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Distribution Agreement - Type D

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Distribution Agreement - Type D Powered By Docstoc
					This document sets forth a D type distribution whereby a parent intends to distribute to
its shareholders all of the outstanding stock of its subsidiary, thereby terminating the
parent-subsidiary relationship. This agreement sets forth the terms, provisions and
covenants governing the distribution of stock. As drafted, the parent agrees to
capitalize the subsidiary with equity and the subsidiary will become the obligor or
guarantor on certain indentified industrial revenue bonds. This sample agreement
contains both standard clauses but can be modified and customized to ensure that the
understandings of the parties are properly set forth.
                            "D" Type - Distribution Agreement
    This Distribution Agreement (this "agreement"), dated as of _________[date], by and between (Parent)
Corporation, a Delaware corporation and (Subsidiary) Corporation, a Delaware corporation and, as of the date of
this agreement, a wholly owned subsidiary of (Parent).

                                                        Recitals

    (Parent) desires to separate its businesses into independent companies in transactions in one of which (Parent)
intends to distribute to its shareholders all of the outstanding capital stock of (Subsidiary) at the date and time of
such distribution, terminating the parent-subsidiary relationship that has existed between the two companies.

    (Parent) and (Subsidiary) have determined that it is necessary and desirable to set forth certain agreements that
will govern certain matters relating to the Distribution.

   Therefore, in consideration of the mutual agreements, provisions and covenants contained in this agreement, the
parties to it agree as follows:

                                                        Article I.

                                                       Definitions

   1.1. "Action" means any action, suit, arbitration, inquiry, proceeding or investigation by or before any court, any
governmental or other regulatory or administrative agency or commission or any arbitration tribunal.

   1.2. "Administrative services agreement" means the administrative services agreement dated the date of this
agreement and entered into between (Parent) and (Subsidiary).

   1.3. "Affiliate" means the term "affiliate" as defined in Regulation 12b-2 under the Exchange Act.

   1.4. "Agent" means _________ Bank, as distribution agent.

   1.5. "Ancillary agreements" means the tax sharing agreement, the administrative services agreement and any
other agreement entered into between the parties to this agreement on or prior to the distribution date, the terms of
which are to be effective after the distribution date.

   1.6. "Code" means the Internal Revenue Code of 1986, as amended.

   1.7. "Commission" means the Securities and Exchange Commission.

   1.8. "(Parent) board" means the board of directors of (Parent).

   1.9. "(Parent) stock" means the class A common stock and class B common stock, both without par value, of
(Parent).

   1.10. "(Parent) Subsidiary" means any subsidiary of (Parent) other than (Subsidiary) or any subsidiary of it.

    1.11. "Distribution" means the distribution to holders of (Parent) stock of the shares of (Subsidiary) common
stock owned by (Parent) on the distribution date.

   1.12. "Distribution date" means the close of business on the date determined by the (Parent) board (or a duly
authorized committee of it) as of which the distribution shall be effected.
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    1.13. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, or any successor
legislation.

   1.14. "Exchange Act" means the Securities Exchange Act of 1934, as amended.

   1.15. "Form 10" means the registration statement on Form 10 (and any amendment thereto, whether on Form 8
or otherwise) filed by (Subsidiary) with the Commission to effect the registration of (Subsidiary)'s common stock
pursuant to the Exchange Act.

    1.16. "(Subsidiary) common stock" means the class A common stock and class B common stock, both without
par value, of (Subsidiary).

   1.17. "(Subsidiary)" means any subsidiary of (Parent) or (Subsidiary) that, effective as of the distribution date or
otherwise in connection with the distribution, will be, or is contemplated to be, a subsidiary of (Subsidiary), and any
other subsidiary of (Subsidiary) which may be later organized or acquired.

   1.18. "Information statement" means the information statement to be sent to the holders of (Parent) Stock in
connection with the distribution.

    1.19. "Insurance proceeds" means those monies (i) received by an insured from an insurance carrier, or (ii) paid
by an insurance carrier on behalf of the insured, in either case net of any applicable premium adjustments (including
reserves), retrospectively rated premium adjustments, deductibles, retentions, or costs paid by such insured.

   1.20. "IRS" means the Internal Revenue Service.

   1.21. "Liabilities" means any and all debts, losses, liabilities, claims, damages, obligations, payments, costs and
expenses, absolute or contingent, mature or not mature, liquidated or un-liquidated, accrued or un-accrued, known or
unknown, whenever arising (unless otherwise specified in this agreement), including all attorney's fees, costs and
expenses relating to them, and including, without limitation, those debts, losses, liabilities, claims, damages,
obligations, payments, costs and expenses, arising under any law, rule, regulation, action, threatened action, order or
consent decree of any governmental entity or any award of any arbitrator of any kind, and those arising under any
contract, commitment or undertaking.

   1.22. "NASDAQ" means the National Association of Securities Dealers Automated Quotation System.

   1.23. "Phantom units" means any phantom stock unit granted under the (Parent) Corporation phantom stock plan.

   1.24. "Record date" means the close of business on the date to be determined by the (Parent) board (or a duly
authorized committee of it) as the record date for the distribution.

   1.25. "Stock option" means any stock option granted under the (Parent) Corporation Stock Option Plan.

    1.26. "Subsidiaries" means, unless otherwise indicated, direct and indirect subsidiaries of an entity, including any
partnership or other business entity in which the applicable company or one or more subsidiaries have a majority of
the voting interest of the governing body of such partnership or entity.

   1.27. "Tax sharing agreement" means the tax sharing agreement, dated the date of this agreement, entered into
between (Parent) and (Subsidiary).




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                                                       Article II.

                                                    The Distribution

    2.01. The Distribution. On or prior to the distribution date, (Parent) will deliver to the agent for the benefit of
holders of record of (Parent) stock on the record date stock certificates, endorsed by (Parent) in blank, representing,
in the aggregate, one share of (Subsidiary) class A common stock for every two shares of (Parent) class A common
stock and one share of (Subsidiary) class B common stock for every two shares of (Parent) class B common stock
outstanding on the record date, together with irrevocable instructions to distribute as promptly as possible the
appropriate number of such shares of (Subsidiary) common stock to each such holder or designated transferee or
transferees of such holder. (Subsidiary) and (Parent) shall provide to the agent any information required in order to
complete the distribution on the basis of one share of (Subsidiary) class A common stock for every two shares of
(Parent) class A common stock and one share of (Subsidiary) class B common stock for every two shares of (Parent)
class B common stock outstanding on the record date. (Parent) shall instruct the agent to distribute such (Subsidiary)
shares on or promptly after the distribution date to holders of record of (Parent) stock on the record date. All of the
shares of (Subsidiary) so distributed shall be fully paid, non-assessable and free of preemptive rights.

    2.02. Fractional Shares. No certificate or scrip representing fractional shares of (Subsidiary) common stock shall
be issued as part of the distribution. (Parent) shall direct the agent to (a) determine the number of whole shares and
fractional shares of class A and class B common stock of (Subsidiary) allocable to each holder of record of class A
and class B common stock of (Parent) as of the record date, (b) exchange all fractional shares of class A common
stock of (Subsidiary) so allocated for shares of class B common stock of (Subsidiary), (c) aggregate all fractional
shares of class B common stock (including fractional shares exchanged pursuant to clause (b) above) and sell the
whole shares of class B common stock obtained by this process on NASDAQ on the first day of regular trading of
(Subsidiary) class B common stock, and (d) cause to be distributed to each holder of record of (Parent) stock as of
the record date to which a fractional share shall be allocable, such holder's ratable share of the net proceeds of such
sale.

   2.03. Cooperation Prior to the Distribution.

       (a). (Parent) and (Subsidiary) shall prepare, and (Parent) shall promptly mail to the holders of (Parent) stock
   as of the record date, the information statement, which shall set forth appropriate disclosures concerning
   (Subsidiary), the distribution and other matters. (Parent) and (Subsidiary) shall also prepare, and (Subsidiary)
   shall file with the Commission, the Form 10, which shall include or incorporate by reference the information
   statement. (Parent) and (Subsidiary) shall use reasonable efforts to cause the Form 10 to become effective under
   the Exchange Act as soon as practicable.

       (b). (Parent) and (Subsidiary) shall cooperate in preparing, filing with the Commission and causing to
   become effective any registration statements or amendments of it which are required to reflect the establishment
   of, or amendments to, any employee benefit and other plans contemplated by the distribution.

       (c). (Parent) and (Subsidiary) shall take all such action as may be necessary or appropriate under the
   securities or blue sky laws of states or other political subdivisions of the United States, in connection with the
   transactions contemplated by this agreement and the ancillary agreements.

      (d). (Parent) and (Subsidiary) shall prepare and (Subsidiary) shall file an application to authorize the
   (Subsidiary) class B common stock for quotation on the NASDAQ.

    2.04. Conditions to Distribution. This agreement and the consummation of each of the transactions provided for
in this agreement shall be subject to approval of the (Parent) board or a duly designated Committee of it. The
(Parent) board (or such committee) shall in its discretion establish the record date and the distribution date and all
appropriate procedures in connection with the distribution, but in no event shall the distribution date occur prior to

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such time as all of the following have occurred: (i) the (Parent) board (or such committee) has formally approved the
distribution; (ii) the Form 10 shall have been declared effective by the Commission; (iii) rulings from the IRS shall
have been obtained and shall be in effect providing in substance that the distribution will be a tax-free "spin-off"
under Section 355 of the Code; (iv) the (Subsidiary) class B common stock shall have been authorized for quotation
on the NASDAQ; and (v) the transactions contemplated by Sections 3.01, 3.02, 3.03, 3.04(a)(1), 3.05 and 3.06 shall
have been consummated in all material respects; provided that the satisfaction of such conditions shall not create any
obligation on the part of (Parent) or any other party to this agreement to effect the distribution or in any way limit
(Parent)'s power of termination set forth in Section 6.9 or alter the consequences of any such termination from those
specified in such Section.

   2.05. Certain Post-distribution Transactions.

       (a). (Subsidiary) shall, and shall cause each (Subsidiary) subsidiary to, comply with each representation and
   statement made, or to be made, to any taxing authority in connection with any ruling obtained, or to be obtained,
   by (Parent) and/or (Subsidiary), from any taxing authority with respect to the transactions contemplated by this
   agreement.

       (b). Unless (Parent) waives such requirement, during the three year period following the distribution date,
   (Subsidiary) shall obtain a favorable opinion of legal counsel or other tax advisor, which opinion shall be
   reasonably acceptable to (Parent), or shall receive a favorable supplemental tax ruling from the IRS before it (i)
   makes a material disposition, by means of a sale or exchange of assets or capital stock, a distribution to
   stockholders or otherwise, of any assets of (Subsidiary) or a (Subsidiary) subsidiary, (ii) repurchases or issues
   any (Subsidiary) capital stock (other than repurchases from former participants in the (Parent) Corporation
   Employee Stock Ownership Plan), (iii) enters into any financing arrangement with (Parent), or (iv) liquidates or
   merges into another company where (Subsidiary) is not the surviving entity.

      (c). (Parent) shall from time to time after the distribution date, and without additional consideration, execute
   such deeds, assignments and other instruments of conveyance as may be necessary or advisable to transfer or
   confirm legal, record ownership of assets (both real and personal) used by (Subsidiary) and the (Subsidiary)
   subsidiaries in their businesses to or in (Subsidiary) and the (Subsidiary) subsidiaries.

      (d). (Parent) and (Subsidiary) may from time to time find it desirable to combine and/or coordinate the
   purchase of various types of insurance from third party insurers. Should (Parent) and (Subsidiary) desire to
   combine and/or coordinate the purchase of insurance, it shall be done in such a way that is beneficial to both
   parties and would require each party to hold each other harmless from any and all liabilities of whatever type that
   might arise out of the respective party's operations.

                                                       Article III.

                                        Transactions Relating to the Distribution

   3.01. Capitalization.

      (a). As of the distribution date, or as soon as possible after, (Subsidiary) will become the obligor or guarantor,
   as applicable, of the industrial revenue bonds identified in Exhibit A, to this agreement, replacing (Parent) in
   such capacity.

       (b). (Parent) will capitalize (Subsidiary) with $_____ million of equity effective as of _________[date]. This
   capitalization takes into account the fact that (Subsidiary) will draw down a $_____ million term loan and will
   assume liability for the industrial revenue bonds identified in Exhibit A. As a part of this capitalization
   calculation, all intercompany account balances between (Parent) and (Subsidiary) for transactions occurring prior
   to_________[date] shall be forgiven. All (Subsidiary) related intercompany transactions occurring

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   after _________[date], and on or prior to the distribution date, shall be for the account of (Subsidiary), provided
   that all intercompany account transactions occurring during such period shall be settled by a payment in cash on
   or shortly after the distribution date.

      (c). (Subsidiary) shall assume liability for all of the industrial revenue bonds identified in Exhibit A, and
   indemnifies (Parent) and holds (Parent) harmless from all liabilities resulting from them pursuant to the
   provisions of Article IV.

    3.02. Satisfaction of Any Claims Against (Parent). (Subsidiary) agrees that, except as provided in the tax sharing
agreement, the making of the capital contribution described in Section 3.01 by (Parent) shall be in complete
satisfaction of any claim which (Subsidiary) or any (Subsidiary) subsidiary might otherwise have against (Parent) as
its parent or shareholder by reason of dividends or tax benefits paid or made available to (Parent) by (Subsidiary)
and the (Subsidiary) subsidiaries at any time prior to the distribution.

   3.03. Ancillary Agreements. On or prior to the date of this agreement, (Parent) and (Subsidiary) shall execute
and deliver each ancillary agreement to which it is a party.

   3.04. Employee Benefit Plans.

        (a).

            (1). (Subsidiary) shall establish a long-term incentive plan in the form attached hereto as Exhibit B (the
        "Long-Term Incentive Plan") to become effective as of the distribution date. (Parent) shall approve such plan
        as the sole shareholder of (Subsidiary). (Subsidiary) and the (Subsidiary) subsidiaries shall be solely
        responsible for all liabilities and obligations however arising under the Long-Term Incentive Plan and
        (Parent) shall have no obligations or liabilities under them at any time. (Subsidiary) shall issue "replacement"
        stock options, as described below, to all (Subsidiary) employees who shall hold outstanding and unexercised
        stock options immediately prior to the distribution date.

            (2). (Subsidiary) shall grant replacement options to purchase class A common stock of (Subsidiary) to the
        following individuals:

   Name                                                                                      Number

   ....................................................................................... .............................................................................................
   ....................................................................................... ..............................................................................................
   ....................................................................................... ..............................................................................................
   ....................................................................................... ..............................................................................................
   ....................................................................................... ..............................................................................................


            The exercise price of such options shall be established by apportioning the exercise price of each stock
        option, based upon the relative market values at the time of the distribution, among the common stock of
        (Subsidiary), _________ and (Parent) Energy Company ("Energy"). The portion of such stock option
        exercise price allocated to (Subsidiary) shall be multiplied by two (to provide for the one-for-two distribution
        ratio of (Subsidiary) common stock for (Parent) common stock) and shall represent the exercise price of the
        applicable (Subsidiary) stock option. (Parent) will calculate the adjusted exercise price and will promptly
        advise (Subsidiary), which adjusted exercise price shall be binding on (Subsidiary).

         (3). All other employees of (Subsidiary) who now hold stock options shall have their stock options
     replaced by options to purchase class A common stock of (Subsidiary) by (1) determining the equity value
     immediately following the distribution that the option holders have in their current shares under option, and
     (2) setting a new option exercise price in the new stock options to purchase (Subsidiary) class A common
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       stock (after consideration of the one-for-two distribution ratio) such that the total equity value in the option
       holder's existing (Parent) stock options immediately following the distribution is maintained in the new
       options. If the per share market price of the (Subsidiary) common stock is less than the option holder's post-
       distribution equity in each share of (Parent) common stock subject to exercise (after adjusting for the one-for-
       two distribution ratio) the exercise price will be set at approximately $1 per share and options to purchase
       sufficient additional shares of common stock of (Subsidiary) will be granted, also at an exercise price of
       approximately $1 per share, as necessary to permit each option holder to maintain the equity —he has in h—
       options to purchase (Parent) common stock.

           (4). For purposes of determining equity value of each option holder referenced in Section 3.04 (a)(3)
       immediately following the Distribution, the exercise price of a current share of (Parent) common stock
       subject to an option will be subtracted from the sum of the average trading values of the share prices of (A)
       Energy, (B) _________, and (C) one-half of (Subsidiary) (to account for the one-for-two distribution ratio)
       over a short period of time (e.g., 30 days) following the distribution. For purposes of determining the market
       value of (Subsidiary) common stock to compute (i) the exercise price and (ii) possibly an additional number
       of shares subject to stock options, the same period of time (e.g., 30 days) will be used.

       (b). Prior to the date hereof, (Parent) established its Flexible Benefits Plan to provide medical insurance (the
   "Welfare Benefit Plan") to current, former and future employees (and their dependents and beneficiaries) of
   (Parent) and the (Parent) subsidiaries (collectively, the "(Parent) beneficiaries"), including to the current, former
   and future employees (and their dependents and beneficiaries) of (Subsidiary) and the (Subsidiary) subsidiaries
   (collectively, the "(Subsidiary) beneficiaries"). (Parent) has, prior to the distribution date, established a trust fund
   (the "Welfare Trust Fund") for the purpose of funding the benefits provided by the Welfare Benefit Plan. The
   Welfare Trust Fund has been written and established in a manner designed to satisfy the conditions for
   qualification as an organization exempt from federal income tax under Section 501(c)(9) of the Code. (Parent)
   shall transfer to (Subsidiary) and (Subsidiary) shall assume responsibility for the Welfare Benefit Plan and the
   Welfare Trust Fund.

        (c). Prior to the date of this agreement, [Partnership], a partnership owned _____% by (Subsidiary),
    established its Savings and Investment Plan (the "SIP Plan") and (Parent) established its Profit Based Thrift Plan
    (the "Thrift Plan"). The Thrift Plan contains funds attributable to certain individuals who will become employees
    of (Subsidiary) and the (Subsidiary) subsidiaries. The SIP Plan contains such provisions as are necessary or
    reasonably appropriate to allow the transfer to it of assets held under the Thrift Plan on behalf of the SIP Plan
    participants. On the date which follows by at least 30 days the filings of IRS Forms 5310 by the Thrift Plan and
    the SIP Plan, (Parent) shall cause the trust established under the Thrift Plan (the "Thrift Plan Trust") to transfer to
    the trust established under the SIP Plan (the "SIP Plan Trust") assets in an amount equal to the value of the Thrift
    Plan account balances attributable to (Subsidiary) employees as of the applicable valuation date. Such assets
    shall consist of cash, stocks and bonds. The amount to be transferred pursuant to this paragraph shall be
    calculated and transferred as follows:
    (1) (Parent) shall make or cause to be made its best estimate of the aggregate account balances of participants
under the Thrift Plan of the SIP Plan participants as of the valuation date selected by (Parent) in compliance with the
requirements of the Thrift Plan;
    (2) As soon as practicable after such valuation date, (Parent) shall cause such estimated amount to be transferred
from the Thrift Plan Trust to the SIP Plan Trust;
    (3) As soon as practicable after such valuation date, (Parent) shall determine or cause to be determined the final
amount of the account balances of the SIP Plan Participants under the Thrift Plan Trust as of such valuation date;
    (4) As soon as practicable, (A) if the amount of such final account balances exceeds the amount previously
transferred pursuant to clause (2) of this section, (Parent) shall cause the Thrift Plan Trust to transfer to the SIP Plan
Trust assets equal to such excess, or (B) if the amount transferred pursuant to clause (2) of this section exceeds the
amount of such final balances, (Subsidiary) shall cause the SIP Plan Trust to transfer to the Thrift Plan Trust assets
equal to such excess; and


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    (5) (Subsidiary) shall cause all assets so transferred to the SIP Plan Trust to be allocated among the accounts of
the applicable participants in the SIP Plan in a manner such that the account balance of each applicable participant
under the SIP Plan as of the date of transfer shall be equal to such final account balance of such applicable
participants under the Thrift Plan.

       Nothing in this agreement shall require (Subsidiary) to maintain the SIP Plan for any period of time or impair
   the right of (Subsidiary) to amend or terminate the SIP Plan in accordance with its terms or applicable law.

       (d). Prior to the date hereof, (Parent) established a Supplemental Pension Plan which provides supplemental
   pension benefits for certain (Parent) employees, including certain (Subsidiary) employees. (Parent) shall transfer
   to (Subsidiary) and (Subsidiary) shall assume responsibility for the Supplemental Pension Plan, provided that
   (Subsidiary) shall have no responsibility for benefits under such plan for (Parent) employees who do not become
   (Subsidiary) employees on and after the distribution date.

          (e). Prior to the date hereof, (Parent) established the (Parent) Corporation Pension Plan (the "(Parent) Pension
     Plan") and [Partnership] established the [Partnership] Pension Plan (the "P Pension Plan"). The (Parent) Pension
     Plan contains funds attributable to certain employees of (Subsidiary) and (Subsidiary) subsidiaries. The P
     Pension Plan contains such provisions as are necessary or reasonably appropriate to allow the transfer to it of
     assets held under the (Parent) Pension Plan on behalf of the P Pension Plan participants. On the date which
     follows by at least 30 days the filings of IRS Forms 5310 by the (Parent) Pension Plan and the P Pension Plan,
     (Parent) shall cause the trust established under the (Parent) Pension Plan (the "plan trust") to divide the assets of
     the (Parent) Pension Plan in the same ratio that the projected benefit obligation for (Subsidiary) and (Subsidiary)
     subsidiary employees bears to the total projected benefits obligations for all participants in the (Parent)
     Corporation Pension Plan, and as so divided, to transfer such assets attributable to (Subsidiary) and (Subsidiary)
     Subsidiary employees to the P Pension Plan Trust. Such assets shall consist of cash, stocks and bonds. The
     amount to be transferred pursuant to this paragraph shall be calculated and transferred as follows:
     (i) (Parent) has made a calculation of the projected benefit obligation as of _________[date] for all participants
in the (Parent) Pension Plan. (Parent) shall also make or cause to be made its best estimate of the value of all assets
held by the (Parent) Pension Plan as of the valuation date selected by (Parent) in compliance with the requirements
of the (Parent) Pension Plan;
     (ii) As soon as practicable after such valuation date, (Parent) shall cause an estimated amount to be transferred
from the (Parent) Pension Plan Trust to the P Pension Plan Trust which bears the same ratio to the total estimated
value of (Parent) Pension Plan assets as the ratio of the projected benefit obligation for employees of (Subsidiary)
and the (Subsidiary) subsidiaries bears to the total projected benefit obligation;
     (iii) As soon as practicable after such valuation date, (Parent) shall determine or cause to be determined the final
apportionment of assets based on the final value of assets held in the (Parent) Pension Plan Trust as of such
valuation date and the projected benefit obligation as of _________[date];
     (iv) As soon as practicable thereafter, (A) if the amount of such final apportionment of assets exceeds the amount
previously transferred pursuant to clause (ii) of this section, (Parent) shall cause the (Parent) Pension Plan Trust to
transfer to the P Pension Plan Trust assets equal to such excess, or (B) if the amount transferred pursuant to clause
(ii) of this section exceeds the amount of such final balances, (Subsidiary) shall cause the P Pension Plan Trust to
transfer to the (Parent) Pension Plan Trust assets equal to such excess.

      Nothing in this agreement shall require (Subsidiary) to maintain the P Pension Plan for any period of time or
   impair the right of (Subsidiary) to amend or terminate the P Pension Plan in accordance with its terms or
   applicable law.

      (f). (Subsidiary) shall retain or assume, as the case may be, all obligations to all (Subsidiary) beneficiaries
   under the Welfare Benefit Plan and all obligations to SIP Plan, Pension Plan and Supplemental Pension Plan
   participants, whether arising before or after the distribution date, and shall indemnify and hold (Parent) harmless
   against any and all such liabilities. Expenses incurred in consummating the transactions and transfers described


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   in this section 3.04 shall be borne ratably by (Parent) and (Subsidiary), based upon the number of their respective
   employees.

       (g). (Parent) and (Subsidiary) shall, in connection with the transactions and transfers described in this section
   3.04 and at (Subsidiary)'s expense, cooperate in making any and all appropriate filings required under the Code
   or ERISA, and the regulations under them, and any applicable securities laws, and take all such action as may be
   necessary to cause such transactions and transfers to take place on or as soon as practicable after the distribution
   date.

       (h). As of the Distribution Date, (Subsidiary) and the (Subsidiary) subsidiaries shall assume or retain, as the
   case may be, sole responsibility for all liabilities and obligations, if any, of (Parent) and the (Parent) subsidiaries
   with respect to claims made by (Subsidiary) employees relating to any employer liability or obligation not
   otherwise provided for in this agreement, as well as with respect to any employee benefit or payment to a
   (Subsidiary) employee not otherwise provided for in this agreement. To the extent not otherwise provided in this
   agreement, (Parent) and (Subsidiary) shall take such action as is necessary to effect an adjustment to the books of
   (Parent) and of (Subsidiary) and of their respective subsidiaries so that, as of the distribution date, the prepaid
   expense balances and accrued employee liabilities with respect to any employee liability or obligation assumed
   or retained as of the distribution date by (Subsidiary) and the (Subsidiary) subsidiaries are appropriately reflected
   on their respective balance sheets as of the distribution date. To the extent that (Parent) or the (Parent)
   subsidiaries pay for any claim, expense, Liability or obligation in respect of a (Subsidiary) employee not
   otherwise provided for in this agreement, (Subsidiary) or the (Subsidiary) subsidiaries shall reimburse (Parent) as
   of the distribution date, to the extent not previously reimbursed.

      (i). Except as otherwise specifically provided in this Section 3.04, this agreement shall not affect any
   employee benefit plan, Welfare Benefit Plan or other compensation arrangement of (Parent) or the (Parent)
   subsidiaries in respect of any employees of (Parent) or the (Parent) subsidiaries who are not (Subsidiary)
   employees. Except as otherwise specifically provided, this agreement shall not affect any (Subsidiary) or
   (Subsidiary) subsidiary employee benefit plans, Welfare Benefit Plan or other compensation arrangements which
   (Subsidiary) or the (Subsidiary) subsidiaries have maintained on or before the distribution date, and (Parent)
   shall have no liability or obligations with respect to such plans or arrangements at any time. No provisions of this
   agreement shall be construed as a limitation on the right of (Parent), (Subsidiary) or any of their respective
   subsidiaries to amend such plans or terminate its participation in them and no provision of this agreement shall
   be construed to create a right in any employee or beneficiary of such employee under a plan which such
   employee or beneficiary would not otherwise have under the terms of the plan itself.

   3.05. The (Subsidiary) Board. (Subsidiary) and (Parent) shall take all actions which may be required to elect or
otherwise appoint, on or prior to the distribution date, the following persons as directors of (Subsidiary):

   .....................................................................................................................................................................................
   .....................................................................................................................................................................................
   .....................................................................................................................................................................................


    3.06. (Subsidiary) Certificate and Bylaws. Prior to the distribution date, (a) the board of directors of (Subsidiary)
shall (1) approve the Restated Certificate of Incorporation of (Subsidiary) and all amendments to it, substantially in
the form of Exhibit A to the Information Statement, to be in effect at the distribution date and shall file the same
with the Secretary of State of the State of Delaware and (2) adopt the bylaws of (Subsidiary) substantially in the
form of Exhibit B to the Information Statement, to be in effect at the distribution date, and (b) (Parent), as sole
shareholder of (Subsidiary), shall approve such Restated Certificate of Incorporation and all amendments to it.

   3.07. (Parent) Phantom Stock Plan. On or shortly after the distribution date, (Parent) shall transfer to (Subsidiary)
assets equal to the (Subsidiary) related equity Messrs. _________(who holds _________ units), _________(who

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holds _________ units) and _________(who holds _________ units) have in their respective phantom units as of the
time of the distribution. (Parent) shall advise (Subsidiary) of the amount of equity each such individual has in the
phantom units, which amounts shall be binding upon (Subsidiary). Except for the fact that (Parent) shall advise
(Subsidiary) of the adjusted base prices of the phantom units, (Subsidiary) shall have liability for, and shall
administer, all phantom units in accordance with the terms of the (Parent) Corporation Phantom Stock Plan (a copy
of which is attached as Exhibit —).

    3.08. Stock Transfer Agent. (Parent) currently acts as transfer agent and registrar for the class A common stock
of (Parent). Effective as of the distribution date, (Subsidiary) will assume the responsibility of acting as transfer
agent and registrar for the class A common stock of (Parent) (to be renamed (Parent) Energy Company after the
distribution date) and the class A common stock of (Subsidiary). (Subsidiary) shall comply with all applicable laws,
rules and regulations with regard to performing those functions. (Subsidiary) shall provide (Parent) with such
periodic reports as (Parent) may reasonably request regarding stock ownership of the (Parent) class A common
stock. (Parent) shall pay (Subsidiary) for providing such service in accordance with the terms of the administrative
services agreement.

    3.09. Industrial Revenue Bond. (Parent) agrees that on or before _________[date], it will make the principal
payment of approximately $_____, plus all accrued interest on it, all of which is payable under the lease and
agreement of _________[date], between (Parent) Corporation and the City of _________, _________. The
assignment of that lease and agreement shall otherwise remain in full force and effect.

                                                         Article IV.

                                                       Indemnification

     4.01. Indemnification by (Parent). Except as otherwise set forth in the tax sharing agreement, (Parent) shall
indemnify, defend and hold harmless (Subsidiary), each affiliate of (Subsidiary) and each of their respective
directors, officers and employees and each of the heirs, executors, administrators, personal representatives,
successors and assigns of any of the foregoing (the "(Subsidiary) indemnitees") from and against any and all
liabilities of the (Subsidiary) indemnitees arising out of or due to the failure or alleged failure of (Parent) or any of
its affiliates to pay, perform or otherwise discharge in due course any item set forth on Exhibit — to this agreement.

    4.02. Indemnification by (Subsidiary). Except as otherwise set forth in the tax sharing agreement, (Subsidiary)
shall indemnify, defend and hold harmless (Parent), each affiliate of (Parent) and each of their respective directors,
officers and employees and each of the heirs, executors, administrators, personal representatives, successors and
assigns of any of the foregoing (the "(Parent) indemnitees") from and against any and all liabilities of the (Parent)
indemnitees arising out of or due to the failure or alleged failure of (Subsidiary) or any of its affiliates to pay,
perform or otherwise discharge in due course any item set forth on Exhibit — to this Agreement.

    4.03. Limitations on Indemnification Obligations. The amount which any party (an "indemnifying party") is or
may be required to pay to any other party (an "indemnitee") pursuant to Section 4.01 or Section 4.02 shall be
reduced (including, without limitation, retroactively) by any insurance proceeds or other amounts actually recovered
by or on behalf of such indemnitee and actual cash reserves held by or for the benefit of such indemnitee, in
reduction of the related liability. If an indemnitee shall have received the payment required by this agreement from
an indemnifying party in respect of any liability and shall subsequently actually receive insurance proceeds or other
amounts in respect of such liability, then such indemnitee shall pay to such indemnifying party a sum equal to the
amount of such insurance proceeds or other amounts actually received (up to but not in excess of the amount of any
indemnity payment made under this Agreement). An insurer who would otherwise be obligated to pay any claim
shall not be relieved of the responsibility with respect to it, or, solely by virtue of the indemnification provisions of
this Agreement, have any subrogation rights with respect to it, it being expressly understood and agreed that no
insurer or any other third party shall be entitled to a "windfall" (i.e., a benefit they would not be entitled to receive in


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the absence of the indemnification provisions appearing in this agreement) by virtue of the indemnification
provisions of this Agreement.

   4.04. Procedure for Indemnification.

       (a). If an indemnitee shall receive notice or otherwise learn of the assertion by a person (including, without
   limitation, any governmental entity) who is not a party to this agreement or to any of the ancillary agreements of
   any claim or of the commencement by any such person of any action (a "third party claim") with respect to
   which an indemnifying party may be obligated to provide indemnification pursuant to this agreement, such
   indemnitee shall give such indemnifying party written notice of it promptly after becoming aware of such third
   party claim; the failure of any indemnitee to give notice as provided in this Section 4.04 shall not relieve the
   related indemnifying party of its obligations under this Article IV, except to the extent that such indemnifying
   party is prejudiced by such failure to give notice. Such notice shall describe the third party claim in reasonable
   detail and, if ascertainable, shall indicate the amount (estimated if necessary) of the liability that has been or may
   be sustained by such indemnitee.

        (b). An indemnifying party may elect to defend or to seek to settle or compromise, at such indemnifying
   party's own expense and by such indemnifying party's own counsel, any third party claim. Within 30 days of the
   receipt of notice from an Indemnitee in accordance with Section 4.04(a) (or sooner, if the nature of such third
   party claim requires it), the indemnifying party shall notify the related indemnitee if the indemnifying party
   elects not to defend or to seek to settle or compromise such third party claim, which election may be made only
   in the event of a good faith assertion by the indemnifying party that a claim was inappropriately tendered under
   Section 4.01 or 4.02. Unless an indemnifying party elects not to assume the defense of or to seek to settle or
   compromise a third party claim, such indemnifying party shall not be liable to such indemnitee under this article
   IV for any legal or other expenses subsequently incurred by such Indemnitee in connection with the defense of
   it; provided that if the defendants in any such claim include both the indemnifying party and one or more
   indemnitees, and in any indemnitee's reasonable judgment a conflict of interest between one or more of such
   indemnitees and such indemnifying party exists in respect of such claim, such indemnitees shall have the right to
   employ separate counsel to represent such indemnitees and in that event the reasonable fees and expenses of
   such separate counsel (but not more than one separate counsel reasonably satisfactory to the indemnifying party)
   shall be paid by such indemnifying party; and provided further that the indemnifying party shall not be entitled
   to settle such action or claim on behalf of the indemnitee without the prior written consent of the indemnitee,
   which consent shall not unreasonably be withheld. For the purposes of this agreement, such consent shall be
   deemed to be reasonably withheld only if such settlement would, in addition to the payment of money, impose an
   unreasonable and material burden on the indemnitee, including without limitation a consent judgment or
   injunction. If an indemnifying party elects not to defend, or elects not to seek to settle or compromise, a third
   party claim, such indemnitee may defend or seek to compromise or settle such third party claim.

       (c). If an indemnifying party chooses to defend or to seek to compromise or settle any third party claim, the
   related indemnitee, at its own expense, shall make available to such indemnifying party any personnel or any
   books, records or other documents within its control or which it otherwise has the ability to make available that
   are necessary or appropriate for such defense, settlement or compromise, and shall otherwise cooperate in the
   defense, settlement or compromise of such third party claims.

      (d). Notwithstanding anything else in this Section 4.04 to the contrary, neither an indemnifying party nor an
   indemnitee shall settle or compromise any third party claim unless such settlement or compromise contemplates
   as an unconditional term of it the giving by such claimant or plaintiff to the indemnitee or the indemnifying
   party, respectively, of a written release from all liability with respect to such third party claim.

      (e). Any claim on account of a liability which does not result from a third party claim shall be asserted by
   written notice given by the indemnitee to the related indemnifying party. Such indemnifying party shall have a
   period of 30 days after the receipt of such notice within which to respond in writing to it. If such indemnifying

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   party does not respond within such 30 day period, such indemnifying party shall be deemed to have rejected
   responsibility to make payment. If such indemnifying party does respond in writing within such 30 day period
   and rejects such claim in whole or in part, or in the event a claim is deemed to have been rejected, such
   indemnitee shall be free to pursue such remedies as may be available to such party under applicable law.

       (f). In addition to any adjustments required pursuant to Section 4.03, if the amount of any liability shall, at
   any time subsequent to the payment required by this agreement, be reduced by recovery, settlement or otherwise,
   the amount of such reduction, less any expenses incurred in connection with them, shall promptly be repaid by
   the indemnitee to the indemnifying party.

       (g). Upon the written demand of an indemnitee, an indemnifying party shall reimburse or advance funds to
   such indemnitee for all liabilities reasonably incurred by it in connection with investigating or defending any
   third party claim in advance of its final disposition; provided that such reimbursement need be made only upon
   delivery to the indemnifying party of an undertaking by such indemnitee to repay all amounts so reimbursed or
   advanced if it shall ultimately be determined that such Indemnitee is not entitled to indemnification under this
   Article IV or otherwise.

       (h). In the event of payment by an indemnifying party to any indemnitee in connection with any third party
   claim, such indemnifying party shall be subrogated to and shall stand in the place of such indemnitee as to any
   events or circumstances in respect of which such indemnitee may have any right or claim relating to such third
   party claim against any claimant or plaintiff asserting such third party claim or against any other person. Such
   indemnitee shall cooperate with such indemnifying party in a reasonable manner, and at the cost and expense of
   such indemnifying party, in prosecuting, in its name or in the name of the indemnitee, any subrogated right or
   claim.

   4.05. Remedies Cumulative. The remedies provided in this Article IV shall be cumulative and shall not preclude
assertion by any indemnitee of any other rights or the seeking of any and all other remedies against any
indemnifying party; provided that all remedies sought or asserted by an Indemnitee against an indemnifying party
with respect to a liability shall be limited by and be subject to the provisions of this Article IV.

    4.06. Survival of Indemnities. The obligations of each of (i) (Parent) on the one hand, and (ii) (Subsidiary), on
the other hand, under this Article IV, shall survive the sale or other transfer by it of any assets or businesses or the
assignment by it of any Liabilities, with respect to any loss of the other related to such assets, businesses or
Liabilities.

                                                        Article V.

                                                  Access to Information

     5.01. Access to Information. From and after the distribution date, (Parent) shall afford to (Subsidiary) and its
authorized accountants, counsel and other designated representatives reasonable access (including using reasonable
efforts to give access to persons or firms possessing information) and duplicating rights during normal business
hours to all records, books, contracts, instruments, computer data and other data and information (collectively,
"information") within (Parent)'s possession or under (Parent)'s direction or control relating to (Subsidiary), any
(Subsidiary) subsidiary, (Parent) or any (Parent) subsidiary, insofar as such access is reasonably required by
(Subsidiary) or any (Subsidiary) subsidiary. Similarly, (Subsidiary) shall afford to (Parent) and its authorized
accountants, counsel and other designated representatives reasonable access (including using reasonable efforts to
give access to persons or firms possessing information) and duplicating rights during normal business hours to
information within (Subsidiary)'s possession or under (Subsidiary)'s direction or control relating to (Parent), any
(Parent) subsidiary, (Subsidiary) or any (Subsidiary) subsidiary, insofar as such access is reasonably required by
(Parent). Information may be requested under this article V for, without limitation, audit, accounting, claims,
litigation and tax purposes, as well as for purposes of fulfilling disclosure and reporting obligations and for

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performing this agreement the ancillary agreements and the transactions contemplated hereby and thereby. Except as
otherwise provided herein, (Parent) and (Subsidiary) shall retain and keep confidential all information relating to the
other party. The confidentiality obligation contained in this agreement shall not apply to information which (i) is not
confidential at the time it is obtained by the party, (ii) becomes available to the party, through no fault of that party's
employees, agents, successors or assigns under this agreement, from a third party source having no requirement of
confidentiality to the other party to this agreement, (iii) falls into the public domain through no fault of the party, or
(iv) is required to be disclosed by law or to a governmental agency.

    5.02. Retention of Records. Except as otherwise agreed to in writing, each of (Parent) and (Subsidiary) shall
retain, and shall cause its subsidiaries to retain, for a period of at least seven years, all information relating to the
other and the other's subsidiaries; provided that after the expiration of such period, such information shall not be
destroyed or otherwise disposed of at any time, except as otherwise provided in the administrative services
agreement.

    5.03. Production of Witnesses. At all times from and after the distribution date, each of (Parent) and (Subsidiary)
shall use reasonable efforts to make available to the other upon written request, its and its subsidiaries' officers,
directors, employees and agents as witnesses to the extent that such persons may reasonably be required in
connection with any legal, administrative or other proceedings in which the requesting party may from time to time
be involved.

                                                         Article VI.

                                                       Miscellaneous

   6.01. Outside Auditors. For a period of five years after the distribution date, (Subsidiary) shall appoint a "Big
Eight" accounting firm to perform the audit of (Subsidiary's) annual financial statements.

    6.02. Complete Agreement; Construction. This agreement, including any schedules and exhibits and the ancillary
agreements and other agreements and documents referred to herein, shall constitute the entire agreement between
the parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter. Notwithstanding any other provisions in this agreement to the contrary,
in the event and to the extent that there shall be a conflict between the provisions of this agreement and the
provisions of the tax sharing agreement or the administrative services agreement, the provisions of the tax sharing
agreement or the administrative services agreement shall control.

   6.03. Survival of Agreements. Except as otherwise contemplated by this agreement, all covenants and
agreements of the parties contained in this agreement shall survive the distribution date.

    6.04. Expenses. Except as otherwise set forth in this agreement or any ancillary agreement, all costs and
expenses arising prior to the distribution date (whether or not then payable) in connection with the consummation of
the transactions contemplated by this agreement other than (i) the fees and expenses of any counsel to (Subsidiary),
(ii) costs incurred in connection with any financing arrangements entered into by (Subsidiary) or any of its
subsidiaries, and (iii) fees of the National Association of Securities Dealers, Inc. incurred with respect to the
authorization for quotation of the (Subsidiary) corporate stock, all of which shall be paid by (Subsidiary) shall be
paid by (Parent) to the extent that appropriate documentation concerning such costs and expenses shall be provided
to (Parent). Such costs and expenses shall include, without limitation, printing costs and other expenses related to
the preparation, printing and distribution of the information statement.

    6.05. Governing Law. This agreement shall be governed by and construed in accordance with the laws of the
State of Illinois, without regard to the principles of conflicts of laws of it.



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   6.06. Notices. All notices and other communications hereunder shall be in writing and shall be delivered by hand
or mailed by registered or certified mail (return receipt requested) to the parties at the following addresses (or at
such other addresses for a party as shall be specified by like notice) and shall be deemed given on the date on which
such notice is received:

   To (Parent):
   _______________________________

   To (Subsidiary):
   _______________________________


   6.07. Amendments. This agreement may not be modified or amended except by an agreement in writing signed
by both parties hereto.

    6.08. Successors and Assigns. This agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties and their respective successors and permitted assigns.

    6.09. Termination. This agreement may be terminated and the distribution abandoned at any time prior to the
distribution date by and in the sole discretion of the (Parent) board (or a duly authorized committee thereof) without
the approval of (Subsidiary), or of (Parent) shareholders. In the event of such termination, no party shall have any
liability of any kind to any other party except that expenses incurred in connection with the transactions
contemplated hereby shall be paid as provided in Section 6.04.

   6.10. No Third-Party Beneficiaries. Except for the provisions of Article IV relating to indemnitees, this
agreement is solely for the benefit of the parties to it and their respective affiliates and shall not be deemed to confer
upon third parties any remedy, claim, reimbursement, claim of action or other right in excess of those existing
without reference to this agreement.

    6.11. Titles and Headings. Titles and headings to sections in this agreement are inserted for the convenience of
reference only and are not intended to be part of or to affect the meaning or interpretation of this agreement.

    6.12. Legal Enforceability. Any provision of this agreement which is prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of it.
Any such prohibition or unenforceability shall not invalidate or render unenforceable such provision or remedies
otherwise available to any party to this agreement. Without prejudice to any rights or remedies otherwise available
to any party to this agreement, each party to this agreement acknowledges that damages would be inadequate
remedy for any breach of the provisions of this agreement and agrees that the obligations of the parties under this
agreement shall be specifically enforceable.

   In witness, the parties have caused this agreement to be duly executed as of the day and year first written above.

   [Exhibits omitted]

                                                                                                   (Parent) Corporation
                                                                                                        By: _________
                                                                                               (Subsidiary) Corporation
                                                                                                        By: _________




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DOCUMENT INFO
Description: This document sets forth a D type distribution whereby a parent intends to distribute to its shareholders all of the outstanding stock of its subsidiary, thereby terminating the parent-subsidiary relationship. This agreement sets forth the terms, provisions and covenants governing the distribution of stock. As drafted, the parent agrees to capitalize the subsidiary with equity and the subsidiary will become the obligor or guarantor on certain indentified industrial revenue bonds. This sample agreement contains both standard clauses but can be modified and customized to ensure that the understandings of the parties are properly set forth.
This document is also part of a package M&A Forms for your Business 6 Documents Included