Exhibit 10.9
DISTRIBUTION AGREEMENT
between
SINGLE SOURCE FINANCIAL SERVICES CORPORATION
and
SINGLE SOURCE ELECTRONIC TRANSACTIONS, INC.
dated as of October 27, 2003
BUSINESS SEPARATION TRANSACTIONS
--------------------------------
THIS DISTRIBUTION AGREEMENT is made and entered into as of the 27th day
of October, 2003 by and between SINGLE SOURCE FINANCIAL SERVICES CORPORATION, a
New York corporation ("PARENT") and SINGLE SOURCE ELECTRONIC TRANSACTIONS, INC.,
a Nevada corporation ("SPIN COMPANY"). PARENT and SPIN COMPANY will each be
referred to as a "Party" and together as the "Parties."
RECITALS
WHEREAS, the Board of Directors of Parent has deemed it appropriate and
advisable, to:
(a) separate and divide the existing businesses of Parent so that the
Spin Company Business shall be owned directly and indirectly by Spin Company,
and
(b) distribute, following such separation and division, as a dividend
to the holders of shares of Common Stock of Parent as of the Distribution Record
Date (the "PARENT COMMON STOCK") all of the outstanding shares of common stock
of Spin Company (the "SPIN COMPANY COMMON STOCK");
WHEREAS, Parent and Spin Company have determined that it is necessary
and desirable to set forth the principal corporate transactions required to
effect such separation, division and distribution and to set forth other
agreements that will govern certain other matters prior to and following such
separation, division and distributions.
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained in this Agreement, the Parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. GENERAL. Unless otherwise defined herein or unless the
context otherwise requires, the following terms will have the following meanings
(such meanings to be equally applicable to the singular and plural forms of the
terms defined).
(a) "ACTION" means any action, suit, arbitration, inquiry, proceeding
or investigation by or before any Governmental Authority or any arbitration
tribunal.
(b) "AFFILIATE" means, when used with respect to specified Person,
another Person that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Person
specified.
(c) "AGENT" means The Lebrecht Group, APLC, or such other trust company
or bank designated by Parent, who shall act as agent for holders of Parent
Common Stock in connection with the Distribution.
(d) "AGREEMENT" means this Distribution Agreement by and between Parent
and Spin Company, including any amendments hereto and each Schedule and Exhibit
attached hereto.
(e) "ANCILLARY AGREEMENTS" means those agreements listed on EXHIBIT A
attached hereto.
(f) "BOOKS AND RECORDS" means all books, records, manuals, agreements
and other materials (in any form or medium), including without limitation, all
mortgages, licenses, indentures, contracts, financial data, customer lists,
marketing materials and studies, advertising materials, price lists,
correspondence, distribution lists, supplier lists, production data, sales and
promotional materials and records, purchasing materials and records, personnel
records, manufacturing and quality control records and procedures, blue prints,
research and development files, records, data and laboratory books, accounts
records, sales order files, litigation files, computer files, microfiche, tape
recordings and photographs.
(g) "CODE" means the Internal Revenue Code of 1986, as amended, or any
successor law.
(h) "COMMISSION" means the United States Securities and Exchange
Commission.
(i) "CONSENTS" has the meaning ascribed to such term in SECTION 2.07
hereof.
(j) "CONVEYANCING AND ASSUMPTION INSTRUMENTS" means, collectively, the
various written agreements, instruments and other documents to be entered into
to effect the Corporate Restructuring Transactions or to otherwise effect the
transfer of assets and the assumption of Liabilities in the manner contemplated
by this Agreement, the Ancillary Agreements and the Corporate Restructuring
Transactions.
(k) "CORPORATE RESTRUCTURING TRANSACTIONS" means, collectively, (a)
each of the distributions, transfers, conveyances, contributions, assignments
and other transactions described and set forth in EXHIBIT B attached hereto, and
(b) such other distributions, transfers, conveyances, contributions, assignments
and othtransactions so long as such other distributions, transfers, conveyances,
contributions, assignments and other transactions do not, individually or in the
aggregate, adversely affect the Parent Business (other than to a DE MINIMIS
extent) that may be required to be accomplished, effected or consummated by
Parent, Spin Company or any of their respective Subsidiaries and Affiliates in
order to separate and divide, in a series of transactions that, to the extent
intended to qualify for tax-free transactions under the Code, shall qualify for
tax-free treatment under the Code, the existing businesses of Parent so that,
except as otherwise expressly set forth in EXHIBIT B hereto:
(i) assets, liabilities and business necessary for the
continuing operation of the Spin Company Business shall be owned, directly and
indirectly, by Spin Company;
(ii) the business, assets and liabilities of Parent that
remain after the separations and divisions described in clause (i) above,
including, without limitation, the assets, liabilities and business necessary
for the continuing operation of the Parent Business, are, after giving effect to
the Distribution, owned, directly and indirectly, by Parent.
(l) "DISTRIBUTION" means the distribution on the Distribution Date as a
dividend to holders of record of shares of Parent Common Stock as of the
Distribution Record Date of all of the outstanding Spin Company Common Shares
owned by Parent on the basis provided in SECTION 3.02 hereof.
(m) "DISTRIBUTION DATE" means such date as may hereafter be determined
by Parent's Board of Directors as the date on which the Distribution shall be
effected.
(n) "DISTRIBUTION RECORD DATE" means the close of business on the date
determined by the Board of Directors of Parent for the purpose of determining
the holders of record of Parent Common Stock entitled to participate in the
Distribution. In no case will the Distribution Record Date be a date earlier
than fifty (50) days prior to the Distribution Date.
(o) "NYCL" means the New York Business Corporation Law, as amended.
(p) "ENVIRONMENTAL LAWS" means any and all federal, state, local and
foreign statutes, Laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions (including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601, ET
SEQ.), whether now or hereafter in existence, relating to the environment,
natural resources or human health and safety or endangered or threatened species
of fish, wildlife and plants or to emissions, discharges or releases of
pollutants, contaminants, petroleum or petroleum products, chemicals or toxic or
hazardous substances or waste into the environment, including, without
limitation, ambient air, surface water, ground water or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, petroleum or
petroleum products, chemicals or toxic or hazardous substances or waste or the
cleanup or other remediation thereof.
(q) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(r) "EXCHANGE ACT FILE MATERIAL" means the Registration Statement, as
amended at the time it was declared effective under the Exchange Act, the
related Information Statement or any amendment or supplement thereto, the
related letter of transmittal, any related stockholder communication, any other
exhibits to any of the foregoing and any amendment or supplement thereto, in
each case including all information incorporated by reference therein.
(s) "GAAP" means United States generally accepted accounting principles
and practices, as in effect on the date of this Agreement, as promulgated by the
Financial Accounting Standards Board and its predecessors.
(t) "GOVERNMENTAL AUTHORITY" means any government or any agency,
bureau, board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether federal, state or
local, domestic or foreign.
(u) "INDEMNIFIABLE LOSSES" means, with respect to any Person, any and
all losses, liabilities, penalties, claims, damages, demands, costs and expenses
(including, without limitation, reasonable attorneys' fees, investigation
expenses and any and all other out-of-pocket expenses, but excluding any
punitive or consequential damages) or other Liabilities whatsoever that are
assessed, imposed, awarded against, incurred or accrued by such Person either
(a) in investigating, preparing for, defending against or otherwise arising out
of or in connection with any Actions, any potential or threatened Actions or any
Third Party Claims for which such Person would be entitled to indemnification
under ARTICLE VII hereof, or (b) in respect of any other event, occurrence or
matter for which such Person would be entitled to indemnification under ARTICLE
VII hereof, in each case whether accrued or incurred on, before or after the
date of this Agreement.
(v) "INDEMNIFYING PARTY" has the meaning ascribed to such term in
SECTION 7.03(A) hereof.
(w) "INDEMNIFIED PARTY" has the meaning ascribed to such term in
SECTION 7.03(A) hereof.
(x) "INFORMATION STATEMENT" means the Spin Company Information
Statement.
(y) "INSURANCE PROCEEDS" means, with respect to any insured party,
those monies, net of any applicable premium adjustment, retrospectively-rated
premium, deductible, retention, or cost of reserve paid or held by or for the
benefit of such insured, which are either:
(i) received by an insured from an insurance carrier; or
(ii) paid by an insurance carrier on behalf of an insured.
(z) "LAW" means all laws, statutes and ordinances and all regulations,
rules and other pronouncements of Governmental Authorities having the effect of
law of the United States, any foreign country, or any domestic or foreign state,
province, commonwealth, city, country, municipality, territory, protectorate,
possession or similar instrumentality, or any Governmental Authority thereof.
(aa) "LIABILITIES" means any and all debts, liabilities, obligations,
responsibilities, response actions, losses, damages (whether compensatory,
punitive or treble), fines, penalties and sanctions, absolute or contingent,
matured or unmatured, liquidated or unliquidated, foreseen or unforeseen, joint,
several orindividual, asserted or unasserted, accrued or unaccrued, known or
unknown, whenever arising, including, without limitation, those arising under or
in connection with any Law (including any Environmental Law), Action, threatened
Action, order or consent decree of any Governmental Authority or any award of
any arbitration tribunal, and those arising under any contract, guarantee,
commitment or undertaking, whether sought to be imposed by a Governmental
Authority, private party, or party to this Agreement, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute,
or otherwise, and including at any costs, expenses, interest, attorneys' fees,
disbursements and expense of counsel, expert and consulting fees and costs
related thereto or to the investigation or defense thereof.
(bb) "NASDAQ OTCBB" means the NASDAQ Over-the-Counter-Bulletin Board.
(cc) "PARENT" means Single Source Financial Services, Inc., a New York
corporation.
(dd) "PARENT ASSETS" means, collectively, all the rights and assets
owned by Parent or any of its Subsidiaries as of the close of business on the
Distribution Date other than the Spin Company Assets and the capital stock of
Spin Company, including without limitation:
(i) the capital stock of the Parent Subsidiaries;
(ii) all of the assets included on the Parent Business PRO
FORMA BALANCE SHEET that are owned by Parent and its Subsidiaries as of the
close of business on the Distribution Date and any other asset acquired by
Parent or any of its Subsidiaries from the date of the Parent Business PRO FORMA
BALANCE SHEET to the close of business on the Distribution Date that is owned by
Parent and its Subsidiaries as of the close of business on the Distribution Date
and that is of a type or nature that would have resulted in such asset being
included as an asset on the Parent Business PRO FORMA BALANCE SHEET had it been
acquired on or prior to the date of the Parent Business PRO FORMA BALANCE SHEET,
determined on the basis consistent with the determination of assets included on
the Parent Business PRO FORMA BALANCE SHEET; and
(iii) all of the assets and rights expressly allocated to
Parent or any of the Subsidiaries under this Agreement or any of the Ancillary
Agreements.
(ee) "PARENT BUSINESS" means the businesses (other than the Spin
Company Business) that, after giving effect to the Corporate Restructuring
Transactions, are or were conducted by:
(i) Parent, the Parent Subsidiaries or any of the other
members of the Parent Group;
(ii) any other division, Subsidiary or investment of Parent,
or any Parent Subsidiary or any of the other members of the Parent Group managed
or operated or in existence as of the date of this Agreement or any prior time,
unless such other division, Subsidiary or investment is expressly included in
the Spin Company Group immediately after giving effect to the Corporate
Restructuring Transactions; and
(iii) any business entity acquired or established by or for
Parent or any of the Parent Subsidiaries between the date of this Agreement and
the close of business on the Distribution Date that is engaged in, or intends to
engage in, any business that is of a type or nature that would have resulted in
such business being included either as a Parent Subsidiary or an asset of Parent
on the Parent Business PRO FORMA BALANCE SHEET had it been acquired or
established on or prior to the date of the Parent Business PRO FORMA BALANCE
SHEET, determined on a basis consistent with the determination of the
Subsidiaries and assets included on the Parent Business PRO FORMA BALANCE SHEET.
(ff) "PARENT BUSINESS PRO FORMA BALANCE SHEET" means the Pro Forma
Consolidated Balance Sheet for Parent and the Parent Subsidiaries as of October
31, 2003 which will be attached hereto as EXHIBIT C upon their completion, but
in no event later than February 28, 2004.
(gg) "PARENT COMMON STOCK" has the meaning ascribed to such term in the
RECITALS to this Agreement.
(hh) "PARENT CORPORATE RECORDS" has the meaning ascribed to such term
in SECTION 6.01(A) hereof.
(ii) "PARENT GROUP" means Parent, the Parent Subsidiaries and the
corporations, partnerships, joint ventures, investments and other entities that
represent equity investments of Parent or any of the Parent Subsidiaries
following consummation of the Corporate Restructuring Transactions and the
Distribution.
(jj) "PARENT HOLDERS" means the holders of record of Parent Common
Stock as of the Distribution Record Date.
(kk) "PARENT INDEMNIFIED PARTIES" means:
(i) Parent, the Parent Subsidiaries and each Affiliate thereof
after giving effect to the Corporate Restructuring Transactions and the
Distribution; and
(ii) each of the respective past, present and future
directors, officers, employees and agents of any of the entities described in
the immediately preceding clause (i) and each of the heirs, executors,
successors and assigns of such directors, officers, employees and agents.
(ll) "PARENT LIABILITIES" means, collectively, all of the Liabilities
of Parent and the Parent Subsidiaries and each of the other members of the
Parent Group remaining after giving effect to the Corporate Restructuring
Transactions and the Distribution, including without limitation:
(i) all of the Liabilities included on the Parent Business PRO
FORMA BALANCE SHEET that remain outstanding as of the close of business on the
Distribution Date;
(ii) all Liabilities that are incurred or that otherwise
accrue or are accrued at any time on, prior to or after the date of the Parent
Business PRO FORMA BALANCE SHEET and that arise or arose out of, or in
connection with, the Parent Assets or the Parent Business, determined on a basis
consistent with the determination of Liabilities of Parent included on the
Parent Business PRO FORMA BALANCE SHEET;
(iii) all of the Liabilities of Parent, the Parent
Subsidiaries or any of the other members of the Parent Group or to be retained
or assumed by Parent, any Parent Subsidiary or any other members of the Parent
Group pursuant to the Corporate Restructuring Transactions, this Agreement or
any of the Ancillary Agreements;
(iv) all of the Liabilities of the parties hereto or their
respective Subsidiaries (whenever arising whether prior to, on, or following the
Distribution Date) arising out of or in connection with or otherwise relating to
the management or conduct before or after the Distribution Date of the Parent
Business;
(v) all other Liabilities of the Parent, the Parent
Subsidiariany of the other members of the Parent Group (that do not constitute
Spin Company Liabilities), which other Liabilities of Parent, the Parent
Subsidiaries or any of the other members of the Parent Group shall include,
without limitation, any and all Liabilities arising out of or relating to any
Action or Third Party Claim by any Governmental Authority or any other Person
that is based on any alleged breach of fiduciary duty by the Board of Directors
of Parent or any member thereof, or any Parent stockholder derivative suit or
other similar Actions;
(vi) Spin Company Securities Liabilities;
(vii) Securities Liabilities arising out of events occurring
prior to the Distribution Date, and Securities Liabilities arising out of events
occurring after the Distribution Date and relating to the Parent.
(mm) "PARENT RECORDS" has the meaning ascribed to such term in SECTION
6.01(B) hereof.
(nn) "PARENT SUBSIDIARIES" means the Subsidiaries of Parent set forth
in EXHIBIT D hereto and all other Subsidiaries of Parent other than Spin Company
or its Subsidiaries.
(oo) "PARENT TRADEMARKS AND TRADE NAMES" means all trademarks, service
marks, and trade names containing "SINGLE SOURCE FINANCIAL SERVICES" or
variations thereof, along with their respective applications and registrations
wherever used or registered.
(pp) "PERSON" means any natural person, corporation, business trust,
joint venture, association, company, partnership, limited liability company or
other entity, or any government, or any agency or political subdivision thereof.
(qq) "PRIOR SPIN COMPANY BUSINESSES" means, collectively, all
divisions, Subsidiaries, other business entities or investments of Parent (or
one of its Subsidiaries) that, at any time prior to the date of the Spin Company
Business PRO FORMA BALANCE SHEET, were included in the Spin Company segments for
purposes of segment reporting in any of Parent's Annual Reports on Form 10-KSB,
and were sold, transferred, otherwise disposed of or discontinued prior to such
date.
(rr) "PRIVILEGE" has the meaning ascribed to such term in SECTION
6.07(A) hereof.
(ss) "PRIVILEGED INFORMATION" has the meaning ascribed to such term in
SECTION 6.07(a) hereof.
(tt) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(uu) "SECURITIES LIABILITIES" means any and all losses, liabilities,
penalties, claims, damages, demands, costs or expenses or other Liabilities
whatsoever that are assessed, imposed, awarded against, incurred or accrued by a
Person arising out of or relating in whole or in part to any Action, any
potential or threatened Action or any Third Party Claim (or potential or
threatened Third Party Claim) by any Governmental Authority or any other person
that is based on any violations or alleged violations of the Securities Act,
Exchange Act, any of the rules or regulations of the Commission promulgated
under the Securities Act or Exchange Act, or any other securities or similar
Law.
(vv) "SPIN COMPANY" means Single Source Electronic Transactions, Inc.,
a Nevada corporation, the Spin Company Subsidiaries and the corporations,
partnerships, joint ventures, investments and other entities that represent
equity investments of any of Spin Company or any of the Spin Company
Subsidiaries following the consummation of the Corporate Restructuring
Transactions and the Distribution.
(ww) "SPIN COMPANY ASSETS" means, collectively, all of the following
rights and assets that are owned by Parent and or any of its Subsidiaries as of
the close of business on the Distribution Date:
(i) the capital stock of the Spin Company Subsidiaries;
(ii) all of the assets included on the Spin Company Business
PRO FORMA BALANCE SHEET that are owned by Parent or any of its Subsidiaries as
of the close of business on the Distribution Date;
(iii) all of the assets and rights expressly allocated to Spin
Company or any of the Spin Company Subsidiaries under this Agreement or any of
the Ancillary Agreements; and
(iv) any other asset acquired by Parent or any of its
Subsidiaries from the date of the Spin Company Business PRO FORMA BALANCE SHEET
to the close of business on the Distribution Date that is owned by Parent or any
of its Subsidiaries as of the close of business on the Distribution Date and
that is of a nature or type that would have resulted in such asset being
included as an asset on the Spin Company Business PRO FORMA BALANCE SHEET had it
been acquired on or prior to the date of the Spin Company Business PRO FORMA
BALANCE SHEET, determined on a basis consistent with the determination of the
assets included on the Spin Company Business PRO FORMA BALANCE SHEET.
(xx) "SPIN COMPANY BUSINESS" means the businesses that, after giving
effect to the Corporate Restructuring Transactions, are conducted by:
(i) the Spin Company and its Subsidiaries or any of the other
members of the Spin Group; and
(ii) any business entity acquired or established by or for
Parent or the Spin Company or any of its Subsidiaries between the date of this
Agreement and the close of business on the Distribution Date that is engaged in,
or intends to engage in, any business that is of a type or nature that would
have resulted in such business being included either as a Subsidiary or an asset
of Spin Company on the Spin Company Business PRO FORMA BALANCE SHEET had it been
acquired or established on or prior to the date of the Spin Company Business PRO
FORMA BALANCE SHEET, determined on a basis consistent with the determination of
the Subsidiaries and assets included on the Spin Company Business PRO FORMA
BALANCE SHEET.
(yy) "SPIN COMPANY PRO FORMA BALANCE SHEET" means the PRO FORMA
Consolidated Balance Sheet for Spin Company and the Spin Company Subsidiaries
which will be attached hereto as EXHIBIT E upon their completion, but in no
event later than February 28, 2004.
(zz) "SPIN COMPANY COMMON SHARES" means the shares of Spin Company
Common Stock owned by Parent after giving effect to the stock dividend provided
for in SECTION 2.02 hereof.
(aaa) "SPIN COMPANY COMMON STOCK" has the meaning ascribed to such term
in the RECITALS to this Agreement.
(bbb) "SPIN COMPANY GROUP" means Spin Company, the Spin Company
Subsidiaries and the corporations, partnerships, joint ventures, investments and
other entities that represent equity investments of Spin Company or any of the
Spin Company Subsidiaries following the consummation of the Corporate
Restructuring Transactions and the Distribution.
(ccc) "SPIN COMPANY INDEMNIFIED PARTIES" means:
(i) Spin Company and each Affiliate thereof after giving
effect to the Corporate Restructuring Transactions and Distribution; and
(ii) each of the respective past, present and future
directors, officers, employees and agents of any of the entities described in
the immediately preceding clause (i) and each of the heirs, executors,
successors and assigns of any of such directors, officers, employees and agents.
(ddd) "SPIN COMPANY INFORMATION STATEMENT" means the Information
Statement or Registration Statement relating to the Spin Company and the
transactions contemplated hereby to be distributed to holders of Parent Common
Stock pursuant to the terms of this Agreement.
(eee) "SPIN COMPANY LIABILITIES" means, collectively, all of the
Liabilities of Spin Company, the Spin Company Subsidiaries and each of the other
members of the Spin Company Group after giving effect to the Corporate
Restructuring Transactions, the Distribution and the transactions contemplated
under the Debt and Cash Allocation Agreement, including, without limitation:
(i) all of the Liabilities included on the Spin Company
Business PRO FORMA BALANCE SHEET that remain outstanding as of the close of
business on the Distribution Date;
(ii) all other Liabilities included on the Spin Company
Business PRO FORMA BALANCE SHEET and that arise or arose out of, or in
connection with, the Spin Company Assets, the Spin Company Business or the Prior
Spin Company Businesses, determined on a basis consistent with the determination
of Liabilities of Spin Company on the Spin Company Business PRO FORMA BALANCE
SHEET;
(iii) all of the Liabilities of Spin Company, the Spin Company
Subsidiaries or any of the other members of the Spin Company Group under, or to
be retained or assumed by Spin Company, any Spin Company Subsidiary or any of
the other members of the Spin Company Group pursuant to, this Agreement or any
of the Ancillary Agreements;
(iv) all the Liabilities of the parties hereto or their
respective Subsidiaries (whenever arising whether prior to, on, or following the
Distribution Date) arising out of or in connection with or otherwise relating to
the management or conduct before or after the Distribution Date of the Spin
Company Business; and
(v) Securities Liabilities arising out of events occurring
after the Distribution Date and relating to the Spin Company.
(fff) "SPIN COMPANY RECORDS" has the meaning ascribed to such term in
SECTION 6.01(A) hereof.
(ggg) "SPIN COMPANY REGISTRATION STATEMENT" or "REGISTRATION STATEMENT"
means the Registration Statement on Form 10 to be filed with the Commission
pursuant to the requirements of Section 12 of the Exchange Act and the rules and
regulations thereunder in order to register the Spin Company Common Stock under
Section 12(b) of the Exchange Act.
(hhh) "SPIN COMPANY SECURITIES LIABILITIES" means any and all
Securities Liabilities arising out of, or in connection with, or relating in
whole or in part to any of the following: (i) the Spin Company Registration
Statement; (ii) the Spin Company Information Statement; (iii) any of the
information, data (financial or otherwise) or disclosures in (or any alleged
failure to set forth certain information, data or disclosures in) the Spin
Company Registration Statement or Spin Company Information Statement
irrespective of (A) who authored, prepared or provided such information, data or
disclosures (or, as the case may be, the section or discussion in which certain
information, data or disclosure is alleged to have been omitted), or (B) the
form in which, or medium through which (e.g., verbally, in writing, etc.), such
information, data, disclosures, discussion or section were provided.x
(iii) "SPIN COMPANY SUBSIDIARIES" means the Subsidiaries listed in
EXHIBIT F hereto.
(jjj) "SUBSIDIARY" means, with respect to any Person:
(i) any corporation of which at least a majority in interest
of the outstanding voting stock (having by the terms thereof voting power under
ordinary circumstances to elect a majority of the directors of such corporation,
irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of a contingency) is at the time, directly or indirectly, owned or
controlled by such Person or by such Person and one or more of its Subsidiaries;
or
(ii) any noncorporate entity in which such Person or such
Person and one or more Subsidiaries of such person either (a) directly or
indirectly, as of the date of determination thereof, has at least a majority
ownership interest, or (b) as of the date of determination is a general partner
or an entity performing similar functions (e.g., manager of a Limited Liability
Company or a trustee of a trust).
(kkk) "TAX" or "TAXES" means any income, gross income, gross receipts,
profits, capital stock, franchise, withholding, payroll, social security,
workers compensation, unemployment, disability, property, AD VALOREM, stamp,
excise, occupation, services, sales, use, license, lease, transfer, import,
export, value added, alternative minimum, estimated or other similar Tax
(including any fee, assessment or other charge in the nature of or in lieu of
any Tax) imposed by any governmental entity or political subdivision thereof,
and any interest, penalties, additions to Tax or additional amounts in respect
of the foregoing.
(lll) "TERMINATION DATE" means the date on which this Agreement is
terminated pursuant to and in accordance with the provisions of SECTION 8.11 of
this Agreement.
(mmm) "THIRD PARTY CLAIM" has the meaning as defined in SECTION 7.04(A)
hereof.
SECTION 1.02. REFERENCES. References to an "EXHIBIT" or to a "SCHEDULE"
are, unless otherwise specified, to one of the Exhibits or Schedules attached to
this Agreement, and references to a "SECTION" are, unless otherwise specified,
to one of the Sections of this Agreement.
ARTICLE II
PRE-DISTRIBUTION TRANSACTIONS;
CERTAIN COVENANTS
SECTION 2.01. CORPORATE RESTRUCTURING TRANSACTIONS. On or prior to the
Distribution Date and otherwise in accordance with the terms and provisions set
forth in EXHIBIT B hereto, Parent and Spin Company shall, and shall cause each
of their respective Subsidiaries to, as applicable, take such actions as are
necessary to cause, effect and consummate the Corporate Restructuring
Transactions. Parent and Spin Company hereby agree that any one or more of the
Corporate Restructuring Transactions may be modified, supplemented or
eliminated; provided such modification, supplement or elimination (a) is
necessary or appropriate to divide the existing businesses of Parent so that the
Spin Company Business shall be owned, directly and indirectly, by Spin Company,
and (b) does not, individually or in the aggregate, adversely affect the Parent
Business (other than to a DE MINIMIS extent).
SECTION 2.02. PRE-DISTRIBUTION STOCK DIVIDENDS TO PARENT. On or prior
to the Distribution Date, Spin Company shall issue to Parent, as a stock
dividend, the number of shares of Spin Company Common Stock as is required to
effect the Distribution. Parent shall not be required to cancel any share
certificates currently held by it representing Spin Company Common Stock.
SECTION 2.03. CHARTER AND BYLAWS OF SPIN COMPANY. On or prior to the
Distribution Date, Parent and Spin Company shall take all necessary actions so
that, as of the Distribution Date, the Restated Certificate of Incorporation and
Bylaws of Spin Company will be sufficient to complete the Distribution.
SECTION 2.04. ELECTION OF DIRECTORS OF SPIN COMPANY. On or prior to the
Distribution Date, Parent, as the sole stockholder of Spin Company, shall take
all necessary action so that as of the Distribution Date the directors of the
Spin Company will be as set forth in the Spin Company Information Statement.
SECTION 2.05. TRANSFER AND ASSIGNMENT OF CERTAIN LICENSES AND PERMITS.
(a) LICENSES AND PERMITS RELATING TO THE SPIN COMPANY BUSINESS. On or
prior to the Distribution Date, or as soon as reasonably practicable thereafter,
Parent shall (and, if applicable, shall cause any other Person over which it has
legal or effective direct or indirect control to), duly and validly transfer or
cause to be duly and validly transferred to the appropriate member of the Spin
Company Group (as directed by Spin Company) all transferable licenses, permits
and authorizations issued by any Governmental Authority that relate to the Spin
Company Business but which are held in the name of any member of the Parent
Group, or any of their respective employees, officers, directors, stockholders
or agents.
(b) LICENSES AND PERMITS RELATING TO THE PARENT BUSINESS. On or prior
to the Distribution Date, or as soon as reasonably practicable thereafter, Spin
Company shall (and, if applicable, shall cause any other Person over which it
has legal or effective direct or indirect control to), duly and validly transfer
or cause to be duly and validly transferred to the appropriate member of the
Parent Group (as directed by Parent) all transferable licenses, permits and
authorizations issued by any Governmental Authority that relate to the Parent
Business but which are held in the name of any member of the Spin Company Group,
or any of their respective employees, officers, directors, stockholders or
agents.
SECTION 2.06. TRANSFER AND ASSIGNMENT OF CERTAIN AGREEMENTS.
(a) TRANSFER AND ASSIGNMENT OF PARENT BUSINESS AGREEMENTS. On or prior
to the Distribution Date, or as soon as reasonably practicable thereafter, and
subject to limitations set forth in this SECTION 2.06, Spin Company shall (and,
if applicable, shall cause any of the other members of its Group over which it
has legal or effective direct or indirect control to), assign, transfer and
convey to Parent (or such other member of the Parent Group as Parent shall
direct) all of its (or such other member of its Group's) right, title and
interest in and to any and all agreements that relate exclusively to the Parent
Business or any member of the Parent Group.
(b) TRANSFER AND ASSIGNMENT OF SPIN COMPANY BUSINESS AGREEMENTS. On or
prior to the Distribution Date, or as soon as reasonably practicable thereafter,
and subject to the limitations set forth in this SECTION 2.06, Parent shall
(and, if applicable, shall cause any of the other members of its Group over
which it has legal or effective direct or indirect control to), assign, transfer
and convey to Spin Company (or such other member of the Spin Company Group as
Spin Company shall direct) all of its (or such other member of its Group's)
right, title and interest in and to any and all agreements that relate
exclusively to the Spin Company Business or any member of the Spin Company
Group.
(c) JOINT AGREEMENTS. Subject to the provisions of SECTION 2.06(E)
below, any agreement to which any party hereto (or any other member of such
party's Group) is a party that inures to the benefit of both the Parent Business
and the Spin Company Business shall be assigned in part, at the expense and risk
of the assignee, on or prior to the Distribution Date or as soon as reasonably
practicable thereafter, so that each party (or such member of such party's
Group) shall be entitled to the rights and benefits inuring to its business
under such agreement.
(d) OBLIGATIONS OF ASSIGNEES. The assignee of any agreement assigned,
in whole or in part, hereunder (an "ASSIGNEE") shall, as a condition to such
assignment, assume and agree to pay, perform, and fully discharge all
obligations of the assignor under such agreement (whether such obligations arose
or were incurred prior to, on or subsequent to the Distribution Date and
irrespective of whether such obligations have been asserted as of the
Distribution Date) or, in the case of a partial assignment under SECTION 2.06(C)
above, such Assignee's related portion of such obligations as determined in
accordance with the terms of the relevant agreement, where determinable on the
face thereof, and otherwise as determined in accordance with the practice of the
parties prior to the Distribution. Furthermore, the Assignee shall use its
commercially reasonable efforts to cause the assignor of such agreement to be
released from its obligations under the assigned agreements.
(e) NO ASSIGNMENT OF CERTAIN AGREEMENTS. Notwithstanding anything in
this Agreement to the contrary, this Agreement shall not constitute an agreement
to assign any agreement, in whole or in part, or any rights thereunder if the
agreement to assign or attempt to assign, without the consent of a third party,
would constitute a breach thereof or in any way adversely affect the rights of
the Assignee thereof until such consent is obtained. If an attempted assignment
there, would be ineffective or would adversely affect the rights of any party
hereto so that the Assignee would not, in fact, receive all such rights, the
parties hereto will cooperate with each other to effect any arrangement designed
reasonably to provide for the Assignee the benefits of; and to permit the
Assignee to assume liabilities under, any such agreement.
SECTION 2.07. CONSENTS. The parties hereto shall use their reasonable
efforts to obtain any third-party consents or approvals that are required to
consummate the Corporate Restructuring Transactions, the Distribution and the
other transactions contemplated herein (the "CONSENTS").
SECTION 2.08. OTHER TRANSACTIONS. On or prior to the Distribution Date
(but in all events prior to the Distribution), Parent and Spin Company shall
have consummated those other transactions in connection with the Corporate
Restructuring Transactions and the Distribution that are contemplated by the
Spin Company Information Statement and not specifically referred to in SECTIONS
2.01 through 2.07 above, subject, however, to the limitations set forth in
SUBPARAGRAPH (b) of SECTION 2.01 above.
SECTION 2.09. ELECTION OF OFFICERS. On or prior to the Distribution
Date, Parent and Spin Company shall, as applicable, take all actions necessary
and desirable so that as of the Distribution Date the officers of the Spin
Company will be as set forth in the Spin Company Information Statement.
SECTION 2.10. PREPARATION AND FILING OF SPIN COMPANY REGISTRATION
STATEMENT. Parent and Spin Company shall prepare or cause to be prepared, at
Spin Company's sole expense, and Spin Company shall file or cause to be filed
with the Commission, the Spin Company Registration Statement. The Spin Company
Registration Statement shall include or incorporate by reference the Spin
Company Information Statement setting forth appropriate disclosure concerning
Parent, Spin Company, the Distribution and such other matters as may be required
to be disclosed therein by the provisions of the Exchange Act and the rules and
regulations promulgated thereunder. Parent and Spin Company shall take all such
actions as may be reasonably necessary or appropriate in order to cause the Spin
Company Registration Statement to become effective by order of the Commission
pursuant to the Exchange Act.
SECTION 2.11. STATE SECURITIES LAWS. Prior to the Distribution Date,
Parent and Spin Company shall take all such action as may be necessary or
appropriate, at Spin Company's sole expense, under the securities or Blue Sky
laws of states or other political subdivisions of the United States in order to
effect the Distribution.
SECTION 2.12. LISTING APPLICATION. Prior to the Distribution Date,
Parent and Spin Company shall prepare and file with NASDAQ listing applications
and related documents and shall take all such other actions with respect thereto
as shall be necessary or desirable in order to cause the NASDAQ OTCBB to list on
or prior to the Distribution Date, subject to official notice of issuance, the
Spin Company Common Shares.
SECTION 2.13. CERTAIN FINANCIAL AND OTHER ARRANGEMENTS.
(a) SETTLEMENT OF INTERCOMPANY ACCOUNTS BETWEEN SPIN COMPANY GROUP AND
PARENT GROUP. All intercompany receivables, payables and loans (other than
receivables, payables and loans otherwise specifically provided for in any of
the Ancillary Agreements or hereunder), including, without limitation, in
respect of any cash balances, any cash balances representing deposited checks or
drafts for which only a provisional credit has been allowed or any cash held in
any centralized cash management system, between any member of the Spin Company
Group and any member of the Parent Group shall, as of the close of business on
the Distribution Date, be settled, capitalized or converted into ordinary trade
accounts, in each case as may be agreed in writing prior to the Distribution
Date by duly authorized representatives of Parent and Spin Company.
(b) OPERATIONS IN ORDINARY COURSE. Except as otherwise provided in this
Agreement or any Ancillary Agreement, during the period from the date of this
Agreement through the Distribution Date, Parent and Spin Company shall, and
shall cause any entity that is a Subsidiary of such party at any time during
such period to, conduct its business in a manner substantially consistent with
current and past operating practices and in the ordinary course, including,
without limitation, with respect to the payment and administration of accounts
payable and the collection and administration of accounts receivable, the
purchase of capital assets and equipment and the management of inventories.
SECTION 2.14. DIRECTOR, OFFICER AND EMPLOYEE RESIGNATIONS. Subject to
the provisions of SECTION 2.04 and SECTION 2.09 above:
(a) RESIGNATIONS BY DIRECTORS AND EMPLOYEES OF THE PARENT GROUP. Parent
shall cause all of its directors and all employees of the Parent Group to
resign, effective as of the close of business on the Distribution Date, from all
boards of directors or similar governing bodies of each member of the Spin
Company Group on which they serve, and from all positions as officers or
employees of any member of the Spin Company Group, except as otherwise set forth
in the Spin Company Information Statement or mutually agreed to in writing on or
prior to the Distribution Date by Parent and Spin Company.
(b) RESIGNATIONS BY DIRECTORS AND EMPLOYEES OF THE SPIN COMPANY GROUP.
Spin Company shall cause all of its directors and all employees of the Spin
Company Group to resign, effective as of the close of business on the
Distribution Date, from all boards of directors or similar governing bodies of
each member of the Parent Group on which they serve, and from all positions as
officers or employees of any member of the Parent Group, except as otherwise set
forth in the Spin Company Information Statement or mutually agreed to in writing
on or prior to the Distribution Date by Spin Company and Parent.
SECTION 2.15. TRANSFERS NOT EFFECTED PRIOR TO THE DISTRIBUTION;
TRANSFERS DEEMED EFFECTIVE AS OF THE DISTRIBUTION DATE. To the extent that any
transfers contemplated by this ARTICLE II shall not have been consummated on or
prior to the Distribution Date, the Parties hereto shall cooperate (and shall
cause each of their respective Affiliates and each member of their respective
Groups over which they have legal or effective direct or indirect control to
cooperate) to effect such transfers as promptly following the Distribution Date
as shall be practicable. Nothing herein shall be deemed to require the transfer
of any assets or the assumption of any Liabilities which by their terms or
operation of law cannot be transferred or assumed; provided, however, that the
Parties hereto shall cooperate (and shall cause each of their respective
Affiliates and each member of their respective Groups over which they have legal
or effective direct or indirect control to cooperate) to seek to obtain any
necessary consents or approvals for the transfer of all assets and Liabilities
contemplated to be transferred pursuant to this ARTICLE II. In the event that
any such transfer of assets or Liabilities has not been consummated, from and
after the Distribution Date the Party retaining such asset or Liability (or, as
applicable, such other member or members of such Party's Group) shall hold such
asset in trust for the use and benefit of the Party entitled thereto (at the
expense of the Party entitled thereto) or retain such Liability for the account
of the Party by whom such Liability is to be assumed pursuant hereto, as the
case may be, and take such other action as may be reasonably requested by the
Party to whom such asset is to be transferred, or by whom such Liability is to
be assumed, as the case may be, in order to place such Party, insofar as is
reasonably possible, in the same position as would have existed had such asset
or Liability been transferred or assumed as contemplated hereby. As and when any
such asset or Liability becomes transferable or assumable, such transfer shall
be effected forthwith. As of the Distribution Date, each Party hereto (or, if
applicable, such other members of such Party's Group) shall be deemed to have
acquired (or, as applicable, retained) complete and sole beneficial ownership
over all of the assets, together with all rights, powers and privileges incident
thereto, and shall be deemed to have assumed in accordance with the terms of
this Agreement all of the Liabilities, and all duties, obligations and
responsibilities incident thereto, which such Party (or any other member of such
Party's Group) is entitled to acquire or required to assume pursuant to the
terms of this Agreement.
SECTION 2.16. ANCILLARY AGREEMENTS. Prior to the Distribution Date,
Parent and Spin Company shall enter into, and/or where applicable shall cause
such other members of their respective Groups to enter into, (a) the Ancillary
Agreements and (b) any other agreements in respect of the Corporate
Restructuring Transactions and the Distribution as are reasonably necessary or
appropriate in connection with the transactions contemplated hereby and thereby
so long as such agreements do not adversely affect the Parent Business other
than to a DE MINIMIS extent.
SECTION 2.17. TAX SHARING. Each Party shall be responsible for any
Taxes owed as a result of each Parties respective business operations during any
full or partial year after the Distribution Date. Parent shall be responsible
for any Taxes owed as a result of both Parties' business operations through the
Distribution Date.
ARTICLE III
THE DISTRIBUTION
SECTION 3.01. PARENT ACTION PRIOR TO THE DISTRIBUTION. Subject to the
terms and conditions set forth herein, Parent shall take, or cause to be taken,
the following acts or actions in connection with, and to otherwise effect in
accordance with the terms of this Agreement, the Distribution.
(a) DECLARATION OF DISTRIBUTION AND ESTABLISHMENT OF DISTRIBUTION DATE.
The Board of Directors of Parent shall, in conjunction with Spin Company's
written approval and subject to and in accordance with the applicable rules of
the NASDAQ OTCBB and provisions of the NYCL, declare the Distribution and
establish the Distribution Record Date, the Distribution Date, the date on which
Spin Company Common Shares shall be mailed to the Parent Holders and all
appropriate procedures in connection with the Distribution to the extent not
provided for herein; provided, however, that no such action shall create any
obligation on the part of Parent to effect the Distribution or in any way limit
Parent's power of termination as set forth in SECTION 8.11 hereof or alter the
consequences of any such termination from those specified in such Section.
(b) NOTICE TO NASDAQ OTCBB. Parent shall, to the extent possible, give
the NASDAQ OTCBB not less than ten days advance notice of the Distribution
Record Date in compliance with Rule 10b-17 under the Exchange Act.
(c) MAILING OF SPIN COMPANY INFORMATION STATEMENT. Parent shall, as
soon as practicable after the Spin Company Registration Statement shall have
been declared effective under the Exchange Act, cause the Spin Company
Information Statement to be mailed to the Parent Holders.
SECTION 3.02. THE DISTRIBUTION.
(a) DUTIES AND OBLIGATIONS OF PARENT. Subject to the conditions
contained herein, on the Distribution Date, but effective immediately following
the close of business on the Distribution Date, Parent shall:
(i) deliver to the Agent the share certificates representing
the Spin Company Common Shares issued to Parent by Spin Company pursuant to
SECTION 2.02 hereof, endorsed by Parent in blank, for the benefit of the Parent
Holders; and
(ii) instruct the Agent to distribute, as soon as practicable
following the consummation of the Distribution, to the Parent Holders.
(b) DUTIES AND RESPONSIBILITIES OF SPIN COMPANY. Spin Company shall
provide, or cause to be provided, to the Agent sufficient certificates
representing Spin Company Common Stock in such denominations as the Agent may
request in order to effect the Distribution. All shares of Spin Company Common
Stock issued pursuant to the Distribution will be validly issued, fully paid and
nonassessable and free of any preemptive (or similar) rights.
SECTION 3.03. FRACTIONAL SHARES.
(a) NO FRACTIONAL SHARES. Notwithstanding anything herein to the
contrary, no certificate or scrip evidencing a fractional share of Spin Company
Common Stock shall be issued in connection with the Distribution, and any such
fractional share interests to which a Parent Holder would otherwise be entitled
will not entitle such Parent Holder to vote or to any rights of a stockholder of
Spin Company. In lieu of any such fractional shares, each Parent Holder who, but
for the provisions of this SECTION 3.03, would be entitled to receive a
fractional share interest of Spin Company Common Stock pursuant to the
Distribution shall be entitled to receive one whole share.
(b) UNCLAIMED STOCK. Any Spin Company Common Stock and dividends or
distributions with respect to Spin Company Common Stock that remain unclaimed by
any Parent Holder 180 days after the Distribution Date shall be returned to
Parent and any such Parent Holders shall look only to Parent for the Spin
Company Common Stock and any such dividends or distributions to which they are
entitled, subject in each case to applicable escheat or other abandoned property
laws.
(c) BENEFICIAL OWNERS. Solely for purposes of computing fractional
share interests pursuant to SECTION 3.03(A), the beneficial owner of shares of
Parent Common Stock held of record in the name of a nominee will be treated as
the holder of record of such shares.
ARTICLE IV
CONDITIONS TO THE DISTRIBUTION
SECTION 4.01. CONDITIONS PRECEDENT TO THE DISTRIBUTION. The obligation
of Parent to cause the Distribution to be consummated shall be subject to the
fulfillment or waiver, on or prior to the Termination Date, of each of the
following conditions:
(a) EFFECTIVE DATE OF SPIN COMPANY REGISTRATION STATEMENT. The Spin
Company Registration Statement shall have been declared effective by order of
the Commission and no stop order shall have been entered, and no proceeding for
that purpose shall have been initiated or threatened by the Commission with
respect thereto.
(b) PRE-DISTRIBUTION TRANSACTIONS. Each of the transactions and other
matters contemplated by ARTICLE II and SECTION 3.01 hereof (including, without
limitation, each of the distributions, transfers, conveyances, contributions,
assignments or other transactions included in, or otherwise necessary to
consummate, the Corporate Restructuring Transactions) shall have been fully
effected, consummated and accomplished.
(c) COVENANTS. The covenants contained in ARTICLE V of this Agreement
that are required to be performed on or before the Distribution Date shall have
been fully performed.
(d) NO PROHIBITIONS. Consummation of the transactions contemplated
hereby shall not be prohibited by Law and no Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, executive order, decree, injunction or other order
(whether temporary, preliminary or permanent) which is in effect and which
materially restricts, prevents or prohibits consummation of the Distribution or
any transaction contemplated by this Agreement, it being understood that the
Parties hereto hereby agree to use their reasonable best efforts to cause any
such decree, judgment, injunction or other order to be vacated or lifted as
promptly possible.
(e) CONSENTS. Parent, Spin Company and the other members of their
respective Groups shall have obtained all Consents the failure of which to
obtain would, in the determination of the Board of Directors of Parent, have a
material adverse effect on the Parent Group or the Spin Company Group, each
taken as a whole, and such Consents shall be in full force and effect.
SECTION 4.02. NO CONSTRAINT. Notwithstanding the provisions of SECTION
4.01 above, the fulfillment or waiver of any or all of the conditions precedent
to the Distribution set forth therein shall not stop Parent from effecting the
Distribution unless it is deemed to be illegal or the transaction is rejected by
the Commission.
SECTION 4.03. DEFERRAL OF DISTRIBUTION DATE. If after the Distribution
Date has been established by the Board of Directors of Parent all the conditions
precedent to the Distribution set forth in this Agreement have not theretofore
been fulfilled or waived, or Parent does not reasonably anticipate that they
will be fulfilled or waived, on or prior to the date established as the
Distribution Date, Parent shall, by resolution of its Board of Directors defer
the Distribution Date to a later date.
SECTION 4.04. PUBLIC NOTICE OF DEFERRED DISTRIBUTION DATE. If the Board
of Directors of Parent defers the Distribution Date in accordance with SECTION
4.03 above and public announcement of the prior Distribution Date has
theretofore been made, Parent shall promptly thereafter issue, in accordance
with the advice of legal counsel, a public announcement with respect to such
deferment and shall, with the advice of the legal counsel, take such other
actions as may be deemed necessary or desirable with respect to the
dissemination of such information.
ARTICLE V
COVENANTS
SECTION 5.01. FURTHER ASSURANCES. Parent and Spin Company shall use all
reasonable efforts to:
(a) take or cause to be taken all actions, and do or cause to be done
all things reasonably necessary, proper or advisable under applicable Law and
agreements or otherwise to consummate and make effective the transactions
contemplated hereby, including without limitation using commercially reasonable
efforts to obtain any consents and approvals from, enter into any amendatory
agreements with and make any applications, registrations or filings with, any
third Person or any Governmental Authority necessary or desirable in order to
consummate the transactions contemplated hereby or to carry out the purposes of
this Agreement; and
(b) execute and deliver such further instruments and documents and take
such other actions as the other party may reasonably request in order to
consummate the transactions contemplated hereby and effectuate the purposes of
this Agreement.
SECTION 5.02. PARENT NAME. At a time mutually agreeable to the Parties,
Parent shall grant Spin Company all the rights to use the name "Single Source"
and all names derived from it, and Parent shall amend its Article of
Incorporation to change its name to any name of Parent's choice.
SECTION 5.03. SUPPLIES AND DOCUMENTS. Until such time as the name of
Parent is changed in accordance with SECTION 5.02 above, Spin Company will allow
Parent the right to use existing supplies and documents which have imprinted
thereon the name "Single Source" to the extent that such supplies and documents
were existing in the inventory of Parent.
SECTION 5.04. ASSUMPTION AND SATISFACTION OF LIABILITIES. Except as
otherwise specifically set forth in any Ancillary Agreement, from and after the
Distribution Date:
(a) Parent shall, and shall cause each of the other members of the
Parent Group over which it has legal or effective direct or indirect control to,
assume, pay, perform and discharge all Parent Liabilities in accordance with
their terms, which determinable, and otherwise as determined in accordance with
the practice of the Parties prior to the Distribution;
(b) Spin Company shall, and shall cause each of the other members of
the Spin Company Group over which it has legal or effective direct or indirect
control to, assume, pay, perform and discharge all Spin Company Liabilities in
accordance with their terms, when determinable, and otherwise as determined in
accordance with the practice of the Parties prior to the Distribution; and
SECTION 5.05. NO REPRESENTATIONS OR WARRANTIES; CONSENTS.
(a) GENERAL. Each of the parties hereto understands and agrees that no
party hereto is, in this Agreement or in any other agreement or document
contemplated by this Agreement (including the Ancillary Agreements) or
otherwise, making any representation or warranty whatsoever, including without
limitations, any representation or warranty:
(i) as to the value or freedom from encumbrance of, or any
other matter concerning, any assets of such party; or
(ii) as to the legal sufficiency to convey title to any asset
as of the execution, delivery and filing of this Agreement or any Ancillary
Agreement, including, without limitation, any Conveyancing and Assumption
Instrument.
(b) DISCLAIMER OF MERCHANTABILITY OR FITNESS OF ASSETS. Each Party
hereto further understands and agrees that there are no warranties, express or
implied, as to the merchantability or fitness of any of the assets either
transferred to or retained by the Parent Group or the Spin Company Group,
pursuant to Corporate Restructuring Transactions and the other terms and
provisions of this Agreement or any Ancillary Agreement, and all such assets
that are so transferred will be transferred on an "AS IS, WHERE IS" basis, and
the Party to which any such assets are transferred hereunder, or which retains
assets hereunder, shall prove to be insufficient or that the title of such Party
or any other member of its respective Group to any such assets shall be other
than good and marketable and free from encumbrances.
(c) NO REPRESENTATIONS OR WARRANTIES REGARDING CONSENTS. Each of the
Parties hereto understands and agrees that no Party hereto is, in this Agreement
or any Ancillary Agreement or in any other agreement or document contemplated by
this Agreement or any Ancillary Agreement or otherwise, representing or
warranting in any way that the obtaining of any consents or approvals, the
execution and delivery of any amendatory agreements and the making of any
filings or applications contemplated by this Agreement will satisfy the
provisions of any or all applicable agreements or the requirements of any or all
applicable Law. Each of the Parties hereto further agrees and understands that
the Party to which any assets are transferred as contemplated by the Corporate
Restructuring Transactions or the other provisions of this Agreement shall bear
the economic and legal risk that any necessary consents or approvals are not
obtained, that any necessary amendatory agreements are not executed and
delivered or that any requirements of Law are not complied with.
(d) COVENANT TO USE REASONABLE EFFORTS TO OBTAIN CONSENTS.
Notwithstanding the provisions of SECTION 5.05(C) above, each of the Parties
hereto shall (and shall cause each other member of its respective Group over
which it has direct or indirect legal or effective control to) use reasonable
efforts to obtain all consents and approvals, to enter into all amendatory
agreements and to make all filings and applications that may be reasonably
required for the consummation of the transactions contemplated by this Agreement
and shall take all such further reasonable actions as shall be reasonably
necessary to preserve for each of the Parent Group and the Spin Company Group,
to the greatest extent feasible, the economic and operational benefits of the
allocation of assets and Liabilities contemplated by this Agreement. In case at
any time after the Distribution Date any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party to this Agreement shall take all such necessary or
desirable action.
SECTION 5.06. REMOVAL OF CERTAIN GUARANTEES.
(a) REMOVAL OF PARENT GROUP AS GUARANTOR OF SPIN COMPANY AND SPIN
COMPANY LIABILITIES. Except as otherwise contemplated in the Corporate
Restructuring Transactions or otherwise specified in any Ancillary Agreement,
Parent and Spin Company shall use commercially reasonable efforts to have, on or
prior to the Distribution Date, or as soon as practicable thereafter, Parent and
any other member of the Parent Group removed as a guarantor of, or obligor under
or for, any Spin Company Liability.
(b) REMOVAL OF SPIN COMPANY GROUP AS GUARANTOR OF PARENT LIABILITIES.
Except as otherwise contemplated in the Corporate Restructuring Transactions or
otherwise specified in any Ancillary Agreement, Parent and Spin Company shall
use commercially reasonable efforts to have, on or prior to the Distribution
Date, or as soon as practicable thereafter, Spin Company and any other member of
the Spin Company Group removed as a guarantor of, or obligor under or for, any
Parent Liability.
SECTION 5.07. PUBLIC ANNOUNCEMENTS. Each Party hereto shall consult
with each other before issuing any press release or otherwise issuing any other
similar written public statement with respect to this Agreement or the
Distribution and shall not issue any such press release or make any such public
statement without the prior consent of each other Party, which shall not be
unreasonably withheld; provided, however, that a Party may, without the prior
consent of any other Party, issue such press release or other similar written
public statement as may be required by Law or any listing agreement with a
securities exchange to which any Party hereto (or any member of such Party's
Group) is a party if it has used all reasonable efforts to consult with such
other Party and to obtain such Party's consent but has been unable to do so in a
timely manner.
SECTION 5.08. INTERCOMPANY AGREEMENTS. Effective as of the consummation
of the Distribution, Spin Company and Parent shall (and shall cause each other
member of its respective Group over which it has legal or effective direct or
indirect control) to terminate each and every agreement between it and any
member of the other Group other than this Agreement, any of the Ancillary
Agreements and any of the license agreements referred to in SECTION 2.06(E)
above; provided, however, that such termination shall not have any effect
whatsoever of any of its rights and/or obligations that accrued or were incurred
prior to the Distribution Date (subject to the terms of SECTION 2.13 above).
SECTION 5.09. TAX MATTERS. Parent and the Spin Company intend the
Distribution to be treated as fax-free distributions under Code Section 355 and
each such Party shall use its reasonable efforts to cause the Distribution to so
qualify. Neither Parent nor Spin Company shall intentionally take any action
that would cause:
(a) the Distribution to fail to qualify as tax-free distributions under
Code Section 355;
(b) any other transfer described in the Corporate Restructuring
Transaction that is intended to qualify as tax- free transfer under Code Section
332, 351, 355, or 368 to fail to so qualify; or
(c) Parent or any Parent Subsidiary to recognize any gains relating to
deferred intercompany transactions or excess loss accounts between or among
members of affiliated groups of corporations of which Parent is the common
parent.
ARTICLE VI
ACCESS TO INFORMATION
SECTION 6.01. PROVISION, TRANSFER AND DELIVERY OF APPLICABLE SPIN
COMPANY RECORDS.
(a) PROVISIONS, TRANSFER AND DELIVERY OF SPIN COMPANY RECORDS. Each of
Parent and Spin Company shall (and shall cause each other member of its
respective Group over which it has legal or effective direct or indirect control
to) arrange, as soon as practicable following the Distribution Date for the
transportation (at Spin Company's cost) to Spin Company of the Books and Records
in its possession (i) that relate primarily to the Spin Company Business or are
necessary to operate the Spin Company Business (collectively, the "SPIN COMPANY
RECORDS"), and (ii) that consist of the corporate minutes of the Board of
Directors (or committees thereof) of Parent or otherwise relate to the business,
administrative and management operations of Parent as the parent holding company
of the Parent Business and Spin Company Business (collectively, the "PARENT
CORPORATE RECORDS") except to the extent such items are already in the
possession of any member of the Spin Company Group. The Spin Company Records and
the Parent Corporate Records shall be the property of Spin Company, but shall be
available to Parent Company for review and duplication, at its cost, pursuant to
the terms of this Agreement.
(b) PROVISION, TRANSFER AND DELIVERY OF PARENT RECORDS. Spin Company
shall (and shall cause each other member of its respective Group over which it
has legal or effective direct or indirect control to) arrange as soon as
practicable following the Distribution Date for the transportation (at Parent's
cost) to Parent of the Books and Records in its possession that relate primarily
to tParent Business or are necessary to operate the Parent Business
(collectively, the "PARENT RECORDS"), except to the extent such items are
already in possession of any member of the Parent Group. The Parent Records
shall be the property of Parent, but shall be available to Spin Company for
review and duplication, at its cost, pursuant to the terms of this Agreement.
SECTION 6.02. ACCESS TO INFORMATION.
(a) ACCESS TO BOOKS AND RECORDS. Unless otherwise contemplated by
SECTION 6.06 hereof, from and after the Distribution Date, Parent and Spin
Company shall (and shall cause each of the other members of its respective Group
over which it has legal or effective direct or indirect control to) afford to
each other party and its authorized accountants, counsel and other designated
representatives reasonable access and duplicating rights (all such duplicating
costs to be borne by the requesting party) during normal business hours, subject
to appropriate restrictions for classified, privileged or confidential
information, to the personnel, properties, Books and Records and other data and
information of such Party and each member of such Party's Group relating to
operations prior to the Distribution insofar as such access is reasonably
required by the other requesting Party for the conduct of the requesting Party's
business (but not for competitive purposes).
(b) PROVISIONS OF POST-DISTRIBUTION COMMISSION FILINGS. For a period of
five years following the Distribution Date, Parent and Spin Company shall (and
shall cause each of the other members of its respective group over which it has
legal or effective direct or indirect control to) provide to the other, promptly
following such time at which such documents are filed with the Commission, all
documents (other than documents or portions thereof for which confidential
treatment has been granted or a request for confidential treatment is pending)
filed by it and by each other member of such party's Group with the Commission
pursuant to the Securities Act or periodic and interim reporting requirements of
the Exchange Act and the rules and regulations of the Commission promulgated
thereunder.
SECTION 6.03. REIMBURSEMENT; OTHER MATTERS. Except to the extent
otherwise contemplated hereby or by any Ancillary Agreement, a Party providing
Books and Records or access to information to any other Party (or such Party's
representatives) under this ARTICLE VI shall be entitled to receive from such
other party, upon the presentation of invoices therefore, payments for such
amounts, relating to supplies, disbursements and other out-of-pocket expenses,
as may be reasonably incurred in providing such Books and Records or access to
information.
SECTION 6.04. CONFIDENTIALITY.
(a) GENERAL RESTRICTION ON DISCLOSURE. Parent and Spin Company shall
not (and shall not permit any other member of its respective Group over which it
has legal or effective direct or indirect control to) use or permit the use of
(without the prior written consent of the other) and shall hold, and shall cause
its consultants, advisors and other representatives and any other member of its
respective Group (over which it has legal or effective direct or indirect
control) to hold, in strict confidence, all information in its possession,
custody or control to the extent such information either
(i) relates to the periods up to the Distribution Date,
(ii) relates to any Ancillary Agreement, or
(iii) is obtained in the course of performing services for the
other party to any Ancillary Agreement, and each party hereto shall not (and
shall cause each other member of its respective Group over which it has legal or
effective direct or indirect control not to) otherwise release or disclose such
information to any other Person, except its auditors, attorneys, financials
advisors, bankers and other consultants and advisors, without prior written
consent of the other affected party or parties, unless compelled to disclose
such information by judicial or administrative process or unless such disclosure
is required by Law and such party has use reasonable efforts to consult with the
other affected party or parties prior too such disclosure.
(b) COMPELLED DISCLOSURE. To the extent that a Party hereto is
compelled by judicial or administrative process to disclose such information
under circumstances in which any evidentiary privilege would be available, such
Party agrees to assert such privilege in good faith prior to making such
disclosure. Each of the Parties shall consult with the other Party in connection
with any such judicial or administrative process, including without limitation,
in determining whether any privilege is available, and shall not object to each
such relevant Party and its counsel participating in any hearing or other
proceeding (including, without limitation, any appeal of an initial order to
disclose) in respect of such disclosure and assertion or privilege.
(c) EXCEPTIONS TO CONFIDENTIAL TREATMENT. Anything herein to the
contrary notwithstanding, no Party hereto shall be prohibited from using or
permitting the use of, or required to hold in confidence, any information to the
extent that (i) such information has been or is in the public domain through no
fault of such Party, (ii) such information is, after the Distribution Date,
lawfully acquired from other sources by such Party, or (iii) this Agreement, any
Ancillary Agreement or any other agreement entered into pursuant hereto permits
the use or disclosure of such information by such Party.
SECTION 6.05. WITNESS SERVICES. At all times from and after the
Distribution date, Parent and Spin Company shall use its reasonable efforts to
make available to each other Party hereto, upon reasonable written request, the
officers, directors, employees and agents of each member of its respective Group
for fact finding, consultation or interviews and as witness to the extent that:
(a) such persons may reasonably be required in connection with the
prosecution or defense of any Action in which the requesting Party or any member
of its respective Group may from time to time be involved; and
(b) there is no conflict in the Action between the requesting Party or
any member of its respective Group and the Party to which a request is made
pursuant to this SECTION 6.05 or any member of such Party's Group. Except as
otherwise agreed by the Parties, a Party providing witness services to any other
Party under this Section shall be entitled to receive from the recipient of such
services, upon the presentation of invoices therefor, payments for such amounts,
relating to supplies, disbursements and other out-of-pocket expenses (but not
salary expenses) and direct and indirect costs of employees who participate in
fact finding, consultation or interviews or are witnesses, as are actually and
reasonably incurred in providing such fact finding, consulting, interviews or
witness services by the party providing such services.
SECTION 6.06. RETENTION OF RECORDS. Except when a longer period is
required by Law or is specifically provided for herein or in any Ancillary
Agreement, each Party hereto shall cause the members of its Group over which it
has legal or effective direct or indirect control, to retain, for a period of at
least seven years following the Distribution Date, all material information
(including without limitation all material Books and Records) relating to such
Group and its operations prior to the Distribution Date. Notwithstanding the
foregoing, any party hereto may offer in writing to deliver to the other Party
all or portion of such information as it relates to members of the offering
Party's Group and, if such offer is accepted in writing within ninety (90) days
after receipt thereof, the offering Party shall promptly arrange for the
delivery of such information (or copies thereof) to the accepting Party (at the
expense of such accepting Party). If such offer is not so accepted, the offered
information may be destroyed or otherwise disposed of by the offering Party at
any time thereafter.
SECTION 6.07. PRIVILEGED MATTERS.
(a) PRIVILEGED INFORMATION. The Parties hereto shall, and shall cause
the members of its Group over which it has legal or effective direct or indirect
control to, use its reasonable efforts to maintain, preserve, protect and assert
all privileges including, without limitation, all privileges arising under or
relating to the attorney-client relationship (including without limitation the
attorney-client and attorney work product privileges) that relate directly or
indirectly to any member of any other Group for any period prior to the
Distribution Date ("PRIVILEGE" or "PRIVILEGES"). The Parties hereto shall use
reasonable efforts not to waive, or permit any member of its Group over which it
has legal or effect direct or indirect control to waive, any such Privilege that
could be asserted unapplicable Law without the prior written consent of the
other Parties. With respect to each Party, the rights and obligations created by
this SECTION 6.07 shall apply to all information as to which a member of any
Group did assert or, but for the Distribution, would have been entitled to
assert the protection of a Privilege ("PRIVILEGED INFORMATION") including, but
not limited to, any and all information that either:
(i) was generated or received prior to the Distribution Date
but which, after the Distribution, is in the possession of a member of another
Group; or
(ii) is generated or received after the Distribution Date but
refers to or relates to Privileged Information that was generated or received
prior to the Distribution Date.
(b) PRODUCTION OF PRIVILEGED INFORMATION. Upon receipt by a Party or
any member of its Group of any subpoena, discovery or other request that
arguably calls for the production or disclosure of Privileged Information, or if
a Party or any member of its Group obtains knowledge that any current or former
employee of such Party or any member of its Group has received any subpoena,
discovery or other request that arguably calls for the production or disclosure
of Privileged Information, such party shall promptly notify the other party of
the existence of the request and shall provide the other Party a reasonable
opportunity to review the information and to assert any rights it may have under
this SECTION 6.07 or otherwise to prevent the production or disclosure of
Privileged Information. No Party will, or will permit any member of its Group
over which it has direct or indirect legal or effective control to, produce or
disclose any information arguably covered by a Privilege under this SECTION 6.07
unless:
(i) the party has provided its express written consent to such
production or disclosure; or
(ii) a court of competent jurisdiction has entered an order
which is not then appealable or a final, nonappealable order finding that the
information is not entitled to protection under any applicable privilege.
(c) NO WAIVER. The Parties hereto understand and agree that the
transfer of any Books and Records or other information between any members of
the Parent Group or the Spin Company Group shall be made in reliance on the
agreements of Parent and Spin Company, as set forth in SECTION 6.04 and SECTION
6.07 hereof, to maintain the confidentiality of Privileged Information and to
assert and maintain all applicable Privileges. The Books and Records being
transferred pursuant to SECTION 6.01 hereof, the access to information being
granted pursuant to SECTION 6.02 hereof, the agreement to provide witnesses and
individuals pursuant to this Agreement shall not be deemed a waiver of any
Privilege that has been or may be asserted under this Section or otherwise.
ARTICLE VII
INDEMNIFICATION
SECTION 7.01. INDEMNIFICATION BY PARENT. Except as otherwise
specifically set forth in any provision of this Agreement or of any Ancillary
Agreement, Parent shall, to the fullest extent permitted by Law, indemnify,
defend and hold harmless the Spin Company Indemnified Parties from and against
any and all Indemnifiable Losses of the Spin Company Indemnified Parties arising
out of, by reason of or otherwise in connection with either (i) the Parent
Liabilities, or (ii) the breach by Parent of any provision of this Agreement or
any Ancillary Agreement.
SECTION 7.02. INDEMNIFICATION BY SPIN COMPANY. Except as otherwise
specifically set forth in any provision of this Agreement or of any Ancillary
Agreement, Spin Company shall, to the fullest extent permitted by Law,
indemnify, defend and hold harmless the Parent Indemnified Parties from and
against any and all Indemnifiable Losses of the Parent Indemnified Parties
arising out of, by reason of or otherwise in connection with either (i) the Spin
Company Liabilities, or (ii) the breach by Spin Company of any provision of this
Agreement or any Ancillary Agreement.
SECTION 7.03. LIMITATIONS ON INDEMNIFICATION OBLIGATIONS.
(a) REDUCTIONS FOR INSURANCE PROCEEDS AND OTHER RECOVERIES. The amount
that any Party (an "INDEMNIFYING PARTY") is or may be required to pay any other
Person (an "INDEMNIFIED PARTY") pursuant to SECTION 7.01 or SECTION 7.02, as
applicable, shall be reduced (retroactively or prospectively) by any Insurance
Proceeds or other amount actually recovered from third parties by or on behalf
of such Indemnified Party in respect of the related Indemnifiable Losses (except
that nothing herein shall be construed as requiring any Indemnified Party in
respect of any Spin Company Liability to file any claim for insurance). The
existence of a claim by an Indemnified Party for insurance or against a third
party in respect of any Indemnifiable Loss shall not, however, delay any payment
pursuant to the indemnification provisions contained herein and otherwise
determined to be due and owing by an Indemnifying Party. Rather the Indemnifying
Party shall make payment in full of such amount so determined to be due and
owing by it against an assignment by the Indemnified Party to the Indemnifying
Party of the entire claim of the Indemnified Party for such insurance or against
such third party. Notwithstanding any other provisions of this Agreement, it is
the intention of the parties hereto that no insurer or any other third party
shall be (i) entitled to a benefit it would not be entitled to receive in the
absence of the foregoing indemnification provisions or (ii) relieved of the
responsibility to pay any claims for which it is obligated. If an Indemnified
Party shall have received the payment required by this Agreement from an
Indemnifying Party in respect of any Indemnifiable Losses and shall subsequently
actually receive Insurance Proceeds or other amounts in respect of such
Indemnifiable Losses, then such Indemnified Party shall hold such Insurance
Proceeds in trust for the benefit of such Indemnifying Party and shall pay to
such Indemnifying Party a sum equal to the amount of such Insurance Proceeds or
other amounts actually received, up to the aggregate amount of any payments
received from such Indemnifying Party pursuant to this Agreement in respect of
such Indemnifiable Losses.
SECTION 7.04. PROCEDURES FOR INDEMNIFICATION. Except as otherwise
specifically provided in any Ancillary Agreement:
(a) NOTICE OF THIRD PARTY CLAIMS. If a claim or demand is made against
an Indemnified Party by any Person who is not a member of the Parent Group or
Spin Company Group (a "THIRD PARTY CLAIM") as to which such Indemnified Party is
entitled to indemnification pursuant to this Agreement, such Indemnified Party
shall notify the Indemnifying Party in writing, and in reasonable detail, of the
Third Party Claim promptly (and in any event within fifteen (15) business days)
after receipt by such Indemnified Party of written notice of the Third Party
Claim; provided, however, that failure to give such notification shall not
affect the Indemnified Party's right to indemnification hereunder except to the
extent the Indemnifying Party shall have been actually prejudiced as a result of
such failure (except that the Indemnifying Party shall not be liable for any
expenses incurred during the period in which the Indemnified Party failed to
give such notice). Thereafter, the Indemnified Party shall deliver to the
Indemnifying Party, promptly (and in any event within fifteen (15) business
days) after the Indemnified Party's receipt thereof, copies of all notices and
documents (including court papers) received by the Indemnified Party relating to
the Third Party Claim.
(b) LEGAL DEFENSE OF THIRD PARTY CLAIMS. If a Third Party Claim is made
against an Indemnified Party, the Indemnifying Party shall be entitled to
participate in the defense thereof and, if it so chooses, to assume the defense
thereof with counsel selected by the Indemnifying Party, which counsel shall be
reasonably satisfactory to the Indemnified Party. Should the Indemnifying Party
so elect to assume the defense of a Third Party Claim, the Indemnifying Party
shall not be liable to the Indemnified Party for legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof. If the Indemnifying Party assumes such defense, the Indemnified Party
shall have the right to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by the
Indemnifying Party, it being understood that the Indemnifying Party shall
control such defense. The Indemnifying Party shall be reliable for the
reasonable fees and expenses of counsel employed by the Indemnified Party for
any period during which the Indemnifying Party has failed to assume the defense
of the Third Party Claim (other than during the period prior to the time the
Indemnified Party shall have given notice of the Third Party Claim as provided
above). If the Indemnifying Party so elects to assume the defense of any Third
Party Claim, all of the Indemnified Parties shall cooperate with the
Indemnifying Party in the defense or prosecution thereof. Notwithstanding the
foregoing:
(i) the Indemnifying Party shall not be entitled to assume the
defense of any Third Party Claim (and shall be liable to the Indemnified Party
for the reasonable fees and expenses of counsel incurred by the Indemnified
Party in defending such Third Party Claim) if the Third Party Claim seeks an
order, injunction or other equitable relief or relief for other than money
damages against the Indemnified Party which the Indemnified Party reasonably
determines, after conferring with its counsel, cannot be separated from any
related claim for money damages; provided, however, that if such equitable
relief or other relief portion of the Third Party Claim can be separated from
that for money damages, the Indemnifying Party shall be entitled to assume the
defense of the portion relating to money damages;
(ii) an Indemnifying Party shall not be entitled to assume the
defense of any Third Party Claim (and shall be liable for the reasonable fees
and expenses of counsel incurred by the Indemnified Party in defending such
Third Party Claim) if, in the Indemnified Party's reasonable judgment, a
conflict of interest between such Indemnified Party and such Indemnified Party
exists in respect of such Third Party Claim; and
(iii) if at any time after assuming the defense of a Third
Party Claim an Indemnifying Party shall fail to prosecute or withdraw from the
defense of such Third Party Claim, the Indemnified Party shall be entitled to
resume the defense thereof and the Indemnifying Party shall be liable for the
reasonable fees and expenses of counsel incurred by the Indemnified Party in
such defense.
(c) SETTLEMENT OF THIRD PARTY CLAIMS. Except as otherwise provided
below in SECTION 7.07(c), or as otherwise specifically provided in any Ancillary
Agreement, if the Indemnifying Party has assumed the defense of any Third Party
Claim, then
(i) in no event will the Indemnified Party admit any liability
with respect to, or settle compromise or discharge, any Third Party Claim
without the Indemnifying Party's prior written consent; provided however, that
the Indemnified Party shall have the right to settle, compromise or discharge
such Third Party Claim without the consent of the Indemnifying Party if the
Indemnifying Party releases the Indemnifying Party from its indemnification
obligation hereunder with respect to such Third Party Claim and such settlement,
compromise or discharge would not otherwise adversely affect the Indemnifying
Party, and
(ii) the Indemnified Party will agree to any settlement,
compromise or discharge of a Third Party Claim that the Indemnifying Party may
recommend and that by its terms obligates the Indemnifying Party to pay the full
amount of the liability in connection with such Third Party Claim and releases
the Indemnified Party completely in connection with such Third Party Claim and
that would not otherwise adversely affect the Indemnified Party
provided, however, that the Indemnified Party may refuse to agree to any such
settlement, compromise or discharge if the Indemnified Party agrees that the
Indemnifying Party's indemnification obligation with respect to such Third Party
Claim shall not exceed the amount that would be required to be paid by or on
behalf of the Indemnifying Party in connection with such settlement, compromise
or discharge. If the Indemnifying Party has not assumed the defense of a Third
Party Claim then in no event shall the Indemnified Party settle, compromise or
discharge such Third Party Claim without providing prior written notice to the
Indemnifying Party, which shall have the option within fifteen (15) business
days following receipt of such notice to:
(i) approve and agree to pay the settlement,
(ii) approve the amount of the settlement, reserving the right
to contest the Indemnified Party's right to indemnity pursuant to this
Agreement,
(iii) disapprove the settlement and assume in writing all past
and future responsibility for such Third Party Claim (including all of
Indemnified Party's prior expenditures in connection therewith), or
(iv) disapprove the settlement and continue to refrain from
participation in the defense of such Third Party Claim, in which event the
Indemnifying Party shall have no further right to contest the amount or
reasonableness of the settlement if the Indemnified Party elects to proceed
therewith.
In the event the Indemnifying Party does not respond to such written notice from
the Indemnified Party within such fifteen (15) business-day period, the
Indemnifying Party shall be deemed to have elected option (i).
(e) OTHER CLAIMS. Any claim on account of an Indemnifiable Loss that
does not result from a Third Party Claim shall be asserted by written notice
given by the Indemnified Party to the applicable Indemnifying Party. Such
Indemnifying Party shall have a period of fifteen (15) business days after the
receipt of such notice within which to respond thereto. If such Indemnifying
Party does not respond within such fifteen (15) business-day period, such
Indemnifying Party shall be deemed to have refused to accept responsibility to
make payment. If such Indemnifying Party does not respond within such fifteen
(15) business-day period or rejects such claim in whole or in part, such
Indemnified Party shall be free to pursue such remedies as may be available to
such party under applicable Law or this Agreement.
SECTION 7.05. INDEMNIFICATION PAYMENTS. Indemnification required by
this ARTICLE VII shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received or
loss, liability, claim, damage or expense is incurred.
SECTION 7.06. OTHER ADJUSTMENTS. In addition to any adjustments
required pursuant to SECTION 7.04 hereof, if the amount of any Indemnifiable
Losses shall, at any time subsequent to any indemnification payment made by the
Indemnifying Party pursuant to this ARTICLE VII, be reduced by recovery,
settlement or otherwise, the amount of such reduction, less any expenses
incurred in connection therewith, shall promptly be repaid by the Indemnified
Party to the Indemnifying Party, up to the aggregate amount of any payments
received from such Indemnifying Party pursuant to this Agreement in respect of
such Indemnifiable Losses.
SECTION 7.07. OBLIGATIONS ABSOLUTE. The foregoing contractual
obligations of indemnification set forth in this ARTICLE VII shall:
(a) also apply to any and all Third Party Claims that allege that any
Indemnified Party is independently, directly, vicariously or jointly and
severally liable to such Third Party;
(b) to the extent permitted by applicable Law, apply even if the
Indemnified Party is partially negligent or otherwise partially culpable or at
fault, whether or not such liability arises under any doctrine of strict
liability; and
(c) be in addition to any liability or obligation that an Indemnifying
Party may have other than pursuant to this Agreement.
SECTION 7.08. SURVIVAL OF INDEMNITIES. The obligations of Parent and
Spin Company under this ARTICLE VII shall survive the sale or other transfer by
any of them of any assets or businesses or the assignment by any of them of any
Liabilities, with respect to any Indemnifiable Loss of any Indemnifiable Party
related to such assets, business or Liabilities.
SECTION 7.9 REMEDIES CUMULATIVE. The remedies provided in this ARTICLE
VII shall be cumulative and shall not preclude assertion by any Indemnified
Party of any other rights or the seeking of any and all other remedies against
any Indemnifying Party.
SECTION 7.10. COOPERATION OF THE PARTIES WITH RESPECT TO ACTIONS AND
THIRD PARTY CLAIMS.
(a) IDENTIFICATION OF PARTY IN INTEREST. Any party to this Agreement
that has responsibility for an Action of Third Party Claim shall identify itself
as the true party in interest with respect to such Action or Third Party Claim
and shall use its reasonable efforts to obtain the dismissal of any other party
to this Agreement from such Action or Third Party Claim.
(b) DISPUTES REGARDING RESPONSIBILITY FOR ACTIONS AND THIRD PARTY
CLAIMS. If there is uncertainty or disagreement concerning which party to this
Agreement has responsibility for any Action of Third Party Claim, the following
procedure shall be followed in an effort to reach agreement concerning
responsibility for such Action or Third Party Claim:
(i) The parties in disagreement over the responsibility for an
Action or Third Party Claim shall exchange brief written statements setting
forth their position concerning which party has responsibility for the Action or
Third Party Claim in accordance with the provisions of this ARTICLE VII. These
statements shall be exchanged within five (5) days of a party putting another
party on written notice that the other party is or may be responsible for the
Action or Third Party Claim.
(ii) If within five (5) days of the exchange of the written
statement of each party's position agreement is not reached on responsibility
for the Action or Third Party Claim, the General Counsel for each of the parties
in disagreement over responsibility for the Action or Third Party Claim shall
speak either by telephone or in person to attempt to reach agreement on
responsibility for the Action or Third Party Claim.
(a) EFFECT OF FAILURE TO FOLLOW PROCEDURE. Failure to follow the
procedure set forth in clause (b) above shall not affect the rights and
responsibilities of the parties as established by other provisions of this
ARTICLE VII.
(b) EXCHANGE OF INFORMATION. In connection with the handling of current
or future Actions or Third Party Claims, the parties may determine that it is in
their mutual interest to exchange privileged or confidential information. If so,
the Parties agree to discuss whether it is in their mutual interest to enter
into a joint defense agreement or information exchange agreement to maintain
confidentiality of their communications and to permit them to maintain the
confidentiality of proprietary information or information that is otherwise
confidential or subject to an applicable privilege, including but not limited to
the attorney-client, work product, executive, deliberative process, or
self-evaluation privileges.
SECTION 7.11. CONTRIBUTION. To the extent that any indemnification
provided for under SECTION 7.01 OF SECTION 7.02 is unavailable to an Indemnified
Party, then the Indemnifying Party under such Section, in lieu if indemnifying
such Indemnified Party thereunder, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Indemnifiable Losses (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Indemnifying Party on the one hand and the Indemnified Party on the other
hand from the transaction or other matter that in the Indemnifiable Losses or
(ii) if the allocation provided by the clause (i) above is not permitted by
applicable Law, in such proportion as is appropriate to reflect not only the
relative benefits referred to on clause (i) above but also the relative fault of
the Indemnifying Party on the one hand and of the Indemnified Party on the other
hand in connection with the action, inaction, statements or omissions that
resulted in such Indemnifiable Losses as well as any other relevant equitable
considerations.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. COMPLETE AGREEMENT; CONSTRUCTION. This Agreement,
including the Exhibits and Schedules hereto, and the Ancillary Agreements shall
constitute the entire agreement between the Parties with respect to the subject
matter hereof and shall supercede all previous negotiations, commitments and
writings with respect to such subject matter. In the event of any inconsistency
between this Agreement and any Schedule or Exhibit hereto, the Schedule or
Exhibit, as the case may be, shall prevail. 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 any Ancillary Agreement, such Ancillary Agreement shall control.
SECTION 8.02. ANCILLARY AGREEMENTS. Any applicable Ancillary Agreements
are listed in EXHIBIT B attached hereto.
SECTION 8.03. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to the other parties.
SECTION 8.04. SURVIVAL OF AGREEMENTS. Except as otherwise expressly
provided herein, all covenants and agreements of the parties contained in this
Agreement shall survive the Distribution Date.
SECTION 8.05. RESPONSIBILITY FOR EXPENSES.
(a) EXPENSES INCURRED ON OR PRIOR TO DISTRIBUTION DATE. Subject to the
provisions of SECTION 8.05 (C) below and except as otherwise set forth in this
Agreement or any Ancillary Agreement, all costs and expenses incurred on or
prior to the Distribution Date (whether or not paid on or prior to the
Distribution Date) in connection with the preparation, execution, delivery and
implementation of this Agreement and any Ancillary Agreement, the Information
Statements and the Distribution, and the consummation of the transactions
contemplated hereby and thereby shall be charged to and paid for by Spin
Company.
(b) EXPENSES INCURRED OR ACCRUED AFTER DISTRIBUTION DATE. Subject to
the provisions of SECTION 8.05(C) below and except as otherwise set forth in
this Agreement or any Ancillary Agreement, each Party shall bear its own costs
and expenses first incurred or accrued after the Distribution Date.
(c) ENVIRONMENTAL EXPENSES. Notwithstanding the provision of SECTION
8.05(A) and SECTION 8.05(B) above, expenses and other costs incurred in
connection with compliance with any Environmental Laws applicable to the
transactions contemplated hereby shall be paid by the Party that after the
Distribution Date will, or that this Agreement contemplated will, own the assets
or operate the business subject to such Environmental Laws.
SECTION 8.06. NOTICES. All notices and other communications to a party
hereunder shall be in writing and hand delivered, sent by facsimile, or by
overnight courier and will be deemed given on the date on which the notice is
received by such party at the address for such party set forth below (or at such
other address for the party as the party shall, from time to time, specify by
like notice to the other parties):
If to Parent, at: [Parent Address]
[Parent Address]
[Parent Address]
[Parent Fax]
Attention:
If to Spin Company, at: Single Source Electronic Transactions, Inc.
00000 Xxxxx Xxxxx, Xxxx X
Xxxxxx Xxxx, XX 00000
Facsimile (000) 000-0000
Attention: President
SECTION 8.07. WAIVERS. The failure of any Party hereto to require
strict performance by any other Party of any provision in this Agreement will
not waive or diminish that Party's right to demand strict performance thereafter
of that or any other provision hereof.
SECTION 8.08. AMENDMENTS. Subject to the terms of SECTION 8.11 hereof,
this Agreement may not be modified or amended except by an agreement in writing
signed by the Parties hereto.
SECTION 8.09. ASSIGNMENT. This Agreement shall be assignable in whole
in connection with a merger or consolidation or the sale of all or substantially
all the assets of a Party hereto so long as the resulting, surviving or
transferee entity assumes all the obligations of the relevant Party hereto by
operation of Law or pursuant to an agreement in form and substance reasonably
satisfactory to the other Parties to this Agreement. Otherwise this Agreement
shall not be assignable, in whole or in part, directly or indirectly, by any
Party hereto without the prior written consent of the others, and any attempt to
assign any rights or obligations arising under this Agreement without such
consent shall be void.
SECTION 8.10. SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the Parties
and their respective permitted successors and permitted assigns.
SECTION 8.11. TERMINATION. This Agreement may not be terminated except
by an agreement in writing signed by the Parties hereto.
SECTION 8.12. ATTORNEY FEES. A Party in breach of this Agreement shall,
on demand, indemnify and hold harmless the other Parties hereto for and against
all out-of-pocket expenses, including, without limitation, reasonable legal
fees, incurred by such other Party by reason of the enforcement and protection
of its rights under this Agreement. The payment of such expenses is in addition
to any other relief to which such other Party may be entitled hereunder or
otherwise.
SECTION 8.13. TITLE AND HEADINGS. Titles and headings to Sections
herein are inserted for the convenience of reference only and are not intended
to be a part of or to affect the meaning or interpretation of this Agreement.
SECTION 8.14. EXHIBITS AND SCHEDULES. The Exhibits and Schedules
attached hereto shall be construed with and as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein.
SECTION 8.15. GOVERNING LAW. All questions and/or disputes concerning
the construction, validity and interpretation of this Agreement and the
schedules and exhibits hereto shall be governed by the internal laws, and not
the law of conflicts, of the State of California. Each of the Parties to this
Agreement hereby irrevocably and unconditionally agrees to be subject to, and
hereby consents and submits to, the jurisdiction of the courts of the State of
California and of the federal courts sitting in the County of Los Angeles, State
of California.
SECTION 8.18. SEVERABILITY. In the event any one or more of the
provisions or part thereof contained in this Agreement should be held invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby. The Parties shall endeavor in good faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions, the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
SECTION 8.19. SUBSIDIARIES. Each of the Parties hereto shall cause to
be performed, and hereby guarantee the performance of, all actions, agreements
and obligations set forth herein to be performed by any Subsidiary of such Party
which is contemplated to be a Subsidiary of such party on and after the
Distribution Date.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
Single Source Financial SINGLE SOURCE ELECTRONIC TRANSACTIONS, INC.
Services Corporation
BY: BY:
ITS: ITS:
