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EXHIBIT 99.1
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT (this "Agreement") is made as of June 3, 1998
between ITT CORPORATION, a Nevada corporation ("ITT"), and ITT EDUCATIONAL
SERVICES, INC., a Delaware corporation (the "Company").
WHEREAS, ITT is a wholly-owned subsidiary of Starwood Hotels & Resorts
Worldwide, Inc., a Maryland corporation ("Starwood, Inc." and, together with
Starwood Hotels & Resorts, a Maryland real estate investment trust,
"Starwood");
WHEREAS, ITT is currently the owner of 22,500,000, or approximately 83%,
of the issued and outstanding shares of the common stock (the "Common Stock")
of the Company;
WHEREAS, ITT is offering and selling to the public by means of a
Registration Statement (File No. 333-46267) first filed with the Securities and
Exchange Commission ("SEC") on Form S-3 on February 13, 1998 (the "Registration
Statement") shares of the Common Stock (the "Offering"); and
WHEREAS, ITT (as the successor to ITT Industries, Inc., an Indiana
corporation formerly a Delaware corporation known as ITT Corporation) and the
Company are parties to (i) a Intercompany Agreement, dated as of December 19,
1994 (the "Intercompany Agreement"), (ii) an Employee Benefits and
Administrative Services Agreement, dated as of December 19, 1994 (the "Benefits
Agreement") and (iii) a Treasury Services and Credit Facilities Agreement,
dated as of August 15, 1994 (the "Treasury Agreement");
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Agreement hereby agree as follows:
1. Certain Definitions.
"Affiliate" of any Person means any other Person controlling, controlled
by or under common control with such first Person, where "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person whether through the ownership of voting securities,
contract or otherwise. Without limiting the generality of the foregoing,
Starwood is an Affiliate of ITT as of the date hereof.
"Designated Representatives" means each person designated by ITT pursuant
to paragraphs 3(a) and 3(b) hereof. The parties agree that as of the date
hereof the Designated Representatives are Xxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxxxxx
X. Xxxxxxx and Xxxxx X. Xxxxxxxxxx.
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"ITT Board Seats" means, at any time, the lesser of four or the number
equal to the product of (a) the authorized number of directors on the Board and
(b) a fraction, the numerator of which is the aggregate number of shares of
issued and outstanding shares of Common Stock held by the ITT Group (as defined
in paragraph 3(c)) and the denominator of which is the aggregate number of
issued and outstanding shares of Common Stock; provided, however, that if the
product of such calculation does not equal a whole number, the result shall be
rounded to the next highest whole number.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
2. Effectiveness of this Agreement. This Agreement shall take effect upon
the closing (the "Closing Date") of the sale of shares of Common Stock offered
by ITT pursuant to the Registration Statement.
3. Nomination of Members of Board of Directors; Nominating Committee.
(a) From and after the Closing Date, unless the prior written
consent of ITT is obtained, the Company covenants and agrees that it shall
take, or cause to be taken, all necessary or desirable actions, so that:
(i) subject to paragraph 3(d) below, the authorized number of
directors on the Company's board of directors (the "Board") shall not
exceed 10 and the authorized number of classes of directors shall not
exceed three;
(ii) subject to paragraph 3(d) below, the authorized number of
directors comprising the nominating committee, or any successor committee
which may be performing similar functions (the "Nominating Committee"),
of the Board shall not exceed four directors;
(iii) subject to paragraph 3(d) below, prior to each annual meeting
of the Company's stockholders, the Company shall cause to be nominated
for, and recommend election to, the Board the number of persons
designated by ITT equal to the ITT Board Seats minus the aggregate number
of Designated Representatives (A) who are then serving on the Board and
(B) whose terms are not expiring at such annual meeting of the Company's
stockholders; and
(iv) subject to paragraph 3(d) below, the Company shall cause two of
the Designated Representatives who serve on the Board to be appointed to
the Nominating Committee; provided, however, that at such time as the ITT
Board Seats equal (a) two, the Company shall only be required to cause
one of the Designated Representatives who serve on the Board to be
appointed to the Nominating Committee, and (b) one, the Company shall
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not be required to cause the Designated Representative who serves on the
Board to be appointed to the Nominating Committee.
(b) In the event that any of the Designated Representatives ceases to
serve as a member of the Board during his or her term of office, the Company
shall cause a person designated by ITT to fill the resulting vacancy on the
Board; provided, that, if causing a person designated by ITT to fill the
resulting vacancy on the Board would cause the number of Designated
Representatives serving on the Board to exceed the ITT Board Seats, the Company
shall have no obligation under this paragraph 3(b).
(c) The rights of ITT under this paragraph 3 shall terminate at such
time as ITT and its Affiliates (together with ITT, the "ITT Group") hold in the
aggregate less than 7.5% of the issued and outstanding shares of the Common
Stock; provided, however, that if the ITT Group sells, transfers, assigns,
pledges or otherwise disposes of, in the aggregate, 10% or more of the issued
and outstanding Common Stock to any one transferee (including any Affiliate of
such transferee), ITT Group's rights under this paragraph 3 may be assigned, in
whole but not in part, to any such transferee at the time of such transfer (the
transferee of such rights and its Affiliates, the "Rights Transferee"). The
extent of the rights of the Rights Transferee under this paragraph 3 shall be
determined solely by the number of issued and outstanding shares of Common
Stock received by the Rights Transferee from the ITT Group in such transfer.
Subject to paragraph 3(d) below, in connection with the transfer of rights to
the Rights Transferee, to the extent of the rights of the Rights Transferee,
the Company shall cause the person(s) designated by the Rights Transferee to be
appointed to the Board to fill any vacancy on the Board resulting from the
resignation of any Designated Representative. The rights of the Rights
Transferee under this paragraph 3 shall terminate at such time as the number of
shares of Common Stock received by transfer from the ITT Group and held by the
Rights Transferee constitutes in the aggregate less than 7.5% of the issued and
outstanding Common Stock.
(d) Notwithstanding anything to the contrary contained in this
paragraph 3, the Company shall have no obligation to take, or cause to be
taken, any action under paragraphs 3(a) or 3(b) hereof, if such action taken,
or caused to be taken, would or reasonably could, in the written opinion of
outside counsel to the Company, violate any of the Company's directors'
fiduciary duties.
4. No Transfer Restrictions.
(a) The Company covenants and agrees that it will not, without the
prior written consent of ITT, take, or cause to be taken, after the date
hereof, any action that has the effect of subjecting the ITT Group, or any
transferee (including any Affiliate of such transferee) from the ITT Group of
10% or more of the issued and outstanding Common Stock (a "Ten-Percent
Transferee") to any anti-takeover provision of the General Corporation Law of
the State of Delaware or of any other state, the Company's certificate of
incorporation or by-laws or any stockholder rights or similar plan adopted by
the Company to which the ITT Group is not currently subject, if such anti-
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takeover provision(s) would have the effect of significantly limiting or
restricting the free transferability of the Common Stock owned by the ITT Group
or any Ten-Percent Transferee or would significantly limit or restrict the
right of the ITT Group or any Ten-Percent Transferee to vote the shares of
Common Stock or would otherwise significantly adversely affect the value of the
shares of Common Stock currently owned by the ITT Group or any such shares of
Common Stock transferred to any Ten-Percent Transferee. In furtherance of the
foregoing covenant, the Company agrees to make any available elections, to
approve in advance any proposed transfers and to include provisions in any
stockholder rights or similar plans so as not to adversely affect the free
transferability or the voting rights of the Common Stock currently owned by the
ITT Group or any such shares of Common Stock transferred to any Ten Percent
Transferee or otherwise significantly adversely affect the value of the shares
of Common Stock currently owned by the ITT Group or any such shares of Common
Stock transferred to any Ten-Percent Transferee. The Company shall not take, or
cause to be taken, any action which would have the effect, directly or
indirectly, of subjecting the shares of Common Stock currently owned by the ITT
Group or any such shares of Common Stock transferred to any Ten-Percent
Transferee to any restriction, limitation or provision of law that the other
holders of Common Stock are not subject.
(b) The obligations of the Company under this paragraph 4 shall
terminate at such time as the ITT Group holds in the aggregate less than 10%
of the issued and outstanding shares of Common Stock.
5. Regulatory Approvals.
(a) If any sale, transfer, assignment, pledge or other disposition of
shares by any member of the ITT Group would cause a change in ownership or
control of the Company or any of its ITT Technical Institutes under any of the
laws, regulations and/or standards of the U.S. Department of Education, the
state education authorities that regulate the Company's ITT Technical
Institutes or the accrediting commissions that accredit the Company's ITT
Technical Institutes (collectively, the "Regulators"), ITT shall give written
notice to the Company of the date of such sale, transfer, assignment, pledge or
other disposition (the "Transfer Date") at least 120 days prior to the proposed
Transfer Date. Promptly upon receipt of such notice, the Company shall take,
or cause to be taken, all actions, and do, or cause to be done, all things,
necessary, proper or advisable under applicable laws and regulations to obtain
as promptly as practicable all the required prior approvals from such
Regulators prior to the Transfer Date; provided, however, to the extent that
any Regulator's approval is not obtained prior to the Transfer Date or is not
required prior to the Transfer Date, the Company's obligation to obtain such
Regulator's approval shall continue after the Transfer Date until such time as
such Regulator's approval is obtained. No member of the ITT Group shall make
such sale, transfer, assignment, pledge or other disposition until the Company
receives all of the required prior approvals. ITT (as to itself and on behalf
of the ITT Group) and the Company agree to cooperate to obtain the approval of
the Regulators for such sale, transfer, assignment, pledge or other
disposition.
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(b) As a condition to any transfer by the ITT Group of rights under
paragraph 3(c) hereof, the ITT Group shall require the Rights Transferee to
agree to be bound by the obligations of the ITT Group under paragraph 5(a)
hereof.
6. Intercompany Agreements.
(a) The parties confirm that the Intercompany Agreement has been
terminated, except that (i) the obligations of the Company described in clause
(i) and (ii) of the last sentence of Section 3.3 of the Intercompany Agreement
shall survive as set forth therein and (ii) the obligations of the parties
under Section 4 of the Intercompany Agreement shall continue.
(b) The parties confirm that the Benefits Agreement and the Treasury
Agreement have been terminated.
7. Indemnification.
7.1. Offering Indemnification.
(a) ITT hereby agrees to indemnify and hold harmless the Company and
its officers, directors, employees, agents and representatives from and
against any and all liabilities, claims, damages, losses or expenses,
including, without limitation, any special, indirect, incidental or
consequential damages (collectively, "Losses"), relating to, arising out of or
due to any (i) untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any preliminary prospectus or
final prospectus included therein, or any amendment or supplement thereto, or
any document incorporated by reference therein (collectively, the "Offering
Documents") or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only insofar as any such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon, and in conformity with, written information furnished to the Company by
or on behalf of ITT or any of its Affiliates (other than the Company and its
subsidiaries, employees, agents and representatives) specifically for use in
the Offering Documents.
(b) The Company hereby agrees to indemnify and hold harmless ITT, its
officers and directors, each Person who controls ITT and each of their
respective directors and officers and all employees, agents and representatives
of any of the foregoing from and against any and all Losses relating to,
arising out of or due to any (i) untrue statement or alleged untrue statement
of any material fact contained in the Offering Documents or (ii) any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that the Company will not be liable in any such case to the extent
that any such Losses arise out of or are based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such Offering
Documents in reliance upon and in conformity with written information furnished
to the Company by or on behalf of ITT or any of
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its Affiliates (other than the Company and its subsidiaries, employees, agents
and representatives) specifically for use in the Offering Documents.
7.2. Litigation Indemnification.
(a) The Company hereby agrees to indemnify and hold harmless ITT and
its officers, directors, stockholders, affiliates and employees, and agents and
representatives of any of the foregoing from and against any and all Losses
relating to, arising out of or due to any litigation, arbitration or other
proceeding arising out of or related to the conduct of the business or
operations of the Company and its subsidiaries (whether before or after the
Closing Date), including, without limitation, the matters described in the
Registration Statement under the caption "Business -- Legal Proceedings" and
other proceedings in which Persons allege similar claims of misrepresentations
and violations of law. Nothing in the foregoing sentence shall require the
Company to reimburse ITT for any amount on account of any such Losses paid by
ITT prior to the Closing Date.
(b) ITT hereby agrees to indemnify and hold harmless the Company and
its officers, directors, stockholders, affiliates and employees, and agents and
representatives of any of the foregoing from and against any and all Losses
relating to, arising out of or due to any litigation, arbitration or other
proceeding arising out of or related to the conduct of the business or
operations of ITT (whether before or after the Closing Date), excluding any
Losses relating to, arising out of or due to any of the matters for which
indemnification is provided pursuant to paragraph 7.2(a) with respect to the
conduct of the business or operations of the Company and its subsidiaries.
Nothing in the foregoing sentence shall require ITT to reimburse the Company
for any amount on account of any such Losses paid by the Company prior to the
Closing Date.
7.3. Indemnification Procedure. Promptly after receipt by an indemnified
party under this paragraph 7 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under paragraphs 7.1 or 7.2, notify the indemnifying party
of the commencement thereof; provided, however, that any failure to give such
notice will not waive any rights of the indemnified party except to the extent
the rights of the indemnifying party were materially prejudiced. In case any
such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not
(except as described below) be liable to such indemnified party under this
paragraph 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
out-of-pocket costs of investigation. The indemnified party will have the
right to employ its counsel in any such action, but the fees and expenses of
such counsel will be at the expense of such indemnified party unless (a) the
employment of counsel by the indemnified party has been authorized in writing
by the indemnifying party, (b) the indemnified
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party has reasonably concluded that there may be legal defenses available to
it or other indemnified parties that are different from or in addition to those
available to the indemnifying party (in which case the indemnifying party will
not have the right to direct the defense of such action on behalf of the
indemnified party) or (c) the indemnifying party has not in fact employed
counsel to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees and expenses of counsel will be at the expense of the
indemnifying party or parties. All such fees and expenses and other fees and
expenses reasonably incurred in connection with investigating or defending such
action or other claim for which indemnification is sought under this paragraph
7 will be reimbursed promptly as they are incurred. An indemnifying party will
not be liable for the fees and expenses of more than one separate counsel for
all indemnified parties in connection with any proceeding or related
proceedings in the same jurisdiction. If the indemnifying party shall elect to
control the defense of any such action, it shall not settle any such action
without the consent of the indemnified party, which consent may not be
unreasonably withheld, and in all events may not be withheld if such
indemnifying party agrees fully to indemnify such other party in connection
therewith. If the indemnifying party shall not control the defense of any such
action, the indemnified party shall be entitled to take whatever action it
deems necessary or appropriate to resolve or settle such action, but in no
event shall it have any obligation to defend any such action or to appeal any
adverse finding or determination. ITT and the Company agree to cooperate with
each other in the defense of any action for which indemnification is sought
under this paragraph 7, including providing access to information, employees
and records under paragraph 8 hereof.
7.4. Effect on Underwriting Documents. Notwithstanding anything to the
contrary herein contained or set forth in the underwriting agreement relating
to the Offering:
(a) the provisions of this paragraph 7 shall govern and control the
indemnification arrangements, and any claims or Losses arising thereunder,
between the Company and ITT with respect to liabilities arising under the
Registration Statement or the other Offering Documents; and
(b) the provisions of such underwriting agreement shall govern and
control the indemnification arrangements, and any claims or Losses arising
thereunder, between the Company and the underwriters.
8. Access to Information.
8.1. Access to Information.
(a) From and after the date hereof, each of the Company and ITT shall
afford to the other and its representatives, reasonable access and duplicating
rights during normal business hours to all information within such party's
possession relating to such other party's businesses, assets or liabilities,
insofar as such access is reasonably required by such other party and is
subject to additional confidentiality provisions as the disclosing party deems
appropriate. Without
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limiting the generality of the foregoing, information may be requested under
this paragraph 8.1 for audit, accounting, claims, ITT corporate policy
compliance, litigation, regulatory and tax purposes, as well as for purposes of
fulfilling disclosure and reporting obligations as such party may reasonably
request. In the case of information provided under circumstances giving rise
to a legally cognizable privilege from disclosure, neither the Company nor ITT
shall waive such privilege without the consent of the other party.
(b) Without limiting the generality of the foregoing paragraph, with
respect to any period that any member of the ITT Group is required to account
for its investment in the Company under the equity method of accounting
(determined in accordance with generally accepted accounting principles
consistently applied), with reasonable promptness, but in no event later than
30 days after the end of each of the first three fiscal quarters in each fiscal
year of the Company and 75 days after the end of each fiscal year, the Company
shall deliver to ITT such financial and other information and data with respect
to the Company and its business, properties, financial position, results of
operations as ITT may from time to time reasonably request in connection with
the preparation of consolidated financial statements or filings with the SEC by
any member of the ITT Group.
(c) If the Rights Transferee is required to account for its
investment in the Company under the equity method of accounting (determined in
accordance with generally accepted accounting principles consistently applied),
any assignment of the ITT Group's rights to the Rights Transferee under
paragraph 3(c) hereof shall also have the effect of assigning the ITT Group's
rights under paragraph 8(b).
8.2. Access to Employees. Each of the Company and ITT and their
respective representatives shall use reasonable efforts to make available to
the other, upon written request, its directors, officers, employees, agents and
representatives as witnesses to the extent that any such person may reasonably
be required (giving consideration to business demands of such persons) in
connection with any legal, administrative or other proceedings in which the
requesting party may from time to time be involved.
8.3. Retention of Records. Except as otherwise required by law or
agreed in writing, each of the Company and ITT shall use reasonable efforts to
accommodate the other with respect to retention and provision of copies of any
significant information in such party's possession or under its control
relating to the business, assets or liabilities of the other party.
9. Insurance Matters.
9.1. Policies and Rights Transfer. Subject, in each case, to the terms
of such Policies (as defined below) and any limitations or obligations of the
Company contemplated by this paragraph 9 or Schedule 9.1(a), ITT hereby agrees
that the Company will access, as a named or named additional insured party,
under each of the insurance policies (the "Policies") set forth on Schedule
9.1(a) hereto and all predecessor policies thereto, specifically including
rights of indemnity
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and the right to be defended by or at the expense of the insurer, with respect
to all claims, suits, actions, proceedings, injuries, losses, liabilities,
damages and expenses incurred or claimed to have been during the period from
December 20, 1995 through the Closing Date unless otherwise indicated on the
schedule in or in connection with the conduct of the business of the Company
(the "Educational Business") or, to the extent any claim is made against the
Company or any of its subsidiaries, the conduct of the business of ITT, and
which claims, suits, actions, proceedings, injuries, losses, liabilities,
damages and expenses may arise out of an insured or insurable occurrence under
one or more of such Policies; provided, however, that nothing in this clause
shall be deemed to constitute (or to reflect) an assignment of such Policies,
or any of them, to the Company.
9.2. Claims. If, subsequent to the date hereof, any Person shall
assert a claim against the Company or any of its subsidiaries (including,
without limitation, where the Company or any of its subsidiaries is a joint
defendant with other Persons) with respect to any claim, suit, action,
proceeding, injury, loss, liability, damage or expense incurred or claimed to
have been incurred during the period from December 20, 1995 through the Closing
Date in or in connection with the conduct of the Educational Business or, to
the extent any claim is made against the Company or any of its subsidiaries
(including, without limitation, where the Company or any of its subsidiaries is
a joint defendant with other Persons) the conduct of the business of ITT, and
which claim, suit, action, proceeding, injury, loss, liability, damage or
expense may arise out of an insured or insurable occurrence under one or more
of the Policies, ITT shall, at the time such claim is asserted, to the extent
any such Policy may require that insurance proceeds thereunder be collected
directly by the party against whom the insured claim is asserted, be deemed to
designate, without need of further documentation, the Company as the agent and
attorney-in-fact to assert and to collect any related insurance proceeds under
such Policy, and shall further be deemed to assign, without need of further
documentation, to the Company any and all rights of an insured party under such
Policy with respect to such asserted claim, specifically including rights of
indemnity and the right to be defended by or at the expense of the insurer and
the right to any applicable insurance proceeds thereunder; provided, however,
that nothing in this paragraph 9.2 shall be deemed to constitute (or to
reflect) an assignment of the Policies, or any of them, to the Company;
provided further, however, that, with respect to those Policies set forth on
Schedule 9.1(a) hereto for which the Company has payment obligations as
reflected on such Schedule, the Company and its subsidiaries shall only have
the rights as reflected on such Schedule, the Company and its subsidiaries
shall only have the rights set forth under this paragraph 9.2 with respect to
such Policies if such payment obligations have been satisfied by the Company at
the relevant time as contemplated by Schedule 9.1(a).
9.3. Administration: Other Matters.
(a) Administration. Except as otherwise provided in paragraph 9.2
hereof, from and after the date hereof, ITT shall be responsible for (i)
insurance administration of the Policies and (ii) claims administration under
such Policies with respect to all liabilities; provided that the retention of
such responsibilities by ITT is in no way intended to limit, inhibit or
preclude any right to insurance coverage for any insured claim of a named
insured under such Policies as contemplated by the terms of this Agreement; and
provided further that ITT's retention of the administrative
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responsibilities for the Policies shall not relieve the party submitting any
insured claim of the primary responsibility for reporting such insured claim
accurately, completely and in a timely manner (it being understood that the
Company shall report insured claims to the relevant carrier through ITT) or of
such party's authority to settle (within the periods specified in Schedule
9.1(a) in the cases of the Policies numbered 1,3 and 4 on Schedule 9.1(a)) any
such insured claim. ITT may discharge its administrative responsibilities
under this paragraph 9.3 by contracting for the provision of services by
independent parties. Except as contemplated by Schedule 9.1(a) hereto or this
Agreement, each of the parties, hereto shall administer and pay any costs
relating to defending its respective insured claims under the Policies to the
extent such defense costs are not covered under such Policies and shall be
responsible for obtaining or reviewing the appropriateness of releases upon
settlement of its respective insured claims under Policies. The disbursements,
out-of-pocket expenses and direct and indirect costs of employees or agents of
ITT relating to claims administration and insurance administration contemplated
by this paragraph 9.3(a) shall be the responsibility of the Company.
(b) Access to Specified Policies. Where liabilities are specifically
covered under the Policies set forth on Schedule 9.1(a) hereto numbered 18 and
19 for periods on or before the Closing Date or under any such Policy covering
claims made after the Closing Date with respect to an occurrence during the
period commencing December 20, 1995 through the Closing Date, then after the
Closing Date the Company may claim coverage for insured claims under such
Policy as and to the extent that such insurance is available up to the full
extent of the applicable limits of liability of such Policy (and may receive
any insurance proceeds with respect thereto and contemplated by paragraph 9.2
or paragraph 9.3(d) hereof).
(c) Liability Limitation. Except as specifically contemplated by
lettered items under Schedule 9.1(a) or as specifically provided in this
Agreement, the Company and ITT shall not be liable to one another for claims
not reimbursed by insurers for any reason not within the control of the Company
or ITT, as the case may be, including, without limitation, coinsurance
provisions, deductibles, quota share deductibles, exhaustion of aggregates,
self-insured retentions, bankruptcy or insolvency of an insurance carrier,
Policy limitations or restrictions, any coverage disputes or any defect in such
claim or its processing.
(d) Allocation of Insurance Proceeds. Except as otherwise provided
in paragraph 9.2, insurance proceeds received with respect to claims, costs and
expenses under the Policies shall be paid to ITT in trust, and ITT shall
thereafter administer the Policies by paying the insurance proceeds, as
appropriate, to the Company in accordance with this paragraph 9 within five (5)
business days. Payment of the allocable portions of indemnity costs of
insurance proceeds resulting from such Policies will be made by ITT to the
appropriate party upon receipt from the insurance carrier within five business
days. In the event that the aggregate limits on any Policies are exceeded by
the aggregate of outstanding insured claims by the parties hereto, the parties
shall agree on an equitable allocation of insurance proceeds based upon their
respective bona fide claims. The parties agreed to use commercially reasonable
efforts to maximize available coverage under the Policies applicable to it, and
to take all commercially reasonable steps to recover from all other responsible
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parties in respect of an insured claim to the extent coverage limits under the
Policy have been exceeded or would be exceeded as a result of such insured
claim.
9.4. Agreement for Waiver of Conflict and Shared Defense. In the event
that insured claims of ITT and/or the Company exist relating to the same
occurrence, the parties shall jointly defend and, to the extent it is
reasonable to do so, waive any conflict of interest necessary to the conduct of
the joint defense. Nothing in this paragraph 9.4 shall be construed to limit
or otherwise alter in any way the obligations of the parties to this Agreement,
including those created by this Agreement, by operation of law or otherwise.
9.5. Cooperation. The parties agreed to use commercially reasonable
efforts to cooperate with respect to the various insurance matters contemplated
by this Agreement (including, without limitation, in connection with Policies
where ITT or the Company is a named or named additional insured party).
9.6. Directors and Officers Liability Insurance. The Company agrees
that from and after the date hereof it will maintain in full force and effect
at its expense a policy or policies of directors liability insurance naming as
an insured party each Designated Representative who may serve on the Board.
Such policy or policies shall have the same terms and conditions and the same
limits of liability as the directors liability insurance maintained by the
Company for its other directors who serve concurrently with the Designated
Representatives.
10. Confidential Information. ITT and the Company hereby covenant and
agree to hold in trust and confidence all Confidential Information relating to
the other party or its Affiliates. For the purpose hereof, "Confidential
Information" shall mean all non-public information not otherwise subject to a
legally cognizable privilege from disclosure which is disclosed by either party
to the other in connection with this Agreement. Confidential Information may
include, without limitation, technical, economic and business data, know-how,
flow sheets, drawings, business plans, computer software and databases and
other similar materials. Without prejudice to the rights and remedies of any
party to this Agreement, a party disclosing any Confidential Information to the
other party shall be entitled to equitable relief including injunctive relief
in order to protect its Confidential Information from unauthorized disclosure.
11. Amendment. This Agreement may not be amended or modified in any
respect except by a written agreement signed by the parties hereto.
12. Waiver. No waiver by either party hereto of any term or condition of
this Agreement, in any one or more instances, shall operate as a waiver of such
term or condition at any other time.
13. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity,
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legality or enforceability of any other provision of this Agreement in such
jurisdiction or affect the validity, legality or enforceability of any
provision in any other jurisdiction, but this Agreement shall be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
14. Entire Agreement. Except as otherwise expressly set forth herein,
this Agreement embodies the complete agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among
the parties, written or oral, that may have related to the subject matter
hereof in any way.
15. Successors and Assigns; No Third-Party Beneficiaries. Except as
otherwise provided herein, this Agreement shall bind and inure to the benefit
of and be enforceable by the parties hereto and their respective successors and
permitted assigns. Notwithstanding anything to the contrary contained in this
Agreement, ITT shall not have the right to freely assign, in whole or in part,
this Agreement, except to other members of the ITT Group and except with
respect to rights transferred to the Rights Transferee as expressly permitted
hereunder. Except as otherwise provided herein, nothing contained in this
Agreement, except as expressly set forth, is intended to confer upon any other
Person, other than the parties hereto and their respective successors and
permitted assigns, any rights or remedies.
16. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be an original and all of which taken
together shall constitute one and the same agreement.
17. Remedies. The Company and ITT shall be entitled to enforce their
rights under this Agreement specifically, to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages would not be an adequate remedy for any breach of the provisions of
this Agreement and that the Company and ITT, in their sole discretion, may
apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief (without posting a bond or other security)
in order to enforce or prevent any violation of the provisions of this
Agreement.
18. Notices. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given:
(a) on the date of service if served personally on the party to whom notice is
to be given; (b) on the day of transmission if sent via facsimile transmission
to the facsimile number given below, and telephonic confirmation of receipt is
obtained promptly after completion of transmission; (c) on the day after
delivery to Federal Express or similar overnight courier or the Express Mail
service maintained by the United States Postal Service; or (d) on the fifth day
after mailing, if mailed to the party to whom notice is to be given, by first
class mail, registered or certified, postage prepaid and properly addressed, to
the party as follows:
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If to ITT:
ITT Corporation
000 Xxxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attn: General Counsel
Facsimile: (000) 000-0000
If to the Company:
ITT Educational Services, Inc.
0000 Xxxxxx Xxxxx Xxxxxxx N. Drive
P.O. Box 50466
Indianapolis, Indiana 46250-0466
Attn: General Counsel
Facsimile: (000) 000-0000
Any party may change its address for the purpose of this paragraph 18
by giving the other party written notice of its new address in the manner set
forth above.
19. Governing Law. The corporate law of the State of Delaware shall
govern all issues and questions concerning the relative rights of the Company
and its stockholders. All other issues and questions concerning the
construction, validity, interpretation and enforceability of this Agreement
shall be governed by, and construed in accordance with, the laws of the State
of Indiana, without giving effect to any choice of law or conflict of law rules
or provisions (whether of the State of Indiana or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the
State of Indiana.
20. Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
* * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
ITT CORPORATION
By__/s/ Xxxx X. Schnaid________
Its__Vice President____________
ITT EDUCATIONAL SERVICES, INC.
By__/s/ Xxxxx X. Elwood_______
Its__Senior Vice President, General
Counsel and Secretary
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