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Assumption of Liabilities & Indemnity Agreement

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Exhibit 10(ii)


ASSUMPTION OF LIABILITIES

AND

INDEMNITY AGREEMENT

This Assumption of Liabilities and Indemnity Agreement (this "Agreement") is entered into as of December 31, 1996 by and between PRIMEX TECHNOLOGIES, INC., a Virginia corporation, having its executive offices at 10101 Ninth Street North, St. Petersburg, Florida 33716-3807 ("Primex"), and OLIN CORPORATION, a Virginia corporation, having its executive offices at 501 Merritt 7, Norwalk, Connecticut 06851 ("Olin") (Primex and Olin each being referred to as a "Party" and collectively as the "Parties").


WITNESSETH:
WHEREAS, Olin and Primex have entered into that certain Distribution Agreement dated as of December 30, 1996 concerning the spin-off of Primex from Olin (the "Distribution Agreement"); and


WHEREAS, Olin and Primex desire to allocate certain liabilities and obligations associated with their respective businesses;


NOW, THEREFORE, in consideration of the premises and of the mutual covenants hereinafter set forth, the Parties hereby agree as follows:


I. PRIMEX ASSUMPTION AND INDEMNITY. Primex shall solely assume, and shall indemnify and hold harmless Olin from and against:


A. All claims, damages, losses, liabilities, fines, penalties, costs and expenses (including reasonable attorneys' fees and disbursements) (collectively, "Liabilities") arising out of, associated with, or resulting from the activities, business, operations, assets, properties, conduct or status of Primex on or after the Effective Time (as defined in the Distribution Agreement) except for the matter described in Article II.B below;


B. All Liabilities associated with the matters, current sites and businesses described in Exhibit I, including, without limitation, those Liabilities in connection with the removal, remediation or control of environmental conditions at or associated with any of the sites identified therein.


C. All Liabilities arising out of, associated with, or resulting from the activities, business, operations, assets, properties, conduct or status of Olin's Aerospace and Ordnance Divisions (including their respective constituent Olin subsidiaries) prior to the Effective Time that are continued by Primex following the Distribution (as defined in the Distribution Agreement) except for the matter described in Article II.B below.


D. All Liabilities arising out of, associated with, or resulting from the activities, business, operations, assets, properties, conduct or status of the discontinued businesses and former sites related to Olin's Aerospace and Ordnance Divisions (including their respective constituent Olin subsidiaries) identified in Exhibit II, including, without limitation, Liabilities in


connection with the removal, remediation or control of environmental conditions at any of the sites identified thereby and except for those matters described in Article II.B and E below.


E. All Liabilities arising out of or resulting from or any of the agreements and guarantees identified in Exhibit III except with respect to the Partnership Agreement referred to in such Exhibit III only those Liabilities accruing on or after the date the partnership interest under such Partnership Agreement was transferred to Primex.


F. All Liabilities for employee benefits for which Primex is responsible pursuant to Article VI of the Distribution Agreement.


G. All Liabilities arising out of, in connection with, or related to any of the contracts with the U.S. Government, or any instruments or agreements related thereto, that Olin was obligated to guarantee pursuant to the novation of such contracts to Primex or its subsidiaries.


II. OLIN ASSUMPTION AND INDEMNITY. Olin shall solely assume, and shall indemnify and hold harmless Primex from and against:


A. All Liabilities arising out of, associated with, or resulting from the activities, business, operations, assets, properties, conduct or status of Olin on or after the Effective Time;


B. Civil settlements, monetary judgments and legal fees and costs (excluding without limitation obligations to fulfill the offset requirement), in each case incurred and paid after the Effective Time, all in connection with the Belgium Legal Matter described in Exhibit IV.


C. All other Liabilities arising out of, associated with, or resulting from the activities, business, operations, assets, properties, conduct or status of Olin prior to the Effective Time except for those described in Article I above.


D. All claims and Liabilities for employee benefits for which Olin is responsible pursuant to Article VI of the Distribution Agreement.


E. All Liabilities arising out of, associated with, or resulting from the activities, business, operations, assets, properties, conduct or status of Ravenna Army Ammunition Plant in Ravenna, Ohio and the Badger Army Ammunition Plant in Baraboo, Wisconsin, including without limitation close-out costs, unfunded pension costs, and unfunded retiree benefit cost.


F. All Liabilities arising out of or resulting from the Partnership Agreement referred to in Exhibit III hereto that accrued prior to the date the partnership interest arising under such Partnership Agreement was transferred to Primex.


III. INSURANCE MATTERS. The amount which any indemnifying Party is or may be required to pay to any indemnified Party hereunder shall be reduced (including, without limitation, retroactively) by any proceeds of insurance policies or other amounts actually recovered by or on behalf of such indemnified Party in reduction of the related Liability. If an indemnified Party shall have received the payment (an "Indemnity Payment") required by this Agreement from an indemnifying Party in respect of any Liability and shall subsequently actually receive proceeds of insurance policies or other amounts in respect of such Liability, then such indemnified Party shall pay to such indemnifying Party a sum equal to the amount actually received (up to but not in excess of the amount of any Indemnity Payment made hereunder). An insurer who would otherwise be


obligated to pay any claim shall not be relieved of the responsibility with respect thereto, or, solely by virtue of the indemnification provisions hereof, have any subrogation rights with respect thereto, it being expressly understood and agreed that no insurer or any other third party shall be entitled to a benefit they would not otherwise be entitled to receive in the absence of the indemnification provisions hereof by virtue of the indemnification provisions hereof.


IV. PROCEDURES FOR INDEMNIFICATION.


A. THIRD PARTY CLAIMS. If a claim or demand is made against an indemnified Party by any person who is not a party to this Agreement (a "Third Party Claim") as to which such indemnified Party is entitled to indemnification pursuant to this Agreement, such indemnified Party shall notify the indemnifying Party in writing, and in reasonable detail, of the Third Party Claim promptly (and in any event within 15 business days) after receipt by such indemnified Party of written notice of the Third Party Claim; provided, however, that failure to give such notification shall not affect the indemnification provided hereunder except to the extent the indemnifying Party shall have been actually prejudiced as a result of such failure (except that the indemnifying Party shall not be liable for any expenses incurred during the period in which the indemnified Party failed to give such notice). Thereafter, the indemnified Party shall deliver to the indemnifying Party, promptly (and in any event within 15 business days) after the indemnified Party's receipt thereof, copies of all notices and documents (including court papers) received by the indemnified Party relating to the Third Party Claim.


If a Third Party Claim is made against an indemnified Party, the indemnifying Party shall be entitled to participate in the defense thereof and, if it so chooses and acknowledges in writing its obligation to indemnify the indemnified Party therefor, to assume the defense thereof with counsel selected by the indemnifying Party; provided, however, that such counsel is not reasonably objected to by the indemnified Party. Should the indemnifying Party so elect to assume the defense of a Third Party Claim, the indemnifying Party shall not be liable to the indemnified Party for legal or other expenses subsequently incurred by the indemnified Party in connection with the defense thereof. If the indemnifying Party assumes such defense, the indemnified Party shall have the right to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the indemnifying Party, it being understood that the indemnifying Party shall control such defense. The indemnifying Party shall be liable for the fees and expenses of counsel employed by the indemnified Party for any period during which the indemnifying Party has failed to assume the defense thereof (other than during the period prior to the time the indemnified Party shall have given notice of the Third Party Claim as provided above). If the indemnifying Party so elects to assume the defense of any Third Party Claim, the indemnified Party shall cooperate with the indemnifying Party in the defense or prosecution thereof.


If the indemnifying Party acknowledges in writing its obligation to indemnify the indemnified Party for a Third Party Claim, then in no event will the indemnified Party admit any liability with respect to, or settle, compromise or discharge, any Third Party Claim without the indemnifying Party's prior written consent; provided, however, that the indemnified Party shall have the right to settle, compromise or discharge such Third Party Claim without the consent of the indemnifying Party if the indemnified Party releases the indemnifying Party from its indemnification obligation hereunder with respect to such Third Party Claim and such settlement, compromise or discharge would not otherwise adversely affect the indemnifying Party. If the indemnifying Party acknowledges in writing its obligation to indemnify the indemnified Party for a


Third Party Claim, the indemnified Party will agree to any settlement, compromise or discharge of a Third Party Claim that the indemnifying Party may recommend and that by its terms obligates the indemnifying Party to pay the full amount of the liability in connection with such Third Party Claim and releases the indemnified Party completely in connection with such Third Party Claim and that would not otherwise adversely affect the indemnified Party; provided, however, that the indemnified Party may refuse to agree to any such settlement, compromise or discharge if the indemnified Party agrees that the indemnifying Party's indemnification obligation with respect to such Third Party Claim shall not exceed the amount that would be required to be paid by or on behalf of the indemnifying Party in connection with such settlement, compromise or discharge.


Notwithstanding the foregoing, the indemnifying Party shall not be entitled to assume the defense of any Third Party Claim (and shall be liable for the fees and expenses of counsel incurred by the indemnified Party in defending such Third Party Claim) if the Third Party Claim seeks an order, injunction or other equitable relief or relief for other than money damages against the indemnified Party which the indemnified Party reasonable determines, after conferring with its counsel, cannot be separated from any related claim for money damages. If such equitable relief or other relief portion of the Third Party Claim can be so separated fro
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