EXHIBIT 10.2
FORM OF REORGANIZATION AGREEMENT
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This Reorganization Agreement is made and entered into as of _________,
2000 (the "Agreement") by and among Xxxxxx X. Xxxxxx, Inc., a Massachusetts
corporation ("Parent"), and c-quential, Inc., a Delaware corporation ("Sub") .
WHEREAS, Parent has, as part of its global management and technology
consulting business, developed a niche practice which focuses on the
telecommunications, information technology, media and electronic (the "Time
Industries") industries (such practice, the "Sub Business");
WHEREAS, the Board of Directors of Parent has determined that the interests
of Parent and its stockholders would be best served by separating its businesses
into two companies, one consisting of the Sub Business and the other consisting
of Parent's remaining businesses (the "Retained Business");
WHEREAS, in furtherance of the foregoing, Parent wishes to transfer and
assign to Sub substantially all of the assets and properties relating to the Sub
Business as specified in this Agreement in exchange for (i) the assumption by
Sub of certain liabilities and obligations relating to the Sub Business as
specified in this Agreement and (ii) the issuance to ADLI, a wholly-owned
subsidiary of Parent and the parent of Sub, of ___________ shares of Sub's Class
A Common Stock and_________shares of Sub's Class B Common Stock (the "Sub
Shares");
WHEREAS, Sub is willing to assume such liabilities and obligations and to
issue the Sub Shares to Parent in exchange for such assets and properties (the
"Reorganization");
WHEREAS, Sub has filed for an initial public offering ("IPO") of an amount
of its common stock pursuant to the registration statement (the "IPO
Registration Statement") on Form S-1 (File No. 333-36652) filed with the United
States Securities and Exchange Commission (the "Commission") pursuant to the
Securities Act of 1933, as amended, which IPO Registration Statement the parties
contemplate will become effective on ____, 2000 and which offering will be
consummated in accordance therewith on ____, 2000 (the "IPO Closing Date"); and
WHEREAS, Parent and Sub have determined that it is necessary and desirable
to set forth the principal corporate transactions required to effect the
Reorganization and the other agreements that will govern certain other matters
in connection with the Reorganization.
NOW, THEREFORE, in consideration of the foregoing and the other agreements
and covenants contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
Section1 1. DEFINITIONS.
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Section 1.1 General. As used in this Agreement, capitalized terms defined
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immediately after their use shall have the respective meanings thereby provided
and the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
Action: any action, claim, suit, arbitration, inquiry, subpoena, discovery
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request, proceeding or investigation by or before any court or grand jury, any
governmental or other regulatory or administrative agency or commission or any
arbitration tribunal.
ADLI: Xxxxxx X. Xxxxxx International, Inc., a Delaware corporation.
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Affiliate: with respect to any Person, a Person that, directly or
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indirectly, through one or more intermediaries, controls, or is controlled by,
or is under the common control with, such specified Person; provided, however,
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that Parent and Sub shall not be deemed to be Affiliates of each other for
purposes of this Agreement or any Ancillary Agreement. A person shall be deemed
to control another Person if such first Person possesses, directly or
indirectly, the power to direct, or cause the direction of, the management and
policies of the second Person, whether through the ownership of voting
securities, by contract or otherwise.
Ancillary Agreements: the Conveyancing and Assumption Instruments, the
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Corporate Services Agreement, the Use and Occupancy Agreement, the Intellectual
Property Agreement, the Registration Rights Agreement and the Tax Allocation
Agreement.
Assumed Debt Obligations: shall mean the Foreign Bank Obligations and the
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US Debt Obligations.
Assumed Liabilities: collectively, all of the Liabilities and other
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obligations of Parent and the other members of the Parent Group listed on Annex
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II hereto.
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Bids, Quotations and Proposals: the bids, quotations or proposals which
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have been submitted or made by the Sub Business, or by a member of the Parent
Group on behalf of the Sub Business, which are outstanding as of the Effective
Date.
Books and Records: the books and records of Parent and the other members of
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the Parent Group (or true and complete copies thereof), including all
computerized books and records owned by Parent or the other members of the
Parent Group, which relate principally to the Sub Business, including, without
limitation, all such books and records relating to Transferred Employees, the
purchase of materials, supplies and services, dealings with customers of the Sub
Business.
Code: the Internal Revenue Code of 1986, as amended.
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Commission: shall have the meaning set forth in the fifth WHEREAS clause of
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this Agreement.
Contributed Assets: collectively, all of the assets and properties of
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Parent and the other members of the Parent Group identified on Annex I hereto.
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Conveyancing and Assumption Instruments: collectively, the various
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agreements, bills of sale, assignments, instruments and other documents to be
entered into in order to effect the transfer of the Contributed Assets to Sub
and the Sub Group members, and the assumption by
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Sub and the Sub Group members of the Assumed Liabilities, in the manner
contemplated by this Agreement.
Corporate Services Agreement: the Corporate Services Agreement, in the
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form of Exhibit 1 attached hereto, pursuant to which Parent and the other
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members of the Parent Group will provide to Sub and the other members of the Sub
Group certain corporate services on the terms and conditions specified therein.
Designated Industry: means the business of (A) providing such management,
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technology, strategic consulting services as have been provided by the Sub
Business prior to and up to the date of this Agreement to such types of Persons
in the telecommunications, information technology, media and electronic
industries as have received such services from the Sub Business prior to and up
to the date of this Agreement, and (B) providing such financial modeling
services as have been provided by the Sub Business prior to and up to the date
of this Agreement to financial advisors and financial institutions with respect
to the telecommunications, information technology, media and electronic
industries.
Debt Agreements: collectively, the U.S. Debt Agreements and the Foreign
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Bank Agreement.
Disclosing Party: shall have the meaning set forth in Section 8.9.2 hereof.
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Dispute: shall have the meaning set forth in Section 11.1 hereof.
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Effective Date: Unless otherwise provided in this Agreement, or in any
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agreement to be executed in connection with this Agreement, the effective time
and date of each transfer of property, assumption of liability, license,
undertaking, or agreement in connection with the Reorganization shall be
________, Eastern Standard time, ___________, 2000 or such other date as may be
fixed by the Board of Directors of Parent.
Exchange Act: the Securities and Exchange Act of 1934, as amended, and the
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rules and regulations promulgated thereunder.
Foreign Bank Agreements: shall mean the General Business Conditions and
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Credit Confirmation Agreement by and between ADLI and Deutschebank A.G.
Foreign Bank Obligations: shall mean all of the obligations of Parent and
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ADLI under and in connection with the Foreign Bank Agreements to repay
indebtedness.
Governmental Authority: any federal, state, local, foreign or international
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court, government, department, commission, board, bureau, agency, official or
other regulatory, administrative or governmental authority.
Group: the members of the Parent Group or Sub Group, as applicable.
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Holdings: c-quential Holdings, Inc., a Delaware corporation.
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Indemnifiable Losses: with respect to any claim by an Indemnified Party
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for indemnification authorized pursuant to Section 6 hereof, any and all losses,
liabilities, claims, damages, obligations, payments, costs and expenses
(including, without limitation, the costs and expenses of any and all Actions,
demands, assessments, judgments, settlements and compromises relating thereto
and reasonable attorneys' fees and disbursements in connection therewith)
suffered by such Indemnified Party with respect to such claim.
Indemnified Party: any Person who is entitled to receive payment from an
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Indemnifying Party pursuant to Section 6 hereof.
Indemnifying Party: any party who is required to pay any other Person
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pursuant to Section 6 hereof.
Indemnity Payment: the amount an Indemnifying Party is required to pay an
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Indemnified Party pursuant to Section 6 hereof.
Independent Director: with respect to Sub, shall mean a member of the Sub
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Board of Directors who is not an employee or officer of Sub or an officer,
employee or director of Parent or a member of the Parent Group, and with respect
to Parent, shall mean a member of the Parent Board of Directors who is not an
employee or officer of Parent or a member of the Parent Group.
Information: means information, whether or not patentable or
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copyrightable, in written, oral, electronic or other tangible or intangible
forms, stored in any medium, including studies, reports, records, books,
contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications, drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes,
computer programs or other software, marketing plans, customer names,
communications by or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or under their
direction (including attorney work product), and other technical, financial,
employee or business information or data.
Insurance Proceeds: those monies received by an insured from an insurance
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carrier or paid by an insurance carrier on behalf of the insured.
Intellectual Property Agreement: the Intellectual Property Agreement, in
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the form of Exhibit 2 attached hereto, pursuant to which Parent is contributing
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to Sub the use of certain intellectual property.
IPO: shall have the meaning set forth in the fifth WHEREAS clause of this
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Agreement.
IPO Closing Date: shall have the meaning set forth in the fifth WHEREAS
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clause of this Agreement.
IPO Liabilities: means any Liabilities relating to, arising out of or
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resulting from any untrue statement or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, with
respect to all information contained in the IPO Registration Statement or any
preliminary, final or supplemental prospectus forming a part of the IPO
Registration Statement.
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IPO Registration Statement: shall have the meaning set forth in the sixth
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WHEREAS clause.
Liabilities: any and all debts, liabilities and obligations, whether or
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not accrued, contingent (known or unknown) or reflected on a balance sheet,
including without limitation those arising under any law, rule, regulation,
Action, order or consent decree of any governmental entity or any judgment of
any court of any kind or any award of any arbitrator of any kind, and those
arising under any contract, commitment or undertaking.
Nasdaq: shall have the meaning set forth in Section 5.1.3 hereof.
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Parent: Xxxxxx X. Xxxxxx, Inc., a Massachusetts corporation.
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Parent Common Stock: the common stock of Parent, par value $.01 per share.
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Parent Group: Parent and each subsidiary and Affiliate of Parent,
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exclusive of the Persons included in the Sub Group immediately after the
Effective Date.
Parent Insurance Policies: all policies and contracts of any kind pursuant
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to which insurance carriers provide insurance coverage to Parent in respect of
claims or occurrences relating to, without limitation, property damage, business
interruption, transit, extended coverage, employee crime, general liability,
products liability, errors and omissions, automobile liability, employer's
liability and workers' compensation.
Parent Stock Plans: all plans maintained by Parent that permit employees
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of Parent or Sub to purchase Parent Common Stock, other than plans qualified
under Section 401(a) of the Code and Parent Stock Option Plans.
Parent Stock Option Plans: all plans maintained by Parent that provide for
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grants of options to purchase shares of Parent Common Stock to employees of
Parent and its affiliated persons.
Parent Stock Options: options to acquire Parent Common Stock granted under
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the Parent Stock Option Plans.
Person: any individual, partnership, corporation, limited liability
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company, association, trust, joint venture, unincorporated organization or other
entity.
Plan: has the meaning set forth in Section 2.2 hereof.
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Privilege: shall have the meaning set forth in Section 8.10.1 hereof.
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Privileged Information: shall have the meaning set forth in Section 8.10.1
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hereof.
Receiving Party: shall have the meaning set forth in Section 8.9.2 hereof.
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Registration Rights Agreement: the Registration Rights Agreement, in the
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form of Exhibit 3 attached hereto, pursuant to which Sub is granting to ADLI (or
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another member of the Parent Group) the right to register shares of Sub Common
Stock on the terms and conditions specified therein.
Reorganization: the transaction referred as such in the fourth WHEREAS
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clause of this Agreement.
Retained Business: the business of Parent referred to as such in the
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second WHEREAS clause of this Agreement.
Retained Liabilities: collectively, all of the Liabilities of the Parent
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Group as of the Effective Date, other than the Assumed Liabilities.
Retained Receivables: shall mean all of the receivables relating to the
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Sub Business as of the Effective Date, including, without limitation, any
receivables which relate to any work-in-process performed by Parent or a member
of the Parent Group prior to the Effective Date.
Restricted Area: means each country of the world in which Sub and the Sub
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Group members are, collectively, as of the date of this Agreement or at any time
prior to the Termination Date, conducting any business activities.
Securities Act: the Securities Act of 1933, as amended, and the rules and
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regulations promulgated thereunder.
Sub: c-quential, Inc., a Delaware corporation.
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Sub Business: means the management and technology consulting practice
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historically operated by the Parent Group, known as the "TIME practice," which
focuses on the Time Industries.
Sub Common Stock: Collectively, the Class A common stock, par value $.01
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per share, and Class B common stock, par value $.01 per share, of Sub.
Sub Employees: shall have the meaning set forth in Section 9.2 hereof.
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Sub Group: Sub, each subsidiary and Affiliate of Sub immediately after the
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Effective Date and each Person that becomes a subsidiary or Affiliate of Sub
after the Effective Date.
Sub Shares: shall have the meaning set forth in the third WHEREAS clause
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of this Agreement.
Tax Allocation Agreement: the Tax Allocation Agreement, substantially in
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the form of Exhibit 4 attached hereto.
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Termination Date: shall have the meaning set forth in Section 8.11.
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Third Party Claims: shall have the meaning set forth in Section 6.3.1
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hereof.
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Time Industries: shall have the meaning set forth in the First WHEREAS
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clause of this Agreement.
Transferred Employees: the employees of Parent and the other members of
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the Parent Group immediately prior to the Effective Date who commence work on
behalf of Sub and the other members of the Sub Group as of the Effective Date.
US Debt Obligations: shall mean all of the obligations of Parent and ADLI
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under the US Debt Agreements to repay indebtedness.
US Debt Agreements: shall mean (i) the Amended and Restated Credit
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Agreement dated April 25, 2000 by and among Parent, ADLI, CitiBank, N.A. and the
Lenders identified therein, and all other agreements executed in connection
therewith, and (ii) the Amended and Restated Note Purchase Agreement dated April
25, 2000 by and among Parent and the Noteholders party thereto, and all other
agreements executed in connection therewith.
Use and Occupancy Agreement: the Use and Occupancy Agreement, in the form
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of Exhibit 5 attached hereto, pursuant to which Parent and the other members of
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the Parent Group will provide to Sub and the other members of the Sub Group use
and occupancy of certain properties as specified therein.
Section 2. REORGANIZATION AND RELATED TRANSACTIONS.
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Section 2.1 The Reorganization.
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Section 2.1.1 Subject to the terms and conditions of this Agreement
(including, without limitation, Section 3 below), as of the Effective Date,
Parent hereby assigns, transfers, conveys and delivers, and causes each member
of the Parent Group to deliver, to Sub or the applicable member of the Sub
Group, and Sub hereby accepts, and causes the applicable members of the Sub
Group to accept, from Parent and the applicable members of the Parent Group, all
right, title and interest in and to the Contributed Assets, and contributes and
enters into the Ancillary Agreements, in a transaction or transactions described
in Section 351 of the Code, all as specified in more detail in Annex III
attached hereto. Without limiting the generality of the foregoing, Parent shall
first assign, transfer, convey and deliver to ADLI, and ADLI shall accept from
Parent, the Contributed Assets held by Parent, and immediately thereafter, ADLI
shall assign, transfer and deliver to Sub, and Sub shall accept from ADLI, the
Contributed Assets held by ADLI in each case in accordance with a Conveyancing
and Assumption Instrument satisfactory to the parties.
Section 2.1.2 Subject to Section 7.3 hereof, to the extent that any
such conveyances, assignments, transfers and deliveries shall not have been so
consummated on the Effective Date, Parent and Sub shall cooperate to effect such
consummation as promptly thereafter as shall be practicable, it nonetheless
being understood and agreed by Parent and Sub that neither shall be liable in
any manner to any Person who is not a party to this Agreement other than a
member of the Parent Group or the Sub Group for any failure of any of the
transfers contemplated by this Section 2 to be consummated on or subsequent to
the Effective Date.
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Whether or not all of the Contributed Assets or the Assumed Liabilities shall
have been legally transferred to Sub as of the Effective Date, Parent and Sub
agree that, as of the Effective Date, Sub and the other members of the Sub Group
shall have, and shall be deemed to have acquired, complete and sole beneficial
ownership over all of the Contributed Assets, except as described herein with
respect to assets which are non-assignable, together with all of the rights,
powers and privileges (except as provided in Section 8.10 hereof) incident
thereto, and shall be deemed to have assumed in accordance with the terms of
this Agreement all of the Assumed Liabilities and all of the Parent Group's
duties, obligations and responsibilities incident thereto.
Section 2.2 Subsidiaries. Parent and Sub shall cause each of the members
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of their respective Group and all foreign subsidiaries and divisions to execute
such Conveyancing and Assumption Instruments, local transfer agreements,
assignments, assumptions, novations and other documents as shall be necessary to
carry out the assignment and transfer of the Contributed Assets and assumption
of the Assumed Liabilities as detailed described in Annex III hereto (the
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"Plan") to effect the purposes of this Agreement with respect to their
respective operations both inside and outside the United States.
Section 2.3 Parent Approval. Parent shall cooperate with Sub in
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effecting, and if so requested by Sub, Parent shall, as the sole stockholder of
ADLI, which is the principal stockholder of Sub, approve or ratify any actions
which are reasonably necessary or desirable to be taken by Sub to effectuate the
transactions contemplated by this Agreement in a manner consistent with the
terms of this Agreement and the Ancillary Agreements including, without
limitation, (a) the election or appointment of directors and officers of Sub to
serve in such capacities following the Effective Date and (b) the approval of
appropriate plans, agreements and arrangements for Transferred Employees and
non-employee members of Sub's board of directors.
Section 3. ASSUMPTION AND RETENTION OF LIABILITIES; ISSUANCE OF SHARES.
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Section 3.1 Assumed Liabilities. Upon the terms and subject to the
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conditions set forth in this Agreement and in addition to any other Liabilities
otherwise expressly assumed by Sub and the Sub Group pursuant to this Agreement,
the Ancillary Agreements or any other agreement contemplated by this Agreement,
Sub hereby agrees with Parent, and shall cause the members of the Sub Group
(with the except of any members of the Sub Group that are classified as foreign
corporations for U.S. tax purposes), to assume, pay, perform and discharge in
due course any and all Assumed Liabilities. Without limiting the generality of
the foregoing, with respect to the Assumed Debt Obligations, on the Effective
Date, ADLI shall first assume from Parent the Assumed Debt Obligations, and
immediately thereafter, Sub shall assume from ADLI all of the Assumed Debt
Obligations, in each case in accordance with a Conveyancing and Assumption
Instrument satisfactory to the parties.
Section 3.2 Retained Liabilities. Upon the terms and subject to the
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conditions set forth in this Agreement and in addition to any other liabilities
otherwise expressly retained by Parent pursuant to this Agreement, the Ancillary
Agreements or any other agreement contemplated by this Agreement, Parent hereby
agrees with Sub that Parent and the other
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members of the Parent Group shall pay, perform and discharge in due course any
and all Retained Liabilities.
Section 3.3 Issuance of Shares. Upon the terms and subject to the
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conditions set forth in this Agreement, Sub hereby issues to ADLI (or another
member of the Parent Group as described in Annex II), the Sub Shares.
Section 4. DOCUMENTS AND ITEMS TO BE DELIVERED ON THE EFFECTIVE DATE.
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Section 4.1 Documents to Be Delivered by Parent. On the Effective Date,
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or such other date as agreed in connection with the consummation the Plan,
Parent shall contribute, transfer and deliver, or will cause the member of the
Parent Group to contribute, transfer and deliver, to Sub and the members of the
Sub Group all of the following items and agreements (collectively, together with
all agreements and documents contemplated by such agreements, the "Ancillary
Agreements"):
Section 4.1.1 A duly executed Intellectual Property Agreement;
Section 4.1.2 A duly executed Tax Allocation Agreement;
Section 4.1.3 A duly executed Corporate Services Agreement;
Section 4.1.4 A duly executed Use and Occupancy Agreement;
Section 4.1.5 A duly executed Registration Rights Agreement;
Section 4.1.6 Resignations of each person who is an officer or
director of Parent or a member of the Parent Group, immediately prior to the
Effective Date, and who will be employee, officer or director of Sub from and
after the Effective Date; and
Section 4.1.7 Such other agreements, documents or instruments as
Parent reasonably believes are necessary or desirable in order to achieve the
purposes hereof.
Section 4.2 Documents to Be Delivered by Sub. As of the Effective Date,
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Sub will, and shall cause the members of the Sub Group to, deliver to Parent or
the applicable member of the Parent Group, all of the following:
Section 4.2.1 In each case where Sub or a member of the Sub Group is
a party to any agreement or instrument referred to in Section 4.1, a duly
executed counterpart of such agreement or instrument;
Section 4.2.2 A certificate or certificates representing the Sub
Shares; and,
Section 4.2.3 Resignations of each person who is an officer or
director of Sub, immediately prior to the Effective Date, and who will be an
employee, officer or director of Parent from and after the Effective Date.
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Section 5. [Intentionally Omitted]
Section 6. SURVIVAL, INDEMNIFICATION, CLAIMS AND OTHER MATTERS.
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Section 6.1 Survival of Agreements.
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Section 6.1.1 All covenants and agreements of the parties in this
Agreement and the Ancillary Agreements shall survive the Effective Date;
provided, however, that the term of any Section hereof or Ancillary Agreement
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which by its terms is limited to a finite period shall survive as set forth
herein or therein, as applicable.
Section 6.1.2 Except as specifically provided herein, the provisions
of this Section 6 shall terminate and be of no further force and effect on the
third anniversary of the IPO Closing Date.
Such termination shall in no way limit the obligations of Sub with
respect to the Assumed Liabilities or the obligations of Parent with respect to
the Retained Liabilities and related indemnification rights under this
Agreement, which shall survive indefinitely.
Section 6.1.3 The obligations of Sub and Parent under Sections 6, 7
and 8 of this Agreement shall survive the sale or other transfer by either of
them of any assets or businesses or the assignment by either of them of any
Liabilities. To the extent that Parent or a member of the Parent Group
transfers to another party any of the Retained Liabilities (except for such
amounts of Retained Liabilities which in any individual instance are not
material), Parent shall cause such transferee of such Retained Liabilities to
assume specifically its obligations with respect thereto under this Agreement
and to fulfill its obligations related to such Retained Liabilities. To the
extent Sub or a member of the Sub Group transfers to another party any of the
Assumed Liabilities (except for such amounts of Assumed Liabilities which in any
individual instance are not material), Sub shall cause such transferee to assume
specifically its obligations with respect thereto under this Agreement and to
fulfill its obligations related to such Assumed Liabilities. The failure of the
transferee to fulfill its obligations with respect to the Retained Liabilities
or the Assumed Liabilities shall not relieve Parent or Sub, or any member of
their respective Group, as the case may be, of its obligations hereunder with
respect thereto.
Section 6.2 Indemnification.
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Section 6.2.1 Parent, on its behalf and on behalf of the other
members of the Parent Group, shall indemnify, defend and hold harmless Sub, each
member of the Sub Group and each of their respective directors, officers,
employees and agents from and against any and all Indemnifiable Losses incurred
by any of them arising out of or due to, directly or indirectly, (a) any Third
Party Claims in connection with any of the Retained Liabilities, (b) any claims,
including Third Party Claims, in connection with the operations of the Sub
Business prior to the Effective Date, including, without limitation, any claims
with respect to securities law matters (other than any IPO Liabilities), (c)
Third Party Claims that Parent, or another member of the Parent Group, failed to
perform or violated any provision of this Agreement which is to be performed or
complied with by Parent or such member of the Parent Group, as applicable or (d)
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breaches of this Agreement or any of the Ancillary Agreements by Parent or a
member of the Parent Group.
Section 6.2.2 Sub, on its behalf and on behalf of the other members
of the Sub Group, shall indemnify, defend and hold harmless Parent, each other
member of the Parent Group, and each of their respective directors, officers,
employees and agents from and against any and all Indemnifiable Losses incurred
by any of them arising out of or due to, directly or indirectly, (a) any Third
Party Claims in connection with any of the Assumed Liabilities, (b) Third Party
Claims that Sub, or the other members of the Sub Group, failed to perform or
violated any provision of this Agreement which is to be performed or complied
with by Sub or the other members of the Sub Group, as applicable, (c) breaches
of this Agreement by Sub or its the other members of the Sub Group, or (d) any
IPO Liabilities.
Section 6.2.3 Amounts required to be paid pursuant to this Section 6
are hereinafter sometimes collectively called "Indemnity Payments" and are
individually called an "Indemnity Payment"). The amount by which any party (an
"Indemnifying Party") is required to pay to any other party (an "Indemnified
Party") pursuant to Section 6.2.1 or Section 6.2.2 shall be reduced (including
retroactively) by any Insurance Proceeds or other amounts actually recovered by
such Indemnified Party in reduction of the related Indemnifiable Loss. If an
Indemnified Party shall have received an Indemnity Payment in respect of an
Indemnifiable Loss and shall subsequently actually receive Insurance Proceeds or
other amounts (such as judgment or settlement amounts) in respect of such
Indemnifiable Loss, then such Indemnified Party shall pay to such Indemnifying
Party a sum equal to the lesser of the amount of such Insurance Proceeds or
other amounts actually received or the net amount of Indemnity Payments actually
received previously. The Indemnified Party agrees that the Indemnifying Party
shall be subrogated to such Indemnified Party under any insurance policy.
Section 6.2.4 PARENT'S AND SUB'S RESPECTIVE OBLIGATIONS PURSUANT TO
SECTION 6.2.1(d) AND SECTION 6.2.2(c) SHALL, BE LIMITED TO DIRECT AND ACTUAL
DAMAGES, TO THE EXCLUSION OF INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES. THIS
SECTION 6.2.4 SHALL NOT APPLY TO (a) ANY FAILURE BY SUB OR THE SUB GROUP MEMBERS
TO ASSUME, PAY, PERFORM OR DISCHARGE ANY AND ALL ASSUMED LIABILITIES, (b) ANY
FAILURE BY PARENT OR THE PARENT GROUP MEMBERS TO PAY, PERFORM OR DISCHARGE ANY
AND ALL RETAINED LIABILITIES OR (c) ANY BREACH BY PARENT OR SUB, OR THE MEMBERS
OF THEIR RESPECTIVE GROUP, OF THEIR RESPECTIVE INDEMNITY OBLIGATIONS UNDER THIS
AGREEMENT, INCLUDING THE INDEMNITY OBLIGATIONS SET FORTH IN THIS SECTION 6.
Section 6.2.5 Indemnification obligations contained elsewhere in this
Agreement shall be subject to the provisions of this Section 6.
Section 6.3 Procedure for Indemnification of Third Party Claims.
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Section 6.3.1 If a party shall receive notice of any claim or Action
brought, asserted, commenced or pursued by any Person not a party to this
Agreement (herein referred to as a "Third Party Claim"), with respect to which
the other party is or may be obligated to make
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an Indemnity Payment, it shall give such other party prompt written notice
thereof (including any pleadings relating thereto) after becoming aware of such
Third Party Claim, specifying in reasonable detail the nature of the Third Party
Claim and the amount or estimated amount thereof to the extent then feasible
(which estimate shall not be conclusive of the final amount of such claim);
provided, however, that the failure of a party to give notice as provided
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in this Section 6.3.1 shall not relieve the other party of its indemnification
obligations under this Section 6, except to the extent that such other party is
actually prejudiced by such failure to give notice.
Section 6.3.2 The Indemnifying Party may elect to defend or seek to
settle or compromise any Third Party claim as to which a claim for
indemnification hereunder has been asserted, at the Indemnifying Party's own
expense and by counsel selected by the Indemnifying Party and reasonably
acceptable to the Indemnified Party, by so notifying the Indemnified Party
within thirty (30) days after the Indemnified Party has given notice of the
Third Party Claim in accordance with Section 6.3.1 hereof (or such earlier time
as may be necessary for the Indemnified Party to submit a responsive pleading
required in connection with the Third Party Claim). Unless the Indemnifying
Party fails to assume the defense or to seek to settle or compromise the Third
Party Claim in a timely manner, the Indemnifying Party shall not be liable to
the Indemnified Party for any legal or other expenses subsequently incurred by
the Indemnified Party in connection with the defense, settlement or compromise
of the Third Party Claim; provided, however, that if, in the reasonable judgment
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of the Indemnified Party, based on the advice of counsel, a conflict of interest
between the Indemnified Party and the Indemnifying Party exists with respect to
the Third Party Claim, the Indemnified Party shall have the right to employ one
counsel selected by it and reasonably acceptable to the Indemnifying Party, and
in that event, the reasonable fees and expenses of such separate counsel shall
be paid by the Indemnifying Party. Once the Indemnifying Party has assumed the
defense of any Third Party Claim, it must actively and diligently defend or seek
to settle or compromise the Third Party Claim until conclusion of the matter,
unless the Indemnified Party agrees to the Indemnifying Party's withdrawal.
Section 6.3.3 If the Indemnifying Party responds to a notice of Third
Party Claim by denying its obligation to indemnify the person or entity claiming
a right of defense and indemnification under this Agreement, or if the
Indemnifying Party fails to defend in a timely manner, the Indemnified Party
shall be entitled to defend or seek to settle or compromise such Third Party
Claim by counsel selected by it. In addition, if it is later determined,
through procedures referenced in Section 11 of this Agreement, or by agreement
of the parties, that the Indemnifying Party wrongly denied its indemnification
obligation with respect to, or failed to timely defend, such claim, then the
Indemnifying Party shall (a) reimburse the Indemnified Party for all costs and
expenses (other than salaries of officers and employees) reasonably incurred by
the Indemnified Party in connection with its defense, settlement or compromise
of the Third Party Claim and (b) be estopped from challenging a judgment, order,
settlement or compromise resolving the Third Party Claim entered into in good
faith by the Indemnified Party (if such claim has been resolved prior to the
conclusion of the proceeding between the Indemnified Party and the Indemnifying
Party). The Indemnifying Party, after initially rejecting a claim for defense
or indemnification by the Indemnified Party, may, at any time prior to the
resolution of the Third Party Claim, assume the defense of, or seek to settle or
compromise said claim, provided that (i) the Indemnifying Party reimburses the
Indemnified Party for all costs and expenses (other than salaries of officers
and employees) reasonably incurred by the Indemnified Party in connection
12
with the defense of such claim (including costs incurred in the transition of
the defense from the Indemnified Party to the Indemnifying Party) and (ii) the
assumption of the defense of the Third Party Claim will not prejudice or cause
harm to the Indemnified Party.
Section 6.3.4 With respect to any Third Party Claim relating to any
matter subject to a claim for indemnification hereunder, no party shall enter
into any compromise or settlement or consent to the entry of any judgment which
(a) does not include as a term thereof the giving by the third party of a
release to the Indemnified Party of all further liability in respect of such
Third Party Claim or (b) imposes any obligation on the Indemnified Party without
said Indemnified Party's written consent (which consent shall not be
unreasonably withheld), except an obligation to pay money which the Indemnifying
Party has agreed to pay on behalf of the Indemnified Party. In the event that
an Indemnified Party enters into any such compromise, settlement or consent
without the written consent of the Indemnifying Party (other than as
contemplated by Section 6.3.3 hereof), the entry of such compromise, settlement
or consent shall relieve the Indemnifying Party of its indemnification
obligation related to the Third Party Claim underlying such compromise,
settlement or consent.
Section 6.3.5 Upon final judgment, determination, settlement or
compromise of any Third Party Claim, and unless otherwise agreed to by the
parties in writing, the Indemnifying Party shall pay promptly on behalf of the
Indemnified Party, or to the Indemnified Party in reimbursement of any amount
theretofore required to be paid by it, the amount so determined by final
judgment, determination, settlement or compromise. Upon the payment in full by
the Indemnifying Party of such amount, the Indemnifying Party shall succeed to
the rights of such Indemnified Party to the extent not waived in settlement,
against the third party who made such Third Party Claim and any other Person who
may have been liable to the Indemnified Party with respect to the indemnified
matter.
Section 6.3.6 If the Indemnifying Party elects to defend or to seek
to settle or compromise the Third Party Claim, the Indemnified Party shall make
available to the Indemnifying Party any personnel or any books, records or other
documents within its control or which it otherwise has the ability to make
available that are necessary or appropriate for such defense, settlement or
compromise, and shall otherwise cooperate in the defense, settlement or
compromise of the Third Party Claim; provided, however, that nothing in this
-------- -------
Section 6.3.6 shall be deemed to require the-waiver of any privilege, including
attorney-client privilege, or protection afforded by the attorney work product
doctrine. In addition, regardless of the party actually defending a Third Party
Claim for which there is an indemnity obligation under Section 6.2 hereof, the
parties shall give each other regular status reports relating to such action
with detail sufficient to permit the other party to assert and protect its
rights and obligations under this Agreement.
Section 6.3.7 The provisions of this Section 6.3 shall survive in
perpetuity and shall be the exclusive procedures for any Third Party Claims
subject to the provisions of Section 6.2.1 or 6.2.2 hereof.
Section 6.4 Other Claims. Any claim on account of an Indemnifiable Loss
------------
which does not result from a Third Party Claim shall be asserted by written
notice from the Indemnified Party to the Indemnifying Party. The Indemnifying
Party shall have a period of sixty (60) days
13
(or such shorter time period as may be required by law as indicated by the
Indemnified Party in the written notice) within which to respond. If the
Indemnifying Party does not respond within such sixty (60) day (or lesser)
period, the Indemnifying Party shall be deemed to have accepted responsibility
to make payment and shall have no further right to contest the validity of such
claim. If the Indemnifying Party does respond within such sixty (60) day (or
lesser) period and rejects such claim in whole or in part, the Indemnified Party
shall be free to pursue resolution of the matter as provided in Section 11
hereof.
Section 6.5 No Beneficiaries. Except to the extent expressly provided
----------------
otherwise in this Section 6, the indemnification provided for by this Section 6
shall not inure to the benefit of any third party or parties and shall not
relieve any insurer who would otherwise be obligated to pay any claim of the
responsibility with respect thereto or, solely by virtue of the indemnification
provisions hereof, provide any subrogation rights with respect thereto and each
party agrees to waive such rights against the other to the fullest extent
permitted.
Section 6.6 Named Parties. The parties hereto acknowledge that it may not
-------------
be feasible to substitute Sub for Parent as a named party in Actions, whether
domestic or foreign, constituting Assumed Liabilities. In such event, Parent
shall remain as a named party, but, following the Effective Date, Sub shall
assume the defense of any such Action in accordance with the provisions of
Section 6.3 hereof and Parent and the other members of the Parent Group shall
cooperate with Sub as contemplated by Section 6.3 and Section 8 hereof.
Section 6.7 Order of Precedence. This Section 6 shall not operate to
-------------------
terminate or reduce any obligation or liability existing or arising under the
Tax Allocation Agreement. To the extent that the provisions of this Section 6
are inconsistent with the provisions of the Tax Allocation Agreement with
respect to the subject matter thereof, the provisions of the Tax Allocation
Agreement shall control.
Section 7. CERTAIN ADDITIONAL MATTERS RELATED TO THE TRANSFER OF THE SUB
-------------------------------------------------------------
BUSINESS.
--------
Section 7.1 Conveyancing and Assumption Instruments. In connection with
---------------------------------------
the transfer, conveyance, assignment and delivery of the Contributed Assets and
the assumption of the Assumed Liabilities contemplated by this Agreement, Parent
and Sub agree to execute, or cause to be executed by the appropriate member of
their Group, and to deliver to each other, as appropriate, the Conveyancing and
Assumption Instruments.
Section 7.2 No Representations or Warranties. Except as provided in
--------------------------------
Section 2.1 hereof, Sub understands and agrees that Parent is not in this
Agreement or in any other agreement or document contemplated by this Agreement,
representing or warranting in any way (a) as to the value or freedom from
encumbrance of, or as to any other matter concerning, any Contributed Assets or
(b) as to the legal sufficiency to convey title to any Contributed Assets of the
execution, delivery and filing of the Conveyancing and Assumption Instruments,
IT BEING UNDERSTOOD THAT ALL SUCH ASSETS ARE BEING TRANSFERRED AS IS, WHERE IS
and without any representation or warranty of any kind, express or implied (the
implied warranties of merchantability and fitness for a particular purpose being
hereby specifically disclaimed), and that Sub shall bear the economic and legal
risk that any conveyance of such assets shall prove to be insufficient or that
Sub's title to any such assets shall be other than good and marketable and free
from encumbrances. Similarly, Sub understands and agrees that Parent is not in
this Agreement or in any other agreement or document contemplated by this
Agreement representing or warranting in any way that the obtaining of the
consents or approvals, the execution and delivery of any amendatory agreements
and the making of the filings and applications contemplated by this Agreement
shall satisfy the provisions of all applicable laws or
14
judgments, it being understood and agreed that, subject to Section 7.3 hereof,
Sub shall bear the economic and legal risk that any necessary consents or
approvals are not obtained or that any requirements of law or judgments are not
complied with. The foregoing, however, shall not limit any responsibilities
which Parent may have to use its commercially reasonable efforts to effect
transfers under the other provisions of this Agreement.
Section 7.3 Further Assurances; Subsequent Transfers.
----------------------------------------
Section 7.3.1 Each of Parent and Sub will execute and deliver such
further instruments of conveyance, transfer and assignment and will take such
other actions as each of them may reasonably request of the other in order to
effectuate the purposes of this Agreement and to carry out the terms hereof.
Without limiting the generality of the foregoing, at any time and from time to
time after the Effective Date, at the reasonable request of Sub and without the
payment of any further consideration, Parent will execute and deliver to Sub
such other instruments of transfer, conveyance, assignment and confirmation and
take such action as Sub may reasonably deem necessary or desirable in order to
more effectively transfer, convey and assign to Sub or a Sub Group member and to
confirm Sub's (or such Sub Group member's) title to all of the Contributed
Assets, to put Sub in actual possession and operating control thereof and to
permit Sub to exercise all rights with respect thereto (including, without
limitation, rights under contracts and other arrangements as to which the
consent of any third party to the transfer thereof shall not have previously
been obtained) and Sub will execute and deliver to Parent all instruments,
undertakings or other documents and take such other action as Parent may
reasonably deem necessary or desirable in order to have Sub and the other
members of the Sub Group fully assume and discharge the Assumed Liabilities and
relieve Parent and the members of the Parent Group of any liability or
obligations with respect thereto and evidence the same to third parties.
Notwithstanding the foregoing, Parent and Sub shall not be obligated, in
connection with the foregoing, to expend monies other than reasonable out-of-
pocket expenses and attorneys' fees.
Section 7.3.2 Parent and Sub will use their best efforts to obtain
any consent, approval or amendment required to novate and/or assign all
agreements, leases, licenses and other rights of any nature whatsoever relating
to the Contributed Assets to Sub; provided, however, that Parent shall not be
-------- -------
obligated to pay any consideration therefor (except for filing fees and other
administrative charges) to the third party from whom such consents, approvals
and amendments are requested. In the event and to the extent that Parent is
unable to obtain any such required consent, approval or amendment, (a) Parent,
or the applicable Parent Group member, shall continue to be bound thereby and
(b) unless not permitted by law or the terms thereof, Sub shall pay, perform and
discharge fully all the obligations of Parent, or the applicable Parent Group
member, thereunder from and after the Effective Date and indemnify Parent and
any Parent Group member for all Indemnifiable Losses arising out of such
performance by Sub. Parent shall, without the payment of any further
consideration, pay and remit to Sub promptly any monies, rights and other
considerations received in respect of such performance. Parent shall exercise
or exploit its rights and options under all such agreements, leases, licenses
and other rights and commitments referred to in this Section 7.3.2 only as
reasonably directed by Sub and at Sub's expense. If and when any such consent
shall be obtained or such agreement, lease, license or other right shall
otherwise become assignable or able to be novated, Parent shall promptly assign
and novate all rights and obligations thereunder to Sub without payment of
15
further consideration and Sub shall, without the payment of any further
consideration, assume such rights and obligations. To the extent that the
assignment of any contract or agreement (or their proceeds) pursuant to this
Section 7.3 is prohibited by law or not otherwise obtained, the assignment
provisions of this Section shall operate to create a subcontract with Sub and
the applicable Sub Group member to perform each relevant unassignable contract
at a subcontract price equal to the monies, rights and other considerations
received by Parent with respect to the performance by Sub and the applicable Sub
Group member under such subcontract.
Section 7.4 Bids, Quotations and Proposals. All Bids, Quotations and
------------------------------
Proposals included in the Contributed Assets shall be transferred to the Sub
Group to the extent permitted by law. Parent and Sub shall work together and
use their best efforts to preserve such Bids, Quotations and Proposals and
facilitate the award of contracts pursuant thereto consistent with applicable
laws and regulations. Any contracts awarded pursuant to an outstanding Bid,
Quotation or Proposal shall be considered an agreement and treated in the same
manner as provided for in the last two sentences of Section 7.3.2 hereof.
Section 7.5 Certain Intercompany Arrangements. Following the Effective
---------------------------------
Date, the parties agree to discuss in good faith the provision of any services
and products to be provided by the other, but which inadvertently were not the
subject of an Ancillary Agreement or other written agreement. Nothing in this
Section 7.5, however, shall require or authorize Parent or Sub to provide and
charge each other for any services other than on the terms and conditions
specified in the Corporate Services Agreement or the other Ancillary Agreements.
Section 7.6 Debt Agreements. Parent shall not, and shall cause ADLI and
---------------
the other members of the Parent Group not to, take any action or omit to take
any action that would cause or result in an event of default under the Debt
Agreements. Parent shall promptly notify Sub of any notice of default under the
Debt Agreements, and agrees to use its best efforts to promptly cure such event
of default and cooperate with Sub in furtherance of the foregoing.
Section 7.7 Collection of Certain Receivables. Sub shall, as agent for
---------------------------------
Parent, have the sole and exclusive right to collect the Retained Receivables in
accordance with Parent's normal collection processes and procedures. So long as
the Retained Receivables are the obligation of Sub, neither Parent nor its
agents shall make any solicitation for collection purposes nor institute
litigation for the collection of any amounts due thereunder, except for such
Retained Receivables which Sub has consented to Parent's collection thereof.
All payments received by Sub in respect of the Retained Receivables shall be for
Parent's account. Sub shall remit to Parent within fifteen (15) days of the end
of each calendar month any and all amounts received by Sub in respect of the
Retained Receivables, together with a written report for such month specifying
the amounts paid and the Person from whom payment was made, as well as any other
supporting documentation reasonably requested by Parent. The payment by an
account debtor shall be applied to the Retained Receivable of such account
debtor in inverse order of aging, commencing with the oldest invoice, unless the
account debtor's payment specifically identifies the Retained Receivable for
which such payment is being made. Notwithstanding the foregoing, nothing
contained in this Section 7.7 shall be construed to grant Parent any right with
respect to any receivables accrued in connection with Sub's operation of the Sub
Business on or after the Effective Date.
16
Section 7.8 Legend on Sub Shares. Parent, on behalf of ADLI (or such other
--------------------
member of the Parent Group may hold the Sub Shares), acknowledges and agrees
that each certificate representing the Sub Shares will bear the following legend
or one substantially similar thereto:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"), and may not
be offered, sold, transferred, hypothecated or otherwise assigned except
pursuant to (1) a registration statement with respect to such securities which
is effective under the Act or (2) an available exemption from such registration
under the Act."
Section 7.9 Supplies and Documents. Sub shall have the right to use
----------------------
existing supplies and documents (including without limitation invoices, purchase
orders, forms, labels, shipping materials, catalogues, sales brochures,
operating manuals, instructional documents and similar materials, and
advertising material) which have imprinted thereon the name "Xxxxxx X. Xxxxxx"
or trademarks, logotypes or variations comprising the name "Xxxxxx X. Xxxxxx"
for a period not to exceed six (6) months following the IPO Closing Date;
provided, however, that Sub agrees (a) to use only such supplies and documents
-------- -------
existing in inventory as of the Effective Date, (b) to conspicuously state on
such supplies and documents when used that they are not documents of Sub and (c)
not to order or utilize in any manner any additional supplies and documents
containing the name "Xxxxxx X. Xxxxxx." The foregoing shall be subject to and
shall not in any way modify the provisions of the Intellectual Property
Agreement.
Section 8. GENERAL COVENANTS REGARDING INFORMATION, SERVICES, CONFIDENTIALITY,
-------------------------------------------------------------------
NON-COMPETITION AND VOTING.
--------------------------
Section 8.1 Generally. Each of Parent and Sub agrees to provide, or cause
---------
the members of its Group to provide, to each other, at any time before or after
the Effective Date, as soon as reasonably practicable after written request
therefor, any Information in the possession or under the control of such party
that the requesting party reasonably needs (i) to comply with reporting,
disclosure, filing or other requirements imposed on the requesting party
(including under applicable securities laws) by a Government Authority having
jurisdiction over the requesting party, (ii) for use in any other judicial
regulatory, administrative or other proceeding or in order to satisfy audit,
accounting, claims, regulatory, litigation or other similar requirements, (iii)
to comply with its obligations under this Agreement or any Ancillary Agreement
or (iv) in connection with the ongoing businesses of Parent or Sub, as the case
may be; provided, however, that in the event that any party determines that any
-------- -------
such provision of Information could be commercially detrimental, violate any law
or agreement, or waive any attorney-client privilege, the parties shall take all
reasonable measures to permit the compliance with such obligations in a manner
that avoids any such harm or consequence.
Section 8.2 Internal Accounting Controls; Financial Information. After
---------------------------------------------------
the Effective Date, (i) each party shall maintain in effect at its own cost and
expense adequate systems and controls for its business to the extent necessary
to enable the other party to satisfy its reporting, accounting, audit and other
obligations, and (ii) each party shall provide, or cause its Group to provide,
to the other party (and the members of its Group) in such form as such
requesting party shall request, at no charge to the requesting party, all
financial and other data
17
and information as the requesting party determines necessary or advisable in
order to prepare its financial statements and reports or filings with any
Governmental Authority.
Section 8.3 Ownership of Information. Any Information owned by a party
------------------------
that is provided to a requesting party pursuant to this Section 8 shall be
deemed to remain the property of the providing party. Unless specifically set
forth herein, nothing contained in this Agreement shall be construed as granting
or conferring rights of license or otherwise in any such Information.
Section 8.4 Record Retention. To facilitate the possible exchange of
----------------
Information pursuant to this Section 8 and other provisions of this Agreement
after the Effective Date, each party agrees to use its reasonable commercial
efforts to retain all Information in its respective possession or control on the
Effective Date substantially in accordance with the policies of Parent as in
effect on the Effective Date. However, except as set forth in the Tax
Allocation Agreement, at any time after the Effective Date, each party may amend
its respective record retention policies at such party's discretion; provided,
--------
however, that if a party desires to effect the amendment within three (3) years
-------
after the IPO Closing Date, the amending party must give thirty (30) days prior
written notice of such change in the policy to the other party to this
Agreement.
Section 8.5 Destruction. No party will destroy, or permit any member of
-----------
its Group to destroy, any Information that exists on the Effective Date (other
than Information that is permitted to be destroyed under the current record
retention policies of Parent and that falls under the categories listed in
Section 8.1) without first using its reasonable commercial efforts to notify the
other party of the proposed destruction and giving the other party the
opportunity to take possession of such Information prior to such destruction.
Section 8.6 Limitation of Liability. No party shall have any liability to
-----------------------
any other party in the event that any Information exchanged or provided pursuant
to this Section 8 is found to be inaccurate, in the absence of gross negligence
or willful misconduct by the party providing such Information. No party shall
have any liability to any other party if any Information is destroyed or lost
after reasonable commercial efforts by such party to comply with the provisions
of Section 8.4.
Section 8.7 Other Agreements Providing for Exchange of Information. The
------------------------------------------------------
rights and obligations granted under this Section 8 are subject to any specific
limitations, qualifications or additional provisions on the sharing, exchange or
confidential treatment of Information set forth in this Agreement and any
Ancillary Agreement.
Section 8.8 Production of Witnesses; Records; Cooperation. After the
---------------------------------------------
Effective Date, except in the case of a legal or other proceeding by one party
against another party (which shall be governed by such discovery rules as may be
applicable under Section 11 or otherwise), each party hereto shall use its
reasonable commercial efforts to make available to each other party, upon
written request, the former, current and future directors, officers, employees,
other personnel and agents of such party as witnesses and any books, records or
other documents within its control or which it otherwise has the ability to make
available, to the extent that any such person (giving consideration to business
demands of such directors, officers, employees, other personnel and agents) or
books, records or other documents may reasonably be required in
18
connection with Actions in which the requesting party may from time to time be
involved, regardless of whether such legal, administrative or other proceeding
is a matter with respect to which indemnification may be sought hereunder. The
requesting party shall bear all costs and expenses in connection therewith.
Section 8.9 Confidentiality.
---------------
Section 8.9.1 Each of Parent and Sub shall, and shall use its best
efforts to cause the members of its Group and each of their respective officers,
employees, agents, consultants, advisors and Affiliates to, hold, in strict
confidence and not disclose to another Person, except as provided herein or
unless compelled to disclose by judicial or administrative process or, in the
opinion of counsel (which may be in-house counsel), by other requirements of
law, confidential information concerning the other party.
Section 8.9.2 For purposes of this Section 8.9, confidential
information about a particular party (referred to herein as the "Disclosing
Party") shall mean information known by the other party (referred to herein as
the "Receiving Party") on the Effective Date and reasonably understood by the
receiving party to be confidential and related to the disclosing party's
business interests, or disclosed confidentially by the disclosing party to the
receiving party after the Effective Date under the terms and for the purposes of
this Agreement or any of the Ancillary Agreements except for: (a) information
which is or becomes generally available to the public other than as a result of
a disclosure by the Disclosing Party; (b) information learned by the Receiving
Party on a non-confidential basis for the first time after the Effective Date,
but prior to any disclosure by the Disclosing Party; (c) information developed
by the Receiving Party independent of any confidential information of the
Disclosing Party which is known by the receiving party on the Date or disclosed
by the Disclosing Party thereafter; and (d) information which becomes available
to the Receiving Party on a non-confidential basis from a source other than the
Disclosing Party if such source was not subject to any prohibition against
transmitting the information to the Receiving Party.
Section 8.9.3 Each party shall protect confidential information of
the other party by using the same degree of care, but no less than a reasonable
degree of care, to prevent the unauthorized disclosure of the other party's
confidential information as the party uses to protect its own confidential
information of a like nature.
Section 8.9.4 Each party shall use its best efforts to insure that
the members of its Group and all of its and their officers, employees, agents,
consultants, advisors and Affiliates agree to be bound by the foregoing
restrictions on use and disclosure of confidential information as a condition to
receiving such information; provided, that such party will be responsible for
--------
any breach of such confidentiality provisions by any such person.
Section 8.10 Privileged Matters.
------------------
Section 8.10.1 Parent and Sub agree to maintain, preserve and assert
all privileges that either party may have, including, without limitation, any
privilege or protection arising under or relating to any attorney-client or
accountant-client relationship that existed prior to the Effective Date
("Privilege" or "Privileges"). Parent and Sub shall be entitled in perpetuity
to
19
require the assertion or decide whether to consent to the waiver of any and all
Privileges which, in the case of Sub, relate to the Sub Business and, in the
case of Parent, relate to the Retained Business. Parent and Sub shall each use
the same degree of care as it would with respect to itself so as not to waive-
any Privilege which could be asserted by the other party under applicable law,
without the prior written consent of the other party. The rights and obligations
created by this Section 8.10 shall apply to all information as to which, but for
the Reorganization, Parent or Sub would have been entitled to assert or did
assert the protection of a Privilege ("Privileged Information"), including, but
not limited to, (a) all information generated prior to the Effective Date but
which, after the Reorganization, is in the possession of the other party or its
Group, (b) all communications subject to a Privilege occurring prior to the
Effective Date between counsel for Parent and any individual who, at the time of
the communication, was an employee of Parent, regardless of whether such
employee is or becomes an employee of Sub, and (c) all information generated,
received or arising after the Effective Date that refers or relates to
Privileged Information generated, received or arising prior to the Effective
Date.
Section 8.10.2 Upon the receipt by either party of any subpoena,
discovery or other request which arguably calls for production or disclosure of
Privileged Information of the other party and whenever either party obtains
knowledge that any current or former employee of such party has received any
subpoena, discovery or other request which arguably calls of the production or
disclosure of Privileged Information of the other party, such party shall
promptly notify the other party of the existence of the request and shall
provide the other party with a reasonable opportunity to review the information
and to assert any rights it may have under this Section 8.10 or otherwise to
prevent the production or disclosure of Privileged Information. Neither party
will produce or disclose any information covered by a Privilege of the other
party under this Section 8.10 unless (a) the other party has provided its
express written consent to such production or disclosure or (b) a court of
competent jurisdiction has entered a final, non-appealable order finding that
the information is not entitled to protection under any applicable Privilege.
Section 8.10.3 Parent's transfer of Information to Sub, and each
party's agreement to permit the other party to possess Privileged Information
occurring or generated prior to the Effective Date, are made in reliance on each
party's agreement, as set forth in this Section 8.10, to maintain the
confidentiality of Privileged Information and to maintain, preserve and assert
all applicable Privileges. The access to information granted or permitted by
this Agreement, the agreement to provide witnesses and individuals pursuant to
Section 8.8 hereof and transfer of Privileged Information to Sub pursuant to
this Agreement shall not be deemed a waiver of any Privilege that has been or
may be asserted under this Section 8.10 or otherwise. Nothing in this Agreement
shall operate to reduce, minimize or condition the rights granted to either
party in, or the obligations imposed upon either party by, this Section 8.10.
Section 8.11 Non-Competition and Non-Solicitation.
------------------------------------
Section 8.11.1 Parent covenants and agrees that it will not, and it will
cause each member of the Parent Group not to, for a period beginning on the
Effective Date and ending on the earlier of (a) the third anniversary of the
IPO Closing Date and (b) the date on which the Parent Group no longer own
shares of Sub Common Stock representing at least forty percent (40%) of the
total voting power of Sub (in either case, the "Termination Date"), directly or
20
indirectly, anywhere in the Restricted Area (i) engage or participate in any
activity in the Designated Industry, (ii) invest in, make loans to or assist
(whether as owner, part-owner, shareholder, partner, member, consultant, or in
any other capacity) any person or business whose activities, products or
services are in the Designated Industry or (iii) employ directly or indirectly,
attempt to employ, recruit or otherwise solicit, induce or influence any
individual to leave an employment or service relationship with Sub or the other
members of the Sub Group. Notwithstanding the foregoing Parent and the members
of the Parent Group (i) may make passive investments in a competitive
enterprise, the shares of which are publicly traded, if the Parent Group's
aggregate investment in such enterprise constitutes less than five percent (5%)
of the equity ownership of such enterprise, (ii) may engage in transactions and
activities with Sub and the members of the Sub Group as contemplated by the
Ancillary Agreements, and (iii) may own, directly or indirectly up to one
hundred percent (100%) of the capital stock of Sub.
Without implied limitation, the foregoing covenant shall prohibit the
Parent Group from (i) hiring, attempting to hire or otherwise soliciting, for
itself or on behalf of any entity or person, any officer, director, consultant
or other employee of Sub or member of the Sub Group, and (ii) encouraging,
whether for itself or on behalf of any entity or person, any officer, director,
consultant or other employee to terminate his or her relationship or employment
with Sub or any member of the Sub Group.
Section 8.11.2 Sub covenants and agrees that it will not, and it will
cause each member of the Sub Group not to, for a period beginning of the
Effective Date and ending on the Termination Date, directly or indirectly,
employ, attempt to employ, recruit or otherwise solicit, induce or influence any
individual to leave an employment or service relationship with Parent or the
other members of the Parent Group.
Section 8.12 Election of Sub Directors. For so long as the Parent Group
-------------------------
owns in the aggregate at least forty percent (40%) of the total voting power of
Sub, Parent, on behalf of the Parent Group, hereby covenants and agrees that
whenever there shall be submitted to the stockholders of Sub nominees to serve
as members of the Board of Directors of Sub, the Parent Group shall vote all of
such shares of the voting Sub Common Stock to elect individuals to the Board of
Directors of Sub such that at least a majority of the Board of Directors of Sub
do not consist of individuals who are directors, officers or employees of Parent
or a member of the Parent Group.
Section 8.13 Mail and Other Communications. Each of Parent and Sub
-----------------------------
agrees to forward or direct (as appropriate) to the other party any mail or
other communications intended for such other party which is received by it.
Section 8.14 Order of Precedence. To the extent that the provisions of
-------------------
this Section 8 are inconsistent with the provisions of the Tax Allocation
Agreement with respect to the subject matter thereof, the provisions of the Tax
Allocation Agreement shall control.
Section 9 EMPLOYEE MATTERS AND BENEFITS.
-----------------------------
Section 9.1 Employment. At the Effective Date, Sub shall offer employment
----------
to each Transferred Employee [at an annual compensation rate no less than such
Transferred Employee's
21
current annual compensation rate with Parent.] Following the Reorganization,
such compensation shall be subject to Sub's normal review procedures with
respect to compensation. Sub shall continue the status of a Transferred Employee
on leave of absence or short or long term disability absence, and shall recall,
reinstate or terminate the employment of such Transferred Employee in accordance
with the leave of absence policy applicable to the Transferred Employee that was
in effect when the Transferred Employee's leave of absence began. Anything
contained in this Section 9.1 to the contrary notwithstanding, Sub shall not be
obligated to employ any person who declines employment with Sub and such person
shall not be considered a Transferred Employee.
Section 9.2 Retirement Plans. As of the Effective Date, Sub may become a
----------------
participating employer in each of Parent's retirement plans with respect to its
employees and the employees of the members of the Sub Group collectively, ("Sub
Employees"). Sub, and each member of the Sub Group, may remain a participating
employer until the Parent Group ceases to own at least [fifty percent (50%)] in
the aggregate of Sub Common Stock. Sub shall be solely responsible for
contributions required under such plans for the Sub Employees from and after the
Effective Date, and Parent shall be solely responsible for contributions for
Transferred Employees accrued prior to the Effective Date, including any
unfunded liability under any defined benefit plan. Sub shall also be solely
responsible for its share of any administrative expenses under Parent's
retirement plans. Parent shall remain solely responsible for any stock
repurchase obligation under its retirement plans with respect to any Sub
Employee.
Section 9.3 Welfare Plans. As of the Effective Date, Sub may become a
-------------
participating employer in each of Parent's welfare and fringe benefit plans and
programs with respect to the Sub Employees. Sub, and each member of the Sub
Group, may remain a participating employer in each such plan or program until
Parent Group ceases to own at least [fifty percent (50%)] in the aggregate of
Sub Common Stock. Sub shall be solely responsible for contributions,
liabilities and obligations under such plans and programs for the Sub Employees
from and after the Effective Date, and Parent shall be solely responsible for
contributions, liabilities and obligations under such plans and programs for
Transferred Employees accrued prior to the Effective Date. Any Sub Employee who
retires from Sub while Sub is a participating employer of Parent's retiree
health plan and who meets the eligibility requirements for retiree health under
said plan may elect to remain in such plan through age 65, subject to payment of
all required premium payments.
Section 9.4 Other Liabilities and Obligations. [As of the Effective Date,
---------------------------------
Sub shall assume and be solely responsible for all liabilities and obligations
whatsoever of Parent with respect to claims made by or with respect to
Transferred Employees, relating to their employment by the Parent Group in
connection with the Sub Business not otherwise provided for in this Agreement,
including, without limitation, accrued holiday, vacation and other termination
(including severance) benefits. Parent shall be solely responsible for
salaries, wages and other incentive bonus compensation earned by Transferred
Employees but not paid before the Effective Date.] Without limiting the
foregoing, nothing in this Agreement or in the transactions contemplated hereby
shall be construed as giving any Transferred Employee any rights to termination
benefits (including severance) on account of the Reorganization. Sub shall,
with respect to any participation of the Sub Employees, assist Parent in the
administration of claims and benefits under the relevant plan and cooperate with
Parent and its auditors and benefits
22
administrators. In addition, the parties agree that, to the extent permitted by
applicable law, matters arising out of or resulting from foreign plans and non-
U.S.-related employment of Transferred Employees be handled in a manner which is
consistent with comparable U.S. matters as set forth herein.
Section 9.5 Preservation of Rights to Amend or Terminate Plans. No
--------------------------------------------------
provision of this Agreement, including, without limitation, the agreement of
Parent or Sub that it will make a contribution or payment to or under any plan
referred to herein for any period, shall be construed as a limitation on the
right of Parent or Sub to amend or terminate such plan which Parent or Sub would
otherwise have under the terms of such plan or otherwise.
Section 9.6 Reimbursement. Parent and Sub acknowledge that each may incur
-------------
costs and expenses (including, without limitation, contributions to plans and
the payment of insurance premiums) pursuant to any of the employee benefit,
welfare or compensation plans, programs or arrangements which are, as set forth
in this Agreement, the responsibility of the other party. Accordingly, Parent
and Sub agree to reimburse each other, as soon as practicable but in any event
within thirty (30) days of receipt from the other of appropriate verification,
for all such costs and expenses, except to the extent that such reimbursement
would be duplicative of the obligations of the parties set forth in the
Corporate Services Agreement.
Section 9.7 Stock Option Plans and Parent Stock Plans.
-----------------------------------------
Section 9.7.1 Parent shall cause the Parent Stock Option Plans and
Parent Stock Options to be interpreted so that employment of the Transferred
Employees by Sub and the other Sub Group members shall be treated as employment
with Parent for purposes of the Parent Stock Option Plans' provisions causing
outstanding Parent Stock Options to expire upon the termination of employment of
the Transferred Employees and for purposes of Parent Stock Options Plans'
provisions causing outstanding Parent Stock to be repurchased by Parent upon the
termination of employment of the Transferred Employees. Sub agrees to promptly
notify Parent of the termination of employment for any reason of each
Transferred Employee who is a holder of Parent Stock Options or who participates
in Parent Stock Plans for Parent's use in administering the Parent Stock Option
Plans and Parent Stock Plans.
Section 9.7.2 Any and all tax withholding and employment taxes
(including the paying over of such taxes to the government) and related
reporting required in connection with the exercise of a Parent Stock Option by
any Transferred Employee or in connection with the issuance of Parent Common
Stock under a Parent Stock Plan to any Transferred Employee shall be the
responsibility of Sub. Parent shall not be required to deliver any shares of
Parent Common Stock to any Transferred Employee until it shall have received
satisfactory evidence that the Transferred Employee has remitted all required
tax withholding to Sub. Sub shall hold Parent harmless against any employment
tax liabilities, including interest and penalties, asserted against Parent by
reason of any failure of Sub properly and timely to withhold and pay over, pay
or report any amounts described in this paragraph as being the responsibility of
Sub. Parent and Sub agree to share relevant information and otherwise cooperate
with respect to tax matters pertaining to Parent Stock Options or Parent Common
Stock issued under Parent Stock Plans, so that the employers' withholding,
reporting and employment tax payment obligations relating thereto are satisfied
and any tax benefits or liabilities associated therewith are properly allocated
23
between Parent and Sub. Parent shall remain solely responsible for any
repurchase obligations under the Parent Stock Plans and Parent Stock Option
Plans; provided, however, that such rights shall not arise until a Transferred
-------- -------
Employee ceases to be employed by Sub or a member of the Sub Group.
Section 10. INSURANCE.
---------
Section 10.1 General. Parent shall keep in effect all policies under the
-------
Parent Insurance Policies in effect as of the date hereof insuring the
Contributed Assets and operations of the Sub Business after the Effective Date
as set forth in the Corporate Services Agreement or any other Ancillary
Agreement, unless Sub shall have earlier obtained appropriate coverage and
notified Parent in writing to that effect.
Section 11. DISPUTE RESOLUTION.
------------------
Section 11.1 Negotiation and Binding Arbitration. In the event a
-----------------------------------
dispute, controversy or claim between Parent and Sub or any of their respective
Group members arises out of or relates to this Agreement, the Ancillary
Agreements (other than the Tax Allocation Agreement, which shall be governed by
the relevant provision of such agreement) or any other agreement entered into
pursuant hereto or thereto (collectively, a "Dispute"), Parent and Sub agree to
abide by the following procedures to resolve any such Dispute.
Section 11.2 Negotiation. In the event of a Dispute, the claiming party
------------
shall first give written notice to the other party, describing briefly the
nature of the Dispute and the remedies it is claiming. Each party shall then
select two of its Independent Directors to meet, no later than ten (10) days
after the receipt of such notice, and on such other occasions as determined by
such individuals to be necessary, to attempt in good faith to negotiate a
resolution of such Dispute. If the four (4) individuals do not mutually resolve
the Dispute on behalf of the partners within thirty (30) days of receipt of such
notice, the Dispute shall then be resolved in accordance with certain Section
11.3 below.
Section 11.3 Dispute Resolution. Any Dispute that is not resolved
------------------
pursuant to Section 11.2, shall be resolved solely and exclusively by binding
arbitration to be conducted before JAMS/Endispute, Inc. as its successor. The
arbitration shall be held in Boston, Massachusetts before a single arbitrator
and shall be conducted in accordance with the rules and regulations promulgated
by JAMS/Endispute, Inc. unless specifically modified herein.
The parties covenant and agree that the arbitration shall commence within
sixty (60) days of the date on which a written demand for arbitration is filed
by either Parent or Sub with JAMS/Endispute. In connection with the arbitration
proceeding, the arbitrator shall have the power to order the production of
documents by each party and any third-party witnesses; however, the arbitrator
shall not have the power to order the taking of depositions, the answering of
interrogatories or the response to requests for admission. In connection with
any arbitration, each party shall provide to the other, no later than seven
business days before the date of the arbitration, the identity of all persons
that may testify at the arbitration and a copy of all documents that may be
introduced at the arbitration or considered or used by a party's witness or
expert. The arbitrator's decision and award shall be made and delivered within
six (6) months of
24
the selection of the arbitrator and judgment on the award may be entered by any
court having competent jurisdiction. The arbitrator's decision shall set forth a
reasoned basis for any award of damages or finding of liability. The arbitrator
shall not have power to award damages in excess of actual compensatory damages
and shall not multiply actual damages or award punitive damages or any other
damages that are specifically excluded under this Agreement, and each party
hereby irrevocably waives any claim to such damages.
The parties covenant and agree that they will participate in the
arbitration in good faith and that they will share equally its costs except as
otherwise provided herein. This clause applies equally to requests for
temporary, preliminary or permanent injunctive relief, except that in the case
of temporary or preliminary injunctive relief any party may proceed in court
without prior arbitration for the limited purpose of avoiding immediate and
irreparable harm. The provisions of this Section 11.3 shall be enforceable in
any court of competent jurisdiction, and the parties shall bear their own costs
in the event of any proceeding to enforce this Agreement except as otherwise
provided herein. The arbitrator may in his or her discretion assess costs and
expenses (including the reasonable legal fees and expenses of the prevailing
party) against any party to a proceeding. Any party unsuccessfully refusing to
comply with an order of the arbitrators shall be liable for costs and expenses,
including attorneys' fees, incurred by the other party in enforcing the award.
Section 11.4 Consent to Jurisdiction. Each of Parent and Sub irrevocably
-----------------------
and unconditionally consents to the exclusive jurisdiction of JAMS/Endispute,
Inc. to resolve all Disputes between Parent and Sub or any member of their
respective Group arising out of or relating to this Agreement, the Ancillary
Agreements or any other agreement entered into pursuant hereto or thereto, and
further consents to the jurisdiction of the courts of the Commonwealth of
Massachusetts for the purposes of enforcing the arbitration provisions of
Section 11.1 of this Agreement. Each party further irrevocably waives any
objection to proceeding before JAMS/Endispute based upon lack of personal
jurisdiction or to the laying of venue and further irrevocably and
unconditionally waives and agrees not to make a claim in any court that
arbitration before JAMS/Endispute, Inc. has been brought in an inconvenient
forum.
Section 12. MISCELLANEOUS.
-------------
Section 12.1 Amendment and Waiver. The provisions of this Agreement,
--------------------
including, without limitation, this Section, may not be waived and this
Agreement shall not be amended or modified except in accordance with this
Section. The provisions of this Agreement may be waived only by the written
consent of a majority of the Independent Directors of the party which is the
beneficiary of the particular provision being waived. No failure or delay by
any party in exercising any right or remedy hereunder shall operate as a waiver
thereof, and a waiver of a particular right or remedy on one occasion shall not
be deemed a waiver of any other right or remedy or a waiver on any subsequent
occasion. The provisions of this Agreement may be amended, modified or
supplemented only by the written consent of a majority of the Independent
Directors of each of the parties.
Section 12.2 Expenses. Except as otherwise provided in this Agreement,
--------
any Ancillary Agreement or any other agreement being entered into by Parent and
Sub and their respective Group members pursuant to this Agreement, Sub shall pay
all investment banking, legal,
25
accounting, printing, governmental filing, listing, distribution agent and
similar fees, costs and expenses incurred in connection with the Reorganization,
the IPO (whether or not payable as of the Effective Date) and the transactions
contemplated by this Agreement. To the extent any of the foregoing expenses have
previously been paid or incurred by Parent, Sub shall reimburse Parent for all
such expenses, including the expenses directly incurred by Parent in connection
with the services Parent and its employees and agents performed in furtherance
of any of the foregoing.
Section 12.3 Notices. All notices, requests, demands and other
-------
communications under this Agreement shall be in writing and shall be deemed to
have been duly given (a) on the date of service if served personally on the
party to whom notice is given, (b) on the day of transmission if sent via
facsimile transmission to the facsimile number given below, provided that
telephonic confirmation of receipt is obtained promptly after completion of the
transmission, (c) on the business day after delivery to a nationally recognized
overnight courier service or the Express Mail service maintained by the United
States Postal Service, provided receipt of delivery has been confirmed, or (d)
on the fifth day after mailing, provided receipt of delivery is confirmed, if
mailed to the party to whom notice is to be given, by first class mail,
registered or certified, postage prepaid, properly addressed and return receipt
requested, to the party as follows:
If to Parent, at: Xxxxxx X. Xxxxxx, Inc.
Xxxxx Xxxx
Xxxxx 0000
Xxxxxxxxx, XX 00000
Facsimile: (000)000-0000
Attn: President
with a copy to:
and:
If to Sub, at: c-quential, Inc.
Xxxxxxxxxx 000
XX-0000 Xxxxxxx, Xxxxxx
Attention: President
Facsimile No.:
with a copy to:
and: Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
26
Facsimile: (000)000-0000
Attn: Xxxxxx X. Cable, P.C.
Either party may change its address for receiving notices by written notice
given to the other party in the manner provided above.
Section 12.4 [Intentionally Omitted]
Section 12.5 Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of, and be binding upon and enforceable against the respective
successors and assigns of the parties hereto, provided that this Agreement may
not be assigned by either party without the prior written consent of the other
party, and any attempt to assign any rights or obligations hereunder without
such consent shall be void.
Section 12.6 Entire Agreement, Parties in Interest. This Agreement
-------------------------------------
(including the schedules, annexes and exhibits hereto and the Ancillary
Agreements) comprises the entire agreement between the parties hereto as to the
subject matter hereof and supersedes all prior agreements and understandings
between them relating thereto and, except as provided in Section 6.2 hereof, is
not intended to confer upon any Person other than the parties hereto (including
the members of each party's Group and their respective successors and permitted
assigns) any rights or remedies hereunder.
Section 12.7 Severability. If any term or provision of this Agreement or
------------
the application thereof to any person or circumstance shall to any extent be
invalid or unenforceable, the remainder of this Agreement or the application of
such terms or provisions to persons or circumstances other than those as to
which it is invalid or unenforceable shall not be affected thereby and each term
and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
Section 12.8 Captions. Captions and headings are supplied herein for
--------
convenience only and shall not be deemed a part of this Agreement for any
purpose.
Section 12.9 Annexes, Etc. The Annexes, Schedules and Exhibits shall be
------------
construed with and as part of this Agreement to the same extent as if the same
had been set forth verbatim herein.
Section 12.10 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the internal substantive laws of the Commonwealth
of Massachusetts, without giving effect to the principles of conflicts of laws
thereof.
Section 12.11 Counterparts. This Agreement may be executed in several
------------
counterparts, and all counterparts so executed shall constitute one agreement,
binding upon the parties hereto, notwithstanding that the parties are not
signatory to the same counterpart.
[Signatures on next page]
27
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their authorized representatives as an agreement under seal, all as
of the day and year first written above.
XXXXXX X. XXXXXX, INC., a Massachusetts
corporation
By:______________________________________________
Name:
Title:
C-QUENTIAL, INC., a Delaware corporation
By:______________________________________________
Name:
Title:
28
ANNEX I
-------
CONTRIBUTED ASSETS
------------------
Contributed Assets: the following assets owned by Parent relating
principally to the Sub Business as of the Effective Date, as follows:
(a) all of Parent's right and interest in, to, under and relating to all
agreements, contracts and leases, whether written or oral, of Parent relating to
the Sub Business;
(b) all of Parent's right and interest in, to and under all outstanding
Bids, Quotations and Proposals pertaining to the Sub Business to the extent that
such Bids, Quotations and Proposals can be transferred or assigned; all of
Parent's right and interest in, to and under all contracts and agreements
awarded to Parent before or after the Effective Date pertaining to the Sub
Business, as assignee if those contracts are assignable and assigned or
transferred by operation of law; or as a right to payment by Parent to Sub of a
subcontract price equal to the monies, rights and other considerations received
by Parent under contracts and agreements awarded to Parent before or after the
Effective Date pertaining to the Sub Business if assignment of those contracts
and/or agreements and/or the proceeds therefrom is prohibited by law or not
otherwise obtained;
(c) all rights and interests of Parent in and with respect to the patents,
trademarks, copyrights, trade secrets, know-how and other intellectual property
concerning the Sub Business to the extent, but only to the extent, such rights
are being licensed to Sub pursuant to, and in accordance with, the Intellectual
Property Agreement;
(d) all of the Books and Records (or copies thereof);
(e) all permits and licenses held by Parent which are transferable and
which relate principally to the Sub Business;
(f) all intangible assets, other than intellectual property rights, of
Parent used in the Sub Business, including customer lists, marketing and other
data, and goodwill; and
(g) all trucks, automobiles and other vehicles owned by Parent which are
used in the Sub Business and are identified on Appendix I attached hereto.
----------
29
ANNEX II
--------
ASSUMED LIABILITIES
-------------------
Assumed Liabilities: all Liabilities and obligations relating to or
arising from the operation of the Sub Business (other than the Retained
Liabilities), whether before or after the Effective Date, including but not
limited to:
(a) all Liabilities and obligations of Parent pursuant to, under or
relating to all agreements, contracts and leases, whether written or oral, of
Parent relating to the Sub Business and the Contributed Assets;
(b) all Liabilities under all outstanding Bids, Quotations and Proposals
pertaining to the Sub Business to the extent such Bids, Quotations and Proposals
can be transferred or assigned; and all contracts awarded to Parent before or
after the Effective Date pertaining to the Sub Business, as (i) an assignee if
those contracts are assignable and assigned or transferred by operation of law,
or (ii) subcontractor if assignment of those contracts and/or proceeds therefrom
is prohibited by law or not otherwise obtained;
(c) all Liabilities and obligations to or with respect to Transferred
Employees not specifically retained by Parent pursuant to the Agreement,
including, without limitation, withholding, payroll and employment taxes
pursuant to Section 9 of the Agreement;
(d) the Liabilities and obligations being assumed by or agreed to be
performed by Sub pursuant to any other agreement being entered into in
connection with the Agreement, including, without limitation, the Ancillary
Agreements; and
(e) the Assumed Debt Obligations.
30
ANNEX III
---------
Plan
31
