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).
(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:
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
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
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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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 a