EXHIBIT 10.1
CORPORATE SEPARATION AGREEMENT
____________________
IREX CORPORATION,
ACandS, INC.,
CENTIN, LLC,
SPACECON, LLC
AND
SPECIALTY PRODUCTS & INSULATION CO.
November ___, 1998
TABLE OF CONTENTS
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Page
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1. DEFINITIONS.................................................................................................. 2
2. SPIN-OFF AND ECP SALE........................................................................................ 2
3. MANAGEMENT OF THE BUSINESSES................................................................................. 2
4. FINANCING ARRANGEMENTS....................................................................................... 2
5. INTERCOMPANY ACCOUNTS........................................................................................ 3
6. EMPLOYEE BENEFIT PLANS....................................................................................... 3
7. REAL ESTATE ARRANGEMENTS..................................................................................... 3
8. COMPUTER SUPPORT............................................................................................. 3
9. HEALTH INSURANCE............................................................................................. 6
10. LIABILITY AND WORKER'S COMPENSATION INSURANCE............................................................... 6
11. BONDS....................................................................................................... 7
12. TAX AGREEMENTS.............................................................................................. 7
13. CLOSING BALANCE SHEET AND SETTLEMENT ARRANGEMENTS........................................................... 7
14. TIME OF PAYMENTS............................................................................................ 8
15. OTHER SHARED ARRANGEMENTS................................................................................... 9
16. NO TIME LIMITATIONS ON ADJUSTMENTS.......................................................................... 9
17. INDEMNIFICATION............................................................................................. 9
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16. NON-COMPETE................................................................................................ 10
19. OFFSET..................................................................................................... 11
20. CONFIDENTIALITY........................................................................................... 11
21. DISPUTE RESOLUTION......................................................................................... 12
22. ACCESS TO BOOKS AND RECORDS................................................................................ 12
23. MISCELLANEOUS.............................................................................................. 12
(a) Severability...................................................................................... 12
(b) No Third Party Beneficiaries...................................................................... 12
(c) Incorporation by Reference........................................................................ 12
(d) Notices........................................................................................... 13
(e) Entire Agreement.................................................................................. 13
(f) Governing Law; Jurisdiction....................................................................... 14
(g) Amendments, Waivers and Consents.................................................................. 14
(h) Effect of Headings................................................................................ 14
(i) Counterparts...................................................................................... 14
(j) Survival.......................................................................................... 14
(k) Assignment........................................................................................ 14
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CORPORATE SEPARATION AGREEMENT
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THIS CORPORATE SEPARATION AGREEMENT ("Agreement"), made this ______ day of
October __, 1998, is between IREX CORPORATION, a Pennsylvania corporation
("Irex"), its wholly owned contracting subsidiaries, ACANDS, INC. a Delaware
corporation ("ACandS"), CENTIN, LLC, a Pennsylvania corporation ("CENTIN"),
SPACECON, LLC, a Delaware corporation ("Spacecon") (ACandS, CENTIN and Spacecon
are collectively referred to herein as the "Contracting Subsidiaries" and Irex,
ACandS, CENTIN and Spacecon, as the "Irex Group"), and SPECIALTY PRODUCTS &
INSULATION CO., a Pennsylvania corporation ("SPI").
WITNESSETH:
WHEREAS, Irex is a holding company which owns the Contracting Subsidiaries,
which are engaged in the specialty contracting business, and SPI, which is
engaged, directly and through its subsidiaries, in the distribution of
mechanical insulation and architectural products (the "Distribution Business");
WHEREAS, the Board of Directors of Irex has determined that it is in the
best corporate interest of Irex and its subsidiaries for SPI to operate as an
independent company;
WHEREAS, Irex shall accomplish the separation of SPI (the "Separation")
through a tax-free spin-off (the "Spin-off") of 100 percent of the common stock,
par value $.01 per share (the "Common Stock"), of SPI to the shareholders of
Irex;
WHEREAS, immediately preceding the Spin-off, SPI shall declare and pay to
Irex a special distribution (the "Special Dividend") in the amount of
$10,500,000 (which amount shall be paid $7,000,000 in cash and an aggregate
principal amount of $3,500,000 of SPI's 10-1/2% Junior Subordinated Notes due
2002) and immediately thereafter shall issue and sell [_____________] shares of
Common Stock to Evercore Capital Partners L.P., Evercore Capital Partners (NQ)
L.P. and Evercore Capital Offshore Partners L.P. (the "ECP Sale");
WHEREAS, the Irex Group and SPI wish to enter various arrangements
concerning their operations after the Separation, with such arrangements to be
made, to the extent possible, as though they were made on an arms-length basis;
and
WHEREAS, the Irex Group and SPI wish to enter into agreements relating to
the Separation, including agreements concerning previous participation in shared
or common arrangements and programs.
WHEREAS, SPI has entered into a Stock Subscription Agreement, dated as of
October __, 1998 (the "Subscription Agreement"), by and among Irex, SPI,
Evercore Capital Partners
L.P., Evercore Capital Partners (NQ) L.P. and Evercore Capital Offshore Partners
L.P. (collectively, "Purchasers"), pursuant to which SPI will sell Common Stock
to Purchasers immediately following the Spin-Off.
NOW, THEREFORE, in consideration of the premises contained herein, and upon
the terms and conditions hereinafter set forth, each of the parties, intending
to be legally bound, agrees as follows:
1. Definitions. As used in this Agreement, the following terms shall have
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the following meanings:
(a) "Closing Balance Sheet" shall mean the balance sheet of SPI as of
the Closing Date reflecting the Spin-off, the ECP Sale and the Special
Dividend and the transactions contemplated herein.
(b) "Closing Date" shall mean the closing date of the ECP Sale.
2. Spin-off and ECP Sale. The Irex Group and SPI acknowledge and agree
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that considerable cooperation among them will be necessary to effect the Spin-
off and the ECP Sale, and the parties agree to use their best efforts to effect
such transactions. Irex will pay all ongoing third-party expenses of SPI
incurred in connection with the Spin-off and the ECP Sale as they are billed,
including attorneys' and accountants' fees and expenses, filing fees, listing
fees, printing costs and similar items, and SPI will reimburse Irex for all such
third-party expenses of SPI on the Closing Date. The unpaid fees and expenses of
Xxxxxx & Co. and Xxxx Xxxxx Xxxx Xxxxxx Incorporated (not to exceed $625,000 in
the aggregate) shall be paid directly by SPI out of the proceeds of the ECP
Sale, and SPI shall reimburse Irex for any previous payments by Irex to such
investment bankers and financial advisors relating to the Spin-off and IPO.
3. Management of the Businesses. Irex and SPI each acknowledge that the
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services of employees of the other party may be necessary after the Closing Date
in connection with the transition which will occur as part of the Separation.
Thus, each agrees, to the extent possible, to make its employees available to
the other in connection with such transition; provided, however, that (a) a
party shall not be required to unreasonably disrupt its own business in order to
provide such services and (b) to the extent that such services require a
significant commitment of an employee's time, the party receiving such service
shall reimburse the other party the reasonable value of such services. Neither
Irex nor SPI will seek reimbursement for the services of an employee unless it
has notified the other of its intention to seek such reimbursement, and of the
proposed rate of reimbursement, prior to performance of the services.
4. Financing Arrangements.
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(a) As of the Closing Date, the bank loans, letter of credit
commitments, surety agreements and other financial obligations of Irex
(collectively, the "Irex Financial
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Commitments") shall be the sole responsibility of Irex, and SPI shall have no
liability under the Irex Financial Commitments. Irex shall obtain or cause to be
obtained all appropriate releases, terminations and satisfactions necessary to
fully release SPI from any and all liability in connection with the Irex
Financial Commitments from and after the Closing Date, including, without
limitation, under any guaranties, liens or security interests SPI may have
previously given, executed or granted in connection with the Irex Financial
Commitments.
(b) SPI shall be responsible for all funding arrangements relating to
its business beginning as of the Closing Date and Irex shall have no liability
in connect ion with such arrangements.
5. Accounts Receivable. Irex and SPI shall establish separate bank
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deposit accounts prior to the Closing Date. Notwithstanding any other provision
of this Agreement, if the Irex Group or SPI receives payment on an account
receivable of the other, it shall advise the other of such receipt within one
(1) business day of learning of the receipt, and shall remit payment to the
other within three (3) business days.
6. Employee Benefit Plans.
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Obligations concerning employee benefit plans shall be governed by the
Benefits Sharing Agreement, dated as of the date hereof, between Irex and SPI
(the "Benefits Sharing Agreement")..
7. Real Estate Arrangements.
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(a) From and after the Closing Date, SPI shall be entitled to
continue to occupy and use the premises presently occupied and used by SPI
located at 000 Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxx pursuant to the lease
agreement between Irex and SPI dated December 30, 1992, as amended, which Lease
shall continue in full force and effect in accordance with the terms and
conditions thereof.
(b) As of the Closing Date, SPI shall have vacated, and thereafter
shall have no right to occupy, any of Irex's premises located on Lime Street, in
Lancaster, Pennsylvania.
8. Computer Support. Subject to Section 8(l), Irex has provided, and
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continues to provide, SPI with use of, access to and support for certain
computer resources consisting of: (i) Irex's computer mainframe and related
equipment and notes server, both out-sourced and in-sourced; (ii) Irex's
JDEdwards software applications, its communications software allowing remote
access to the JDEdwards system, its Lotus Notes server software and other
related software, both out-sourced and in-sourced; and (iii) programming and
communication services in connection with the software applications provided
(collectively, the "Computer System"). Applications available to SPI through the
Computer System include, but are not limited to, Address Book, Electronic Mail,
Accounts Receivable, Accounts Payable, General Ledger,
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Financial Reporting, Payroll, Fixed Assets, Inventory Management, Sales Order
Processing, Sales Analysis, Purchasing and Human Resources. For the period
provided for in this Agreement (the "Service Period"), Irex will continue to
provide SPI with such use, access and support, provided that Irex may outsource
hardware, software or support services currently provided in-house at its sole
discretion; provided further, that any such outsourcing shall meet the standard
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set forth in Section 8(a) below. SPI will comply with the non-financial terms,
such as confidentiality obligations, of Irex's agreements with Computer System
vendors during the Service Period.
(a) During the Service Period, Irex warrants to SPI that the response
time, service specifications, and operating capacity of the Computer System will
be similar or better in all material respects than that available to SPI prior
to the Closing Date. To the extent that the vendor of the frame relay network
which Irex is installing provides Irex with guarantees concerning improved
response time, Irex will provide those guarantees to SPI.
(b) In the event that the Computer System at any time fails to
operate according to the warranted response time, service specifications or
operating capacity, Irex will employ its reasonable best efforts to timely
address the problem, giving due regard to the impact on SPI's business. Irex,
however, shall not be responsible for any loss to SPI resulting from failure of
the Computer System to operate according to warranty. Irex shall provide SPI
with the benefit of all representations, warranties and indemnities received by
SPI from software vendors and suppliers. SPI's sole remedy for such failure
shall be the correction of the failure and a reduction in its payments to Irex
for Computer Systems Costs (as defined herein) for the period of failure.
(c) In no event shall Irex be responsible for consequential or
incidental damages in connection with the Computer System. Irex shall make
available to SPI, or, if necessary, assert on behalf of SPI, any claim which may
be available against any Irex vendor for deficiencies in the service provided to
SPI, provided that SPI shall pay the cost of asserting such claim.
(d) During the Service Period, Irex shall (i) make available to SPI
any upgrades which Irex determines to accept or acquire from its vendors
concerning the Computer System, (ii) include SPI in the evaluation process of
any enhancements, modifications or new releases announced by its software
vendors, including access to the test environment prior to implementation
thereof, and (iii) give reasonable consideration to the interests of SPI in
making upgrade decisions. Irex will upgrade to all new releases, modifications
or enhancements necessary to maintain support from the vendor thereof.
(e) As compensation for the services provided by Irex under this
Section 8, SPI will pay Irex, on a monthly basis, (i) a pro rata share of Irex's
Computer System Costs (as defined herein) incurred in connection with services
provided by World Technology Services LLD ("WTS") or JDEdwards, and (ii) fifty
percent of Irex's remaining Computer System Costs. The pro rata share of WTS and
JDEdwards costs will be based on the ratio of SPI "concurrent users"
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(as defined by Irex's agreements with such vendors) to total "concurrent users."
In the event that a dispute arises concerning the amount of Computer System
Costs chargeable to SPI, Irex will continue to provide the computer services
specified in this Agreement while the dispute resolution procedure is pending.
Notwithstanding the foregoing, in the event SPI requests a service or upgrade
which Irex can reasonably obtain or provide but which Irex will not use, Irex
shall obtain or provide such service or upgrade and SPI shall pay the full cost
of such upgrade or service.
(f) Subject to Section 8(h), "Computer System Costs" shall mean all
costs incurred for the services of WTS or a replacement vendor of IBM AS 400
services, all costs for the use of JDEdwards software, and all other costs
attributable to operation of the MIS function as determined by the Irex
accounting system on a basis consistent with that used to allocate MIS costs on
the Closing Date, excluding the cost of programmers, whether in-house or third
party, except to the extent any programmer's time is attributable to work
substantially beneficial to both Irex and SPI, and excluding the cost of
telecommunications for field locations.
(g) SPI will also pay to Irex on a monthly basis the actual cost of
all programmers' time and field telecommunication costs attributable to its
projects or its locations. In-house programmers' time will be quoted to SPI at
hourly rates reasonably reflecting the compensation and overhead attributable to
each programmer. Third-party programmers' time, other than time included within
Computer System Costs, and field telecommunication costs will be charged at
invoiced cost. Programmers' time will not be charged to SPI unless it has been
authorized in writing by an individual designated by SPI to Irex as having the
responsibility to authorize such time. SPI will also reimburse Irex for the cost
of the materials, equipment and software purchased at SPI's request for use at
SPI's locations in connection with the Computer System. Costs chargeable to SPI
will not be included in Computer System Costs.
(h) Notwithstanding anything to the contrary contained herein, if at
any time during the Service Period, Irex and SPI are required to obtain separate
licenses from JDEdwards, each party will thereafter pay the JDEdwards fees
attributable to its own license, and JDEdwards fees shall thereafter be excluded
from Computer System Costs.
(i) Irex will acquire and maintain all software licenses necessary to
permit SPI's use of the Computer System, provided, however, that the actual cost
of any additional hardware required by SPI at field locations after the Closing
Date, and any software licenses required for installation of software directly
in such field units will be paid for by SPI.
(j) The parties understand and agree that the existing Computer
System is set up to service the number of field locations and volume of business
being performed by SPI, Irex, and other Irex subsidiaries as of the Closing
Date. In the event that SPI grows to the extent that the existing Computer
System must be significantly reconfigured to handle this growth, the pricing
provided for herein will be renegotiated to more fairly and accurately account
for such changed circumstances.
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(k) Irex understands that the software which WTS will use and the
JDEdwards upgrade Irex will install during 1998 are Year 2000 compliant, and
will resolve any remaining Year 2000 problems in the Computer System which are
not related to specific PC's or PC software. Irex will make available to SPI the
benefit of any Year 2000 warranties and certifications it receives from WTS,
JDEdwards and other vendors.
(l) The terms of this Section 8 (the "Computer Services Agreement")
shall extend for three (3) years from the Closing Date, provided that SPI shall
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be entitled to terminate this Computer Services Agreement at any time after 18
months after the Closing Date upon six months prior written notice. If SPI
desires to continue with this Computer Services Agreement after the third
Service Period year, Irex and SPI will attempt in good faith to negotiate an
extension, provided that SPI will give Irex notice at least six months prior to
the end of the term whether or not it desires to negotiate such an extension.
9. Health Insurance. For periods prior to the Closing Date, Irex has
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maintained health insurance programs covering employees of both Irex and its
subsidiaries, including SPI. The cost of these programs is determined in part by
the actual cost of claims, for which Irex receives periodic bills or credits.
SPI and Irex will share the costs and expenses of such programs as determined in
Sections 4.1(b) and 4.1(c) of the Benefits Sharing Agreement.
10. Liability and Worker's Compensation Insurance
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(a) Irex is the lead named insured on policies of liability insurance
(including general liability, automobile liability and worker's compensation
insurance) providing coverage for periods prior to the Closing Date for which
Irex's subsidiaries, including SPI, are also named insureds. The cost of these
programs is determined in part by the actual paid or incurred cost of claims.
After the Closing Date, Irex will provide administration for these policies.
(b) SPI will reimburse Irex for any increased cost after the Closing
Date associated with these policies which is attributable to SPI claims, and
Irex will refund to SPI any decreased cost after the Closing Date associated
with these policies which is attributable to SPI claims. These programs require
letters of credit or other collateral for unfunded incurred losses and unfunded
incurred but not reported losses ("IBNR"). SPI will also reimburse Irex for the
cost of any collateral required by unfunded SPI incurred losses and IBNR related
to SPI losses. Irex will keep SPI advised concerning the handling of SPI claims,
and will offer to SPI the exercise of settlement authority over SPI claims, to
the extent such authority is available to Irex under the policies. Irex will not
authorize settlement of any claims, the costs of which would be reimbursable by
SPI hereunder, in an amount exceeding the claims handler's authority established
in their existing Service Contracts without the approval of SPI. Nothing
contained in this section will require SPI to pay any claim or costs for which
it is indemnified pursuant to Section 17 herein.
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11. Bonds. Irex and SPI currently maintain bonds through a bonding program
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which provides bonding capacity for Irex and its subsidiaries, including SPI.
After the Closing Date, SPI will make required payments relating to the renewal
of bonds obtained for the benefit of SPI ("SPI Bonds") and the members of the
Irex Group will make required payments relating to the renewal of bonds for any
of them. Each of SPI and the Irex Group will use commercially reasonable best
efforts to implement separate and distinct bonding programs, independent of the
other. To the extent any member of the Irex Group is liable for any payment made
on an SPI Bond or SPI is liable for any payment made on an Irex bond or bond of
any other Irex subsidiary, the party for whose benefit the bond was obtained
shall indemnify the other party for any payments made on such bonds. Credits
received on bond premiums paid prior to the Closing Date will be returned to the
company for which the bond was obtained promptly, and in no event less than ten
(10) days after such credit is received.
12. Tax Agreements. Obligations of the parties with respect to taxes shall
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be governed by the Tax Sharing and Indemnification Agreement, dated as of the
date hereof, between Irex and SPI.
13. Closing Balance Sheet and Settlement Arrangements.
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(a) Prior to the Closing Date, but in no event more than three
business days prior to the Closing Date, the parties shall jointly prepare an
estimate of the inter-company accounts among the parties hereto, including, but
not limited to all amounts due between the parties as a result of the Special
Dividend, the Spin-off, the ECP Sale and any inter-company accounts receivable
(other than accounts receivable not yet due and payable in accordance with
customary terms between the parties) (the "Estimated Inter-company Accounts
Statement"), as of the Closing Date. Such Estimated Inter-Company Accounts
Statement shall show the net inter-company liability (or receivable) owed by SPI
to the Irex Group (or from the Irex Group to SPI) (the "Estimated Net Inter-
Company Amount") and will be prepared in accordance with the accounting policies
and practices (the "Accounting Principles") used to prepare the Balance Sheet
(as defined in the Subscription Agreement). If the Estimated Net Inter-company
Amount is reflected as a liability of SPI to the Irex Group, then SPI shall, on
the Closing Date, pay such amount to Irex. If the Estimated Net Inter-company
Amount is reflected as a receivable of SPI from the Irex Group, the Irex Group
shall, on the Closing Date, pay such amount to SPI.
(b) Promptly after the Closing Date, and in any event not later than
thirty (30) days following the Closing Date, Irex shall prepare and deliver to
SPI a statement of the inter-company accounts among the parties hereto,
including, but not limited to all amounts due between the parties as a result of
the Special Dividend, the Spin-off, the ECP Sale and any inter-company accounts
receivable (other than accounts receivable not yet due and payable in accordance
with customary terms between the parties) (the "Inter-company Accounts
Statement") as of the Closing Date. Such Inter-Company Accounts Statement shall
show the net inter-company liability (or receivable) owed by SPI to the Irex
Group (or from the Irex Group to SPI)
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(the "Net Inter-Company Amount") and will be prepared in accordance with the
Accounting Principles.
(c) After preparation of the Inter-company Accounts Statement, Irex
shall deliver the Inter-Company Accounts Statement to SPI and to SPI's
accountants (which firm shall be designated in writing to Irex prior to the
Closing Date) for review and SPI and SPI's accountants may make inquiries of
Irex and its accountants regarding questions concerning or disagreements with
the Inter-company Accounts Statement arising in the course of such review. SPI
and SPI's accountants shall complete their review of the Inter-company Accounts
Statement within thirty (30) days of the delivery of the Inter-company Accounts
Statement to SPI and SPI's accountants. Promptly following completion of its
review, SPI shall submit to Irex a letter regarding its concurrence or
disagreement with the accuracy of the Inter-company Accounts Statement. Unless
SPI delivers a letter disagreeing with the accuracy of the Inter-company
Accounts Statement within such thirty (30) day period, the Inter-company
Accounts Statement shall be binding upon the parties. Following delivery of such
letter, if SPI shall disagree as to the computation of any item in the Inter-
company Accounts Statement, Irex and SPI shall attempt promptly to resolve such
disagreement in good faith. If a resolution of such disagreement has not been
effected within fifteen (15) days (or longer, as mutually agreed by the parties)
after delivery of such letter, Irex and SPI shall submit such disagreement to an
accounting firm (independent of Irex and SPI) jointly selected by Irex and SPI.
The determination of such firm with respect to such disagreement and the
accuracy of the Inter-company Accounts Statement as a result shall be completed
within 120 days of the Closing Date and may be challenged only pursuant to
Section 21 hereof. The fees, costs and expenses of the independent accounting
firm selected in the event of a dispute shall be shared equally by Irex and SPI.
(d) If the Net Inter-company Amount, as finally determined pursuant
to Sections 13(c) and 21, reflects a liability of SPI to the Irex Group (after
taking into account all payments made by SPI to Irex or by Irex to SPI, as the
case may be, pursuant to Section 13(a)), then SPI shall be obligated to pay to
Irex the amount of any such liability with five (5) business days after the
final determination of the Net Inter-company Amount by wire transfer of
immediately available funds to an account designated in writing by Irex. If the
Net Inter-company Amount, as finally determined pursuant to Sections 13(c) and
21, reflects a receivable from the Irex Group payable to SPI (after taking into
account all payments made by SPI to Irex or by Irex to SPI, as the case may be,
pursuant to Section 13(a)), then Irex shall be obligated to pay to SPI the
amount of any such liability within five (5) business days after the final
determination of the Net Inter-company Amount by wire transfer of immediately
available funds to an account designated in writing by SPI.
14. Time of Payments. Unless otherwise specified herein, all payments
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required of either party herein other than those relating to intercompany
account adjustments, or the Special Dividend, or the payment of expenses
associated with the Spin-off and the ECP Sale will be made within 30 days of the
date invoiced or otherwise requested. Amounts to be credited shall be paid
within 30 days of the date a refund is actually received, if from a third party,
or the date the
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amount of the credit is determined, if internal to SPI or the Irex Group. The
foregoing, however, shall not apply to payments or credits for materials
purchased by the Contracting Subsidiaries from SPI after the Closing Date, it
being understood and agreed that such purchases are outside the scope of this
agreement and will be independently provided for.
15. Other Shared Arrangements. The parties agree that, with respect to any
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other shared or common arrangements which have not been identified and addressed
herein by the parties as of this date, they shall use their best efforts to
resolve such matters in a manner reasonably acceptable to the parties hereto
and consistent with the arrangements set forth herein.
16. No Time Limitations on Adjustments. The provisions herein pertaining
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to payments or credits for increased or decreased costs relating to liability
insurance, and health insurance will continue indefinitely, so long as any
claims covered by this Agreement are open.
17. Indemnification.
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(a) SPI shall indemnify, hold harmless and defend Irex and the
Contracting Subsidiaries from any and all damages, loss, liability, cost or
expense, including attorneys fees, arising from or related to: (i) business
conducted by SPI on or after January 1, 1982; and (ii) the breach by SPI of any
representation, warranty or covenant of this Agreement, subject to any
limitations provided for herein.
(b) Each member of the Irex Group shall jointly and severally
indemnify, hold harmless and defend SPI from any and all loss, liability, cost
or expense, including attorneys' fees, arising from or related to (i) business
conducted by any of them at any time; (ii) any business conducted by any party
(or its predecessors in interest) to this Agreement prior to January 1, 1982;
and (iii) the breach by any of them of any representation, warranty or covenant
of this agreement, subject to any limitations provided for herein. Without
limiting the generality of the foregoing, each member of the Irex Group shall
indemnify, hold harmless and defend SPI from any and all damages, loss,
liability, cost or expense, including attorneys' fees, arising from or relating
to the installation, sale, use, handling or removal of asbestos-containing
products by any member of the Irex Group at any time and any liability any
member of the Irex Group has assumed concerning the sale, use handling or
removal of asbestos containing products. The parties agree that any asbestos-
related general liability or product liability claim against SPI shall be
included within this indemnity unless the claim is based on meritorious
allegations which constitute a Section 3.20(f) Breach (as defined in the
Subscription Agreement) or is based only on allegations which constitute such a
breach.
(c) The party seeking indemnity under this paragraph 17 (the
"Indemnified Party") shall provide the party from which indemnity is sought (the
"Indemnifying Party") with prompt notice of any notice, demand, claim, suit or
proceeding which may result in an indemnity obligation ("Indemnified Claim").
Upon receipt of such notice, the Indemnifying Party shall immediately undertake
the defense of such Indemnified Claim, and pay all out of pocket costs and
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expenses associated therewith. The Indemnifying Party shall keep the Indemnified
Party informed of all developments concerning the Indemnified Claim, and shall
afford the Indemnified Party the opportunity, at the Indemnified Party's
expense, to associate counsel in the defense of the Indemnified Claim if it so
chooses. The Indemnified Party shall provide the Indemnifying Party with any
necessary cooperation in the defense of the Indemnified Claim. So long as it
agrees to make prompt payment, the Indemnifying Party may settle, compromise or
resolve the Indemnified Claim for any amount which it determines appropriate. No
delay in giving notice shall relieve a party of any liability hereunder unless
the party is materially and adversely affected by the delay.
(d) Nothing contained in subparagraph (a) and (b) above shall affect
the obligation of SPI, for warranties for materials sold by SPI to the
Contracting Subsidiaries. The warranties shall be as provided at the time of
sale, and shall be unaffected by this agreement.
18. Non-Compete; Non-Solicitation. (a) For a period of five (5) years from
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the Closing Date, the Irex Group, and any business or entity owned or controlled
in whole or in part by any of them shall not distribute any mechanical
insulation, acoustical ceiling, passive fire protection and related or ancillary
products in competition with SPI, and SPI and any business or entity owned or
controlled by it in whole or in part shall not engage in any insulation
contracting, interior finish contracting, asbestos, lead or hazardous material
abatement contracting, or any related specialty contracting in competition with
any member of the Irex Group. It shall not be a violation of this agreement for
any member of the Irex Group to continue any resale of materials which it is
conducting on the Closing Date from the same location and on the same scale, or
to make incidental or opportunistic sales of materials. The parties agree that
remedies at law are inadequate for a breach of this provision, and that, in
addition to any other available remedies, the party seeking to enforce this
provision may obtain an injunction against any breach hereof.
(b) For the period of three (3) years from the Closing Date, no
member of the Irex Group shall, without the prior written consent of SPI,
employ, solicit for employment or otherwise contract for the services of any
employee of SPI or any of its Affiliates (as defined below) at the time of this
Agreement, or who shall subsequently become an employee of SPI or any of its
Affiliates. For the period of three (3) years from the Closing Date, SPI shall
not, without the prior written consent of Irex, employ, solicit for employment
or otherwise contract for the services of any employee of the Irex Group or any
of its Affiliates at the time of this Agreement, or who shall subsequently
become an employee of a member of the Irex Group or any of its Affiliates.
Notwithstanding the foregoing, no party hereto shall be prohibited from
employing a person employed by another party hereto (or any Affiliate of such
party) if (x) such person responds to a general solicitation, by newspaper
advertisement or other means, which is not targeted solely at employees of such
other party or (y) such person has previously ceased to be employed by such
other party (or Affiliate of such party ) under circumstances which did not
involve a violation of this agreement.
(c) For the purposes of this Section 18, the term "Affiliate" shall
mean, with respect to any person or entity, any other person or entity which,
directly or indirectly, owns or is
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owned by, or is under common ownership with, such person or entity. The term
"own" (including, with correlative meanings, "owned by" and "under common
ownership with") shall mean the ownership of 50% or more of the voting
securities (or their equivalent) of a particular entity.
19. Offset. In the event that any member of the Irex Group fails to pay an
------
obligation to SPI when due, SPI may offset any sum which it owes to any member
of the Irex Group against the unpaid obligation. In the event that SPI fails to
pay an obligation to any member of the Irex Group when due, any member of the
Irex Group may off set any sum which it owes SPI against the unpaid obligation.
20. Confidentiality. (a) Each of the parties, for itself and all of its
---------------
present or future Affiliates, hereby agrees that it and all present and future
Affiliates will not in any manner, directly or indirectly, singly or jointly,
intentionally or negligently disclose to any unauthorized party any Confidential
Proprietary Information of the other party. "Confidential Proprietary
Information" shall mean confidential information including, without limitation,
trade secrets, client lists and other confidential and proprietary client
information, marketing and business plans, pricing methods, methods of
recruiting procedures, innovative techniques and other confidential and
proprietary information of the other party. For the purposes of the foregoing,
Confidential Proprietary Information shall not include:
(i) information which is or becomes generally available to the
public other than as a result of a disclosure by a party;
(ii) information which was already known to a party on a
nonconfidential basis prior to being furnished to a party by another party;
(iii) information independently developed by a party; or
(iv) information which becomes available to a party on a
nonconfidential basis from another source if such source was not known to such
party to be subject to any prohibition against transmitting the information.
(b) If any of the parties hereto or any agent or representative of
any such party (a "Recipient Party"), is requested or required (by deposition,
interrogatory, request for documents, subpoena, civil investigative demand or
similar process), to disclose any Confidential Proprietary Information of
another party hereto, such party shall notify the party to whom such
Confidential Proprietary Information belongs so that such party may promptly
seek an appropriate protective order and/or take any other action to protect the
confidentiality of such Confidential Proprietary Information. In the event that
such a protective order is not obtained or that the party to which such
Confidential Proprietary Information belongs waives compliance with this
Section, (i) the Recipient Party may disclose to the tribunal or other person
only that portion of the Confidential Proprietary Information as the Recipient
Party is advised by its counsel is legally
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required to be disclosed and shall use its best efforts to obtain assurances
that such Confidential Proprietary Information shall be treated confidentially
and (ii) the Recipient party shall not be liable for such disclosure unless such
disclosure to such tribunal or other person was caused by or resulted from, a
previous disclosure by such Recipient Party which was not permitted pursuant to
this Agreement.
21. Dispute Resolution. All controversies or claims arising out of or
------------------
relating to this Agreement shall be settled in the first instance by non-binding
mediation between the parties using mutually agreeable professional mediation
services. Failing a resolution through mediation, the parties may bring a
judicial proceeding concerning such dispute solely in the courts of the
Commonwealth of Pennsylvania located in the County of Lancaster or in the United
States District Court for the Eastern District of Pennsylvania. By execution and
delivery of this Agreement, each of the parties to this Agreement accepts the
exclusive jurisdiction of such courts, and irrevocably agrees to be bound by any
final judgment rendered thereby in connection with this Agreement. The
interpretation and construction of this Agreement shall be governed by the laws
of the Commonwealth of Pennsylvania.
22. Access to Books and Records. Subject to the provisions of Section 20
---------------------------
herein, each party shall grant the other party reasonable access to its books
and records during regular business hours to allow the other party to provide
services under this Agreement, file tax returns, conduct litigation, or for any
other legitimate purpose. Irex will grant SPI such access to books and records
of Irex pertaining to insurance policies and programs, tax returns, computer
services and other relevant matters as is necessary for SPI to verify the
accuracy of xxxxxxxx to SPI pursuant to this Agreement.
23. Miscellaneous.
-------------
(a) Severability. If any provision of this Agreement is held invalid
------------
or unenforceable, either in its entirety or by virtue of its scope or
application to given circumstances, such provision shall thereupon be deemed
modified only to the extent necessary to render the same valid, or not
applicable to given circumstances, or excised from this Agreement, as the
situation may require, and this Agreement shall be construed and enforced as if
such provision had been included herein as so modified in scope or application
or had not been included herein, as the case may be.
(b) No Third Party Beneficiaries. Neither this Agreement nor any
----------------------------
provisions set forth herein is intended to, nor shall, create any rights nor
confer any benefits upon any person other than the parties hereto.
(c) Incorporation by Reference. The Exhibits to this Agreement
--------------------------
constitute integral parts of this Agreement and are hereby incorporated into
this Agreement by this reference. The text of the Exhibits shall prevail over
the description of such documents or the provisions hereof in this Agreement.
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(d) Notices. All notices, demands, consents or other communications
-------
required or permitted hereunder shall be in writing and shall be deemed to have
been given when personally delivered, when sent by registered or certified mail,
return receipt requested, postage prepaid, or when sent via prepaid overnight
courier, addressed to their respective addresses as set forth below or to such
other place as the parties hereto shall specify by notice to the other parties
hereto given in the manner required above. Any notice, demand, consent or other
communication given hereunder in the manner required above shall be deemed to
have been effected and received as of the date hand-delivered or, if mailed,
three days after the date so mailed, or if sent via overnight courier, the next
business day.
If to any member of the Irex Group: Irex Corporation
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: X.X. Xxxxxxx,
President and Chief Executive Officer
With a copy to: Xxxxx X. Xxxxxxx, Esquire
Sr. Vice President & General Counsel
Irex Corporation
000 Xxxxx Xxxx Xxxxxx
P. O. Xxx 0000
Xxxxxxxxx, XX 00000
If to SPI: Specialty Products & Insulation Co.
0000 Xxxxxxxxxx Xxxxxx
P. O. Xxx 000
Xxxx Xxxxxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxx, President
With a copy to: Xxxxx X. Whare, Esquire
Corporate Counsel
Specialty Products & Insulation Co.
0000 Xxxxxxxxxx Xxxxxx
P. X. Xxx 000
Xxxx Xxxxxxxxxx, XX 00000-0000
(e) Entire Agreement. All prior negotiations, discussions and
----------------
agreements of, by and between the parties and/or their representatives,
concerning the subject matter hereof, whether in writing or by parol, are herein
merged and engrossed, and except for this Agreement and the Benefit Sharing
Agreement and Tax Sharing and Indemnification Agreements and other agreements,
documents and instruments contemplated hereby and thereby, there are and shall
be
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no other agreements and/or understandings by the parties other than as contained
herein or therein or in a subsequent amendment or rider executed by the parties
with all of the formalities hereto. All prior written or oral contracts,
agreements or arrangements between Irex and SPI with regard to management or
administrative services (to the extent such agreements are not contained herein)
are hereby terminated.
(f) Governing Law; Jurisdiction. This Agreement shall be governed by,
---------------------------
and construed and enforced in accordance with, the laws of the Commonwealth of
Pennsylvania, as from time to time constituted and without regard to the
conflicts of laws principles thereof. Subject to Section 21, the parties agree
that any action brought in connection with this Agreement shall be maintained
only in the Court of Common Pleas of Lancaster County or the United States
District Court for the Eastern District of Pennsylvania, or a court to which an
appeal from any such court could be taken. The parties consent to the exclusive
personal jurisdiction of such courts for all such purposes.
(g) Amendments, Waivers and Consents. Any provision in this Agreement
--------------------------------
to the contrary notwithstanding, changes in or additions to this Agreement may
be made, and compliance with any covenant or provision herein set forth may be
omitted or waived, with the written consent of the parties hereto.
(h) Effect of Headings. The section headings contained herein are for
------------------
convenience of reference only and in no way shall they be held to nor shall they
affect the construction hereof.
(i) Counterparts. This Agreement may be executed in counterparts, all
------------
of which together shall constitute a single agreement.
(j) Survival. All agreements made by the parties in this Agreement,
--------
or in any certificates or other documents delivered pursuant hereto, shall
survive the Closing Date.
(k) Assignment. This Agreement shall not be assignable by either
----------
party without the prior written approval of the other party. To the extent
assignable, this Agreement shall be binding upon, and inure to the benefit of,
the parties hereto and their successors and assigns.
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IN WITNESS WHEREOF, the parties have executed this Corporate Separation
Agreement the day and year first above written.
IREX CORPORATION
By:________________________________________
Attest:____________________
Secretary
ACANDS, INC.
By:________________________________________
Attest:____________________
Secretary
CENTIN, LLC
By:________________________________________
Attest:____________________
Secretary
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SPACECON, LLC
By:________________________________________
Attest:___________________
Secretary
SPECIALTY PRODUCTS &
INSULATION CO.
By:________________________________________
Attest:____________________
Secretary
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