1
EXHIBIT 10.2
LIMITED LICENSE AGREEMENT
This Limited License Agreement (the "Agreement"), dated as of
_________, 2001, between KPMG CONSULTING, INC., a Delaware corporation, its
subsidiaries, successors and assigns ("Licensee"), and KPMG INTERNATIONAL
(formerly KLYNVELD PEAT MARWICK GOERDELER), a verein (association) organised and
existing under the laws of Switzerland, its predecessors, successors and assigns
("KPMG International"), to become effective only if there is, and as of the date
of, an initial public offering of common stock of Licensee (the "Effective
Date").
WITNESSETH:
WHEREAS, the parties hereto recognise the following
DEFINITIONS OF TERMS used in the Agreement:
COMPONENT LICENSE AGREEMENT means the agreement signed by the four founding
firms of KPMG International, KPMG International, Peat Marwick International and
Klynveld Main Goerdeler governing the ownership and use of the component parts
of the names "KPMG", "KPMG International" and "Klynveld Peat Marwick Goerdeler",
which came into effect on 1 April 1987.
INTERNATIONAL BOARD means the International Board of KPMG International as set
forth in the Statutes of Association of KPMG International.
INTERNATIONAL COUNCIL means the International Council of KPMG International as
set forth in the Statutes of Association of KPMG International.
INTERNATIONAL HEADQUARTERS means the International Headquarters of KPMG
International situated in Amsterdam, The Netherlands as set forth in the
Statutes of Association of KPMG International.
LICENSE AGREEMENT means the standard License Agreement between KPMG
International and a Member Firm for the purpose of controlling the use of the
Service Marks.
1
2
MEMBER FIRM means any national or regional professional services firm, including
all of its Subsidiaries as defined in the Agreement, which has been admitted as
a member firm of KPMG International by the International Council and has signed
the Statutes of Association of KPMG International (or a Signature Addendum to
such Statutes), a License Agreement and a Membership Agreement. Every Member
Firm shall be a full scope Member Firm - which means a Member Firm which offers
and has the capability to provide and deliver services to national and
international clients in all areas of KPMG International's core services as may
be designated as core services from time to time by the International Council,
unless otherwise approved by the International Council. With the specific
approval of the International Council, a Member Firm or a Subsidiary as defined
herein may be a LIMITED SCOPE FIRM, which means a firm which offers and has the
capability to provide and deliver services to national and international clients
in one or more but not all areas of such core services.
MEMBERSHIP AGREEMENT means the standard Membership Agreement between KPMG
International and a Member Firm for the purpose of defining the exclusive
relationship of the Member Firm and its Subsidiaries with KPMG International.
OPERATING TERRITORIES means certain agreed-upon territories where Licensee shall
be permitted by the Agreement to utilise the KPMG name and logo and other
Service Marks, as more fully defined in Section 1d., below.
SERVICE MARKS means the names and marks set out in Exhibit A hereto.
STATUTES or KPMG STATUTES means the Statutes of Association of KPMG
International.
SUBSIDIARY means any firm, division, practice, entity or operation which is
wholly or dominantly owned, and/or managed and controlled by a Member Firm, and
which therefore is not required to sign a separate License Agreement or
Membership Agreement.
WHEREAS, KPMG International has the sole authority to license
the names "KPMG", "KPMG International" and "Klynveld Peat Marwick Goerdeler" and
the Service Marks set forth in Exhibit A hereto; that is, marks and names which
use any one or more of the component names "KLYNVELD", "PEAT", "MARWICK" or
"GOERDELER", alone or as initials (i.e., "KPMG") or in combination with other
names or marks set forth in Exhibit A hereto (which names and marks are referred
to collectively as the "Service Marks");
2
3
WHEREAS, Deutsche Treuhand-Gesellschaft Aktiengesellschaft,
Wirtschaftspruefungsgesellschaft (now KPMG Deutsche Treuhand-Gesellschaft AG),
KMG Klynveld Kraayenhof & Co. (now KPMG Holding N.V.), Peat Marwick Main & Co.
(now KPMG LLP), Peat Marwick McLintock (now KPMG), Klynveld Peat Marwick
Goerdeler (now KPMG International), Peat Marwick International, a partnership,
and Klynveld Main Goerdeler, an association, have entered into the Component
License Agreement, effective as of 1 April 1987;
WHEREAS, Licensee wishes to utilise the KPMG name and logo and
other Service Marks owned and/or licensed by KPMG International in the Operating
Territories;
WHEREAS, Licensee wishes to use the Service Marks in
connection with the providing and advertising of services in the field of
management consulting (including, without limitation, systems integration and
integrated solutions services), and on products related to such services (which
trademark uses are intended to be included within the definition of the Service
Marks as used herein) in the Operating Territories;
WHEREAS, Licensee has been the subject of appropriate due
diligence procedures by KPMG International and/or Member Firms to determine its
suitability as a licensee;
WHEREAS, KPMG International and Licensee wish to ensure the
greatest possible protection of the Service Marks and recognise that effective
defense of the Service Marks makes it desirable that the Service Marks be
subject to uniform policies of protection and quality standards;
WHEREAS, Licensee recognises that the value and goodwill of
the Service Marks will be protected and enhanced by the Agreement; and
WHEREAS, the parties recognise that Licensee is not, and does
not become by entering into the Agreement, a Member Firm, Limited Scope Firm or
Subsidiary, but is and remains an independent professional firm.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants hereinafter set forth, the parties agree as follows:
1. Grant of License
a. Licensee acknowledges that KPMG International has the sole
authority to license to Licensee the use of the names "KPMG",
"KPMG International" and "Klynveld Peat
3
4
Marwick Goerdeler" and the Service Marks set forth in Exhibit
A hereto, and that this right to license derives exclusively
from the KPMG Statutes and the Component License Agreement.
b. Upon the terms and conditions hereinafter set forth, KPMG
International hereby grants to Licensee, and Licensee hereby
accepts, the right, license and privilege to use the Service
Marks in connection with Licensee's providing and advertising
of services in the field of management consulting (including,
without limitation, systems integration and integrated
solutions services), and on products related to such services,
in, and only in, the Operating Territories. Such grant shall
not be exclusive to Licensee (except that KPMG International
shall not make such a grant to any other person, firm or
entity in the Operating Territories, other than a Member Firm
in the Operating Territories); provided, however, that
Licensee shall have the exclusive, worldwide right to the name
"KPMG Consulting, Inc." and "KPMG Consulting, Incorporated,"
subject to the provisions of Section 1(e). The grant of the
license to use the Service Marks shall not include any right
of Licensee to enter into any sublicense agreements related to
the Service Marks without the express written consent of KPMG
International, except in the case of a subsidiary or other
entity directly or indirectly controlled by Licensee. In
addition, Licensee shall only utilise the name "KPMG" in
immediate conjunction with "Consulting" or take other
necessary steps in order to ensure that Licensee does not
represent that it is the same as or is affiliated with KPMG
LLP or KPMG International, or is governed by or affiliated
with KPMG LLP or KPMG International, including, but not
limited to, in Licensee's advertisements, press releases, name
plates or other publications. KPMG International shall use its
best efforts to cause each Member Firm that uses the Service
Marks to take all necessary steps to distinguish itself from
Licensee and avoid representing that it is the same firm as or
is affiliated with Licensee.
c. The limited license hereby granted shall be effective as of
the Effective Date and shall continue for four (4) years
unless earlier terminated in accordance with the provisions of
Section 4 below.
d. The limited license to use the Service Marks hereby granted
shall only apply to the Licensee's Operating Territories. The
Operating Territories shall initially be comprised of those
territories of Member Firms, Limited Scope Firms and
Subsidiaries whose consulting practices have joined or have
been acquired by Licensee as of or prior to the Effective
Date. If Licensee from time to time acquires consulting
practices of other
4
5
Member Firms, Limited Scope Firms or Subsidiaries at later
dates, the territories of those acquired consulting practices
shall at such dates become a part of the Operating
Territories.
e. Licensee shall not compete, directly or indirectly, under any
name, with any Member Firm outside of the Licensee's Operating
Territories during the Noncompetition Period without the
express written consent of the subject Member Firm(s). For the
avoidance of doubt, if Licensee is providing consulting
services and products on a project primarily based in the
Operating Territories which it services, this paragraph shall
not preclude Licensee from engaging any person, firm or entity
which is not a Member Firm to deliver such consulting services
and products for such portion of the services or products to
be provided on the project outside of the Operating
Territories. The preceding sentence shall not be used as a
means to circumvent the purposes of this paragraph. As used in
this Agreement, "Noncompetition Period" means the period which
is the later of (i) December 31, 2001 and (ii) six (6) months
following the receipt of the termination notice by the Chief
Executive Officer of KPMG International as contemplated by
Section 4(b) below; provided, however, that in no event shall
the Noncompetition Period extend beyond the fourth anniversary
of the Effective Date.
f. Neither KPMG International (to the extent that it might in the
future be permitted by law to conduct operations) nor any of
its Member Firms shall compete, directly or indirectly, with
Licensee in the Licensee's Operating Territories during the
Noncompetition Period, without the express written consent of
Licensee. For the avoidance of doubt, this paragraph shall not
preclude KPMG International (to the extent that it might in
the future be permitted by law to conduct operations) or its
Member Firms from engaging any person, firm or entity which is
not a Member Firm to deliver consulting services and products
in the Operating Territories, to the extent that such party is
providing consulting services and products on a project
primarily based in their respective exclusive territories
outside of the Operating Territories, if such project also
includes services to be provided in the Operating Territories.
The preceding sentence shall not be used as a means to
circumvent the purposes of this paragraph.
g. The parties hereto acknowledge and agree that Licensee and the
Member Firms may refer work to one another and may enter into
contractor/subcontractor relationships, provided that the
Licensee and the Member Firms shall have no legal obligations
to do so and that
5
6
any such referrals or relationships shall be determined on a
case by case basis, subject to individual circumstances and
based on reasonable commercial terms. In no event shall any
referral fees be paid between the Licensee and any Member
Firm.
h. During the Noncompetition Period, Licensee shall not solicit
or hire any partners or employees of any Member Firm, and no
Member Firm shall, and KPMG International shall ensure that no
Member Firm shall, solicit or hire any employees of Licensee
without the express written consent of the current employer.
i. Licensee, KPMG International and the Member Firms shall
maintain their respective rights to their respective
intellectual properties. The license or transfer of any
intellectual property between or among Licensee, KPMG
International and the Member Firms will be determined on a
case by case basis, with the pricing and other terms to be
reflected in mutually negotiated contracts based upon
reasonable commercial terms.
2. Protection of Title and Registration
a. Licensee agrees that it will not challenge the title or any
rights of KPMG International or any Member Firm, Limited Scope
Firm, or Subsidiary in and to the names "KPMG", "KPMG
International" and "Klynveld Peat Marwick Goerdeler" and the
Service Marks set forth in Exhibit A hereto, or make any claim
or take any action adverse to KPMG International's or any
Member Firm's, Limited Scope Firm's, or Subsidiary's rights
therein, or challenge the validity of the Agreement.
b. Licensee agrees, both during and after the term of the
Agreement, to co-operate fully and in good faith with KPMG
International and to execute such documents as KPMG
International reasonably requests for the purpose of securing,
preserving, defending, and protecting KPMG International's
rights in and to the names "KPMG", "KPMG International" and
"Klynveld Peat Marwick Goerdeler" and the Service Marks.
c. Licensee shall promptly notify KPMG International in writing
of any infringement, imitation, passing off or use of the
Service Marks or any confusingly similar marks by any third
party which comes to its attention. KPMG International and
Licensee shall each have the right to bring a proceeding
against any such third parties to enforce their rights
hereunder.
6
7
d. International Headquarters shall obtain and maintain
registrations for the Service Marks used by Licensee. This
obligation shall apply to any and all Service Marks used by
Licensee. Licensee shall obtain and maintain registrations for
its intellectual property, including names or marks used in
combination with, or variations on, the Service Marks.
e. If Licensee uses the Service Marks, Licensee shall use the
name "KPMG" and the Service Marks in accordance with the
provisions of the KPMG Image System regarding the legal and
communicative name of License and the use of the letters
"KPMG" and the KPMG logo on its stationery and other
documents.
3. Terms of Payment
Licensee has paid to KPMG International the sum of US$10.00 and KPMG
International hereby acknowledges receipt thereof as full payment for
this limited license. The parties also acknowledge the mutual
undertakings made herein as consideration for the Agreement.
4. Term of the Agreement and Termination
a. Unless earlier terminated pursuant to this Section 4, the term
of the Agreement shall be for four (4) years from the
Effective Date.
b. Licensee may terminate the Agreement at any time by six months
written notice to the Chief Executive Officer of KPMG
International, but in no event can the Licensee change its
name before June 30, 2001. The commencement of the period of
notice shall be the date of receipt by the Chief Executive
Officer of such written notice.
c. The International Board may terminate the Agreement at any
time if Licensee, in the International Board's reasonable,
good faith judgment, has violated the material terms and
conditions of the Agreement; provided, however, that the
International Board may exercise this termination right only
if it has delivered to the Chief Executive Officer of Licensee
a written notice and description of such violation and such
violation has not been cured during the ninety (90) day period
following such notice.
d. Upon the earlier to occur of (i) a Change in Control of
Licensee or (ii) the entry by Licensee into a definitive
agreement for a Change in Control, Licensee shall provide a
written notice to the Chief Executive Officer of KPMG
International. Upon the receipt of
7
8
such notice, KPMG International shall have the right,
exercisable for the thirty (30) day period following the
receipt of such notice, to terminate this Agreement if in the
reasonable, good faith judgment of the International Board the
Change in Control of Licensee will have a material detrimental
effect on KPMG International and/or any Member Firm. If KPMG
International determines to terminate this Agreement, it shall
provide a reasonable transition period during which Licensee
shall discontinue the use of the Service Marks. KPMG
International agrees that neither it nor any Member Firm shall
receive any consideration in exchange for waiving any
termination right in this Section 4(d). "Change in Control"
means:
(i) a sale or transfer to a non-affiliated third party of
all or substantially all of the assets of Licensee on
a consolidated basis in any transaction or series of
related transactions;
(ii) any merger, consolidation or reorganisation to which
Licensee is a party, except for a merger,
consolidation or reorganisation in which Licensee is
the surviving corporation and, after giving effect to
such merger, consolidation or reorganisation, the
holders of Licensee's outstanding equity (on a fully
diluted basis) immediately prior to the merger,
consolidation or reorganisation will own in the
aggregate immediately following the merger,
consolidation or reorganisation Licensee's
outstanding equity (on a fully diluted basis) either
(A) having the ordinary voting power to elect a
majority of the members of Licensee's Board of
Directors to be elected by the holders of its common
stock and any other class which votes together with
the common stock as a single class or (B)
representing at least 50% of the equity value of
Licensee as reasonably determined by the Board of
Directors; or
(iii) any person other than KPMG LLP or its affiliates
acquires beneficial ownership of 50% or more of the
outstanding equity of Licensee generally entitled to
vote on the election of directors.
e. The Agreement shall terminate immediately in the event that:
(i) Licensee dissolves or discontinues its business as a
going concern; or
(ii) A national government expropriates or nationalises
all or substantially all of the assets or business of
Licensee.
8
9
f. Upon termination of the Agreement:
(i) All rights of Licensee to use the Service Marks
granted under the Agreement shall revert and inure to
the benefit of KPMG International, subject to a
reasonable transition period in the case of a
termination pursuant to Section 4(d);
(ii) Licensee's right to continue using the Service Marks,
or any marks or names that are likely to cause
confusion therewith, shall immediately terminate, and
neither Licensee nor any of its partners or
shareholders or employees nor any successor firm or
entity shall use the Service Marks after the date of
termination, nor shall they register or use any
names, terms or trademarks constituting Service
Marks, without the prior written consent of KPMG
International, in each case subject to a reasonable
transition period in the case of a termination
pursuant to Section 4(d); and
(iii) KPMG International may take the necessary steps to
cancel any record of Licensee as a licensee of the
Service Marks. Licensee hereby agrees to execute any
documents which KPMG International may reasonably
require for that purpose.
g. For the twelve (12) month period following a termination of
this Agreement, KPMG International shall not, and shall use
its best efforts to cause the Member Firms not to, use the
name "KPMG Consulting" or similar variations in any territory
constituting part of the Operating Territories in effect at
the time of such termination.
h. In the event of a termination of the Agreement by KPMG
International in accordance with the terms of this Agreement,
Licensee shall have no right to any compensation from KPMG
International or any Member Firms, Limited Scope Firms, or
Subsidiaries.
i. Licensee shall have the right to immediately terminate this
Agreement in the event that KPMG International dissolves. The
parties agree that, after such dissolution, Licensee may only
retain those name and service xxxx xxxxxx law rights,
registrations, or applications therefor which do not derive
from grants received under the Agreement.
9
10
The parties specifically agree that, in the event of such
dissolution, they shall be restored, as nearly as possible, to
their positions before execution of the Agreement.
j. The agreements, representations, covenants and obligations set
forth in Sections l(e), l(f) and l(h) shall survive the
termination of this Agreement.
5. Applicable Law
The relationship between the parties to the Agreement shall be governed
by the terms and conditions set forth herein. Except to the extent that
the laws of Switzerland mandatorily govern this Agreement, this
Agreement shall be governed and construed in accordance with the
federal laws of the United States of America and the laws of the State
of New York; provided, however, that the validity of the Service Marks
in any jurisdiction shall be governed by the law of the jurisdiction in
which rights relating to the Service Marks are sought to be exercised.
6. Validity
a. The language of the Agreement and all documents, meetings and
proceedings relating thereto shall be English.
b. No modifications, amendments or supplements to the Agreement
shall be effective for any purpose unless duly recorded in
writing and signed by authorised representatives of Licensee
and KPMG International or their successors or assigns.
c. If any provision of the Agreement should be invalid or
inoperable, this shall not affect the validity of the
remaining provisions of the Agreement. The parties hereto
shall in such event use their best efforts to substitute for
any invalid or inoperable provision a valid or operable
arrangement which achieves results as nearly equivalent as
possible to the invalid or inoperable provision.
7. Relationship of Parties
a. Nothing contained herein shall be construed to place the
parties in the relationship of agents, partners or joint
venturers, and Licensee shall have no power to obligate or
bind KPMG International or any Member Firm, Limited Scope Firm
or Subsidiary in any manner whatsoever.
10
11
b. No provision of the Agreement shall be interpreted as having
the effect of placing the management of Licensee under the
control of KPMG International or any Member Firm, Limited
Scope Firm or Subsidiary.
8. No Assignment or Mortgage
The Agreement and all rights and duties hereunder are personal to
Licensee and shall not, without the written consent of KPMG
International, be assigned, mortgaged or otherwise encumbered by
Licensee or by operation of law.
9. Limited Rights of Direct Action by Four Member Firms
KPMG Deutsche Treuhand-Gesellschaft AG (Germany), KPMG SpA (Italy),
KPMG Holding NV (Netherlands), and KPMG (UK) (collectively, the "four
Member Firms") hereby agree to be fully bound by the terms and
conditions of Sections 1.f. and 1.h. above, and are subject to a direct
action by the Licensee for any violations thereof. Each of he four
Member Firms (in addition to KPMG International) is exclusively granted
a direct right of action against the Licensee solely with respect to
any violations of Sections 1.e., 1.h. and 1.i. above including, without
limitation, on behalf of that Member Firm itself and such other Member
Firm(s) in which it holds an equity interest. Such direct actions would
be governed by Section 5 above and Section 10 below. In no event shall
more than one action be brought with regard to a given violation.
10. Enforcement
Any controversy or claim arising out of or relating to this Agreement
shall be settled by arbitration pursuant to the Commercial Rules of the
American Arbitration Association and judgment on the award rendered by
the arbitration may be entered in any court in the United States having
jurisdiction thereof. The arbitration shall take place before a panel
of three arbitrators, which shall consist of one person selected by
each of the two sides to the dispute and the third person to be jointly
selected by the two arbitrators previously selected. The arbitration
proceeding shall be conducted in New York City, New York. The
arbitration panel shall have the authority to award any remedy or
relief that a court of competent jurisdiction could order or grant,
including, without limitation, the issuance of an injunction. However,
either party may, without inconsistency with this arbitration
provision, apply to any court having jurisdiction hereof and seek
interim provisional injunctive or other equitable relief until the
arbitration award is rendered or the controversy is
11
12
otherwise resolved. Except as necessary in court proceedings to enforce
this arbitration provision or an award rendered hereunder, or to obtain
interim relief, neither a party nor an arbitrator may disclose the
existence, content or results of any arbitration hereunder without the
prior written consent of both parties. The parties acknowledge that
this Agreement evidences a transaction involving interstate commerce.
Notwithstanding any choice of law provision included in this Agreement,
the United States Federal Arbitration Act shall govern the
interpretation and enforcement of this arbitration provision. Each of
the parties hereto irrevocably and unconditionally waives trial by jury
in any legal action or proceeding relating to the Agreement and any
counter-claims therein.
12
13
IN WITNESS WHEREOF, the parties have caused the Agreement to be duly executed as
of the day and year first above written.
KPMG CONSULTING, INC.
By:
---------------------------
Name:
-------------------------
Title:
------------------------
KPMG INTERNATIONAL
By:
---------------------------
Name:
-------------------------
Title:
------------------------
As to Section 9 only:
KPMG Deutsche Treuhand-Gesellschaft AG (Germany)
-----------------------------
KPMG SpA (Italy)
-----------------------------
KPMG Holding NV (Netherlands)
-----------------------------
KPMG (UK)
-----------------------------
13
