Exhibit 2.1
EXECUTION COPY
--------------------------------------------------------------------------------
ROLLUP AGREEMENT
among
[LOCAL FIRM],
PRICEWATERHOUSECOOPERS INTERNATIONAL LIMITED,
PwCC LIMITED
and
THE NONCOMPETE PARTIES
Dated as of April 11, 2002
--------------------------------------------------------------------------------
ROLLUP AGREEMENT
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions
SECTION 1.1. Definitions ................................................... 2
ARTICLE II
Local Transaction and Exchange
SECTION 2.1. Local Transaction and Transfer of the Consulting Business ..... 23
SECTION 2.2. Transfer of Sub Shares and Issuance of BermudaCo Shares ....... 24
SECTION 2.3. Modifications ................................................. 27
ARTICLE III
Closings
SECTION 3.1. Closings ...................................................... 28
SECTION 3.2. Net Book Value Adjustment ..................................... 29
ARTICLE IV
Conditions to Escrow Closing and Closing
SECTION 4.1. Conditions to BermudaCo's Obligation to Consummate the Escrow
Closing ..................................................... 32
SECTION 4.2. Conditions to the Territory's Obligation to Consummate the
Escrow Closing .............................................. 34
SECTION 4.3. Condition to Delivery of the Escrow Release on the Closing Date 36
SECTION 4.4. Frustration of Closing Conditions ............................. 36
i
ARTICLE V
Representations and Warranties of the Territory
SECTION 5.1. Organization, Standing and Authority .......................... 37
SECTION 5.2. No Violation; Consents and Approvals .......................... 38
SECTION 5.3. Financial Statements .......................................... 38
SECTION 5.4. Absence of Changes or Events .................................. 39
SECTION 5.5. Taxes ......................................................... 39
SECTION 5.6. Title to Assets ............................................... 39
SECTION 5.7. Contracts ..................................................... 41
SECTION 5.8. Litigation .................................................... 43
SECTION 5.9. Employee and Related Matters .................................. 43
SECTION 5.10. Compliance with Laws .......................................... 45
SECTION 5.11. Labor Matters ................................................. 45
SECTION 5.12. Intellectual Property, etc .................................... 46
SECTION 5.13. Brokers ....................................................... 46
SECTION 5.14. Voting Requirements ........................................... 47
SECTION 5.15. Validity of Sub Shares ........................................ 47
SECTION 5.16. Noncompete Parties ............................................ 47
SECTION 5.17. Private Placement ............................................. 47
ARTICLE VI
Representations and Warranties of BermudaCo and PwCIL
SECTION 6.1. Organization, Standing and Authority ........................... 48
SECTION 6.2. No Violation; Consents and Approvals ........................... 49
SECTION 6.3. Validity of BermudaCo Shares ................................... 49
SECTION 6.4. Other Rollup Agreements ........................................ 49
ARTICLE VII
Covenants of the Territory and Sub
SECTION 7.1. Access ......................................................... 50
SECTION 7.2. Ordinary Conduct ............................................... 51
SECTION 7.3. Confidentiality ................................................ 51
SECTION 7.4. Preparation of Local Partner Information Memorandum and
Registration Statement; Partner Vote ......................... 52
SECTION 7.5. No Solicitation by the Territory ............................... 54
SECTION 7.6. Expenses ....................................................... 55
ii
SECTION 7.7. Implementation of Financial Controls .......................... 56
SECTION 7.8. Redemption of Paid-in-Capital and Memorandum Accounts ......... 56
SECTION 7.9. Compliance with No-Action Letter .............................. 56
SECTION 7.10. Acquired Assets Schedules ..................................... 56
SECTION 7.11. Special Provisions in the Event of Failure to Consummate the
Closing ..................................................... 57
SECTION 7.12. Covered Persons ............................................... 58
SECTION 7.13. Use of PricewaterhouseCoopers Name ............................ 59
SECTION 7.14. Delivery of Financial Statements .............................. 60
SECTION 7.15. Power of Attorney ............................................. 61
SECTION 7.16. Funding of Consulting Partner Benefit Plans ................... 61
SECTION 7.17. Right of First Offer .......................................... 61
ARTICLE VIII
Covenants of BermudaCo and PwCIL
SECTION 8.1. Performance of Obligations by BermudaCo After Closing Date .... 62
SECTION 8.2. Amendment of LuxCo and BermudaCo Constitutive Documents ....... 62
SECTION 8.3. Access ........................................................ 63
SECTION 8.4. [Reserved] .................................................... 63
SECTION 8.5. Compliance with No-Action Letter .............................. 63
SECTION 8.6. Replacement of Guarantees ..................................... 63
SECTION 8.7. Confidentiality ............................................... 64
SECTION 8.8. Compensation Matters .......................................... 64
SECTION 8.9. International Partner Approval ................................ 64
ARTICLE IX
Mutual Covenants
SECTION 9.1. Consents ...................................................... 64
SECTION 9.2. Publicity ..................................................... 65
SECTION 9.3. Reasonable Best Efforts ....................................... 66
SECTION 9.4. Regulatory Matters ............................................ 66
SECTION 9.5. Intercompany Arrangements ..................................... 66
SECTION 9.6. Further Assurances ............................................ 66
SECTION 9.7. Other Transaction Agreements .................................. 67
SECTION 9.8. Tax Matters ................................................... 67
SECTION 9.9. Accounts ...................................................... 69
SECTION 9.10. Real Estate Matters ........................................... 70
SECTION 9.11. Intellectual Property Matters ................................. 72
iii
SECTION 9.12. Insurance Policies and Claims Administration ................. 73
SECTION 9.13. Client Contracts ............................................. 75
ARTICLE X
Noncompetition
SECTION 10.1. Non-Competition .............................................. 76
SECTION 10.2. Additional Considerations and Agreements ..................... 78
SECTION 10.3. Termination of Article X ..................................... 79
SECTION 10.4. Miscellaneous ................................................ 79
SECTION 10.5. Amendments and Waivers ....................................... 80
SECTION 10.6. Dispute ...................................................... 80
SECTION 10.7. The Arbitrator ............................................... 80
SECTION 10.8. The Arbitration Proceeding ................................... 82
ARTICLE XI
Indemnification
SECTION 11.1. Indemnification by the Territory ............................. 84
SECTION 11.2. Indemnification and Contribution by BermudaCo ................ 84
SECTION 11.3. Losses Net of Insurance and on an After-Tax Basis ............ 86
SECTION 11.4. Termination of Indemnification ............................... 86
SECTION 11.5. Procedures Relating to Third Party and Direct Indemnification
Claims ...................................................... 86
SECTION 11.6. Contribution Among Rollup Territories ........................ 89
ARTICLE XII
Termination
SECTION 12.1. Termination .................................................. 89
SECTION 12.2. Other Transaction Agreements; Material to Be Returned ........ 91
SECTION 12.3. Effect of Termination ........................................ 92
iv
ARTICLE XIII
Miscellaneous
SECTION 13.1. Assignment ................................................... 92
SECTION 13.2. No Third Party Beneficiaries ................................. 92
SECTION 13.3. Amendments ................................................... 92
SECTION 13.4. Consents and Approvals ....................................... 93
SECTION 13.5. Waivers ...................................................... 93
SECTION 13.6. No Survival of Representations ............................... 93
SECTION 13.7. Notices ...................................................... 93
SECTION 13.8. Exhibits and Schedules; Interpretation ....................... 95
SECTION 13.9. Counterparts ................................................. 95
SECTION 13.10. Entire Agreement ............................................. 95
SECTION 13.11. Severability ................................................. 95
SECTION 13.12. Consent to Jurisdiction; Reference to Arbitration ............ 96
SECTION 13.13. Governing Law ................................................ 98
v
EXHIBITS
EXHIBIT A Local Structure Term Sheet
EXHIBIT B Form of Transition Services Agreement
EXHIBIT C-1 Form of Transfer Rights Agreement
EXHIBIT C-2 Form of Redemption and Non-Competition Agreement
EXHIBIT D Form of Voting Agreement
EXHIBIT E Shareholders Agreement Term Sheet
EXHIBIT F-1 Form of Assignment and Assumption Agreement
EXHIBIT F-2 Form of Sublease Agreement
EXHIBIT F-3 Form of Master License Agreement
EXHIBIT G-1 BermudaCo Structure Term Sheet
EXHIBIT G-2 LuxCo Structure Term Sheet
EXHIBIT H Form of No-Action Letter
EXHIBIT I Form of Underwriting Agreement
EXHIBIT J Form of Local Counsel Opinion
EXHIBIT K Form of Employment Arrangements Term Sheet
EXHIBIT L Form of Inter-Territory Contribution Agreement
SCHEDULES
Schedule 2.1(a)(i) Definition of "Leased Real Property"
Schedule 2.1(a)(ii) Definition of "Acquired Assets"
Schedule 2.1(a)(iii) Definition of "Acquired Intellectual Property"
Schedule 2.1(a)(iv) Definition of "Acquired Permits"
Schedule 2.1(a)(v) Definition of "Global IP Schedule"
Schedule 2.1(b)(ii) Local Transaction and Transfer of the Consulting Business
Schedule 2.1(c)(i) Definition of "Excluded Liabilities"
Schedule 2.1(c)(ii) Definition of "Excluded Liabilities"
Schedule 2.2(c)(iii) Definition of "Rollup Territory"
Schedule 2.2(b)(ii) Transfer of Sub Shares and Issuance of BermudaCo Shares
Schedule 2.2(c)(i) Transfer of Sub Shares and Issuance of BermudaCo Shares
Schedule 2.2(c)(ii) Transfer of Sub Shares and Issuance of BermudaCo Shares
Schedule 3.2 Net Book Value Adjustment
Schedule 4.1(vii) Conditions to BermudaCo's Obligation to Consummate the Escrow Closing
Schedule 5.3(a) Financial Statements
Schedule 5.5 Taxes
Schedule 5.6(b) Title to Assets
Schedule 5.8 Litigation
Schedule 5.9(a) Employee and Related Matters
vi
Schedule 5.14 Voting Requirements
Schedule 7.7 Implementation of Financial Controls
Schedule 7.12(a)(i) Definitions of "Consulting Partner" and "Staff Employee"
Schedule 7.13(c) Use of PricewaterhouseCoopers Name
Schedule 9.5 Intercompany Arrangements
Schedule 9.10 Real Estate Matters
Schedule 10.1(a) Definition of "Restricted Consulting Services"
Schedule 10.1(b) Definition of "Substantial Territorial Business Activity"
Schedule 10.1(c) Definition of "Restricted Consulting Services"
vii
ROLLUP AGREEMENT dated as of April 11, 2002, among
[Local Firm], a [jurisdiction] [entity type] [other local
entities] (collectively, the "Territory"),
PricewaterhouseCoopers International Limited, a private
company limited by guarantee, not having a share capital,
incorporated under the laws of England and Wales ("PwCIL"),
PwCC Limited, a Bermuda holding company ("BermudaCo") and the
other parties set forth on the signature pages hereto (such
other parties, the "Noncompete Parties").
The Territory and BermudaCo desire to effect the Local Transaction
and the Exchange (each as defined herein) upon the terms and subject to the
conditions of this Agreement (as defined herein).
The governing body of the Territory, by resolution duly adopted, has
declared that it deems the Local Transaction and the Exchange to be expedient
and in the best interests of the Territory, and deems it advisable and in the
best interests of its Partners to consummate, and has approved, the Transaction
Agreements (as defined herein) and the transactions contemplated thereby on the
terms and conditions set forth in the Transaction Agreements.
The Board of Directors of BermudaCo, by resolution duly adopted, has
declared that it deems the Local Transaction and the Exchange to be expedient
and in the best interests of BermudaCo, and deems it advisable and in the best
interests of its shareholders to consummate, and has approved, the Transaction
Agreements and the transactions contemplated thereby on the terms and conditions
set forth in the Transaction Agreements.
PwCIL, as part of its general coordinating role for the
PricewaterhouseCoopers network of firms, has declared its willingness to assist
the participants in completing the Local Transaction and the Exchange.
2
Accordingly, the parties hereto hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.1. Definitions. As used in this Agreement, the following
terms shall have the following meanings:
"Accounting Firm" shall have the meaning ascribed to such term in
Section 3.2(a).
"Acquired A/R" shall mean all receivables constituting the right to
receive payments in respect of goods or services arising from (i) the assets
taken into account on the balance sheet of the Consulting Business as of
December 31, 2001 set forth on Schedule 5.3(a) (including, without limitation,
assets such as Contracts to which no value was attributed) and (ii) the assets
acquired by the Territory or any of its Subsidiaries since December 31, 2001
which, had they been held by the Territory or any of its Subsidiaries at such
date, would have been taken into account on the balance sheet for the Consulting
Business as of such date set forth on Schedule 5.3(a) (including, without
limitation, assets such as Contracts to which no value would have been
attributed).
"Acquired Assets" shall mean all the right, title and interest of
the Territory and its Subsidiaries in, to and under all of the following assets,
in each case (i) as in existence as of the Closing Date and (ii) excluding the
Excluded Assets and subject to Sections 9.1 and 9.11(c):
(i) all assets taken into account on the balance sheet for the
Consulting Business as of December 31, 2001 set forth on Schedule 5.3(a)
(including, without limitation, assets such as Contracts to which no value
was attributed);
(ii) all assets acquired by the Territory or any of its Subsidiaries
since December 31, 2001 which, had they been held by the Territory or any
of its Subsidiaries at that date, would have been taken into account on
the balance sheet for the Consulting Business as of such date set forth on
Schedule 5.3(a) (including, without limitation, assets such as Contracts
to which no value would have been attributed);
(iii) all assets which the Transition Services Agreement expressly
or by implication envisages will be held by BermudaCo, Sub or one of their
respective Subsidiaries following the Closing Date;
(iv) the Acquired Intellectual Property;
3
(v) the Assigned Contracts, including, without limitation, any
rights thereunder and any task order, delivery order, proposal, bid,
quote, award or prequalification to bid for any Contract which, if
accepted or fulfilled, would constitute an Assigned Contract for purposes
of this subparagraph (v);
(vi) the Acquired A/R;
(vii) the Acquired Permits;
(viii) the Leased Real Property (subject to Section 9.10);
(ix) office and other supplies, including, without limitation,
wrappings and supply and packaging items, that are primarily used in the
operation or conduct of the Consulting Business, but excluding any which
are of a type which the Transition Services Agreement expressly or by
implication envisages will be provided or supplied by the Territory or its
Subsidiaries to BermudaCo, Sub or their respective Subsidiaries following
the Closing Date;
(x) equipment (including, without limitation, vehicles) (i) taken
into account on the balance sheet of the Consulting Business as of
December 31, 2001 set forth on Schedule 5.3(a) (including, without
limitation, assets to which no value was attributed) or (ii) acquired by
the Territory or any of its Subsidiaries since December 31, 2001 which,
had it been held by the Territory or any of its subsidiaries at such date,
would have been taken into account on the balance sheet for the Consulting
Business as of such date set forth on Schedule 5.3(a) (including, without
limitation, assets to which no value would have been attributed);
(xi) the Acquired WIP;
(xii) that portion of all rights, claims and credits to the extent
that they relate to the Consulting Business or to any Acquired Asset or
any Assumed Liability, including, without limitation, that portion of all
rights in and to services and products sold or leased (including, without
limitation, products returned after the Closing and rights of rescission,
replevin and reclamation) in the operation or conduct of the Consulting
Business and that portion of any rights, claims and credits arising under
insurance policies (subject to Section 9.12 hereof) and that portion of
all guarantees, representations, warranties, indemnities and similar
rights in favor of the Territory or any of its Subsidiaries to the extent
that they relate to the Consulting Business or to any Acquired Asset or
Assumed Liability;
(xiii) all goodwill generated by or associated with the Consulting
Business, including, without limitation, goodwill related to the name
4
"PricewaterhouseCoopers Consulting" or any derivative thereof to the
extent used in the Consulting Business (but not "PricewaterhouseCoopers");
(xiv) all books of account, ledgers, general, financial, legal,
regulatory, Tax, accounting and personnel records, files, customers' and
suppliers' lists, sales and promotional literature, customer and supplier
correspondence, manuals, files, data, papers, personnel and employment
records and other information, that relate exclusively to, the ownership,
operation or conduct of the Consulting Business or any Acquired Asset or
Assumed Liability (collectively, the "Books and Records");
(xv) that portion of all other intangible assets of a type not
described in clauses (i) through (xiv) above to the extent they relate to
the operation or conduct of the Consulting Business, but excluding that
portion of any which are of a type which the Transition Services Agreement
expressly or by implication envisages will be provided or supplied by the
Territory or its Subsidiaries to BermudaCo, Sub or their respective
Subsidiaries following the Closing Date; and
(xvi) the other assets listed on Schedule 2.1(a)(ii).
"Acquired Intellectual Property" shall mean all right, title and
interest of the Territory and its Subsidiaries in, to and under (i) the
Intellectual Property listed on the Global IP Schedule which is not noted as
"Shared Use", (ii) the Intellectual Property listed on Schedule 2.1(a)(iii) and
(iii) any and all Intellectual Property not listed on the Global IP Schedule but
used in the Consulting Business on or prior to the Closing Date which, if such
Intellectual Property had been listed on such schedule, would not have been
noted thereon as "Shared Use" based on an application of the principles that
governed the preparation of the Global IP Schedule.
"Acquired Permits" shall mean all Permits, other than those Permits
listed on Schedule 2.1(a)(iv), which (i) are owned or held by Sub, a Subsidiary
of Sub, an entity which is transferred to Sub pursuant to Section 2.1 or any
Subsidiary of such entity or (ii) if not so owned or held, are exclusively used
in the operation or conduct of the Consulting Business, to the extent such
Permits are transferable under applicable law.
"Acquired WIP" shall mean all work in process or work in progress of
the Consulting Business and all work product relating thereto arising from (i)
the assets taken into account on the balance sheet of the Consulting Business as
of December 31, 2001 set forth on Schedule 5.3(a) (including, without
limitation, assets such as Contracts to which no value was attributed) and (ii)
the assets acquired by the Territory or any of its Subsidiaries since December
31, 2001 which, had they been held by the Territory or any of its Subsidiaries
at such date, would have been taken into account on the balance sheet for the
Consulting Business as of such date set forth on Schedule 5.3(a) (including,
without limitation, assets such as Contracts to which no value would have been
attributed).
5
"Adjusted Global Rollup Share Amount" shall mean the sum of the
Territory Adjusted Global Rollup Share Amount and the Consulting Partner
Adjusted Global Rollup Share Amount.
"Affiliate" shall mean, with respect to any person, any other person
directly or indirectly Controlling, Controlled by or under common Control with
such first person; provided, however, that no entity that is part of a member
firm of the PricewaterhouseCoopers global network of firms shall be deemed to be
an Affiliate of any other such member firm or of PwCIL solely as a consequence
of such membership for any purpose under this Agreement or the Other Transaction
Agreements; and, provided further, that neither L&F nor any other captive
insurance entity Controlled by or under common Control with the Territory or
PwCIL shall be deemed to be an Affiliate of the Territory or PwCIL for purposes
of Section 11.2 hereof.
"Agreement" shall mean this Rollup Agreement.
"Applicable Spot Rate" shall mean, with respect to any non-U.S.
currency, the exchange rate published in The Financial Times on the date hereof
as the mid-point closing U.S. dollar exchange rate with respect to such currency
for the most recent prior Business Day.
"Arbitration Proceeding" shall have the meaning ascribed to such
term in Section 10.6.
"Arbitrator" shall have the meaning ascribed to such term in Section
10.7(a).
"Assigned Contract" shall mean that portion of any Contract of the
Territory or any of its Subsidiaries to the extent that it relates to the
operation or conduct of the Consulting Business, but excluding that portion of
any Contract to the extent that the Transition Services Agreement expressly or
by implication envisages will be for the benefit of the Territory or its
Subsidiaries following Closing.
"Assumed Benefit Plan" shall have the meaning ascribed to such term
in Section 7.12(f).
"Assumed Liabilities" shall mean all the following obligations and
liabilities of the Territory and its Subsidiaries, in each case excluding any
Excluded Liabilities, whether arising prior to or after the Closing Date:
(i) that portion of all obligations, liabilities and commitments of
whatever nature under the Assigned Contracts;
6
(ii) that portion of all obligations and liabilities to the extent
that they relate to any Acquired Asset;
(iii) all other obligations and liabilities to the extent that they
arise from or relate to the conduct or operation of the Consulting
Business;
(iv) all liabilities and obligations assumed by BermudaCo or its
Affiliates pursuant to Section 7.12;
(v) all liabilities taken into account on the balance sheet for the
Consulting Business as of December 31, 2001 set forth on Schedule 5.3(a)
(including, without limitation, those provided against or noted);
(vi) all liabilities of the Territory or any of its Subsidiaries
since December 31, 2001 which, had they been liabilities of the Territory
or its Subsidiaries at that date would have been taken into account on the
balance sheet for the Consulting Business as of such date set forth on
Schedule 5.3(a);
(vii) all liabilities which the Transition Services Agreement
expressly or by implication envisages will be assumed by BermudaCo, Sub or
their respective Subsidiaries following the Closing; and
(viii) all liabilities for Assumed Taxes.
"Assumed Taxes" shall mean any liability, obligation or commitment,
whether or not accrued, assessed or currently due and payable, for (A) Taxes
relating to the operation and ownership of the Consulting Business, the Acquired
Assets or the Assumed Liabilities and (B) Transfer Taxes incurred by the
Territory, BermudaCo or any of their respective Affiliates in connection with
the transactions contemplated by the Transaction Agreements; provided, however,
that Assumed Taxes shall not include any Excluded Taxes.
"Balance Sheets" shall have the meaning ascribed to such term in
Section 5.3(a).
"Balance Sheet Principles" shall have the meaning ascribed to such
term in Section 3.2(a).
"Baseline Balance Sheet" shall have the meaning ascribed to such
term in Section 3.2(a).
"Benefit Plans" shall have the meaning ascribed to such term in
Section 5.9(a).
7
"BermudaCo" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"BermudaCo Material Adverse Effect" shall mean any state of facts,
change, development, event, occurrence, action or omission that could reasonably
be expected to prevent or materially impede, interfere with, hinder or delay the
consummation by BermudaCo of the transactions contemplated by the Transaction
Agreements.
"BermudaCo Shares" shall mean the Class A common shares of
BermudaCo.
"Books and Records" shall have the meaning ascribed to such term in
the definition of "Acquired Assets".
"Business Day" shall mean any day other than (a) a Saturday or
Sunday, (b) any other day on which commercial banks in New York City are
authorized or required by law to close and (c) when such term is used in
relation to the Territory or any of its Subsidiaries not located in the United
States, any other day on which commercial banks in the country in which such
entity is located are authorized or required to close.
"Business Material Adverse Effect" shall mean any state of facts,
change, development, event, occurrence, action or omission that individually or
in the aggregate could reasonably be expected to (i) result in a material
adverse effect on the business, assets, financial condition or results of
operations of the Consulting Business, taken as a whole (other than any change
or event relating (A) generally to the economy (including, without limitation,
interest rate or exchange rate fluctuations or capital markets conditions), (B)
to the Transaction Agreements or the announcement thereof or the performance of
any obligations thereunder, (C) generally to companies operating in businesses
similar to the Consulting Business or (D) to the loss of customers of the
Consulting Business for whom the Territory provides audit services) or (ii)
prevent or materially impede, interfere with, hinder or delay the consummation
by the Territory, Sub or any of their respective Subsidiaries of the
transactions contemplated by the Transaction Agreements.
"Challenge Notice" shall have the meaning ascribed to such term in
Section 10.7(d).
"Client Contract" shall mean a contract or agreement entered into by
or on behalf of the Territory or any of its Subsidiaries with clients for the
provision of services by the Territory to the extent that at Closing the same
remains to be completed or performed.
"Closing" shall have the meaning ascribed to such term in Section
3.1(b).
8
"Closing Date" shall have the meaning ascribed to such term in
Section 3.1(b).
"Closing Date Balance Sheet" shall have the meaning ascribed to such
term in Section 3.2(a).
"Closing Statement" shall have the meaning ascribed to such term in
Section 3.2(a).
"Consulting Business" shall mean the business or businesses in
respect of the Balance Sheets (as such business is conducted on the date hereof
and on the Closing Date), subject to such acquisitions or disposals of
businesses which have been contracted or completed (i) after December 31, 2001
and before the date hereof, which acquisitions or disposals are described on the
supplementary schedules referred to in Section 5.3(a), or (ii) after the date
hereof and prior to the Closing with the consent of PwCIL.
"Consulting Partner" shall mean any Partner of the Territory listed
as such on Schedule 7.12(a)(i), which such Schedule shall be updated as of the
Closing Date (such update to be subject to the approval of PwCIL and, after the
IPO Closing Date, BermudaCo).
"Consulting Partner Adjusted Global Rollup Share Amount" shall mean
25% of the Global Rollup Share Amount minus the number of BermudaCo Shares,
LuxCo Shares and Exchangeable Shares (each valued at the per-BermudaCo Share
purchase price set forth in the Underwriting Agreement, which shall be net of
underwriting discounts and commissions allocable to such shares in accordance
with that agreement) yielding the sum of the Pension Hole Amounts of all Rollup
Territories participating in the Global Rollup (which sum shall be calculated by
PwCIL).
"Consulting Partner Share Consideration" shall mean the sum of (i)
the number of BermudaCo Shares (valued at the per-BermudaCo Share purchase price
set forth in the Underwriting Agreement, which shall be net of underwriting
discounts and commissions allocable to such shares in accordance with that
agreement) yielding the Pension Hole Amount of the Territory, plus (ii) the
number of BermudaCo Shares equal to the Consulting Partner Adjusted Global
Rollup Share Amount multiplied (in the case of this clause (ii)) by the number
set forth on Schedule 2.2(c)(i) as the "Consulting Partner Share Consideration
Percentage" (as such number shall be adjusted by PwCIL to correct clerical
errors, or increased on a pro rata basis so that the sum of the "Consulting
Partner Share Consideration Percentages" of all Rollup Territories and any other
firms in the PricewaterhouseCoopers global network equals 100%), expressed as a
percentage of all such amounts of all Rollup Territories participating in the
Global Rollup (which percentage shall be calculated by PwCIL).
"Contracts" shall have the meaning ascribed to such term in Section
6.2(a).
9
"Control" shall mean the power to direct the affairs of a person by
reason of ownership of voting stock (or other similar equity interest), by
contract or otherwise.
"Controlling Party" shall have the meaning ascribed to such term in
Section 11.5(a)(ii).
"Covered Person" shall mean each Consulting Partner listed on
Schedule 4.1(vii) and each Staff Employee.
"Cross LOS Contract" shall mean a Client Contract which relates both
to the Consulting Business and the provision of other services by the Territory.
"Direct Claim" shall have the meaning ascribed to such term in
Section 11.5(b).
"Dispute" shall have the meaning ascribed to such term in Section
10.6.
"Dispute Notice" shall have the meaning ascribed to such term in
Section 10.6.
"$" shall mean U.S. dollars.
"Due Date" shall have the meaning ascribed to such term in Section
9.8(e).
"Environmental Law" shall mean all laws (including, without
limitation, common law), rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions or binding agreements issued, promulgated or entered into
by any Governmental Entity, relating in any way to the environment, the
preservation or reclamation or natural resources, or the presence or handling of
Hazardous Substances.
"Escrow Closing" shall have the meaning ascribed to such term in
Section 3.1(a).
"Escrow Closing Date" shall have the meaning ascribed to such term
in Section 3.1(a).
"Escrow Release" shall have the meaning ascribed to such term in
Section 3.1(b).
"Excess Policy Benefit" shall have the meaning ascribed to such term
in Section 9.12(i).
"Exchange" shall have the meaning ascribed to such term in Section
2.2(a).
10
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Exchangeable Shares" shall mean the exchangeable shares of a
Subsidiary of LuxCo to be issued to various entities in the
PricewaterhouseCoopers network of firms in Canada or other applicable Rollup
Territories, such shares to be exchangeable for BermudaCo Shares on a
one-for-one basis.
"Excluded Assets" shall have the meaning ascribed to such term in
Section 2.1(b).
"Excluded Liabilities" shall mean:
(a) that portion of any obligation, liability or commitment of
whatever nature, whether presently in existence or arising hereafter, of
the Territory, Sub or their respective Subsidiaries, or any other person,
the assumption or continued holding of which is not expressly provided for
by this Agreement (it being understood that any obligation, liability or
commitment falling within any of paragraphs (i) through (viii) of the
definition of Assumed Liabilities does not fall within this paragraph
(a)); and
(b) (i) that portion of any liability, obligation or commitment of
the Territory, Sub or their respective Subsidiaries to the extent that it
relates to any Excluded Asset;
(ii) any liability of the Territory, Sub or their respective
Subsidiaries in respect of Benefit Plans, except as otherwise provided in
Section 7.12 or any Schedule related thereto;
(iii) any indebtedness for borrowed money, capital leases or
guarantees thereof of the Territory, Sub or their respective Subsidiaries,
except for ordinary course trade payables relating to the Consulting
Business or the Acquired Assets and except as set forth on Schedule
2.1(c)(i);
(iv) any liabilities for Excluded Taxes;
(v) any liability set forth on Schedule 2.1(c)(ii);
(vi) that portion of any liability, obligation or commitment of the
Territory or any of its Subsidiaries to the extent not relating to the
Consulting Business or the Acquired Assets, other than such liabilities,
obligations or commitments which are Assumed Liabilities; and
11
(vii) that portion of any obligation, liability or commitment not
falling within paragraphs (v) or (vi) of the definition of Assumed
Liabilities which the Transition Services Agreement expressly or by
implication envisages will not be an obligation, liability or commitment
of BermudaCo, Sub or any of their respective Subsidiaries following
Closing.
"Excluded Taxes" shall mean any liability, obligation or commitment,
whether or not accrued, assessed or currently due and payable, (A) for any Taxes
not relating to the operation and ownership of the Consulting Business, the
Acquired Assets or the Assumed Liabilities, (B) for Income Taxes relating to the
operation and ownership of the Consulting Business, the Acquired Assets or the
Assumed Liabilities for any Pre-Closing Tax Period, (C) for Taxes (other than
Transfer Taxes) imposed by a Taxing Authority in connection with the Local
Transaction and the transactions associated with the transfer of the Consulting
Business to BermudaCo and the withdrawal of the Consulting Partners in
accordance with Articles II and III of this Agreement and the Local Structure
Term Sheet, (D) for Transfer Taxes incurred by the Territory, BermudaCo or any
of their respective Affiliates in connection with the transactions contemplated
by the Transaction Agreements to the extent the Territory is responsible for
such Transfer Taxes pursuant to Section 9.8(a), and (E) for the avoidance of
doubt, for any Taxes (whether or not described in clauses (A) through (D) above)
that are the liability of the Partners of the Territory. For purposes of this
Agreement, in the case of any Straddle Period, Income Taxes for the Pre-Closing
Tax Period shall be computed as if such taxable period ended as of the close of
business on the Closing Date.
"Exhibits" shall mean the exhibits to this Agreement, as amended
from time to time pursuant to Section 13.3.
"Final Non-Participation Determination" shall have the meaning
ascribed to such term in Section 2.2(c).
"Final Offer" shall have the meaning ascribed to such term in
Section 7.17.
"Financial Statements" shall have the meaning ascribed to such term
in Section 5.3(a).
"Global IP Schedule" shall mean the Schedule of Intellectual
Property attached hereto as Schedule 2.1(a)(v).
"Global Prior Charge Amount" shall mean, with respect to any Rollup
Territory, the aggregate expenses (if any) estimated as of the IPO Closing Date
to be incurred by such Rollup Territory in respect of the global costs of
achieving the Global Rollup and facilitating the separation and operation of the
PricewaterhouseCoopers organization after Closing, as set forth and designated
as such on Schedule 2.2(c)(i) of the applicable Rollup Agreement, which amount
may be updated by PwCIL from time to
12
time on or prior to the Closing Date to reflect the actual expenses incurred by
the Territory as of the Closing Date and/or updated estimates of expenses to be
incurred by the Territory after the Closing Date (in each case taking into
account expense or other relevant information supplied by the Territory).
"Global Rollup" shall mean the consummation of rollup transactions
on terms substantively equivalent in all material respects to those provided in
this Agreement with the Rollup Territories except as permitted by Section 6.4.
"Global Rollup Expense Amount" shall have the meaning ascribed to
such term in Section 7.6(c).
"Global Rollup Share Amount" shall mean the sum of the number of all
BermudaCo Shares issued to or on behalf of the Rollup Territories, or to or on
behalf of any other firm in the PricewaterhouseCoopers global network, in the
Global Rollup plus the number of BermudaCo Shares issued to public investors as
part of the IPO to fund working capital needs of the BermudaCo group plus the
number of all LuxCo Shares issued to or on behalf of the Rollup Territories, or
to or on behalf of any other firm in the PricewaterhouseCoopers global network,
in the Global Rollup plus the number of all Exchangeable Shares issued to the
Rollup Territories, or to or on behalf of any other firm in the
PricewaterhouseCoopers global network, in the Global Rollup.
"Governmental Entity" shall have the meaning ascribed to such term
in Section 5.2(b).
"GRMS Practice" shall have the meaning ascribed to such term in
Section 7.17.
"Hazardous Substances" shall mean any chemical, material, substance,
waste, pollutant or contaminant that is prohibited, limited or regulated by or
pursuant to any Environmental Law.
"Income Taxes" shall mean all income, profits, franchise and other
similar Taxes on or measured by net income or profits or another, similar base.
"indemnified party" shall have the meaning ascribed to such term in
Section 11.5(a)(i).
"Indemnifying Territory" shall have the meaning ascribed to such
term in Section 11.6.
"Injunction" shall have the meaning ascribed to such term in Section
4.1(iv).
13
"Insurance Charges" shall have the meaning ascribed to such term in
Section 9.12(e).
"Intellectual Property" shall mean Software, copyrights, trademarks,
service marks, brand names, certification marks, trade dress, assumed names,
domain names, trade names and other indications of origin, the goodwill
associated with the foregoing and registrations in any jurisdiction of, and
applications in any jurisdiction to register, the foregoing, including, without
limitation, any extension, modification or renewal of any such registration or
application; rights in inventions, discoveries and ideas, whether patentable or
not in any jurisdiction; patents, applications for patents (including, without
limitation, divisions, provisionals, continuations, continuations in-part and
renewal applications), and any renewals, extensions or reissues thereof, in any
jurisdiction; rights in non-public information, trade secrets, know-how,
formulae, processes, procedures, research records, records of inventions, test
information, market surveys, software and confidential information, whether
patentable or not in any jurisdiction and rights in any jurisdiction to limit
the use or disclosure thereof by any person; writings and other works, whether
copyrightable or not in any jurisdiction; registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or extensions
thereof; any similar intellectual property or proprietary rights; and any claims
or causes of action (pending, threatened or which could be filed) arising out of
or related to any infringement or misappropriation of any of the foregoing.
"International Client Contract" shall mean a Client Contract which
relates both to the Consulting Business and to the provision of similar services
by a member of the PricewaterhouseCoopers global network of firms that does not
participate in the Global Rollup on the Closing Date.
"International Partner Approval" shall have the meaning ascribed to
such term in Section 5.14.
"IPO" shall mean the initial public offering of the BermudaCo
Shares.
"IPO Closing" shall mean the consummation of the IPO pursuant to the
terms of the Underwriting Agreement.
"IPO Closing Date" shall mean the date on which the IPO Closing
occurs.
"L&F" shall have the meaning ascribed to such term in Section
9.12(i).
"L&F Policy" shall have the meaning ascribed to such term in Section
9.12(i).
"L&F Non-Consulting Claims" shall have the meaning ascribed to such
term in Section 9.12(i).
14
"Large Scale" with respect to any Restricted Consulting Services
shall mean those solutions which support both (i) multiple departments or
organizations within a business entity and (ii) involve multiple applications,
modules or subcomponents.
"Leased Real Property" shall mean real property and interests in
real property, including, without limitation, all improvements and fixtures
thereon, furniture and other appurtenances, thereto leased by the Territory, Sub
or their respective Subsidiaries or Partners set forth on Schedule 2.1(a)(i)
(excluding any portion thereof identified as "excess" on such Schedule), or, if
no such schedule is attached hereto as of the Closing Date, such real property
and interests to the extent used in the operation or conduct of the Consulting
Business, but excluding any real property interests, improvements, fixtures,
furniture and appurtenances which the Transition Services Agreement expressly or
by implication envisages will be held by the Territory or its Subsidiaries
following the Closing Date.
"Liens" shall have the meaning ascribed to such term in Section
5.6(a).
"Local Partner Approval" shall have the meaning ascribed to such
term in Section 5.14.
"Local Partner Information Memorandum" shall have the meaning
ascribed to such term in Section 7.4(a).
"Local Structure Term Sheet" shall mean the local structure term
sheet attached hereto as Exhibit A.
"Local Transaction" shall have the meaning ascribed to such term in
Section 2.1(a).
"Local Transaction Agreement" shall have the meaning ascribed to
such term in Section 2.1(a).
"Loss" shall have the meaning ascribed to such term in Section 11.1.
"LuxCo" shall mean PwC Consulting SCA, a Luxembourg partnership
limited by shares (societe en commandite par actions).
"LuxCo Shares" shall mean the Class I shares of LuxCo.
"Material Contract Threshold" shall have the meaning ascribed to
such term in Section 5.7(a)(i).
"NBV Amount" shall mean, with respect to any Rollup Territory, the
amount set forth and designated as such on Schedule 2.2(c)(i) of the applicable
Rollup
15
Agreement (or the equivalent amount in any other currency based on the
Applicable Spot Rate as determined, for purposes of this definition and
notwithstanding anything to the contrary in the definition of "Applicable Spot
Rate", as of the Closing Date).
"No-Action Letter" shall have the meaning ascribed to such term in
Section 4.1(x).
"Noncompete Parties" shall have the meaning ascribed to such term in
the introductory paragraph of this Agreement.
"Non-Controlling Party" shall have the meaning ascribed to such term
in Section 11.5(a)(ii).
"Non-Participating Territory" shall have the meaning ascribed to
such term in Section 2.2(c).
"Non-Participating Territory Adjustment" shall have the meaning
ascribed to such term in Section 2.2(c).
"Notice of Disagreement" shall have the meaning ascribed to such
term in Section 3.2(a).
"Other Transaction Agreements" shall mean all the Transaction
Agreements other than this Agreement.
"Partner" shall mean, with respect to the Territory or PwCIL, any
person who is a "partner" or "principal" of such entity, or any person holding a
comparable designation with respect to such entity.
"Partner Pension Benefits" shall have the meaning ascribed to such
term in Section 7.12(d).
"Pension Hole Amount" shall mean, with respect to any Rollup
Territory, the so-called "pension hole" amount for such Rollup Territory's
Consulting Partners as set forth and designated as such on Schedule 2.2(c)(i) of
the applicable Rollup Agreement, which amount may be updated by PwCIL from time
to time on or prior to the Closing Date to reflect the actual pension hole
amount for such Consulting Partners as of the Closing Date and/or estimated
pension hole amounts to be effected after the Closing Date (in each case taking
into account expense or other relevant information supplied by the Territory).
"Permits" shall have the meaning ascribed to such term in Section
5.10.
16
"Permitted Liens" shall have the meaning ascribed to such term in
Section 5.6(a).
"person" shall mean any natural person, corporation, limited
liability company, partnership, joint venture, trust, business association,
Governmental Entity or other entity.
"Power of Attorney" shall have the meaning ascribed to such term in
Section 7.15.
"Pre-Closing Tax Period" shall mean any taxable period beginning on
or before the Closing Date (in the case of a Straddle Period including only the
portion of such taxable period ending on the Closing Date).
"Pre-Separation Claims Administration" shall have the meaning
ascribed to such term in Section 9.12(f).
"PwCIL" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"PwCIL Material Adverse Effect" shall mean any state of facts,
change, development, event, occurrence, action or omission that could reasonably
be expected to prevent or materially impede, interfere with, hinder or delay the
consummation by PwCIL of the transactions contemplated by the Transaction
Agreements.
"PwCUS" shall have the meaning ascribed to such term in Section
4.1(x).
"Real Property Leases" shall have the meaning ascribed to such term
in Section 5.6(b).
"Redemption and Non-competition Agreement" shall have the meaning
ascribed to such term in Section 2.2(d).
"Region" shall mean, with respect to the Territory or any other
Rollup Territory (the "relevant Territory"), the country or countries in which
the relevant Territory provides Services as of the Closing Date as specified in
the applicable Local Structure Term Sheet and, with respect to BermudaCo and its
Affiliates, the same such country or countries specified in such applicable
Local Structure Term Sheet or, if no such specification has been made therein,
the country in which the Territory is domiciled.
"Registration Statement" shall mean the registration statement on
Form S-1 filed with the SEC in connection with the IPO, as the same shall be
amended from time to time, including, without limitation, the information (if
any) deemed to be
17
part of the Registration Statement at the time of effectiveness pursuant to Rule
430A under the Securities Act.
"Representatives" shall have the meaning ascribed to such term in
Section 7.1(a).
"Restricted Assets" shall have the meaning ascribed to such term in
Section 9.1.
"Restricted Consulting Services" constitute:
(i) those Services not described in subpart (ii) below that are
provided by BermudaCo or its Affiliates at a level of Substantial
Territorial Business Activity in the relevant Region, but only if not
provided (a) by the relevant Territory or its Affiliates in the relevant
Region at a level of Substantial Territorial Business Activity or (b) by
the member firms of the PricewaterhouseCoopers global network of firms at
a level of Substantial Global Business Activity, in each case, by
reference to the activities of the relevant entities and their Partners
and employees immediately after the Closing Date (it being understood that
any such Services meeting the above tests shall in such case constitute
Restricted Consulting Services only with respect to the applicable
Region); provided, however, that in no event will Restricted Consulting
Services include those services set forth in the parenthetical phrases
contained within subpart (ii) below. See Schedule 10.1(c) for examples.
(ii) the following specific services:
(a) corporate wide strategic planning (except with respect to human
resources services, tax and legal services, transaction services,
corporate finance and business recovery services);
(b) Large Scale process, transformational change (except with
respect to human resources transformational change) and information
technology implementation and integration services (except with respect to
risk management systems and treasury systems); and
(c) managed application solutions, comprising business process
outsourcing, application outsourcing services, application services
provision, information technology outsourcing, and information technology
hosting service (except with respect to internal audit services, security
and compliance services, e-conomy, treasury, corporate finance, business
recovery, dispute analysis and investigation and transactions services,
tax and legal services, web based information portal services, bookkeeping
and company administrative services, and pension, benefits and human
resources services). For the avoidance of doubt,
18
the Territory and its Affiliates may continue to provide outsourcing
services pursuant to contracts in effect as of the Closing Date that do
not constitute Acquired Assets, and amendments, modifications or
replacements thereof, including any extensions or renewals thereof;
provided, that (i) this subpart (c) will be of no force or effect until
such time as the relevant parties that are members of the
PricewaterhouseCoopers global network or Affiliates thereof enter into a
written agreement providing for the transfer to LuxCo and/or its
Affiliates of certain contracts described specifically in such agreement
as "BPO Contracts" and (ii) in any event, the services described in this
subpart (c) shall not be "Restricted Partnership Services" by virtue of
the operation of the Substantial Territorial Business Activity test
provided in subpart (i) of the definition of "Restricted Partnership
Services."
provided, however, that unless otherwise agreed by BermudaCo and the Territory,
"Restricted Consulting Services" shall not include services provided by the
Territory in a Region to a client if that client is (1) a person that is part of
a group under common Control with aggregate consolidated revenues in that Region
of less than the amount set forth for that Region on Schedule 10.1(a) on an
annual basis at the time of the applicable engagement and (2) a person that is a
part of a group under common Control that has at such time aggregate annual
worldwide consolidated revenues of less than $5 billion, provided further, that
in the event a client at the start of any particular engagement falls within the
proviso immediately above and subsequently ceases on account of revenue growth
to fall within such exception, the Territory or its applicable Affiliate may
nevertheless complete the current engagements and related follow-on work. For
the avoidance of doubt, "Restricted Consulting Services" does not include (1)
work for international aid agencies and international funding organizations or
institutions or (2) policy work for governmental bodies.
"Restricted Partnership Services" constitute:
(i) those Services not described in subpart (ii) below that are
provided by the relevant Territory or its Affiliates in the relevant Region at a
level of Substantial Territorial Business Activity , but only if not provided by
BermudaCo or its Affiliates at a level of (a) Substantial Territorial Business
Activity in the relevant Region or (b) Substantial Global Business Activity, in
each case, by reference to the activities of the relevant entities and their
Partners and employees immediately after the Closing Date (it being understood
that any such Services meeting the above tests shall in such case constitute
Restricted Partnership Services only with respect to the applicable Region),
provided, however, that in no event will Restricted Partnership Services include
those services set forth in the parenthetical phrase contained within subpart
(ii)(c) below.
(ii) the following specific services:
(a) attestation including accounting, regulatory and audit
services;
19
(b) tax (consulting and compliance) and legal services (where
permitted under applicable law);
(c) corporate finance, business recovery, dispute analysis and
investigation and transaction services (except with respect to
corporate-wide strategic planning, information technology and outsourcing
opportunities and merger integration and restructuring services and
privatization services for international funding organizations or
institutions);
(d) assurance services including risk management and systems
assurance services. For the avoidance of doubt, "assurance services" do
not include information technology, data warehousing, customer management,
systems integration, web services or the conduct or publication of
surveys; and
(e) pension and benefit actuarial services.
"Rights" shall have the meaning ascribed to such term in Section
9.10(b).
"Rollup Territory" shall mean each entity listed on Schedule
2.2(c)(iii).
"Rollup Transaction" shall mean, with respect to any Rollup
Territory, the exchange by such Rollup Territory of the assets and liabilities
comprising its consulting business (or the equity interests of an entity holding
such assets) for BermudaCo Shares, LuxCo Shares or Exchangeable Shares.
"Schedules" shall mean the schedules to this Agreement.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Independence Rules" shall mean Rule 2-01 of Regulation S-X of
the Exchange Act on auditor independence (codified at 17 C.F.R. pts. 210 and
240); the SEC's interpretations of the independence rules (collected at
Codification of Financial Reporting Policies, Section 600-Matters Relating to
Independent Accountants, reprinted in Fed. Sec. L. Rep. (CCH) Paragraph 73,251
et seq.) and the SEC's Release "Revision of the Commission's Auditor
Independence Requirements" (Exchange Act Release No. 43602, Fed. Sec. L. Rep.
(CCH) Paragraph 86,406 (November 21, 2000) (effective February 5, 2001)) or
rules that may be promulgated thereunder or any other provisions of the SEC's
independence rules.
"Securities Act" shall mean the U.S. Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Services" shall mean services recognized or actively marketed in
the relevant market as a service offering.
20
"Share Consideration" shall mean the sum of the Territory Share
Consideration and the Consulting Partner Share Consideration.
"Shareholders Agreement" shall mean a shareholders agreement among
PwCIL, the Territory, LuxCo, BermudaCo and the other parties thereto to be
executed by such parties on the Closing Date on substantially the terms set
forth on Exhibit E.
"Software" shall mean all types of computer software programs,
including, without limitation, operating systems, application programs, software
tools, firmware and software imbedded in equipment, including, without
limitation, both object code and source code. The term "Software" shall also
include all written or electronic data, documentation, and materials that
explain the structure or use of Software or that were used in the development of
Software or are used in the operation of the Software including, without
limitation, logic diagrams, flow charts, procedural diagrams, error reports,
manuals and training materials, look-up tables and databases.
"Staff Employee" shall mean any employee of the Territory or its
Subsidiaries listed as such on Schedule 7.12(a)(i), which Schedule shall be
updated as of the Closing Date (such update to be subject to the approval of
PwCIL and, to the extent such update occurs on a date following the IPO Closing
Date, BermudaCo).
"Straddle Period" shall mean any taxable period that begins on or
before and ends after the Closing Date.
"Sub" shall mean collectively one or more entities, the type and
jurisdiction of which is set forth in the Local Structure Term Sheet, that
currently exist, or are to be formed by the Territory, that will be utilized to
effect the Local Transaction and the Exchange.
"Sub Net Book Value" shall have the meaning ascribed to such term in
Section 3.2(a).
"Sub Shares" shall mean the voting stock, or analogous ownership
interests, of Sub.
"Subsidiary" of any person shall mean any other person (i) more than
50% of whose outstanding shares or securities representing the right to vote for
the election of directors or other managing authority of such other person are,
now or hereafter, owned or Controlled, directly or indirectly, by such first
person, but such other person shall be deemed to be a Subsidiary only so long as
such ownership or Control exists, or (ii) which does not have outstanding shares
or securities with such right to vote, as may be the case in a partnership,
joint venture or unincorporated association, but more than 50% of whose
ownership interest representing the right to make the decisions for such other
person is, now or hereafter, owned or Controlled, directly or indirectly, by
such first person, but
21
such other person shall be deemed to be a Subsidiary only so long as such
ownership or Control exists; provided; however, that Sub and its Subsidiaries
shall be deemed to be Subsidiaries of the Territory until the Closing, provided
further, that no entity that is part of a member firm of the
PricewaterhouseCoopers global network of firms shall be deemed to be a
Subsidiary of any other such member firm or of PwCIL solely as a consequence of
such membership for any purpose under this Agreement or the Other Transaction
Agreements.
"Substantial Global Business Activity" with respect to BermudaCo and
its Affiliates on the one hand, and the member firms of the
PricewaterhouseCoopers global network of firms and their Affiliates, on the
other, shall mean that the relevant persons, on an aggregate basis, have
achieved with respect to the Service in question as of the Closing Date at least
$100 million in annual revenues in fiscal 2002, based on, in the case of
BermudaCo and its Affiliates, their fiscal year 2002 financial statements and,
in the case of the member firms of the PricewaterhouseCoopers global network of
firms, their fiscal year 2002 financial statements (exclusive of revenue of the
businesses transferred to BermudaCo and its Affiliates as set forth on their
fiscal year 2002 financial statements).
"Substantial Territorial Business Activity" with respect to
BermudaCo and its Affiliates on the one hand, and the relevant Territory and its
Affiliates on the other, shall mean that such person, within the applicable
Region, has achieved with respect to the Service in question as of the Closing
Date, at least that percentage set forth in Schedule 10.1(b) of the annual
revenues of the relevant Territory and its Affiliates, as set forth on the
fiscal year 2002 financial statements of the Territory (inclusive of revenue of
the businesses transferred to BermudaCo and its Affiliates as set forth on their
fiscal year 2002 financial statements) and in any event at least $2 million.
"Successor Plan" shall have the meaning ascribed to such term in
Section 7.12(b).
"Takeover Proposal" shall have the meaning ascribed to such term in
Section 7.5(a).
"Tax" shall mean all income, profits, franchise, gross receipts,
capital, net worth, sales, use, withholding, turnover, value added, ad valorem,
registration, general business, employment, social security, real property,
personal property, stamp, transfer, conveyance, excise and other taxes,
withholdings, duties, levies, imposts and other similar charges and assessments
(including, without limitation, any and all fines, penalties and additions
attributable to or otherwise imposed on or with respect to any such taxes,
withholdings, duties, levies, imposts and other charges or assessments, and
interest thereon).
"Tax Claim" shall have the meaning ascribed to such term in Section
11.5(a)(ii).
22
"Tax Return" shall mean any return, filing, report questionnaire,
information statement or other document required to be filed, including, without
limitation, any amendments thereto, for any taxable period with any Taxing
Authority (whether or not a payment is required to be made with respect to such
filing).
"Taxing Authority" shall mean any governmental or regulatory
authority, body or instrumentality exercising any authority to impose, regulate
or administer the imposition of Taxes.
"Territory" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"Territory Acquisition Agreement" shall have the meaning ascribed to
such term in Section 7.5(b).
"Territory Adjusted Global Rollup Share Amount" shall mean 75% of
the Global Rollup Share Amount minus the sum of (i) the number of BermudaCo
Shares, LuxCo Shares and Exchangeable Shares (each valued at the per-BermudaCo
Share purchase price set forth in the Underwriting Agreement, which shall be net
of underwriting discounts and commissions allocable to such shares in accordance
with that agreement) yielding the sum of the Global Prior Charge Amounts of all
Rollup Territories participating in the Global Rollup (which sum shall be
calculated by PwCIL), (ii) the number of BermudaCo Shares, LuxCo Shares and
Exchangeable Shares (as so valued) yielding the aggregate net book value of the
assets and liabilities contributed, transferred and assigned in the Local
Transactions of all Rollup Territories other than the Non- Participating
Territories (which for the purposes of this clause (ii) shall (A) be calculated
in the same way, using the same methods, as those used in connection with the
preparation of the Balance Sheets, whether or not doing so is in accordance with
U.S. GAAP, such calculations to be made by PwCIL in consultation with each
Rollup Territory no later than 5 days prior to the IPO Closing Date and (B) take
into account each balance sheet exclusion described in the first paragraph of
Section 3.2(a)) and (iii) the number of BermudaCo Shares issued to public
investors as part of the IPO to fund the working capital needs of the BermudaCo
group.
"Territory Percentage" shall mean a fraction, expressed as a
percentage, (i) the numerator of which is the sum of (A) the product of the
number set forth on Schedule 2.2(c)(i) as the "Territory Share Consideration
Percentage" and 0.75; plus (B) the product of the number set forth on Schedule
2.2(c)(i) as the "Consulting Partner Share Consideration Percentage" and 0.25
(in each case as increased on a pro rata basis so that the sum of the Territory
Percentages of all Rollup Territories equals 100%) and (ii) the denominator of
which is the sum of all Territory Percentages of all Rollup Territories which
are not Non-Participating Territories.
23
"Territory Policy" shall have the meaning ascribed to such term in
Section 9.12(a).
"Territory Share Consideration" shall mean the sum of (i) the number
of BermudaCo Shares (valued at the per-BermudaCo Share purchase price set forth
in the Underwriting Agreement, which shall be net of underwriting discounts and
commissions allocable to such shares in accordance with that agreement) yielding
the Global Prior Charge Amount of the Territory, plus (ii) the number of
BermudaCo Shares (as so valued) yielding the net book value of the assets and
liabilities contributed, transferred and assigned in the Local Transaction of
the Territory (which for the purposes of this clause (ii) shall (A) be
calculated in the same way, using the same methods, as those used in connection
with the preparation of the Balance Sheets, whether or not doing so is in
accordance with U.S. GAAP, such calculations to be made by PwCIL in consultation
with the Territory no later than 5 days prior to the IPO Closing Date and (B)
take into account each balance sheet exclusion described in the first paragraph
of Section 3.2(a)) plus (iii) the number of BermudaCo Shares equal to the
Territory Adjusted Global Rollup Share Amount multiplied (in the case of this
clause (iii)) by the number set forth on Schedule 2.2(c)(i) as the "Territory
Share Consideration Percentage" (as such number shall be adjusted by PwCIL to
correct clerical errors, or increased on a pro rata basis so that the sum of the
"Territory Share Consideration Percentages" of all Rollup Territories and any
other firms in the PricewaterhouseCoopers global network equals 100%), expressed
as a percentage of all such amounts of all the Rollup Territories participating
in the Global Rollup (which percentage shall be calculated by PwCIL).
"Third Party" shall have the meaning ascribed in such term in
Section 7.17.
"Third Party Claim" shall have the meaning ascribed to such term in
Section 11.5(a)(i).
"Transaction Agreements" shall mean this Agreement, the Power of
Attorney, the Underwriting Agreement, the Redemption and Non-competition
Agreement, the Shareholders Agreement, the Transition Services Agreement, the
Local Transaction Agreement, Exhibits C-1, C-2, D, J and L (and, to the extent
required pursuant to Section 9.10, Exhibits F-1, F-2 and F-3), in each case as
amended from time to time pursuant to Section 13.3, and all other agreements to
be executed by the Territory or BermudaCo in connection herewith or therewith
(including, without limitation, any additional agreements described in the Local
Structure Term Sheet in order to effect the local transactions described therein
and any related conveyances of Sub within the BermudaCo group).
"Transfer Taxes" shall mean all real, personal and intellectual
property transfer, documentary, sales, use, registration, value-added,
recording, capital, stamp and
24
other similar Taxes, including, without limitation, Luxembourg and Gibraltar
capital duties.
"Transferred Employee" shall have the meaning ascribed to such term
in Section 7.12(a).
"Transition Services Agreement" shall mean the Transition Services
Agreement in the form attached hereto as Exhibit B (as amended from time to time
pursuant to Section 13.3) together with any exhibits thereto.
"Underwriting Agreement" shall mean the underwriting agreement to be
executed in connection with the IPO, substantially in the form attached hereto
as Exhibit I, as amended from time to time pursuant to Section 13.3.
"U.S. GAAP" shall mean generally accepted accounting principles in
effect from time to time in the United States of America.
ARTICLE II
Local Transaction and Exchange
Pursuant to the transactions contemplated by this Agreement, the Territory and
Sub shall effect the Local Transaction, and the Territory, PwCIL and BermudaCo
shall effect the Exchange, on the terms and subject to the conditions set forth
herein, as follows:
SECTION 2.1. Local Transaction and Transfer of the Consulting
Business. (a) On the terms of one or more transfer agreements (as such terms and
agreements are described in the Local Structure Term Sheet) (collectively, the
"Local Transaction Agreement"), at the Closing the Territory shall, or shall
cause the applicable Subsidiaries to, make such contributions, transfers and
assignments such that, upon the consummation of such contributions, transfers
and assignments (in each case free and clear of any Liens (other than Permitted
Liens)), Sub shall own and assume, to the extent not already owned or assumed by
Sub, (A) all the assets and liabilities constituting Acquired Assets and Assumed
Liabilities at the time of the Closing, (B) all the issued and outstanding
equity interests in entities the assets of which (including, without limitation,
any Subsidiaries of such entities) would convey indirectly all the assets and
liabilities constituting Acquired Assets and Assumed Liabilities at the time of
the Closing or (C) a combination of (A) and (B), which assets and equity
interests would convey, directly or indirectly, all the assets and liabilities
constituting Acquired Assets and Assumed Liabilities at the time of the Closing,
and Sub and any entity in which Sub holds an equity interest shall not own or
have any obligation in respect of any Excluded Asset or Excluded Liability (such
contributions, transfers and assignments being referred to collectively as the
"Local Transaction"). In the event that it is tax-efficient to do so, the
25
Territory or such Subsidiaries may transfer cash or notes (the form of which
must be reasonably acceptable to PwCIL and BermudaCo) in lieu of all or any
portion of the Acquired A/R to the extent, if any, expressly set forth in the
Local Structure Term Sheet.
(b) "Excluded Assets" shall mean the following assets of the
Territory and its Subsidiaries, which shall be excluded from the Acquired Assets
and shall not (subject to the rights of PwCIL and BermudaCo under the
Transaction Agreements) be owned or beneficially owned by Sub following the
consummation of the Local Transaction pursuant to the Local Transaction
Agreement:
(i) that portion of all rights, claims, credits and causes of action
of the Territory or any of its Subsidiaries to the extent related to any
Excluded Liability;
(ii) all the assets of or assets relating to the Benefit Plans,
other than assets related to any liabilities referred to in Section 7.12
as Assumed Liabilities;
(iii) all financial and Tax records that form a part of the general
ledger of the Territory or any of its Subsidiaries; provided that
BermudaCo shall receive a copy of the portions of any such records to the
extent they directly relate to the Consulting Business;
(iv) subject to Section 7.13, all right, title and interest in and
to, and all goodwill (other than as described in clause (xiii) of the
definition of Acquired Assets) generated by or associated with, the
trademarks "PwC" and "PricewaterhouseCoopers" and all derivatives thereof;
(v) the assets listed on Schedule 2.1(b)(ii);
(vi) all rights of the Territory and its Subsidiaries (other than
Sub or any of its Subsidiaries) under the Transaction Agreements;
(vii) that portion of all assets described in clauses (v), (xii) or
(xv) of the definition of Acquired Assets to the extent that they relate
to businesses other than the Consulting Business;
(viii) all cash and cash equivalents (except (A) to the extent
contributed in lieu of Acquired A/R as permitted under the last sentence
of Section 2.1(a), (B) to the extent reflected on the Closing Date Balance
Sheet or (C) cash and cash equivalents of Sub or any of its Subsidiaries
if Sub or such Subsidiary is an entity existing on the date hereof).
(c) Pursuant to the terms of the Local Transaction Agreement, upon
the consummation of the Local Transaction, Sub shall assume and agree to pay,
honor, perform and discharge all of the obligations and liabilities constituting
Assumed
26
Liabilities with respect to the Territory (to the extent that it has not
previously done so). At the Closing, pursuant to the terms of the Local
Transaction Agreement, Sub shall deliver to the Territory all assumption
agreements and other instruments as may be required under applicable law or as
the Territory may reasonably request to effect such assumption and agreement.
(d) Pursuant to the terms of the Local Transaction Agreement, upon
the consummation of the Local Transaction, the Territory or any of its
Subsidiaries (other than Sub or any of its Subsidiaries) shall assume and agree
to pay, honor, perform and discharge all of the obligations and liabilities
constituting Excluded Liabilities (to the extent that it has not previously done
so). At the Closing, pursuant to the terms of the Local Transaction Agreement,
the Territory or such Subsidiary shall deliver to Sub all assumption agreements
and other instruments as may be required under applicable law or as BermudaCo
may reasonably request to effect such assumption and agreement.
SECTION 2.2. Transfer of Sub Shares and Issuance of BermudaCo
Shares. (a) Immediately following the consummation of the Local Transaction, at
the Closing, upon the terms and subject to the conditions set forth herein, the
Territory hereby agrees to transfer to BermudaCo, free and clear of all Liens,
and BermudaCo hereby agrees to accept in exchange for the issuance of BermudaCo
Shares on the basis set forth in paragraph (b) of this Section 2.2 from the
Territory (the "Exchange"), all of the Sub Shares owned or held by the Territory
or any of its Subsidiaries. Subject to the terms and conditions of this
Agreement, the Territory shall deliver to BermudaCo at the Closing (in exchange
for the BermudaCo Shares issuable pursuant to paragraph (b) of this Section 2.2)
(i) duly executed transfers in respect of the Sub Shares held by the Territory
or its Subsidiaries and the share certificate(s) in respect thereof and (ii)
such other documents, including, without limitation, evidence of authority, as
BermudaCo may reasonably request.
(b) Immediately following the consummation of the Local Transaction,
at the Closing, upon the terms and subject to the conditions set forth herein,
BermudaCo shall issue to the Territory the Share Consideration (as the Share
Consideration shall be adjusted pursuant to paragraph (c) of this Section 2.2)
in exchange for all of the Sub Shares to be delivered by the Territory to
BermudaCo pursuant to paragraph (a) of this Section 2.2. For the avoidance of
doubt, an illustration of the operation of this paragraph (b), as well as of
paragraph (d) below, is set forth on Schedule 2.2(b)(ii). Subject to the terms
and conditions of this Agreement, BermudaCo shall deliver to the Territory at
the Closing (in exchange for the Sub Shares to be delivered by the Territory to
BermudaCo pursuant to paragraph (a) of this Section 2.2) duly executed share
certificates in respect of the BermudaCo Shares to be issued as the Share
Consideration pursuant to this paragraph (which BermudaCo Shares will be issued
free and clear of all Liens) and (ii) such other documents, including, without
limitation, evidence of authority, as the Territory may reasonably request.
27
(c) In the event that any Rollup Territory does not participate in
the Global Rollup on the IPO Closing Date and PwCIL has made a Final
Non-Participation Determination with respect to such Rollup Territory (each, a
"Non-Participating Territory"), the number of BermudaCo Shares issuable to the
Territory in respect of clause (iii) of the definition of "Territory Share
Consideration" and clause (ii) of the definition of "Consulting Partner Share
Consideration" on the Closing Date pursuant to paragraph (b) of this Section 2.2
shall be adjusted (the "Non-Participating Territory Adjustment") so that the
number of BermudaCo Shares issuable to the Territory in such respect is equal to
the sum of (A) the product obtained by multiplying (x) the Territory Adjusted
Global Rollup Share Amount by (y) a fraction, the numerator of which is the
number set forth on Schedule 2.2(c)(i) as the "Territory Share Consideration
Percentage", and the denominator of which is the sum of all such amounts of all
Rollup Territories (including, without limitation, the Territory) other than the
Non-Participating Territories (which sum shall be calculated by PwCIL);
provided, that in the event that the Closing Date shall occur after the IPO
Closing Date, the denominator of such fraction shall be equal to the number
which would have been the denominator if the Closing had occurred on the IPO
Closing Date; plus (B) the product obtained by multiplying (x) the Consulting
Partner Adjusted Global Rollup Share Amount by (y) a fraction, the numerator of
which is the number set forth on Schedule 2.2(c)(i) as the "Consulting Partner
Share Consideration Percentage", and the denominator of which is the sum of all
such amounts of all Rollup Territories (including, without limitation, the
Territory) other than the Non-Participating Territories (which sum shall be
calculated by PwCIL); provided, that in the event that the Closing Date shall
occur after the IPO Closing Date, the denominator of such fraction shall be
equal to the number which would have been the denominator if the Closing had
occurred on the IPO Closing Date. If the Non-Participating Territory Adjustment
would result in a fractional share being issued to the Territory, such fraction
shall be rounded up to the nearest whole number.
A "Final Non-Participation Determination" with respect to a Rollup
Territory shall mean a determination made in good faith by PwCIL to terminate
discussions with such Rollup Territory toward the consummation of a Rollup
Transaction. A Final Non-Participation Determination may be made with respect to
any Rollup Territory (i) upon the termination of the Rollup Agreement with
respect to such Rollup Territory, (ii) on the IPO Closing Date, if the rollup
transaction with respect to such Rollup Territory shall not have be consummated
on such date and (iii) in the event that PwCIL determines in good faith not to
terminate the applicable Rollup Agreement due to a failure to close on the IPO
Closing Date, at any time prior to the one-year anniversary of the IPO Closing
Date. The Territory, BermudaCo and PwCIL agree that if a Rollup Transaction with
respect to any Rollup Territory has not been consummated on or before the
one-year anniversary of the IPO Closing Date, a Final Non-Participation
Determination shall be deemed made with respect to such Rollup Territory on such
one-year anniversary. For the avoidance of doubt, a description of the
operation of this Section 2.2(c) is provided on Schedule 2.2(c)(ii).
28
(d) Following the consummation of the Exchange, the Territory shall
(i) pursuant to the terms of a redemption and non-competition agreement
substantially in the form of Exhibit C-2 hereto (the "Redemption and
Non-competition Agreement") and otherwise in conformity with the Local Structure
Term Sheet, distribute the Consulting Partner Share Consideration (less the
number of BermudaCo Shares to be issued pursuant to Section 7.12(d) and the
Local Structure Term Sheet in respect of Consulting Partners who will not become
employees of BermudaCo or its Affiliates immediately following the IPO Closing
Date) to the Consulting Partners, or, if required under applicable law, cash or
other consideration with an aggregate value equal to the value of the BermudaCo
Shares (valued at the per-BermudaCo Share purchase price set forth in the
Underwriting Agreement, which shall be net of underwriting discounts and
commissions allocable to such shares in accordance with that agreement) to which
such Consulting Partner would have otherwise been entitled, in exchange for each
such Consulting Partner's partnership interest (or analogous ownership interest)
in the Territory (in addition to the Territory's obligations pursuant to Section
7.8) and (ii) offer for sale in the IPO, pursuant to the terms of the
Underwriting Agreement, at least such number of the remaining BermudaCo Shares
as is sufficient to result in the Territory owning (after effecting the
transaction contemplated by this clause (ii) and Section 7.8 and taking into
account the rollup transactions with respect to the other Rollup Territories) no
more than the percentage required under the terms of the No-Action Letter of the
BermudaCo Shares received as a result of the Exchange. For the avoidance of
doubt, an illustration of the operation of the foregoing principles of this
paragraph (d), as well as the calculation of the Share Consideration, is set
forth on Schedule 2.2(b)(ii). The number of BermudaCo Shares to be sold in the
IPO by each respective Rollup Territory shall be determined according to (i)
first, the Global Prior Charge Amounts of such Rollup Territories to the extent
such charges involve immediate expenditures, (ii) second, the NBV Amounts of
such Rollup Territories, (iii) third, amounts payable in connection with Section
7.12(d) to the extent specified in the Local Structure Term Sheet and (iv)
fourth, amounts payable to Consulting Partners who must receive cash or other
consideration in lieu of BermudaCo Shares due to requirements of applicable law;
provided, that any allocations made with a view toward compliance with the
No-Action Letter shall be made without reference to the above. Further
determinations regarding the BermudaCo Shares to be sold in the IPO shall be
made by PwCIL in its discretion. With the approval of PwCIL, BermudaCo may (but
shall be under no obligation to) issue new BermudaCo Shares in the IPO for
purposes of funding its and its Affiliates' portions of Transfer Tax
liabilities, the expenses payable by LuxCo or BermudaCo under the Rollup
Agreements, payments of cash to certain Rollup Territories, and other legitimate
cash needs, in each case acceptable to PwCIL. In the event that a written
agreement providing for the transfer to BermudaCo and/or its Affiliates of
certain contracts described specifically in such agreement as "BPO Contracts" is
not consummated, all references to (x) "75%" or "0.75" in the definitions of
"Territory Adjusted Global Rollup Share Amount" and "Territory Percentage" and
in Section 7.6 shall be changed to "74.78%" and "0.7478", respectively; and (y)
"25%" or "0.25" in the definitions of "Consulting Partner Adjusted Global Rollup
Share Xxxxxx"
00
and "Territory Percentage" and in Section 7.6 shall be changed to "25.22%" and
"0.2522", respectively.
(e) On the Closing Date, PwCIL shall submit an invoice to BermudaCo
setting forth in reasonable detail the amount, if any, by which the aggregate
expenses incurred by PwCIL and the Rollup Territories as of the Closing Date in
respect of advisors retained by BermudaCo, LuxCo, Consulting Partners or their
Affiliates and representatives in connection with the Global Rollup exceed
$10,000,000. Subject to the reasonable approval of BermudaCo, payment to PwCIL
(or such other entity as PwCIL shall direct) in respect of such invoice shall be
made no later than 30 days after the Closing Date, and shall be made by wire
transfer in immediately available funds to the accounts specified by PwCIL. The
proceeds of any such payment shall be distributed by PwCIL (or paid directly if
so directed by PwCIL) to the Rollup Territories according to the amounts
incurred by each such Rollup Territory in respect of such expenses.
(f) Each of BermudaCo and the Territory agree to effect a
post-closing adjustment of the Territory Share Consideration of all of the
Rollup Territories to reflect the calculation of the net book value of the
assets and liabilities actually contributed, transferred and assigned in each
Local Transaction, calculated in accordance with the principles set forth in
clause (ii) of the definition of "Territory Share Consideration", such
calculations to be made by PwCIL as soon as practicable after the Closing Date;
provided, that such adjustments shall not result in an increase or decrease in
the aggregate Territory Share Consideration of all Rollup Territories in the
aggregate. Notwithstanding the foregoing, BermudaCo shall not be required to
issue stock or make payments pursuant to this Section 2.2(f) except to the
extent it has previously received shares or payments from other Rollup
Territories. The Territory shall indemnify BermudaCo for all costs incurred by
BermudaCo, its Affiliates and Subsidiaries in connection with such payments,
receipts of payments and issuances or receipts of shares.
SECTION 2.3. Modifications. (a) The Territory and BermudaCo agree to
modify the transactions contemplated by this Article II and the Local Structure
Term Sheet to the extent reasonably requested by PwCIL to achieve any tax
planning benefit that PwCIL reasonably determines to be in the best interests of
the participants in the Global Rollup, provided, that (i) such modification
shall have been approved by 75% of the members of the Global Board of PwCIL and
(ii) such modification preserves the overall economic substance of such
transactions and is not reasonably expected to result in an adverse effect on
the Territory, its Partners or, after the IPO Closing Date, BermudaCo or its
Affiliates. Subject to the proviso in the first sentence of Section 13.3, this
Agreement shall be amended as required to give effect to any such modification.
(b) In the event that PwCIL reasonably determines, on the basis of
U.S. legislative developments occurring after the date hereof, that it would be
in the best interests of the participants in the Global Rollup for the structure
of BermudaCo and its Affiliates contemplated by this Agreement to be changed so
that BermudaCo would be a
30
U.S. corporation, with the other structural aspects of the transaction being
substantially similar to those contemplated hereby, then, notwithstanding any
provision herein to the contrary, upon the affirmative vote of 75% of the
members of the Global Board of PwCIL, PwCIL shall cause BermudaCo to be, or
assign its rights hereunder to, a U.S. corporation which would become BermudaCo
for all purposes hereunder and each reference herein to BermudaCo would be
deemed a reference to such entity (and cause such other changes to be made to
the structure as PwCIL deems to be appropriate in light of such change to
BermudaCo, provided that such other changes do not cause the other aspects of
the structure to be substantially different from those contemplated hereby) and
this Agreement shall be amended as may be necessary to give effect to such
changes. Alternatively, in the event that PwCIL reasonably determines, on the
basis of such legislative developments, that it would be in the best interests
of the participants in the Global Rollup for the structure of BermudaCo and its
Affiliates contemplated by this Agreement to be changed so that BermudaCo would
be a U.K. corporation, with a subsidiary holding company similar to LuxCo or a
reasonable alternative subsidiary holding company and the other structural
aspects of the transaction being substantially similar to those contemplated
hereby, then, notwithstanding any provision herein to the contrary, upon the
affirmative vote of 75% of the members of the Global Board of PwCIL, (i) PwCIL
shall (A) cause BermudaCo to be, or assign its rights hereunder to, a U.K.
corporation which would become BermudaCo for all purposes hereunder (and each
reference herein to BermudaCo would be a reference to such entity), (B) if
applicable, cause LuxCo to be, or assign its rights hereunder to, an alternative
subsidiary holding company (and each reference herein to LuxCo would be deemed a
reference to such alternative subsidiary holding company), (C) permit the
Territory to elect to make its contribution at the U.K. corporation level and
(D) cause such other changes to be made to the structure as PwCIL deems to be
appropriate in light of such change to BermudaCo (and, if applicable, LuxCo),
provided that such other changes do not cause the other aspects of the structure
to be substantially different from those contemplated hereby, and (ii) this
Agreement shall be amended as may be necessary to give effect to the matters
described in clauses (A), (B), (C) and (D) above.
ARTICLE III
Closings
SECTION 3.1. Closings. (a) The escrow closing (the "Escrow Closing")
shall be held at 10:00 a.m. on the date on which the conditions set forth in
Sections 4.1 and 4.2 (excluding those conditions intended to be satisfied at the
Escrow Closing) shall have been satisfied or waived (the "Escrow Closing Date").
Each of the Territory, PwCIL and BermudaCo shall use reasonable best efforts to
cause the Escrow Closing to occur on the Escrow Closing Date. The Escrow Closing
Date shall occur no earlier than July 1, 2002.
31
(b) (A) On the IPO Closing Date, provided that the condition set
forth in Section 4.3 has been satisfied, a duly authorized designee of PwCIL,
acting pursuant to the Power of Attorney, shall deliver an escrow release (the
"Escrow Release") to effect the closing (the "Closing", and the date on which
the Closing shall occur, the "Closing Date") of the transactions contemplated by
the Transaction Agreements. In the event that the Closing does not occur on or
prior to the tenth Business Day following the Escrow Closing Date, all escrow
arrangements in place pursuant to the Escrow Closing shall be canceled, and the
documents and shares placed in escrow shall promptly be returned to the
signatory parties thereto.
(B) In the event that the Closing does not occur on the IPO Closing
Date, the terms of this Agreement shall continue in full force and effect until
the termination of this Agreement pursuant to Article XII. It is understood and
agreed that the Closing may occur after the IPO Closing Date, and that the
Escrow Closing Date may occur after the date on which the conditions specified
in Sections 4.1(viii) and 4.2(vi) are satisfied.
(c) The Escrow Closing and the Closing shall take place at the
offices of Cravath, Swaine & Xxxxx, Worldwide Plaza, 000 Xxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, or such other location as the parties hereto shall
mutually agree.
(d) At the Escrow Closing, (i) the Territory shall cause to be
delivered (subject only to the execution of the Escrow Release at the Closing)
to BermudaCo all bills of sale, assignments and other instruments of transfer or
conveyance as may be required under applicable law or as BermudaCo may
reasonably request to transfer to BermudaCo the Sub Shares contemplated to be
transferred at the Closing in accordance with Section 2.2(a), in each case free
and clear of all Liens; provided that the terms of such instruments shall not
result in an increase in the obligations of the Territory beyond those expressly
set forth in this Agreement, and (ii) BermudaCo shall deliver (subject only to
the execution of the Escrow Release at the Closing) to the Territory all bills
of sale, assignments and other instruments of transfer or conveyance as may be
required under applicable law or as the Territory may reasonably request to
issue to the Territory the BermudaCo Shares contemplated to be transferred at
the Closing in accordance with Section 2.2(b), free and clear of all Liens;
provided that the terms of such instruments shall not result in an increase in
the obligations of BermudaCo beyond those expressly set forth in this Agreement.
SECTION 3.2. Net Book Value Adjustment. (a) Within 90 days after the
Closing Date, the Territory shall prepare and deliver to BermudaCo a closing
statement (the "Closing Statement"), consisting of (i) an unaudited balance
sheet fairly presenting the assets and liabilities of Sub as of the Closing Date
(as the same may be modified pursuant to this Section 3.2, the "Closing Date
Balance Sheet") prepared in accordance with the Balance Sheet Principles
(provided that, except as approved by BermudaCo (such approval not to be
unreasonably withheld, delayed or conditioned) (A) the effect of any
intercompany or similar write-ups or xxxx-ups of the book value of inventory or
any
32
other assets shall be eliminated to the extent such write-ups or xxxx-ups were
not in the ordinary course consistent with past practice or were not consistent
with the Balance Sheet Principles and (B) no purchase accounting adjustments in
respect of the Global Rollup shall be made) and (ii) a statement of the Sub Net
Book Value. "Sub Net Book Value" shall mean the amount derived by subtracting
(x) the total liabilities reflected on the Closing Date Balance Sheet from (y)
the total assets reflected on the Closing Date Balance Sheet, in each case
without consideration, as applicable, of goodwill and other intangibles, any
assets created as a result of the Global Rollup, any Excluded Taxes and any
Transfer Taxes incurred by the Territory, BermudaCo or any of their respective
Affiliates in connection with the transactions contemplated by the Transaction
Agreements.
BermudaCo shall cause the employees of the Consulting Business to
assist the Territory and its auditors in the preparation of the Closing
Statement and shall provide the Territory and its auditors reasonable access,
during normal business hours and upon reasonable prior notice, to the personnel,
properties, books and records of the Consulting Business for such purpose.
During the 90 day period following BermudaCo's receipt of the
Closing Statement, BermudaCo and its auditors shall be permitted to review the
working papers relating to the Closing Statement and the Territory and its
Subsidiaries shall cooperate with BermudaCo and its auditors to provide them
with any other information used in preparing the Closing Statement reasonably
requested by BermudaCo or its auditors. The Closing Date Balance Sheet contained
in the Closing Statement and the Sub Net Book Value derived from the Closing
Date Balance Sheet shall become final and binding upon the parties on the 90th
day following delivery thereof, unless BermudaCo delivers to the Territory
written notice of its disagreement ("Notice of Disagreement") specifying in
reasonable detail such disagreement with respect thereto. Any agreed amount of
deficiency or overage with respect to the Sub Net Book Value shall be promptly
paid, notwithstanding any Notice of Disagreement.
During the 20 Business Day period following the delivery of a Notice
of Disagreement, the Territory and BermudaCo shall seek in good faith to resolve
in writing any differences which they may have with respect to the matters
specified in the Notice of Disagreement. During such 20 Business Day period, the
Territory and its auditors shall be permitted to review the working papers
related to the Notice of Disagreement and BermudaCo and its Subsidiaries and
their auditors shall cooperate with the Territory and its auditors to provide
them with any other information used in preparing the Notice of Disagreement
reasonably requested by the Territory or its auditors. If during such 20
Business Day period the Territory and BermudaCo agree in writing on the
determination of the Closing Date Balance Sheet and the amount of the Sub Net
Book Value, such determination shall be final and binding on the parties for all
purposes hereunder. If the Territory and BermudaCo have not resolved such
differences by the end of such 20 Business Day period, the Territory and
BermudaCo shall submit, in writing, to
33
an independent public accounting firm (the "Accounting Firm") their briefs
detailing their views as to the correct form of the Closing Date Balance Sheet
and amount of the Sub Net Book Value, and the Accounting Firm shall determine
the final form of the Closing Date Balance Sheet and amount of the Sub Net Book
Value, which determination shall be final and binding on the parties for all
purposes hereunder. The Accounting Firm shall be Ernst & Young LLP or, if such
firm is unable or unwilling to act, such other independent public accounting
firm as shall be agreed upon by the parties hereto in writing. The Accounting
Firm shall use reasonable best efforts to consult with personnel of the
Accounting Firm or Firms engaged in connection with another dispute under this
provision involving a Rollup Territory in an attempt to maintain consistency
with similar issues among the Rollup Territories. The Territory and BermudaCo
shall use reasonable best efforts to cause the Accounting Firm to render a
decision resolving the matters submitted to it within 20 Business Days following
the submission of the matters. The Territory and BermudaCo agree that judgment
may be entered upon the determination of the Accounting Firm in any court having
jurisdiction over the party against which such determination is to be enforced.
The cost of any dispute resolution (including, without limitation, the fees and
expenses of the Accounting Firm) pursuant to this Section shall be borne equally
by the Territory and BermudaCo. The fees and disbursements of the auditors and
other advisors of each party hereto incurred in connection with their review of
the Closing Statement and review of any Notice of Disagreement shall be borne by
such party.
Without limiting the generality of the foregoing, the Sub Net Book
Value is to be calculated in the same way, using the same methods, as those used
in connection with the preparation of the combined balance sheet of BermudaCo
set forth on Schedule 3.2 (the "Baseline Balance Sheet"), whether or not doing
so is in accordance with U.S. GAAP. In addition to the accounting principles set
forth in the first paragraph of this Section 3.2(a), the principles described in
the previous sentence are referred to in this Agreement as the "Balance Sheet
Principles". The scope of the disputes to be resolved by the Accounting Firm
shall be limited to whether such calculation was done in accordance with the
Balance Sheet Principles, and whether there were mathematical errors in the
Closing Statement, and the Accounting Firm is not to make any other
determination, including, without limitation, any determination as to whether
U.S. GAAP was followed for the Baseline Balance Sheet, the Closing Date Balance
Sheet or the Closing Statement or as to whether the NBV Amount is correct. Any
items on or omissions from the Baseline Balance Sheet that are based upon errors
of fact or mathematical errors or that are not in accordance with the Balance
Sheet Principles shall be retained for purposes of calculating the Sub Net Book
Value.
(b) If the NBV Amount exceeds the Sub Net Book Value, the Territory
shall, within 4 Business Days after the Sub Net Book Value becomes final and
binding on the parties, make payment by wire transfer to an account specified by
BermudaCo in immediately available funds of the amount by which the NBV Amount
exceeds the Sub Net Book Value, together with interest thereon from the Closing
Date to the date of
34
payment at a rate equal to LIBOR plus 1.0% per annum, compounded monthly. Such
interest shall be calculated on the basis of a year of 365 days and the actual
number of days elapsed.
(c) If the Sub Net Book Value exceeds the NBV Amount, BermudaCo
shall, within 4 Business Days after the Sub Net Book Value becomes final and
binding on the parties, make payment by wire transfer to an account specified by
the Territory in immediately available funds of the amount by which the Sub Net
Book Value exceeds the NBV Amount, together with interest thereon from the
Closing Date to the date of payment at a rate equal to LIBOR plus 1.0% per
annum, compounded monthly. Such interest shall be calculated on the basis of a
year of 365 days and the actual number of days elapsed. In the event that it
would be tax-efficient for the Territory to receive additional BermudaCo Shares
or accounts receivable in lieu of cash pursuant to this paragraph (c), BermudaCo
shall consider in good faith any proposal by the Territory to effect such a
transfer.
ARTICLE IV
Conditions to Escrow Closing and Closing
SECTION 4.1. Conditions to BermudaCo's Obligation to Consummate the
Escrow Closing. The obligation of BermudaCo to consummate the Escrow Closing is
subject to the satisfaction (or waiver by PwCIL) as of the Escrow Closing Date
of the following conditions:
(i) The International Partner Approval and the Local Partner
Approval shall have been obtained.
(ii) The representations and warranties of the Territory in this
Agreement (without regard to any qualifications therein as to materiality
or Business Material Adverse Effect) shall be true and correct, in each
case as of the date of this Agreement and as of the Escrow Closing Date as
though made on such date (or, in the case of each representation and
warranty which expressly speaks as of an earlier or later date, as of the
earlier or later date as of which such representation and warranty
speaks), unless the failure of such representations and warranties to be
true and correct, individually or in the aggregate, could not reasonably
be expected to have a Business Material Adverse Effect. The Territory
shall have delivered to PwCIL and BermudaCo a certificate on its behalf,
dated the Escrow Closing Date and signed by an authorized officer or other
signatory, representing and confirming that the foregoing condition has
been satisfied, it being understood that the delivery and execution of
such certificate shall not create any liability for the Territory.
35
(iii) The Territory shall have performed, and shall have caused Sub
and each other Subsidiary of the Territory to have performed, in all
material respects all covenants, obligations and agreements required by
the Transaction Agreements to be performed or complied with by the
Territory, Sub or such Subsidiary, as the case may be, by the Escrow
Closing Date. BermudaCo agrees that it shall not waive the failure of this
condition with respect to the failure of any Rollup Territory which has
prior to the Closing Date, or shall substantially contemporaneously with
the Territory, consummate the closing of its Rollup Transaction, to duly
execute and deliver (subject only to the delivery of the Escrow Release)
the Inter-Territory Contribution Agreement substantially in the form of
Exhibit L or a shareholders agreement on substantially the terms set forth
on Exhibit E. The Territory shall have delivered to PwCIL and BermudaCo a
certificate on its behalf, dated the Escrow Closing Date and signed by an
authorized officer or other signatory, representing and confirming that
the foregoing condition has been satisfied.
(iv) No action shall have been taken, or any statute, rule,
regulation or order shall have been enacted or entered or deemed
applicable to the transactions contemplated by the Transaction Agreements,
and no temporary restraining order or preliminary or permanent injunction
or other order (each, an "Injunction") shall have been issued by, any
Governmental Entity, that would prohibit the consummation of the Closing.
(v) All material (individually or in the aggregate) authorizations,
consents, Permits, orders or approvals of, or declarations or filings
with, or expirations of waiting periods imposed by, any Governmental
Entity reasonably necessary in connection with the consummation of the
Closing (including, without limitation, any of the foregoing expressly
stated in the Local Structure Term Sheet) shall have been obtained or
made.
(vi) All material (individually or in the aggregate) consents,
waivers, authorizations and approvals (including, without limitation, any
of the foregoing listed on Schedule 5.6(b), 9.10 or the Local Structure
Term Sheet) required to be obtained by the Territory of any person
necessary in connection with the Local Transaction and the Exchange
(without regard to the effect of, or any reference to, Section 9.1) or
otherwise shall have been duly obtained and shall be in full force and
effect on the Escrow Closing Date.
(vii) No fewer than 80% of the Consulting Partners listed on
Schedule 4.1(vii) (excluding for purposes of this paragraph (vii) any
Consulting Partner to whom BermudaCo or any of its Affiliates does not
make an offer of employment) shall have executed and delivered (subject
only to the execution of the Escrow Release) employment agreements (or
alternatives, such as agreements with personal service companies) with
Sub, LuxCo, BermudaCo or any of their
36
respective Subsidiaries substantially in the form of Exhibit K hereto no
later than the Business Day immediately preceding the date on which the
Registration Statement is first filed with the SEC, and shall become (or
continue to be, as the case may be), to the Territory's knowledge,
employees of Sub, LuxCo, BermudaCo or any of their respective
Subsidiaries, as applicable, immediately following the Closing, provided,
that if Sub has entered into employment agreements with any Consulting
Partners prior to the date hereof, the condition set forth in this
paragraph (vii) shall be deemed satisfied with respect to such Consulting
Partners if such employment agreements are reasonably satisfactory to
BermudaCo, and if such Consulting Partners shall become (or continue to
be), to the Territory's knowledge, employees of Sub, LuxCo, BermudaCo or
any of their respective Subsidiaries immediately following the Closing.
The Territory shall have delivered to PwCIL and BermudaCo a certificate on
its behalf, dated the Escrow Closing Date and signed by an authorized
officer or other signatory, representing and confirming that the foregoing
condition has been satisfied.
(viii) The Underwriting Agreement shall have been duly executed and
delivered by all parties thereto other than LuxCo and BermudaCo.
(ix) The BermudaCo Shares shall have been approved for listing on
the New York Stock Exchange or NASDAQ, subject to official notice of
issuance.
(x) PricewaterhouseCoopers LLP ("PwCUS") shall have received from
the SEC a no-action letter (or letters, if applicable) substantially in
the form of Exhibit H hereto (as amended from time to time pursuant to
Section 13.3), on behalf of the PricewaterhouseCoopers global network of
firms, to the effect that, upon the Closing, the activities of LuxCo,
BermudaCo and their respective affiliates shall not be attributed to any
firm in such network for purposes of the SEC Independence Rules (such
letter or letters, the "No-Action Letter").
(xi) The Territory shall have delivered a legal opinion of local
counsel substantially in the form of Exhibit J hereto.
(xii) To the extent required to comply with the terms of the
No-Action Letter, the Territory shall have established retirement trust
arrangements satisfactory to PwCIL; provided, that this paragraph (xii)
shall not apply in the event that the Territory will not have unfunded
pension liabilities as of the Closing Date.
(xiii) At least 75% of the members of the Global Board of PwCIL
shall have approved the per-BermudaCo Share purchase price set forth in
the Underwriting Agreement.
37
SECTION 4.2. Conditions to the Territory's Obligation to Consummate
the Escrow Closing. The obligation of the Territory to consummate the Escrow
Closing is subject to the satisfaction (or waiver by the Territory) as of the
Escrow Closing of the following conditions:
(i) The International Partner Approval and the Local Partner
Approval shall have been obtained.
(ii) The representations and warranties of BermudaCo and PwCIL in
this Agreement (without regard to any qualifications therein as to
materiality or BermudaCo Material Adverse Effect) shall be true and
correct, in each case as of the date of this Agreement and as of the date
of the Escrow Closing as though made on such date (or, in the case of each
representation and warranty which expressly speaks as of an earlier date,
as of the earlier date as of which such representation and warranty
speaks), unless the failure of such representations and warranties to be
true and correct, individually or in the aggregate, could not reasonably
be expected to have a BermudaCo Material Adverse Effect. BermudaCo and
PwCIL shall have delivered to the Territory a certificate on behalf of
each of BermudaCo and PwCIL, respectively, dated the Escrow Closing Date
and signed by an authorized officer of BermudaCo and PwCIL, respectively,
representing and confirming that the foregoing condition has been
satisfied, it being understood that the delivery and execution of such
certificates shall not create any liability for BermudaCo or PwCIL.
(iii) Each of BermudaCo and PwCIL shall have performed in all
material respects all covenants, obligations and agreements required by
the Transaction Agreements to be performed or complied with by it by the
Escrow Closing Date. Each of BermudaCo and PwCIL shall have delivered to
the Territory a certificate on behalf of such party dated the Escrow
Closing Date and signed by an authorized officer of such party
representing and confirming that the foregoing condition has been
satisfied.
(iv) No action shall have been taken, or any statute, rule,
regulation or order shall have been enacted or entered or deemed
applicable to the transactions contemplated by the Transaction Agreements,
and no Injunction shall have been issued by, any Governmental Entity, that
would prohibit the consummation of the Closing.
(v) All material (individually or in the aggregate) authorizations,
consents, Permits, orders or approvals of, or declarations or filings
with, or expirations of waiting periods imposed by, any Governmental
Entity reasonably necessary in connection with the consummation of the
Closing (including, without limitation, any of the foregoing expressly
stated in the Local Structure Term Sheet) shall have been obtained or
made.
38
(vi) The Underwriting Agreement shall have been duly executed and
delivered by all parties thereto other than the Territory.
(vii) All material (individually or in the aggregate) consents,
waivers, authorizations and approvals (including, without limitation, any
of the foregoing listed on Schedule 5.6(b), 9.10 or the Local Structure
Term Sheet) required to be obtained by PwCIL or BermudaCo of any person
necessary in connection with the Local Transaction and the Exchange
(without regard to the effect of, or any reference to, Section 9.1) or
otherwise shall have been duly obtained and shall be in full force and
effect on the Escrow Closing Date.
(viii) The BermudaCo Shares shall have been approved for listing on
the New York Stock Exchange or NASDAQ, subject to official notice of
issuance.
(ix) PwCUS shall have received the No-Action Letter.
(x) BermudaCo shall have delivered a legal opinion of local counsel
with respect to the valid issuance of the BermudaCo Shares.
(xi) BermudaCo shall have delivered a legal opinion of counsel to
the effect that the BermudaCo Shares to be distributed on the Closing Date
are not required to be registered under the Securities Act (subject to
customary assumptions).
(xii) At least 75% of the members of the Global Board of PwCIL shall
have approved the per-BermudaCo Share purchase price set forth in the
Underwriting Agreement.
SECTION 4.3. Condition to Delivery of the Escrow Release on the
Closing Date. The obligation of PwCIL to cause its duly authorized designee to
deliver the Escrow Release on the Closing Date is subject to the satisfaction or
waiver of all conditions to the IPO Closing set forth in the Underwriting
Agreement, other than a condition providing that the Closing shall have
occurred.
SECTION 4.4. Frustration of Closing Conditions. Neither the
Territory, PwCIL nor BermudaCo may rely on the failure of any condition set
forth in this Article IV to be satisfied if such failure was caused by such
party's failure to act in good faith or to use reasonable best efforts, as and
to the extent required by Section 9.3, to cause the Escrow Closing or the
Closing to occur.
39
ARTICLE V
Representations and Warranties of the Territory
The Territory hereby represents and warrants to PwCIL and BermudaCo
as follows (it being understood that any such representation and warranty made
with respect to Sub or any Subsidiary of Sub shall not be deemed made before the
Escrow Closing Date), subject to such exceptions as are disclosed on any
Schedule attached hereto (it being understood and agreed that under no
circumstances shall any breach of the representations and warranties in this
Article V give rise to any liability of the Territory or its Affiliates to pay
damages or to indemnify any person, the only remedy for such breach being the
right to terminate this Agreement prior to the Closing Date in accordance with
Article XII or elect not to consummate the Closing in accordance with Article
IV).
SECTION 5.1. Organization, Standing and Authority. Each of the
Territory, Sub and any Subsidiaries of Sub is a company or partnership duly
organized, validly existing and in good standing under the laws of its
jurisdiction of formation or organization. Each of the Territory and Sub has all
requisite corporate or other power and authority to conduct the Consulting
Business in all material respects as it is currently conducted and to own, lease
or operate the assets and properties used in connection therewith. The Territory
is the holder of all of the issued and outstanding shares or other ownership
interests of Sub. Every entity directly engaged in the conduct or operation of,
and every person that owns any direct interest in, or every entity (other than a
natural person) that owns a direct or indirect interest in, the Consulting
Business is a party (other than a Noncompete Party) to this Agreement. Subject
to the Territory obtaining the Local Partner Approval and International Partner
Approval, each of the Territory and Sub has all requisite corporate power and
authority to enter into the Transaction Agreements to which it is a party, to
comply with the terms of such Transaction Agreements and to consummate the
transactions contemplated thereby. As of the Escrow Closing Date, all acts and
other proceedings required to be taken by each of the Territory and Sub to
authorize the execution, delivery and performance of the Transaction Agreements
to which it is a party and the consummation of the transactions contemplated
thereby have been duly and properly taken. The appropriate governing body of
each of the Territory and Sub, by resolution duly adopted, has declared the
Local Transaction and the Exchange to be expedient and for the best interests of
the Territory or Sub, as the case may be, and deems it advisable and in the best
interests of its Partners, stockholders or analogous persons, as the case may
be, to consummate, and has approved, the Transaction Agreements and the
transactions contemplated thereby on the terms and conditions set forth in the
Transaction Agreements. This Agreement has been duly executed and delivered by
the Territory and constitutes its legal, valid and binding obligation
enforceable against it in accordance with its terms (subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
other similar laws affecting creditors' rights generally from time to time in
effect and to general principles of equity, including, without limitation,
concepts of materiality, reasonableness, good faith
40
and fair dealing regardless of whether considered in a proceeding in equity or
at law). As of the Escrow Closing Date, each of the Other Transaction Agreements
to which each of the Territory and Sub is to be a party will have been duly
executed and delivered by it (subject only to the execution of the Escrow
Release) and, upon the Closing, will constitute its legal, valid and binding
obligation enforceable against it in accordance with its terms (subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws affecting creditors' rights generally from time
to time in effect and to general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair dealing
regardless of whether considered in a proceeding in equity or at law). On the
Closing Date, other than Sub and any Subsidiaries of Sub, none of the Affiliates
of the Territory will be engaged in the operation of the Consulting Business.
Sub and its Subsidiaries are not engaged in any business other than the
Consulting Business as of the Closing Date, and, as of the Closing Date, will
have no liabilities that are Excluded Liabilities.
SECTION 5.2. No Violation; Consents and Approvals. (a) The execution
and delivery of this Agreement by the Territory does not, and the execution and
delivery by each of the Territory, Sub and their respective Subsidiaries of the
Other Transaction Agreements to which it is to be a party and the consummation
of the transactions contemplated thereby and compliance with the terms thereof
will not, (i) subject to obtaining the Local Partner Approval and International
Partner Approval, conflict with or result in any violation of any provision of
the constitutive or organizational documents of the Territory or Sub or the
comparable organizational documents of any of their respective Subsidiaries,
(ii) conflict with, result in a violation or breach of, or constitute a default,
or give rise to any right of a termination, revocation, cancelation or
acceleration, under, any Contract to which the Territory, Sub or any of their
respective Subsidiaries is a party, except for any such conflict, violation,
breach, default, loss, right, entitlement or Lien which, individually or in the
aggregate, could not reasonably be expected to have a Business Material Adverse
Effect, or (iii) conflict with or result in a violation of any judgment, order,
decree, writ, injunction, statute, law, ordinance, rule or regulation applicable
to the Territory, Sub or any of their respective Subsidiaries or to the property
or assets of the Territory, Sub or any of their respective Subsidiaries, except
for any such conflict, violation, loss or Lien (in the case of clauses (ii) or
(iii)) which, individually or in the aggregate, could not reasonably be expected
to have a Business Material Adverse Effect.
(b) No consent, approval, license, Permit, order, authorization of,
registration, declaration or filing with, or notice to, any domestic or foreign
court, administrative or regulatory agency or commission or other governmental
authority or instrumentality (whether local, municipal, provincial, Federal,
national, supra-national or otherwise) (each, a "Governmental Entity") is
required to be obtained or made by or with respect to the Territory, Sub or any
of their respective Subsidiaries in connection with the execution and delivery
of the Transaction Agreements or the consummation of the transactions
contemplated thereby or compliance with the terms thereof, other than
41
consents, approvals, licenses, permits, orders, authorizations, registrations,
declarations or filings the failure of which to be obtained or made could not
reasonably be expected, individually or in the aggregate, to have a Business
Material Adverse Effect.
SECTION 5.3. Financial Statements. (a) Schedule 5.3(a) sets forth
the balance sheets for the Consulting Business as of June 30, 2001 and December
31, 2001 (collectively, the "Balance Sheets"), and the monthly operating report
relating to the Consulting Business for the fiscal year ended June 30, 2001 and
the six months ended December 31, 2001, together with the supplementary
schedules submitted to PwCIL (with the financial statements delivered pursuant
to Section 7.14, collectively, the "Financial Statements"). The Financial
Statements have been or will be prepared in accordance with U.S. GAAP (except as
specifically described on Schedule 5.3(a)) consistently applied and on that
basis fairly present for the purposes of consolidation the financial condition
and results of operations of the Consulting Business as of the date thereof and
for the period indicated, and are derived from the Books and Records.
(b) The Consulting Business does not have any material liabilities,
obligations or commitments of any nature (whether accrued, absolute, contingent,
asserted or otherwise) except for liabilities, obligations and commitments (i)
disclosed on the Balance Sheets or the supplementary schedules thereto or (ii)
incurred in the ordinary course of business consistent with past practice since
December 31, 2001, and not in violation of this Agreement.
SECTION 5.4. Absence of Changes or Events. Since December 31, 2001,
there has been no change or event which, individually or in the aggregate, could
reasonably be expected to have a Business Material Adverse Effect. Since
December 31, 2001, the Territory and each of its Subsidiaries have carried on
the Consulting Business in the ordinary course of business consistent with past
practice (except in connection with the transactions contemplated by the
Transaction Agreements).
SECTION 5.5. Taxes. Except as set forth on Schedule 5.5, (a) the
Territory, Sub and each of their respective Subsidiaries and any affiliated
group of entities of which the Territory, Sub or any of their respective
Subsidiaries is or has been a member, (i) has filed or caused to be filed in a
timely manner (within any applicable extension periods) all material Tax Returns
and (ii) all Taxes due on such Tax Returns have been timely paid in full or will
be timely paid in full by the due date thereof (except for those Taxes being
contested in good faith); (b) no Liens (other than Permitted Liens) for material
Taxes have been filed, and no material claims for Taxes have been asserted in
writing, by any Taxing Authority with respect to the Territory, Sub or any of
their respective Subsidiaries, that could create a liability for, or otherwise
affect, Sub, the Consulting Business or the Acquired Assets; (c) no Taxing
Authority is examining, or threatening to examine, any Tax return or report
filed by Sub or any of its Subsidiaries; (d) neither the Territory nor Sub nor
any of their respective Subsidiaries or Affiliates has entered into any material
agreement or consent regarding the treatment for Tax purposes
42
of the Sub, any of its Subsidiaries, the Consulting Business, or the Acquired
Assets; (e) none of the Territory, Sub or any of their respective Subsidiaries
has been a member of an affiliated group of entities that filed Tax Returns on a
combined, consolidated or unitary basis (other than a group the common parent of
which was the Territory); and (f) none of the Territory, Sub or any of their
respective Subsidiaries has any liability for the Taxes of any person (other
than any of the Territory, Sub or any of their respective Subsidiaries) under
applicable law or pursuant to any tax allocation or sharing agreement.
SECTION 5.6. Title to Assets. (a) Either the Territory, Sub or their
respective Subsidiaries has and, after giving effect to the Local Transaction
and the Exchange, Sub and its Subsidiaries will have, good and valid title to,
or, with respect to material Leased Real Property and other material leased
Acquired Assets, valid and binding leasehold interests in, all the Acquired
Assets (except for assets not material to the Consulting Business which have
been sold or otherwise disposed of in the ordinary course of the Consulting
Business consistent with past practice), in each case free and clear of all
mortgages, liens, options, charges, title defects, security interests, charges
and similar encumbrances ("Liens") except (i) mechanics', carriers', workmen's,
repairmen's or other similar liens arising or incurred in the ordinary course of
business, (ii) conditional sales contracts (covering personalty and equipment,
but not real property) and equipment leases entered into in the ordinary course
of business, (iii) Liens for Taxes, assessments and other governmental charges
which are not due and payable or which may thereafter be paid without penalty or
which are being contested in good faith in appropriate proceedings and for which
adequate reserves have been provided, (iv) leases, subleases and license
agreements described on Schedule 9.10 and Liens affecting the interest of the
landlords, sublessors and licensors thereunder (or any underlying landlords,
sublessors and licensors) and (v) other Liens which do not materially impair
continued use and operation of any Acquired Asset in the conduct of the
Consulting Business (the items described in clauses (i) through (v) above are
hereinafter referred to collectively as "Permitted Liens"). The Permitted Liens,
taken together, do not materially impair the value or continued use and
operation of the Acquired Assets to which they relate in the conduct of the
Consulting Business as presently conducted. The Acquired Assets, together with
the rights of BermudaCo under the Transaction Agreements, constitute all the
assets necessary to conduct the Consulting Business in substantially the same
manner as currently conducted. This Section 5.6(a) (other than the immediately
preceding sentence) does not relate to matters with respect to Intellectual
Property, which are the subject of Section 5.12.
(b) Schedule 5.6(b) sets forth a complete list of all leases,
subleases and occupancy agreements for Leased Real Property (collectively, as
same may have been amended or supplemented, "Real Property Leases") and
identifies each of the Real Property Leases by (i) the date thereof and the
dates of any amendments, modifications and supplements thereto and (ii) the
original parties thereto and, in the case of Real Property Leases that have been
assigned, the current parties thereto. Schedule 5.6(b) also (i) sets forth the
expiration date of each Real Property Lease and indicates whether any
43
unexercised renewal option(s) exist thereunder, (ii) in the case of Real
Property Leases which are subleases, identifies the underlying prime leases,
(iii) indicates for each Real Property Lease if consents of the landlord, any
applicable prime landlord or any other person known to the Territory, or any
party to any agreement or instrument described in clause (iv), are required in
order to execute and deliver the assignment, sublease or license agreement
thereof or thereunder described on Schedule 9.10 and names the person or persons
from whom consent is required and (iv) identifies any nondisturbance agreements
and material reciprocal easement or operating agreements relating to each Real
Property Lease. True, correct and complete descriptions and copies of the Real
Property Leases and other agreements identified on Schedule 5.6(b) have been
delivered to PwCIL and BermudaCo or have been made available to PwCIL and
BermudaCo for their review. None of the Territory or any of its Subsidiaries has
any interest in real property primarily used in the Consulting Business other
than the Leased Real Property.
SECTION 5.7. Contracts. (a) There is no Contract that constitutes or
contains an Acquired Asset or an Assumed Liability or that after the Closing
will be binding upon BermudaCo or any of its Subsidiaries or their respective
assets that is:
(i) a Contract which has aggregate future sums due from or to the
Territory, Sub or any of their respective Subsidiaries in respect of the
Consulting Business in excess of the product obtained by multiplying the
Territory Percentage of the Territory by $25,000,000 (such product, the
"Material Contract Threshold") (or the equivalent amount in any other
applicable currency based on the Applicable Spot Rate) and, in the case of
Contracts with sums due from the Territory, Sub or any of their respective
Subsidiaries, is not terminable by the Territory, Sub or the relevant
Subsidiary without cost upon 60 days or less notice;
(ii) a Contract which following the Closing would limit the ability
of LuxCo or BermudaCo or any of their respective Subsidiaries to compete
with any person or to engage in any activity or business, or pursuant to
which any benefit is required to be given or lost as a result of so
competing or engaging;
(iii) a Contract providing for "exclusivity" or under which the
Consulting Business is in any material respect restricted, or which after
the Closing would restrict LuxCo, BermudaCo or any of their respective
Affiliates in any material respect, with respect to provision or purchase
of any services, distribution, marketing, development or manufacture;
(iv) except as could not reasonably be expected to have a Business
Material Adverse Effect, a Contract granting the other party or any third
person "most favored nation" status;
(v) (A) an employee collective bargaining agreement, arrangement or
other Contract with any labor union, staff association, works council or
other body
44
of employee representatives, (B) a plan, scheme, program or a Contract
that provides for a guaranteed level of base salary or the payment of any
bonus or incentive compensation, (C) a plan, scheme, program or Contract
that provides for severance, termination or similar type of compensation
or benefits upon the termination or resignation of any Covered Person, (D)
a plan, scheme, program or Contract that provides for pension, retirement,
deferred compensation, medical or life insurance benefits for former
employees or for Covered Persons upon their retirement from, or
termination of employment with any person that carries on any part of, the
Consulting Business (other than health coverage continuation required by
law), or (E) as of the Closing Date, a plan, scheme, program or Contract
with any Consulting Partner that is inconsistent in any material respect
with such Consulting Partner's "partner personalized statement", in each
case (other than with respect to clause (E)) which has aggregate future
sums due from or to the Territory, Sub or any of their respective
Subsidiaries, in excess of the Material Contract Threshold (or the
equivalent amount in any other applicable currency based on the Applicable
Spot Rate);
(vi) a Contract under which the Sub or any of its Subsidiaries has
(A) incurred any indebtedness for borrowed money that is currently owing
or (B) given any guarantee of any such indebtedness;
(vii) a Contract creating or granting a material Lien on any
Acquired Asset other than a Permitted Lien (including, without limitation,
material Liens upon properties acquired under conditional sales, capital
leases or other title retention or security devices, in each case which
are not Permitted Liens);
(viii) a Contract which has aggregate sums due from or to the
Territory, Sub or any of their respective Subsidiaries in excess of the
Material Contract Threshold (or the equivalent amount in any other
applicable currency based on the Applicable Spot Rate) (A) that contains a
prohibition or limitation on the assignment of all or any portion thereof
by the Territory, Sub or any of their respective Subsidiaries to any other
person (without regard to any exception permitting assignments to
Subsidiaries or Affiliates) or (B) that the consummation of any of the
transactions contemplated by the Transaction Agreements or the execution
and delivery or effectiveness of the Transaction Agreements will conflict
with, result in a violation or breach of, or constitute a default under
(with or without notice or lapse of time or both), or give rise under such
Contract to any right of, or result in, a termination, right of first
refusal, amendment, revocation, cancelation or acceleration, or loss of
material benefit, or to increased, guaranteed, accelerated or additional
rights or entitlements of any person;
(ix) a Contract which has aggregate sums due from or to the
Territory, Sub or any of their respective Subsidiaries in excess of the
Material Contract Threshold (or the equivalent amount in any other
applicable currency based on the
45
Applicable Spot Rate) that requires consent, waiver, approval or
authorization of or notice to a third party in the event of or with
respect to the consummation of any of the transactions contemplated by the
Transaction Agreements or the execution and delivery or effectiveness of
the Transaction Agreements;
(x) a Contract which has aggregate sums due from or to the
Territory, Sub or any of their respective Subsidiaries in excess of the
Material Contract Threshold (or the equivalent amount in any other
applicable currency based on the Applicable Spot Rate) not containing a
waiver of incidental, consequential, punitive and special damages in favor
of the Territory, Sub or their respective Subsidiaries (and their
respective assignees) in all circumstances; and
(xi) a Contract which has aggregate sums due from or to the
Territory, Sub or any of their respective Subsidiaries in excess of the
Material Contract Threshold (or the equivalent amount in any other
applicable currency based on the Applicable Spot Rate) entered into in the
last five years in connection with the settlement or other resolution of
any suit, claim, action, investigation or proceeding.
(b) As of the date hereof, neither the Territory nor Sub nor any of
their respective Subsidiaries has received any written notice of the intention
of any party to terminate any Assigned Contract meeting the criteria set forth
in paragraph (a)(i) above, or that any party considers that the Territory, Sub
or their respective Subsidiaries is in breach in any material respect or default
thereunder or in potential breach in any material respect or default thereunder.
Complete and correct copies of all the Assigned Contracts identified in Section
5.7(a), together with all modifications and amendments thereto to the date of
this Agreement, have been made available to PwCIL and BermudaCo (other than such
Contracts the disclosure of which would constitute a breach of such Contract or
would violate applicable law).
(c) The effect of Section 9.1 in determining whether an asset or
liability constitutes an Assigned Contract, Acquired Asset or Assumed Liability
shall be excluded for all purposes of this Section 5.7.
SECTION 5.8. Litigation. Schedule 5.8 sets forth a complete and
correct list of all claims, actions, suits or judicial, administrative and
regulatory proceedings or investigations pending or threatened in writing since
January 1, 2000 by or against the Territory, Sub or any of their respective
Subsidiaries affecting the Consulting Business or the Acquired Assets (i) which
involves an amount in controversy in excess of the Material Contract Threshold
(or the equivalent amount in any other applicable currency based on the
Applicable Spot Rate) or (ii) which could reasonably be expected to have a
Business Material Adverse Effect. There is no injunction, order, judgment, writ
or decree to which the Territory, Sub or any of their respective Subsidiaries is
a party or subject to, or in default under which, individually or in the
aggregate, could reasonably be expected
46
to have a Business Material Adverse Effect. This Section 5.8 does not relate to
matters with respect to Taxes, which are the subject of Section 5.5, or Acquired
Intellectual Property, which is the subject of Section 5.12, or Benefit Plans,
which are the subject of Section 5.9(b)(ii).
SECTION 5.9. Employee and Related Matters. (a) Schedule 5.9(a)
contains a true and complete list of all material "employee welfare benefit
plans", "employee pension benefit plans" and any other bonus, pension,
profit-sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock appreciation, restricted stock, stock option, phantom
stock, performance, retirement, thrift, savings, stock bonus, cafeteria, paid
time-off, perquisite, fringe benefit, vacation, severance, disability, death
benefit, hospitalization, medical, welfare benefit or other plan, scheme,
program, policy, arrangement or understanding, and each employment, consulting,
deferred compensation, severance, termination or indemnification agreement or
arrangement but expressly excluding such benefits or payments required by
applicable law any governmental plan or program that requires mandatory payment
of social insurance taxes or similar contributions to a governmental fund with
respect to wages of any employee that are maintained or contributed to, or
required to be maintained or contributed to, by the Territory, Sub or any of
their respective Subsidiaries or any person or entity that is Controlled by, in
Control of, or under common Control with, the Territory, Sub or any of their
respective Subsidiaries, in each case for the benefit of a Covered Person
(collectively, "Benefit Plans"). The Territory and Sub have made available to
PwCIL and BermudaCo true, correct and complete copies of (1) each such Benefit
Plan (or, in the case of any such unwritten Benefit Plan, a description
thereof), (2) the two most recent annual reports filed with any governmental
agency with respect to each such Benefit Plan (if any such report was required),
(3) the most recent summary plan description or similar document for each such
Benefit Plan for which such summary plan description is required or was
otherwise provided to plan participants or beneficiaries and (4) each trust
agreement and insurance annuity contract relating to any such Benefit Plan. Each
Benefit Plan has been administered in material compliance with its terms. The
Territory, Sub and their respective Subsidiaries and all the Benefit Plans are
in compliance in all material respects with all laws applicable or related to
any Benefit Plan. No event has occurred, and no condition exists, with respect
to any Benefit Plan that could reasonably be expected to result in any material
(individually or in the aggregate) liability to the Territory, Sub, any of their
respective Subsidiaries, LuxCo, BermudaCo, any Benefit Plan or any service
provider to any Benefit Plan, other than liabilities for contributions to, or
benefits payments from, such Benefit Plans in the ordinary course.
(b) (i) Each Benefit Plan intended to qualify for favorable tax
treatment under the law of any jurisdiction is so qualified and has received the
appropriate approval of any appropriate governmental agency, and no such
approval has been revoked, nor has revocation been threatened, nor has any event
occurred with respect to such Benefit Plan that could adversely affect its
qualification, and (ii) there is no pending, or to the
47
knowledge of the Territory, threatened litigation that would materially affect
the Benefit Plans.
(c) All contributions and premiums required to be made by the
Territory, Sub or any of their respective Subsidiaries with respect to the
Benefit Plans related to the Consulting Business under applicable law or the
terms of any Benefit Plan related to the Consulting Business have been timely
made.
(d) No condition exists with respect to any Benefit Plan that
presents a risk to Sub, LuxCo, BermudaCo of incurring any unfunded liability,
and each Benefit Plan may be amended or terminated without any material unfunded
liability to Sub, LuxCo, BermudaCo or any of their respective Subsidiaries.
Neither the Territory nor Sub nor any of their respective Subsidiaries has any
obligations for retiree health and life benefits under any Benefit Plan. Neither
the Territory nor Sub nor any of their respective Subsidiaries has any
obligations in respect of unfunded Benefit Plans for Staff Employees.
(e) Neither the execution and delivery of this Agreement nor the
obtaining of the Local Partner Approval or the International Partner Approval
nor the consummation of the transactions contemplated by this Agreement will (x)
entitle any Covered Person to any bonus, incentive compensation or severance pay
or increase any benefits provided under any of the Benefit Plans, (y) accelerate
the time of payment or vesting or trigger any payment or funding (through a
grantor trust or otherwise) of compensation or benefits under, increase the
amount payable or trigger any other obligation pursuant to, any of the Benefit
Plans in respect of any Covered Person or (z) result in any breach or violation
of, or a default under, any of the Benefit Plans.
(f) Each Consulting Partner and each Staff Employee is listed on
Schedule 7.12(a)(i). Sub has no employees other than employees primarily engaged
in the Consulting Business.
SECTION 5.10. Compliance with Laws. The Territory, Sub and their
respective Subsidiaries have in effect all material certificates, permits,
licenses, franchises approvals, qualifications, registrations, certifications,
and other similar authorizations from any Governmental Entity ("Permits")
applicable to the Consulting Business as currently conducted. The Territory, Sub
and their respective Subsidiaries are in compliance in all material respects
with any existing laws, rules, regulations, Permits, ordinances, orders,
judgments, writs, injunctions, statutes or decrees applicable to the Consulting
Business as presently conducted, and neither the Territory nor Sub nor any of
their respective Subsidiaries has received any written communication during the
past 12 months from a Governmental Entity that alleges to the contrary. Neither
the Territory nor Sub nor any of their respective Subsidiaries has received any
written notice that any material investigation or review by any Governmental
Entity is pending with respect to any of the Acquired Assets or the Consulting
Business or that any such investigation or
48
review is contemplated. The Territory, Sub and their respective Subsidiaries
have complied and are in compliance in all material respects with all existing
Environmental Laws applicable to the existence, condition (financial or
otherwise), operations, properties, assets or business of the Consulting
Business and no condition or state of facts exists that could reasonably be
expected to give rise to a violation of, or a material liability or default
under, any such Environmental Law. This Section 5.10 does not relate to matters
with respect to Taxes, which are the subject of Section 5.5, labor matters,
which are the subject of Section 5.11, Intellectual Property, which is the
subject of Section 5.12, or Benefit Plans, which are the subject of Section
5.9(a).
SECTION 5.11. Labor Matters. (i) There is not any pending or, to the
Territory's knowledge, threatened, and since January 1, 2001 there has not been
any, labor dispute, industrial action or strike, work stoppage or lockout with
respect to the Consulting Business; (ii) neither the Territory nor Sub nor any
of their respective Subsidiaries is engaged in any unlawful labor practice in
connection with the conduct of the Consulting Business; (iii) there are not any
unfair labor practice charges against the Territory, Sub or any of their
respective Subsidiaries pending before any sovereign, state or local agency in
connection with the conduct of the Consulting Business; (iv) there are not any
proceedings in connection with the conduct of the Consulting Business pending
before any sovereign, state or local agency responsible for the prevention of
unlawful employment practices that could reasonably be expected to result in any
material liability to the Consulting Business; and (v) the Territory, Sub and
their respective Subsidiaries are in material compliance with all laws and
regulations, regulating labor, wages, employment, workplace, workplace safety or
labor practices, in the case of each of clauses (i), (ii), (iii), (iv) and (v)
above which is material to the Consulting Business.
SECTION 5.12. Intellectual Property, etc. Either the Territory or
its Subsidiaries has all rights and powers necessary to grant the licenses and
make the assignments granted and made pursuant to and under the terms of this
Agreement and the Other Transaction Agreements, subject to author's rights
(other than the author's rights of the Territory or any of its Subsidiaries)
provided by applicable law. Either the Territory or its Subsidiaries has and,
following the Closing, Sub and its Subsidiaries will have, all right, title and
interest in, to and under the registrations of all trademarks that are material
to the Consulting Business (except as provided in Section 7.13, other than those
relating to the PricewaterhouseCoopers name or any derivative thereof), and has
all rights and powers necessary to make the assignment set forth in this
Agreement and the Other Transaction Agreements of such trademarks that are
material to such Consulting Business, subject to rights provided by inventors'
rights laws of any jurisdiction and to all existing agreements between the
Territory or its Subsidiaries and third parties with respect to such trademarks
entered into prior to the date of this Agreement. The conduct of the Consulting
Business as it is currently conducted does not violate or infringe the
Intellectual Property rights or rights in trade secrets or confidential
information of any person except for any such violations or infringements that,
individually or in the aggregate, could not reasonably be expected to have a
Business Material Adverse Effect.
49
No proceedings are pending against the Territory or its Subsidiaries by any
person with respect to the ownership, validity, enforceability, effectiveness or
use in the Consulting Business of any Acquired Intellectual Property and, since
January 1, 2000, none of the Territory or any of its Subsidiaries has received
any written notice alleging that the conduct of the Consulting Business during
such period violated or infringed any Intellectual Property rights or rights in
trade secrets or confidential information of any person, other than proceedings
or allegations which, individually or in the aggregate, could not reasonably be
expected to have a Business Material Adverse Effect.
SECTION 5.13. Brokers. No broker, investment banker, financial
advisor or other person, other than Xxxxxx Xxxxxxx & Co., the fees and expenses
of which (other than with respect to underwriting discounts and commissions)
will be treated as "global prior charges", and Xxxxxx Brothers, Inc., the fees
and expenses of which (other than with respect to underwriting discounts and
commissions) will be treated as "global prior charges" (except as provided in
Section 7.6, and subject to Section 2.2(e)), is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the Transaction Agreements or the transactions contemplated thereby based
upon arrangements made by or on behalf of the Territory, Sub or their respective
Subsidiaries.
SECTION 5.14. Voting Requirements. Set forth on Schedule 5.14 are
the required consents and approvals of this Agreement and the transactions
contemplated hereby required by the constitutive or organizational documents of
the Territory or otherwise in order to effect the Closing (collectively, the
"Local Partner Approval"). Together with (i) the approval of this Agreement and
the transactions contemplated hereby by the Board of PwCIL and (ii) the
affirmative vote of 2/3 of the total votes capable of being cast of the members
of PwCIL (the "International Partner Approval") in favor of this Agreement and
the transactions contemplated hereby, the Local Partner Approval is the only
vote or consent of the holders of any partnership interests or similar ownership
interests of the Territory which may be necessary to approve the Transaction
Agreements and the transactions contemplated thereby.
SECTION 5.15. Validity of Sub Shares. The Sub Shares have been duly
authorized, and, when the Sub Shares shall have been delivered (subject only to
the execution of the Escrow Release) in accordance with this Agreement on the
Escrow Closing Date, such Sub Shares will have been validly issued, fully paid
and nonassessable.
SECTION 5.16. Noncompete Parties. The Noncompete Parties comprise
every business entity Controlling, Controlled by, or under common Control
(including, without limitation, through common ownership by Partners in the
Territory) with, the Territory (other than Sub and its Subsidiaries), other than
such business entities which are Controlled by the Territory or a Noncompete
Party.
50
SECTION 5.17. Private Placement. The Territory is (a) an "accredited
investor" within the meaning of Rule 501(a) under the Securities Act or (b) is
not a "U.S. person" within the meaning of Rule 902(k) under the Securities Act
and will receive the Share Consideration in an "offshore transaction" within the
meaning of Rule 902(h) under the Securities Act. The Territory has such
knowledge and experience in financial and business matters such that it is
capable of evaluating the merits and risks of the Rollup Transaction, the IPO
and the other transactions contemplated hereby, including an investment
consisting of the Share Consideration. The Territory is able to fend for itself,
is able to bear the economic risk of holding the Share Consideration for an
indefinite period of time and to suffer a complete loss of the value of the
Share Consideration. The Territory acknowledges that it has received all the
information it considers necessary or appropriate for deciding whether to
participate in the Rollup Transaction, the IPO and the other transactions
contemplated hereby.
ARTICLE VI
Representations and Warranties of BermudaCo and PwCIL
Each of BermudaCo and PwCIL hereby represents and warrants to the
Territory and Sub as follows (it being understood and agreed that under no
circumstances shall any breach of the representations and warranties in this
Article VI give rise to any liability of BermudaCo or PwCIL to pay damages or to
indemnify any person, the only remedy for such breach being the right to
terminate this Agreement prior to the Closing Date in accordance with Article
XII or elect not to consummate the Closing in accordance with Article IV):
SECTION 6.1. Organization, Standing and Authority. BermudaCo is a
holding company duly organized, validly existing and in good standing under the
laws of Bermuda. PwCIL is a private company limited by guarantee, not having a
share capital, duly organized, validly existing and in good standing under the
laws of England and Wales. Subject to the International Partner Approval being
obtained, each of BermudaCo and PwCIL has all requisite corporate or other power
and authority to enter into the Transaction Agreements to which it is a party
and to consummate the transactions contemplated thereby. As of the Escrow
Closing Date, all corporate acts and other proceedings required to be taken by
each of BermudaCo and PwCIL to authorize the execution, delivery and performance
of the Transaction Agreements to which it is a party and the consummation of the
transactions contemplated thereby have been duly and properly taken. This
Agreement has been duly executed and delivered by each of BermudaCo and PwCIL
and constitutes the legal, valid and binding obligation of each of BermudaCo and
PwCIL, enforceable against each of BermudaCo and PwCIL in accordance with its
terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights generally
from time to time in effect and to general principles of equity, including,
without
51
limitation, concepts of materiality, reasonableness, good faith and fair dealing
regardless of whether considered in a proceeding in equity or at law). As of the
Escrow Closing Date, each of the Other Transaction Agreements to which BermudaCo
or PwCIL is to be a party has been duly executed and delivered (subject only to
the execution of the Escrow Release) by BermudaCo or PwCIL, as applicable and,
upon the Closing, will constitute the legal, valid and binding obligation of
each of BermudaCo and PwCIL, enforceable against each of BermudaCo and PwCIL in
accordance with its terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing regardless of whether considered in
a proceeding in equity or at law). As of the IPO Closing Date, BermudaCo does
not own any assets and has not incurred any liabilities, and has not had any
business or operations (excluding, in each case, any assets, liabilities,
business or operations in connection with the consummation of the Global
Rollup).
SECTION 6.2. No Violation; Consents and Approvals. (a) The execution
and delivery of this Agreement by each of BermudaCo and PwCIL does not, and the
execution and delivery by each of BermudaCo and PwCIL of the Other Transaction
Agreements to which it is to be a party and the consummation of the transactions
contemplated hereby and thereby and compliance with the terms hereof and thereof
will not, (i) conflict with or result in any violation of any provision of the
constitutive or organizational documents of BermudaCo or PwCIL, as applicable,
(ii) conflict with, result in a violation or breach of, or constitute a default,
or give rise to any right of termination, revocation, cancelation or
acceleration, under, any loan or credit agreement, note, bond, mortgage,
indenture, benefit plan, deed of trust, license, lease, sublease, contract,
purchase order, commitment or agreement, written or unwritten (collectively,
"Contracts"), to which BermudaCo or PwCIL is a party, except for any such
conflict, violation, breach, default, loss or right, entitlement or Lien which,
individually or in the aggregate, could not reasonably be expected to result in
a BermudaCo Material Adverse Effect or a PwCIL Material Adverse Effect,
respectively or (iii) conflict with or result in a violation of any judgment,
order, decree, writ, injunction, statute, law, ordinance, rule or regulation
applicable to BermudaCo or PwCIL or to the property or assets of BermudaCo or
PwCIL, except for any such conflict, violation, loss or Lien which, individually
or in the aggregate, could not reasonably be expected to have a BermudaCo
Material Adverse Effect or a PwCIL Material Adverse Effect, respectively.
(b) No consent, approval, license, permit, order or authorization
of, registration, declaration or filing with, or notice to, any Governmental
Entity is required to be obtained or made by or with respect to BermudaCo or
PwCIL in connection with the execution and delivery of the Transaction
Agreements or the consummation of the transactions contemplated thereby, other
than such consents, approvals, licenses, permits, orders, authorizations,
registrations, declarations or filings the failure of which to be obtained or
made could not reasonably be expected to have, individually or in the
52
aggregate, a BermudaCo Material Adverse Effect or a PwCIL Material Adverse
Effect, respectively.
SECTION 6.3. Validity of BermudaCo Shares. The BermudaCo Shares have
been duly authorized, and, when the BermudaCo Shares shall have been delivered
in accordance with this Agreement on the Escrow Closing Date, such BermudaCo
Shares will have been validly issued, fully paid and nonassessable.
SECTION 6.4. Other Rollup Agreements. Except to the extent required
to comply with applicable law, as of the date of this Agreement, the terms of
this Agreement (including, without limitation, the exhibits hereto) are
substantively equivalent in all material respects to, and in any event not
materially more burdensome to the Territory than, the terms of each other rollup
agreement (including, without limitation, the exhibits thereto) with each other
Rollup Territory (in each case, excluding for purposes of this Section 6.4 any
tax-related structural differences in such terms or other differences in such
terms reasonably necessary to comply with local law or practice in an applicable
jurisdiction or jurisdictions). In the event that any material amendment or
modification is made after the date of this Agreement to any such other rollup
agreement, the Territory (i) shall be provided with prompt written notice
describing such amendment or modification and (ii) shall be afforded, to the
extent permitted under applicable law, the opportunity to amend this Agreement
in like manner.
ARTICLE VII
Covenants of the Territory and Sub
The Territory covenants and agrees as follows:
SECTION 7.1. Access. (a) Prior to the Closing, the Territory shall,
and shall cause its Subsidiaries to, give LuxCo, BermudaCo and their respective
employees, counsel, accountants, investment bankers and other representatives
and advisors (collectively, "Representatives") full access upon reasonable
advance notice and during normal business hours to all offices and other
facilities used in the Consulting Business and to all books, records,
agreements, documents, information, personnel, data and files to the extent
relating to the Consulting Business, and during such period shall furnish to the
Representatives any information concerning the Consulting Business as they may
reasonably request (including without limitation, to the extent practicable, by
electronic means); provided that the Territory shall not be required to disclose
such information if such disclosure would violate applicable law or contract;
and, provided further, that the Territory shall use reasonable best efforts to
obtain the required consents necessary to permit the timely disclosure of such
information.
53
(b) After the Closing and until the seven year anniversary of the
Closing Date, the Territory will, and will cause its Subsidiaries to, give
LuxCo, BermudaCo and their respective Subsidiaries and their Representatives
reasonable access, during normal business hours and upon reasonable notice, to
all books, documents, information, data, files and other records relating to (i)
the operation of the Consulting Business prior to the Closing, (ii) the Acquired
Assets or (iii) the Assumed Liabilities, and to furnish copies thereof, which
LuxCo, BermudaCo or their respective Subsidiaries or their Representatives
reasonably request, at the Territory's cost and expense if such copies are
reasonably required to operate the Consulting Business on a stand-alone basis,
and otherwise at BermudaCo's expense, including, without limitation, in
connection with claims, proceedings, actions, investigations, audits and other
regulatory or legal proceedings involving or relating to (w) the IPO and rights
or obligations of BermudaCo or Sub under the Transaction Agreements, (x) the
operation of the Consulting Business, (y) the Acquired Assets or (z) the Assumed
Liabilities, and the Territory shall furnish reasonable assistance (at
BermudaCo's expense) (including, without limitation, access to personnel) to
LuxCo, BermudaCo and their respective Subsidiaries and their Representatives in
connection with such claims and other proceedings; provided that such access
shall be granted until the later of the seventh anniversary of the Closing Date
and the expiration date of the applicable statute of limitations with respect to
tax matters. The Territory shall permit, promptly upon reasonable request,
LuxCo, BermudaCo or any of their respective Subsidiaries to use original copies
of any such records for purposes of litigation, provided such records are
promptly returned to the Territory following such use. The Territory shall not,
and shall not permit any of its Subsidiaries to, destroy any such records prior
to the expiration of such access period without providing BermudaCo with written
notice detailing the contents of such records, and providing BermudaCo with the
opportunity to obtain such records, at least 120 days prior to the destruction
thereof.
SECTION 7.2. Ordinary Conduct. Except with the written consent of
PwCIL and, after the IPO Closing Date, BermudaCo, or as expressly permitted or
required by the terms of the Transaction Agreements, from the date of this
Agreement to the Closing, the Territory shall conduct, and shall cause its
Subsidiaries to conduct, the Consulting Business in the usual, regular and
ordinary course consistent with past practice and use reasonable best efforts to
keep intact the Consulting Business, keep available the services of the Covered
Persons and preserve the relationships of the Consulting Business with
customers, suppliers, licensors, licensees, distributors, resellers and others
with whom the Consulting Business deals to the end that the Consulting Business
and the goodwill of the Consulting Business shall be unimpaired at the Closing,
provided, that in determining compliance with the foregoing covenant no
consideration will be given to the loss of customers of the Consulting Business
for whom the Territory provides audit services. From the date of this Agreement
to the Closing, the Territory shall not and shall cause its Subsidiaries not to,
accelerate the billing or collection or other realization of cash or Excluded
Assets from the Acquired Assets or accelerate the provision of services of the
Consulting Business or delay the payment of liabilities which would become
Assumed Liabilities or grant any allowance or discount, in each case
54
outside the ordinary course of business consistent with past practice. Prior to
the Closing, the Territory shall not, and shall cause its Subsidiaries not to,
take any action that would, or that could reasonably be expected to, result in
any of the conditions set forth in Article IV not being satisfied.
SECTION 7.3. Confidentiality. The Territory shall keep confidential
and shall cause its Subsidiaries and their respective Partners, officers,
directors, employees and advisors to, and shall use reasonable best efforts to
cause its Affiliates and their respective Partners, officers, directors,
employees and advisors to, keep confidential (and not use, except as otherwise
permitted in any Transaction Agreement) all non-public information relating to
the Consulting Business, the Acquired Assets, the Assumed Liabilities and the
transactions contemplated by the Transaction Agreements, except as required by
compulsory legal process. If requested by BermudaCo in relation to specific
agreements, the Territory shall enforce any confidentiality agreement to which
it is a party relating to the Consulting Business, the Acquired Assets or the
Assumed Liabilities on BermudaCo's behalf and, following the Closing, at
BermudaCo's request and cost.
SECTION 7.4. Preparation of Local Partner Information Memorandum and
Registration Statement; Partner Vote. (a) The Territory shall prepare and, no
later than the fourth Business Day following the date hereof, distribute to the
Partners of the Territory an information memorandum based on a prescribed form
approved by PwCIL (the "Local Partner Information Memorandum", it being
understood that such term shall not include the global partner information
memorandum to be distributed in connection with the transactions contemplated
hereby, or the Registration Statement). The Territory hereby acknowledges that
time is of the essence with respect to performance of the foregoing covenant.
Prior to distributing the Local Partner Information Memorandum (or any amendment
or supplement thereto), the Territory shall (i) provide PwCIL, LuxCo and
BermudaCo an opportunity to review and comment on such document, (ii) include in
such document all comments reasonably proposed by PwCIL, LuxCo and BermudaCo and
(iii) not distribute such document prior to receiving the approval of PwCIL,
LuxCo and BermudaCo, which approval shall not be unreasonably withheld, delayed
or conditioned.
(b) The Territory and its Subsidiaries shall assist LuxCo and
BermudaCo in the preparation of the Registration Statement in any manner which
LuxCo or BermudaCo shall reasonably request.
(c) The Territory agrees that the information included or
incorporated by reference in the Local Partner Information Memorandum will not
(except to the extent revised or superseded by amendments or supplements
thereto), at the date the Local Partner Information Memorandum is distributed to
the Partners of the Territory, or at the time of any amendment or supplement
thereof, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
55
misleading, except that no covenant is made by the Territory hereto with respect
to statements made in the Local Partner Information Memorandum based on
information supplied in writing by or on behalf of PwCIL or BermudaCo for
inclusion or incorporation by reference therein. Each of PwCIL and BermudaCo
agrees that such information will not (except to the extent revised or
superseded by amendments or supplements contemplated hereby), at the date the
Local Partner Information Memorandum is distributed to the Partners of the
Territory, or at the time of any amendment or supplement thereof, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
Territory agrees that the Local Partner Information Memorandum shall be
consistent in all material respects with the draft registration statement with
respect to the IPO (as provided to the Territory for use in the preparation of
the Local Partner Information Memorandum) and the global partner information
memorandum to be prepared in connection with the Global Rollup (as provided to
the Territory for use in the preparation of the Local Partner Information
Memorandum).
(d) The Territory agrees that the information provided by it in
writing for inclusion or incorporation by reference in the Registration
Statement to BermudaCo will not (except to the extent revised or superseded by
amendments or supplements thereto), at the date the Registration Statement is
filed with the SEC, or at the time of any amendment or supplement thereof,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein with respect to the Territory, Sub, their respective Subsidiaries or the
Consulting Business, in light of the circumstances under which they are made,
not misleading.
(e) The Territory shall, as promptly as practicable after the date
of this Agreement, establish a date (which will be as promptly as reasonably
practicable following the date of this Agreement, and in no event later than 20
days after the date on which the Local Partner Information Memorandum is mailed)
for, duly call, give notice of and conduct a vote of its Partners and take all
other such steps necessary, for the purpose of obtaining the Local Partner
Approval. The Local Partner Approval shall include an authorization to the
governing body of the Territory to amend, modify or supplement the terms and
conditions of this Agreement (including, without limitation, an authorization to
comply with Section 2.3), subject to Section 13.3 hereof. Subject to Section
7.5(b)(i), the Territory shall, through its governing body, recommend to its
Partners that they approve the Transaction Agreements and the transactions
contemplated thereby and shall include such recommendation in the Local Partner
Information Memorandum. Without limiting the generality of the foregoing, the
Territory agrees that its obligations pursuant to this Section 7.4(e) shall not
be affected by the commencement, public proposal, public disclosure or
communication to the Territory or any other person of any Takeover Proposal. The
Territory hereby acknowledges that time is of the essence with respect to
56
performance of the foregoing covenant. The Territory shall promptly notify PwCIL
and BermudaCo of the outcome of the vote.
SECTION 7.5. No Solicitation by the Territory. (a) Except as
otherwise expressly authorized by PwCIL and, after the IPO Closing Date,
BermudaCo, the Territory shall not, nor shall it permit any of its Subsidiaries
to, or authorize or permit any director, officer or employee of the Territory or
any of its Subsidiaries or any investment banker, attorney, accountant or other
advisor or representative of the Territory or any of its Subsidiaries to,
directly or indirectly, (i) solicit, initiate or encourage, or take any other
action knowingly to facilitate, any Takeover Proposal or (ii) enter into,
continue or otherwise participate in any discussions or negotiations regarding,
or furnish to any person any information with respect to, or otherwise cooperate
in any way with, any Takeover Proposal.
The term "Takeover Proposal" means any inquiry, proposal or offer
from any person relating to, or that is reasonably likely to lead to, any direct
or indirect acquisition, in one transaction or a series of transactions,
including, without limitation, any merger, consolidation, exchange offer,
binding share exchange, business combination, recapitalization, liquidation,
dissolution, joint venture or similar transaction, of the assets or businesses
of the Consulting Business, other than with respect to the transactions
contemplated by the Transaction Agreements and asset dispositions in the
ordinary course of business.
(b) Except as otherwise expressly authorized by PwCIL and, after the
IPO Closing Date, BermudaCo, neither the governing body of the Territory nor any
committee thereof shall (or shall agree or resolve to) (i) (A) withdraw or
modify in a manner adverse to PwCIL or BermudaCo or propose publicly to withdraw
or modify in a manner adverse to PwCIL or BermudaCo the recommendation or
declaration of advisability by such governing body or any such committee of the
Transaction Agreements or the transactions contemplated thereby, unless the
governing body of the Territory shall determine in good faith that it is
required, pursuant to its fiduciary duties, to withdraw or modify such
recommendation or declaration (it being understood and agreed that any such
withdrawal or modification shall not relieve the Territory of its obligation to
comply with the first sentence of Section 7.4(e)), or (B) recommend, or propose
publicly to recommend, the approval or adoption of any Takeover Proposal, (ii)
adopt or approve, or propose publicly to adopt or approve, any Takeover
Proposal, or withdraw its approval of the Transaction Agreements and the
transactions contemplated thereby, or propose publicly to withdraw its approval
of the Transaction Agreements and the transactions contemplated thereby or (iii)
cause or permit the Territory to enter into any letter of intent, memorandum of
understanding, agreement in principle, acquisition agreement, merger agreement,
option agreement, joint venture agreement, partnership agreement or other
agreement (each, a "Territory Acquisition Agreement") constituting or related
to, or which is intended to or is reasonably likely to lead to, any Takeover
Proposal.
57
(c) In addition to the obligations of the Territory set forth in
paragraphs (a) and (b) of this Section 7.5, unless otherwise approved by PwCIL
and, after the IPO Closing Date, BermudaCo, the Territory promptly and in any
event within 24 hours shall advise PwCIL and BermudaCo in writing of any
Takeover Proposal, of any request for information that the Territory reasonably
believes could reasonably be expected to lead to or contemplates a Takeover
Proposal or any inquiry the Territory reasonably believes could reasonably be
expected to lead to any Takeover Proposal, the terms and conditions of such
Takeover Proposal, request or inquiry (including, without limitation, any
subsequent material amendment or modification to such terms and conditions) and
the identity of the person making any such Takeover Proposal, request or
inquiry. The Territory shall keep PwCIL and BermudaCo informed in all material
respects on a current basis of the status and details (including, without
limitation, amendments or proposed amendments) of any such Takeover Proposal,
request or inquiry.
SECTION 7.6. Expenses. (a) Subject to Sections 2.2 and 9.8, whether
or not the transactions contemplated hereby are consummated, and except as
provided in paragraph (b) of this Section 7.6 and as otherwise expressly
provided in the Transaction Agreements, all costs and expenses not constituting
Global Prior Charge Amounts incurred in connection with the Transaction
Agreements and the transactions contemplated thereby shall be paid by the party
incurring such costs or expenses.
(b) Notwithstanding any other agreement to the contrary, the
reasonable costs of any insurance premiums (including, without limitation, any
additional premiums payable thereon from time to time pursuant to the terms of
the policy) for policies obtained by BermudaCo or any of its Affiliates covering
Losses of the type referred to in Section 11.2(a)(ii) incurred by PwCIL, the
Territory and each other member firm of the PricewaterhouseCoopers global
network of firms selling BermudaCo Shares in connection with the Registration
Statement (excluding, without limitation, any premiums or portions of any
premiums attributable (as agreed between BermudaCo and PwCIL) to customary
"directors and officers" coverage (including, without limitation, a customary
insured amount)) shall be allocated as follows: BermudaCo shall pay 25% of the
amount of such premiums, and the Territory shall pay the product obtained by
multiplying 75% of such premiums by the Territory Percentage of the Territory.
BermudaCo and its applicable Affiliates shall have the right to reimbursement
from the Territory to the extent that any of them makes payment of the full
premium to the insurer, and the Territory agrees promptly to reimburse BermudaCo
and its applicable Affiliates for its aggregate share of any such premium. Any
insurance policy referred to above shall name the Territory and its directors,
officers and control persons as additional insureds, and shall contain a waiver
of subrogation rights against any insured party (in the absence of fraud or
wilful misconduct) in form and substance reasonably satisfactory to PwCIL and
PwCUS. The Territory shall have no obligations under this paragraph (b) in the
event that this Agreement is terminated solely due to the failure to obtain the
local Partner Approval or the International Partner Approval, the failure of the
condition set forth in
58
Section 4.1(vii) to be satisfied or circumstances not reasonably attributable to
the action or inaction of the Territory.
(c) In the event that this Agreement shall be terminated or the
Closing otherwise shall not occur on the IPO Closing Date (except to the extent
that such termination or failure to consummate the Closing was due to the
failure to obtain the Local Partner Approval or the International Partner
Approval, the failure of the condition set forth in Section 4.1(vii) to be
satisfied or circumstances not reasonably attributable to the action or inaction
of the Territory), in addition to any remedy PwCIL or BermudaCo may have at law
or equity, the Territory shall pay to BermudaCo, by wire transfer of same-day
funds to an account designated by BermudaCo within two business days after such
termination or the IPO Closing Date, as the case may be, an amount equal to the
product obtained by multiplying (x) the Territory Percentage of the Territory by
(y) the Global Rollup Expense Amount. The "Global Rollup Expense Amount" shall
mean, as at the date of any determination, the expenses and fees which are (i)
primarily for the benefit of the PricewaterhouseCoopers global network and not
for any individual Territory, in each case which are paid, payable or accrued by
LuxCo, BermudaCo and the Rollup Territories as at such date, in connection with
the preparation for, and consummation of, the Global Rollup and (ii) approved by
PwCIL.
SECTION 7.7. Implementation of Financial Controls. The Territory
will comply with the requirements set forth on Schedule 7.7 with respect to
separability, business operations and financial operations, at the times set
forth therein. In the event of any inconsistencies between the provisions of
this Section 7.7 and the terms of the Transition Services Agreement, on and
after the Closing Date the terms of the Transition Services Agreement shall
govern. The Territory hereby acknowledges that time is of the essence with
respect to performance of the foregoing covenant.
SECTION 7.8. Redemption of Paid-in-Capital and Memorandum Accounts.
On the Closing Date, the Territory agrees that it shall, on the terms described
in the Local Structure Term Sheet and at its expense, redeem or otherwise
transfer (as described in the Local Structure Term Sheet) to the applicable
Consulting Partner, free of any restrictions, in cash the entire amount of the
paid-in capital and memorandum accounts and similar capital contributions of,
and loans made to the Territory by, each Consulting Partner; provided, however,
the Territory shall, if agreed by PwCIL in consultation with the Territory,
partially redeem such accounts in BermudaCo Shares, subject to adequate
financial arrangements being made available to Consulting Partners for payment
of taxes and outstanding loans, and subject to any other conditions described in
the Local Structure Term Sheet.
SECTION 7.9. Compliance with No-Action Letter. After the Closing,
the Territory agrees that it shall strictly comply with the requirements set
forth with respect to members of the PricewaterhouseCoopers global network of
firms in the No-Action Letter,
59
and take such other actions as PwCIL or BermudaCo shall reasonably request with
respect to compliance with such No-Action Letter.
SECTION 7.10. Acquired Assets Schedules. On or prior to the Escrow
Closing Date, the Territory shall deliver to PwCIL and BermudaCo schedules (or
updates to existing Schedules, as applicable (including updates expressly
contemplated in any such Schedules)) setting forth in reasonable detail (i) the
Assigned Contracts having aggregate future sums due from or to the Territory,
Sub or any of their respective Subsidiaries in excess of the Material Contract
Threshold (to the extent not already set forth on a Schedule attached hereto in
connection with Section 5.7, it being understood that no such additional
disclosure shall have any effect for purposes of determining whether the
condition set forth in Section 4.2(ii) shall have been satisfied), (ii) the
Acquired Permits, (iii) the Leased Real Property, (iv) the Acquired Assets
referred to in clause (x) of the definition of "Acquired Assets" and (v) the
information which would have been required to have been delivered on the date
hereof pursuant to Section 5.8 if clauses (i) and (ii) had been deleted
therefrom. Such schedule shall be in form and substance reasonably acceptable to
each of PwCIL, BermudaCo and the Territory.
SECTION 7.11. Special Provisions in the Event of Failure to
Consummate the Closing. In the event that this Agreement shall be terminated or
the Closing otherwise shall not occur on the IPO Closing Date (except to the
extent that such termination or failure to consummate the Closing was due to the
failure to obtain either the International Partner Approval or the Local Partner
Approval, the failure of the condition set forth in Section 4.1(vii) to be
satisfied or circumstances not reasonably attributable to the action or inaction
of the Territory), in addition to the provisions of Section 7.6, the Territory
and the Noncompete Parties hereby (i) acknowledge and agree that,
notwithstanding any agreement or understanding to the contrary, PwCIL shall have
the right to cause the Territory and the Noncompete Parties, within six months
of the IPO Closing Date, to discontinue all use of the Name (as defined in the
Regulations of PwCIL) or "PwC" or "PwCC" in connection with the Consulting
Business, (ii) acknowledge and agree that, notwithstanding any agreement or
understanding to the contrary, LuxCo and BermudaCo and their Subsidiaries and
Affiliates shall be permitted to compete with the Consulting Business in any
territory in which the Consulting Business operates and (iii) acknowledge and
agree that, notwithstanding any agreement or understanding to the contrary,
LuxCo and BermudaCo and their respective Subsidiaries shall be permitted to use
the name "PricewaterhouseCoopers", "PricewaterhouseCoopers Consulting", "PwC",
"PwCC" or any derivative thereof on the terms set forth in Section 7.13. It is
understood and agreed that notwithstanding any exceptions to the immediately
preceding sentence or any other provision in this Agreement, nothing herein
shall modify any rights PwCIL or PwC Business Trust may have to modify name
rights or take any other action with respect to a firm that fails to participate
in the Global Rollup. The provisions of clause (i) of the second immediately
preceding sentence may be waived once for a period to extend through no later
than one year from the IPO Closing Date or at such earlier time as a Final
Non-Participation Determination with respect to the Territory
60
has been made in writing by PwCIL in the event that PwCIL determines in good
faith that such a waiver would be in the best interests of the member firms of
PwCIL in order to consummate a subsequent rollup transaction; provided, that if
such subsequent rollup transaction does not occur on or before the one year
anniversary of the IPO Closing Date, PwCIL shall enforce the provisions of such
clause (i) to the fullest extent permitted under applicable law. The Territory
and PwCIL acknowledge and agree that the provisions of clause (i) above shall be
enforceable directly by BermudaCo after the earlier of (i) the date of a final
Non-Participation Determination with respect to the Territory and (ii) the one
year anniversary of the Closing Date. PwCIL shall use reasonable best efforts to
cause, within one year from the IPO Closing Date, the forfeiture by any firm
which is a part of the PricewaterhouseCoopers global network of firms that is
not a Rollup Territory of its rights to use the names "PwCC",
"PricewaterhouseCoopers Consulting" or "PwC Consulting" in any manner.
SECTION 7.12. Covered Persons. (a) The employment of the Staff
Employees shall be either (i) transferred to BermudaCo or transferred to or
continued by Sub or (ii) transferred to, or continued by, an Affiliate of
BermudaCo or Sub, in each case in accordance with the applicable provisions of
the Local Structure Term Sheet. BermudaCo, Sub or any of their respective
Affiliates shall make an offer of employment (substantially on the terms set
forth on Exhibit K hereto) to each Consulting Partner listed on Schedule
4.1(vii). Except as otherwise agreed by the parties hereto, no party shall
employ, or make an offer of employment or partnership to, any Partner or
client-facing employee of the other (it being understood that any Partner,
client-facing employee of the Consulting Business or any other Consulting
Business subject to the Global Rollup shall be deemed to be an employee or
Partner of LuxCo for purposes of this provision); and from and after the Closing
Date the Territory and its Affiliates shall use reasonable best efforts to
effect the withdrawal or termination, as applicable, of any Consulting Partner.
For purposes of this Agreement, each Covered Person employed or engaged by
BermudaCo, Sub or any of their respective Affiliates after the Local Transaction
and the Exchange shall be referred to herein as a "Transferred Employee".
(b) Except as set forth in the Local Structure Term Sheet, BermudaCo
shall grant, or shall cause an Affiliate of BermudaCo to grant, each Transferred
Employee credit for eligibility and vesting purposes only under employee benefit
plans, schemes, programs or arrangements of BermudaCo (or its Affiliates) in
which such Transferred Employee participates after the Closing (a "Successor
Plan"). For the purposes of determining the severance, vacation and sick leave
entitlements only of each such Transferred Employee following the Closing,
BermudaCo (or its Affiliate, as applicable) shall take into account all services
taken into account under the severance, vacation and sick leave Benefit Plans,
respectively, in which such Transferred Employee participated immediately prior
to the Closing.
(c) With respect to any Successor Plan that is a medical, dental,
health or life insurance plan, BermudaCo (or its Affiliate, as applicable) shall
(i) waive any
61
exclusions for pre-existing conditions to the extent such exclusions did not
apply to a Transferred Employee under the applicable Benefit Plans in which such
Transferred Employee participated immediately prior to the Closing and (ii)
waive any waiting period under the corresponding Benefit Plan in which such
Transferred Employee or his or her covered dependents was an active participant
immediately prior to the Closing.
(d) Except as expressly set forth herein (including, without
limitation, Section 7.8) or in the Local Structure Term Sheet, and except for
obligations and liabilities of the nature described in Section 7.8, BermudaCo
and its Affiliates (other than Consulting Partners) shall be responsible for (i)
any liabilities, obligations or Losses owed or related to Consulting Partners or
Staff Employees arising while such persons were Consulting Partners or Staff
Employees, whether occurring on or prior to the Closing, and (ii) any
liabilities, obligations or Losses (whether payable in cash or other
consideration) relating to any Staff Employee or Consulting Partner, arising
since such persons became Consulting Partners or Staff Employees, whose
employment does not transfer to BermudaCo or an Affiliate of BermudaCo (or who
does not become an employee of BermudaCo or such Affiliate) in connection with
the Closing if the Territory uses reasonable best efforts to effect the
termination of, or gives notice to terminate, any such Covered Person within 60
days after the Closing, including, without limitation, the amount of any
severance or other similar payments paid by the Territory to such Staff Employee
or Consulting Partner in connection with the termination of such Staff Employee
or Consulting Partner, the amount of which (with reference to amounts and value)
shall be no greater than is consistent with past practice, if any, of the
Territory; provided, that the Territory shall use reasonable best efforts to
mitigate the amount and value of any such payments; and, provided further, that
the Local Structure Term Sheet shall specify the extent of the ability of the
Territory to satisfy such severance or other similar payment obligations, or to
obtain reimbursement therefor (or estimates thereof), from BermudaCo Shares, and
to the extent that all or any portion of such severance, reimbursements or other
similar payments are made in BermudaCo Shares, the provision of such shares
shall be effected pursuant to Section 2.2(d) hereto and as further set forth in
the Local Structure Term Sheet. Except as set forth herein or in the Local
Structure Term Sheet, the Territory shall retain liability and responsibility
for pension benefits accrued by Consulting Partners as of the Closing ("Partner
Pension Benefits"). The applicable provisions of the Local Structure Term Sheet
describe the Territory's obligations with respect to (i) the Partner Pension
Benefits (ii) pension benefits owed to Staff Employees.
(e) With the exception of benefits due under an Assumed Benefit
Plan, the Benefit Plans of the Territory shall be responsible for any claims for
medical, dental, life insurance, short-term and long-term disability benefits
incurred by Covered Persons before the Closing. For this purpose, a claim for
medical and dental benefit is incurred on the date the applicable services are
rendered, a claim for life insurance benefit is incurred on the date of death
and a claim for short-term and long-term disability benefits is incurred on the
date payment is required to be made.
62
(f) Except as otherwise provided herein, BermudaCo or its applicable
Affiliate shall be responsible for all liabilities or obligations (other than
Partner Pension Benefits) related to any Benefit Plan established or maintained
by any entity that, immediately prior to the Closing, employs only Covered
Persons (an "Assumed Benefit Plan"), provided that all such liabilities or
obligations are reflected on the Closing Date Balance Sheet.
(g) The Territory and its Subsidiaries shall comply with all
applicable labor laws in connection with the transactions contemplated hereby,
including, without limitation, consultation requirements, except where the
failure so to comply could not reasonably be expected to result in a Business
Material Adverse Effect.
(h) As may be further detailed in the Local Structure Term Sheet,
each Consulting Partner shall continue to be credited under the Territory's
qualified or non-qualified retirement plans, programs or arrangements sponsored
or contributed to by the Territory in which Consulting Partners participate with
service with BermudaCo and its Affiliates for the limited purposes of vesting
and retirement eligibility (but not benefit accrual), subject to the terms and
conditions of such plans, programs or arrangements. However, if a Consulting
Partner takes a distribution while employed by BermudaCo or its Affiliates, such
imputed service crediting shall cease, certain forfeitures may occur, and
certain retirement subsidies may no longer be available, all as more fully
described in the Local Partner Information Memorandum, applicable withdrawal
agreements, and the applicable plan documents. Compensation earned after the
Closing shall not be taken into account under the plans, programs or
arrangements referred to above.
SECTION 7.13. Use of PricewaterhouseCoopers Name. (a) For a period
of 4 years beginning on the Closing Date, in accordance with the grant of a
license by PwC Business Trust, LuxCo, BermudaCo and their respective
Subsidiaries shall have the exclusive right to use the names "PwC Consulting"
and "PwCC"; provided, however, that:
(i) all publications, letterhead and stationery, name plates, office
signage, business cards and other materials in public circulation clearly
designate LuxCo, BermudaCo or such Subsidiary as not owned by PwCIL or any
Affiliate thereof;
(ii) LuxCo, BermudaCo or such Subsidiary, as the case may be, does
not represent in any publication, advertisement, press release, name
plates, office signage, business cards or other similar material that it
is the same firm, or controls, manages, governs or is affiliated with
PwCIL or any Affiliate, Subsidiary or division thereof; and
(iii) in the event that LuxCo or BermudaCo cease to use the "PwC" or
"PricewaterhouseCoopers" name in connection with their businesses, such
use will be restricted (following no longer than a one-year period of
dual-branding) to
63
references (including, for purposes of this paragraph (iii) only,
references to the name "PwC" or "PricewaterhouseCoopers" or any derivative
thereof) to the historic ownership of the Consulting Business by the
PricewaterhouseCoopers global network of firms as follows: "Formerly the
global management consulting services business of PricewaterhouseCoopers"
or similar language to that effect.
(b) So long as the provisions of Section 7.13(a) shall be in effect,
the Territory and the Noncompete Parties shall not use the name "PwC" or
"PricewaterhouseCoopers" or any derivative thereof in connection with the
provision of Restricted Consulting Services.
(c) So long as the provisions of Section 7.13(a) shall be in effect,
each of the Territory, the Noncompete Parties and PwCIL shall not use the name
"PwCC", "PricewaterhouseCoopers Consulting" or "PwC Consulting" or any
confusingly similar name in any manner, and shall not grant a license or other
right to use such name or names to any other person, provided, that the
Territory may continue to use (i) the names listed on Schedule 7.13(c) and (ii)
other recently used names as are consistent with such recent past uses.
(d) Throughout the license period set forth in this Section 7.13(a),
LuxCo, BermudaCo and their respective Subsidiaries shall use all commercially
reasonable effort and cause their respective officers, employees, agents and
contractors to use their commercially reasonable efforts to promote and conduct
the Consulting Business in a manner consistent with good business practices and
the high standards and prestige represented by the licensed
PricewaterhouseCoopers name. The materials and workmanship of all sales and
promotional materials for the Consulting Business bearing the
PricewaterhouseCoopers name at all times shall be of high quality.
SECTION 7.14. Delivery of Financial Statements. Within 18 days after
the end of the fiscal quarter, for the quarter ending March 31, 2002 and for
each subsequent fiscal quarter ending prior to the Closing Date, the Territory
shall deliver to PwCIL in the prescribed reporting format a balance sheet, and
monthly operating report relating to the Consulting Business, including, without
limitation, the supplementary schedules thereto, as of and for the year to date
then ended (as well as comparable information for the period beginning at the
start of the applicable fiscal year and ending at the end of such fiscal
quarter), which financial statements may be unaudited and have been or will be
prepared in accordance with U.S. GAAP (except as described on Schedule 5.3(a))
consistently applied.
SECTION 7.15. Power of Attorney. Prior to the Escrow Closing Date
the Territory shall deliver an executed power of attorney or similar grant of
authority by the Territory to PwCIL (the "Power of Attorney") to (i) execute on
the Territory's behalf the Underwriting Agreement on the Escrow Closing Date and
(ii) effect on the Territory's
64
behalf the Escrow Release as described in Section 3.1(b), in each case as such
power of attorney or similar grant of authority is described in the Local
Structure Term Sheet.
SECTION 7.16. Funding of Consulting Partner Benefit Plans. (a) The
Territory shall fund or otherwise defease to the extent feasible, from net cash
or other proceeds to the Territory from the IPO after all related tax payments
and deductions, unfunded liabilities which are not Assumed Liabilities with
respect to Benefit Plans for the benefit of Consulting Partners.
(b) The funding contemplated in paragraph (a) above shall be
effected in a manner consistent with PwCIL-approved retirement benefit funding
principles, including without limitation ensuring that the future Benefit Plan
expense burden on the Territory after the Closing Date is no greater than the
future Benefit Plan expense burden prior to the Closing Date (after giving
effect to any changes in Benefit Plans effected in anticipation of the Rollup
Transactions). The level, offer and manner of funding of such Benefit Plans
shall be, in amount, manner and degree, no less favorable to the Consulting
Partners than any funding arrangements of the Territory for existing and retired
Partners of the Territory who are not Consulting Partners. The Territory hereby
agrees that if any portions of such Consulting Partner Benefit Plans remain
unfunded following the Closing Date, the Territory shall, in the event that any
benefit plans for the benefit of existing or retired Partners of the Territory
(other than Consulting Partners) are funded after the Closing Date, fund such
Consulting Partner Benefit Plans on no less favorable terms; provided, that the
foregoing shall not apply in the case of payments to or in respect of benefit
plans, or amounts therein, in the context of purchases from or sales to third
parties of businesses constituting less than all or substantially all of the
Territory's business where no payment with respect to the benefit plans of
existing or retired Partners of the Territory and its Affiliates not subject to
such purchase or sale receives payments of any kind.
(c) The Territory's written plan for compliance with this Section
7.16 shall be submitted to the Global Board of PwCIL no later than June 1, 2002,
and may be rejected by the Global Board only to the extent such plan violates
any of the funding principles described in paragraph (a) and (b) above; it being
understood that acceptance thereof shall constitute compliance with the terms of
Section 7.16(a).
(d) The foregoing shall not require the Territory to fund the
benefit plans of any of the existing, retired or Consulting Partners
disproportionately.
SECTION 7.17. Right of First Offer. If, during the period from the
Closing Date until the third anniversary of the Closing Date, the Territory
determines that it is interested in entering into an arrangement with an
unaffiliated person (a "Third Party") for the purpose of selling all or a
significant part of the business conducted as of the Closing Date known as
Global Risk Management Services (the "GRMS Practice"),
65
the Territory shall give BermudaCo a right of first offer to acquire such
practice as follows:
(a) The Territory shall give written notice to BermudaCo of its
interest in selling all or a significant part of the GRMS Practice. BermudaCo
shall have 10 days after receipt of such notice to notify the Territory of
whether or not BermudaCo wishes to pursue negotiations for such an arrangement
with respect to the GRMS Practice and to submit a proposal to the Territory. In
the event that BermudaCo declines to pursue negotiations or does not provide
such notice and proposal to the Territory within the 10-day period, the
Territory shall be free to enter into an arrangement for the purposes of selling
the GRMS Practice to a Third Party.
(b) In the event that BermudaCo expresses interest in negotiations
and submits a preliminary proposal, then for an additional 30-day period, the
Territory shall conduct negotiations on an exclusive basis with BermudaCo
diligently and in good faith to reach an agreement with BermudaCo. At the end of
such 30-day period, if the parties have not reached an agreement at such time,
BermudaCo shall give the Territory a written notice setting forth the final
offer by BermudaCo for such an arrangement (the "Final Offer"). If the Territory
rejects the Final Offer, it shall thereafter be free to negotiate and enter into
an arrangement for the purposes of selling the GRMS Practice to a Third Party.
No such arrangement shall be entered into without the Territory again complying
with clause (a) hereof, unless entered into within 180 days after the date of
the Final Offer.
ARTICLE VIII
Covenants of BermudaCo and PwCIL
BermudaCo and, in the case of Section 8.9, PwCIL, covenants and
agrees as follows:
SECTION 8.1. Performance of Obligations by BermudaCo After Closing
Date. From and after the Closing Date, BermudaCo shall duly and faithfully pay,
or cause to be paid, and perform, or cause to be performed, all the Assumed
Liabilities.
SECTION 8.2. Amendment of LuxCo and BermudaCo Constitutive
Documents. Prior to the Closing, PwCIL shall cause LuxCo to amend its
constitutive documents to effect the provisions described in the LuxCo Structure
Term Sheet attached hereto as Exhibit G-2, and BermudaCo shall amend its
constitutive documents to effect the provisions described in the BermudaCo
Structure Term Sheet attached hereto as Exhibit G-1.
SECTION 8.3. Access. After the Closing and until the seven year
anniversary of the Closing Date, BermudaCo will, and will cause its Subsidiaries
to, give
66
the Territory, its Subsidiaries and their Representatives reasonable access,
during normal business hours and upon reasonable notice, to all books,
documents, information, data, files and other records relating to (i) the
operation of the Consulting Business before the Closing, (ii) the Acquired
Assets or (iii) the Assumed Liabilities, and to furnish copies thereof, which
the Territory, its Subsidiaries or their Representatives reasonably request,
including, without limitation, in connection with claims, proceedings, actions,
investigations, audits and other regulatory or legal proceedings involving (x)
the operation of the Consulting Business, (y) the Acquired Assets or (z) the
Assumed Liabilities, and BermudaCo shall furnish reasonable assistance (at the
Territory's expense) (including, without limitation, access to personnel) to the
Territory and its Subsidiaries and their Representatives in connection with such
claims and other proceedings; provided that BermudaCo shall not be required to
disclose such information if such disclosure would violate applicable law or
contract; and, provided further, that BermudaCo shall use reasonable best
efforts to obtain the required consents necessary to permit the timely
disclosure of such information. BermudaCo shall not, and shall not permit any of
its Subsidiaries to, destroy any such records prior to the seventh anniversary
of the Closing Date without providing the Territory with notice detailing the
contents of such records, and providing the Territory with the opportunity to
obtain such records, at least 120 days prior to the destruction thereof.
BermudaCo shall permit, promptly upon reasonable request, the Territory or any
of its Subsidiaries to use original copies of any such records for purposes of
litigation, provided such records are promptly returned to BermudaCo following
such use.
SECTION 8.4. [Reserved.]
SECTION 8.5. Compliance with No-Action Letter. After the Closing,
BermudaCo agrees that it shall strictly comply with the requirements set forth
with respect to BermudaCo or "Newco" in the No-Action Letter, and take such
other actions as PwCIL shall reasonably request with respect to compliance with
such No-Action Letter. BermudaCo agrees that it shall not enter into any
alliance arrangement prohibited by the No-Action Letter with any member or
network firm (other than a Rollup Territory) of the PricewaterhouseCoopers
global network of firms.
SECTION 8.6. Replacement of Guarantees. BermudaCo shall, at the
reasonable request of the Territory, enter into arrangements to replace the
guarantees and indemnities granted by the Territory in respect of the Consulting
Business to the extent such guarantees or indemnities are Assumed Liabilities
and shall, until such time as all material replacement arrangements are in
place, indemnify the Territory against all claims and liabilities arising under
such guarantees and indemnities.
SECTION 8.7. Confidentiality. BermudaCo shall keep confidential and
shall cause its Subsidiaries to, and shall use reasonable best efforts to cause
its Affiliates and their respective officers, directors, employees and advisors
to, keep confidential all non-public information relating to the Territory, the
Excluded Assets, the Excluded
67
Liabilities and the transactions contemplated by the Transaction Agreements,
except as required by compulsory legal process. If requested by PwCIL or the
Territory in relation to specific agreements, BermudaCo shall enforce any
confidentiality agreement to which it is a party relating to the Territory, the
Excluded Assets or the Excluded Liabilities on the Territory's behalf and,
following the Closing, at the Territory's request and cost.
SECTION 8.8. Compensation Matters. BermudaCo agrees that it and its
Affiliates' policies with respect to aggregate cash compensation and grants of
stock and options under incentive plans in fiscal years 2003 and 2004 for former
Consulting Partners shall be substantially equivalent to those described in the
Registration Statement, unless otherwise approved by a majority of the
independent directors of BermudaCo (which majority shall include at least two
such independent directors).
SECTION 8.9. International Partner Approval. PwCIL shall, as
promptly as practicable after the date of this Agreement, establish a date
(which will be as promptly as reasonably practicable following the date of this
Agreement, and in no event later than 20 days after the date hereof) for, duly
call, give notice of and conduct a vote of the member firms of the
PricewaterhouseCoopers global network of firms and take all other such steps
necessary, for the purpose of obtaining the International Partner Approval.
ARTICLE IX
Mutual Covenants
Each of the Territory, PwCIL and BermudaCo covenants and agrees as
follows:
SECTION 9.1. Consents. Notwithstanding anything in any of the
Transaction Agreements to the contrary, none of the Transaction Agreements shall
constitute an agreement to assign or transfer any interest in any asset, claim,
right or benefit the transfer of which is otherwise contemplated hereby if such
an assignment or transfer or attempt to make such an assignment or transfer
without the consent or approval of a third party would constitute a breach or
other contravention of the rights of such third party, or affect adversely the
rights of any party hereto or any of their Affiliates, as the case may be,
thereunder (such assets being collectively referred to herein as "Restricted
Assets"); and any transfer or assignment to BermudaCo by the Territory, Sub or
any of their respective Subsidiaries of any interest under any such Restricted
Asset shall be made subject to such consent or approval being obtained. The
Territory, PwCIL and BermudaCo shall use reasonable best efforts, and shall
cause their respective Subsidiaries to use reasonable best efforts, to obtain
such consents or approvals prior to the Closing Date. In the event any such
consent or approval is not obtained by five Business Days prior to the Closing
Date, (i) the Territory shall promptly inform PwCIL and BermudaCo of such fact
and continue at PwCIL's or BermudaCo's request to use
68
reasonable best efforts to cooperate with PwCIL or BermudaCo, as applicable, in
attempting to obtain any such consent or approval and (ii) to the extent
practicable, the Territory and BermudaCo shall, and shall cause their respective
Subsidiaries to, effect alternative arrangements in the form of a license,
sublease, or operating agreement in form and substance satisfactory to PwCIL and
BermudaCo until such time as such consent or approval has been obtained which
results in BermudaCo receiving all the benefits and bearing all the ordinary
course costs, liabilities and other obligations with respect to any such
Restricted Asset, and (iii) notwithstanding anything in the Transaction
Agreements to the contrary, unless and until any such consent or approval with
respect to any Restricted Asset is obtained, such Restricted Asset shall not
constitute an Acquired Asset and any associated liability shall not constitute
an Assumed Liability for any purpose under the Transaction Agreements (except as
otherwise expressly provided herein). PwCIL and the Territory shall consider and
discuss whether it is necessary or advisable to seek the consent of any
counterparty to any Intellectual Property not proprietary to a party hereto or
its Subsidiaries or any Contract meeting the criteria set forth in Section
5.7(a)(i) or, in the alternative, to effect alternative arrangements in the form
of a license, sublease or operating agreement with respect to any such
Intellectual Property or Contract. The provisions of this Section 9.1 shall
apply to Client Contracts, Cross LOS Contracts or International Client
Contracts, except to the extent inconsistent with Section 9.13.
SECTION 9.2. Publicity. The Territory, PwCIL and BermudaCo each
agree that no public release or announcement (which, for the avoidance of doubt,
shall not include internal communications to Partners marked "confidential" or
interoffice communications among employees or Partners) concerning the
transactions contemplated by the Transaction Agreements shall be issued by such
party or any of its Subsidiaries or any of their Representatives without the
prior written consent of the other such party, except as required by applicable
law or the rules or regulations of any securities exchange on which securities
of such party are listed, in which case the party that is required (or whose
Subsidiaries or Representatives are required) to make the release or
announcement shall allow the other such party reasonable time to comment on such
release or announcement in advance of such issuance; provided, however, that
each of the Territory, PwCIL and BermudaCo may, following reasonable prior
consultation with each other party, make internal announcements to their
respective employees in compliance with applicable law and, provided further,
BermudaCo may file the Registration Statement and issue any related press
releases permitted under the Securities Act.
SECTION 9.3. Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, including, without limitation, Section 9.1, each
of the Territory, PwCIL and BermudaCo shall use reasonable best efforts to cause
the Closing to occur on the IPO Closing Date and to consummate each of the
transactions contemplated by the Transaction Agreements (including, without
limitation, the IPO), including using reasonable best efforts to obtain all
material consents, permits, authorizations and approvals of, and to make all
necessary filings, notifications or registrations with, all
69
Governmental Entities and other persons which are necessary for the consummation
of the transactions contemplated by the Transaction Agreements and the operation
by BermudaCo of the Consulting Business after the Closing Date.
SECTION 9.4. Regulatory Matters. Without limiting the generality of
Section 9.3, each of the Territory, PwCIL and BermudaCo shall (a) promptly after
the date of this Agreement, make or cause its Subsidiaries to make any filing or
notice required under any antitrust, competition, merger or other law or
regulation applicable to the Transaction Agreements or the transactions
contemplated thereby and (b) provide any supplemental information requested in
connection with such laws or regulations promptly after such request is made.
Each of the Territory, PwCIL and BermudaCo shall, and shall cause its
Subsidiaries to, furnish to the other such information and assistance as the
other may reasonably request in connection with its preparation of any filing or
submission which is necessary under such laws or regulations or which is
otherwise requested by a Governmental Entity in the course of any review of the
transactions contemplated by the Transaction Agreements. The Territory, PwCIL
and BermudaCo shall keep each other apprised of the status of any communications
with, and inquiries or requests for additional information from any such
Governmental Entity. Notwithstanding any other provision of this Agreement, the
Territory shall not be required (except as necessary to comply with the terms of
the No-Action Letter) to make, divest, hold separate or otherwise commit to take
any action that limits its freedom of action with respect to any businesses or
assets material to its business (taken as a whole) in connection with its
efforts to obtain any regulatory consents or approvals.
SECTION 9.5. Intercompany Arrangements. The Territory and BermudaCo
acknowledge and agree that, immediately prior to the Closing, all Contracts
(other than those described on Schedule 9.5 (which such Schedule may be updated
after the date hereof, subject to the reasonable approval of PwCIL and, after
the IPO Closing Date, BermudaCo), and those constituting the Transaction
Agreements) between Sub or any of its Subsidiaries, on the one hand, and the
Territory or any of its Subsidiaries (exclusive of Sub and its Subsidiaries), on
the other hand, shall be terminated or settled, as the case may be, and be of no
further force or effect, notwithstanding any terms thereof to the contrary.
SECTION 9.6. Further Assurances. From time to time after the Closing
Date, and for no further consideration, each of the Territory and BermudaCo
shall, and shall cause its Subsidiaries to, execute, acknowledge and deliver
such assignments, transfers, consents, assumptions and other documents and
instruments and take such other actions as may reasonably be deemed necessary or
desirable by the other party to consummate the transactions contemplated hereby
(including, without limitation, (i) transferring back to the Territory any
Excluded Asset or Excluded Liability, which Excluded Asset or Excluded Liability
was inadvertently transferred to, or held by (and not transferred by), Sub or
BermudaCo at the Closing and (ii) transferring to BermudaCo any
70
Acquired Asset or Assumed Liability contemplated by this Agreement to be
transferred to Sub or BermudaCo at the Closing which was not so transferred at
the Closing).
SECTION 9.7. Other Transaction Agreements. Subject to the terms and
conditions hereof, each of the Territory, PwCIL and BermudaCo shall, on the
Escrow Closing Date, execute (and cause their respective Subsidiaries to
execute, as applicable), subject only to the execution of the Escrow Release (it
being understood that the execution of the Underwriting Agreement by the
Territory shall occur on the Escrow Closing Date, and shall not be subject to
the execution of the Escrow Release), each of the Other Transaction Agreements
to be executed by such party, in each case substantially in the form attached as
an Exhibit to this Agreement (unless the form of such Other Transaction
Agreement is not so attached hereto), and shall cause its Subsidiaries who are
parties to Other Transaction Agreements to perform, pay and satisfy all of their
respective obligations and liabilities thereunder as and when due.
SECTION 9.8. Tax Matters. (a) Any Transfer Taxes incurred by the
Territory, BermudaCo or any of their respective Affiliates in connection with
the transactions contemplated by the Transaction Agreements (including, without
limitation, any Luxembourg or Gibraltar capital duties or any similar taxes
incurred by BermudaCo or any of its Affiliates in connection with such
transactions) shall be borne equally by the Territory and BermudaCo, except to
the extent that any such Transfer Taxes are promptly recoverable by either the
Territory or BermudaCo or their respective Affiliates, in which case it shall be
paid by the person legally liable therefor. To the extent that such Transfer
Taxes are promptly recoverable by a party other than the payor or its Affiliate,
such party shall promptly deliver the full amount of such recovery to the payor.
Promptly after the date hereof, the parties agree to negotiate in good faith to
develop a specific plan to minimize any Transfer Taxes referred to in the first
sentence of this Section 9.8(a) to the extent practicable in light of the
commercial objectives of the parties, and the parties shall amend the Local
Structure Term Sheet as necessary to give effect to such plan.
(b) PwCIL, BermudaCo and the Territory shall, and shall cause their
respective Subsidiaries and Affiliates to, cooperate with respect to Tax
matters, including, without limitation, sharing any information required for Tax
Return preparation purposes. Without limiting the foregoing, the Territory and
its Affiliates will promptly provide, and will cause their attorneys,
accountants and other representatives and agents to promptly provide, all
information reasonably requested by BermudaCo, its Affiliates or the Consulting
Partners or their attorneys, accountants or other representatives or agents
relating to Assumed Taxes and relating to Taxes to be incurred by BermudaCo, its
Affiliates or the Consulting Partners in connection with the transactions
contemplated by the Transaction Agreements, and the Territory and its Affiliates
will make available their employees, attorneys, accountants and other
representatives and agents for discussions regarding Assumed Taxes and such
other Taxes to the extent reasonably requested by BermudaCo or its Affiliates or
their attorneys, accountants or other representatives or agents. Without
limiting the foregoing, BermudaCo and its Affiliates will promptly
71
provide, and will cause their attorneys, accountants and other representatives
and agents to promptly provide, all information reasonably requested by the
Territory, its Affiliates or their attorneys, accounts or other representatives
or agents relating to Excluded Taxes and relating to Taxes to be incurred by the
Territory and its Affiliates in connection with the transactions contemplated by
the Transaction Agreements, and BermudaCo and its Affiliates will make available
their employees, attorneys, accountants and other representatives and agents for
discussions regarding Excluded Taxes and such other Taxes to the extent
reasonably requested by the Territory or its Affiliates or their attorneys,
accountants or other representatives or agents.
(c) The Territory shall prepare, or cause to be prepared, on a basis
consistent with past practice (except as required by law), all Tax Returns of
Sub and each of its Subsidiaries for any taxable period that ends on or before
the Closing Date. The Territory shall prepare, or cause to be prepared, on a
basis consistent with past practice (except as required by law), any Tax Returns
of the Territory or its Subsidiaries with respect to Assumed Taxes for any
Pre-Closing Tax Period. BermudaCo shall prepare, or cause to be prepared, on a
basis consistent with past practice (except as required by law), all Tax Returns
of Sub and each of its Subsidiaries for any Straddle Period.
(d) In the case of any Tax Return described in Section 9.8(c) with
respect to (i) Excluded Taxes, if such Tax Return is prepared by BermudaCo or
its Affiliate, or (ii) Assumed Taxes, if such Tax Return is prepared by the
Territory or its Affiliate, the party preparing such Tax Return shall present
such Tax Return to the Territory, in the case of (i), or BermudaCo, in the case
of (ii), for review and comment at least 30 days before the date on which such
Tax Return is required to be filed. The party preparing such Tax Return shall
consider in good faith any suggestions or comments made by the other party after
such review and shall timely file, or cause to be filed, such Tax Return with
the appropriate Taxing Authority.
(e) In the case of any Tax Return described in Section 9.8(c), (i)
if such Tax Return is prepared by BermudaCo or its Affiliate, the Territory
shall pay BermudaCo the amount of any Excluded Tax that is payable with respect
to such Tax Return and, (ii) if such Tax Return is prepared by the Territory or
its Affiliate, BermudaCo shall pay the Territory the amount of any Assumed Taxes
that are payable with respect to such Tax Return, in each case at least five
Business Days prior to the date such payment is due or, if earlier, at the time
such payment is customarily made (the "Due Date"); provided that the party to
which such amount shall be paid has delivered to the other party (i) a copy of
such Tax Return in accordance with Section 9.8(d) and (ii) a copy of its
calculations with respect to such Excluded Taxes or Assumed Taxes, as the case
may be, within a reasonable period of time (but no less than 10 days) prior to
the relevant Due Date.
(f) In the event that any Taxing Authority initiates any audit of
the Territory or any of its Affiliates for any Pre-Closing Period that relates
to any Tax for which BermudaCo is responsible under this Agreement, the
Territory shall notify
72
BermudaCo in writing of the initiation of such audit, shall keep BermudaCo
informed regarding the progress of such audit and permit BermudaCo to control
the defense of such audit relating to such Tax to the extent practicable (at
BermudaCo's expense). In the event that such audit leads to the assertion of any
actual Tax liability for which BermudaCo is responsible, the principles of
Article XI shall apply. In the event that any Taxing Authority initiates any
audit of Sub or any other Affiliate of BermudaCo for any Pre-Closing Period that
relates to any Tax for which the Territory is responsible under this Agreement,
BermudaCo shall notify the Territory in writing of the initiation of such audit,
shall keep the Territory informed regarding the progress of such audit and
permit the Territory to control the defense of such audit relating to such Tax
to the extent practicable (at the Territory's expense). In the event that such
audit leads to the assertion of any actual Tax liability for which the Territory
is responsible, the principles of Article XI shall apply.
SECTION 9.9. Accounts. (a) The Territory, to the extent that it
directly or indirectly owned any Acquired Assets or Restricted Assets (other
than through its ownership of Sub) prior to the Closing, hereby irrevocably
constitutes and appoints, effective as of the Closing, each of Sub and BermudaCo
and assigns it as true and lawful attorney of the Territory and its Subsidiaries
with full power of substitution (i) to collect in a reasonable manner consistent
with reasonable past practice for the account of Sub or BermudaCo any Acquired
Assets and Restricted Assets and (ii) to institute and prosecute all proceedings
which Sub, BermudaCo and their respective Subsidiaries may in their sole
discretion deem proper in order to enforce any right, title or interest in, to
or under the Acquired Assets and Restricted Assets, and to defend or compromise
any and all actions, suits or proceedings in respect of the Acquired Assets and
Restricted Assets.
(b) All payments and reimbursements received by the Territory or its
Subsidiaries or any Affiliate thereof in connection with or arising out of the
Acquired Assets or Assumed Liabilities (without regard to the effect of, or any
reference to, Section 9.1) after the Closing shall be held by such person in
trust for the benefit of BermudaCo and, promptly upon receipt by such person of
any such payment or reimbursement such person shall pay over to BermudaCo the
amount of such payment or reimbursement without right of setoff.
(c) All payments and reimbursements received by BermudaCo or its
Affiliates in connection with or arising out of the Excluded Assets or Excluded
Liabilities after the Closing Date shall be held by such person in trust for the
benefit of the Territory, and, promptly upon receipt by such person of any such
payment or reimbursement, such person shall pay over to the Territory the amount
of such payment or reimbursement without right of setoff.
(d) The Territory covenants and agrees that it shall use reasonable
best efforts to, and shall use reasonable best efforts to cause its Subsidiaries
to, promptly forward to BermudaCo any mail (physical, electronic or otherwise),
facsimile or
73
telephone inquiries of actual or potential clients, customers, suppliers and
vendors of or relating to the Consulting Business, including, without
limitation, customer orders.
SECTION 9.10. Real Estate Matters. (a) The Territory and BermudaCo
shall enter into, or cause their respective Subsidiaries to enter into, the
agreements referred to on Schedule 9.10 hereof covering the assignment or making
of Real Property Leases to BermudaCo, Sub or any of their respective
Subsidiaries, the subleasing of Leased Real Property to BermudaCo, Sub or any of
their respective Subsidiaries and/or the granting of licenses to occupy Leased
Real Property to BermudaCo, Sub or any of their respective Subsidiaries, in each
case at the time of the Closing. Such agreements shall be substantially in the
form of Exhibits F-1, F-2 and F-3, as applicable (or such other agreement (as
described in the Local Structure Term Sheet) as is substantively equivalent
under applicable law), with such deviations therefrom, or additions thereto, as
are set forth or contemplated in such Schedule 9.10 or as are otherwise
reasonably agreed upon by PwCIL, BermudaCo and the Territory. Subject to the
preceding sentence, such agreements shall be (i) an assignment and assumption
agreement (Exhibit F-1) in cases where the Leased Real Property is either (A) a
stand-alone location or (B) the predominant part of the space demised by the
underlying lease and the parties intend that such location will become a
stand-alone location, unless it is reasonably agreed by PwCIL, BermudaCo, and
the Territory to enter into a sublease or license agreement to facilitate the
transaction without the necessity to obtain a landlord consent or to facilitate
obtaining any required landlord consent; (ii) a sublease (Exhibit F-2) in cases
where the Leased Real Property is (x) less than 75% of the space covered by the
underlying lease, and a block or blocks of space occupied by BermudaCo, Sub
and/or their respective Subsidiaries, and (y) is segregated from blocks of space
occupied by the Territory and/or its Subsidiaries, or unless it is reasonably
agreed by PwCIL, BermudaCo, and the Territory to enter into a license agreement
to facilitate the transaction without the necessity to obtain a landlord consent
or to facilitate obtaining any required landlord consent; (iii) a license
agreement (Exhibit F-3) in cases where the Leased Real Property covers space
occupied by BermudaCo, Sub and/or their respective Subsidiaries that is not
segregated from the space occupied by the Territory and/or its Subsidiaries; and
(iv) in cases of an assignment under clause (i) where space covered by the
underlying lease continues to be occupied by the Territory and/or its
Subsidiaries, the assignee and the assignor (i.e., the Territory or its
Subsidiary, as applicable) of the lease shall enter into a sublease-back
(Exhibit F-2) or license-back agreement (Exhibit F-3), as applicable under
clause (ii) or clause (iii) whereby the Territory or its Subsidiary (as
applicable) shall be the subtenant or licensee (as applicable), said Exhibits
F-2 and F-3 being modified to the extent necessary to reflect, as applicable, a
subletting-back or a license-back. Each assignment agreement shall be made for
nominal consideration. Each sublease shall provide for rent, additional rent and
other charges equal to the sublessee's proportionate share of the rent,
additional rent and other charges payable under the applicable underlying lease.
Each license agreement shall be for a license fee to be agreed upon by the
parties, such license fee not to be less than the licensee's pro rata share of
rent, additional rent and other charges payable under the applicable lease.
74
(b) In any instance where the Territory or the applicable Subsidiary
of the Territory is not able to provide to BermudaCo, Sub or the applicable
Subsidiary of BermudaCo or Sub a lease, sublease or occupancy license in respect
of a Real Property Lease for at least six (6) months after the Closing Date, and
such Real Property Lease shall expire pursuant to its terms on any date during
such period, the Territory or its Subsidiaries shall use reasonable best efforts
to obtain an extension of such Real Property Lease for at least such six-month
period (but not longer than one year without, in instances where a lease or
sublease is to be assigned (or a sublease or a license agreement is to be made)
to BermudaCo, Sub or a Subsidiary of BermudaCo or Sub, first obtaining
BermudaCo's written consent thereto). If any such extension shall be on changed
terms and conditions that will increase BermudaCo's, Sub's or their respective
Subsidiaries' obligations or decrease their rights, such changes shall be
subject to BermudaCo's prior written consent, which consent shall not be
unreasonably withheld, delayed or conditioned. In instances where a Real
Property Lease is assigned, and the assignor thereof is not released by the
landlord from liability under the assigned lease accruing on and after the
effective date of the assignment, the request for the required landlord's
consent to such assignment shall request that, in the event of a tenant default
under the lease after the effective date of the assignment, the landlord,
simultaneously with the giving to the then tenant of notice of such default,
shall simultaneously give notice of such default to such assignor, and (i)
afford assignor the right to cure such default and (ii) in the event of the
termination of the lease by reason of an uncured tenant default, afford assignor
the right to enter into a new lease with landlord covering the leased premises,
for a term commensurate with the terminated term of the terminated Real Property
Lease, including any extant renewal options (the foregoing rights enumerated in
clauses (i) and (ii) being collectively referred to as the "Rights"), and
otherwise upon the same then-executory terms and conditions of the terminated
Real Property Lease (as would have been applicable during the terminated term of
such Real Property Lease). If a particular lease landlord shall refuse to afford
such Rights to assignor, then provisions shall be inserted in the Assignment and
Assumption Agreement in the form of Exhibit F-1 providing, in effect, that the
assignee (i) shall notify assignor, within two business days of assignee's
receipt, of any tenant default notice given by landlord under the lease
(enclosing a copy of such landlord default notice therewith), and (ii) unless
assignee in such notice shall notify assignor that it is proceeding promptly
(and actually does so proceed) to effectuate a cure of such default, that
assignor shall have the right (but not the obligation) to enter into the leased
premises to effectuate any necessary cure of such default.
In the event the landlord will not consent to a particular
assignment, but will consent to a sublease, then the parties shall enter into a
sublease, and, in the event such sublease is of a stand-alone facility or a
facility that is intended to be a stand-alone facility, then the sublease shall
be modified so that the mutual recapture rights contained therein shall be
deleted, but sublessor's reasonable approval rights of any assignment of the
sublease or sub-subletting of all or any portion of the subleased premises, if
contained therein, shall continue.
75
(c) The Territory will not, and will cause its Subsidiaries not to,
amend, supplement, extend or otherwise modify any Real Property Lease so as to
increase BermudaCo's, Sub's or a Subsidiary's obligations or decrease its
rights, without first obtaining BermudaCo's written consent thereto, which
consent shall not be unreasonably withheld, delayed or conditioned; provided,
however, that the Territory or the applicable Subsidiary may, without
BermudaCo's consent, extend a Real Estate Lease pursuant to paragraph (b) of
this Section for a period of up to one year without any other change in the
terms and conditions thereof.
SECTION 9.11. Intellectual Property Matters. Effective as of the
Closing Date and except as otherwise provided herein (including, without
limitation, Section 9.1, Article X and the Transition Services Agreement),
(a) BermudaCo, Sub and each of their respective Subsidiaries grant
to the Territory a perpetual, irrevocable, royalty-free, fully-paid, world-wide,
transferable, with rights to sublicense, license to make, have made, use, sell,
offer for sale, import, provide and distribute any product or practice any
process, and to use, copy, distribute, modify and otherwise fully exploit the
Intellectual Property listed on the Global IP Schedule which is noted as
"Primary Use" and any and all Intellectual Property not listed on the Global IP
Schedule but used in the Consulting Business on or prior to the Closing Date
which, if such Intellectual Property had been listed on such schedule, would
have been noted thereon as "Primary Use" based on an application of the
principles that governed the preparation of the Global IP Schedule, consistent
with the manner in which such Intellectual Property was so made, used, sold,
offered for sale, imported, provided and distributed, copied, distributed,
modified or otherwise exploited by the Territory in connection with the conduct
or operation of any business other than the Consulting Business immediately
prior to the Closing Date, and to modify, improve or develop such Intellectual
Property (and retain ownership of such modification, improvement or
development); and
(b) The Territory (and the Territory shall cause its applicable
Affiliates to) grant to BermudaCo, LuxCo, Sub and each of their respective
Subsidiaries a perpetual, irrevocable, royalty-free, fully-paid, world-wide,
transferable, with rights to sublicense, license to make, have made, use, sell,
offer for sale, import, provide and distribute any product or practice any
process, and to use, copy, distribute, modify and otherwise fully exploit the
Intellectual Property listed on the Global IP Schedule which is noted as "Shared
Use"and any and all Intellectual Property not listed on the Global IP Schedule
but used in the Consulting Business on or prior to the Closing Date which, if
such Intellectual Property had been listed on such schedule, would have been
noted thereon as "Shared Use" based on an application of the principles that
governed the preparation of the Global IP Schedule, consistent with the manner
in which such Intellectual Property was so made, used, sold, offered for sale,
imported, provided and distributed, copied, distributed, modified or otherwise
exploited in connection with the conduct of the Consulting Business immediately
prior to the Closing Date, and to modify, improve or develop such
76
Intellectual Property (and retain ownership of such modification, improvement or
development).
(c) (i) To the extent that any Acquired Intellectual Property is
proprietary to the Territory, and as of the date hereof not owned by Sub or its
Subsidiaries, the documentation required to perfect the transfer and assignment
of such Acquired Intellectual Property to Sub or its Subsidiaries shall be in
form and substance reasonably agreed between the parties after good faith
negotiation thereof, considering what documentation is appropriate to the
jurisdiction and form of Intellectual Property being so transferred and
assigned, and shall be on terms not inconsistent with the terms hereof. To the
extent that any Acquired Intellectual Property is not proprietary to the
Territory, such Acquired Intellectual Property shall be transferred and assigned
in accordance with Section 9.1 hereof and on terms not inconsistent with the
terms hereof.
(ii) To the extent that any Intellectual Property to be licensed
pursuant to Sections 9.11(a) or (b) is proprietary to BermudaCo, Sub and
their Subsidiaries or the Territory or its Affiliates, respectively, such
Acquired Intellectual Property shall be licensed pursuant to documents, in
form and substance as reasonably agreed to by the parties after good faith
negotiation thereof, that are appropriate to the jurisdiction and form of
Intellectual Property being so licensed and are on terms not inconsistent
with the terms hereof. To the extent that any Intellectual Property to be
licensed pursuant to Sections 9.11(a) or (b) is not proprietary to
BermudaCo, Sub and their Subsidiaries or the Territory, respectively, such
Intellectual Property shall be licensed in accordance with the Transition
Services Agreement and Section 9.1 hereof, and on terms not inconsistent
with the terms hereof.
SECTION 9.12. Insurance Policies and Claims Administration. (a) The
Territory or one or more of its Subsidiaries shall continue to own all property,
casualty and liability insurance programs (other than those currently owned in
the name of Sub and its Subsidiaries), including, without limitation, primary
and excess general and professional liability, automobile, workers'
compensation, property and crime insurance policies with respect to the
Consulting Business in effect on or before the Closing Date (collectively, the
"Territory Policies" and individually, a "Territory Policy"), provided that
claims made under such policies on or prior to the Closing Date shall constitute
Acquired Assets under clause (xii) of the definition thereof to the extent such
claims relate to the Consulting Business, an Acquired Asset or an Assumed
Liability. The Territory shall use reasonable best efforts to maintain the
Territory Policies in full force and effect up to and including the Closing
Date, and, subject to the provisions of this Agreement, the Territory and its
Subsidiaries shall retain all of their respective rights, benefits and
privileges, if any, under the Territory Policies. Nothing contained herein shall
be construed to change the ownership of the Territory Policies.
77
(b) To the extent not already provided for by the terms of a
Territory Policy, the Territory shall use reasonable best efforts to cause
BermudaCo, Sub and the Consulting Partners to be named as additional insureds
under Territory Policies whose coverage is on an occurrence basis whose
effective policy periods include the Closing Date, in respect of claims
occurring prior to the Closing Date; provided, however, that nothing contained
herein shall be construed to require the Territory or any of its Subsidiaries to
pay, unless reimbursed therefor by BermudaCo, any additional premium or other
charges in respect to, or waive or otherwise limit any of its rights, benefits
or privileges under, any Territory Policy in order to effect the naming of
BermudaCo and Sub as such additional insureds.
(c) Commencing on and as of the Closing Date, BermudaCo shall be
responsible for establishing and maintaining such separate property, casualty
and liability insurance policies and programs as BermudaCo may elect for
activities and claims involving the Consulting Business.
(d) The Territory and its Subsidiaries shall have the primary right,
responsibility and authority for claims and financial administration for claims
that relate to or affect the Territory Policies; provided that BermudaCo shall
have the sole right to assert and pursue, and collect in the name of the
Territory, and the Territory shall cooperate with BermudaCo in asserting and
pursuing, coverage and payment for claims under Territory Policies whose
effective policy periods include the Closing Date and that relate to the
Consulting Business, an Acquired Asset or an Assumed Liability by the
appropriate insurance carrier(s). In asserting and pursuing such coverage and
payment, BermudaCo shall have sole power and authority to make binding
decisions, determinations, commitments and stipulations on its own behalf and on
behalf of the Territory and its Subsidiaries and Affiliates, which decisions,
determinations, commitments and stipulations shall be final and conclusive if
made to maximize the overall economic benefit of the Territory Policies;
provided, that (i) BermudaCo shall consult with the Territory prior to making
any such decision, determination, commitment or stipulation with respect to any
material matter and (ii) BermudaCo and the Territory shall use reasonable best
efforts to agree on the terms of any settlement of any claim arising in
connection with any Assumed Liability prior to BermudaCo settling such claim.
(e) BermudaCo, and its Subsidiaries and Affiliates, shall assume
responsibility for, and shall pay to the appropriate insurance carriers or
otherwise, any premiums, retrospectively rated premiums, defense costs,
indemnity payments, deductibles, retentions or other charges, as appropriate
(collectively, "Insurance Charges"), whenever arising, which shall become due
and payable under the terms and conditions of any applicable Territory Policy in
respect of any coverages, liabilities, losses, claims, actions or occurrences
before the Closing Date and related to the Consulting Business. To the extent
that the terms of any applicable Territory Policy provide that the Territory or
any of its Subsidiaries shall have an obligation to pay or guarantee the payment
of any Insurance Charges relating to the Consulting Business
78
before the Closing Date, the Territory shall be entitled to demand that
BermudaCo make such payment directly to the person or entity entitled thereto.
In connection with any such demand, the Territory shall submit to BermudaCo a
copy of any invoice received by the Territory pertaining to such Insurance
Charges together with appropriate supporting documentation, to the extent
available. In the event that BermudaCo fails to pay any such Insurance Charges
when due and payable, whether at the request of the party entitled to payment or
upon demand by the Territory, the Territory and its Subsidiaries may (but shall
not be required to) pay such insurance charges for and on behalf of BermudaCo
and, thereafter, BermudaCo shall forthwith reimburse the Territory for such
payment. Subject to the other provisions of this Section 9.12, the retention by
the Territory of the Territory Policies and the responsibility for claims
administration and financial administration of the Territory Policies are in no
way intended to limit, inhibit or preclude any right of BermudaCo, the Territory
or any other insured to insurance coverage for any insured claims under the
Territory Policies.
(f) BermudaCo and its Subsidiaries and Affiliates acknowledge that
the Territory has previously experienced losses and received claims which arose
from the Consulting Business and which were, or might have been, covered by one
or more Territory Policies, and prior to the Closing Date the Territory will
have made decisions and commitments regarding the administration of such claims,
including, without limitation, reaching agreements and stipulations regarding
such claims (collectively "Pre-Separation Claims Administration"). BermudaCo
and its Subsidiaries and Affiliates covenant not to contest or challenge in any
manner any action taken by the Territory prior to the Closing Date in connection
with or relating to Pre-Separation Claims Administration, or to interfere with
the performance of any agreement, commitment or stipulation so made by the
Territory in connection with or relating to Pre-Separation Claims
Administration.
(g) An insurance carrier which would otherwise be obligated to pay
any claim shall not be relieved of the responsibility with respect thereto, or,
solely by virtue of the provisions of this Section 9.12, have any subrogation
rights with respect thereto, it being expressly understood and agreed that no
insurance carrier or any third party shall be entitled to a windfall (i.e., a
benefit they would not be entitled to receive in the absence of the provisions
of this Section 9.12) by virtue of the provisions hereof.
(h) The provisions of this Section 9.12 relate solely to matters
involving the Territory Policies, and shall not be construed to affect any
obligation of or impose any obligation on the parties hereto with respect to any
life, health and accident, dental or medical insurance policies applicable to
any of the officers, directors, employees or other representatives of the
parties hereto or their Affiliates.
(i) In this Section 9.12(i), "L&F" means any of L&F Indemnity
Limited, Catamount Indemnity Limited, or Lifeguard Insurance (Dublin) Limited;
"L&F Policy" means any insurance policy issued by L&F whose limits of liability
have not been
79
exhausted by the Closing Date; "L&F Consulting Claims" means any Assumed
Liabilities for which coverage was or is provided by any L&F Policy or would be
provided but for the application after the Closing Date of the limits of
liability in any such policy; "L&F Non-Consulting Claims" means any Excluded
Liabilities for which coverage was or is provided by any L&F Policy or would be
provided but for the application after the Closing Date of the limits of
liability in any such policy. Notwithstanding any other provision of this
Section 9.12, the following provisions shall apply to all L&F Consulting Claims
and L&F Non-Consulting Claims.
(A) As between the Territory and BermudaCo, but subject to
subsections (C), (D) and (E) below, BermudaCo shall have the primary right,
responsibility, and authority for the defense, settlement, and other
administration of L&F Consulting Claims and may exercise the rights of the
insured (including collection of insurance proceeds) under policies issued by
L&F with respect to such claims. The Territory shall retain the primary right,
responsibility, and authority for the defense, settlement, and other
administration of L&F Non-Consulting Claims.
(B) Whenever it becomes reasonably apparent to BermudaCo that the
ultimate cost (including all defense costs and payment of any settlement or
judgment) of any L&F Consulting Claim is likely to exceed one-half of the
deductible or self-insured retention for that claim under the applicable L&F
policy, BermudaCo will notify the Territory of the claim and describe it in
reasonable detail. From then until the conclusion of the claim, BermudaCo will
keep the Territory informed of the progress of the claim, will provide the
Territory information about the claim that the Territory reasonably requires to
monitor the claim and BermudaCo's handling of it, and will consult with the
Territory in advance of making any material decision about the handling of the
claim or the conduct of the litigation (including the making of any settlement
proposals). The Territory will reimburse BermudaCo for the reasonable
out-of-pocket costs of providing information about L&F Consulting Claims (such
as for photocopying documents or consulting BermudaCo's outside counsel, but not
for the time of employees of BermudaCo). BermudaCo will also send the Territory
copies of any reports about the claim that it gives L&F.
(C) Whenever a proposal or offer to settle an L&F Consulting Claim
is made in writing, and whenever such a proposal or offer is made orally under
circumstances that would suggest to a reasonable observer that the proposal or
offer is serious, BermudaCo will promptly advise the Territory of the terms of
the proposed settlement and whether BermudaCo wishes or not to settle the claim
on those terms. BermudaCo will promptly provide further information about the
claim and the proposed settlement that the Territory may reasonably request to
enable it to evaluate the proposed settlement.
(D) If BermudaCo and the Territory disagree about any material issue
relating to BermudaCo's handling of an L&F Consulting Claim or the conduct of
related
80
litigation (including with respect to settlement proposals), they will hold a
meeting promptly, attended by the Chief Executive Officer, or persons with
similar decision-making authority, of each party, to attempt in good faith to
negotiate a resolution of the dispute. If the parties do not resolve their
dispute at such a meeting, they will then submit their dispute (including any
dispute as to whether an issue is material or not) to binding arbitration as
expeditiously as possible in New York, New York, before a single arbitrator who
is expert in the litigation and resolution of claims such as L&F Consulting
Claims and who is reasonably acceptable to both BermudaCo and the Territory.
BermudaCo and the Territory will each bear one-half of the fees and expenses of
the arbitrator, but will otherwise bear their own expenses of the arbitration.
The arbitrator will determine the procedure of the arbitration, but will adopt
procedures that will enable the arbitration to be completed quickly and in a
timeframe so as to ensure no unreasonable delay in the conduct of the litigation
or the handling of a settlement proposal. The decision of the arbitrator will be
final and binding on both BermudaCo and the Territory, which will then
immediately cooperate in implementing the arbitrator's decision. For the
avoidance of doubt, the parties acknowledge that the Territory's obligation to
cooperate in implementing the arbitrator's decision shall not extend to any
obligation to request or cause L&F to act in accordance therewith.
(E) If L&F pays the full limit of its liability under any L&F
Policy, and if coverage of any L&F Consulting Claim or L&F Non-Consulting Claim
would have been available under that policy but for the exhaustion of its limit
of liability, and if the party (BermudaCo or the Territory) to which that
coverage would have been available has not received any Excess Policy Benefit
(as defined below) under the exhausted L&F Policy, and if the other party has
received any Excess Policy Benefit under that policy, then on June 30 and
December 31 of each year thereafter, the party that received the Excess Policy
Benefit shall pay the other party the amount for which the L&F Policy would have
provided coverage but for its exhaustion, provided that, the cumulative total of
payments under this Section 9.2(i)(E) shall not exceed the Excess Policy
Benefit. "Excess Policy Benefit" means, with respect to each L&F Policy, for
BermudaCo, the total amount that L&F paid under that policy on account of L&F
Consulting Claims minus the product of the limits of liability of the policy
multiplied by 0.082, and in the case of the Territory, the total amount that L&F
paid under that policy on account of L&F Non-Consulting Claims minus the product
of the limits of liability of the policy multiplied by one minus 0.082.
SECTION 9.13. Client Contracts. (a) The Territory, PwCIL and
BermudaCo shall as soon as practicable following the date hereof establish
procedures (including, without limitation, the form of disclosures to be made to
third parties in connection with the transactions contemplated hereby and the
form of documentation (if any) to be provided to such third parties in
connection with obtaining their consents) in connection with soliciting clients'
consents in respect of Client Contracts where such consents are required for the
assignment of such contracts or otherwise to implement the transactions
contemplated hereby.
81
(b) If any consents referred in paragraph (a) above shall not have
been obtained by the Territory by the Closing Date, the Territory and BermudaCo
shall continue to follow the procedures referred to in paragraph (a) above for
obtaining such consents as soon as practicable thereafter with such
modifications to those procedures as BermudaCo and the Territory may from time
to time agree.
(c) The Territory and BermudaCo shall cooperate to review the terms
of all Cross LOS Contracts to which the Territory or any of its Subsidiaries is
a party, in order to determine prior to Closing whether any such Cross LOS
Contracts, subject to such consents from clients or other parties as may be
necessary having been obtained, should be terminated and replaced by separate
contracts relating to the Consulting Business with BermudaCo and its
Subsidiaries on the one hand, and with the Territory and its Subsidiaries
relating to the provision of other services on the other hand, or whether the
Territory should subcontract to BermudaCo and its Subsidiaries the provision of
consulting services to the client pursuant to such Cross LOS Contract with the
contract not being treated as an Assigned Contract, or whether any such contract
should be treated as an Assigned Contract and the provision of services and/or
goods other than consulting services under such contract should be subcontracted
to the Territory and its Subsidiaries. Procedures as referred to in paragraph
(a) above shall apply to the solicitation of any client consents necessary to
implement these arrangements in respect of any Cross LOS Contract.
(d) The Territory and BermudaCo shall cooperate to review the terms
of all International Client Contracts to which the Territory or any of its
Subsidiaries is a party, in order to determine prior to Closing whether, subject
to such consents from clients and other parties as may be necessary having been
obtained, any revised subcontracting or other arrangements should to be
implemented following the Closing Date or whether certain rights and obligations
should be assigned and transferred to other persons. The procedures referred to
in paragraph (a) above shall apply to the solicitation of any client consents in
relation to an International Client Contract.
(e) The provisions of this Section 9.13 shall only apply to Client
Contracts, Cross LOS Contracts and International Contracts.
ARTICLE X
Noncompetition
SECTION 10.1. Non-Competition. (a) From and after the Closing Date,
BermudaCo and its Affiliates shall not, directly or through any Affiliate of
BermudaCo, engage in, make any investment in the equity of (other than as
permitted by Section 10.2), or enter into a strategic alliance in any form with
any person for the purpose in whole or in part of engaging in the provision of
any Restricted Partnership Services; provided, that
82
the foregoing shall not preclude co-bidding or working side by side with any
such person on one or more joint assignments that do not arise from, constitute
or that are promoted or marketed as, an actual or de facto alliance or involve
the payment of referral fees, commissions, co- or joint marketing funds or other
compensation in connection with such arrangement.
(b) From and after the Closing Date, the Territory, the Noncompete
Parties and their respective Affiliates shall not, directly or through any
Affiliate, engage in, make any investment in the equity of (other than as
permitted by Section 10.2), or enter into a strategic alliance in any form with
any person (other than BermudaCo and LuxCo) for the purpose in whole or in part
of engaging in the provision of any Restricted Consulting Services, subject to
the proviso of Section 10.1(a) above.
(c) From and after the Closing Date, PwCIL and its Affiliates shall
not, directly or through any Affiliate of PwCIL, engage in, make any investment
in the equity of (other than as permitted by Section 10.2), or enter into a
strategic alliance in any form with any person for the purpose in whole or in
part of engaging in the provision of any Restricted Consulting Services, subject
to the proviso of Section 10.1(a) above.
(d) From and after the Closing Date, BermudaCo and its Affiliates
shall not (i) solicit, recruit or hire any person who immediately after the
Closing Date is a Partner or client facing employee of the Territory, the
Noncompete Parties, PwCIL or their respective Affiliates or (ii) solicit or
encourage any such Partner or client facing employee of the Territory, the
Noncompete Parties, PwCIL or their respective Affiliates to leave the employment
of such entity or resign as a Partner; provided, that (x) the foregoing shall
not prohibit BermudaCo or its Affiliates from soliciting, recruiting or hiring
any such Partner or client facing employee who has ceased to be a Partner of or
be employed by the Territory, the Noncompete Parties, PwCIL or their respective
Affiliates for at least 12 months; and (y) general solicitations or
advertisements shall not be deemed to be solicitations for purposes of this
paragraph (d).
(e) From and after the Closing Date, the Territory, the Noncompete
Parties, PwCIL and their respective Affiliates shall not (i) solicit, recruit or
hire any person who immediately after the Closing Date is a "partner" (or
similar designation) or client facing employee of BermudaCo or its Affiliates or
(ii) solicit or encourage any such "partner" (or similar designation) or client
facing employee of BermudaCo or its Affiliates to leave the employment of such
entity or resign as a "partner" (or similar designation); provided, (x) that the
foregoing shall not prohibit the Territory, the Noncompete Parties, PwCIL or
their respective Affiliates from soliciting, recruiting or hiring any such
"partner" (or similar designation) or client facing employee who has ceased to
be a "partner" or (similar designations) of or employed by BermudaCo or its
Affiliates for at least 12 months; and (y) general solicitations or
advertisements shall not be deemed to be solicitations for purposes of this
paragraph (e).
83
SECTION 10.2. Additional Considerations and Agreements. (a)
BermudaCo, the Territory, the Noncompete Parties and PwCIL each agree that the
Territory, the Noncompete Parties, PwCIL and their respective Affiliates may not
invest in, acquire, purchase or otherwise combine with any person that is
actively engaged in the provision of any Restricted Consulting Services;
provided, that, such parties may engage in such an acquisition, purchase or
combination with any such person that derives less than 50% of its total
revenues from the provision of Restricted Consulting Services so long as the
Territory, the Noncompete Parties, PwCIL or such Affiliate, as the case may be,
uses reasonable best efforts within six months of the date of such acquisition,
purchase or combination to divest, but in any event within one year thereafter,
divests itself or causes the divestiture of such portion of the business engaged
in the provision of Restricted Consulting Services (whether through a
subsidiary, division, group, franchise or any other type of segment or business
unit). BermudaCo, the Territory, the Noncompete Parties and PwCIL each agree
that, notwithstanding Section 10.1 or this Section 10.2, nothing herein shall
prohibit the investment or the retention of investments by the Territory, the
Noncompete Parties, PwCIL or their respective Affiliates in no more than 5% of
the issued and outstanding ownership interests of businesses which engage in
Restricted Consulting Services.
(b) BermudaCo, the Territory, the Noncompete Parties and PwCIL each
agree that BermudaCo and its Affiliates may not invest in, acquire, purchase or
otherwise combine with any person that is actively engaged in the provision of
any Restricted Partnership Services; provided, that, such parties may engage in
such an acquisition, purchase or combination with any such person that derives
less than 50% of its total revenues from the provision of Restricted Partnership
Services so long as BermudaCo or its Affiliate, as the case may be, uses
reasonable best efforts within six months of the date of such acquisition,
purchase or combination to divest, but in any event within one year thereafter,
divests itself or causes the divestiture of such portion of the business engaged
in the provision of Restricted Partnership Services (whether through a
subsidiary, division, group, franchise or any other type of segment or business
unit). BermudaCo, the Territory, the Noncompete Parties and PwCIL each agree
that, notwithstanding Section 10.1 or this Section 10.2, nothing herein shall
prohibit the investment or the retention of investments by BermudaCo or its
Affiliates in no more than 5% of the issued and outstanding ownership interests
of businesses which engage in Restricted Partnership Services.
(c) Each of BermudaCo and its Affiliates agrees that it shall not
rely on the credentials of, or on citations with respect to, the Territory, the
Noncompete Parties or PwCIL or any of their Affiliates other than with respect
to services provided prior to the Closing Date by the Consulting Business in the
conduct or operation of its business, except with the prior written consent of
the Territory, the Noncompete Parties, PwCIL, or such Affiliate as applicable.
Each of the Territory, the Noncompete Parties and PwCIL and their respective
Affiliates agrees that it shall not rely on the credentials of, or on citations
with respect to, BermudaCo or LuxCo or any of their Affiliates or the
84
Consulting Business prior to the Closing Date in the conduct or operation of its
business, except with the prior written consent of BermudaCo.
SECTION 10.3. Termination of Article X. The provisions of this
Article X and the rights and obligations of BermudaCo, the Territory, the
Noncompete Parties and PwCIL hereunder shall, except as otherwise set forth on
the Local Structure Term Sheet, terminate on the fifth anniversary of the
Closing Date; provided, that the provisions of Section 10.1(d) and (e) shall,
except as otherwise set forth on the Local Structure Term Sheet, terminate on
the third anniversary of the Closing Date.
SECTION 10.4. Miscellaneous. (a) Each of BermudaCo, the Territory,
the Noncompete Parties and PwCIL confirm that they have received independent
legal advice relating to all of the matters provided for in this Agreement,
including the provisions of this Article X. Each of BermudaCo, the Territory,
the Noncompete Parties and PwCIL agree that they consider that the provisions
contained in this Article X are no greater than are reasonable and necessary to
ensure the full value of the goodwill and know how relating to the Consulting
Business being transferred to BermudaCo and its Affiliates and to ensure the
full value of the goodwill relating to the other businesses of the Territory and
its Affiliates. If any provision contained in this Article X shall for any
reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Article X, but this Article X shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein. It is the
intention of the parties that if any of the restrictions or covenants contained
herein is held to cover a geographic area or to be for a length of time which is
not permitted by applicable law, or in any way construed to be too broad or to
any extent invalid, such provision shall not be construed to be null, void and
of no effect, but to the extent such provision would be valid or enforceable
under applicable law, such provision shall be construed and interpreted or
reformed so as to provide for a covenant having the maximum enforceable
geographic area, time period and other provisions (not greater than those
contained herein) as shall be valid and enforceable under such applicable law.
(b) Notwithstanding the provisions of Section 13.1 herein, the
provisions of this Article X shall be assignable to any purchaser of all or a
portion of the businesses of the parties covered hereby in any manner of
business combination or other transaction; provided, that any such purchaser
also assumes in writing the obligations of this Article X, in form and substance
reasonably satisfactory to the nonassigning party or parties, and the assignor
remains bound by the restrictions contained herein.
(c) Notwithstanding anything in this Article X, (i) any Person that
acquires BermudaCo (or a successor of BermudaCo) or substantially all of the
assets of BermudaCo (or a successor of BermudaCo) in any manner of business
combination, and that provides Restricted Partnership Services may continue to
provide, and such Person's Affiliates may continue to provide, Restricted
Partnership Services provided that such
85
services are provided by a separate Subsidiary or Affiliate of such Person not
controlled by or controlling BermudaCo (or a successor of BermudaCo); and (ii)
any Person that acquires substantially all of the assets of the Territory, the
Noncompete Parties and their respective Affiliates, and that provides Restricted
Consulting Services may continue to provide, and such Person's Affiliates may
continue to provide, Restricted Consulting Services provided that such services
are provided by a separate Subsidiary or Affiliate of such Person not controlled
by or controlling the Territory, the Noncompete Parties and their respective
Affiliates.
SECTION 10.5. Amendments and Waivers. This Article X, and the
definitions of "Restricted Consulting Services" and "Restricted Partnership
Services" may be amended or waived pursuant to an instrument in writing executed
by PwCIL (following the affirmative vote of at least 75% of its Global Board)
and BermudaCo; provided that no amendment or waiver that expands the definition
of "Restricted Consulting Services" or restricts the definition of "Restricted
Partnership Services" with respect to the relevant territory may be entered into
without the consent of the Territory.
SECTION 10.6. Dispute. In the event of any dispute, controversy or
claim (including a breach thereof) arising out of or related solely to the
non-competition clause set forth in Sections 10.1(a), (b) and (c) hereof (the
"Dispute"), the party claiming such Dispute shall give written notice, with
reasonable specificity, to the other party as soon as practicable but in no
event later than 15 days after such Dispute is first noticed in accordance with
the notice provision in Section 13.7 (the "Dispute Notice"), and thereafter, the
parties to the Dispute shall attempt in good faith to resolve such Dispute. If
the parties to the Dispute fail to reach a resolution of the Dispute within 10
business days of receipt of the Dispute Notice, and unless otherwise agreed to
in writing by such parties, such Dispute shall be referred to and decided by
final and binding arbitration. Any arbitration arising under this Section shall
proceed in accordance with the procedures and requirements set forth in this
Section 10.6, Section 10.7 and Section 10.8 (the "Arbitration Proceeding"). The
Arbitration Proceeding shall be deemed to have commenced, without any further
action on the part of the parties to the Dispute, on the 21st day following
receipt of the Dispute Notice, unless the parties to the Dispute have reached a
written resolution of the Dispute prior to that time.
SECTION 10.7. The Arbitrator. (a) PwCIL and BermudaCo shall as soon
as practicable after the Closing agree upon compensation for the retention of
the services of and appoint a sole arbitrator (the "Arbitrator") to arbitrate
all Disputes for all Rollup Transactions as may arise during the first eighteen
months following the Closing; provided, however, that if an Arbitrator has not
been so appointed within ten days following commencement of any Arbitration
Proceeding, an Arbitrator shall be appointed by the International Chamber of
Commerce and all parties to this Agreement hereby agree that, subject to Section
10.7(d), such appointment shall be final and binding on the parties to this
Agreement. The Arbitrator (or his or her successor), subject to the terms
hereof, shall continue to serve hereunder until the eighteenth month after
Closing and thereafter,
86
but only during the pendency of any Dispute or ensuing Arbitration Proceeding
that was initiated by a Dispute Notice received prior to the end of the
eighteenth month after Closing.
(b) Any Arbitrator appointed other than by agreement of PwCIL and
BermudaCo shall be a fluent speaker of English with at least 15 years of
experience in the fields described in the definitions of "Restricted Consulting
Services" and "Restricted Partnership Services" or fields closely related
thereto and shall not, unless otherwise agreed to by the parties of the
Arbitration Proceeding, have spent significant time working for members of the
PricewaterhouseCoopers global network or any predecessor organizations. The
decision of the International Chamber of Commerce, as Appointing Authority, as
to the suitability of any Arbitrator in relation to this Section 10.7(b) shall
be final.
(c) The Arbitrator, once appointed, shall remain available as and
shall continue to be the Arbitrator during the term set forth in Section 10.7(a)
until resignation, death, disability or removal hereunder. The provisions
governing the Arbitration Proceedings set out in Sections 10.6 - 10.8 herein are
being put in place to allow for fast and balanced decisions by an experienced
industry expert with respect to questions of exclusive fields of competition in
sometimes closely related fields and the Arbitrator shall be tasked with
arbitrating all Disputes with efficiency and speed in all respects, and to
require a minimum of hearings, briefs, evidence, experts and the other typical
requirements of litigation and standard arbitration proceedings.
(d) PwCIL or BermudaCo shall have the right to challenge the
appointment of the Arbitrator at any time and without limitation if
circumstances exist that give rise to doubts as to the arbitrator's (i)
impartiality or independence, (ii) mental or physical fitness to serve or (iii)
ability to decide Disputes in accordance with the provisions of Sections 10.6,
10.7 or 10.8. If PwCIL or BermudaCo seeks to challenge the appointment or
continued service of an Arbitrator, that party shall immediately send notice of
the challenge within fifteen days after receiving notice of the appointment of
the challenged arbitrator or within fifteen days after the grounds in (i), (ii)
or (iii) above become known to the party in accordance with the notice provision
in Section 13.7 (the "Challenge Notice").
(i) Once a challenge has been made, the Arbitrator may voluntarily
resign. Alternatively, the nonchallenging party may agree to the challenge
such that the Arbitrator will be removed and replaced. If the
nonchallenging party agrees to the challenge, a substitute Arbitrator
shall be appointed in accordance with the procedures outlined in Sections
10.6 and 10.7. The decision of the Arbitrator regarding voluntarily
resignation and the decision of the nonchallenging party regarding
agreeing to the challenge must be communicated to the challenging party
within three business days of receipt of the Challenge Notice in
accordance with the notice provision in Section 13.7.
87
(ii) In the event that the Arbitrator does not voluntarily resign
and the nonchallenging party does not agree to the challenge, the decision
as to whether to uphold the challenge shall be submitted to the
International Chamber of Commerce. PwCIL and BermudaCo shall be permitted
to submit written statements to the International Chamber of Commerce in
support of their position within seven business days of receipt of the
Challenge Notice. Both parties shall request an expedited decision on the
challenge from the International Chamber of Commerce.
(e) This Section 10.7 shall also apply to appoint a substitute
Arbitrator in the event of the death or resignation of an Arbitrator during an
Arbitration Proceeding.
SECTION 10.8. The Arbitration Proceeding. (a) The parties to this
Agreement agree that the Arbitration Proceeding shall take place in New York,
London or Geneva, the seat of the Arbitration shall be England, the relationship
between the parties to this Agreement is commercial in nature, and that any
Disputes shall be deemed commercial. The provisions governing the procedure of
the Arbitration Proceedings are as set out in Sections 10.6, 10.7 and 10.8
herein may be varied only with the written agreement of each of the parties to
the Arbitration Proceedings.
(b) The parties to this Agreement agree that the following
procedures shall apply to the Arbitration Proceeding:
(i) The party that sent the Dispute Notice shall make the necessary
arrangements for the taking of a stenographic record of the hearing.
(ii) All papers, documents or evidence, whether written or oral,
filed with or presented to the Arbitrator shall be deemed by the parties
to this Agreement and by the Arbitrator to be confidential information. No
party to this Agreement or Arbitrator shall disclose in whole or in part
to any other person or entity any confidential information submitted in
connection with the Arbitration Proceeding, except to the extent
reasonably necessary to assist in the arbitration, or to prepare for the
arbitration of the Dispute, or to the extent necessary to enforce an award
made by the Arbitrator.
(iii) The Arbitration Proceeding shall be conducted in the English
language and all documents, exhibits and other evidence shall be
translated into English.
(iv) There shall be no prehearing discovery of any kind.
(v) The parties to the Arbitration Proceeding shall each be
permitted to submit a written statement in support of their position no
later than five days after the Arbitration Proceeding has commenced.
Parties to the Arbitration Proceeding may submit answering statements
within three days of the submission of the
88
parties' initial written statements. No further written statements shall
be submitted, unless required by the Arbitrator.
(vi) The hearing, if necessary, shall occur within fifteen days of
the commencement of the Arbitration Proceeding. The parties to the
Arbitration Proceeding will encourage the Arbitrator to dispense with
holding a hearing.
(vii) PwCIL and BermudaCo, and any other parties to the Arbitration
Proceeding, shall each pay an equal share of the fees and expenses of the
Arbitrator and the costs of the Arbitration Proceeding. Each party to the
Arbitration Proceeding shall otherwise pay its own costs and attorneys'
fees. The Arbitrator's fees shall be an amount that is usual and customary
for Arbitrators in arbitrations of this type.
(viii) The Arbitrator shall be empowered to decide if he has
jurisdiction over the Dispute.
(c) The sole substantive issue to be decided by the Arbitrator shall
be whether a breach of Section 10.1(a), (b) or (c) has occurred. In the event
such a breach is found, the Arbitrator is empowered to enjoin a party from
performing any act prohibited or to compel a party to perform any act which will
give effect to the obligations set out in Sections 10.1(a), (b) or (c). The
Arbitrator shall issue a written explanation of the reasons for the award and a
full statement of facts found in reaching the decision. This determination of
the Arbitrator shall be rendered no later than the fifth day after the
conclusion of the arbitration hearing.
(i) In the event that a party to the Arbitration Proceeding seeks an
amendment of the award to correct a typographical or transcription error,
the party shall do so by sending a notice of the amendment sought in
accordance with the notice provision in Section 13.7 within three days
after receipt of the award. The Arbitrator shall issue any amendment to
the award within three days of receipt of the notice seeking an amendment.
(d) In the event the Arbitrator finds a breach of Section 10.1(a),
(b) or (c) by a party to this Agreement, the prevailing party may request an
award of damages for the breach of Section 10.1(a), (b) or (c) pursuant to the
arbitration provisions set forth in Section 13.12. The parties to this Agreement
agree that the Arbitrator's decision under Sections 10.6, 10.7 and 10.8 shall be
final, binding and conclusive upon the parties to this Agreement, an arbitrator
appointed under Section 13.12, and any court or tribunal. An arbitrator
appointed under Section 13.12 shall not be empowered to award, whether based in
contract, tort or otherwise, any special, indirect, incidental, consequential,
punitive, exemplary or other similar types of damages whatsoever, including loss
of profits, business interruptions and claims of customers on account of any
breach of Section 10.1(a), (b) or (c) found by the Arbitrator.
89
(e) In making his or her determination hereunder, the Arbitrator
shall review the terms of the Agreement and Sections 10.1(a), (b) and (c), the
usages and customs of the trade in the Territory, what is just and equitable
under the circumstances and, any evidence submitted by the parties to the
Arbitration Proceedings in accordance with the provisions of this Section 10.8
and the substantive law of this Agreement.
(f) The parties to this Agreement agree that the award of the
Arbitrator rendered in connection with the Arbitration Proceeding shall be final
and binding upon the parties and any judgment upon such an award may be entered
and enforced in any court of competent jurisdiction.
ARTICLE XI
Indemnification
SECTION 11.1. Indemnification by the Territory. From and after the
Closing Date, the Territory shall, and shall cause its Subsidiaries (other than
Sub and its Subsidiaries and any Consulting Partner) to, jointly and severally,
indemnify PwCIL, BermudaCo, Sub and its Subsidiaries and their respective
Affiliates and each of their respective officers, directors, employees, agents
and representatives, and any Consulting Partner (including, without limitation,
retired or former Consulting Partners), against and hold them harmless from
(whether in connection with a Third Party Claim or a Direct Claim) any loss,
claim, damage, liability (whether asserted or unasserted, absolute or
contingent), cost, expense, obligations, judgments, Liens, injunctions, charges,
orders, decrees, rulings, dues, assessments, Taxes, fines, penalties, fees and
amounts paid in settlement (including, without limitation, reasonable fees and
expenses of counsel consistent with Section 11.5(a)(ii)) (each a "Loss" and,
collectively, "Losses") as incurred (payable promptly upon written request) by
any such indemnified party arising from, in connection with or otherwise with
respect to (i) any breach of any obligation (other than those contained in
Section 7.4) of the Territory or any of its Subsidiaries contained in the
Transaction Agreements (other than with respect to such obligations contained in
Article VII, to the extent that any such breach is primarily attributable to the
action or inaction of the Covered Persons, or with respect to such obligations
the compliance with which by the Territory would violate applicable law); (ii)
any of the Excluded Liabilities; and (iii) any of the Excluded Assets. For the
avoidance of doubt, the parties hereto understand and agree that neither the
Territory nor any of its Subsidiaries shall be required to indemnify any person
pursuant to this Section 11.1 for any Loss arising from a breach by the
Territory of any of the provisions in Article V of this Agreement.
Notwithstanding the foregoing, neither the Territory nor any of its Subsidiaries
shall be required pursuant to this Agreement to indemnify any Consulting Partner
(including, without limitation, a retired or former Consulting Partner) for any
Losses incurred with respect to Excluded Taxes.
90
SECTION 11.2. Indemnification and Contribution by BermudaCo. (a) (i)
From and after the Closing, BermudaCo shall indemnify the Territory, its
Affiliates and each of their respective officers, directors, employees, Partners
(including, without limitation, retired or former Partners other than retired or
former Consulting Partners), agents and representatives against and hold them
harmless from (whether in connection with a Third Party Claim or a Direct Claim)
any Loss as incurred (payable promptly upon written request) by any such
indemnified party arising from, in connection with or otherwise with respect to
(i) any breach of any obligation (other than those contained in Section 7.4) of
BermudaCo or any of its Affiliates contained in the Transaction Agreements
(other than with respect to such obligations the compliance with which by
BermudaCo would violate applicable law); (ii) any of the Assumed Liabilities;
(iii) any of the Acquired Assets; and (iv) the operation of the Consulting
Business after the Closing. For the avoidance of doubt, the parties hereto
understand and agree that BermudaCo shall not be required to indemnify any
person pursuant to this Section 11.2 for any loss arising from a breach by
BermudaCo of any of the provisions in Article VI of this Agreement.
(ii) (A) BermudaCo hereby agrees to indemnify and hold harmless
PwCIL, the Territory, their respective officers, directors, employees, Partners
(including, without limitation, retired or former Partners other than retired or
former Consulting Partners) and agents, and each person, if any, who controls
PwCIL or the Territory within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act from and against any and all Losses (including,
without limitation, Losses in connection with any obligation to indemnify any
party to the Underwriting Agreement pursuant to the indemnification and
contribution provisions contained therein), other than costs and expenses
incurred in respect of litigation, as incurred (payable promptly upon written
request) by any such indemnified party arising from, in connection with or
otherwise with respect to any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or prospectus relating
thereto, or caused by or relating to any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(B) Without limiting the scope or applicability of Section 11.2(b),
and except as may otherwise be paid under Section 11.2(a)(ii)(A), BermudaCo
hereby agrees to indemnify and hold harmless PwCIL, the Territory, their
respective officers, directors, employees, Partners (including, without
limitation, retired or former Partners other than retired or former Consulting
Partners) and agents, and each person, if any, who controls PwCIL or the
Territory within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act from and against any and all costs and expenses (including
attorneys' fees) incurred (payable promptly upon written request) by any such
indemnified party arising from, in connection with or otherwise with respect to
any litigation involving or concerning any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or
prospectus relating thereto, or
91
caused by or relating to any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) To the extent that the indemnification provided for in paragraph
(a) of this Section 11.2 is unavailable to any indemnified party or insufficient
in respect of any Losses, then BermudaCo, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such Losses in such proportion as is
appropriate to reflect the relative benefits received by BermudaCo on the one
hand (determined with reference to the total number of BermudaCo Shares, LuxCo
Shares, Exchangeable Shares and cash IPO proceeds, if any, distributed to
Consulting Partners in all Rollup Territories in the transactions contemplated
hereby) and such indemnified party on the other hand (determined with reference
to the Territory Percentage of the indemnified party). No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act of 1933) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. BermudaCo acknowledges that
the remedies provided for in this Section 11.2(b) are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
(c) Except as otherwise set forth herein, each of the Territory,
BermudaCo and PwCIL acknowledges and agrees that the indemnification provided in
Section 11.1 or 11.2, as applicable, shall be the exclusive remedy against an
indemnifying party with respect to the matters covered by such indemnification.
SECTION 11.3. Losses Net of Insurance and on an After-Tax Basis. The
amount of any Loss for which indemnification is provided under this Article XI
shall be (a) net of any amounts recoverable by the indemnified party under
insurance policies with respect to such Loss and any such amounts actually
recovered by any indemnified party to the extent relating to any Loss previously
paid by any indemnifying party hereunder shall be paid over promptly to such
indemnifying party and (b) adjusted as appropriate so that the indemnified party
receives on a net basis the amount required to be paid hereunder, taking into
account of any net Tax benefit to the indemnified party arising from the
incurrence or payment of any such Loss and any net Tax cost incurred by the
indemnified party in respect of such indemnification. If an indemnified party
shall have used reasonable best efforts to recover any amounts recoverable
(first, in respect of claims under Section 11.2(a)(ii), from the policy referred
to in Section 7.6(b), and second, from any other available insurance policies)
under insurance policies and shall not have recovered the applicable Loss in
full within 120 days, the indemnifying party shall promptly pay upon written
request the amount, with interest accrued thereon, by which such Loss exceeds
the amounts actually recovered.
92
SECTION 11.4. Termination of Indemnification. The obligations to
indemnify and hold harmless any party pursuant to Sections 11.1 and 11.2 shall
not terminate.
SECTION 11.5. Procedures Relating to Third Party and Direct
Indemnification Claims. (a) Third Party Claims. (i) In order for a person (the
"indemnified party") to be entitled to any indemnification pursuant to this
Article XI in respect of, arising out of or involving a claim or demand made by
any person other than a party hereto against the indemnified party (a "Third
Party Claim"), such indemnified party must notify the indemnifying party in
writing of the Third Party Claim promptly, and in any event within 20 Business
Days, after receipt by such indemnified party of notice of the Third Party
Claim; provided, however, that failure to give such notification shall not
affect the indemnification provided under this Agreement except to the extent
the indemnifying party shall have been actually and materially prejudiced as a
result of such failure. Thereafter, the indemnified party shall deliver to the
indemnifying party promptly, and in any event within ten Business Days, after
the indemnified party's receipt thereof, copies of all notices and documents
(including, without limitation, court papers) received by the indemnified party
relating to the Third Party Claim; provided, however, that failure to make such
delivery shall not affect the indemnification provided under this Agreement
except to the extent the indemnifying party shall have been actually and
materially prejudiced as a result of such failure.
(ii) If a Third Party Claim is made against an indemnified party,
the indemnifying party shall be entitled to participate in the defense thereof
and, if it so chooses and acknowledges its obligation to fully indemnify the
indemnified party therefor in accordance with this Agreement, to assume and
control the defense thereof with counsel selected by the indemnifying party and
reasonably acceptable to the indemnified party (which acceptance shall not be
unreasonably withheld, delayed or conditioned). 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 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 at its own expense
counsel separate from the counsel employed by the indemnifying party, it being
understood that the indemnifying party shall control such defense, subject to
the remaining terms of this Section 11.5(a)(ii). The indemnifying party shall be
liable for the reasonable fees and expenses of one primary counsel, and to the
extent reasonably required in connection with such Third Party Claim, one or
more local counsel, and such other counsel as may be reasonably required due to
a conflict among indemnified parties, in each case employed by the indemnified
party for any period during which the indemnifying party has not assumed the
defense thereof. If the indemnifying party chooses to defend or prosecute any
Third Party Claim, all the parties hereto shall cooperate and shall cause their
Affiliates to cooperate in the defense or prosecution thereof. Such cooperation
shall include the retention and (upon the indemnifying party's request) the
provision to the
93
indemnifying party of records and information that are reasonably relevant to
such Third Party Claim, and making employees available on a mutually convenient
basis to provide additional information and explanation of any material provided
hereunder. Whether or not the indemnifying party assumes the defense of a Third
Party Claim, the indemnified party shall not admit any liability with respect
to, or settle, compromise or discharge, such Third Party Claim without the
indemnifying party's prior written consent (which consent shall not be
unreasonably withheld, delayed or conditioned). If the indemnifying party
assumes the defense of a Third Party Claim, the indemnified party shall agree to
any settlement, compromise or discharge of such Third Party Claim that the
indemnifying party may recommend and that by its terms (or pursuant to a binding
commitment of the indemnifying party) obligates the indemnifying party to pay
the full amount (subject to any limitation on payment contained in this Article
XI) of such liability in connection with such Third Party Claim, which releases
the indemnified party completely in connection with such Third Party Claim.
Notwithstanding the foregoing, the indemnifying party shall not be entitled to
assume the defense of any Third Party Claim (and shall be liable for the
reasonable fees and expenses of one primary counsel, and to the extent
reasonably required in connection with such Third Party Claim, one or more local
counsel, and such other counsel as may be reasonably required due to a conflict
among indemnified parties, 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 that the indemnified party reasonably determines, after conferring with
its outside counsel, cannot be separated from any related claim for money
damages. If such equitable relief or other relief portion of the Third Party
Claim can be so separated from that for money damages, the indemnifying party
shall be entitled to assume the defense of the portion relating to money
damages.
Notwithstanding the foregoing in this Section 11.5(a)(ii), if a
Third Party Claim includes or could include both a claim for Taxes that are
Excluded Taxes and a claim for Assumed Taxes, and such claim for Taxes that are
Excluded Taxes is not separable from such claim for Assumed Taxes, the Territory
(if the claim for Taxes that are Excluded Taxes exceeds or could reasonably be
expected to exceed in amount the claim for Assumed Taxes), or otherwise
BermudaCo (the Territory or BermudaCo, as the case may be, the "Controlling
Party"), shall be entitled to control the defense of such Third Party Claim
(such Third Party Claim, a "Tax Claim"). In such case, the other party (the
"Non-Controlling Party") shall be entitled to participate fully (at the
Non-Controlling Party's sole expense) in the conduct of such Tax Claim and the
Controlling Party shall not settle such Tax Claim without the consent of such
Non-Controlling Party (which consent shall not be unreasonably withheld, delayed
or conditioned). The costs and expenses of conducting the defense of such Tax
Claim (excluding any costs and expenses incurred by the Non-Controlling Party)
shall be reasonably apportioned based on the relative amounts of the claim for
Taxes that are Excluded Taxes and the claim for Taxes that are Assumed Taxes.
94
(b) Direct Claims. In the event any indemnified party should have an
indemnification claim against any indemnifying party under the Transaction
Agreements that does not involve a Third Party Claim being asserted against or
sought to be collected from such indemnified party (a "Direct Claim"), the
indemnified party shall deliver notice of such Direct Claim to the indemnifying
party. The failure by any indemnified party so to notify the indemnifying party
shall not relieve the indemnifying party from any liability that it may have to
such indemnified party, except to the extent that the indemnifying party has
been actually and materially prejudiced by such failure. If the indemnifying
party does not notify the indemnified party within 15 Business Days following
its receipt of such notice that the indemnified party disputes such Direct
Claim, such Direct Claim specified by the indemnified party in such notice shall
be conclusively deemed a liability of the indemnifying party under this Article
XI and the indemnifying party shall pay the amount of such liability to the
indemnified party on demand, or in the case of any notice in which the amount of
the Direct Claim is estimated, on such later date when the amount of such Direct
Claim is finally determined. If the indemnifying party disputes its liability
with respect to such Direct Claim in a timely manner, the indemnifying party and
the indemnified party shall proceed in good faith to negotiate a resolution of
such dispute.
SECTION 11.6. Contribution Among Rollup Territories. The Territory
hereby agrees that, in the event that any Rollup Territory or such Rollup
Territory's Affiliates, officers, directors, employees, Partners (including,
without limitation, retired or former Partners other than retired or former
Consulting Partners) or agents, and each person, if any, who controls such other
Rollup Territory within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, (i) incurs any Losses arising from, in
connection with or otherwise with respect to any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
prospectus relating thereto, or caused by or relating to any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading or (ii) is obligated to indemnify any party
to the Underwriting Agreement pursuant to the indemnification and contribution
provisions contained therein in respect of any losses, claims, damages or
liabilities referred to therein, it shall contribute to the amount paid or
payable by such indemnifying Rollup Territory (an "Indemnifying Territory") as a
result of such indemnification in such proportion as is appropriate to reflect
the relative benefits received by the Territory on the one hand and such
Indemnifying Territory on the other hand from the Closing (determined with
reference to the Territory's and the applicable Indemnifying Territory's
Territory Percentages). No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) or manifest error shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation or manifest error. The Territory acknowledges that the
remedies provided for in this Section 11.6 are not exclusive and shall not limit
any rights or remedies which may otherwise be available to any Indemnifying
Territory at law or in equity. PwCIL shall assign its rights pursuant to this
Section 11.6 to any Rollup Territory
95
which becomes an Indemnifying Territory, and the Territory hereby consents to
any such assignment.
ARTICLE XII
Termination
SECTION 12.1. Termination. Notwithstanding anything in this
Agreement to the contrary, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Escrow Closing Date
whether before or after the Local Partner Approval and the International Partner
Approval have been obtained, upon written notice (other than in the case of
Section 12.1(i) below) from the terminating party to the non-terminating party
specifying the subsection of this Section 12.1 pursuant to which such
termination is effected:
(i) by mutual written consent of the Territory, PwCIL and BermudaCo;
(ii) by PwCIL or BermudaCo upon written notice to the Territory if
any of the conditions to the Escrow Closing set forth in Section 4.1 shall
have become incapable of fulfillment and shall not have been waived in
writing by PwCIL and BermudaCo (including, without limitation, the failure
of the condition set forth in Section 4.1(vii) by the date prescribed
therein); provided, however, that the right to terminate this Agreement
pursuant to this Section 12.1(ii) shall not be available if the failure to
consummate the Closing by such date was caused by the breach of this
Agreement by the party so requesting to terminate this Agreement;
(iii) by the Territory upon 30 days' prior written notice to PwCIL
and BermudaCo if any of the conditions to the Escrow Closing set forth in
Section 4.2 shall have become incapable of fulfillment and shall not have
been waived in writing by the Territory; provided, that the right to
terminate this Agreement pursuant to this Section 12.1(iii) shall not be
available if the failure to consummate the Closing by such date was caused
by the breach of this Agreement by the Territory);
(iv) (A) by either the Territory or PwCIL, upon written notice to
each party hereto if the Escrow Closing does not occur on or prior to
December 31, 2002; provided, however, that the right to terminate this
Agreement pursuant to this Section 12.1(iv)(A) shall not be available if
the failure to consummate the Closing by such date was caused by the
breach of this Agreement by the party so requesting to terminate this
Agreement;
(B) by BermudaCo, upon written notice to each party hereto if the
Closing does not occur on or prior to the one year anniversary of the IPO
Closing
96
Date; provided, however, that the right to terminate this Agreement
pursuant to this Section 12.1(iv)(B) shall not be available if the failure
to consummate the Closing by such date was caused by the breach of this
Agreement by BermudaCo;
(v) by PwCIL or BermudaCo in the event that the Territory's
governing body (x) withdraws or modifies its recommendation of the
Transaction Agreements and the transactions contemplated thereby pursuant
to Section 7.5(b)(i)(A) or (y) fails to publicly reaffirm its
recommendation of the Transaction Agreements and the transactions
contemplated thereby within ten Business Days of a written request by
PwCIL or BermudaCo to provide such reaffirmation;
(vi) by PwCIL or BermudaCo in the event that the Territory fails to
perform the covenants contained in Section 7.4(a), Section 7.4(e) and
Section 7.7 by the dates for performance set forth therein, it being
understood and agreed by the Territory that there shall be no opportunity
to cure any violation of the foregoing covenants;
(vii) prior to the IPO Closing Date, by PwCIL in connection with the
termination of the Global Rollup in the event that PwCIL shall determine
that such termination would be in the interests of the member firms of the
PricewaterhouseCoopers global network of firms;
(viii) (a) by the Territory, if PwCIL or BermudaCo breaches or fails
to perform in any respect any of its representations, warranties or
covenants contained in this Agreement and such breach or failure to
perform (x) would give rise to the failure of a condition set forth in
Section 4.2(ii) or Section 4.2(iii) and (y) cannot be or has not been
cured within 30 days following delivery by the Territory of written notice
of such breach or failure to perform or (b) by PwCIL or BermudaCo, if the
Territory or Sub breaches or fails to perform in any respect any of its
representations, warranties or covenants contained in this Agreement and
such breach or failure to perform (1) would give rise to the failure of a
condition set forth in Section 4.1(ii) or Section 4.1(iii) and (2) cannot
be or has not been cured within 30 days following delivery by PwCIL or
BermudaCo (as applicable) of written notice of such breach or failure to
perform; or
(b) by either the Territory, PwCIL or BermudaCo if any Injunction
granting any of the relief set forth in Section 4.1(iv) shall be in effect
and shall have become a final non-appealable order, decree or ruling;
provided that the party seeking to terminate this Agreement pursuant to
this clause shall have used reasonable best efforts to prevent the entry
of and to remove such Injunction.
SECTION 12.2. Other Transaction Agreements; Material to Be Returned.
(a) In the event that this Agreement is terminated by the Territory, PwCIL or
BermudaCo pursuant to Section 12.1, the transactions contemplated by the
Transaction Agreements
97
shall be terminated, without further action by any party hereto, and each of the
Territory, PwCIL and BermudaCo shall immediately enter into, or cause its
relevant Affiliates to enter into, written consents to terminate each of the
Other Transaction Agreements as to the Territory.
(b) Furthermore, in the event that this Agreement is terminated as
provided herein:
(i) PwCIL and BermudaCo shall return all documents and other
material received from the Territory, Sub or their respective Subsidiaries
or any of their respective Representatives relating to the Consulting
Business or the transactions contemplated by the Transaction Agreements,
whether obtained before or after the execution of this Agreement, to the
Territory or, at its option, destroy such documents and material; and
(ii) the Territory and Sub shall return all documents and other
material received from PwCIL or BermudaCo or their respective Subsidiaries
or any of their Representatives relating to PwCIL, BermudaCo or the
transactions contemplated by the Transaction Agreements, whether obtained
before or after the execution of this Agreement, to PwCIL or BermudaCo, as
applicable, or at their respective options, destroy such documents and
material.
SECTION 12.3. Effect of Termination. Upon the termination hereof,
this Agreement shall become void and of no further force and effect, except for
the provisions of (i) Section 7.11 relating to special provisions in the event
of a failure to consummate the Closing, (ii) Section 7.3 relating to
confidentiality, (iii) Section 9.2 relating to publicity, (iv) Section 7.6
relating to certain expenses, (v) this Article XII and (vi) Article XIII.
Nothing in this Article XII shall be deemed to release any party from any
liability for any breach by such party of the terms and provisions of this
Agreement or to impair the right of any party to compel specific performance by
any other party of its obligations under this Agreement. It is understood and
agreed that nothing in this Section 12.3 shall be deemed to constitute a waiver
by PwCIL of any rights or powers it possesses under the Regulations of PwCIL or
otherwise to cause any member or network firm in the PricewaterhouseCoopers
global network of firms to comply with the SEC Independence Rules and the rules
and regulations thereunder.
ARTICLE XIII
Miscellaneous
SECTION 13.1. Assignment. Subject to Section 10.4(b), neither this
Agreement nor any rights or obligations hereunder may be assigned or otherwise
transferred by any party (including, without limitation, by operation of law)
without the
98
prior written consent of the other parties hereto (other than as contemplated by
Section 2.3), and any assignment or transfer without such consent shall be null
and void and of no effect; provided, however, that no assignment shall limit the
assignor's obligations hereunder.
SECTION 13.2. No Third Party Beneficiaries. Except as provided in
Article XI, this Agreement is for the sole benefit of the parties hereto and
their permitted assigns and nothing herein expressed or implied shall give or be
construed to give to any person, other than the parties hereto and such
permitted assigns, any legal or equitable rights hereunder, whether as third
party beneficiaries or otherwise.
SECTION 13.3. Amendments. This Agreement may be amended by the
parties hereto at any time, whether before or after the Local Partner Approval
and International Partner Approval have been obtained; provided, however, that
after the Local Partner Approval has been obtained, there shall be made no
amendment that by law requires further approval by the Partners of the Territory
without the further approval of such Partners. No amendment to this Agreement or
to any Other Transaction Agreement shall be effective unless it shall be in
writing and signed by the Territory, PwCIL and BermudaCo; provided, that PwCIL
may amend, modify or supplement Xxxxxxxx X, X-0, X-0, H and I and Schedule
2.2(c)(i) at any time prior to the IPO Closing Date in its sole discretion; and,
provided further, that any such amendment, modification or supplement to this
Agreement effected by PwCIL pursuant to the immediately preceding proviso shall
be effective only if (i) in the event such amendment, modification or supplement
materially and adversely affects the Territory, such amendment, modification or
supplement shall have been approved by at least 75% of the members of the Global
Board of PwCIL, and (ii) except for any changes with respect to the Global Prior
Charge Amounts or Pension Hole Amounts, such amendment, modification or
supplement shall burden each Rollup Territory substantially equivalently. The
Territory, BermudaCo and PwCIL each acknowledge and agree that PwCIL will have
the exclusive right to set, and subsequently modify, the pricing per share set
forth in the Underwriting Agreement upon the approval of at least 75% of the
members of the PwCIL Global Board.
SECTION 13.4. Consents and Approvals. For any matter under this
Agreement requiring the consent or approval of any party to be valid and binding
on the parties hereto, such consent or approval must be in writing.
SECTION 13.5. Waivers. No failure or delay of any party in
exercising any right or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the parties hereunder are cumulative
and are not exclusive of any rights or remedies which they would otherwise have
hereunder. None of the Transaction Agreements (or any provision thereof) may be
waived except pursuant to a writing executed by the waiving party. In
99
the event that the Closing shall not have occurred on the IPO Closing Date, the
waiver of any covenant, condition or other obligation of the Territory after the
IPO Closing Date shall require the consent of each of BermudaCo and PwCIL;
provided, however, that the foregoing shall not apply to the provisions of
Section 7.11.
SECTION 13.6. No Survival of Representations. The representations
and warranties in the Transaction Agreements shall terminate on the Closing
Date, and no party hereto shall have liability therefor at any time on or after
the Closing Date.
SECTION 13.7. Notices. All notices or other communications required
or permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent by facsimile or sent, postage prepaid, by registered, certified or
express mail or reputable overnight courier service and shall be deemed given
when so delivered by hand or sent by facsimile, or if mailed, three days after
mailing (one Business Day in the case of express mail or overnight courier
service), as follows (or at such other address for a party as shall be specified
by notice given in accordance with this Section 13.7):
(i) if to BermudaCo:
PwCC Limited
c/o PricewaterhouseCoopers LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Facsimile: (000) 000-0000
with copies to:
Cravath, Swaine & Xxxxx
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
(ii) if to PwCIL:
PricewaterhouseCoopers International Limited
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
100
with copies to:
Cravath, Swaine & Xxxxx
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Fax: (000) 000-0000
(iii) if to the Territory:
[ ]
[ ]
[ ]
Attention: [ ]
Facsimile: [ ]
with copies to:
[ ]
[ ]
[ ]
Attention: [ ]
Fax: [ ]
SECTION 13.8. Exhibits and Schedules; Interpretation. The headings
contained in this Agreement or in any Exhibit or Schedule hereto and in the
table of contents to this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. All
Exhibits and Schedules annexed hereto or referred to herein are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein. Any capitalized terms used in any Schedule or Exhibit but not otherwise
defined therein, shall have the meaning as defined in this Agreement. When a
reference is made in this Agreement to a Section, Article, Exhibit or Schedule,
such reference shall be to a Section or Article of, or an Exhibit or Schedule
to, this Agreement unless otherwise indicated. In the event of any conflict or
inconsistency between this Agreement and the Local Structure Term Sheet, this
Agreement shall govern unless the conflicting provision in the Local Structure
Term Sheet expressly refers to such conflict or inconsistency and expressly
states that such provision shall govern.
SECTION 13.9. Counterparts. This Agreement may be executed in one or
more counterparts (including, without limitation, by facsimile), 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.
101
SECTION 13.10. Entire Agreement. The Transaction Agreements,
including, without limitation, the schedules, exhibits, annexes and attachments
thereto, contain the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and thereof and supersede all
prior agreements and understandings relating to such subject matter.
SECTION 13.11. Severability. If any provision of this Agreement or
the application of any such provision to any person or circumstance shall be
held invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.
SECTION 13.12. Consent to Jurisdiction; Reference to Arbitration.
(a) Each of PwCIL and BermudaCo irrevocably submits, and each of the Territory
and the Noncompete Parties irrevocably submits, and agrees to cause each of
their respective Subsidiaries to irrevocably submit to the exclusive
jurisdiction of (i) the state courts of New York, and (ii) the Federal courts
located in the State of New York, for the purposes of any suit, action or other
proceeding to compel arbitration pursuant to paragraph (b) below or to enforce
any award determined in accordance with paragraph (b) below (and each agrees
that no such action, suit or proceeding relating to the foregoing shall be
brought by it or any of its Subsidiaries except in such courts). Each of PwCIL
and BermudaCo further agrees, and each of the Territory and the Noncompete
Parties further agrees, and agrees to cause their respective Subsidiaries to
agree, that service of any process, summons, notice or document by U.S.
registered mail to such person's respective address set forth above shall be
effective service of process for any action, suit or proceeding in New York with
respect to any matters to which it has submitted to jurisdiction as set forth
above in the immediately preceding sentence. Each of PwCIL and BermudaCo
irrevocably and unconditionally waives (and agrees not to plead or claim), and
each of the Territory and the Noncompete Parties irrevocably and unconditionally
waives (and agrees not to plead or claim), and agrees to cause their respective
Subsidiaries to irrevocably waive, any objection to the laying of venue of any
action, suit or proceeding arising out of the Transaction Agreements or the
transactions contemplated thereby in (i) the state courts of New York located in
the Borough of Manhattan or (ii) the Federal courts located in the State of New
York in the Borough of Manhattan or that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
(b) Except as provided for in Section 3.2, Section 9.12 and Article
X hereof, if a dispute among the parties hereto arises out of or arises in
connection with the Transaction Agreements or the transactions contemplated
thereby, the parties hereto agree that they will first attempt to settle any
such dispute through good faith negotiations in the spirit of mutual cooperation
between business executives with authority to resolve such dispute. Prior to
taking action as provided elsewhere in this Section 13.12(b), and on the terms
and procedures described on the Local Structure Term Sheet, the parties hereto
shall first submit such dispute to an appropriate corporate officer or partner
of each party
102
to the dispute for resolution, and if such corporate officers and partners are
unable to resolve such dispute, either party to the dispute may request that
their respective chief executive officers, or their respective delegees, attempt
to resolve such dispute. The officers or delegees to whom any such claim or
controversy is submitted shall attempt to resolve the dispute through good faith
negotiations over a reasonable period, not to exceed 30 days in the aggregate
unless otherwise agreed. Such 30 day period shall be deemed to commence on the
date of a notice from any party describing the particular dispute. Where the
Local Structure Term Sheet provides for "fast track" arbitration or mediation
procedures, any disputes among the parties relating to Section 9.6 of this
Agreement shall also be subject to the "fast track" arbitration or mediation
provisions described in the Local Structure Term Sheet. Except as otherwise
expressly provided in any Transaction Agreement, any and all disputes among the
parties hereto arising out of or in connection with the Transaction Agreements
or the transactions contemplated thereby (including, without limitation, the
validity, scope and enforceability of this Section 13.12(b)), which cannot be
settled amicably pursuant to foregoing, shall be finally settled by arbitration
pursuant to the then-existing Rules of Arbitration of the International Chamber
of Commerce before a single arbitrator, subject to the following:
(i) The seat of the arbitration shall be England. However, hearings
may be held in New York, London or Geneva, as the party or parties against
whom the arbitration is sought shall specify or agree (as the case may be)
or, in the absence of such specification or agreement within 15 days of
the request for arbitration, the arbitrator shall decide.
(ii) The parties to the dispute may select an arbitrator who is a
national of the same country as one of the parties. If the parties to the
dispute fail to agree on the selection of an arbitrator within 15 days
from the date on which the request for arbitration was notified to the
other parties to the dispute, any party to the dispute may apply to the
International Chamber of Commerce to make the appointment.
(iii) The parties shall use reasonable best efforts to ensure that
such arbitration proceedings are conducted expeditiously and acknowledge
that the arbitrator appointed shall have the power to issue procedural
directions for such purposes.
(iv) In the event that the International Chamber of Commerce
appoints an arbitrator pursuant to paragraph (ii) above, any party to the
arbitration shall have the right to challenge the individual appointed on
the grounds that such individual is a competitor of any of the parties,
provided that such challenge is made within 15 days of the International
Chamber of Commerce notifying such appointment. The challenging party
shall give reasons for its challenge to the proposed arbitrator. The
International Chamber of Commerce Court shall have the final decision as
to whether the individual concerned is in fact a competitor.
103
(v) The arbitrator shall conduct the proceedings in the English
language. The arbitrator shall decide in accordance with the terms of the
relevant Transaction Agreement, after taking into account the customs and
usage of the profession applicable to the transaction.
(vi) The arbitrator shall have the power, if requested by any party
to any arbitral proceedings under this Section 13.12(b), to order those
proceedings to be consolidated with any other arbitral proceedings arising
out of or in connection with the Transaction Agreements. The arbitrator
may also order that concurrent hearings of such proceedings be held. The
parties shall comply with any such order for consolidation or joinder and
the arbitrator shall have the power to make a single award in respect of
any number of arbitral proceedings which have been so consolidated or
joined. The parties shall not seek to challenge any award so rendered on
the grounds that they were not a party to the arbitration or arbitrations
under which the award was made.
(vii) Other than with respect to compelling arbitration pursuant to
this Section 13.12(b) or with respect to enforcing any award determined in
accordance with this Section 13.12(b), the parties hereto renounce all
recourse to litigation to the extent not inconsistent with applicable law
and acknowledge that the award of the arbitrator shall be final and that
neither the procedures followed by the arbitrator nor the award shall be
subject to review by any court (including, without limitation, on any
question of law arising out of the award), except as may otherwise be
required by applicable law. Judgment with respect to any award may be
entered in any court having jurisdiction over the parties hereto, any such
other parties or their assets.
(viii) Performance by the parties hereto under the Transaction
Agreements shall continue if reasonably possible during any disagreement
or arbitration proceedings and no amounts payable to any party thereunder
shall be withheld on account of such disagreement or proceedings, provided
that if the payment of such amounts is the subject of disagreement or
arbitration, any of such parties may discharge their obligations hereunder
or thereunder by making payment into an interest-bearing escrow account to
be established for such purpose. Upon the resolution of the dispute, such
escrowed amounts, plus the applicable proportionate amount of accrued
interest, shall be disbursed in accordance with the decision of the
arbitrator.
(c) Each party hereto waives, to the maximum extent not prohibited
by law, any right it may have to claim or recover in any legal action or
proceeding referred to in this Agreement for any special, exemplary, lost
profits, punitive or consequential damages.
104
(d) If this Section 13.12 is found to be a separate agreement, then
Section 13.13 shall be deemed to be incorporated herein.
SECTION 13.13. Governing Law. This Agreement, and any disputes
arising hereunder or controversies related hereto, shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to the laws that might otherwise govern under applicable principles of conflict
of laws thereof.
105
IN WITNESS WHEREOF, the parties have caused this Rollup Agreement to
be executed by their duly authorized officers or have executed this Rollup
Agreement, as applicable, as of the date first above written.
[LOCAL FIRM],
by
------------------------------------
Name:
Title:
PRICEWATERHOUSECOOPERS
INTERNATIONAL LIMITED,
by
------------------------------------
Name:
Title:
PwCC LIMITED,
by
------------------------------------
Name:
Title:
[NONCOMPETE PARTY], as a
Noncompete Party,
by
------------------------------------
Name:
Title:
Schedule 2.2(b)(ii)
The following sets forth the operations of Section 2.2(b) and Section 2.2(d) in
a hypothetical situation. Assume the following:
Net Book Territory Consulting
Global Prior Value (per Share Partner Share
Charges Balance Pension Hole Consideration Consideration
Amount Sheets) Amount Percentage Percentage
Territory A $100 $250 $100 50 60
Territory B $ 50 $100 $ 50 35 30
Territory C $ 25 $ 50 $ 25 15 10
Further assume that the number of BermudaCo, LuxCo and Exchangeable Shares to be
issued to the three territories is 1,000, and that the per-BermudaCo Share price
in the Underwriting Agreement is $5. "Share Consideration" is defined as
Territory Share Consideration plus Consulting Partner Share Consideration. By
operation of the definition of "Territory Share Consideration", the territories
would first receive the following number of shares in respect of their
respective Global Prior Charges:
Territory A 20
Territory B 10
Territory C 5
965 shares remain to be distributed. Next, the territories would receive the
following number of shares in respect of their respective net book values
(calculated consistent with the preparation of the Balance Sheets, whether or
not doing so is in accordance with U.S. GAAP):
Territory A 50
Territory B 20
Territory C 10
885 shares remain to be distributed. Next, the Territories would receive the
following number of shares in respect of their respective Pension Hole Amounts:
Territory A 20
Territory B 10
Territory C 5
850 shares remain to be distributed. The Territory Adjusted Global Rollup Share
Amount would be calculated as follows:
2
Global Rollup Share Amount: 1000 shares
* 75%
---
Total Global Prior Charge adjustment 750 shares
Total Net Book Value adjustment - 35
---
715 shares
- 80
635 shares
The Territory Share Consideration would therefore be as follows:
Territory A: 20 shares (Global Prior Charges)
+ 50 shares (Net Book Value)
------------
70 shares
+ 635 * 50% =317.5 shares
------------
387.5 shares
Territory B: 10 shares (Global Prior Charges)
+ 20 shares (Net Book Value)
------------
30 shares
+ 635 * 35% =222.25 shares
------------
252.25 shares
Territory C: 5 shares (Global Prior Charges)
+ 10 shares (Net Book Value)
------------
15 shares
+ 635 * 15% =95.25 shares
------------
110.25 shares
The Consulting Partner Adjusted Global Rollup Share Amount would be calculated
as follows:
Global Rollup Share Amount: 1000 shares
* 25%
-----
250 shares
Total Pension Hole Amount adjustment - 35
-----
215 shares
The Consulting Partner Share Consideration would be calculated as follows:
Territory A: 20 shares (Pension Hole Amount)
+ 215 * 60% = 129 shares
-------------------------
149 shares
3
Territory B: 10 shares (Pension Hole Amount)
+ 215 * 30% = 64.5 shares
--------------------------
74.5 shares
Territory C: 5 shares (Pension Hole Amount)
+ 215 * 10% = 21.5 shares
--------------------------
26.5 shares
Schedule 2.2(c)(ii)
The following sets forth the operation of Section 2.2(c) in a hypothetical
situation. Assume the following:
TERRITORY SHARE CONSULTING PARTNER
CONSIDERATION SHARE CONSIDERATION
PERCENTAGE PERCENTAGE
Territory A: 50 40
Territory B: 20 30
Territory C: 10 10
Territory D: 10 10
Territory E. 10 10
Further assume that, prior to the IPO Closing Date, Territory E fails to comply
with Section 7.7 by the time prescribed therein. The Board of PwCIL then
terminates the rollup agreement with respect to Territory E, and makes a Final
Non-Participation Determination with respect to such territory. Pursuant to the
calculation set forth in the first paragraph of Section 2.2(c), the number of
shares issuable (after adjustments) to each remaining Rollup Territory on the
Closing Date would be equal to the Territory Adjusted Global Rollup Share Amount
and the Consulting Partner Adjusted Global Rollup Share Amount (as applicable)
multiplied by the following fractions:
TERRITORY SHARE CONSULTING PARTNER
CONSIDERATION SHARE CONSIDERATION
Territory A: 50/90 40/90
Territory B: 20/90 30/90
Territory C: 10/90 10/90
Territory D: 10/90 10/90
Further assume that Territories B, C and D fail to consummate their respective
rollup transactions on the IPO Closing Date. The Board of PwCIL makes a Final
Non- Participation Determination with respect to Territory D, but not
Territories B or C. The number of shares issuable (after adjustments) to
Territory A on the Closing Date would therefore be equal to the Territory
Adjusted Global Rollup Share Amount and the Consulting Partner Adjusted Global
Rollup Share Amount (as applicable), multiplied by the following fraction:
2
TERRITORY SHARE CONSULTING PARTNER
CONSIDERATION SHARE CONSIDERATION
Territory A 50/80 40/80
Territory B's shares after adjustments, equal to the Territory Adjusted Global
Rollup Share Amount multiplied by 20/80 and the Consulting Partner Adjusted
Global Rollup Share Amount multiplied by 30/80, and Territory C's shares after
adjustments, equal to the Global Rollup Share Amount multiplied by 10/80 and the
Consulting Partner Adjusted Global Rollup Share Amount multiplied by 10/80,
would be reserved for issuance on the consummation of a subsequent rollup
transaction. On the one-year anniversary of the IPO Closing Date, Territory B
consummates a rollup transaction, but Territory C does not. A Final
Non-Participation Determination with respect to Territory C is thereby deemed
made. The shares issuable after adjustments to Territory B on the consummation
of the rollup transaction for Territory B would be equal to the Territory
Adjusted Global Rollup Share Amount multiplied by 20/80 and the Consulting
Partner Adjusted Global Rollup Share Amount multiplied by 30/80.
