock Eligbility
|
John Hancock | Infinium | John Hancock | |||||||
401K Feedback file from JP Morgan
|
JP Morgan | Infinum | JP Morgan | |||||||
KAISER ELIGIBILITY
|
Kaiser Permanete | Infinium | Kaiser Permanete | |||||||
Transmit file to Life Plus for Marsh
|
Marsh | Infinium | Marsh | |||||||
Upload Life Plus file
|
Marsh | Infinium | Marsh | |||||||
LifePlus Eligibility
|
Marsh | Infinium | Marsh | |||||||
HSA Send Extract File From Robot Job
|
Mellon | Infinium | Mellon | |||||||
Medco Prescription
|
Merck Medco | Infinium | Merck Medco | |||||||
Metlife ltd/std mth — GL Advices
|
Metlife Advices | Infinium | Metlife | |||||||
Metlife LTD/STD ( Menu option)
|
Metlife Advices | Infinium | Metlife | |||||||
Metlife Dental
|
Metlife Dental | Infinium | Metlife Dental | |||||||
Print Voluntary Accident Monthly report data
|
National Union Fire | Infinum | National Union Fire | |||||||
PACIFICARE ELIG
|
PACIFICARE | Infinium | PACIFICARE | |||||||
Prudential Loans Systems
|
Prudential | Infinium | Prudential | |||||||
ENI Prudential Dollar Send — 800
|
Prudential | Infinium | Prudential | |||||||
CAP Prudential Dollar Send -881
|
Prudential | Infinium | Prudential | |||||||
ECI Prudential Dollar Send — 883
|
Prudential | Infinium | Prudential |
26
| Interface Name | Program Name | Business Purpose | Vendor | Source System | Destination System | |||||
AC ISP Rate change file
|
ACS | ACS | Infinium | |||||||
Dependents
|
ACS | Infinium | ACS | |||||||
ACS Salary ISP and Pension
|
ACS | Infinium | ACS | |||||||
Create ADP Tax Journal
|
ADP | Infinium | ADP | |||||||
ADP Qtrly Unempl Process
|
ADP | ADP | Infiniium GL | |||||||
Maintain ADP Tax Controls
|
ADP | Infinium | ADP | |||||||
ADP Periodic & Qtrly File Downld
|
ADP | Infinium | ADP | |||||||
ADP Balance Report
|
ADP | Infinium | ADP | |||||||
Refresh ADP Employee Number
|
ADP | Infinium | ADP | |||||||
SAVINGS BOND CONT FL
|
BANK OF CANADA | Infinium | BANK OF CANADA | |||||||
Unemployement emps
|
Barnett | Infinium | Barnett | |||||||
To update Infinium HR; contains pension data
|
Buck | Buck | Infinium | |||||||
Load and List wage request file from Cartus
|
CARTUS | CARTUS | Infinium | |||||||
Load Cartus file and process-batch job
|
CARTUS | CARTUS | Infinium | |||||||
Bring in Cartus Wage Request file
|
CARTUS | CARTUS | Infinium | |||||||
Load Cartus Gross Ups
|
CARTUS | CARTUS | Infinium | |||||||
US_RELOWAGE_UPDATE.CARTUS
|
CARTUS | Infinium | CARTUS | |||||||
Send Cartus Receipt of gr
|
CARTUS | Infinium | CARTUS |
27
| Interface Name | Program Name | Business Purpose | Vendor | Source System | Destination System | |||||
Re-Apply Concur (PYPME History) to Payroll
|
Concur | Concur | Infinium | |||||||
Concur — Load Employees from INFIN
|
Concur | Concur | Infinium | |||||||
Expense transations
|
Concur | Concur | Infinium | |||||||
CONCUR — travel process expense records
|
Concur | Concur | Infinium | |||||||
Concur- Employee Master File Feed
|
Concur | Infinium | Concur | |||||||
Employee information
|
Concur | Infinium | Concur E-Xpense | |||||||
FTP Employee information
|
Concur | Infinium | Concur | |||||||
Export Employees to Concur
|
Concur | Infinium | Concur | |||||||
US Bank — Concur Travel
|
Concur | Infinum | Concur | |||||||
Garnishments
|
County Government | Infinium | County Government | |||||||
Empire Eligbility and HDHP Mellon pass thru
|
Empire/Blue | Infinium | Empire/Blue | |||||||
Labor feed 800
|
Infinium | B&G | Infinium | |||||||
Labor feed CQC
|
Infinium | Canada | Infinium | |||||||
Canadian Kronos Labor interface to Infinium
|
Infinium | Canada Krono | Infinium | |||||||
Labor To Daily Time (CPSAL)
|
Infinium | CPSAL | Infinium | |||||||
Labor Load (FFSAL)
|
Infinium | FFSAL | Infinium | |||||||
Labor Load (FISAL)
|
Infinium | FISAL | Infinium | |||||||
Labor feed 831
|
Infinium | FLOBW | Infinium | |||||||
Labor feed 800
|
Infinium | Flojet | Infinium | |||||||
labor laod(FLSAL)
|
Infinium | FLSAL | Infinium | |||||||
Labor Load (GPH9V)
|
Infinium | G9H | Infinium | |||||||
Labor load (GPH9W)
|
Infinium | G9H | Infinium | |||||||
Labor feed 835
|
Infinium | Gould Pumps -WTG | Infinium | |||||||
Labor feed 800
|
Infinium | Heat | Infinium | |||||||
After Posting CL-Create GL Interface Files
|
Infinium | Infinium | Infinium | |||||||
Time(LEOSAL)
|
Infinium | LEOSAL | Infinium | |||||||
Time(PISAL)
|
Infinium | PISAL | Infinium |
28
| Interface Name | Program Name | Business Purpose | Vendor | Source System | Destination System | |||||
Labor feed 860
|
Infinium | Rule Hr | Infinium | |||||||
Labor feed 860
|
Infinium | Rule Sal | Infinium | |||||||
Time(WPC)
|
Infinium | WCP | Infinium | |||||||
Time(WEDBW)
|
Infinium | WEDBW | Infinium | |||||||
Promotions
|
Infinium | Excel | Infinium | |||||||
Salary Changes
|
Infinium | Excel | Infinium | |||||||
FTC Employee Master to be FTP
|
ITT | Infinium | Infinium | |||||||
FTCGL to be sent out to FTC
|
ITT | Infinium | Infinium | |||||||
Goulds GL to be FTP
|
ITT | Infinium | Infinium | |||||||
Goulds Flowtronex GL to be FTP
|
ITT | Infinium | Infinium | |||||||
Creates and Builds GL recs for a Cycle code
|
ITT | Infinium | Infinium | |||||||
Employee information 800
|
ITT | Infinium | B&G | |||||||
Kronos employee download CQC
|
ITT | Infnium | Canadian companies | |||||||
Generic GL Interface File
|
ITT | Infinium | Infinium | |||||||
Active Directory
|
ITT | Infinium | ITT | |||||||
FLYGT EMP FEED
|
ITT — FLYGT | Infinium | FLYGT | |||||||
HM Update Health Mast — Defense Companies
|
ITT — HM | Infinium | HM | |||||||
Hyperion Planning- Build Transmission file
|
ITT Hyperion | Infinium | Hyperion | |||||||
SAP AUTO PAY Benefit Deductions sent to
Seneca Fall SAP system
|
ITT SAP | Infinium | SAP P2P | |||||||
Send file to Hancock
|
John Hancock | Infinium | John Hancock | |||||||
John Hancock Eligbility
|
John Hancock | Infinium | John Hancock | |||||||
Receive Long Term Care file
|
John Hancock | John Hancock | Infinium | |||||||
Receive LongTerm Care Billing file
|
John Hancock | John Hancock | Infinium | |||||||
Copy from Tape J&HKVI data to file XPYPJHI
|
John Hancock | John Hancock | Infinium | |||||||
Receive life plus file
|
John Hancock | John Hancock | Infinium | |||||||
401K Feedback file from JP Morgan
|
JP Morgan | Infinum | JP Morgan | |||||||
401K Hourly to JP Morgan
|
JP Morgan | JP Morgan | Infinium | |||||||
KAISER ELIGIBILITY
|
Kaiser Permanete | Infinium | Kaiser Permanete | |||||||
Transmit file to Life Plus for Marsh
|
Marsh | Infinium | Marsh | |||||||
Upload Life Plus file
|
Marsh | Infinium | Marsh | |||||||
Life Plus Eligibility
|
Marsh | Infinium | Marsh | |||||||
Receive Life Plus Input File
|
Marsh | Marsh | Infinium |
29
| Interface Name | Program Name | Business Purpose | Vendor | Source System | Destination System | |||||
Medco Prescription
|
Merck Medco | Infinium | Merck Medco | |||||||
Metlife ltd/std mth — GL Advices
|
Metlife Advices | Infinium | Metlife | |||||||
Metlife LTD/STD ( Menu option)
|
Metlife Advices | Infinium | Metlife | |||||||
Metlife Dental
|
Metlife Dental | Infinium | Metlife Dental | |||||||
Print Voluntary Accident Monthly report data
|
National Union Fire | Infinum | National Union Fire | |||||||
PACIFICARE ELIG
|
PACIFICARE | Infinium | PACIFICARE | |||||||
Receive and process autotime — car allowance
|
Runzheimer | Runzheimer | Infinium | |||||||
Receive and process Can AT — car allowance
|
Runzheimer | Runzheimer | Infinium | |||||||
Re-Apply Runzheimer (PYPME History) to Payroll
|
Runzheimer | Runzheimer | Infinium | |||||||
Cobra — New Hire
|
SHPS | Infinium | SHPS | |||||||
FSA — Deduction feed to SHPS
|
SHPS | Infinium | SHPS | |||||||
Stock Options Eligibility
|
Smith Barney | Infinium | Smith Barney | |||||||
Smith Barney CODES FILE
|
Smith Barney | Infinium | Smith Barney | |||||||
Smith Barney EMAIL ADDRESSES
|
Smith Barney | Infinium | Smith Barney | |||||||
Smith Barney PARTICIPANTS
|
Smith Barney | Infinium | Smith Barney | |||||||
Receive Smith Barney Options
|
Smith Barney | Smith Barney | Infinium | |||||||
Receive Smith Barney Restricted
|
Smith Barney | Smith Barney | Infinium | |||||||
New Hire
|
State of Indiana | Infinium | State of Indiana | |||||||
United Way Upload to PYPDE
|
United Way | United Way | Infinium | |||||||
WebMD ELIGIBILITY
|
WebMD | Infinium | WebMD | |||||||
FTP CCUSECHD2 — Well Fargo password change
|
Wells Fargo | Infinium | Wells Fargo | |||||||
CLP to send payroll ACH file to Wells Fargo
|
Wells Fargo | Infinium | Wells Fargo | |||||||
CLP to run entire Wells Fargo pos pay process
|
Wells Fargo | Infinium | Wells Fargo | |||||||
modified International ACH file for ALL of CANADA
|
Wells Fargo | Infinium | Wells Fargo | |||||||
Direct deposit transmission
|
Wells Fargo | Infinium | Wells Fargo | |||||||
Send Check Recon to bank
|
Wells Fargo | Infinium | Wells Fargo | |||||||
Re-send check recon to bank
|
Wells Fargo | Infinium | Wells Fargo | |||||||
Payroll ACH
|
Wells Fargo | Infinium | Wells Fargo | |||||||
CLP to receive check recon file from Wells Fargo
|
Wells Fargo | Wells Fargo | Infinium | |||||||
Receive Check recon
|
Wells Fargo | Wells Fargo | Infinium |
30
ATTACHMENT B
The following table documents the process day for the in-scope pay cycles:
| EMPLOYER | CYCLE CODE | NAME | FREQ | Paid Lag | Paid Current | Process Day | NEWCO | Required By | ||||||||
GOULDS PUMPS CANADA (IPG)
|
CGOBW | Bl WEEKLY CGO | B | X | Pay Week — Monday | ITTCO | Mon — 2pm | |||||||||
ONTARIO PRO SERVICES CENTER
|
CONBW | Bl WEEKLY CON | B | X | Pay Week — Monday | ITTCO | Mon — 2pm | |||||||||
ITT CANNON
|
BIWBW | BIWBI WEEKLY | B | X | Pay Week — Tuesday | ITTCO | Tues — 2pm | |||||||||
ITT CANNON
|
BIWHR | BIW HOURLY | B | X | Pay Week — Tuesday | ITTCO | Tues — 2pm | |||||||||
ITT CANNON
|
BWCAN | Bl WEEKLY CANNON | B | X | Pay Week — Monday | ITTCO | Tues — 2pm | |||||||||
ITT CANNON
|
HRCAN | CANNON HOURLY EMPLOYEES | B | X | Pay Week — Tuesday | ITTCO | Tues — 2pm | |||||||||
ITTVEAM, LLC
|
BWVEA | VEAM SALARY | B | X | Pay Week — Monday | ITTCO | Tues — 2pm | |||||||||
ITTVEAM, LLC
|
HRVEA | HOURLY VEAM | B | X | Pay Week — Monday | ITTCO | Tues — 2pm | |||||||||
ITT CORPORATION
|
BWIND | ITT INDUSTRIES BI-WEEKLY | B | X | Pay Week — Tuesday | Unknown | Tues — 2pm | |||||||||
COMPUTER & EQUIP LEASING CORP
|
CELBW | COMPUTER & EQUIP LEASING | B | X | Non Pay Week — Friday | Unknown | Tues — 2pm | |||||||||
ITT TRANSPORTATION DIST SVCS
|
BWGRP | TDS BW | B | X | Non Pay Week — Friday | Unknown | Tues — 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
AERHR | AEROSPACE HOURLY AH | W | X | Pay Week — Monday | ITTCO | Tues — 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
AESAL | AEROSPACE SALARY AP | B | X | Pay Week — Monday | ITTCO | Tues — 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
AMOHR | AMORY HOURLY FH | W | X | Pay Week — Monday | ITTCO | Tues — 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
AMSAL | AMORY SALARY FS | B | X | Pay Week — Tuesday | ITTCO | Tues — 2pm |
31
| EMPLOYER | CYCLE CODE | NAME | FREQ | Paid Lag | Paid Current | Process Day | NEWCO | Required By | ||||||||
ITT R&CW CANADA
|
FPCAS | FLUID PRODUCTS | B | X | Pay Week — Monday | WaterCO | Mon — 2pm | |||||||||
ITT WATER & WASTEWATE
|
FLCAN | BI WEEKLY FLYGT | B | X | Non Pay Week — | WaterCO | Mon — 2pm | |||||||||
ITT CORPORATI
|
BWIND | ITT INDUSTRIES | B | X | Pay Week — Tuesday | Unknown | Tues — 2pm | |||||||||
COMPUTER & EQUIP
|
CELBW | COMPUTER & EQUIP | B | X | Non Pay Week — | Unknown | Tues — 2pm | |||||||||
ITT
|
BWGRP | TDS BW | B | X | Non Pay | Unknown | Tues — 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
BGSAL | BELL & GOSSETT | B | X | Pay Week — Tuesday | WaterCO | Tues — 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
BGUN | BELL& GOSSETT | B | X | Pay Week — Tuesday | WaterCO | Tues — 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
CONHR | CONOFLOW HOURLY CH | W | X | Pay Week — Monday | WaterCO | Tues — 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
COSAL | CONOFLOW SALARY CN | B | X | Non Pay Week —Friday | WaterCO | Tues — 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
CPSAL | CUSTOM PUMPS SALARY | B | X | Non Pay Week — Thursday | WaterCO | Tues — 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
FLOBW | FLOJET BI WEEKLY | B | X | Non Pay Week — | WaterCO | Tues — 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
FTCBW | FTC BI WEEKLY | B | X | Pay Week — Tuesday | WaterCO | Tues — 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
GRSAL | GRINDEX SALARY GR | B | X | Non Pay Week —Friday | Unknown | Tues — 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
HTUN | HEAT TRANSFER | W | X | Pay Week — Monday | WaterCO | Tues — 2pm | |||||||||
ITT FLUID
|
RCSAL | R&CW HQ | B | X | Pay Week — | WaterCO | Tues — 2pm | |||||||||
ITT FLUID
|
SHBW | SHEROTEC | B | X | Non Pay | Unknown | Tues — 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
SHHR | SHEROTEC HOURLY ST | W | X | Pay Week — Monday | Unknown | Tues — 2pm | |||||||||
ITT FLUID
|
WTBW | WET | B | X | Pay Week — | Unknown | Tues — 2pm | |||||||||
LAING
|
LTSAL | LAING | B | X | Pay Week — | WaterCO | Tues — 2pm | |||||||||
ITT CORPORATI |
FRCSA | GOULD SHARED | B | X | Non Pay Week — | Unknown | Tues — 2pm | |||||||||
ITT GOULDS PUMPS PA
|
H9XSA | ASHLAND SALARY | B | X | Non Pay Week — | Unknown | Tues — 2pm | |||||||||
ITT GOULDS PUMPS TEXAS
|
H9WSA | TX TURBINE & PRO SHOP SALARY |
B | X | Non Pay Week — Thursday | WaterCO | Tues — 2pm | |||||||||
FLOWTRONE X PSI INC
|
FLOBW | FLOWTRONE X PSI BW | B | X | Non Pay Week — | WaterCO | Tues — 2pm | |||||||||
ITT WATER
|
9XLWS | WATER TEC | B | X | Non Pay | WaterCO | Tues — 2pm |
32
| EMPLOYER | CYCLE CODE | NAME | FREQ | Paid Lag | Paid Current | Process Day | NEWCO | Required By | ||||||||
ITT WATER TECHNOLOG
|
92WTG | WATER TECH WEEKLY | W | X | Pay Week — Monday | WaterCO | Tues — 2pm | |||||||||
GODWIN PUMPS OF
|
WKGWP | GODWIN PUMP | W | X | Pay Week — Tuesday | WaterCO | Tues — 2pm | |||||||||
GODWIN PUMPS OF
|
BWGWP | GODWIN PUMP Bl - | B | X | Pay Week — Tuesday | WaterCO | Tues — 2pm | |||||||||
ITT WATER & WASTEWATE R IN LLC |
FISAL | MINERVA SALARY BIWEEKLY | B | X | Non Pay Week —Friday | WaterCO | Tues — 2pm | |||||||||
ITT WATER & WASTEWATE
|
FFSAL | FLYGT FLORIDA SAL | B | X | Non Pay Week — | WaterCO | Tues — 2pm | |||||||||
ITT RULE
|
RUSAL | RULE SALARY | B | X | Pay Week — | WaterCO | Tues — 2pm | |||||||||
ADVANCED WATER
|
WPC | WATER POLUTION | B | X | Pay Week — Monday | WaterCO | Tues — 2pm | |||||||||
SRP ACQUISITION CORP
|
ROYCE | SRP ACQUISITION CORP | B | X | Pay Week — Monday | WaterCO | Tues — 2pm | |||||||||
WEDECO INC
|
WEDBW | WEDECO BW | B | X | Pay Week — | WaterCO | Tues — 2pm | |||||||||
THE FB LEOPOLD
|
LEOSA | LEOPOLD BW | B | X | Pay Week — Monday | WaterCO | Tues — 2pm | |||||||||
NOVA ANALYTICS
|
BWEXE | Bi-Weekly Executive | B | X | Pay Week — Tuesday | WaterCO | Tues — 2pm | |||||||||
NOVA ANALYTICS EUROPE LLC
|
BWNAE | BW NOVA ANALYTICS EUROPE LLC | B | X | Pay Week — Tuesday | WaterCO | Tues — 2pm | |||||||||
GLOBAL WATER INSTRUMEN TATION |
BWGWI | BW GLOBAL WATER INSTRUMEN TATION |
B | X | Non Pay Week Tuesday | WaterCO | Tues — 2pm | |||||||||
BELLINGHA M&
|
BWBSI | BELLINGHA M& | B | X | Pay Week — Tuesday | WaterCO | Tues — 2pm | |||||||||
AANDERAA DATA INSTRUMEN
|
BWADI | BW AANDERAA DATA | B | X | Pay Week — Tuesday | WaterCO | Tues — 2pm |
33
| EMPLOYER | CYCLE CODE | NAME | FREQ | Paid Lag | Paid Current | Process Day | NEWCO | Required By | ||||||||
ITT FLUID TECHNOLOGY
|
CTBW | C’TREAT BW | B | X | Non Pay Week -Friday | ITTCO | Tues - 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
EVHR | ENG VALVES HOURLY | W | X | Pay Week - Monday | ITTCO | Tues - 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
EVSAL | ENG VALVES SALARY EV | B | X | Non Pay Week -Friday | ITTCO | Tues - 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
GRSAL | GRINDEX SALARY GR | B | X | Non Pay Week -Friday | Unknown | Tues - 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
MFCBW | MOTION FLOW CONTROL SALARY | B | X | Pay Week - Tuesday | ITTCO | Tues - 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
SHBW | SHEROTEC BW | B | X | Non Pay Week -Friday | Unknown | Tues - 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
SHHR | SHEROTEC HOURLY ST | W | X | Pay Week - Monday | Unknown | Tues - 2pm | |||||||||
ITT FLUID TECHNOLOGY
|
WTBW | WET | B | X | Pay Week - Monday | Unknown | Tues - 2pm | |||||||||
ITT GOULDS PUMPS
|
CARBN | CARBON INDUSTRIES | B | X | Non Pay Week -Friday | ITTCO | Tues - 2pm | |||||||||
ITT GOULDS PUMPS
|
EVZHR | DIV-IPG, UNITS VU,PJ,QU WEEKLY | W | X | Pay Week - Monday | ITTCO | Tues - 2pm | |||||||||
ITT GOULDS PUMPS
|
H9WPS | PRO SHOP SALARY TX-BI-WEEKLY | B | X | Pay Week - Monday | ITTCO | Tues - 2pm | |||||||||
ITT GOULDS PUMPS
|
PROBW | BI WEEKLY CYCLE | B | X | Non Pay Week -Friday | ITTCO | Tues - 2pm | |||||||||
ITT GOULDS PUMPS
|
9XLCS | CITY OF INDUSTRY SALARY | B | X | Non Pay Week -Friday | ITTCO | Tues - 2pm | |||||||||
ITT GOULDS PUMPS
|
9XLSA | GOULD’S IPG BI-WEEKLY SALARY | B | X | Non Pay Week -Friday | ITTCO | Tues - 2pm | |||||||||
ITT GOULDS PUMPS
|
92SHR | SF UNION -IPG-SU, CPG-WU WKLY | W | X | Pay Week - Monday | ITTCO | Tues - 2pm |
34
| EMPLOYER | CYCLE CODE | NAME | FREQ | Paid Lag | Paid Current | Process Day | NEWCO | Required By | ||||||||||||||
ITT CORPORATION( FRC) |
FRCSA | GOULD SHARED SERVICES | B | X | Non Pay Week — Thursday | Unknown | Tues — 2pm | |||||||||||||||
ITT GOULDS PUMPS PA |
H9XSA | ASHLAND SALARY | B | X | Non Pay Week —Friday | Unknown | Tues — 2pm | |||||||||||||||
ITT GOULDS PUMPS IPG |
H9YSA | IPG SALARY | B | X | Non Pay Week — Thursday | ITTCO | Tues — 2pm | |||||||||||||||
ITT ENERGY ABSORPTION(ENIDINE) |
EAHR | ENIDINE WEEKLY HOURLY EA | W | X | Pay Week — Tuesday | ITTCO | Tues — 2pm | |||||||||||||||
ITT ENERGY ABSORPTION(ENIDINE) |
EASAL | ENIDINE BI-WEEKLY SALARY EA | B | X | Pay Week — Tuesday | ITTCO | Tues — 2pm | |||||||||||||||
ITT ENERGY ABSORPTION (CAP) |
CAHR | CAP WEEKLY HOURLY CA | W | X | Pay Week — Monday | ITTCO | Tues — 2pm | |||||||||||||||
ITT ENERGY ABSORPTION (CAP) |
CASAL | CAP BI-WEEKLY SALARY CA | B | X | Non Pay Week —Friday | ITTCO | Tues — 2pm | |||||||||||||||
ITT CONTROLS (CMC) |
BIHR | BILLERICA HOURLY CM | B | X | Pay Week — Tuesday | ITTCO | Tues — 2pm | |||||||||||||||
ITT CONTROLS (CMC) |
BISAL | BILLERICA Bl WEEKLY SALARY CM | B | X | Pay Week — Tuesday | ITTCO | Tues — 2pm | |||||||||||||||
ITT CONTROLS (CMC) |
CMHR | CMC BI-WEEKLY HOURLY CM | B | X | Pay Week — Tuesday | ITTCO | Tues — 2pm | |||||||||||||||
ITT CONTROLS (CMC) |
CMSAL | CMC BI-WEEKLY SALARY CM | B | X | Pay Week — Tuesday | ITTCO | Tues — 2pm | |||||||||||||||
ITT-KALIBURN INC. |
KBHR | KALI BURN HOURLY (BI-WEEKLY) | B | X | Pay Week — Tuesday | ITTCO | Tues — 2pm | |||||||||||||||
ITT-KALIBURN INC. |
KBSAL | KALI BURN SALARY (BI-WEEKLY | B | X | Pay Week — Tuesday | ITTCO | Tues — 2pm | |||||||||||||||
ITT KONI |
BWFRI | KONI FRICTION SALARIED | B | X | Non Pay Week — Thursday | ITTCO | Tues — 2pm | |||||||||||||||
ITT KONI |
BWKON | BI WEEKLY KONI | B | X | Non Pay Week — Thursday | ITTCO | Tues — 2pm | |||||||||||||||
35
ATTACHMENT C
Custom Queries to be run once a month by service provider:
| Application Used to | ||||||||
| Query/Report Name | Produce Information | Provider | Information Supplied | Frequency of Request | ||||
| DWA87200_MonthYear | Infinium Query | Debbie Weeks | Salaries Information of employees on Severance (Income Codes 00140 and 00270) |
Monthly | ||||
| Payroll by Individual | Business Objects | Carol Whisler | Payroll information of HQ Employees with names and cost centers |
Monthly | ||||
| Headcount | Business Objects | Idania Miro | Payroll information of HQ Employees with names and cost centers |
Monthly |
36
SCHEDULE CB2
SECURITY OPERATIONS CENTER
SECURITY OPERATIONS CENTER
Schedule Intentionally Deleted Prior to Distribution Date
1
SCHEDULE CB3
INFINIUM APPLICATION SERVICES
INFINIUM APPLICATION SERVICES
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
| Dan Johnston Exelis Inc. |
Enterprise Applications Manager | (260) 451-6042 | dan.johnston@exelisinc.com | |||
| Donna Sanabria Xylem Inc. |
IT Director, Corporate Functions and PMO | (914) 641-2046 | donna.sanabria@xyleminc.com |
GENERAL SERVICE DESCRIPTION
Service Provider will provide Infinium Application Support Services for Service Receiver.
Service Receiver and its Subsidiaries will utilize Service Provider’s resources based on the
functionality, processes, input and output screens, and documents that support the Service
Provider’s business and business processes in the twelve months prior to the Distribution date.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement,
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
| Minimum Service | ||||||||||||
| BAU Transaction | Period | |||||||||||
| Service # | Service Name | Description of Service | Volume | (in mo.) | Service Charge | |||||||
| Provide Infinium Application HR, Payroll, and General Ledger Related Support Services: | ||||||||||||
IT-Infinium-01
|
Infinium Application HR, Payroll and related GL Support Services | • Access to
Infinium Application
— Service Provider
will provide access
to application
through form(s)
signed off by the
appropriate signing
authority or
designated Executive
per the Master
Services Agreement,
and submitted through
Remedy tickets.
Service Provider will
give access to the
requested menu
options. Service
Provider will provide
access to application
for authorized
service receiver
users per the
security guidelines
outlined in the
Master Services
Agreement. Service
Provider will create
new application and
database users
pre-approved by
Service Recipient,
maintain application
and database
passwords, maintain
application and
database security to
meet security and
controls guidelines
identified in Master
Services Agreement,
as well as monitor
and restrict
unauthorized access
to source code and
data. Service
Provider will
maintain production
batch schedule,
execute batch jobs,
assess impact of
failed batch jobs,
and adjust schedule
to account for batch
job failures and
delays. Service
Provider will execute
web server and
application server
configuration
changes, monitor and
maintain application
administration Cron
jobs and shell
scripts. Time
required to provide
access to the
application will be
within (5) five
business days.
|
18 | Costs will be passed through as part of the HR/Payroll/Benefits TSA | ||||||||
• Infinium
Support & Maintenance
— Service Provider
will monitor incident
resolution requests
as reported via
Remedy tickets,
recommend and notify
Service Receiver, and
implement incident
resolution or
expected fix from
vendor per the SLA
outlined in the
Service Level section
of this agreement.
Service Provider will
identify and
communicate breaks in
application
discovered by
automated or
monitoring system,
develop solution and
approach to address
break in application,
and implement fixes
to resolve break in
application.
|
65 calls/ month | |||||||||||
• Infinium
Database Support —
Service Provider will
trouble shoot
database related
incidents as reported
via Remedy tickets.
These activities
include maintaining
database schemas if
necessary, performing
data cleanup
activities as well as
scheduled maintenance
activities,
requesting
database/file
restores, and
providing support for
all database issues
in production and
test/development
environments.
|
6 calls/ month | |||||||||||
• Custom
reports and data
extracts will be
provided as necessary
to support legal,
audit and compliance
tasks when requested
by authorized
individuals. |
||||||||||||
• Ad-Hoc
development/services
or processing of
reports consistent
with what was
provided in the |
||||||||||||
2
| Minimum Service | ||||||||||||
| BAU Transaction | Period | |||||||||||
| Service # | Service Name | Description of Service | Volume | (in mo.) | Service Charge | |||||||
| 12 months prior to the distribution date will be supported as part of this agreement. Any new Ad-Hoc reporting requirements will be considered out-of-scope and will be provided on a time and materials basis as described in the Additional Pricing section of this agreement. | ||||||||||||
• Any
modification of
3rd Party
Interfaces consistent
with support of BAU
or seasonal business
processes which were
provided with
existing internal
resources in the 12
months prior to the
distribution date
will be supported as
part of this
agreement. Any
changes to 3rd party
relationships which
require new interface
modifications or
re-writes are not
included as part of
the scope of this
agreement and will be
provided on a time
and materials basis
as described in the
Additional Pricing
section of this
agreement. |
||||||||||||
| Provide Infinium Application General Ledger Support for Enterprise Accounting Function: | ||||||||||||
IT-Infinium-02
|
Infinium Application GL Services for Enterprise Accounting Function Support Services |
• Access to
Infinium Application
— Service Provider
will provide access
to application
through form(s)
signed off by the
appropriate signing
authority or
designated Executive
per the Master
Services Agreement,
and submitted through
Remedy tickets.
Service Provider will
give access to the
requested menu
options. Service
Provider will provide
access to application
for authorized
service receiver
users per the
security guidelines
outlined in the
Master Services
Agreement. Service
Provider will create
new application and
database users
pre-approved by
Service Recipient,
maintain application
and database
passwords, maintain
application and
database security to
meet security and
controls guidelines
identified in Master
Services Agreement,
as well as monitor
and restrict
unauthorized access
to source code and
data. Service
Provider will
maintain production
batch schedule,
execute batch jobs,
assess impact of
failed batch jobs,
and adjust schedule
to account for batch
job failures and
delays. Service
Provider will execute
web server and
application server
configuration
changes, monitor and
maintain application
administration Cron
jobs and shell
scripts. Time
required to provide
access to the
application will be
within (5) five
business days.
|
18 | Costs will be passed through as part of General Ledger Accounting — ITT HQ TSA | ||||||||
• Infinium
Support & Maintenance
— Service Provider
will monitor incident
resolution requests
as reported via
Remedy tickets,
recommend and notify
Service Receiver, and
implement incident
resolution or
expected fix from
vendor per the SLA
outlined in the
Service Level section
of this agreement.
Service Provider will
identify and
communicate breaks in
application
discovered by
automated or
monitoring system,
develop solution and
approach to address
break in application,
and implement fixes
to resolve break in
application.
|
65 calls/ month | |||||||||||
3
| Minimum Service | ||||||||||||
| BAU Transaction | Period | |||||||||||
| Service # | Service Name | Description of Service | Volume | (in mo.) | Service Charge | |||||||
• Infinium
Database Support —
Service Provider will
trouble shoot
database related
incidents as reported
via Remedy tickets.
These activities
include maintaining
database schemas if
necessary, performing
data cleanup
activities as well as
scheduled maintenance
activities,
requesting
database/file
restores, and
providing support for
all database issues
in production and
test/development
environments.
|
6 calls/ month | |||||||||||
• Custom
reports and data
extracts will be
provided as necessary
to support legal,
audit and compliance
tasks when requested
by authorized
individuals. |
||||||||||||
• Ad-Hoc
development/services
or processing of
reports consistent
with what was
provided in the 12
months prior to the
distribution date
will be supported as
part of this
agreement. Any new
Ad-Hoc reporting
requirements will be
considered
out-of-scope and will
be provided on a time
and materials basis
as described in the
Additional Pricing
section of this
agreement. |
||||||||||||
• Any
modification of
3rd Party
Interfaces consistent
with support of BAU
or seasonal business
processes which were
provided with
existing internal
resources in the 12
months prior to the
distribution date
will be supported as
part of this
agreement. Any
changes to 3rd party
relationships which
require new interface
modifications or
re-writes are not
included as part of
the scope of this
agreement and will be
provided on a time
and materials basis
as described in the
Additional Pricing
section of this
agreement. |
||||||||||||
| Provide Infinium Accounts Payable and Currency Management Support for Enterprise Accounting Function: | ||||||||||||
IT-Infinium-03
|
Infinium Application AP and CM Support Services | • Access to
Infinium Application
— Service Provider
will provide access
to application
through form(s)
signed off by the
appropriate signing
authority or
designated Executive
per the Master
Services Agreement,
and submitted through
Remedy tickets.
Service Provider will
give access to the
requested menu
options. Service
Provider will provide
access to application
for authorized
service receiver
users per the
security guidelines
outlined in the
Master Services
Agreement. Service
Provider will create
new application and
database users
pre-approved by
Service Recipient,
maintain application
and database
passwords, maintain
application and
database security to
meet security and
controls guidelines
identified in Master
Services Agreement,
as well as monitor
and restrict
unauthorized access
to source code and
data. Service
Provider will
maintain production
batch schedule,
execute batch jobs,
assess impact of
failed batch jobs,
and adjust schedule
to account for batch
job failures and
delays. Service
Provider will execute
web server |
18 | Costs will be passed through as part of General Ledger Accounting–ITT HQ | ||||||||
4
and
application server
configuration
changes, monitor and
maintain application
administration Cron
jobs and shell
scripts. Time
required to provide
access to the
application will be
within (5) five
business days.
|
||||||||||||
• Infinium
Support & Maintenance
— Service Provider
will monitor incident
resolution requests
as reported via
Remedy tickets,
recommend and notify
Service Receiver, and
implement incident
resolution or
expected fix from
vendor per the SLA
outlined in the
Service Level section
of this agreement.
Service Provider will
identify and
communicate breaks in
application
discovered by
automated or
monitoring system,
develop solution and
approach to address
break in application,
and implement fixes
to resolve break in
application.
|
20 calls/ month | |||||||||||
• Infinium
Database Support —
Service Provider will
trouble shoot
database related
incidents as reported
via Remedy tickets.
These activities
include maintaining
database schemas if
necessary, performing
data cleanup
activities as well as
scheduled maintenance
activities,
requesting
database/file
restores, and
providing support for
all database issues
in production and
test/development
environments.
|
6 calls/ month |
| * | BAU volumes will be calculated on a rolling 12-month average to account for seasonal fluctuations and any temporary spike in service volumes post-spin. | |
| * | For BAU volumes, one incident will be considered the equivalent of one call (regardless of the number of phone conversations related to the same issue). |
Services that will not be provided as part of this agreement are:
| • | Employee Self Service Module (including Online Benefits Enrollment) |
Service Volumes Greater Than or Less Than Observed Pre-Distribution Date
Service Provider will deliver the same volume of Services as delivered in the 12 months prior to
the Distribution Date, plus or minus 10% (such activity, including any such 10% deviation,
“Business as Usual activities” or “BAU”) at no additional cost per unit. Service Provider will
accommodate Service Receiver’s inorganic (Mergers, Acquisitions, and Divestitures) activities on a
time and materials basis with respect to the one-time set-up fees. The table below will then apply
following the completion of the one-time set-up activities.
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume within
BAU [Note: BAU
already includes +/-
10% of
pre-distribution date
volumes]
|
No incremental one-time fees when Service Receiver utilizes services and structure as-is with no changes under this agreement | Steady-State fee structure for requisite service as documented below |
5
| Scenario | One-Time Setup Fees | Monthly Fees | ||
Service Volume
greater or less than
BAU
|
Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver provided the Service Receiver utilizes services and structure as-is with no significant changes under this agreement | Service Provider will develop a commercially reasonable quote for acceptance by the Service Receiver incremental to the base service costs documented below for the requisite service. |
Ad-Hoc development/services or processing of reports consistent with what was provided prior
to the distribution date will be supported as part of this agreement. Service Provider will use
commercially reasonable efforts based on provider’s current abilities to accommodate regulatory or
legal ad-hoc requests. Ad-hoc requests which may need to be performed to assist Service Receiver
in meeting new legal obligations will be provided on a time and materials basis as described in the
Additional Pricing section of this agreement. Any changes to 3rd party relationships which require
interface modifications or re-writes are not included as part of the scope of this agreement.
Should the Service Receiver require such changes, Parties agree to negotiate in good faith with
regard to such modification. In the event modifications to the services provided are required by
law for only the Service Recipient and such modifications increase the cost for Service Provider,
Service Recipient that requires the modifications shall pay all the additional costs including the
costs for the other Service Recipients.
Exit Services
The following services will be provided upon receipt of a Termination Notice to exit from this
Service.
| Service # | Service Name | Description of Service | Service Charge ($/hour) | |||
| Service Provider will make commercially reasonable best efforts to assist Service Receiver in exiting of this agreement. These efforts include: | ||||||
IT-Infinium-04
|
Infinium Migration | • Support of
data extraction
requests from the
Service Receiver
|
Time and Materials Based on Additional Pricing Section | |||
• Providing
Subject Matter
Expertise in helping
the Service Receiver
understand current
state data schema and
configuration
details |
||||||
| Service Provider will provide the following knowledge transfer services: | ||||||
IT-Infinium-05
|
Infinium Knowledge Transfer |
• Existing
non-sensitive
documentation
maintained by the
Service Provider will
be given to the
Service Receiver as
it relates to the
Infinium Application
and related
interfaces
|
Time and Materials Based on Additional Pricing Section |
6
Supplemental Services
For requests for supplemental services relating to Infinium Application support services by Service
Receiver not mentioned in this Schedule or not included within the costs documented in this
agreement, Service Receiver will provide a discreet project request and submit such request to
Service Provider using the formalized Change Request attached as Annex A for consideration by
Service Provider.
Where notice is required a number of business days prior to some required
action by Service Provider, notice must be received by 12 noon Eastern Time to
be counted as received during such business day. Service Provider shall, within
a commercially reasonable period, provide a price quote to be commercially
reasonable based on the current cost of the Services to Service Receiver taking
into account, such items as the specific time the request was made, service
delivery volumes, exit planning activities, and other activities Service
Provider is currently engaged in at the time of the request, but not later than
30 days after the request was made. If Service Provider, in its sole
discretion determines (i) such request would increase the ongoing operating
costs for Service Provider (as a service recipient) or any other service
receiver or (ii) that it is not capable of making such changes with its current
staff during the time period requested without interrupting the Services
provided to itself or any other service receiver. Service Provider need not
provide a price quote or perform the services. Where a price quote is
provided, Service Provider shall provide the service requested upon acceptance
of the price.
LOCATIONS
Services are initially provided from Fort Wayne, IN, USA to Canada and USA
locations for HR and payroll, and White Plains, NY for GL, AP, and CM.
PREREQUISITES/DEPENDENCIES
| • | Service Receiver will maintain the applications and interfaces documented in Attachment A. | ||
| • | Any IT services required to support business services outlined in the HR/Payroll/Benefits TSA and which were provided in the 12 months prior to the distribution date will be supported as part of this agreement. | ||
| • | If Service Receiver sends inaccurate data to Service Provider it will be the responsibility of the Service Receiver to rectify any problems and bear any costs incurred to rectify the issue. | ||
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. |
7
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the
following addresses (with an email copy to the Service Owners set forth above):
If to the Service Provider:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
If to the Service Receiver:
Xylem Inc.
240 Fall Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
Xylem Inc.
240 Fall Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
SERVICE LEVEL
Service Provider will classify incidents at its own discretion. Such
classifications shall be consistent with the priorities Service Provider set
for itself as a recipient of services. Incidents classified using this
methodology will be triaged as documented in Attachment B.
In the event incidents cannot be resolved in the time outlined in Attachment B,
Service Provider shall promptly notify Service Receiver and work together to
try and resolve such incidents.
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year.
These rates apply to internal Service Provider employees only, and should external resources be
8
required, the costs for those external resources will be reviewed with the Service Receiver prior
to execution of the project.
Additional Pricing Rates (All in USD)
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
9
ATTACHMENT A
| Interface Name | Program Name | Business Purpose | Vendor | Source System | Destination System | |||||
| AC ISP Rate change file | ACS | ACS | Infinium | |||||||
| To update Infinium HR; contains pension data | Buck | Buck | Infinium | |||||||
| Load and List wage request file from Cartus | CARTUS | CARTUS | Infinium | |||||||
| Load Cartus file and process-batch job | CARTUS | CARTUS | Infinium | |||||||
| Bring in Cartus Wage Request file | CARTUS | CARTUS | Infinium | |||||||
| Load Cartus Gross Ups | CARTUS | CARTUS | Infinium | |||||||
| Re-Apply Concur (PYPME History) to Payroll | Concur | Concur | Infinium | |||||||
| Concur — Load Employees from INFIN | Concur | Concur | Infinium | |||||||
| Expense transations | Concur | Concur | Infinium | |||||||
| CONCUR — travel process expense records | Concur | Concur | Infinium | |||||||
| Labor feed 800 | Infinium | B&G | Infinium | |||||||
| Labor feed CQC | Infinium | Canada | Infinium | |||||||
| Canadian Kronos Labor interface to Infinium | Infinium | Canada Krono | Infinium | |||||||
| Labor To Daily Time (CPSAL) | Infinium | CPSAL | Infinium | |||||||
| Labor Load (FFSAL) | Infinium | FFSAL | Infinium | |||||||
| Labor Load(FISAL) | Infinium | FISAL | Infinium |
10
| Interface Name | Program Name | Business Purpose | Vendor | Source System | Destination System | |||||
| Labor feed 831 | Infinium | FLOBW | Infinium | |||||||
| Labor feed 800 | Infinium | Flojet | Infinium | |||||||
| labor laod(FLSAL) | Infinium | FLSAL | Infinium | |||||||
| Labor Load (GPH9V) | Infinium | G9H | Infinium | |||||||
| Labor feed 810 | Infinium | Gould Pumps — EVZ | Infinium | |||||||
| Labor feed 835 | Infinium | Gould Pumps — WTG | Infinium | |||||||
| Labor feed 800 | Infinium | Heat | Infinium | |||||||
| Labor feed 905 | Infinium | Koni Sal | Infinium | |||||||
| Labor feed for Olympic | Infinium | Olympic | Infinium | |||||||
| Time(PISAL) | Infinium | PISAL | Infinium | |||||||
| Labor feed 860 | Infinium | Rule Hr | Infinium | |||||||
| Labor feed 860 | Infinium | Rule Sal | Infinium | |||||||
| Time(WPC) | Infinium | WCP | Infinium | |||||||
| Labor Load (BIWHR) | Infinium | BIWHR | Infinium |
11
| Interface Name | Program Name | Business Purpose | Vendor | Source System | Destination System | |||||
| Promotions | Infinium | Excel | Infinium | |||||||
| Salary Changes | Infinium | Excel | Infinium | |||||||
| FTC Employee Master to be FTP | ITT | Infinium | Infinium | |||||||
| FTC GL to be sent out to FTC | ITT | Infinium | Infinium | |||||||
| Goulds GL to be FTP | ITT | Infinium | Infinium | |||||||
| Cannon’s Full Employee Master Update To Cim | ITT | Infinium | Cannon | |||||||
| Send file to Hancock | John Hancock | Infinium | John Hancock | |||||||
| John Hancock Eligbility | John Hancock | Infinium | John Hancock | |||||||
| Receive Long Term Care file | John Hancock | John Hancock | Infinium | |||||||
| Receive Long Term Care Billing file | John Hancock | John Hancock | Infinium | |||||||
| Receive life plus file | John Hancock | John Hancock | Infinium | |||||||
| Upload Life Plus file | Marsh | Infinium | Marsh | |||||||
| Send Prudential Demographics Systems |
Prudential | Infinium | Prudential | |||||||
| Prudential Systems Demographics(ENI, CAP, CMC, ECI) |
Prudential | Infinium | Prudential | |||||||
| Receive and process autotime — car allowance | Runzheimer | Runzheimer | Infinium | |||||||
| Smith Barney EMAIL ADDRESSES | Smith Barney | Infinium | Smith Barney | |||||||
| Smith Barney PARTICIPANTS | Smith Barney | Infinium | Smith Barney | |||||||
| Receive Smith Barney Restricted | Smith Barney | Smith Barney | Infinium | |||||||
| Re-send check recon to bank | Wells Fargo | Infinium | Wells Fargo | |||||||
| Payroll ACH | Wells Fargo | Infinium | Wells Fargo | |||||||
| CLP to receive check recon file from Wells Fargo | Wells Fargo | Wells Fargo | Infinium | |||||||
| Receive Check recon | Wells Fargo | Wells Fargo | Infinium |
12
ATTACHMENT B
Following are the incident priorities and expected resolution target times:
| Priority | Accept | Resolve Incidents | ||
| Urgent | 30 mins | 1 hr | ||
| High | 1 hr | 4 hrs | ||
| Medium | 2 hrs | 8 hrs | ||
| Low | 4 hrs | 48 hrs |
Priority of Incidents
Urgent: System/Component or Program is inoperable, Multiple users effected. No alternatives
or backup is available.
High: Single user with a System/Component or Program that is inoperable. Component degraded with
limited access or functionality. A Workaround is available.
Medium: Job functions can be performed with some restricted functionality. Training, questions or
concerns need to be addressed but production is not affected.
Low: Attention is needed to assist in non-critical situations. A workaround is available.
Recovery Times
In the event of a hardware failure, the hardware vendor will be engaged for repair or replacement.
The anticipated outage period for an event of this nature is 16 hours.
In the event of a failure which results in the database having to be restored, the anticipated
outage would be 6+ hours.
13
Annex A
TSA Change Request Form
TSA Change Request Form
TSA Schedule:
Receiver TSA Owner:
Date of Request:
Completed By:
Requested Service Change:
| Already agreed to | ||||||||
| Service Description | with Service | |||||||
| Item Number | (Listed on schedule in the TSA) | Monthly Charge | Requested Change | Provider (Y/N) | ||||
1
|
||||||||
2 |
||||||||
3 |
||||||||
4 |
||||||||
5 |
Outcome:
| Outcome | ||||
| Item Number | (Approved, Denied) | Specific Action to be taken | ||
1
|
||||
2 |
||||
3 |
||||
4 |
||||
5 |
Approvals
Approved By:
|
Approved By: | |
Provider TSA Functional Lead
|
Receiver TSA Functional Lead | |
Executive Representative:
|
Executive Representative: | |
Provider TSA Manager
|
Receiver TSA Manager |
14
SCHEDULE CB4
ITT.COM EMAIL FORWARDING INFRASTRUCTURE
Capitalized terms used herein and not otherwise defined shall have the meaning assign such
term in the Agreement. The Services provided hereunder are subject in all respects to the terms and
conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this service should be directed
to:
| Name | Title | Phone | ||||
Service Provider |
||||||
Suleiman Walker
|
Messaging Manager | (719) 591-3626 | suleiman.walker@exelisinc.com | |||
Exelis Inc. |
||||||
Service Receiver |
||||||
Jakob Jakobsson
|
Manager Directory | +46 471 247584 | jakob.jakobsson@xyleminc.com | |||
Xylem Inc
|
Services & Messaging |
GENERAL SERVICE DESCRIPTION
Service Provider will perform ITT.com Email Forwarding Services for Service Receiver.
The primary service is to provide a computer processing platform that supports the business
applications of the Business, which includes IT support for technology infrastructure.
SCOPE OF SERVICES
Upon the terms and subject to the conditions of this Services Schedule and the Agreement, the
Service Provider shall provide to Service Recipient the services identified below (collectively,
the “Services”).
1
| Service # | Service Name | Description of Service | Transaction Volume | Duration | Service Charge | |||||||
IT-Email Forwarding-01 |
Email Forwarding Support Services |
Provide Email Forwarding services for email messages sent to ITT.com. Service Provider will forward messages to new Service Receiver domain addresses. | Unlimited number of emails forwarded | 12 | Cost plus 2% - 10% per month | |||||||
Services that will not be provided as part of this agreement are:
| • | Filtering of spam beyond SenderBase reputation level | ||
| • | Legal holds – Emails will not be saved as they will be forwarded to the Service Receiver, and it is the Service Receiver’s obligation to save emails if required by their legal counsel | ||
| • | Updating of Service Receiver’s domain changes |
Service Provider reserves the right to temporary halt the service, provided notification is given
to Service Receiver using commercially reasonable efforts, due to:
| • | Unusual increase in volume of emails | ||
| • | Threats to security | ||
| • | Constraints to network resources |
Should the Service Receiver require changes to the documented services, Parties agree to negotiate
in good faith with regard to such modification.
Exit Services
No exit services will be provided under this agreement.
LOCATIONS
Services are initially provided from Fort Wayne, IN, USA to global locations.
2
PREREQUISITES/DEPENDENCIES
| • | Service Receiver cannot create additional ITT.com email addresses | ||
| • | Service Receiver must have Cisco Iron Port hardware and software licenses active and maintained for the period of time in which this agreement is in effect. | ||
| • | Service Receiver must have Transport Layer Security (TLS) enabled and maintained for the period of time in which this agreement is in effect. | ||
| • | Service Receiver must have Microsoft Exchange active and maintained for the period of time in which this agreement is in effect. | ||
| • | Security and access controls will be maintained as set forth in the Master Services Agreement. |
NOTICE REQUIREMENT
Official Notices and Bills under this Schedule should be sent to the
following addresses (with an email copy to the Service Owners set forth above):
If to the Service Provider:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Joe.daniel@exelisinc.com
If to the Service Receiver:
Xylem Inc.
2881 E. Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
Xylem Inc.
2881 E. Bayard Street
Seneca Falls, NY 13148
Attention: Linda Lynch
Linda.lynch@xyleminc.com
3
SERVICE LEVEL
Service Provider will classify incidents at its own discretion and will make
commercially reasonable efforts to resolve incidents with service delivery.
In the event incidents cannot be resolved, Service Provider shall promptly notify
Service Receiver and work together to try and resolve such incidents.
ADDITIONAL PRICING
Hourly Rate for Services Not Specified but Provided by Service Provider Employees (including
but not limited to modifications, consulting, exit strategy development, transition, etc.) are
documented below. Such services will be provided solely at the Service Provider’s discretion.
Service Provider is not obligated to provide additional services not specified in this agreement.
The employee category is defined by the Service Provider. The rates documented below shall be
commercially reasonable and designated by the Service Provider, closest to its current cost to
provide the service. The hourly rates below include the 4.5% amount for inflation each year. These
rates apply to internal Service Provider employees only, and should external resources be required,
the costs for those external resources will be reviewed with the Service Receiver prior to
execution of the project.
| Additional Pricing Rates (All in USD) | ||||||||||||
| Location | Low | Medium | High | |||||||||
USA |
$ | 75 | $ | 100 | $ | 125 | ||||||
Greece |
$ | 35 | $ | 46 | $ | 58 | ||||||
Mexico |
$ | 19 | $ | 25 | $ | 31 | ||||||
Sweden |
$ | 75 | $ | 100 | $ | 125 | ||||||
4
Annex A
TSA Change Request Form
TSA Change Request Form
TSA Schedule:
Receiver TSA Owner:
Date of Request:
Completed By:
Requested Service Change:
| Already agreed to | ||||||||
| Service Description | with Service | |||||||
| Item Number | (Listed on schedule in the TSA) | Monthly Charge | Requested Change | Provider (Y/N) | ||||
1
|
||||||||
2 |
||||||||
3 |
||||||||
4 |
||||||||
5 |
Outcome:
| Outcome | ||||
| Item Number | (Approved, Denied) | Specific Action to be taken | ||
1
|
||||
2 |
||||
3 |
||||
4 |
||||
5 |
Approvals
Approved By:
|
Approved By: | |
Provider TSA Functional Lead
|
Receiver TSA Functional Lead | |
Executive Representative:
|
Executive Representative: | |
Provider TSA Manager
|
Receiver TSA Manager |
5
SCHEDULE CB5
BASIC TIME AND MATERIALS SUPPORT
BASIC TIME AND MATERIALS SUPPORT
Capitalized terms used herein and not otherwise defined shall have the meaning assigned to
such term in the Agreement. The Services provided hereunder are subject in all respects to the
terms and conditions of the Agreement, except where expressly noted.
SERVICE OWNER
All service matters, general inquiries and notices regarding this Service should be directed
to:
| Name | Title | Phone | ||||
Service Provider’s Contact |
||||||
Exelis Inc. |
||||||
Joe Daniel
|
TSA Manager | office: (703) 790-6309 | Joe.daniel@itt.com | |||
Service Receiver’s Contact |
||||||
Xylem Inc. |
||||||
Tim Coogan
|
TSA Manager | Office 914 323-5790 | Tim.Coogan@itt.com |
PARTIES TO THE AGREEMENT
Service Receiver: Exelis Inc.
Service Receiver: Xylem Inc.
GENERAL SERVICE DESCRIPTION
Service Receiver may need assistance after the Distribution Date from the Service Provider for
miscellaneous services, including but not limited to consulting, advisory, knowledge transfer and
other similar services in various areas including, but not limited to finance, tax, accounting,
insurance, treasury, human resources and communications, which are not already provided for under
all of the other TSAs between ITT Corporation, Xylem Inc., and Exelis Inc.
The Service Provider hereby agrees to cause its and its affiliates employees (collectively,
“Experts”) to provide a reasonable amount of services, including specifically the services listed
in Appendix A, upon reasonable notice and request from the Service Receiver on a time and materials
basis from the Distribution Date through April 30, 2013 (the “Minimum Term” and the “Maximum
Term”).
To utilize this TSA Schedule, employees of Service Receiver should request such services via email
or telephonically where both parties have a clear expectation of the estimated number of hours of
assistance being requested. For projects that are expected to require more than 5 to 10 hours of
assistance a one or two paragraph project plan should be agreed to in order to avoid
misunderstandings. The project plan should be put together by the Service Provider’s “Expert “with
respect to the requested services.
Employees of Service Receiver should advise their TSA manager that a request for services has been
made together with a description of such services requested and the estimated number of hours
requested.
The “Expert” should advise their TSA manager that a request for services has been made and the
estimated number of hours requested.
SCOPE OF SERVICES
The scope of services will depend on the needs of the Service Recipient and the capabilities
and availability of the Experts.
LOCATIONS
All locations around the world.
PREREQUISITES/DEPENDENCIES
The Experts remain employees of Service Provider. Service Receivers acknowledge and agree
that Service Provider has discretion to terminate the Experts and the Experts have the ability to
terminate their employment with Service Provider. In the event the Experts are no longer employed
by Service Provider, Service Provider will, at the request of the Service Receiver, use
commercially reasonable efforts to provide similar services. However, if Service Receivers or an
affiliate employ any of the Experts, the specific service requested under this Schedule can be
terminated by the Service Provider, at the Service Provider’s sole discretion on 5 business days
notice to the Service Receiver.
2
TAX STATUS
Sales tax will be charged as determined by the Service Provider and the
Service Receiver shall pay such tax along with the payment for the service
provided.
BILLING LOCATION
Service Provider will provide Service Receiver with an invoice to its
address set forth below under Notice Requirements, except in cases where
services are provided outside of the United States, in which case invoices will
be created by the Service Provider’s legal entity in the country where the
services are being performed and invoiced to the Service Receiver’s legal
entity that requested the services in the Service Provider’s local currency.
The bill will cover all charges for services under this Schedule from Service
Provider and, to the extent reasonably feasible, will be itemized among
Service Receiver’s legal entities if identified by the Service Receiver when
requesting the service. The invoice will contain the number of hours each
Expert worked, a short paragraph describing the services and the US dollar
amount per Expert.
The Experts shall track their time on either a time sheet or any other
proper method such as the utilizing the time sheet attached hereto and Service
Provider agrees that the time sheets will accompany the invoice that is sent to
the Service Recipient for payment. In cases where the requested services are
expected to take longer than 30 days to complete, the Service Provider will be
allowed to invoice the Service Receiver once per month for all costs incurred
to date.
NOTICE REQUIREMENTS
No notice of Termination is required under this Schedule and there shall be no make-whole fee
under this Schedule
Notices and bills to the Service Provider should be sent to:
Exelis Inc.
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
1650 Tysons Boulevard
Suite 1700
McLean, VA 22102
Attention: Joe Daniel
Notices and bills to the Service Receiver should be sent to:
Xylem Inc.
1133 Westchester Avenue
Suite 2000
White Plains, NY 10604
Attention: Tim Coogan
1133 Westchester Avenue
Suite 2000
White Plains, NY 10604
Attention: Tim Coogan
3
PRICING
In addition to the costs specifically set forth below, Service Receivers shall also pay all
business travel expenses relating to the Services in accordance with Service Providers documented
travel policies and any incremental out of pocket costs incurred by the Service Provider in order
to provide the requested services that are invoiced by unaffiliated 3rd parties. Service
Provider agrees to provide vendor invoices as backup to the Service Receiver when invoicing the
Service Receiver under the terms of this TSA.
The hourly rates below include a 4.5% increase for inflation and the 2% profit margin and
shall be applicable in 2011 and 2012. The rates shall increase by 4.5% in 2013. There shall be no
make whole fee due under Section 11 of the Agreement upon early termination of this TSA.
| Service | Hourly Rate* | |
Hourly Rate Administrative/Secretarial.
|
$50 per hour | |
Hourly Rate for a Non Executive
|
$100 per hour | |
Hourly Rate for an Executive
|
$150 per hour |
| * | Note: In cases where invoicing is done outside the United States, the above rates should be converted to local currency based on the exchange rate on the date the invoice is prepared. |
The pricing for the services described in Appendix A will be as set forth in Appendix A
unless no pricing is provided in which case if services are provided on an hourly basis the
rates above will apply.
Appendix A
Due Diligence Manager Software Application
Draft Base Statement of Work
Version 1.0 Draft
September 20, 2011
Draft Base Statement of Work
Table of Contents
1 Scope |
3 | |||
2 Technical Support Requirements |
3 | |||
2.1. Routine Application Maintenance |
3 | |||
2.1.1. Routine Tasks |
3 | |||
2.1.2. Outages |
3 | |||
2.2. Change and Improvement Process |
4 | |||
2.2.1. Change Request Analysis |
4 | |||
2.2.2. Change Request Processing |
4 | |||
2.3. Testing |
4 | |||
3 Deliverables |
4 | |||
4 Training and Support |
4 | |||
5 Place of Performance |
5 | |||
6 Period of Performance |
5 | |||
7 Project Management |
5 | |||
8 Labor Categories and Rates |
5 |
| ITT Proprietary Information | Page ii |
Draft Base Statement of Work
| 1 | Scope | |
The software application — Due Diligence Manager (DDM) — is a web-based, data-driven
software application that provides the ITT Due Diligence staff with the capabilities that
directly support the due diligence process. The SOW describes approach for identifying,
scoping, estimating, developing, testing, deploying, and maintaining the software and
application operation of the DDM application. |
||
This document describes the requirements for maintaining and modifying the ITT Due
Diligence Manager software application, including the underlying database. |
||
| 2 | Technical Support Requirements | |
| 2.1 | Routine Application Maintenance | |
ITT AIS Development Staff will perform all routine application sofware maintenance tasks
to ensure that the DDM software application is available to the user community on an
continuous basis. |
||
| 2.1.1 | Routine Tasks | |
ITT AIS Development Staff will periodically identify and correct latent issues discovered
during normal operations. These tasks include Application Server settings, configuration,
software upgrades and patches. These tasks are typically background and housekeeping tasks
that should not affect active users. |
||
| 2.1.2 | Outages | |
In the event of a failure (outage, defined as non-availability of DDM application software
functionality), the develop staff will make every attempt to restore software
availability. |
||
For software-related outages, ITT AIS Development Staff will investigate the reported
issue, determine the cause, correct the issue source, deploy a corrective update, verify
the correction, and notify the issue initiator of the resolution.
|
||
Outages that are not immediately identifiable as due to a DDM software issue, must be
directed to the ITT organization’s IT data center help desk, who will initiate a support
ticket and process that ticket to resolve the issue based on internal processes defined by
that organization. ITT AIS Development Staff will support that effort to determine the
source of the outage. |
ITT Proprietary Information Page 3
Draft Base Statement of Work
2.2 Change and Improvement Process
Requests for modifying the design, functionality or configuration of the DDM software
application shall be presented to the development staff by the user community through a
change request document. |
| 2.2.1 | Change Request Analysis | |
The ITT AIS development staff will review each request and develop an estimate for the
level of effort required to implement the requested change. This activity may include
dialogue with the initiating organization in order to ensure understanding of the
objectives and outcomes of the requested change. |
||
| 2.2.2 | Change Request Processing | |
ITT AIS staff will process the final RFC proposal through internal contracting offices,
ultimately to be released to the requesting activity as a proposal for implementing the
final change request. Once the requesting organization approves a proposal and the
requisite contractual documentation is finalized, ITT AIS development staff will schedule
and execute the finalized change request. Once the change is completed, ITT AIS will
deploy the change to the live DDM server for review by the requesting organization. After
completing a comprehensive review of the deployed application software change, and after
providing ITT AIS Development Staff with approval, ITT AIS Development Staff will close
the change request by initiating a contract closure letter to the requesting organization. |
||
| 2.3 | Testing | |
Prior to deployment of all requested and approved changes. DDM software changes will be
thoroughly tested using ITT AIS Development Staffs internal test process. The test
objectives, steps, and results will be documented in an appropriate format to ensure that
testing has been conducted and that any resultant software bugs have been resolved. |
||
| 3 | Deliverables | |
For Change Requests that impact the DDM User Guide or DDM Administrator Guide
ITT AIS Development Staff will update the affected documentation and release to the
requesting organization an update in pdf format. |
||
| 4 | Training and Support | |
For Change Requests that include signification changes where training on new
fieatures and functionality are requested as part of the Change Request, ITT AIS
Development Staff will schedule and conduct an on-line training course to cover the |
ITT Proprietary Information Page 4
Draft Base Statement of Work
| areas affected. Training will be addressed and included in the proposal for each Change Request as needed. | ||
| If requested, the ITT AIS Development Staff will provide technical training to ITT’s IT staff for further support and build-out the DDM application source code and application web server. This support will be estimated and quoted through the same process desciribed above for change requests. | ||
| 5 | Place of Performance | |
| All development tasks will be performed at ITT AIS site in Chesapeake, VA. | ||
| 6 | Period of Performance | |
| The proposed project schedule will be provided on a case by case basis. The final schedule will be updated once the project is accepted by the requesting organization. | ||
| 7 | Project Management | |
| ITT AIS Development Staff will identify DDM project manager who will be responsible for ensuring that the agreed-upon tasks identified in the final accepted proposal are scheduled, tracked, and completed in accordance with the project schedule. Any issues affecting cost, schedule, or technical performance will be brought to the attention of the client as soon as possible for resolution. | ||
| 8 | Labor Categories and Rates | |
| Labor categories to be applied to tasks under this SOW are listed below. These rates are estimates. Each task order will require a formal quote issued by ITT AIS Contracts Office based on the level of effort estimates as described in paragraph 2.2. |
| Labor Category | Estimated Labor Rate | |||
Project Manager |
Cost plus 2% - 10% | |||
Sr. Software Engineer |
Cost plus 2% - 10% | |||
Software Engineer |
Cost plus 2% - 10% | |||
ITT Proprietary Information Page 5
Appendix A-1
Management Reporting (HFM/Planning) Post Separation Support Requirements
Following the separation of ITT into 3 companies, key management reporting resources will be
required to provide post separation support and knowledge transfer between the NewCos. High level
areas of support and knowledge transfer include:
| • | Month-end close | |
| • | Year-end close | |
| • | New Year setup and rollforward | |
| • | OpPlan, Forecast, and Budget | |
| • | Metadata Management | |
| • | Ledger Mapping | |
| • | Break/Fix Support |
Listed below are the key HFM and Planning resources whose post separation support will be required
during the period 11/1/2011 through the 2012 March Close (approximately 4/20/2012).
| Future | November | December | January | February | March | April | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Resource | NewCo | Executive | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ITTCo | Xylem | Exelis | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ITTCo | No | n/a | 48 | 48 | n/a | 48 | 24 | n/a | 48 | 24 | n/a | 36 | 12 | n/a | 36 | 12 | n/a | 12 | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Xylem | No | 48 | n/a | 48 | 24 | n/a | 24 | 24 | n/a | 24 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exelis | No | 48 | 48 | n/a | 24 | 24 | n/a | 24 | 24 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ITTCo | No | n/a | 48 | 0 | n/a | 24 | 0 | n/a | 24 | 0 | n/a | 12 | 0 | n/a | 12 | 0 | n/a | 12 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ITTCo | Yes | n/a | 48 | 48 | n/a | 24 | 24 | n/a | 24 | 24 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Xylem | No | 48 | n/a | 48 | 24 | n/a | 24 | 24 | n/a | 24 | 12 | n/a | 12 | 12 | n/a | 12 | 12 | n/a | 12 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Service Provider Owners and Service Receiver Owners are set forth under “Service Owner” above.
SCHEDULE D
Fiscal Calendar
2
3
SCHEDULE E
The initial TSA Managers for ITT Corporation, Exelis Inc. and Xylem Inc. shall be Daryl Bowker,
Joseph Daniel and Tim Coogan, respectively.
4
Exhibit 10.5
ITT TRANSITIONAL TRADEMARK LICENSE AGREEMENT — EXELIS
This ITT TRANSITIONAL TRADEMARK LICENSE AGREEMENT- EXELIS (this “Agreement”) dated as
of October 25, 2011 by and between ITT MANUFACTURING ENTERPRISES LLC, a Delaware limited liability
company (formerly known as ITT Manufacturing Enterprises, Inc.) (“ITTME”) and
EXELIS INC., an Indiana corporation (“Exelis”; and together with ITTME, the
“Parties”, and each individually a “Party”) shall become effective as of the
Distribution Date.
WHEREAS, ITTME, a Subsidiary of ITT Corporation, an Indiana corporation (“ITT”), is
the owner of the trademarks and service marks listed on Schedule A attached hereto
(“ITT Marks”);
WHEREAS, pursuant to the Distribution Agreement, dated as of October 25, 2011 (the
“Distribution Agreement”), ITT is distributing certain of its assets and liabilities to
Exelis and Xylem, Inc. (the “Distribution”);
WHEREAS, after the Distribution, the Parties will no longer be affiliated, but Exelis wishes
to continue to use the ITT Marks for a limited transitional period in connection with the Defense
Business (as defined below) and ITTME has agreed to allow such use, subject to the terms and
conditions herein; and
WHEREAS, this Agreement is a License Agreement that must be executed pursuant to Section
2.8 of the Distribution Agreement.
NOW, THEREFORE, in consideration of the promises and of the mutual covenants and agreements
herein contained, and for good and valuable consideration, including that recited in the
Distribution Agreement, the receipt and adequacy of which is acknowledged by the Parties, the
Parties agree as follows:
ARTICLE 1 — DEFINITIONS
1.1. Definitions. The following capitalized terms used in this Agreement shall have the
meanings set forth below. Unless otherwise defined herein, all other capitalized terms shall have
the meanings ascribed to them in the Distribution Agreement.
“Affiliate” shall mean, when used with respect to a specified Person, a Person that
directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under
common control with the specified Person. For the purposes of this definition, “control”, when
used with respect to any specified Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or other interests. For purposes of this Agreement, no
Party or its Subsidiaries, shall be deemed to be “Affiliates” of any other Party and its
Subsidiaries.
“Covered Affiliates” shall mean all (i) Current Affiliates of Exelis, (ii) future
Subsidiaries of Exelis and (iii) future Affiliates of Exelis formed as part of an internal
reorganization for tax or administrative purposes. For the avoidance of doubt, Covered
Affiliates shall not include any Affiliates of any third-party acquirer of Exelis and its
Subsidiaries.
“Current” shall mean with respect to Affiliates, Subsidiaries, products, fields or
uses, as applicable, those entities, products, fields or uses in existence as of the Distribution
Date.
“Defense Business” shall mean the businesses conducted through the Electronic Systems,
Geospatial Systems, Information Systems and Mission Systems segments of ITT prior to the Effective
Time (as defined in the Distribution Agreement), including, for the avoidance of doubt, the
businesses of (i) the Defense Entities and the Defense Divisions and (ii) any other division,
Subsidiary, line of business or investment of ITT or any of its Subsidiaries managed or operated
prior to the Effective Time by any Defense Entity, unless such other division, Subsidiary, line of
business or investment is an ITT Retained Entity, an ITT Retained Division, a Water Entity or a
Water Division.
“Legacy Products” shall mean (i) tactical radios, counter-IED jammers, radar systems,
night vision products, image processing software all currently in existence and being offered for
sale or having been sold to Exelis customers as of the Distribution Date, where one or more of the
ITT Marks are used in product molds, stamps, engineering drawings, instruction manuals, screen
displays, code listings, and the like; (ii) any versions of the foregoing products that are offered
for sale or sold after the Distribution Date and are modified to have improved performance or
functionality (but excluding any new generations of such products that require a new qualification
by any government customer) and (iii) other products solely as may be agreed by the Parties, in
their sole discretion, during the Unified License Term.
“New Products” shall mean products that are first sold or offered for sale after the
Distribution Date, including new Legacy Products that require a new qualification by any government
customer.
“Person” shall mean any natural person, firm, individual, corporation, business trust,
joint venture, association, company, limited liability company, partnership or other organization
or entity, whether incorporated or unincorporated, or any governmental entity.
“Source Indicators” shall mean trademarks, service marks, corporate names, trade
names, domain names, logos, slogans, designs, trade dress and other designations of source or
origin.
“Subsidiary” shall mean with respect to any Person (i) a corporation, fifty percent
(50%) or more of the voting or capital stock of which is, as of the time in question, directly or
indirectly owned by such Person and (ii) any other Person in which such Person, directly or
indirectly, owns fifty percent (50%) or more of the equity or economic interest thereof or has the
power to elect or direct the election of fifty percent (50%) or more of the members of the
governing body of such entity.
1.2. Terms Generally. The definitions in Section 1.1 shall apply equally to both
singular and plural forms of the terms defined. The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”, unless the context expressly
provides otherwise.
2
ARTICLE 2 — GRANT OF LICENSE
2.1. Grant of License to “ITT” for Use in Unified Brand Name.
(a) Subject to the terms and conditions herein, ITTME grants to Exelis and its Covered
Affiliates a non-exclusive, worldwide, fully paid-up, non-assignable (subject to Section
6.1), and non-sublicensable (subject to Section 2.8) license to use the ITT Word Mark
(as set forth on Schedule A) as Source Indicators solely in combination with the name
“Exelis” (“New Brand Name”) to form the composite name “ITT Exelis” (the “Unified Brand
Name”) and solely in connection with the operation, advertisement, marketing, promotion and
support of the Defense Business, for three (3) years after the Distribution Date (the “Unified
Initial Term”).
(b) Subject to the terms and conditions herein, ITTME hereby grants to Exelis and its Covered
Affiliates, effective as of the Distribution Date, a no-cost option to extend the term of the
license in Section 2.1(a) for the Unified Brand Name by one (1) year increments, up to a
maximum of two (2) additional years (the “Unified Renewal Term” and together with the
Unified Initial Term, the “Unified License Term”). Exelis may exercise this option by
providing written notice to ITTME at any time during the Unified Initial Term, and will provide
such written notice not later than three (3) months prior to the expiration of the Unified Initial
Term, unless otherwise agreed by the Parties.
2.2. Grant of License to ITT Marks for Legacy Products. Subject to the terms and conditions
herein, ITTME grants to Exelis and its Covered Affiliates (those Covered Affiliates in subsections
(i) and (iii) only) a non-exclusive, worldwide, fully paid-up, non-assignable (subject to
Section 6.1), and non-sublicensable (subject to Section 2.8) license to use the ITT
Marks (as trademarks, service marks, logos, trade dress and the like, but not as domain names,
corporate names, trade names, d/b/a names and similar names) solely in connection with the
operation, advertisement, marketing, promotion and support of Legacy Products, and with respect to
advertising, marketing and promotion, solely in a manner consistent with their use prior to the
Distribution Date. This license for Legacy Products shall continue with respect to each Legacy
Product for so long as that Legacy Product remains in production. For the avoidance of doubt, the
license rights granted under this Section 2.2 shall not apply to any New Products. For the
avoidance of doubt, molds, tools and dyes that imprint or stamp any ITT Marks into spare parts for
Legacy Products discontinued before the Distribution Date or during the Unified License Term may be
used and such spare parts may be sold, until (i) the expiration of Exelis’s contractual obligations
to provide such spare parts or (ii) such spare parts become obsolete.
2.3. Grant of General Transitional License for the ITT Marks (other than in connection with
Legacy Products). Subject to the terms and conditions herein, ITTME grants to Exelis and its
Covered Affiliates (those Covered Affiliates in subsections (i) and (iii) only) a non-exclusive,
worldwide, fully paid-up, non-assignable (subject to Section 6.1), and non-sublicensable
(subject to Section 2.8) license to use the ITT Marks as Source Indicators solely in
connection with the operation, advertisement, marketing and promotion of the Defense Business in a
manner consistent with Exelis and such Covered Affiliates’ use of such ITT Marks prior to the
Distribution Date, solely for the following purposes and solely until the end of each time periods
below. Exelis and its Covered Affiliates acknowledge that the licenses in this Section
3
2.3 are transitional in nature, and that Exelis and its Covered Affiliates shall use
commercially reasonable efforts to transition away from substantially all of the following uses of
the ITT Marks promptly after the Distribution Date. Exelis and its Covered Affiliates shall not
unreasonably delay until each applicable deadline set forth in this Section 2.3 to
accomplish the actions specified therein.
(a) Exelis must file (or cause to be filed) to change all of its and its Covered Affiliates’
corporate names, trade names, d/b/a names and similar names to names that do not contain any ITT
Marks, within six (6) months after the Unified License Term, and promptly and diligently prosecute
all such changes to completion;
(b) Except as permitted under the licenses of Sections 2.1 and 2.2, Exelis must remove
(or cause to be removed) all uses of ITT Marks as Source Indicators from all of its and its Covered
Affiliates’ websites and electronic media that are promoted to third parties and under Exelis’s or
its Covered Affiliates’ possession or control within one-hundred-eighty (180) days after the
Distribution Date and the use of ITT as part of the name of substantially invisible internal
servers shall be ceased within a commercially reasonable time period not to exceed eighteen (18)
months from the Distribution Date;
(c) Except as permitted under the licenses of Sections 2.1 and 2.2, Exelis must use
commercially reasonable efforts to remove (or cause to be removed) all of its and its Covered
Affiliates’ uses of ITT Marks as Source Indicators in all channels, pages and other designated
areas of social networks and social media that are publicly affiliated with Exelis within
one-hundred-eighty (180) days after the Distribution Date;
(d) Except as permitted under the licenses of Sections 2.1 and 2.2, after the
Distribution Date, Exelis and its Covered Affiliates must (i) not create any new
personal property or disposable materials, including signage, advertising, promotional materials,
brochures, catalogues, operation and instruction manuals, datasheets, software, packaging,
stationery, business cards, invoices, receipts, forms, literature other similar items bearing the
ITT Marks and (ii) cease commercial use of any of the foregoing materials in existence as of the
Distribution Date within one-hundred-eighty (180) days after the Distribution Date;
(e) Except as permitted under the licenses of Sections 2.1 and 2.2, Exelis must remove
(or cause to be removed) all ITT Marks from any of its or its Covered Affiliates’ heavy machinery,
tools, equipment, and substantially permanent building signage (including etched glass, engraved
marble and the like) (i) that are visible to third parties, within two (2) years from the
Distribution Date or (ii) that are not visible to third parties, when such items are replaced in
the ordinary course of business;
(f) Except as may be permitted by the licenses of Sections 2.1 and 2.2 Exelis must
discontinue (or cause to be discontinued) the use of all of its or its Covered Affiliates’ molds,
tools and dyes that imprint or stamp any ITT Marks into products visible to third parties within
two (2) years after Unified Initial Term or within one (1) year after Unified Renewal Term.
Approaching the end of the License Term, Exelis and its Covered Affiliates must not create amounts
of product that are imprinted or stamped with the ITT Marks at rates that materially exceed the
ordinary course of business consistent with past practice. Exelis and its
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Covered Affiliates may sell any products created pursuant to the foregoing until three (3)
years after the Unified Initial Term or until two (2) years after Unified Renewal Term. For the
avoidance of doubt, molds, tools and dyes that imprint or stamp any ITT Marks into spare parts for
products discontinued before the Distribution Date or during the Unified License Term may be used,
and such imprinted or stamped spare parts may be sold, until (i) the expiration of Exelis’s
contractual obligations to provide such imprinted or stamped spare parts or (ii) such spare parts
become obsolete; and
(g) Except as permitted under the licenses of Sections 2.1 and 2.2, Exelis and its
Covered Affiliates must cease all other uses of the ITT Marks within one-hundred-eighty (180) days
after the Distribution Date, or as mutually agreed by the Parties.
2.4. Restrictions on ITTME. Subject to the terms and conditions herein, during the Unified
License Term, ITTME shall not license the ITT Marks for use in connection with any Defense Business
to any entities other than ITT Corporation (or to ITT Corporation for use in its Aerospace Controls
and Interconnect Solutions businesses), without the prior written approval of Exelis, such approval
not to be unreasonably withheld.
2.5. Website Disclaimer. Exelis and its Covered Affiliates shall display on their
respective websites a mutually-agreed upon disclaimer as to their lack of current affiliation with
ITT after the Distribution Date, for so long as any such website contains an ITT Mark.
2.6. Fair Use. Notwithstanding anything in this Agreement to the contrary, Exelis and its
Covered Affiliates may use the ITT Marks at all times after the Distribution Date (i) in a neutral,
non-trademark use to describe the history of their business; or (ii) as required or permitted by
applicable law.
2.7. Destruction. At ITTME’s request, at the end of the time periods in Section
2.3, Exelis shall (i) destroy or permanently modify (or cause to destroy or permanently modify)
all of the materials bearing the ITT Marks in the possession or control of Exelis and its Covered
Affiliates that are capable of destruction or permanent modification; and/or (ii) certify in
writing to ITTME that such destruction or permanent modification is complete.
2.8. Sublicensing. Exelis and its Covered Affiliates may sublicense the license in
Section 2.3 without ITTME’s consent, solely to advertisers, distributors, vendors, dealers,
suppliers and other Persons for use in connection with the operation of Exelis and its Covered
Affiliates’ businesses, but not for such Persons’ unrelated use. Provided that
Exelis and its Covered Affiliates had authorized or permitted such Persons to use the ITT Marks for
such purposes prior to the Distribution Date, Exelis and its Covered Affiliates shall terminate
such authorization or permission granted according to the deadlines set forth in Section
2.3. All other sublicenses of the license in Section 2.3 require the prior written
consent of ITTME in its sole discretion. Exelis shall be liable to ITTME for any act or omission
by a sublicensee that would constitute a breach hereof if committed by Exelis.
2.9. Use by Covered Affiliates. Any obligations upon, or rights granted to, Exelis
hereunder shall also apply to its Covered Affiliates. Exelis shall be liable hereunder for any act
or omission by its Covered Affiliates as if committed by Exelis.
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2.10. Reservation of Rights. All rights in the ITT Marks not expressly granted to Exelis
and its Covered Affiliates herein are reserved to ITTME.
2.11. Consideration. The Parties agree that the consideration for the licenses in
Sections 2.1- 2.3 is a portion of the consideration set forth in the Distribution
Agreement, and that no further royalties are therefore due under this Agreement.
ARTICLE 3 — QUALITY CONTROL/OWNERSHIP/ENFORCEMENT
3.1. Quality Control. Exelis shall use the ITT Marks solely: (i) in good faith, in a
dignified manner and in accordance with good trademark practice in all applicable countries and
jurisdictions and (ii) in connection with activities, products, and services that reflect favorably
upon the high levels of quality associated with ITT’s operation of the ITT business prior to the
Distribution Date. ITTME agrees that, in view of the Parties’ status immediately prior to the
Distribution Date as part of one corporate organization, each Party’s knowledge of standards and
procedures for ensuring consistent quality and Exelis’s history of providing high-quality goods and
services, ITTME accepts Exelis’s Current use of the ITT Marks and adherence to Current standards of
quality as satisfying this Section 3.1(i) and (ii). With respect to its use of the
ITT Marks under the transitional license of Section 2.3, Exelis agrees to use the ITT Marks
in accordance with all style, use, advertising, website and similar guidelines provided by ITTME,
provided that ITTME shall not impose any burdens upon Exelis that are inconsistent
with or disproportionate to those practices employed by ITT and its own Affiliates. Exelis and its
Covered Affiliates shall not take any action (or fail to take any action) that harms or jeopardizes
the value, validity or goodwill of the ITT brand. ITTME agrees that Exelis’s use of the ITT Marks
as of the Distribution Date complies with this Section 3.1.
3.2. Compliance with Laws. Exelis shall (i) use all commercially reasonable efforts to
comply with all applicable statutes, laws, regulations, rules and good industry practice
(“Laws”) wherever it uses any ITT Marks and (ii) use all notices and legends required by
applicable Laws and/or that are reasonably requested by ITTME so as to preserve and maintain the
validity of and ITTME’s rights in the ITT Marks, provided that any notice
requirements of ITTME shall not (x) impose any burdens upon Exelis that are inconsistent with or
disproportionate to those employed by ITT and its own Affiliates and/or (y) confuse consumers as to
the Parties’ non-affiliation after the Distribution Date, and/or (z) be inconsistent with any US
Government regulations or requirements.
3.3. Ownership/No Contest. Exelis acknowledges and agrees that, as between the Parties,
ITTME owns all right, title, and interest in the ITT Marks. Exelis will not challenge or contest
such ownership or the validity of any ITT Marks, including in any claim, dispute, action, suit,
arbitration, inquiry or proceeding (“Action”). Exelis shall be considered a “related
company” under Section 5 of the U.S. Lanham Act, 15 U.S.C. § 1055, such that its use of the ITT
Marks and the goodwill generated thereby shall inure to the sole benefit of ITTME. Notwithstanding
the foregoing, to the extent Exelis is deemed to have any ownership rights in the ITT Marks, at
ITTME’s request, Exelis shall cause such rights to be assigned to ITTME or its designee for no
consideration.
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3.4. New Registrations by Exelis. If Exelis wishes to request ITTME to apply for a
new registration for (i) an ITT Mark in the Defense Business in any additional country or
jurisdiction and/or (ii) in connection with new products or services in the Defense Business (in
each case, a “New Mark”), Exelis shall notify ITTME in writing, and the Parties will
negotiate in good faith to establish appropriate procedures and coverage of costs associated with
such New Marks. Neither Party shall file to register the Unified Brand Name as a Source Indicator
without the other Party’s prior written consent.
3.5. Enforcement. During the License Term, each Party shall promptly notify the other
Party after it becomes aware of any actual or threatened infringement, misappropriation, dilution
or other unauthorized use (“Infringement”) of the ITT Marks in connection with the Defense
Business. ITTME will be responsible for enforcement of the ITT Marks, and shall pay for all
enforcement, unless otherwise agreed to by the parties for any specific matters. The parties
anticipate that ITTME and/or ITT Corporation will continue to protect the ITT Marks with the same
level of care historically used but in no event less than commercially reasonable standard of care.
The Parties shall cooperate in good faith in all Actions brought pursuant to this Section
3.5 with Exelis providing reasonable assistance (without being required to incur out-of-pocket
costs) with respect to such enforcement and the Parties shall keep each other informed of all
material developments relating thereto. The Parties will fully cooperate to enforce the Unified
Brand Name against infringement or dilution by third parties.
3.6. Cooperation. During the License Term and for a period of five (5) years thereafter,
Exelis and its Covered Affiliates shall, upon the request of ITTME, use commercially reasonable
efforts to provide free of charge and without undue delay, evidence of use of the ITT Marks that
may be reasonably required to support the maintenance or renewal of relevant trademark
registrations and/or defend ITT Marks against challenges for lack of use (e.g., copies of sales &
marketing material, customer invoices and shipping documents); provided that if
Exelis no longer desires to store such materials for a product line after the Term it may notify
ITTME of the same and deliver (at Exelis’s cost) electronic media samples of such materials to
ITTME and upon acknowledgment by ITTME of receipt of such materials, and the obligations of this
Section 3.6 for this product line shall cease thereafter.
ARTICLE 4 — TERM AND TERMINATION/SURVIVAL
4.1. Term. The term of the license in Section 2.1 is for the Unified License Term.
The term of the license in Section 2.2 is as set forth therein. The term of each license
in Section 2.3, commences upon the date of the Distribution, and ends upon the date
specified therein. The term of this Agreement (“Term”) commences on the Distribution Date
and continues until the last license deadline (including any post-termination transitional periods)
in Article 2 expires.
4.2. Termination. ITTME has the right to terminate this Agreement, effective upon notice
to Exelis, if Exelis or its Covered Affiliates commit an intentional material breach of this
Agreement that materially harms the goodwill of the ITT Marks and does not cure same within thirty
(30) days after notice from ITTME.
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4.3. Termination of Section 2.1 License Upon Acquisition. Should Exelis be acquired by any
third party, (i) if the acquisition occurs during the Unified License Term, the license in
Section 2.1 shall terminate ninety (90) days from the closing date of such acquisition,
subject to a mutually-agreed reasonable extension for items for which brand transition is not
commercially practicable within ninety (90) days and (ii) the licenses in Sections 2.2 and
2.3 shall continue in full force and effect.
4.4. Survival. All provisions of this Agreement, that, by their nature, are intended to
survive the expiration of the Term or the termination of this Agreement shall survive such event.
ARTICLE 5 — REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION
5.1. By Each Party. Each Party represents and warrants to the other Party that: (i) the
warranting Party has full power and authority to execute and deliver this Agreement and to perform
its obligations under this Agreement and (ii) this Agreement has been duly executed and delivered
by the warranting Party and, assuming the due execution and delivery of this Agreement by both
Parties, constitutes a valid and binding agreement of the warranting Party enforceable against the
warranting Party in accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the enforcement of
creditors’ rights generally and general equitable principles.
5.2. Disclaimer. Except as expressly set forth in Section 5.1, the licenses in
Section 2.1, Section 2.2 and Section 2.3 are granted to Exelis and its
Covered Affiliates on an “as is,” “where is” basis, and ITTME disclaims any additional
representations and warranties, either express or implied, with respect thereto, including any
warranties of title, ownership, value, suitability, condition, merchantability, fitness for use or
non-infringement of third-party rights.
5.3. Indemnification. Without limiting the terms and provisions of the Distribution
Agreement, Exelis shall (and shall cause each member of the Defense Group to) indemnify, defend and
hold harmless the ITT Indemnitees from and against any and all Indemnifiable Losses relating to any
third-party Action brought against any ITT Indemnitee for property damage or personal injury
relating to the operation of the Defense Business by the Defense Group, to the extent any such
Action is brought against any ITT Indemnitee due to ITTME’s ownership of the ITT Marks.
Section 7.5 of the Distribution Agreement shall apply to the indemnification procedures
herein as applicable, mutatis mutandis.
ARTICLE 6 — MISCELLANEOUS
6.1. Assignment. ITTME may assign this Agreement to any Person who acquires the
ITT Marks, and any such acquirer must assume in writing all of ITTME’s obligations herein.
Exelis may assign this Agreement to any Person who acquires Exelis and its Subsidiaries,
provided that the licenses herein shall continue in effect only for Exelis and its
Subsidiaries and may not be extended to such acquirer or any of its other Affiliates. Further,
each Party may assume this Agreement in bankruptcy and may assign this Agreement to an Affiliate as
part of an internal reorganization for tax or administrative purposes. All other
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assignments of this Agreement by a Party require the prior written consent of the
non-assigning Party, which will not be unreasonably withheld. Any purported transaction in
violation of this Section 6.1 or Section 2.8 shall be null and void ab initio and
of no force and effect. In the event of a permitted assignment, this Agreement shall be binding
upon and inure to the benefit of the Parties and their respective permitted successors and assigns.
6.2. Notice. Any notice hereunder shall be in writing and delivered by reputable overnight
courier, facsimile or email to the address below (which may be amended pursuant to due notice
herein):
if to Exelis, to:
Exelis Inc.
Deputy General Counsel and Chief Intellectual Property Counsel
1650 Tysons Blvd., Suite 1700
McLean, VA 22102
Facsimile: +1 703 790 6364
Email: Tom.Blasey@itt.com
if to ITTME, to:
ITT Manufacturing Enterprises LLC
1105 N. Market Street, Suite 1300
Wilmington, DE 19801
Facsimile: +49 7151 699 401
Email: Wolfgang.Esser@itt.com
With a copy to ITT:
Intellectual Property Counsel
ITT Corporation
1133 Westchester Avenue, Suite 2000
White Plains, NY 10604
Facsimile: +1 914 696 2970
Email: trademarks@itt.com
6.3. Amendments and Waivers. Any provision of this Agreement may be amended solely by a
writing signed by both Parties. No failure or delay by any Party in exercising any right hereunder
shall operate as a waiver of any other or further exercise thereof or the exercise of any other
right herein. The rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by Law.
6.4. Governing Law. This Agreement shall be governed by and construed in accordance with
the law of the State of Delaware and, any dispute arising out of this Agreement shall be resolved
solely in the state or federal courts located in Delaware. EACH PARTY
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UNCONDITIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN CONNECTION WITH THE FOREGOING.
6.5. Specific Performance. Each Party acknowledges and agrees that the other Party would
be irreparably damaged if any of the provisions of this Agreement are not performed in accordance
with their specific terms and that any breach of this Agreement could not be adequately compensated
in all cases by monetary damages alone. Accordingly, in addition to any other right or remedy to
which any Party may be entitled at law or in equity, each Party shall be entitled to enforce any
provision of this Agreement by a decree of specific performance and to temporary, preliminary and
permanent injunctive relief to prevent breaches or threatened breaches of any of the provisions of
this Agreement, without posting any bond or other undertaking.
6.6. Counterparts. This Agreement may be signed in counterparts (including by facsimile or
other electronic transmission).
6.7. Third-Party Beneficiaries. Except as expressly provided herein, no provision of this
Agreement shall confer upon any person other than the Parties hereto any rights or remedies
hereunder.
6.8. Relationship. The Parties hereto are and shall remain independent contractors.
Nothing herein shall be deemed to establish a partnership, joint venture or agency relationship
between the parties. Neither party shall have the right to obligate or bind the other party in any
manner to any third party.
6.9. Severability. If any provision of this Agreement is held to be unenforceable under
applicable Law, such provision shall be deemed to be excluded from this Agreement and the balance
of this Agreement shall be interpreted as if such provision were so excluded and shall be enforced
to the maximum extent permitted by Law.
6.10. Interpretation. The headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement. This Agreement shall be
construed as if drafted jointly by the Parties.
6.11. Further Assurances. The Parties agree to execute such further documents and perform
such further actions as may be reasonably requested by the other Party to evidence and effectuate
further the purposes and intents set forth in this Agreement.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.
| ITT MANUFACTURING ENTERPRISES LLC |
||||
| By: | /s/ Burt M. Fealing | |||
| Name: | Burt M. Fealing | |||
| Title: | Vice President & Corporate Secretary | |||
| EXELIS INC. |
||||
| By: | /s/ Ann D. Davidson | |||
| Name: | Ann D. Davidson | |||
| Title: | Vice President, General Counsel and Secretary | |||
Exhibit 10.6
MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT (this “Lease”), made as of the 25th day of
October, 2011, between each of the landlords (each a
“Landlord”) identified on Schedule I
attached hereto and made a part hereof and each of the tenants (each a “Tenant”) identified on
Schedule I.
W I T N E S S E T H :
WHEREAS, ITT Corporation (“ITT”) and certain of its subsidiaries have entered into a
Distribution Agreement dated on or about the date hereof (the “Distribution Agreement”);
WHEREAS, the board of directors of ITT has determined that it is appropriate,
desirable and in the best interests of ITT, ITT’s stockholders and its other constituents
to separate the Water Business (as defined in the Distribution Agreement) and the Defense
Business (as defined in the Distribution Agreement) from ITT pursuant to and in accordance with the
Distribution Agreement;
WHEREAS, in connection with the separation of the Water Business and the Defense Business from
ITT, ITT desires to transfer, and to cause certain of its subsidiaries to transfer, (i) certain
Assets and Liabilities (as defined in the Distribution Agreement) associated with the Water
Businesses, to the Water Group (as defined in the Distribution Agreement), and (ii) certain Assets
and Liabilities associated with the Defense Businesses, to the Defense Group (as defined in the
Distribution Agreement); and
WHEREAS, in connection therewith, each of ITT and Xylem Inc. desire that certain members of
the ITT Group (as defined in the Distribution Agreement) and Water Group (as defined in the
Distribution Agreement), as applicable, lease certain real property to certain other members of
such Groups, as more fully set forth herein.
NOW, THEREFORE, the parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby covenant as follows:
1. PREMISES
1.1 Each Landlord, in consideration of the rents herein reserved and of the terms, provisions,
covenants and agreements on the part of each Tenant to be kept, observed and performed, does hereby
lease and demise unto each Tenant, and each Tenant does hereby hire and take from each Landlord,
the premises (“Premises”) more particularly described in Exhibit L attached hereto and made
a part hereof located in the building (“Building”) identified on Schedule I described
opposite the applicable Landlord’s and Tenant’s name.
1
1.2 All references herein to “Landlord” and “Tenant” shall apply to each Landlord and Tenant
identified on Schedule I and all references herein to “Premises”, “Term”, “Expiration
Date”, and “Rent”, shall apply to each Landlord and Tenant in accordance with the corresponding
material terms set forth in Exhibit L applicable to such parties’ Premises. In the event
of any inconsistencies or conflicts between the terms of provisions of this Lease and the material
terms set forth in Exhibit L, the material terms set forth in Exhibit L shall
control.
TO HAVE AND TO HOLD the Premises for the term, at the rent and upon the conditions hereinafter
provided.
2. TERM AND POSSESSION
The term of this Lease shall commence on the date identified on Exhibit L (the
“Commencement Date”) and shall be for the period set forth on Exhibit L (the
“Term”), unless renewed or sooner terminated pursuant to any provision set forth herein
(the “Expiration Date”), unless terminated earlier as provided in this Lease.
3. RENT
3.1 Tenant shall pay to Landlord as rent (the “Rent”) for the Premises during Term the
Rent identified onExhibit L.
3.2 The Rent shall be payable in equal monthly installments within five (5) days of the first
day of each and every month during the Term, without previous demand therefor and without offset or
deduction of any kind whatsoever, except as herein specifically set forth. Notwithstanding the
foregoing, Tenant shall pay the first month’s installment of Rent within five (5) days of the
execution of this Lease and, if the Commencement Date occurs on other than the first day of a
calendar month, Tenant shall pay its pro rata share of Rent for such calendar month.
3.3 All Rent payable hereunder shall be made payable to Landlord and sent to Landlord’s
address set forth on the corresponding Exhibit L, or to such other person or persons or at
such other place as may be designated by written notice from Landlord to Tenant, from time to time,
and shall be made in local currency in which the Premises is located (or as otherwise agreed to by
Landlord and Tenant in writing) which shall be legal tender for all debts, public and private. At
Tenant’s option, Rent may be payable when due by wire transfer or other payment of immediately
available funds to an account designated from time to time by Landlord. Landlord shall be deemed
to receive such payments when Landlord’s bank actually receives the wire transfer from Tenant’s
bank for the account of Landlord.
3.4 Tenant shall remain obligated under this Lease in accordance with its terms and shall not
take any action to terminate, rescind or avoid this Lease except as expressly permitted in this
Lease, notwithstanding any action for bankruptcy, insolvency, reorganization, liquidation,
dissolution or other proceeding affecting Landlord or any assignee of Landlord or any action with
respect to this Lease which may be taken by any trustee, receiver or liquidator or by any court.
Except as expressly set forth herein, Tenant hereby waives all right (i) to terminate this Lease,
or (ii) to surrender this Lease, or (iii) to any abatement, deferment, reduction, set-off,
counterclaim or defense with respect to any Rent payable hereunder. Except as expressly set forth
herein, Tenant shall remain obligated under this Lease in accordance with its terms and
2
Tenant
hereby waives any and all rights now or hereafter conferred by statute or otherwise to modify or to
avoid strict compliance with its obligations under this Lease. Notwithstanding any such statute or
otherwise, Tenant shall be bound by all the terms and provisions contained in this Lease.
4. INTENTIONALLY OMITTED
5. USE OF PREMISES
5.1 Tenant shall use and occupy the Premises for the same purposes and in the same manner as
used immediately prior to the Commencement Date. Any proposed change of use of the Premises by
Tenant must be approved by Landlord in writing, which may by granted or denied, in Landlord’s sole
discretion.
6. CONDITION OF PREMISES, ALTERATIONS AND REPAIRS
6.1 Except as otherwise set forth herein, Tenant agrees to accept the Premises in its present
“as is” condition, and Landlord makes no representation as to the condition of the Premises, except
as otherwise set forth herein. Landlord represents and warrants to Tenant that: (i) Landlord is
the owner of fee simple title to the Premises and all improvements located thereon, (ii) the
certificate of occupancy for the Premises permits the uses conducted at the Premises as of the
Commencement Date; and (iii) to Landlord’s knowledge, as of the Commencement Date, the Premises are
in compliance with all applicable laws, statutes, ordinances, regulations, orders, and
requirements, including without limitation, the Americans with Disabilities Act (as amended). If
during the course of any Alterations done by Tenant, Tenant discovers any structural defects or
conditions that will prevent Tenant from performing Tenant’s Alterations pursuant to Tenant’s
approved plans or if Tenant discovers any condition which is a breach of any representation of
Landlord set forth in this Lease that will prevent Tenant from performing Tenant’s Alterations
pursuant to Tenant’s approved plans (if any), Tenant shall give Landlord notice of the same.
Landlord at its option, may choose to cure the same within thirty (30) days after notice from
Tenant. In the event that Landlord does not cure or commence to cure and is diligently prosecuting
such cure, within such thirty (30) day period, Tenant may cure such condition at Landlord’s cost
and expense. Landlord shall reimburse Tenant for Tenant’s actual out-of-pocket expenses incurred in
curing any such defective condition within thirty (30) days following Landlord’s receipt of
Tenant’s demand therefore. Notwithstanding anything set forth herein to the contrary, in no event
shall Tenant be deemed to be prevented from performing any approved Alterations if there is a
commercially reasonable alternative that will not be prevented by any structural defect.
6.2 Landlord, at its sole cost and expense, shall make any Landlord Repairs. When used in
this Section, the term “Landlord Repairs” shall mean capital repairs and replacements to
the Premises, including, without limitation, repairs and replacements to the roof, floors,
foundation, exterior walls, structural components, existing parking lots, adjoining sidewalks and
curbs, if any, and shall perform all maintenance, necessary to maintain the Premises and any
sidewalks and curbs in substantially the same condition and repair as existed as of the date
hereof, ordinary wear and tear excepted or existing walkways of the Premises, and HVAC, plumbing
and electrical systems or other mechanical systems of the Building. Notwithstanding
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anything set
forth herein to the contrary, any Landlord Repairs required by the negligence or misconduct of
Tenant and/or its employees, agents or invitees shall be performed by Landlord at Tenant’s sole
cost and expense, less any insurance proceeds actually received by Landlord, net all of Landlord’s
costs and expenses associated with any such insurance claims.
6.3 Except as expressly set forth herein, Tenant shall have no right to make any changes,
alterations, additions, improvements or repairs in or to the interior of the Premises without the
prior written consent of Landlord, which consent may be withheld in Landlord’s sole discretion.
6.4 Landlord and Tenant shall cooperate and mutually agree upon any Separation Work (as herein
defined) as may be reasonably necessary to lease the Premises to Tenant. Subject to any required
Landlord approvals, Tenant shall use commercially reasonable efforts to physically demise and
separate the Premises, but only to the extent Landlord and Tenant have mutually agreed upon any
required Separation Work, from the remaining portion of Premises (the “Remaining Portion”) at
Tenant’s sole cost and expense. Such demising and separation work is referred to herein as the
“Separation Work.” The Separation Work shall include the following, as required and applicable: (i)
installation of one or more code-compliant sheetrock demising walls between the Remaining Portion
and the Premises or such other demising and partition materials as shall be reasonably sufficient
to separate the Premises from the Remaining Portion, finished to match the wall finishes on the
Premises to the extent practicable; and (ii) any reconfiguration of HVAC distribution, sprinkler
system distribution, electrical outlets, and lighting necessary as a consequence of installation of
such demising wall(s). All Separation Work must comply with all applicable fire, safety, health,
and building codes provided, however, it shall not be a default hereunder if Tenant does
not commence or complete the Separation Work on or before the Commencement Date.
7. INSURANCE
7.1 Throughout the Term, Tenant shall, at its own cost and expense, provide and keep in force,
for the benefit of Landlord, Tenant and any mortgagee or lessor of a Superior Lease, (a) general
public liability insurance protecting and indemnifying Landlord, Tenant and any mortgagee and
lessor of a Superior Lease against all third party claims for damages to person or property or for
loss of life or of property occurring upon, in, or about the Premises, if any, in limits of at
least $2,000,000 combined single limit per occurrence for bodily injury, death and property
damage, $5,000,000 in the aggregate per policy year or such greater limits as may be required from
time to time by any mortgagee or lessor of a Superior Lease or as may be reasonably required from
time to time by Landlord consistent with insurance coverage on properties similarly constructed,
occupied and maintained, and (b) Worker’s Compensation insurance (including Employers’ Liability
Insurance) covering all employees of the Tenant employed at the Premises to the extent required by
the laws and statutes of the State in which the Premises are located, including, without
limitation, during the course of work to the Premises so as to protect Landlord, Tenant and the
Premises against all worker’s compensation claims (collectively, “Tenant’s Required
Insurance”). Throughout the Term, Landlord, at Tenant’s sole cost and expense, shall provide
and keep in force for the benefit of Landlord and Tenant and any mortgagee or lessor of a Superior
Lease (a) property/fire, and casualty insurance in respect of the Premises and all installations,
additions and improvements which may now or hereafter be
4
erected thereon, insuring against loss or
damage by fire, water, lightning and such other risks as are now or hereafter embraced by
“all-risk”, in an amount sufficient to prevent Landlord and Tenant from becoming coinsurers and in
any event in an amount not less than one hundred percent (100%) of the actual replacement value
thereof (i.e., including the cost of debris removal but excluding foundations and excavations) as
reasonably determined by Landlord from time to time; and (b) boiler insurance, if applicable, in an
amount not less than one hundred percent (100%) of the actual replacement value thereof (including
the cost of debris removal but excluding foundations and excavations) as reasonably determined by
Landlord from time to time (collectively, “Landlord’s Required Insurance”).
7.2 Landlord shall be an additional insured in all Tenant’s Required Insurance (other than
Workers’ Compensation insurance) and Tenant shall be an additional insured in all Landlord’s
Required Insurance. In the event that the Premises shall be subject to any mortgage or Superior
Lease, the public liability insurance shall, if required by such mortgage or Superior Lease, name
the mortgagee and lessor of a Superior Lease as additional named insureds and all other insurance
provided hereunder shall name the mortgagee as an additional named insured under a standard
“noncontributory mortgagee” endorsement or its equivalent. Tenant shall provide Landlord copies of
any policies or certificates evidencing the Tenant’s Required Insurance. Landlord shall provide
Tenant copies of any policies or certificates evidencing the Landlord’s Required Insurance. Both
Tenant’s Required Insurance and Landlord’s Required Insurance shall contain endorsements to the
effect that such policies will not be materially changed, modified, altered or cancelled without at
least thirty (30) days’ prior written notice to other party.
7.3 All of the above-mentioned insurance policies and/or certificates shall be written by
insurance companies of recognized responsibility, licensed to do business in the state or
jurisdiction where the Premises are located, which are reasonably satisfactory to Landlord or
Tenant, as applicable, and well rated by national rating organizations.
7.4 At least thirty (30) days prior to the expiration of any policy or policies of such
insurance, the responsible party shall renew such insurance, and shall deliver to the other party
within the said period of time, copies of such policies or certificates of insurance, together with
proof of payment of all premiums therefor. If Tenant fails to renew such insurance at least three
(3) days prior to the expiration of any policy or policies of such insurance, Landlord shall have
the right, but not the obligation, without waiving or releasing Tenant from any obligation, to
procure Tenant’s Required Insurance at Tenant’s cost and expense and the cost thereof shall be
payable on demand as Rent, together with interest thereon at the rate equal to lesser of ten
percent (10%) per annum and the highest rate permitted by law (the “Applicable Rate”).
7.5 Neither party shall violate, or permit to be violated, any of the conditions of any of the
said policies of insurance, and each party shall perform and satisfy the requirements of the
companies writing such policies so that companies of good standing, reasonably satisfactory to the
other party, shall be willing to write and/or continue such insurance.
7.6 At the option of either party, the Tenant’s Required Insurance or the Landlord’s Required
Insurance, as applicable, may be effected by blanket and/or umbrella policies covering the Premises
and other properties owned or leased by Tenant or owned by Landlord,
5
respectively, provided that
the policies otherwise comply with the provisions of this Lease and allocate to the Premises the
specified coverage, without coinsurance by reason of, or damage to, any other property named
therein, and if the insurance required by this Lease shall be effected by any such blanket or
umbrella policies, each party shall furnish to the other party certified copies or duplicate
originals of such policies in place of the originals, with schedules thereto attached showing the
amount of insurance afforded by such policies applicable to the Premises, but not necessarily
reflect the entire limit for the Tenant, but only for the portion applicable to the Premises.
7.7 Tenant hereby releases Landlord with respect to any claim (including a claim for
negligence) which it might otherwise have against Landlord for loss, damages or destruction with
respect to its property by fire or other peril (including rental value or business interest, as the
case may be) occurring during the Term. This waiver of subrogation and release shall extend to the
agents of Landlord and its employees.
8. DAMAGE OR DESTRUCTION
8.1 Insured Casualty. If, at any time after the execution of this Lease, the
Premises, or any portion thereof, should be damaged or destroyed by any casualty insured or
required to be insured hereunder by Landlord’s Required Insurance, the following provisions shall
govern the rights and obligations of Landlord and Tenant:
i. If such damage or destruction occurs and is to the extent of twenty-five
percent (25%) or more of the then current replacement cost of the Improvements,
Landlord or Tenant may elect to terminate this Lease by giving at least fifteen (15)
days written notice of its said election to the other party, such notice to be given
within thirty (30) days after the date of such damage or destruction. If neither
Landlord nor Tenant shall elect to terminate this Lease, Landlord shall repair,
reconstruct or restore the Demised Premises in accordance with the provisions of
subparagraph ii, below.
ii. Except as provided in subparagraph (i) above, in the event the Demised
Premises, or any portion thereof, should be damaged or destroyed by any casualty
insured or required to be insured hereunder by Landlord’s Required Insurance, this
Lease shall nevertheless continue in full force and effect (except as otherwise
herein provided) and Landlord shall promptly commence and with due diligence
complete the repair, reconstruction or restoration of the Demised Premises so far as
practicable to the condition in which the Premises were immediately prior to such
damage or destruction.
8.2 Uninsured Casualty. If at any time after the execution of this Lease, the Demised
Premises, or any portion thereof, should be damaged or destroyed by any casualty not required on
the part of the Landlord to be insured against hereunder and such damage or destruction is to the
extent of twenty-five percent (25%) or more of the then current replacement cost of the
Improvements, Landlord or Tenant may elect to terminate this Lease by giving at least fifteen (15)
days written notice of its said election to the other party, such notice to be given within thirty
(30) days after the date of such damage or destruction. If at any time after the execution of
6
this
Lease the improvements on the Demised Premises or any portion thereof should be damaged or
destroyed by any casualty not required on the part of the Landlord to be insured against hereunder
and Landlord or Tenant has not elected to terminate this Lease as provided herein, then Landlord
shall repair, reconstruct or restore the Demised Premises. If Landlord elects to repair,
reconstruct or restore the Demised Premises after such damage or destruction thereto, this Lease
shall continue in full force and effect (except as otherwise herein provided) and Landlord shall
promptly commence and with due diligence complete the repair, reconstruction or restoration of the
Demised Premises so far as practicable to the condition to which the Demised Premises were
immediately prior to such damage or destruction. If Landlord fails to make such election, then
this Lease shall be deemed terminated as of the date of such damage or destruction, and all amounts
paid or payable by Tenant to Landlord shall, where applicable, be prorated between Landlord and
Tenant.
8.3 Abatement of Rent. Tenant agrees at all times after any damage to or destruction
of the improvement on the Demised Premises, or any portion thereof, to continue the operation of
its business therein to the extent practicable from the standpoint of good business, and in the
event Landlord is required or elects to make any repairs, reconstruction or restoration of any
damage or destruction to the Demised Premises under any of the provisions of this Paragraph, Tenant
shall not be entitled to any damages by reason of any inconvenience or loss sustained by Tenant as
a result thereof. Provided that the damage or destruction was not caused in whole or in part by
the negligence or misconduct of Tenant and/or its employees, agents or invitees, during the period
commencing with the date of any such damage or destruction which Landlord is required or elects
hereunder to repair, reconstruct or restore, and ending with the completion of such repairs,
reconstruction or restoration, the Rent shall be proportionately abated in an amount equal to the
proportion thereof which the number of square feet of gross floor area in the Demised Premises
rendered untenable by Tenant (and is actually not used or occupied by Tenant) thereby bears to the
total number of square feet of gross floor area in the Demised Premises immediately prior to such
damage or destruction. Payment of the full amount of Rent and all other charges shall resume upon
the completion of such work of repair, reconstruction or restoration.
8.4 Effect of Termination. In the event this Lease is terminated under any of the
provisions of this Paragraph, such termination shall become effective at the time and in accordance
with the respective provisions herein contained for the termination of this Lease; provided,
however, that all rentals and other charges on the part of Tenant to be paid hereunder shall be
prorated and paid either as of the date of such damage or destruction, or as of the date Tenant
ceases doing any business in, upon or from the Demised Premises, whichever last occurs.
8.5 Anything contained herein to the contrary notwithstanding, any different procedure for the
Restoration of the Premises or disbursement of insurance proceeds which may be required under any
mortgage or Superior Lease (defined below) shall take precedence over and be in addition to any
contrary procedure provided for in this Lease.
9. CONDEMNATION
9.1 If (a) the whole of the Premises shall be lawfully taken by condemnation or other eminent
domain proceedings pursuant to any law, general or special, or (b) substantially all of
7
the
Premises (hereinafter defined) shall be taken in or by such proceedings, and within thirty (30)
days after receipt from Landlord of a notice of a pending condemnation Tenant shall have given
notice to Landlord of its intention to terminate this Lease if such taking is effected, this Lease
shall terminate, in the case of a taking of the whole of the Premises, on the date of such taking,
and, in the case of the taking of substantially all of the Premises on the first Rent payment date
occurring not less than thirty (30) days after such taking. All Rent required to be paid by Tenant
under this Lease shall be paid up to the date of such termination and upon such termination this
Lease shall be of no further force and effect, except that any obligation or liability of either
party, actual or contingent, under this Lease which has accrued on or prior to such termination
date shall survive and any prepayment of Rent shall be prorated between the parties. For purposes
of this Article “substantially all of the Premises” shall be deemed to mean such portion of the
Premises as, when so taken, would leave remaining a balance of the Premises which, due either to
the area so taken or the location of the part so taken in relation to the part not so taken, would
not under economic conditions, applicable zoning laws, building regulations then existing or
prevailing, readily accommodate a new building or buildings of a nature similar to the Building
existing at the date of such taking and after performance of all covenants, agreements, terms and
provisions herein and by law provided to be performed and paid by Tenant. Tenant, in cooperation
with Landlord, shall have the right to participate in any condemnation proceedings and be
represented by counsel, at Tenant’s sole cost, for the purpose of protecting its interests
hereunder. Landlord agrees that it will not enter into any agreement with any condemning authority
in settlement of or on the threat of any condemnation or other eminent domain proceeding affecting
the Premises without the consent of Tenant, which consent shall not be unreasonably withheld or
delayed.
9.2 If only a portion of the Premises shall be so taken and Section 9.1 does not
apply, this Lease shall be unaffected by such taking, except that Rent payable by Tenant pursuant
to the provisions of this Lease shall be equitably reduced to a just and appropriate amount
according to the nature and extent of the taking.
9.3 Landlord shall be entitled to receive the entire award in any proceeding with respect to
any taking provided for in this Article without deduction therefrom for any estate vested in Tenant
by this Lease and Tenant shall receive no part of such award, except that, in the case of a partial
taking which does not result in a termination of this Lease. Tenant hereby assigns to Landlord all
of its right, title and interest in or to every such award. Nothing herein contained shall be
deemed to prohibit Tenant from making a separate claim, to the extent permitted by law, for the
value of Tenant’s inventory, movable trade fixtures, machinery and moving expenses, provided that
the making of such claim does not adversely affect or diminish Landlord’s award.
9.4 In the event of any taking of the Premises which does not result in a termination of this
Lease, Landlord at Landlord’s expense, subject to the provisions of Articles 6 and 8 and whether or
not any award or awards shall be sufficient for the purpose, shall proceed with reasonable
diligence to repair, alter and restore the remaining parts of the Premises to substantially the
condition existing immediately prior to the date of taking to the extent that the same may be
feasible and so as to constitute a complete and tenantable Premises. If the proceeds of such award
or awards are not sufficient to pay the full cost thereof, Landlord shall pay such deficit.
8
9.5 Anything contained herein to the contrary notwithstanding, any different procedure for the
Restoration of the Premises or disbursement of proceeds which may be required under any mortgage or
Superior Lease shall take precedence over and be in addition to any contrary procedure provided for
in this Lease.
9.6 In case of any governmental action, not resulting in the taking or condemnation of any
portion of the Premises but creating a right to compensation therefor, such as the changing of the
grade of any street upon which the Premises abut, this Lease shall continue in full force and
effect without reduction or abatement of Rent and the award shall be paid to Landlord, provided
such action does not have a material adverse effect on Tenant’s use and occupancy of the Premises.
10. ASSIGNMENT AND SUBLETTING
10.1 Tenant shall not, directly or indirectly, voluntarily or involuntarily, by operation of
law or otherwise, assign, mortgage, pledge or encumber this Lease, or underlet or suffer or permit
all or any part of the Premises to be used or occupied by others, without the prior written consent
of Landlord, such consent not to be unreasonably withheld, conditioned or delayed, in each
instance. Neither party shall sublease, license or otherwise permit the occupancy of any portion
of the Building or Premises to a competitor of the other party. Notwithstanding any of the
foregoing, without the consent of Landlord, Tenant may assign or sublease this Lease to any
“Affiliate,” as defined herein; provided, however, that (i) Tenant provides Landlord at least
thirty (30) days prior written notice of such assignment or sublease and (ii) Tenant and any such
Affiliate both remain jointly and severally liable for all obligations and liabilities under this
Lease. “Affiliate” shall mean (i) Tenant’s parent or any other entity that is wholly owned by
Tenant, or under common control with Tenant; (ii) any entity acquiring all or substantially all of
the Tenant’s assets or stock; or (iii) any successor entity to Tenant following a merger, provided,
in each instance, such assignee or sublessee is not a competitor of Landlord, as determined by
Landlord in Landlord’s reasonable judgment.
11. SUBORDINATION
11.1 Subject to the provisions of Section 11.3 below, all rights and interests of Tenant under
this Lease are subject, subordinate and inferior to all existing and future superior ground or
underlying leases (a “Superior Lease”) and mortgages encumbering the Premises or any part
thereof, and to all renewals, modifications, consolidations, replacements and extensions of any
such Superior Leases and mortgages. The right of the holder of any such Superior Lease or mortgage
shall at all times be and remain prior and superior to all rights and interest of Tenant. This
provision shall constitute a self-operative subordination agreement with respect to all such
Superior Leases and mortgages and all renewals, modifications, consolidations, replacements and
extensions thereof. If the holder of any such Superior Lease or mortgage shall require confirmation
of any subordination or a separate subordination agreement, Tenant shall execute such confirmation
or subordination agreement, within ten (10) days of Landlord’s request, in the form required by the
lessor under such Superior Lease or holder of such mortgagee, as applicable, and reasonably
satisfactory to Tenant; provided, however, such subordination shall be upon the express condition
that the validity of the Lease shall be recognized by the mortgagee, and that, notwithstanding any
default by the mortgagor with respect to said mortgage or any
9
foreclosure thereof, Tenant’s
possession and right of use under this Lease in and to the Premises shall not be disturbed by such
mortgagee unless and until Tenant shall breach any of the provisions hereof and this Lease or
Tenant’s right to possession hereunder shall have been terminated in accordance with the provisions
of this Lease.
11.2 In the event any proceedings are brought for the foreclosure of, or in the event of
exercise of power of sale under, any first mortgage covering Landlord’s interest in the Premises,
and such holder takes possession of the Premises, either as the result of foreclosure of such
mortgage or by accepting a deed to the Premises in lieu of foreclosure, or the Premises shall be
purchased at such a foreclosure by a third party, and such holder or third party shall furnish
Tenant satisfactory evidence that it has acquired title to the Premises subject to no liens or
encumbrances superior to this Lease, other than taxes not yet due and payable, Tenant shall attorn
to such holder or third party and recognize it as its landlord under this Lease, and such holder or
third party will in such event recognize and accept Tenant as its tenant hereunder, whereupon this
Lease shall continue in full force and effect as a direct lease between such holder or third party
and Tenant for the term of this Lease and such holder or third party shall, henceforth, be subject
to all of the terms of this Lease and perform all of the obligations of Landlord hereunder with the
same force and effect as if it were originally named as Landlord hereunder; provided, however, that
if conflicting claims should be made to the rent payable hereunder, Tenant shall have the right to
institute an interpleader suit for the purpose of determining who is entitled to payment of such
rent and to pay the rent in accordance with the judicial determination rendered in such proceeding.
11.3 At Tenant’s request, Landlord further agrees that, it shall obtain a written
non-disturbance and attornment agreement from any current or future mortgagee, lienholder, trustee
or encumbrancer whose interest shall be prior to this Lease as of the Commencement Date and
Landlord shall furnish Tenant with a copy of such agreement. Said non-disturbance agreement shall
expressly provide, inter alia, that (i) the parties thereto are executing such
agreement for the benefit of Tenant herein; and (ii) so long as Tenant shall be not then in default
under this Lease, no action or proceeding shall be taken at any time during the lease term or any
extension thereof, which shall disturb Tenant’s possession, quiet enjoyment, or any other
beneficial use of the demised premises as provided for in this Lease. The subordination of
Tenant’s interest hereunder to any mortgage or Superior Lease shall be expressly conditioned upon
Tenant’s receipt of such non-disturbance agreement.
11.4 Landlord represents and warrants to Tenant that there is no mortgage or Superior Lease
affecting the Premises as of the date hereof.
12. OBLIGATIONS OF TENANT
12.1 Tenant shall promptly comply, in all material respects, with all laws, ordinances,
orders, rules, regulations, and requirements or requests of all Federal, state, municipal or other
governmental or quasi-governmental authorities or bodies then having jurisdiction over the Premises
(or any part thereof) applicable to the use and occupation thereof by Tenant, of every nature and
kind (each, a “Requirement”), and Tenant shall so perform and comply, whether or not such
laws, ordinances, orders, rules, regulations or requirements shall now exist or shall hereafter be
enacted or promulgated and whether or not the same may be said to be within the
10
present
contemplation of the parties hereto; provided, however, that Tenant is under no obligation to
remedy or to render compliant any violations of applicable laws or Requirements, now existing or
hereafter promulgated, applicable to the Premises, unless and to the extent such violation or
non-compliance is a result of Tenant’s particular use of the Premises. Except to the extent the
same is Tenant’s responsibility hereunder, Landlord shall comply in all material respects with all
Requirements applicable to the ownership of the Premises.
12.2 Tenant agrees to give Landlord notice of any law, ordinance, rule, regulation or
requirement enacted, passed, promulgated, made, issued or adopted after the Commencement Date by
any of the governmental departments or agencies or authorities hereinbefore mentioned affecting the
Premises or Tenant’s use thereof, a copy of which is served upon or received by Tenant, or a copy
of which is posted on, or fastened or attached to the Premises, or otherwise brought to the
attention of Tenant, by mailing within five (5) business days after such service, receipt, posting,
fastening or attaching or after the same otherwise comes to the attention of Tenant, a copy of each
and every one thereof to Landlord. At the same time, Tenant will inform Landlord as to the Work
which Landlord is required to do or take in order to comply therewith, provided, however if such
Work is necessitated by Tenant’s particular use of the Premises, Tenant shall notify Landlord as to
the Work which Tenant proposes to do or take in order to comply therewith, subject to Landlord’s
reasonable approval. Notwithstanding the foregoing, however, if such Work would require any
Alterations which would, in Landlord’s opinion, reduce the value of the Premises or change the
general character, design or use of the Building or other improvements thereon, and if Tenant does
not desire to contest the same, Tenant shall, if Landlord so requests, defer compliance therewith
in order that Landlord may, if Landlord wishes, contest or seek modification of or other relief
with respect to such Requirements, but nothing herein shall relieve Tenant of the duty and
obligation, at Tenant’s expense, to comply with such Requirements, or such Requirements as
modified, whenever Landlord shall so direct, provided, however, if Landlord’s decision to defer
such compliance materially disrupts Tenant’s ability to operate its business in the manner
historically operated, Tenant shall have the right to terminate this Lease upon ninety (90) days
written notice to Landlord.
12.3 Landlord and Tenant shall defend, indemnify and save harmless each other, any partners or
members of each other, any partners or members of any partners or members of each other and any
officers, stockholders, directors or employees of any of the foregoing (collectively,
“Indemnified Parties”), on an after-tax basis from (a) any and all liabilities, claims,
causes of actions, suits, damages and expenses (collectively, “Claims”) arising from (i)
any work or thing whatsoever done, or any condition created in or about the Premises during the
Term, (ii) any use, non-use, possession, occupation, Alteration, repair, condition, operation,
management or maintenance of the Premises or any part thereof; (iii) any negligent or otherwise
wrongful act or omission of Landlord or Tenant or any of their employees, agents, contractors or
subcontractors, (iv) any accident, injury (including death) or damage to any person or property
occurring in, on or about the Premises or any part thereof or in, on or about any street, alley,
sidewalk, curb, vault, passageway, common area or space comprising a part thereof or adjacent
thereto, and (v) any breach, violation or non-performance of any covenant, condition or agreement
in this Lease to be fulfilled, kept, observed or performed by Landlord or Tenant; and (b) all
costs, expenses and liabilities incurred, including, without limitation, reasonable attorney’s fees
and disbursements through and including appellate proceedings, in or in connection with any of such
Claims. If any action or proceeding shall be brought against any of the Indemnified Parties by
11
reason of any such Claims, Landlord or Tenant, as applicable, upon notice from any of the
Indemnified Parties, shall resist and defend such action or proceeding, at its sole cost and
expense by counsel chosen by the indemnifying party who shall be satisfactory to such Indemnified
Party. The indemnifying party or its counsel shall keep each Indemnified Party fully apprised at
all times of the status of such defense. Notwithstanding the foregoing, an Indemnified Party may
retain its own attorneys to defend or assist in defending any claim, action or proceeding involving
potential liability in excess of One Hundred Thousand Dollars ($100,000), and the indemnifying
party shall pay the reasonable fees and disbursements of such attorneys. The provisions of this
Section shall survive the expiration or earlier termination of this Lease.
12.4 If at any time prior to, or during the Term (or within the statutory period thereafter if
attributable to Tenant), any mechanic’s or other lien or order for payment of money, which shall
have been either created by, caused (directly or indirectly) by, or suffered against Tenant, shall
be filed against the Premises or any part thereof, Tenant, at its sole cost and expense, shall
cause the same to be discharged by payment, bonding or otherwise, as provided by law, within ten
(10) business days after the filing thereof. Tenant shall, upon notice and request in writing by
Landlord, defend for Landlord, at Tenant’s sole cost and expense, any action or proceeding which
may be brought on or for the enforcement of any such lien or order for payment of money, and will
pay any damages and satisfy and discharge any judgment entered in such action or proceeding and
save, indemnify and hold harmless Landlord, on an after tax basis from any liability, claim or
damage resulting therefrom. In default of Tenant’s procuring the discharge of any such lien as
aforesaid Landlord may, without notice, and without prejudice to its other remedies hereunder,
procure the discharge thereof by bonding or payment or otherwise, and all cost and expense which
Landlord shall incur shall be paid by Tenant to Landlord as Rent forthwith.
12.5 LANDLORD SHALL NOT UNDER ANY CIRCUMSTANCES BE LIABLE TO PAY FOR ANY WORK, LABOR OR
SERVICES RENDERED OR MATERIALS FURNISHED TO OR FOR THE ACCOUNT OF TENANT UPON OR IN CONNECTION WITH
THE PREMISES, AND NO MECHANIC’S OR OTHER LIEN FOR SUCH WORK, LABOR OR SERVICES OR MATERIAL
FURNISHED SHALL, UNDER ANY CIRCUMSTANCES, ATTACH TO OR AFFECT THE REVERSIONARY INTEREST OF LANDLORD
IN AND TO THE PREMISES OR ANY ALTERATIONS, REPAIRS, OR IMPROVEMENTS TO BE ERECTED OR MADE THEREON.
NOTHING CONTAINED IN THIS LEASE SHALL BE DEEMED OR CONSTRUED IN ANY WAY AS CONSTITUTING THE REQUEST
OR CONSENT OF LANDLORD, EITHER EXPRESS OR IMPLIED, TO ANY CONTRACTOR, SUBCONTRACTOR, LABORER OR
MATERIALMAN FOR THE PERFORMANCE OF ANY LABOR OR THE FURNISHING OF ANY MATERIALS FOR ANY SPECIFIC
IMPROVEMENT, ALTERATION TO OR REPAIR OF THE PREMISES OR ANY PART THEREOF, NOR AS GIVING TENANT ANY
RIGHT, POWER OR AUTHORITY TO CONTRACT FOR OR PERMIT THE RENDERING OF ANY SERVICES OR THE FURNISHING
OF ANY MATERIALS ON BEHALF OF LANDLORD THAT WOULD GIVE RISE TO THE FILING OF ANY LIEN AGAINST THE
PREMISES.
12
12.6 Neither Landlord nor its agents shall be liable for any loss of or damage to the Premises
of Tenant or others by reason of casualty, theft or otherwise, or for any injury or damage to
persons or property resulting from any cause of whatsoever nature, unless caused by or due to the
negligence or willful misconduct of Landlord, its agents, servants or employees.
12.7 Except as otherwise set forth on Exhibit L attached hereto, Landlord shall
continue to deliver the same customary real estate related services to Tenant as Tenant had
previously and customarily enjoyed prior to Commencement Date at levels substantially comparable to
the level of services enjoyed by Tenant during the twelve (12) month period immediately preceding
the Commencement Date.
13. DEFAULT BY TENANT
13.1 Each of the following shall be deemed an event of default (an “Event of Default”)
and a breach of this Lease by Tenant:
A. If Tenant shall fail to pay the Rent to be paid by Tenant hereunder for a period of five
(5) business days after written notice of such default by Landlord to Tenant.
B. If Tenant shall default in the performance or observance of any of the other agreements,
conditions, covenants or terms herein contained, and such default shall continue for thirty (30)
days after written notice by Landlord to Tenant, or if such default is of such a nature that it
cannot be completely remedied with said thirty (30) day period and Tenant shall not commence within
said thirty (30) day period to remedy such default and thereafter diligently prosecute the same to
completion.
C. If Tenant abandons the Premises, except as may be permitted in the case of any casualty,
damage or condemnation.
D. If this Lease or the estate of Tenant hereunder shall be assigned, sublet, transferred,
mortgaged or encumbered without compliance with the provisions of this Lease applicable thereto.
E. If (i) Tenant shall commence any case, proceeding or other action (A) under any existing
or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered with respect to
Tenant, or seeking to adjudicate Tenant a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, liquidation, dissolution, composition or other relief with respect to
Tenant or Tenant’s debts, or (B) seeking appointment of a receiver, trustee, custodian or other
similar official for Tenant or for all or any substantial part of Tenant’s property; or (ii) Tenant
shall make a general assignment for the benefit of Tenant’s creditors; or (iii) there shall be
commenced against Tenant any case, proceeding or other action of a nature referred to in clause (i)
above or seeking issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of Tenant’s property, which case, proceeding or other action
(x) results in the entry of an order for relief or (y) remains undismissed, undischarged or
unbonded for a period of thirty (30) days; or (iv) Tenant shall take any action consenting to or
approving of any of the acts set forth in clause (i) or (ii) above; or (v) Tenant
13
shall generally
not, or shall be unable to, pay Tenant’s debts as they become due or shall admit in writing
Tenant’s inability to pay Tenant’s debts.
13.2 To the extent permitted by applicable law, if an Event of Default shall occur, Landlord
may elect to declare all Rent for the remainder of the Term due and payable and, if Landlord shall
make such an election, the present value of the Rent shall be due and payable ten (10) days after
notice by Landlord to Tenant of such election. The aforesaid present value shall be determined by
discounting each monthly installment of Rent for the remainder of the Term from the date such
installment would have been due and payable to the date of Landlord’s election to accelerate, by a
rate of one (1%) percent per annum less than the interest rate paid under a United States Treasury
Bill of comparable duration. Landlord also may elect to proceed by appropriate judicial
proceedings, either at law or in equity, to enforce performance or observance by Tenant of the
applicable provisions of this Lease and/or to recover damages for breach thereof.
13.3
A. If an Event of Default shall occur and Landlord, at any time thereafter, at its option,
gives written notice to Tenant stating that this Lease and the Term shall expire and terminate on
the date specified in such notice, which date shall be not less than three (3) days after the
giving of such notice, and if, on the date specified in such notice, Tenant shall have failed to
cure the default which was the basis for the Event of Default, then, all rights of Tenant under
this Lease and to the Term herein demised shall expire and terminate as if the date specified in
the notice given were the date herein definitely fixed for the expiration of the Term and Tenant
immediately shall quit and surrender the Premises, which termination shall not relieve Tenant from
any liability then or thereafter accruing hereunder.
B. If an Event of Default described in Sections 13.1(A) or (B) hereof shall
occur, or this Lease shall be terminated as provided in Section 13.3(A) hereof, Landlord,
without notice, and with or without court proceedings, (i) may re-enter and repossess the Premises
using such force for that purpose as may be necessary without being liable to indictment,
prosecution or damages therefor or (ii) may dispossess Tenant by summary proceedings or otherwise,
which reentry and repossession by Landlord shall not relieve Tenant from any liability then or
thereafter accruing hereunder.
13.4 If this Lease shall be terminated as provided in Section 13.3(A) hereof and/or
Tenant shall be dispossessed by summary proceedings or otherwise as provided in Section
13.3(B) hereof,
A. Tenant shall pay to Landlord all Rent payable under this Lease by Tenant to Landlord to
the date upon which this Lease and the Term shall have expired and come to an end or to the date of
re-entry upon the Premises by Landlord, as the case may be;
B. Landlord may repair and alter the Premises in such manner as Landlord may deem necessary
or advisable without relieving Tenant of any liability under this Lease or otherwise affecting any
such liability, and/or let or re-let the Premises or any parts thereof for the whole or any part of
the remainder of the Term or for a longer period, in Landlord’s name or as
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agent of Tenant, and out
of any rent and other sums collected or received as a result of such re-letting Landlord shall:
(i) first, pay to itself the cost and expense of terminating this Lease, re-entering, retaking,
repossessing, repairing and/or altering the Premises, or any part thereof, and the cost and expense
of removing all persons and property therefrom, including in such costs brokerage commissions,
legal expenses and attorneys’ fees and disbursements, (ii) second, pay to itself the cost and
expense sustained in securing any new tenants and other occupants, including in such costs
brokerage commissions, legal expenses and attorneys’ fees and disbursements and other expenses of
preparing the Premises for re-letting, and, if Landlord shall maintain and operate the Premises,
the cost and expense of operating and maintaining the Premises, and (iii) third, pay to itself any
balance remaining on account of the liability of Tenant to Landlord. Landlord in no way shall be
responsible or liable for any failure to re-let the Premises or any part thereof, or for any
failure to collect any rent due on any such re-letting, and no such failure to re-let or to collect
rent shall operate to relieve Tenant of any liability under this Lease or to otherwise affect any
such liability;
C. Tenant shall be liable for and shall pay to Landlord, as damages, any deficiency
(referred to as “Deficiency”) between the Rent reserved in this Lease for the period which
otherwise would have constituted the unexpired portion of the Term and the net amount, if any, of
rents collected under any re-letting effected pursuant to the provisions of Section 13.4(B)
hereof for any part of such period (first deducting from the rents collected under any such
re-letting all of the payments to Landlord described in Section 13.4(B) hereof); any such
Deficiency shall be paid in installments by Tenant on the days specified in this Lease for payment
of installments of Rent, and Landlord shall be entitled to recover from Tenant each Deficiency
installment as the same shall arise, and no suit to collect the amount of the Deficiency for any
installment period shall prejudice Landlord’s right to collect the Deficiency for any subsequent
installment period by a similar proceeding; and
D. Whether or not Landlord shall have collected any Deficiency installments as aforesaid,
Landlord shall be entitled to recover from Tenant, and Tenant shall pay to Landlord, on demand, in
lieu of any further Deficiencies, as and for liquidated and agreed final damages (it being agreed
that it would be impracticable or extremely difficult to fix the actual damage), a sum equal to the
amount by which the Rent reserved in this Lease for the period which otherwise would have
constituted the unexpired portion of the Term exceeds the then fair and reasonable rent value of
the Premises for the same period, both discounted to present worth at the rate of one percent (1%)
per annum less than the interest rate paid under a United States Treasury Bill of comparable
duration less the aggregate amount of Deficiencies theretofore collected by Landlord pursuant to
the provisions of Section 13.4(C) hereof for the same period; it being agreed that before
presentation of proof of such liquidated damages to any court, commission or tribunal, if the
Premises, or any part thereof, shall have been re-let by Landlord for the period which otherwise
would have constituted the unexpired portion of the Term, or any part thereof, the amount of rent
reserved upon such re-letting shall be deemed, prima facie, to be the fair and
reasonable rental value for the part or the whole of the Premises so re-let during the term of the
re-letting.
13.5 No termination of this Lease pursuant to Section 13.3(A) hereof, and no taking
possession of and/or re-letting the property, or any part thereof, pursuant to Sections
13.3(B) and
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13.4(B) hereof, shall relieve Tenant of its liabilities and obligations
hereunder, all of which shall survive such expiration, termination, repossession or re-letting.
13.6 To the extent not prohibited by law, Tenant hereby waives and releases all rights now or
hereafter conferred by statute or otherwise which would have the effect of limiting or modifying
any of the provisions of this Article. Tenant shall execute, acknowledge and deliver any
instruments which Landlord may request, whether before or after the occurrence of an Event of
Default, evidencing such waiver or release.
13.7 The Rent payable by Tenant hereunder and each and every installment thereof, and all
costs, attorneys’ fees and disbursements and other expenses which may be incurred by Landlord in
enforcing the provisions of this Lease or on account of any delinquency of Tenant in carrying out
the provisions of this Lease shall be and they hereby are declared to constitute a valid perfected
lien upon the interest of Tenant in this Lease and in the Premises, and the rents, issues and
profits therefrom.
13.8 Suit or suits for the recovery of damages, or for a sum equal to any installment or
installments of Rent payable hereunder or any Deficiencies or other sums payable by Tenant to
Landlord pursuant to this Article, may be brought by Landlord from time to time at Landlord’s
election, and nothing herein contained shall be deemed to require Landlord to await the date
whereon this Lease or Term would have expired by limitation had there been no Event of Default by
Tenant and termination.
13.9 Nothing contained in this Article shall limit or prejudice the right of Landlord to prove
and obtain as liquidated damages in any bankruptcy, insolvency, receivership, reorganization or
dissolution proceeding an amount equal to the maximum allowed by a statute or rule of law governing
such proceeding and in effect at the time when such damages are to be proved, whether or not such
amount shall be greater than, equal to or less than the amount of the damages referred to in any of
the preceding Sections of this Article.
13.10 No receipt of moneys by Landlord from Tenant after the termination of this Lease, or
after the giving of any notice of the termination of this Lease shall reinstate, continue or extend
the Term or affect any notice theretofore given to Tenant, or operate as a waiver of the right of
Landlord to enforce the payment of Rent payable by Tenant hereunder or thereafter falling due, or
operate as a waiver of the right of Landlord to recover possession of the Premises by proper
remedy, except as herein otherwise expressly provided, it being agreed that after the service of
notice to terminate this Lease or the commencement of any suit or summary proceedings, or after a
final order or judgment for the possession of the Premises, Landlord may demand, receive and
collect any moneys due or thereafter falling due without in any manner affecting such notice,
proceeding, order, suit or judgment, all such moneys collected being deemed payments on account of
the use and occupation of the Premises or, at the election of Landlord, on account of Tenant’s
liability hereunder.
13.11 Except as otherwise expressly provided herein or as prohibited by applicable law, Tenant
hereby expressly waives the service of any notice to quit or notice of Landlord’s intention to
re-enter provided for in any statute, or of the institution of legal proceedings to that end, and
Tenant, for and on behalf of itself and all persons claiming through or under Tenant, also waives
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any and all right of redemption provided by any law or statute now in force or hereafter enacted or
otherwise, or re-entry or repossession or to restore the operation of this Lease in case Tenant
shall be dispossessed by a judgment or by warrant of any court or judge or in case of re-entry or
repossession by Landlord or in case of any expiration or termination of this Lease, and Landlord
and Tenant waive and shall waive trial by jury in any action, proceeding or counterclaim brought by
either of the parties hereto against the other on any matter whatsoever arising out of or in any
way connected with this Lease, the relationship of Landlord and Tenant, Tenant’s use or occupancy
of the Premises, or any claim of injury or damage. The terms “enter”, “re-enter”, “entry” or
“re-entry”, as used in this Lease are not restricted to their technical legal meaning.
13.12 No failure by Landlord to insist upon the strict performance of any covenant, agreement,
term or condition of this Lease or to exercise any right or remedy consequent upon a breach
thereof, and no acceptance of full or partial Rent during the continuance of any such breach, shall
constitute a waiver of any such breach or of such covenant, agreement, term or condition. No
covenant, agreement, term or condition of this Lease to be performed or complied with by Tenant,
and no breach thereof, shall be waived, altered or modified except by a written instrument executed
by Landlord. No waiver of any breach shall affect or alter this Lease, but each and every
covenant, agreement, term and condition of this Lease shall continue in full force and effect with
respect to any other then existing or subsequent breach thereof.
13.13 Tenant shall pay to Landlord an amount net to Landlord on an after-tax basis equal to
all costs and expenses, including, without limitation, reasonable attorneys’ fees and
disbursements, incurred by Landlord in any action or proceeding to which Landlord may be made a
party by reason of any act or omission of Tenant. Tenant also shall pay to Landlord all costs and
expenses, including, without limitation, reasonable attorneys’ fees and disbursements, incurred by
Landlord in enforcing any of the covenants and provisions of this Lease and incurred in any action
brought by Landlord against Tenant on account of the provisions hereof, and all such costs,
expenses, and attorneys’ fees and disbursements may be included in and form a part of any judgment
entered in any proceeding brought by Landlord against Tenant on or under this Lease. All of the
sums paid or obligations incurred by Landlord as aforesaid, with interest and costs, shall be paid
by Tenant to Landlord on demand.
13.14 If an Event of Default shall occur under this Lease or Tenant shall fail to comply with
its obligations under this Lease, Landlord may (a) perform the same for the account of Tenant if
the same arises out of any obligation owed by Tenant to a third party or (b) make any expenditure
or incur any obligation for the payment of money in connection with any obligation owed to
Landlord, including, but not limited to reasonable attorneys’ fees and disbursements in
instituting, prosecuting or defending any action or proceeding, with interest thereon at Applicable
Rate and such amounts shall be deemed to be Rent hereunder and shall be paid by Tenant to Landlord
immediately upon demand therefor.
13.15 In the event that Tenant shall fail to pay Rent within five (5) days after its due date,
then from and after the sixth (6th) day until the date Tenant finally pays the Rent, Tenant shall
pay Landlord a late charge at the rate of ten (10%) percent per annum with respect to the
delinquent amount, provided, however, no late charges shall be assessed against Tenant prior to
January 1, 2012.
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14. NO WAIVER
The failure of Landlord or Tenant to enforce any agreement, condition, covenant or term, by
reason of its breach by Tenant or Landlord, as the case may be, shall not be deemed to void, waive
or affect the right of Landlord or Tenant to enforce the same agreement, condition, covenant or
term on the occasion of a subsequent default or breach. The specific remedies to which Landlord
may resort under the terms of this Lease are cumulative and are not intended to be exclusive of any
other remedies or means of redress to which Landlord may be lawfully entitled in case of any breach
or threatened breach by Tenant of any of the terms, covenants and conditions of this Lease. The
failure of Landlord or Tenant to insist in any one or more cases upon the strict performance of any
of the terms, covenants and conditions of this Lease, or to exercise any right or remedy herein
contained, shall not be construed as a waiver or relinquishment for the future of such terms,
covenants and conditions. The receipt by Landlord, or payment by Tenant, of Rent with knowledge of
the breach of any of such terms, covenants and conditions shall not be deemed a waiver of such
breach. The acceptance of any check or payment bearing or accompanied by any endorsement, legend
or statements shall not, of itself, constitute any change in or termination of this Lease. No
surrender of the Premises by Tenant (prior to any termination of this Lease) shall be valid unless
consented to in writing by Landlord or in accordance with the express terms of this Lease. In
addition to the other remedies in this Lease provided, Landlord shall be entitled to the restraint
by injunction of the violation or attempted or threatened violation of any of the terms, covenants
and conditions of this Lease or to a decree compelling performance of any of such terms, covenants
and conditions.
15. ESTOPPEL CERTIFICATE
Landlord and Tenant agree that they shall, at any time and from time to time, within twenty
(20) days of request by the other party execute, acknowledge and deliver to the requesting party a
statement in writing certifying: (i) that this Lease is unmodified and in full force and effect (or
if there have been any modifications, that the Lease is in full force and effect as modified and
stating the modifications), (ii) the dates to which the Rent has been paid, (iii) the address to
which notices to Landlord or Tenant, as applicable, should be sent, (iv) stating whether or not
either party is in default in keeping, observing or performing any term, covenant, agreement,
provision, condition or limitation contained in this Lease and, if in default, specifying each such
default, (v) whether or not there are any offsets or defenses against the enforcement of any
provisions of the Lease by either party and if so, specifying the same, (vi) the Commencement Date
and the date of expiration for the current term of the Lease, (vii) that Tenant is in possession of
the Premises and (viii) any other matters reasonably requested by the other party; it being
intended that any such statement delivered pursuant to this Article may be relied upon by the
requesting party or any prospective purchaser of the Premises or any mortgagee thereof or any
assignee of any mortgage upon the Premises.
16. QUIET ENJOYMENT
Tenant, upon payment of the Rent herein reserved and upon the due performance and observance
of all the covenants, conditions and agreements herein contained on Tenant’s part to be performed
and observed, shall and may at all times during the Term peaceably and quietly have, hold and enjoy
the Premises in the same manner in which Tenant enjoyed the Premises
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immediately prior to the
Commencement Date without any manner of suit, trouble or hindrance of and from any person claiming
by, through or under Landlord, subject, however, to the terms and provisions of this Lease.
17. SURRENDER
17.1 Tenant shall, on the last day of the Term, or upon the sooner termination of the Term,
quit and surrender to Landlord the Premises vacant, free of all equipment, furniture and other
personal property, and in good order and condition, reasonable wear and tear excepted, and Tenant
shall remove or demolish all of the fixtures, structures and other improvements which Landlord
shall elect pursuant to and in accordance with Section 6.4 hereof. Any property not so
removed shall become the property of Landlord, and Landlord may cause such property to be removed
from the Premises and disposed of, but the cost of any such removal and disposition and of
repairing any damage caused by such removal shall be borne by Tenant. Tenant’s obligation to
observe and perform this covenant shall survive the expiration or earlier termination of the Term.
17.2 Tenant acknowledges that possession of the Premises must be surrendered to Landlord at
the expiration or sooner termination of the term of this Lease. Tenant agrees to indemnify
Landlord against and save Landlord harmless from all costs, claims, loss or liability resulting
from the failure or delay by Tenant in so surrendering the Premises, including, without limitation,
any claims made by any succeeding tenant founded on such failure or delay. Tenant therefore agrees
that if possession of the Premises is not surrendered to Landlord upon the expiration or sooner
termination of the term of this Lease, then Tenant shall pay to Landlord, as liquidated damages for
each month and for each portion of any month during which Tenant holds over in the Premises after
the expiration or sooner termination of the term of this Lease, in addition to any sums payable
pursuant to the foregoing indemnity, a sum equal to one hundred-fifty percent (150%) the aggregate
of the Rent which was payable under this Lease with respect to the last month of the term hereof.
Nothing herein contained shall be deemed to permit Tenant to retain possession of the Premises
after the expiration or sooner termination of the term of this Lease. If Tenant holds over in
possession after the expiration or termination of the term of the Lease, such holding over shall
not be deemed to extend the term or renew this Lease, but the tenancy thereafter shall continue as
a tenancy from month to month upon the terms and conditions of this Lease at the Rent as herein
increased. This provision shall survive the expiration or earlier termination of this Lease.
18. ACCESS
Landlord shall have the right and privilege at all times during the last six (6) months of the
Term to display a customary (as would be customary for similar buildings in the surrounding area)
“For Sale” sign on the Building and during the last six (6) months of the Term, Landlord shall have
the right and privilege to enter the Premises at reasonable times upon prior reasonable notice
during business hours for the purpose of exhibiting the same to prospective new tenants, but no
more than once a month, and to display the customary “To Let” signs on the Building. Landlord
shall also, at all reasonable times upon prior reasonable notice during the Term (the parties
acknowledge and agree that no prior notice shall be required in the event of an emergency), have
the right to enter the Premises or any part thereof for the purpose of making
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such repairs or
Alterations therein as Landlord is required to make under the terms of this Lease. Throughout the
Initial Term and any Extend Term of this Lease, Tenant shall have access to the Premises 24 hours a
day, seven days a week.
19. ENVIRONMENTAL MATTERS
19.1 Tenant covenants that (i) Tenant shall not cause or contribute to, and shall not permit
or direct any other Person to cause or contribute to, any contamination from any Hazardous
Substances (hereinafter defined) at, on, under or emanating from the Premises (ii) Tenant shall
not, and, (subject to Tenant’s contractual obligations to permit Landlord and its Affiliates or the
predecessors thereof, if applicable, to perform any necessary investigation, remediation or
corrective action regarding environmental matters), shall not cause or permit any other Person to,
use manufacture, store, generate, treat or Release any Hazardous Substances at, on, under or from
the Premises, except where such use, manufacture, storage, generation, treatment or Release or
threatened release is in material compliance with applicable Environmental Law (as defined below)
and is reasonably related to the conduct of Tenant’s business, (iii) in the event that Tenant’s (or
its subtenants’ or assignees’) operations at or near the Premises result in the imposition of a
Lien on the Premises under any Environmental Law resulting from a matter for which Tenant would be
obliged to indemnify Landlord pursuant to Section 19.2 hereof, Tenant shall promptly and
expeditiously take all necessary steps to have such Lien removed, and (iv) Tenant shall not, and
shall not cause or permit any other Person to, install or operate any underground tanks for the
storage of any Hazardous Substances, including fuel oil, gasoline, waste oils, and/or other
petroleum products or by-products.
19.2 Tenant hereby agrees to indemnify Landlord, any mortgagee and any lessor under a Superior
Lease and hold Landlord, any mortgagee and any lessor of a Superior Lease harmless from and against
any and all losses, liabilities (including strict liability), damages, injuries, expenses
(including reasonable attorneys’ and consulting fees), costs of any settlement or judgment and
claims of any and every kind whatsoever (collectively “Losses”) paid, incurred or suffered
by, or asserted against Landlord, any mortgagee and any lessor of a Superior Lease by any person or
governmental authority for, with respect to, or as a direct or indirect result of, either (i) the
presence or Release or threatened release at, on or under, or from the Premises of any Hazardous
Substance (including, without limitation, any such Losses or claims asserted or arising under the
Comprehensive Environmental Response, Compensation and Liability Act, as amended, any so-called
federal, state or local “Superfund” or
“Superlien” laws) or (ii) the violation of any applicable
Environmental Law, to the extent such presence or Release or threatened release or violation is
caused by Tenant’s or any subtenant’s or assignee’s (or any of their representatives’) use of the
Premises.
19.3 Notwithstanding any other provision of this Lease regarding indemnification of Landlord
by Tenant (other than Tenant’s obligations to indemnify Landlord pursuant to Section 19.6),
Landlord hereby agrees to indemnify Tenant and hold Tenant harmless from and against any and all
Losses paid, incurred or suffered by, or asserted against Tenant for, with respect to, or
as a direct or indirect result of, either (i) the presence or Release or threatened release at, on
or under, or from the Premises of any Hazardous Substance (including, without limitation, any such
Losses or claims asserted or arising under the Comprehensive Environmental Response, Compensation
and Liability Act, as amended, any so-called federal, state or local “Superfund” or
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“Superlien”
laws) or (ii) the violation of any applicable Environmental Law, to the extent such presence or
Release or threatened release or violation is caused by: (x) Landlord’s or any of its Affiliates’
or assignee’s (or any of their representatives’) use or ownership of the Premises; or (y) any
environmental condition or contamination that existed on or prior to the commencement of this Lease
at, on or under, or from the Premises, except to the extent exacerbated by Tenant’s, any
subtenant’s, assignee’s or representative’s negligence. With respect to asbestos containing
building materials, Landlord acknowledges and agrees that Tenant shall have no liability or
obligations concerning the removal or replacement thereof on the Premises, which are the sole
responsibility of the Landlord, provided, however, that Tenant shall be responsible for all costs
of any removal, replacement or abatement of asbestos containing building materials on the Premises
to the extent required pursuant to applicable Environmental Law as a result of Tenant’s (or any of
its subtenant’s or assignee’s) negligence or undertaking any modifications, maintenance, repairs,
or other activities on the Premises that results in any disturbance of asbestos containing building
materials, but only if the location of such materials have been previously identified with
reasonable specificity in writing by Landlord to Tenant.
19.4 In the event that an obligation to investigate or remediate the Premises arises under any
and all applicable environmental transaction trigger statutes or otherwise as a result of the
termination of the Lease or the cessation of operations at the subject Premises, Tenant shall be
primarily responsible for the completion of such investigation or remediation, unless such
termination or cessation is in connection with a sale or other transfer of the Premises or of the
Landlord or any other entity that directly or indirectly owns or controls the Premises, in which
case the transferor shall have such primary responsibility; provided, however, that the
foregoing shall in no way alter the allocation of liability for any such investigation or
remediation provided for under Sections 19.2 and 19.3 of this Lease. Each of Landlord and Tenant
agree to cooperate in good faith with each other to facilitate the completion of any obligations
under this Section 19.4, including, but not limited to: (i) promptly executing any applications,
filings, certifications, or other documents reasonably requested by the other party; (ii) providing
reasonable access to the other party (including representatives, consultants or agents) during
normal business hours to the Premises and relevant information and personnel; (iii) taking
commercially reasonable efforts at its own cost and expense to reasonably mitigate interference
with the conduct of any such investigation or remediation or with the current operation or use of
the Premises; (iv) accepting the use of cost-efficient remediation strategies (as reasonably
determined by party principally liable for the remediation under Sections 19.3 and 19.4), including
the use of risk-based remediation standards based on continued industrial use of the property or
imposition of restrictive deed notices or other institutional or engineering controls (as long as
such cost-efficient remediation strategies would not materially interfere with or otherwise
materially impede the operation or use of the Premises); (v) providing prompt notification of all
meetings with consultants and Governmental Authorities and an opportunity to participate, at its
own expense, in such meetings; (vi) promptly providing copies of all material documents related to
the investigation or remediation and affording the other party a reasonable opportunity to review
and provide comments, at its own expense, on all reports, correspondence, work plans or other
materials submitted to any Governmental Authority and (vii) allowing the other party to observe and
monitor, at its own expense, the conduct of any investigative or remedial work being done at the
Premises.
19.5 For purposes hereof:
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A. “Hazardous Substances” shall mean any material, substance or waste that is
listed, classified, regulated, characterized or otherwise defined as “hazardous,” “toxic,” or
“radioactive, ” or as “pollutants” or “contaminants” (or words of similar intent or meaning) under
applicable Environmental Laws; and any petroleum (including crude oil or any fraction thereof),
petroleum products or by-products and any constituents thereof, asbestos or asbestos-containing
material, urea formaldehyde insulation, toxic mold, polychlorinated biphenyls, flammable or
explosive substances, radon, or pesticides.
B. “Environmental Laws” shall mean all foreign, federal, state or local statutes,
laws, ordinances, codes, rules, regulations, judgments, orders or decrees or other binding
directives of relevant governmental agencies or authorities regulating, relating to, or imposing
liability or standards of conduct concerning pollution or protection of the environment or human
health and safety (to the extent related to pollution or exposure to harmful or deleterious
substances), including those relating to the use, manufacture, distribution, storage, recycling,
treatment, transport or Release or threatened release of any hazardous, toxic or dangerous wastes,
substances or materials as now or at any time hereunder in effect .
C. “Release” shall mean any Release or threatened release, spill, emission,
leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration into the indoor or outdoor environment (including the abandonment or disposal
of any barrels, containers or other closed receptacles containing any Hazardous Substance).
19.6 Tenant shall not conduct any intrusive environmental investigation of the Premises
(including any collection or analysis of groundwater, surface water, soil or building materials) or
disclose the existence of any known or suspected environmental condition to any governmental
authority, unless such investigation or disclosure is: (i) required by applicable Environmental
Law or any other applicable Requirement, (ii) required by an enforceable order (or reasonably
believed by Tenant to be an enforceable order), directive or demand of a governmental authority,
acting within its jurisdiction (or reasonably believed by Tenant to be acting within its
jurisdiction), (iii) reasonably undertaken to facilitate the defense of a pending third party claim
or a third party claim reasonably anticipated based upon written communications from a person who
is not a party to this Lease or an Affiliate thereof, (iv) reasonably undertaken in an emergency to
protect against a threat to human health or the environment, (v) reasonably undertaken in
connection with repairs to or maintenance of the Premises, (vi) reasonably undertaken in connection
with the expansion of the Premises to accommodate additional operations or uses reasonably
consistent with those currently present, provided that such expansion or alteration has been
approved by Landlord pursuant to Article 6 of this Lease and the Tenant has received Landlord’s
prior written approval for the proposed investigation, sampling, analysis, report or disclosure.
Tenant shall promptly notify Landlord if it reasonably believes that an intrusive environmental
investigation or disclosure to a governmental authority is required and shall allow Landlord a
reasonable opportunity to assume control over or, at Landlord’s discretion, to participate in the
conduct of, the investigation or disclosure, except that if, due to exigent circumstances, Tenant’s
action is reasonably undertaken without such notice to or allowance of or participation by
Landlord, Tenant may inform the Landlord of the environmental condition and Tenant’s conduct with
respect to it as soon as practicable thereafter. To the extent that Tenant conducts an
investigation or makes a disclosure
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that is not in compliance with this provision, Tenant shall
indemnify and hold Landlord harmless for the cost of any remedial action arising or resulting from
any conditions of contamination identified as a result of such investigation or disclosure.
19.7 If Tenant receives (i) any notice of any material event involving the presence, Release
or threatened release, investigation or remediation of any Hazardous Substance at, on, under or
from the Premises or in connection with Tenant’s, or Tenant’s representatives, agents or
subtenants, use or operations thereon, or (ii) any complaint, order, citation or notice with regard
to any material violation of or material obligation under Environmental Law pertaining to the
Premises (an “Environmental Complaint”) from any governmental authority or other person,
then Tenant shall promptly notify Landlord orally and in writing of said notice. Without in any
way limiting the generality of the foregoing, if Tenant receives any notice of any lien filed as
security for amounts paid to clean up Hazardous Substances at the Premises, then Tenant shall
promptly notify Landlord and Landlord shall have the right, but not the obligation, to discharge
such lien upon not less than ten (10) days’ notice to Tenant. Notwithstanding the foregoing, for
so long as Landlord is an Affiliate of Principal Stockholder, Tenant shall have no obligation to
notify Landlord of any notice, complaint, order, or citation received from or on behalf of the
Principal Stockholder or any Affiliate thereof, or from any other person in connection with the
implementation of any obligations of Principal Stockholder set forth in the Environmental Annex
that indicates the Principal Stockholder or any Affiliate thereof has also received such notice,
complaint, order, or citation. Tenant shall provide Landlord with immediate notification of and
indemnification for any notice of deficiency, notice of violation or citation issued by any
governmental agency.
19.8 After providing Tenant with notice and a reasonable opportunity to cure, Landlord shall
have the right (but not the obligation) to enter onto the Premises or to take such other actions as
it deems necessary or advisable to cleanup, remove, resolve or minimize the impact of, or otherwise
remediate or correct the presence or Release or threatened release of a Hazardous Substance or an
Environmental Complaint, provided that Landlord shall not unreasonably interfere with Tenant’s use
of the Premises. All costs and expenses reasonably incurred by Landlord in the exercise of any
such rights shall be payable by Tenant upon demand, provided and to the extent that such presence
or Release or threatened release or Environmental Complaint is subject to Tenant’s duty to
indemnify Landlord under Section 19.2 hereof.
19.9 Landlord has the right from time to time, upon reasonable prior notice and without undue
interference in Tenant’s operations, to perform (at its own expense, unless it reasonably believes
that Tenant has breached Section 19.1 hereof, in which case with respect to such breach it will be
at Tenant’s expense and in which case Landlord may request that Tenant perform) an environmental
audit, environmental site assessment, or, if reasonably deemed necessary by Landlord, an
environmental risk assessment, each in form and substance satisfactory to Landlord, of the
Premises, hazardous waste management practices and/or hazardous waste disposal sites used by
Tenant. Said audit, site assessment and/or risk assessment must be by an environmental consultant
reasonably satisfactory to Landlord and Tenant.
19.10 The provisions of this Article shall survive the expiration or earlier termination of
this Lease.
23
20. LANDLORD GENERALLY NOT LIABLE FOR INJURY OR DAMAGE, ETC.
20.1 Tenant is and shall be in exclusive control and possession of the Premises, and subject
to Section 19.3 of this Lease, Landlord shall not, in any event whatsoever, be liable for any
injury or damage to any property or to any person happening in, on or about the Premises, nor for
any injury or damage to any property of Tenant, or of any other person or persons contained
therein, nor for any injury or damage to the Premises or to any property belonging to Tenant or any
other person which may be caused by any fire or breakage, or which may arise from any other cause
whatsoever unless caused by the gross negligence or willful misconduct of Landlord, its agents or
employees. The provisions hereof permitting Landlord to enter and inspect the Premises are made
for the purpose of enabling Landlord to be informed as to whether Tenant is complying with the
agreements, terms, covenants and conditions hereof, and if Landlord so desires, to do such acts as
Tenant shall fail to do at Tenant’s sole cost and risks. Notwithstanding the foregoing, and
subject to Section 19.3, Landlord agrees to defend and to indemnify and save Tenant harmless from
and against all liability, and all losses, damages, claims and expenses (including, without
limitation, reasonable attorneys’ fees) arising out of injury to or death of persons, damage to or
destruction or loss of property, that directly or indirectly is caused by or results from
Landlord’s use of and operations on, in and about the Premises. Landlord’s obligations hereunder
shall survive the expiration or early termination of this Lease, unless Tenant purchases the
Premises, in which case Landlord shall cease to have any obligation hereunder to Tenant upon the
closing of the sale unless the parties agree otherwise in writing.
20.2 In the event of any default by Landlord of its obligation hereunder, if any, Tenant’s
exclusive remedy shall be an action for damages (Tenant hereby waiving the benefit of any laws
granting it a lien upon the property of Landlord and/or upon rent due Landlord), but prior to any
such action Tenant will give Landlord written notice specifying such default with particularity,
and Landlord shall thereupon have thirty (30) days (plus such additional reasonable period as may
be required in the exercise by Landlord of due diligence) in which to cure any such default.
Unless and until Landlord fails to so cure any default after such notice, Tenant shall not have any
remedy or cause of action by reason thereof. All obligations of Landlord hereunder will be
construed as covenants, not conditions, all such obligations will be binding upon Landlord only
with respect to the period of its ownership of the Premises and not for any period prior thereto or
thereafter. Under no circumstances whatsoever shall Landlord or Tenant ever be liable hereunder
for consequential damages or special damages.
20.3 Subject to Tenant’s rights under Article 19, Tenant shall look only to Landlord’s estate
and interest in the Premises (or the proceeds thereof) for the satisfaction of Tenant’s remedies
for the collection of any judgment (or other judicial process) requiring the payment of money by
Landlord in the event of any default by Landlord under this Lease, and no other property or other
assets of Landlord, any member or partner of Landlord or any member or partner of any member or
partner of Landlord, or any officer, director, stockholder or employee of any of the foregoing
shall be subject to levy, execution or other enforcement procedure for the satisfaction of Tenant’s
remedies under or with respect to this Lease, the relationship of landlord and tenant hereunder or
Tenant’s use and occupancy of the Premises. However, nothing contained herein shall be construed
to permit Tenant to offset, and Tenant agrees that Tenant shall not offset, against rents due a
successor landlord, any judgment (or other judicial process)
24
requiring the payment of money by
reason of any default of a prior landlord. If Tenant is required to report information concerning
the Premises to any governmental agency, Landlord shall have no claim against Tenant for any
diminution in value of the Premises resulting from such report, except to the extent such
diminution in value is caused by a change in the physical condition of the Premises caused by
Tenant (or, with respect to any change in physical condition that involves exacerbation of any
environmental condition or contamination that existed on or prior to the commencement of this
Lease, where Landlord would be entitled to indemnification pursuant to Section 19.2 of this Lease).
21. MISCELLANEOUS PROVISIONS
21.1 It is mutually agreed by and between Landlord and Tenant that the respective parties
shall and they hereby do waive trial by jury in any action, proceeding or counterclaim brought by
either of the parties hereto against the other on any matters whatsoever arising out of or in any
way connected with this Lease, Tenant’s use or occupancy of the Premises, and/or any claim of
injury or damage excluding any claim for personal injury or property damage.
21.2 Tenant shall have the right to place one or more signs on the Premises to indicate the
nature of the business of Tenant. The sign shall be lawful under applicable sign codes and
subdivision covenants and all signs shall be reasonably approved by Landlord before being placed on
the Premises.
21.3 The term “Landlord” as used herein shall mean only the owner or the mortgagee in
possession for the time being of the applicable Premises, so that in the event of any sale,
transfer or conveyance of the Premises, Landlord shall be and hereby is entirely freed and relieved
of all agreements, covenants and obligations of Landlord hereunder, and it shall be deemed and
construed without further agreement between the parties or their successors in interest or between
the parties and the purchaser, transferee or grantee at any such sale, transfer or conveyance that
such purchaser, transferee or grantee has assumed and agreed to carry out any and all agreements,
covenants and obligations of Landlord hereunder.
21.4 The term “Tenant” as used herein shall mean the tenant identified on Schedule
I an applicable to the corresponding Premises, and from and after any valid assignment or
transfer in whole of said Tenant’s interest under this Lease, with respect to the applicable
Premises, pursuant to the provisions of Article 10, shall mean only the assignee or transferee
thereof; but the foregoing shall not release the assignor or transferor from liability under this
Lease.
21.5 The words “re-enter” and “re-entry” as used herein shall not be restricted to their
technical legal meaning.
21.6 The use herein of the neuter pronoun in any reference to Landlord or Tenant shall be
deemed to include any individual Landlord or Tenant, and the use herein of the words “successor and
assigns” or “successors or assigns” of Landlord or Tenant shall be deemed to include the heirs,
executors, administrators, representatives and assigns of any individual Landlord or Tenant.
25
21.7 The headings herein are inserted only as a matter of convenience and for reference and in
no way define, limit or describe the scope or intent of this Lease nor in any way affect this
Lease.
21.8 This Lease shall be governed by and construed in accordance with the laws of the State in
which the Premises are located.
21.9 This Lease contains the entire agreement between the parties and may not be extended,
renewed, terminated or otherwise modified in any manner except by an instrument in writing executed
by the party against whom enforcement of any such modification is sought. All prior understandings
and agreements between the parties and all prior working drafts of this Lease are merged in this
Lease, which alone expresses the agreement of the parties. The parties agree that no inferences
shall be drawn from matters deleted from any working drafts of this Lease or against the party
preparing drafts hereof. The parties took equal part in drafting this Lease and no rule of
construction that would cause any of the terms hereof to be construed against the drafter shall be
applicable to the interpretation of this Lease.
21.10 The agreements, terms, covenants and conditions herein shall bind and inure to the
benefit of Landlord and Tenant and their respective heirs, personal representatives, successors
and, except as is otherwise provided herein, their assigns.
21.11 Notice whenever provided for herein shall be in writing and shall be given either by
nationally recognized overnight courier, facsimile or by certified or registered mail, return
receipt requested, to:
| To Landlord: | as set forth on Exhibit L | |||
| w/copy to: | as set forth on Exhibit L | |||
| To Tenant: | as set forth on Exhibit L | |||
| w/copy to: | as set forth on Exhibit L |
or to such other persons or at such other addresses as may be designated from time to time by
written notice from either party to the other. Notices shall be deemed given on the date of
delivery thereof and shall be deemed delivered on the date delivery is refused if properly sent and
addressed in accordance with the terms of this Section.
21.12 If any provision of this Lease shall be invalid or unenforceable, the remainder of the
provisions of this Lease shall not be affected thereby and each and every provision of this Lease
shall be enforceable to the fullest extent permitted by law.
21.13 Landlord and Tenant represents and warrants to each other that they have not dealt with
any real estate broker in connection with this Lease and both agree to indemnify each other
harmless from any and all claims arising out of any breach of this representation and
26
warranty.
The provisions of this Section shall survive the expiration or earlier termination of this Lease.
21.14 If any officer, servant or employee of Landlord renders assistance at the request of
Tenant or on the request of any officer, servant, employee, guest or licensee of Tenant, then that
employee shall be deemed the agent of the person making such request and Landlord is hereby
expressly released from any and all liability or loss in connection therewith.
21.15 This Lease shall not be recorded but the parties hereto agree, upon the request of
either party, to execute and deliver for recording a memorandum of lease incorporating the basic
terms and conditions hereof but deleting any statement or mention of the rental payments.
21.16 Notwithstanding anything to the contrary contained in this Lease, Tenant shall reimburse
Landlord, within five (5) business days after demand, as Rent hereunder, for any and all reasonable
costs that may be incurred by Landlord (including, without limitation, its attorneys’, accountants’
and other professional fees, costs and disbursements) in connection with any request by Tenant for
Landlord’s consent, review or approval relating to any matter hereunder.
21.17 Notwithstanding anything to the contrary contained in this Lease, each right and remedy
of Landlord or Tenant provided for in this Lease shall be cumulative and shall be in addition to
every other right or remedy provided for in this Lease or now or hereafter existing at law or in
equity or by statute or otherwise, and the exercise or beginning of the exercise by any party
hereto of any one or more of the rights or remedies provided for in this Lease or now or hereafter
existing at law or in equity or by statute or otherwise shall not preclude the simultaneous or
later exercise by such party of any or all other rights or remedies provided for in this Lease or
now or hereafter existing at law or in equity or by statute or otherwise.
21.18 Landlord and Tenant represent and warrant to each other that their respective execution
and delivery of the Lease has been duly authorized, that the individual executing this Lease on
behalf of such party has been duly authorized to do so, and that no other action or approval is
required.
22. Confidential Information
22.1 Notwithstanding the expiration or earlier termination of this Lease, for a period of five
(5) years from the date hereof, Landlord and Tenant shall hold, and shall cause each of their
respective affiliates and subsidiaries to hold, and shall each cause their respective officers,
employees, agents, consultants and advisors (or potential buyers) to hold, in strict confidence,
and not to disclose or release or use, without the prior written consent of the other party (which
may be withheld in such party’s sole and absolute discretion, except where disclosure is required
by applicable laws), any and all Confidential Information (as defined herein) concerning any other
party; provided, that the parties may disclose, or may permit disclosure of, Confidential
Information (i) to their respective auditors, attorneys, financial advisors, bankers, insurers and
other appropriate consultants and advisors who have a need to know such information and are
informed of their obligation to hold such Confidential Information confidential to the same extent
as is applicable to the parties and in respect of whose failure to comply with such
27
obligations,
the applicable party will be responsible, (ii) if the parties or any of their respective
subsidiaries are required or compelled to disclose any such Confidential Information by judicial or
administrative process or by other requirements of applicable laws or stock exchange rule, (iii) as
required in connection with any legal or other proceeding by one party against any other party,
(iv) as necessary in order to permit a party to prepare and disclose its financial statements, tax
returns or other required disclosures, or (v) as necessary for a party to enforce its rights under
this Lease. Notwithstanding the foregoing, in the event that any demand or request for disclosure
of Confidential Information is made pursuant to clause (ii), (iii), (iv) or (v) above, each party,
as applicable, shall promptly notify the other of the existence of such request or demand and shall
provide the other a reasonable opportunity to seek an appropriate protective order or other remedy,
which such parties will cooperate in obtaining. In the event that such appropriate protective
order or other remedy is not obtained, the party which faces the disclosure requirement shall
furnish only that portion of the Confidential Information that is legally required to be disclosed
and shall take commercially reasonable steps to ensure that confidential treatment is accorded such
Confidential Information. “Confidential Information” shall mean all non-public,
confidential or proprietary information concerning Landlord or Tenant, or any of their respective
affiliates or subsidiaries, or their past, current or future activities, businesses, finances,
assets, liabilities or operations, including any such information that was acquired by any party
after the date hereof, or that was provided to a party by a third party in confidence, except for
any information that is (i) in the public domain or known to the industry through no fault of the
receiving party or its affiliates or subsidiaries, (ii) lawfully acquired after the date hereof by
such party or its affiliates or subsidiaries from other sources not known to be subject to
confidentiality obligations with respect to such information or (iii) independently developed by
the receiving party after the date hereof without reference to any Confidential Information.
22.2 Each of the parties acknowledges that it and the other members of their respective
affiliates and subsidiaries may have in their possession confidential or proprietary information of
third parties that was received under confidentiality or non-disclosure agreements with such third
party while part of the ITT Corporation companies. Each of the parties will hold, and will cause
the other members of their respective affiliates and subsidiaries and their respective
representatives to hold, in strict confidence the confidential and proprietary information of third
parties to which they or any other member of their respective affiliates and subsidiaries has
access, in accordance with the terms of any agreements entered into prior to the date on which
Landlord and Tenant are no longer part of the same group of companies between one or more members
of the ITT Corporation companies (whether acting through, on behalf of, or in connection with, the
separated Businesses) and such third parties.
22.3 The parties agree that irreparable damage would occur in the event that the provisions of
this Section 22 were not performed in accordance with their specific terms. Accordingly,
it is hereby agreed that the parties shall be entitled to an injunction or injunctions to enforce
specifically the terms and provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are entitled at law or in
equity.
28
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day and year
first above set forth.
| LANDLORD: | ||||||||
| By: | ITT Cannon de Mexico, S.A. de C.V. | |||||||
| Name: Title: |
/s/ William Taylor
|
|||||||
| TENANT: | ||||||||
| By: | Jabsco Sociedad de Responsabilidad Limitada de Capital Variable |
|||||||
| Name: Title: |
/s/ Robert Wolpert
|
|||||||
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day and year first
above set forth.
| LANDLORD: | ||||||||
| By: | ITT Cannon LLC | |||||||
| Name: Title: |
/s/ William Taylor
|
|||||||
| TENANT: | ||||||||
| By: | Flow Control LLC | |||||||
| Name: Title: |
/s/ Robert Wolpert
|
|||||||
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day and year first
above set forth.
| LANDLORD: | ||||||||
| By: | Lowara UK Ltd. | |||||||
| Name: Title: |
/s/ Duncan Lewis
|
|||||||
| TENANT: | ||||||||
| By: | ITT Industries Ltd. | |||||||
| Name: Title: |
/s/ John Veness
|
|||||||
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day and year first
above set forth.
| LANDLORD: | ||||||||
| By: | Xylem Inc. | |||||||
| Name: Title: |
/s/ Frank R. Jimenez
|
|||||||
| TENANT: | ||||||||
| By: | ITT Corporation | |||||||
| Name: Title: |
/s/ Aris C. Chicles
|
|||||||
SCHEDULE I
EXHIBIT L
MATERIAL TERMS OF EACH LEASE
See Attached
SCHEDULE I
| Corresponding | ||||||
| Material Terms | ||||||
| Exhibit | Building/Premises | Landlord | Tenant | |||
L-1
|
ITT Cannon de Mexico, S.A. de C.V. Avenida del Libre Comercio S/N Entre Calzada Industrial Nuevo Nogales y Calzeda del Raquet Club Col. Parque Industrial Nuevo Nogales Nogales, Sonora C.P. 84093 | ITT Cannon de Mexico, S.A. de C.V. | Jabsco Sociedad de Responsabilidad Limitada de Capital Variable |
|||
L-2
|
666 East Dyer Road Santa Ana, Ca. USA 92705 | ITT Cannon LLC | Flow Control LLC | |||
L-3
|
Millwey Rise Industrial Estate Axminster EX13 5HU, United Kingdom |
Lowara UK Ltd. | ITT Industries Ltd. | |||
L-4
|
#74 WSO Bayard St. Seneca Falls, NY | Xylem Inc. | ITT Corporation |
1
EXHIBIT L-1
Building
|
ITT Cannon de Mexico, S.A. de C.V. Avenida del Libre Comercio S/N Entre Calzada Industrial Nuevo Nogales y Calzeda del Raquet Club Col. Parque Industrial Nuevo Nogales Nogales, Sonora C.P. 84093 | |
Landlord
|
ITT Cannon de Mexico, S.A. de C.V. | |
Tenant
|
Jabsco Sociedad de Responsabilidad Limitada de Capital Variable | |
Premises (square feet)
|
59,541 square feet, as depicted on the floor plan attached hereto. Permitted uses — general office, warehouse, computer servers, and assembly and pump sanitation. Fabrication ( examples — machining, plating, molding, silk screening, die casting etc) activities are expressly not allowed | |
Term & Option
|
12 months — Commencing on the Commencement Date
Tenant will have the option to renew at 1.15 times base rent as noted below for an additional 3 months, if written notice is provided to the Landlord 60 days prior to the termination of this agreement. Tenant will have the option to terminate this agreement at any time after the 1st 6 months with 6 months advance written notice to the landlord |
|
Base Rent
|
Cost plus 2% - 10% Mexican Pesos per month (Cost plus 2% - 10% notional US Dollars) payable in Mexican Pesos plus 11%VAT |
|
Notices
|
Landlord — Suzy Lee 666 East Dyer Road Santa Ana, Ca. 92705 Office: 714-628-8279 suzy.lee@itt.com |
|
| Tenant — Dan Kelly 1133 Westchester Avenue, Suite 2000 White Plains, NY 10605 Office: 914- 323-5994 dan.kelly@xyleminc.com |
2
Rent Payments
|
a. Unless otherwise directed by Landlord in writing, all Rent
payments shall be made to Landlord in Mexico Pesos at the address
identified in the above “Notice” provision. |
|
b. Rent payments are to be made monthly in advance upon
presentation of invoice to the Tenant. 1st rent
payment is due within 5 days after Commencement Date. .
Subsequent rent payments are due every 30 days. It is tenant’s
full responsibility to pay rent on a timely basis. |
||
c. Payments over 10 days late will be charged interest at a rate
of 10% per annum |
||
Services to be
provided by Landlord
as a part of the
monthly base rent
|
Building maintenance, fire protection, building security, janitorial, pest control, tenant parking, utilities, building insurance, real property taxes, grounds maintenance, and mail separation at the ICS reception desk. | |
Special Provisions
|
a.
Tenant will be required to provide, install, and pay for any
capital improvements (building, furniture, computers, and
equipment) required during the term of the agreement.
Installation of capital equipment requires landlord approval in
advance. |
|
b.
Tenant agrees to provide at its own expense building reception
services via its own entrance to the facility and mail room
services |
||
c.
Tenant will be required to provide and pay for all support and
services required to move out of the facility at the end of the
lease term. If tenant requires contractors to assist them in
moving out of the facility, tenant agrees to provide landlord
with proof of adequate contractor insurance coverage prior to
contractor entering into the facility. |
||
d.
Tenant agrees to remove all of their personal property from
the Premises at the end of the lease term. Tenant must return
rented space to pre move in condition, with the exception of the
offices, which should be left in an “as is” condition. This
includes phones purchased directly by the Tenant, but excludes
any phones provided by the landlord. |
||
e.
Tenant will be required to provide and pay for all support and
services required to move into a new facility at the end of the
lease term. |
||
f.
Landlord will provide tenant with 40 unassigned parking spaces
in the Landlord’s parking lot located on the facility grounds |
||
g.
Tenant agrees that all cabling that is used to attached
Tenant’s PC’s to the IT infrastructure will remain the property
of the landlord and will not be removed by the Tenant at the end
of the lease term. |
||
h.
All PC connection equipment will be designated as the property
of the Tenant and will be removed by the Tenant at Tenant’s
expense at the end of the term of this agreement |
3
i.
Fixed assets on the books of the landlord as of the
Commencement date will remain the property of the Landlord during
and at the end of the lease term. |
||
j.
Fixed assets on the books of the Tenant as of the date of the
ITT separation will remain the property of the Tenant during and
at the end of the lease term. |
||
k.
Tenant agrees to provide all IT support necessary to maintain
Tenant’s Server Room at its own cost. Upon termination of this
agreement, Tenant will provide all required support at its own
cost to shutdown, package and remove the servers from the
Premises. |
||
l.
Tenant agrees to pay all personal property taxes associated
with Tenant’s personal property located on the Premises. If
Landlord is required to pay personal property taxes on Tenant’s
personal property, Tenant agrees to immediately reimburse
Landlord. |
||
m.
Tenant will not be allowed to access the ICS computer network.
Tenant’s employees will be allowed to access Tenant’s own
computer network via wireless or landline data connections on the
Premises |
||
n.
Tenant shall have the reasonable right to use, and Landlord
shall at all times have exclusive control of, and operate and
maintain, the Common Areas including, but not limited to the
cafeteria in the manner Landlord may reasonably determine to be
appropriate. |
||
o.
Tenant’s employees will not be allowed access to any ICS /Landlord
manufacturing areas including but not limited to ITAR
restricted areas. Tenant’s employees will be required to show
proper identification to enter the facility as determined by the
Landlord |
||
p.
Tenant’s minimum General Liability Insurance Policy and
Property insurance shall be Two Million Dollars ($2,000,000) and
must be paid for by tenant. |
||
q.
Tenant has no right to sublease their space. |
||
r.
Tenant agrees not to put up any external or internal signs
during the term of the agreement, except for signs related to the
production and assembly of Tenant’s products, which can be
displayed in Tenant’s assembly area. |
||
s.
Tenant will supply at Tenant’s cost, a phone PBX system and
phones to be used by Tenant’s employees during the course of this
agreement. Tenant will enter into its own contract for phone
service at the facility and all costs associated with this
contract will be paid for by Tenant |
||
t.
Tenant also agrees to enter into a contract for cafeteria
services for its employees located at the facility and all costs
associated with this contract will be paid for by Tenant |
||
u.
Water Discharges |
4
i.
Tenant must provide Landlord with copy of analysis of water
discharges, Air Emissions, Fire Risk, Hazardous materials,
Hazardous waste as often as required by the Safety and
Environmental Laws and Regulations or upon reasonable request |
||
ii.
Tenant’s Water discharge analysis must be performed in
coordination with Landlord’s EH&S department |
||
v.
Tenant will have the right to transfer additional assembly
lines into the facility, provided that the following criteria are
met; |
||
a.
They can be fit into the existing space that is being rented
under the terms of this Lease |
||
b.
The additional assembly line uses an assembly line process
that is already being used by the Tenant to assemble its products
as of the Commencement Date |
||
c.
The new assembly lines do not require significant additional
utilities usage at the plant (electric, water, sewer, gas, oil
etc) |
||
w.
If the assembly line to be transferred by Tenant into the
Premises does not meet the criteria as defined in section v
above, Tenant cannot install new assembly lines or new assembly
processes at the Premises without the advance approval in writing
from the Landlord. Adequate time should be given to the Landlord
to review any Tenant proposal to install new assembly lines. |
||
x.
If Landlord chooses to sell the building during the term of
this Lease it must be sold under condition that Tenant will
remain in the building under the terms of this Lease. |
||
Local Law Provisions
|
None | |
Governing Law
|
Nogales, Sonora, Mexico |
5
6
EXHIBIT L-2
Building
|
666 East Dyer Road Santa Ana, Ca. USA 92705 |
|
Prime Lease (as amended)
|
Not applicable — facility is owned by ITT Corp, ICS Div | |
Landlord
|
ITT Cannon LLC | |
Tenant
|
Flow Control LLC | |
Premises (square feet)
|
17,052, square feet, as depicted on the floor plan attached hereto. Permitted uses — general office and laboratory work | |
Term & Option
|
3 months — Commencing on the Commencement Date Tenant will have the option to renew at 1.15 times base rent as noted below for an additional 3 months, if written notice is provided to the landlord 60 days prior to the termination of this agreement | |
Base Rent
|
Cost plus 2% - 10% per month | |
Notices
|
Landlord — Suzy Lee 666 East Dyer Road Santa Ana, Ca. 92705 Office: 714-628-8279 suzy.lee@itt.com |
|
| Tenant — Dan Kelly 1133 Westchester Avenue, Suite 2000 White Plains, NY 10605 Office: 914- 323-5994 dan.kelly@xyleminc.com |
||
Rent Payments
|
a. Unless otherwise directed by Landlord in writing, all Rent
payments shall be made to Landlord at the address identified in
the above “Notice” provision. |
|
b. Rent payments are to be made monthly in advance.1st
rent payment is due within 5 days of the Commencement Date.
Subsequent rent payments are due every 30 days. No invoices will
be provided by landlord. It is tenant’s full responsibility to pay
rent on a timely basis. |
||
c. Payments over 10 days late will be charged interest at a rate
of 10% per annum |
7
Services to be provided
by Landlord as a part
of the monthly base
rent
|
Building maintenance, fire protection, building security, janitorial, pest control, tenant parking, utilities, phone PBX, PC support, building insurance, receptionist, real property taxes, mail room, grounds maintenance, phone usage, tenant server maintenance and server backups, network closet support, | |
Special Provisions
|
a. Tenant will be required to provide, install, and pay for any
capital improvements (building, furniture, computers, and
equipment) required during the term of the agreement. Installation
of capital equipment requires landlord approval in advance. |
|
b. Tenant will be required to provide and pay for all support and
services required to move out of the facility at the end of the
lease term. If tenant requires contractors to assist them in
moving out of the facility, Tenant agrees to provide Landlord with
proof of adequate contractor insurance coverage prior to
contractor entering into the facility. |
||
c. Tenant agrees to remove all of their personal property from the
landlord’s premises at the end of the lease term. This includes
phones purchased directly by the tenant, but excludes any phones
provided by the landlord. |
||
d. Tenant will be required to provide and pay for all support and
services required to move into a new facility at the end of the
lease term. |
||
e. Landlord agrees to provide Tenant with unassigned parking
spaces in the rear (south side) of the facility. Landlord agrees
to provide Tenant with 7 identified parking spaces in the front
(north side) of the facility. Landlord agrees to provide Tenant
with 1 visitor parking space in the front (north side) of the
facility. |
||
f. Tenant agrees that all cabling that is used to attached
tenant’s PC’s to the IT infrastructure will remain the property of
the landlord and will not be removed by the tenant at the end of
the lease term. |
||
g. All PC connection equipment will be designated as the property
of the tenant and will be removed by the tenant at tenant’s
expense at the end of the term of this agreement |
||
h. Fixed assets currently on the books of the landlord as of
Commencement Date will remain the property of the Landlord during
and at the end of the lease term. This would include all of the
furniture and partitions in the executive area that the tenant
will occupy during the term of this agreement |
||
i. Fixed assets currently on the books of the Tenant as of the
Commencement Date will remain the property of the tenant during
and at the end of the lease term. This would include all of the
furniture and partitions in areas other than the executive area
that the tenant will occupy during the term of this agreement. |
8
j. As a part of Tenant’s move out of the facility at the
expiration of this agreement, Landlord’s IT department will
shutdown Tenant’s servers and other IT equipment and make a back
up copy of all the data that is on the servers immediately prior
to the shutdown of the servers. Tennant will be charged for these
services by the landlord based on a rate of $50 per hour. Tennant
will be required to package and ship the servers and other IT
equipment at Tenant’s cost. |
||
k. The landlord’s IT department will be allowed access to Tenant’s
designated areas as per the attached floor plan for purposes of
providing the services that are included in the monthly base rent.
The landlord’s IT department will have the right to access the
tenant’s IT data in order to provide the services that are
included in the monthly base rent |
||
l. Tenant will be required to provide workers compensation
insurance at its own expense for the employees located at
landlord’s facility based on State of California requirements
m. Tenant agrees to pay all personal property taxes associated
with tenant’s personal property located in landlord’s facility. If
Landlord is required to pay personal property taxes on tenant’s
personal property, tenant agrees to immediately reimburse
landlord. |
||
n. Tenant’s minimum General Liability Insurance Policy and
Property insurance shall be Two Million Dollars ($2,000,000) and
must be paid for by tenant. |
||
o. Tenant will not be allowed to access the ICS computer network.
Tenant’s employees will be allowed to access Tenant’s own
computer network via wireless or landline data connections on the
Leased Premises |
||
p. Tenant shall have the reasonable right to use, and Landlord
shall at all times have exclusive control of, and operate and
maintain, the Common Areas in the manner Landlord may reasonably
determine to be appropriate. |
||
q. Tenant’s employees will not be allowed access the east building
with exception of the cafeteria or to areas of the west building
that are not being rented under this agreement, except to gain
access to rented space. Tenant’s employees will be required to
show proper identification to enter the facility as determined by
the Landlord |
||
r. Tenant has no right to sublease their space. |
||
s. Tenant agrees not to put up any external or internal signs
during the term of the agreement On or prior to the Commencement
Date, Landlord will remove at Landlord’s expense, all of Tenants
pictures that are presently in the west lobby reception area and
give them to Tenant |
||
t. If Landlord chooses to sell the building during the term of
this Lease it must be sold under condition that Tenant can remain
in the Premises under the terms of this Lease. |
9
Local Law Provisions
|
Not applicable | |
Governing Law
|
State of California |
10
11
EXHIBIT L-3
Building
|
Lowara UK Ltd. | |
| Millwey Rise Industrial Estate | ||
| Axminster EX13 5HU, United Kingdom | ||
Landlord
|
Lowara UK Ltd. | |
Tenant
|
ITT Industries Ltd. | |
Premises (square feet)
|
16,000 square feet, as depicted on the floor plan attached hereto. Permitted uses — general office, warehouse, light machining, impeller balancing, and pump assembly work which follow traditional engineering practices and are within the parameters of the effective insurance policy. | |
Term & Option
|
24 months — Commencing on date of ITT separation into 3 companies | |
| Lease is up to 2 years. Tenant will have the option to terminate this agreement at any time after the 1st twelve months with 6 months advance written notice to the Landlord. | ||
Base Rent & Related Costs
|
Base Rent of £ Cost plus 2% - 10% per month, to be increased 4.5% after 1 year. The base rent excludes property taxes, property insurance, utilities (natural gas, electricity, and water services), and common services such as building maintenance and compressor usage. Property taxes, insurance, and utilities shall be invoiced separately on a monthly basis at the rate of 30% of the actual monthly cost. Common services will be invoiced at £ Cost plus 2% - 10% per month. | |
Notices
|
Notice for Landlord, Lowara UK, to local controller — Norbert Rosser Lowara UK, 44-1297-630-221, Email: | |
| norbert.rosser@xyleminc.com | ||
| Notice for Tenant, ITT Industries LTD, to local controller — Adrian Roberts. Email: adrian.roberts@itt.com | ||
| The address for Tenant and Landlord is as follows: | ||
| Millwey Rise Industrial Estate Axminster EX13 5HU, United Kingdom |
||
Rent & Related Payments
|
1. Unless otherwise directed by Landlord in writing, all Rent and
Utility payments shall be made to Landlord in British Pounds at the
address identified in the above “Notice” provision. |
|
2. Rent payments are to be made monthly in advance upon
presentation of an invoice to the Tenant. 1st rent
payment is due on the date of ITT separation. Subsequent rent
payments |
12
are due every 30 days. It is Tenant’s full responsibility
to pay rent on a timely basis. |
||
3. Utility payments shall be invoiced and paid following receipt of
each month’s utility bills. Tenant’s pro-rata share of each
utility bill shall be 30%. Utility payments will be due in 30
days. |
||
4. Property tax and insurance payments shall be invoiced and paid
following receipt of each month’s bills. Tenant’s pro-rata share
of each bill shall be 30%. Payments will be due in 30 days. |
||
5. Common services payments are to be made monthly upon
presentation of an invoice to the Tenant. |
||
6. Payments over 10 days late will be charged interest at a rate of
10% per annum. |
||
Services to be provided
by Landlord as a part of
the monthly base rent
|
Exterior structural building maintenance, fire protection, 32 tenant parking spaces, grounds maintenance, loading bay area access. | |
Special Provisions
|
1. Tenant will be required to provide, install, and pay for any
capital improvements (building, furniture, computers, and
equipment) required during the term of the agreement. Installation
of capital equipment requires landlord approval in advance. |
|
2. Tenant shall make their own processes for fire alarm and fire
assembly point. |
||
3. Tenant agrees to provide at its own expense building reception
services via its own entrance to the facility and its own mail room
services. These services are for admitting and discharging
employees, and authorized guests and customers visiting the
facility and for providing mail and package delivery to its own
employees. This paragraph does not refer to the construction of
the reception area by the Landlord. |
||
4. Tenant agrees to provide the following services at its own
expense: internal maintenance, shipping and receiving, janitorial
services, pest control, snow removal for its parking area ad
walkways, ramp/access to tenant loading bay area, security alarm
system for tenant occupied area, insurance for tenant owned assets,
CCTV, waste removal, in/out system connected to building fire
system, upgrade and/or replace any fixtures or fittings in tenant
occupied area. |
||
5. Tenant will supply at Tenant’s cost a phone system and phones to
be used by tenant’s employees during the course of this agreement.
Tenant will enter into its own contract for phone service at the
facility and all costs associated with this contract will be paid
for by Tenant. |
||
6. Tenant will supply at Tenant’s cost an IT network and system and |
13
| personal computers to be used by tenant’s employees during the course of this agreement. Tenant shall pay for all operating and maintenance costs associated with this network during the course of this agreement. This excludes electricity as this is provided by the Landlord in the base rent. | ||
| 7. | Landlord shall have entitled access to the Tenant’s space in order to carry out maintenance and/or access equipment which affects the entire building (for example, electrical junction boxes). | |
8.
|
Tenant shall have entitled access to the Landlord’s area of the building in order to carry out emissions tests on the spray booth. | |
9.
|
Tenant will use the waste facilities on premises (belonging to Landlord) for disposal of cardboard and wood. | |
| 10. | If Landlord chooses to sell the building during the term of this TSA it must be sold under condition that tenant will remain in the building under the terms of this TSA. | |
| 11. | Tenant will be required to provide and pay for all support and services required to move out of the facility at the end of the lease term. If Tenant requires contractors to assist them in moving out of the facility, tenant agrees to provide landlord with proof of adequate contractor insurance coverage prior to contractor entering into the facility. | |
12.
|
Tenant agrees to remove all of their personal property from the Landlord’s premises at the end of the lease term. Tenant must return rented space to the condition of the leased area as of October 1, 2011. | |
13.
|
Tenant will be required to provide and pay for all support and services required to move into a new facility at the end of the lease term. | |
14.
|
Landlord agrees to provide Tenant with 32 unassigned parking spaces in the Landlord’s parking lot located on the facility grounds. | |
15.
|
Tenant agrees that all cabling and connection equipment that is used to attached tenant’s PC’s to the IT infrastructure will remain the property of the Landlord and will not be removed by the tenant at the end of the lease term. | |
16.
|
Fixed assets remaining on the books of the Landlord as of the date of the ITT separation will remain the property of the Landlord during and at the end of the lease term. | |
17.
|
Fixed assets remaining on the books of the tenant as of the date of the ITT separation will remain the property of the Tenant during and at the end of the lease term. | |
18.
|
Tenant will be required to provide public liability insurance at its own expense for the employees located at landlord’s facility based on UK requirements. | |
19.
|
Tenant agrees to pay all personal property taxes associated with Tenant’s personal property located in Landlord’s facility. If |
14
Landlord is required to pay personal property taxes on Tenant’s
personal property, Tenant agrees to immediately reimburse landlord. |
||
20.
|
Tenant will not be allowed to access the Lowara computer
network. Tenant’s employees will be allowed to access Tenant’s own
computer network via wireless or landline data connections on the
Leased Premises. |
|
21.
|
Tenant shall have the reasonable right to use, and Landlord
shall at all times have exclusive control of, and operate and
maintain, the Common Areas in the manner Landlord may reasonably
determine to be appropriate. |
|
22.
|
Tenant’s employees will not be allowed access the areas of the
building that are not being rented under this agreement, except to
gain access to the pump test facility on a pre-agreed scheduled
basis. Tenant’s employees will be required to show proper
identification to enter the facility and the pump testing area as
determined by the Landlord |
|
23.
|
Tenant has no right to sublease their space. |
|
24.
|
Assignment of this agreement requires Landlord approval in
writing. |
|
25.
|
Tenant and Landlord shall agree on the posting of external
signs during the term of the agreement, except for signs related to
the production and assembly of Tenant’s products which can be
displayed in Tenant’s assembly area. |
|
26.
|
On the commencement date of this agreement, Landlord will
remove at Landlord’s expense, all of Tenants pictures that are
presently in the reception and other areas of the building |
|
27.
|
Water Discharges |
|
a. Tenant must provide landlord with copy of analysis of water
discharges, Air Emissions, Fire Risk, Hazardous materials,
Hazardous waste as often as required by the Safety and
Environmental Laws and Regulations |
||
b. Tenant’s Water discharge analysis must be performed in
coordination with Landlord’s EH&S department |
||
28.
|
Tenant cannot install new assembly lines or new assembly
processes at the facility without the advance approval in writing
from the Landlord. Adequate time should be given to the Landlord to
review any Tenant proposal to install new assembly lines. |
|
29.
|
Choice of Law: The parties irrevocably agree that the courts
of England and Wales shall have exclusive jurisdiction to settle
any dispute or claim that arises out of or in connection with this
lease or its subject matter or formation. |
|
30.
|
The Tenant shall keep the Landlord indemnified against all
expenses, costs, claims, damage and loss which the Landlord shall
incur as a consequence or any breach of any Tenant |
15
covenants in
this lease, or any act or omission of the Tennant or its workers,
contractors, agents and invitees. |
||
31. As soon as the Tenant becomes aware of any defect in the
Property, it shall give the Landlord notice of it. The Tenant
shall indemnify the Landlord against any liability in relation to
the Property by reason of failure of the Tenant to comply with any
of the tenant covenants in this lease. |
||
32. To the extent that the same are not provided by the Landlord as
at the date hereof the Tenant shall keep the Property equipped with
such fire prevention, detection and fire-fighting equipment which
shall be required under all relevant laws or required by the
insurers of the Property or reasonably recommended by them or
reasonably required by the Landlord or the Superior Landlord and
shall keep that, equipment properly maintained and available for
inspection. |
||
33. The Tenant shall provide Landlord with access to the Tenant’s
space for 1) planned maintenance work, and 2) in the case of an
emergency. Planned maintenance access shall be requested 24 hours
in advance. 24 hour advance notice is not required in the case of
emergency access. Landlord shall establish a lock box where a key
to the Tenant’s area shall be kept. A limited number of parties
from both Landlord and Tennant shall have access to the lock box. |
||
34. The Tenant shall carry out Health and Safety operations as per
UK Government Guidelines HSG65 and GHG (greenhouse gas) Guidelines
or its successors, as applicable, and also cooperate with the
Landlord in adhering to its health and safety plan in common areas. |
||
35. The Tenant shall carry out their Environmental obligations and
operations as per the Environment Agency’s Pollution Prevention
Guidance documents as may be relevant, and cooperate with the
Landlord in adhering to any Environmental Management System the
Landlord operates. |
||
Local Law Provisions
|
N/A | |
Governing Law
|
Please see paragraph “29.” |
16
17
EXHIBIT L-4
| Building | #74 WSO Bayard St. Seneca Falls, NY | |||||
| Prime Lease (as amended) | Not Applicable | |||||
| Landlord | Xylem Inc. | |||||
| Tenant | ITT Corporation | |||||
| Premises (square feet) | Approximately 13,974, square feet of office space, as depicted on the cross-hatched floor plan attached hereto. | |||||
| Term | Lessee shall have a minimum term commencing on the date hereof through February 29, 2012 (“Minimum Term”) which may be extended through August 31, 2012, (“Maximum Term”) if written notice is provided to the Landlord by January 5, 2012. | |||||
Base Rent
|
Period | Monthly Rent | ||||
| Through 12/31/11 | Cost plus 2% - 10% | |||||
| From 1/1/12 through 8/31/12 | Cost plus 2% - 10% | |||||
Notices
|
To: Landlord | |||||
| Dan Kelly | ||||||
| 1133 Westchester Avenue | ||||||
| Suite 2000 | ||||||
| White Plains, NY 10547 | ||||||
| (914) 323-5994 | ||||||
| To: Tenant | ||||||
| Joanne Scalard | ||||||
| 1133 Westchester Avenue | ||||||
| Suite 3000 | ||||||
| White Plains, NY 10547 | ||||||
| (914) 641-1783 | ||||||
| Rent Payments | a. Unless otherwise directed by Lessor in writing, all Rent
payments shall be made to Lessee at the address identified
in the above “Notice” provision. |
|||||
b. Rent payments are to be made monthly in
advance.1st rent payment is due within 5 days of
the Commencement Date. Subsequent rent payments are due
every 30 days. No invoices will be provided by landlord. It
is tenant’s full responsibility to pay rent on a timely
basis. |
||||||
18
c. Payments over 10 days late will be charged interest at a
rate of 10% per annum |
||||||
| Services to be provided by Landlord | Building maintenance, fire protection, building security, janitorial, pest control, tenant parking, utilities, building insurance, receptionist, real property taxes, mail room, grounds maintenance, and waste removal | |||||
a. If Landlord chooses to sell the building during the term
of this Lease it must be sold under condition that Tenant
can remain in the Premises under the terms of this Lease. |
||||||
| Special Provisions | a. Tenant will be required to provide, install, and pay for
any capital improvements (building, furniture, computers,
and equipment) required during the term of the agreement.
Installation of capital equipment requires landlord approval
in advance. |
|||||
b. Tenant will be required to provide and pay for all
support and services required to move out of the facility at
the end of the lease term. If tenant requires contractors to
assist them in moving out of the facility, Tenant agrees to
provide Landlord with proof of adequate contractor insurance
coverage prior to contractor entering into the facility. |
||||||
c. Tenant agrees to remove all of their personal property
from the landlord’s premises at the end of the lease term.
This includes phones purchased directly by the tenant, but
excludes any phones provided by the landlord. |
||||||
d. Tenant will be required to provide and pay for all
support and services required to move into a new facility at
the end of the lease term. |
||||||
e. Landlord agrees to provide Tenant with unassigned parking
spaces in the parking lot to the East side of the facility. |
||||||
f. All PC connection equipment will be designated as the
property of the tenant and will be removed by the tenant at
tenant’s expense at the end of the term of this agreement |
||||||
g. Fixed assets currently on the books of the landlord as of
Commencement Date will remain the property of the Landlord
during and at the end of the lease term. |
||||||
h. Fixed assets currently on the books of the Tenant as of
the Commencement Date will remain the property of the tenant
during and at the end of the lease term. |
||||||
i. Tenant will be required to provide workers compensation
insurance at its own expense for the employees located at
landlord’s facility based on State of New York requirements. |
||||||
j. Tenant agrees to pay all personal property taxes
associated with tenant’s personal property located in
landlord’s facility. If Landlord is required to pay personal
property taxes on tenant’s
| ||||||
19
personal property, tenant agrees
to immediately reimburse landlord. |
||||||
k. Tenant’s minimum General Liability Insurance Policy and
Property insurance shall be Two Million Dollars ($2,000,000)
and must be paid for by tenant. |
||||||
l. Tenant will not be allowed to access the Xylem RCW
computer network. Tenant’s employees will be allowed to
access Tenant’s own computer network via wireless or
landline data connections on the Leased Premises. |
||||||
m. Tenant shall have the reasonable right to use, and
Landlord shall at all times have exclusive control of, and
operate and maintain, the Common Areas in the manner
Landlord may reasonably determine to be appropriate. |
||||||
n. Tenant’s employees will not be allowed access the other
parts of the building that are not being rented under this
agreement with exception of the South cafeteria and central
rest rooms, except to gain access to rented space. Tenant’s
employees will be required to show proper identification to
enter the facility as determined by the Landlord |
||||||
o. Tenant has no right to sublease their space. |
||||||
p. Tenant agrees not to put up any external or internal
signs during the term of the agreement without prior
approval of the Landlord. |
||||||
Local Law Provisions
|
New York law shall apply | |||||
20
21
MASTER SUBLEASE AGREEMENT
THIS MASTER SUBLEASE AGREEMENT (“Sublease”) is made as of the 30th day of September, 2011, by
and between the each of the sublessors (each a “Sublessor”) identified on Schedule I
attached hereto and made a part hereof, and each of the sublessees (each a “Sublessee”) identified
on Schedule I.
WITNESSETH:
WHEREAS, pursuant to the terms and conditions of each lease agreement described on Exhibit
S attached hereto and made a part hereof (the “Prime Lease”), each landlord (each a “Landlord”)
identified on Schedule I leased to each Sublessor certain premises (“Premises”) in the
building (“Building”) described opposite its name on Schedule I (each Sublessor has
delivered or made available upon request to each Sublessee a true and complete copy of the relevant
Prime Lease);
WHEREAS, each Sublessor in consideration of the rents herein reserved and of the terms,
provisions, covenants and agreements on the part of each Sublessee to be kept, observed and
performed, desires to sublease to each Sublessee and each Sublessee desires to sublease from each
Sublessor a portion of the Premises, shown outlined on the Floor Plan annexed to Exhibit S
(“Subleased Premises”), on the terms, covenants and conditions described set forth in Exhibit
S and as hereinafter provided;; and
WHEAREAS, all references herein to “Sublessor” and Sublessee” shall apply to each Sublessor
and Sublessee identified on Schedule I and all references to “Landlord”, “Prime Lease”,
“Building”, “Premises”, “Subleased Premises”, “Term”, Base Rent”, and Sublessee’s proportionate
share of “Additional Rent” shall apply to each Sublessor and Sublessee in accordance with the
corresponding material terms set forth in Exhibit S applicable to such parties’ Subleased
Premises.
NOW, THEREFORE, Each Sublessor and each Sublessee covenant and agree as follows:
| 1. | Sublease |
Sublessor hereby subleases to Sublessee, and Sublessee hereby hires and subleases from
Sublessor, the Subleased Premises.
| 2. | Term |
The term (“Term”) of this Sublease shall be for the period set forth on Exhibit S,
unless sooner terminated pursuant to any provision set forth herein or in the Prime Lease.
1
3. Base Rent
During the entire Term, Sublessee shall pay Sublessor, as rent for the Subleased Premises, the
annual sums (“Base Rent”) set forth on Exhibit S, in equal monthly installments, within
five (5) days after the first day of each month, without prior notice or demand and without setoff
or deduction.
4. Conflicts Between Sublease and Attached Exhibits
In the event of any inconsistencies or conflicts between the terms and provisions of this
Sublease and the material terms set forth in Exhibit S, the material terms set forth in
Exhibit S shall control, provided in all instances the terms and provisions of this
Sublease, including the schedules and exhibits, remain subject to the terms and provisions of the
Prime Lease.
5. Rent Payments
All Base Rent, Additional Rent and other charges payable by Sublessee to Sublessor
(collectively, “Rent”) shall be forwarded in accordance with the applicable provision set forth on
Exhibit S. Notwithstanding the foregoing, Sublessee shall pay the first month’s
installment of Rent upon the execution of this Sublease and, if the date upon which this Sublease
is executed occurs on other than the first day of a calendar month, Sublessee shall pay its pro
rata share of Rent for such calendar month.
6. Late Charge
In the event that Sublessee shall fail to pay Rent within five (5) days after its due date,
then from and after the sixth (6th) day until the date Sublessee finally pays the Rent, Sublessee
shall pay Sublessor a late charge at the rate of ten (10%) percent per annum with respect to the
delinquent amount, provided, however, no late charges shall be assessed against Sublessee prior to
January 1, 2012.
7. Use
Sublessee shall use and occupy the Subleased Premises for the same purposes and in the same
manner as used immediately prior to the date hereof and in a manner consistent with the provisions
of the Prime Lease.
8. Condition of Subleased Premises
Sublessee acknowledges that Sublessee is hiring the Subleased Premises in “as is” condition.
In making and executing this Sublease, Sublessee has not relied upon or been induced by any
statements or representations of any person with respect to the physical condition of the Subleased
Premises. Sublessee has relied solely on its own investigations, examinations and inspections of
the Subleased Premises.
2
9. Subordination
Sublessor and Sublessee agree that this Sublease is, and shall be, subject and subordinate to
all of the terms, covenants and conditions of the Prime Lease, and to the matters to which the
Prime Lease shall be subordinate.
10. Incorporation of Prime Lease Terms
10.1 The terms, covenants and conditions contained in the Prime Lease are hereby incorporated
herein and shall, as between Sublessor and Sublessee, constitute the terms, covenants and
conditions of this Sublease, except to the extent set forth below. As between the parties hereto,
Sublessor agrees to observe and perform the terms, covenants and conditions on its part to be
observed and performed hereunder and Sublessee agrees to be bound by the provisions of the Prime
Lease and to keep, observe and perform the terms, covenants and conditions on its part to be kept,
observed and performed hereunder as well as those applicable terms, covenants and conditions to be
observed and performed by Sublessor as tenant under the Prime Lease with respect to the Subleased
Premises. The remedies of the parties, as Sublessor and Sublessee hereunder, shall be the same as
the respective remedies of the Landlord and the tenant under the Prime Lease with respect to the
Subleased Premises. Sublessee shall in no case have any rights with respect to the Subleased
Premises greater than Sublessor’s rights as tenant under the Prime Lease, and Sublessor shall have
no liability to Sublessee for any matter or thing for which Sublessor does not have co-extensive
rights as tenant under the Prime Lease.
10.2 Sublessee agrees to perform, fulfill and observe all covenants and agreements of
Sublessor as tenant, as set forth in the Prime Lease, the extent applicable to the Subleased
Premises, except for the covenants and agreements of Sublessor set forth therein with respect to
the payment of rent and other charges to the Landlord (and except for the covenants and agreements
of Sublessor herein to be performed by Sublessor hereunder) and except with regard to any other
provision thereof, the content or context of which would render them inapplicable to Sublessee.
11. Indemnification
Sublessor and Sublessee shall indemnify each other and save the other harmless from and
against any and all claims, liability and expense for loss or damage suffered by the other to the
extent caused by (i) the negligence, or willful misconduct of the indemnifying party, its agents,
contractors or employees; (ii) any act or occurrence in the Sublet Premises unless caused by the
negligence or willful misconduct of the indemnifying party, its agents, contractors or employees;
and (iii) breach of this Sublease by the indemnifying party, its agents, contractors or employees
including, but not limited to, losses caused to the non-indemnifying party under the Sublease. The
obligations under this Paragraph 11 shall survive the termination of this Sublease.
12. Liability Insurance
At all times during the Term, Sublessee shall, at its own cost and expense, provide and keep
in force for the benefit of Landlord, Sublessee and Sublessor, comprehensive general
liability insurance against claims for bodily injury, death or property damage occurring in, on or
3
about the Subleased Premises, with limits as specified in the Prime Lease. The insurance to be
provided and kept in force hereunder by Sublessee shall include Sublessee, as insured, and
Sublessor and Landlord, as additional insureds. Said policy shall be obtained by Sublessee and
certificates thereof delivered to Sublessor promptly after the signing of this Sublease. Said
policy shall be for a period of not less than one year and shall contain a provision whereby the
same cannot be materially changed or canceled unless Sublessor is given at least thirty (30) days’
written notice of such material change or cancellation. Sublessee shall obtain and pay for renewals
of such insurance from time to time at least thirty (30) days before the expiration thereof, and
Sublessee shall promptly deliver certificates thereof to Sublessor. Any insurance required to be
provided by Sublessee pursuant to this Sublease may be provided by blanket insurance covering the
Subleased Premises and other properties of Sublessee upon condition that (i) such blanket insurance
complies with all of the other requirements of this Sublease and is acceptable to Sublessor and
Landlord, and (ii) certificates of such insurance are delivered to Sublessor and Landlord.
Sublessee shall obtain and pay for insurance on its equipment, furnishings, furniture and other
personal property in the Subleased Premises.
13. Restriction on Assignments, etc.
Sublessee shall not, directly or indirectly, voluntarily or involuntarily, by operation of law
or otherwise, assign, mortgage, pledge or encumber this Sublease, or underlet or suffer or permit
all or any part of the Subleased Premises to be used or occupied by others, without the prior
written consent of Landlord (to the extent and in the manner required under the Prime Lease) and
Sublessor, such consent not to be unreasonably withheld, conditioned or delayed, in each instance.
Sublessor shall not sublease any portion of the Premises to a competitor of Sublessee.
Notwithstanding any of the foregoing, but in each case subject to the governing terms of the Prime
Lease, without the consent of Sublessor, Sublessee may assign or sublease this Sublease to any
“Affiliate,” as defined herein; provided, however, that (i) such assignment or sublease does not
violate any provisions of the Prime Lease, (ii) obtains any consent or approval of Landlord
required under the Prime Lease, (iii) Sublessee provides Sublessor at least thirty (30) days prior
written notice of such assignment or sublease; and (iv) Sublessee and any such Affiliate both
remain jointly and severally liable for all obligations and liabilities under this Sublease.
“Affiliate” shall mean (i) Sublessee’s parent or any other entity that is wholly owned by
Sublessee, or under common control with Sublessee; (ii) any entity acquiring all or substantially
all of the Sublessee’s assets or stock; or (iii) any successor entity to Sublessee following a
merger as determined by Sublessor, in Sublessor’s reasonable judgment.
14. Alterations
14.1 Sublessee shall not perform any additions, alterations and improvements to the Subleased
Premises, or any part thereof, without the prior written consent of Landlord (to the extent
required under the Prime Lease) and Sublessor, and otherwise in full compliance with all of the
applicable terms, covenants and conditions of the Prime Lease. Sublessee expressly understands and
agrees that in the event Landlord requires removal of improvements and alterations performed by
and/or for Sublessee and restoration of the Subleased Premises,
Sublessee agrees to promptly comply with such removal and restoration requirement of Landlord at
the end of the term of the Sublease.
4
14.2 Sublessor and Sublessee shall cooperate and mutually agree upon any Separation Work (as
herein defined) as may be reasonably necessary to sublease the Premises to Sublessee. Subject to
any required Landlord approvals, Sublessee shall use commercially reasonable efforts to physically
demise and separate the Subleased Premises, but only to the extent Sublessor and Sublessor have
mutually agreed upon any required Separation Work, from the remaining portion of Premises (the
“Remaining Portion”) at Sublessee’s sole cost and expense. Such demising and separation work is
referred to herein as the “Separation Work.” The Separation Work shall include the following, as
required and applicable: (i) installation of one or more code-compliant sheetrock demising walls
between the Remaining Portion and the Subleased Premises or such other demising and partition
materials as shall be reasonably sufficient to separate the Subleased Premises from the Remaining
Portion, finished to match the wall finishes on the Premises to the extent practicable; (ii) any
reconfiguration of HVAC distribution, sprinkler system distribution, electrical outlets, and
lighting necessary as a consequence of installation of such demising wall(s); and all Separation
Work must comply with all applicable fire, safety, health, and building codes provided,
however, it shall not be a default hereunder if Sublessor does not commence or complete the
Separation Work on the date hereof.
15. Approvals
In any instance where the approval or consent of Sublessor is required hereunder, such consent
or approval shall not be unreasonably withheld, conditioned or delayed. However, any refusal by
Sublessor to consent or approve any matter requested by Sublessee shall be deemed reasonable if,
inter alia, Landlord has refused to give consent or approval thereto whenever such
consent or approval is necessary under the Prime Lease. To the extent that any of the provisions
of the Prime Lease conflict with or are inconsistent with the provisions of this Sublease, whether
or not such inconsistency is expressly noted herein, the provisions of the Prime Lease shall in all
instances prevail over this Sublease.
16. Notices
16.1 Any notice, demand, bill, invoice, statement or communication which either Sublessor or
Sublessee may desire or be required to give to the other in connection with this Sublease shall be
in writing and shall be deemed to have been sufficiently given if sent by (i) Certified or
Registered Mail, Return Receipt Requested, or (ii) a nationally recognized overnight courier, such
as Airborne Express, Federal Express or United Parcel, to such other party at the “Notices”
addresses identified on the corresponding Exhibit S.
16.2 Each such bill, invoice, statement, notice or communication shall be deemed to have been
delivered on the date when the original of same is received.
17. Time Limits
The time limits set forth in the Prime Lease for the performance of any act or the making of
any payment (other than the payment of Rent) are, for the purposes of this Sublease, changed
5
so
that the time of Sublessee in a particular case hereunder to do or perform any act or make any
payment shall be three days less than the time of Sublessor as tenant under the Prime Lease to do
so in such case.
18. Services
Except as otherwise set forth on Exhibit S attached hereto, Sublessee shall be
entitled to receive all of the services pertaining to the Subleased Premises which Sublessor is
entitled to receive under the Prime Lease and did receive during the twelve (12) month period
immediately preceding the date hereof. Sublessee recognizes that such services are to be supplied
by Landlord and not by Sublessor. In the event that Landlord shall fail to supply such services or
shall refuse to comply with any of the provisions of the Prime Lease insofar as they affect
Sublessee’s occupancy of the Subleased Premises, Sublessor shall, at the written request of
Sublessee, request Landlord to so comply and if Landlord shall fail or refuse to do so then, to the
extent permitted by the terms of the Prime Lease, Sublessee shall have the right to exercise, in
its own name and in the name of Sublessor, all of the rights to enforce performance on the part of
Landlord as are available to Sublessor, provided that the same shall be without cost, expense or
liability to Sublessor. Sublessor shall be under no liability to Sublessee in the event of the
failure by Landlord to supply any services, unless the same is due to the fault of Sublessor.
19. Brokerage
Sublessor and Sublessee represent to each other that in connection with this Sublease, they
have dealt with no real estate brokers or consultants.
20. Parking and Signage; Satellite Dishes etc.
20.1 Except as otherwise set forth on Exhibit S attached hereto, Sublessor and
Sublessee agree to share proportionately all parking and signage rights granted to Sublessor under
the Prime Lease, if any, based upon Sublessor’s and Sublessee’s proportionate share of the
Premises.
20.2 Sublessor and Sublessee agree to share proportionately all rights granted to Sublessor
under the Prime Lease with respect to satellite dishes and/or antennae equipment, if any, based
upon Sublessor’s and Sublessee’s proportionate share of the Premises.
21. Termination of Prime Lease/Sublease
Sublessor agrees that it shall not exercise any options to terminate the Prime Lease during
the Term hereof without having first obtained the prior written consent of Sublessee, such consent
not to be unreasonably withheld. If the Prime Lease shall be terminated prior to the Expiration
Date of this Sublease, this Sublease shall thereupon be ipso facto terminated and
Sublessor shall not be liable to Sublessee by reason thereof, unless said termination shall have
been effected because of a default on the part of Sublessor as tenant under the Prime Lease which
was not the result of a default by Sublessee.
6
22. Surrender of Subleased Premises; Holding Over
22.1 This Sublease shall expire and Sublessee shall deliver up and surrender possession of the
Subleased Premises to Sublessor on the last day of the Term hereof, and Sublessee hereby waives the
right to any notice of termination or notice to quit. Upon the expiration or sooner termination of
this Sublease, Sublessee covenants to deliver up and surrender possession of the Subleased Premises
in the same condition in which Sublessee has agreed to maintain and keep the same during the term
of this Sublease and remove Sublessee’s equipment, furniture and other personal property in
accordance with the provisions of this Sublease and the Prime Lease, normal wear and tear and
damage by fire or other casualty excepted.
22.2 Upon the failure of Sublessee to surrender possession of the Subleased Premises to
Sublessor upon the expiration or sooner termination of this Sublease, Sublessee shall pay to
Sublessor an amount equal to 150% of the then current Base Rent and additional rent required to be
paid by Sublessee under this Sublease, applied to any period in which Sublessee shall remain in
possession after the expiration or sooner termination of this Sublease. Acceptance by Sublessor of
Base Rent and additional rent after such expiration or earlier termination shall not constitute a
consent to a holdover hereunder or result in a renewal. The foregoing provisions of this paragraph
are in addition to and do not affect Sublessor’s right to reentry or any other rights of Sublessor
hereunder or otherwise provided by law.
22.3 In addition to the foregoing provisions, Sublessee hereby covenants and agrees to
indemnify and hold Sublessor harmless from and against all costs and expenses, including legal fees
and any judgment for monetary damages, incurred and/or paid by Sublessor under the Prime Lease as a
result of Sublessee’s holdover.
23. Successors and Assigns
This Sublease, together with the agreements, terms, covenants and conditions herein shall bind
and inure to the benefit of Sublessor and Sublessee and their respective heirs, personal
representatives, successors and, except as is otherwise provided herein, their assigns.
24. Miscellaneous
24.1 Sublessor represents that: (i) Sublessor has not received any notice of default or
termination of the Prime Lease; and (ii) Sublessor shall not enter into any agreement that will
modify or amend the Prime Lease so as to increase or materially affect the obligations of Sublessee
pursuant to this Sublease, or adversely affect Sublessee’s right to use and occupy the Subleased
Premises or any other rights of Sublessee under this Sublease.
24.2 It is mutually agreed by and between Sublessor and Sublessee that the respective parties
shall and they hereby do waive trial by jury in any action, proceeding or counterclaim brought by
either of the parties hereto against the other on any matters whatsoever arising out of or in any
way connected with this Sublease, Sublessee’s use or occupancy of the Premises,
7
and/or any claim of
injury or damage excluding any claim for personal injury or property damage.
24.3 The headings herein are inserted only as a matter of convenience and for reference and in
no way define, limit or describe the scope or intent of this Sublease nor in any way affect this
Sublease.
24.4 This Sublease shall be governed by and construed in accordance with the laws of the
State, Country or applicable province in which the Premises are located.
24.5 This Sublease contains the entire agreement between the parties and may not be extended,
renewed, terminated or otherwise modified in any manner except by an instrument in writing executed
by the party against whom enforcement of any such modification is sought. All prior understandings
and agreements between the parties and all prior working drafts of this Sublease are merged in this
Sublease, which alone expresses the agreement of the parties. The parties agree that no inferences
shall be drawn from matters deleted from any working drafts of this Sublease or against the party
preparing drafts hereof. The parties took equal part in drafting this Sublease and no rule of
construction that would cause any of the terms hereof to be construed against the drafter shall be
applicable to the interpretation of this Sublease.
24.6 If any provision of this Sublease shall be invalid or unenforceable, the remainder of the
provisions of this Sublease shall not be affected thereby and each and every provision of this
Sublease shall be enforceable to the fullest extent permitted by law.
24.7 If any officer, servant or employee of Sublessor renders assistance at the request of
Sublessee or on the request of any officer, servant, employee, guest or licensee of Sublessee, then
that employee shall be deemed the agent of the person making such request and Sublessor is hereby
expressly released from any and all liability or loss in connection therewith.
24.8 This Sublease shall not be recorded.
24.9 Notwithstanding anything to the contrary contained in this Sublease, Sublessee shall
reimburse Sublessor, within five (5) business days after demand, as Additional Rent hereunder, for
any and all reasonable costs that may be incurred by Sublessor (including, without limitation, its
attorneys’, accountants’ and other professional fees, costs and disbursements) in connection with
any request by Sublessee for Sublessor’s consent, review or approval relating to any matter
hereunder.
24.9 Notwithstanding anything to the contrary contained in this Sublease, each right and
remedy of Sublessor or Sublessee provided for in this Sublease shall be cumulative and shall be in
addition to every other right or remedy provided for in this Sublease or now or hereafter existing
at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by
any party hereto of any one or more of the rights or remedies provided for in this
Sublease or now or hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by such party of any or all other rights or remedies
provided for in this Sublease or now or hereafter existing at law or in equity or by statute or
otherwise.
8
25. Confidential Information
25.1 Notwithstanding the expiration or earlier termination of this Sublease, for a period of
five (5) years from the date hereof, Sublessor and Sublessee shall hold, and shall cause each of
their respective affiliates and subsidiaries to hold, and shall each cause their respective
officers, employees, agents, consultants and advisors (or potential buyers) to hold, in strict
confidence, and not to disclose or release or use, without the prior written consent of the other
party (which may be withheld in such party’s sole and absolute discretion, except where disclosure
is required by applicable laws), any and all Confidential Information (as defined herein)
concerning any other party; provided, that the parties may disclose, or may permit
disclosure of, Confidential Information (i) to their respective auditors, attorneys, financial
advisors, bankers, insurers and other appropriate consultants and advisors who have a need to know
such information and are informed of their obligation to hold such Confidential Information
confidential to the same extent as is applicable to the parties and in respect of whose failure to
comply with such obligations, the applicable party will be responsible, (ii) if the parties or any
of their respective subsidiaries are required or compelled to disclose any such Confidential
Information by judicial or administrative process or by other requirements of applicable laws or
stock exchange rule, (iii) as required in connection with any legal or other proceeding by one
party against any other party, (iv) as necessary in order to permit a party to prepare and disclose
its financial statements, tax returns or other required disclosures, or (v) as necessary for a
party to enforce its rights under this Sublease. Notwithstanding the foregoing, in the event that
any demand or request for disclosure of Confidential Information is made pursuant to clause (ii),
(iii), (iv) or (v) above, each party, as applicable, shall promptly notify the other of the
existence of such request or demand and shall provide the other a reasonable opportunity to seek an
appropriate protective order or other remedy, which such parties will cooperate in obtaining. In
the event that such appropriate protective order or other remedy is not obtained, the party which
faces the disclosure requirement shall furnish only that portion of the Confidential Information
that is legally required to be disclosed and shall take commercially reasonable steps to ensure
that confidential treatment is accorded such Confidential Information. “Confidential
Information” shall mean all non-public, confidential or proprietary information concerning
Sublessor or Sublessee, or any of their respective affiliates or subsidiaries, or their past,
current or future activities, businesses, finances, assets, liabilities or operations, including
any such information that was acquired by any party after the date hereof, or that was provided to
a party by a third party in confidence, except for any information that is (i) in the public domain
or known to the industry through no fault of the receiving party or its affiliates or subsidiaries,
(ii) lawfully acquired after the date hereof by such party or its affiliates or subsidiaries from
other sources not known to be subject to confidentiality obligations with respect to such
information or (iii) independently developed by the receiving party after the date hereof without
reference to any Confidential Information.
25.2 Each of the parties acknowledges that it and the other members of their respective
affiliates and subsidiaries may have in their possession confidential or proprietary information of
third parties that was received under confidentiality or non-disclosure agreements with such third
party while part of the ITT Corporation companies. Each of the parties will hold, and will cause
the other members of their respective affiliates and subsidiaries and their respective
representatives to hold, in strict confidence the confidential and proprietary information of third
9
parties to which they or any other member of their respective affiliates and subsidiaries has
access, in accordance with the terms of any agreements entered into prior to the date on which
Sublessor and Sublessee are no longer part of the same group of companies between one or more
members of the ITT Corporation companies (whether acting through, on behalf of, or in connection
with, the separated Businesses) and such third parties.
25.3 The parties agree that irreparable damage would occur in the event that the provisions of
this Section 25 were not performed in accordance with their specific terms. Accordingly,
it is hereby agreed that the parties shall be entitled to an injunction or injunctions to enforce
specifically the terms and provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are entitled at law or in
equity.
26. Access
Sublessee shall have access to the Subleased Premises twenty-four (24) hours a day, seven (7)
days a week or as otherwise provided for in the Prime Lease, provided, however, Sublessee’s
employees shall be required to show proper identification reasonably required by Sublessor to enter
the Subleased Premises. Sublessor shall have the right to enter upon or obtain access to the
Subleased Premises or any part thereof without charge at all reasonable times upon reasonable prior
notice (except in the case of an emergency, in which case no notice will be required) to inspect
the Subleased Premises, or to otherwise exercise or perform any of the rights or obligations of
Sublessor under the Prime Lease or this Sublease. At any time during the Term of this Sublease, at
reasonable times upon prior reasonable notice, Sublessor may, at Sublessor’s option, enter into and
upon the Subleased Premises if Sublessor reasonably determines that Sublessee is not acting within
a commercially reasonable time to maintain, repair or replace anything for which Sublessee is
responsible under this Sublease, or the Prime Lease, and correct the same after providing written
notice, without being deemed in any manner guilty of trespass, eviction or forcible entry and
detainer and without incurring any liability for any damage or interruption of Sublessee’s business
resulting therefrom. If Sublessee shall have vacated the Subleased Premises, has not paid Rent and
is in default beyond any applicable notice and cure period, Sublessor may at Sublessor’s option
reenter the Subleased Premises at any time during the last six (6) months of the then current Term
of this Sublease and make any and all such changes, alterations, revisions, additions and tenant
and other improvements in or about the Subleased Premises as Sublessor shall elect, all without any
abatement of any of the Rent otherwise to be paid by Sublessee under this Sublease.
28. Counterparts
This Sublease may be executed by one or more of the parties to this Sublease on any number of
separate counterparts, and all of said counterparts taken together shall be deemed to constitute
one and the same instrument.
10
IN WITNESS WHEREOF, this Sublease has been executed as of the day and year first above written.
| SUBLESSOR: | ||||||
| ITT Corporation India PVT. LTD. | ||||||
| By: Name: |
/s/ N. Chandrashekhar
|
|||||
| Title: | Head Finance — ITTCO India | |||||
| SUBLESSEE: | ||||||
| Xylem Water Solutions India Pvt Ltd. | ||||||
| By: Name: |
/s/ Tangellapalli Venugopalakrishna
|
|||||
| Title: | Director Finance | |||||
IN WITNESS WHEREOF, this Sublease has been executed as of the day and year first above written.
| SUBLESSOR: | ||||||
| ITT Fluid Technology S.A. | ||||||
| By: Name: |
/s/ Miguel Otarola
|
|||||
| Title: | Director & General Manager | |||||
| SUBLESSEE: | ||||||
| ITT Water and Wastewater Chile S.A. | ||||||
| By: Name: |
/s/ Javier Canala-Echevarria
|
|||||
| Title: | Managing Director | |||||
IN WITNESS WHEREOF, this Sublease has been executed as of the day and year first above written.
| SUBLESSOR: | ||||||
| Flow Control LLC | ||||||
| By: Name: |
/s/ Robert Wolpert
|
|||||
| Title: | President | |||||
| SUBLESSEE: | ||||||
| Aerospace Controls LLC | ||||||
| By: Name: |
/s/ Geraldine Hale
|
|||||
| Title: | Controller | |||||
IN WITNESS WHEREOF, this Sublease has been executed as of the day and year first above written.
| SUBLESSOR: | ||||||
| ITT Corporation | ||||||
| By: Name: |
/s/ Aris C. Chicles
|
|||||
| Title: | Senior Vice President | |||||
| SUBLESSEE: | ||||||
| Xylem Inc. | ||||||
| By: Name: |
/s/ Frank R. Jimenez
|
|||||
| Title: | Vice President & General Counsel | |||||
IN WITNESS WHEREOF, this Sublease has been executed as of the day and year first above written.
| SUBLESSOR: | ||||||
| Xylem Water Solutions India Pvt. LTD. | ||||||
| By: Name: |
/s/ Tangellapalli Venugopalakrishna
|
|||||
| Title: | Director Finance | |||||
| SUBLESSEE: | ||||||
| ITT Corporation India PVT. LTD | ||||||
| By: Name: |
/s/ N. Chandrashekhar
|
|||||
| Title: | Head Finance — ITTCO India | |||||
IN WITNESS WHEREOF, this Sublease has been executed as of the day and year first above written.
| SUBLESSOR: | ||||||
| Xylem Nanjing | ||||||
| By: Name: |
/s/ Harald Rach
|
|||||
| Title: | General Manager Nanjing Xylem | |||||
| SUBLESSEE: | ||||||
| ITT (China) Investment Company Limited (IP China) | ||||||
| By: Name: |
/s/ Glen McClure
|
|||||
| Title: | Director Business Development IP China | |||||
SCHEDULE I
EXHIBIT S
MATERIAL TERMS OF EACH SUBLEASE
See Attached
SCHEDULE I
| Corresponding | ||||||||
| Material | Sublessor | Sublessee | ||||||
| Terms Exhibit | Building/Premises | Landlord | (TSA Provider) | (TSA Receiver) | ||||
S-1
|
Savli Plant-Vadodara | Today’s Petrotech Ltd | ITT Corporation India PVT. LTD. | Xylem Water Solutions India Pvt Ltd. |
||||
S-2
|
Lot B, of the agricultural and industrial area la Chimba at Antofagasta, described as Lot Number 252 of the year 1996, of the State Real Estate Record Office of Antofagasta. Mrs. Vilma Francisca Ramírez Cuevas acquired the property from Mrs. Magaly del R . Cortes Ossandon through a purchase agreement shown at the office of the Public Notary from Antofagasta of Mr. Luis H. Chávez Zambrano dated June 24, 1996. The property is registered in page 3.406 under number 4.674 of the Real Estate Records kept at the State Records of Antofagasta in the year 1997 Acantitita N° 597 — B,Antofagasta, Chile | Vilma Francisca Ramirez Cuevas Industrial Compania Limitada |
ITT Fluid Technology S.A. | ITT Water and Wastewater Chile S.A. | ||||
S-3
|
Av. Washington # 3701, Edificio 8 Parque Industrial las Americas C.P. 31114 Chihuahua, Chih. Mexico 31200 | Grupo American Industries Ave. Washington #3701 Edificio. 18 Parque Industrial las Americas, Chihuahua, Chih. Mexico 31200 | Flow Control LLC | Aerospace Controls LLC |
| Corresponding | ||||||||
| Material | Sublessor | Sublessee | ||||||
| Terms Exhibit | Building/Premises | Landlord | (TSA Provider) | (TSA Receiver) | ||||
S4
|
1133 Westchester Avenue, First Floor, White Plains, New York 10604 |
1133-399 Westchester Avenue, LLC and and 1133-300 Westchester Avenue, LLC. | ITT Corporation | Xylem Inc. | ||||
S-5
|
New Delhi Sales Office |
Narayan Prasad Sharma & Kailash Chand Sharma |
Xylem Water Solutions India Pvt. LTD. | ITT Corporation India PVT. LTD. | ||||
S-6
|
Nanjing Warehouse Space |
Xylem Nanjing | ITT (China) Investment Company Limited (IP China) |
2
EXHIBIT S-1
Building
|
Savli Plant-Vadodara | |
| Plot no 731, GIDC Savli, Manjusar-Savli GIDC, Vadodara — 391770 | ||
Landlord
|
Todays Petrotech Limited | |
Sub Lessor
|
ITT Corporation India Pvt. LTD | |
Sub Lessee
|
Xylem Water Solutions India Pvt Ltd. | |
Premises
|
375,000 sq. ft. including offices, shed and common area | |
Sublease Premises (square feet)
|
Agreed to portion of the 375,000 sq. ft. including offices, shed and common area will be shared | |
Term
|
Sublessee shall have a minimum term commencing on October 31, 2011 (the “Commencement Date”) through November 30, 2011 (“Minimum Term”) which may be extended upon 15 days prior written notice to Sublessor through March 31, 2012 | |
| Rent is due by day 5 of each calendar month. Sublessee’s obligation to pay rent shall commence on the Commencement Date. | ||
Rental Payments
|
Base rent: Cost plus 2% - 10% handling charge per month | |
Notices
|
Sub Lessor: | |
| Rabi Burman, Director, Sales | ||
| ITT Corporation India Pvt Ltd, Plot No 731, GIDC Savli, Manjusar-Savli | ||
| Rd, Vadodara, India, | ||
| 91 22 678 84 3032 | ||
| Rabindranath.burman@itt.com | ||
| Sublessee: | ||
| Sam Yamdagni, President & Managing Director | ||
| Xylem Water Solutions India Private Limited | ||
| Plot No. 731, GIDC Savli, Manjusar – Savli Road, Vadodara — 391770 | ||
| 91 22 678 43 080 | ||
Services to be
provided by Sub Lessor
|
Common Area, Plant and Office Space to be utilized by Sub Lessee for operations, functional management and space for employees and meetings. | |
| The Base rent covers the following items: |
3
a. Lease |
||
b. Security |
||
c. Canteen |
||
d. Horticulture |
||
e. Water |
||
f. Electricity |
||
g. Housekeeping |
||
h. Printing & Stationery |
||
i. Pantry |
||
j. Telephone |
||
k. Water |
||
l. DG Set |
||
m. Insurance |
||
Special Provisions
|
Any additional investment required for capital improvements (building, furniture, computers, and equipment) during the period of the TSA by Sub Lessee Limited shall need to be paid by Sub Lessee. Installation of capital equipment requires ITT Corporation India Private Limited approval in advance. | |
| Capital expenditures and related expenses that are incurred by Sub Lessor to prepare facility for Sub Lessee occupancy and usage of production facility under the terms of this TSA, prior to the commencement date of the TSA, will be paid for by Sub Lessor and either expensed or capitalized and the related depreciation or amortization is considered to be a part of the Base Rent as shown in this TSA | ||
| Sub Lessee will be required to provide and pay for all support and services required to move out of the facility at the end of the lease term. If Sub Lessee requires contractors to assist them in moving out of the facility, Sub Lessee agrees to provide landlord with proof of adequate contractor insurance coverage prior to contractor entering into the facility. | ||
| Sub Lessee agrees to remove all of their personal property from the Sub Lessor’s premises at the end of the lease term. Sub Lessee must return rented space to pre move in condition, with the exception of the offices, which should be left in an “as is” condition. | ||
| Sub Lessee will be required to provide and pay for all support and services required to move into a new facility at the end of the lease term. | ||
| Sub Lessor will provide Sub Lessee with sufficient Seating & parking spaces in the parking lot. | ||
| Sub Lessee agrees that all cabling and connection equipment that is used |
4
| to attached Sub Lessee’s PC’s to the IT infrastructure will remain the property of the Sub Lessor and will not be removed by the Sub Lessee at the end of the TSA. | ||
| Fixed assets on the books of the respective parties as of the date of the ITT separation will remain the property of the respective parties during and at the end of the TSA term. | ||
| Sub Lessee shall have the reasonable right to use, and Sub Lessor shall at all times have exclusive control of, and operate and maintain, the Common Areas including the cafeteria in the manner Sub Lessor may reasonably determine to be appropriate. | ||
| Assignment of this agreement requires Sub Lessor’s approval in writing | ||
Local Law Provisions
|
Indian Contract Act, 1872 |
5
6
EXHIBIT S-2
Building
|
Lot B, of the agricultural and industrial area la Chimba at Antofagasta, described as Lot Number 252 of the year 1996, of the State Real Estate Record Office of Antofagasta. Mrs. Vilma Francisca Ramírez Cuevas acquired the property from Mrs. Magaly del R . Cortes Ossandon through a purchase agreement shown at the office of the Public Notary from Antofagasta of Mr. Luis H. Chávez Zambrano dated June 24, 1996. The property is registered in page 3.406 under number 4.674 of the Real Estate Records kept at the State Records of Antofagasta in the year 1997 | |
| Acantitita N° 597 – B | ||
| Antofagasta, Chile | ||
Prime Lease (as
amended)
|
Leasing Contract dated Nov 1, 2002 | |
Landlord
|
Vilma Francisca Ramirez Cuevas Industrial Compania Limitada | |
Sub Lessor
|
ITT Fluid Technology S.A. | |
Sub Lessee
|
ITT Water and Wastewater Chile S.A. | |
Premises (square
feet)
|
2,776.95 Sq Meters | |
Subleased Premises
(square feet)
|
15 sq meters (office space) and 125 sq meters (warehouse space, as depicted on the floor
plan attached hereto. Permitted uses – general office, warehouse storage, packing, equipment distribution, shipping & pump assembly |
|
Term & Option
|
3 months — Commencing on October 31, 2011 (the “Commencement Date”) | |
| Sub Lessee will have the option to renew at 1.15 times base rent as noted below for an additional 3 months, if written notice is provided to the Sub Lessor 60 days prior to the termination of this agreement. Sub Lessee will have the option to terminate this agreement at any time with 1 month advance written notice to the Sub Lessor | ||
| Sublessee’s obligation to pay rent shall commence on the Commencement Date. | ||
Base Rent
|
Total Base Rent will be Cost plus 2% - 10% per month, payable in Chilean Pesos. The Base Rent includes a charge for other building related services 5.8% of space rent of Cost plus 2% - 10% or Cost plus 2% - 10% per month. The UF exchange rate to be used to convert invoices from UF to Chilean Pesos will be the |
7
| rate as published in the newspaper El Mercurio on the invoice date. IVA taxes of 19% will be charged to sub lessee on each invoice. Sublessee’s obligation to pay rent hereunder shall commence on the Commencement Date. | ||
Sublessee’s Security Deposit |
Sub Lessor acknowledges that sub lessee has previously provided sub lessor with a one month security deposit of Cost plus 2% - 10%, which will be returned within 30 days of the termination of this agreement, provided the sub lessee complies with the Special Provisions clauses b, c, f, and g of this agreement that relate to moving out of the facility | |
Notices
|
Sub Lessor – Miguel Otarola Bawdehn, | |
| Director, GM Latin America, Camino de la Colina 1448 Parque | ||
| Industrial, El Rosal, Huechuraba, | ||
| Santiago Chile, | ||
| 562-544-7011, | ||
| miguel.otarola@itt.com | ||
| Sub Lessee – Javier Canala | ||
| Alcalde Guzman 1480 | ||
| Quilicura, Santiago Chile | ||
| javier.canala@xyleminc.com | ||
Rent Payments
|
a. Unless otherwise directed by Sub Lessor in writing, all Rent payments shall be made to
Sub Lessor by bank wire transfer to a Sub Lessor designated bank in Chile. Rent payments are
to be made monthly in advance upon presentation of invoice to the Sub Lessee.
1st rent payment is due within 5 days after Commencement Date. . Subsequent rent
payments are due every 30 days. It is Sub Lessee’s full responsibility to pay rent on a
timely basis. |
|
b. Payments over 10 days late will be charged interest at a rate of 10% per annum |
||
Services to be
provided by Sub
Lessor as a part of
the monthly Base
Rent
|
Building maintenance, fire protection, building security, janitorial, pest control, utilities, minimal kitchen services, building insurance, real property taxes, grounds maintenance, internet access for 2 sub lessees employees, building reception service, and incoming mail distribution | |
Special Provisions
|
a. Sub Lessee will be required to provide, install, and pay for any capital improvements
(building, furniture, computers, and equipment) required during the term of the agreement.
Installation of capital equipment requires Sub Lessor approval in advance. |
|
b. Sub Lessee will be required to provide and pay for all support and services required to
move out of the facility at the end of the lease term. If Sub Lessee requires contractors to
assist them in moving |
8
out of the facility, Sub Lessee agrees to provide Sub Lessor with
proof of adequate contractor insurance coverage prior to contractor entering into the
facility. |
||
c. Sub Lessee agrees to remove all of their personal property (including all inventories)
from the Premises at the end of the lease term. Sub Lessee must return rented space to pre
move in condition, with the exception of the offices, which should be left in an “as is”
condition. This includes phones purchased directly by the Sub Lessee, but excludes any
phones provided by the Sub Lessor. |
||
d. Sub Lessee will be required to provide and pay for all support and services required to
move into a new facility at the end of the lease term. |
||
e. Sub Lessee agrees to park its light trucks on the public street and will not park these
vehicles on the facility grounds |
||
f. Sub Lessee agrees that all cabling that is used to attached Sub Lessee’s PC’s to the IT
infrastructure will remain the property of the Sub Lessor and will not be removed by the Sub
Lessee at the end of the lease term. |
||
g. All PC connection equipment will be designated as the property of the Sub Lessor and will
not be removed by the Sub Lessee at the end of the term of this agreement |
||
h. Sub Lessee agrees to maintain it’s PC’s at its own cost. Sub Lessor will not provide PC
maintenance services to Sub Lessee during the term of this agreement. |
||
i. Fixed assets on the books of the Sub Lessor as of the Commencement date will remain the
property of the Sub Lessor during and at the end of the lease term. This includes but is not
limited to the 5 ton bridge crane and the central telephone switching device located at the
facility |
||
j. Fixed assets on the books of the Sub Lessee as of the date of the ITT separation will
remain the property of the Sub Lessee during and at the end of the lease term. This includes
but is not limited to the warehouse container, warehouse racking, and furniture located in
the warehouse container as well as furniture used in the office area by sub lessee’s
employees, and the cell phones used by sub lessee’s employees |
||
k. Minimal kitchen services are defined as coffee, hot water, sugar and other condiments for
coffee only. |
||
l. Sub Lessee agrees to pay all personal property taxes associated with Sub Lessee’s
personal property located on the Premises. If Sub Lessor is required to pay personal
property taxes on Sub Lessee’s personal property, Sub Lessee agrees to immediately reimburse
Sub Lessor. |
||
m. Sub Lessee will not be allowed to access the Sub Lessor computer network. Sub Lessee’s
employees will be allowed to |
9
access Sub Lessee’s own computer network and the internet via
wireless cell phones and USB memory stick. |
||
n. Sub Lessee shall have the reasonable right to use, and Sub Lessor shall at all times have
exclusive control of, and operate and maintain, the Common Areas including, but not limited
to the kitchen in the manner Sub Lessor may reasonably determine to be appropriate. |
||
o. Sub Lessee’s employees will not be allowed access to any Sub Lessor manufacturing areas.
Sub Lessee’s employees will be required to show proper identification to enter the facility
as determined by the Sub Lessor. |
||
p. Sub Lessee agrees to provide the following insurance coverage for the duration of this
agreement |
||
• Civil Responsible Coverage US $2.000.000.- (against third parties) |
||
• Fire and Earthquake Coverage US $151.000 (physical assets), US $121.000 (equipment),
US $30.000 (inventory) |
||
• Life and accident insurance to each of our employees. UF 1000 (per person).
Equivalent to US $46.000 per person. |
||
q. Sub Lessee has no right to sublease their space. |
||
r. Sub Lessee agrees not to put up any external or internal signs during the term of the
agreement. Sub Lessee will be invoiced by Sub Lessor for the actual cost of long distance
calls made by Sub Lessee employees. Invoices will be sent monthly and Sub Lessor will
include as backup to the invoice an itemized list of the long distance phone calls made by
Sub Lessee’s employees as per the phone company records and phone company invoice to the Sub
Lessor. Payment will be made by the Sub Lessee via bank wire transfer no later than 30 days
after the invoice date (See Rent Payments — item a — for bank account details. |
||
s. Sub Lessee will not have the right to transfer additional assembly lines or any other
employees or activities into the facility |
||
t. The Sub Lessor shall not be responsible to reimburse sub lessee in the event that sub
lessee’s property is stolen as a result of a robbery that may take place at the property nor
for damages that the sub lessee’s property may suffer as a result of fire, floods, breakage
of sewer, humidity or heat effects and all situations of similar nature. |
||
Local Law Provisions
|
None | |
Governing Law
|
Antofagasta, Chile |
10
11
EXHIBIT S-3
Building
|
Calle Washington # 3701 Building 8 Interior Ave de las Americas, Parque Industrial las Americas, Chihuahua, Chihuahua Mexico 31200 |
|
Prime Lease (as amended)
|
Lease contract dated Oct 7, 2005 as amended on March 14, 2006 | |
Landlord
|
Grupo American Industries | |
Sub Lessor
|
Flow Control LLC | |
Sub Lessee
|
Aerospace Controls LLC | |
Premises (square feet)
|
109,606 Sq Ft | |
Subleased Premises (square feet) |
16,600 square feet, as depicted on the floor plan attached hereto. Permitted uses — general office, warehouse and storage, quality labs, receiving and shipping, computer servers, machining, fabrication, and assembly. | |
Term & Option
|
6 months — Commencing on October 31, 2011, (the “Commencement Date”) | |
| Sub lessee will have the option to renew at 1.15 times base rent as noted below for an additional 3 months, if written notice is provided to the Sub Lessor 60 days prior to the termination of this agreement. Sub lessee will have the option to terminate this agreement at any time during, or after the 1st 6 months with 1 months advance written notice to the Sublessor. Sublessee’s obligation to pay rent hereunder shall commence on the Commencement Date. | ||
Base Rent
|
Cost plus 2% - 10% per month fixed charge payable in US Dollars | |
Notices
|
Sub Lessor — Dan Kelly | |
| 1133 Westchester Avenue, Suite 2000 | ||
| White Plains, NY 10605 | ||
| 914- 323- 5994, dan.kelly@xyleminc.com |
||
| Sub Lessee — Alan Gilden | ||
| Director, Integrated Supply Chain | ||
| 28150 Industry Drive | ||
| Valencia, Ca. 91355 | ||
| Alan.Gilden@itt.com |
12
Base Rent Payments
|
a. Unless otherwise directed by Sub Lessor in writing, all Base
Rent payments shall be made to Sub Lessor in US Dollars at the
address identified in the above “Notice” provision. |
|
b. Base Rent payments are to be made monthly in advance upon
presentation of invoice to the Sub lessee. 1st base
rent payment is due within 5 days after Commencement Date.
Subsequent base rent payments are due every 30 days. It is sub
lessee’s full responsibility to pay base rent on a timely basis. |
||
c. Payments over 10 days late will be charged interest at a rate
of 10% per annum |
||
Services to be provided
by Landlord as a part of
the monthly base rent
|
Building maintenance, fire protection, pest control, sub lessee parking, building insurance, real property taxes, grounds maintenance, mail delivery and receptionist services, | |
Facility Pass Through
Expenses — Additional
Rent Changes
|
a. All utilities, cafeteria, janitorial, security, waste disposal,
telephone service, cell service T1 internet line, and tutlar
“paging system” will be passed through to sub lessee at sub
lessor’s cost with no mark up over and above amount charged by the
landlord to the sub lessor. |
|
b. Sub lessor will invoice sub lessee once a month immediately
following receipt of invoices from the landlord and obtaining
invoice approval from both the sub lessor and sub lesse Mexico
General Mangers. The monthly invoice from the sub lessor will be
accompanied by all of the landlord’s invoices as substantiation
for the invoice. All invoices will be payable in US Dollars. |
||
c. Payment terms are net 30 days from sub lessor invoice date |
||
d. Payments over 10 days late will be charged interest at a rate
of 10% per annum |
||
e. There will be no changes to proration percentages used by the
landlord to allocate facility expenses between the sub lessor and
sub lessee during term of this agreement. The proration
percentages used by the landlord immediately prior to the
Commencement Date will be used for the term of this agreement. |
||
f. The sub lessee’s General Manager agrees that invoice approval
must be completed within 5 days of receipt of the invoices from
the sub lessor or reasons for non approval disclosed to the sub
lessor |
||
Special Provisions
|
a) Sub lessee will be required to provide, install, and pay
for any capital improvements (building, furniture, computers, and
equipment) required during the term of the agreement. Installation
of capital equipment requires sub lessor approval in advance. |
|
b) Sub lessee agrees to provide at its own expense an entrance to
the facility which will be completed before the Commencement Date.
Sub lessee’s employees will only be allowed to enter the facility
through |
13
this new entrance. Sub lessee agrees that it will hire
additional security services through the landlord in connection
with safeguarding this new entrance, and that these expenses will
be paid for by the sub lessee |
||
c) Sub lessee will be required to provide and pay for all support
and services required to move out of the facility at the end of
the lease term. If sub lessee requires contractors to assist them
in moving out of the facility, sub lessee agrees to provide sub
lessor with proof of adequate contractor insurance coverage prior
to contractor entering into the facility. |
||
d) Sub lessee agrees to remove all of their personal property from
the Premises at the end of the lease term. Sub lessee must return
rented space to pre move in condition, with the exception of
walls, ducting, lighting, other plumbing, and the offices, which
should be left in an “as is” condition. |
||
e) Sub lessee will be required to provide and pay for all support
and services required to move into a new facility at the end of
the lease term. |
||
f) Sub Lessor will provide sub lessee with 6 assigned parking
spaces in the Landlord’s parking lot located on the facility
grounds inside the fence on the south side of the facility. |
||
g) Sub lessee will at its own expense create parking spaces for
any additional required sub lessee vehicles on the east side of
the building. |
||
h) Sub lessee agrees that all cabling that is used to attached Sub
lessee’s PC’s to the IT infrastructure before the Sub lessee’s
Switch will remain the property of the sub lessor and will not be
removed by the sub lessee at the end of the lease term. |
||
i) All PC connection equipment will be designated as the property
of the Sub lessee and will be removed by the Sub lessee at Sub
lessee’s expense at the end of the term of this agreement less
office wiring and the like. |
||
j) Fixed assets on the books of the sub lessor (including the
telephone switch) as of the Commencement date will remain the
property of the sub lessor during and at the end of the lease
term. |
||
k) Fixed assets on the books of the Sub lessee as of the date of
the ITT separation will remain the property of the Sub lessee
during and at the end of the lease term. |
||
l) Sub lessee agrees to provide all IT support necessary to
maintain Sub lessee’s Server Room at its own cost. Upon
termination of this agreement, Sub lessee will provide all
required support at its own cost to shutdown, package and remove
the servers from the Premises. |
||
m) Sub lessee agrees to pay all personal property taxes associated
with Sub lessee’s personal property located on the Premises. If
sub lessor is required to pay personal property taxes on Sub
lessee’s personal property, Sub lessee agrees to immediately
reimburse sub lessor. |
||
n) Sub lessee will not be allowed to access the Flow Control
computer network and vice versa. Sub lessee’s employees will be
allowed to access Sub lessee’s own computer network via wireless
or landline data connections on the Premises. |
||
o) Sub lessee shall have the reasonable right to use, and sub
lessor shall at all times have exclusive control of, and operate
and maintain, the |
14
Common Areas including, but not limited to the
cafeteria in the manner sub lessor may reasonably determine to be
appropriate. |
||
p) Sub lessee’s employees will not be allowed access to any sub
lessor manufacturing areas, except on an escorted basis (examples
— nurse office, cafeteria, purchasing office etc.). Sub lessee’s
employees will be required to show proper identification to enter
the facility as determined by the sub lessor |
||
q) Sub lessee’s minimum General Liability Insurance Policy and
Property insurance shall be Two Million Dollars ($2,000,000) and
must be paid for by sub lessee. |
||
r) Sub lessee has no right to sublease their space. |
||
s) Sub lessee agrees not to put up any external or internal signs
during the term of the agreement, except for signs related to the
production and assembly of Sub lessee’s products, which can be
displayed in Sub lessee’s assembly area. |
||
t) Sub lessor agrees to take down any signs at the facility that
contain the name “ITT” on them at its own expense |
||
u) Sub lessee will have the right to transfer additional
production into the facility, provided that the following
criteria are met; |
||
a. They can be fit into the existing space that is being rented
under the terms of this Lease |
||
b. Advance written approval required by Sublessor, not to be
unreasonably withheld |
||
v) Prior to the Commencement Date, sub lessee will put in the
following at its own expense; |
||
a. Separate employee entrance |
||
b. Fencing required to separate the Sub Lessor and sub lessee
employees and work areas |
||
w) Sub lessor agrees to provide sub lessee assess to sub lessor’s
shipping / receiving dock for truck loading and truck unloading
purposes for the duration of this agreement |
||
Local Law Provisions
|
None | |
Governing Law
|
Chihuahua, Chihuahua, Mexico |
15
16
EXHIBIT S-4
Building
|
1133 Westchester Avenue, White Plains, New York 10604 | |
Prime Lease (as amended)
|
Lease Agreement, dated on or about October 31, 2011, between ITT Corporation and 1133-399 Westchester Avenue, LLC, effective October 31, 2011 | |
Landlord
|
1133-399 Westchester Avenue, LLC and and 1133-300 Westchester Avenue, LLC. |
|
Sub Lessor
|
ITT Corporation | |
Sub Lessee
|
Xylem Inc. | |
Premises
|
The space leased by ITT Corporation on or prior to the Commencement Date at the Building, including any additional storage space | |
Subleased Premises (square feet) |
7114 rentable square feet, as depicted on the floor plan attached hereto. Tenant and Subtenant shall equally share and equally have the right to use the Subleased Premises in a manner similar to the way ITT Corporation utilized the space during the 12 months prior to October 31, 2011. |
|
Term & Option
|
Term: Commencing on the Distribution Date (the “Commencement Date”) and ending on December 31, 2013. | |
Base Rent
|
Cost plus 2% - 10% per month during 2011 | |
| Cost plus 2% - 10% per month during 2012 | ||
| Cost plus 2% - 10% per month during the period January 1, 2013 through and including July 31, 2013 | ||
| Cost plus 2% - 10% per month from August 1, 2013 through the end of the Term | ||
Sublessee’s
Proportionate Share of
CAM Charges
|
Subtenant will pay 50% of the maintenance, cleaning, heating, telephone, electrical and other utility costs, fire protection, plant service, holiday decorations, and shared mechanical systems for the Subleased Premises, otherwise known as common area maintenance, plus 50% of the agreed to leasehold improvements (“CAM”) charges for the Subleased Premises. The parties understand that CAM charges may be incurred from multiple parties including Landlord, Sublessor or other third parties. The Base Rent amount set forth above includes a 2% increase above actual costs for the calendar years 2012 and 2013. Tenant shall provide Subtenant with reasonable documentation supporting the CAM charges. |
17
Notices
|
Sub Lessor: | |
| ITT Corporation | ||
| 1133 Westchester Ave | ||
| Suite 3000 | ||
| White Plains, NY 10604 | ||
| Attention: General Counsel | ||
| Sub Lessee: | ||
| Xylem Inc. | ||
| 1133 Westchester Ave | ||
| Suite 2000 | ||
| White Plains, NY 10604 | ||
| Attention: General Counsel | ||
| Day to Day Contact Personnel | ||
| Sub Lessor Representative: | ||
| ITT Corporation | ||
| Tom McArdle (914) 641-2075 | ||
| Tom.McArdle@itt.com | ||
| Sub Lessee Representative: | ||
| Xylem Inc. | ||
| Carolyn Clark (914) 323-5858 | ||
| Carolyn.Clark@Xyleminc.com | ||
Rent Payments
|
1) Unless otherwise directed by Landlord in writing, all Rent payments
and payments of CAM charges shall be made to Tenant at the address
identified in the above “Notice” provision. |
|
2) Rent payments are to be made monthly in advance.1st rent
payment is due within 5 days of the Commencement Date. Subsequent rent
payments are due every 30 days. It is Subtenant’s full responsibility to
pay rent on a timely basis. Subtenant shall pay the CAM charges within
30 days of the date of an invoice (provided by Tenant) describing such
charges. |
||
3) Payments over 10 days late will be charged interest at a rate of 10%
per annum. |
||
Services to be provided
by Tenant as a part of
the monthly base rent
|
1) Tenant will maintain the Subleased Premises in a manner similar to the
way it was maintained during the twelve months prior to October 31, 2011,
including but not limited to contracting for and providing CAM services. |
|
2) Tenant will provide security access to all perimeter doors and
coordinate with the Subtenant Representative, identified above in |
18
connection with access to the Premises and/or Sublease Premises during
business and non-business days. |
||
3) Subtenant and Tenant agree that the location and use of the reception
area of each company on the first floor of the Subleased Premises shall
be as depicted on Annex A. |
||
4) Subtenant and Tenant agree that Deloitte & Touche (“D&T”) can share
the space indicated on Annex A. In the event, either Tenant or Subtenant
changes it auditors, the space currently configured for D&T shall be
modified to allow for the separation of the auditors of the Tenant and
Subtenant into equal space with equal access. The party to this Sublease
that changes their auditors shall be responsible for all costs associated
with the modification of the Sublease Premises. |
||
5) Subtenant shall be permitted to brand a portion of the lobby as agreed
to with the Tenant and place a monument within Tenant’s outdoor space in
accordance with the terms of the Prime Lease. |
||
6) Tenant and Subtenant shall cooperate and work together in good faith
to allow each other to transition into their own space at the Premises,
shall make tapes from the security cameras available in the event of a
investigation, shall promptly return mail or other deliveries
inadvertently provided to the other and shall advise the other party of
activities or information impacting the Premises they reasonably believe
the other party would want to know, provided, however, that such
activities shall not unduly burden or interfere with ether parties
business and operations. |
||
Special Provisions
|
1) Within 15 days after this TSA has ended Subtenant will remove, at its
cost, its logo and any and all improvements or modifications made for the
benefit of the Subtenant to the Subleased Premises after September 15,
2011. |
|
2) Subtenant will be required to provide, install, and pay for any
capital improvements (building, furniture, computers, and equipment)
required by it during the term of the agreement. Installation of capital
equipment may require Landlord approval in advance. |
||
3) Subtenant will be required to provide and pay for all support and
services required to move out of the Subleased Premises at the |
19
end of the Term. If Subtenant requires contractors to assist them in making capital
improvements or moving out of the Subleased Premises, Subtenant agrees to
provide Tenant with proof of adequate contractor insurance coverage prior
to contractor entering into the facility. |
||
4) Subtenant agrees to remove all of their personal property from the
Sublease Premises at the end of the Term. This includes phones purchased
directly by the Subtenant, but excludes any phones provided by the
Landlord or Tenant. Subtenant will restore the Subleased Premises to the
condition it was in prior to September 15, 2011 with respect to actions
it has taken that impact the Subleased Premises after that date. |
||
5) Subtenant will be required to provide and pay for all support and
services required to move into a new facility at the end of the Term. |
||
6) Subtenant agrees that all cabling that is used to attached Subtenant’s
PC’s to the IT infrastructure will remain the property of the Tenant and
will not be removed by the Subtenant at the end of the Term. |
||
7) Fixed assets currently on the books of the Tenant as of Commencement
Date will remain the property of the Tenant during and at the end of the
Term. |
||
8) Fixed assets currently on the books of the Subtenant as of the
Commencement Date will remain the property of the Subtenant during and at
the end of the Term. |
||
9) The Subtenant’s IT, maintenance and other appropriate employees will
be allowed access, upon reasonable notice, to Tenant’s controlled areas
at 1133 Westchester Avenue, White Plains, NY, including the Subleased
Premises, for normal business purposes. |
||
10) The Tenant’s IT, maintenance and other appropriate employees will be
allowed access, upon reasonable notice, to Subtenant’s controlled areas
at 1133 Westchester Avenue, White Plains, NY, for normal business
purposes Subtenant’s minimum General Liability Insurance Policy and Property insurance shall be Two Million Dollars ($2,000,000) and must be paid for by Subtenant. |
20
11) Subtenant will be permitted to use during the Term one of Tenant’s
reserved spots in the back of the building. |
||
12) Subtenant will install a shut-off valve for the glycol cooling system
at the end of the Term. |
||
Local Law Provisions
|
Not applicable | |
Governing Law
|
State of New York |
21
EXHIBIT S-5
Building
|
New Delhi India Sales Office | |
| H-20, Bali Nagar, New Delhi-1100015 | ||
Prime Lease (as amended) |
||
Landlord
|
Mr. Narayan Prasad Sharma & Kailash Chand Sharma | |
Sub Lessor
|
Xylem Water Solutions India Private Limited | |
Sub Lessee
|
ITT Corporation India PVT. LTD | |
Premises (square feet) |
||
Subleased Premises (square feet) |
Commercial office space of ground floor having super covered area appr. 900 sq. ft. | |
Term
|
Sublessee shall have a minimum term commencing on October 31, 2011 (the “Commencement Date”) through December 31, 2011 (“Minimum Term”) which may be extended upon 30 days prior written notice to Sublessor through December 31, 2012 Sublessee’s obligation to pay rent shall commence on the Commencement Date. | |
Monthly Rent
|
Base Rent : Cost plus 2% - 10% | |
Notices
|
Sub Lessor: | |
| Sam Yamdagni, President & Managing Director | ||
| Xylem Water Solutions India Private Limited | ||
| Plot No. 731, GIDC Savli, Manjusar — Savli Road, Vadodara — 391770 | ||
| 91 22 678 43 080 | ||
| Sam.yamdagni@xyleminc.com | ||
| Sub Lessee: | ||
| Rabi Burman, Director, Sales | ||
| ITT Corporation India Pvt Ltd, Plot No 731, GIDC Savli, Manjusar-Savli Rd, Vadodara, India, |
||
| 91 22 678 84 3032 | ||
| Rabindranath.burman@itt.com | ||
Rent Payments
|
Rent payments are to be paid in advance within 5 days after the commencement of the lease (its pro rata share for the first month) and within 5 days of the beginning of every other month. |
23
| Unless otherwise directed by Sublessor in writing, all Rent payments shall be made to Sublessor at the address identified in the above “Notice” provision. | ||||||||
| Services to be provided by Sublessor | Common Office Area to be utilized by Sublessor and Sublessee. Permitted Common Expenses covered include the following (in quantities and quality as provided during the 12 months period prior to October 1, 2011) : | |||||||
| a. | Electricity | |||||||
| b. | Housekeeping | |||||||
| c. | Printing | |||||||
| d. | Pantry | |||||||
| e. | Telephone | |||||||
| f. | Internet | |||||||
Special Provisions
|
1. | Sublessee will provide, install, and pay for any capital improvements (building, furniture, computers, and equipment) required by it during the term of the agreement. Installation of capital equipment requires landlord and Sublessor’s approval in advance. | ||||||
| 2. | Sublessee will provide and pay for all support and services required to move out of the facility at the end of the lease term. If Sublessee requires contractors to assist them in moving out of the facility, Sublessee agrees to provide landlord with proof of adequate contractor insurance coverage prior to contractor entering into the facility. | |||||||
| 3. | Sublessor will provide Sublessee with sufficient parking spaces in the parking lot. Sublessor will provide Sub Lessee with 25% of the parking spaces in the parking lot allotted to Sublessor. Sub Lessee agrees that all cabling and connection equipment that is used to attached tenant’s PC’s to the IT infrastructure will remain the property of the landlord and will not be removed by the Sub Lessee at the end of the lease term. | |||||||
| 4. | Fixed assets on the books of the Sub Lessor as of the date of the ITT separation will remain the property of the Sub Lessor during and at the end of the lease term. | |||||||
| 5. | Fixed assets on the books of the Sub Lessee as of the date of the ITT separation will remain the property of the Sub Leesse during and at the end of lease period | |||||||
| 6. | As a part of Sublesee’s move out of the facility at the expiration | |||||||
24
| of this agreement, Sublessor’s IT department will shutdown Sublessee’s servers and make a back up copy of all the data that is on these servers immediately prior to the shutdown of the servers. | ||||||||
| 7. | Sublessee shall have the reasonable right to use, and Sub Lessor shall at all times have exclusive control of, and operate and maintain, the Common Areas including the cafeteria in the manner Sub Lessor may reasonably determine to be appropriate. | |||||||
| 8. | Sub Lessee has no right to sublease their space. | |||||||
| 9. | Assignment of this agreement requires Sub Lessor approval in writing. | |||||||
| Local Law Provisions | Indian Contract Act, 1872 | |||||||
25
EXHIBIT S-6
Building
|
ITT Nanjing Co., Ltd. (Xylem Nanjing) | |
| Longyang Road, Luhe Economic Development Area, Luhe District, Nanjing, Jiangsu Province, China | ||
Prime Lease |
||
Landlord |
||
Sub Lessor
|
Xylem Nanjing | |
Sub Lessee
|
ITT (China) Investment Company Limited (IP China) | |
Premises (square feet)
|
10,000+ sq. meters | |
Subleased Premises (square feet) |
Plant Warehouse space to store pre-packed pallets, tools, machines. Space requirement not to exceed 500 square meters. | |
Term
|
Sublessee shall have a minimum term commencing on October 31, 2011 (the “Commencement Date”) through December 31, 2011 (“Minimum Term”) which may be extended upon 30 days prior written notice to Sub Lessor through February 29, 2012. Sublessee’s obligation to pay rent shall commence on the Commencement Date. | |
| Under no circumstances this TSA can be extended beyond Feb 29, 2012 | ||
Monthly Rent
|
Base Rent (through Dec 31, 2011): | |
| Cost plus 2% - 10%/month + applicable taxes | ||
| Base Rent (Jan 1~ Feb 29, 2012): | ||
| Cost plus 2% - 10%/month + applicable taxes | ||
Notices
|
Sub Lessor: | |
| Harald Rach, General Manager | ||
| ITT Nanjing Co., Ltd. (Xylem Nanjing) | ||
| Longyang Road, Luhe Economic Development Area, Luhe District, Nanjing, Jiangsu Province, China | ||
| Harald.rach@xyleminc.com | ||
| Sub Lessee: | ||
| Carter Chan, General Manager, IP China | ||
| ITT (China) Investment Company Limited | ||
| 30F Tower A, City Center of Shanghai, 100 Zunyi Road Shanghai 200051 | ||
| Carter.chan@itt.com | ||
Rent Payments
|
Rent payments are to be paid in advance within 5 days after the |
26
| commencement of the lease and within 5 days of the beginning of every other month. | ||||||||
| Unless otherwise directed by Sub Lessor in writing, all Rent payments shall be made in local currency (RMB at the spot exchange rate) to Sublessor at the address identified in the above “Notice” provision. | ||||||||
Services to be
provided by Sub Lessor
|
g. | Strictly warehouse storage space as directed by the Sub Lessor in an area of the plant that does not interfere with day-to-day operations of Xylem Nanjing | ||||||
| h. | A one-time only access to the warehouse space to the Sub lessee to remove the goods from the warehouse upon termination of the TSA. | |||||||
| i. | Sub lessee will not have continued access to the goods while they are in storage. Sub lessee will only be permitted to come-in and out of the facility with appropriate Sub Lessor escort. | |||||||
| j. | Other than at the end of the lease term for the purposes of moving out, any escorted visit to the warehouse area (in cases of emergency) by the Sub lessee will be charged at Cost plus 2% - 10% per visit. | |||||||
Special Provisions
|
10. | Sub lessee will provide all the materials and labor to package and properly store the goods in an area designated by the Sub Lessor . If the material needs to be secured with a fence or locks or any other method, Sub lessee will take full ownership and provide the appropriate means to secure the goods. | ||||||
| 11. | Sub lessee and Sub Lessor will jointly inventory the items at the beginning and at the end of the lease terms. | |||||||
| 12. | Max liability for any unintentional loss or damage to goods: $500. max. | |||||||
| 13. | Sub lessee will provide and pay for all support and services required to move out of the facility at the end of the lease term. If Sub lessee requires contractors to assist them in moving out of the facility, Sub lessee agrees to provide Sub Lessor with proof of adequate contractor insurance coverage prior to contractor entering into the facility. | |||||||
| 14. | Fixed assets on the books of the Sub Lessor as of the date of the ITT separation will remain the property of the Sub Lessor during and at the end of the lease term. | |||||||
| 15. | Fixed assets on the books of the Sub lessee as of the date of the ITT separation will remain the property of the tenant during and at the end of lease period | |||||||
| 16. | Sub Lessee has no right to sublease their space. Assignment of this agreement requires Sub Lessor approval in writing. | |||||||
| Local Law Provisions | The sublease agreement shall be governed by the laws of the People’s Republic of China. | |||||||
27
Exhibit 10.7
FOUR-YEAR COMPETITIVE ADVANCE AND REVOLVING
CREDIT FACILITY AGREEMENT
Dated as of October 25, 2011
among
ITT CORPORATION
THE LENDERS NAMED HEREIN,
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
and
CITIBANK, N.A.,
as Syndication Agent
BARCLAYS BANK PLC
SOCIÉTÉ GÉNÉRALE
THE ROYAL BANK OF SCOTLAND PLC
U.S. BANK NATIONAL ASSOCIATION
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD. and
WELLS FARGO BANK N.A.,
as Documentation Agents
J.P. MORGAN SECURITIES LLC
CITIGROUP GLOBAL MARKETS INC.,
U.S. BANK NATIONAL ASSOCIATION and
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.,
as Lead Arrangers and Joint Bookrunners
TABLE OF CONTENTS
| ARTICLE I DEFINITIONS |
||||
SECTION 1.01. Defined Terms |
1 | |||
SECTION 1.02. Terms Generally |
25 | |||
SECTION 1.03. Accounting Terms; GAAP |
25 | |||
| ARTICLE II THE CREDITS |
||||
SECTION 2.01. Commitments |
26 | |||
SECTION 2.02. Loans |
26 | |||
SECTION 2.03. Competitive Bid Procedure |
28 | |||
SECTION 2.04. Revolving Borrowing Procedure |
30 | |||
SECTION 2.05. Letters of Credit |
31 | |||
SECTION 2.06. Conversion and Continuation of Revolving Loans |
35 | |||
SECTION 2.07. Fees |
36 | |||
SECTION 2.08. Repayment of Loans; Evidence of Debt |
37 | |||
SECTION 2.09. Interest on Loans |
38 | |||
SECTION 2.10. Default Interest |
39 | |||
SECTION 2.11. Alternate Rate of Interest |
39 | |||
SECTION 2.12. Termination, Reduction, Extension and Increase of Commitments |
39 | |||
SECTION 2.13. Prepayment |
41 | |||
SECTION 2.14. Reserve Requirements; Change in Circumstances |
42 | |||
SECTION 2.15. Change in Legality |
43 | |||
SECTION 2.16. Indemnity |
44 | |||
SECTION 2.17. Pro Rata Treatment |
45 | |||
SECTION 2.18. Sharing of Setoffs |
45 | |||
SECTION 2.19. Payments |
46 | |||
SECTION 2.20. Taxes |
46 | |||
SECTION 2.21. Duty to Mitigate; Assignment of Commitments Under Certain Circumstances |
50 | |||
SECTION 2.22. Defaulting Lenders |
51 | |||
| ARTICLE III REPRESENTATIONS AND WARRANTIES |
||||
SECTION 3.01. Organization; Powers |
52 | |||
SECTION 3.02. Authorization |
53 | |||
SECTION 3.03. Enforceability |
53 | |||
SECTION 3.04. Governmental Approvals |
53 | |||
SECTION 3.05. Financial Statements and Projections |
53 | |||
2
SECTION 3.06. Litigation; Compliance with Laws |
54 | |||
SECTION 3.07. Federal Reserve Regulations |
54 | |||
SECTION 3.08. Investment Company Act |
55 | |||
SECTION 3.09. Use of Proceeds |
55 | |||
SECTION 3.10. Full Disclosure; No Material Misstatements |
55 | |||
SECTION 3.11. Taxes |
55 | |||
SECTION 3.12. Employee Pension Benefit Plans |
55 | |||
SECTION 3.13. OFAC |
56 | |||
| ARTICLE IV CONDITIONS OF LENDING |
||||
SECTION 4.01. All Extensions of Credit |
56 | |||
SECTION 4.02. Effective Date |
56 | |||
SECTION 4.03. First Borrowing by Each Borrowing Subsidiary |
59 | |||
| ARTICLE V AFFIRMATIVE COVENANTS |
||||
SECTION 5.01. Existence |
60 | |||
SECTION 5.02. Business and Properties |
60 | |||
SECTION 5.03. Financial Statements, Reports, etc |
60 | |||
SECTION 5.04. Insurance |
61 | |||
SECTION 5.05. Obligations and Taxes |
61 | |||
SECTION 5.06. Litigation and Other Notices |
61 | |||
SECTION 5.07. Maintaining Records; Access to Properties and Inspections |
62 | |||
SECTION 5.08. Use of Proceeds |
62 | |||
SECTION 5.09. Additional Subsidiaries |
62 | |||
SECTION 5.10. Distribution Agreement and Related Agreements |
62 | |||
| ARTICLE VI NEGATIVE COVENANTS |
||||
SECTION 6.01. Priority Indebtedness |
62 | |||
SECTION 6.02. Liens |
63 | |||
SECTION 6.03. Sale and Lease-Back Transactions |
64 | |||
SECTION 6.04. Fundamental Changes |
65 | |||
SECTION 6.05. Restrictive Agreements |
65 | |||
SECTION 6.06. Interest Coverage Ratio |
66 | |||
SECTION 6.07. Leverage Ratio |
66 | |||
| ARTICLE VII EVENTS OF DEFAULT |
||||
3
| ARTICLE VIII THE ADMINISTRATIVE AGENT |
||||
| ARTICLE IX MISCELLANEOUS |
||||
SECTION 9.01. Notices |
71 | |||
SECTION 9.02. Survival of Agreement |
72 | |||
SECTION 9.03. Binding Effect |
72 | |||
SECTION 9.04. Successors and Assigns |
73 | |||
SECTION 9.05. Expenses; Indemnity |
76 | |||
SECTION 9.06. APPLICABLE LAW |
77 | |||
SECTION 9.07. Waivers; Amendment |
77 | |||
SECTION 9.08. Entire Agreement |
78 | |||
SECTION 9.09. Severability |
78 | |||
SECTION 9.10. Counterparts |
78 | |||
SECTION 9.11. Headings |
78 | |||
SECTION 9.12. Right of Setoff |
78 | |||
SECTION 9.13. JURISDICTION; CONSENT TO SERVICE OF PROCESS |
79 | |||
SECTION 9.14. WAIVER OF JURY TRIAL |
79 | |||
SECTION 9.15. Borrowing Subsidiaries |
80 | |||
SECTION 9.16. Conversion of Currencies |
80 | |||
SECTION 9.17. USA PATRIOT Act |
81 | |||
SECTION 9.18. No Fiduciary Relationship |
81 | |||
SECTION 9.19. Non-Public Information |
81 | |||
4
EXHIBITS |
||
Exhibit A-1
|
Form of Competitive Bid Request | |
Exhibit A-2
|
Form of Notice of Competitive Bid Request | |
Exhibit A-3
|
Form of Competitive Bid | |
Exhibit A-4
|
Form of Competitive Bid Accept/Reject Letter | |
Exhibit A-5
|
Form of Revolving Borrowing Request | |
Exhibit B
|
Form of Assignment and Assumption | |
Exhibit C-1
|
Form of Opinion of Dewey & LeBoeuf, Counsel for ITT Corporation | |
Exhibit C-2
|
Form of Opinion of Burt Fealing, General Counsel and Secretary of ITT Corporation | |
Exhibit D-1
|
Form of Borrowing Subsidiary Agreement | |
Exhibit D-2
|
Form of Borrowing Subsidiary Termination | |
Exhibit E
|
Form of Issuing Bank Agreement | |
Exhibit F
|
Form of Note | |
Exhibit G
|
Form of US Tax Certificate | |
Exhibit H
|
Form of Guarantee Agreement | |
SCHEDULES |
||
Schedule 1.01
|
Existing Letters of Credit | |
Schedule 2.01
|
Commitments | |
Schedule 6.01
|
Existing Indebtedness | |
Schedule 6.02
|
Existing Liens | |
Schedule 6.05
|
Existing Restrictive Agreements |
2
FOUR-YEAR COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY AGREEMENT
(as it may be amended, supplemented or otherwise modified, the
“Agreement”) dated as of October 25, 2011, among ITT CORPORATION, an
Indiana corporation (the “Company”); each Borrowing Subsidiary party
hereto; the lenders listed in Schedule 2.01 (together with their
successors and permitted assigns, the “Lenders”); and JPMORGAN CHASE BANK,
N.A., as administrative agent for the Lenders (in such capacity, the
“Administrative Agent”).
The Lenders have been requested to extend credit to the Borrowers (such term and each other
capitalized term used but not otherwise defined herein having the meaning assigned to it in Article
I) to enable the Borrowers (a) to borrow on a standby revolving credit basis on and after the date
hereof and at any time and from time to time prior to the Maturity Date a principal amount not in
excess of $500,000,000 at any time outstanding and (b) to request the issuance of Letters of Credit
for the accounts of the Borrowers in a face amount not in excess of $100,000,000 at any time
outstanding. The Lenders have also been requested to provide procedures pursuant to which the
Borrowers may invite the Lenders to bid on an uncommitted basis on short-term borrowings by the
Borrowers. The proceeds of such borrowings are to be used for working capital and other general
corporate purposes (including, without limitation, commercial paper backup) and to repay any
amounts outstanding under the Existing Credit Agreement. The Letters of Credit shall support
payment obligations incurred in the ordinary course of business by the Borrowers. The Lenders are
willing to extend credit on the terms and subject to the conditions herein set forth.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the following terms shall have the
meanings specified below:
“ABR Borrowing” shall mean a Revolving Borrowing comprised of ABR Loans.
“ABR Loan” shall mean any Revolving Loan bearing interest at a rate determined by reference to
the Alternate Base Rate in accordance with the provisions of Article II.
“Accession Agreement” shall have the meaning assigned to such term in Section 2.12(e).
“Administrative Fees” shall have the meaning assigned to such term in Section 2.07(b).
“Adjusted LIBO Rate” means, with respect to any Eurocurrency Borrowing (including any notional
Eurocurrency Borrowing of one month referred to in the definition of the term “Alternate Base
Rate”) for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the
next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the
Statutory Reserve Rate.
“Administrative Questionnaire” shall mean an Administrative Questionnaire in the form supplied
by the Administrative Agent.
“Affiliate” shall mean, when used with respect to a specified Person, another Person that
directly or indirectly controls or is controlled by or is under common control with the Person
specified.
“Aggregate Credit Exposure” shall mean the aggregate amount of all the Lenders’ Credit
Exposures.
“Agreement Currency” shall have the meaning assigned to such term in Section 9.16(b).
“Alternate Base Rate” shall mean, for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on such
day, (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1% and (c) the Adjusted
LIBO Rate (which, for the avoidance of doubt, shall not include the Applicable Percentage with
respect to Eurocurrency Loans) on such day (or if such day is not a Business Day, the immediately
preceding Business Day) for a deposit in dollars with a maturity of one month plus 1%. For
purposes hereof, “Prime Rate” shall mean the rate of interest per annum publicly announced from
time to time by the Administrative Agent as its prime rate in effect at its principal office in New
York City; each change in the Prime Rate shall be effective on the date such change is publicly
announced as effective. “Federal Funds Effective Rate” shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as released on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so released for any day which is a
Business Day, the arithmetic average (rounded upwards to the next 1/100th of 1%), as determined by
the Administrative Agent, of the quotations for the day of such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing selected by it. If
for any reason the Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate
for any reason, including the inability or failure of the Administrative Agent to obtain sufficient
quotations in accordance with the terms thereof, the Alternate Base Rate shall be determined
without regard to clause (b) of the first sentence of this definition until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a
change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be
effective on the effective date of such change in the Prime Rate, the Federal Funds Effective Rate,
or the Adjusted LIBO Rate, respectively.
“Applicable Percentage” shall mean on any date, with respect to Eurocurrency Loans, ABR Loans,
the Facility Fee or the L/C Participation Fee, as the
2
case may be, the applicable percentage set forth below under the caption “Eurocurrency
Spread,” “Alternate Base Rate Spread”, “Facility Fee Percentage” or “L/C Participation Fee
Percentage,” as the case may be, based upon the Ratings in effect on such date:
| Eurocurrency | Alternate Base | Facility Fee | L/C Participation | |||||||||||||||||
| Spread | Rate Spread | Percentage | Fee Percentage | |||||||||||||||||
| Category 1 | ||||||||||||||||||||
| Baa1 or higher by Moody’s; BBB+ or higher by S&P; BBB+ or higher by Fitch |
1.000 |
% | 0.000 | % | 0.1250 | % | 1.000 | % | ||||||||||||
| Category 2 | ||||||||||||||||||||
| Baa2 by Moody’s; BBB by S&P; BBB by Fitch |
1.100 |
% | 0.100 | % | 0.150 | % | 1.100 | % | ||||||||||||
| Category 3 | ||||||||||||||||||||
| Baa3 by Moody’s; BBB- by S&P; BBB- by Fitch |
1.300 |
% | 0.300 | % | 0.200 | % | 1.300 | % | ||||||||||||
| Category 4 | ||||||||||||||||||||
| Ba1 by Moody’s; BB+ by S&P; BB+ by Fitch |
1.475 |
% | 0.475 | % | 0.275 | % | 1.475 | % | ||||||||||||
| Category 5 | ||||||||||||||||||||
| Lower than Ba1 by Moody’s; Lower than BB+ by S&P; Lower than BB+ by Fitch |
1.875 |
% | 0.875 | % | 0.375 | % | 1.875 | % | ||||||||||||
For purposes of the foregoing: (a) if any Rating Agency shall merge with or into or be
acquired by another Rating Agency, or shall cease to be in the business of rating corporate debt
obligations, or shall otherwise cease to have a Rating in effect notwithstanding the Company’s use
of commercially reasonable efforts to cause such a Rating to be maintained in effect, then the
Eurocurrency Spread, Alternate Base Rate Spread, Facility Fee Percentage and L/C Participation Fee
Percentage shall be determined by reference to the Rating or Ratings remaining available or deemed
to be available as provided below; (b) if any Rating Agency shall not have a Rating in effect for a
reason other than one of the reasons set forth in the preceding clause (a), such Rating Agency
shall be deemed to have a Rating available and such Rating shall be deemed to be in Category 5; (c)
if the Ratings available or deemed to be available shall fall in different Categories, then (i) if
Ratings are available or deemed to be available from all three Rating Agencies, the Eurocurrency
Spread, Alternate Base Rate Spread, Facility Fee Percentage and L/C Participation Fee Percentage
shall be determined by reference to the highest Category achieved or exceeded by at least two of
the three Ratings, (ii) if Ratings are available or deemed to be available from only two Rating
Agencies, the Eurocurrency Spread, Alternate Base Rate Spread, Facility Fee Percentage and L/C
Participation Fee Percentage shall be determined by reference to the higher of the two Ratings or,
if the Ratings differ by more than one Category, the Category one level below that corresponding to
the higher of the two Ratings and (iii) if a Rating is available or deemed
3
to be available from only one Rating Agency, the Eurocurrency Spread, Alternate Base Rate Spread,
Facility Fee Percentage and L/C Participation Fee Percentage shall be determined by reference to
that Rating; and (d) if any Rating shall be changed (other than as a result of a change in the
rating system of the applicable Rating Agency), such change shall be effective as of the date on
which it is first announced by the Rating Agency making such change. Each change in the Applicable
Percentage shall apply to all outstanding Eurocurrency Loans and ABR Loans and to L/C Participation
Fees and Facility Fees accruing during the period commencing on the effective date of such change
and ending on the date immediately preceding the effective date of the next such change. If the
rating system of any Rating Agency shall change, the parties hereto shall negotiate in good faith
to amend the references to specific ratings in this definition to reflect such changed rating
system and, pending the effectiveness of any such amendment, the Applicable Percentage shall be
determined by reference to the Rating most recently in effect from such Rating Agency prior to such
change.
“Applicable Share” of any Lender at any time shall mean the percentage of the Total Commitment
represented by such Lender’s Commitment; provided that in the case of Section 2.22 when a
Defaulting Lender shall exist, “Applicable Share” shall mean the percentage of the Total
Commitments (disregarding any Defaulting Lender’s Commitment) represented by such Lender’s
Commitment. If the Commitments shall be terminated pursuant to Article VII, the Applicable Shares
of the Lenders shall be based upon the Commitments in effect, giving effect to any assignments and
to any Revolving Lender’s status as a Defaulting Lender at the time of determination.
“Approved Fund” means any Person (other than a natural person) that is engaged in making,
purchasing, holding or investing in commercial loans and similar extensions of credit in the
ordinary course and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender
or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“Assignment and Assumption” shall mean an Assignment and Assumption entered into by a Lender
and an assignee in the form of Exhibit B.
“Bankruptcy Event” shall mean, with respect to any Person, that such Person becomes the
subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee,
administrator, custodian, assignee for the benefit of creditors or similar Person charged with the
reorganization or liquidation of its business appointed for it, or in the good faith judgment of
the Administrative Agent has consented to, approved of, or acquiesced in any such proceeding or
appointment, provided that a Bankruptcy Event shall not result solely by virtue of (a) any
ownership interest or the acquisition of any ownership interest in, or the exercise of control
over, such Person by a Governmental Authority or instrumentality thereof or (b) in the case of a
solvent Lender organized under the laws of The Netherlands, the precautionary appointment of an
administrator, guardian, custodian or other similar official by a Governmental Authority or
instrumentality thereof, under or based on the law of the country where such Lender is subject to
home jurisdiction supervision, if applicable law requires that such appointment not be publicly
disclosed, provided, further, in each such case, that such ownership interest or such action, as
applicable, does not result in or provide such Person with immunity from the jurisdiction of courts
within the United States or from the
4
enforcement of judgments or writs of attachment on its assets or permit such Person (or such
Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm its
obligations hereunder.
“Board” shall mean the Board of Governors of the Federal Reserve System of the United States.
“Board of Directors” shall mean the Board of Directors of a Borrower or any duly authorized
committee thereof.
“Borrower” shall mean the Company or any Borrowing Subsidiary.
“Borrowing” shall mean a group of Loans of a single Type made by the Lenders (or, in the case
of a Competitive Borrowing, by the Lender or Lenders whose Competitive Bids have been accepted
pursuant to Section 2.03) on a single date and as to which a single Interest Period is in effect.
“Borrowing Date” shall mean any date on which a Borrowing is made or a Letter of Credit issued
hereunder.
“Borrowing Subsidiary” shall mean any Subsidiary which shall have become a Borrowing
Subsidiary as provided in Section 9.15, other than any Subsidiary that shall have ceased to be a
Borrowing Subsidiary as provided in Section 9.15.
“Borrowing Subsidiary Agreement” shall mean an agreement in the form of Exhibit D-1 hereto
duly executed by the Company and a Subsidiary.
“Borrowing Subsidiary Termination” shall mean an agreement in the form of Exhibit D-2 hereto
duly executed by the Company and a Borrowing Subsidiary.
“Business Day” shall mean any day (other than a day which is a Saturday, Sunday or legal
holiday in the State of New York) on which banks are open for business in New York City; provided,
however, that, when used in connection with a Eurocurrency Loan, the term “Business Day” shall also
exclude any day on which banks are not open for dealings in deposits in the applicable currency in
the London interbank market, and, when used in connection with determining any date on which any
amount is to be paid or made available in a Non-US Currency, the term “Business Day” shall also
exclude any day on which commercial banks and foreign exchange markets are not open for business in
the principal financial center in the country of such Non-US Currency or Frankfurt, Germany if such
Non-US Currency is the Euro.
“Capital Lease Obligations” of any Person shall mean the obligations of such Person to pay
rent or other amounts under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP; the amount of such
obligations shall be the capitalized amount thereof determined in accordance with GAAP, and the
final maturity of such obligations shall be the date of the last payment of such or any other
amounts due under such lease (or other arrangement) prior to the first date on which such lease (or
other
5
arrangement) may be terminated by the lessee without payment of a premium or a penalty.
“CFC” shall mean (a) each Person that is a “controlled foreign corporation” for purposes of
the Code and (b) each subsidiary of any such controlled foreign corporation.
A “Change in Control” shall be deemed to have occurred if (a) any Person or group of Persons
shall have acquired beneficial ownership of more than 30% of the outstanding Voting Shares of the
Company (within the meaning of Section 13(d) or 14(d) of the Exchange Act and the applicable rules
and regulations thereunder), or (b) during any period of 12 consecutive months, commencing after
the Effective Date, individuals who on the first day of such period were directors of the Company
(together with any replacement or additional directors who were nominated or elected by a majority
of directors then in office) cease to constitute a majority of the Board of Directors of the
Company.
“Change in Law” shall mean the occurrence, after the date of this Agreement, of any change in
applicable law or regulation or in the interpretation, promulgation, implementation or
administration thereof by any Governmental Authority charged with the interpretation or
administration thereof (whether or not having the force of law); provided that, notwithstanding
anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act
and all requests, rules, guidelines or directives thereunder or issued in connection therewith and
(ii) all requests, rules, guidelines or directives promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or
the United States regulatory authorities, in each case pursuant to Basel III, shall in each case be
deemed to be a “Change in Law”, regardless of the date enacted, adopted, promulgated or issued.
“Closing Date” shall mean the date on which executed counterparts of this Agreement shall have
been delivered by the parties hereto. In the event such executed counterparts shall be held under
any escrow arrangement pending the effectiveness of this Agreement, the Closing Date shall be the
date on which this Agreement, fully executed by the parties hereto, shall be delivered by the
escrow or similar agent to the Company and the Administrative Agent.
“Code” shall mean the Internal Revenue Code of 1986, as the same may be amended from time to
time, and the Treasury regulations promulgated thereunder.
“Commitment” shall mean, with respect to each Lender, the commitment of such Lender hereunder
as set forth in Schedule 2.01 under the heading “Commitment” or in an Assignment and Assumption
delivered by such Lender under Section 9.04, as such Commitment may be permanently terminated,
reduced or increased from time to time pursuant to Section 2.12 or pursuant to one or more
assignments under Section 9.04. The Commitment of each Lender shall automatically and permanently
terminate on the Maturity Date if not terminated earlier pursuant to the terms hereof.
6
“Competitive Bid” shall mean an offer by a Lender to make a Competitive Loan pursuant to
Section 2.03.
“Competitive Bid Accept/Reject Letter” shall mean a notification made by a Borrower pursuant
to Section 2.03(d) in the form of Exhibit A-4.
“Competitive Bid Rate” shall mean, as to any Competitive Bid, (i) in the case of a
Eurocurrency Loan, the Margin, and (ii) in the case of a Fixed Rate Loan, the fixed rate of
interest offered by the Lender making such Competitive Bid.
“Competitive Bid Request” shall mean a request made pursuant to Section 2.03(a) in the form of
Exhibit A-1.
“Competitive Borrowing” shall mean a Borrowing consisting of a Competitive Loan or concurrent
Competitive Loans from the Lender or Lenders whose Competitive Bids for such Borrowing have been
accepted under the bidding procedure described in Section 2.03.
“Competitive Loan” shall mean a Loan made pursuant to the bidding procedure described in
Section 2.03. Each Competitive Loan shall be a Eurocurrency Competitive Loan or a Fixed Rate Loan
and will be denominated in either Dollars or a Non-US Currency.
“Competitive Loan Exposure” shall mean, with respect to any Lender at any time, the sum of (a)
the aggregate principal amount of all outstanding Competitive Loans denominated in Dollars made by
such Lender and (b) the sum of the Dollar Equivalents of the principal amounts of all outstanding
Competitive Loans denominated in Non-US Currencies made by such Lender, determined on the basis of
the applicable Exchange Rates in effect on the respective dates of the Competitive Bid Requests
pursuant to which such Competitive Loans were made.
“Confidential Information Memorandum” shall mean the Confidential Information Memorandum dated
July 2011 related to the credit facilities established by this Agreement, the Exelis Credit
Agreement and the Xylem Credit Agreement.
“Consenting Lender” shall have the meaning assigned to such term in Section 2.12(d).
“Consolidated EBITDA” shall mean, for any period, Consolidated Net Income for such period,
plus (a) without duplication and to the extent deducted in determining such Consolidated
Net Income, the sum of (i) Consolidated Interest Expense for such period, (ii) consolidated income
tax expense for such period, (iii) all amounts attributable to depreciation for such period and
amortization of intangible and capitalized assets for such period, (iv) any losses during such
period attributable to the disposition of assets other than in the ordinary course of business, (v)
any other extraordinary non-cash charges for such period, (vi) any non-cash expenses for such
period resulting from the grant of stock options or other equity-based incentives to any director,
officer or employee of the Company or any Subsidiary, (vii) any losses attributable to early
extinguishment of Indebtedness or obligations under any Hedging Agreement, in each
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case other than in connection with the Spin-Offs or the Transactions, (viii) any unrealized
non-cash losses for such period attributable to accounting in respect of Hedging Agreements, (ix)
the cumulative effect of changes in accounting principles and (x) fees, expenses, tax liabilities
and losses attributable to early extinguishment of Indebtedness for such period, in each case
relating to the Transactions or to the Spin-Offs, in an aggregate after-tax amount for all periods
not to exceed $700,000,000, and minus (b) without duplication and to the extent included in
determining such Consolidated Net Income, (i) any gains during such period attributable to the
disposition of assets other than in the ordinary course of business, (ii) any other extraordinary
non-cash gains for such period, (iii) any gains attributable to the early extinguishment of
Indebtedness or obligations under any Hedging Agreement, (iv) any unrealized non-cash gains for
such period attributable to accounting in respect of Hedging Agreements, (v) the cumulative effect
of changes in accounting principles and (vi) any cash payments made during such period with respect
to noncash items added back (or that would have been added back had this Agreement been in effect)
in computing Consolidated EBITDA for any prior period. For purposes of calculating Consolidated
EBITDA for any period to determine the Leverage Ratio, if during such period the Company or any
Subsidiary shall have consummated (a) the Spin-Offs or (b) a Material Acquisition or a Material
Disposition, Consolidated EBITDA for such period shall be calculated after giving pro forma effect
thereto in accordance with Section 1.03(b).
“Consolidated Interest Expense” shall mean, for any period, the interest expense (including
imputed interest expense in respect of Capital Lease Obligations) of the Company and its
consolidated Subsidiaries for such period, determined on a consolidated basis in accordance with
GAAP. Consolidated Interest Expense for any period during which the Company or any Subsidiary
shall have consummated (a) the Spin-Offs or (b) a Material Acquisition or a Material Disposition
shall be calculated after giving pro forma effect thereto in accordance with Section 1.03(b).
“Consolidated Net Income” shall mean, for any period, the net income or loss of the Company
and its consolidated Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP.
“Consolidated Net Tangible Assets” shall mean at any time the total of all assets appearing on
the most recent consolidated balance sheet of the Company and its Subsidiaries delivered under
Section 5.03(a) or (b) (or, prior to the delivery of any such balance sheet, the most recent pro
forma balance sheet referred to in Section 3.05(c)), less the sum of the following items as shown
on such consolidated balance sheet:
(i) the book amount of all segregated intangible assets, including such items as good
will, trademarks, trademark rights, trade names, trade name rights, copyrights, patents,
patent rights and licenses and unamortized debt discount and expense less unamortized debt
premium;
(ii) all depreciation, valuation and other reserves;
(iii) current liabilities;
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(iv) any minority interest in the shares of stock (other than Preferred Stock) and
surplus of Subsidiaries; and
(v) deferred income and deferred liabilities.
“Consolidated Total Indebtedness” shall mean, as of any date, the aggregate principal amount
of Indebtedness of the Company and the Subsidiaries outstanding as of such date, determined on a
consolidated basis in accordance with GAAP; provided that, for purposes of this definition, the
term “Indebtedness” shall not include contingent obligations of the Company or any Subsidiary as an
account party in respect of any letter of credit or letter of guaranty to the extent such letter of
credit or letter of guaranty does not support Indebtedness.
“Credit Exposure” shall mean, with respect to any Lender at any time, the Dollar Equivalent of
the aggregate principal amount at such time of all outstanding Loans of such Lender, plus the
aggregate amount at such time of such Lender’s L/C Exposure.
“Credit Party” shall mean the Administrative Agent, the Issuing Bank or any Lender.
“Declining Lender” shall have the meaning assigned to such term in Section 2.12(d).
“Default” shall mean any event or condition which upon notice, lapse of time or both would
constitute an Event of Default.
“Defaulting Lender” shall mean any Lender that (a) has failed, within three Business Days of
the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion
of its participations in Letters of Credit or (iii) pay over to any Credit Party any other amount
required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies
the Administrative Agent in writing that such failure is the result of such Lender’s good faith
determination that a condition precedent to funding (specifically identified and including the
particular default, if any) has not been satisfied or, in the case of clause (iii), such payment is
the subject of a good faith dispute, (b) has notified the Company, any other Borrower or any Credit
Party in writing, or has made a public statement to the effect, that it does not intend or expect
to comply with any of its funding obligations under this Agreement (unless such writing or public
statement indicates that such position is based on such Lender’s good faith determination that a
condition precedent (specifically identified and including the particular default, if any) to
funding a loan under this Agreement cannot be satisfied) or generally under other agreements in
which it commits to extend credit, (c) has failed, within three Business Days after request by the
Administrative Agent made in good faith to provide a certification in writing from an authorized
officer of such Lender that it will comply with its obligations to fund prospective Loans and
participations in then outstanding Letters of Credit under this Agreement, unless such Lender has
notified the Administrative Agent in writing that such failure is the result of such Lender’s good
faith determination that a condition precedent to funding (specifically identified and including
the particular default, if any) has not been satisfied, provided that such Lender shall cease to be
a Defaulting Lender pursuant to this clause (c) upon the Administrative Agent’s receipt of
9
such certification in form and substance reasonably satisfactory to it, or (d) has become the
subject of a Bankruptcy Event.
“Designated Hedging Obligations” shall mean all obligations of the Company or any Subsidiary
under each Hedging Agreement that (a) is in effect on the Effective Date with a counterparty that
is a Lender (or an Affiliate thereof) as of the Effective Date or (b) is entered into after the
Effective Date with any counterparty that is a Lender (or an Affiliate thereof) at the time such
Hedging Agreement is entered into, and, in either case, the obligations under which have been
designated as “Designated Hedging Obligations” in a written notice delivered by the Company to the
Administrative Agent.
“Distribution Agreement” shall mean the Distribution Agreement dated as of October 25, 2011,
among the Company, Exelis Inc. and Xylem Inc., pursuant to which the Company shall effect the
Spin-Offs.
“Dollar Equivalent” shall mean, on any date of determination, with respect to any amount in
any Non-US Currency, the equivalent in Dollars of such amount, determined using the Exchange Rate
with respect to such Non-US Currency on such date.
“Dollars” or “$” shall mean lawful money of the United States of America.
“Domestic Subsidiary” shall mean any Subsidiary incorporated or organized under the laws of
the United States of America, any State thereof or the District of Columbia, other than any
Subsidiary that is a CFC.
“Effective Date” shall mean the first date on which the conditions set forth in Section 4.02
are satisfied.
“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund and
(d) any other Person, other than, in each case, a natural person, the Company or any Affiliate of
the Company.
“Equity Interests” shall mean shares of capital stock, partnership interests, membership
interests, beneficial interests or other ownership interests, whether voting or nonvoting, in, or
interests in the income or profits of, a Person, and any warrants, options or other rights
entitling the holder thereof to purchase or acquire any of the foregoing.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same may be
amended from time to time.
“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that,
together with the Company, is treated as a single employer under Section 414(b) or (c) of the Code,
or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
“ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043 of ERISA or
the regulations issued thereunder, with respect to a Plan other
10
than events for which the 30 days’ notice period has been waived; (b) a failure by any Plan to
meet the minimum funding standards (as defined in Section 412 of the Code or Section 302 of ERISA)
applicable to such Plan, in each instance, whether or not waived; (c) the filing pursuant to
Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (d) the incurrence of any liability under Title IV of
ERISA with respect to the termination of any Plan or the withdrawal or partial withdrawal of the
Company or any of its ERISA Affiliates from any Plan or Multiemployer Plan; (e) the receipt by the
Company or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to the
intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the
receipt by the Company or any ERISA Affiliate of any notice, or the receipt by any Multiemployer
Plan from the Company or any ERISA Affiliate of any notice, that Withdrawal Liability is being
imposed or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA or in “endangered” or “critical” status
(within the meaning of Section 432 of the Code or Section 305 of ERISA); or (g) the occurrence of a
“prohibited transaction” with respect to which the Company or any of its Subsidiaries is a
“disqualified person” (within the meaning of Section 4975 of the Code), or with respect to which
the Company or any such Subsidiary could otherwise be liable.
“Euro” shall mean the lawful currency of the member states of the European Union that have
adopted a single currency in accordance with applicable law or treaty.
“Eurocurrency Borrowing” shall mean a Borrowing comprised of Eurocurrency Loans.
“Eurocurrency Competitive Borrowing” shall mean a Competitive Borrowing comprised of
Eurocurrency Loans.
“Eurocurrency Competitive Loan” shall mean any Competitive Loan bearing interest at a rate
determined by reference to the LIBO Rate in accordance with the provisions of Article II.
“Eurocurrency Loan” shall mean any Eurocurrency Competitive Loan or Eurocurrency Revolving
Loan.
“Eurocurrency Revolving Borrowing” shall mean a Revolving Borrowing comprised of Eurocurrency
Loans.
“Eurocurrency Revolving Loan” shall mean any Revolving Loan bearing interest at a rate
determined by reference to the Adjusted LIBO Rate in accordance with the provisions of Article II.
“Event of Default” shall have the meaning assigned to such term in Article VII.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
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“Exchange Rate” shall mean, with respect to any Non-US Currency on a particular date, the rate
at which such Non-US Currency may be exchanged into Dollars, as set forth on such date on the
applicable Reuters currency page. In the event that such rate does not appear on any Reuters
currency page, the Exchange Rate with respect to such Non-US Currency shall be determined by
reference to such other publicly available service for displaying exchange rates as may be agreed
upon by the Administrative Agent and the Company or, in the absence of such agreement, such
Exchange Rate shall instead be the Administrative Agent’s spot rate of exchange in the London
interbank market at or about 10:00 a.m., London time, on such date for the purchase of Dollars with
such Non-US Currency, for delivery two Business Days later; provided, however, that if at the time
of any such determination, for any reason, no such spot rate is being quoted, the Administrative
Agent may use any reasonable method it deems applicable to determine such rate, and such
determination shall be conclusive absent manifest error.
“Excluded Taxes” shall mean, with respect to any Credit Party (including any assignee of or
successor to a Credit Party and any Participant) and any other recipient of any payment to be made
by or on account of any obligation of a Borrower under this Agreement or any Loan Documents: (a)
income or franchise Taxes imposed on (or measured by) net income or gain (however denominated) by
the United States of America, or by the jurisdiction under the laws of which such Credit Party
(including any assignee of or successor to such Credit Party and any Participant or other
recipient) is organized or in which its principal office is located or, in the case of any Lender,
in which its applicable lending office is located, (b) any branch profits Taxes imposed by the
United States of America or any similar Taxes imposed by any other jurisdiction in which the
Company is located, (c) any backup withholding Tax imposed by the United States of America or any
similar Taxes imposed by any other jurisdiction in which the Company is located, (d) in the case of
a Non-US Lender (other than an assignee pursuant to a request by a Borrower under Section 2.21(b)),
any US Federal withholding Taxes resulting from any law in effect on the date such Non-US Lender
becomes a party to this Agreement (or designates a new lending office) or is attributable to such
Non-US Lender’s failure to comply with Section 2.20(f) (including as a result of any inaccurate or
incomplete documentation), except to the extent that such Non-US Lender (or its assignor, if any)
was entitled, at the time of designation of a new lending office (or assignment), to receive
additional amounts from a Borrower with respect to such withholding Taxes pursuant to Section
2.20(a), and (e) any Taxes imposed with respect to the requirements of FATCA.
“Exelis Credit Agreement” shall mean the Four-Year Competitive Advance and Revolving Credit
Facility Agreement dated as of October 25, 2011, among Exelis Inc., certain lenders and JPMorgan
Chase Bank, N.A., as Administrative Agent.
“Exelis Form 10” shall mean the Form 10 Registration Statement filed by Exelis Inc. with the
Securities and Exchange Commission on July 11, 2011.
“Existing Credit Agreement” shall mean the Three-Year Competitive Advance and Revolving Credit
Facility Agreement dated as of August 9, 2010, among the Company, certain lenders and JPMorgan
Chase Bank, N.A., as Administrative Agent.
12
“Existing Letter of Credit” means each letter of credit previously issued for the account of
any Borrower under the Existing Credit Agreement that (a) is outstanding on the Effective Date and
(b) is listed on Schedule 1.01.
“Existing Maturity Date” shall have the meaning assigned to such term in Section 2.12(d).
“Facility Fee” shall have the meaning assigned to such term in Section 2.07(a).
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement
(including any regulations that are issued thereunder) and any official governmental
interpretations thereof.
“Fees” shall mean the Facility Fee, the Administrative Fees, the L/C Participation Fees, the
Ticking Fees and the Issuing Bank Fees.
“Financial Officer” of any Person shall mean the chief financial officer, principal accounting
officer, controller, assistant controller, treasurer, associate or assistant treasurer or director
of treasury services of such Person.
“Fitch” shall mean Fitch Ratings, a wholly owned subsidiary of Fimilac, S.A, or any of its
successors.
“Fixed Rate Borrowing” shall mean a Borrowing comprised of Fixed Rate Loans.
“Fixed Rate Loan” shall mean any Competitive Loan bearing interest at a fixed percentage rate
per annum (the “Fixed Rate”) (expressed in the form of a decimal to no more than four decimal
places) specified by the Lender making such Loan in its Competitive Bid.
“Foreign Subsidiary” shall mean any Subsidiary that is not a Domestic Subsidiary.
“ Form 10s” shall mean the Exelis Form 10 and the Xylem Form 10.
“GAAP” shall mean United States generally accepted accounting principles, applied on a
consistent basis.
“Governmental Authority” shall mean the government of the United States of America, any other
nation or any political subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to
government (including any supra-national body exercising such powers or functions, such as the
European Union or the European Central Bank).
13
“Guarantee Agreement” shall mean the guarantee agreement, substantially in the form of Exhibit
H, to be entered into by the Administrative Agent, the Company and the other Guarantors.
“Guarantee Requirement” shall mean, at any time on or after the Effective Date, the
requirement that the Administrative Agent shall have received from the Company and each Significant
Domestic Subsidiary (A) a counterpart of the Guarantee Agreement, duly executed and delivered on
behalf of the Company or such Subsidiary or (B) in the case of any Person that becomes a
Significant Domestic Subsidiary after the Effective Date, a supplement to the Guarantee Agreement
in the form specified therein duly executed and delivered on behalf of such Subsidiary, together
with documents and opinions with respect to such Subsidiary comparable to those referred to in
paragraphs (a) and (b) of Section 4.02 and reasonably satisfactory to the Administrative Agent,
and, in each case, the Guarantee Agreement shall be in full force and effect and enforceable
against the Company or such Subsidiary, as the case may be.
“Guarantor” shall mean the Company (except with respect to obligations of the Company) and
each Significant Domestic Subsidiary.
“Hedging Agreement” means any agreement with respect to any swap, forward, future or
derivative transaction, or any option or similar agreement, involving, or settled by reference to,
one or more rates, currencies, commodities, prices of equity or debt securities or instruments, or
economic, financial or pricing indices or measures of economic, financial or pricing risk or value,
or any similar transaction or combination of the foregoing transactions; provided that no
phantom stock or similar plan providing for payments only on account of services provided by
current or former directors, officers, employees or consultants of the Company or the Subsidiaries
shall be a Hedging Agreement. The “amount” or “principal amount” of the obligations of the Company
or any Subsidiary in respect of any Hedging Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that the Company or such Subsidiary would be
required to pay if such Hedging Agreement were terminated at such time.
“Increasing Lender” shall have the meaning assigned to such term in Section 2.12(e).
“Indebtedness” of any Person shall mean all indebtedness representing money borrowed or the
deferred purchase price of property (other than trade accounts payable) or any capitalized lease
obligation, which in any case is created, assumed, incurred or guaranteed in any manner by such
Person or for which such Person is responsible or liable (whether by agreement to purchase
indebtedness of, or to supply funds to or invest in, others or otherwise). For the avoidance of
doubt, the term Indebtedness shall not include obligations under Hedging Agreements.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to
any payment made by a Borrower under this Agreement and (b) Other Taxes.
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“Interest Coverage Ratio” shall mean the ratio of (a) Consolidated EBITDA to (b) Consolidated
Interest Expense, each as calculated for any period of the four prior consecutive fiscal quarters.
“Interest Payment Date” shall mean (a) with respect to any ABR Loan, the last day of each
March, June, September and December, (b) with respect to any Eurocurrency Loan or Fixed Rate Loan,
the last day of each Interest Period applicable thereto, and with respect to a Eurocurrency Loan
with an Interest Period of more than three months’ duration or a Fixed Rate Loan with an Interest
Period of more than 90 days’ duration, each day that would have been an Interest Payment Date for
such Loan had successive Interest Periods of three months’ duration or 90 days’ duration, as the
case may be, been applicable to such Loan and (c) with respect to any Loan, the Maturity Date or
the date of any prepayment of such Loan or conversion of such Loan to a Loan of a different Type.
“Interest Period” shall mean (a) as to any Eurocurrency Borrowing, the period commencing on
the date of such Borrowing or on the last day of the immediately preceding Interest Period
applicable to such Borrowing, as the case may be, and ending on the numerically corresponding day
(or, if there is no numerically corresponding day, on the last day) in the calendar month that is
1, 2, 3 or 6 months thereafter, as the applicable Borrower may elect and (b) as to any Fixed Rate
Borrowing, the period commencing on the date of such Borrowing and ending on the date specified in
the Competitive Bids in which the offers to make the Fixed Rate Loans comprising such Borrowing
were extended, which shall not be earlier than seven days after the date of such Borrowing or later
than 360 days after the date of such Borrowing; provided, however, that if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, in the case of Eurocurrency Loans only, such next succeeding
Business Day would fall in the next calendar month, in which case such Interest Period shall end on
the next preceding Business Day. Interest shall accrue from and including the first day of an
Interest Period to but excluding the last day of such Interest Period.
“IRS” shall mean the United States Internal Revenue Service.
“Issuing Bank” shall mean (a) JPMorgan Chase Bank, N.A., (b) Citibank N.A. , and (c) each
Lender that shall have become an Issuing Bank hereunder as provided in Section 2.05(j) (other than
any Person that shall have ceased to be an Issuing Bank as provided in Section 2.05(i)), each in
its capacity as an issuer of Letters of Credit hereunder. Each Issuing Bank may, in its
discretion, arrange for one or more Letters of Credit to be issued by Affiliates of such Issuing
Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to
Letters of Credit issued by such Affiliate (it being agreed that such Issuing Bank shall, or shall
cause such Affiliate to, comply with the requirements of Section 2.05 with respect to such Letters
of Credit).
“Issuing Bank Agreement” shall mean an agreement in substantially the form of Exhibit E.
“Issuing Bank Fees” shall have the meaning assigned to such term in Section 2.07(c).
15
“Judgment Currency” shall have the meaning assigned to such term in Section 9.16(b).
“L/C Disbursement” shall mean a payment or disbursement made by an Issuing Bank pursuant to a
Letter of Credit.
“L/C Exposure” shall mean at any time the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit at such time plus (b) the aggregate principal amount of all L/C
Disbursements that have not yet been reimbursed at such time. The L/C Exposure of any Lender at
any time shall mean its Applicable Share of the aggregate L/C Exposure at such time.
“L/C Participation Fee” shall have the meaning assigned to such term in Section 2.07(c).
“Lead Arrangers” shall mean J.P. Morgan Securities LLC and Citigroup Global Markets Inc.
“Letter of Credit” shall mean any letter of credit issued pursuant to Section 2.05 and any
Existing Letter of Credit.
“Lender Parent” shall mean, with respect to any Lender, any Person as to which such Lender is,
directly or indirectly, a subsidiary.
“Leverage Ratio” shall mean, at any time, the ratio of (a) Consolidated Total Indebtedness at
such time to (b) Consolidated EBITDA for the most recently ended period of four consecutive fiscal
quarters.
“LIBO Rate” shall mean, with respect to any Eurocurrency Borrowing for any Interest Period,
the rate appearing on the Reuters “LIBOR01” screen displaying British Bankers’ Association Interest
Settlement Rates (or on any successor or substitute screen provided by Reuters, or any successor to
or substitute for such service, providing rate quotations comparable to those currently provided on
such screen, as determined by the Administrative Agent from time to time for purposes of providing
quotations of interest rates applicable to Dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest
Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the
event that such rate is not available at such time for any reason, then the “LIBO Rate” with
respect to such Eurocurrency Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the
principal London office of the Administrative Agent in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
“Lien” shall mean, with respect to any property or asset, any mortgage, deed of trust, lien,
pledge, security interest, charge or other encumbrance on, of, or in such property or asset.
16
“Loan” shall mean a Competitive Loan or a Revolving Loan, whether made as a Eurocurrency Loan,
an ABR Loan or a Fixed Rate Loan, as permitted hereby.
“Loan Documents” shall mean this Agreement, the Guarantee Agreement, the Letters of Credit,
the Borrowing Subsidiary Agreements, any Issuing Bank Agreements, and promissory notes, if any,
issued pursuant to Section 9.04(i).
“Loan Parties” shall mean the Company and each Significant Domestic Subsidiary.
“Margin” shall mean, as to any Eurocurrency Competitive Loan, the margin (expressed as a
percentage rate per annum in the form of a decimal to no more than four decimal places) to be added
to or subtracted from the LIBO Rate in order to determine the interest rate applicable to such
Loan, as specified in the Competitive Bid relating to such Loan.
“Margin Regulations” shall mean Regulations T, U and X of the Board as from time to time in
effect, and all official rulings and interpretations thereunder or thereof.
“Margin Stock” shall have the meaning given such term under Regulation U of the Board.
“Material Acquisition” shall mean any acquisition of (a) Equity Interests in any Person if,
after giving effect thereto, such Person will become a Subsidiary or (b) assets comprising all or
substantially all the assets of (or all or substantially all the assets constituting a business
unit, division, product line or line of business of) any Person; provided that the aggregate
consideration therefor (including Indebtedness assumed in connection therewith, all obligations in
respect of deferred purchase price (including obligations under any purchase price adjustment but
excluding earnout or similar payments) and all other consideration payable in connection therewith
(including payment obligations in respect of noncompetition agreements or other arrangements
representing acquisition consideration)) exceeds $100,000,000.
“Material Adverse Effect” shall mean an event or condition that has resulted in a material
adverse effect on (a) the business, assets, liabilities, operations or financial condition of the
Company and its Subsidiaries, taken as a whole, (b) the ability of any Borrower to perform any of
its material obligations under any Loan Document or (c) the enforceability of the Lenders’ rights
under any Loan Document.
“Material Disposition” shall mean any sale, transfer or other disposition of (a) all or
substantially all the issued and outstanding Equity Interests in any Person that are owned by the
Company or any Subsidiary or (b) assets comprising all or substantially all the assets of (or all
or substantially all the assets constituting a business unit, division, product line or line of
business of) any Person; provided that the aggregate consideration therefor (including Indebtedness
assumed by the transferee in connection therewith, all obligations in respect of deferred purchase
price (including obligations under any purchase price adjustment but excluding earnout or similar
payments) and all other consideration payable in connection therewith (including payment
obligations in respect
17
of noncompetition agreements or other arrangements representing acquisition consideration))
exceeds $100,000,000.
“Material Indebtedness” shall mean Indebtedness (other than the Loans, Letters of Credit and
guarantees under the Loan Documents), or obligations in respect of one or more Hedging Agreements
or Securitization Transactions, of any one or more of the Company and the Subsidiaries in an
aggregate principal amount of $50,000,000 or more.
“Maturity Date” shall mean the fourth anniversary of the Closing Date, as such date may be
extended pursuant to Section 2.12(d).
“MNPI” shall mean material information concerning the Company and the Subsidiaries and their
securities that has not been disseminated in a manner making it available to investors generally,
within the meaning of Regulation FD under the Securities Act and the Exchange Act.
“Moody’s” shall mean Moody’s Investors Service, Inc. or any of its successors.
“Multiemployer Plan” shall mean a multiemployer plan as defined in Section 4001(a)(3) of
ERISA.
“Non-US Currency” shall mean any currency other than Dollars that is freely transferable and
convertible into Dollars in the London market and as to which an Exchange Rate and LIBO Rates may
be determined.
“Non-US Currency Loan” shall mean any Competitive Loan denominated in a currency other than
Dollars.
“Non-US Lender” shall mean a Lender that is not a US Person.
“Notice of Competitive Bid Request” shall mean a notification made pursuant to Section 2.03(a)
in the form of Exhibit A-2.
“Obligations” means (a) the due and punctual payment of (i) the principal of and interest
(including interest accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the
Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, (ii) each payment required to be made under this Agreement in respect of
any Letter of Credit, when and as due, including payments in respect of reimbursement of L/C
Disbursements, interest thereon and obligations to provide cash collateral, and (iii) all other
monetary obligations of the Company or any Subsidiary under this Agreement and each other Loan
Document, including obligations to pay fees, expense reimbursement obligations and indemnification
obligations, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and
punctual payment of all Designated Hedging
18
Obligations and (c) the due and punctual payment and performance of all other obligations of
each Loan Party under or pursuant to this Agreement and each of the other Loan Documents.
“Other Taxes” shall mean any present or future stamp, court, documentary, intangible,
recording, filing or similar excise or property Taxes (other than Excluded Taxes) that arise from
any payment made under, from the execution, delivery, performance, enforcement or registration of,
or from the registration, receipt or perfection of a security interest under this Agreement or any
other Loan Document.
“Participant” shall have the meaning assigned to such term in Section 9.04(f).
“Participant Register” has the meaning assigned to such term in Section 9.04(f).
“PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA
and any successor entity performing similar functions.
“Permitted Encumbrances” means:
(a) Liens imposed by law for Taxes that are not yet due or are being contested in
compliance with Section 5.05;
(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like
Liens imposed by law (other than any Lien imposed pursuant to Section 430(k) of the Code or
Section 303(k) of ERISA or a violation of Section 436 of the Code), arising in the ordinary
course of business and securing obligations that are not overdue by more than 30 days or
are being contested in compliance with Section 5.05;
(c) pledges and deposits made (i) in the ordinary course of business in compliance
with workers’ compensation, unemployment insurance and other social security laws and (ii)
in respect of letters of credit, bank guarantees or similar instruments issued for the
account of the Company or any Subsidiary in the ordinary course of business supporting
obligations of the type set forth in the preceding clause (i);
(d) pledges and deposits made (i) to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business (but
excluding obligations constituting Indebtedness) and (ii) in respect of letters of credit,
bank guarantees or similar instruments issued for the account of the Company or any
Subsidiary in the ordinary course of business supporting obligations described in clause
(i) above;
(e) pledges or Liens necessary to secure a stay of any legal or equitable process in a
proceeding to enforce a liability or obligation contested in good faith by the Company or a
Subsidiary or required in connection with the institution by
19
the Company or a Subsidiary of any legal or equitable proceeding to enforce a right or
to obtain a remedy claimed in good faith by the Company or a Subsidiary, or required in
connection with any order or decree in any such proceeding or in connection with any
contest of any tax or other governmental charge; or the making of any deposit with or the
giving of any form of security to any governmental agency or any body created or approved
by law or governmental regulation in order to entitle the Company or a Subsidiary to
maintain self-insurance or to participate in any fund in connection with workers’
compensation, unemployment insurance, old age pensions or other social security or to share
in any provisions or other benefits provided for companies participating in any such
arrangement or for liability on insurance of credits or other risks;
(f) judgment liens in respect of judgments that do not constitute an Event of Default
under clause (i) of Article VII;
(g) any Lien on property in favor of the United States of America, or of any agency,
department or other instrumentality thereof, to secure partial, progress or advance
payments pursuant to the provisions of any contract;
(h) easements, zoning restrictions, rights-of-way and similar encumbrances on real
property imposed by law or arising in the ordinary course of business that do not secure
any monetary obligations and do not materially detract from the value of the affected
property or interfere with the ordinary conduct of business of the Company or any
Subsidiary;
(i) banker’s liens, rights of setoff or similar rights and remedies as to deposit
accounts, securities accounts or other funds maintained with depository institutions or
securities intermediaries; provided that such deposit accounts, securities accounts
or funds are not established or deposited for the purpose of providing collateral for any
Indebtedness and are not subject to restrictions on access by the Company or any Subsidiary
in excess of those required by applicable banking or other regulations;
(j) Liens arising by virtue of Uniform Commercial Code financing statement filings (or
similar filings under applicable law) regarding operating leases entered into by the
Company and the Subsidiaries in the ordinary course of business
(k) Liens representing any interest or title of a licensor, lessor or sublicensor or
sublessor, or a licensee, lessee or sublicensee or sublessee, in the property subject to
any lease, license or sublicense or concession agreement;
(l) any Lien affecting property of the Company or any Subsidiary securing Indebtedness
of the United States of America or a State thereof (or any instrumentality or agency of
either thereof) issued in connection with a pollution control or abatement program required
in the opinion of the Company to meet environmental criteria with respect to manufacturing
or processing operations of the Company or any Subsidiary and the proceeds of which
Indebtedness have financed the cost of acquisition of such program, and renewals or
extensions of
20
any such Lien that do not extend to additional assets or increase the amount of the
obligations secured thereby; and
(m) contractual rights of set-off not established to secure the payment of
Indebtedness.
“Person” shall mean any natural person, corporation, limited liability company, business
trust, joint venture, association, company, partnership or government, or any agency or political
subdivision thereof.
“Plan” shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject
to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA
sponsored, maintained or contributed to by the Company or any ERISA Affiliate.
“Preferred Stock” shall mean any capital stock entitled by its terms to a preference (a) as to
dividends or (b) upon a distribution of assets.
“Priority Indebtedness” shall mean, without duplication, (a) all Indebtedness or obligations
in respect of one or more Hedging Agreements of any Subsidiary (other than any Guarantor) and (b)
(i) all Indebtedness of the Company or any Subsidiary, and all obligations in respect of one or
more Hedging Agreements, secured by any Lien on any asset of the Company or any Subsidiary, (ii)
all obligations of the Company or any Subsidiary under conditional sale or other title retention
agreements relating to property acquired by the Company or such Subsidiary (excluding trade
accounts payable incurred in the ordinary course of business), (iii) all Capital Lease Obligations
of the Company or any Subsidiary, (iv) all Securitization Transactions of the Company or any
Subsidiary and (v) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property
owned or acquired by the Company or any Subsidiary, whether or not the Indebtedness secured thereby
has been assumed by the Company or such Subsidiary.
“Rating Agencies” shall mean Moody’s, S&P and Fitch.
“Ratings” shall mean the ratings from time to time established by the Rating Agencies for
senior, unsecured, non-credit-enhanced long-term debt of the Company.
“Register” shall have the meaning given such term in Section 9.04(d).
“Regulation D” shall mean Regulation D of the Board as from time to time in effect and all
official rulings and interpretations thereunder or thereof.
“Related Parties” shall mean, with respect to any specified Person, such Person’s Affiliates
and the directors, officers, partners, trustees, employees, agents and advisors of such Person and
of such Person’s Affiliates.
“Reportable Event” shall mean any reportable event as defined in Section 4043 of ERISA or the
regulations issued thereunder with respect to a Plan (other than a
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Plan maintained by an ERISA Affiliate that is considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Code Section 414).
“Required Lenders” shall mean, at any time, Lenders having Commitments representing more than
50% of the Total Commitment or, for purposes of acceleration pursuant to Article VII, Lenders
holding Credit Exposures representing more than 50% of the Aggregate Credit Exposure.
“Responsible Officer” of any Person shall mean any executive officer or Financial Officer of
such Person and any other officer or similar official thereof responsible for the administration of
the obligations of such Person in respect of this Agreement.
“Revolving Borrowing” shall mean a Borrowing consisting of simultaneous Revolving Loans from
each of the Lenders.
“Revolving Borrowing Request” shall mean a request made pursuant to Section 2.04 in the form
of Exhibit A-5.
“Revolving Credit Exposure” shall mean, with respect to any Lender at any time, the aggregate
principal amount at such time of all outstanding Revolving Loans of such Lender.
“Revolving Loans” shall mean the revolving loans made pursuant to Section 2.01 and 2.04. Each
Revolving Loan shall be in Dollars and shall be a Eurocurrency Revolving Loan or an ABR Loan.
“S&P” shall mean Standard and Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. or any of its successors.
“SEC” shall mean the Securities and Exchange Commission.
“Securitization Transaction” shall mean any transfer by the Company or any Subsidiary of
accounts receivable or interests therein (a) to a trust, partnership, corporation, limited
liability company or other entity, which transfer is funded in whole or in part, directly or
indirectly, by the incurrence or issuance by the transferee or successor transferee of Indebtedness
or other securities that are to receive payments from, or that represent interests in, the cash
flow derived from such accounts receivable or interests therein, or (b) directly to one or more
investors or other purchasers. The “amount” or “principal amount” of any Securitization
Transaction shall be deemed at any time to be the aggregate principal or stated amount of the
Indebtedness or other securities referred to in the first sentence of this definition or, if there
shall be no such principal or stated amount, the uncollected amount of the accounts receivable or
interests therein transferred pursuant to such Securitization Transaction, net of any such accounts
receivable or interests therein that have been written off as uncollectible.
“Significant Domestic Subsidiary” shall mean, at any time, each Domestic Subsidiary other than
Domestic Subsidiaries that in the aggregate do not account for
22
more than 10% of the combined revenues (excluding revenues consisting of payments from the
Company or any Subsidiary) of the Company and its Domestic Subsidiaries.
“Significant Subsidiary” shall mean, at any time, each Borrower and each subsidiary accounting
for more than 5% of the consolidated revenues of the Company for the most recent period of four
consecutive fiscal quarters of the Company for which pro forma or historical financial statements
of the Company have been delivered prior to the date hereof (as described in Section 3.05(b)) or
pursuant to Section 5.03(a) or 5.03(b) or more than 5% of the consolidated total assets of the
Company at the end of such period; provided that if at the end of or for any such period of four
consecutive fiscal quarters all Subsidiaries that are not Significant Subsidiaries shall account
for more than 10% of the consolidated revenues of the Company or more than 10% of the consolidated
total assets of the Company, the Company shall designate sufficient Subsidiaries as “Significant
Subsidiaries” to eliminate such excess (or if the Company shall have failed to designate such
Subsidiaries within 10 Business Days, Subsidiaries shall automatically be deemed designated as
Significant Subsidiaries in descending order based on the amounts of their contributions to
consolidated total assets until such excess shall have been eliminated), and the Subsidiaries so
designated or deemed designated shall for all purposes of this Agreement constitute Significant
Subsidiaries.
“Spin-Offs” shall mean (a) the spin off by the Company of its C4ISR (command, control,
communications, computers, intelligence, surveillance and reconnaissance) electronics and systems,
and informational and technical services, businesses through the transfer of such businesses to
Exelis Inc. and the distribution of all of the shares of common stock of Exelis Inc. to the
shareholders of the Company, as described in the Exelis Form 10 and (b) the spin off by the Company
of its water infrastructure and applied water businesses, in each case through the transfer of such
businesses to Xylem Inc. and the distribution of all of the shares of common stock of Xylem Inc. to
the shareholders of the Company, as described in the Xylem Form 10.
“Statutory Reserve Rate” shall mean a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including any marginal, special, emergency or supplemental reserves),
expressed as a decimal, established by the Board to which the Administrative Agent is subject for
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the
Board). Such reserve percentages shall include those imposed pursuant to such Regulation D.
Eurocurrency Loans shall be deemed to constitute eurocurrency funding and to be subject to such
reserve requirements without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Lender under such Regulation D or any comparable regulation.
The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.
“subsidiary” shall mean, with respect to any Person (the “parent”), any corporation,
association or other business entity of which securities or other ownership interests representing
more than 50% of the ordinary voting power are, at the time as of which any determination is being
made, owned or controlled by the parent or one or more subsidiaries of the parent or by the parent
and one or more subsidiaries of the parent.
23
“Subsidiary” shall mean a subsidiary of the Company.
“Taxes” shall mean any present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental Authority, including
any interest, additions to tax or penalties applicable thereto.
“Ticking Fee” shall have the meaning assigned to such term in Section 2.07(d).
“Total Commitment” shall mean, at any time, the aggregate amount of Commitments of all the
Lenders, as in effect at such time.
“Transactions” shall have the meaning assigned to such term in Section 3.02.
“Type”, when used in respect of any Loan or Borrowing, shall refer to the Rate by reference to
which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes
hereof, “Rate” shall include the LIBO Rate, the Alternate Base Rate, the Competitive Bid Rate and
the Fixed Rate.
“USA PATRIOT Act” shall have the meaning assigned to such term in Section 3.13.
“US Person” shall mean a “United States person” within the meaning of Section 7701(a)(30) of
the Code.
“US Tax Certificate” has the meaning assigned to such term in Section 2.20(f)(ii)(D)(2).
“Voting Shares” shall mean, as to a particular corporation or other Person, outstanding shares
of stock or other Equity Interests of any class of such Person entitled to vote in the election of
directors, or otherwise to participate in the direction of the management and policies, of such
Person, excluding shares or Equity Interests entitled so to vote or participate only upon the
happening of some contingency.
“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a complete
or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle
E of Title IV of ERISA.
“Withholding Agent” shall mean a Borrower and the Administrative Agent.
“Xylem Credit Agreement” shall mean the Four-Year Competitive Advance and Revolving Credit
Facility Agreement dated as of October 25, 2011, among Xylem Inc., certain lenders and JPMorgan
Chase Bank, N.A., as Administrative Agent.
“Xylem Form 10” shall mean the Form 10 Registration Statement filed by Xylem Inc. with the
Securities and Exchange Commission on July 11, 2011.
24
SECTION 1.02. Terms Generally. The definitions of terms used herein shall apply equally to
the singular and plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The
word “will” shall be construed to have the same meaning and effect as the word “shall”. The words
“asset” and “property” shall be construed to have the same meaning and effect and to refer to any
and all real and personal, tangible and intangible assets and properties, including cash,
securities, accounts and contract rights. The word “law” shall be construed as referring to all
statutes, rules, regulations, codes and other laws (including official rulings and interpretations
thereunder having the force of law or with which affected Persons customarily comply), and all
judgments, orders, writs and decrees, of all Governmental Authorities. Unless the context requires
otherwise, (a) any definition of or reference to any agreement, instrument or other document
(including this Agreement and the other Loan Documents) shall be construed as referring to such
agreement, instrument or other document as from time to time amended, supplemented or otherwise
modified (subject to any restrictions on such amendments, supplements or modifications set forth
herein), (b) any definition of or reference to any statute, rule or regulation shall be construed
as referring thereto as from time to time amended, supplemented or otherwise modified (including by
succession of comparable successor laws), (c) any reference herein to any Person shall be construed
to include such Person’s successors and assigns (subject to any restrictions on assignment set
forth herein) and, in the case of any Governmental Authority, any other Governmental Authority that
shall have succeeded to any or all functions thereof, (d) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof and (e) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and
Exhibits and Schedules to, this Agreement.
SECTION 1.03. Accounting Terms; GAAP. (a) Except as otherwise expressly provided herein, all
terms of an accounting or financial nature used herein shall be construed in accordance with GAAP
as in effect from time to time; provided that if the Company, by notice to the Administrative
Agent, shall request an amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the operation of such
provision (or if the Administrative Agent or the Required Lenders, by notice to the Company, shall
request an amendment to any provision hereof for such purpose), regardless of whether any such
notice is given before or after such change in GAAP or in the application thereof, then such
provision shall be interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been withdrawn or such
provision amended in accordance herewith.
(b) All pro forma computations required to be made hereunder giving effect to any Material
Acquisition or Material Disposition shall be calculated after giving pro forma effect thereto as if
such transaction had occurred on the first day of the period of four consecutive fiscal quarters
ending with the most recent fiscal quarter for which financial statements shall have been delivered
pursuant to Section 5.03(a) or 5.03(b) (or, prior to the delivery of any such financial statements,
ending with the last fiscal quarter
25
included in the pro forma financial statements referred to in Section 3.05(b)), and, to the
extent applicable, to the historical earnings and cash flows associated with the assets acquired or
disposed of and any related incurrence or reduction of Indebtedness, (i) in accordance with Article
11 of Regulation S-X under the Securities Act, if such Material Acquisition or Material Disposition
would be required to be given pro forma effect in accordance with Regulation S-X for purposes of
preparing the Company’s annual and quarterly reports to the SEC, and (ii) in any event, on a
reasonable basis consistent with accepted financial practice. If any Indebtedness bears a floating
rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be
calculated as if the rate in effect on the date of determination had been the applicable rate for
the entire period (taking into account any Hedging Agreement applicable to such Indebtedness if
such Hedging Agreement has a remaining term in excess of 12 months).
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments. Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, each Lender agrees, severally and not jointly, to
make Revolving Loans in Dollars to the Borrowers, at any time and from time to time on and after
the date hereof and until the earlier of the Maturity Date and the termination of the Commitment of
such Lender, in an amount that will not result in (a) the sum of the Revolving Credit Exposure and
the L/C Exposure of such Lender exceeding such Lender’s Commitment or (b) the Aggregate Credit
Exposure exceeding the Total Commitment then in effect. Within the foregoing limits, the Borrowers
may borrow, pay or prepay and reborrow Revolving Loans hereunder, on and after the Effective Date
and prior to the Maturity Date, subject to the terms, conditions and limitations set forth herein.
SECTION 2.02. Loans. (a) Each Revolving Loan shall be made as part of a Borrowing consisting
of Revolving Loans made by the Lenders ratably in accordance with their respective Commitments;
provided, however, that the failure of any Lender to make any Revolving Loan shall not in itself
relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no
Lender shall be responsible for the failure of any other Lender to make any Loan required to be
made by such other Lender). Each Competitive Loan shall be made in accordance with the procedures
set forth in Section 2.03. The Loans comprising any Borrowing shall be (i) in the case of
Competitive Loans, in an aggregate principal amount permitted under Section 2.03, and (ii) in the
case of Revolving Loans, in an aggregate principal amount that is an integral multiple of
$5,000,000 and not less than $10,000,000 (or an aggregate principal amount equal to the remaining
balance of the Commitments).
(b) Each Competitive Borrowing shall be comprised entirely of Eurocurrency Competitive Loans
or Fixed Rate Loans, and each Revolving Borrowing shall be comprised entirely of Eurocurrency
Revolving Loans or ABR Loans, as the applicable Borrower may request pursuant to Section 2.03 or
2.04, as applicable. Each Lender may at its option make any Loan by causing any domestic or foreign
branch, agency or Affiliate of such Lender to make such Loan; provided that any exercise of such
option shall not affect the obligation of the applicable Borrower to repay such Loan in
26
accordance with the terms of this Agreement and such branch, agency or Affiliate shall, to the
extent of any such loans made by it, have all the rights of such Lender hereunder. Borrowings of
more than one Type may be outstanding at the same time. For purposes of the foregoing, Loans
having different Interest Periods, regardless of whether they commence on the same date, shall be
considered separate Loans.
(c) Subject to Section 2.06 and, in the case of any Borrowing denominated in a Non-US
Currency, to any alternative procedures that the applicable Borrower, the applicable Lenders and
the Administrative Agent may agree upon, each Lender shall make each Loan to be made by it
hereunder on the proposed date thereof by wire transfer of immediately available funds to the
Administrative Agent in New York, New York, not later than 1:00 p.m., New York City time, and the
Administrative Agent shall by 3:00 p.m., New York City time, credit the amounts so received to the
account or accounts specified from time to time in one or more notices delivered by the Company to
the Administrative Agent or, if a Borrowing shall not occur on such date because any condition
precedent herein specified shall not have been met, forthwith return the amounts so received to the
respective Lenders. Competitive Loans shall be made by the Lender or Lenders whose Competitive
Bids therefor are accepted pursuant to Section 2.03 in the amounts so accepted. Revolving Loans
shall be made by the Lenders pro rata in accordance with their Applicable Shares. Unless the
Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing
that such Lender will not make available to the Administrative Agent such Lender’s portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such portion available to
the Administrative Agent on the date of such Borrowing in accordance with this paragraph (c) and
the Administrative Agent may, in reliance upon such assumption, make available to the applicable
Borrower on such date a corresponding amount in the required currency. If and to the extent that
such Lender shall not have made such portion available to the Administrative Agent, such Lender and
such Borrower severally agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon in such currency, for each day from the date
such amount is made available to such Borrower until the date such amount is repaid to the
Administrative Agent, at (i) in the case of such Borrower, the interest rate applicable at the time
to the Loans comprising such Borrowing and (ii) in the case of such Lender, a rate determined by
the Administrative Agent to represent its cost of overnight funds. If such Lender shall repay to
the Administrative Agent such corresponding amount, such amount shall constitute such Lender’s Loan
as part of such Borrowing for purposes of this Agreement.
(d) If any Issuing Bank shall not have received from a Borrower the payment required to be
made by Section 2.05(e) within the time period set forth in Section 2.05(e), such Issuing Bank will
promptly notify the Administrative Agent of the L/C Disbursement and the Administrative Agent will
promptly notify each Lender of such L/C Disbursement and its Applicable Share thereof. Each Lender
shall pay by wire transfer of immediately available funds to the Administrative Agent not later
than 2:00 p.m., New York City time, on such date (or, if such Lender shall have received such
notice later than 12:00 (noon), New York City time, on any day, not later than 10:00 a.m., New York
City time, on the immediately following Business Day), an amount equal to such Lender’s Applicable
Share of such L/C Disbursement (it being understood that such
27
amount shall be deemed to constitute an ABR Loan of such Lender and shall bear interest as
provided herein), and the Administrative Agent will promptly pay to the Issuing Bank any amounts so
received by it from the Lenders. The Administrative Agent will promptly pay to the Issuing Bank
any amounts received by it from the Borrower pursuant to Section 2.05(e) prior to the time that any
Lender makes any payment pursuant to this paragraph; any such amounts received by the
Administrative Agent thereafter will be promptly remitted by the Administrative Agent to the
Lenders that shall have made such payments and to the Issuing Bank, as their interests may appear.
If any Lender shall not have made its Applicable Share of such L/C Disbursement available to the
Administrative Agent as provided above, such Lender and the Borrowers severally agree to pay
interest on such amount, for each day from and including the date such amount is required to be
paid in accordance with this paragraph to but excluding the date such amount is paid, to the
Administrative Agent at (i) in the case of the Borrowers, a rate per annum equal to the interest
rate applicable to ABR Loans pursuant to Section 2.09, and (ii) in the case of such Lender, for the
first such day, the Federal Funds Effective Rate, and for each day thereafter, the Alternate Base
Rate.
SECTION 2.03. Competitive Bid Procedure. (a) In order to request Competitive Bids, a
Borrower shall hand deliver or fax to the Administrative Agent a duly completed Competitive Bid
Request in the form of Exhibit A-1 hereto, to be received by the Administrative Agent (i) in the
case of a Eurocurrency Competitive Loan, not later than 10:00 a.m., New York City time, (A) four
Business Days before a proposed Competitive Borrowing in the case of a Competitive Borrowing
denominated in Dollars and (B) five Business Days before a proposed Competitive Borrowing in the
case of a Competitive Borrowing denominated in a Non-US Currency and (ii) in the case of a Fixed
Rate Borrowing, not later than 10:00 a.m., New York City time, (A) one Business Day before a
proposed Competitive Borrowing in the case of a Competitive Borrowing denominated in Dollars and
(B) two Business Days before a proposed Competitive Borrowing in the case of a Competitive
Borrowing denominated in a Non-US Currency. No ABR Loan shall be requested in, or made pursuant
to, a Competitive Bid Request. A Competitive Bid Request that does not conform substantially to
the format of Exhibit A-1 may be rejected in the Administrative Agent’s sole discretion, and the
Administrative Agent shall promptly notify the applicable Borrower of such rejection by fax. Each
Competitive Bid Request shall refer to this Agreement and specify (A) whether the Borrowing then
being requested is to be a Eurocurrency Borrowing or a Fixed Rate Borrowing, (B) the date of such
Borrowing (which shall be a Business Day), (C) the currency of the requested Borrowing (which shall
be Dollars or a Non-US Currency), (D) the aggregate principal amount of the requested Borrowing
(which shall be an integral multiple of 1,000,000 units of the applicable currency with a Dollar
Equivalent on the date of the applicable Competitive Bid Request of at least $10,000,000), and (E)
the Interest Period with respect thereto (which may not end after the Maturity Date). Promptly
after its receipt of a Competitive Bid Request that is not rejected as aforesaid, the
Administrative Agent shall fax to the Lenders a Notice of Competitive Bid Request inviting the
Lenders to bid, on the terms and conditions of this Agreement, to make Competitive Loans.
(b) Each Lender invited to bid may, in its sole discretion, make one or more Competitive Bids
to the applicable Borrower responsive to such Borrower’s
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Competitive Bid Request. Each Competitive Bid by a Lender must be received by the
Administrative Agent by fax, in the form of Exhibit A-3 hereto, (i) in the case of a Eurocurrency
Competitive Loan, not later than 9:30 a.m., New York City time, three Business Days before a
proposed Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than 9:30
a.m., New York City time, on the day of a proposed Competitive Borrowing. A Lender may submit
multiple bids to the Administrative Agent. Competitive Bids that do not conform substantially to
the format of Exhibit A-3 may be rejected by the Administrative Agent, and the Administrative Agent
shall notify the Lender making such nonconforming bid of such rejection as soon as practicable.
Each Competitive Bid shall refer to this Agreement and specify (x) the principal amount (which
shall be an integral multiple of 1,000,000 units of the applicable currency and which may equal the
entire principal amount of the Competitive Borrowing requested) of the Competitive Loan or Loans
that the Lender is willing to make, (y) the Competitive Bid Rate or Rates at which the Lender is
prepared to make the Competitive Loan or Loans and (z) the Interest Period and the last day
thereof. If any Lender invited to bid shall elect not to make a Competitive Bid, such Lender shall
so notify the Administrative Agent by fax (I) in the case of Eurocurrency Competitive Loans, not
later than 9:30 a.m., New York City time, three Business Days before a proposed Competitive
Borrowing, and (II) in the case of Fixed Rate Loans, not later than 9:30 a.m., New York City time,
on the day of a proposed Competitive Borrowing; provided, however, that failure by any Lender to
give such notice shall not cause such Lender to be obligated to make any Competitive Loan as part
of such Competitive Borrowing. A Competitive Bid submitted by a Lender pursuant to this paragraph
(b) shall be irrevocable.
(c) The Administrative Agent shall as promptly as practicable notify the applicable Borrower,
by fax, of all the Competitive Bids made, the Competitive Bid Rate and the principal amount of each
Competitive Loan in respect of which a Competitive Bid was made and the identity of the Lender that
made each bid. The Administrative Agent shall send a copy of all Competitive Bids to the
applicable Borrower for its records as soon as practicable after completion of the bidding process
set forth in this Section 2.03.
(d) The applicable Borrower may in its sole and absolute discretion, subject only to the
provisions of this paragraph (d), accept or reject any Competitive Bid referred to in paragraph (c)
above. The applicable Borrower shall notify the Administrative Agent by telephone, confirmed by
fax in the form of a Competitive Bid Accept/Reject Letter, whether and to what extent it has
decided to accept or reject any or all of the bids referred to in paragraph (c) above not more than
one hour after it shall have been notified of such bids by the Administrative Agent pursuant to
such paragraph (c); provided, however, that (i) the failure of the applicable Borrower to give such
notice shall be deemed to be a rejection of all the bids referred to in paragraph (c) above, (ii)
the applicable Borrower shall not accept a bid made at a particular Competitive Bid Rate if it has
decided to reject a bid made at a lower Competitive Bid Rate, (iii) the aggregate amount of the
Competitive Bids accepted by the applicable Borrower shall not exceed the principal amount
specified in the Competitive Bid Request, (iv) if the applicable Borrower shall accept a bid or
bids made at a particular Competitive Bid Rate but the amount of such bid or bids shall cause the
total amount of bids to be accepted to exceed the amount specified in the Competitive Bid Request,
then the applicable Borrower shall
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accept a portion of such bid or bids in an amount equal to the amount specified in the
Competitive Bid Request less the amount of all other Competitive Bids accepted with respect to such
Competitive Bid Request, which acceptance, in the case of multiple bids at such Competitive Bid
Rate, shall be made pro rata in accordance with the amount of each such bid at such Competitive Bid
Rate, and (v) except pursuant to clause (iv) above, no bid shall be accepted for a Competitive Loan
unless such Competitive Loan is in an amount that is an integral multiple of 1,000,000 units of the
applicable currency, and in calculating the pro rata allocation of acceptances of portions of
multiple bids at a particular Competitive Bid Rate pursuant to clause (iv) above, the amounts shall
be rounded to integral multiples of 1,000,000 units of the applicable currency in a manner which
shall be in the discretion of the applicable Borrower. A notice given pursuant to this paragraph
(d) shall be irrevocable.
(e) The Administrative Agent shall promptly notify each bidding Lender whether or not its
Competitive Bid has been accepted (and if so, in what amount and at what Competitive Bid Rate) by
fax, and each successful bidder will thereupon become bound, subject to the other applicable
conditions hereof, to make the Competitive Loan in respect of which its bid has been accepted.
(f) No Competitive Borrowing shall be requested or made hereunder if after giving effect
thereto (i) the Aggregate Credit Exposure would exceed the Total Commitment or (ii) in the event
the Maturity Date shall have been extended as provided in Section 2.12(d), the sum of the LC
Exposures attributable to Letters of Credit expiring after any Existing Maturity Date and the
Competitive Loan Exposures attributable to Competitive Loans maturing after such Existing Maturity
Date would exceed the aggregate Commitments that have been extended to a date after the expiration
date of the last of such Letters of Credit and the maturity of the last of such Competitive Loans.
(g) If the Administrative Agent shall elect to submit a Competitive Bid in its capacity as a
Lender, it shall submit such bid directly to the applicable Borrower one quarter of an hour earlier
than the latest time at which the other Lenders are required to submit their bids to the
Administrative Agent pursuant to paragraph (b) above.
SECTION 2.04. Revolving Borrowing Procedure. In order to request a Revolving Borrowing, a
Borrower shall hand deliver or fax to the Administrative Agent a duly completed Revolving Borrowing
Request in the form of Exhibit A-5 (i) in the case of a Eurocurrency Revolving Borrowing, not later
than 10:30 a.m., New York City time, three Business Days before such Borrowing, and (ii) in the
case of an ABR Borrowing, not later than 10:30 a.m., New York City time, on the day of such
Borrowing. No Fixed Rate Loan shall be requested or made pursuant to a Revolving Borrowing
Request. Such notice shall be irrevocable and shall in each case specify (A) whether the Borrowing
then being requested is to be a Eurocurrency Revolving Borrowing or an ABR Borrowing; (B) the date
of such Revolving Borrowing (which shall be a Business Day) and the amount thereof; and (C) if such
Borrowing is to be a Eurocurrency Revolving Borrowing, the Interest Period with respect thereto.
If no election as to the Type of Revolving Borrowing is specified in any such notice, then the
requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period with respect to any
Eurocurrency Revolving Borrowing is specified in any such notice, then the applicable Borrower
shall be deemed to have selected an Interest Period of one month’s duration. Notwithstanding any
other
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provision of this Agreement to the contrary, no Revolving Borrowing shall be requested if the
Interest Period with respect thereto would end after the Maturity Date in effect for any Lender.
The Administrative Agent shall promptly advise each of the Lenders of any notice given pursuant to
this Section 2.04 and of each Lender’s portion of the requested Borrowing.
SECTION 2.05. Letters of Credit. (a) General. The Borrowers may request the issuance of
Letters of Credit, in a form reasonably acceptable to the Administrative Agent and the applicable
Issuing Bank, appropriately completed, for the accounts of the Borrowers, at any time and from time
to time while the Commitments remain in effect. Each Existing Letter of Credit shall be deemed,
for all purposes of this Agreement, to be a Letter of Credit issued hereunder for the account of
the applicable Borrower. All Letters of Credit shall be denominated in Dollars. This Section
shall not be construed to impose an obligation upon any Issuing Bank to issue any Letter of Credit
that is inconsistent with the terms and conditions of this Agreement.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. In order to
request the issuance of a Letter of Credit (or to amend, renew or extend an existing Letter of
Credit), the applicable Borrower shall hand deliver or fax to the applicable Issuing Bank and the
Administrative Agent (reasonably in advance of, but not later than 10:00 a.m., New York City time,
five Business Days before, the requested date of issuance, amendment, renewal or extension) a
notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be
amended, renewed or extended, the date of issuance, amendment, renewal or extension, the date on
which such Letter of Credit is to expire (which shall comply with paragraph (c) below), the amount
of such Letter of Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare such Letter of Credit. Following receipt of such
notice and prior to the issuance of the requested Letter of Credit or the applicable amendment,
renewal or extension, the Administrative Agent shall notify the Borrowers, each Lender and the
applicable Issuing Bank of the amount of the Aggregate Credit Exposure after giving effect to (i)
the issuance, amendment, renewal or extension of such Letter of Credit, (ii) the issuance or
expiration of any other Letter of Credit that is to be issued or will expire prior to the requested
date of issuance of such Letter of Credit and (iii) the borrowing or repayment of any Loans that
(based upon notices delivered to the Administrative Agent by the Borrowers) are to be borrowed or
repaid prior to the requested date of issuance of such Letter of Credit. A Letter of Credit shall
be issued, amended, renewed or extended only if, and upon issuance, amendment, renewal or extension
of each Letter of Credit the Borrowers shall be deemed to represent and warrant that, (i) after
giving effect to such issuance, amendment, renewal or extension (A) the L/C Exposure shall not
exceed $100,000,000 and (B) the Aggregate Credit Exposure shall not exceed the Total Commitment,
(ii) in the case of a Letter of Credit that will expire later than the first anniversary of such
issuance, amendment, renewal or extension, the applicable Borrower, the applicable Issuing Bank and
the Required Lenders shall have reached agreement on the fees to be applicable thereto as
contemplated by the last sentence of Section 2.07(c) and (iii) in the event the Maturity Date shall
have been extended as provided in Section 2.12(d), the sum of the LC Exposures attributable to
Letters of Credit expiring after any Existing Maturity Date (as defined in Section 2.12(d)) and the
Competitive Loan Exposures attributable to
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Competitive Loans maturing after such Existing Maturity Date shall not exceed the aggregate
Commitments that have been extended to a date after the expiration date of the last of such Letters
of Credit and the maturity of the last of such Competitive Loans.
(c) Expiration Date. Each Letter of Credit shall expire at the close of business on the
earlier of (x) the date one year after the date of the issuance of such Letter of Credit (or, in
the case of any renewal or extension thereof, one year after such renewal or extension) or such
longer period as may be agreed to between the applicable Borrower and the Issuing Bank and (y) the
date that is five Business Days prior to the Maturity Date, unless such Letter of Credit expires by
its terms on an earlier date; provided that any Letter of Credit with a one-year tenor may provide
for renewal thereof under procedures reasonably satisfactory to the applicable Issuing Bank for
additional one-year periods (which shall in no event extend beyond the date referred to in clause
(y) above).
(d) Participations. By the issuance of a Letter of Credit and without any further action on
the part of the applicable Issuing Bank or the Lenders, the applicable Issuing Bank hereby grants
to each Lender, and each such Lender hereby acquires from the applicable Issuing Bank, a
participation in such Letter of Credit equal to such Lender’s Applicable Share from time to time of
the aggregate amount available to be drawn under such Letter of Credit, effective upon the issuance
of such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the
applicable Issuing Bank, such Lender’s Applicable Share from time to time of each L/C Disbursement
made by such Issuing Bank and not reimbursed by the applicable Borrower (or, if applicable, another
party pursuant to its obligations under any other Loan Document) by the time provided in Section
2.02(d). Each Lender acknowledges and agrees that its obligation to acquire participations
pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall
not be affected by any circumstance whatsoever, including the occurrence and continuance of a
Default or an Event of Default, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever.
(e) Reimbursement. If an Issuing Bank shall make any L/C Disbursement in respect of a Letter
of Credit, the applicable Borrower shall pay to the Administrative Agent such L/C Disbursement not
later than (i) if such Borrower shall have received notice of such L/C Disbursement prior to 10:00
a.m., New York City time, on any Business Day, 2:00 p.m., New York City time, on such Business Day
or (ii) otherwise, 12:00 noon, New York City time, on the Business Day next following the day on
which the Borrower shall have received notice from such Issuing Bank that payment of such draft
will be made.
(f) Obligations Absolute. The Borrowers’ obligations to reimburse L/C Disbursements as
provided in paragraph (e) above shall be absolute, unconditional and irrevocable, and shall be
performed strictly in accordance with the terms of this Agreement, under any and all circumstances
whatsoever, and irrespective of:
(i) any lack of validity or enforceability of any Letter of Credit or any Loan
Document, or any term or provision therein;
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(ii) any amendment or waiver of or any consent to departure from all or any of the
provisions of any Letter of Credit or any Loan Document;
(iii) the existence of any claim, setoff, defense or other right that the Borrowers,
any other party guaranteeing, or otherwise obligated with, the Borrowers, any Subsidiary or
other Affiliate thereof or any other Person may at any time have against the beneficiary
under any Letter of Credit, any Issuing Bank, the Administrative Agent or any Lender or any
other Person, whether in connection with this Agreement, any other Loan Document or any
other related or unrelated agreement or transaction;
(iv) any draft or other document presented under a Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(v) payment by the applicable Issuing Bank under a Letter of Credit against
presentation of a draft or other document that does not comply with the terms of such
Letter of Credit; and
(vi) any other act or omission to act or delay of any kind of any Issuing Bank, the
Lenders, the Administrative Agent or any other Person or any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for the
provisions of this Section, constitute a legal or equitable discharge of the Borrowers’
obligations hereunder.
Without limiting the generality of the foregoing, it is expressly understood and agreed that
the absolute and unconditional obligation of the Borrowers hereunder to reimburse L/C Disbursements
will not be excused by the gross negligence or wilful misconduct of any Issuing Bank, the
Administrative Agent or any Lender. However, the foregoing shall not be construed to excuse any
Issuing Bank from liability to the Borrowers to the extent of any direct damages (as opposed to
consequential damages, claims in respect of which are hereby waived by the Borrowers to the extent
permitted by applicable law) suffered by the Borrowers that are caused by such Issuing Bank’s gross
negligence or wilful misconduct in determining whether drafts and other documents presented under a
Letter of Credit comply with the terms thereof; it is understood that each Issuing Bank may accept
documents that appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary and, in making any payment
under any Letter of Credit (i) an Issuing Bank’s exclusive reliance on the documents presented to
it under such Letter of Credit as to any and all matters set forth therein, including reliance on
the amount of any draft presented under such Letter of Credit, whether or not the amount due to the
beneficiary thereunder equals the amount of such draft and whether or not any document presented
pursuant to such Letter of Credit proves to be insufficient in any respect, if such document on its
face appears to be in order, and whether or not any other statement or any other document presented
pursuant to such Letter of Credit proves to be forged or invalid or any statement therein proves to
be inaccurate or untrue in any respect whatsoever and (ii) any noncompliance in any immaterial
respect of the documents presented under such Letter of Credit with the terms thereof shall, in
each case, be deemed not to constitute wilful misconduct or gross negligence of an Issuing Bank.
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(g) Disbursement Procedures. The applicable Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for payment under a Letter
of Credit. Such Issuing Bank shall as promptly as possible give telephonic notification, confirmed
by fax, to the Administrative Agent and the applicable Borrower of such demand for payment and
whether such Issuing Bank has made or will make an L/C Disbursement thereunder; provided that any
failure to give or delay in giving such notice shall not relieve such Borrower of its obligation to
reimburse the Issuing Bank and the Lenders with respect to any such L/C Disbursement. The
Administrative Agent shall promptly give each Lender notice thereof.
(h) Interim Interest. If an Issuing Bank shall make any L/C Disbursement in respect of a
Letter of Credit, then, unless the applicable Borrower shall reimburse such L/C Disbursement in
full on the date such L/C Disbursement is made, the unpaid amount thereof shall bear interest for
the account of such Issuing Bank, for each day from and including the date of such L/C
Disbursement, to but excluding the earlier of the date of payment or the date on which interest
shall commence to accrue on Loans made to reimburse such L/C Disbursements provided in Section
2.02(d).
(i) Resignation or Removal of an Issuing Bank. An Issuing Bank may resign at any time by
giving 180 days’ prior written notice to the Administrative Agent, the Lenders and the Company, and
may be removed at any time by the Company by notice to the Issuing Bank, the Administrative Agent
and the Lenders. Subject to the next succeeding paragraph, upon the acceptance of any appointment
as an Issuing Bank hereunder by a successor Issuing Bank, such successor shall succeed to and
become vested with all the interests, rights and obligations of the retiring Issuing Bank and the
retiring Issuing Bank shall be discharged from its obligations to issue additional Letters of
Credit hereunder. At the time such removal or resignation shall become effective, the Borrowers
shall pay all accrued and unpaid fees pursuant to Section 2.07(c)(ii). The acceptance of any
appointment as an Issuing Bank hereunder by a successor Lender shall be evidenced by an agreement
entered into by such successor, in a form satisfactory to the Company and the Administrative Agent,
and, from and after the effective date of such agreement, (i) such successor Lender shall have all
the rights and obligations of the previous Issuing Bank under this Agreement and the other Loan
Documents and (ii) references herein and in the other Loan Documents to the term “Issuing Bank”
shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the resignation or removal of
an Issuing Bank hereunder, the retiring Issuing Bank shall remain a party hereto and shall continue
to have all the rights and obligations of an Issuing Bank under this Agreement and the other Loan
Documents with respect to Letters of Credit issued by it prior to such resignation or removal, but
shall not be required to issue additional Letters of Credit.
(j) Additional Issuing Banks. The Company may, at any time and from time to time with the
consent of the Administrative Agent (which consent shall not be unreasonably withheld) and such
Lender, designate one or more additional Lenders to act as an issuing bank under the terms of this
Agreement. Any Lender designated as an issuing bank pursuant to this paragraph shall, upon
entering into an Issuing Bank
34
Agreement with the Company, be deemed to be an “Issuing Bank” (in addition to being a Lender)
hereunder.
(k) Issuing Bank Reports. Unless otherwise agreed by the Administrative Agent, each Issuing
Bank shall report in writing to the Administrative Agent (i) on or prior to each Business Day on
which such Issuing Bank issues, amends, renews or extends any Letter of Credit, the date of such
issuance, amendment, renewal or extension, and the aggregate face amount of the Letters of Credit
issued, amended, renewed or extended by it and outstanding after giving effect to such issuance,
amendment, renewal or extension (and whether the amount thereof shall have changed), it being
understood that such Issuing Bank shall not effect any issuance, renewal, extension or amendment
resulting in an increase in the aggregate amount of the Letters of Credit issued by it without
first obtaining written confirmation from the Administrative Agent that such increase is then
permitted under this Agreement, (ii) on each Business Day on which such Issuing Bank makes any L/C
Disbursement, the date and amount of such L/C Disbursement, (iii) on any Business Day on which a
Borrower fails to reimburse an L/C Disbursement required to be reimbursed to such Issuing Bank on
such day, the date of such failure and the amount of such L/C Disbursement and (iv) on any other
Business Day, such other information as the Administrative Agent shall reasonably request as to the
Letters of Credit issued by such Issuing Bank.
SECTION 2.06. Conversion and Continuation of Revolving Loans. Each Borrower shall have the
right at any time upon prior irrevocable notice to the Administrative Agent (i) not later than
10:30 a.m., New York City time, on the day of the conversion, to convert all or any part of any
Eurocurrency Revolving Loan into an ABR Loan, and (ii) not later than 10:30 a.m., New York City
time, three Business Days prior to conversion or continuation, to convert any ABR Loan into a
Eurocurrency Revolving Loan or to continue any Eurocurrency Revolving Loan as a Eurocurrency
Revolving Loan for an additional Interest Period, subject in each case to the following:
(a) if less than all the outstanding principal amount of any Revolving Borrowing shall be
converted or continued, the aggregate principal amount of the Revolving Borrowing converted or
continued shall be an integral multiple of $5,000,000 and not less than $10,000,000;
(b) accrued interest on a Revolving Borrowing (or portion thereof) being converted shall be
paid by the Borrower at the time of conversion;
(c) if any Eurocurrency Revolving Loan is converted at a time other than the end of the
Interest Period applicable thereto, the Borrower shall pay, upon demand, any amounts due to the
Lenders pursuant to Section 2.16;
(d) any portion of a Revolving Borrowing maturing or required to be repaid in less than one
month may not be converted into or continued as a Eurocurrency Revolving Loan;
(e) any portion of a Eurocurrency Revolving Loan which cannot be continued as a Eurocurrency
Revolving Loan by reason of clause (d) above shall be
35
automatically converted at the end of the Interest Period in effect for such Eurocurrency
Revolving Loan into an ABR Borrowing;
(f) no Interest Period may be selected for any Eurocurrency Revolving Borrowing that would end
later than the Maturity Date in effect for any Lender; and
(g) at any time when there shall have occurred and be continuing any Default or Event of
Default, if the Administrative Agent or the Required Lenders shall so notify the Company, no
Revolving Loan may be converted into or continued as a Eurocurrency Revolving Loan.
Each notice pursuant to this Section shall be irrevocable and shall refer to this Agreement
and specify (i) the identity and amount of the Revolving Borrowing to be converted or continued,
(ii) whether such Revolving Borrowing is to be converted to or continued as a Eurocurrency
Revolving Borrowing or an ABR Borrowing, (iii) if such notice requests a conversion, the date of
such conversion (which shall be a Business Day) and (iv) if such Revolving Borrowing is to be
converted to or continued as a Eurocurrency Revolving Borrowing, the Interest Period with respect
thereto. If no Interest Period is specified in any such notice with respect to any conversion to
or continuation as a Eurocurrency Revolving Borrowing, the Borrower shall be deemed to have
selected an Interest Period of one month’s duration. If no notice shall have been given in
accordance with this Section 2.06 to convert or continue any Revolving Borrowing, such Revolving
Borrowing shall, at the end of the Interest Period applicable thereto (unless repaid pursuant to
the terms hereof), automatically be continued into a new Interest Period as an ABR Borrowing.
SECTION 2.07. Fees. (a) The Company agrees to pay to each Lender, through the Administrative
Agent, on each March 31, June 30, September 30 and December 31 (with the first payment being due on
September 30, 2011) and on each date on which the Commitment of such Lender shall be terminated as
provided herein (and any subsequent date on which such Lender shall cease to have any Revolving
Credit Exposure or L/C Exposure), a facility fee (a “Facility Fee”), at a rate per annum equal to
the Applicable Percentage from time to time in effect, on the amount of the Commitment of such
Lender, whether used or unused, during the preceding quarter (or other period commencing on the
Closing Date, or ending with the Maturity Date or any date on which the Commitment of such Lender
shall be terminated) or, if such Lender continues to have any Revolving Credit Exposure or L/C
Exposure after its Commitment terminates, on the daily amount of such Lender’s Revolving Credit
Exposure and L/C Exposure. All Facility Fees shall be computed on the basis of the actual number
of days elapsed in a year of 365 or 366 days, as the case may be. The Facility Fee due to each
Lender shall commence to accrue on the Closing Date and shall cease to accrue on the earlier of the
Maturity Date and the termination of the Commitment of such Lender as provided herein.
(b) The Company agrees to pay the Administrative Agent, for its own account, the
administrative and other fees separately agreed to by the Company and the Administrative Agent (the
"Administrative Fees”).
(c) The Company agrees to pay (i) to each Lender, through the Administrative Agent, on each
March 31, June 30, September 30 and December 31 and
36
on the date on which the Commitment of such Lender shall be terminated as provided herein, a
fee (an “L/C Participation Fee”) calculated on such Lender’s average daily L/C Exposure (excluding
the portion thereof attributable to unreimbursed L/C Disbursements) during the preceding quarter
(or shorter period commencing with the Effective Date or ending with the later of (A) the Maturity
Date or the date on which the Commitment of such Lender shall be terminated and (B) the date on
which such Lender shall cease to have any L/C Exposure) at a rate equal to the Applicable
Percentage from time to time, and (ii) to each Issuing Bank with respect to each Letter of Credit
issued by it the fees agreed upon by the Company and such Issuing Bank plus, in connection with the
issuance, amendment or transfer of any Letter of Credit or any L/C Disbursement, such Issuing
Bank’s customary documentary and processing charges (collectively, the “Issuing Bank Fees”). All
L/C Participation Fees and Issuing Bank Fees shall be computed on the basis of the actual number of
days elapsed in a year of 360 days. Notwithstanding the foregoing, in the case of any Letter of
Credit that will expire later than the first anniversary of the issuance, amendment, renewal or
extension thereof, the L/C Participation Fee and Issuing Bank Fees shall be increased by an amount
to be agreed upon prior to such issuance, amendment, renewal or extension by the applicable
Borrower, the applicable Issuing Bank and the Required Lenders.
(d) The Company agrees to pay to each Lender, through the Administrative Agent, on the earlier
of the Closing Date and the date on which the Commitments terminate (if such earlier date is later
than November 30, 2011), a ticking fee (the “Ticking Fee”) equal to 0.20% per annum of the daily
aggregate principal amount of the Commitment of such Lender for the period commencing on and
including November 30, 2011, and ending on but excluding the Closing Date.
(e) All Fees shall be paid on the dates due, in immediately available funds, to the
Administrative Agent for distribution, if and as appropriate, among the Lenders, except that the
Issuing Bank Fees shall be paid directly to the applicable Issuing Banks and the Administrative
Fees shall be paid pursuant to paragraph (b) above. Once paid, none of the Fees shall be
refundable under any circumstances in the absence of demonstrable error.
SECTION 2.08. Repayment of Loans; Evidence of Debt. (a) Each Borrower hereby agrees that the
outstanding principal balance of each Revolving Loan shall be payable on the Maturity Date and that
the outstanding principal balance of each Competitive Loan shall be payable on the last day of the
Interest Period applicable thereto. Each Loan shall bear interest on the outstanding principal
balance thereof as set forth in Section 2.09.
(b) Each Lender shall maintain in accordance with its usual practice an account or accounts
evidencing the indebtedness to such Lender resulting from each Loan made by such Lender from time
to time, including the amounts of principal and interest payable and paid to such Lender from time
to time under this Agreement.
(c) The Administrative Agent shall maintain accounts in which it will record (i) the amount of
each Loan made hereunder, the currency of each Loan, the Borrower of each Loan, the Type of each
Loan made and the Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and
37
payable from each Borrower to each Lender hereunder and (iii) the amount of any sum received
by the Administrative Agent hereunder from each Borrower and each Lender’s share thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs (b) and (c) of this
Section shall, to the extent permitted by applicable law, be prima facie evidence of the existence
and amounts of the obligations therein recorded; provided, however, that the failure of any Lender
or the Administrative Agent to maintain such accounts or any error therein shall not in any manner
affect the obligations of the Borrowers to repay the Loans in accordance with their terms.
(e) Any Lender may request that Loans made by it be evidenced by promissory notes. In such
event, the Borrowers shall prepare, execute and deliver to such Lender promissory notes payable to
such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Administrative Agent. Thereafter, the Loans evidenced by such promissory
notes and interest thereon shall at all times (including after assignment pursuant to Section 9.04)
be represented by one or more promissory notes in such form payable to the payee named therein (or,
if such promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.09. Interest on Loans. (a) Subject to the provisions of Section 2.10, the Loans
comprising each Eurocurrency Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to (i) in the case of
each Eurocurrency Revolving Loan, the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Percentage from time to time in effect, and (ii) in the case of each
Eurocurrency Competitive Loan, the LIBO Rate for the Interest Period in effect for such Borrowing
plus the Margin offered by the Lender making such Loan and accepted by the applicable Borrower
pursuant to Section 2.03.
(b) Subject to the provisions of Section 2.10, the Loans comprising each ABR Borrowing shall
bear interest (computed on the basis of the actual number of days elapsed over a year of 365 or 366
days, as the case may be, for periods during which the Alternate Base Rate is determined by
reference to the Prime Rate and 360 days for other periods) at a rate per annum equal to the
Alternate Base Rate plus the Applicable Percentage.
(c) Subject to the provisions of Section 2.10, each Fixed Rate Loan shall bear interest at a
rate per annum (computed on the basis of the actual number of days elapsed over a year of 360 days)
equal to the fixed rate of interest offered by the Lender making such Loan and accepted by the
applicable Borrower pursuant to Section 2.03.
(d) Interest on each Loan shall be payable on each Interest Payment Date applicable to such
Loan except as otherwise provided in this Agreement. The applicable Adjusted LIBO Rate, LIBO Rate
or Alternate Base Rate for each Interest Period or day within an Interest Period, as the case may
be, shall be determined by the Administrative Agent, and such determination shall be conclusive
absent manifest error.
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SECTION 2.10. Default Interest. If a Borrower shall default in the payment of the principal
of or interest on any Loan or any other amount becoming due hereunder, whether at scheduled
maturity, by notice of prepayment, by acceleration or otherwise, such Borrower shall on demand from
time to time from the Administrative Agent pay interest, to the extent permitted by law, on such
defaulted amount up to (but not including) the date of actual payment (after as well as before
judgment) at a rate per annum (computed as provided in Section 2.09(b)) equal to the Alternate Base
Rate plus 2%.
SECTION 2.11. Alternate Rate of Interest. In the event, and on each occasion, that on the day
two Business Days prior to the commencement of any Interest Period for a Eurocurrency Borrowing,
the Administrative Agent shall have determined (i) that deposits in the currency and principal
amounts of the Eurocurrency Loans comprising such Borrowing are not generally available in the
London market or (ii) that reasonable means do not exist for ascertaining the Adjusted LIBO Rate,
the Administrative Agent shall, as soon as practicable thereafter, give fax notice of such
determination to the Borrowers and the Lenders. In the event of any such determination under
clause (i) or (ii) above, until the Administrative Agent shall have advised the Company and the
Lenders that the circumstances giving rise to such notice no longer exist, (x) any request by a
Borrower for a Eurocurrency Competitive Borrowing pursuant to Section 2.03 shall be of no force and
effect and shall be denied by the Administrative Agent, and (y) any request by a Borrower for a
Eurocurrency Revolving Borrowing pursuant to Section 2.04 shall be deemed to be a request for an
ABR Borrowing. In the event the Required Lenders notify the Administrative Agent that the rates at
which Dollar deposits are being offered will not adequately and fairly reflect the cost to such
Lenders of making or maintaining Eurocurrency Loans in Dollars during such Interest Period, the
Administrative Agent shall notify the applicable Borrower of such notice and until the Required
Lenders shall have advised the Administrative Agent that the circumstances giving rise to such
notice no longer exist, any request by such Borrower for a Eurocurrency Revolving Borrowing shall
be deemed a request for an ABR Borrowing. Each determination by the Administrative Agent hereunder
shall be made in good faith and shall be conclusive absent manifest error.
SECTION 2.12. Termination, Reduction, Extension and Increase of Commitments. (a) The
Commitments shall be automatically terminated (i) on March 31, 2012, if the Effective Date shall
not have occurred by such date, and (ii) otherwise, on the Maturity Date.
(b) Upon at least three Business Days’ prior irrevocable fax notice to the Administrative
Agent, the Company may at any time in whole permanently terminate, or from time to time in part
permanently reduce, the Total Commitment; provided, however, that (i) each partial reduction of the
Total Commitment shall be in an integral multiple of $10,000,000 and (ii) no such termination or
reduction shall be made (A) which would reduce the Total Commitment to an amount less than the
Aggregate Credit Exposure or (B) which would reduce any Lender’s Commitment to an amount that is
less than the sum of such Lender’s Revolving Credit Exposure and L/C Exposure.
(c) Each reduction in the Total Commitment hereunder shall be made ratably among the Lenders
in accordance with their respective Commitments. The
39
Borrowers shall pay to the Administrative Agent for the account of the Lenders, on the date of
each reduction or termination of the Total Commitment, the Facility Fees on the amount of the
Commitments terminated accrued through the date of such termination or reduction.
(d) The Company may, by written notice to the Administrative Agent (which shall promptly
deliver a copy to each of the Lenders) not less than 30 days and not more than 90 days prior to any
anniversary of the date hereof, request that the Lenders extend the Maturity Date and the
Commitments for an additional period of one year. Each Lender shall, by notice to the Company and
the Administrative Agent given not later than the 20th day after the date of the Administrative
Agent’s receipt of the Company’s extension request, advise the Company whether or not it agrees to
the requested extension (each Lender agreeing to a requested extension being called a “Consenting
Lender” and each Lender declining to agree to a requested extension being called a “Declining
Lender”). Any Lender that has not so advised the Company and the Administrative Agent by such day
shall be deemed to have declined to agree to such extension and shall be a Declining Lender. If
Lenders constituting the Required Lenders shall have agreed to an extension request, then the
Maturity Date shall, as to the Consenting Lenders, be extended to the first anniversary of the
Maturity Date theretofore in effect. The decision to agree or withhold agreement to any Maturity
Date extension shall be at the sole discretion of each Lender. The Commitment of any Declining
Lender shall terminate on the Maturity Date in effect prior to giving effect to any such extension
(such Maturity Date being called the “Existing Maturity Date”). The principal amount of any
outstanding Loans made by Declining Lenders, together with any accrued interest thereon and any
accrued fees and other amounts payable to or for the accounts of such Declining Lenders hereunder,
shall be due and payable on the Existing Maturity Date, and on the Existing Maturity Date, the
Borrowers shall also make such other prepayments of their Loans as shall be required in order that,
after giving effect to the termination of the Commitments of, and all payments to, Declining
Lenders pursuant to this sentence, the Aggregate Credit Exposures shall not exceed the Total
Commitment. Notwithstanding the foregoing provisions of this paragraph, the Company shall have the
right, pursuant to Section 9.04, at any time prior to the Existing Maturity Date, to replace a
Declining Lender with a Lender or other financial institution that will agree to a request for the
extension of the Maturity Date, and any such replacement Lender shall for all purposes constitute a
Consenting Lender. Notwithstanding the foregoing, no extension of the Maturity Date pursuant to
this paragraph shall become effective unless (i) the Administrative Agent shall have received
documents consistent with those delivered with respect to the Company and the Borrowers under
Section 4.02(a) and (b) and Section 4.03(a), giving effect to such extension and (ii) on the
anniversary of the date hereof that immediately follows the date on which the Company delivers the
applicable request for extension of the Maturity Date, the conditions set forth in paragraphs (b)
and (c) of Section 4.01 shall be satisfied (with all references in such paragraphs to a Borrowing
being deemed to be references to such extension and without giving effect to the parenthetical in
Section 4.01(b)) and the Administrative Agent shall have received a certificate to that effect
dated such date and executed by a Financial Officer of the Company.
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(e) The Company may, by written notice to the Administrative Agent, executed by the Company
and one or more financial institutions (any such financial institution referred to in this Section
being called an “Increasing Lender”), which may include any Lender, cause Commitments to be
extended by the Increasing Lenders (or cause the Commitments of the Increasing Lenders to be
increased, as the case may be) in an amount for each Increasing Lender set forth in such notice,
provided, however, that (a) the aggregate amount of all new Commitments and increases in existing
Commitments pursuant to this paragraph during the term of this Agreement shall in no event exceed
$200,000,000, (b) each Increasing Lender, if not already a Lender hereunder, (x) shall have a
Commitment, immediately after the effectiveness of such increase, of at least $25,000,000, (y)
shall be subject to the approval of the Administrative Agent and each Issuing Bank (which approval
shall not be unreasonably withheld) and (z) shall become a party to this Agreement by completing
and delivering to the Administrative Agent a duly executed accession agreement in a form
satisfactory to the Administrative Agent and the Company (an “Accession Agreement”) and (c) the
decision of any existing Lender to become an Increasing Lender shall be in the sole discretion of
such Lender, and no existing Lender shall be required to increase its Commitment hereunder. New
Commitments and increases in Commitments pursuant to this Section shall become effective on the
date specified in the applicable notices delivered pursuant to this Section. Upon the
effectiveness of any Accession Agreement to which any Increasing Lender is a party, (i) such
Increasing Lender shall thereafter be deemed to be a party to this Agreement and shall be entitled
to all rights, benefits and privileges accorded a Lender hereunder and subject to all obligations
of a Lender hereunder and (ii) Schedule 2.01 shall be deemed to have been amended to reflect the
Commitment of such Increasing Lender as provided in such Accession Agreement. Upon the
effectiveness of any increase pursuant to this Section in the Commitment of a Lender already a
party hereto, Schedule 2.01 shall be deemed to have been amended to reflect the increased
Commitment of such Lender. Notwithstanding the foregoing, no increase in the aggregate Commitments
(or in the Commitment of any Lender) shall become effective under this Section unless, on the date
of such increase, (i) the Administrative Agent shall have received documents consistent with those
delivered with respect to the Company and the Borrowers under Section 4.02(a) and (b) and Section
4.03(a), giving effect to such increase and (ii) the conditions set forth in paragraphs (b) and (c)
of Section 4.01 shall be satisfied (with all references in such paragraphs to a Borrowing being
deemed to be references to such increase and without giving effect to the parenthetical in Section
4.01(b)) and the Administrative Agent shall have received a certificate to that effect dated such
date and executed by a Financial Officer of the Company. Following any extension of a new
Commitment or increase of a Lender’s Commitment pursuant to this paragraph, any Revolving Loans
outstanding prior to the effectiveness of such increase or extension shall continue outstanding
until the ends of the respective Interests Periods applicable thereto, and shall then be repaid or
refinanced with new Revolving Loans made pursuant to Section 2.01.
SECTION 2.13. Prepayment. (a) Each Borrower shall have the right at any time and from time
to time to prepay any Revolving Borrowing, in whole or in part, upon giving fax notice (or
telephone notice promptly confirmed by fax) to the Administrative Agent: (i) before 10:00 a.m.,
New York City time, three Business Days prior to prepayment, in the case of Eurocurrency Revolving
Loans, and (ii) before
41
10:00 a.m., New York City time, one Business Day prior to prepayment, in the case of ABR Loans;
provided, however, that in the case of any Revolving Borrowing, each partial prepayment shall be in
an amount which is an integral multiple of $10,000,000 and not less than $50,000,000.
(b) On the date of any termination or reduction of the Commitments pursuant to Section 2.12,
the Borrowers shall pay or prepay so much of the Revolving Borrowings as shall be necessary in
order that the Aggregate Credit Exposure will not exceed the Total Commitment after giving effect
to such termination or reduction.
(c) Each notice of prepayment shall specify the prepayment date and the principal amount of
each Borrowing (or portion thereof) to be prepaid, shall be irrevocable and shall commit the
applicable Borrower to prepay such Borrowing (or portion thereof) by the amount stated therein on
the date stated therein. All prepayments under this Section shall be subject to Section 2.16 but
otherwise without premium or penalty. All prepayments under this Section shall be accompanied by
accrued interest on the principal amount being prepaid to the date of payment.
SECTION 2.14. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision herein, if after the date of this Agreement any
Change in Law shall result in the imposition, modification or applicability of any reserve, special
deposit or similar requirement against assets of, deposits with or for the account of or credit
extended by any Credit Party, or shall result in the imposition on any Credit Party or the London
interbank market of any other condition affecting this Agreement, such Credit Party’s Commitment or
any Eurocurrency Loan or Fixed Rate Loan made by such Credit Party or any Letter of Credit, and the
result of any of the foregoing shall be to increase the cost to such Credit Party of making or
maintaining any Eurocurrency Loan or Fixed Rate Loan or of issuing or maintaining any Letter of
Credit or to reduce the amount of any sum received or receivable by such Credit Party hereunder
(whether of principal, interest or otherwise) by an amount deemed by such Credit Party to be
material, then such additional amount or amounts as will compensate such Credit Party for such
additional costs or reduction will be paid by the Borrowers to such Credit Party upon demand.
Notwithstanding the foregoing, no Credit Party shall be entitled to request compensation under this
paragraph, (A) with respect to any Competitive Loan made by such Credit Party if the Change in Law
giving rise to such request was applicable to such Credit Party at the time of submission of the
Competitive Bid pursuant to which such Competitive Loan was made or issued, or (B) with respect to
any Change in Law in respect of costs imposed on such Lender or Issuing Bank under the Dodd-Frank
Wall Street Reform and Consumer Protection Act or Basel III (x) if the applicable Change in Law and
the resulting costs shall have become fully effective without the need for any further legislative
or regulatory action, and such increased costs shall have been determined by such Credit Party, in
each case prior to July 20, 2011, or (y) if it shall not be the general policy or practice of such
Credit Party to seek compensation in similar circumstances under similar provisions in comparable
credit facilities, as determined in good faith by such Credit Party.
(b) If any Credit Party shall have determined that any Change in Law regarding capital
adequacy has or would have the effect of reducing the rate of return on such Credit Party’s capital
or on the capital of such Credit Party’s holding company, if
42
any, as a consequence of this Agreement, such Credit Party’s Commitment or the Loans made or
Letters of Credit issued by such Credit Party pursuant hereto to a level below that which such
Credit Party or such Credit Party’s holding company could have achieved but for such Change in Law
(taking into consideration such Credit Party’s policies and the policies of such Credit Party’s
holding company with respect to capital adequacy) by an amount deemed by such Credit Party to be
material, then from time to time such additional amount or amounts as will compensate such Credit
Party for such reduction will be paid by the Borrowers to such Credit Party.
(c) A certificate of any Credit Party setting forth such amount or amounts as shall be
necessary to compensate such Credit Party or its holding company as specified in paragraph (a) or
(b) above, as the case may be, shall be delivered to the Company and shall be conclusive absent
manifest error. The Borrowers shall pay such Credit Party the amount shown as due on any such
certificate delivered by it within 10 days after its receipt of the same.
(d) Failure on the part of any Credit Party to demand compensation for any increased costs or
reduction in amounts received or receivable or reduction in return on capital with respect to any
period shall not constitute a waiver of such Credit Party’s right to demand compensation with
respect to such period or any other period; provided that the Borrowers shall not be required to
compensate any Credit Party pursuant to this Section for any increased costs or expenses incurred
or reductions suffered more than 90 days prior to the date that such Credit Party notifies the
Company of the Change in Law giving rise to such increased costs or expenses or reductions and of
such Credit Party’s intention to claim compensation therefor; provided further
that, if the Change in Law giving rise to such increased costs or expenses or reductions is
retroactive, then the 90-day period referred to above shall be extended to include the period of
retroactive effect thereof. The protection of this Section shall be available to each Credit Party
regardless of any possible contention of the invalidity or inapplicability of the Change in Law
which shall have occurred or been imposed.
SECTION 2.15. Change in Legality. (a) Notwithstanding any other provision herein, if any
change in any law or regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it unlawful for any Lender or
any of its Affiliates to make or maintain any Eurocurrency Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurocurrency Loan, then, by written notice
to the Company and to the Administrative Agent, such Lender may:
(i) declare that Eurocurrency Loans will not thereafter be made by such Lender
hereunder, whereupon such Lender shall not submit a Competitive Bid in response to a
request for a Eurocurrency Competitive Borrowing, and any request for a Eurocurrency
Revolving Borrowing shall, as to such Lender only, be deemed a request for an ABR Loan,
unless such declaration shall be subsequently withdrawn; and
(ii) require that all outstanding Eurocurrency Loans denominated in Dollars made by it
be converted to ABR Loans (which ABR Loans shall, for purposes of this Section 2.15, be
determined at a rate per annum by reference to
43
the greater of clause (a) or (b) of the definition of the term “Alternate Base Rate”)
and that all outstanding Eurocurrency Loans denominated in the affected Non-US Currency be
promptly prepaid, in which event all such Eurocurrency Loans in Dollars shall be
automatically converted to ABR Loans (at a rate per annum as so determined) as of the
effective date of such notice as provided in paragraph (b) below and all such Non-US
Currency Loans shall be promptly prepaid.
In the event any Lender shall exercise its rights under (i) or (ii) above with respect to
Eurocurrency Loans, all payments and prepayments of principal which would otherwise have been
applied to repay the Eurocurrency Loans that would have been made by such Lender or the converted
Eurocurrency Loans of such Lender shall instead be applied to repay the ABR Loans made by such
Lender in lieu of, or resulting from the conversion of, such Eurocurrency Loans.
(b) For purposes of this Section 2.15, a notice by any Lender shall be effective as to each
Eurocurrency Loan, if lawful, on the last day of the Interest Period currently applicable to such
Eurocurrency Loan; in all other cases such notice shall be effective on the date of receipt.
SECTION 2.16. Indemnity. The Borrowers shall indemnify each Lender against any out-of-pocket
loss or reasonable expense which such Lender may sustain or incur as a consequence of (a) any
failure to borrow or to refinance, convert or continue any Loan hereunder after irrevocable notice
of such borrowing, refinancing, conversion or continuation has been given pursuant to Section 2.03,
2.04 or 2.06, (b) any payment, prepayment or conversion, or assignment required under Section 2.21,
of a Eurocurrency Loan required by any other provision of this Agreement or otherwise made or
deemed made on a date other than the last day of the Interest Period, if any, applicable thereto,
(c) any default in payment or prepayment of the principal amount of any Loan or any part thereof or
interest accrued thereon, as and when due and payable (at the due date thereof, whether by
scheduled maturity, acceleration, irrevocable notice of prepayment or otherwise) or (d) the
occurrence of any Event of Default, including, in each such case, any loss or reasonable expense
sustained or incurred or to be sustained or incurred in liquidating or employing deposits from
third parties acquired to effect or maintain such Loan or any part thereof as a Eurocurrency Loan.
Such loss or reasonable expense shall include an amount equal to the excess, if any, as reasonably
determined by such Lender, of (i) its cost of obtaining the funds for the Loan being paid, prepaid,
refinanced or not borrowed (assumed to be the Adjusted LIBO Rate applicable thereto) for the period
from the date of such payment, prepayment, refinancing or failure to borrow or refinance to the
last day of the Interest Period for such Loan (or, in the case of a failure to borrow or refinance
the Interest Period for such Loan which would have commenced on the date of such failure) over (ii)
the amount of interest (as reasonably determined by such Lender) that would be realized by such
Lender in reemploying the funds so paid, prepaid or not borrowed or refinanced for such period or
Interest Period, as the case may be. A certificate of any Lender setting forth any amount or
amounts which such Lender is entitled to receive pursuant to this Section as a result of any loss
shall be delivered to such Borrower and shall be conclusive absent manifest error; provided that
any expenses related to any such loss that are incurred by such Lender and reported under such
certificate shall be required to be reasonably documented.
44
SECTION 2.17. Pro Rata Treatment. Except as required under Sections 2.15 and 2.21, each
payment of the Facility Fees and each reduction of the Commitments shall be allocated pro rata
among the Lenders in accordance with their respective Commitments (or, if such Commitments shall
have expired or been terminated, in accordance with the respective principal amounts of their
outstanding Revolving Loans). Except as required under Section 2.15, each payment or repayment of
principal of any Revolving Borrowing and each refinancing or conversion of any Revolving Borrowing
shall be allocated pro rata among the Lenders in accordance with the respective principal amounts
of their outstanding Revolving Loans comprising such Borrowing, and each payment of interest on any
Revolving Borrowing shall be allocated pro rata among the Lenders in accordance with the respective
amounts of accrued and unpaid interest on their outstanding Revolving Loans comprising such
Borrowing. Each payment of principal of any Competitive Borrowing shall be allocated pro rata
among the Lenders participating in such Borrowing in accordance with the respective principal
amounts of their outstanding Competitive Loans comprising such Borrowing. Each payment of interest
on any Competitive Borrowing shall be allocated pro rata among the Lenders participating in such
Borrowing in accordance with the respective amounts of accrued and unpaid interest on their
outstanding Competitive Loans comprising such Borrowing. For purposes of determining the
Commitments of the Lenders at any time, each outstanding Competitive Borrowing shall be deemed to
have utilized the Commitments of the Lenders (including those Lenders which shall not have made
Loans as part of such Competitive Borrowing) pro rata in accordance with their respective
Commitments. Each Lender agrees that in computing such Lender’s portion of any Borrowing to be
made hereunder, the Administrative Agent may, in its discretion, round each Lender’s percentage of
such Borrowing to the next higher or lower whole Dollar amount.
SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if it shall, through the exercise
of a right of banker’s lien, setoff or counterclaim, or pursuant to a secured claim under Section
506 of Title 11 of the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable bankruptcy, insolvency or
other similar law or otherwise, or by any other means (other than pursuant to Sections 2.14, 2.16
or 2.20), obtain payment (voluntary or involuntary) in respect of any Revolving Loans or amounts
owed to it in respect of L/C Disbursements as a result of which the unpaid principal portion of its
Revolving Loans and the amounts owed to it in respect of L/C Disbursements shall be proportionately
less than the unpaid principal portion of the Revolving Loans and amounts owed in respect of L/C
Disbursements of any other Lender, it shall be deemed simultaneously to have purchased from such
other Lender at face value, and shall promptly pay to such other Lender the purchase price for, a
participation in the Revolving Loans and amounts owed in respect of L/C Disbursements of such other
Lender, so that the aggregate unpaid principal amount of the Revolving Loans and participations in
the Revolving Loans and amounts owed in respect of L/C Disbursements of each Lender shall be in the
same proportion to the aggregate unpaid principal amount of all Revolving Loans and amounts owed in
respect of L/C Disbursements then outstanding as the principal amount of its Revolving Loans and
the amounts owed to it in respect of L/C Disbursements prior to such exercise of banker’s lien,
setoff or counterclaim or other event was to the principal amount of all Revolving Loans and
amounts owed in respect of L/C Disbursements
45
outstanding prior to such exercise of banker’s lien,
setoff or counterclaim or other event;
provided, however, that, if any such purchase or purchases or adjustments shall be made
pursuant to this Section 2.18 and the payment giving rise thereto shall thereafter be recovered,
such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the
purchase price or prices or adjustment restored without interest. Any Lender holding a
participation in a Revolving Loan or amount owed in respect of an L/C Disbursement deemed to have
been so purchased may exercise any and all rights of banker’s lien, setoff or counterclaim with
respect to any and all moneys owing to such Lender by reason thereof as fully as if such Lender had
made a Revolving Loan in the amount of such participation.
SECTION 2.19. Payments. (a) Except to the extent that any Tax is required to be withheld or
deducted under applicable law or regulation, but subject to the provisions of Section 2.20, the
Borrowers shall make each payment (including principal of or interest on any Borrowing or any L/C
Disbursement and any Fees or other amounts) hereunder without deduction, counter-claim or setoff in
immediately available funds from an account in the United States not later than 12:00 noon, local
time at the place of payment, on the date when due in immediately available funds to the
Administrative Agent at its offices at 383 Madison Avenue, New York, New York. Each such payment
(other than principal of and interest on Non-US Currency Loans, which shall be made in the
applicable Non-US Currencies) shall be made in Dollars. The Administrative Agent shall promptly
distribute all payments for the accounts of the Lenders received by it to the Lenders.
(b) Whenever any payment (including principal of or interest on any Borrowing or any Fees or
other amounts) hereunder shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of interest or Fees, if applicable.
(c) Notwithstanding any contrary provision hereof, if any Lender shall fail to make any
payment required to be made by it hereunder to or for the account of the Administrative Agent or
any Issuing Bank, the Administrative Agent may, in its discretion, until such time as all such
unsatisfied obligations of such Lender have been fully paid, (i) apply any amounts received by the
Administrative Agent for the account of such Lender for the benefit of the Administrative Agent or
the applicable Issuing Bank to satisfy such Lender’s obligations to it under each such Section
and/or (ii) hold any such amounts in a segregated account as cash collateral for, and for
application to, any future obligations of such Lender under any such Section, in each case in any
order as determined by the Administrative Agent in its discretion.
SECTION 2.20. Taxes. (a) Each payment by each applicable Borrower under this Agreement shall
be made without withholding for any Taxes, unless such withholding is required by any law. If any
Withholding Agent determines, in its sole discretion exercised in good faith, that it is so
required to withhold Taxes, then such Withholding Agent may so withhold and shall timely pay the
full amount of withheld Taxes to the relevant Governmental Authority in accordance with applicable
law. If such Taxes are Indemnified Taxes, then the amount payable by the applicable Borrower shall
be increased as necessary so that, net of such withholding (including such withholding
46
applicable to additional amounts payable under this Section), the applicable Credit Party
receives the amount it would have received had no such withholding been made.
(b) Each applicable Borrower shall timely pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.
(c) As soon as practicable after any payment of Indemnified Taxes by any Borrower to a
Governmental Authority, such Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing such payment or other
evidence of such payment reasonably satisfactory to the Administrative Agent.
(d) Each Borrower shall indemnify each Credit Party for any Indemnified Taxes that are paid or
payable by such Credit Party in connection with this Agreement (including amounts paid or payable
under this Section 2.20(d)) and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority, except to the extent that such Borrower has paid additional amounts with
respect to such Taxes pursuant to Section 2.20(a) of this Agreement. The indemnity under this
Section 2.20(d) shall be paid within 10 days after the Credit Party delivers to the applicable
Borrower a certificate stating the amount of any Indemnified Taxes so paid or payable by such
Credit Party. Such certificate shall be conclusive of the amount so paid or payable absent manifest
error. Such Credit Party shall deliver a copy of such certificate to the Administrative Agent.
(e) Each Lender shall severally indemnify the Administrative Agent for any Taxes (but, in the
case of any Indemnified Taxes, only to the extent that the Borrowers have not already indemnified
the Administrative Agent for such Indemnified Taxes and without limiting the obligation of any
Borrower to do so) attributable to such Lender that are paid or payable by the Administrative Agent
in connection with this Agreement and any reasonable expenses arising therefrom or with respect
thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. The indemnity under this Section 2.20(e) shall be paid within 10 days after
the Administrative Agent delivers to the applicable Lender a certificate stating the amount of
Taxes or expenses so paid or payable by the Administrative Agent. Such certificate shall be
conclusive of the amount so paid or payable absent manifest error.
(f) (i) Any Lender that is entitled to an exemption from, or reduction of, any applicable
withholding Tax with respect to any payments under this Agreement or the Loan Documents shall
deliver to the Borrowers and the Administrative Agent, on or prior to the date such Lender becomes
a party to this Agreement and at the time or times reasonably requested by any Borrower or the
Administrative Agent, such properly completed and executed documentation reasonably requested by
such Borrower or the Administrative Agent as will permit such payments to be made without, or at a
reduced rate of, withholding. In addition, any Lender shall, on or prior to the date such Lender
becomes a party to this Agreement and at the time or times reasonably requested by any Borrower or
the Administrative Agent, deliver such other documentation prescribed by law or reasonably
requested by such Borrower or the Administrative Agent as will enable
47
such Borrower or the Administrative Agent to determine whether or not such Lender is subject
to backup withholding or information reporting requirements. Upon the reasonable request of any
Borrower or the Administrative Agent, any Lender shall update any form or certification previously
delivered pursuant to this Section 2.20(f). If any form or certification previously delivered
pursuant to this Section expires or becomes obsolete or inaccurate in any respect with respect to a
Lender, such Lender shall promptly (and in any event within 10 days after such expiration,
obsolescence or inaccuracy) notify such Borrower and the Administrative Agent in writing of such
expiration, obsolescence or inaccuracy and update the form or certification if it is legally
eligible to do so.
(ii) Without limiting the generality of the foregoing, if any Borrower is a US Person,
any Lender with respect to such Borrower shall, if it is legally eligible to do so, deliver
to such Borrower and the Administrative Agent (in such number of copies reasonably
requested by such Borrower and the Administrative Agent) on or prior to the date on which
such Lender becomes a party hereto, duly completed and executed copies of whichever of the
following is applicable (including any applicable substitute or successor forms):
(A) in the case of a Lender that is a US Person, IRS Form W-9 certifying
that such Lender is exempt from US Federal backup withholding tax;
(B) in the case of a Non-US Lender claiming the benefits of an income tax
treaty to which the United States is a party (1) with respect to payments of
interest under this Agreement, IRS Form W-8BEN establishing an exemption from,
or reduction of, US Federal withholding Tax pursuant to the “interest” article
of such tax treaty and (2) with respect to any other applicable payments under
this Agreement or the Loan Documents, IRS Form W-8BEN establishing an exemption
from, or reduction of, US Federal withholding Tax pursuant to the “business
profits” or “other income” article of such tax treaty;
(C) in the case of a Non-US Lender for whom payments under this Agreement
constitute income that is effectively connected with such Lender’s conduct of a
trade or business in the United States, IRS Form W-8ECI;
(D) in the case of a Non-US Lender claiming the benefits of the exemption
for portfolio interest under Section 881(c) of the Code both (1) IRS Form
W-8BEN and (2) a certificate substantially in the form of Exhibit G (a “US Tax
Certificate”) to the effect that such Lender is not (a) a “bank” within the
meaning of Section 881(c)(3)(A) of the Code, (b) a “10 percent shareholder” of
such Borrower within the meaning of Section 881(c)(3)(B) of the Code (c) a
“controlled foreign corporation” described in Section 881(c)(3)(C) of the Code
and (d) conducting a trade or business in the United States with which the
relevant interest payments are effectively connected;
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(E) in the case of a Non-US Lender that is not the beneficial owner of
payments made under this Agreement (including a partnership or a participating
Lender) (1) an IRS Form W-8IMY on behalf of itself and (2) the relevant forms
prescribed in clauses (A), (B), (C), (D) and (F) of this paragraph (f)(ii) that
would be required of each such beneficial owner or partner of such partnership
if such beneficial owner or partner were a Lender; provided, however, that if
the Lender is a partnership and one or more of its partners are claiming the
exemption for portfolio interest under Section 881(c) of the Code, such Lender
may provide a US Tax Certificate on behalf of such partners; or
(F) any other form prescribed by law as a basis for claiming exemption
from, or a reduction of, US Federal withholding Tax together with such
supplementary documentation necessary to enable such Borrower or the
Administrative Agent to determine the amount of Tax (if any) required by law to
be withheld.
(iii) Each Lender shall deliver to the Withholding Agent, at the time or times
prescribed by law (including as prescribed as a result of any change in law or the taking
effect of any law occurring after the date hereof) and at such time or times reasonably
requested by the Withholding Agent, such documentation prescribed by applicable law
(including as prescribed by Section 1471(b)(3)(C)(i) of the Code and as prescribed by any
change in law or the taking effect of any law occurring after the date hereof) and such
additional documentation reasonably requested by the Withholding Agent as may be necessary
for the Withholding Agent (A) to comply with its obligations under FATCA, (B) to determine
that such Lender has complied with such Lender’s obligations under FATCA and (C) to
determine the amount to deduct and withhold from such payment. For purposes of this Section
2.20(f)(iii), FATCA shall include any regulations or official interpretations thereof.
(g) If any party determines, in its sole discretion exercised in good faith, that it has
received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.20
(including additional amounts paid pursuant to this Section 2.20), it shall pay to the indemnifying
party an amount equal to such refund (but only to the extent of indemnity payments made and
additional amounts paid under this Section with respect to the Taxes giving rise to such refund),
net of all out-of-pocket expenses (including any Taxes) of such indemnified party and without
interest (other than any interest paid by the relevant Governmental Authority with respect to such
refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such
indemnified party the amount paid to such indemnified party pursuant to the previous sentence (plus
any penalties, interest or other charges imposed by the relevant Governmental Authority) in the
event such indemnified party is required to repay such refund to such Governmental Authority. This
Section 2.20(g) shall not be construed to require any party to make available its Tax returns (or
any other information relating to its Taxes which it deems confidential) to any other party or any
other Person.
(h) Each Lender shall severally indemnify the Administrative Agent and each Borrower for any
Taxes incurred or asserted against the Administrative Agent or
49
such Borrower by any Governmental Authority and any reasonable expenses arising therefrom as a
result of the failure by such Lender to deliver, or as a result of the inaccuracy, inadequacy or
deficiency of, any documentation required to be delivered by such Lender to the Administrative
Agent or such Borrower pursuant to Section 2.20(f). The indemnity under this Section 2.20(h) shall
be paid within 10 days after the Administrative Agent or such Borrower delivers to the applicable
Lender a certificate stating the amount of Taxes or expenses so paid or payable by the
Administrative Agent or such Borrower. Such certificate shall be conclusive of the amount so paid
or payable absent manifest error.
(i) Each party’s obligations under this Section 2.20 shall survive any assignment of rights
by, or the replacement of, a Lender, the termination of the Commitments and the repayment,
satisfaction or discharge of all other obligations under this Agreement.
(j) For purposes of Sections 2.20(e), (f), (h) and (i), the term “Lender” includes any (i)
Issuing Bank and (ii) assignee and Participant under Section 9.04.
SECTION 2.21. Duty to Mitigate; Assignment of Commitments Under Certain Circumstances. (a)
Any Lender (including any assignee and any Lender for the benefit of a Participant) or Issuing Bank
claiming any additional amounts payable pursuant to Section 2.14 or Section 2.20 or exercising its
rights under Section 2.15 shall use reasonable efforts (consistent with legal and regulatory
restrictions) to file any certificate or document requested by the Company or to change the
jurisdiction of its applicable lending office if the making of such a filing or change would avoid
the need for or reduce the amount of any such additional amounts which may thereafter accrue or
avoid the circumstances giving rise to such exercise and would not, in the sole determination of
such Lender (including any assignee and any Lender for the benefit of a Participant) or Issuing
Bank, be otherwise disadvantageous to such Lender (including any assignee and any Lender for the
benefit of a Participant) or Issuing Bank.
(b) In the event that any Lender (including any assignee and any Lender for the benefit of a
Participant) or Issuing Bank shall have delivered a notice or certificate pursuant to Section 2.14
or 2.15, or any Borrower shall be required to make additional payments to any Lender (including any
assignee and any Lender for the benefit of a Participant) or Issuing Bank under Section 2.20, the
Company shall have the right, at its own expense, upon notice to such Lender (including any
assignee and any Lender for the benefit of a Participant) or Issuing Bank and the Administrative
Agent, to require such Lender (including any assignee and any Lender for the benefit of a
Participant) or Issuing Bank to transfer and assign without recourse, representation or warranty
(in accordance with and subject to the restrictions contained in Section 9.04) all interests,
rights and obligations contained hereunder to another financial institution approved by the
Administrative Agent (which approval shall not be unreasonably withheld) which shall assume such
obligations; provided that (i) no such assignment shall conflict with any law, rule or regulation
or order of any Governmental Authority and (ii) the assignee or the Company, as the case may be,
shall pay to the affected Lender (including any assignee and any Lender for the benefit of a
Participant) or Issuing Bank in immediately available funds on the date of such assignment the
principal of and interest accrued to the date of payment on the Loans and L/C Disbursements made by
it hereunder and all other
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amounts accrued for its account or owed to it hereunder and shall cause all Letters of Credit
issued by it to be canceled on such date.
SECTION 2.22. Defaulting Lenders. Notwithstanding any provision of this Agreement to the
contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for
so long as such Lender is a Defaulting Lender:
(a) Facility Fees shall cease to accrue on the unfunded portion of the Commitment of such
Defaulting Lender pursuant to Section 2.07(a);
(b) the Commitment and Revolving Credit Exposure of such Defaulting Lender shall not be
included in determining whether the Required Lenders have taken or may take any action hereunder
(including any consent to any amendment, waiver or other modification pursuant to Section 9.07);
provided, that this clause (b) shall not apply to the vote of a Defaulting Lender in the case of an
amendment, waiver or other modification requiring the consent of such Lender or each Lender
affected thereby;
(c) if any L/C Exposure exists at the time such Lender becomes a Defaulting Lender then:
(i) unless a Default or an Event of Default shall have occurred and be continuing, all
or any part of the L/C Exposure of such Defaulting Lender shall be reallocated among the
non-Defaulting Lenders in accordance with their respective Applicable Shares, but only to
the extent the sum of all non-Defaulting Lenders’ Revolving Credit Exposures plus such
Defaulting Lender’s L/C Exposure does not exceed the total of all non-Defaulting Lenders’
Commitments;
(ii) if the reallocation described in clause (i) above cannot, or can only partially,
be effected, each Borrower shall within two Business Days following notice by the
Administrative Agent cash collateralize for the benefit of the applicable Issuing Bank only
such Borrower’s obligations corresponding to such Defaulting Lender’s L/C Exposure (after
giving effect to any partial reallocation pursuant to clause (i) above) in accordance with
the procedures set forth in Article VII for so long as such L/C Exposure is outstanding;
(iii) if a Borrower cash collateralizes any portion of such Defaulting Lender’s L/C
Exposure pursuant to clause (ii) above, such Borrower shall not be required to pay any L/C
Participation Fees to such Defaulting Lender pursuant to Section 2.07(c) with respect to
such Defaulting Lender’s L/C Exposure during the period such Defaulting Lender’s L/C
Exposure is cash collateralized;
(iv) if the L/C Exposure of the Defaulting Lender is reallocated pursuant to clause
(i) above, then the fees payable to the Lenders pursuant to Section 2.07(a) and Section
2.07(c) shall be adjusted in accordance with such non-Defaulting Lenders’ Applicable
Shares; and
(v) if all or any portion of such Defaulting Lender’s L/C Exposure is neither
reallocated nor cash collateralized pursuant to clause (i) or (ii) above, then, without
prejudice to any rights or remedies of the applicable Issuing Bank or any
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other Lender hereunder, all Facility Fees that otherwise would have been payable to
such Defaulting Lender (solely with respect to the portion of such Defaulting Lender’s
Commitment that was utilized by such L/C Exposure) and L/C Participation Fees payable under
Section 2.07(c) with respect to such Defaulting Lender’s L/C Exposure shall be payable to
such Issuing Bank until and to the extent that such L/C Exposure is reallocated and/or cash
collateralized; and
(d) so long as such Lender is a Defaulting Lender, each Issuing Bank shall not be required to
issue, amend or increase any Letter of Credit unless it is satisfied that the related exposure and
the Defaulting Lender’s then outstanding L/C Exposure will be 100% covered by the Commitments of
the non-Defaulting Lenders and/or cash collateral will be provided by the applicable Borrowers in
accordance with Section 2.22(c), and participating interests in any newly issued or increased
Letter of Credit shall be allocated among non-Defaulting Lenders in a manner consistent with
Section 2.22(c)(i) (and such Defaulting Lender shall not participate therein).
If (i) a Bankruptcy Event with respect to a Lender Parent of any Lender shall occur following
the date hereof and for so long as such event shall continue or (ii) any Issuing Bank has a good
faith belief that any Lender has defaulted in fulfilling its obligations under one or more other
agreements in which such Lender commits to extend credit, such Issuing Bank shall not be required
to issue, amend or increase any Letter of Credit, unless such Issuing Bank shall have entered into
arrangements with the applicable Borrowers or such Lender satisfactory to such Issuing Bank to
defease any risk to it in respect of such Lender hereunder.
In the event that the Administrative Agent, the Borrowers and each Issuing Bank each agree
that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a
Defaulting Lender, then the L/C Exposure of the Lenders shall be readjusted to reflect the
inclusion of such Lender’s Commitment and on such date such Lender shall purchase at par such of
the Loans of the other Lenders (other than Competitive Loans) as the Administrative Agent shall
determine may be necessary in order for such Lender to hold such Loans in accordance with its
Applicable Share.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to each of the Lenders as follows (it being agreed that
each Borrower other than the Company makes the following representations only as to itself, but
that the Company makes such representations as to all the Borrowers):
SECTION 3.01. Organization; Powers. Each Borrower and each of the Significant Subsidiaries
(a) is a corporation duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has all requisite power and authority to own its property and
assets and to carry on its business as now conducted and as proposed to be conducted, (c) is
qualified to do business in every jurisdiction where such qualification is required, except where
the failure so to qualify would not result in a Material Adverse Effect, and (d) in the case of
each Borrower, has the
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corporate power and authority to execute, deliver and perform its obligations under the Loan
Documents and to borrow hereunder and thereunder.
SECTION 3.02. Authorization. The execution, delivery and performance by each Loan Party of
each Loan Document to which it is or will be a party and the Borrowings hereunder (collectively,
the “Transactions”) (i) have been or, upon execution and delivery thereof, will be duly authorized
by all requisite corporate action and (ii) will not (A) violate (x) any provision of any law,
statute, rule or regulation (including the Margin Regulations) or of the certificate of
incorporation or other constitutive documents or by-laws of such Borrower, (y) any order of any
Governmental Authority or (z) any provision of any indenture, material agreement or other
instrument to which any Borrower is a party or by which it or any of its property is or may be
bound, where such violation is reasonably likely to result in a Material Adverse Effect, (B) be in
conflict with, result in a breach of or constitute (alone or with notice or lapse of time or both)
a default under any such indenture, material agreement or other instrument, where such default is
reasonably likely to result in a Material Adverse Effect or (C) result in the creation or
imposition of any lien upon any property or assets of any Borrower.
SECTION 3.03. Enforceability. This Agreement and each other Loan Document to which any Loan
Party is a party constitutes a legal, valid and binding obligation of such Loan Party enforceable
in accordance with its terms.
SECTION 3.04. Governmental Approvals. No action, consent or approval of, registration or
filing with or other action by any Governmental Authority, other than those which have been taken,
given or made, as the case may be, is or will be required with respect to any Borrower in
connection with the Transactions.
SECTION 3.05. Financial Statements and Projections. (a) The Company has heretofore furnished
to the Administrative Agent and the Lenders copies of its consolidated balance sheet and statements
of income, cash flow and retained earnings as of and for the year ended December 31, 2010, and the
three months ended March 31, 2011, and June 30, 2011. Such financial statements present fairly, in
all material respects, the consolidated financial condition and the results of operations of the
Company and its subsidiaries as of such dates and for such periods in accordance with GAAP.
(b) The Company has heretofore furnished to the Lenders its unaudited pro forma consolidated
balance sheet and statements of income, cash flow and retained earnings as of and for the year
ended December 31, 2010, and the three months ended March 31, 2011, and June 30, 2011, prepared
giving effect to the Spin-Offs and the Transactions as if the Spin-Offs and the Transactions had
occurred, with respect to each such balance sheet, on the date thereof and, with respect to such
other financial statements for each period, on the first day of such period. Such unaudited pro
forma consolidated financial statements (i) have been prepared by the Company in good faith, based
on the assumptions used to prepare the pro forma consolidated financial statements included in the
Confidential Information Memorandum (which assumptions are believed by the Company on the date
hereof to be reasonable), (ii) are based on the best information available to the Company as of the
date of delivery thereof after due inquiry and (iii) subject to clauses (i) and (ii) above, (A)
accurately reflect all adjustments
53
necessary to give effect to the Spin-Offs and the Transactions and (B) present fairly, in all
material respects, the pro forma financial position, results of operations and cash flows of the
Company and the consolidated Subsidiaries as of such date and for such period as if the Spin-Offs
and the Transactions had occurred on each such date or at the beginning of each such period, as the
case may be.
(c) There has been no material adverse change in the consolidated financial condition of the
Company and the Subsidiaries taken as a whole from the financial condition reported in the pro
forma financial statements referred to in paragraph (b) of this Section.
SECTION 3.06. Litigation; Compliance with Laws. (a) There are no actions, proceedings or
investigations filed or (to the knowledge of any Borrower) threatened or affecting any Borrower or
any Subsidiary in any court or before any Governmental Authority or arbitration board or tribunal
which question the validity or legality of this Agreement, the Transactions or any action taken or
to be taken pursuant to this Agreement and no order or judgment has been issued or entered
restraining or enjoining any Borrower or any Subsidiary from the execution, delivery or performance
of this Agreement nor is there any other action, proceeding or investigation filed or (to the
knowledge of any Borrower or any Subsidiary) threatened against any Borrower or any Subsidiary in
any court or before any Governmental Authority or arbitration board or tribunal which would be
reasonably likely to result in a Material Adverse Effect or materially restrict the ability of any
Borrower to comply with its obligations under the Loan Documents.
(b) Neither any Borrower nor any Subsidiary is in violation of any law, rule or regulation
(including any law, rule or regulation relating to the protection of the environment or to employee
health or safety), or in default with respect to any judgment, writ, injunction or decree of any
Governmental Authority, where such violation or default would be reasonably likely to result in a
Material Adverse Effect.
(c) Except with respect to any matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, none of the Company or any
Subsidiary has received notice of any claim with respect to or is otherwise aware of any
environmental liability to which it is or is reasonably likely to become subject. The Company
believes that the accounting reserves maintained by it for possible asbestos-related liabilities
and reflected in the financial statements referred to in Section 3.05 are adequate in all material
respects based on facts and circumstances known to it on the date hereof.
SECTION 3.07. Federal Reserve Regulations. (a) Neither any Borrower nor any Subsidiary that
will receive proceeds of the Loans hereunder is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or carrying Margin
Stock.
(b) No part of the proceeds of any Loan will be used, whether directly or indirectly, and
whether immediately, incidentally or ultimately, to purchase or carry Margin Stock or to refund
indebtedness originally incurred for such purpose, or for any
54
other purpose which entails a violation of, or which is inconsistent with, the provisions of
the Margin Regulations.
SECTION 3.08. Investment Company Act. No Borrower is an “investment company” as defined in,
or subject to regulation under, the Investment Company Act of 1940 (the “1940 Act”).
SECTION 3.09. Use of Proceeds. All proceeds of the Loans and Letters of Credit shall be used
for the purposes referred to in the recitals to this Agreement and in accordance with the
provisions of Section 3.07.
SECTION 3.10. Full Disclosure; No Material Misstatements. None of the representations or
warranties made by any Borrower in connection with this Agreement as of the date such
representations and warranties are made or deemed made, and neither the Confidential Information
Memorandum nor any of the other reports, financial statements, certificates or other information
furnished by or on behalf of any Borrower to the Administrative Agent or any Lender pursuant to or
in connection with this Agreement or the credit facilities established hereby, contains or will
contain any material misstatement of fact or omits or will omit to state any material fact
necessary to make the statements therein, in the light of the circumstances under which they were
or will be made, not misleading; provided that, with respect to forecasts or projected financial
information contained in the documents referred to above, the Company represents only that such
information was prepared in good faith based upon assumptions believed by it to be reasonable at
the time made and at the time so furnished and as of the date hereof (it being understood that such
forecasts and projections may vary from actual results and that such variances may be material).
SECTION 3.11. Taxes. Each Borrower and each of the Significant Subsidiaries has filed or
caused to be filed all Federal, state and local tax returns which are required to be filed by it,
and has paid or caused to be paid all taxes shown to be due and payable on such returns or on any
assessments received by it, other than any taxes or assessments the validity of which is being
contested in good faith by appropriate proceedings, and with respect to which appropriate
accounting reserves have to the extent required by GAAP been set aside.
SECTION 3.12. Employee Pension Benefit Plans. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other ERISA Events for which liability is
reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect.
The present value of all accumulated benefit obligations under each Plan (based on the assumptions
used for purposes of FASB ASC Topic 715) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed the fair market value of the assets of such Plan by an
amount that could reasonably be expected to result in a Material Adverse Effect, and the present
value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions
used for purposes of FASB ASC Topic 715) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed the fair market value of the assets of all such
underfunded Plans by an amount that could reasonably be expected to result in a Material Adverse
Effect.
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SECTION 3.13. OFAC. None of the Borrowers, nor any of their respective Affiliates, is in
violation of (i) any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto, (ii) Executive Order No. 13,224, 66 Fed Reg 49,079 (2001), issued by the
President of the United States (Executive Order Blocking Property and Prohibiting Transactions with
Persons Who Commit, Threaten to Commit or Support Terrorism) or (iii) the anti-money laundering
provisions of the USA PATRIOT Act (Title III of Pub. L. 107-56) (the “USA PATRIOT Act”) amending
the Bank Secrecy Act, 31 U.S.C. Section 5311 et seq and any other laws relating to terrorism or
money laundering.
ARTICLE IV
CONDITIONS OF LENDING
The obligations of the Lenders to make Loans and of the Issuing Banks to issue Letters of
Credit hereunder are subject to the Closing Date having occurred and the satisfaction of the
following conditions:
SECTION 4.01. All Extensions of Credit. On the date of each Borrowing and on the date of each
issuance of a Letter of Credit:
(a) The Administrative Agent shall have received a notice of such Borrowing as required by
Section 2.03 or Section 2.04, as applicable, or, in the case of the issuance of a Letter of Credit,
the applicable Issuing Bank shall have been requested to issue such Letter of Credit as
contemplated by Section 2.05.
(b) The representations and warranties set forth in Article III hereof (except those contained
in Sections 3.05(c) and 3.06(a)) shall be true and correct in all material respects on and as of
the date of such Borrowing or issuance of a Letter of Credit with the same effect as though made on
and as of such date, except to the extent such representations and warranties expressly relate to
an earlier date, in which case such representations and warranties shall be true and correct in all
material respects on and as of such earlier date.
(c) At the time of and immediately after such Borrowing or issuance of a Letter of Credit no
Event of Default or Default shall have occurred and be continuing.
Each Borrowing and issuance of a Letter of Credit shall be deemed to constitute a representation
and warranty by each Borrower on the date of such Borrowing or issuance of a Letter of Credit as to
the matters specified in paragraphs (b) and (c) of this Section 4.01.
SECTION 4.02. Effective Date. On the Effective Date:
(a) The Administrative Agent shall have received favorable written opinions of (i) Dewey &
LeBoeuf, counsel for the Company, to the effect set forth in Exhibit C-1 hereto and (ii) Burt
Fealing, General Counsel and Secretary of the Company, to the effect set forth in Exhibit C-2
hereto, each dated the Effective Date and addressed
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to the Administrative Agent, the Lenders and the Issuing Banks and satisfactory to the
Lenders, the Administrative Agent and Cravath, Swaine & Moore LLP, counsel for the Administrative
Agent.
(b) The Administrative Agent shall have received (i) a copy of the certificate of
incorporation, including all amendments thereto, of each Loan Party, certified as of a recent date
by the Secretary of State of its state of incorporation, and a certificate as to the existence of
the Company as of a recent date from such Secretary of State; (ii) a certificate of the Secretary
or an Assistant Secretary of the Company or such Subsidiary dated the Effective Date and certifying
(A) that attached thereto is a true and complete copy of the by-laws of such Loan Party as in
effect on the Effective Date and at all times since a date prior to the date of the resolutions
described in (B) below, (B) that attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors of such Loan Party authorizing the execution, delivery and
performance of the Loan Documents to which such Loan Party is a party and, in respect of the
Company, the Borrowings hereunder, and that such resolutions have not been modified, rescinded or
amended and are in full force and effect, (C) that the certificate of incorporation referred to in
clause (i) above has not been amended since the date of the last amendment thereto shown on the
certificate of existence furnished pursuant to such clause (i) and (D) as to the incumbency and
specimen signature of each officer executing this Agreement or any other document delivered in
connection herewith on behalf of such Loan Party; and (iii) a certificate of another officer of
such Loan Party as to the incumbency and specimen signature of the Secretary or Assistant Secretary
executing the certificate pursuant to (ii) above.
(c) The Administrative Agent shall have received a certificate, dated the Effective Date and
signed by a Financial Officer of the Company, confirming compliance with the conditions precedent
set forth in paragraph (g), the second sentence of paragraph (i) and paragraphs (j), (l), (m), (n),
(o) and (p) of this Section and in paragraphs (b) and (c) of Section 4.01 (without giving effect to
the parenthetical in such paragraph (b)).
(d) The principal of and accrued and unpaid interest on any loans outstanding under the
Existing Credit Agreement shall have been paid in full, all other amounts due under the Existing
Credit Agreement shall have been paid in full, all letters of credit issued under the Existing
Credit Agreement shall have been terminated or shall have become Existing Letters of Credit and the
commitments of the lenders and issuing banks under the Existing Credit Agreement shall have been
permanently terminated.
(e) The Administrative Agent shall have received all Fees and other amounts due and payable
for the accounts of the Lenders or for its own account on or prior to the Effective Date and, to
the extent invoiced prior to the Effective Date, all fees, charges and disbursements of counsel
that the Borrowers have agreed to pay or reimburse.
(f) The Credit Parties shall have received all documentation and other information required by
bank regulatory authorities under applicable “know your customer” and anti-money laundering rules
and regulations, including the USA PATRIOT Act.
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(g) The Guarantee Requirement shall have been satisfied.
(h) The Administrative Agent and the Lenders shall have received the historical and pro forma
financial statements and projections referred to in Section 3.05, as well as unaudited pro forma
consolidated balance sheets and related statements of income and cash flows of the Company and the
subsidiaries for each fiscal quarter (if any) ended after June 30, 2011, but at least 60 days
before the Effective Date, which financial statements shall not be materially inconsistent with the
pro forma financial statements or projections previously provided to the Lenders.
(i) The Administrative Agent and the Lenders shall have received true and complete copies of
the Distribution Agreement and all other material agreements required to be delivered thereunder or
in connection therewith. The terms of the Distribution Agreement shall be consistent in all
material respects with the information set forth in the Form 10s, and no term or condition of the
Distribution Agreement or any related agreement shall have been waived, amended or otherwise
modified in a manner material and adverse to the rights or interests of the Lenders, except as
previously approved by the Lead Arrangers.
(j) All conditions to the Spin-Offs set forth in the Form 10s shall have been satisfied, and
the Spin-Offs and all related transactions shall have been consummated on terms consistent with
applicable law and, except for changes not materially detrimental to the creditworthiness of the
Company and the Subsidiaries or to the rights of the Lenders, with the information set forth in the
Form 10s and the pro forma financial information and projections delivered to the Lenders.
(k) The Administrative Agent and the Lenders shall have received copies of, and the Lead
Arrangers shall have been reasonably satisfied with, (i) the solvency opinion delivered to the
Board of Directors of the Company and (ii) the legal opinion and any private letter ruling
delivered to or obtained by the Company as to the tax-free nature of the Spin-Offs.
(l) After giving effect to the Spin-Offs and the Transactions, the Company and the
Subsidiaries shall have outstanding no Indebtedness, committed credit facilities, guarantees or
other material contingent obligations, letters of credit, preferred stock or contingent obligations
other than (i) the Commitments and Letters of Credit, (b) other commitments and letters of credit
in an aggregate amount not greater than $150,000,000 and (c) other Indebtedness and contingent
obligations of the Company in an aggregate amount not greater than $100,000,000.
(m) All conditions precedent to the effectiveness of the Exelis Credit Agreement and the Xylem
Credit Agreement shall have been satisfied.
(n) There shall not have occurred since December 31, 2010, any event, condition or
circumstance that has had or could be reasonably be expected to have a material adverse effect on
the business, results of operations, properties, assets or financial condition of the Company and
the Subsidiaries, taken as a whole.
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(o) There shall be no litigation or administrative proceeding that could reasonably be
expected to have a material adverse effect on the Spin-Offs or on the business, results of
operations, properties, assets or financial condition of the Company and the Subsidiaries, taken as
a whole.
(p) All requisite Governmental Authorities and material third parties shall have approved or
consented to the Spin-Offs and the Transactions to the extent required, all applicable notice or
appeal periods shall have expired and there shall be no governmental or judicial action, actual or
threatened, that could reasonably be expected to restrain, prevent or impose burdensome conditions
on the Spin-Offs or the Transactions.
SECTION 4.03. First Borrowing by Each Borrowing Subsidiary. On or prior to the first date on
which Loans are made to or Letters of Credit are issued for the benefit of any Borrowing
Subsidiary:
(a) The Credit Parties shall have received the favorable written opinion of counsel
satisfactory to the Administrative Agent, addressed to the Credit Parties and satisfactory to the
Credit Parties and to Cravath, Swaine & Moore LLP, counsel for the Administrative Agent, addressing
such legal issues as the Administrative Agent or such counsel may reasonably request.
(b) The Administrative Agent shall have received a copy of the Borrowing Subsidiary Agreement
executed by such Borrowing Subsidiary.
(c) It shall not be unlawful for such Subsidiary to become a Borrower hereunder or for any
Lender to make Loans or otherwise extend credit to such Subsidiary as provided herein or for any
Issuing Bank to issue Letters of Credit for the account of such Subsidiary.
(d) The Credit Parties shall have received (i) all documentation and other information
required by bank regulatory authorities under applicable “know your customer” and anti-money
laundering rules and regulations, including the USA PATRIOT Act and (ii) such documents and
certificates as the Administrative Agent or its counsel may reasonably request relating to the
organization, existence and good standing of such Borrowing Subsidiary, the authorization of the
Transactions insofar as they relate to such Borrowing Subsidiary and any other legal matters
relating to such Borrowing Subsidiary, its Borrowing Subsidiary Agreement or such Transactions, all
in form and substance reasonably satisfactory to the Administrative Agent and its counsel.
ARTICLE V
AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees with each Lender and the Administrative Agent that so long
as this Agreement shall remain in effect or the principal of or interest on any Loan, any Fees or
any other amounts payable hereunder shall be unpaid or any Letters of Credit have not been canceled
or have not expired or any amounts drawn thereunder have not been reimbursed in full, unless the
Required
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Lenders shall otherwise consent in writing, it will, and will cause each of the Significant
Subsidiaries to:
SECTION 5.01. Existence. Do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence, rights and franchises, except as expressly permitted
under Section 6.01; provided, however, that nothing in this Section shall prevent the abandonment
or termination of the existence, rights or franchises of any Significant Subsidiary or any rights
or franchises of any Borrower if such abandonment or termination is in the best interests of the
Borrowers and is not disadvantageous in any material respect to the Lenders.
SECTION 5.02. Business and Properties. Comply in all material respects with all applicable
laws, rules, regulations and orders of any Governmental Authority (including any of the foregoing
relating to the protection of the environment or to employee health and safety), whether now in
effect or hereafter enacted; and at all times maintain and preserve all property material to the
conduct of its business and keep such property in good repair, working order and condition and from
time to time make, or cause to be made, all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business carried on in connection
therewith may be properly conducted at all times.
SECTION 5.03. Financial Statements, Reports, etc. In the case of the Company, furnish to the
Administrative Agent for distribution to each Lender:
(a) within 90 days after the end of each fiscal year, its consolidated balance sheet and the
related consolidated statements of income and cash flows showing its consolidated financial
condition as of the close of such fiscal year and the consolidated results of its operations during
such year, all audited by Deloitte & Touche LLP or another independent registered public accounting
firm of recognized national standing selected by the Company and accompanied by an opinion of such
accountants (without a “going concern” or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect that such consolidated
financial statements fairly present its financial condition and results of operations on a
consolidated basis in accordance with GAAP (it being agreed that the requirements of this paragraph
may be satisfied by the delivery pursuant to paragraph (d) below of an annual report on Form 10-K
containing the foregoing);
(b) within 45 days after the end of each of the first three fiscal quarters of each fiscal
year, its consolidated balance sheet and related consolidated statements of income, cash flow and
stockholders’ equity, showing its consolidated financial condition as of the close of such fiscal
quarter and the consolidated results of its operations during such fiscal quarter and the then
elapsed portion of the fiscal year, all certified by one of its Financial Officers as fairly
presenting its financial condition and results of operations on a consolidated basis in accordance
with GAAP, subject to normal year-end audit adjustments (it being agreed that the requirements of
this paragraph may be satisfied by the delivery pursuant to paragraph (d) below of a quarterly
report on Form 10-Q containing the foregoing);
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(c) concurrently with any delivery of financial statements under paragraph (a) or (b) above, a
certificate of a Financial Officer (i) certifying that, to the best of such Financial Officer’s
knowledge, no Event of Default or Default has occurred or, if such an Event of Default or Default
has occurred, specifying the nature and extent thereof and any corrective action taken or proposed
to be taken with respect thereto and (ii) setting forth reasonably detailed calculations
demonstrating compliance with Sections 6.06 and 6.07;
(d) promptly after the same become publicly available, copies of all reports on forms 10-K,
10-Q and 8-K filed by it with the SEC, or any Governmental Authority succeeding to any of or all
the functions of the SEC, or, in the case of the Company, copies of all reports distributed to its
shareholders, as the case may be; and
(e) promptly, from time to time, such other information as any Lender shall reasonably request
through the Administrative Agent.
Information required to be delivered to the Administrative Agent pursuant to this Section 5.03
shall be deemed to have been distributed to the Lenders if such information, or one or more annual
or quarterly reports containing such information, shall have been posted by the Administrative
Agent on an IntraLinks or similar site to which the Lenders have been granted access or shall be
available on the website of the Securities and Exchange Commission at http://www.sec.gov (and a
confirming electronic correspondence shall have been delivered or caused to be delivered to the
Lenders providing notice of such posting or availability). Information required to be delivered
pursuant to this Section 5.03 may also be delivered by electronic communications pursuant to
procedures approved by the Administrative Agent.
SECTION 5.04. Insurance. Keep its insurable properties adequately insured at all times by
financially sound and reputable insurers, and maintain such other insurance, to such extent and
against such risks, including fire and other risks insured against by extended coverage, as is
customary with companies similarly situated and in the same or similar businesses (it being
understood that the Borrowers and their Significant Subsidiaries may self-insure to the extent
customary with companies similarly situated and in the same or similar businesses).
SECTION 5.05. Obligations and Taxes. Pay and discharge promptly when due all taxes,
assessments and governmental charges imposed upon it or upon its income or profits or in respect of
its property, as well as all other material liabilities, in each case before the same shall become
delinquent or in default and before penalties accrue thereon, unless and to the extent that the
same are being contested in good faith by appropriate proceedings and adequate reserves with
respect thereto shall, to the extent required by GAAP, have been set aside.
SECTION 5.06. Litigation and Other Notices. Give the Administrative Agent prompt written
notice of the following (which the Administrative Agent shall promptly provide to the Lenders):
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(a) the filing or commencement of, or any written threat or written notice of intention of any
Person to file or commence, any action, suit or proceeding which is reasonably likely to result in
a Material Adverse Effect;
(b) any Event of Default or Default, specifying the nature and extent thereof and the action
(if any) which is proposed to be taken with respect thereto; and
(c) any change in any of the Ratings.
SECTION 5.07. Maintaining Records; Access to Properties and Inspections. Maintain financial
records in accordance with GAAP and, upon reasonable notice, at all reasonable times, permit any
authorized representative designated by the Administrative Agent or any Lender to visit and inspect
the properties of the Company and of any Significant Subsidiary and to discuss the affairs,
finances and condition of the Company and any Significant Subsidiary with a Financial Officer of
the Company and such other officers as the Company shall deem appropriate.
SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans only for the purposes set forth
in the recitals to this Agreement.
SECTION 5.09. Additional Subsidiaries. If any Significant Domestic Subsidiary is formed or
acquired after the Effective Date, or if any Subsidiary becomes a Significant Domestic Subsidiary
after the Effective Date, the Company will, as promptly as practicable, and in any event within 30
days (or such longer period as the Administrative Agent may agree to in writing), notify the
Administrative Agent thereof and cause the Guarantee Requirement to be satisfied with respect to
such Subsidiary.
SECTION 5.10. Distribution Agreement and Related Agreements. Comply with all its obligations
under the Distribution Agreement and all other agreements with Exelis Inc., Xylem Inc. or their
subsidiaries entered into pursuant thereto or in connection therewith.
ARTICLE VI
NEGATIVE COVENANTS
Each Borrower covenants and agrees with each Lender and the Administrative Agent that so long
as this Agreement shall remain in effect or the principal of or interest on any Loan, any Fees or
any other amounts payable hereunder shall be unpaid or any Letters of Credit have not been canceled
or have not expired or any amounts drawn thereunder have not been reimbursed in full, unless the
Required Lenders shall otherwise consent in writing, it will not, and will not cause or permit any
of the Subsidiaries to:
SECTION 6.01. Priority Indebtedness. Create, incur, assume or permit to exist any Priority
Indebtedness other than:
(a) Indebtedness under the Loan Documents;
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(b) Indebtedness existing on the date hereof and set forth on Schedule 6.01, and extensions,
renewals or replacements of any such Indebtedness that do not increase the outstanding principal
amount thereof; provided that no additional Subsidiaries will be added as obligors or guarantors in
respect of any Indebtedness referred to in this clause (b) and no such Indebtedness shall be
secured by any additional assets (other than as a result of any Lien covering after-acquired
property in effect on the date hereof);
(c) Indebtedness of any Subsidiary to the Company or any other Subsidiary, or Indebtedness of
the Company to any Subsidiary; provided that no such Indebtedness shall be assigned to, or
subjected to any Lien in favor of, a Person other than the Company or a Subsidiary;
(d) Indebtedness (including Capital Lease Obligations and obligations under conditional sale
or other title retention agreements) incurred to finance the acquisition, construction or
improvement of, and secured only by, any fixed or capital assets acquired, constructed or improved
by the Company or any Subsidiary, and extensions, renewals or replacements of any such Indebtedness
that do not increase the outstanding principal amount thereof or add additional Subsidiaries as
obligors or guarantors in respect thereof and that are not secured by any additional assets;
provided that such Indebtedness is incurred prior to or within 180 days after such acquisition or
the completion of such construction or improvement and does not exceed the cost of acquiring,
constructing or improving such fixed or capital assets;
(e) Indebtedness of any Person that becomes a Subsidiary after the date hereof; provided that
such Indebtedness and any Liens securing the same exist at the time such Person becomes a
Subsidiary and are not created in contemplation of or in connection with such Person becoming a
Subsidiary, and any such Liens do not extend to additional assets of the Company or any Subsidiary,
and extensions, renewals or replacements of any of the Indebtedness referred to above in this
clause that do not increase the outstanding principal amount thereof or add additional Subsidiaries
as obligors or guarantors in respect thereof and that are not secured by any additional assets;
(f) Indebtedness of any Foreign Subsidiary incurred after the date hereof, the net proceeds of
which are promptly dividended to the Company or one or more Domestic Subsidiaries; provided that
such Indebtedness is not secured by assets of the Company or any Domestic Subsidiary; and
(g) other Priority Indebtedness to the extent the sum, without duplication, of (i) the
aggregate amount thereof outstanding at any time and (ii) the aggregate sales price for the assets
transferred in all sale and lease-back arrangements permitted under Section 6.03 and in effect at
any time shall not exceed the greater of (i) $150,000,000 and (ii) 5% of Consolidated Net Tangible
Assets.
SECTION 6.02. Liens. Create, incur, assume or permit to exist any Lien on any property or
asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including
accounts receivable) or rights in respect of any thereof, except:
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(a) Permitted Encumbrances;
(b) Liens existing on the date hereof and set forth on Schedule 6.02, and extensions or
renewals of any such Liens that do not extend to additional assets or increase the amount of the
obligations secured thereby;
(c) any Lien securing indebtedness of a Subsidiary to the Company or another Subsidiary or of
the Company to a Subsidiary, provided that in the case of any sale or other disposition of such
indebtedness by the Company or a Subsidiary, such sale or other disposition shall be deemed to
constitute the creation of another Lien not permitted by this clause (c);
(d) Liens deemed to exist in connection with sale and lease-back transactions permitted under
Section 6.03;
(e) Liens on fixed or capital assets acquired, constructed or improved by the Company or any
Subsidiary; provided that (i) such Liens secure only Indebtedness (including Capital Lease
Obligations and obligations under conditional sale or other title retention agreements) permitted
by Section 6.01(d) and obligations relating thereto not constituting Indebtedness and (ii) such
Liens shall not extend to any other asset of the Company or any Subsidiary (other than the proceeds
and products thereof); provided further that in the event purchase money
obligations are owed to any Person with respect to financing of more than one purchase of any fixed
or capital assets, such Liens may secure all such purchase money obligations and may apply to all
such fixed or capital assets financed by such Person;
(f) any Lien existing on any asset prior to the acquisition thereof by the Company or any
Subsidiary or existing on any asset of any Person that becomes a Subsidiary (or of any Person not
previously a Subsidiary that is merged or consolidated with or into a Subsidiary in a transaction
permitted hereunder) after the date hereof prior to the time such Person becomes a Subsidiary (or
is so merged or consolidated); provided that (i) such Lien is not created in contemplation
of or in connection with such acquisition or such Person becoming a Subsidiary (or such merger or
consolidation), (ii) such Lien shall not extend to any other asset of the Company or any Subsidiary
and (C) such Lien shall secure only those obligations that it secures on the date of such
acquisition or the date such Person becomes a Subsidiary (or is so merged or consolidated) and any
extensions, renewals and refinancings thereof that do not increase the outstanding principal amount
thereof;
(g) sales of accounts receivable and interests therein pursuant to Securitization Transactions
constituting Priority Indebtedness permitted under Section 6.01; and
(h) Liens securing other Priority Indebtedness to the extent such Priority Indebtedness and
such Liens are permitted under Section 6.01.
SECTION 6.03. Sale and Lease-Back Transactions. Enter into any arrangement, directly or
indirectly, with any Person whereby it shall sell or transfer any property used or useful in its
business, whether now owned or hereafter acquired, and
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thereafter rent or lease such property or other property which it intends to use for
substantially the same purpose or purposes as the property being sold or transferred, except (a)
any such arrangement entered into with respect to a property within 180 days after the acquisition
thereof and (b) other such arrangements to the extent the sum, without duplication, of (a) the
aggregate sales price for the assets transferred in all such arrangements in effect at any time and
(b) the aggregate amount of Priority Indebtedness permitted under Section 6.01(g) and outstanding
at such time shall not exceed the greater of (i) $150,000,000 and (ii) 5% of Consolidated Net
Tangible Assets.
SECTION 6.04. Fundamental Changes. (a) In the case of the Company or any other Borrower,
merge into or consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a
series of transactions and including by means of any merger or sale of capital stock or otherwise)
all or substantially all of its assets (whether now owned or hereafter acquired), or liquidate or
dissolve, except that, if at the time thereof and immediately after giving effect thereto no
Default or Event of Default shall have occurred and be continuing or would result from such
transaction, (a) the Company or any Borrower may merge or consolidate with any Person if (i) in the
case of any such merger involving the Company, the Company is the surviving Person and (ii) in the
case of any other such Merger, a Borrower is the surviving Person and (b) any Borrower other than
the Company may sell, transfer, lease or otherwise dispose of all or substantially all of its
assets to, or liquidate or dissolve into, the Company.
(b) Remain engaged primarily in businesses of the type conducted by the Company and the
Subsidiaries on the date of this Agreement and businesses reasonably related thereto.
SECTION 6.05. Restrictive Agreements. Directly or indirectly enter into, incur or permit to
exist any agreement or other arrangement that restricts (a) the ability of the Company or any
Subsidiary to create, incur or permit to exist any Lien upon any of its assets to secure the
Obligations or (b) the ability of any Subsidiary to pay dividends or other distributions with
respect to its Equity Interests or to make or repay loans or advances to the Company or any
Subsidiary or to guarantee Indebtedness of the Company or any Subsidiary; provided that (i) the
foregoing shall not apply to (A) restrictions on and conditions to the assignment of agreements
between the Company or any Subsidiary and any Governmental Authority or amounts owed under such
agreements, including those restrictions and conditions imposed by 31 USCS § 3727 and FAR Subpart
32.8 and any such assignments shall be in full compliance with 31 USCS § 3727 and FAR Subpart 32.8
or any successor law or regulation, (B) other restrictions and conditions imposed by law or by any
Loan Document, (C) restrictions and conditions existing on the date hereof identified on Schedule
6.05 (but shall apply to any amendment or modification expanding the scope of any such restriction
or condition), or (D) in the case of any Subsidiary that is not a wholly-owned Subsidiary,
restrictions and conditions imposed by its organizational documents or any related joint venture or
similar agreement, provided that such restrictions and conditions apply only to such Subsidiary and
to any Equity Interests in such Subsidiary, (ii) clause (a) of the foregoing shall not apply to (A)
restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by
clause (a) or (c) of the definition of “Permitted
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Encumbrances” in Section 1.01 if such restrictions or conditions apply only to the assets
securing such Indebtedness or (B) customary provisions in leases and other agreements restricting
the assignment thereof and (iii) clause (b) of the foregoing shall not apply to (A) customary
restrictions and conditions contained in agreements relating to the sale of any asset, provided
that such restrictions and conditions apply only to the asset that is to be sold, (B) restrictions
and conditions imposed by agreements relating to Indebtedness of any Subsidiary in existence at the
time such Subsidiary became a Subsidiary (but shall apply to any amendment or modification
expanding the scope of, any such restriction or condition), provided that such restrictions and
conditions apply only to such Subsidiary or (C) restrictions and conditions imposed by agreements
relating to Indebtedness of Foreign Subsidiaries permitted under Section 6.01, provided that such
restrictions and conditions apply only to Foreign Subsidiaries.
SECTION 6.06. Interest Coverage Ratio. Permit the Interest Coverage Ratio to be less than
3.00 to 1.00.
SECTION 6.07. Leverage Ratio. At any time permit the Leverage Ratio to be greater than 3.00
to 1.00.
ARTICLE VII
EVENTS OF DEFAULT
In case of the happening of any of the following events (each an “Event of Default”):
(a) any representation or warranty made or deemed made in or in connection with the execution
and delivery of this Agreement or the Borrowings or issuances of Letters of Credit hereunder shall
prove to have been false or misleading in any material respect when so made, deemed made or
furnished;
(b) default shall be made in the payment of any principal of any Loan or the reimbursement
with respect to any L/C Disbursement when and as the same shall become due and payable, whether at
the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or
otherwise;
(c) default shall be made in the payment of any interest on any Loan or L/C Disbursement or
any Fee or any other amount (other than an amount referred to in paragraph (b) above) due
hereunder, when and as the same shall become due and payable, and such default shall continue
unremedied for a period of five days;
(d) default shall be made in the due observance or performance of any covenant, condition or
agreement contained in Section 5.01 or Article VI;
(e) default shall be made in the due observance or performance of any covenant, condition or
agreement contained herein or in any other Loan Document (other than those specified in clauses
(b), (c) or (d) above) and such default shall continue unremedied for a period of 30 days after
notice thereof from the Administrative Agent or any Lender to the Company;
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(f) the Company or any Subsidiary shall (i) fail to pay any principal or interest, regardless
of amount, due in respect of any Material Indebtedness beyond the period of grace, if any, provided
in the agreement or instrument under which such Indebtedness was created, or (ii) fail to observe
or perform any other term, covenant, condition or agreement contained in any agreement or
instrument evidencing or governing any Material Indebtedness, or any other event shall occur or
condition shall exist, beyond the period of grace, if any, provided in such agreement or instrument
referred to in this clause (ii), if the effect of any failure referred to in this clause (ii) is to
cause, or to permit the holder or holders of such Material Indebtedness or a trustee on its or
their behalf or the applicable counterparty to cause, an acceleration of the maturity of such
Indebtedness or a termination or similar event in respect thereof;
(g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in
a court of competent jurisdiction seeking (i) relief in respect of the Company, or of a substantial
part of the property or assets of the Company or any Subsidiary with assets having gross book value
in excess of $25,000,000, under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other Federal or state bankruptcy, insolvency, receivership or similar law, (ii)
the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Company or for a substantial part of the property or assets of the Company or any
Subsidiary with assets having gross book value in excess of $25,000,000 or (iii) the winding up or
liquidation of the Company; and such proceeding or petition shall continue undismissed for 60 days
or an order or decree approving or ordering any of the foregoing shall be entered;
(h) the Company or any Subsidiary with assets having a gross book value in excess of
$25,000,000 shall (i) voluntarily commence any proceeding or file any petition seeking relief under
Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal
or state bankruptcy, insolvency, receivership or similar law, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition
described in (g) above, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Company or for a substantial part
of the property or assets of the Company, (iv) file an answer admitting the material allegations of
a petition filed against it in any such proceeding, (v) make a general assignment for the benefit
of creditors, (vi) become unable, admit in writing its inability or fail generally to pay its debts
as they become due or (vii) take any action for the purpose of effecting any of the foregoing;
(i) one or more final judgments shall be entered by any court against the Company or any of
the Subsidiaries for the payment of money in an aggregate amount in excess of $50,000,000 and such
judgment or judgments shall not have been paid, covered by insurance, discharged or stayed for a
period of 60 days, or a warrant of attachment or execution or similar process shall have been
issued or levied against property of the Company or any of the Subsidiaries to enforce any such
judgment or judgments;
(j) any guarantee purported to be created under the Guarantee Agreement shall cease to be, or
shall be asserted by any Loan Party not to be, in full force and effect, except upon the
consummation of any transaction permitted under this Agreement as a result of which the Loan Party
(other than the Company) providing such guarantee ceases
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to be a Subsidiary or upon the termination of the Guarantee Agreement in accordance with its
terms;
(k) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when
taken together with all other such ERISA Events, could reasonably be expected to result in a
Material Adverse Effect; or
(l) a Change in Control shall occur;
then, and in every such event (other than an event with respect to any Borrower described in
paragraph (g) or (h) above), and at any time thereafter during the continuance of such event, the
Administrative Agent, at the request of the Required Lenders, shall, by notice to the Company, take
any or all of the following actions, at the same or different times: (i) terminate forthwith the
Commitments, (ii) declare the Loans then outstanding to be forthwith due and payable in whole or in
part, whereupon the principal of the Loans so declared to be due and payable, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the Borrowers accrued
hereunder, shall become due and payable without presentment, demand, protest or any other notice of
any kind, all of which are hereby expressly waived anything contained herein to the contrary
notwithstanding, (iii) require the Borrowers to deposit with the Administrative Agent cash
collateral in an amount equal to the aggregate L/C Exposures to secure the Borrowers’ reimbursement
obligations under Section 2.05; and, in the case of any event with respect to any Borrower
described in paragraph (g) or (h) above, the Commitments shall automatically terminate and the
principal of the Loans then outstanding, together with accrued interest thereon and any unpaid
accrued Fees and all other liabilities of the Borrowers accrued hereunder shall automatically
become due and payable, without presentment, demand, protest or any other notice of any kind, all
of which are hereby expressly waived, anything contained herein to the contrary notwithstanding,
and the Borrowers shall deposit with the Administrative Agent cash collateral in an amount equal to
the aggregate L/C Exposure to secure the Borrowers’ reimbursement obligations under Section 2.05.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
Each of the Lenders and the Issuing Banks hereby irrevocably appoints the Administrative Agent
as its agent and authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms of the Loan
Documents, together with such actions and powers as are reasonably incidental thereto.
Any bank serving as the Administrative Agent hereunder shall have the same rights and powers
in its capacity as a Lender or an Issuing Bank as any other Lender or Issuing Bank and may exercise
the same as though it were not the Administrative Agent, and such bank and its Affiliates may
accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity
for and generally engage in any kind of business with the Company or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent hereunder.
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The Administrative Agent shall not have any duties or obligations except those expressly set
forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the
Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any
duty to take any discretionary action or to exercise any discretionary powers, except discretionary
rights and powers expressly contemplated by the Loan Documents that the Administrative Agent is
required to exercise in writing by the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith to be
necessary, under the circumstances as provided in the Loan Documents), provided that the
Administrative Agent shall not be required to take any action that, in its opinion, could expose
the Administrative Agent to liability or be contrary to any Loan Document or applicable law, and
(c) except as expressly set forth in the Loan Documents, the Administrative Agent shall not have
any duty to disclose, and shall not be liable for the failure to disclose, any information relating
to the Company or any Subsidiary that is communicated to or obtained by any bank serving as
Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not
be liable for any action taken or not taken by it with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as
the Administrative Agent shall believe in good faith to be necessary, under the circumstances as
provided in the Loan Documents) or in the absence of its own gross negligence or wilful misconduct,
as determined by a court of competent jurisdiction by a final and non-appealable judgment. The
Administrative Agent shall be deemed not to have knowledge of any Default unless and until written
notice thereof is given to the Administrative Agent by the Company, a Lender or an Issuing Bank,
and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with any Loan Document,
(ii) the contents of any certificate, report or other document delivered thereunder or in
connection therewith, (iii) the performance or observance of any of the covenants, agreements or
other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability,
effectiveness or genuineness of any Loan Document or any other agreement, instrument or document,
or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document,
other than to confirm receipt of items expressly required to be delivered to the Administrative
Agent.
The Administrative Agent shall be entitled to rely, and shall not incur any liability for
relying, upon any notice, request, certificate, consent, statement, instrument, document or other
writing believed by it to be genuine and to have been signed, sent or otherwise authenticated by
the proper Person. The Administrative Agent also may rel upon any statement made to it orally or
by telephone and believed by it to be made by the proper Person, and shall not incur any liability
for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel
for the Company), independent accountants and other experts selected by it, and shall not be liable
for any action taken or not taken by it in accordance with the advice of any such counsel,
accountants or experts.
The Administrative Agent may perform any of and all its duties and exercise its rights and
powers hereunder or under any other Loan Document by or
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through any one or more sub-agents appointed by the Administrative Agent. The Administrative
Agent and any such sub-agent may perform any of and all their duties and exercise their rights and
powers through their respective Related Parties. The exculpatory provisions of this Article shall
apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such
sub-agent, and shall apply to their respective activities in connection with the syndication of the
credit facilities provided for herein as well as activities as Administrative Agent.
Subject to the terms of this paragraph, the Administrative Agent may resign at any time by
notifying the Lenders, the Issuing Banks and the Company. Upon receipt of any such notice of
resignation, the Required Lenders shall have the right, in consultation with the Company, to
appoint a successor. If no successor shall have been so appointed by the Required Lenders and
shall have accepted such appointment within 30 days after the retiring Administrative Agent gives
notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders and
the Issuing Banks, appoint a successor Administrative Agent, which shall be a Lender with an office
in the United States of America, having a combined capital and surplus of at least $500,000,000, or
an Affiliate of any such Lender. Upon the acceptance of its appointment as Administrative Agent
hereunder by a successor, such successor shall succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder and under the other Loan
Documents. The fees payable by the Company to the successor Administrative Agent shall be the same
as those payable to its predecessor unless otherwise agreed between the Company and such successor.
After the Administrative Agent’s resignation hereunder, the provisions of this Article and Section
9.02, as well as any exculpatory, reimbursement and indemnification provisions set forth in any
other Loan Document, shall continue in effect for the benefit of such retiring Administrative
Agent, its sub agents and their respective Related Parties in respect of any actions taken or
omitted to be taken by any of them while it was acting as Administrative Agent or as sub-agent, as
the case may be.
Each Lender and Issuing Bank acknowledges that it has, independently and without reliance upon
the Administrative Agent or any other Lender or Issuing Bank, or any of the Related Parties of any
of the foregoing, and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement. Each Lender and Issuing Bank
also acknowledges that it will, independently and without reliance upon the Administrative Agent or
any other Lender or Issuing Bank, or any of the Related Parties of any of the foregoing, and based
on such documents and information as it shall from time to time deem appropriate, continue to make
its own decisions in taking or not taking action under or based upon this Agreement, any other Loan
Document or any related agreement or any document furnished hereunder or thereunder.
Each Lender, by delivering its signature page to this Agreement and funding its Loans on the
Effective Date, or delivering its signature page to an Assignment and Assumption or an Accession
Agreement pursuant to which it shall become a Lender hereunder, shall be deemed to have
acknowledged receipt of, and consented to and approved, each Loan Document and each other document
required to be delivered to, or
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be approved by or satisfactory to, the Administrative Agent or the Lenders on the Effective
Date.
No Lender or Issuing Bank shall have any right individually to enforce any guarantee of the
Obligations, it being understood and agreed that all powers, rights and remedies under the Loan
Documents may be exercised solely by the Administrative Agent on behalf of the Lenders and the
Issuing Bank in accordance with the terms thereof. Each Lender and each Issuing Bank will be
deemed, by its acceptance of the benefits of the guarantees of the Obligations provided under the
Loan Documents, to have agreed to the foregoing provisions.
Notwithstanding anything herein to the contrary, neither the Lead Arrangers nor any Person
named on the cover page of this Agreement as a Syndication Agent, a Documentation Agent or a Joint
Bookrunner shall have any duties or obligations under this Agreement or any other Loan Document
(except in its capacity, as applicable, as a Lender or an Issuing Bank), but all such Persons shall
have the benefit of the indemnities provided for hereunder.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. (a)Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to paragraph (b) below), all notices and other
communications provided for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by fax or by electronic
communication, as follows:
(i) if to any Borrower, to ITT Corporation, 1133 Westchester Avenue, White Plains, New
York 10604, Attention of Thomas Scalera, Chief Financial Officer (Fax No. 914-696-2960;
E-mail: thomas.scalera@itt.com), as agent for such Borrower;
(ii) if to the Administrative Agent, to JPMorgan Chase Bank, N.A., Loan and Agency
Services Group, 1111 Fannin Street, Floor 10, Houston, TX 77022, Attention of Jeremy Jones
(Fax No. 713-750-2878; E-mail: jeremy.m.jones@jpmorgan.com), with a copy to JPMorgan Chase
Bank, N.A. at 383 Madison Avenue, New York, New York 10179, Attention of Robert Bryant (Fax
No. 212-270-6539; E-mail: rob.d.bryant@jpmorgan.com) and JPMorgan Chase Bank, N.A., Loan
and Agency Group (London) at 125 London Wall, Floor 9, London, EC2Y 5AJ, United Kingdom,
Attention of Loan and Agency London (Fax No. +44 207 777 2360; Email:
Loan_and_Agency_London@jpmorgan.com) Re: ITT Corporation; and
(iii) if to any Issuing Bank, to it at its address (or fax number or e-mail address)
most recently specified by it in a notice delivered to the Administrative Agent and the
Company (or, in the absence of any such notice, to the address (or
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fax number or e-mail address) set forth in the Administrative Questionnaire of the
Lender that is serving as such Issuing Bank or is an Affiliate thereof);
(iv) if to any other Lender, to it at its address (or fax number or e-mail address)
set forth in its Administrative Questionnaire.
Notices sent by hand or overnight courier service, or mailed by certified or registered mail,
shall be deemed to have been given when received; notices sent by fax shall be deemed to have been
given when sent (except that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next business day for the recipient);
and notices delivered through electronic communications to the extent provided in this clause (a)
and paragraph (b) below shall be effective as provided in such paragraph.
(b) Notices and other communications to the Lenders and Issuing Banks hereunder may be
delivered or furnished by electronic communications (including email and Internet and intranet
websites) pursuant to procedures approved by the Administrative Agent; provided that the foregoing
shall not apply to notices under Article II to any Lender or Issuing Bank if such Lender or Issuing
Bank, as applicable, has notified the Administrative Agent that it is incapable of receiving
notices under such Article by electronic communication. Any notices or other communications to the
Administrative Agent or the Company may be delivered or furnished by electronic communications
pursuant to procedures approved by the recipient thereof prior thereto; provided that approval of
such procedures may be limited or rescinded by any such Person by notice to each other such Person.
SECTION 9.02. Survival of Agreement. All covenants, agreements, representations and
warranties made by the Borrowers herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement shall be considered to have been relied
upon by the Lenders and the Issuing Banks and shall survive the making by the Lenders of the Loans
and issuance of Letters of Credit regardless of any investigation made by the Lenders or the
Issuing Banks or on their behalf, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any Fee or any other amount payable under this
Agreement is outstanding and unpaid, any Letter of Credit is outstanding or the Commitments have
not been terminated. The provisions of Sections 2.14, 2.16, 2.20 and 9.05 shall remain operative
and in full force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of the Loans, the
expiration of any Letter of Credit, the expiration of the Commitments, the invalidity or
unenforceability of any term or provision of this Agreement, or any investigation made by or on
behalf of the Administrative Agent or any Lender.
SECTION 9.03. Binding Effect. This Agreement shall become effective on the Effective Date and
when it shall have been executed by the Company and the Administrative Agent and when the
Administrative Agent shall have received copies hereof (telecopied or otherwise) which, when taken
together, bear the signature of each Lender, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns, except that the
Borrowers shall not have the
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right to assign any rights hereunder or any interest herein without the prior consent of all
the Lenders.
SECTION 9.04. Successors and Assigns. (a) Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the successors and assigns of such
party; and all covenants, promises and agreements by or on behalf of any party that are contained
in this Agreement shall bind and inure to the benefit of its successors and assigns.
(b) Each Lender may assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it); provided, however, that (i) such assignment
shall be subject to the prior written consent (not to be unreasonably withheld or delayed) of: (1)
the Company, unless (x) the assignee is a Lender, an Affiliate of a Lender or an Approved Fund, or
(y) an Event of Default has occurred and is continuing; provided that the Company shall be deemed
to have consented to any such assignment unless it shall object thereto by written notice to the
Administrative Agent within 10 Business Days after having received notice thereof, (2) the
Administrative Agent, and (3) each Issuing Bank, (ii) the parties to each such assignment shall
execute and deliver to the Administrative Agent an Assignment and Assumption, and a processing and
recordation fee of $3,500, (iii) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire, (iv) the amount of the Commitment assigned
(determined as of the date the Assignment and Assumption with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $5,000,000, except in the event that
the amount of the Commitment of such assigning Lender remaining after such assignment shall be zero
and (v) without providing (1) prior notice to the Administrative Agent and (2) information
reasonably requested by the Administrative Agent so that it may comply with information reporting
requirements under the Code, no assignment shall be made to a prospective assignee that bears a
relationship to any Borrower described in Section 108(e)(4) of the Code. Upon acceptance and
recording pursuant to paragraph (e) of this Section, from and after the effective date specified in
each Assignment and Assumption, which effective date shall be at least five Business Days after the
execution thereof, (A) the assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement and (B) the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all or the remaining portion of an
assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a
party hereto (but shall continue to be entitled to the benefits of Sections 2.14, 2.16, 2.20 and
9.05, as well as to any Fees accrued for its account hereunder and not yet paid)). Notwithstanding
the foregoing, any Lender assigning its rights and obligations under this Agreement may retain any
Competitive Loans made by it outstanding at such time, and in such case shall retain its rights
hereunder in respect of any Loans so retained until such Loans have been repaid in full in
accordance with this Agreement.
(c) By executing and delivering an Assignment and Assumption, the assigning Lender thereunder
and the assignee thereunder shall be deemed to confirm to
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and agree with each other and the other parties hereto as follows: (i) such assigning Lender
warrants that it is the legal and beneficial owner of the interest being assigned thereby free and
clear of any adverse claim, (ii) except as set forth in (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any statements, warranties
or representations made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto or the financial condition of the Borrowers or the
performance or observance by the Borrowers of any obligations under this Agreement or any other
instrument or document furnished pursuant hereto; (iii) such assignee represents and warrants that
it is legally authorized to enter into such Assignment and Assumption; (iv) such assignee confirms
that it has received a copy of this Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 5.03 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into such Assignment and
Assumption; (v) such assignee will independently and without reliance upon the Administrative
Agent, such assigning Lender or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in taking or not
taking action under this Agreement; (vi) such assignee appoints and authorizes the Administrative
Agent to take such action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance
with their terms all the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(d) The Administrative Agent shall maintain at one of its offices in The City of New York a
copy of each Assignment and Assumption delivered to it and a register for the recordation of the
names and addresses of the Lenders, and the Commitment of, and the principal amount of the Loans
owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries
in the Register shall be conclusive in the absence of manifest error and the Borrowers, the
Administrative Agent, the Issuing Banks and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement. The Register shall be available for inspection by each party hereto, at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning
Lender and an assignee together with an Administrative Questionnaire completed in respect of the
assignee (unless the assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in paragraph (b) above and the written consent of the Company to such assignment
(if required under paragraph (a) above), the Administrative Agent shall (i) accept such Assignment
and Assumption and (ii) record the information contained therein in the Register. Each assignee,
by its execution and delivery of an Assignment and Assumption, shall be deemed to have represented
to the assigning Lender and the Administrative Agent that such assignee is an Eligible Assignee.
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(f) Each Lender may sell participations to one or more banks or other entities (each, a
"Participant”) in all or a portion of its rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans owing to it); provided, however, that (i) such
Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such obligations, (iii) each
Participant shall be entitled to the benefit of the cost protection provisions contained in
Sections 2.14, 2.16 and 2.20 to the same extent as if it were the selling Lender (and limited to
the amount that could have been claimed by the selling Lender had it continued to hold the interest
of such Participant), except that all claims made pursuant to such Sections shall be made through
such selling Lender, (iv) the Borrowers, the Administrative Agent, the Issuing Banks and the other
Lenders shall continue to deal solely and directly with such selling Lender in connection with such
Lender’s rights and obligations under this Agreement and (v) without providing (1) prior notice to
the Administrative Agent and (2) information reasonably requested by the Administrative Agent so
that it may comply with information reporting requirements under the Code, no participation shall
be made to a prospective Participant that bears a relationship to any Borrower described in Section
108(e)(4) of the Code. In no event shall a Lender that sells a participation agree with the
Participant to take or refrain from taking any action hereunder except that such Lender may agree
with the Participant that it will not, without the consent of the Participant, agree to (i)
increase or extend the term of such Lender’s Commitment, or extend the time or waive any
requirement for the reduction or termination, of such Lender’s Commitment, (ii) extend the date
fixed for the payment of principal of or interest on the related Loans or any portion of any fee
hereunder payable to the Participant, (iii) reduce the amount of any such payment of principal or
(iv) reduce the rate at which interest is payable thereon, or any fee hereunder payable to the
Participant, to a level below the rate at which the Participant is entitled to receive such
interest or fee. Each Lender that sells a participation shall, acting solely for this purpose as a
non-fiduciary agent of the Borrowers (solely for tax purposes), maintain a register on which it
enters the name and address of each Participant and the principal amounts (and stated interest) of
each Participant’s interest in the Loans or other obligations under this Agreement (the
"Participant Register”); provided that no Lender shall have any obligation to disclose all or any
portion of the Participant Register to any Person (including the identity of any Participant or any
information relating to a Participant’s interest in any Commitments, Loans, Letters of Credit or
its other obligations under this Agreement) except to the extent that such disclosure is necessary
to establish that such Commitment, Loan, Letter of Credit or other obligation is in registered form
under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant
Register shall be conclusive absent manifest error, and such Lender shall treat each person whose
name is recorded in the Participant Register as the owner of such participation for all purposes of
this Agreement notwithstanding any notice to the contrary.
(g) Any Lender or participant may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section, disclose to the assignee or
participant or proposed assignee or participant any information relating to the Borrowers furnished
to such Lender; provided that, prior to any such disclosure, each such assignee or participant or
proposed assignee or participant shall execute an agreement for the benefit of the Company whereby
such assignee or participant shall
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agree (subject to customary exceptions) to preserve the confidentiality of any such
information.
(h) The Borrowers shall not assign or delegate any rights and duties hereunder without the
prior written consent of all Lenders.
(i) Any Lender may at any time pledge all or any portion of its rights under this Agreement to
a Federal Reserve Bank or any central bank; provided that no such pledge shall release any Lender
from its obligations hereunder or substitute any such Bank for such Lender as a party hereto. In
order to facilitate such an assignment to a Federal Reserve Bank, each Borrower shall, at the
request of the assigning Lender, duly execute and deliver to the assigning Lender a promissory note
or notes evidencing the Loans made to such Borrower by the assigning Lender hereunder in the form
of Exhibit F.
SECTION 9.05. Expenses; Indemnity. (a) The Borrowers agree to pay all reasonable
out-of-pocket expenses incurred by the Administrative Agent, the Lead Arrangers and the Joint
Bookrunners named on the cover of this Agreement and their Affiliates in connection with the
arrangement and syndication of the credit facility established hereby and the preparation,
negotiation, execution and delivery of the Loan Documents (and all related commitment or fee
letters) or in connection with any amendments, modifications or waivers of the provisions hereof or
thereof, or incurred by the Administrative Agent or any Lender in connection with the
administration, enforcement or protection of their rights in connection with the Loan Documents
(including all such out-of pocket expenses incurred during any workout or restructuring) or in
connection with the Loans made or Letters of Credit issued hereunder, including the reasonable fees
and disbursements of counsel for the Administrative Agent and each Lead Arranger and Joint
Bookrunner or, in the case of enforcement or protection of their rights, the Lenders (which, in the
case of preparation, negotiation, execution, delivery and administration of the Loan Documents, but
not the enforcement or protection of rights thereunder, shall be limited to a single counsel for
the Administrative Agent, the Lead Arrangers and the Joint Bookrunners).
(b) The Borrowers agree to indemnify the Administrative Agent, the Lead Arrangers, the
Syndication Agent and the Joint Bookrunners named on the cover page of this Agreement, the Issuing
Banks, each Lender, each of their Affiliates and the directors, officers, employees and agents of
the foregoing (each such Person being called an “Indemnitee”) against, and to hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related reasonable expenses,
including reasonable counsel fees and expenses, incurred by or asserted against any Indemnitee
arising out of (i) the arrangement and syndication of the credit facility established hereby and
the preparation, negotiation, execution and delivery of the Loan Documents (and all related
commitment or fee letters) or consummation of the transactions contemplated thereby, (ii) the use
of the proceeds of the Loans or issuance of Letters of Credit or (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, regardless of whether initiated by
any third party or by any Borrower and whether or not any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses are
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determined by a final and non-appealable judgment of a court of competent jurisdiction to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.
(c) The provisions of this Section shall remain operative and in full force and effect
regardless of the expiration of the term of this Agreement, the consummation of the transactions
contemplated hereby, the repayment of any of the Loans, the expiration of any Letter of Credit, the
invalidity or unenforceability of any term or provision of this Agreement or any investigation made
by or on behalf of the Administrative Agent, the Issuing Banks or any Lender. All amounts due
under this Section shall be payable on written demand therefor.
(d) Notwithstanding any other provision, this Section 9.05 shall not apply with respect to any
matters, liabilities or obligations relating to Taxes.
SECTION 9.06. APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF
OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
SECTION 9.07. Waivers; Amendment. (a) No failure or delay of the Administrative Agent, the
Issuing Banks or any Lender in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of the Administrative
Agent, the Issuing Banks and the Lenders hereunder are cumulative and are not exclusive of any
rights or remedies which they would otherwise have. No waiver of any provision of this Agreement
or consent to any departure therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice or demand on any Borrower or any
Subsidiary in any case shall entitle such party to any other or further notice or demand in similar
or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Borrowers and the Required
Lenders; provided that no such agreement shall (i) increase the Commitment or L/C Exposure of any
Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or
L/C Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the written consent of each Lender affected thereby, (iii) postpone the date of any
scheduled payment of the principal amount of any Loan or L/C Disbursement, or any interest thereon,
or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written consent of each
Lender affected thereby, (iv) change Section 2.17, or change any other provision of any Loan
Document in a manner that would alter the pro rata sharing of payments required thereby, without
the written consent of each Lender, (v) change Section 9.04(h), (vi) release the Company, or
substantially all the Significant Domestic Subsidiaries, from their obligations under the Guarantee
Agreement (except as
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expressly provided in the Guarantee Agreement), or limit their liability in respect of the
guarantees under the Guarantee Agreement, without the written consent of each Lender, or (vii)
change any of the provisions of this Section or the definition of “Required Lenders” or any other
provision hereof specifying the number or percentage of Lenders required to waive, amend or modify
any rights hereunder or make any determination or grant any consent hereunder, without the written
consent of each Lender; provided further that no such agreement shall amend, modify or otherwise
affect the rights or duties of the Administrative Agent or the Issuing Bank hereunder without the
prior written consent of the Administrative Agent or the Issuing Bank, as the case may be.
Notwithstanding the foregoing, any provision of this Agreement may be amended by an agreement in
writing entered into by the Borrowers, the Required Lenders and the Administrative Agent (and, if
its rights or obligations are affected thereby, the Issuing Bank) if (i) by the terms of such
agreement the Commitment of each Lender not consenting to the amendment provided for therein shall
terminate upon the effectiveness of such amendment and (ii) at the time such amendment becomes
effective, each Lender not consenting thereto receives payment in full of the principal of and
interest accrued on each Loan made by it and all other amounts owing to it or accrued for its
account under this Agreement.
SECTION 9.08. Entire Agreement. This Agreement and the agreements referenced in Section
2.07(b) constitute the entire contract among the parties relative to the subject matter hereof.
Any previous agreement among the parties with respect to the subject matter hereof is superseded by
this Agreement. Nothing in this Agreement, expressed or implied, is intended to confer upon any
party other than the parties hereto any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
SECTION 9.09. Severability. In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of which comes as
close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 9.10. Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall constitute an original but all of which when taken together shall constitute but one
contract, and shall become effective as provided in Section 9.03.
SECTION 9.11. Headings. Article and Section headings and the Table of Contents used herein
are for convenience of reference only, are not part of this Agreement and are not to affect the
construction of, or to be taken into consideration in interpreting, this Agreement.
SECTION 9.12. Right of Setoff. If an Event of Default shall have occurred and be continuing,
each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted
by law, to set off and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such Lender to or for the
credit or obligations of the
78
Company and any Borrowing Subsidiary now or hereafter existing under any Loan Document held by
such Lender, irrespective of whether or not such Lender shall have made any demand thereunder and
although such obligations may be unmatured. Each Lender agrees promptly to notify the Company and
the Administrative Agent after such setoff and application made by such Lender, but the failure to
give such notice shall not affect the validity of such setoff and application. The rights of each
Lender under this Section are in addition to other rights and remedies (including other rights of
setoff) which such Lender may have.
SECTION 9.13. JURISDICTION; CONSENT TO SERVICE OF PROCESS. (A) EACH PARTY HEREBY IRREVOCABLY
AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF ANY NEW
YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK COUNTY, AND
ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY LETTER OF CREDIT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF
ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR, TO THE EXTENT
PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT
IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
(B) EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY
LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR THEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN ANY NEW
YORK STATE OR FEDERAL COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.
(C) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER
PROVIDED FOR NOTICES IN SECTION 9.01. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY
TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 9.14. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT
79
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATION IN THIS SECTION.
SECTION 9.15. Borrowing Subsidiaries. Within two Business Days after the receipt by the
Administrative Agent of a Borrowing Subsidiary Agreement executed by a Subsidiary and the Company,
the Administrative Agent shall deliver to each Lender a notice of such request to become a
Borrowing Subsidiary under this Agreement. If the designation of such Borrowing Subsidiary
obligates the Administrative Agent or a Lender to comply with “know your customer” or similar
identification procedures in circumstances where the necessary information is not already available
to it, the Administrative Agent or such Lender shall deliver to the Company, (a) within five
Business Days after the receipt of such a Borrowing Subsidiary Agreement in respect of a Domestic
Subsidiary or (b) within 10 Business Days after the receipt of such a Borrowing Subsidiary
Agreement in respect of a Foreign Subsidiary, a request to that effect, and the Company shall,
promptly upon receipt of such request, supply such documentation and other evidence as is
reasonably requested by the Administrative Agent or such Lender in order for the Administrative
Agent or such Lender to carry out and comply with the requirements of the USA PATRIOT Act or any
other applicable laws and regulations, and, unless the results of such inquiry conflict with the
requirements of such laws and regulations, or if no such request by the Administrative Agent or any
Lender is made within the time period set forth above, such Borrowing Subsidiary shall become a
party hereto and a Borrower hereunder with the same effect as if it had been an original party to
this Agreement. Notwithstanding the foregoing, no Subsidiary shall become a Borrower Subsidiary if
it shall be unlawful for such Subsidiary to become a Borrower hereunder or for any Lender to make
Loans or otherwise extend credit to such Subsidiary as provided herein or for any Issuing Bank to
issue Letters of Credit for the account of such Subsidiary. Upon the execution by the Company and
a Borrowing Subsidiary and delivery to the Administrative Agent of a Borrowing Subsidiary
Termination with respect to such Borrowing Subsidiary, such Borrowing Subsidiary shall cease to be
a Borrowing Subsidiary hereunder; provided that no Borrowing Subsidiary Termination will become
effective as to any Borrowing Subsidiary (other than to terminate such Borrowing Subsidiary’s right
to obtain further Loans or Letters of Credit under this Agreement) at a time when any principal of
or interest on any Loan to such Borrowing Subsidiary or any Letter of Credit issued for the account
of such Borrowing Subsidiary shall be outstanding hereunder. Promptly following receipt of any
Borrowing Subsidiary Termination, the Administrative Agent shall send a copy thereof to each
Lender.
SECTION 9.16. Conversion of Currencies. (a) If, for the purpose of obtaining judgment in any
court, it is necessary to convert a sum owing hereunder in one currency into another currency, each
party hereto agrees, to the fullest extent that it may effectively do so, that the rate of exchange
used shall be that at which in accordance with
80
normal banking procedures in the relevant jurisdiction the first currency could be purchased
with such other currency on the Business Day immediately preceding the day on which final judgment
is given.
(b) The obligations of the Borrowers in respect of any sum due to any party hereto or any
holder of the obligations owing hereunder (the “Applicable Creditor”) shall, notwithstanding any
judgment in a currency (the “Judgment Currency”) other than the currency in which such sum is
stated to be due hereunder (the “Agreement Currency”), be discharged only to the extent that, on
the Business Day following receipt by the Applicable Creditor of any sum adjudged to be so due in
the Judgment Currency, the Applicable Creditor may in accordance with normal banking procedures in
the relevant jurisdiction purchase the Agreement Currency with the Judgment Currency; if the amount
of the Agreement Currency so purchased is less than the sum originally due to the Applicable
Creditor in the Agreement Currency, the Borrowers agree, as a separate obligation and
notwithstanding any such judgment, to indemnify the Applicable Creditor against such loss. The
obligations of the Borrowers contained in this Section 9.16 shall survive the termination of this
Agreement and the payment of all other amounts owing hereunder.
SECTION 9.17. USA PATRIOT Act. Each Lender hereby notifies the Borrowers that pursuant to the
requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that
identifies the Borrowers, which information includes the name and address of each Borrower and
other information that will allow such Lender to identify the Borrowers in accordance with its
requirements.
SECTION 9.18. No Fiduciary Relationship. The Company, on behalf of itself and its
subsidiaries, agrees that in connection with all aspects of the transactions contemplated hereby
and any communications in connection therewith, the Company, the Subsidiaries and their Affiliates,
on the one hand, and the Administrative Agent, the Lenders, the Issuing Banks and their Affiliates,
on the other hand, will have a business relationship that does not create, by implication or
otherwise, any fiduciary duty on the part of the Administrative Agent, the Lenders, the Issuing
Banks or their Affiliates, and no such duty will be deemed to have arisen in connection with any
such transactions or communications.
SECTION 9.19. Non-Public Information. Each Lender acknowledges that all non-public
information, including requests for waivers and amendments, furnished by the Company or the
Administrative Agent pursuant to or in connection with, or in the course of administering, this
Agreement will be syndicate-level information, which may contain MNPI. Each Lender hereby advises
the Company and the Administrative Agent that (a) it has developed compliance procedures regarding
the use of MNPI and that it will handle MNPI in accordance with such procedures and applicable law,
including Federal, state and foreign securities laws, and (b) it has identified in its
Administrative Questionnaire a credit contact who may receive information that may contain MNPI in
accordance with its compliance procedures and applicable law, including Federal, state and foreign
securities laws.
81
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by
their respective authorized officers as of the day and year first above written.
| ITT CORPORATION, as Borrower, | ||||||
| by | /s/ Burt M. Fealing
|
|||||
| Title: Vice President & Secretary | ||||||
| JPMORGAN CHASE BANK, N.A., | ||||||
| individually and as Administrative Agent, | ||||||
| by | /s/ Robert D. Bryant
|
|||||
| Title: Vice President | ||||||
| CITIBANK, N.A., | ||||||
| by | /s/ Andrew Sidford
|
|||||
| Title: Vice President | ||||||
SIGNATURE PAGE TO ITT CORPORATION
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
| Lender: THE BANK OF TOKYO- | ||||||
| MITSUBISHI UFJ, LTD., | ||||||
| by | /s/ Ken Egusa
|
|||||
| Title: Vice President | ||||||
SIGNATURE PAGE TO ITT CORPORATION
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
| Lender: U.S. BANK N.A., | ||||||
| by | /s/ Michael P. Dickman
|
|||||
| Title: Vice President U.S. Bank, N.A. | ||||||
SIGNATURE PAGE TO ITT CORPORATION
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
| Lender: BARCLAYS BANK PLC, | ||||||
| by | /s/ Kevin Kullen
|
|||||
| Name: Kevin Cullen | ||||||
| Title: Director | ||||||
SIGNATURE PAGE TO ITT CORPORATION
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
| Lender: Société Générale, | ||||||
| by | /s/ Yao Wang
|
|||||
| Title: Director | ||||||
SIGNATURE PAGE TO ITT CORPORATION
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
| Lender: THE ROYAL BANK OF SCOTLAND PLC | ||||||
| by | /s/ L. Peter Yetman
|
|||||
| Title: Director | ||||||
SIGNATURE PAGE TO ITT CORPORATION
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
| Lender: WELLS FARGO BANK, N.A., | ||||||
| by | /s/ Tom Molitor
|
|||||
| Title: Director | ||||||
SIGNATURE PAGE TO ITT CORPORATION
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
| Lender: BNP PARIBAS, | ||||||
| by | /s/ Richard Pace
|
|||||
| Title: Managing Director | ||||||
| For any Lender requiring a second signature line: | ||||||
| by | /s/ Melissa Balley
|
|||||
| Title: Vice President | ||||||
SIGNATURE PAGE TO ITT CORPORATION
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
| Lender: ING BANK N.V. DUBLIN BRANCH, | ||||||
| by | /s/ Emma Condon
|
|||||
| Title: Vice President | ||||||
| For any Lender requiring a second signature line: | ||||||
| by | /s/ Aidan Neill
|
|||||
| Title: Director | ||||||
SIGNATURE PAGE TO ITT CORPORATION
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
| Lender: MIZUHO CORPORATE BANK, LTD., | ||||||
| by | /s/ David Lim
|
|||||
| Title: Authorized Signatory | ||||||
SIGNATURE PAGE TO ITT CORPORATION
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
| Lender: THE NORTHERN TRUST COMPANY, | ||||||
| by | /s/ Daniel J. Boote
|
|||||
| Title: Senior Vice President | ||||||
SIGNATURE PAGE TO ITT CORPORATION
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
| Lender: UBS LOAN FINANCE LLC | ||||||
| by | /s/ Irja R. Otsa
|
|||||
| Title: Associate Director | ||||||
| by | /s/ Mary E. Evans
|
|||||
| Title: Associate Director | ||||||
SIGNATURE PAGE TO ITT CORPORATION
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
| Lender: INTESA SANPAOLO S.P.A — NEW YORK BRANCH, | ||||||
| by | /s/ Robert Wurster
|
|||||
| Title: Senior Vice President | ||||||
| For any Lender requiring a second signature line: | ||||||
| by | /s/ Francesco Di Mario
|
|||||
| Title: F.V.P & Head of Credit | ||||||
SIGNATURE PAGE TO ITT CORPORATION
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
CREDIT AGREEMENT DATED AS OF OCTOBER 25, 2011
| Lender: THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND, | ||||||
| by | /s/ Wendy Hobson
|
|||||
| Title: Authorised Signatory | ||||||
| by | /s/ John Goggin
|
|||||
| Title: Authorised Signatory | ||||||
EXHIBIT A-1
[FORM OF]
COMPETITIVE BID REQUEST
JPMorgan Chase Bank, N.A., as Administrative Agent
for the Lenders referred to below,
383 Madison Avenue
New York, NY 10179
for the Lenders referred to below,
383 Madison Avenue
New York, NY 10179
[Date]
Attention: [ ]
Ladies and Gentlemen:
The undersigned, ________________ (the “Borrower”), refers to the Four-Year Competitive
Advance and Revolving Credit Facility Agreement dated as of October 25, 2011 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”), among ITT
Corporation, the Borrowing Subsidiaries party thereto, the Lenders party thereto, JPMorgan Chase
Bank, N.A., as Administrative Agent, and Citibank, N.A., as Syndication Agent. Capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement. The Borrower hereby gives you notice pursuant to Section 2.03(a) of the Credit
Agreement that it requests a Competitive Borrowing under the Credit Agreement, and in that
connection sets forth below the terms on which such Competitive Borrowing is requested to be made:
(A) Date of Competitive Borrowing
(which is a Business Day) |
||||
(B) Currency of Competitive Borrowing1 |
||||
(C) Principal amount
of Competitive Borrowing2 |
||||
(D) Interest rate basis3 |
||||
(E) Interest Period and the
last day thereof4 |
||||
| 1 | Dollar or a Non-US Currency. | |
| 2 | An integral multiple of 1,000,000 units of the applicable currency with a Dollar Equivalent of at least $10,000,000 but not greater than the Total Commitment then available. | |
| 3 | A Eurocurrency Borrowing or a Fixed Rate Borrowing. | |
| 4 | Shall be subject to the definition of the term “Interest Period” and end not later than the Maturity Date. |
Upon acceptance of any or all of the Loans offered by the Lenders in response to this request,
the Borrower shall be deemed to have represented and warranted that the conditions to lending
specified in Section 4.01(b) and (c) of the Credit Agreement have been satisfied.
| Very truly yours, | ||||||
| [NAME OF BORROWER], | ||||||
| by | ||||||
| Title: [Financial Officer] | ||||||
2
EXHIBIT A-2
[FORM OF]
NOTICE OF COMPETITIVE BID REQUEST
[Name of Lender]
[Address]
[Address]
[Date]
Attention: [ ]
Ladies and Gentlemen:
Reference is made to the Four-Year Competitive Advance and Revolving Credit Facility Agreement
dated as of October 25, 2011 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among ITT Corporation, the Borrowing Subsidiaries party thereto, the
Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and Citibank, N.A., as
Syndication Agent. Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. _____________ (the “Borrower”) made a
Competitive Bid Request on , 20[ ], pursuant to Section 2.03(a) of the Credit
Agreement, and in that connection you are invited to submit a Competitive Bid by
[Date]/[Time].1 Your Competitive Bid must comply with Section 2.03(b) of the Credit
Agreement and the terms set forth below on which the Competitive Bid Request was made:
(A) Date of Competitive Borrowing |
||||
(B) Currency of Competitive Borrowing |
||||
(C) Principal amount of
Competitive Borrowing |
||||
(D) Interest rate basis |
||||
(E) Interest Period and the
last day thereof. |
||||
| 1 | The Competitive Bid must be received by the Administrative Agent (i) in the case of Eurocurrency Competitive Loans, not later than 9:30 a.m., New York City time, three Business Days before a proposed Competitive Borrowing, and (ii) in the case of Fixed Rate Loans, not later than 9:30 a.m., New York City time, on the day of a proposed Competitive Borrowing. |
| Very truly yours, | ||||||
| JPMORGAN CHASE BANK, N.A., as Administrative Agent, |
||||||
| by | ||||||
| Title: | ||||||
EXHIBIT A-3
[FORM OF]
COMPETITIVE BID
JPMorgan Chase Bank, N.A., as Administrative Agent
for the Lenders referred to below,
383 Madison Avenue
New York, NY 10179
for the Lenders referred to below,
383 Madison Avenue
New York, NY 10179
[Date]
Attention: [ ]
Ladies and Gentlemen:
The undersigned, [Name of Lender], refers to the Four-Year Competitive Advance and Revolving
Credit Facility Agreement dated as of October 25, 2011 (as amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), among ITT Corporation, the Borrowing
Subsidiaries party thereto, the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative
Agent, and Citibank, N.A., as Syndication Agent. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Credit Agreement. The
undersigned hereby makes a Competitive Bid pursuant to Section 2.03(b) of the Credit Agreement, in
response to the Competitive Bid Request made by ___________
(the “Borrower”) on , 20[ ], and in that connection sets forth below the
terms on which such Competitive Bid is
made:
(A) Principal Amount 1 |
||||
(B) Competitive Bid Rate 2 |
||||
(C) Interest Period and last
day thereof |
||||
The undersigned hereby confirms that it is prepared, subject to the conditions set forth in
the Credit Agreement, to extend credit to the Borrower upon acceptance by the Borrower of this bid
in accordance with Section 2.03(d) of the Credit Agreement.
| 1 | An integral multiple of 1,000,000 units of the applicable currency and may be equal to the entire principal amount of the Competitive Borrowing requested. Multiple bids will be accepted by the Administrative Agent. | |
| 2 | i.e., LIBO Rate + or %, in the case of Eurocurrency Competitive Loans, or %, in the case of Fixed Rate Loans. |
| Very truly yours, | ||||||
| [NAME OF LENDER], | ||||||
| by | ||||||
| Title: | ||||||
2
EXHIBIT A-4
[FORM OF]
COMPETITIVE BID ACCEPT/REJECT LETTER
JPMorgan Chase Bank, N.A., as Administrative Agent
for the Lenders referred to below
383 Madison Avenue
New York, NY 10179
for the Lenders referred to below
383 Madison Avenue
New York, NY 10179
[Date]
Attention: [ ]
Ladies and Gentlemen:
The undersigned, ______________________, refers to the Four-Year Competitive Advance and
Revolving Credit Facility Agreement dated as of October 25, 2011 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”), among ITT
Corporation, the Borrowing Subsidiaries party thereto, the Lenders party thereto, JPMorgan Chase
Bank, N.A., as Administrative Agent, and Citibank, N.A., as Syndication Agent. Capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement.
In accordance with Section 2.03(c) of the Credit Agreement, we have received a summary of bids
in connection with our Competitive Bid Request dated , and in accordance with
Section 2.03(d) of the Credit Agreement, we hereby accept the following bids for maturity on
[date]:
| Principal Amount | Currency | Fixed Rate/Margin | Lender | |||||||||
| [%]/[+/-. %] | ||||||||||||
We hereby reject the following bids:
| Principal Amount | Currency | Fixed Rate/Margin | Lender | |||||||||
| [%]/[+/-. %] | ||||||||||||
The Competitive Loans should be deposited in JPMorgan Chase Bank, N.A. account number [ ] on [date].
| Very truly yours, | ||||||
| [NAME OF BORROWER], | ||||||
| by | ||||||
| Title: | ||||||
EXHIBIT A-5
[FORM OF]
REVOLVING BORROWING REQUEST
JPMorgan Chase Bank, N.A., as Administrative Agent
for the Lenders referred to below,
383 Madison Avenue
New York, NY 10179
for the Lenders referred to below,
383 Madison Avenue
New York, NY 10179
[Date]
Attention: [ ]
Ladies and Gentlemen:
The undersigned, ____________________________ (the “Borrower”), refers to the Four-Year
Competitive Advance and Revolving Credit Facility Agreement dated as of October 25, 2011 (as
amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”),
among ITT Corporation, the Borrowing Subsidiaries party thereto, the Lenders party thereto,
JPMorgan Chase Bank, N.A., as Administrative Agent, and Citibank, N.A., as Syndication Agent.
Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Credit Agreement. The Borrower hereby gives you notice pursuant to Section 2.04
of the Credit Agreement that it requests a Revolving Borrowing under the Credit Agreement, and in
that connection sets forth below the terms on which such Revolving Borrowing is requested to be
made:
(A) Date of Revolving Borrowing
(which is a Business Day) |
||||
(B) Principal amount of
Revolving Borrowing1 |
||||
(C) Interest rate basis2 |
||||
(D) Interest Period and the
last day thereof 3 |
||||
Upon acceptance of any or all of the Loans made by the Lenders in response to this request,
the Borrower shall be deemed to have represented and warranted that the conditions to lending
specified in Section 4.01(b) and (c) of the Credit Agreement have been satisfied.
| 1 | An integral multiple of $5,000,000 and not less than $10,000,000 (or an aggregate principal amount equal to the Total Commitment then available) but not greater than the Total Commitment then available. | |
| 2 | Eurocurrency Revolving Loan or ABR Loan. | |
| 3 | Shall be subject to the definition of the term “Interest Period.” |
| Very truly yours, | ||||||
| [NAME OF BORROWER], | ||||||
| by | ||||||
| Title: [Financial Officer] | ||||||
EXHIBIT B
[FORM OF]
ASSIGNMENT AND ASSUMPTION
ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (this “Assignment and Assumption”) is dated as of the Effective
Date set forth below and is entered into by and between the Assignor (as defined below) and the
Assignee (as defined below). Capitalized terms used in this Assignment and Assumption and not
otherwise defined herein have the meanings specified in the Four-Year Competitive Advance and
Revolving Credit Facility Agreement dated as of October 25, 2011 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”), among ITT
Corporation, the Borrowing Subsidiaries party thereto, the Lenders party thereto, JPMorgan Chase
Bank, N.A., as Administrative Agent, and Citibank, N.A., as Syndication Agent, receipt of a copy of
which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex
1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this
Assignment and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the
Effective Date inserted by the Administrative Agent as contemplated below, (i) all of the
Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any
other documents or instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and obligations of the
Assignor under the facility identified below (including any Competitive Loans or Letters of Credit
included in such facility) and (ii) to the extent permitted to be assigned under applicable law,
all claims, suits, causes of action and any other rights of the Assignor (in its capacity as a
Lender) against any Person, whether known or unknown, arising under or in connection with the
Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan
transactions governed thereby or in any way based on or related to any of the foregoing, including,
but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all
other claims at law or in equity related to the rights and obligations sold and assigned pursuant
to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii)
above being referred to herein collectively as the “Assigned Interest”). Such sale and assignment
is without recourse to the Assignor and, except as expressly provided in this Assignment and
Assumption, without representation or warranty by the Assignor.
| 1. | Assignor (the “Assignor”): | ||
| 2. | Assignee (the “Assignee”): |
Assignee is an Affiliate of: [Name of Lender]
| 3. | Borrowers: | ||
| 4. | Administrative Agent: | ||
| 5. | Assigned Interest: |
| Aggregate Amount | Percentage | |||||||||||
| of | Amount of | Assigned of | ||||||||||
| Commitment/Loans | Commitment/Loans | Commitment/ | ||||||||||
| of all Lenders | Assigned | Loans1 | ||||||||||
Commitment Assigned |
$ | $ | % | |||||||||
Revolving Loans |
$ | $ | % | |||||||||
Competitive Loans |
$ | $ | % | |||||||||
Effective Date: , 200[ ] [TO BE INSERTED BY ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR].
| 1 | Set forth, to at least nine decimals, as a percentage of the Commitment/Loans of all Lenders thereunder. |
2
The terms set forth in this Assignment and Assumption are hereby agreed to:
| [NAME OF ASSIGNOR], as Assignor, | ||||||||
| by | ||||||||
| Title: | ||||||||
| [NAME OF ASSIGNEE], as Assignee, | ||||||||
| by | ||||||||
| Title: | ||||||||
Consented to:
JPMORGAN CHASE BANK, N.A.
as Administrative Agent,
as Administrative Agent,
by |
||||
| Title: |
Consented to:
[ ], as Issuing Bank,
[ ], as Issuing Bank,
by |
||||
| Title: |
[Consented to:
ITT Corporation,
as the Company,
as the Company,
by |
||||
| Title:]2 |
| 2 | No consent of the Company shall be required for an assignment to a Lender, an Affiliate of a Lender or, if an Event of Default has occurred and is continuing, any other assignee. |
3
Annex I
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties.
1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any
lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken
all action necessary, to execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the Credit Agreement, (ii)
the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement, (iii) the financial condition of the Company, the Borrowing Subsidiaries, or any of
their Subsidiaries or Affiliates or any other Person obligated in respect of the Credit Agreement
or (iv) the performance or observance by the Company, the Borrowing Subsidiaries, or any of their
Subsidiaries or Affiliates or any other Person of any of their respective obligations under the
Credit Agreement.
1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power
and authority, and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement
that are required to be satisfied by it in order to acquire the Assigned Interest and become a
Lender, (iii) from and after the Effective Date under the Assignment and Assumption, it shall be
bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the
Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy
of the Credit Agreement, together with copies of the most recent financial statements delivered
pursuant to Section 5.03 thereof (or, prior to the first such delivery, the financial statements
referred to in Section 3.05 thereof), and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this Assignment and
Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on any agent or any other Lender, and (v) if the
Assignee is organized under the laws of a jurisdiction outside the United States, attached to this
Assignment and Assumption is any documentation required to be delivered by it pursuant to Section
2.20 of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i)
it will, independently and without reliance on the Assignor, any agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under the Credit Agreement, and (ii) it
will perform in accordance with their terms all of the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender.
2. Payments. From and after the Effective Date, the Administrative Agent shall make
all payments in respect of the Assigned Interest (including payments of principal, interest, fees
and other amounts) to the Assignee whether such amounts have accrued prior to or on or after the
Effective Date. The Assignor and the Assignee shall make all appropriate adjustments in payments
by the Administrative Agent for periods prior to the Effective Date or with respect to the making
of this assignment directly between themselves.
3. General Provisions. This Assignment and Assumption shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and assigns. This
Assignment and Assumption may be executed in any number of counterparts, which together shall
constitute one instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by facsimile or other electronic transmission shall be as effective as
delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and
Assumption shall be construed in accordance with and governed by the law of the State of New York
without regard to conflict of laws principles thereof other than Section 5-1401 and 5-1402 of the
New York General Obligations Law.
2
EXHIBIT C-1
[FORM OF]
OPINION OF DEWEY & LEBOEUF, COUNSEL FOR ITT CORPORATION
Reference is made to the Four-Year Competitive Advance and Revolving Credit Facility Agreement
dated as of October 25, 2011 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among ITT Corporation, the Borrowing Subsidiaries party thereto, the
Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and Citibank, N.A., as
Syndication Agent. Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement.
1 The execution, delivery and performance by each Loan Party of the Loan
Documents1, and the borrowings of ITT Corporation under the Credit Agreement will not
violate any provision of law, statute, rule or regulation (including without limitation, the Margin
Regulations) of the United States of America or the State of New York.
2. Each Loan Document constitutes a legal, valid and binding obligation of each Loan Party
party thereto enforceable against such Loan Party in accordance with its terms, subject to any
applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent transfer or conveyance or
other similar laws of general application relating to or affecting the enforcement of creditors’
rights from time to time in effect, and to general principles of equity, regardless of whether such
principles are considered in any proceeding in equity or at law.
| 1 | For opinion purposes, Loan Documents will be defined as those Loan Documents to be executed and delivered as of the Effective Date. |
EXHIBIT C-2
[FORM OF]
OPINION OF BURT FEALING, GENERAL COUNSEL AND SECRETARY FOR ITT CORPORATION
Reference is made to the Four-Year Competitive Advance and Revolving Credit Facility Agreement
dated as of October 25, 2011 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among ITT Corporation, the Borrowing Subsidiaries party thereto, the
Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and Citibank, N.A., as
Syndication Agent. Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement.
1. Each Loan Party (i) is a corporation duly organized and validly existing under the laws of
the [State of Indiana], (ii) has all requisite corporate power and authority to own its property
and assets and to carry on its business as now conducted, (iii) is qualified to do business in
every jurisdiction within the United States where such qualification is required, except where the
failure so to qualify would not result in a Material Adverse Effect, and (iv) has all requisite
corporate power and authority to execute, deliver and perform its obligations under the Loan
Documents to which it is a party, and in the case of ITT Corporation, to borrow funds thereunder.
2. The execution, delivery and performance by each Loan Party of the Loan Documents, and the
borrowings of ITT Corporation under the Credit Agreement, (collectively, the “Transactions”) (i)
have been duly authorized by all requisite corporate action and (ii) will not (a) violate (1) any
provision of law, statute, rule or regulation of the Indiana Business Corporation Law, or of the
articles of incorporation or other constitutive documents or by-laws of such Loan Party, (2) any
order known to me of any governmental authority or (3) any provision of any indenture, material
agreement or other material instrument to which such Loan Party is a party or by which it or its
property is or may be bound, (b) be in conflict with, result in a breach of or constitute (alone or
with notice or lapse of time or both) a default under any such indenture, agreement or other
instrument or (c) result in the creation or imposition of any lien upon any property or assets of
such Loan Party, other than pursuant to the Loan Documents.
3. Each Loan Document has been duly executed and delivered by each Loan Party.
4. No action, consent or approval of, registration or filing with, or any other action by, any
government authority is or will be required in connection with the Transactions, except such as
have been made or obtained and are in full force and effect.
5. Neither ITT Corporation nor any of its subsidiaries is an “investment company” as defined in, or
subject to regulation under, the Investment Company Act of 1940.
2
EXHIBIT D-1
[FORM OF]
BORROWING SUBSIDIARY AGREEMENT
BORROWING SUBSIDIARY AGREEMENT
BORROWING SUBSIDIARY AGREEMENT dated as of [ ], [ ], among
ITT CORPORATION, an Indiana corporation (the “Company”), [Name of
Subsidiary], a [ ] corporation (the “Subsidiary”), and JPMORGAN
CHASE BANK, N.A., as administrative agent (the “Administrative Agent”) for
the lenders (the “Lenders”) party to the Credit Agreement referred to below.
Reference is made to the Four-Year Competitive Advance and Revolving Credit Facility Agreement
dated as of October 25, 2011 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among the Company, the Borrowing Subsidiaries party thereto, the
Lenders party thereto, the Administrative Agent and Citibank, N.A., as Syndication Agent.
Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Credit Agreement.
Under the Credit Agreement, the Lenders have agreed, upon the terms and subject to the
conditions therein set forth, to make competitive advance and revolving credit loans to, and to
issue Letters of Credit for the account of, the Company and its subsidiaries that execute and
deliver to the Administrative Agent a Borrowing Subsidiary Agreement in the form hereof. In
consideration of being permitted to borrow, and to have Letters of Credit issued for its account,
under the Credit Agreement upon the terms and subject to the conditions set forth therein, the
Subsidiary agrees that from and after the date of this Borrowing Subsidiary Agreement it will be,
and will be liable for the observance and performance of all the obligations of, a Borrowing
Subsidiary under the Credit Agreement to the same extent as if it had been one of the original
parties to the Credit Agreement and that it will furnish to the Administrative Agent and the
Lenders copies of its financial statements on an annual basis.
IN WITNESS WHEREOF, the Company and the Subsidiary have caused this Borrowing Subsidiary
Agreement to be duly executed by their authorized officers as of the date first appearing above.
| ITT CORPORATION, | ||||||
| by | ||||||
| Title: | ||||||
| [NAME OF SUBSIDIARY], | ||||||
| by | ||||||
| Title: | ||||||
Accepted as of the date first appearing above:
JPMORGAN CHASE BANK N.A.,
as Administrative Agent,
as Administrative Agent,
by |
||||
| Title: |
EXHIBIT D-2
[FORM OF]
BORROWER TERMINATION AGREEMENT
BORROWER TERMINATION AGREEMENT
JPMorgan Chase Bank, N.A., as Administrative Agent
for the Lenders referred to below,
383 Madison Avenue
New York, NY 10179
for the Lenders referred to below,
383 Madison Avenue
New York, NY 10179
[ ], 20[ ]
Re: Borrower Termination Agreement
Ladies and Gentlemen:
Reference is made to the Four-Year Competitive Advance and Revolving Credit Facility Agreement
dated as of October 25, 2011 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among the ITT Corporation, an Indiana corporation (the “Company”),
the Borrowing Subsidiaries party thereto, the Lenders party thereto, JPMorgan Chase Bank, N.A., as
Administrative Agent and Citibank, N.A., as Syndication Agent. Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to such terms in the Credit
Agreement.
The Company hereby terminates the status of [NAME OF TERMINATED BORROWING SUBSIDIARY] (the
"Terminated Borrower”) as a “Borrower” under the Credit Agreement. [The Company represents and
warrants that all Loans made to the Terminated Borrower have been repaid, all Letters of Credit
issued for the account of the Terminated Borrower have been drawn in full or have expired and all
amounts payable by the Terminated Borrower in respect of any drawings under any Letter of Credit
issued for the account of such Terminated Borrower, interest and/or fees (and, to the extent
notified by the Administrative Agent or any Lender, any other amounts payable under the Credit
Agreement by the Terminated Borrower) have been paid in full on or prior to the date hereof.][The
Company and the Terminated Borrower acknowledge that the Terminated Borrower shall continue to be a
Borrower until such time as all Loans made to the Terminated Borrower have been repaid, all Letters
of Credit issued for the account of the Terminated Borrower have been drawn in full or have expired
and all amounts payable by the Terminated Borrower in respect of any drawings under any Letter of
Credit issued for the account of such Terminated Borrower, interest and/or fees (and, to the extent
notified by the Administrative Agent or any Lender, any other amounts payable under the Credit
Agreement by the Terminated Borrower) have been paid in full.] The execution and delivery of this
Borrower Termination Agreement shall be immediately effective to terminate the right of the
Terminated Borrower to request or receive further extensions of credit under the Credit
Agreement.
THIS INSTRUMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK.
| ITT CORPORATION, | ||||||
| by | ||||||
| Title: | ||||||
EXHIBIT E
[FORM OF]
ISSUING BANK AGREEMENT
ISSUING BANK AGREEMENT dated as of [ ], [ ] (this
“Agreement”), between ITT CORPORATION, an Indiana corporation (the
“Company”) and the financial institution identified on Schedule I hereto as
the Issuing Bank (the “Issuing Bank”).
Reference is made to the Four-Year Competitive Advance and Revolving Credit Facility Agreement
dated as of October 25, 2011 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among the Company, the Borrowing Subsidiaries party thereto, the
Lenders party thereto, the Administrative Agent and Citibank, N.A., as Syndication Agent.
Accordingly, the parties hereto agree as follows:
SECTION 1. Defined Terms. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Credit Agreement. The rules of construction
set forth in Section 1.02 of the Credit Agreement shall apply to this Agreement, mutatis mutandis.
SECTION 2. Letter of Credit Commitment. The Issuing Bank hereby agrees to be an “Issuing
Bank” under, and subject to the terms and conditions hereof and of the Credit Agreement, to issue
Letters of Credit under, the Credit Agreement; provided, however, that Letters of Credit issued by
the Issuing Bank hereunder shall be subject to the limitations, if any, set forth on Schedule I
hereto, in addition to the limitations set forth in the Credit Agreement.
SECTION 3. Issuance Procedure. In order to request the issuance of a Letter of Credit
hereunder, the applicable Borrower (or the Company on behalf of the applicable Borrower) shall hand
deliver or fax a notice (specifying the information required by Section 2.05(b) of the Credit
Agreement) to the Issuing Bank, at its address or fax number specified on Schedule I hereto (or
such other address or fax number as the Issuing Bank may specify by notice to the Company), not
later than the time of day (local time at such address) specified on Schedule I hereto prior to the
proposed date of issuance of such Letter of Credit. A copy of such notice shall be sent,
concurrently, by the applicable Borrower (or the Company on behalf of the applicable Borrower) to
the Administrative Agent in the manner specified for Borrowing Requests under the Credit Agreement.
Upon receipt of such notice, the Issuing Bank shall consult the Administrative Agent by telephone
in order to determine (i) whether the conditions specified in the last sentence of Section 2.05(b)
of the Credit Agreement will be satisfied in connection with the issuance of such Letter of Credit
and (ii) whether the requested expiration date for such Letter of Credit complies with the proviso
to Section 2.05(c) of the Credit Agreement.
SECTION 4. Issuing Bank Fees, Interest and Payments. The Issuing Bank Fees payable to the
Issuing Bank in respect of Letters of Credit issued hereunder are specified on Schedule I hereto
(and such fees shall be in addition to the Issuing Bank’s customary documentary and processing
charges in connection with the issuance, amendment or transfer of any Letter of Credit issued
hereunder). Each payment of Issuing Bank Fees payable hereunder shall be made not later than 12:00
(noon), local time at the place of payment, on the date when
due, in immediately available funds, to the account of the Issuing Bank specified on Schedule
I hereto (or to such other account of the Issuing Bank as it may specify by notice to the Company).
SECTION 5. Credit Agreement Terms. Notwithstanding any provision hereof which may be
construed to the contrary, it is expressly understood and agreed that (a) this Agreement is
supplemental to the Credit Agreement and is intended to constitute an Issuing Bank Agreement, as
defined therein (and, as such, constitutes an integral part of the Credit Agreement as though the
terms of this Agreement were set forth in the Credit Agreement), (b) each Letter of Credit issued
hereunder and each and every L/C Disbursement made under any such Letter of Credit shall constitute
a “Letter of Credit” and an “L/C Disbursement”, respectively, for all purposes of the Credit
Agreement and the other Loan Documents, (c) the Issuing Bank’s commitment to issue Letters of
Credit hereunder and each and every Letter of Credit requested or issued hereunder shall be subject
to the terms and conditions of the Credit Agreement and entitled to the benefits of the Loan
Documents and (d) the terms and conditions of the Credit Agreement are hereby incorporated herein
as though set forth herein in full and shall supersede any contrary provisions hereof.
SECTION 6. Assignment. The Issuing Bank may not assign its commitment to issue Letters of
Credit hereunder without the consent of the Company and prior notice to the Administrative Agent.
In the event of an assignment by the Issuing Bank of all its other interests, rights and
obligations under the Credit Agreement, then the Issuing Bank’s commitment to issue Letters of
Credit hereunder shall terminate unless the Issuing Bank, the Company and the Administrative Agent
otherwise agree.
SECTION 7. Effectiveness. This Agreement shall not be effective until counterparts hereof
executed on behalf of each of the Company and the Issuing Bank have been delivered to and accepted
by the Administrative Agent.
2
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to
be duly executed and delivered as of the date first above written.
| ITT CORPORATION, | ||||||
| by | ||||||
| Title: | ||||||
| [ISSUING BANK], | ||||||
| by | ||||||
| Title: | ||||||
Accepted:
JPMORGAN CHASE BANK N.A., as
Administrative Agent,
Administrative Agent,
by |
||||
| Title: |
SCHEDULE I to
Issuing Bank Agreement
Issuing Bank Agreement
A.
|
Issuing Bank: | |||
B.
|
Issuing Bank’s Address and Telecopy Number for Notices: | |||
C.
|
Time of Day by Which Notices Must be Received | A notice requesting the issuance of a Letter of Credit must be received by the Issuing Bank by 10:00 a.m. (New York time) not less than five Business Days prior to the proposed date of issuance. | ||
D.
|
Special Terms: | The aggregate L/C Exposure in respect of Letters of Credit issued pursuant to this Agreement shall not exceed $[ ]. | ||
E.
|
Issuing Bank Fronting Fee: | [ ]% per annum on the average daily undrawn amount of the Letters of Credit, payable on the same dates that L/C Participation Fees are payable under the Credit Agreement. | ||
F.
|
Issuing Bank’s Account for Payment of Issuing Bank Fees: |
EXHIBIT F
[FORM OF]
PROMISSORY NOTE
New York, New York
[Date]
[Date]
For value received, [NAME OF BORROWER], a [ ] corporation (the “Borrower”),
promises to pay to the order of [name of Lender] (the “Lender”) (i) the unpaid principal amount of
each Loan made by the Lender to the Borrower under the Credit Agreement referred to below, when and
as due and payable under the terms of the Credit Agreement, and (ii) interest on the unpaid
principal amount of each such Loan on the dates and at the rate or rates provided for in the Credit
Agreement. All such payments of principal and interest shall be made in the currencies and to the
accounts specified in the Credit Agreement, in immediately available funds.
All Loans made by the Lender, and all repayments of the principal thereof, shall be recorded
by the Lender and, prior to any transfer hereof, appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding shall be endorsed by the Lender on the
schedule attached hereto, or on a continuation of such schedule attached hereto and made a part
hereof; provided that the failure of the Lender to make any such recordation or endorsement shall
not affect the obligations of the Borrower hereunder or under the Credit Agreement.
This note is one of the promissory notes issued pursuant to the Four-Year Competitive Advance
and Revolving Credit Facility Agreement dated as of October 25, 2011 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”), among ITT
Corporation, the Borrowing Subsidiaries party thereto, the Lenders party thereto, the
Administrative Agent and Citibank, N.A., as Syndication Agent. Reference is made to the Credit
Agreement for provisions for the mandatory and optional prepayment hereof and the acceleration of
the maturity hereof.
| [NAME OF BORROWER], | ||||||
| by | ||||||
| Title: | ||||||
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
| Amount of Principal | Unpaid | Notations | ||||||||||||||
| Date | Amount of Loan | Repaid | Principal Balance | Made By | ||||||||||||
2
EXHIBIT G-1
[FORM OF]
U.S. TAX CERTIFICATE
U.S. TAX CERTIFICATE
(For Non-U.S. Lenders That Are Not
Partnerships For U.S. Federal Income Tax Purposes)
Partnerships For U.S. Federal Income Tax Purposes)
Reference is made to the Four-Year Competitive Advance and Revolving Credit Facility Agreement
dated as of October 25, 2011 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among ITT Corporation, the Borrowing Subsidiaries party thereto, the
Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and Citibank, N.A., as
Syndication Agent.
Pursuant to the provisions of Section 2.20 of the Credit Agreement, the undersigned hereby
certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any
Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is
not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent
shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, (iv) it is not
a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of
the Code and (v) the interest payments in question are not effectively connected with the
undersigned’s conduct of U.S. trade or business.
The undersigned has furnished the Administrative Agent and the Borrower with a certificate of
its non-U.S. person status on IRS Form W-8BEN. By executing this certificate, the undersigned
agrees that (1) if the information provided on this certificate changes, the undersigned shall
promptly so inform the Borrower and the Administrative Agent and (2) the undersigned shall have at
all times furnished the Borrower and the Administrative Agent with a properly completed and
currently effective certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall
have the meanings given to them in the Credit Agreement.
[NAME OF LENDER]
By: |
||||
| Title: |
Date: ________ __, 20[ ]
EXHIBIT G-2
[FORM OF]
U.S. TAX CERTIFICATE
U.S. TAX CERTIFICATE
(For Non-U.S. Lenders That Are Partnerships
For U.S. Federal Income Tax Purposes)
For U.S. Federal Income Tax Purposes)
Reference is made to the Four-Year Competitive Advance and Revolving Credit Facility Agreement
dated as of October 25, 2011 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among ITT Corporation, the Borrowing Subsidiaries party thereto, the
Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and Citibank, N.A., as
Syndication Agent.
Pursuant to the provisions of Section 2.20 of the Credit Agreement, the undersigned hereby
certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing
such Loan(s)) in respect of which it is providing this certificate, (ii) its partners/members are
the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii)
with respect to the extension of credit pursuant to this Credit Agreement, neither the undersigned
nor any of its partners/members is a bank extending credit pursuant to a loan agreement entered
into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of
the Code, (iv) none of its partners/members is a ten percent shareholder of the Borrower within the
meaning of Section 871(h)(3)(B) of the Code, (v) none of its partners/members is a controlled
foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and
(vi) the interest payments in question are not effectively connected with the undersigned’s or its
partners/members’ conduct of a U.S. trade or business.
The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY
accompanied by an IRS Form W-8BEN from each of its partners/members claiming the portfolio interest
exemption. By executing this certificate, the undersigned agrees that (1) if the information
provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the
Administrative Agent and (2) the undersigned shall have at all times furnished the Borrower and the
Administrative Agent with a properly completed and currently effective certificate in either the
calendar year in which each payment is to be made to the undersigned, or in either of the two
calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall
have the meanings given to them in the Credit Agreement.
[NAME OF LENDER]
By: |
||||
| Title: |
Date: ________ __, 20[ ]
EXHIBIT G-3
[FORM OF]
U.S. TAX CERTIFICATE
U.S. TAX CERTIFICATE
(For Non-U.S. Participants That Are
Not Partnerships For U.S. Federal Income Tax Purposes)
Not Partnerships For U.S. Federal Income Tax Purposes)
Reference is made to the Four-Year Competitive Advance and Revolving Credit Facility Agreement
dated as of October 25, 2011 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among ITT Corporation, the Borrowing Subsidiaries party thereto, the
Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and Citibank, N.A., as
Syndication Agent.
Pursuant to the provisions of Section 2.20 of the Credit Agreement, the undersigned hereby
certifies that (i) it is the sole record and beneficial owner of the participation in respect of
which it is providing this certificate, (ii) it is not a bank within the meaning of Section
881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the
meaning of Section 871(h)(3)(B) of the Code, (iv) it is not a controlled foreign corporation
related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (v) the interest
payments in question are not effectively connected with the undersigned’s conduct of a U.S. trade
or business.
The undersigned has furnished its participating Lender with a certificate of its non-U.S.
person status on IRS Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if
the information provided on this certificate changes, the undersigned shall promptly so inform such
Lender in writing and (2) the undersigned shall have at all times furnished such Lender with a
properly completed and currently effective certificate in either the calendar year in which each
payment is to be made to the undersigned, or in either of the two calendar years preceding such
payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall
have the meanings given to them in the Credit Agreement.
[NAME OF PARTICIPANT]
By: |
||||
| Title: |
Date: ________ __, 20[ ]
EXHIBIT G-4
[FORM OF]
U.S. TAX CERTIFICATE
U.S. TAX CERTIFICATE
(For Non-U.S. Participants That Are
Partnerships For U.S. Federal Income Tax Purposes)
Partnerships For U.S. Federal Income Tax Purposes)
Reference is made to the Four-Year Competitive Advance and Revolving Credit Facility Agreement
dated as of October 25, 2011 (as amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among ITT Corporation, the Borrowing Subsidiaries party thereto, the
Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and Citibank, N.A., as
Syndication Agent.
Pursuant to the provisions of Section 2.20 of the Credit Agreement, the undersigned hereby
certifies that (i) it is the sole record owner of the participation in respect of which it is
providing this certificate, (ii) its partners/members are the sole beneficial owners of such
participation, (iii) with respect such participation, neither the undersigned nor any of its
partners/members is a bank extending credit pursuant to a loan agreement entered into in the
ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code,
(iv) none of its partners/members is a ten percent shareholder of the Borrower within the meaning
of Section 871(h)(3)(B) of the Code, (v) none of its partners/members is a controlled foreign
corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code, and (vi) the
interest payments in question are not effectively connected with the undersigned’s or its
partners/members’ conduct of a U.S. trade or business.
The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by an
IRS Form W-8BEN from each of its partners/members claiming the portfolio interest exemption. By
executing this certificate, the undersigned agrees that (1) if the information provided on this
certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned
shall have at all times furnished such Lender with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to the undersigned, or
in either of the two calendar years preceding such payments.
Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall
have the meanings given to them in the Credit Agreement.
[NAME OF PARTICIPANT]
By: |
||||
| Title: |
Date: ________ __, 20[ ]
EXHIBIT H
[FORM OF] GUARANTEE AND CONTRIBUTION AGREEMENT (this
“Agreement”) dated as of October 31, 2011, among ITT CORPORATION, an
Indiana corporation (the “Company”), each of the subsidiaries of the
Company that is listed on Schedule I hereto or that becomes a party hereto
after the date hereof (each a “Subsidiary Guarantor” and, together with
the Company, the “Guarantors”) and JPMORGAN CHASE BANK, N.A., as
administrative agent (the “Administrative Agent”) for the Lenders (as
defined in the Credit Agreement referred to below).
Reference is made to the Four-Year Competitive Advance and Revolving Credit Facility Agreement
dated as of October 25, 2011 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement”), among the Company, the Borrowing Subsidiaries from time to time party thereto
(such Borrowing Subsidiaries together with the Company, the “Borrowers”), the Lenders from time to
time party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent. Capitalized terms used
herein and not defined herein shall have the meanings assigned to such terms in the Credit
Agreement.
The Lenders and Issuing Banks have agreed to extend credit to the Borrowers pursuant to, and
upon the terms and subject to the conditions specified in, the Credit Agreement. Each of the
Subsidiary Guarantors is a Subsidiary and acknowledges that it will derive substantial benefit from
the extension of credit to the Borrowers pursuant to the Credit Agreement. The obligations of the
Lenders and the Issuing Banks to extend such credit are conditioned on, among other things, the
execution and delivery by the Guarantors of a Guarantee Agreement in the form hereof. As
consideration therefor and in order to induce the Lenders and Issuing Banks to extend such credit,
the Guarantors are willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Each Guarantor unconditionally and irrevocably
guarantees (the “Guarantee”), jointly with the other Guarantors and severally, the due and punctual
payment and performance by each Borrower, when and as due, whether at maturity, by acceleration,
upon one or more dates set for prepayment or otherwise, of the Obligations. Each Guarantor further
agrees that the Obligations may be extended or renewed, in whole or in part, without notice to or
further assent from it, and that it will remain bound upon the Guarantee notwithstanding any
extension or renewal of any Obligations.
SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, each Guarantor waives presentment to, demand of payment from and protest to any
Borrower of any of the Obligations, and also waives notice of acceptance of the Guarantee and
notice of protest for nonpayment. To the fullest extent permitted by applicable law, the
obligations of each Guarantor hereunder shall not be affected by (a) the failure of the
Administrative Agent, any other Lender or any Issuing Bank to assert
2
any claim or demand or to enforce or exercise any right or remedy against any Borrower or any
other Guarantor under the provisions of the Credit Agreement, any other Loan Document or otherwise,
(b) any rescission, waiver, amendment or modification of, or any release from any of the terms or
provisions of, this Agreement, any other Loan Document, any Guarantee or any other agreement,
including with respect to any other Guarantor under this Agreement, or (c) the failure of any
Lender to exercise any right or remedy against any other Guarantor.
SECTION 3. Guarantee of Payment. Each Guarantor further agrees that the
Guarantee constitutes a guarantee of payment when due and not of collection, and waives any right
to require that any resort be had by the Administrative Agent, any other Lender or any Issuing Bank
to any of the security, if any, held for payment of the Obligations or to any balance of any
deposit account or credit on the books of the Administrative Agent, any other Lender or any Issuing
Bank in favor of any Borrower or any other Person.
SECTION 4. No Discharge or Diminishment of Guarantee. Subject to Section
24, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including any claim of waiver, release, surrender,
alteration or compromise of any of the Obligations, and shall not be subject to any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality
or unenforceability of the Obligations or otherwise. Without limiting the generality of the
foregoing, the obligations of each Guarantor hereunder shall not be discharged or impaired or
otherwise affected by the failure of the Administrative Agent, any other Lender or any Issuing Bank
to assert any claim or demand or to enforce any remedy under the Credit Agreement, any other Loan
Document or any other agreement, by any law or regulation of any jurisdiction or any other event
affecting any term of the Obligations, by any waiver or modification of any provision of any
thereof, by any default, failure or delay, wilful or otherwise, in the performance of the
Obligations, or by any other act or omission which may or might in any manner or to any extent vary
the risk of any Guarantor or that would otherwise operate as a discharge of such Guarantor as a
matter of law or equity or which would impair or eliminate any right of such Guarantor to
subrogation.
SECTION 5. Defenses of Borrowers Waived. To the fullest extent permitted by
applicable law, each of the Guarantors waives any defense based on or arising out of any defense
available to any Borrower, including any defense based on or arising out of any disability of any
Borrower or the unenforceability of the Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of any Borrower or any other circumstances that might
constitute a defense of any Borrower or any Guarantor, other than final payment in full in cash of
all the Obligations. The Administrative Agent, the Lenders and the Issuing Banks may, at their
election, foreclose on any security held by one or more of them by one or more judicial or non
judicial sales, compromise or adjust any part of the Obligations, make any other accommodation with
any Borrower or any other Guarantor or exercise any other right or remedy available to them against
any Borrower or any other Guarantor, without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Obligations have
3
been fully, finally and indefeasibly paid in cash. Pursuant to applicable law, each of the
Guarantors waives any defense arising out of any such election even though such election operates,
pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or
other right or remedy of such Guarantor against any Borrower or any other Guarantor.
SECTION 6. Agreement to Pay. In furtherance of the foregoing and not in
limitation of any other right which the Administrative Agent, any other Lender or any Issuing Bank
has at law or in equity against any Guarantor by virtue hereof, upon the failure of any Borrower or
any other Guarantor to pay any Obligation when and as the same shall become due, whether at
maturity, by acceleration, after notice of prepayment or otherwise, each Guarantor hereby promises
to and will forthwith pay, or cause to be paid in cash the amount of such unpaid Obligations,
subject to Section 24.
SECTION 7. Indemnity and Subrogation. In addition to all such rights of
indemnity and subrogation as the Guarantors may have under applicable law (but subject to Section
9), the Company and each other Borrower agrees that in the event a payment shall be made by any
Guarantor under this Agreement in respect of any Obligation of any Borrower, the Company and such
Borrower, shall indemnify such Guarantor for the full amount of such payment and, until such
indemnification obligation shall have been satisfied, such Guarantor shall be subrogated to the
rights of the person to whom such payment shall have been made to the extent of such payment.
SECTION 8. Contribution and Subrogation. Each Subsidiary Guarantor (a
"Contributing Guarantor”) agrees (subject to Section 9) that, in the event a payment shall be made
by any other Subsidiary Guarantor under this Agreement, and such other Subsidiary Guarantor (the
"Claiming Guarantor”) shall not have been fully indemnified as provided in Section 7, the
Contributing Guarantor shall indemnify the Claiming Guarantor in an amount equal to the amount of
such payment for which the Claiming Guarantor shall not have been so indemnified, multiplied by a
fraction of which the numerator shall be the net worth of the Contributing Guarantor on the date
hereof (or, in the case of any Guarantor becoming a party hereto pursuant to Section 22, the date
of the Supplement hereto executed and delivered by such Guarantor) and the denominator shall be the
aggregate net worth of all the Guarantors on the date hereof (or, in the case of any Guarantor
becoming a party hereto pursuant to Section 22, the date of the Supplement hereto executed and
delivered by such Guarantor). Any Contributing Guarantor making any payment to a Claiming
Guarantor pursuant to this Section 8 shall be subrogated to the rights of such Claiming Guarantor
under Section 7 to the extent of such payment.
SECTION 9. Subordination. Notwithstanding any provision of this Agreement
to the contrary, all rights of the Guarantors under Sections 7 and 8 and all other rights of
indemnity, reimbursement, contribution or subrogation under applicable law or otherwise shall be
fully subordinated and junior in right of payment to the prior indefeasible payment in full in cash
of all the Obligations. If any amount shall be paid contrary to the provisions of this Section to
any Guarantor on account of such subrogation, contribution, reimbursement, indemnity or similar
right, such amount shall be held in trust for the benefit of the Lenders and the Issuing Banks and
shall forthwith be
4
paid to the Administrative Agent to be credited against the payment of the Obligations,
whether matured or unmatured, in accordance with the terms of the Loan Documents. No failure on
the part of any Borrower or any Guarantor to make the payments required by Sections 6, 7 or 8 (or
any other payments required under applicable law or otherwise) shall in any respect limit the
obligations and liabilities of any Guarantor with respect to its obligations hereunder, and each
Guarantor shall remain liable for the full amount of the obligations of such Guarantor hereunder.
SECTION 10. Information. Each of the Guarantors assumes all responsibility
for being and keeping itself informed of each Borrower’s financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope
and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that none of
the Administrative Agent, the Lenders or the Issuing Banks will have any duty to advise any of the
Guarantors of information known to it or any of them regarding such circumstances or risks.
SECTION 11. Termination. This Agreement, including the Guarantees, (a)
shall terminate when the Obligations have been fully, finally and indefeasibly paid in cash, no
Letters of Credit are outstanding and the Lenders and Issuing Banks have no further commitment to
extend credit under the Credit Agreement and (b) shall continue to be effective or be reinstated,
as the case may be, if at any time payment, or any part thereof, of any Obligation is rescinded or
must otherwise be restored by any Lender, any Issuing Bank or any Guarantor upon the bankruptcy or
reorganization of any Company, any Guarantor or otherwise.
SECTION 12. Representations and Warranties. Each of the Guarantors
represents and warrants as to itself that all representations and warranties relating to it
contained in the Credit Agreement are true and correct.
SECTION 13. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party, and all covenants, promises and agreements by or on
behalf of the parties that are contained in this Agreement shall bind and inure to the benefit of
each party hereto and their respective successors and assigns. This Agreement shall become
effective as to any Guarantor, when a counterpart hereof (or a Supplement referred to in Section
22) executed on behalf of such Guarantor shall have been delivered to the Administrative Agent, and
a counterpart hereof (or a Supplement referred to in Section 22) shall have been executed on behalf
of the Administrative Agent, and thereafter shall be binding upon such Guarantor and the
Administrative Agent and their respective successors and assigns, and shall inure to the benefit of
such Guarantor, the Administrative Agent, the other Lenders and the Issuing Banks, and their
respective successors and assigns, except that no Guarantor shall have the right to assign its
rights or obligations hereunder or any interest herein (and any such attempted assignment shall be
void). This Agreement shall be construed as a separate agreement with respect to each Guarantor
and may be amended, modified, supplemented, waived or released with respect to any Guarantor
without the
5
approval of any Borrower or any other Guarantor and without affecting the obligations of any
Borrower or any other Guarantor hereunder.
SECTION 14. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of the Administrative
Agent hereunder and of the other Lenders and the Issuing Banks under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or consent to any departure by any Borrower or any
Guarantor therefrom shall in any event be effective unless the same shall be permitted by paragraph
(b) below, and then such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice or demand on any Borrower or any Guarantor in any case
shall entitle such Borrower or such Guarantor to any other or further notice or demand in similar
or other circumstances.
(a) Neither this Agreement nor any provision hereof may be waived, amended or modified except
pursuant to a written agreement entered into between the Company, the Guarantors with respect to
which such waiver, amendment or modification relates and the Administrative Agent, with the prior
written consent of the Required Lenders (except as otherwise provided in the Credit Agreement).
SECTION 15.
Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 16. Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 9.01 of the Credit Agreement. All communications and
notices hereunder to each Guarantor shall be given to it in care of the Company.
SECTION 17. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by each Guarantor herein and in the certificates or
other instruments prepared or delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon by the Administrative Agent, the
Lenders, the Issuing Banks and each Guarantor, shall survive the making by the Lenders of the Loans
and the issuance of Letters of Credit regardless of any investigation made by such Lenders or
Issuing Banks or on their behalf, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any Fee or any other amount payable under this
Agreement or any other Loan Document is outstanding and unpaid, any Letter of Credit is outstanding
or the Commitments have not been terminated.
(b) In the event any one or more of the provisions contained in this Agreement or in any other
Loan Document should be held invalid, illegal or
6
unenforceable in any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or impaired thereby (it
being understood that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
SECTION 18. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together shall constitute a
single contract, and shall become effective as provided in Section 13. Delivery of an executed
signature page to this Agreement by facsimile or other electronic imaging, if arrangements for
doing so have been approved by the Administrative Agent, shall be as effective as delivery of a
manually executed counterpart of this Agreement.
SECTION 19. Rules of Interpretation. The rules of interpretation specified
in Section 1.02 of the Credit Agreement shall be applicable to this Agreement.
SECTION 20. Jurisdiction; Consent to Service of Process. (a) Each
Guarantor hereby irrevocably and unconditionally submits, for itself and its property, to the
exclusive jurisdiction of any New York State Court or Federal Court of the United States sitting in
New York County, and any appellate court from any thereof, in any action or proceeding arising out
of or relating to this Agreement or any other Loan Document, or for recognition or enforcement of
any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined in such New York
State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in
this Agreement or any other Loan Document shall affect any right that the Administrative Agent, any
other Lender or any Issuing Bank may otherwise have to bring any action or proceeding relating to
this Agreement or any other Loan Document against any Guarantor or its properties in the courts of
any jurisdiction.
(b) Each Guarantor irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection that it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this Agreement or any other
Loan Document in any court referred to in paragraph (a) of this Section. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 16. Nothing in this Agreement or any other Loan Document will
affect the right of any party to this Agreement to serve process in any other manner permitted by
law.
7
SECTION 21.
Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, ANY
OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY
OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT
OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 21.
SECTION 22. Additional Guarantors. Upon execution and delivery after the
date hereof by the Administrative Agent and any Subsidiary of an instrument in the form of Annex I
hereto, such Subsidiary shall become a Guarantor hereunder with the same force and effect as if
originally named as a Guarantor herein. The execution and delivery of any instrument adding an
additional Guarantor as a party to this Agreement shall not require the consent of any Borrower or
any other Guarantor hereunder. The rights and obligations of each Guarantor hereunder shall remain
in full force and effect notwithstanding the addition of any new Guarantor as a party to this
Agreement.
SECTION 23. Right of Set-off. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and other Indebtedness
at any time owing by such Lender or Affiliate to or for the credit or the account of any Guarantor
against any or all the obligations of such Guarantor now or hereafter existing under this Agreement
and the other Loan Documents held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement or any other Loan Document and although such obligations
may be unmatured. Each Lender agrees promptly to notify the applicable Guarantor and the
Administrative Agent after such setoff and application made by such Lender, but the failure to give
such notice shall not affect the validity of such setoff and application. The rights of each
Lender under this Section 23 are in addition to other rights and remedies (including other rights
of set-off) that such Lender may have.
SECTION 24. Limitation on Amount of Obligations. Notwithstanding anything
in this Agreement to the contrary, the amount of the Obligations guaranteed by any Subsidiary
Guarantor under this Agreement shall be limited to the maximum aggregate amount of such Obligations
that would not render the guarantee of such Subsidiary Guarantor hereunder subject to avoidance as
a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any
comparable provisions of applicable state law (the determination of such maximum amount to take
8
into account, to the greatest extent permitted under Section 548 or such other applicable law,
the rights of such Subsidiary Guarantor to indemnity and contribution under Sections 7 and 8
hereof).
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and
year first above written.
| ITT CORPORATION, | ||||||||
| by | ||||||||
| Title: | ||||||||
| CLEVELAND MOTION CONTROLS INC., | ||||||||
| by | ||||||||
| Title: | ||||||||
| GOULDS PUMPS, INCORPORATED, | ||||||||
| by | ||||||||
| Title: | ||||||||
| ITT CANNON LLC, | ||||||||
| by | ||||||||
| Title: | ||||||||
| ITT ENGINEERED VALVES, LLC, | ||||||||
| by | ||||||||
| Title: | ||||||||
[Signature Page to Guarantee and Contribution Agreement]
| ITT ENIDINE INC., | ||||||||
| by | ||||||||
| Title: | ||||||||
| KONI NA LLC, | ||||||||
| by | ||||||||
| Title: | ||||||||
| NEW ITT AEROSPACE CONTROLS LLC, | ||||||||
| by | ||||||||
| Title: | ||||||||
[Signature Page to Guarantee and Contribution Agreement]
| JPMORGAN CHASE BANK, N.A., as Administrative Agent, | ||||||||
| by | ||||||||
| Title: | ||||||||
[Signature Page to Guarantee and Contribution Agreement]
Schedule I to the
Guarantee and Contribution Agreement
Guarantee and Contribution Agreement
GUARANTORS
| 1. | Goulds Pumps, Incorporated | |
| 2. | ITT Cannon LLC | |
| 3. | New ITT Aerospace Controls LLC | |
| 4. | ITT Engineered Valves, LLC | |
| 5. | ITT Enidine Inc. | |
| 6. | Koni NA LLC | |
| 7. | Cleveland Motion Controls Inc. |
Schedule I to the
Guarantee and Contribution Agreement
Guarantee and Contribution Agreement
SUPPLEMENT No. [ ] (this “Supplement”) dated as of [
], to the Guarantee and Contribution Agreement dated as of October
31, 2011, among ITT CORPORATION, an Indiana corporation (the “Company”),
each of the subsidiaries of the Company that is listed on Schedule I
thereto or that became a party thereto after the date thereof (each a
“Subsidiary Guarantor” and, together with the Company, the “Guarantors”)
and JPMORGAN CHASE BANK, N.A., as administrative agent (the
“Administrative Agent”) for the Lenders (as defined in the Credit
Agreement referred to below).
A. Reference is made to the Four-Year Competitive Advance and Revolving Credit Facility
Agreement dated as of October 25, 2011 (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among the Company, the Borrowing Subsidiaries from time to time
party thereto (together with the Company, the “Borrowers”), the Lenders from time to time party
thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent.
B. Capitalized terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Credit Agreement and the Guarantee Agreement referred to therein.
C. The Guarantors have entered into the Guarantee Agreement in order to induce the Lenders to
make Loans. Section 22 of the Guarantee Agreement provides that additional Subsidiaries may become
Guarantors under the Guarantee Agreement by execution and delivery of an instrument in the form of
this Supplement. The undersigned Subsidiary (the “New Guarantor”) is executing this
Supplement in accordance with the requirements of the Credit Agreement and the Guarantee Agreement
to become a Guarantor under the Guarantee Agreement in order to induce the Lenders to make
additional Loans and as consideration for Loans previously made.
Accordingly, the Administrative Agent and the New Guarantor agree as follows:
SECTION 1. In accordance with Section 22 of the Guarantee Agreement, the New
Guarantor by its signature below becomes a Subsidiary Guarantor and a Guarantor under the Guarantee
Agreement with the same force and effect as if originally named therein as a Guarantor, and the New
Guarantor hereby (a) agrees to all the terms and provisions of the Guarantee Agreement applicable
to it as a Guarantor thereunder and (b) represents and warrants that the representations and
warranties made by it as a Guarantor thereunder and under the Credit Agreement are true and correct
on and as of the date hereof. Each reference to a “Guarantor” in the Guarantee Agreement shall be
deemed to include the New Guarantor. The Guarantee Agreement is hereby incorporated herein by
reference.
2
SECTION 2. The New Guarantor represents and warrants to the Administrative Agent and
the other Lenders that this Supplement has been duly authorized, executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable against it in accordance with its
terms.
SECTION 3. This Supplement may be executed in counterparts, each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.
This Supplement shall become effective when the Administrative Agent shall have received
counterparts of this Supplement that, when taken together, bear the signatures of the New Guarantor
and the Administrative Agent. Delivery of an executed signature page to this Supplement by
facsimile transmission shall be as effective as delivery of a manually executed counterpart of this
Supplement.
SECTION 4. Except as expressly supplemented hereby, the Guarantee Agreement shall
remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in this Supplement
should be held invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and in the Guarantee Agreement shall
not in any way be affected or impaired thereby (it being understood that the invalidity of a
particular provision hereof in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties hereto shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that of the invalid, illegal
or unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be in writing and given as
provided in Section 16 of the Guarantee Agreement. All communications and notices hereunder to the
New Guarantor shall be given to it in care of the Company.
SECTION 8. The New Guarantor agrees to reimburse the Administrative Agent for its
out-of-pocket expenses in connection with this Supplement, including the reasonable fees,
disbursements and other charges of counsel for the Administrative Agent.
3
IN WITNESS WHEREOF, the New Guarantor and the Administrative Agent have duly executed this
Supplement to the Guarantee Agreement as of the day and year first above written.
| [Name Of New Guarantor], | ||||||||
| by | ||||||||
| Title: | ||||||||
| JPMORGAN CHASE BANK, N.A., as Administrative Agent, | ||||||||
| by | ||||||||
| Title: | ||||||||
SCHEDULE 1.01
Existing Letters of Credit
None.
SCHEDULE 2.01
Commitments
| Lender | Commitment | |||
JPMorgan Chase Bank, N.A. |
$ | 51,250,000 | ||
Citibank, N.A. |
$ | 51,250,000 | ||
The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch |
$ | 51,250,000 | ||
U.S. Bank National Association |
$ | 51,250,000 | ||
Barclays Bank PLC |
$ | 35,000,000 | ||
Société Générale |
$ | 35,000,000 | ||
The Royal Bank of Scotland plc |
$ | 35,000,000 | ||
Wells Fargo Bank, N.A. |
$ | 35,000,000 | ||
BNP Paribas |
$ | 25,000,000 | ||
ING Bank N.V. Dublin Branch |
$ | 25,000,000 | ||
Mizuho Corporate Bank (USA) |
$ | 25,000,000 | ||
The Northern Trust Company |
$ | 25,000,000 | ||
UBS Loan Finance LLC |
$ | 25,000,000 | ||
Intesa Sanpaolo, S.p.a. |
$ | 15,000,000 | ||
The Governor and Company of the Bank of Ireland |
$ | 15,000,000 | ||
Total |
$ | 500,000,000 | ||
SCHEDULE 6.01
Existing Indebtedness
| Borrower | Lender | Balance | ||||
ITT Enidine Inc |
Industrial Revenue Bonds with South Carolina Jobs-Economic Development Authority | $ | 2,265,000.00 | |||
ITT Enidine Inc |
Industrial Revenue Bonds with Massachusetts Development Finance Agency | $ | 2,090,000.00 | |||
SCHEDULE 6.02
Existing Liens
Liens on plant, property and equipment associated with the Industrial Revenue bonds referenced in
schedule 6.01.
SCHEDULE 6.05
Existing Restrictive Agreements
None.
EXHIBIT 31.1
CERTIFICATION OF
STEVEN R. LORANGER PURSUANT TO SEC. 302
OF THE SARBANES-OXLEY ACT OF 2002
OF THE SARBANES-OXLEY ACT OF 2002
I, Steven R. Loranger, certify that:
1. I have reviewed this Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2011 of ITT Corporation;
2. Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and
other financial information included in this report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act
Rules 13a-15(e)
and
15d-15(e))
and internal control over financial reporting (as defined in
Exchange Act
rules 13a-15(f)
and
15d-15(f))
for the registrant and have:
a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information
relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being prepared;
b) Designed such internal control over financial reporting,
or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s
disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
d) Disclosed in this report any change in the
registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter
(the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal
control over financial reporting; and
5. The registrant’s other certifying officer and I
have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board
of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in
the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and
report financial information; and
b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
/s/ STEVEN
R. LORANGER
Steven R. Loranger
Chairman, President and Chief
Executive Officer
Date: October 28, 2011
EXHIBIT 31.2
CERTIFICATION OF
DENISE L. RAMOS PURSUANT TO SEC. 302
OF THE SARBANES-OXLEY ACT OF 2002
OF THE SARBANES-OXLEY ACT OF 2002
I, Denise L. Ramos, certify that:
1. I have reviewed this Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2011 of ITT Corporation;
2. Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and
other financial information included in this report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act
Rules 13a-15(e)
and
15d-15(e))
and internal control over financial reporting (as defined in
Exchange Act
rules 13a-15(f)
and
15d-15(f))
for the registrant and have:
a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information
relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being prepared;
b) Designed such internal control over financial reporting,
or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s
disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
d) Disclosed in this report any change in the
registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter
(the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal
control over financial reporting; and
5. The registrant’s other certifying officer and I
have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board
of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in
the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and
report financial information; and
b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
/s/ DENISE
L. RAMOS
Denise L. Ramos
Senior Vice President and
Chief Financial Officer
Date: October 28, 2011
EXHIBIT 32.1
CERTIFICATION
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of ITT Corporation (the
“Company”) on
Form 10-Q
for the period ended September 30, 2011 as filed with the
Securities and Exchange Commission on the date hereof (the
“Report”), I, Steven R. Loranger, Chairman,
President and Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:
(1) The Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
(2) The information contained in the Report fairly
presents, in all material respects, the financial condition and
results of operations of the Company.
/s/ STEVEN
R. LORANGER
Steven R. Loranger
Chairman, President and
Chief Executive Officer
October 28, 2011
A signed original of this written statement required by
Section 906 has been provided to the Company and will be
retained by the Company and furnished to the Securities and
Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of ITT Corporation (the
“Company”) on
Form 10-Q
for the period ended September 30, 2011 as filed with the
Securities and Exchange Commission on the date hereof (the
“Report”), I, Denise L. Ramos, Senior Vice
President and Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:
(1) The Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
(2) The information contained in the Report fairly
presents, in all material respects, the financial condition and
results of operations of the Company.
/s/ DENISE
L. RAMOS
Denise L. Ramos
Senior Vice President and
Chief Financial Officer
October 28, 2011
A signed original of this written statement required by
Section 906 has been provided to the Company and will be
retained by the Company and furnished to the Securities and
Exchange Commission or its staff upon request.