EXHIBIT 10.1
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CONTRIBUTION AGREEMENT
Dated as of December 15, 1997
AMONG
STREAM INTERNATIONAL INC.,
MODUS MEDIA INTERNATIONAL, INC.,
and
MODUS MEDIA INTERNATIONAL HOLDINGS, INC.
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TABLE OF CONTENTS
Page
ARTICLE 1 - DEFINITIONS.................................................................. 2
ARTICLE 2 - THE SEPARATION............................................................... 12
2.1 Transfer of MMI Assets and Assumption of MMI Assumed Liabilities............... 12
2.1.1 Transfer of Assets...................................................... 12
2.1.2 Assumption of Liabilities............................................... 12
2.1.3 Transfer to MMI......................................................... 12
2.1.4 Further Assurances...................................................... 13
2.1.5 Tax Treatment of Drop-down.............................................. 14
2.1.6 Allocation of Cash...................................................... 14
2.2 Ancillary Agreements........................................................... 15
2.3 Resignations................................................................... 15
2.4 Transfers Not Effected on or Prior to the Drop-down............................ 15
2.5 No Representations or Warranties; Consents..................................... 16
2.6 Insurance...................................................................... 16
2.7 Stock Options.................................................................. 16
2.8 Extension of Certain Leases.................................................... 18
2.9 Financial Statements........................................................... 18
ARTICLE 3 - CERTAIN EMPLOYEE AND BENEFIT PLAN MATTERS.................................... 19
3.1 Certain MMI Plans; Assumption of Obligations by MMI............................ 19
3.2 Certain Payments by Stream International....................................... 19
3.3 Employees on Certain Leave..................................................... 20
3.4 Stream Savings Plan............................................................ 20
3.4.1 Creation of Multiple Employer Plan...................................... 20
3.4.2 Subsequent Contributions................................................ 20
3.4.3 New Savings Plan........................................................ 21
3.5 Employee Matters............................................................... 21
3.6 Information Regarding Certain Former Employees of X.X. Xxxxxxxxx............... 21
ARTICLE 4 - THE DISTRIBUTION............................................................. 21
4.1 Action Prior to the Distribution............................................... 21
4.2 Stream International Board Action; Conditions Precedent to the Distribution.... 22
ARTICLE 5 - INDEMNIFICATION.............................................................. 22
5.1 Indemnification by Stream International for Stream International Liabilities... 22
5.2 Indemnification by MMI for MMI Liabilities..................................... 22
5.3 Limitations on Indemnification Obligations................................. 23
5.4 Procedure for Indemnification.............................................. 24
5.4.1 Third Party Claims; Notice......................................... 24
5.4.2 Defense of Third Party Claims...................................... 24
5.4.3 Cooperation by Indemnitee.......................................... 25
5.4.4 Limitation on Authority to Settle Claim............................ 25
5.4.5 Other Claims....................................................... 25
5.4.6 Advancement of Certain Expenses.................................... 26
5.4.7 Subrogation to Rights of Indemnitee................................ 26
5.4.8 Named Parties...................................................... 26
5.4.9 Dispute Resolution................................................. 26
5.4.10 Determination of Time of Payment of Indemnitee..................... 27
5.5 Remedies Cumulative........................................................ 28
5.6 Nature of Indemnity Payments............................................... 28
ARTICLE 6 - ACCESS TO INFORMATION AND SERVICES....................................... 29
6.1 Provision of Corporate Records............................................. 29
6.2 Access to Information...................................................... 29
6.3 Production of Witnesses.................................................... 29
6.4 Reimbursement.............................................................. 29
6.5 Retention of Records....................................................... 30
6.6 Confidentiality............................................................ 30
6.7 Financial Statements....................................................... 30
ARTICLE 7 - MISCELLANEOUS............................................................ 32
7.1 Rule of Construction....................................................... 32
7.2 Survival of Agreements..................................................... 32
7.3 Expenses................................................................... 32
7.4 Governing Law.............................................................. 32
7.5 Notices.................................................................... 33
7.6 Amendments................................................................. 33
7.7 Successors and Assigns..................................................... 33
7.8 Abandonment of Distribution................................................ 34
7.9 No Third Party Beneficiaries............................................... 34
7.10 Titles and Headings........................................................ 34
7.11 Exhibits and Schedules..................................................... 34
7.12 Counterparts............................................................... 34
7.13 Legal Enforceability....................................................... 34
7.14 Entire Agreement........................................................... 35
List of Schedules
Schedules:
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Schedule A MMI Subsidiaries
Schedule B Stream International Subsidiaries
Schedule C Certain Asset and Stock Transfer Agreements
Schedule 3.1 - Employee Benefit Plans
CONTRIBUTION AGREEMENT
This CONTRIBUTION AGREEMENT (the "Agreement"), dated as of December 15,
1997, is among Stream International Inc., a Delaware corporation (f/k/a Stream
International Holdings Inc.) ("Stream International"), Modus Media International
Holdings, Inc., a Delaware corporation and, as of the date hereof, a wholly-
owned direct subsidiary of Stream International ("MMI Holdings"), and Modus
Media International, Inc., a Delaware corporation and a wholly-owned subsidiary
of MMI Holdings ("MMI").
WHEREAS, Stream International has been engaged in (i) the development,
marketing and sale of outsource technical support services to software
publishers, hardware manufacturers and corporate customers (as more fully
defined below, the "Stream International Business"); (ii) the development,
marketing and sale of printing, CD-ROM and disk replication, packaging,
fulfillment and inventory management services (as more fully defined below, the
"MMI Business"); and (iii) the marketing and resale of software and the
development, marketing and sale of software license management services and
software consulting services (as more fully defined below, the "CST Business");
WHEREAS, the Board of Directors of Stream International has determined that
it is appropriate and desirable to separate the MMI Business into a separate
company by (i) transferring the MMI Business to MMI Holdings in exchange for
voting common stock and preferred stock of MMI Holdings; (ii) causing MMI
Holdings to transfer the MMI Business (other than certain indebtedness owed to
X.X. Xxxxxxxxx) to MMI or certain of its Subsidiaries (together with the
transactions described in clause (i), the "Drop-down"); and (iii) prior to the
earlier of (a) the closing of the initial public offering of common stock of
Stream International (the "Stream IPO") and (b) January 10, 1998, distributing
to the holders of common stock of Stream International as of the Record Date all
of the voting common stock of MMI Holdings held by Stream International (the
"Distribution");
WHEREAS, concurrently with the Drop-down, Stream International is effecting
a similar separation of the CST Business by (i) causing Stream International
Services Corp., a Delaware corporation (f/k/a Stream International Inc.)
("SISC"), to transfer the CST Business to Corporate Software & Technology
Holdings, Inc., a Delaware corporation ("CST Holdings"), in exchange for voting
common stock of CST Holdings issued to SISC, and (ii) causing such outstanding
voting stock of CST Holdings to be transferred by SISC to Stream International;
WHEREAS, Stream International intends thereafter to distribute to the
holders of common stock of Stream International as of the Record Date all of the
voting common stock of CST Holdings held by Stream International;
WHEREAS, Stream International, MMI Holdings and MMI have determined that it
is necessary and desirable to set forth the principal corporate transactions
required to effect the Drop-down and the Distribution and to set forth other
agreements that will govern certain relationships and other matters among Stream
International, MMI Holdings and MMI in connection with the Drop-down and the
Distribution; and
WHEREAS, the Drop-down is intended to be a taxable exchange, not subject to
Section 351 of the Code.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
Certain terms are used in this Agreement as specifically defined herein
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined). These definitions are set forth in this Article 1.
Action means any action, suit, arbitration, inquiry, proceeding or
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investigation by or before any Governmental Authority or arbitration tribunal.
Additional Option shall have the meaning ascribed in Section 2.7.
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Adjusted Option shall have the meaning ascribed in Section 2.7.
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Affiliate means "affiliate" as defined in Rule 12b-2 promulgated under the
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Exchange Act, as such Rule is in effect on the date hereof; provided, however,
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that (i) MMI Holdings, MMI and the MMI Subsidiaries, (ii) CST Holdings, CST and
the CST Subsidiaries and (iii) Stream International and the Stream International
Subsidiaries shall not be deemed Affiliates of each other for purposes of this
Agreement; and provided further, that X.X. Xxxxxxxxx (and its Subsidiaries other
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than CST Holdings, MMI Holdings and Stream International and their Subsidiaries
following the Drop-down), on the one hand, and CST Holdings, MMI Holdings and
Stream International (and each of their Subsidiaries following the Drop-down),
on the other hand, shall not be deemed Affiliates of each other for purposes of
this Agreement.
Agreement shall have the meaning ascribed in the Preamble.
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Ancillary Agreements means all of the agreements, instruments,
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understandings, assignments or other arrangements entered into in connection
with the Drop-down and/or the Distribution, including, without limitation, (i)
the Conveyancing Instruments, (ii) the Services Agreements, (iii) the Tax
Indemnification Agreements, (iv) subleases, subcontracts and other instruments
entered into to effect the transactions contemplated hereby, (v) the asset and
stock transfer agreements and instruments for certain Subsidiaries and branches
of SISC and Subsidiaries of Stream International, including those listed on
Schedule C hereto and (vi) the Letter Agreement.
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Assets means, with respect to any Person, the assets, properties and rights
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(including goodwill) of such Person, wherever located (including in the
possession of vendors or other third parties or elsewhere), whether real,
personal or mixed, tangible, intangible or contingent, in each case whether or
not recorded or reflected or required to be recorded or reflected on the books
and records or financial statements of such Person, including the following:
(a) all accounting and other books, records and files whether in
paper, microfilm, microfiche, computer tape or disc, magnetic tape or any other
form;
(b) all apparatus, computers and other electronic data processing
equipment, fixtures, machinery, equipment, furniture, office equipment,
automobiles, trucks, rolling stock, motor vehicles and other transportation
equipment, special and general tools, test devices, prototypes and models and
other tangible personal property;
(c) all inventories of materials, parts, raw materials, supplies,
work-in-process and finished goods and products;
(d) all interests in real property of whatever nature, including
easements, whether as owner, mortgagee or holder of a Security Interest in real
property, lessor, sublessor, lessee, sublessee or otherwise;
(e) all interests in any capital stock or other equity interests of
any Subsidiary of such Person or any other Person, all bonds, notes, debentures
or other securities issued by any such Subsidiary or any other Person, all
loans, advances or other extensions of credit or capital contributions to any
such Subsidiary or any other Person and all other investments in securities of
any Person;
(f) all license agreements, leases of personal property, open
purchase orders, unfilled orders for the manufacture and sale of products and
other contracts, agreements or commitments;
(g) all deposits, letters of credit and performance and surety bonds;
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(h) all written technical information, data, specifications, research
and development information, engineering drawings, operating and maintenance
manuals, and materials and analyses prepared by consultants and other third
parties;
(i) all domestic and foreign patents, copyrights, trade names,
trademarks, service marks and registrations and applications for any of the
foregoing, mask works, trade secrets, inventions, other proprietary information
and licenses from third Persons granting the right to use any of the foregoing;
(j) all computer applications, programs and other software, including
operating software, network software, firmware, middleware, design software,
design tools, systems documentation and instructions;
(k) all cost information, sales and pricing data, customer prospect
lists, supplier records, customer and supplier lists, customer and vendor data,
correspondence and lists, product literature, artwork, design, development and
manufacturing files, vendor and customer drawings, formulations and
specifications, quality records and reports and other books, records, studies,
surveys, reports, plans and documents;
(l) all prepaid expenses, trade accounts and other accounts and notes
receivables;
(m) all rights under contracts or agreements, all claims or rights
against any Person arising from the ownership of any Asset, all rights in
connection with any bids or offers and all claims, choses in action or similar
rights, whether accrued or contingent;
(n) all rights under insurance policies and all rights in the nature
of insurance, indemnification or contribution;
(o) all licenses, permits, approvals and authorizations which have
been issued by any Governmental Authority;
(p) subject to Section 2.1.6, cash or cash equivalents, bank
accounts, lock boxes and other deposit arrangements; and
(q) interest rate, currency, commodity or other swap, collar, cap or
other hedging or similar agreements or arrangements.
Audited Financial Statements shall have the meaning ascribed in Section
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2.9.
Claim Notice shall have the meaning ascribed in Section 5.4.5.
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Code means the Internal Revenue Code of 1986, as amended, and regulations
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and rulings thereunder and shall include corresponding provisions of any
subsequently enacted federal tax law.
Consents means any consents, waivers or approvals from, or notification
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requirements to, any third parties.
Controlled Group shall have the meaning ascribed in Section 3.4.1.
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Conveyancing Instruments means, collectively, the various agreements,
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instruments and other documents, in form and substance mutually satisfactory to
Stream International and MMI Holdings, entered into or to be entered into to
effect the transfer of the MMI Assets by Stream International or its
Subsidiaries to MMI Holdings or its Subsidiaries and the assumption by MMI
Holdings or its Subsidiaries of the MMI Assumed Liabilities.
CST shall have the meaning ascribed in the Preamble.
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CST Assets shall have the meaning ascribed in the CST Contribution
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Agreement, as in effect on the date hereof.
CST Assumed Liabilities shall have the meaning ascribed in the CST
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Contribution Agreement, as in effect on the date hereof.
CST Balance Sheet shall have the meaning ascribed in the CST Contribution
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Agreement, as in effect on the date hereof.
CST Business shall have the meaning ascribed in the CST Contribution
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Agreement, as in effect on the date hereof.
CST Contribution Agreement shall have the meaning ascribed in Section 7.3.
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CST Holdings shall have the meaning ascribed in the Preamble.
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CST Subsidiary shall have the meaning ascribed in the CST Contribution
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Agreement, as in effect on the date hereof.
Determination Event shall have the meaning ascribed in Section 5.4.10.
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Distribution shall have the meaning ascribed in the Preamble.
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Distribution Date means the date on which the Distribution occurs.
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Drop-down shall have the meaning ascribed in the Preamble.
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Due Date shall have the meaning ascribed in Section 5.4.10.
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Employee Benefit Plan means any plan, fund or other arrangement within the
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meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, and any fringe benefit or similar arrangement.
Exchange Act means the Securities Exchange Act of 1934, as amended.
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Former MMI Employee means any person who was an employee of Stream
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International or its Subsidiaries and who worked primarily in the MMI Business
but terminated such employment prior to the date hereof, including, without
limitation, any person who is listed on Schedule 3.1 hereto and who is not a MMI
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Employee.
GAAP means United States generally accepted accounting principles
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consistently applied.
Governmental Approvals means any notices, reports or other filings made
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with or to be made with, or any consents, registrations, approvals, permits or
authorizations obtained from to be obtained from, any Governmental Authority.
Governmental Authority shall mean any federal, state, local, foreign or
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international court, government, department, commission, board, bureau, agency,
official or other regulatory, administrative or governmental authority.
Indemnifiable Losses shall have the meaning ascribed in Section 5.1.
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Indemnifying Party shall have the meaning ascribed in Section 5.3.
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Indemnitee shall have the meaning ascribed in Section 5.3.
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Information shall have the meaning ascribed in Section 6.2.
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Insurance Program means the various insurance policies maintained by Stream
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International and/or X.X. Xxxxxxxxx pursuant to which various insurance carriers
provide insurance coverage to Stream International and its Subsidiaries
(including, prior to the Distribution, MMI Holdings and the MMI Subsidiaries and
CST Holdings and the CST Subsidiaries); provided, however, that the term
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"Insurance Program" shall not include any insurance policy used to pay benefits
under an Employee Benefit Plan, including but not limited to the Employee
Benefit Plans listed on Schedule 3.1 hereto.
Letter Agreement means the Letter Agreement among Stream International, MMI
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and MMI Holdings dated the date hereof with respect to certain Assets and
Liabilities.
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Liabilities means, with respect to any Person, any and all debts,
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liabilities and obligations, absolute or contingent, matured or unmatured,
liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever
arising, including after the Distribution (unless otherwise specified in this
Agreement), of such Person including all costs and expenses relating thereto,
and including, without limitation, those debts, liabilities and obligations
arising under any law, rule, regulation, Action, threatened Action, order or
consent decree of any Governmental Authority or any award of any arbitrator of
any kind, and those arising under any contract, commitment or undertaking.
MMI shall have the meaning ascribed in the Preamble.
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MMI Assets means (i) all Assets of Stream International and its
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Subsidiaries used primarily in the MMI Business, including but not limited to
those Assets shown on Schedule A to the Letter Agreement and those Assets
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reflected on the MMI Balance Sheet, (ii) those Assets of Stream International
and its Subsidiaries that are not primarily used in the MMI Business but that
are identified on Schedule B to the Letter Agreement, and (iii) all Assets of
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Stream International and its Subsidiaries other than the Stream International
Assets, the CST Assets, the outstanding stock issued by and the Assets of
Corporate Software & Technology GmbH (f/k/a Stream International GmbH), and the
outstanding stock issued by and the Assets of Corporate Software & Technology
Limited (f/k/a Corporate Software Limited) and its Subsidiary, International
Software Limited. "MMI Assets" shall not include the original corporate minute
books, stock ledgers and certificates and corporate seals of Stream
International.
MMI Assumed Liabilities means (i) all Liabilities of Stream International
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or its Subsidiaries relating to the MMI Business, including without limitation,
all Liabilities related to the MMI Assets, excluding all indebtedness for
borrowed money to X.X. Xxxxxxxxx other than as set forth in clause (iv) below,
(ii) all Liabilities reflected on the MMI Balance Sheet, excluding all
indebtedness for borrowed money to X.X. Xxxxxxxxx other than as set forth in
clause (iv) below, (iii) the additional Liabilities listed on Schedule C to the
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Letter Agreement, (iv) the net amount of indebtedness to X.X. Xxxxxxxxx set
forth on Schedule D to the Letter Agreement, (v) the Liabilities retained or
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assumed by MMI pursuant to Article 3 hereof, and (vi) all Liabilities of Stream
International or its Subsidiaries (other than, to the extent covered in clause
(i) above, the MMI Subsidiaries) arising out of or related to actions, omissions
or events occurring at or prior to the time of the Distribution which are not
included in the CST Assumed Liabilities or Stream International Liabilities;
provided, however, that the term "MMI Assumed Liabilities" shall not include any
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Liabilities related to Taxes (it being understood that Liabilities related to
Taxes shall be governed by the Tax Indemnification Agreements).
7
MMI Balance Sheet means the MMI balance sheet as of November 30, 1997,
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prepared in accordance with GAAP, a copy of which will be furnished by MMI to
Stream International pursuant to Section 6.7.1 hereof.
MMI Benefit Plans shall have the meaning ascribed in Section 3.1.
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MMI Business means (i) the businesses, Assets and operations of Stream
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International and its Subsidiaries primarily related to the development,
marketing and sale of printing, CD-ROM and disk replication, packaging,
fulfillment and inventory management services, including, without limitation,
all businesses, Assets or operations primarily managed or operated by, or
operationally related primarily to, any of such businesses, which have been sold
or otherwise disposed of or discontinued prior to the Drop-down and (ii)
following the Drop-down, the businesses, Assets and operations of MMI Holdings
and its Subsidiaries as they may be constituted from time to time to the extent
not included in clause (i) of this sentence.
MMI Compensation Agreement shall have the meaning ascribed in Section
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2.1.3.
MMI Employee means (i) any individual who, on or immediately prior to the
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date hereof was employed by Stream International or any of its Subsidiaries, or
who is on a leave of absence approved by Stream International or any of its
Subsidiaries and who, immediately after the Distribution, is employed by MMI
Holdings or any MMI Subsidiary, or who is continuing on a leave of absence
approved by MMI Holdings or any MMI Subsidiary, and (ii) any individual whose
employment is transferred from Stream International or any of its Subsidiaries
to MMI Holdings or any MMI Subsidiary within 12 months after the date hereof.
MMI Foreign Benefit Plans shall have the meaning ascribed in Section 3.1.
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MMI Holdings shall have the meaning ascribed in the Preamble.
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MMI Indemnitee shall have the meaning ascribed in Section 5.1.
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MMI Subsidiary means the Subsidiaries of Stream International listed on
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Schedule A hereto, each of which were Subsidiaries of MMI Holdings prior to the
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date hereof or will become Subsidiaries of MMI Holdings as a result of the Drop-
down.
New MMI Savings Plan shall have the meaning ascribed in Section 3.4.3.
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1995 Contribution Agreement means the Contribution Agreement dated as of
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April 21, 1995, among X.X. Xxxxxxxxx, Stream International Holdings Inc.
(formerly
8
known as X.X. Xxxxxxxxx Global Software Services Corp. and now known as Stream
International Inc.) and Software Holdings, Inc.
Person means any natural person or any corporation, association,
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partnership, joint venture, company, limited liability company, trust,
organization, business or government or any governmental agency or political
subdivision thereof.
Record Date means the close of business on the date to be determined by the
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Stream International Board as the record date for the Distribution.
Restructuring Expenses shall have the meaning ascribed in Section 7.3.
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X.X. Xxxxxxxxx means X.X. Xxxxxxxxx & Sons Company, a Delaware corporation.
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Security Interest means any mortgage, security interest, pledge, lien,
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charge, claim, option, right to acquire, voting or other restriction, right-of-
way, covenant, condition, easement, encroachment, restriction on transfer, or
other encumbrance of any nature whatsoever.
Services Agreements means the Transitional Service Agreement between SISC
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and MMI, the Transitional Service Agreement between SISC and CST and the
Transitional Service Agreement between MMI and CST, each dated the date hereof,
pursuant to which the parties will provide various services to each other
following the date hereof.
SISC shall have the meaning ascribed in the Preamble.
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Stream International shall have the meaning ascribed in the Preamble.
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Stream International Assets means all Assets of Stream International and
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its Subsidiaries used primarily in the Stream International Business, including,
but not limited to (i) Assets reflected on the Stream International Balance
Sheet, and (ii) Assets shown on Schedule E to the Letter Agreement; provided,
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however, that the term "Stream International Assets" shall not include the CST
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Assets, the MMI Assets, the outstanding stock issued by and the Assets of
Corporate Software & Technology GmbH (f/k/a Stream International GmbH), and the
outstanding stock issued by and the Assets of Corporate Software & Technology
Limited (f/k/a Corporate Software Limited) and its Subsidiary, International
Software Limited.
Stream International Balance Sheet means the Stream International balance
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sheet as of November 30, 1997, prepared in accordance with GAAP, a copy of which
will be furnished to MMI Holdings in accordance with Section 6.7.4.
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Stream International Board means the Board of Directors of Stream
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International.
Stream International Business means (i) the businesses, Assets and
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operations of Stream International and its Subsidiaries primarily related to the
development, marketing and sale of outsource technical support services,
including, without limitation, all businesses, Assets of any Person or
operations primarily managed or operated by, or operationally related primarily
to, any of such businesses which have been sold or otherwise disposed of or
discontinued prior to the Drop-down and (ii) following the Drop-down, the
businesses, Assets and operations of Stream International or its Subsidiaries as
they may be constituted from time to time to the extent not included in clause
(i) of this sentence; provided, however, that the term "Stream International
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Business" shall not include the MMI Business or the CST Business.
Stream International Common Stock means the Class A, Class A-1, Class B-N
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and Class B-V Common Stock, each par value $.01 per share, of Stream
International.
Stream International Indemnitee shall have the meaning ascribed in Section
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5.2.
Stream International Liabilities means (i) all Liabilities of Stream
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International or any of its Subsidiaries relating primarily to the Stream
International Business, including, without limitation, all Liabilities related
primarily to the Stream International Assets, but excluding all indebtedness for
borrowed money to X.X. Xxxxxxxxx other than as set forth in clause (iii) below,
(ii) all Liabilities reflected on the Stream International Balance Sheet, but
excluding all indebtedness for borrowed money to X.X. Xxxxxxxxx other than as
set forth in clause (iii) below, (iii) the net indebtedness to X.X. Xxxxxxxxx
shown on Schedule F to the Letter Agreement and (iv) the Liabilities identified
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on Schedule G to the Letter Agreement; provided, however, that the term "Stream
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International Liabilities" shall not include Liabilities of Stream International
as a guarantor of or surety for any MMI Assumed Liabilities or CST Assumed
Liabilities, shall not include the MMI Assumed Liabilities or the CST Assumed
Liabilities, and shall not include any Liabilities related to Taxes (it being
understood that Liabilities related to Taxes shall be governed by the Tax
Indemnification Agreements).
Stream International Option means a stock option, granted under Stream
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International's 1995 Stock Option Plan, 1995 Replacement Stock Option Plan or
1995 California Stock Option Plan, outstanding as of the Distribution Date.
Stream International Subsidiary means the Subsidiaries of Stream
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International, other than CST Holdings or any CST Subsidiary, MMI Holdings or
any MMI Subsidiary, Corporate Software & Technology GmbH (f/k/a Stream
International GmbH), Corporate Software & Technology Limited (f/k/a Corporate
Software
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Limited), and International Software Limited, including without limitation, the
entities listed on Schedule B hereto.
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Stream IPO shall have the meaning ascribed in the Preamble.
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Stream Savings Plan shall have the meaning ascribed in Section 3.4.1.
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Subsidiary, as used herein with respect to any Person, means any other
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Person of which such Person shall at the time own, directly or indirectly
through one or more Subsidiaries, at least a majority of the outstanding capital
stock (or other shares of beneficial interest) entitled to vote generally, or
shall hold at least a majority of partnership or similar interests, or shall be
a general partner.
Target Amounts shall have the meaning ascribed in Section 2.1.6.
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Tax shall have the meaning ascribed in the Tax Sharing Agreement.
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Tax Indemnification Agreements means the Tax Sharing Agreement and the Tax
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Reimbursement Agreement.
Tax Reimbursement Agreement means the Tax Reimbursement Agreement between
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Stream International and X.X. Xxxxxxxxx, dated the date hereof.
Tax Return shall have the meaning ascribed in the Tax Sharing Agreement.
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Tax Sharing Agreement means the Tax Sharing Agreement among Stream
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International, MMI Holdings, MMI, CST Holdings and CST, dated the date hereof.
Third Party Claim shall have the meaning ascribed in Section 5.4.1.
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Third Party Claim Notice shall have the meaning ascribed in Section 5.4.1.
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Transfer Date means (i) with respect to any MMI Employee described in
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clause (a) of the definition of MMI Employee, the date hereof, and (ii) with
respect to any MMI Employee described in clause (b) of the definition of MMI
Employee, the date on which such MMI Employee's employment is transferred from
Stream International or any Stream International Subsidiary to MMI Holdings or
any MMI Subsidiary.
Unaudited Financial Statements shall have the meaning ascribed in Section
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2.9.
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ARTICLE 2
THE SEPARATION
This Article 2 sets forth certain transactions to be consummated in
connection with the Drop-down. Subject to the terms and conditions of this
Agreement, the parties shall consummate such transactions on (except to the
extent specified in Section 2.1.3) the date hereof at such times and in such
sequence as they shall mutually agree.
2.1 Transfer of MMI Assets and Assumption of MMI Assumed Liabilities .
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2.1.1 Transfer of Assets. Except as set forth in Section 2.1.3, on
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the date hereof, Stream International and/or the Stream International
Subsidiaries shall, to the extent necessary by means of appropriate Conveyancing
Instruments, convey, transfer, assign and deliver to MMI Holdings or, if
directed by MMI Holdings, to its Subsidiaries, and MMI Holdings (or its
Subsidiaries, as applicable) will accept from Stream International and/or the
Stream International Subsidiaries, all of Stream International's or its
Subsidiaries' rights, title and interest in and to all of the MMI Assets.
2.1.2 Assumption of Liabilities. In consideration for the
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contribution described in Section 2.1.1, simultaneously with such contribution,
(i) MMI Holdings and/or its Subsidiaries shall, to the extent necessary by means
of appropriate Conveyancing Instruments, assume all of Stream International's
and its Subsidiaries' (other than any MMI Subsidiary) duties, obligations and
responsibilities with respect to the MMI Assumed Liabilities and (ii) MMI
Holdings shall issue to Stream International voting common stock and preferred
stock of MMI Holdings.
2.1.3 Transfer to MMI. Other than certain foreign MMI Assets that
---------------
have been assigned prior to the date hereof, no MMI Asset shall be conveyed,
transferred, assigned or delivered under this Section 2.1, and any purported
conveyance, transfer, assignment, or delivery of any MMI Asset under this
Section 2.1 shall be null and void, unless (i) simultaneously therewith or
immediately prior thereto MMI Holdings shall have delivered to Xxxx Capital Inc.
shares of non-voting common stock of CST Holdings pursuant to the MMI
Compensation Agreement among Stream International, MMI Holdings and Xxxx Capital
Inc. dated as of December 10, 1997 (the "MMI Compensation Agreement") and (ii)
at the time of any such conveyance, transfer, assignment or delivery, no person
shall own or have any beneficial interest in any non-voting stock of MMI
Holdings other than Xxxx Capital Inc. Immediately after the consummation of all
of the transfers and assumptions described in Sections 2.1.1 and 2.1.2, MMI
Holdings shall contribute all of the MMI Assets it received to MMI and MMI shall
assume all of the MMI Assumed Liabilities
12
which had been assumed by MMI Holdings (other than those described in clause
(iv) of the definition of MMI Assumed Liabilities).
2.1.4 Further Assurances.
------------------
(a) In addition to the actions specifically provided for
elsewhere in this Agreement, each of the parties hereto shall use commercially
reasonable efforts, prior to, on and after the date hereof, to take, or cause to
be taken, all actions, and to do, or cause to be done, all things, reasonably
necessary, proper or advisable under applicable laws, regulations and agreements
to consummate and make effective the transactions contemplated by this Agreement
and the Ancillary Agreements, including execution of Conveyancing Instruments
relating to the assumption by MMI Holdings and MMI of MMI Assumed Liabilities
that arise after the Drop-down.
(b) Without limiting the foregoing, prior to, on and after
the date hereof, each party hereto shall cooperate with each other party hereto,
and without any further consideration, but at the expense of the requesting
party, to execute and deliver, or use commercially reasonable efforts to cause
to be executed and delivered, all instruments, including instruments of
conveyance, assignment and transfer, and to make all filings with, and to obtain
all consents, approvals or authorizations of, any Governmental Authority or any
other Person under any permit, license, agreement, indenture or other instrument
(including any Consents or Governmental Approvals), and to take all such other
actions as such party may reasonably be requested to take by any other party
hereto from time to time, consistent with the terms of this Agreement and the
Ancillary Agreements, in order to effectuate the provisions and purposes of this
Agreement and the Ancillary Agreements and the transfer of the MMI Assets, and
the assignment and assumption of the MMI Assumed Liabilities and the other
transactions contemplated hereby and thereby. Without limiting the foregoing,
each party will, at the reasonable request, cost and expense of any other party,
use commercially reasonable efforts to take such other actions as may be
reasonably necessary to vest in such other party good and marketable title, free
and clear of any Security Interest other than a Security Interest securing a MMI
Assumed Liability, if and to the extent it is practicable to do so. In the event
and to the extent that any such required consent, approval or authorization to
assign and assume an agreement, lease, commitment or obligation which is an MMI
Asset or MMI Assumed Liability is not obtained, (i) Stream International or its
applicable Subsidiary shall continue to be bound thereby and (ii) from and after
the date hereof, MMI Holdings or its Subsidiaries shall pay, perform and
discharge fully all the obligations of Stream International or its applicable
Subsidiary thereunder and MMI Holdings and MMI shall indemnify, as set forth in
Section 5.2 hereof, Stream International or its applicable Subsidiary for all
Indemnifiable Losses arising out of such performance or failure to perform by
MMI Holdings or its Subsidiaries or out of the failure to obtain any Consents or
Governmental Approval. Stream International
13
or its applicable Subsidiary shall, without the payment of any further
consideration, pay and remit to MMI promptly any monies, rights and other
considerations received by Stream International or its applicable Subsidiary in
respect of such performance. Stream International or its applicable Subsidiary
shall exercise or exploit its rights and options under all such third party
agreements, leases, licenses and other rights and commitments referred to in
this Section 2.1.4(b) which are MMI Assets only as reasonably directed by MMI
and at MMI's expense. If and when any such Consent or Governmental Approval
shall be obtained or such agreement, lease, license or other right shall
otherwise become assignable or be able to be novated, Stream International or
its applicable Subsidiary shall promptly assign and novate all its rights and
obligations thereunder to MMI Holdings or its Subsidiaries without payment of
further consideration and MMI Holdings or its Subsidiaries shall, without the
payment of any further consideration, assume such rights and obligations.
Without limiting the foregoing obligations, with respect to the Guaranty between
Stream International Inc. and Microsoft Corporation dated June 2, 1995, MMI
Holdings shall use its best efforts to have such Guaranty assigned to MMI
Holdings by February 15, 1998.
2.1.5 Tax Treatment of Drop-down. Each of MMI Holdings, MMI and
---------------------------
Stream International shall, and shall cause each of its Affiliates after the
Drop-down to (i) treat the transactions provided for in Sections 2.1.1 and 2.1.2
of this Agreement as a taxable exchange, and not as a transaction described in
Section 351 of the Code, for federal income tax purposes (and all other
applicable income tax purposes) and (ii) file Form 8594, and all their
respective federal, state, local and other Tax Returns required to be filed.
2.1.6 Allocation of Cash. Notwithstanding anything herein to the
------------------
contrary, but subject to Section 3.2 hereof, the consolidated aggregate cash
held by Stream International and its Subsidiaries as of October 31, 1997, shall
be allocated to the particular business (i.e., the CST Business, the MMI
Business or the Stream International Business) that generated such cash,
provided that the maximum amount allocated to CST pursuant to this sentence
shall be $7,500,000, the maximum amount allocated to MMI pursuant to this
sentence shall be $12,500,000 and the maximum amount allocated to Stream
International pursuant to this sentence shall be $5,000,000 (such amounts are
hereinafter referred to as the "Target Amounts"). If any business has generated
cash in excess of its Target Amount, such excess shall be allocated to the other
businesses, pro rata based on the ratio of their Target Amounts, until one of
such businesses has been allocated its Target Amount. Any remaining excess
shall be allocated to the remaining business until it has been allocated its
Target Amount. If the consolidated aggregate cash held by Stream International
and its Subsidiaries as of October 31, 1997 exceeds $25,000,000, the amount in
excess of $25,000,000 shall be allocated 30% to CST, 50% to MMI and 20% to
Stream International. Any cash generated after October 31, 1997 shall remain
with the particular business (i.e., the CST Business, the MMI Business or the
Stream International Business) that generated
14
such cash; provided, however, that the proceeds received by Stream International
pursuant to that certain Asset Purchase Agreement dated as of the date hereof
between Stream International and X.X. Xxxxxxxxx Norwest, Inc. shall be allocated
40% to the MMI Business and 60% to the CST Business.
2.2 Ancillary Agreements. On (except to the extent specified in
--------------------
Section 2.1.3) the date hereof, Stream International, MMI Holdings and MMI, as
the case may be, shall enter into each of the Ancillary Agreements.
2.3 Resignations. At the request of Stream International, MMI Holdings
------------
shall cause all MMI Employees to resign effective on the date hereof from all
boards of directors or similar governing bodies of Stream International or any
Stream International Subsidiary on which they serve, and from all positions as
officers of Stream International or any Stream International Subsidiary in which
they serve. At the request of MMI Holdings, Stream International shall cause
all of its own and all of the Stream International Subsidiaries' employees and
directors (other than MMI Employees and those directors of Stream International
who will continue to serve as directors of MMI or MMI Holdings) to resign
effective on the date hereof from all boards of directors or similar governing
bodies of MMI Holdings or any MMI Subsidiary on which they serve, and from all
positions as officers of MMI Holdings or any MMI Subsidiary in which they serve.
2.4 Transfers Not Effected on or Prior to the Drop-down. Nothing herein
---------------------------------------------------
shall be deemed to require the transfer of any Assets or the assumption of any
Liabilities which by their terms or operation of law cannot be transferred or
assumed; provided, however, that Stream International and MMI Holdings and their
-------- -------
respective Subsidiaries shall cooperate to seek to obtain any necessary Consents
or Governmental Approvals for the transactions contemplated by this Article 2.
In the event that any transfer of Assets or Liabilities has not been
consummated, effective as of or prior to the date hereof, the party retaining
such Asset or Liability shall thereafter hold such Asset for the party entitled
thereto (at the expense of the party entitled thereto) and retain such Liability
for the account of the party by whom such Liability is to be assumed (at the
expense of the party to whom such Liability is to be transferred), and each
party will take such other action as may be reasonably requested by the other
party in order to place the party to whom such Asset is to be transferred, or by
whom such Liability is to be assumed, as the case may be, insofar as reasonably
possible, in the same position as would have existed had such Asset or Liability
been transferred as of the date hereof. As and when any such Asset or Liability
becomes transferable, such transfer shall be effected forthwith.
2.5 No Representations or Warranties; Consents. MMI Holdings understands
------------------------------------------
and hereby agrees that Stream International is not, in this Agreement or in any
other agreement or document contemplated by this Agreement or otherwise, nor
shall Stream International be deemed or implied to be, representing or
15
warranting in any way except as, and only to the extent, required by applicable
law (i) as to the value or freedom from encumbrance or Security Interest of, or
any other matter concerning, any of the MMI Assets transferred or to be
transferred to MMI Holdings as contemplated by this Article 2 or (ii) as to the
legal sufficiency to convey title to any such Asset of the execution, delivery
and filing of this Agreement or any Ancillary Agreement, including, without
limitation, any Conveyancing Instruments, IT BEING UNDERSTOOD AND HEREBY AGREED
THAT ALL MMI ASSETS ARE BEING TRANSFERRED "AS IS, WHERE IS" and that MMI
Holdings shall bear the economic and legal risk that any conveyances of such
Assets shall prove to be insufficient or that MMI Holdings or any of its
Subsidiaries' title to any such assets shall be other than good and marketable
and free from encumbrances or Security Interests. Similarly, MMI Holdings
understands and hereby agrees that Stream International is not, in this
Agreement or in any other agreement or document contemplated by this Agreement
or otherwise, nor shall Stream International be deemed or implied to be,
representing or warranting in any way that the obtaining of any Consents or
Governmental Approvals, the execution and delivery of any amendatory agreements
and the making of any filings or applications contemplated by this Agreement or
such other agreements or documents shall satisfy the provisions of any or all
applicable agreements or the requirements of any or all applicable laws or
judgments, it being understood and hereby agreed that MMI Holdings and the MMI
Subsidiaries shall bear the economic and legal risk that any necessary Consents
or Governmental Approvals are not obtained or that any requirements of laws or
judgments are not complied with. Notwithstanding the foregoing, the parties
shall use reasonable efforts to obtain all Consents and Governmental Approvals,
to enter into all amendatory agreements and to make all filings and applications
which may be required for the consummation of the transactions contemplated by
this Agreement.
2.6 Insurance. MMI agrees that it will purchase, to the extent available
---------
at a reasonable cost, insurance policies to be in effect as of the Distribution
Date which provide substantially the same types of coverage as the policies
maintained by Stream International or X.X. Xxxxxxxxx under the Insurance Program
with respect to the MMI Business, including without limitation any insurance
required by any lease of real or personal property. Stream International shall,
if so requested by MMI, use reasonable efforts to assist MMI in obtaining such
initial insurance coverage for MMI from and after the Distribution in such
amounts as are agreed upon by Stream International and MMI. Following the
Distribution, each of Stream International and MMI shall cooperate with and
assist the other party in the prevention of conflicts or gaps in insurance
coverage and/or collection of proceeds.
2.7 Stock Options. Prior to the Distribution, Stream International shall
-------------
adjust each Stream International Option by reducing to $4.86 the per share
exercise price for such option (other than options with exercise prices at or
above $4.86 per share and options held by Messrs. Cowan, Leahy, Xxxxx and
Xxxxxxxxx and certain
16
options held by Xx. Xxxxxxx) and by providing, with respect to those option
holders who will be employed by MMI Holdings, CST Holdings or their Subsidiaries
following the Distribution, that the option terminates three months after the
option holder ceases to be employed by MMI Holdings or CST Holdings or their
Subsidiaries, as the case may be (each such option, as so adjusted prior to the
Distribution Date, the "Adjusted Option").
In connection with the Distribution, each Stream International Option to
purchase shares of Class A Common Stock of Stream International shall be
supplemented with an option to purchase an identical number of shares of voting
stock of each of CST Holdings and MMI Holdings, and each Stream International
Option to purchase shares of Class B Common Stock of Stream International shall
be supplemented with an option to purchase such number of shares of voting stock
of each of CST Holdings and MMI Holdings as is equal to the number of shares of
Class A Common Stock into which the shares of Class B Common Stock covered by
such option would be convertible at the conversion rate fixed on the date of the
Drop-down (collectively, the "Additional Options"). The per share exercise
price for the Additional Options shall be equal to the product determined by
multiplying the exercise price per share of Stream International Common Stock at
which such Stream International Option was exercisable by 11.93% in the case of
the Additional Option granted by MMI Holdings and 38.48% in the case of the
Additional Option granted by CST Holdings. The per share exercise price for
each Stream International Option shall be reduced by an amount equal to the
aggregate exercise price of the Additional Options granted in respect of such
option. The Additional Options shall be subject to the terms of the MMI
Holdings and CST Holdings 1997 Class A Replacement Stock Option Plans, 1997
Class A California Replacement Stock Option Plans and 1997 Class B Replacement
Stock Option Plans, as applicable.
Notwithstanding all the foregoing in this Section 2.7, if the holder of an
outstanding Stream International Option does not consent in writing to the
adjustment of such holder's option in accordance with the foregoing, such
holder's option shall not be adjusted and no Additional Options shall be granted
to such holder.
Upon termination of employment of any employee of MMI Holdings or any MMI
Subsidiary who has an Adjusted Option, MMI Holdings shall provide to Stream
International and CST the name of such employee and the date the employee ceased
employment with MMI Holdings or any MMI Subsidiary and shall indicate whether
the termination was for cause. Upon Stream International's request from time to
time, MMI shall also provide a complete list of employees of MMI Holdings or any
MMI Subsidiary who have Adjusted Options, which list shall show such holder's
name, Social Security number and address and shall include such other
information as Stream International shall reasonably request.
17
Upon termination of employment of any employee of Stream International or
any Stream International Subsidiary who has an Additional Options granted by MMI
Holdings, Stream International shall provide to MMI Holdings the name of such
employee and the date the employee ceased employment with Stream International
or a Stream International Subsidiary and shall indicate whether the termination
was for cause. Upon MMI Holdings' request from time to time, Stream
International shall also provide a complete list of employees of Stream
International or any Stream International Subsidiary who have Additional Options
granted by MMI Holdings, which list shall show such holder's name, Social
Security number and address and shall include such other information as MMI
Holdings shall reasonably request.
2.8 Extension of Certain Leases.
---------------------------
To the extent Stream International or X.X. Xxxxxxxxx has any contingent
liability following the date hereof, whether as a primary obligor, guarantor or
otherwise with respect to any lease of real property to which MMI Holdings or a
MMI Subsidiary is a party on the date hereof or which is assigned or purported
to be assigned to MMI Holdings or a MMI Subsidiary pursuant to this Agreement or
any Ancillary Agreement, MMI Holdings or the MMI Subsidiary, as the case may be,
shall cause any such contingent liability of Stream International, any Stream
International Subsidiary and X.X. Xxxxxxxxx to be extinguished upon the earlier
of the time of lease renewal or the time of any extension thereof.
2.9 Financial Statements.
--------------------
At or prior to the Drop-down, MMI shall deliver to Stream International a
complete and correct copy of the audited consolidated balance sheet of MMI as of
December 31, 1996, and the related statements of income, stockholders' equity,
retained earnings and changes in financial condition of MMI for the fiscal year
then ended (collectively, the "Audited Financial Statements"). At or prior to
the Drop-down, MMI shall also furnish to Stream International a complete and
correct copy of the unaudited balance sheet of MMI as at September 30, 1997 and
the related statements of operations and cash flow for the nine months then
ended, compiled by MMI (collectively, the "Unaudited Financial Statements").
MMI Holdings represents that, and the Chief Financial Officer or Treasurer of
MMI shall deliver a Certificate stating that, the Audited Financial Statements
and Unaudited Financial Statements are complete and correct, are in accordance
with the books and records of MMI and present fairly the financial condition and
results of operations of MMI, as at the dates and for the periods indicated, and
have been prepared in accordance with generally accepted accounting principles
consistently applied, except that the Unaudited Financial Statements have been
prepared for the internal use of management and may not be in accordance with
generally accepted accounting principles because of the absence of footnotes
normally contained therein and are subject to normal year-end audit adjustments
which in the aggregate will not be material.
18
ARTICLE 3
CERTAIN EMPLOYEE AND BENEFIT PLAN MATTERS
3.1 Certain MMI Plans; Assumption of Obligations by MMI. Stream
---------------------------------------------------
International or its Subsidiaries maintain the Employee Benefit Plans listed on
Schedule 3.1 hereto for the benefit of the U.S. employees of the MMI Business
(the "MMI Benefit Plans"). Except as provided in Section 3.4 with respect to
the Stream Savings Plan, and concurrently with the action described in Section
2.1.1, Stream International will transfer and assign all MMI Benefit Plans to
MMI Holdings, and MMI Holdings will immediately thereafter transfer and assign
all MMI Benefit Plans to MMI and MMI will (i) accept such transfer and
assignment, (ii) assume and adopt all MMI Benefit Plans, (iii) assume any
Liabilities with respect to such MMI Benefit Plans whether arising before or
after the date hereof and (iv) assume any Liabilities arising (whether before or
after the date hereof) under any Employee Benefit Plan maintained by Stream
International or its Subsidiaries, which is not a MMI Benefit Plan, to the
extent related to MMI Employees and Former MMI Employees including, but not
limited to, under any Employee Benefit Plans maintained up to the date hereof by
Stream International or its Subsidiaries under the laws of any country other
than the United States (the "MMI Foreign Benefit Plans") with respect to MMI
Employees or Former MMI Employees. Nothing in this Agreement shall be construed
to prevent MMI from altering or discontinuing any MMI Benefit Plan or MMI
Foreign Benefit Plan after the Distribution Date, provided that such alteration
or discontinuance relates only to MMI Employees or Former MMI Employees. In
addition to the Liabilities assumed pursuant to the foregoing, MMI will assume
all Liabilities relating to any Employee Benefit Plan of Stream International or
its Subsidiaries which relate to matters occurring prior to the Distribution,
such as any Liabilities arising in connection with the administration of any
Employee Benefit Plan, to the extent such Liabilities do not relate solely to
the CST Business or the Stream International Business or do not relate solely to
a specific employee of the CST Business or the Stream International Business.
3.2 Certain Payments by Stream International. Stream International and
----------------------------------------
its Subsidiaries hereby agree to continue making all regular payments, whether
for insurance premiums, benefits, expenses or other related purposes to (i) any
MMI Benefit Plan, or (ii) any Employee Benefit Plan maintained by Stream
International or its Subsidiaries, with respect to any participating MMI
Employee or participating Former MMI Employee through the date hereof,
consistent with the manner and timing of such payments which are made with
respect to any employee or former employee of Stream International or its
19
Subsidiaries who are participating in the same or comparable Employee Benefit
Plans maintained by Stream International or its Subsidiaries. The amount of any
such payments made after November 30, 1997, or made prior to such date to the
extent relating to any period following such date, shall be deducted from the
cash allocated to MMI pursuant to Section 2.1.6 and added to the cash allocated
to Stream International pursuant to such Section 2.1.6. In addition, Stream
International and its Subsidiaries shall continue to make such payments with
respect to any MMI Employee whose employment is transferred from Stream
International or any of its Subsidiaries to MMI or any MMI Subsidiary within 12
months through the date hereof until the date of such transfer.
3.3 Employees on Certain Leave. If any individual who becomes a MMI
--------------------------
Employee is on a leave of absence approved by Stream International or any of its
Subsidiaries on his or her Transfer Date and continues on a leave approved by
MMI or any MMI Subsidiary after the Transfer Date, then such leave shall
continue under MMI's leave policies and MMI shall assume any liability for any
benefits provided by Stream International or any Stream International Subsidiary
prior to the Transfer Date or any benefits required to be provided to such MMI
Employee by law; provided that the maximum amount and duration of such benefits
as well as the duration of the leave provided before and after the Transfer Date
shall not exceed the limits under the applicable Stream International or Stream
International Subsidiary policy.
3.4 Stream Savings Plan.
-------------------
3.4.1 Creation of Multiple Employer Plan. The Stream Savings
----------------------------------
and Retirement Program was established for the benefit of all U.S. employees of
Stream International and its Subsidiaries under Section 401(k) of the Code (the
"Stream Savings Plan"). On the date hereof the Stream Savings Plan will be
adopted by MMI Holdings, the MMI Subsidiaries, CST Holdings and the CST
Subsidiaries as additional plan sponsors. Therefore, the Stream Savings Plan
will then be maintained by a controlled group of corporations as defined under
Section 414 of the Code ("Controlled Group") as well as corporations that are
not part of the Controlled Group. In addition, Stream International has
approved the amendment of the Stream Savings Plan, effective upon the
Distribution Date, into a multiple employer plan in order to continue to provide
benefits under the terms of the Stream Savings Plan, as amended, for employees
or former employees of any of the corporations that have adopted the Stream
Savings Plan, which corporations, as of the Distribution Date, or thereafter,
cease to be a member of the Controlled Group that includes Stream International.
All assets of the Stream Savings Plan will continue to be maintained in the
existing trust established thereunder.
3.4.2 Subsequent Contributions. After the date hereof, MMI
------------------------
Employees will continue to make contributions to the Stream Savings Plan,
without interruption, based on elections made by them in accordance with the
terms of the Stream Savings Plan. Each MMI Employee who is making salary
reduction contributions to the Stream Savings Plan immediately prior to his or
her Transfer
20
Date, with respect to compensation paid on or before such Transfer Date, and who
continues to be employed by MMI or a MMI Subsidiary until the end of the
calendar quarter in which such Transfer Date occurs, will have matching
contributions made to the Stream Savings Plan as of the end of such calendar
quarter by MMI, with respect to all such contributions made during such calendar
quarter. Stream International shall cease making any matching contributions with
respect to MMI Employees' salary reduction contributions after making its
matching contribution for the calendar quarter which ends immediately prior to
the calendar quarter which includes the Transfer Date of MMI Employees.
3.4.3 New Savings Plan. No later than March 31, 1998, MMI shall
----------------
establish a new savings plan under Section 401(k) of the Code with such terms
and conditions, subject to the limitations of Code Section 411(d)(6), as MMI may
provide and all contributions with respect to MMI Employees will thereafter be
made to such new savings plan (the "New MMI Savings Plan"). No later than March
31, 1998, MMI shall direct the trustee of the trust established under the Stream
Savings Plan to transfer to the trust established under the New MMI Savings
Plan, in such manner and at such time as the trustee of the New MMI Savings Plan
and the trustee of the Stream Savings Plan shall reasonably agree, any Assets
and Liabilities allocable to the individual accounts maintained with respect to
participants and beneficiaries in the Stream Savings Plan who are MMI Employees
or Former MMI Employees, subject to the requirements of Section 414 of the Code.
3.5 Employee Matters. MMI agrees to (i) be solely responsible for all
----------------
employment law compliance with respect to the transfer of all MMI Employees; and
(ii) to assume any Liabilities, whether arising before or after the date hereof,
with respect to any MMI Employee or Former MMI Employee related to (a )
employment with Stream International or any of its Subsidiaries, including,
without limitation, any accrued vacation or severance pay, and (b) the transfer
of employment to MMI or any MMI Subsidiary or any subsequent termination of such
employment.
3.6 Information Regarding Certain Former Employees of X.X. Xxxxxxxxx.
----------------------------------------------------------------
MMI (or, if applicable, its Subsidiaries) shall assume the obligations under
Section 7.2(b)(3) of the 1995 Contribution Agreement including, without
limitation, the obligation to provide information relating to the termination of
an Eligible RRD Newco Employee (as defined in Section 7.2(b)(6) of the 1995
Contribution Agreement) who is a MMI Employee. Such termination information
shall be provided to X.X. Xxxxxxxxx as such information is available to MMI or
any of its Subsidiaries.
21
ARTICLE 4
THE DISTRIBUTION
4.1 Action Prior to the Distribution. Stream International and MMI
--------------------------------
Holdings shall take all such action (if any) as may be necessary or appropriate
under the securities or blue sky laws of the United States or any individual
state (and any comparable laws under any foreign jurisdiction) in connection
with the Distribution.
4.2 Stream International Board Action; Conditions Precedent to the
--------------------------------------------------------------
Distribution. The Stream International Board shall, in its discretion,
------------
establish the Record Date and the Distribution Date and any appropriate
procedures in connection with the Distribution. The consummation of the
Distribution shall be subject to the consummation in all material respects of
each of the transactions contemplated by Article 2 hereof that are required to
be consummated prior to the Distribution; provided, however, that the
-------- -------
satisfaction of such condition shall not create any obligation on the part of
Stream International to effect the Distribution or in any way limit Stream
International's power to abandon the Distribution as set forth in Section 7.8
hereof.
ARTICLE 5
INDEMNIFICATION
5.1 Indemnification by Stream International for Stream International
----------------------------------------------------------------
Liabilities. Except as set forth in the Services Agreement between SISC and
-----------
MMI, Stream International shall indemnify, defend and hold harmless MMI Holdings
and each Affiliate of MMI Holdings (including the MMI Subsidiaries) and each of
their respective directors, officers, employees and agents and each of the
heirs, executors, successors and assigns of any of the foregoing (the "MMI
Indemnitees") from and against any and all losses, claims, damages, obligations,
payments, costs and expenses, matured or unmatured, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated, known or unknown (including,
without limitation, the costs and expenses of any and all Actions, threatened
Actions, demands, assessments, judgments, settlements and compromises relating
thereto and reasonable attorneys' fees and any and all expenses whatsoever
reasonably incurred in investigating, preparing or defending against any such
Actions or threatened Actions) (collectively, "Indemnifiable Losses") of the MMI
Indemnitees (i) arising out of or due to the failure or alleged failure of
Stream International or any of its Affiliates to pay, perform or otherwise
discharge in due course any Stream International Liabilities or (ii) arising out
of Stream International's or any Stream International Subsidiary's performance
of,
22
or failure to perform, any of its covenants or agreements contained in this
Agreement.
5.2 Indemnification by MMI for MMI Liabilities. Except as set forth in
------------------------------------------
the Services Agreement between SISC and MMI, MMI Holdings and MMI shall jointly
and severally indemnify, defend and hold harmless Stream International and each
Affiliate of Stream International (including the Stream International
Subsidiaries) and each of their respective directors, officers, employees and
agents and each of the heirs, executors, successors and assigns of any of the
foregoing (the "Stream International Indemnitees") from and against any and all
Indemnifiable Losses (i) arising out of or due to the failure or alleged failure
of MMI Holdings or any of its Affiliates to pay, perform or discharge any MMI
Assumed Liability (without regard to whether all applicable Consents and
Governmental Approvals relating to the assumption thereof have been obtained);
(ii) arising out of the failure to obtain any Consents or Governmental Approvals
required for the Drop-down and the Distribution; (iii) arising out of any
violation or alleged violation of applicable laws, regulations, rules or orders
of a Governmental Authority, including, but not limited to, federal or state
securities law, in connection with the transactions contemplated by this
Agreement, including the Drop-down and the Distribution (other than in
connection with the Stream IPO); (iv) arising out of MMI Holdings' or any MMI
Subsidiary's performance of, or failure to perform, any obligations described in
Section 2.1.4(b)(ii) hereof; (v) arising out of or related to the contingent
liabilities referred to in Section 2.8 hereof or (vi) arising out of MMI
Holdings' or any MMI Subsidiary's performance of, or failure to perform, any of
its covenants or agreements contained in this Agreement.
5.3 Limitations on Indemnification Obligations. The amount which any
------------------------------------------
party (an "Indemnifying Party") is required to pay to any MMI Indemnitee or
Stream International Indemnitee (an "Indemnitee") pursuant to Sections 5.1 or
5.2 hereof shall be reduced (including, without limitation, retroactively) by
any insurance proceeds or other amounts actually recovered by or on behalf of
such Indemnitee in reduction of the related Indemnifiable Loss. To the extent
an Indemnifying Party makes full payment in respect of an Indemnifiable Loss and
such Indemnifiable Loss is covered by an insurance policy which has not been the
subject of an effective assignment to the Indemnifying Party, at the request of
the Indemnifying Party, the Indemnitee shall use commercially reasonable efforts
at the expense of the Indemnifying Party (which expenses shall be deemed to
include any increase in insurance premiums of the Indemnitee attributable to the
filing of such claims) to enforce any and all claims under such insurance policy
in respect of such Indemnifiable Loss for the benefit of the Indemnifying Party.
If any Indemnitee shall have received the full payment required by this
Agreement from an Indemnifying Party in respect of an Indemnifiable Loss and
shall subsequently actually receive insurance proceeds or other amounts in
respect of such Indemnifiable Loss, then such Indemnitee shall pay to such
Indemnifying Party a sum equal to the amount of such insurance proceeds or
23
other amounts actually received (net of any expenses in obtaining the same), but
not to exceed the net amount of the payments previously received by the
Indemnitee from the Indemnifying Party in respect of such Indemnifiable Loss. An
insurer who would otherwise be obligated to pay any claim shall not be relieved
of the responsibility with respect thereto or, solely by virtue of the
indemnification provisions hereof, have any subrogation rights with respect
thereto, it being expressly understood and agreed that no insurer or any other
third party shall be entitled to a "windfall" (i.e., a benefit they would not be
entitled to receive in the absence of the indemnification provisions) by virtue
of the indemnification provisions hereof. Nothing herein shall require an
Indemnitee to enforce claims under an insurance policy before proceeding to
enforce its rights to indemnification against an Indemnifying Party.
5.4 Procedure for Indemnification.
-----------------------------
5.4.1 Third Party Claims; Notice. If an Indemnitee shall
--------------------------
receive notice or otherwise learn of (i) a default or breach by an Indemnifying
Party under any agreement or instrument with a third party to which the
Indemnifying Party is a party, (ii) the assertion by any other Person of any
claim other than a claim relating to Taxes or (iii) the commencement by any such
Person of any Action (other than an Action relating to Taxes) (clauses (i), (ii)
and (iii) are each hereinafter referred to as a "Third Party Claim") with
respect to which an Indemnifying Party may be obligated to provide
indemnification pursuant to this Article 5, such Indemnitee shall give such
Indemnifying Party written notice thereof within 10 business days after becoming
aware of such Third Party Claim ("Third Party Claim Notice"); provided, however,
-------- -------
that the failure of any Indemnitee to give notice as provided in this Section
5.4.1 shall not relieve the related Indemnifying Party of its obligations under
this Article 5, except to the extent that such Indemnifying Party actually is
prejudiced by such failure to give notice. Such notice shall describe the Third
Party Claim in reasonable detail, and shall indicate the amount (estimated if
necessary) of the Indemnifiable Loss that has been or may be sustained by such
Indemnitee. Thereafter, such Indemnitee shall deliver to such Indemnifying
Party, within five business days after the Indemnitee's receipt thereof, copies
of all notices and documents (including court papers) received by the Indemnitee
relating to the Third Party Claim.
The Indemnifying Party shall have a period of 20 days after the receipt of
a Third Party Claim Notice within which to respond thereto. If such
Indemnifying Party does not respond within such 20-day period, such Indemnifying
Party shall be deemed to have accepted responsibility to indemnify the
Indemnitee in respect of the claims specified in the Third Party Claim Notice
and shall have no further right to contest its obligation in respect thereof.
If such an Indemnifying Party does respond within such 20-day period and
disputes such claim in whole or in part, the Indemnitee and the Indemnifying
Party shall resolve the portion of the claim which is disputed in accordance
with the provisions of Section 5.4.9 hereof.
24
5.4.2 Defense of Third Party Claims. In case any Third Party
-----------------------------
Claim is brought against an Indemnitee and the Indemnifying Party has not
disputed its obligation to indemnify the Indemnitee with respect to any part of
such Third Party Claim, the Indemnifying Party will be entitled to participate
in and to assume the defense thereof to the extent that it may wish, with
counsel reasonably satisfactory to such Indemnitee, and after notice from an
Indemnifying Party to such Indemnitee of its election so to assume the defense
thereof and for so long as the Indemnifying Party diligently pursues such
defense, such Indemnifying Party will not be liable to such Indemnitee for any
legal or other expenses subsequently incurred by such Indemnitee in connection
with the defense thereof; provided, however, that, if the defendants in any such
-------- -------
claim include both the Indemnifying Party and one or more Indemnitees and in any
Indemnitee's reasonable judgment a conflict of interest between one or more of
such Indemnitees and such Indemnifying Party exists in respect of such claim,
such Indemnitees shall have the right to employ separate counsel to represent
such Indemnitees, and in that event the reasonable fees and expenses of such
separate counsel (but not more than one separate counsel reasonably satisfactory
to the Indemnifying Party for all Indemnitees with respect to any single Third
Party Claim or group of consolidated related Third Party Claims) shall be paid
by such Indemnifying Party. If the Indemnifying Party undertakes to assume the
defense of a Third Party Claim, it shall promptly notify the Indemnitee in
writing of its intention to do so.
5.4.3 Cooperation by Indemnitee. If an Indemnifying Party
-------------------------
chooses to defend or to seek to compromise or settle any Third Party Claim, each
related Indemnitee shall make available to such Indemnifying Party any personnel
or any books, records or other documents within its control or which it
otherwise has the ability to make available that are necessary or appropriate
for such defense, settlement or comprise, and shall otherwise cooperate in the
defense, settlement or compromise of such Third Party Claim.
5.4.4 Limitation on Authority to Settle Claim. Notwithstanding
---------------------------------------
anything else in this Section 5.4 to the contrary, neither an Indemnifying Party
nor an Indemnitee shall settle or compromise any Third Party Claim over the
objection of the other; provided, however, that consent to compromise or
-------- -------
settlement shall not be unreasonably withheld, except that consent to any
compromise or settlement involving equitable or injunctive relief against any
Indemnifying Party or Indemnitee may be withheld by such Indemnifying Party or
Indemnitee for any reason. No Indemnifying Party shall consent to any judgment
or enter into any settlement or compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to each
related Indemnitee of a written release from all Liability with respect to such
Third Party Claim.
5.4.5 Other Claims. Any claim on account of any Indemnifiable
------------
Loss which does not result from a Third Party Claim shall be asserted by written
notice
25
given by the Indemnitee to the related Indemnifying Party ("Claim Notice"). Such
Indemnifying Party shall have a period of 20 days after the receipt of the Claim
Notice within which to respond thereto. If such Indemnifying Party does not
respond within such 20-day period, such Indemnifying Party shall be deemed to
have accepted responsibility to make payment and shall have no further right to
contest the validity of such claim. If such Indemnifying Party does respond
within such 20-day period and disputes such claim in whole or in part, the
Indemnitee and the Indemnifying Party shall resolve the portion of the claim
which is disputed in accordance with the provisions of Section 5.4.9 hereof.
5.4.6 Advancement of Certain Expenses. Upon the written demand
-------------------------------
of an Indemnitee, an Indemnifying Party shall reimburse or advance funds to such
Indemnitee for all Indemnifiable Losses reasonably incurred by it in connection
with investigating or defending any Third Party Claim in advance of its final
disposition; provided, however, that such reimbursement need be made only upon
-------- -------
delivery to the Indemnifying Party of an undertaking by such Indemnitee to repay
all amounts so reimbursed or advanced if it shall ultimately be determined that
such Indemnitee is not entitled to indemnification under this Article 5 or
otherwise.
5.4.7 Subrogation to Rights of Indemnitee. In the event of
-----------------------------------
payment by an Indemnifying Party to any Indemnitee in connection with any Third
Party Claim of the full amount payable under this Article 5 in respect thereof,
such Indemnifying Party shall be subrogated to and shall stand in the place of
such Indemnitee as to any events or circumstances in respect of which such
Indemnitee may have any right or claim relating to such Third Party Claim
against any claimant or plaintiff asserting such Third Party Claim or as against
any other Person. In such event, 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 or claim.
5.4.8 Named Parties. The parties hereto acknowledge that it may
-------------
not be feasible to substitute MMI for Stream International as a named party in
any existing Actions constituting MMI Assumed Liabilities. In such event,
Stream International shall remain as a named party and will be able to
participate in the defense of such Action (with the liability regarding the
legal or other expenses for such participation to be determined pursuant to
Section 5.4.2 hereof), but following the date hereof, MMI Holdings and MMI shall
assume the defense of any such Action in accordance with the provisions of this
Section 5.4 and Stream International and its Affiliates shall cooperate with MMI
Holdings and MMI as contemplated by Section 5.4 and Article 6 hereof.
5.4.9 Dispute Resolution. If an Indemnifying Party disputes all
------------------
or part of a Third Party Claim pursuant to Section 5.4.1 or all or part of a
claim other than a Third Party Claim pursuant to Section 5.4.5, such dispute
shall be resolved in
26
accordance with the procedure set forth in this Section 5.4.9. Within 10 days
after notice by the Indemnifying Party that it disputes the claim in question,
the Indemnitee and the Indemnifying Party shall designate in writing one
arbitrator to resolve the dispute; provided that if the Indemnitee and the
Indemnifying Party cannot agree on an arbitrator within such 10-day period, the
arbitrator shall be selected by the Boston, Massachusetts, office of the
American Arbitration Association. The arbitrator so designated shall not be an
Affiliate of the Indemnitee or Indemnifying Party or any employee of, or
consultant to, the Indemnitee, the Indemnifying Party or any of their
Affiliates. Within 15 days after the designation of the arbitrator, the
Indemnitee, the Indemnifying Party and the arbitrator shall meet, at which time
the Indemnitee and the Indemnifying Party shall each be required to set forth in
writing all disputed issues and a proposed ruling on each such issue. The
arbitrator shall thereupon set a date for a hearing, which shall be no later
than 30 days after the submission of the written proposals described in the
immediately preceding sentence, to discuss each of the issues identified by the
Indemnitee and the Indemnifying Party. Each of the Indemnitee and the
Indemnifying Party shall have the right to be represented by counsel. The
arbitration shall be governed by the Commercial Arbitration Rules of the
American Arbitration Association; provided, however, that the arbitrator shall
have sole discretion with regard to the admissibility of evidence.
The arbitrator shall use his or her best efforts to rule on each disputed
issue within 30 days after the completion of the hearing described in the
immediately preceding paragraph. The determination of the arbitrator as to the
resolution of any dispute shall be binding and conclusive upon all parties
hereto. All rulings of the arbitrator shall be in writing and shall be
delivered to the Indemnitee and the Indemnifying Party. The attorneys' fees of
the Indemnitee and the Indemnifying Party in any arbitration shall be borne by
them as determined by the arbitrator, together with the fees of the arbitrator
and the costs and expenses of the arbitration. Any arbitration pursuant to this
Section 5.4.9 shall be conducted in Boston, Massachusetts. Any arbitration
award may be entered in and enforced by any court having jurisdiction thereover
and shall be final and binding upon the parties.
5.4.10 Determination of Time of Payment of Indemnitee. With
----------------------------------------------
respect to any claim made by an Indemnitee pursuant to this Article 5, the
Indemnifying Party shall have no further right to contest its obligations in
respect thereof (or a portion thereof, if applicable pursuant to clause (ii) of
this Section 5.4.10) following the occurrence of a Determination Event with
respect to such claim (or a portion thereof, if applicable pursuant to clause
(ii) of this Section 5.4.10), and the Indemnifying Party thereafter shall pay
all Indemnifiable Losses related to such claim or applicable portion thereof on
their respective Due Dates. With respect to a reimbursement or advance of funds
made by an Indemnifying Party pursuant to Section 5.4.6, the Indemnifying Party
shall have no right to contest the right of the Indemnitee to indemnification
(and, hence, no right to demand repayment pursuant
27
to the proviso clause of Section 5.4.6) with respect to the claim to which the
reimbursement or advance relates (or portion thereof, if applicable pursuant to
clause (ii) of this Section 5.4.10) following the occurrence of a Determination
Event with respect to such claim (or portion thereof, if applicable pursuant to
clause (ii) of this Section 5.4.10). "Determination Event" shall mean the
earliest of (i) the failure of the Indemnifying Party to respond to a Third
Party Claim Notice or Claim Notice within the applicable 20-day period, (ii)
with respect to any portion of a claim, the failure of the Indemnifying Party to
dispute within the applicable 20-day period, its obligation to pay such portion
of the claim in its response to a Third Party Claim Notice or Claim Notice,
(iii) the written acknowledgment of the Indemnifying Party of its obligation
hereunder with respect to such claim or (iv) the decision of an arbitrator
pursuant to Section 5.4.9 hereof upholding the obligation of the Indemnifying
Party in respect of such claims. "Due Date" shall mean (a) with respect to a
Third Party Claim that has been assumed by the Indemnifying Party pursuant to
Section 5.4.2 hereof, as and when any sums related to such claim become due and
payable, (b) with respect to any Third Party Claim whose defense has not been
assumed by the Indemnifying Party, upon written demand by the Indemnitee and (c)
with respect to any claim on account of any Indemnifiable Loss which does not
result from a Third Party Claim, upon written demand therefor by the Indemnitee;
provided, however, that in no event shall the Due Date for any claim occur prior
-------- -------
to the Determination Event for such claim.
5.5 Remedies Cumulative. The remedies provided in this Article 5 shall
-------------------
be cumulative and shall not preclude assertion by any Indemnitee of any other
rights or the seeking of any and all other remedies against any Indemnifying
Party; provided, however, that all remedies sought or asserted by an Indemnitee
-------- -------
against an Indemnifying Party with respect to an Indemnifiable Loss shall be
limited by and be subject to the provisions of this Article 5.
5.6 Nature of Indemnity Payments. All payments by the Indemnifying Party
----------------------------
under Section 5.1 or 5.2 hereof shall be treated, to the maximum extent
allowable under applicable Tax laws, as an adjustment to the MMI Assets
contributed to MMI Holdings in connection with the Drop-down. The amount of
each payment by the Indemnifying Party shall be computed after taking into
account all Tax consequences to the Indemnitee, or any Affiliate, of (i) the
receipt of (or the right to receive) the payment and (ii) the event or
incurrence of the liability that gave rise to the right to receive the payment.
In determining the Tax consequences to the Indemnitee, or any Affiliate, for
purposes of this Section 5.6, any Tax detriment, in the case of a payment, and
any Tax benefit, in the case of an event or an incurrence of a liability, shall
be taken into account in the taxable years or periods in which the Indemnitee,
or any Affiliate, is required to pay additional Taxes by reason of the payment,
or is entitled to a refund of Tax or a reduction in the amount of Taxes it would
otherwise be required to pay by reason of the event or the incurrence of the
liability.
28
ARTICLE 6
ACCESS TO INFORMATION AND SERVICES
6.1 Provision of Corporate Records. Prior to or as soon as practicable
------------------------------
following the date hereof, Stream International shall deliver to MMI Holdings
all existing corporate books and records in Stream International's possession
relating to the MMI Business, including original corporate minute books, stock
ledgers and certificates and corporate seals of each of MMI Holdings and each
MMI Subsidiary, and all active agreements, active litigation files and records
of filings; provided, however, that Stream International shall retain its own
-------- -------
original corporate minute books, stock ledgers and certificates and corporate
seals. Stream International shall also provide to MMI Holdings, unless already
in the possession of MMI Holdings or a MMI Subsidiary and only to the extent
that Stream International maintains them, lists of trademarks, trade names and
copyrights included in the MMI Assets.
6.2 Access to Information. From and after the date hereof, Stream
---------------------
International shall afford to MMI Holdings and its authorized accountants,
counsel and other designated representatives reasonable access (including using
reasonable efforts to give access to third parties possessing information) and
duplicating rights during normal business hours to all records, books,
contracts, instruments, computer data and other data and information
(collectively, "Information") within Stream International's possession relating
to the MMI Business, insofar as such access is reasonably required by MMI
Holdings. MMI Holdings likewise shall afford to Stream International and its
authorized accountants, counsel and other designated representatives reasonable
access (including using reasonable efforts to give access to third parties
possessing information and providing reasonable access to its own employees who
are in possession of relevant information) and duplicating rights during normal
business hours to Information within MMI Holdings' possession relating to the
Stream International Business, insofar as such access is reasonably required by
Stream International. Information may be requested under this Section 6.2 for,
without limitation, audit, accounting, claims, litigation, insurance and tax
purposes, as well as for purposes of fulfilling disclosure and reporting
obligations and for performing this Agreement and the transactions contemplated
hereby.
6.3 Production of Witnesses. From and after the date hereof, each of MMI
-----------------------
Holdings and Stream International shall use reasonable efforts to make available
to the other upon written request, its and its Subsidiaries' officers,
directors, employees and agents as witnesses to the extent that such persons may
reasonably be required in connection with any legal, administrative or other
proceedings in which the requesting party may from time to time be involved.
29
6.4 Reimbursement. Except to the extent otherwise contemplated by the
-------------
Services Agreements or any other Ancillary Agreement, a party providing
Information or personnel to the other party under this Article 6 shall be
entitled to receive from the recipient, upon the presentation of invoices
therefor, payments for such amounts, relating to supplies, disbursements and
other out-of-pocket expenses, as may be reasonably incurred in providing such
Information or personnel; provided, however, that no such reimbursements shall
-------- -------
be required for the salary or cost of fringe benefits or similar expenses
pertaining to employees or directors of the providing party.
6.5 Retention of Records. Except as otherwise required by law or agreed
--------------------
to in writing, each of Stream International and MMI Holdings shall retain, and
shall cause each of its Subsidiaries to retain, in accordance with such party's
record retention program all material Information within such parties'
possession or under its control relating to the other and the other's
Subsidiaries. Notwithstanding the foregoing, in lieu of retaining any specific
Information, Stream International and MMI Holdings may offer in writing to
deliver such Information to the other and if such offer is not accepted within
45 days, the offered Information may be destroyed or otherwise disposed of at
any time. If a recipient of such offer shall request in writing prior to the
scheduled date for such destruction or disposal that any of the information be
delivered to such requesting party, the party proposing the destruction or
disposal shall promptly arrange for the delivery of such of the information as
was requested at the cost of the requesting party.
6.6 Confidentiality. Each of Stream International and MMI Holdings shall
---------------
hold, and shall cause its Subsidiaries, Affiliates, employees, consultants and
advisors to hold, in strict confidence all Information concerning the other
party and its Affiliates, including without limitation information which the
other party and its Affiliates are required by customer or other agreements to
keep confidential, obtained by it prior to the Distribution Date or furnished by
the other or the other's representatives pursuant to this Agreement (except to
the extent that such Information has been (i) in the public domain through no
fault of such party or (ii) later lawfully acquired from other sources by such
party), and each party shall not release or disclose such Information to any
other Person, except as reasonably required to its auditors, attorneys,
financial advisors, bankers and other consultants and advisors, unless compelled
to disclose by judicial or administrative process or, as advised by its counsel,
by other requirements of law or as necessary to enforce its rights under this
Agreement.
6.7 Financial Statements.
--------------------
6.7.1 MMI Holdings shall deliver to Stream International:
(a) no later than December 31, 1997, the MMI Balance Sheet;
30
(b) within 90 days after the end of each fiscal year of MMI
Holdings, an audited balance sheet of MMI Holdings as at the end of such year
and audited statements of income and of cash flows of MMI Holdings for such
year, certified by certified public accountants of established national
reputation selected by MMI Holdings, and prepared in accordance with GAAP; and
(c) within 45 days after the end of each fiscal quarter of
MMI Holdings, an unaudited balance sheet of MMI Holdings as at the end of such
quarter, and unaudited statements of income and of cash flow of MMI Holdings for
such fiscal quarter and for the current fiscal year to the end of such fiscal
quarter.
6.7.2 The foregoing financial statements shall be prepared on a
consolidated basis if MMI Holdings then has any subsidiaries. The financial
statements delivered pursuant to clauses (a) and (b) of Section 6.7.1 shall be
accompanied by a certificate of the chief financial officer of MMI Holdings
stating that such statements have been prepared in accordance with GAAP (except
as noted) and fairly present the financial condition and, with respect to the
financial statements described in clause (b), results of operations of MMI
Holdings at the date thereof and for the periods covered thereby, except that
the financial statements may not be in accordance with GAAP because of the
absence of footnotes normally contained therein and are subject to normal year-
end audit adjustments which in the aggregate will not be material.
6.7.3 MMI Holdings' obligations under clauses (b) and (c) of
Section 6.7.1 shall terminate upon the earliest of (i) the sale of all or
substantially all of the assets of MMI or MMI Holdings, (ii) the sale of all or
substantially all of the outstanding shares of capital stock of MMI Holdings or
MMI (by merger, purchase or otherwise Holdings or MMI but in no event including
any transaction required to effect the Distribution) or (iii) the consummation
of an initial public offering of equity securities of MMI registered under the
Securities Act of 1933, as amended.
6.7.4 Stream International shall deliver to MMI Holdings, no
later than December 31, 1997, the Stream International Balance Sheet, which
shall be accompanied by a certificate of the chief financial officer of Stream
International stating that such balance sheet has been prepared in accordance
with GAAP (except as noted) and fairly presents the financial condition of
Stream International as of the date thereof, except that the balance sheet may
not be in accordance with GAAP because of the absence of footnotes normally
contained therein and are subject to normal year-end adjustments which in the
aggregate will not be material.
31
ARTICLE 7
MISCELLANEOUS
7.1 Rule of Construction. Notwithstanding any other provisions in this
--------------------
Agreement, in the event and to the extent that there shall be a conflict between
the provisions of this Agreement (or any Ancillary Agreement or Conveyancing
Instrument) and the provisions of the Tax Indemnification Agreements or the
Services Agreements, the provisions of the Tax Indemnification Agreements or the
Services Agreements, as the case may be, shall control. Subject to the
preceding sentence, in the event and to the extent that there shall be a
conflict between the provisions of this Agreement and the provisions of any
Ancillary Agreement or Conveyancing Instrument, this Agreement shall control.
Except as otherwise specifically provided in any particular Ancillary Agreement,
all provisions of Section 2.1.3 and of Articles 5 and 7 shall apply to each
agreement constituting an Ancillary Agreement.
7.2 Survival of Agreements. Except as otherwise contemplated by this
----------------------
Agreement, all covenants and agreements of the parties contained in this
Agreement and in each Ancillary Agreement, and liabilities for the breach of any
obligations contained herein or therein, shall survive the date hereof.
7.3 Expenses. Except as otherwise set forth in this Agreement or any
--------
Ancillary Agreement, all costs and expenses incurred prior to or on the earlier
of (i) January 10, 1998 and (ii) the closing of the Stream IPO by CST Holdings,
MMI Holdings and/or Stream International in connection with the preparation,
execution, delivery and implementation of this Agreement, the Ancillary
Agreements, the Contribution Agreement, dated as of even date hereto, among
Stream International, SISC, CST Holdings and CST (the "CST Contribution
Agreement"), the Ancillary Agreements (as defined in the CST Contribution
Agreement) and in connection with the consummation of the transactions
contemplated by this Agreement and the CST Contribution Agreement, but unpaid as
of the earlier of (i) January 10, 1998 and (ii) the closing of the Stream IPO
(collectively, the "Restructuring Expenses"), shall be paid equally by CST
Holdings and MMI Holdings to the extent that appropriate documentation
concerning such costs and expenses shall be provided by CST Holdings, MMI
Holdings and Stream International to CST Holdings and MMI Holdings; provided
that no costs or expenses shall be required to be paid to the extent incurred
after January 10, 1998.
7.4 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the domestic substantive laws of The Commonwealth of
Massachusetts without regard to any choice or conflict of law rule or provision
that would result in the application of the domestic substantive laws of any
other jurisdiction.
32
7.5 Notices. Any notice, request, demand, claim or other communication
-------
hereunder shall be in writing and shall be delivered by registered or certified
mail, return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below, and shall be deemed duly given on the date which
is three days after such notice, request, demand, claim or other communication
is sent:
to Stream International:
Stream International Inc.
000 Xxx Xxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Treasurer
to MMI Holdings and MMI:
Modus Media International Holdings, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Treasurer
Notwithstanding the foregoing, any party may send any notice, request, demand,
claim, or other communication hereunder to the intended recipient at the address
set forth above using any other means (including personal delivery, expedited
courier, messenger service, telecopy, telex, ordinary mail, or electronic mail),
but no such notice, request, demand, claim or other communication shall be
deemed to have been duly given unless and until it actually is received by the
intended recipient. Any party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other party notice in the manner herein set forth.
7.6 Amendments. This Agreement may not be modified or amended except by
----------
an agreement in writing signed by the parties hereto; provided, however, that no
--------- -------
change to the definition of MMI Assumed Liabilities or defined terms used
therein or to the definitions of terms incorporated by reference to the CST
Contribution Agreement, which adversely affects CST Holdings or its
Subsidiaries, shall be effective unless agreed to in writing by CST Holdings.
7.7 Successors and Assigns. This Agreement and all of the provisions
----------------------
hereof shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns, including any corporation with which, or into
which, either party may be merged or which may succeed to its assets or
business;
33
provided, however, that no party may assign, delegate or otherwise transfer its
-------- -------
rights or obligations under this Agreement except to a Person that acquires all
or substantially all of the assets or business of such party (whether by merger,
consolidation, sale of stock, sale of assets or otherwise). Each party agrees
not to transfer all or substantially all of its assets unless the transferee
agrees in writing to be bound by this Agreement.
7.8 Abandonment of Distribution. The Distribution may be abandoned at
---------------------------
any time prior to its consummation by and in the sole discretion of the Stream
International Board without the approval of MMI Holdings, MMI or of Stream
International's stockholders.
7.9 No Third Party Beneficiaries. Except for X.X. Xxxxxxxxx in respect
----------------------------
of Section 2.8 hereof, the provisions of Article 5 hereof relating to
Indemnitees and the proviso clause of Section 7.6 and except for successors and
assigns permitted by Section 7.7, this Agreement is solely for the benefit of
the parties hereto and their respective Subsidiaries and Affiliates and shall
not be deemed to confer upon third parties any remedy, claim, Liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.
7.10 Titles and Headings. Titles and headings to sections herein are
-------------------
inserted for the convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
7.11 Exhibits and Schedules. The Exhibits and Schedules to this Agreement
----------------------
shall be construed with and as an integral part of this Agreement.
7.12 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
7.13 Legal Enforceability. Any provision of this Agreement which is
--------------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision or remedies otherwise available to any party hereto
in any other jurisdiction. Without prejudice
34
to any rights or remedies otherwise available to any party hereto, each party
hereto acknowledges that damages would be an inadequate remedy for any breach of
the provisions of this Agreement and agrees that the obligations of the parties
hereunder shall be specifically enforceable.
7.14 Entire Agreement. This Agreement, all Schedules and Exhibits hereto,
----------------
and all agreements and instruments delivered by the parties pursuant hereto
represent the entire understanding and agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior oral and written
and all contemporaneous oral negotiations, commitments and understandings
between such parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
STREAM INTERNATIONAL INC.
By /s/ Xxxxxx Xxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxxx
Title: President and Chief Operating
Officer
MODUS MEDIA INTERNATIONAL
HOLDINGS, INC.
By /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx
Chief Executive Officer and President
MODUS MEDIA INTERNATIONAL, INC.
By /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx
Chief Executive Officer and President
35
SCHEDULE A
MMI Subsidiaries
New name to be
adopted prior to, as
of or following the Jurisdiction of
Name of Subsidiary date hereof Incorporation
------------------ ----------- -------------
Modus Media Delaware
International, Inc.
Donnelley Documentation Modus Media International Delaware
Services (Ireland) Limited Documentation Services (Ireland)
Limited
X.X. Xxxxxxxxx Holdings Modus Media International Delaware
(Australia) Limited Holdings (Australia) Limited
X.X. Xxxxxxxxx (Ireland) Modus Media International Delaware
Limited (Ireland) Limited
Stream International Pty. Ltd. Modus Media International Australia
Pty. Ltd.
Stream International Ltd. Modus Media International Brazil
Ltda.
Stream International Leinster Modus Media International British Virgin
Unlimited Leinster Unlimited Islands
Stream International France, Modus Media International, S.A. France
S.A.
Modus Media International Hong Kong
(Hong Kong) Pte Limited
Stream International Ireland Modus Media International Ireland
(Holdings) Ireland (Holdings)
Stream International Modus Media International Ireland
Xxxxxx Xxxxxx
00
Stream International Modus Media International Ireland
Kildare Kildare
Stream International Modus Media International Ireland
Fulfillment Services Fulfillment Services
Donnelley Sasatoku KK Japan
Stream International KK Modus Media International Japan
Kabushiki Kaisha
Stream International Modus Media International Korea
Korea Ltd. Korea Ltd.
Modus Media (M) Sdn. Bhd. Malaysia
Stream International S.A. Modus Media International S.A Mexico
de C.V. de C.V.
Stream International B.V. Modus Media International B.V. The Netherlands
Stream International Pte. Ltd. Modus Media International Pte. Singapore
Ltd.
Fulfill Plus Pte. Ltd. Singapore
Taiwan Modus Media Taiwan
International Limited [formation
in progress]
Stream International Limited Modus Media International United Kingdom
Limited
Modus Media International [name reserved] PRC
Software Services (Shenzhen)
Co. Ltd.
[formation in progress]
37
SCHEDULE B
Stream International Subsidiaries
New name to be
adopted prior to, as
of or following the Jurisdiction of
Name of Subsidiary date hereof Incorporation
------------------ ----------- -------------
Stream International Services Delaware
Corp. (f/k/a Stream International
Inc.)
Corporate Software Securities Stream International Massachusetts
Corporation Securities Corporation
Corporate Software Europe Stream International Europe The Netherlands
B.V. B.V.
Stream International N.I. United Kingdom
Limited
Stream International Inc. Nevada
38
SCHEDULE C
Certain Asset and Stock Transfer Agreements
1. Contribution Agreement between Stream International Holdings Inc. and Modus
Media International, Inc. (now known as Modus Media International Holdings,
Inc.) dated November 6, 1997 (for the transfer of Modus Media International
Korea Limited shares from Stream International to MMI Holdings).
2. Contribution Agreement between MMI Holdings and MMI dated December 12, 1997
(for the transfer of Modus Media International Korea Limited shares from
MMI Holdings to MMI).
39
SCHEDULE 3.1
I. The former MMI Employees are listed in the Letter Agreement
II. MMI Benefit Plans
1. Employee Welfare Benefit Plans for the Benefit of Employees of Modus
Media International currently including, Health Plans, Long Term
Disability Plan, Group Life Insurance and AD & D Plan, Dental Plan,
Employee Assistance Plan, Tuition Assistance Plan and Short Term
Disability Plan.
2. Supplemental Life Insurance Plans for Employees of Modus Media
International
a. Allmerica Group Variable Life for certain highly paid employees.
b. New York Life Insurance Company Executive Life Insurance Premium
Payment Program for certain Director level employees or above.
c. New York Life Insurance Company Supplemental Whole Life Insurance
Payroll Deduction Program.
d. Unum Life Insurance Company Supplemental Life Insurance Payroll
Deduction Program.
3. Pre-Tax Contribution Plan for Employees of Modus Media International
4. Dependent Care Flexible Spending Accounting Plan for Employees of
Modus Media International
5. Health Care Flexible Spending Account Plan for Employees of Modus
Media International
6. Stream Savings and Retirement Program for MMI Employees and Former MMI
Employees
7. Business Travel Accident Insurance for Employees of Modus Medial
International
40
8. Computer Reimbursement Program for Employees of Modus Media
International
9. Adoption Assistance Plan for Employees of Modus Media International
10. Matching Charitable Gifts Program
11. Paid Time Off Policy
41
