Document:

Exhibit 10.1

 

TRANSITION SERVICES AGREEMENT

 

This TRANSITION SERVICES AGREEMENT (this “Agreement”) is made this 26th day of September, 2015, by and between SPX Corporation, a Delaware corporation (“SPX”) and SPX FLOW, Inc., a Delaware corporation (“Flowco”).  Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to them in the Separation Agreement (as defined below).

 

W I T N E S S E T H:

 

WHEREAS, SPX and Flowco are parties to that certain Separation and Distribution Agreement dated as of September 22, 2015 (the “Separation Agreement”);

 

WHEREAS, in furtherance of the transactions contemplated in the Separation Agreement, SPX has agreed to provide to Flowco certain services for the periods and on the terms and conditions set forth herein; and

 

WHEREAS, in furtherance of the transactions contemplated in the Separation Agreement, Flowco has agreed to provide to SPX certain services for the periods and on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual agreements and covenants set forth herein and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree:

 

1.             SERVICES

 

1.1          Services.  During the term of this Agreement and subject to the terms and conditions set forth herein,

 

(a)           SPX shall provide to Flowco, or cause an Affiliate or Affiliates of SPX designated by SPX for this purpose to provide to Flowco (with SPX, each, a “SPX Service Provider”), and Flowco agrees to purchase from the SPX Service Providers, the services set forth in Schedule A attached hereto (each, an “SPX Service”, and collectively, the “SPX Services”); and

 

(b)           Flowco shall provide to SPX, or cause an Affiliate or Affiliates of Flowco designated by Flowco for this purpose to provide to SPX (with Flowco, each, a “Flowco Service Provider” and together with the SPX Service Providers, the “Service Provider”), and SPX agrees to purchase from the Flowco Service Providers, the services set forth in Schedule B attached hereto (each, a  “Flowco Service”, collectively, the “Flowco Services” and together with the SPX Services, the “Services”).

 

1.2          Level of Services.  Except as set forth specifically in Schedule A, Schedule B or otherwise specifically agreed to in writing by SPX and Flowco, (a) each party shall provide, or cause its Affiliate to provide, each Service with a degree of care consistent with the care it exercises in the conduct of similar activities for itself, (b) each of the SPX Services that are similar to those provided to, or in connection with the operation of, the Flowco Business prior to the Effective Time shall be, in all material respects, consistent in scope, quality and nature with

 

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those provided to, or provided on behalf of, the Flowco Business prior to the date hereof, (c) each of the Flowco Services that are similar to those provided to, or in connection with the operation of, the Infrastructurco Business prior to the Effective Time shall be, in all material respects, consistent in scope, quality and nature with those provided to, or provided on behalf of, the Infrastructurco Business prior to the date hereof and (d) in no event shall any Service be provided at a level of service (including, without limitation, accuracy, quality, completeness, timeliness, priority and responsiveness) lower than the levels at which such Services were provided prior to the date hereof, if applicable.  The Services to be provided hereunder that are not similar to those provided to the Flowco Business or to the Infrastructurco Business prior to the Effective Time shall be performed by personnel selected by the Service Provider providing such Services, which personnel shall have the capacity, skill and expertise necessary to perform such Services.  In providing the Services, neither the Service Provider nor any of its Affiliates shall be obligated to: (i) hire any additional employees; (ii) maintain the employment of any specific employee; or (iii) purchase, lease or license any additional facilities, equipment or materials; provided that, at all times, the Service Provider shall maintain the standard of care and performance as set forth in the preceding sentences of this Section 1.2.

 

1.3          Cooperation.  Each party shall cause its employees to reasonably cooperate with employees of the Service Provider in providing a Service to such party, to the extent required for effective delivery of the Services and to minimize the disruption to, or additional recordkeeping required by, the Service Provider.  In addition, each party shall name a point of contact who shall be responsible for the day-to-day implementation of this Agreement, including attempted resolution of any issues that may arise during the performance of any of such party’s obligations hereunder.

 

1.4          Third-Party Services.  At its option, each party may cause any Service it is required to provide hereunder to be provided by any third party (a “Third-Party Service”), in which event such Service Provider shall provide prior written notice to the other party of its election to cause such Service to be provided by a third party.  Such Service Provider shall not be responsible for the performance of any Third-Party Services so long as such Service Provider reasonably selects the provider of such Third-Party Services and imposes on such third-party provider the confidentiality obligations specified in this Agreement.  The Service Provider shall assign its rights to enforce any confidentiality claims against such third-party provider to the other party.

 

1.5          Impracticability.  Notwithstanding any other provision of this Agreement, no Service Provider shall be required to provide any Service to the extent the performance of such Service becomes impracticable as a result of a cause or causes outside the control of such Service Provider or to the extent the provision of such Service would require such Service Provider to violate any applicable laws. Each party, as Service Provider, shall promptly notify the other party in writing upon learning of such a cause or causes and shall use commercially reasonable efforts to resume its performance of any Service so suspended with the least possible delay as soon as practicable.

 

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1.6          Performance and Receipt of Services.

 

(a)           SPX and Flowco shall each exercise reasonable care in providing and receiving any Service to (i) prevent access to the Services or the computing, telecommunications or other digital operating or processing systems or environments (including computer programs, data, databases, computers, computer libraries, communications equipment, networks and systems) accessed and/or used in connection with the Services (collectively, the “Information Systems”) by unauthorized Persons and (ii) not damage, disrupt or interrupt the Services or Information Systems.

 

(b)           Neither SPX nor Flowco shall access, nor shall either permit unauthorized Persons to access, the other party’s Information Systems and/or networks without express written authorization of such party, and any such actual or attempted access shall be consistent with any such authorization and the means of access directed by the party granting access to the given Information System.  Each party shall comply with those reasonable policies and procedures relating to access to the other party’s Information Systems as have been provided to it by the other party.

 

1.7          Representatives; Status Meetings.  SPX hereby designates Suzanne Harrington as the SPX representative (the “SPX Representative”) and Flowco hereby designates Nick Persavich as the Flowco representative (the “Flowco Representative”) to coordinate the Services provided under this Agreement.  The SPX Representative and the Flowco Representative shall meet on a monthly basis, or more frequently if reasonably requested by either party, to discuss the Services being provided, the charges and Invoices (as defined below) therefor, any problems with the Services, charges or Invoices, any proposed modifications and any terminations of Services pursuant to Section 6.2(b) below (“Status Meetings”).  Status Meetings shall be held at a time and place mutually agreeable to the Flowco Representative and the SPX Representative and shall be for a reasonable duration; provided that Status Meetings may be held in person or via conference telephone, videophone or similar means.  Each of SPX and Flowco may change its respective representative at any time by written notice to the other party.

 

1.8          Personnel. Each Service Provider shall remain responsible for compensating the employees and the independent contractors it engages to perform the Services on its behalf.  The parties acknowledge and agree that those employees and independent contractors used by the Service Providers in the performance of the Services will have no employer/employee relationship with the recipient of the Services, and that each Service Provider alone is responsible for providing workers’ compensation insurance for its applicable employees, for paying the salaries and wages of its applicable employees, for providing any employee benefits to its applicable employees, and for ensuring that all required tax withholdings are made.

 

2.             PAYMENTS

 

2.1          Services Pricing.  Flowco shall pay SPX or its applicable Affiliate fees for the SPX Services on the basis and in the manner described in Schedule A.  SPX shall pay Flowco or its applicable Affiliate fees for the Flowco Services on the basis and in the manner described in Schedule B.  Each party or its agents shall keep and maintain such books and records as may be reasonably necessary to make any applicable allocations.  During the term of this Agreement and

 

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at any time thereafter upon the reasonable request of another party, each party shall make copies of the relevant portion of such books and records available to the other party for inspection upon request and with reasonable notice.

 

2.2          Invoicing. Except for those charges with alternate invoicing and payment terms specifically set forth in the Schedules hereto, within twenty (20) days following the end of each calendar month during the term hereof, (a) SPX shall provide to Flowco a single invoice in form, format and media reasonably acceptable to Flowco totaling all charges during such month for SPX Services incurred by Flowco hereunder (each, a “SPX Invoice”) and (b) Flowco shall provide to SPX a single invoice in form, format and media reasonably acceptable to SPX totaling all charges during such month for Flowco Services incurred by SPX hereunder (each, a “Flowco Invoice” and with any SPX Invoice, each an “Invoice”).  Any failure by a party to provide an Invoice within such time period or to provide the Invoice in such form, format or media as is reasonably acceptable to the recipient of the Invoice shall not relieve the recipient of the Invoice of its obligation to pay any Invoice received after such date.  Each party agrees to provide such information as reasonably requested by the other party for use in preparation of an Invoice.  Each Invoice shall contain a brief description of each Service giving rise to such charge.

 

2.3          Payment.  Each party shall pay all amounts due under each Invoice no later than forty-five (45) days following receipt of such Invoice, without right to set-off or counterclaim (the “Payment Date”).  Each party reserves the right to require payment in advance for any out-of-pocket expenses that may be incurred in the course of performing this Agreement, including, without limitation, payroll expenses.  In addition, the recipient shall be responsible for any fees or charges payable to any government, regulatory organization or other body in connection with the Services, and any sales, use, value added, property, duties, or other taxes arising under this Agreement including in connection with payments due under any Invoice (but excluding any taxes on the net income of the Service Provider) and shall remit the amount due under this Agreement without offset for any withholdings, fees or charges in respect of any payments under this Agreement.  Each party shall pay all amounts due with respect to those charges with alternate invoicing and payment terms specifically set forth in the Schedules hereto in accordance with the relevant payment terms set forth in the Schedules.

 

2.4          Late Payments. Interest on late payments will accrue at the Prime Rate plus 2% (or the maximum legal rate, whichever is lower) calculated for the actual number of days elapsed, accrued from the applicable Payment Date up to the date of the actual receipt of payment.

 

3.             REPRESENTATIONS AND WARRANTIES

 

In addition to any representations set forth elsewhere in this Agreement (including the Schedules hereto) each party represents and warrants that:

 

3.1          Such party (including, as applicable, its Affiliates) has all necessary rights and authority to provide the Services such party will perform as a Service Provider as contemplated herein.  Each party (including, as applicable, its Affiliates) has obtained all necessary third party and governmental consents and authorizations to provide the Services such party will perform as a Service Provider as contemplated herein.

 

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3.2          Such party is not in breach of any arrangement or agreement with any third party in respect of a Service to be provided by such party that may be provided by a third party pursuant to Section 1.4.

 

4.                                      CONFIDENTIALITY

 

4.1          Information Exchanges.  Subject to applicable Law and good faith claims of privilege, each party hereto shall provide the other party with all information regarding itself and the transactions under this Agreement that the other party reasonably believes that it requires (a) in order to comply with all applicable laws, ordinances, regulations and codes in connection with the provision of Services pursuant to this Agreement or (b) to perform its obligations under this Agreement.   In addition to the foregoing information, each party shall, and shall cause its Affiliates to, afford the other party, upon reasonable advance notice, reasonable access during normal business hours to the facilities, Information, systems, infrastructure and personnel of such party and its Affiliates as reasonably necessary for the applicable recipient of Services to verify the adequacy of internal controls over information technology, reporting of financial data and related processes employed in connection with the Services being provided by any Service Provider, including in connection with verifying compliance with Section 404 of the Sarbanes-Oxley Act of 2002; provided that (i) such access shall not unreasonably interfere with any of the business or operations of the Service Provider or any of their respective Affiliates and (ii) in the event that the Service Provider determines that providing such access could be commercially detrimental, violate any Law or agreement, or waive any attorney-client privilege, then the parties shall use commercially reasonable efforts to permit such access in a manner that avoids any such harm or consequence.

 

4.2          Confidential Information.  SPX and Flowco shall, and each shall cause its Affiliates, officers, directors, employees, agents, representatives and advisors to, (a) hold in trust and maintain confidential all Confidential Information relating to the other party and (b) limit the use and disclosure of the Confidential Information solely to the purposes of such party’s obligations, benefits or rights under this Agreement; provided, however, that a party may disclose such Confidential Information that such party reasonably believes it is required to disclose by applicable Law, provided that (unless prohibited by applicable Law) it first notifies the other party hereto of such requirement and allows such party a reasonable opportunity to seek a protective order or other appropriate remedy to prevent or minimize such disclosure.  For the purposes of this Agreement, “Confidential Information” shall mean all information regarding SPX or Flowco, as applicable, of a confidential or proprietary nature, whether oral, visual, in writing or in any other tangible form, and includes, without limitation, economic, scientific, technical, product and business data, business plans, and the like, except to the extent that such information can be shown to have been (i) in the public domain through no action of the applicable receiving party or its Affiliates or any of their respective representatives or advisors, (ii) lawfully acquired from other sources by such receiving party or its Affiliates or any of their respective representatives or advisors to which it was furnished or (iii) independently developed by such receiving party or its Affiliates without use or reference to Confidential Information of the disclosing party’s or its Affiliates; provided, however, in the case of clause (ii) that, to the receiving party’s knowledge, such sources did not provide such information in breach of any confidentiality or fiduciary obligations.  Without prejudice to the rights and remedies of either party to this Agreement, a party disclosing any Confidential Information to the other party in accordance with the

 

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provisions of this Agreement shall be entitled to seek equitable relief by way of an injunction if the other party hereto breaches or threatens to breach any provision of this Section 4.2.  Upon the earlier of a request by a disclosing party or the termination of this Agreement in accordance with Section 6, each party shall promptly return or destroy all Confidential Information of the other party and copies thereof.  Upon request by the disclosing party, an authorized representative of the other party shall confirm in writing compliance with its obligation set forth in the immediately preceding sentence.

 

5.             REMEDIES; INDEMNIFICATION; LIMITATION OF LIABILITY

 

5.1          Remedies; No Warranties.  SPX and Flowco expressly agree that neither party, nor any of their respective Affiliates (nor any of the officers, directors, stockholders, employees or agents thereof) shall be liable to the other party or any of the Affiliates thereof for any claims, damages, liabilities, losses, costs or expenses (collectively, “Damages”) whatsoever relating to the Services provided by such party pursuant to this Agreement (whether as a result of any action or any failure to act), except for those Damages arising directly from such providing party’s willful misconduct or gross negligence, and, in the case of such willful misconduct or gross negligence, the remedy of the aggrieved party shall be any one or more of the following, at the aggrieved party’s election: to (a) have such Service re-performed as soon as practical without additional charge, and/or (b) terminate this Agreement as to the applicable Service as provided in Section 6.2(b), and in each case, subject to the provisions of Section 5.3.  The parties expressly agree that (i) no warranty of any kind (including any warranties of utility or fitness for any particular purpose or of merchantability or of any other type) shall be implied under this Agreement and that no warranties of any kind are made herein, (ii) except for Services specifically designated as advisory services in the Schedules hereto, it is not the intent of either party to render (in its capacity as Service Provider) nor to receive (in its capacity as recipient of Services) any professional advice or opinions, whether with regard to tax, legal, treasury, finance, employment or other business and financial matters, or technical advice, whether with regard to information technology or other matters, and neither party shall rely on, or construe, any Service rendered by or on behalf of the applicable Service Provider as such professional advice or opinions or technical advice; and (iii) each party shall seek all third-party professional advice and opinions or technical advice as it may desire or need.

 

5.2          Indemnification.

 

(a)           Flowco shall indemnify SPX and its Affiliates and the officers, directors, employees and agents of each (collectively, the “SPX Parties”), and hold each SPX Party harmless against any Damages incurred or suffered by any SPX Party in any way arising out of, relating to, or in connection with any third-party claims based on the performance of SPX Services hereunder (whether by a SPX Service Provider or by a third party as a Third-Party Service), except in the case of third party claims arising directly from SPX’s fraud, willful misconduct or gross negligence.  This Section 5.2(a) shall survive any termination of this Agreement.

 

(b)           SPX shall indemnify Flowco and its Affiliates and the officers, directors, employees and agents of each (collectively, the “Flowco Parties”), and hold each Flowco Party harmless against any Damages incurred or suffered by any Flowco Party in any way arising out of, relating to, or in connection with any third-party claims based on the performance of Flowco Services hereunder (whether by a Flowco Service Provider or by a third party as a Third-Party

 

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Service), except in the case of third-party claims arising directly from Flowco’s willful misconduct or gross negligence.  This Section 5.2(b) shall survive any termination of this Agreement.

 

(c)           The procedures contained in the indemnification and related litigation cooperation provisions of the Separation Agreement shall apply with respect to each Party’s indemnification obligations under this Section 5.2.  The right to indemnification and the remedies set forth in this Section 5 shall constitute the parties’ sole and exclusive remedies with respect to any and all claims arising under or relating to this Agreement or the Services provided hereunder.

 

5.3          Limitation of Liability.  Notwithstanding any other provision in this Agreement to the contrary, (a) other than as may be included in actual payments of Damages to third parties arising from claims subject to indemnification under Section 5.2, no party shall have any liability to the other party relating to this Agreement for damage to reputation, lost business opportunities, lost profits, mental or emotional distress, incidental, special, exemplary, punitive or indirect damages, interference with business operations or diminution in value and (b) other than claims for breaches of Section 4 and actual payments of Damages to third parties arising from claims subject to indemnification under Section 5.2, in no event shall the aggregate liability of a party to the aggrieved party for (i) Damages and (ii) costs of re-performance of a Service, relating to this Agreement (under any theory, whether in contract, tort, statutory or otherwise) exceed the aggregate amounts actually paid by the aggrieved party for Services received under this Agreement (exclusive of any amounts such aggrieved party has paid as reimbursement for pass-through expenses).

 

6.             TERM AND TERMINATION

 

6.1          Term.  Unless earlier terminated in accordance with Section 6.2 below, this Agreement shall be in effect from the Effective Time until the twelve (12) month anniversary of such date.  Except as specifically set forth on Schedule A or Schedule B, upon termination of any Service pursuant to Section 6.2 below, or upon any termination of this Agreement in accordance with its terms, the applicable Service Provider shall have no further obligation to provide the terminated Service (or any Service, in the case of termination of this Agreement) and the recipient of such terminated Service shall have no obligation to pay any fees relating to such terminated Service or Services (or to make any other payments hereunder, in the case of termination of this Agreement); provided that, notwithstanding such termination, the recipient shall remain liable to the Service Provider for fees owed and payable in respect of Services provided prior to the effective date of the termination.

 

6.2                               Termination.

 

(a)           If a party (the “Defaulting Party”) has materially breached its obligations under this Agreement and has not cured such default within thirty (30) days following the date on which the other party (the “Notifying Party”) has given written notice to the Defaulting Party specifying the facts constituting the default, the Notifying Party may, in its sole discretion, (i) suspend or terminate (or any combination thereof) providing or receiving any or all of the Services, in whole or in part, or (ii) terminate this Agreement.  Notwithstanding the foregoing sentence, neither this Agreement nor any Service shall be terminated due to a default by the

 

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Defaulting Party if such default is directly attributable to a breach of this Agreement by the Notifying Party.

 

(b)           Except as otherwise set forth in Schedule A or as provided in this Section, Flowco shall be permitted to terminate this Agreement with respect to any particular or all SPX Services to be provided by a SPX Service Provider upon thirty (30) days prior written notice to SPX (with a copy to SPX Representative) notifying SPX of the specific SPX Services that are no longer required.  Except as otherwise set forth in Schedule B or as provided in this Section, SPX shall be permitted to terminate this Agreement with respect to any particular or all Flowco Services to be provided by a Flowco Service Provider upon thirty (30) days prior written notice to Flowco notifying Flowco (with a copy to Flowco Representative) of the specific Flowco Services that are no longer required.  Notwithstanding the foregoing, for any Service that is provided in whole or in part by a third party and the Service Provider’s agreement or arrangement with such third party relating to such Service cannot be terminated upon fifteen (15) days’ prior written notice, this Agreement with respect to such Service shall not be deemed to have been terminated with respect to such Service until the earliest date by which such Service Provider’s agreement or arrangement with such third party may be terminated without payment or penalty.  SPX or Flowco, as applicable, will incrementally decrease the subsequent Invoices by the applicable amount or amounts of the relevant fees for any Services terminated by the other party hereunder.

 

(c)           SPX may suspend or terminate any or all the SPX Services hereunder effective upon not less than ten (10) days’ prior written notice from SPX to Flowco if Flowco has failed to pay any SPX Invoice or other amounts owing to SPX for SPX Services when due (as provided in Section 2.2) more than ten (10) days after SPX has given Flowco written notice of such past due amount.  Flowco may suspend or terminate any or all the Flowco Services hereunder effective upon not less than ten (10) days’ prior written notice from Flowco to SPX if SPX has failed to pay any Flowco Invoice or other amounts owing to Flowco for Flowco Services when due (as provided in Section 2.2) more than ten (10) days after Flowco has given SPX written notice of such past due amount.

 

(d)           Upon termination of this Agreement for any reason, all rights and obligations of the parties under this Agreement shall cease and be of no further force or effect, except that the provisions of Sections 2.3, 4, 5 and 7 of this Agreement shall survive any such termination or expiration.

 

(e)           Upon the end of the term or the earlier termination of this Agreement, each Service Provider shall, as promptly as practicable thereafter, deliver to the other party all books and records, or copies thereof, that pertain solely to such other party’s businesses that are used or generated in the course of the provision of Services hereunder.

 

7.             GENERAL

 

7.1          Successors and Assigns.  The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties hereto.  Neither party may assign this Agreement or any of such party’s rights hereunder without the prior written consent of the other party; provided, however, that each party may assign, in its sole discretion, any or all of its rights, interests and obligations under this Agreement to one or more of its direct or indirect wholly owned Subsidiaries so long as such assignment does not have any

 

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adverse consequences to the other party or its Affiliates.  No assignment shall relieve the assigning party from any of its obligations under this Agreement and in the event of an assignment, the assigning party shall nonetheless continue to be primarily liable for all of its obligations hereunder.  Each assignee shall execute a counterpart of this Agreement agreeing to be bound by the provisions hereof.

 

7.2          Force Majeure.  No party shall bear any responsibility or liability for any damages arising out of any delay, inability to perform or interruption of its performance of its obligations under this Agreement due to any acts or omissions of the other party hereto or for events beyond its reasonable control including, without limitation, acts of God, acts of governmental authorities, acts of the public enemy or due to war, riot, flood, civil commotion, insurrection, labor difficulty, severe or adverse weather conditions, lack of or shortage of electrical power, malfunctions of equipment or software programs, or any other cause beyond the reasonable control of such party. Each party shall, as promptly as practicable, notify the other upon learning of the occurrence of such event of force majeure affecting its ability to perform its obligations hereunder.  Upon the cessation of a force majeure event, the party whose performance was suspended shall use commercially reasonable best efforts to resume its performance.

 

7.3          Relationship of the Parties.  The parties shall for all purposes be considered independent contractors with respect to each other, and neither shall be considered an employee, employer, agent, principal, partner or joint venturer of the other.

 

7.4          Intellectual Property.  Nothing in this Agreement shall be interpreted to, or shall, assign, transfer or license any intellectual property rights between the parties hereto, and each party shall retain all right, title and interest in and to their respective intellectual property rights and any and all improvements, modifications and derivative works thereof or thereto.

 

7.5          Compliance with Laws.  Each party acknowledges and agrees that the Services shall be provided only with respect to the Flowco Business or to the Infrastructurco Business, as applicable, as such business was operated immediately prior to the Closing Date or as mutually agreed by the parties hereto.  Each party covenants and agrees that it shall use the Services only in accordance with all applicable laws, and in accordance with past practices.  Each party, as a Service Provider, reserves the right to take all actions, including suspension or termination of any particular Service, that such Service Provider reasonably believes to be necessary to assure compliance with applicable laws and such actions will not constitute a breach of this Agreement.  Such Service Provider shall notify the other party promptly of any decision to suspend or terminate any Services and the reasons for any such suspension or termination of such Services.

 

7.6          Entire Agreement; Amendment.  This Agreement, including the Schedules hereto, constitutes the entire agreement between SPX and Flowco with respect to the subject matter hereof.  This Agreement shall not be amended, altered or changed except by a written agreement signed by the parties hereto.

 

7.7          No Waiver.  No delay or omission on the part of either party to this Agreement in requiring performance by the other party or in exercising any right hereunder shall operate as a waiver of any provision hereof or of any right or rights hereunder; and the waiver, omission or delay in requiring performance or exercising any right hereunder on any one occasion shall not be

 

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construed as a bar to or waiver of such performance or right, or of any right or remedy under this Agreement, on any future occasion.

 

7.8          Notices.  Any notice, request, instruction or other document to be given hereunder by any party hereto to any other party shall be in writing and shall be given (and shall be deemed to have been duly given or made upon receipt unless the day of receipt is not a Business Day, in which case it shall be deemed to have been duly given or made on the next Business Day) 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:

 

	
If to SPX:

 

SPX Corporation

13320-A Ballantyne Corporate Place

Charlotte, NC    28277

Attention:  General Counsel

Telecopy number: _________

 

If to SPX Representative:

 

SPX Corporation

13320-A Ballantyne Corporate Place

Charlotte, NC    28277

Attention:  Suzanne Harrington

Telecopy number: _________

Email: suzanne.harrington@spx.com
    	
 
    
	
 
    	
 
    
	
If to Flowco:

 

SPX FLOW, Inc.

13320 Ballantyne Corporate Place

Charlotte, NC    28277

Attention:  General Counsel

Telecopy number: 704.752.7448

 

If to Flowco   Representative:

 

SPX FLOW, Inc.

13320 Ballantyne Corporate Place

Charlotte, NC    28277

Attention:  Nick Persavich

Telecopy number: 980.321.7073

Email: nick.persavich@spx.com
    	
 
    

 

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or at such other address for a party as shall be specified by like notice.

 

7.9          Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any adverse manner to any party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner so that the transactions contemplated hereby are fulfilled to the greatest extent possible.

 

7.10        Counterparts; Signatures.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same agreement.  This Agreement may be executed by facsimile signature.

 

7.11        Governing Law, Etc.  This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware applicable to agreements made and to be performed wholly within such jurisdiction.  Each of the parties hereto hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of (a) the Court of Chancery of the State of Delaware (unless the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter, in which case, any state or federal court within the State of Delaware) and (b) so long as both parties are headquartered in North Carolina, any state or federal court within the State of North Carolina, for the purposes of any suit, action or other proceeding arising out of or relating to this Agreement (and agrees not to commence any such suit, action or other proceeding relating thereto except in such courts), and further agrees that service of any process, summons, notice or document by U.S. registered mail to its address set forth in Section 7.8 shall be effective service of process for any action, suit or proceeding in the Delaware or North Carolina courts with respect to any matters to which it has submitted to jurisdiction in this Section 7.11.

 

7.12        Conflict.  This Agreement is being executed and delivered pursuant to the terms and conditions of the Separation Agreement.  In the event of any inconsistency between the terms of this Agreement and the Separation Agreement, the terms of the Separation Agreement shall control.

 

7.13        Definitions; Interpretation.  When a reference is made in this Agreement to Sections or Schedules, such reference is to a Section of, or a Schedule to, this Agreement, unless otherwise indicated.  The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “herein,” “hereof,” “hereto” or “hereunder” are used in this Agreement, they shall be deemed to refer to this Agreement as a whole and not to any specific Section of this Agreement.  

 

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7.14        Effect if Distribution does not Occur. If the Distribution does not occur, then all actions and events that are, under this Agreement, to be taken or occur effective as of or following the Effective Date, or otherwise in connection with the Distribution, shall not be taken or occur except to the extent specifically agreed by the parties and neither party shall have any liability or further obligation to the other party under this Agreement.

 

Signature Page Follows

 

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IN WITNESS WHEREOF, Flowco and SPX have duly executed this Agreement as of the day, month and year first above written.

 

 

	
 
    	
SPX CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Stephen A. Tsoris
    
	
 
    	
 
    	
Name:   Stephen A. Tsoris
    
	
 
    	
 
    	
Title:   Vice President, Secretary and General Counsel
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SPX   FLOW, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Stephen A. Tsoris
    
	
 
    	
 
    	
Name:   Stephen A. Tsoris
    
	
 
    	
 
    	
Title:   Vice President and Secretary
    

 

Signature Page to Transition Services Agreement

 

 

SCHEDULE A

 

SPX Services

 

Upon reasonable notice, throughout the term of the Transition Services Agreement, the SPX Service Providers shall have reasonable access to the facilities and premises of the applicable members of the Flowco Group to the extent necessary to provide the SPX Services, in each case subject to the reasonable safety, security, confidentiality and other policies and procedures of Flowco in place from time to time.  Flowco shall provide SPX with such information, management direction and documentation as is reasonably necessary for the SPX Service Providers to perform the SPX Services and the members of the Flowco Group shall perform such other duties and tasks as may be reasonably required to permit the SPX Service Providers to perform the SPX Services.

 

I.  INFORMATION TECHNOLOGY

 

A.  The following list of IT services will be provided by SPX:

 

	
Service Description
    	
 
    	
Unit
   Charge
    	
 
    	
Cost Driver
    	
 
    	
Comments
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Access to and use of Licensed Products under   Microsoft Enterprise Enrollment Agreement #83632359
    	
 
    	
None
    	
 
    	
NA
    	
 
    	
Service available through June 29, 2016 and not   extendable.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Purchases of Licenses and services from Microsoft   under Microsoft Select Plus Agreement #X20-02487
    	
 
    	
As Incurred
    	
 
    	
Direct Charge
    	
 
    	
Any licenses purchased under Select Plus for the   account of Flowco will be paid directly to Dell (as Microsoft reseller) by   Flowco. Service available through June 29, 2016 and not extendable.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Access to and use of Microsoft Support Account   Management and Problem Resolution Support (Premium Support services) under   the Enterprise Services Work Order issued under Microsoft Business and   Services Agreement #U4701657
    	
 
    	
None
    	
 
    	
NA
    	
 
    	
Service available through June 29, 2016 and not   extendable. Service only provided until the aggregate Microsoft support hours   utilized by SPX and by Flowco exhaust the number of pre-purchased hours under   the Enterprise Services Work Order.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Access to and use of Oracle Database Programs under   the Oracle Database Enterprise Edition — Processor Perpetual Software Update   License & Support Order (ULA), dated as of September 22, 2015
    	
 
    	
None
    	
 
    	
NA
    	
 
    	
Service available through June 26, 2016 and not   extendable.
    

 

 

	
Service Description
    	
 
    	
Unit
   Charge
    	
 
    	
Cost Driver
    	
 
    	
Comments
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Access to and use of the Oracle Hyperion software   licenses and Oracle Exalytics software licenses under the Oracle License and   Services Agreement between Oracle USA, Inc. and SPX dated December 7,   2007 (as amended)
    	
 
    	
None
    	
 
    	
NA
    	
 
    	
Service available through June 26, 2016 and not   extendable
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Access to and use of the Oracle Big Machines   services under the Oracle BigMachines CPQ Cloud Services Agreement, dated   November 25, 2014, between Oracle America, Inc. and SPX Corporation   and the Oracle BigMachines CPQ Cloud Services Renewal Agreement, with an   effective date of August 11, 2014, between Oracle America, Inc. and   SPX Corporation (d/b/a SPX Process Equipment)
    	
 
    	
As Incurred
    	
 
    	
Direct Charge
    	
 
    	
Flowco is responsible for any applicable charges   related to its access or use (including any annual renewals due during   service period).

 

Service available through March 26, 2016 and   not extendable.

 

Services limited to Flowco locations in Rochester,   NY location and Delavan, WI.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Access to and use of SAP Software under the Software   End-User License Agreement, effective September 21, 2004, by and between   SAP America, Inc. and SPX Corporation (as amended)
    	
 
    	
None
    	
 
    	
NA
    	
 
    	
Service available through December 31, 2015 and   not extendable.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
SAP ERP License Maintenance
    	
 
    	
None
    	
 
    	
NA
    	
 
    	
Service available through December 31, 2015 and   not extendable.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Voice and Data Services & Circuits   (AT&T ILEC, AT&T Mobility, Sprint, Windstream and Level 3 Communications)
    	
 
    	
As Incurred
    	
 
    	
Direct Charge
    	
 
    	
Flowco is responsible for any applicable charges   related to its data circuits, including early termination fees.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Access to and use of Payroll, Payroll Tax and   Garnishment BPO Services provided by AT&T under the Payroll BPO Services   Agreement between SPX and AT&T Corp.
    	
 
    	
$24,000
    	
 
    	
Per Month
    	
 
    	
Payroll BPO services available until   December 31, 2015.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
2015 W2 and other year-end payroll tax BPO Services   provided by AT&T under the Payroll BPO Services Agreement between SPX and   AT&T Corp.
    	
 
    	
$10,000
    	
 
    	
One Time
    	
 
    	
Services available January 1, 2016 through   March 31, 2016. Payment of unit charge is due on or before   January 1, 2016.
    

 

A-2

 

	
Service Description
    	
 
    	
Unit
   Charge
    	
 
    	
Cost Driver
    	
 
    	
Comments
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Project Management Services
    	
 
    	
$130.00
    	
 
    	
Per Hour
    	
 
    	
Any management effort to migrate off an SPX   technology, service and/or contract.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Technical Project Services
    	
 
    	
$150.00
    	
 
    	
Per Hour
    	
 
    	
Any technical effort to migrate off an SPX   technology or service.
    

 

B.            Email Forwarding: At no charge, SPX will immediately forward each email message delivered to any “@spx.com” email address which was associated with an employee of any member of the Flowco Group (each, a “Covered Address”) to an individual destination email address selected by Flowco for each such applicable Covered Address.  Once the initial forwarding for a given Covered Address is established, changes may be made to the destination forwarding location for $50 per change.

 

C.            PeopleSoft Data Migration:  At no charge, SPX will (i) extract the relevant records regarding any Flowco Employee, Former Flowco Employee or Disabled Flowco Employee (each as defined in the Employee Matters Agreement) as included in the PeopleSoft database maintained by SPX as of the Effective Date, (ii) compile a read-only database solely comprised of such Flowco records in a format selected in the reasonable discretion of SPX (provided that such database format includes, at a minimum, query, reporting and standard report development functions) and (iii) deliver such database of Flowco records to Flowco.  In its reasonable discretion, SPX may elect to make such extraction and delivery in one or more phases, provided that the final database includes all such relevant records.  Until the full and final delivery of such database to Flowco in accordance with these provisions, the relevant portion of the applicable PeopleSoft database shall be considered “Archived Data” under Section 7.2(c) of the Separation Agreement.

 

D.            Website Traffic Redirection:  At no charge, SPX will forward the traffic destined for each web URL (each, an “SPX Domain”) in the list attached hereto as Exhibit A.I.D. (as such Exhibit may be amended from time to time in accordance with the provisions of the Transition Services Agreement) to one destination URL selected by Flowco (each, a “Flow Domain”) per SPX Domain.  Once the initial forwarding for an SPX Domain is established, changes may be made to the destination forwarding location for $50 per change.

 

Flowco agrees that no Flowco Domain shall (i) contain any obscene, defamatory, harassing, offensive, or malicious material, (ii) any material that otherwise contains any negative or disparaging references about SPX or its Affiliates, customers, suppliers, employees, officers, directors or the products or services of any such person or entity; or (iii) otherwise operate in any manner likely to cause confusion, mistake, or deception.  Flowco agrees that the determination of the foregoing shall be made in the reasonable discretion of SPX and that SPX may suspend or discontinue forwarding traffic upon notice to Flowco of SPX’s determination of a violation of any of the foregoing.

 

A-3

 

E.             Content on www.SPX.com:

 

·                  Splash Page/Screen: For a period starting on the Distribution Date and ending on the date which is thirty (30) days thereafter, SPX will maintain a ‘splash page’ attached to the www.spx.com web site that the user sees first before being given the option to continue to the main content of the site (the “Splash Page”).  The Splash Page will be presented to user with graphics in substantially the form attached as Exhibit A.I.E. (including the check-box included therein to be unchecked by default) but will only be shown on such user’s first visit to www.spx.com on or after the Distribution Date unless the user clicks the applicable check-box requesting to be shown the Splash Page on user’s next visit.  The Splash Page will provide the user with an option to click a hyperlink providing redirection to www.spxflow.com and Flowco may not change the destination web site without consent of SPX.

 

·                  Footer Bar Hyperlink: For a period starting on the Distribution Date and ending on the date which is six (6) months thereafter, SPX will maintain a hyperlink on the footer bar of the www.spx.com web site linking to directly the www.spxflow.com web site (the “FLOW Link”).  The FLOW Link will be displayed as prominently (including color, size and font) as other hyperlinks included in the footer of such web site.

 

A-4

 

II.  HUMAN RESOURCES

 

US Severance Payments:  Without limiting the responsibility of Flowco and members of the Flowco Group for certain severance Liabilities pursuant to Section 5.06 of the Employee Matters Agreement, SPX will continue to provide coordination, processing and delivery of any applicable severance payments due to any Former Flowco Employees (as defined in the Employee Matters Agreement) who were terminated between August 1, 2015 and the Effective Date and were based in the US at the time of such termination (the “Severed US Flowco Employees”).  SPX and Flowco acknowledge and agree that (i) Flowco shall manage and direct the negotiation with the Severed US Flowco Employees and the determination of the payments to be made to each of the Severed US Flowco Employees and (ii) Flowco shall remain responsible for any Actions arising out of such negotiations and determinations. SPX shall maintain and provide such applicable employment and payment records and other information regarding such Severed US Flowco Employees as reasonably requested by Flowco.

 

Other than as contemplated by Section 5.06 of the Employee Matters Agreement, Flowco shall reimburse SPX for the actual payroll, severance and benefits costs incurred associated with the Severed US Flowco Employees, as well as any third-party costs or expenses (including, but not limited to, taxes) arising from such severance payments, payroll, benefits and human resources participation (if any).

 

A-5

 

III.  FINANCE, ACCOUNTING AND TAX

 

A.            September 26, 2015 Month-End Close and Financial Reporting: Without limiting SPX’s agreement to provide the financial statement preparation and audit information, access and support as set forth in Section 5.2 of the Separation Agreement, SPX agrees to provide Flowco, until October 28, 2015 and at no additional charge, with the following financial reporting services solely with respect to the September 26, 2015 fiscal month-end:

 

·                  Maintain the current Certification (formerly AssureNET) application (“AssureNET”) and, with respect to the period ending September 26, 2015, the reconciliation, certification and variance analysis processes therein, to the extent related to Flowco or other members of the Flowco Group.

 

·                  Provide Flowco and other members of the Flowco Group with reasonable access to and rights under AssureNET in order to enter, review and adjust financial information in a manner consistent with the access and rights of Flowco and such members for fiscal periods ended prior to September 26, 2015.

 

·                  Participate in, and provide reasonable cooperation with respect to, transitioning those certain AssureNET financial reconciliation, certification and variance analysis processes related to Flowco or other members of the Flowco Group.

 

·                  Maintain the current DoubleCheck GRC application (“DoubleCheck”) and, with respect to the fiscal quarter ending September 26, 2015, the issue management, workflow and 302 certification processes therein, to the extent related to Flowco or other members of the Flowco Group.

 

·                  Provide Flowco and other members of the Flowco Group with reasonable access to and rights under DoubleCheck in order to enter, review and approve and close Sarbanes-Oxley issues in a manner consistent with the access and rights of Flowco and such members for fiscal periods ended prior to September 26, 2015.

 

·                  Participate in, and provide reasonable cooperation with respect to, transitioning those certain DoubleCheck the issue management, workflow and 302 certification processes related to Flowco or other members of the Flowco Group.

 

·                  Promptly after completion of the closing process for the fiscal period ending September 26, 2015, participate in the preparation of the Flowco opening balance sheet.

 

·                  For the avoidance of doubt, during the term of these fiscal month-end close services, neither SPX nor Flowco shall enter any transactions or other information in AssureNET or DoublCheck for any periods reflecting activity occurring on or after September 27, 2015.

 

B.            EMEA SAP General Ledger Services:  Until January 31, 2016, SPX Cooling Technologies GmbH shall maintain the current SAP General Ledger module application (the “SAP GL”) and the financial information contained therein for each of SPX International GmbH, SPX U.L.M. GmbH, SPX International Holding GmbH, SPX Clyde UK Limited, UD-RD Holding Company Limited and Medinah Holding GmbH (collectively, the “EMEA Holding Companies”) for an aggregate service fee of EUR 1,000 per month.  During such service period, SPX Cooling Technologies GmbH shall provide the EMEA Holding Companies with reasonable access to and rights under the SAP GL in

 

A-6

 

order to enter, review and adjust financial information in a manner consistent with the access and rights of such EMEA Holding Company for periods prior to the Effective Date.  Upon request from Flowco, SPX shall provide reasonable assistance in the migration of the EMEA Holding Companies from the SAP GL, subject to the Technical Project Services fees set forth in Section I.A above, as applicable.

 

C.            Treasury Services:  For a period of up to three (3) months, SPX shall permit Flowco-designated persons to use the SPX “company profile” in the applicable online banking systems to the extent necessary for access to the bank accounts of the members of the Flowco Group or any related processing/payment services.  SPX may limit or discontinue access to selected Flowco-designated persons at any time in its reasonable discretion.  Flowco will reimburse SPX for costs incurred for any such Treasury-related services provided by a third party.

 

D.            Deregistration of Marley Engineered Products (Shanghai) Co. Ltd.:  Without limiting SPX’s agreement to maintain and provide Flowco with access to (i) certain Archived Data pursuant to Section 7.2(c) of the Separation Agreement and (ii) certain transactional records pursuant to Article VI of the Tax Matters Agreement, SPX agrees to provide Flowco, at no additional charge, with such information and support (including access to selected personnel of Marley Engineered Products LLC) as reasonably requested by Flowco to support the deregistration and liquidation of Marley Engineered Products (Shanghai) Co. Ltd.

 

E.             US Payroll Tax Accounting: Upon request by Flowco and agreement covering project scope and required resources, SPX will provide US payroll tax accounting services to Flowco at the rate of $150/hr.

 

A-7

 

IV.  SPX CONTRACTS

 

SPX shall take commercially-reasonable efforts to allow the applicable members of the Flowco Group to continue to contract services under the same terms as the following SPX contracts, provided that the continuation of these services does not cause breach of any existing vendor agreement and does not result in additional costs to SPX:

 

·                                          Microsoft Enterprise Enrollment Agreement #83632359

·                                          Microsoft Select Plus Agreement #X20-02487

·                                          Enterprise Services Work Order, dated as of June 26, 2015, issued under Microsoft Business and Services Agreement #U4701657

·                                          Oracle Database Enterprise Edition — Processor Perpetual Software Update License & Support Order (ULA), dated as of September 22, 2015

·                                          Oracle License and Services Agreement between Oracle USA, Inc. and SPX dated December 7, 2007 (as amended)

·                                          Oracle BigMachines CPQ Cloud Services Agreement, dated November 25, 2014, between Oracle America, Inc. and SPX Corporation

·                                          Oracle BigMachines CPQ Cloud Services Renewal Agreement, with an effective date of August 11, 2014, between Oracle America, Inc. and SPX Corporation (d/b/a SPX Process Equipment)

·                                          Software End-User License Agreement, effective September 21, 2004, by and between SAP America, Inc. and SPX Corporation (as amended)

·                                          Travel Services Support Agreement with KesselRun

·                                          Travel Risk Management Agreement (Duty of Care) with International SOS, provided that Flowco shall be responsible for any incremental fees or charges arising from services provided thereunder to employees or representatives of the members of the Flowco Group (other than general monitoring services)

·                                          Hotel booking discount programs

·                                          All other Contracts listed on Schedule 2.9 to the Separation Agreement.

 

Subject to the provisions of Section 2.9 of the Separation Agreement, for each of the SPX Contracts listed above and upon request by Flowco, SPX shall provide Flowco with such information regarding pricing and other contract terms and the Flowco usage thereunder as reasonably required by Flowco in connection with negotiation of a replacement contract with the applicable vendor, subject to appropriate restrictions for classified, privileged or confidential information and to the requirements of applicable law or contractual provisions.

 

A-8

 

V. OTHER

 

To be provided on an as-needed basis, subject to reasonable negotiation on project scope, for the term of the Transition Services Agreement:

 

	
Task 
    	
 
    	
Rate
    
	
 
    	
 
    	
 
    
	
Risk Management Consulting: Allocations, Contract   Review, Renewal Process, International Renewals & Ongoing   Concepts (including Tax Issues), Risk Management Activities and Policies Best   Practices, Balance Sheet Accrual & Actuarial Process, Philosophic   Approach to Settlements/ Claims/ Claimants, Insurance Policy Review, Due   Diligence, Divestitures and Certificates of Insurance
    	
 
    	
$250 per hour
    
	
 
    	
 
    	
 
    
	
Consulting on operation of Concur Business Travel   and Expense Management Software
    	
 
    	
$130 per hour
    
	
 
    	
 
    	
 
    
	
Knowledge Transfer Services. Upon request by Flowco,   SPX agrees to make its corporate-level employees available to provide limited   general consulting services to corporate-level employees of Flowco regarding   general processes, enterprise knowledge, routines, best practices and   organizational matters, to the extent related to the services formerly   performed by such Infrastructurco employee.

 

SPX shall have the sole discretion in identifying   the specific employees to perform such services and no obligation to retain   any specific Infrastructurco employee for performance of these services.   Flowco acknowledges and agrees that the scope of these services shall be   limited to general consulting and guidance on prior practices and that any   requests for process outsourcing, functional training/onboarding, preparation   of process summaries or other documentation, information collection,   research, third-party services, implementation, developments, enhancements,   project management or ticket-item resolutions are not included and any such   projects must be separately negotiated on a fee-for-project basis.
    	
 
    	
No Charge
    

 

A-9

 

SCHEDULE B

 

Flowco Services

 

Upon reasonable notice, throughout the term of the Transition Services Agreement, the Flowco Service Providers shall have reasonable access to the facilities and premises of the applicable members of the Infrastructurco Group to the extent necessary to provide the Flowco Services, in each case subject to the reasonable safety, security, confidentiality and other policies and procedures of SPX in place from time to time.  SPX shall provide Flowco with such information, management direction and documentation as is reasonably necessary for the Flowco Service Providers to perform the Flowco Services and the members of the Infrastructurco Group shall perform such other duties and tasks as may be reasonably required to permit the Flowco Service Providers to perform the Flowco Services.

 

I.  INFORMATION TECHNOLOGY

 

A.  The following list of IT services will be provided by Flowco:

 

	
Service Description
    	
 
    	
Unit
   Charge
    	
 
    	
Cost Driver
    	
 
    	
Comments
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Concur Expense Reporting
    	
 
    	
$10.00
    	
 
    	
Per Report (with   minimum)
    	
 
    	
Charges subject to minimum base transactions usage   of 7,800 reports per calendar quarter. Service terminates March 28,   2016.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Data Circuits for Infrastructurco sites (Verizon   MPLS)
    	
 
    	
As Incurred
    	
 
    	
Direct Charge
    	
 
    	
SPX is responsible for any applicable charges   related to its data circuits, including early termination fees.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Communications Center Services for Infrastructurco   equipment located in Verizon’s Amsterdam and Hong Kong Regional Communication   Hubs
    	
 
    	
As Incurred
    	
 
    	
Direct Charge
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Call Forwarding of Office Phones for Infrastructurco   Employees in Charlotte, NC and Shanghai, China
    	
 
    	
$100.00
    	
 
    	
Per month, per location
    	
 
    	
Charlotte Service terminates March 26, 2016

 

Shanghai Service terminates January 1, 2016
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Project Management Services
    	
 
    	
$130.00
    	
 
    	
Per Hour
    	
 
    	
Any management effort to migrate a Flowco   technology, service and/or contract.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Technical Project Services
    	
 
    	
$150.00
    	
 
    	
Per Hour
    	
 
    	
Any technical effort to migrate off a Flowco   technology or service.
    

 

B-1

 

B.            United Arab Emirates:  Subject to reasonable negotiation on project scope and in exchange for fees in accordance with the Project Management Services and Technical Project Services fee structure set forth above, one or more members of the Flowco IT support team in the United Arab Emirates will provide consulting and guidance on information technology needs and set-up at the new Infrastructurco office location in the United Arab Emirates for the four (4) employees of the Infrastructurco Group referenced in Section II.B.1. of this Schedule B.  Infrastructurco will be solely responsible for the purchase of any related equipment, hardware and software (including reimbursement of Flowco for any such items purchased as part of the services).  Infrastructurco acknowledges and agrees that Flowco’s support is solely for the one-time relocation to a new facility in the United Arab Emirates and not for ongoing technical support or maintenance.

 

C.            Chennai, India:  Subject to reasonable negotiation on project scope and in exchange for fees in accordance with the Project Management Services and Technical Project Services fee structure set forth above, one or more members of the Flowco IT support team in India will complete the current project in process regarding set-up at the new Infrastructurco office location in Chennai, India for the two (2) of the employees of the Infrastructurco Group referenced in Section II.B.2. of this Schedule B.  Infrastructurco will be solely responsible for the purchase of any related equipment, hardware and software (including reimbursement of Flowco for any such items purchased as part of the services).  Infrastructurco acknowledges and agrees that Flowco’s support is solely for the one-time relocation of two people to a new facility in Chennai, India and not for ongoing technical support or maintenance.

 

D.            Footer Bar Hyperlink: For a period starting on the Distribution Date and ending on the date which is six (6) months thereafter, Flowco will maintain a hyperlink on the footer bar of the www.spxflow.com web site linking to the www.spx.com web site (the “SPXC Link”).  The SPXC Link will be displayed as prominently (including color, size and font) as other hyperlinks included in the footer of such web site.

 

B-2

 

II.  HUMAN RESOURCES AND PAYROLL SUPPORT

 

A.                  UK HR and Payroll Services and Flexible Benefits:

 

Flowco’s shared service centre in EMEA will continue to provide those certain HR Direct (administration) and Payroll services as denoted in the “Service Scope” as set forth in detail in Exhibit B.II.A-1 hereto and with access for certain eligible employees of Radiodetection Limited and SPX Cooling Technologies UK Limited (collectively, the “Covered Entities”) to participate in those certain flexible benefits schemes set forth in Exhibit B.II.A-2 hereto (the “Flexible Benefits”) (collectively, the “HR Services”).  The HR Service fees set forth below are contingent upon Flowco providing the full scope of HR Services.  If there are certain HR Services that are terminated by SPX pursuant to the terms of the Transition Services Agreement, the fees for any remaining HR Services may increase at Flowco’s discretion due to changes required to establish processes, transitions and interfaces.  All fee amounts are subject to VAT at prevailing rates as required by local laws.

 

The quarterly fees for the HR Services are set forth below:

 

	
Radiodetection   Limited
    	
 
    	
GBP
    	
23,430
    	
 
    
	
SPX Cooling   Technologies UK Limited
    	
 
    	
GBP
    	
7,140
    	
 
    

 

SPX shall cause each of the Covered Entities to continue with the full provision of HR Services, including coverage of eligible employees of the Covered Entities under the Flexible Benefits, from Flowco until June 30, 2016 (the “Term”).  No changes to the fee structure or the time period that fees are applicable may be made by SPX.  Should the net number of the employees of the Covered Entities being supported by Flowco increase by ten (10) or more employees (approx. 5%) from a covered base of two hundred fifteen (215) supported employees, Flowco reserves the right increase the HR Service fee in accordance with the percentage increase in employees.  No deductions for a reduction in the number of applicable employees will be made.

 

SPX will ensure that the existing UK Bank Account(s) of each of the Covered Entities remain available during the Term for use by Flowco in connection with completion of the HR Services.  SPX will provide appropriate access and funding to allow Flowco’s designated third-party payroll provider to execute payroll and payroll related payments (including taxes) on behalf of the Covered Entities pursuant to the HR Services.  Flowco will not utilize its own funds to execute any such payroll or payroll-related payments in the event that such funds are not made available from SPX.

 

Any incremental third party costs incurred by Flowco required in order to support the HR Services will be billed quarterly to the Covered Entities on a cost-only basis. These include, but are not limited to: pension and other benefits administration costs, the employer portion of benefits premium costs and background check costs.

 

Access to HRMS SuccessFactors: Without limiting SPX’s agreement to provide the general cooperation as set forth in the Transition Services Agreement, SPX shall provide Flowco’s designated employees with reasonable access to the HRMS system of SPX, SuccessFactors, in connection with the execution of the HR Services. In addition, SPX agrees that, during the Term,

 

B-3

 

no technical or process changes will be made to the applicable SuccessFactors systems, including implementation of new modules or functionality, without the written consent of Flowco.  Flowco will not be liable for any costs or fines incurred as a result of system service interruption or system changes made without Flowco’s consent.

 

Excluded Services:  For the avoidance of doubt, the HR Services specifically exclude any requirement for Flowco to provide a solution for, or to participate in development of, any HR and Payroll services for SPX or the Covered Entities applicable to any period after the Term or to provide any of the tasks set forth in Exhibit B.II.A-3 hereto.

 

Additional HR project support services:  Upon separate agreement between SPX and Flowco covering support for any projects or activities requested outside of the scope of the Services, and subject to availability of required resources and reasonable lead-times, Flowco’s shared service centre in EMEA will provide the Covered Entities with general HR and payroll support at the following rates:

 

	
Process   Expertise Services
    	
 
    	
GBP 50/hr
    	
 
    
	
Project   Management Services
    	
 
    	
GBP 85/hr
    	
 
    

 

Any incremental third party costs incurred by Flowco required to support any agreed projects or activities requested outside the scope of the HR Services will be billed to SPX on a cost only basis.

 

B.                  Other Employees:  For each of the following, SPX shall reimburse Flowco for the actual payroll, perquisite allowances and benefits costs (including severance) incurred associated with the applicable employees, as well as any third-party costs or expenses (including, but not limited to, taxes) arising from such payroll, benefits and human resources participation (if any).

 

1.              United Arab Emirates: Flowco and SPX acknowledge and agree that four (4) employees of a member of the Infrastructurco Group are currently working in the United Arab Emirates under work permits/visas sponsored by a member of the Flowco Group.  To the extent permissible under applicable law, Flowco will continue to sponsor the work visas for the applicable employees and continue to direct such employees to provide services exclusively to the Infrastructurco Group in a manner consistent to the services provided as of the Effective Date.  SPX agrees and acknowledges that SPX shall be solely responsible for all acts and omissions of the relevant employees and shall have no cause of action against Flowco or any of its Affiliates arising out of the relevant employees’ services.  If SPX fails to transition the work permits/visas with respect to the relevant employees on or before March 31, 2016, Flowco may unilaterally terminate such work permit/visa arrangements and SPX shall reimburse Flowco for all external and reasonable internal costs associated with terminating such work permits/visas and severing or relocating such employees (including any costs arising under such employee’s activities after such termination).

 

For a period ending no later than March 31, 2016, Flowco will continue to permit participation in the worker’s compensation insurance coverages sponsored by Flowco in the United Arab Emirates, by those four (4) employees of members of the Infrastructurco

 

B-4

 

Group who are currently participants in such coverages, solely to the extent permissible under applicable law.

 

2.              India:  Flowco and SPX acknowledge and agree that two (2) employees of SPX Flow Technology (India) Private Limited are, as of the Effective Date, performing services solely for, and on behalf of, members of the Infrastructurco Group (the “Managed India Employees”).  Flowco will continue to direct the Managed India Employees to provide services exclusively to the Infrastructurco Group in a manner consistent to the services provided as of the Effective Date.  SPX agrees and acknowledges that SPX shall be solely responsible for all acts and omissions of each of the Managed India Employees and shall have no cause of action against Flowco or any of its Affiliates arising out of the relevant employees’ services.  If SPX fails to transition the employment agreements with respect to the Managed India Employees on or before March 31, 2016, Flowco may unilaterally terminate such employees and SPX shall reimburse Flowco for all external and reasonable internal costs associated with terminating such employees (including any costs arising under such employee’s activities after such termination).

 

For a period ending no later than March 31, 2016, Flowco will continue to provide payroll and human resources support for the Managed India Employees as well as four (4) other employees of a member of the Infrastructurco Group who are located in India and paid through SPX Flow Technology (India) Private Limited as of the Effective Date.  During such period, Flowco will continue to permit participation in the medical and life insurance coverages sponsored by SPX Flow Technology (India) Private Limited, by such individuals who are currently participants in such coverages, solely to the extent permissible under applicable law.

 

C.                  US Stock Comp Transition Services: Prior to the Distribution, a ‘Corporate Action Team’ between Fidelity Stock Plan Services, LLC and SPX was established to create a system to manage stock awards for the applicable Infrastructurco Employees in accordance with the provisions of Section 4.03 of the Employee Matters Agreement (the “Award Transition Plan”).  SPX and Flowco acknowledge and agree that the final items of the Award Transition Plan, related to transferring the unvested stock into the new participant accounts, cannot take effect until the Flowco Share Ratio and the Infrastructurco Share Ratio (each as defined in the Employee Matters Agreement) are established after the Distribution.  Without limiting Flowco’s obligations under Section 4.08 of the Employee Matters Agreement, Flowco will continue to provide such Services as reasonably required to complete the Infrastructurco participant account transfer under the Award Transition Plan, including, but not limited to: providing direction to Fidelity Stock Plan Services, LLC, conversion of Infrastructurco participant data, mapping of plan features, loading grants as appropriate, and reconciliation of the applicable plans post spin.

 

SPX acknowledges and agrees that Flowco’s support is solely for the one-time completion of the Award Transition Plan and does not include reporting, recurring management or any future grant administration.  The Services provided under this Section II.C of Schedule B shall be provided for a service fee of $250 per hour and shall terminate no later than October 12, 2015.

 

B-5

 

III.  FINANCE, ACCOUNTING AND TAX

 

A.            APAC Income Tax Accounting and Tax Advisory Services: Flowco agrees to provide SPX or its applicable Affiliates with the following tax advisory services, in each case to the extent reasonably requested by SPX:

 

·                  Provide general review of the High Technology Status application for SPX Cooling Technologies (ZJK) Co. Ltd.  Such application will be prepared by SPX but Flowco will assist by reviewing and supporting discussions with the tax authorities.

 

·                  Provide general review of the quarterly tax provision calculations, as prepared by SPX, and advise of corrections as necessary and support the documentation process for each of the following entities: SPX Cooling Technologies (Beijing) Co. Ltd., SPX Cooling Technologies (ZJK) Co. Ltd, Wuxi Balcke Durr Technologies Company Ltd., SPX (GZ) Cooling Technologies Co. Ltd. and SPX Cooling Technologies (Foho) Company (collectively, the “SPX APAC Entities”).

 

·                  Provide pre-filing general review of the 2015 APAC tax returns and related filings for each of the SPX APAC Entities, as prepared by SPX’s local tax advisors/auditors.  Due date for such returns is May 31, 2016.

 

·                  Assist SPX APAC Entities in the preparation of the tax provision-to-return reconciliation of the 2015 tax returns by August 31, 2016.

 

The APAC Income Tax Accounting and Tax Advisory Services shall be provided subject to the following fees, as well as reimbursement of any reasonable third-party costs:

 

	
·
    	
Manager (initially   David Dai):
    	
RMB 1,300/hr.
    	
 
    
	
·
    	
Staff (initially Isaac   Zhu):
    	
RMB 350/hr.
    	
 
    

 

B.            Form 1099 Filings: Upon request by SPX, Flowco will provide SPX and applicable members of the Infrastucturco Group with the reports and data reflecting activity of the members of the Flowco Group prior to the Effective Date to the extent requested by SPX and as reasonably necessary to support the processing and delivery of applicable Form 1099 reports to vendors of SPX.

 

C.            September 26, 2015 Month-End Close and Financial Reporting: Without limiting Flowco’s agreement to provide the financial statement preparation and audit information, access and support as set forth in Section 5.2 of the Separation Agreement, Flowco will provide SPX, until October 28, 2015 and at no additional charge, with the following financial reporting services solely with respect to the September 26, 2015 fiscal month-end:

 

·                  Maintain the current Oracle Hyperion Financial Management application (the “Consolidated HFM”) and the corporate, business unit and consolidating financial information for SPX and Flowco for periods ending on or before September 26, 2015.

 

·                  Provide SPX and other members of the Infrastructurco Group with reasonable access to and rights under the Consolidated HFM in order to enter, review and adjust financial information in a manner consistent with the access and rights of SPX and such members for periods ended prior to September 26, 2015.

 

B-6

 

·                  Participate in, and provide reasonable cooperation with respect to, the financial reporting and month-end closing process reflecting transactions in the Consolidated HFM for members of the Flowco Group for fiscal month-end periods ending on or before September 26, 2015.

 

·                  Promptly after completion of the closing process for the fiscal period ending September 26, 2015, permit and participate in a full replication of the data in the Consolidated HFM for all periods ending on or before September 26, 2015 and reconciliation and delivery of such data to the SPX instance of the Oracle Hyperion Financial Management application.

 

·                  For the avoidance of doubt, during the term of these fiscal month-end close services, neither SPX nor Flowco shall enter any transactions or other information in the Consolidated HFM for any periods reflecting activity occurring on or after September 27, 2015.

 

D.            Treasury Services: SPX will reimburse Flowco for costs incurred for any Treasury-related services provided by a third party.

 

·                  Travel Cards; Purchasing Cards:  The employees of members of the Infrastructurco Group shall have continued use of the travel cards being used by any such employees as of the Effective Date for 30 days thereafter.  SPX shall reimburse Flowco for any charges made against such credit cards and for any administrative charges or fees (including any late fees arising from failure the failure of SPX to pay any Invoice) charged by the third-party provider.  All purchasing cards (P-cards) held by any employee of a member of the Infrastructurco will be terminated as of the Effective Date.

 

·                  APAC Credit Cards: As of the Effective Date, certain members of the Infrastructurco Group participate in a credit card program under an agreement between SPX Corporation (China) Co., Ltd. (a member of the Flowco Group) and China Merchants Bank.  Such members of the Infrastructurco Group shall have continued access to such credit card program and use of the credit cards issued thereunder until June 29, 2016.  Each applicable member of the Infrastructurco Group shall directly pay China Merchants Bank for any charges made against such credit cards and for any related administrative charges or fees.  SPX shall reimburse SPX Corporation (China) Co., Ltd. for any liability incurred arising from the failure by any member of the Infrastructurco Group to make any such payments.

 

·                  Australia Credit Cards: As of the Effective Date, Radiodetection Australia Pty Ltd. (a member of the Infrastructurco Group) participates in a credit card program under an agreement between SPX Flow Technology Australia Pty Ltd. (a member of the Flowco Group) and Bank of America, N.A.  Radiodetection Australia Pty Ltd. shall have continued access to such credit card program and use of the credit cards issued thereunder until December 31, 2015.  Radiodetection Australia Pty Ltd. shall directly pay Bank of America, N.A. for any charges made against such credit cards and for any related administrative charges or fees.  SPX shall reimburse SPX Flow Technology Australia Pty Ltd. for any liability incurred arising from the failure by Radiodetection Australia Pty Ltd. to make any such payments.

 

·                  Online Banking:  For a period of up to three (3) months, Flowco shall permit SPX-designated persons to use the Flowco “company profile” in the applicable online banking systems to the extent necessary for access to the bank accounts of the members of the

 

B-7

 

Infrastructurco Group or any related processing/payment services.  Flowco may limit or discontinue access to selected SPX-designated persons at any time in its reasonable discretion.

 

B-8

 

IV.  FACILITY ACCESS AND MANAGEMENT

 

Flowco agrees to provide SPX or its applicable Affiliates with access, use of limited common areas, telephone and internet access and general administrative services (all in accordance with standards of the Level of Services set forth in Section 1.2 of the Transition Services Agreement) in the following facilities in exchange for the fees set forth below.  Flowco’s agreement to provide access to, or use of, a given facility shall automatically terminate upon termination of Flowco’s right to occupy such facility or relevant portion thereof (for any reason) and Flowco shall not be obligated to provide replacement facilities for SPX.

 

	
Facility
    	
 
    	
 
    	
 
    	
Monthly Fee*
    
	
1.
    	
 
    	
SPX Middle East FZE
   The Galleries, 3rd Floor
   Downtown Jebel Ali
   Dubai, United Arab Emirates
    	
 
    	
AED
    	
17.090,03
    

 

* Monthly fee is applicable for no more than the space utilized and scope of services provided as of the Effective Date and use by the number of employees of members of the Infrastructurco Group that utilized such facility as of the Effective Date.  Additional space of users must be separately negotiated.

 

B-9

 

V.  FLOWCO CONTRACTS

 

Flowco shall take commercially-reasonable efforts to allow the applicable members of the Infrastructurco Group to continue to contract services under the same terms as the following Flowco contracts, provided that the continuation of these services does not cause breach of any existing vendor agreement and does not result in additional costs to Flowco:

 

·                                          Travel Booking Services Support Agreement with BCD, excluding VIP Agent and Meeting Services offerings; provided that, for any period during which any member of the Infrastructurco Group utilizes such contract, SPX shall reimburse Flowco quarterly in an amount equal to 40% of the those certain non-POS fees billed by BCD.

 

·                                          Amendment 11 to the Services Agreement identified by Verizon/MCI Contract Identification Number 566509, between Verizon Business Network Services Inc. and SPX (as predecessor in interest to Flowco), together with all exhibits, attachments, and schedules thereto, all orders issued thereunder, and all prior modifications to any of the foregoing on or before the date hereof.

 

Subject to the provisions of Section 2.9 of the Separation Agreement, for each of the Flowco Contracts listed above and upon request by SPX, Flowco shall provide SPX with such information regarding pricing and other contract terms and the SPX usage thereunder as reasonably required by SPX in connection with negotiation of a replacement contract with the applicable vendor, subject to appropriate restrictions for classified, privileged or confidential information and to the requirements of applicable law or contractual provisions.

 

B-10

 

VI. OTHER

 

To be provided on an as-needed basis, subject to reasonable negotiation on project scope, for the term of the Transition Services Agreement:

 

	
Task
    	
 
    	
Rate
    
	
 
    	
 
    	
 
    
	
M&A Advisory Services. Such services shall   continue until (i) consummation of the applicable identified transaction   or (ii) notice of termination by SPX, whichever is earlier.
    	
 
    	
$20,000 per month;   subject to equitable adjustment to reflect the time commitment and scope of   services provided, upon mutual agreement by SPX and Flowco in good faith
    
	
 
    	
 
    	
 
    
	
Conflict Minerals Assistance:  Overall coordination   of Infrastructurco’s Conflict Minerals Compliance Program data preparation in   support for CMRT report development & submission.  Tasks   include but are not limited to: coordination of supplier identification and   segregation; coordination of CM supplier survey solicitation, expediting,   compilation and reporting; coordination of smelter RCOI for 3TG   materials;  and coordination of Infrastructurco   representatives & consultants involved in CMRT data preparation.   Such services terminate May 31, 2016 if not earlier terminated.
    	
 
    	
$200 per hour
    
	
 
    	
 
    	
 
    
	
Security Assistance Management
    	
 
    	
$130 per hour
    
	
 
    	
 
    	
 
    
	
Knowledge Transfer Services. Upon request by SPX,   Flowco agrees to make its corporate-level employees available to provide   limited general consulting services to corporate-level employees of   Infrastructurco regarding general processes, enterprise knowledge, routines,   best practices and organizational matters, to the extent related to the   services formerly performed by such Flowco employee.

 

Flowco shall have the sole discretion in identifying   the specific employees to perform such services and no obligation to retain   any specific Flowco employee for performance of these services. SPX   acknowledges and agrees that the scope of these services shall be limited to general   consulting and guidance on prior practices and that any requests for process   outsourcing, functional training/onboarding, preparation of process summaries   or other documentation, information collection, research, third-party   services, implementation, developments, enhancements, project management or   ticket-item resolutions are not included and any such projects must be   separately negotiated on a fee-for-project basis.
    	
 
    	
No Charge
    

 

B-11Exhibit 10.2

 

TAX MATTERS AGREEMENT

 

by and between

 

SPX CORPORATION

 

and

 

SPX FLOW, Inc.

 

Dated as of September 26, 2015

 

 

Table of Contents

 

	
ARTICLE I                                DEFINITIONS
    	
2
    
	
 
    	
 
    
	
ARTICLE II                           ALLOCATION   OF TAXES AND REFUNDS
    	
6
    
	
 
    	
 
    	
 
    
	
Section 2.1
    	
Responsibility for   Taxes
    	
6
    
	
Section 2.2
    	
Entitlement to Refunds
    	
7
    
	
Section 2.3
    	
Straddle Periods
    	
7
    
	
Section 2.4
    	
Temporary Differences
    	
7
    
	
 
    	
 
    	
 
    
	
ARTICLE III                      TAX   RETURNS
    	
8
    
	
 
    	
 
    	
 
    
	
Section 3.1
    	
Responsibility for   Preparation, Filing and Payment
    	
8
    
	
Section 3.2
    	
Consistent with Past   Practice
    	
8
    
	
Section 3.3
    	
Closing of Flowco   Taxable Year
    	
8
    
	
Section 3.4
    	
Carrybacks
    	
8
    
	
Section 3.5
    	
Tax Attributes
    	
9
    
	
Section 3.6
    	
Treatment of Deductions   Associated with Equity-Related Compensation
    	
9
    
	
Section 3.7
    	
Review Rights—Material   Adverse Effect
    	
10
    
	
Section 3.8
    	
Review Rights and   Reimbursement—Taxes for Which Non-Preparing Party is Responsible
    	
10
    
	
Section 3.9
    	
Refund Payments
    	
10
    
	
Section 3.10
    	
Expenses
    	
11
    
	
Section 3.11
    	
German Tax Payment
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE IV                       TAX-FREE   STATUS OF THE TRANSACTIONS
    	
11
    
	
 
    	
 
    	
 
    
	
Section 4.1
    	
Representations and   Warranties
    	
11
    
	
Section 4.2
    	
Prohibited Events
    	
11
    
	
Section 4.3
    	
Procedures Regarding   Opinions and Rulings
    	
13
    
	
Section 4.4
    	
Protective   Section 336(e) Elections
    	
13
    
	
Section 4.5
    	
Consistent Reporting
    	
14
    
	
 
    	
 
    	
 
    
	
ARTICLE V                            TAX   PROCEEDINGS
    	
14
    
	
 
    	
 
    	
 
    
	
Section 5.1
    	
Notice
    	
14
    
	
Section 5.2
    	
Conduct
    	
14
    
	
 
    	
 
    	
 
    
	
ARTICLE VI                       COOPERATION
    	
15
    
	
 
    	
 
    	
 
    
	
Section 6.1
    	
General Cooperation
    	
15
    
	
Section 6.2
    	
Retention of Records
    	
15
    
	
 
    	
 
    	
 
    
	
ARTICLE VII                  INDEMNIFICATION
    	
15
    
	
 
    	
 
    	
 
    
	
Section 7.1
    	
Survival
    	
15
    
	
Section 7.2
    	
Indemnification by   Infrastructurco
    	
15
    

 

i

 

Table of Contents

 

	
Section 7.3
    	
Indemnification by Flowco
    	
16
    
	
Section 7.4
    	
Flowco Gross-Up   Obligation
    	
16
    
	
Section 7.5
    	
Characterization of   Indemnification and Reimbursement Payments
    	
16
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII             MISCELLANEOUS
    	
16
    
	
 
    	
 
    	
 
    
	
Section 8.1
    	
Dispute Resolution
    	
16
    
	
Section 8.2
    	
Tax Sharing Agreements
    	
16
    
	
Section 8.3
    	
Specific Performance
    	
17
    
	
Section 8.4
    	
Interest
    	
17
    
	
Section 8.5
    	
Coordination with the   Separation Agreement and Other Ancillary Agreements
    	
17
    
	
Section 8.6
    	
Effective Date
    	
17
    

 

ii

 

TAX MATTERS AGREEMENT

 

THIS TAX MATTERS AGREEMENT (this “Agreement”) is entered into as of September 26, 2015, by and between SPX Corporation, a Delaware corporation (“SPX” or “Infrastructurco”), and SPX FLOW, Inc., a Delaware corporation and wholly-owned subsidiary of SPX (“Flowco”) (each a “Party” and together, the “Parties”).

 

R  E  C  I  T  A  L  S:

 

WHEREAS, SPX currently conducts the Infrastructurco Business and the Flowco Business directly and through its Subsidiaries, and is the common parent of an affiliated group (within the meaning of Section 1504 of the Code) of corporations filing a consolidated return for U.S. federal income tax purposes (the “SPX Consolidated Group”);

 

WHEREAS, the Board of Directors of SPX has determined that it is in the best interests of SPX and its stockholders to separate SPX into two separate, publicly traded companies: (i) Infrastructurco, which will continue to conduct, directly and through its Subsidiaries, the Infrastructurco Business, and (ii) Flowco, which will continue to conduct, directly and through its Subsidiaries, the Flowco Business;

 

WHEREAS, in order to effect such separation, (i) SPX and certain of its Subsidiaries have effectuated the transactions described in the Reorganization Step Plan that precede the completion of the Flowco Asset Transfer and the Distribution (such transactions, the “Restructuring”); (ii) pursuant to the Reorganization Step Plan and that certain Separation and Distribution Agreement entered into as of September 22, 2015, by and between SPX and Flowco (the “Separation Agreement”), SPX has transferred and has caused certain of its Subsidiaries to, transfer (directly or indirectly) the Flowco Assets to Flowco in exchange for (a) the actual or constructive the issuance by Flowco to SPX of shares of the common stock of Flowco, (b) the substitution of Flowco for SPX as the obligor under the Notes, and corresponding issuance and delivery by Flowco of the Flowco Global Note, and (c) the assumption by Flowco (directly or indirectly) of the Flowco Liabilities (the transactions described in this clause (ii), the “Flowco Asset Transfer”); (iii) a portion of the proceeds of the Flowco Financing Arrangements was used, at SPX’s direction, to retire an equal amount of SPX’s outstanding indebtedness under the Credit Agreement; and (iv) SPX will distribute all of the common stock of Flowco to the holders of SPX Common Stock as of the Record Date on a pro rata basis (the “Distribution”);

 

WHEREAS, the Distribution is motivated in whole or substantial part by the corporate business purposes of (i) allowing investors to separately value each company based on its distinct investment identity, (ii) allowing each company to more effectively pursue its distinct operating priorities and strategies and opportunities for long-term growth and profitability in its respective markets, (iii) allowing each company to more directly tie incentive compensation arrangements for its employees to the performance of its business and the achievement of its strategic objectives, enhancing employee hiring and retention, (iv) permitting each company to implement a capital structure appropriate to its strategy and business needs and to concentrate its financial resources solely on its own operations without having to compete with the other company’s businesses for investment capital, and (v) providing each company increased strategic flexibility to make acquisitions and form partnerships and alliances in its target markets, unencumbered by consideration of the potential impact on or of the businesses of the other company, including by allowing each company to effect future acquisitions using its own stock for all or part of the consideration, the value of which will be more closely aligned with the performance of its businesses, and unaffected by the businesses of the other company;

 

WHEREAS, the Parties intend, for U.S. federal income tax purposes, for (i) certain steps of the Restructuring to qualify as tax-free transactions; (ii) the Flowco Asset Transfer to qualify as a reorganization described in Section 368(a)(1)(D) of the Code; (iii) the substitution of Flowco for SPX as the obligor under the Notes to be treated, consistent with the IRS Ruling, as an issuance by Flowco to SPX of

 

 

“securities” (within the meaning of Section 361(a) of the Code) in partial consideration for the Flowco Asset Transfer (in an exchange governed by Section 361(a) of the Code), followed by a distribution by SPX of such securities to holders of the Notes in exchange for the Notes (in an exchange governed by Section 355(a)(1)(A)(ii) of the Code); and (iv) the Distribution to qualify as a transaction described in Section 355(a) of the Code;

 

WHEREAS, as a result of the Distribution, the Flowco Entities that were members of the SPX Consolidated Group will cease to be members of the SPX Consolidated Group (the “Deconsolidation”); and

 

WHEREAS, the Parties intend in this Agreement to allocate economic responsibility for Taxes arising prior to, as a result of, and subsequent to the Distribution, and to provide for and agree upon certain other matters relating to Taxes.

 

NOW, THEREFORE, in consideration of the foregoing and the terms, conditions, covenants and provisions of this Agreement, the Parties hereby agree as follows:

 

ARTICLE I
 DEFINITIONS

 

Any capitalized term used in this Agreement but not defined herein shall have the meaning ascribed to it in the Separation Agreement.  For purposes of this Agreement, the following terms shall have the following meanings:

 

“Agreement” has the meaning set forth in the preamble.

 

“Carryback” has the meaning set forth in Section 3.4.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Counsel” means (i) Fried, Frank, Harris, Shriver & Jacobson LLP, with respect to the Flowco Asset Transfer and the Distribution, and (ii) Baker & McKenzie LLP, with respect to the Restructuring.

 

“Deconsolidation” has the meaning set forth in the recitals.

 

“Distribution” has the meaning set forth in the recitals.

 

“Distribution Date” means the date of the consummation of the Distribution, which shall be determined by the Board of Directors of SPX in its sole and absolute discretion.

 

“Due Date” means (a) with respect to a Tax Return, the date (taking into account all valid extensions) on which such Tax Return is required to be filed under applicable Law and (b) with respect to a payment of Taxes, the date on which such payment is required to be made to avoid the incurrence of interest, penalties and/or additions to tax.

 

“Effective Time” means the time at which the Distribution is effective on the Distribution

 

2

 

Date.

 

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

 

“Flowco” has the meaning set forth in the preamble.

 

“Flowco Asset Transfer” has the meaning set forth in the recitals.

 

“Flowco Entity” means any of Flowco and any entity (including any predecessor thereof) that will be a Subsidiary of Flowco immediately after the Effective Time.

 

“Flowco Prohibited Event” means any Prohibited Event that Flowco causes or permits to occur.

 

“Flowco PTI Taxes” means any U.S. federal income taxes resulting from a Final Determination and attributable to amounts included in the gross income of a Flowco Entity or an Infrastructurco Entity under Section 951(a) of the Code on account of a Flowco Entity that is a “controlled foreign corporation” (within the meaning of Section 957(a) of the Code), to the extent that no Infrastructurco Entity received, prior to the Effective Time, a distribution of the earnings and profits corresponding to such income inclusion.

 

“Income Tax” means any income, franchise or similar tax based upon, measured by or calculated by reference to net income or net profits (including any liability under Treasury Regulations Section 1.1502-6), together with any interest, penalty or addition attributable thereto.

 

“Infrastructurco” has the meaning set forth in the preamble.

 

“Infrastructurco Entity” means any of Infrastructurco and any entity (including any predecessor thereof) that will be a Subsidiary of Infrastructurco immediately after the Effective Time.

 

“Infrastructurco Prohibited Event” means any Prohibited Event that Infrastructurco causes or permits to occur.

 

“IRS” means the U.S. Internal Revenue Service.

 

“IRS Ruling” means private letter ruling PLR-103674-15, dated May 28, 2015, issued by the IRS to SPX.

 

“Notes” means Flowco’s 6.875 % Senior Notes due 2017 subject to the Indenture.

 

“Opinions” means the opinions of Counsel with respect to certain Tax aspects of the Transactions.

 

3

 

“Party” and “Parties” have the meanings set forth in the preamble.

 

“Past Practice” means past custom, practices, accounting methods, elections and conventions.

 

“Permitted Carryback” has the meaning set forth in Section 3.4.

 

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

 

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

 

“Pre-Distribution Flowco State Income Taxes” means any U.S. state Income Taxes incurred by any Flowco Entity in any Pre-Distribution Period (excluding, for the avoidance of doubt, any such Taxes that are attributable to any action taken by a Flowco Entity on the Distribution Date after the Effective Time).

 

“Prohibited Event” has the meaning set forth in Section 4.2(a).

 

“Refund” means any refund of Taxes or any credit for Taxes in lieu thereof, including any interest payable thereon or with respect thereto.

 

“Restructuring” has the meaning set forth in the recitals.

 

“Ruling Request” means the request for rulings submitted to the IRS by Counsel on January 21, 2015, regarding the U.S. federal income tax treatment of the substitution of Flowco for SPX as the obligor under the Notes (including the exhibits thereto and any supplemental submissions).

 

“Separation Agreement” has the meaning set forth in the recitals.

 

“Spin-Off Taxes” means any Taxes that are not attributable to a Prohibited Event and that are attributable to (i) the Restructuring, the Flowco Asset Transfer, the Distribution or the Deconsolidation or (ii) the settlement of any intercompany receivable, payable, loan or other account between any Flowco Entity and any Infrastructurco Entity pursuant to Section 2.4 of the Separation Agreement.

 

“SPX” has the meaning set forth in the preamble.

 

“SPX Consolidated Group” has the meaning set forth in the recitals.

 

“SPX Consolidated Taxes” means any U.S. federal, state or local Income Taxes reported or reportable on any Tax Return filed or required to be filed by an Infrastructurco Entity in its

 

4

 

capacity as the common parent of an affiliated (or similar) group of corporations that reports its U.S. federal, state or local Income Taxes, respectively, on a consolidated (or similar) basis.

 

“Straddle Period” means any taxable period that begins on or before and ends after the Distribution Date.

 

“Tax” means any tax, charge, fee, duty, levy, impost, or other similar assessment, in each case imposed by any governmental authority, including, but not limited to, any net income (including any liability under Treasury Regulations Section 1.1502-6(a)), gross income, gross receipts, excise, real property, personal property, sales, use, service, service use, license, lease, capital stock, transfer, recording, franchise, business organization, occupation, premium, environmental, windfall profits, profits, customs, payroll, unclaimed property, wage, withholding, social security, employment, unemployment, insurance, severance, workers compensation, excise, stamp, alternative minimum, estimated, value added, ad valorem or other tax, in each case, together with any interest, penalty or addition attributable thereto.

 

“Tax Attribute” means any net operating loss, capital loss, investment tax credit carryover, earnings and profits, foreign tax credit carryover, overall foreign loss, previously taxed income, separate limitation loss or any other loss, deduction, credit or other comparable item.

 

“Tax Benefit” means any Refund, deduction, credit, or other item that reduces the amount of Taxes otherwise required to be paid.

 

“Tax-Free Status of the Transactions” means the tax-free treatment for which certain of the Transactions are intended to qualify, as described in the Opinions.

 

“Tax Materials” means (i) the Opinions, (ii) the representation letters from SPX and Flowco upon which Counsel will rely in rendering the Opinions, (iii) the Ruling Request, and (iv) any other materials delivered or deliverable by SPX or Flowco in connection with the rendering by Counsel of the Opinions or the consideration by the IRS of the Ruling Request.

 

“Tax Proceeding” means any audit, assessment, review, examination or other proceeding (including any appeal thereof) administered by any Taxing Authority for the purpose of determining or redetermining any Tax or Refund, including any proceeding relating to a competent authority determination.

 

“Tax Return” means any return, report, declaration, certificate, form or similar statement or document (including any related or supporting information or schedule attached thereto and any amendment thereof) supplied to, filed with, or required to be supplied to or filed with, a Taxing Authority in connection with the payment, determination, assessment or collection of any Tax or Refund or the administration of any Law relating to any Tax or Refund.

 

“Taxing Authority” means any governmental authority (including any subdivision, agency, commission or entity thereof) or any quasi-governmental or private body having jurisdiction over the assessment, determination, administration, collection or imposition of any Tax.

 

5

 

“Transactions” means the transactions described in the Reorganization Step Plan.

 

“Treasury Regulations” means the regulations promulgated under the Code by the U.S. Treasury Department.

 

“Unqualified Tax Opinion” means a “will” opinion, without substantive qualifications, of a nationally recognized law or accounting firm, which firm is reasonably acceptable to the Party not receiving such Unqualified Tax Opinion.

 

“U.S.” means the United States of America.

 

ARTICLE II
 ALLOCATION OF TAXES AND REFUNDS

 

Section 2.1                           Responsibility for Taxes.  Economic responsibility for Taxes shall be allocated between the Parties as follows:

 

(a)                                 Infrastructurco shall be responsible for:

 

(i)                                     any Taxes attributable to any of the activities of the Infrastructurco Business or any of the Infrastructurco Assets or Infrastructurco Liabilities;

 

(ii)                                  any SPX Consolidated Taxes;

 

(iii)                               any Pre-Distribution Flowco State Income Taxes;

 

(iv)                              any sales, use, unclaimed property or escheat taxes incurred in any Pre-Distribution Period with respect to SPX’s corporate headquarters;

 

(v)                                 any Taxes attributable to an Infrastructurco Prohibited Event; and

 

(vi)                              any Spin-Off Taxes;

 

provided, however, that Infrastructurco shall not be responsible for any Taxes for which Flowco is responsible under clause (ii) or clause (iii) of Section 2.1(b).

 

(b)                                 Flowco shall be responsible for:

 

(i)                                     any Taxes that are (A) attributable to any of the activities of the Flowco Business or any of the Flowco Assets or Flowco Liabilities and (B) not described in Section 2.1(a);

 

(ii)                                  all Flowco PTI Taxes for any taxable year, but only if all Flowco PTI Taxes in such taxable year exceed, in the aggregate, $100,000 (in which case, for the avoidance of doubt, Flowco shall be responsible for all such Flowco PTI Taxes); and

 

(iii)                               any Taxes attributable to a Flowco Prohibited Event, but only if such Taxes exceed, in the aggregate, $100,000 (in which case, for the avoidance of doubt, Flowco shall be responsible for all such Taxes).

 

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Section 2.2                           Entitlement to Refunds.  Refunds shall be allocated between the Parties as follows:

 

(a)                                 Infrastructurco shall be entitled to any Refund in respect of Taxes for which Infrastructurco is responsible pursuant to Section 2.1(a), except to the extent such Refund is attributable to a Permitted Carryback.

 

(b)                                 Flowco shall be entitled to (i) any Refund in respect of Taxes for which Flowco is responsible pursuant to Section 2.1(b) and (ii) any other Refund, to the extent such Refund is attributable to a Permitted Carryback.

 

Section 2.3                           Straddle Periods.  To the extent necessary for purposes of this Agreement, any Tax incurred with respect to any Straddle Period shall be apportioned between the Pre-Distribution portion and the Post-Distribution portion of such Straddle Period as follows:

 

(a)                                 any such Tax based on or measured by income, receipts, services or transactions (including Income Taxes and sales, use, withholding, payroll and other employment taxes, but not including real and personal property taxes) shall be apportioned between the Pre-Distribution portion and the Post-Distribution portion of such Straddle Period based on an interim closing of the books as of the Effective Time; provided, however, that any exemption, allowance or deduction that is calculated on an annual or periodic basis shall be apportioned on a per diem basis; and

 

(b)                                 any such Tax not described in Section 2.3(a) shall be apportioned between the Pre-Distribution portion and the Post-Distribution portion of such Straddle Period on a per diem basis.

 

Section 2.4                           Temporary Differences.  If, as a result of a Final Determination relating to Taxes for which Infrastructurco or Flowco is responsible under Section 2.1(a) or Section 2.1(b), respectively, any Flowco Entity or any Infrastructurco Entity, respectively, reports, with respect to any taxable year, any Tax Benefit that (a) results in Tax savings for such taxable year of at least $50,000 and (b) it would not have reported but for such Final Determination (including, for the avoidance of doubt, any Tax Benefit resulting from the elections under Section 336(e) of the Code described in Section 4.4), then such Flowco Entity or Infrastructuro Entity, as the case may be, shall make a payment to Infrastructurco or Flowco, respectively, equal to the actual reduction of Taxes attributable to such Tax Benefit (determined on a with and without basis), such payment to be made promptly after filing the annual U.S. federal corporate income tax return on which such Tax Benefit is reported (i.e., if such a Final Determination results in Tax Benefits over multiple taxable years, payments shall be made only as and when any reduction in annual Taxes attributable to such Tax Benefits occurs).

 

ARTICLE III
 TAX RETURNS

 

Section 3.1                           Responsibility for Preparation, Filing and Payment.  With respect to any Tax Return for a Pre-Distribution Period or Straddle Period required to be filed by an Infrastructurco Entity or a Flowco Entity:

 

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(a)                                 Infrastructurco shall prepare and file, or cause to be prepared and filed, any such Tax Return required by Law to be filed by an Infrastructurco Entity, and shall pay or cause to be paid any Taxes shown to be due and owing thereon; and

 

(b)                                 Flowco shall prepare and file, or cause to be prepared and filed, any such Tax Return required by Law to be filed by a Flowco Entity, and shall pay or cause to be paid any Taxes shown to be due and owing thereon;

 

provided, however, that, in the case of any such consolidated or combined tax return, each non-filing entity included in such tax return shall, at the request of the filing entity, prepare and deliver to the filing entity any supporting tax returns or other documents that relate to such non-filing entity and are necessary to the preparation of such consolidated or combined tax return; and

 

provided, further, that (x) Flowco shall prepare and file, or cause to be prepared and filed, any such Tax Return relating to sales or use taxes, and (y) Infrastructurco shall prepare and file, or cause to be prepared and filed, any such Tax Return relating to unclaimed property or escheat taxes.

 

Section 3.2                           Consistent with Past Practice.  Unless otherwise agreed by the Parties, and except to the extent otherwise required by applicable Law, each Tax Return described in Section 3.1 shall be prepared in a manner consistent with Past Practice.

 

Section 3.3                           Closing of Flowco Taxable Year.  Infrastructurco and Flowco shall use reasonable best efforts to close the taxable year of each Flowco Entity for all U.S. federal and state income tax purposes as of the end of the Distribution Date, to the extent permitted by applicable Law.

 

Section 3.4                           Carrybacks.  Except to the extent otherwise consented to by Infrastructurco or prohibited by applicable Law, Flowco shall cause each Flowco Entity to elect to relinquish, waive or otherwise forego the carryback of any loss, credit or other Tax Attribute from any Post-Distribution Period to any Pre-Distribution Period or Straddle Period (a “Carryback”).  In the event that a Flowco Entity is permitted under the preceding sentence to effect a Carryback (such Carryback, a “Permitted Carryback”), Infrastructurco shall cooperate with Flowco in seeking any corresponding Refund; provided, however, that Flowco shall indemnify and hold the Infrastructurco Entities harmless from and against any and all collateral Tax consequences resulting from or caused by such Permitted Carryback, including, without limitation, the loss or postponement of any benefit from the use of Tax Attributes generated by an Infrastructurco Entity if (a) such Tax Attributes expire unutilized, but would have been utilized but for such Carryback, or (b) the use of such Tax Attributes is postponed to a later taxable period than the taxable period in which such Tax Attributes would have been utilized but for such Carryback.

 

Section 3.5                           Tax Attributes.

 

(a)                                 Infrastructurco and Flowco shall, prior to any relevant Due Date, jointly determine in good faith the allocation of Tax Attributes arising in Pre-Distribution Periods and in existence immediately after the Effective Time between Infrastructurco Entities and Flowco Entities in accordance with applicable Law, including Treasury Regulations Sections 1.1502-

 

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9T(c), 1.1502-21, 1.1502-21T, 1.1502-22, 1.1502-79 and, if applicable, 1.1502-79A (and any applicable state, local and foreign Laws); provided, however, that:

 

(i)                                     earnings and profits shall be allocated in accordance with Code Section 312(h) and Treasury Regulations Section 1.312-10(a);

 

(ii)                                  any earnings and profits allocated to any Flowco Entity shall include both non-previously taxed income within the meaning of Code Section 959(c)(3) and previously taxed income (as defined in Code Section 959(a));

 

(iii)                               Infrastructurco shall be entitled to make any determination as to (A) basis, and (B) valuation, and shall make such determination consistent with Past Practice, where applicable.

 

For the avoidance of doubt, any previously taxed income (as defined in Code Section 959(a)) in existence immediately after the Effective Time shall be allocated to the corporation to which such previously taxed income is attributable for U.S. federal income tax purposes (including any successor to such corporation). Infrastructurco and Flowco hereby agree to compute all Taxes for Post-Distribution Periods consistently with the determination of the allocation of Tax Attributes pursuant to this Section 3.5(a) unless otherwise required by a Final Determination.

 

(b)                                 To the extent that the amount of any Tax Attribute is later reduced or increased by a Taxing Authority or Tax Proceeding, such reduction or increase shall be allocated to the Party to which such Tax Attribute was allocated pursuant to Section 3.5(a), except to the extent otherwise required by applicable Law.

 

Section 3.6                           Treatment of Deductions Associated with Equity-Related Compensation.

 

(a)                                 From and after the Distribution Date, only the current or most recent employer of the relevant employee may claim any Tax deduction in respect of any equity award or other incentive compensation of such employee described in Section 4.03 (“Treatment of Outstanding Equity Incentive Awards”) of the Employee Matters Agreement, except to the extent otherwise required by applicable Law.

 

(b)                                 If, as a result of a Final Determination, an Infrastructurco Entity or Flowco Entity realizes a Tax Benefit from a deduction to which a Flowco Entity or Infrastructurco Entity, respectively, is entitled pursuant to Section 3.6(a), then Infrastructurco or Flowco, as the case may be, shall pay or cause to be paid to Flowco or Infrastructurco, respectively, an amount equal to the value of such Tax Benefit (determined on a with and without basis), such payment to be made promptly after filing the Tax Return on which such Tax Benefit is reflected.

 

Section 3.7                           Review Rights—Material Adverse Effect.  If a Tax Return prepared by an Infrastructurco Entity or a Flowco Entity pursuant to Section 3.1 takes a position that would reasonably be expected to materially adversely affect any Flowco Entity or any Infrastructurco Entity, respectively, the Party responsible for preparing such Tax Return under Section 3.1 shall deliver a draft of such Tax Return (or of the relevant portions of such Tax Return) to the non-preparing Party for its review and comment, such delivery to be made a reasonable amount of time prior to the Due Date (it being understood and agreed that in the case of any such Tax Return for U.S. federal Income Taxes or other material Taxes, “a reasonable amount of time” means at least thirty (30) days prior to the Due Date).  The Parties shall attempt to resolve any

 

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dispute regarding the preparation of such Tax Return through good faith negotiation before resorting to the dispute resolution procedures contained in Section 8.1.  In the event that any such dispute is not resolved prior to the Due Date, the Tax Return shall be timely filed and subsequently amended as necessary to reflect the resolution of such dispute.

 

Section 3.8                           Review Rights and Reimbursement—Taxes for Which Non-Preparing Party is Responsible.  If a Tax Return prepared by an Infrastructurco Entity or a Flowco Entity pursuant to Section 3.1 reflects Taxes for which Flowco or Infrastructurco, respectively, is responsible under Section 2.1, the Party responsible for preparing such Tax Return under Section 3.1 shall deliver a draft of such Tax Return (or of the relevant portions of such Tax Return), together with a written calculation of the amount of Taxes reflected thereon for which the non-preparing Party is responsible under Section 2.1, to the non-preparing Party for its review and comment, such delivery to be made a reasonable amount of time prior to the Due Date (it being understood and agreed that in the case of any such Tax Return for U.S. federal Income Taxes or other material Taxes, “a reasonable amount of time” means at least thirty (30) days prior to the Due Date).  The non-preparing Party shall pay the preparing Party the amount of Taxes for which the non-preparing Party is responsible under Section 2.1 at least two (2) business days before the Due Date for the payment of such Taxes (whether or not the non-preparing Party disputes such amount).  The Parties shall attempt to resolve any dispute regarding the preparation of such Tax Return or the amount of Taxes reflected thereon for which the non-preparing Party is responsible under Section 2.1 through good faith negotiation before resorting to the dispute resolution procedures contained in Section 8.1.  In the event that any such dispute is not resolved prior to the Due Date, the Tax Return shall be timely filed and subsequently amended as necessary to reflect the resolution of such dispute, and/or the preparing Party shall return to the non-preparing Party any amounts paid by the non-preparing Party but which are determined to be the responsibility of the preparing Party under Section 2.1, as applicable.

 

Section 3.9                           Refund Payments.  A Party that receives a Refund to which the other Party is entitled in whole or in part under Section 2.2 shall pay to the other Party the portion to which the other Party is entitled, net of any Taxes or other costs (other than Tax Return preparation expenses) incurred by the preparing Party in connection with the receipt or accrual of such Refund and attributable to such portion, within ten (10) days after (a) receipt of the Refund in cash or (b) the filing of the relevant Tax Return (in the case of a Refund that is a credit against payment of future Taxes).

 

Section 3.10                    Expenses.  Notwithstanding anything to the contrary herein, each Party shall bear its own expenses in preparing any Tax Return governed by Section 3.1.

 

Section 3.11                    German Tax Payment.  To the extent required by German law, SPX U.L.M. GmbH shall contribute cash to SPX Cooling Technologies Leipzig GmbH equal to the amount of the combined tax loss sustained by Infrastructurco Entities organized under German law.  In the event SPX U.L.M. GmbH contributes cash to SPX Cooling Technologies Leipzig GmbH pursuant to the previous sentence, Infrastructurco shall, at the same time, make a payment of equivalent amount to Flowco.

 

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ARTICLE IV
 TAX-FREE STATUS OF THE TRANSACTIONS

 

Section 4.1                           Representations and Warranties.

 

(a)                                 By Flowco.  Flowco hereby represents and warrants that the facts presented and the statements and representations made in the Tax Materials are true, correct and complete in all respects to the extent they relate to any Flowco Entity with respect to any period of time following the Effective Time.

 

(b)                                 By SPX.  SPX hereby represents and warrants that the facts presented and the statements and representations made in the Tax Materials are true, correct and complete in all respects to the extent they relate to either (i) any Infrastructurco Entity, whether preceding or following the Effective Time or (ii) any Flowco Entity with respect to any period of time preceding the Effective Time.

 

(c)                                  No Contrary Knowledge.  Each of SPX and Flowco represents and warrants that it knows of no fact (after due inquiry) that may adversely affect the Tax-Free Status of the Transactions.

 

(d)                                 No Contrary Plan.  Each of SPX and Flowco represents and warrants that neither it nor any of its Affiliates has any plan or intention to take any action, or to fail to take any action, in a manner that would be inconsistent with any fact presented or statement or representation made in the Tax Materials.

 

Section 4.2                           Prohibited Events.

 

(a)                                 From the Effective Time to the first day following the second anniversary of the Distribution, neither Flowco nor Infrastructurco may (each of the following actions and events, a “Prohibited Event”):

 

(i)                                     (A) with respect to Flowco, fail to cause to be continued the active conduct of the Flowco Business as conducted immediately prior to the Distribution, or (B) with respect to Infrastructurco, fail to cause to be continued the active conduct of the Infrastructurco Business as conducted immediately prior to the Distribution;

 

(ii)                                  voluntarily dissolve or liquidate (or take any other action that would be treated as a liquidation for U.S. federal income tax purposes);

 

(iii)                               (A) with respect to Flowco, cause or permit to occur any event (or series of events) involving the capital stock of Flowco, any assets of Flowco or any assets of any Flowco Entity, or (B) with respect to Infrastructurco, permit to occur any event (or series of events) involving the capital stock of Infrastructurco, any assets of Infrastructurco or any assets of any Infrastructurco Entity, in each case, that adversely affects, or could reasonably be expected to adversely affect, the Tax-Free Status of the Transactions;

 

(iv)                              (A) with respect to Flowco, cause or permit to occur any transaction or series of transactions (or any agreement, understanding or arrangement, within the meaning of Section 355(e) of the Code and the Treasury Regulations promulgated thereunder, to enter into a transaction or series of

 

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transactions), whether such transaction is supported by management or shareholders, is a hostile acquisition, or otherwise, that would, when combined with any other direct or indirect changes in stock ownership, result in a direct or indirect acquisition (within the meaning of Section 355(e) of the Code) of 40% or more of (1) the value of all outstanding shares of stock or (2) the total combined voting power of all outstanding shares of voting stock, in either case, of Flowco, as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction in such series, or (B) with respect to Infrastructurco, permit to occur any transaction or series of transactions (or any agreement, understanding or arrangement, within the meaning of Section 355(e) of the Code and the Treasury Regulations promulgated thereunder, to enter into a transaction or series of transactions), whether such transaction is supported by management or shareholders, is a hostile acquisition, or otherwise, that would, when combined with any other direct or indirect changes in stock ownership, result in a direct or indirect acquisition (within the meaning of Section 355(e) of the Code) of 40% or more of (1) the value of all outstanding shares of stock or (2) the total combined voting power of all outstanding shares of voting stock, in either case, of Infrastructurco, as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction in such series; or

 

(v)                                 (A) with respect to Flowco, take or permit to be taken by any Flowco Entity any other action that (1) would be inconsistent with any fact presented or statement or representation made in the Tax Materials or any representation, warranty or covenant contained herein or (2) adversely affects, or could reasonably be expected to adversely affect, the Tax-Free Status of the Transactions, or (B) with respect to Infrastructurco, take or permit to be taken by any Infrastructurco Entity any other action that (1) would be inconsistent with any fact presented or statement or representation made in the Tax Materials or any representation, warranty or covenant contained herein or (2) adversely affects, or could reasonably be expected to adversely affect, the Tax-Free Status of the Transactions;

 

provided, however, that the following actions shall not be taken into account for purposes of this Section 4.2(a) (and shall be excluded from the definition of “Prohibited Event”):

 

(vi)                              any repurchase by Flowco or by Infrastructurco of stock of Flowco or Infrastructurco, respectively, that (A) satisfies the requirements set forth in Section 4.05(1)(b) of Revenue Procedure 96-30, 1996-1 C.B. 696 (as in effect prior to the amendment of such Revenue Procedure by Revenue Procedure 2003-48, 2003-2 C.B. 86), (B) could not reasonably be expected to adversely affect the Tax-Free Status of the Transactions, and (C) is not an acquisition that would be taken into account in applying Section 355(e)(2)(A)(ii) of the Code;

 

(vii)                           any adoption of, or issuance of stock pursuant to, a shareholder rights plan that is described in or is similar to the shareholder rights plan described in Revenue Ruling 90-11, 1990-1 C.B. 10; and

 

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(viii)                        any issuance of stock that satisfies Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulations Section 1.355-7(d).

 

(b)                                 Notwithstanding the general prohibition imposed by Section 4.2(a), either Party may cause or permit to occur a Prohibited Event if (i) such Party has provided to the other Party an Unqualified Tax Opinion, in form and substance reasonably satisfactory to the other Party, that such Prohibited Event will not adversely affect the Tax-Free Status of the Transactions, (ii) such Party has received a private letter ruling from the IRS that such Prohibited Event will not adversely affect the Tax-Free Status of the Transactions, or (iii) the other Party has consented in writing to such Prohibited Event; provided, however, that, for the avoidance of doubt, a Party’s satisfaction of the conditions described in this Section 4.2(b) shall not affect such Party’s responsibility under Section 2.1 for any Taxes attributable to such Prohibited Event.  In determining whether an Unqualified Tax Opinion is satisfactory, the other Party may consider, among other factors, the appropriateness of any assumptions or representations supporting such Unqualified Tax Opinion and the strength of any reasoning contained therein.

 

Section 4.3                           Procedures Regarding Opinions and Rulings.

 

(a)                                 Neither Infrastructurco nor Flowco may seek any guidance from the IRS or any other Taxing Authority (whether written, verbal or otherwise) at any time concerning the Restructuring, the Flowco Asset Transfer, the Distribution or the Deconsolidation without the other Party’s prior written consent (which may not be unreasonably conditioned, delayed or withheld).  The Parties shall cooperate in good faith regarding any such request for guidance undertaken with such consent.

 

(b)                                 Each Party shall use its reasonable best efforts to comply with any reasonable request made by the other Party in connection with any attempt by such other Party to secure an Unqualified Tax Opinion regarding a Prohibited Event.

 

Section 4.4                           Protective Section 336(e) Elections.  Infrastructurco and Flowco shall make a protective election under Section 336(e) of the Code (and any similar election under state or local law) in accordance with Treasury Regulations Section 1.336-2(h) and (j) (and any applicable provisions under state and local law), and shall cooperate in the timely completion and/or filings of such elections and any related filings or procedures (including filing or amending any Tax Returns to implement a protective election that becomes effective) and the execution of any necessary agreements, with respect to (i) the Distribution and (ii) such qualified stock dispositions of Subsidiaries of Flowco as Flowco shall designate resulting from the asset sales deemed to occur pursuant to the protective elections under Section 336(e) of the Code contemplated by this Section 4.4.  This Section 4.4 is intended to constitute a binding, written agreement to make an election under Section 336(e) of the Code with respect to the Distribution.  To the extent the protective elections contemplated by this Section 4.4 result in Tax Benefits, Section 2.4 contains a payment obligation with respect to such Tax Benefits in certain cases.

 

Section 4.5                           Consistent Reporting.  Each of Infrastructurco and Flowco covenants and agrees that it will not take, and will cause its respective Affiliates to refrain from taking, any position on any Tax Return, in connection with any Tax Proceeding or otherwise that is

 

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inconsistent with the Tax-Free Status of the Transactions or the IRS Ruling, notwithstanding any other provision herein, except to the extent otherwise required pursuant to a Final Determination.

 

ARTICLE V
 TAX PROCEEDINGS

 

Section 5.1                           Notice.  Within ten (10) days after a Party or any of its Affiliates becomes aware of the commencement of a Tax Proceeding that (a) reasonably could be expected to have a material adverse effect on the other Party, (b) relates to Taxes or a Refund for which the other Party is responsible or to which the other Party is entitled under ARTICLE II, or (c) relates to Spin-Off Taxes or a Prohibited Event, such Party shall notify the other in writing of such Tax Proceeding, and shall promptly forward or make available copies of any written communications with a Taxing Authority in connection with such Tax Proceeding.  Any failure of a Party to comply with the preceding sentence shall not relieve the other Party of any indemnification obligation hereunder except to the extent that such Party is actually prejudiced by such failure.

 

Section 5.2                           Conduct.

 

(a)                                 General Rule.  To the extent feasible and requested by either Party, control of the conduct of any Tax Proceeding described in Section 5.1 shall be divided between the Parties in accordance with each Party’s economic interest in such Tax Proceeding, taking into account any indemnification obligations and the other provisions of this Agreement (e.g., each Party shall be entitled to control the conduct of any aspects of such Tax Proceeding that relate primarily to Taxes for which such Party is responsible under Section 2.1).  The Parties shall cooperate in good faith regarding any procedural or other aspects of such Tax Proceeding that do not implicate the economic interests of one Party disproportionately, and any disputes regarding the application of this Section 5.2(a) shall be resolved in accordance with Section 8.1.

 

(b)                                 Alternative Procedure.  If division of control of a Tax Proceeding as contemplated by Section 5.2(a) is not feasible, the Party whose economic interest in such Tax Proceeding is greater, taking into account any indemnification obligations and the other provisions of this Agreement, shall be entitled (but not obligated) to control the conduct of such Tax Proceeding.

 

(c)                                  Notice and Participation Rights.  The Party that controls the conduct of any Tax Proceeding (or portion thereof) pursuant to Section 5.2(a) or Section 5.2(b) shall, to the extent requested by the other Party:

 

(i)                                     keep the other Party reasonably and timely informed regarding such Tax Proceeding (or portion thereof);

 

(ii)                                  permit the other Party to attend any formally scheduled meetings with a Taxing Authority in relating to such Tax Proceeding (or portion thereof); and

 

(iii)                               not settle such Tax Proceeding (or portion thereof) without the prior written consent of the other Party, which consent shall not be unreasonably withheld, delayed or conditioned.

 

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(d)                                 Power of Attorney.  Infrastructurco shall execute and deliver to Flowco (or Flowco’s designee) any power of attorney or other similar document reasonably requested by Flowco in connection with any Tax Proceeding regarding a Flowco Prohibited Event.

 

ARTICLE VI
 COOPERATION

 

Section 6.1                           General Cooperation.  Each Party shall, and shall cause its Affiliates to, provide such cooperation or information relating to any Tax, Refund, Tax Return or Tax Proceeding as the other Party (or any of its Affiliates) reasonably requests in writing, including by making its employees, advisors, and facilities available, without charge, on a reasonable and mutually convenient basis.

 

Section 6.2                           Retention of Records.  Each Infrastructurco Entity and Flowco Entity shall retain or cause to be retained all Tax Returns, schedules and work papers, and all material records or other documents relating thereto in their possession, until sixty (60) days after the expiration of the applicable statute of limitations (including any waivers or extensions thereof) of the taxable periods to which such Tax Returns and other documents relate or until the expiration of any additional period that either Party reasonably requests, in writing, with respect to specific material records and documents. A Party (or Affiliate thereof) intending to destroy any material records or documents shall provide the other Party with reasonable advance notice and the opportunity to copy or take possession of such records and documents.  Either Party shall notify the other in writing of any waivers or extensions of the applicable statute of limitations that may affect the period for which the foregoing records or other documents must be retained.

 

ARTICLE VII
 INDEMNIFICATION

 

Section 7.1                           Survival.  Except as otherwise contemplated by this Agreement, all covenants, agreements, indemnities, representations and warranties contained herein shall survive the Effective Time and shall remain in full force and effect thereafter.

 

Section 7.2                           Indemnification by Infrastructurco.  Infrastructurco shall indemnify and hold the Flowco Entities harmless from and against, without duplication, all Taxes for which Infrastructurco is responsible pursuant to Section 2.1(a), and any reasonable out-of-pocket costs or expenses related thereto (excluding any expenses governed by Section 3.10).

 

Section 7.3                           Indemnification by Flowco.  Flowco shall indemnify and hold the Infrastructurco Entities harmless from and against, without duplication, all Taxes for which Flowco is responsible pursuant to Section 2.1(b), and any reasonable out-of-pocket costs or expenses related thereto (excluding any expenses governed by Section 3.10).

 

Section 7.4                           Flowco Gross-Up Obligation.  If Flowco makes an indemnity or reimbursement payment to any Infrastructurco Entity attributable to any Flowco Prohibited Event, such indemnity or reimbursement payment shall be increased to take into account any Taxes of such Infrastructurco Entity resulting from the receipt of such indemnity or reimbursement payment.  For this purpose, the amount of such Taxes shall be determined

 

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assuming that such Infrastructurco Entity is taxed at the highest applicable marginal rate then in effect and has no Tax Attributes.

 

Section 7.5                           Characterization of Indemnification and Reimbursement Payments.  For all Tax purposes, Infrastructurco and Flowco agree to treat any indemnification or reimbursement or other similar payment made hereunder (other than any payment of interest accruing after the Distribution Date) as an adjustment to the amount of cash transferred between Infrastructurco and Flowco in the Flowco Asset Transfer.

 

ARTICLE VIII
 MISCELLANEOUS

 

Section 8.1                           Dispute Resolution.  In the event of any dispute between the Parties as to any matter covered by this Agreement that cannot be timely resolved through good faith negotiation:

 

(a)                                 if the amount in dispute is less than $10,000,000, the Parties shall appoint a nationally-recognized independent public accounting firm or law firm to resolve such dispute; and

 

(b)                                 if the amount in dispute equals or exceeds $10,000,000, the Parties shall appoint a panel of three nationally-recognized independent public accounting firms and/or law firms to resolve such dispute by majority decision, unless the Parties mutually agree instead to resolve such dispute (i) under Section 8.1(a), (ii) by using the dispute resolution procedures set forth in the Separation Agreement, or (iii) in some other way.

 

The Parties agree that the resolution of such dispute pursuant to this Section 8.1 shall be final and conclusive and binding on the Parties and that any fees and expenses related to the resolution of such dispute shall be borne by the non-prevailing Party.

 

Section 8.2                           Tax Sharing Agreements.  Any Tax sharing, indemnification or similar agreement between an Infrastructurco Entity and a Flowco Entity (other than any such agreement entered into in connection with the Transactions) shall be terminated as of no later than the Effective Time and, after the Effective Time, no Infrastructurco Entity or Flowco Entity shall have any further rights or obligations under any such Tax sharing, indemnification or similar agreement.

 

Section 8.3                           Specific Performance.  The Parties agree that irreparable damage would occur in the event that the provisions of this Agreement were not performed in accordance with their specific terms.  Accordingly, it is hereby agreed that the Parties shall be entitled to (i) an injunction or injunctions to enforce specifically the terms and provisions hereof, (ii) provisional or temporary injunctive relief in accordance therewith in any Delaware Court, and (iii) enforcement of any such award of an arbitral tribunal or a Delaware Court in any court of the United States, or any other any court or tribunal sitting in any state of the United States or in any foreign country that has jurisdiction, this being in addition to any other remedy or relief to which they may be entitled.

 

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Section 8.4                           Interest.  Any amount not paid when due pursuant to this Agreement shall bear interest at a rate per annum equal to the then effective Prime Rate plus 2% (or the maximum legal rate, whichever is lower), 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 8.5                           Coordination with the Separation Agreement and Other Ancillary Agreements.  This Agreement constitutes part of a more comprehensive agreement between the Parties, the other provisions of which are contained in the Separation Agreement and the other Ancillary Agreements.  Any general provision contained in the Separation Agreement (e.g., the provisions of Section 1.2 and ARTICLE X thereof) shall apply to this Agreement, mutatis mutandis, as though included herein, except to the extent the subject matter of such provision is expressly provided for herein.  In the event of any conflict between this Agreement and the Employee Matters Agreement regarding employee compensation or benefits matters, the Employee Matters Agreement shall control.

 

Section 8.6                           Effective Date.  This Agreement shall become effective only upon the occurrence of the Distribution.

 

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

 

 

	
SPX CORPORATION
    	
 
    
	
By
    	
/s/ Stephen A. Tsoris
    	
 
    
	
Name: Stephen A. Tsoris
    	
 
    
	
Title: Vice President, Secretary and General   Counsel
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
SPX FLOW, INC.
    	
 
    
	
By
    	
/s/ Stephen A. Tsoris
    	
 
    
	
Name: Stephen A. Tsoris
    	
 
    
	
Title: Vice President and Secretary
    	
 
    

 

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