EXHIBIT 2.11
Indemnification and Insurance Matters Agreement
between
3COM CORPORATION
and
PALM, INC.
______________, 2000
TABLE OF CONTENTS
Page
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ARTICLE I. MUTUAL RELEASES; INDEMNIFICATION.................................................. 1
Section 1.1. Release of Pre-Closing Claims............................................... 1
Section 1.2. Indemnification by Palm..................................................... 2
Section 1.3. Indemnification by 3Com..................................................... 2
Section 1.4. Indemnification With Respect to Environmental Actions and Conditions........ 3
Section 1.5. Reductions for Insurance Proceeds and Other Recoveries...................... 4
Section 1.6. Procedures for Defense, Settlement and Indemnification of Third Party Claims
............................................................................ 4
Section 1.7. Additional Matters.......................................................... 5
Section 1.8. Survival of Indemnities..................................................... 6
ARTICLE II. INSURANCE MATTERS................................................................ 6
Section 2.1. Palm Insurance Coverage During the Transition Period........................ 6
Section 2.2. Cooperation and Agreement Not to Release Carriers........................... 7
Section 2.3. Palm Insurance Coverage After the Insurance Transition Period............... 7
Section 2.4. Responsibilities for Deductibles and/or Self-insured Obligations............ 7
Section 2.5. Procedures With Respect to Insured Palm Liabilities......................... 8
Section 2.6. Insufficient Limits of Liability for 3Com Liabilities and Palm Liabilities.. 8
Section 2.7. Cooperation................................................................. 8
Section 2.8. No Assignment or Waiver..................................................... 8
Section 2.9. No Liability................................................................ 8
Section 2.10. Additional or Alternate Insurance........................................... 9
Section 2.11. Further Agreements.......................................................... 9
Section 2.12. Matters Governed by Employee Matters Agreement.............................. 9
ARTICLE III. MISCELLANEOUS.................................................................. 10
Section 3.1. Entire Agreement............................................................ 10
Section 3.2. Governing Law............................................................... 10
Section 3.3. Dispute Resolution.......................................................... 10
Section 3.4. Notices..................................................................... 11
Section 3.5. Parties in Interest......................................................... 11
Section 3.6. Other Agreements Evidencing Indemnification Obligations..................... 12
Section 3.7. Counterparts................................................................ 12
Section 3.8. Assignment.................................................................. 12
Section 3.9. Severability................................................................ 12
Section 3.10. Failure or Indulgence Not Waiver............................................ 13
Section 3.11. Amendment................................................................... 13
Section 3.12. Authority................................................................... 13
Section 3.13. Interpretation.............................................................. 13
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TABLE OF CONTENTS
(continued)
Page
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ARTICLE IV. DEFINITIONS...................................................................... 13
Section 4.1. 3Com Business............................................................... 13
Section 4.2. 3Com Facilities............................................................. 13
Section 4.3. 3Com Group.................................................................. 13
Section 4.4. 3Com Indemnitees............................................................ 14
Section 4.5. Action...................................................................... 14
Section 4.6. Affiliated Company.......................................................... 14
Section 4.7. Assets...................................................................... 14
Section 4.8. Assignment Agreement........................................................ 14
Section 4.9. Coverage Amount............................................................. 14
Section 4.10. Employee Matters Agreement.................................................. 14
Section 4.11. Environmental Actions....................................................... 14
Section 4.12. Environmental Conditions.................................................... 15
Section 4.13. Environmental Laws.......................................................... 15
Section 4.14. Hazardous Materials......................................................... 15
Section 4.15. Indemnitee.................................................................. 15
Section 4.16. Insurance Policies.......................................................... 15
Section 4.17. Insurance Proceeds.......................................................... 15
Section 4.18. Insurance Transition Period................................................. 16
Section 4.19. Insured Palm Liability...................................................... 16
Section 4.20. IPO Date.................................................................... 16
Section 4.21. IPO Liabilities............................................................. 16
Section 4.22. IPO Registration Statement.................................................. 16
Section 4.23. Liabilities................................................................. 16
Section 4.24. Non-US Plan................................................................. 16
Section 4.25. Palm Business............................................................... 16
Section 4.26. Palm Contracts.............................................................. 16
Section 4.27. Palm Covered Parties........................................................ 17
Section 4.28. Palm Facilities............................................................. 17
Section 4.29. Palm Group.................................................................. 17
Section 4.30. Palm Indemnitees............................................................ 17
Section 4.31. Palm Liabilities............................................................ 17
Section 4.32. Person...................................................................... 17
Section 4.33. Pre-Separation Third Party Site Liabilities................................. 17
Section 4.34. Release..................................................................... 17
Section 4.35. Separation.................................................................. 18
Section 4.36. Separation Agreement........................................................ 18
Section 4.37. Separation Date............................................................. 18
Section 4.38. Shared 3Com Percentage...................................................... 18
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TABLE OF CONTENTS
(continued)
Page
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Section 4.39. Shared Palm Percentage...................................................... 18
Section 4.40. Shared Percentage........................................................... 18
Section 4.41. Subsidiary.................................................................. 18
Section 4.42. Tax Sharing Agreement....................................................... 19
Section 4.43. Taxes....................................................................... 19
Section 4.44. Third Party Claim........................................................... 19
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INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT
This Indemnification and Insurance Matters Agreement (this "Agreement") is
entered into on _________, 2000 between 3Com Corporation, a Delaware corporation
("3Com"), and Palm, Inc., a Delaware corporation ("Palm"). Capitalized terms
used herein and not otherwise defined herein shall have the meanings ascribed to
such terms in the Article IV below.
RECITALS
WHEREAS, 3Com and its Subsidiaries have transferred or will transfer to
Palm and its Subsidiaries effective as of the Separation Date, substantially all
of the assets of the Palm Business in accordance with the Master Separation and
Distribution Agreement dated as of December ___, 1999 between 3Com and Palm's
predecessor corporation, Palm Computing, Inc., a California corporation (the
"Separation Agreement").
WHEREAS, the parties desire to set forth certain agreements regarding
indemnification and insurance.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:
ARTICLE I.
MUTUAL RELEASES; INDEMNIFICATION
Section 1.1. Release of Pre-Closing Claims.
(a) Palm Release. Except as provided in Section 1.1(c) and Schedule 1.1 to
this Agreement, effective as of the Separation Date, Palm does hereby, for
itself and as agent for each member of the Palm Group, remise, release and
forever discharge the 3Com Indemnitees from any and all Liabilities whatsoever,
whether at law or in equity (including any right of contribution), whether
arising under any contract or agreement, by operation of law or otherwise,
existing or arising from any acts or events occurring or failing to occur or
alleged to have occurred or to have failed to occur or any conditions existing
or alleged to have existed on or before the Separation Date, including in
connection with the transactions and all other activities to implement any of
the Separation, the IPO and the Distribution.
(b) 3Com Release. Except as provided in Section 1.1(c) and Schedule 1.1 to
this Agreement, effective as of the Separation Date, 3Com does hereby, for
itself and as agent for each member of the 3Com Group, remise, release and
forever discharge the Palm Indemnitees from any and all Liabilities whatsoever,
whether at law or in equity (including any right of contribution), whether
arising under any contract or agreement, by operation of law or otherwise,
existing or arising from any acts or events occurring or failing to occur or
alleged to have occurred or to have failed to occur or any conditions existing
or alleged to have existed on or before the Separation Date,
including in connection with the transactions and all other activities to
implement any of the Separation, the IPO and the Distribution.
(c) No Impairment. Nothing contained in Section 1.1(a) or (b) shall impair
any right of any Person to enforce the Separation Agreement or any other
Ancillary Agreement (including this Agreement), in each case in accordance with
its terms.
(d) No Actions as to Released Claims. Palm agrees, for itself and as agent
for each member of the Palm Group, not to make any claim or demand, or commence
any Action asserting any claim or demand, including any claim of contribution or
any indemnification, against 3Com or any member of the 3Com Group, or any other
Person released pursuant to Section 1.1(a), with respect to any Liabilities
released pursuant to Section 1.1(a). 3Com agrees, for itself and as agent for
each member of the 3Com Group, not to make any claim or demand, or commence any
Action asserting any claim or demand, including any claim of contribution or any
indemnification, against Palm or any member of the Palm Group, or any other
Person released pursuant to Section 1.1(b), with respect to any Liabilities
released pursuant to Section 1.1(b).
(e) Further Instruments. At any time, at the request of any other party,
each party shall cause each member of its respective Group to execute and
deliver releases reflecting the provisions hereof.
Section 1.2. Indemnification by Palm. Except as otherwise provided in this
Agreement, Palm shall, for itself and as agent for each member of the Palm
Group, indemnify, defend (or, where applicable, pay the defense costs for) and
hold harmless the 3Com Indemnitees from and against any and all Liabilities that
any third party seeks to impose upon the 3Com Indemnitees, or which are imposed
upon the 3Com Indemnitees, and that relate to, arise out of or result from any
of the following items (without duplication):
(i) the Palm Business, any Palm Liability or any Palm Contract;
(ii) any breach by Palm or any member of the Palm Group of the
Separation Agreement or any of the Ancillary Agreements (including this
Agreement); and
(iii) any IPO Liabilities.
In the event that any member of the Palm Group makes a payment to the 3Com
Indemnitees hereunder, and any of the 3Com Indemnitees subsequently diminishes
the Liability on account of which such payment was made, either directly or
through a third-party recovery, 3Com will promptly repay (or will procure a 3Com
Indemnitee to promptly repay) such member of the Palm Group the amount by which
the payment made by such member of the Palm Group exceeds the actual cost of the
associated indemnified Liability. This Section 1.2 shall not apply to any
Liability indemnified under Section 1.4.
Section 1.3. Indemnification by 3Com. Except as otherwise provided in this
Agreement, 3Com shall, for itself and as agent for each member of the 3Com
Group, indemnify, defend (or, where applicable, pay the defense costs for) and
hold harmless the Palm Indemnitees from and
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against any and all Liabilities that any third party seeks to impose upon the
Palm Indemnitees, or which are imposed upon the Palm Indemnitees, and that
relate to, arise out of or result from any of the following items (without
duplication):
(i) the 3Com Business or any Liability of the 3Com Group other than
the Palm Liabilities; and
(ii) any breach by 3Com or any member of the 3Com Group of the
Separation Agreement or any of the Ancillary Agreements (including this
Agreement).
In the event that any member of the 3Com Group makes a payment to the Palm
Indemnitees hereunder, and any of the Palm Indemnitees subsequently diminishes
the Liability on account of which such payment was made, either directly or
through a third-party recovery, Palm will promptly repay (or will procure a Palm
Indemnitee to promptly repay) such member of the 3Com Group the amount by which
the payment made by such member of the 3Com Group exceeds the actual cost of the
indemnified Liability. This Section 1.3 shall not apply to any Liability
indemnified under Section 1.4.
Section 1.4. Indemnification With Respect to Environmental Actions and
Conditions.
(a) Indemnification by Palm. Palm shall, for itself and as agent for each
member of the Palm Group, indemnify, defend and hold harmless the 3Com
Indemnitees from and against any and all Environmental Actions relating to,
arising out of or resulting from Environmental Conditions (i) arising out of
operations occurring on and after the Separation Date at any of the Palm
Facilities, or (ii) on any of the Palm Facilities arising from an event causing
contamination that first occurs on or after the Separation Date (including any
Release of Hazardous Materials occurring after the Separation Date that migrates
to any of the Palm Facilities), except to the extent that such Environmental
Conditions arise out of the operations of the 3Com Group on and after the
Separation Date.
(b) Indemnification by 3Com. 3Com shall, for itself and as agent for each
member of the 3Com Group, indemnify, defend and hold harmless the Palm
Indemnitees from and against any and all Environmental Actions relating to,
arising out of or resulting from any of the following items:
(i) Environmental Conditions (x) existing on, under, about or in the
vicinity of any of the Palm Facilities prior to the Separation Date, or (y)
arising out of operations occurring on or before the Separation Date at any of
the Palm Facilities;
(ii) Except as arising out of the operations of the Palm Group on and
after the Separation Date, Environmental Conditions on, under, about or arising
out of operations occurring at any time, whether before or after the Separation
Date, at any of the 3Com Facilities; and
(iii) Pre-Separation Third Party Site Liabilities.
(c) Agreement Regarding Payments to Indemnitee. In the event an
Indemnifying Party makes any payment to or on behalf of an Indemnitee with
respect to an Environmental Action for
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which the Indemnifying Party is obligated to indemnify under this Section 1.4,
and the Indemnitee subsequently receives any payment from a third party on
account of the same financial obligation covered by the payment made by the
Indemnifying Party for that Environmental Action or otherwise diminishes the
financial obligation, the Indemnitee will promptly pay the Indemnifying Party
the amount by which the payment made by the Indemnifying Party, exceeds the
actual cost of the financial obligation.
Section 1.5. Reductions for Insurance Proceeds and Other Recoveries. The
amount that any party (an "Indemnifying Party") is or may be required to pay to
any other Person (an "Indemnitee") pursuant to Section 1.2, 1.3 or 1.4, as
applicable, shall be reduced (retroactively or prospectively) by any Insurance
Proceeds or other amounts actually recovered from third parties by or on behalf
of such Indemnitee in respect of the related loss. The existence of a claim by
an Indemnitee for monies from an insurer or against a third party in respect of
any indemnifiable loss shall not, however, delay any payment pursuant to the
indemnification provisions contained herein and otherwise determined to be due
and owing by an Indemnifying Party. Rather the Indemnifying Party shall make
payment in full of the amount determined to be due and owing by it against an
assignment by the Indemnitee to the Indemnifying Party of the entire claim of
the Indemnitee for Insurance Proceeds or against such third party.
Notwithstanding any other provisions of this Agreement, it is the intention of
the parties that no insurer or any other third party shall be (i) entitled to a
benefit it would not be entitled to receive in the absence of the foregoing
indemnification provisions, or (ii) relieved of the responsibility to pay any
claims for which it is obligated. If an Indemnitee has received the payment
required by this Agreement from an Indemnifying Party in respect of any
indemnifiable loss and later receives Insurance Proceeds or other amounts in
respect of such indemnifiable loss, then such Indemnitee shall hold such
Insurance Proceeds or other amounts in trust for the benefit of the Indemnifying
Party (or Indemnifying Parties) and shall pay to the Indemnifying Party, as
promptly as practicable after receipt, a sum equal to the amount of such
Insurance Proceeds or other amounts received, up to the aggregate amount of any
payments received from the Indemnifying Party pursuant to this Agreement in
respect of such indemnifiable loss (or, if there is more than one Indemnifying
Party, the Indemnitee shall pay each Indemnifying Party, its proportionate share
(based on payments received from the Indemnifying Parties) of such Insurance
Proceeds).
Section 1.6. Procedures for Defense, Settlement and Indemnification of
Third Party Claims.
(a) Notice of Claims. If a 3Com Indemnitee or a Palm Indemnitee (as
applicable) (an "Indemnitee") shall receive notice or otherwise learn of the
assertion by a Person (including any Governmental Authority) who is not a member
of the 3Com Group or the Palm Group of any claim or of the commencement by any
such Person of any Action (collectively, a "Third Party Claim") with respect to
which a party (an "Indemnifying Party") may be obligated to provide
indemnification to such Indemnitee pursuant to Section 1.2, 1.3 or 1.4, or any
other section of the Separation Agreement or any Ancillary Agreement (including
this Agreement), 3Com and Palm (as applicable) will ensure that such Indemnitee
shall give such Indemnifying Party written notice thereof within 30 days after
becoming aware of such Third Party Claim. Any such notice shall describe the
Third Party Claim in reasonable detail. Notwithstanding the foregoing, the delay
or
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failure of any Indemnitee or other Person to give notice as provided in this
Section 1.6(a) shall not relieve the related Indemnifying Party of its
obligations under this Article I, except to the extent that such Indemnifying
Party is actually and substantially prejudiced by such delay or failure to give
notice.
(b) Defense By Indemnifying Party. An Indemnifying Party will manage the
defense of and may settle or compromise any Third Party Claim. Within 30 days
after the receipt of notice from an Indemnitee in accordance with Section 1.6(a)
(or sooner, if the nature of such Third Party Claim so requires), the
Indemnifying Party shall notify the Indemnitee that the Indemnifying Party will
assume responsibility for managing the defense of such Third Party Claim, which
notice shall specify any reservations or exceptions.
(c) Defense By Indemnitee. If an Indemnifying Party fails to assume
responsibility for managing the defense of a Third Party Claim, or fails to
notify an Indemnitee that it will assume responsibility as provided in Section
1.6(a), such Indemnitee may manage the defense of such Third Party Claim;
provided, however, that the Indemnifying Party shall reimburse all such costs
and expenses in the event it is ultimately determined that the Indemnifying
Party is obligated to indemnify the Indemnitee with respect to such Third Party
Claim.
(d) No Settlement By Indemnitee Without Consent. Unless the Indemnifying
Party has failed to manage the defense of the Third Party Claim in accordance
with the terms of this Agreement, no Indemnitee may settle or compromise any
Third Party Claim without the consent of the Indemnifying Party.
(e) No Consent to Certain Judgments or Settlements Without Consent.
Notwithstanding any provision of this Section 1.6, no party shall consent to
entry of any judgment or enter into any settlement of a Third Party Claim
without the consent of the other party (such consent not to be unreasonably
withheld) if the effect of such judgment or settlement is to (A) permit any
injunction, declaratory judgment, other order or other nonmonetary relief to be
entered, directly or indirectly, against the other party or (B) affect the other
party in a material fashion due to the allocation of Liabilities and related
indemnities set forth in the Separation Agreement, this Agreement or any other
Ancillary Agreement.
Section 1.7. Additional Matters.
(a) Cooperation in Defense and Settlement. With respect to any Third Party
Claim that implicates both Palm and 3Com in a material fashion due to the
allocation of Liabilities, responsibilities for management of defense and
related indemnities set forth in the Separation Agreement, this Agreement or any
of the Ancillary Agreements, the parties agree to cooperate fully and maintain a
joint defense (in a manner that will preserve the attorney-client privilege with
respect thereto) so as to minimize such Liabilities and defense costs associated
therewith. The party that is not responsible for managing the defense of such
Third Party Claims shall, upon reasonable request, be consulted with respect to
significant matters relating thereto and may, if necessary or helpful, associate
counsel to assist in the defense of such claims.
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(b) Substitution. In the event of an Action in which the Indemnifying
Party is not a named defendant, if either the Indemnitee or the Indemnifying
Party shall so request, the parties shall endeavor to substitute the
Indemnifying Party for the named defendant. If such substitution or addition
cannot be achieved for any reason or is not requested, the rights and
obligations of the parties regarding indemnification and the management of the
defense of claims as set forth in this Article I shall not be altered.
(c) Subrogation. In the event of payment by or on behalf of any
Indemnifying Party to or on behalf of any Indemnitee in connection with any
Third Party Claim, such Indemnifying Party shall be subrogated to and shall
stand in the place of such Indemnitee, in whole or in part based upon whether
the Indemnifying Party has paid all or only part of the Indemnitee's Liability,
as to any events or circumstances in respect of which such Indemnitee may have
any right, defense or claim relating to such Third Party Claim against any
claimant or plaintiff asserting such Third Party Claim or against any other
person. Such Indemnitee shall cooperate with such Indemnifying Party in a
reasonable manner, and at the cost and expense of such Indemnifying Party, in
prosecuting any subrogated right, defense or claim.
(d) Not Applicable to Taxes. This Agreement shall not apply to Taxes
(which are covered by the Tax Sharing Agreement).
Section 1.8. Survival of Indemnities. Subject to Section 3.8, the rights
and obligations of the members of the 3Com Group and the Palm Group under this
Article I shall survive the sale or other transfer by any party of any Assets or
businesses or the assignment by it of any Liabilities or the sale by any member
of the 3Com Group or the Palm Group of the capital stock or other equity
interests of any Subsidiary to any Person.
ARTICLE II.
INSURANCE MATTERS
Section 2.1. Palm Insurance Coverage During the Transition Period.
(a) Maintain Comparable Insurance. Throughout the period beginning on the
Separation Date and ending on the Distribution Date (i.e., the "Insurance
Transition Period"), 3Com shall, subject to insurance market conditions and
other factors beyond its control, maintain policies of insurance, including for
the benefit of Palm or any of its Subsidiaries, directors, officers, employees
or other covered parties (collectively, the "Palm Covered Parties") which are
comparable to those maintained generally by 3Com; provided, however, that if
3Com determines that (i) the amount or scope of such coverage will be reduced to
a level materially inferior to the level of coverage in existence immediately
prior to the Insurance Transition Period or (ii) the retention or deductible
level applicable to such coverage, if any, will be increased to a level
materially greater than the levels in existence immediately prior to the
Insurance Transition Period, 3Com shall give Palm notice of such determination
as promptly as practicable. Upon notice of such determination, Palm shall be
entitled to no less than 60 days to evaluate its options regarding continuance
of coverage hereunder and may cancel its interest in all or any portion of such
coverage as of any day within such 60 day period.
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(b) Reimbursement for Premiums. Palm shall promptly pay or reimburse 3Com,
as the case may be, for premium expenses, and Palm Covered Parties shall
promptly pay or reimburse 3Com for any costs and expenses which 3Com may incur
in connection with the insurance coverages maintained pursuant to this Section
2.1, including but not limited to any subsequent premium adjustments. All
payments and reimbursements by Palm and Palm Covered Parties to 3Com shall be
made within thirty (30) days after Palm's receipt of an invoice from 3Com.
Section 2.2. Cooperation and Agreement Not to Release Carriers. Each of
3Com and Palm will share such information as is reasonably necessary in order to
permit the other to manage and conduct its insurance matters in an orderly
fashion. Each of 3Com and Palm, at the request of the other, shall cooperate
with and use commercially reasonable efforts to assist the other in recoveries
for claims made under any insurance policy for the benefit of any insured party,
and neither 3Com nor Palm, nor any of their Subsidiaries, shall take any action
which would intentionally jeopardize or otherwise interfere with either party's
ability to collect any proceeds payable pursuant to any insurance policy. Except
as otherwise contemplated by the Separation Agreement, this Agreement or any
Ancillary Agreement, after the Separation Date, neither 3Com nor Palm shall (and
shall ensure that no member of their respective Groups shall), without the
consent of the other, provide any insurance carrier with a release, or amend,
modify or waive any rights under any such policy or agreement, if such release,
amendment, modification or waiver would adversely affect any rights or potential
rights of any member of the other Group thereunder. However, nothing in this
Section 2.2 shall (A) preclude any member of any Group from presenting any claim
or from exhausting any policy limit, (B) require any member of any Group to pay
any premium or other amount or to incur any Liability, or (C) require any member
of any Group to renew, extend or continue any policy in force.
Section 2.3. Palm Insurance Coverage After the Insurance Transition
Period. From and after expiration of the Insurance Transition Period, Palm shall
be responsible for obtaining and maintaining insurance programs for its risk of
loss and such insurance arrangements shall be separate and apart from 3Com's
insurance programs. Notwithstanding the foregoing, 3Com, upon the request of
Palm, shall use all commercially reasonable efforts to assist Palm in the
transition to its own separate insurance programs from and after the Insurance
Transition Period, and shall provide Palm with any information that is in the
possession of 3Com and is reasonably available and necessary to either obtain
insurance coverages for Palm or to assist Palm in preventing unintended self-
insurance, in whatever form.
Section 2.4. Responsibilities for Deductibles and/or Self-insured
Obligations. Palm will reimburse 3Com for all amounts necessary to exhaust or
otherwise satisfy all applicable self-insured retentions, amounts for fronted
policies, deductibles and retrospective premium adjustments and similar amounts
not covered by Insurance Policies in connection with Palm Liabilities and
Insured Palm Liabilities.
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Section 2.5. Procedures With Respect to Insured Palm Liabilities.
(a) Reimbursement. Palm will reimburse 3Com for all amounts incurred to
pursue insurance recoveries from Insurance Policies for Insured Palm
Liabilities.
(b) Management of Claims. The defense of claims, suits or actions giving
rise to potential or actual Insured Palm Liabilities will be managed (in
conjunction with 3Com's insurers, as appropriate) by the party that would have
had responsibility for managing such claims, suits or actions had such Insured
Palm Liabilities been Palm Liabilities.
Section 2.6. Insufficient Limits of Liability for 3Com Liabilities and
Palm Liabilities.
In the event that there are insufficient limits of liability available
under 3Com's Insurance Policies in effect prior to the Distribution Date to
cover the Liabilities of 3Com and/or Palm that would otherwise be covered by
such Insurance Policies, then to the extent that other insurance is not
available to 3Com and/or Palm for such Liabilities an adjustment will be made in
accordance with the following procedures:
(a) Each party will be allocated an amount equal to their Shared
Percentage of the lesser of (A) the available limits of liability available
under 3Com's Insurance Policies in effect prior to the Distribution Date net of
uncollectible amounts attributable to insurer insolvencies, and (B) the proceeds
received from 3Com's Insurance Policies if the Liabilities are the subject of
disputed coverage claims and, following consultation with each other, 3Com
and/or Palm agree to accept less than full policy limits from 3Com's and Palm's
insurers (the "Coverage Amount").
(b) A party who receives more than its share of the Coverage Amount (the
"Overallocated Party") agrees to reimburse the other party (the "Underallocated
Party") to the extent that the Liabilities of the Underallocated Party that
would have been covered under such Insurance Policies is less than the
Underallocated Party's share of the Coverage Amount.
(c) This Section 2.6(a) shall terminate ten years following the
Distribution Date.
Section 2.7. Cooperation. 3Com and Palm will cooperate with each other in
all respects, and they shall execute any additional documents which are
reasonably necessary, to effectuate the provisions of this Article II.
Section 2.8. No Assignment or Waiver. This Agreement shall not be
considered as an attempted assignment of any policy of insurance or as a
contract of insurance and shall not be construed to waive any right or remedy of
any member of the 3Com Group in respect of any Insurance Policy or any other
contract or policy of insurance.
Section 2.9. No Liability. Palm does hereby, for itself and as agent for
each other member of the Palm Group, agree that no member of the 3Com Group or
any 3Com Indemnitee shall have any Liability whatsoever as a result of the
insurance policies and practices of 3Com and its Subsidiaries as in effect at
any time prior to the Distribution Date, including as a result of the level or
scope of any such insurance, the creditworthiness of any insurance carrier, the
terms and conditions
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of any policy, the adequacy or timeliness of any notice to any insurance carrier
with respect to any claim or potential claim or otherwise.
Section 2.10. Additional or Alternate Insurance. Notwithstanding any
provision of this Agreement, during the Insurance Transition Period 3Com and
Palm shall work together to evaluate insurance options and secure additional or
alternate insurance for Palm and/or 3Com if desired and cost effective. Nothing
in this Agreement shall be deemed to restrict any member of the Palm Group from
acquiring at its own expense any other insurance policy in respect of any
Liabilities or covering any period.
Section 2.11. Further Agreements. The Parties acknowledge that they
intend to allocate financial obligations without violating any laws regarding
insurance, self-insurance or other financial responsibility. If it is determined
that any action undertake pursuant to the Separation Agreement, this Agreement
or any Ancillary Agreement is violative of any insurance, self-insurance or
related financial responsibility law or regulation, the parties agree to work
together to do whatever is necessary to comply with such law or regulation while
trying to accomplish, as much as possible, the allocation of financial
obligations as intended in the Separation Agreement, this Agreement and any
Ancillary Agreement.
Section 2.12. Matters Governed by Employee Matters Agreement. This Article
II shall not apply to any insurance policies that are the subject of the
Employee Matters Agreement.
ARTICLE III.
MISCELLANEOUS
Section 3.1. Entire Agreement. This Agreement, the Master Separation
Agreement, the other Ancillary Agreements and the Exhibits and Schedules
attached hereto and thereto, constitutes the entire agreement between the
parties with respect to the subject matter hereof and shall supersede all prior
written and oral and all contemporaneous oral agreements and understandings with
respect to the subject matter hereof.
Section 3.2. Governing Law. This Agreement shall be construed in
accordance with and all Disputes hereunder shall be governed by the laws of the
State of California, excluding its conflict of law rules and the United Nations
Convention on Contracts for the International Sale of Goods. The Superior Court
of Santa Xxxxx County and/or the United States District Court for the Northern
District of California shall have jurisdiction and venue over all Disputes
between the parties that are permitted to be brought in a court of law pursuant
to Section 3.3.
Section 3.3. Dispute Resolution. If a dispute, controversy or claim
("Dispute") arises between the parties relating to the interpretation or
performance of this Agreement, or the grounds for the termination hereof,
appropriate senior executives (e.g. director or V.P. level) of each party who
shall have the authority to resolve the matter shall meet to attempt in good
faith to negotiate a resolution of the Dispute prior to pursuing other available
remedies. The initial meeting between the appropriate senior executives shall be
referred to herein as the "Dispute Resolution Commencement Date." Discussions
and correspondence relating to trying to resolve such Dispute shall be treated
as
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confidential information developed for the purpose of settlement and shall be
exempt from discovery or production and shall not be admissible. If the senior
executives are unable to resolve the Dispute within thirty (30) days from the
Dispute Resolution Commencement Date, and either party wishes to pursue its
rights relating to such Dispute, then the Dispute will be mediated by a mutually
acceptable mediator appointed pursuant to the mediation rules of JAMS/Endispute
within thirty (30) days after written notice by one party to the other demanding
non-binding mediation. Neither party may unreasonably withhold consent to the
selection of a mediator or the location of the mediation. Both parties will
share the costs of the mediation equally, except that each party shall bear its
own costs and expenses, including attorney's fees, witness fees, travel
expenses, and preparation costs. The parties may also agree to replace mediation
with some other form of non-binding or binding ADR.
Any Dispute which the parties cannot resolve through mediation within
ninety (90) days of the Dispute Resolution Commencement Date, unless otherwise
mutually agreed, shall be submitted to final and binding arbitration under the
then current Commercial Arbitration Rules of the American Arbitration
Association ("AAA"), by three (3) arbitrators in Santa Xxxxx County, California.
Such arbitrators shall be selected by the mutual agreement of the parties or,
failing such agreement, shall be selected according to the aforesaid AAA rules.
The arbitrators will be instructed to prepare and deliver a written, reasoned
opinion stating their decision within thirty (30) days of the completion of the
arbitration. The prevailing party in such arbitration shall be entitled to
expenses, including costs and attorneys' and other professional fees, incurred
in connection with the arbitration (but excluding any costs and fees associated
with prior negotiation or mediation). The decision of the arbitrator shall be
final and non-appealable and may be enforced in any court of competent
jurisdiction. The use of any ADR procedures will not be construed under the
doctrine of laches, waiver or estoppel to adversely affect the rights of either
party.
Any Dispute regarding the following is not required to be negotiated,
mediated or arbitrated prior to seeking relief from a court of competent
jurisdiction: breach of any obligation of confidentiality; infringement,
misappropriation, or misuse of any intellectual property right; any other claim
where interim relief from the court is sought to prevent serious and irreparable
injury to one of the parties or to others. However, the parties to the Dispute
shall make a good faith effort to negotiate and mediate such Dispute, according
to the above procedures, while such court action is pending.
Section 3.4. Notices. Notices, offers, requests or other communications
required or permitted to be given by either party pursuant to the terms of this
Agreement shall be given in writing to the respective parties to the following
addresses:
if to 3Com:
3Com Corporation
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
if to Palm:
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Palm Computing, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
or to such other address as the party to whom notice is given may have
previously furnished to the other in writing as provided herein. Any notice
involving non-performance, termination, or renewal shall be sent by hand
delivery, recognized overnight courier or, within the United States, may also be
sent via certified mail, return receipt requested. All other notices may also
be sent by fax, confirmed by first class mail. All notices shall be deemed to
have been given and received on the earlier of actual delivery or three (3) days
from the date of postmark.
Section 3.5. Parties in Interest. This Agreement, including the
Schedules and Exhibits hereto, and the other documents referred to herein, shall
be binding upon 3Com, 3Com's Subsidiaries, Palm and Palm's Subsidiaries and
inure solely to the benefit of the Palm Indemnitees and the 3Com Indemnitees and
their respective permitted assigns, and nothing in this Agreement, express or
implied, is intended to confer upon any other Person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
Section 3.6. Other Agreements Evidencing Indemnification Obligations.
3Com hereby agrees to execute, for the benefit of any Palm Indemnitee, such
documents as may be reasonably requested by such Palm Indemnitee, evidencing
3Com's agreement that the indemnification obligations of 3Com set forth in this
Agreement inure to the benefit of and are enforceable by such Palm Indemnitee.
Palm hereby agrees to execute, for the benefit of any 3Com Indemnitee, such
documents as may be reasonably requested by such 3Com Indemnitee, evidencing
Palm's agreement that the indemnification obligations of Palm set forth in this
Agreement inure to the benefit of and are enforceable by such 3Com Indemnitee.
Section 3.7. Counterparts. This Agreement, including the Schedules and
Exhibits hereto, and the other documents referred to herein, may be executed in
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
Section 3.8. Assignment. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective legal
representatives and successors, and nothing in this Agreement, express or
implied, is intended to confer upon any other Person any rights or remedies of
any nature whatsoever under or by reason of this Agreement. This Agreement may
be enforced separately by each member of the 3Com Group and each member of the
Palm Group. Neither party may assign this Agreement or any rights or obligations
hereunder, without the prior written consent of the other party, and any such
assignment shall be void; provided, however, either party may assign this
Agreement to a successor entity in conjunction with such party's
reincorporation.
Section 3.9. Severability. If any term or other provision of this
Agreement or the Schedules or Exhibits attached hereto is determined by a
nonappealable decision by a court, administrative agency or arbitrator to be
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain
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in full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the fullest extent
possible.
Section 3.10. Failure or Indulgence Not Waiver. No failure or delay on
the part of either party hereto in the exercise of any right hereunder shall
impair such right or be construed to be a waiver of, or acquiescence in, any
breach of any representation, warranty or agreement herein, nor shall any single
or partial exercise of any such right preclude other or further exercise thereof
or of any other right.
Section 3.11. Amendment. No change or amendment will be made to this
Agreement except by an instrument in writing signed on behalf of each of the
parties to this Agreement.
Section 3.12. Authority. Each of the parties hereto represents to the
other that (a) it has the corporate or other requisite power and authority to
execute, deliver and perform this Agreement, (b) the execution, delivery and
performance of this Agreement by it have been duly authorized by all necessary
corporate or other action, (c) it has duly and validly executed and delivered
this Agreement, and (d) this Agreement is a legal, valid and binding obligation,
enforceable against it in accordance with its terms subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equity principles.
Section 3.13. Interpretation. The headings contained in this Agreement,
in any Exhibit or Schedule hereto and in the table or contents to this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized term used in any Schedule or
Exhibit but not otherwise defined therein, shall have the meaning assigned to
such term in this Agreement. When a reference is made in this Agreement to an
Article or a Section, Exhibit or Schedule, such reference shall be to an Article
or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated.
ARTICLE IV.
DEFINITIONS
Section 4.1. 3Com Business. "3Com Business" means any business of 3Com
other than the Palm Business.
Section 4.2. 3Com Facilities. "3Com Facilities" means all of the real
property and improvements thereon owned or occupied at any time on or before the
Separation Date by any member of the 3Com Group, whether for the 3Com Business
or the Palm Business, excluding the Palm Facilities.
Section 4.3. 3Com Group. "3Com Group" means 3Com, each Subsidiary and
Affiliated Company of 3Com (other than any member of the Palm Group) immediately
after the Separation
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Date, after giving effect to the Non-US Plan and each Person that becomes a
Subsidiary or Affiliate Company of 3Com after the Separation Date.
Section 4.4. 3Com Indemnitees. "3Com Indemnitees" means 3Com, each
member of the 3Com Group and each of their respective directors, officers and
employees.
Section 4.5. Action. "Action" means any demand, action, suit,
countersuit, arbitration, inquiry, proceeding or investigation by or before any
federal, state, local, foreign or international governmental authority or any
arbitration or mediation tribunal.
Section 4.6. Affiliated Company. "Affiliated Company" of any Person
means any entity that controls, is controlled by, or is under common control
with such Person. As used herein, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such entity, whether through ownership of voting securities or other
interests, by contract or otherwise.
Section 4.7. Assets. "Assets" has the meaning set forth in Section 4.4
of the Assignment Agreement.
Section 4.8. Assignment Agreement. "Assignment Agreement" means the
General Assignment and Assumption Agreement attached as Exhibit C to the
Separation Agreement.
Section 4.9. Coverage Amount. "Coverage Amount" has the meaning set
forth in Section 2.6(a) of this Agreement.
Section 4.10. Employee Matters Agreement. "Employee Matters Agreement"
means the Employee Matters Agreement attached as Exhibit E to the Separation
Agreement.
Section 4.11. Environmental Actions. "Environmental Actions" means any
notice, claim, act, cause of action, order, decree or investigation by any third
party (including, without limitation, any Governmental Authority) alleging
potential liability (including potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, damage to
flora or fauna caused by Environmental Conditions, real property damages,
personal injuries or penalties) arising out of, based on or resulting from the
Release of or exposure of any individual to any Hazardous Materials.
Section 4.12. Environmental Conditions. "Environmental Conditions" means
the presence in the environment, including the soil, groundwater, surface water
or ambient air, of any Hazardous Material at a level which exceeds any
applicable standard or threshold under any Environmental Law or otherwise
requires investigation or remediation (including, without limitation,
investigation, study, health or risk assessment, monitoring, removal, treatment
or transport) under any applicable Environmental Laws.
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Section 4.13. Environmental Laws. "Environmental Laws" means all laws and
regulations of any Governmental Authority with jurisdiction that relate to the
protection of the environment (including ambient air, surface water, ground
water, land surface or subsurface strata) including laws and regulations
relating to the Release of Hazardous Materials, or otherwise relating to the
treatment, storage, disposal, transport or handling of Hazardous Materials, or
to the exposure of any individual to a Release of Hazardous Materials.
Section 4.14. Hazardous Materials. "Hazardous Materials" means chemicals,
pollutants, contaminants, wastes, toxic substances, radioactive and biological
materials, hazardous substances, petroleum and petroleum products or any
fraction thereof.
Section 4.15. Indemnitee. "Indemnitee" has the meaning set forth in
Section 1.5(a) hereof.
Section 4.16. Insurance Policies. "Insurance Policies" means insurance
policies pursuant to which a Person makes a true risk transfer to an insurer.
Section 4.17. Insurance Proceeds. "Insurance Proceeds" means those
monies:
(a) received by an insured from an insurance carrier; or
(b) paid by an insurance carrier on behalf of the insured;
from Insurance Policies.
Section 4.18. Insurance Transition Period. "Insurance Transition Period"
has the meaning set forth in Section 2.1 of this Agreement.
Section 4.19. Insured Palm Liability. "Insured Palm Liability" means any
Palm Liability to the extent that (i) it is covered under the terms of 3Com's
Insurance Policies in effect prior to the Distribution Date, and (ii) Palm is
not a named insured under, or otherwise entitled to the benefits of, such
Insurance Policies.
Section 4.20. IPO Date. "IPO Date" means the date on which Palm effects
its initial public offering of common stock. Scheduled to occur on or before
June 2, 2000.
Section 4.21. IPO Liabilities. "IPO Liabilities" means any Liabilities
relating to, arising out of or 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 a IPO Registration Statement.
Section 4.22. IPO Registration Statement. "IPO Registration Statement"
means the registration statement on Form S-1 pursuant to the Securities Act to
be filed with the SEC registering the shares of common stock of Palm to be
issued in the IPO, together with all amendments thereto.
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Section 4.23. Liabilities. "Liabilities" has the meaning set forth in
Section 4.15 of the Assignment Agreement.
Section 4.24. Non-US Plan. "Non-US Plan" means the plan of reorganization
described in Exhibit K of the Separation Agreement.
Section 4.25. Palm Business. "Palm Business" means the business and
operations of Palm, as described in the IPO Registration Statement and except as
otherwise expressly provided herein, any terminated, divested or discontinued
businesses or operations that at the time of termination, divestiture or
discontinuation primarily related to the Palm Business as then conducted.
Section 4.26. Palm Contracts. "Palm Contracts" has the meaning set forth
in Section 4.23 of the Assignment Agreement.
Section 4.27. Palm Covered Parties. "Palm Covered Parties" shall have the
meaning set forth in Section 2.1(a) of this Agreement.
Section 4.28. Palm Facilities. "Palm Facilities" means all of those
facilities to be transferred to Palm on the Separation Date as set forth on
Schedule 1 to the Real Estate Matters Agreement.
Section 4.29. Palm Group. "Palm Group" means Palm, each Subsidiary and
Affiliated Company of Palm immediately after the Separation Date or that is
contemplated to be a Subsidiary or Affiliated Company of Palm pursuant to the
Non-US Plan and each Person that becomes a Subsidiary or Affiliate Company of
Palm after the Separation Date.
Section 4.30. Palm Indemnitees. "Palm Indemnitees" means Palm, each
member of the Palm Group and each of their respective directors, officers and
employees.
Section 4.31. Palm Liabilities. "Palm Liabilities" has the meaning set
forth in Section 1.3 of the Assignment Agreement.
Section 4.32. Person. "Person" means an individual, a partnership, a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization and a governmental
entity or any department, agency or political subdivision thereof.
Section 4.33. Pre-Separation Third Party Site Liabilities. "Pre-
Separation Third Party Site Liabilities" means any and all Environmental Actions
arising out of Hazardous Materials found on, under or about any landfill any
waste, storage, transfer or recycling site and resulting from or arising out of
Hazardous Materials stored, treated, recycled disposed or otherwise handled at
such site prior to the Separation Date (whether for the operation of the Palm
Business or for the operation of any past or presently (as of the date hereof)
existing 3Com Business as operated on or before the Separation Date).
Section 4.34. Release. "Release" means any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor
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environment, including, without limitation, the movement of Hazardous Materials
through ambient air, soil, surface water, groundwater, wetlands, land or
subsurface strata.
Section 4.35. Separation. "Separation" means the transfer and
contribution from 3Com to Palm, and Palm's receipt and assumption of, directly
or indirectly, substantially all of the Assets and Liabilities currently
associated with the Palm Business and the stock, investments or similar
interests currently held by 3Com in subsidiaries and other entities that conduct
such business.
Section 4.36. Separation Agreement. "Separation Agreement" means the
Master Separation and Distribution Agreement dated as of December ___, 1999, of
which this is an Exhibit thereto.
Section 4.37. Separation Date. " Separation Date" means the effective date
and time of each transfer of property, assumption of liability, license,
undertaking, or agreement in connection with the Separation, which shall be
12:01 a.m., Pacific Time, February 26, 2000, or such date as may be fixed by the
Board of Directors of 3Com.
Section 4.38. Shared 3Com Percentage. "Shared 3Com Percentage" means 90%.
Section 4.39. Shared Palm Percentage. "Shared Palm Percentage" means 10%.
Section 4.40. Shared Percentage. "Shared Percentage" means the Shared
Palm Percentage or the Shared 3Com Percentage, as the case may be.
Section 4.41. Subsidiary. "Subsidiary" of any Person means a corporation
or other organization whether incorporated or unincorporated of which at least a
majority of the securities or interests having by the terms thereof ordinary
voting power to elect at least a majority of the board of directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person or by
any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries; provided, however, that no Person that is not directly or
indirectly wholly-owned by any other Person shall be a Subsidiary of such other
Person unless such other Person controls, or has the right, power or ability to
control, that Person.
Section 4.42. Tax Sharing Agreement. "Tax Sharing Agreement" means the Tax
Sharing Agreement, attached as Exhibit F to the Separation Agreement.
Section 4.43. Taxes. "Taxes" has the meaning set forth in the Tax Sharing
Agreement.
Section 4.44. Third Party Claim. "Third Party Claim" has the meaning set
forth in Section 1.5(a) of this Agreement.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, each of the parties has caused this Indemnification and
Insurance Matters Agreement to be executed on its behalf by its officers
thereunto duly authorized on the day and year first above written.
3COM CORPORATION PALM, INC.
By:___________________________ By:_______________________________
Name:_________________________ Name:_____________________________
Title:________________________ Title:____________________________
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