EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
between
VERIZON DATA SERVICES INC.
and
INFOCROSSING, INC.
dated as of
September 1, 2004
Verizon Communications Inc. Proprietary and Confidential Information. Use and
disclosure outside of Verizon Communications Inc. is subject to the terms and
conditions of a non-disclosure agreement
TABLE OF CONTENTS
Page
Article 1 CERTAIN DEFINITIONS.....................................2
1.1 Defined Terms..........................................2
1.2 Other Definitional Provisions..........................8
Article 2 THE TRANSACTION.........................................8
2.1 Purchase and Sale......................................8
2.2 Purchase Price.........................................9
2.3 Closing................................................9
2.4 The Spin-Off Transaction...............................9
Article 3 REPRESENTATIONS AND WARRANTIES.........................10
3.1 Representations and Warranties of Seller..............10
3.1.1 Seller Existence; Authority...............10
3.1.2 The Company's Existence and
Qualification; Title to Company Stock.....10
3.1.3 Compliance with Laws......................10
3.1.4 Litigation................................10
3.1.5 No Conflicts; Approvals...................11
3.1.6 Real and Personal Property; Title to
Property; Leases..........................11
3.1.7 Material Contracts........................11
3.1.8 Insurance.................................12
3.1.9 Taxes.....................................12
3.1.10 Employee Matters..........................13
3.1.11 Environmental Matters.....................15
3.1.12 Financial Statements......................15
3.1.13 No Material Adverse Circumstance..........16
3.1.14 Intellectual Property Matters.............16
3.1.15 Brokers...................................16
3.1.16 No Interest in Other Entities.............16
3.1.17 No Undisclosed Liabilities................16
3.1.18 Accounts, Safe Deposit Boxes,
Current Officers..........................17
3.1.19 Affiliate Transactions....................17
3.2 Representations and Warranties of Buyer...............17
3.2.1 Buyer Existence, Etc......................17
3.2.2 Litigation................................17
3.2.3 No Conflicts; Approvals...................17
3.2.4 Financing.................................18
3.2.5 Brokers or Finders........................18
3.2.6 Investigation; Acknowledgment.............18
3.2.7 Insurance Matters.........................18
3.2.8 Investment Representation.................19
3.3 Schedule Disclosure...................................19
Article 4 COVENANTS AND AGREEMENTS...............................19
4.1 Agreements of Seller Pending the Closing..............19
4.1.1 Conduct of the Acquired Business
in the Ordinary Course....................19
4.1.2 Access....................................20
4.1.3 Casualty Insurance Proceeds...............21
4.1.4 Financial Information.....................21
4.1.5 Separation of Shared Services
with the Retained Businesses..............21
4.1.6 Updated List of Material Contracts........21
4.1.7 Performance of Business Associate
Agreement Obligation......................21
4.2 Agreements of Buyer...................................21
4.2.1 Approvals and Disapprovals................21
4.2.2 Control of Business Pending Closing.......22
4.2.3 Retention of Books and Records............22
4.2.4 Use of Verizon Marks......................22
4.3 Covenants of Seller and Buyer.........................23
4.3.1 HSR Act Review............................23
4.3.2 Confidentiality...........................24
4.3.3 Employee Obligations of Confidentiality...24
4.3.4 Tax Matters...............................25
Article 5 CONDITIONS PRECEDENT TO CLOSING........................29
5.1 Conditions Precedent to Obligations of Buyer..........29
5.1.1 Representations and Warranties True
as of Closing.............................29
5.1.2 Compliance with this Agreement............29
5.1.3 Closing Certificate.......................29
5.1.4 Intellectual Property Agreement...........30
5.1.5 Transition Services Agreement.............30
5.1.6 Stock Certificates........................30
5.1.7 Certificate Regarding Satisfaction
of Conditions.............................30
5.1.8 Good Standing Certificate.................30
5.2 Conditions Precedent to Obligations of Seller.........30
5.2.1 Representations and Warranties True
as of Closing.............................30
5.2.2 Compliance with this Agreement............30
5.2.3 Closing Certificate.......................30
5.2.4 Intellectual Property Agreement...........30
5.2.5 Purchase Price............................31
5.2.6 Certificate Regarding Satisfaction
of Conditions.............................31
5.2.7 Good Standing Certificate.................31
5.3 Conditions Precedent to the Obligations of
Buyer and Seller......................................31
5.3.1 No Governmental Orders or Legal
Proceedings...............................31
5.3.2 Approvals; HSR Act........................31
Article 6 INDEMNIFICATION........................................31
6.1 Indemnification Obligation of Seller..................31
6.2 Indemnification Obligation of Buyer...................32
6.3 Survival..............................................32
6.4 Limitations on Claims for Certain Losses..............33
6.5 Indemnification Procedure as to Third-Party Claims....33
6.6 Payment...............................................34
6.7 Adjustment for Insurance..............................34
6.8 Exclusive Remedies....................................35
6.10 Matters Known Prior to Closing........................35
6.11 Subrogation...........................................35
Article 7 EMPLOYEE MATTERS.......................................35
7.1 Transferred Employees.................................35
7.1.1 Identification of Transferred Employees...35
7.1.2 Employment of Transferred Employees.......36
7.1.3 No Duplicate Benefits.....................37
7.1.4 Employees on LTD..........................37
7.2 Employee Benefits.....................................37
7.2.1 Defined Benefit Plans.....................37
7.2.2 Savings Plans.............................38
7.2.3 Welfare Plans.............................38
7.2.4 Income Deferral Plan......................40
7.3 Vacation..............................................40
7.4 Employee Rights.......................................41
7.4.1 No Third Party Beneficiaries..............41
7.4.2 Plan Terms Controlling....................41
7.5 WARN Act Requirements.................................41
7.6 Successors and Assigns................................41
7.7 Assistance............................................42
Article 8 MISCELLANEOUS..........................................42
8.1 Termination...........................................42
8.2 Further Assurances....................................43
8.3 Non-Solicitation......................................43
8.3.1 Non-Solicitation by Seller................43
8.3.2 Non-Solicitation by Buyer.................43
8.4 Contents of Agreement; Amendments.....................43
8.5 Assignment and Binding Effect.........................43
8.6 Waiver................................................44
8.7 Notices...............................................44
8.8 APPLICABLE LAW; CONSENT TO JURISDICTION; WAIVER
OF JURY TRIAL.........................................45
8.9 No Benefit to Others..................................45
8.10 No Punitive Damages...................................45
8.11 Expenses..............................................46
8.12 Headings..............................................46
8.13 Severability..........................................46
8.14 Counterparts..........................................46
EXHIBITS
Exhibit A Contribution, Assignment and Assumption Agreement
Exhibit B Intellectual Property Agreement
Exhibit C Transition Services Agreement
DISCLOSURE SCHEDULES
3.1.3 Compliance with Laws
3.1.4 Litigation
3.1.5 No Conflicts; Approvals
3.1.6 Title to Property
3.1.7(a) Material Contracts
3.1.7(b) Status of Material Contracts
3.1.9 Taxes
3.1.10(a) ERISA Plans, Plans, and Foreign Plans
3.1.10(b) Severance and Termination Payments
3.1.10(c) Pension Liabilities
3.1.10(d) Status of Plans
3.1.10(e) Multiemployer Plans
3.1.10(g) Company Plans
3.1.10(h) Collective Bargaining Agreements
3.1.11 Environmental Matters
3.1.12 Financial Statements
3.1.13 Material Adverse Circumstance
3.1.14 Intellectual Property
3.1.16 Interests in Other Entities
3.1.17 Undisclosed Liabilities
3.1.18 Accounts, Safe Deposit Boxes, Current Officers
3.1.19 Affiliate Transactions
4.1.1 Conduct of Acquired Business
5.3.2 Approvals Required for Closing
7.1.1(a) Transferred Employees
7.1.1(b) Retained Employees
7.2.3(e) Executive Minimum Severance Benefits
OTHER SCHEDULES
3.2.3 Buyer Approvals
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement"), dated as of
September 1, 2004, is entered into by and between Verizon Data Services Inc., a
Delaware corporation ("Seller"), and Infocrossing, Inc. a Delaware corporation
("Buyer").
R E C I T A L S
WHEREAS, Seller owns all of the outstanding common stock, no par value
(the "Company Stock"), of Verizon Information Technologies Inc., a Delaware
corporation (the "Company").
WHEREAS, the Company is engaged in the business of providing customers
in the healthcare industry with information technology outsourcing services,
healthcare transaction processing services, Health Insurance Portability and
Accountability Act ("HIPAA") consulting and implementation services, payer
application solutions and Medicaid fiscal agent services (the "Acquired
Business").
WHEREAS, the Company is also engaged in the businesses of (i) providing
data center outsourcing services, application hosting services, enterprise
communications solutions, enterprise help desk services and managed network
services and (ii) providing OSS and BSS telecommunications software products,
including provisioning and activation, billing and mediation, workforce
management and network security applications (collectively and together with any
other ongoing business activity that is not exclusively a part of or included
only in the Acquired Business, the "Retained Businesses").
WHEREAS, prior to the Closing (as defined below), Seller will (i) cause
the Company to contribute assets relating to the Retained Businesses to a newly
formed, wholly owned subsidiary of the Company and cause such subsidiary to
assume liabilities directly relating to the Retained Businesses, in each case
pursuant to the Contribution Agreement (as defined below), and (ii) cause the
Company to subsequently distribute all of the equity interests in such
subsidiary to Seller (the "Spin-Off Transaction").
WHEREAS, on the terms and conditions contained in this Agreement and
after the consummation of the Spin-Off Transaction, Buyer desires to purchase
the Company Stock from Seller, and Seller desires to sell the Company Stock to
Buyer.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements and conditions herein
contained, and intending to be legally bound, the parties hereto agree as
follows:
Article 1
CERTAIN DEFINITIONS
1.1 Defined Terms. For purposes of this Agreement (including the Disclosure
Schedules and other Schedules hereto), the terms defined in this Agreement shall
have the respective meanings specified herein, and, in addition, the following
terms shall have the following meanings:
"Acquired Business" is defined in the Recitals.
"Action" means any claim, action, suit, litigation, arbitration,
investigation or other proceeding, whether civil, criminal or administrative,
before a Governmental Authority.
"Affiliate" or "affiliate" means, as to any Person, any other Person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. The term "control" (including, with
correlative meanings, the terms "controlled by" and "under common control
with"), as applied to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or other
ownership interest, by contract or otherwise.
"Agreement" means this Purchase and Sale Agreement, and all Schedules
(including the Disclosure Schedules) and Exhibits hereto, as amended, modified
or supplemented from time to time in accordance with the terms hereof.
"Approval" means any approval, authorization, consent, qualification or
registration, or any extension, modification, amendment or waiver of any of the
foregoing, required to be obtained from, or any notice, statement or other
communication required to be filed with or delivered to, any Governmental
Authority.
"Assumed Liabilities" has the meaning set forth in the Contribution
Agreement.
"Business Associate Agreement Obligation" means the obligation of the
Company under Section 1.3.3 of Amendment No. 3 to the Missouri Contract to
require any agent or subcontractor to whom the Company provides any Protected
Health Information (as defined in Amendment No. 3 to the Missouri Contract)
received from, created by, or received by the Company pursuant to the Missouri
Contract to agree to the same restrictions and conditions stated in Amendment
No. 3 to the Missouri Contract that apply to the Company with respect to such
information.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banks in the City of New York are authorized or required to close.
"Buyer" is defined in the introduction of this Agreement.
"Buyer Indemnitee" is defined in Section 6.1.
"Buyer Savings Plan(s)" is defined in Section 7.2.2(b).
"Buyer Welfare Plans" is defined in Section 7.2.3(a).
"Buyer's FSA" is defined in Section 7.2.3(d)(i).
"Cap" is defined in Section 6.4.
"Claim" is defined in Section 6.5(a).
"Closing" and "Closing Date" are defined in Section 2.3.
"COBRA" means the Consolidated Omnibus Reconciliation Act of 1985, as
amended.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Commercially Reasonable Efforts" means a Party's efforts in accordance
with reasonable commercial practices and without the payment of any money to any
third party except the incurrence of reasonable costs and expenses that are not,
individually or in the aggregate, material in the context of the commercial
objective to be achieved under this Agreement by the Party that has the
applicable obligation to use such efforts to achieve such objective.
"Company" is defined in the Recitals.
"Company Monthly Business Closing Date" means the last calendar day of
each calendar month.
"Company Stock" is defined in the Recitals.
"Contract" means any contract, subcontract, purchase order, sale order,
agreement, arrangement, bond, indenture, commitment, note, loan, mortgage, lease
or other agreement legally binding on the parties thereto.
"Contributed Assets" has the meaning set forth in the Contribution
Agreement.
"Contribution" is defined in Section 2.4(b).
"Contribution Agreement" is defined in Section 2.4(b).
"Damaged Assets" is defined in Section 4.1.3.
"Deductible" is defined in Section 6.4.
"Due Date" is defined in Section 6.6(a).
"Election" is defined in Section 4.3.4(k).
"Employee" is defined in Section 3.1.10(a).
"Environmental Laws" means all Laws relating to pollution or protection
of human health or the environment (including air, surface water, ground water,
land surface and subsurface strata), including Laws relating to emissions,
discharges, releases or threatened releases of Hazardous Material, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transportation or handling of Hazardous Material.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means, with respect to any Person, all other Persons
that are treated as a single employer with that Person pursuant to sections
414(b), 414(c), 414(m), and/or 414(o) of the Code.
"ERISA Plans" is defined in Section 3.1.10(a).
"Financial Statements" is defined in Section 3.1.12(a).
"Foreign Plans" has the meaning set forth in Section 3.1.10(a).
"FRP" is defined in Section 7.2.3(d).
"GAAP" means generally accepted accounting principles in the United
States of America.
"Governmental Authority" means any government or any agency, bureau,
board, commission, court, department, official, political subdivision, tribunal
or other instrumentality of any government, whether federal, interstate, state
or local, domestic or foreign (other than a Taxing Authority).
"Governmental Order" means any judgment, injunction, decree, order,
ruling or other determination of a Governmental Authority.
"Hazardous Material" means (a) any "hazardous substance," "pollutant"
or "contaminant," as said terms are defined in the Comprehensive Environmental
Response, Compensation and Liability Act (Title 42 United States Code ss. 601 et
seq.), or Title 40 Code of Federal Regulations Part 302, (b) any toxic or
hazardous substance, material or waste (whether solid, liquid or gaseous), (c)
petroleum or any fraction thereof or (d) any other substance or waste which is
regulated under any applicable Environmental Law with respect to its collection,
storage, transportation for disposal, treatment or disposal.
"HIPAA" is defined in the Recitals.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Included Claims" is defined in Section 6.4.
"Indemnitee" is defined in Section 6.5(a).
"Indemnitor" is defined in Section 6.5(a).
"Intellectual Property" has the meaning set forth in the Intellectual
Property Agreement.
"Intellectual Property Agreement" is defined in Section 5.1.4.
"Knowledge" or "knowledge" or any similar phrase means, when used with
respect to Seller, only those facts, circumstances or events actually known by
any of the following persons: Harry A. Artz - President, Information
Technologies Inc.; or Greg Uchimura - Vice President Finance, Verizon
Information Technologies Inc.; and when used with respect to Buyer, the actual
knowledge of Patrick Dolan and Zach Lonstein. "Knowledge" and "knowledge" shall
not include any constructive or imputed knowledge.
"Labor Laws" is defined in Section 3.1.10(h).
"Law" means any constitutional provision, statute or other law, rule,
regulation or interpretation of any Governmental Authority and any Governmental
Order.
"Licensed Intellectual Property" has the meaning set forth in the
Intellectual Property Agreement.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest, preemptive right, existing or claimed right of first refusal, right of
first offer, right of consent, put right, default or similar right or other
adverse claim of any kind or nature whatsoever (including any conditional sale
or other title retention agreement and any financing lease having substantially
the same economic effect as any of the foregoing).
"Loss" means any action, cost, damage, disbursement, expense,
liability, Tax, loss, deficiency, obligation, penalty or settlement of any kind
or nature (net of any Tax benefits), including interest or other carrying costs
and legal, accounting and other professional fees and expenses incurred in the
investigation, collection, prosecution and defense of claims, that may be
imposed on or otherwise incurred or suffered by the specified Person.
"Material Adverse Circumstance" means any fact, circumstance or
condition that has or would reasonably be expected to have a material adverse
effect on the business, assets, liabilities, properties, financial condition or
results of operations of the Acquired Business, but shall not include any fact,
circumstance or condition involving Assumed Liabilities or any fact,
circumstance or condition (a) that results from the execution or announcement of
this Agreement or occurring by reason of any actions taken by Buyer following
the date of this Agreement, (b) that is generally applicable in (i) the United
States economy, (ii) the United States or global financial or capital markets or
(iii) the healthcare industry and/or the segment of the healthcare industry that
is responsible for processing or administration of healthcare claims or (c) that
results from or relates to any acts of terrorism.
"Material Contract" is defined in Section 3.1.7(a).
"Missouri Contract" means Contract No. C900676001 between the Company
and the State of Missouri, titled "MMIS Fiscal Agent Services."
"Nondisclosure Agreement" is defined in Section 4.1.2.
"Party" or "party" means a party to this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permit" means any license, permit, franchise, order or certificate of
authority, or any extension, modification, amendment or waiver of the foregoing,
required to be issued by a Governmental Authority.
"Permitted Lien" means (a) Liens for Taxes not yet delinquent, or the
amount or validity of which is being contested in good faith by appropriate
proceedings during which collection or enforcement against the relevant property
is stayed, (b) standard utility easements, covenants and restrictions of record
that do not individually or in the aggregate materially interfere with the
operation of the Acquired Business as presently conducted, (c) mechanics',
carriers', workers', repairers' and other statutory Liens, (d) existing zoning
or similar Laws that do not materially interfere with the operation of the
Acquired Business, (e) any (i) interest or title of a lessor or sublessor under
any lease or sublease, (ii) Lien that the interest or title of such lessor or
sublessor may be subject to, or (iii) subordination of the interest of the
lessee or sublessee under such lease or sublease to any Lien referred to in the
preceding clause (ii), and (f) any other Liens that do not materially interfere,
individually or in the aggregate, with the operation of the Acquired Business as
currently conducted.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity or enterprise
of whatever nature.
"Plans" is defined in Section 3.1.10(a).
"Post-Signing Material Contract" is defined in Section 4.1.6.
"Prime Rate" means the annual interest rate set forth from time to time
as the Prime Rate in the "Money Rates" table of The Wall Street Journal.
"Pro Forma Balance Sheet" is defined in Section 3.1.12(a).
"Pro Forma Operating Margin Statement" is defined in Section 3.1.12(a).
"Purchase Price" is defined in Section 2.2.
"Real Property Leases" means any Contract pursuant to which the
Company: (a) leases real property or any buildings or other structures from a
third party, whether as lessee or sublessee, (b) leases real property or any
buildings or structures to another party, whether as lessor or sublessor or (c)
holds or has granted a leasehold interest in any real property.
"Retained Assets" has the meaning set forth on the Contribution
Agreement.
"Retained Business Employee" is defined in Section 2.4(b).
"Retained Businesses" is defined in the Recitals.
"Retained Liabilities" has the meaning set forth in the Contribution
Agreement.
"Securities Act" is defined in Section 3.2.9.
"Seller" is defined in the introduction of this Agreement.
"Seller Indemnitee" is defined in Section 6.2.
"Seller Pension Plan" is defined in Section 7.2.1(a).
"Seller Savings Plan(s)" is defined in Section 7.2.2(a).
"Seller Welfare Plans" is defined in Section 7.2.3(a).
"Severance Maintenance Period" is defined in Section 7.2.3(e).
"Spin-Off Subsidiary" is defined in Section 2.4(a).
"Spin-Off Transaction" is defined in the Recitals.
"Subsidiary" means, with respesct to any Person, any other Person in
which such Person has a direct or indirect equity or ownership interest in
excess of 50%.
"Tax Return" is defined in Section 3.1.9.
"Taxes" or "Tax" means (i) all taxes of any kind, including any
federal, state, local and foreign income, profits, license, severance,
occupation, windfall profits, capital gains, capital stock, transfer,
registration, social security (or similar), production, franchise, gross
receipts, payroll, sales, employment, use, property, ad valorem, real property,
personal property, excise, value added, stamp, alternative or add-on minimum,
withholding and any other tax or assessment, (ii) all interest, penalties and
additions to tax or additional amounts imposed by any taxing authority in
connection with any item described in clause (i), and (iii) any transferee
liability in respect of any items described in clauses (i) and/or (ii).
"Taxing Authority" means any government or subdivision, agency,
commission or authority thereof having jurisdiction over the assessment,
determination, collection or other imposition of Taxes.
"Third Party Intellectual Property" has the meaning set forth in the
Intellectual Property Agreement.
"Transaction Documents" means this Agreement, the Contribution
Agreement, the Intellectual Property Agreement and the Transition Services
Agreement.
"Transfer Taxes" is defined in Section 4.3.4(g).
"Transferred Employees" is defined in Section 7.1.2.
"Transition Service Agreement" is defined in Section 5.1.5.
"Verizon" means Verizon Communications Inc.
"Verizon Corporate Policies" is defined in Section 3.2.7.
"Verizon Marks" has the meaning set forth in the Intellectual Property
Agreement.
"WARN" means the Worker Adjustment and Retraining Notification Act of
1988, as amended, and the rules and regulations promulgated thereunder.
1.2 Other Definitional Provisions.
(a) The words "hereof," "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and Section, Schedule (including
Disclosure Schedule) and Exhibit references are to this Agreement unless
otherwise specified.
(b) Unless the context otherwise requires, the words "include," "includes" and
"including" and words of similar import when used in this Agreement shall be
deemed to be followed by the phrase "without limitation."
(c) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.
(d) The words "writing," "written" and comparable terms refer to printing,
typing, lithography and other means of reproducing words in a visible form.
(e) Any instrument or Law defined or referred to herein means such instrument or
Law as from time to time amended, modified or supplemented, including (in the
case of instruments) by waiver or consent and (in the case of any Law) by
succession of comparable successor Laws and includes (in the case of
instruments) references to all attachments thereto and instruments incorporated
therein. Any term defined herein by reference to any instrument or Law has such
meaning whether or not such instrument or Law is in effect.
(f) References to a Person are, unless the context otherwise requires, also to
its successors and assigns.
(g) The words "shall" and "will" have equal force and effect.
(h) All accounting terms not otherwise defined herein have the meaning assigned
under generally accepted accounting principles in the United States which have
effective dates on or prior to the date of the applicable or related financial
statement.
Article 2
THE TRANSACTION
2.1 Purchase and Sale. Subject to the terms and conditions of this Agreement and
after the consummation of the Spin-Off Transaction, at the Closing, Seller will
sell and transfer the Company Stock to Buyer, and Buyer will purchase the
Company Stock from Seller.
2.2 Purchase Price. The aggregate purchase price to be paid by Buyer to Seller
for the Company Stock shall be forty-three million five hundred thousand dollars
($43,500,000) (the "Purchase Price"). At the Closing, Buyer shall pay the
Purchase Price by wire transfer of immediately available funds in U.S. dollars
to such account(s) as Seller shall designate prior to the Closing Date.
2.3 Closing. Unless this Agreement shall have been earlier terminated in
accordance with the provisions of this Agreement, the purchase and sale of the
Company Stock (the "Closing") shall take place (a) at the offices of Seller at
10:00 a.m. local time, on the second Business Day following the day on which all
conditions precedent set forth in Article 5 hereof have been satisfied or waived
in writing (other than the conditions precedent that are not capable of being
satisfied until the Closing, but subject to the satisfaction or waiver of those
conditions), or (b) at such other location and/or on such other date as may be
mutually agreed upon in writing by the parties. The date of the Closing is
referred to herein as the "Closing Date." If the Closing extends over more than
one consecutive day, the Closing Date shall be deemed to have occurred on the
last day of the Closing. If the Closing occurs, for purposes of this Agreement,
the Closing shall be deemed to have occurred at 12:01 a.m. on the Closing Date.
2.4 The Spin-Off Transaction.
(a) Formation of Spin-Off Subsidiary. Prior to the Closing Date, Seller shall
cause the Company to organize a limited liability company (the "Spin-Off
Subsidiary"), which shall initially be a wholly owned subsidiary of the Company.
(b) Contribution of Assets and Assumption of Liabilities. Prior to the Closing
but before the distribution of the Spin-Off Subsidiary's capital stock pursuant
to Section 2.4(c) below, Seller will cause (i) the Company to enter into, and
cause the Spin-Off Subsidiary to enter into, a Contribution, Assignment and
Assumption Agreement substantially in the form attached hereto as Exhibit A (the
"Contribution Agreement"), (ii) the Company to contribute to the Spin-Off
Subsidiary all of its right, title and interest in and to all of the Contributed
Assets pursuant to the Contribution Agreement, (iii) the Company to transfer to
the Spin-Off Subsidiary each employee of the Company who provides substantially
all of his or her services to or with respect to the Retained Businesses (each a
"Retained Business Employee") and (iv) the Spin-Off Subsidiary to assume all of
the Assumed Liabilities pursuant to the Contribution Agreement (such
contribution, transfer and assumption the "Contribution").
(c) Distribution of Spin-Off Subsidiary Stock. Immediately prior to the Closing
and after the Contribution, Seller shall cause the Company to distribute all of
the limited liability company interests of the Spin-Off Subsidiary to Seller.
(d) No Conflict with Other Provisions. The parties hereto acknowledge and agree
that (i) nothing in this Agreement shall be deemed to prohibit the consummation
of the transactions described in this Section 2.4 and (ii) the transactions
described in this Section 2.4 shall not constitute a breach of any provision of
this Agreement, including Section 3.1.
Article 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Seller. Except as otherwise indicated on
the Disclosure Schedules hereto and except to the extent of any changes
resulting from operation of the Acquired Business or the Retained Businesses in
the ordinary course or as contemplated in this Agreement or the other
Transaction Documents, Seller represents and warrants to Buyer as follows:
3.1.1 Seller Existence; Authority. Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. Seller has the requisite corporate power and authority to execute
and deliver this Agreement and the other Transaction Documents to which it is a
party and to perform its obligations hereunder and thereunder. The execution,
delivery and performance by Seller of this Agreement and all other Transaction
Documents to which Seller is a party have been duly authorized by all necessary
corporate action on the part of Seller. This Agreement has been, and the other
Transaction Documents to which Seller is a party have been, or when executed
will be, duly executed and delivered by Seller, and this Agreement constitutes,
and the other Transaction Documents to which Seller is a party do or will when
executed and delivered constitute, legally valid and binding obligations of
Seller, enforceable against it in accordance with their respective terms, except
as such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar Laws affecting creditors' rights generally and by
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity).
3.1.2 The Company's Existence and Qualification; Title to Company Stock.
(a) The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to carry on the Acquired Business as
currently conducted. The Company is duly qualified to do business as a foreign
corporation in the jurisdictions where such qualification is required, except
where the failure to be so qualified is not a Material Adverse Circumstance.
(b) Seller owns, beneficially and of record, all of the Company Stock free and
clear of all Liens other than Permitted Liens. The Company Stock represents all
of the outstanding equity securities of the Company. There are no authorized or
outstanding options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, redemption rights or other contracts or commitments
that could require Seller to issue, sell, purchase or otherwise cause to become
outstanding or redeemed any equity securities of the Company.
3.1.3 Compliance with Laws. The Company is operating the Acquired Business in
compliance in all material respects with all applicable Laws.
3.1.4 Litigation. As of the date hereof, there is no Action pending or, to the
Knowledge of Seller, threatened against the Company that relates to the Acquired
Business and (a) involves a claim or potential claim of liability in excess of
$200,000, (b) enjoins or seeks to enjoin any significant activity by the Company
or (c) individually or in the aggregate with one or more other Actions, would
constitute a Material Adverse Circumstance. The Company is not a party to, nor
is it subject to the provisions of, any Governmental Order that would constitute
a Material Adverse Circumstance.
3.1.5 No Conflicts; Approvals. The execution, delivery and performance by Seller
of this Agreement and the other Transaction Documents to which Seller is a party
and the consummation by Seller of the transactions contemplated hereby and
thereby will not (a) violate, or constitute a breach or default under (whether
upon lapse of time and/or the occurrence of any act or event or otherwise), the
certificate of incorporation or by-laws of Seller, (b) result in the imposition
of any Lien against any material Retained Assets or (c) violate any Law, except
in the cases of clauses (b) and (c) for any such impositions and violations that
would not, individually or in the aggregate, constitute a Material Adverse
Circumstance. Except for (i) matters identified in Disclosure Schedule 3.1.5 and
(ii) any filings or approvals required under the HSR Act and (iii) any Approvals
required under any applicable Law, the execution, delivery and performance by
Seller of this Agreement and the other Transaction Documents to which Seller is
a party and the consummation by Seller of the transactions contemplated hereby
and thereby will not require any Approvals to be obtained by Seller or the
Company except for any such Approvals the failure of which to obtain would not,
individually or in the aggregate, constitute a Material Adverse Circumstance.|
3.1.6 Real and Personal Property; Title to Property; Leases. The Company has
valid leasehold interest in or other right to use, free of all Liens other than
Permitted Liens, (a) all items of real property used in the Acquired Business,
including leaseholds and all other interests in such real property, and (b) such
other tangible assets and properties that are used in the Acquired Business,
including all such tangible assets that they purport to own or have the right to
use as reflected in the Financial Statements or that were thereafter acquired,
except, in any such case, for assets and properties that were disposed of since
December 31, 2003 in the ordinary course of business. The tangible properties of
the Company that are material to the Acquired Business are in a good state of
maintenance and repair (except for ordinary wear and tear) and are adequate for
the Acquired Business as currently conducted. The Company owns or has the right
to use pursuant to valid lease, sublease, agreement or permission all material
items of tangible personal property necessary for the operation of the Acquired
Business as currently conducted. The leasehold properties occupied by the
Company as lessee are held under valid leases in full force and effect pursuant
to their terms, subject only to such exceptions as are not, individually or in
the aggregate, material to the Acquired Business.
3.1.7 Material Contracts.
(a) Disclosure Schedule 3.1.7(a) contains a list, as of the date hereof, of each
Contract (each of which shall be deemed a "Material Contract") to which the
Company is a party or to which the Company or any of its properties or assets is
subject or by which any thereof is bound that:
(i) expressly limits or restricts the ability of the Company to compete or
otherwise to conduct the Acquired Business in any material manner or place;
(ii) involves an obligation for borrowed money in excess of $200,000, or
provides for a guaranty for borrowed money, letter of credit, comfort letter,
surety or other bond in an amount in excess of $200,000 by the Company in
respect of any Person other than the Company;
(iii) creates a joint venture, limited liability company or partnership (other
than teaming agreements);
(iv) obligates the Company to pay an amount in excess of $200,000 for the
purchase of goods and/or services during the fiscal year ending December 31,
2004; and
(v) relates to the sale of goods and/or the provision of services pursuant to
which the Company expects to accrue revenue in excess of $200,000 during the
fiscal year ending December 31, 2004.
Material Contracts shall be deemed not to include any of the following: (w) real
estate leases described in Section 3.1.6, (x) Contracts relating to Intellectual
Property licenses described in Section 3.1.14 and commercial "off the shelf"
software, (y) Contracts listed in Disclosure Schedule 3.1.19 or (z) Contracts
included in the Contributed Assets.
(b) True copies of the Material Contracts, including all amendments and
modifications thereto but excluding proprietary pricing or technical
information, in the possession of the Company have been made available to Buyer.
As of the date hereof, each Material Contract is legally valid and in full force
and effect according to its terms, and the Company has performed any accrued
obligations thereunder and has not received written notice alleging a default or
breach under any such Material Contract, except where such failure to be in full
force and effect, failure to perform or default or breach is not, individually
or in the aggregate, a Material Adverse Circumstance. Each Material Contract is
enforceable in accordance with its terms against the Company and, to the
Knowledge of Seller, the other parties thereto, except to the extent that (i)
the failure to be so enforceable is not, individually or in the aggregate, a
Material Adverse Circumstance or (ii) such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar Laws
affecting creditors' rights generally and by general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity). Consummation of the transactions contemplated by this Agreement will
not (and will not give any Person a right to) terminate or modify any material
rights of the Company under any Material Contract, except for any termination or
modification that would not constitute a Material Adverse Circumstance.
3.1.8 Insurance. The Company is insured with reputable insurers (or
self-insured) against all risks normally insured against by companies in similar
lines of business, and all of the insurance policies and bonds required to be
maintained by the Company are in full force and effect. Insurance coverage for
the Company is maintained by an Affiliate of Seller.|
3.1.9 Taxes. The Company, or Seller or an Affiliate thereof on the Company's
behalf, has timely filed all material federal, state and local tax returns,
declarations, reports, estimates, information returns and statements required to
be filed in respect of any Taxes ("Tax Returns") required to be filed on or
before the date hereof in all jurisdictions in which such Tax Returns are
required to be filed, and the Company, or Seller or an Affiliate thereof on the
Company's behalf, has paid or will pay prior to the Closing all Taxes shown to
be due thereon. All such Tax Returns have been prepared in compliance with all
applicable Laws and are true and accurate in all material respects. Other than
with respect to Taxes for which Seller is responsible under Section 4.3.4(b), no
statute of limitations in respect of income Taxes of the Company nor any
extension of time with respect to which Taxes may be assessed or collected by a
Taxing Authority has been waived or extended.
3.1.10 Employee Matters.
(a) Disclosure Schedule 3.1.10(a) lists, as of the date hereof, each material
"employee pension benefit plan," as that term is defined in section 3(2) of
ERISA; each material "employee welfare benefit plan," as that term is defined in
section 3(1) of ERISA (such plans being hereinafter referred to collectively as
the "ERISA Plans"); and each other material retirement, pension, profit-sharing,
money purchase, deferred compensation, excess benefits, incentive compensation,
bonus, stock option, stock purchase, stock bonus, stock appreciation, phantom
stock, restricted stock, severance pay, unemployment benefit, vacation pay,
savings, medical, dental, post-retirement medical, post-retirement life,
accident, disability, weekly income, salary continuation, health, life, sick
pay, tuition refund, or other insurance, fringe benefit, or other employee
benefit plan, program, agreement, or arrangement maintained or contributed to by
the Company, Seller or their ERISA Affiliates in respect of or for the benefit
of (i) any employee (including all full-time and part-time employees, employees
on workers' compensation, military leave with re-employment rights under federal
law, maternity leave, leave under the Family Medical Act of 1993 or short term
disability and employees on approved leave of absence with a legal or
contractual right to reinstatement) of the Company or of Seller or its
Affiliates who provides substantially all of his or her services to or for the
Acquired Business and, in each case, who is not a Retained Business Employee
(any such employee referred to hereinafter as an "Employee") or (ii) any former
Employee, but excluding any such plan, program, agreement, or arrangement
maintained or contributed to solely in respect of or for the benefit of
Employees or former Employees employed or formerly employed outside of the
United States (collectively, together with the ERISA Plans, referred to
hereinafter as the "Plans"). Disclosure Schedule 3.1.10(a) also lists, as of the
date hereof, any such plan, program, agreement, or arrangement maintained or
contributed to solely in respect of or for the benefit of Employees or former
Employees employed or formerly employed outside of the United States
(collectively referred to hereinafter as the "Foreign Plans"). There are no
material written employment, severance, termination or similar-type agreements
between any Employee who, upon the Closing, will be a Transferred Employee and
the Company, Seller or any Affiliate of either. With respect to each Plan and
each Foreign Plan, Seller has made available to Buyer a current, accurate and
complete copy (or, to the extent no such copy exists, an accurate description)
thereof and to the extent applicable: (i) any related trust agreement or other
funding instrument; (ii) the most recent determination letter, if applicable;
(iii) any Summary Plan Description (to the extent required by applicable Law);
and (iv) for the two (2) most recent years (A) the Form 5500 and attached
schedules, if applicable, (B) audited financial statements, if applicable, and
(C) actuarial valuation reports, if applicable.
(b) Except pursuant to agreements permitted by Section 4.1.1(d)(i), the
execution and delivery of this Agreement by Seller and the performance of this
Agreement by Seller will not directly result now or at any time in the future in
the payment or in the acceleration of payment to any Employee of any severance,
termination, or similar payments or benefits.
(c) Neither Seller nor any of its ERISA Affiliates, any of the ERISA Plans, any
trust created thereunder, or any trustee or administrator thereof, has engaged
in any transaction as a result of which the Company could be subject to any
material liability pursuant to Section 409 of ERISA or to either a civil penalty
assessed pursuant to Section 502(i) of ERISA or a tax imposed pursuant to
Section 4975 of the Code. Since the effective date of ERISA, no material
liability under Title IV of ERISA has been incurred or is reasonably expected to
be incurred by Seller, with respect to the Acquired Business, or by the Company
(other than liability for premiums due to the PBGC), unless such liability has
been, or prior to the Closing Date will be, satisfied in full.
(d) With respect to the Plans, other than those ERISA Plans identified on
Disclosure Schedule 3.1.10(e) as "multiemployer plans":
(i) the PBGC has not instituted proceedings to terminate any ERISA Plan that is
subject to Title IV of ERISA;
(ii) none of the ERISA Plans has incurred an "accumulated funding deficiency"
(as defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of each of the ERISA
Plans ended prior to the date of this Agreement;
(iii) Each of the Plans has been operated and administered in all material
respects in accordance with its provisions and with all applicable Laws;
(iv) Each of the ERISA Plans that is intended to be "qualified" within the
meaning of Section 401(a) of the Code and, to the extent applicable, Section
401(k) of the Code, has been determined by the IRS to be so qualified, and
nothing has occurred since the date of the most recent such determination (other
than the effective date of certain amendments to the Code, the remedial
amendment period for which has not yet expired) that would adversely affect the
qualified status of any of such ERISA Plans; and
(v) As of the date hereof, there are no pending material claims against any of
the Plans by any Employee, former Employee, or beneficiary covered under any
such Plan, or otherwise involving any such Plan (other than routine claims for
benefits and routine expenses).
(e) None of the ERISA Plans is a "multiemployer plan," as that term is defined
in Section 3(37) of ERISA. The Company has not made or incurred, and the
transactions contemplated by this Agreement will not result in the Company
making or incurring, a "complete withdrawal" or a "partial withdrawal," as such
terms are respectively defined in Sections 4203 and 4205 of ERISA that would
result in the incurrence of a material liability by the Company.
(f) Each Foreign Plan is in compliance in all material respects with all
applicable Laws.
(g) Except for the Plans set forth on Disclosure Schedule 3.1.10(g), (i) none of
the Plans is sponsored by the Company and (ii) all of the Plans are sponsored by
Seller or its Affiliates. Except as provided in Article 7, no benefit
liabilities under any Plans will be assumed by Buyer as a result of the
transaction contemplated herein.
(h) None of the Employees is represented by a labor union or labor organization,
and the Company is not subject to any collective bargaining agreement covering
any Employees. To the Knowledge of Seller, during the 12 months preceding the
date of this Agreement, there have not been any union organizational campaigns
by or directed at any Employees. Except as would not constitute a Material
Adverse Circumstance, the Company has complied during the past three years in
all material respects with WARN and all applicable Laws relating to the
employment, payment and termination of Employees, including the provisions
thereof relating to wages, hours, immigration, severance, vacation, collective
bargaining, unfair labor practices, contributions, unemployment, withholding
taxes, occupational health and safety, equal employment opportunity and
non-discrimination (including the Americans with Disabilities Act) (hereinafter
together referred to as "Labor Laws").
3.1.11 Environmental Matters. The Company (a) has obtained all material Permits
required under all Environmental Laws to carry on the Acquired Business as
conducted on the date hereof, (b) is in compliance in all material respects with
the terms and conditions of all such Permits and (c) is operating the Acquired
Business in compliance in all material respects with all applicable
Environmental Laws. As of the date hereof, there is no Action pending or, to the
Knowledge of Seller, threatened against the Company, and the Company is not a
party to, or subject to the provisions of, any Governmental Order, in each case
relating to compliance with or liability under any Environmental Law. To the
Knowledge of Seller, there are no conditions that have resulted in or would
reasonably be expected to give rise to any material liability of the Company
under any Environmental Law.
3.1.12 Financial Statements.
(a) Disclosure Schedule 3.1.12 contains (i) the unaudited balance sheet of the
Company as at December 31, 2003, after giving pro forma effect to the Spin-Off
Transaction and the other transactions contemplated by this Agreement and the
other Transaction Documents as if the Spin-Off Transaction and such other
transactions had occurred on December 31, 2003 (the "Pro Forma Balance Sheet"),
and (ii) the unaudited statement of operating margin of the Company for the year
ended December 31, 2003, after giving pro forma effect to the Spin-Off
Transaction and the other transactions contemplated by this Agreement and the
other Transaction Documents as if the Spin-Off Transaction and such other
transactions had occurred on January 1, 2003 (the "Pro Forma Operating Margin
Statement" and together with the Pro Forma Balance Sheet, the "Financial
Statements").
(b) The Pro Forma Balance Sheet has been prepared from the books and records of
the Company in accordance with GAAP (except that the Pro Forma Balance Sheet
does not reflect income Taxes and except for the absence of notes) and presents
fairly, in all material respects, the financial position of the Company as of
the date thereof, after giving pro forma effect to the Spin-Off Transaction and
the other transactions contemplated by this Agreement and the other Transaction
Documents as if the Spin-Off Transaction and such other transactions had
occurred on December 31, 2003.
(c) The Pro Forma Operating Margin Statement has been prepared from the books
and records of the Company, after giving pro forma effect to the Spin-Off
Transaction and the other transactions contemplated by this Agreement and the
other Transaction Documents as if the Spin-Off Transaction and such other
transactions had occurred on January 1, 2003.
3.1.13 No Material Adverse Circumstance. Since December 31, 2003, there has not
occurred any change or event affecting the Company that is a Material Adverse
Circumstance.
3.1.14 Intellectual Property Matters. Subject to the terms and conditions of the
Intellectual Property Agreement, to the Knowledge of Seller, all material
Intellectual Property currently used by the Company exclusively in the operation
of the Acquired Business consists solely of items and rights in Intellectual
Property which are (a) owned by the Company and included in Retained Assets, (b)
in the public domain, (c) Third Party Intellectual Property rightfully used by
the Company pursuant to a license or other valid right, (d) Licensed
Intellectual Property licensed to the Company pursuant to the Intellectual
Property Agreement or (e) Verizon Marks, and, with respect to Intellectual
Property owned by the Company, the Company owns (subject to previously granted
rights and licenses, including joint ownership rights, if any) the entire right,
title and interest in and to such Intellectual Property free and clear of any
Liens other than Permitted Liens. As of the date hereof, there are no Actions
pending or, to the Knowledge of Seller, threatened alleging that the Company is
infringing upon any Third Party Intellectual Property in the conduct of the
Acquired Business as currently conducted. To the Knowledge of Seller, no Person
is infringing upon any Intellectual Property owned by the Company.
3.1.15 Brokers. No agent, broker, finder, investment or commercial banker or
other Person or firm engaged by or acting on behalf of Seller, the Company or
any of their respective Affiliates in connection with the negotiation, execution
or performance of this Agreement or the transactions contemplated by this
Agreement is or will be entitled to any broker's or finder's or similar fee or
other commission arising in connection with this Agreement or such transactions.
3.1.16 No Interest in Other Entities. No shares of any corporation or any
ownership or other investment interest, either of record, beneficially or
equitably, in any association, partnership, joint venture or other Person are
included in the Retained Assets.
3.1.17 No Undisclosed Liabilities. The Company has not incurred any liabilities
that would be required in accordance with GAAP to be disclosed in the Financial
Statements except liabilities (a) that are reflected or disclosed in the
Financial Statements, (b) that are disclosed in this Agreement, the Disclosure
Schedules hereto or any other Transaction Document, (c) that were incurred after
December 31, 2003 in the ordinary course of business, (d) for Taxes or (e) that
are Assumed Liabilities.
3.1.18 Accounts, Safe Deposit Boxes, Current Officers. Disclosure Schedule
3.1.18 sets forth as of July 8, 2004 (a) a true and correct list of all bank and
savings accounts, certificates of deposit and safe deposit boxes of the Company
and those persons authorized to draw on these accounts or deposits or to have
access to these boxes, (b) true and correct copies of all corporate borrowing
and depository resolutions and a list of those persons entitled to act
thereunder, and (c) a true and correct list of all officers of the Company.
3.1.19 Affiliate Transactions. Disclosure Schedule 3.1.19 lists, as of the date
hereof, all Contracts between the Company and Verizon or any of its direct or
indirect wholly-owned Subsidiaries that are not included in the Contributed
Assets.
3.2 Representations and Warranties of Buyer. Buyer represents and warrants
to Seller as follows:
3.2.1 Buyer Existence, Etc. Buyer is a corporation duly incorporated, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation. Buyer has the requisite corporate power and authority to execute
and deliver this Agreement and the other Transaction Documents to which it is a
party and to perform its obligations hereunder and thereunder. The execution,
delivery and performance by Buyer of this Agreement and all other Transaction
Documents to which Buyer is a party have been duly authorized by all necessary
action on the part of Buyer. This Agreement has been, and the other Transaction
Documents to which Buyer is a party have been, or when executed will be, duly
executed and delivered by Buyer, and this Agreement constitutes, and the other
Transaction Documents to which Buyer is a party do or will when executed and
delivered constitute, legally valid and binding obligations of Buyer,
enforceable against it in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar Laws affecting creditors' rights generally and by
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity).
3.2.2 Litigation. As of the date hereof, there is no Action pending, or to the
Knowledge of Buyer, threatened against Buyer, the result of which if decided
adversely to Buyer, individually or in the aggregate, would reasonably be
expected to have a material adverse effect on the ability of Buyer to consummate
the transactions contemplated by this Agreement and the other Transaction
Documents. Buyer is not a party to, nor is it subject to the provisions of, any
Governmental Order that would reasonably be expected to have a material adverse
effect on the ability of Buyer to consummate the transactions contemplated by
this Agreement and the other Transaction Documents.
3.2.3 No Conflicts; Approvals. The execution, delivery and performance by Buyer
of this Agreement and the other Transaction Documents to which Buyer is a party
will not (a) violate, or constitute a breach or default under (whether upon
lapse of time and/or the occurrence of any act or event or otherwise), the
certificate of incorporation or by-laws of Buyer or (b) violate any Law, except
in the case of clause (b) for any such violations that would not reasonably be
expected to have a material adverse effect on the ability of Buyer to consummate
the transactions contemplated by this Agreement and the other Transaction
Documents. Except for (i) matters identified in Schedule 3.2.3 and (ii) any
filings or approvals required under the HSR Act, the execution, delivery and
performance by Buyer of this Agreement and the other Transaction Documents to
which Buyer is a party will not require any Approvals to be obtained except for
any such Approvals the failure of which to obtain would not reasonably be
expected to have a material adverse effect on the ability of Buyer to consummate
the transactions contemplated by this Agreement and the other Transaction
Documents.
3.2.4 Financing. Buyer has and will have at the Closing sufficient cash and/or
cash equivalents to pay the entire Purchase Price at the Closing and to make all
other necessary payments of fees and expenses in connection with the
transactions contemplated by this Agreement. Buyer has adequate funds to operate
the Company and the Acquired Business as conducted on the Closing Date.
3.2.5 Brokers or Finders. No agent, broker, finder, investment or commercial
banker or other Person or firm engaged by or acting on behalf of Buyer or any of
its Affiliates in connection with the negotiation, execution or performance of
this Agreement or the transactions contemplated by this Agreement is or will be
entitled to any broker's or finder's or similar fee or other commission arising
in connection with this Agreement or such transactions, except for TripleTree,
LLC, as to which Buyer shall have full responsibility and neither Seller nor any
of Seller's Affiliates shall have any liability.
3.2.6 Investigation; Acknowledgment. Buyer has conducted a review and analysis
of the business, operations, assets, liabilities, results of operations,
financial condition, software, technology and prospects of the Company and
acknowledges that Buyer has been provided adequate access to the personnel,
properties, premises and records of the Company for such purpose. Except for the
representations and warranties contained in this Agreement, Buyer acknowledges
that neither Seller, any of its Affiliates nor any other Person makes any other
express or implied representation or warranty with respect to the Company Stock,
the Company prior to or after the date hereof, the Acquired Business or
otherwise or with respect to any other information provided to Buyer, whether on
behalf of Seller or such other Persons, including as to (a) merchantability or
fitness for any particular use or purpose, (b) the operation of the Acquired
Business by Buyer after the Closing in any manner other than as conducted by the
Company on or prior to the date hereof, or (c) the probable success or
profitability of the ownership, use or operation of the Company or the Acquired
Business by Buyer after the Closing. Neither Seller nor any other Person will
have or be subject to any liability or indemnification obligation to Buyer or
any other Person resulting from the distribution to Buyer, or Buyer's use of,
any such information, including the Confidential Information Summary dated May
11, 2004 related to the Acquired Business and any information, document or
material made available to Buyer in certain "data rooms," management
presentations, functional "break-out" discussions, responses to questions
submitted on behalf of Buyer, whether orally or in writing, documents provided
after the date hereof pursuant to Article 4, or in any other form in expectation
or furtherance of the transactions contemplated by this Agreement.
3.2.7 Insurance Matters. Buyer acknowledges that the policies and insurance
coverage maintained on behalf of the Company are part of the corporate insurance
program maintained by Verizon (the "Verizon Corporate Policies"). Verizon
Corporate Policies will not be available or transferred to Buyer or the Company
after the Closing. It is understood that Verizon shall be free at its discretion
at any time to cancel or not renew any of the Verizon Corporate Policies.
3.2.8 Investment Representation. Buyer acknowledges that the Company Stock is
not registered under the Securities Act of 1933, as amended (the "Securities
Act"). Buyer is an "accredited investor" as defined under the Securities Act and
possesses such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of its investments hereunder.
Buyer is acquiring the Company Stock from Seller for its own account, for
investment purposes only and not with a view to the distribution thereof. Buyer
agrees that the Company Stock will not be sold, transferred, offered for sale,
pledged, hypothecated or otherwise disposed of without registration under the
Securities Act, except pursuant to a valid exemption from registration under the
Securities Act.
3.3 Schedule Disclosure.
(a) Seller shall have the right from time to time prior to the Closing to
supplement the Disclosure Schedules hereto with respect to any matter that
arises after the date hereof and that would have been required or permitted to
be set forth or described in the Disclosure Schedules had such matter existed or
been known as of the date of this Agreement. Any such supplemental disclosure
will be deemed to have cured any breach of the representations and warranties
made in Section 3.1 for all purposes hereunder other than determining whether
the condition set forth in Section 5.1.1 has been satisfied.
(b) Each Disclosure Schedule hereto shall be in writing and shall qualify this
Agreement, although Disclosure Schedules need not be attached to each copy of
this Agreement. The inclusion of an item in a Disclosure Schedule as an
exception to a representation or warranty shall not be deemed an admission by
Seller that such item represents an exception or material fact, event or
circumstance or that such item constitutes a Material Adverse Circumstance. Any
fact or item that is disclosed in any Disclosure Schedule in a way as to make
its relevance or applicability to information called for by any other Disclosure
Schedule reasonably apparent shall be deemed to be disclosed in such other
Disclosure Schedule, notwithstanding the omission of a reference or
cross-reference thereto.
Article 4
COVENANTS AND AGREEMENTS
4.1 Agreements of Seller Pending the Closing.
4.1.1 Conduct of the Acquired Business in the Ordinary Course. Except as set
forth on Disclosure Schedule 4.1.1, as required by applicable Law or as required
or permitted by this Agreement and the other Transaction Documents, from the
date hereof until the Closing Seller shall not, without the prior consent of
Buyer (which may not be unreasonably withheld), permit the Company to:
(a) conduct the Acquired Business in any manner other than in the ordinary
course;
(b) sell, lease, license, or otherwise dispose of any material part of the
Retained Assets other than in the ordinary course of business;
(c) grant any material increase in the compensation of Employees who, upon the
Closing, will be Transferred Employees, except merit, incentive or promotional
increases in the ordinary course of business consistent with past practice;
(d) enter into any employment agreement or severance agreement with any Employee
who, upon the Closing, will be a Transferred Employee except in the ordinary
course of business consistent with past practice; provided that the Company may
enter into (i) retention agreements for which Seller or its Affiliates (other
than the Company) retain all obligations and liabilities and (ii) agreements
that terminate or are terminable prior to the Closing Date and, if so
terminated, will not impose any liability or obligation on Buyer or the Company;
(e) incur or guaranty any indebtedness for borrowed money unless such
indebtedness or guaranty is included in the Assumed Liabilities;
(f) amend the certificate of incorporation or by-laws of the Company;
(g) make any loans, advances or capital contributions to, or investments in, any
other Person in excess of $200,000 in the aggregate, other than in the ordinary
course of business; provided that the Company may make (i) plan loans under and
in accordance with the terms of the Seller Savings Plan(s) and (ii) loans to
officers and employees for moving, relocation and travel expenses consistent
with past practices;
(h) make any capital expenditures in excess of $200,000 in the aggregate, other
than in the ordinary course of business;
(i) permit the Company to merge or consolidate with any other Person;
(j) engage in any practice to accelerate the collection of any accounts
receivable included in the Retained Assets or delay payment of any accounts
payable or other liabilities included in the Retained Liabilities beyond their
scheduled due dates; provided that the Company may delay payment of accounts
payable and other liabilities included in the Retained Liabilities that it is
contesting in good faith; or
(k) agree, in writing or otherwise, to do any of the foregoing.
4.1.2 Access. Subject to Section 4.3.2, the nondisclosure agreement dated May
10, 2004 (the "Nondisclosure Agreement") between Buyer and Verizon, applicable
Laws, contractual obligations of confidentiality owed by Seller or the Company
to other Persons and doctrines of attorney-client privilege, from and after the
date of this Agreement, until the earlier to occur of the Closing or the
termination of this Agreement, Seller shall cause the Company to permit Buyer
and its authorized representatives to have reasonable access, during regular
business hours and upon reasonable advance notice, to the books and records of
the Company (including all financial analyses, financial statements and other
financial information used by the Company to prepare its financial statements,
and external reports material to the management of the Acquired Business), to
the Company's facilities and assets, to the officers and key managers of the
Company and to the documents made available to Buyer prior to the date hereof in
certain "data rooms," to the extent that such access does not materially
interfere with the conduct of the Acquired Business or the Retained Businesses.
4.1.3 Casualty Insurance Proceeds. In the event that any of the assets of the
Company have been damaged prior to the Closing Date by a casualty covered by
insurance (the "Damaged Assets"), the Seller will cause the Company to use
Commercially Reasonable Efforts to collect amounts due (if any) in respect of
such Damaged Assets under the Company's insurance policies, which amounts if
collected either will be used to repair or replace the Damaged Assets or will be
retained in the Company and not distributed to the Company's stockholder.
4.1.4 Financial Information. Subject to Section 4.3.2 and the Nondisclosure
Agreement, from the date hereof until the Closing, Seller shall cause the
Company to deliver to Buyer as soon as possible, but in any event within 30
calendar days after each Company Monthly Business Closing Date, a statement of
operating margin of the Acquired Business for the period from the date of the
immediately preceding Company Monthly Business Closing Date through such Company
Monthly Business Closing Date and for the portion of the fiscal year ending with
such current Company Monthly Business Closing Date, in each case prepared on a
basis consistent with the Pro Forma Operating Margin Statement.
4.1.5 Separation of Shared Services with the Retained Businesses.
Notwithstanding anything to the contrary in this Agreement, Seller and its
Affiliates shall have the right to cause the Company to take such actions as may
be necessary to separate certain services and functions shared by the Acquired
Business and the Retained Businesses, including the transfer or duplication of
certain assets of the Company, and the modification of certain Real Property
Leases to either subdivide such Real Property Leases or to assign the Real
Property Lease to an Affiliate of Seller (where the Company no longer intends to
occupy the property). All out-of-pocket costs associated with the foregoing
activities shall be borne by Seller.
4.1.6 Updated List of Material Contracts. If, after the date hereof, the Company
enters into any Contract that would have been required to be listed on
Disclosure Schedule 3.1.7(a) had the Company been a party to such Contract on
the date hereof (each a "Post-Signing Material Contract"), Seller shall, or
shall cause the Company to, deliver to Buyer at the Closing a supplement to
Disclosure Schedule 3.1.7(a) that lists each Post-Signing Material Contract;
provided, however, that Seller's failure to provide such supplement shall not
give rise to any claim or cause of action against Seller, including a claim for
indemnification under Article 6.
4.1.7 Performance of Business Associate Agreement Obligation. Prior to the
Closing Date, Seller shall cause the Company to use commercially reasonable
efforts to perform and comply with the Business Associate Agreement Obligation,
in each case to the extent such Business Associate Agreement Obligation has
accrued on or prior to the Closing Date.
4.2 Agreements of Buyer.
4.2.1 Approvals and Disapprovals. Buyer agrees to approve or disapprove in
writing any action that requires its consent under this Agreement within five
Business Days following its receipt of written notice from Seller or the Company
requesting such approval, and Buyer agrees not to unreasonably withhold any such
consent. If Buyer fails to approve or disapprove of any such action in writing
within five Business Days after receipt of such written notice from Seller or
the Company, then Buyer shall be deemed to have consented to such action and the
taking of such action shall not be deemed to constitute a breach of this
Agreement.
4.2.2 Control of Business Pending Closing. Nothing contained in this Agreement
shall give Buyer, directly or indirectly, the right to control the Company's
operations prior to the Closing.
4.2.3 Retention of Books and Records. Buyer shall cause the Company and its
Subsidiaries to retain, for seven years after the Closing Date, all books,
records and other documents pertaining to the Acquired Business that relate to
the period prior to the Closing Date that are required to be retained under
current retention policies of Seller and its Affiliates, except for Tax Returns
and supporting documentation relating to the Acquired Business or its assets
which shall be retained until 60 days after the expiration of the applicable
statute of limitations, and to make the same available after the Closing Date
for inspection at Buyer's offices and copying by Seller or its agents at
Seller's expense, during regular business hours without significant disruption
to the Acquired Business and upon reasonable request and upon reasonable advance
notice. At and after the expiration of such period, if Seller or any of its
Affiliates has previously requested in writing that such books and records be
preserved, Buyer shall either preserve such books and records for such
reasonable period as may be requested by Seller or any of its Affiliates or
transfer such books and records to Seller or its designated Affiliate. Seller
agrees that such records will be kept subject to Section 4.3.2 and used only for
purposes of accounting, Taxes or litigation, or as required by any Governmental
Authority.
4.2.4 Use of Verizon Marks.
(a) Buyer shall cease and shall cause the Company to cease any and all use of
Verizon Marks, including the designation "Verizon" or "GTE," in any fashion or
combination, including words and designs related to Verizon or GTE, as well as
eliminate the use of any other designation indicating affiliation with Verizon
or GTE or Seller or any of their respective Subsidiaries, as soon as practicable
after the Closing Date, but not more than 30 calendar days after the Closing
Date; provided, however, that with respect to stationery, contracts, purchase
orders, agreements and other business forms and writings which could result
after the Closing Date in a legal commitment of Verizon, GTE or Seller or any of
their Subsidiaries, Buyer shall or shall cause the Company to cease immediately
after the Closing Date any use of the Verizon Marks, in any fashion or
combination, as well as of any other designation indicating affiliation after
the Closing Date with Verizon or GTE or Seller or any of their respective
Subsidiaries. Within 30 calendar days after the Closing Date, Buyer shall notify
or shall cause the Company to notify, in writing, all customers, suppliers and
financial institutions having current business relationships with the Company
that the Company has been acquired from the Seller by the Buyer.
(b) As of the Closing Date, neither Buyer nor the Company shall use or include
the Verizon Marks, including "GTE" or "Verizon," as or in their corporate,
popular or trade names, or in any advertising or publications placed or
published after the Closing Date. Any such advertising and publications placed
or published on or before the Closing Date shall be discontinued and not be
renewed after the Closing Date.
(c) As of the Closing Date, Buyer shall cease, and shall cause the Company to
cease, selling any products, offering any services or otherwise using any
Verizon Mark, including "Verizon," "GTE" or any other trademark, service mark or
indication of origin or any mark or indication of origin confusingly similar
thereto.
(d) Buyer agrees not to use or seek to register, or permit the Company to use or
seek to register, any trade name, service mark, trademark or domain name
identical with or confusingly similar to Verizon Marks, including "Verizon" or
"GTE." Buyer agrees that it will never directly or indirectly challenge, contest
or call into question or raise any questions concerning the validity or
ownership of Verizon Marks, including "Verizon" or "GTE," by Verizon or any of
its Affiliates or any registration or application for registration of Verizon
Marks, including "Verizon" or "GTE." Buyer agrees that nothing herein shall give
Buyer or the Company any right to or interest in any Verizon Marks, including
"Verizon" or "GTE," except the right to use the same in accordance with the
express provisions of this Section 4.2.4 of this Agreement, and that all and any
uses of Verizon Marks, including "Verizon" or "GTE," by Buyer or the Company
shall inure to the benefit of Verizon.
4.3 Covenants of Seller and Buyer.
4.3.1 HSR Act Review.
(a) Seller and Buyer shall cooperate and use Commercially Reasonable Efforts to
obtain all (and will promptly prepare all registrations, filings and
applications, requests and notices preliminary to all) Approvals and to make any
filings that may be necessary to effect the purchase and sale of the Company
Stock and the other transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, within 20 calendar days after the date
of this Agreement, or such other time as the parties may agree, the parties will
make such filings as may be required by the HSR Act with respect to the
transactions contemplated by this Agreement. Thereafter, the parties will file
as promptly as practicable all reports or other documents required or requested
by the U.S. Federal Trade Commission or the U.S. Department of Justice pursuant
to the HSR Act, including requests for additional information concerning such
transactions, so that the waiting period specified in the HSR Act will expire as
soon as reasonably possible after the execution and delivery of this Agreement.
Each of Seller and Buyer shall use its Commercially Reasonable Efforts to
cooperate and oppose any preliminary injunction sought by any Governmental
Authority preventing the consummation of the transactions contemplated by this
Agreement. This Section 4.3.1(a), however, shall not be deemed to require Buyer
or Seller to enter into any agreement, consent decree or other commitment
requiring it or any of its Affiliates to divest or hold separate any assets or
to take any other action that would have a material adverse effect on the
business, financial condition or results of operations of it and its Affiliates,
taken as a whole. Buyer agrees to pay all application fees required in
connection with any filings under the HSR Act.
(b) Seller and Buyer shall each cause their respective counsel to furnish the
other party such necessary information and reasonable assistance as the other
may reasonably request in connection with its preparation of necessary filings
or submissions under the provisions of the HSR Act. Seller and Buyer shall each
cause their respective counsel to supply to the other party copies of all
correspondence, filings or written communications by such party or its
Affiliates with any Governmental Authority or staff members thereof, with
respect to the transactions contemplated by this Agreement and any related or
contemplated transactions, except for documents filed pursuant to Item 4(c) of
the Hart-Scott-Rodino Notification and Report Form or communications regarding
the same, documents or information submitted in response to any request for
additional information or documents pursuant to the HSR Act which reveal
Seller's or Buyer's negotiating objectives or strategies or purchase price
expectations.
4.3.2 Confidentiality.
(a) Except and to the extent otherwise expressly provided in the Transaction
Documents, each of Buyer and Seller agree that, after the Closing, it will, and
will cause its respective Affiliates to, (i) maintain the confidentiality of the
information, documents and instruments delivered to it by the other party hereto
and the other party's Affiliates and agents in connection with the performance
of the obligations of such other party and such other party's Affiliates under
this Agreement and the other Transaction Documents and (ii) only disclose such
information, documents and instruments to its duly authorized officers,
directors, representatives and agents; provided that this Section 4.3.2(a) shall
not apply to any information, document or instrument that (A) is or becomes
generally available, without restriction on use or disclosure by the disclosing
party, or is or becomes generally known to the public, (B) is rightfully
received by the receiving party or any of its Affiliates from a third party
without restriction on use or disclosure and, to the receiving party's
Knowledge, without breach of any obligation to the disclosing party, (C) is
independently developed by or for the receiving party or any of its Affiliates
without reference to or use of information, documents or instruments protected
by this Section 4.3.2(a), (D) is the subject of prior written approval of the
disclosing party, or (E) is disclosed or made available after the Closing Date
by the disclosing party to any Person without restriction on use or disclosure.
Prior to the Closing, the use and disclosure of all such information, documents
and instruments will continue to be governed by the Nondisclosure Agreement. In
the event of a conflict between this Section 4.3.2 and Article 5 of the
Intellectual Property Agreement, Article 5 of the Intellectual Property
Agreement shall prevail.
(b) Seller and Buyer shall coordinate all publicity relating to the transactions
contemplated by this Agreement, and no party shall issue any press release,
publicity statement or other public notice relating to this Agreement, or the
transactions contemplated by this Agreement, without consulting with the other
party; provided that to the extent legal counsel to Seller or Buyer, as the case
may be, shall advise such party in writing that a particular action is required
by applicable Law, such party shall be obligated only to use Commercially
Reasonable Efforts to consult with the other party prior to issuing any such
press release, publicity statement or other public notice; and provided further
that subsequent to any initial press release or public statement regarding the
Transactions that is issued in compliance with this Section 4.3.2, either party
or their Affiliates may make subsequent public statements, issue press releases
or public notices, or otherwise make non-confidential disclosures, the substance
of which are substantially similar to the information contained in any public
statement, press release, notice or filing by any of the parties or their
Affiliates without any requirement of prior notice or consent.
4.3.3 Employee Obligations of Confidentiality. Notwithstanding anything to the
contrary contained in this Agreement, Seller shall retain the right, after the
Closing Date, to enforce agreements with employees of the Company related to
Intellectual Property owned by Seller or any of its Affiliates (other than the
Company), including Intellectual Property owned jointly with the Company.
4.3.4 Tax Matters.
(a) Tax Returns.
(i) Except as provided in Section 4.3.4(g), Seller shall prepare or cause to be
prepared and file or cause to be filed all Tax Returns for the Company for all
periods ending on or prior to the Closing Date. Buyer shall prepare or cause to
be prepared and file or cause to be filed all Tax Returns for the Company for
all periods ending after the Closing Date.
(ii) Notwithstanding Section 4.3.4(a)(i) hereof, at Verizon's or Seller's
option, Buyer shall prepare or cause to be prepared and file or cause to be
filed any Tax Returns for Taxes of the Company for periods ending on or prior to
the Closing Date which are required to be filed after the Closing Date.
(iii) With respect to the Tax Returns required to be filed by Buyer pursuant to
Section 4.3.4(a)(i) or Section 4.3.4(g) for which Verizon or Seller has any
liability for the Taxes due (including pursuant to its indemnity obligations
hereunder), and with respect to Tax Returns filed by Buyer pursuant to Section
4.3.4(a)(ii) that include periods beginning before the Closing Date, such Tax
Returns will be properly and timely filed and will be correct, accurate and
complete in all material respects, and Buyer shall furnish a copy of such Tax
Returns to Seller for Seller's approval, which shall not be unreasonably
withheld, not later than 20 calendar days before the due date for filing such
returns (including extensions thereof). Furthermore, with respect to such Tax
Returns, Buyer shall not take (and shall cause the Company not to take) a
position with respect to any item on any Tax Return relating to the
determination of the taxable income or taxable value of the Company that is
inconsistent with the position taken with respect to such item on a prior Tax
Return or, if inconsistent, will obtain Seller's prior written consent to such
inconsistent position if such inconsistent position would materially and
adversely affect the Tax liability of Verizon or Seller (including pursuant to
any indemnity obligations hereunder).
(b) Liability for Taxes.
(i) Provided Buyer has complied with the provisions of Section 4.3.4(e), Seller
shall be liable for and shall hold Buyer and the Company harmless from any and
all (A) Taxes due or payable by or with respect to the Company for Tax periods
(or portions thereof) ending on or prior to the Closing Date (including any
liability associated with Seller's portion of Transfer Taxes under Section
4.3.4(g) hereof), (B) Taxes or other payments required to be paid after the date
hereof by the Company to any party under any Tax sharing agreement (whether
written or not) or by reason of being a successor-in-interest or transferee of
another entity, (C) Taxes arising by reason of any breach of the representations
contained in Section 3.1.9 hereof, and (D) with respect to any and all Taxes of
any member of a consolidated, combined or unitary group of which the Company (or
any predecessor) is or was a member on or prior to the Closing Date, Taxes
arising by reason of the liability of the Company pursuant to Treasury
Regulation Section 1.1502-6(a) or any analogous or similar state, local or
foreign law or regulation. Buyer shall permit Seller reasonable access to
information concerning the Company within its control as reasonably necessary to
verify any claim for indemnification under this Section.
(ii) Buyer shall be liable for and shall hold Verizon and Seller harmless from
(A) any and all Taxes of the Company for Tax periods (or portions thereof)
beginning after the Closing Date (other than Taxes for which Buyer is entitled
to be indemnified under Section 4.3.4(b)(i)) and (B) Buyer's portion of Transfer
Taxes under Section 4.3.4(g).
(c) Allocation. For any taxable period that includes but does not end on the
Closing Date: (i) liability for any Tax determined by reference to income,
capital gains, gross income, gross receipts, sales, net profits, windfall
profits or similar items shall be allocated between the portions of the period
at issue based on the date on which such items accrued based on the closing of
the books of the Company as of the Closing Date; and (ii) all other items shall
be allocated pro rata based on the number of days in each portion of the taxable
period. Seller shall pay the proportionate amount of such Taxes that is
attributable to the portion of the taxable period ending on the Closing Date,
and Buyer shall pay the proportionate amount of such Taxes that is attributable
to the portion of such taxable period after the Closing Date.
(d) Refunds. Any refunds or credits of Taxes with respect to the Company
relating to Taxes for any period ending on or before the Closing Date for which
Seller is liable under Section 4.3.4(b) and not reflected as an asset on the
Closing Balance Sheet shall be for the account of Seller. Buyer shall, if Seller
so requests and at Seller's expense, cause the relevant entity (Buyer, Company
or any successor) to file for and obtain any refunds or credits to which Verizon
or Seller is entitled hereunder, including through the prosecution of any
administrative or judicial proceeding which Seller, in its reasonable
discretion, chooses to direct such entity to pursue. Buyer shall permit Seller
to control (at Seller's expense) the prosecution of any such refund or credit
claimed, and when deemed appropriate by Seller, shall cause the relevant entity
to authorize by appropriate power of attorney such person as Seller shall
designate to represent such entity with respect to such refund claimed. Buyer
shall, and shall cause the Company to, notify Seller of the existence of any
state of facts that would constitute a reasonable basis for claiming a refund or
credit of Taxes to which Seller is entitled hereunder. Buyer shall forward to
Seller any such refund promptly after the refund is received or any such credit
is granted. Notwithstanding the foregoing, the control of the prosecution of a
claim for refund or credit for Taxes paid pursuant to a deficiency assessed
subsequent to the Closing Date as the result of an audit shall be governed by
the provisions of Section 4.3.4(e). In the event that any refund or credit of
Taxes for which a payment has been made to Seller pursuant to this Section
4.3.4(d) is subsequently reduced or disallowed, Seller shall indemnify, defend
and hold harmless Buyer and the Company against, and reimburse Buyer and the
Company for, any Tax liability, including interest and penalties, assessed
against the Company by reason of the reduction or disallowance. Any refunds or
credits of Taxes with respect to the Company relating to Taxes for which Buyer
is liable under Section 4.3.4(b) or as reflected as an asset on the Closing
Balance Sheet shall be for the account of Buyer.
(e) Contests. If an audit is commenced, an adjustment is proposed or any other
claim is made by any Taxing Authority with respect to a Tax liability of the
Company relating to a tax period or portion thereof ending on or prior to the
Closing Date for which Verizon or Seller reasonably could be liable under
Section 4.3.4(b), Buyer shall promptly notify Seller of such audit or such
proposed adjustment or such claim (unless Verizon or Seller previously was
notified in writing by the relevant Taxing Authority). If Seller so requests and
at Seller's expense, Buyer shall cause the relevant entity (Buyer, the Company
or any successor) to contest such claim on audit or by appropriate claim for
refund or credit of Taxes or in a related administrative or judicial proceeding,
and shall permit Seller, at its option and expense, to control the prosecution
and settlement of any such audit or refund claim or related administrative or
judicial proceeding with respect to those specific matters which could
reasonably affect Verizon's Tax liability or the Tax liability of Seller,
including any liability hereunder, or their right to payment; and, where deemed
necessary by Seller and in accordance with the foregoing, Buyer shall cause the
relevant entity to authorize by appropriate powers of attorney such persons as
Seller shall designate to represent such entity with respect to such audit or
refund claim or related administrative or judicial proceeding and to settle or
otherwise resolve any such proceeding as it specifically relates to such
matters; provided, however, that if the results of such Tax audit or proceeding
could reasonably be expected to have a material adverse effect on the assets,
business, operations, or financial condition of Buyer for taxable periods ending
after the Closing Date, then there shall be no settlement or closing or other
agreement with respect thereto without the written consent of Buyer. Buyer shall
further execute and deliver, or cause to be executed and delivered, to Seller or
its designee all instruments and documents reasonably requested by Seller to
implement the provisions of this subsection (e). Any refund of Taxes obtained by
Buyer or the affected entity shall be paid promptly to Seller in accordance with
Section 4.3.4(d) hereof. Buyer shall have the sole right to represent the
interests of the Company in all other Tax audits or administrative or court
proceedings.
(f) Information and Cooperation. Subject to the provisions of Section 4.3.2 and
the Nondisclosure Agreement, from and after the Closing Date, Buyer shall
deliver to Seller or its designee (including for purposes of this sentence,
Seller's tax advisors), as soon as practicable after Seller's request, such
information and data that are reasonably available concerning the pre-Closing
Date operations of the Company and make available such knowledgeable employees
of Buyer and the Company as Seller may reasonably request, including providing
the full and complete information and data required by Seller's customary Tax
and accounting information requests to the extent reasonably available, in order
to enable Verizon and Seller to complete fully and file all Tax Returns that
they may be required to file pursuant to this Section 4.3.4, to respond to and
contest audits by any taxing authorities pursuant to this Section 4.3.4, and to
prosecute any claim for refund or credit to which Verizon or Seller is entitled
hereunder and to otherwise enable Verizon and Seller fully to satisfy their
accounting and Tax requirements. From and after the Closing Date, Seller shall
deliver to Buyer (including for purposes of this sentence, Buyer's tax
advisors), as soon as practicable after Buyer's request, such information and
data that are reasonably available concerning any Tax attributes that are
allocated to the Company or other Tax matters that is necessary in order to
enable Buyer to complete and file all Tax Returns that it may be required to
file with respect to the activities of Buyer or the Company from and after the
Closing Date, to respond to and contest audits by any Taxing Authorities with
respect to such activities, to prosecute any claim for refund or credit to which
Buyer or the Company is entitled and to otherwise enable Buyer and the Company
to satisfy their accounting and Tax requirements. Seller shall execute and Buyer
shall execute (and shall cause the Company to execute) such documents as may be
necessary to file any Tax Returns, to respond to or contest any audit, to
prosecute any claim for refund or credit and to otherwise satisfy any Tax
requirements relating to the Company.
(g) Transfer Taxes. Notwithstanding anything herein to the contrary, Buyer and
Seller each shall be responsible for one half of all sales, use, registration,
transfer, stamp duty, documentary, securities transactions, real estate
transfer, and similar Taxes and notarial fees assessed or payable in connection
with the transfer of the Company Stock or other transactions contemplated
hereby, regardless of whether such Taxes become due or payable on or after the
Closing Date (collectively, "Transfer Taxes"), including any real property
transfer Tax imposed as a result of such transfer, and Buyer and Seller each
shall be responsible for one half of all interest, penalties and additions to
Taxes related to such Taxes. Buyer shall prepare and timely file all Tax Returns
relating to such Taxes.
(h) Tax Sharing Agreements, Etc. All tax allocation, indemnification or sharing
agreements, policies, arrangements and practices between Seller or an Affiliate
of Seller and the Company shall be terminated as of the Closing Date.
(i) Amendments to Tax Returns. Buyer shall not, and shall not permit the Company
to, amend any Tax Return covering any period ending before the Closing Date
without the prior written consent of Seller, which consent shall not be
unreasonably withheld, if such amendment could adversely affect Seller.
(j) Relationship with Article 6. In the event of any conflict between the
provisions of this Section 4.3.4 and the provisions of Article 6, the provisions
of this Section 4.3.4 shall govern and control with respect to any matter
relating to Taxes.
(k) Section 338(h)(10) Election.
(i) Buyer shall join Seller in making an election with respect to the Company
and its Subsidiaries under Sections 338(g) and 338(h)(10) of the Code (the
"Election"). Buyer and Seller shall take all actions necessary to make such
Election valid (and shall not take any action that would render the Election
invalid), and shall report, in connection with the determination of income,
franchise or other Taxes measured by net income, the transactions being
undertaken pursuant to this Agreement in a manner consistent with the Election
unless required to do otherwise by Law.
(ii) Buyer shall be responsible for the initial preparation of all forms and
documents required in connection with making the Election, and Buyer and Seller
shall timely execute and file all forms required to be filed to make the
Election. Buyer represents that it is eligible to make the Election. Seller
shall execute and deliver to Buyer such documents or forms as are required by
any tax laws to complete the Election.
(iii) To the extent permitted by state and local Laws, the principles and
procedures of this Section 4.3.4(k) shall also apply with respect to a Section
338(h)(10) election or equivalent or comparable provision under state or local
law. Seller and Buyer covenant and agree that to the extent an election similar
to a Section 338(h)(10) election under the Code is optional under any state or
local law, they shall so elect so as to treat the transactions contemplated
herein as a sale of assets for state and local income and franchise tax
purposes.
(l) Purchase Price Allocation. Within 150 days after the Closing Date, Buyer
shall provide to Seller for Seller's review a draft of the exhibits proposed to
be attached to the Form 8023 and a copy of the Internal Revenue Service Form
8883 and Form 8594 (if required by applicable Law) or other required forms, if
any, related to asset acquisitions and any required exhibits thereto. Within 30
days after receipt of such documents, Seller shall, in writing, either agree or
state its objections. Seller and Buyer shall negotiate in good faith to attempt
to resolve any objections. If Seller and Buyer are unable to resolve Seller's
objections, the objections shall be submitted to a public accounting firm with
nationally recognized tax expertise selected jointly by Seller and Buyer for
resolution as rapidly as possible. Seller and Buyer shall file the Form 8023
(and any other documents required by Law to make the Election) on or before the
due date for making the Election. Seller and Buyer agree to follow said purchase
price allocation (which shall include any adjustments to said allocation
resulting from purchase price adjustments contemplated by Section 6.9 hereof)
for purposes of all U.S. federal and, where applicable, state and local income
and franchise tax returns, to the extent said values are relevant for such
purposes.
(m) Claims. Any claims for indemnity under this Section 4.3.4 may be made at any
time prior to 60 days after the expiration of the applicable Tax statute of
limitations with respect to the relevant taxable period (including all periods
of extension, whether automatic or permissive).
Article 5
CONDITIONS PRECEDENT TO CLOSING
5.1 Conditions Precedent to Obligations of Buyer. The obligation of Buyer to
purchase the Company Stock is subject to the fulfillment or satisfaction, prior
to or at the Closing, of each of the following conditions precedent, which may
be waived in writing in whole or in part by Buyer:
5.1.1 Representations and Warranties True as of Closing. The representations and
warranties of Seller contained herein shall be true and correct on the Closing
Date as though made on the Closing Date (without regard to any materiality or
Material Adverse Circumstance qualifiers set forth therein), except to the
extent such representations and warranties by their terms speak as of an earlier
date, in which case they shall be true and correct as of such earlier date
(without regard to any materiality or Material Adverse Circumstance qualifiers
set forth therein), except in each case to the extent that the failure of such
representations and warranties to be true and correct would not, individually or
in the aggregate, constitute a Material Adverse Circumstance.
5.1.2 Compliance with this Agreement. Seller shall have performed and complied
in all material respects (or shall have cured any material nonperformance or
noncompliance) with all agreements and conditions required by this Agreement to
have been performed or complied with by it prior to or at the Closing.
5.1.3 Closing Certificate. Seller shall have delivered to Buyer a certificate,
dated the Closing Date, certifying that the conditions specified in Sections
5.1.1 and 5.1.2 have been satisfied.
5.1.4 Intellectual Property Agreement. Seller shall have delivered to Buyer an
Intellectual Property Agreement substantially in the form attached hereto as
Exhibit B (the "Intellectual Property Agreement"), duly executed by Seller,
Verizon and the Company.
5.1.5 Transition Services Agreement. The Company and the Spin-Off Subsidiary
shall have duly executed and delivered to each other a Transition Services
Agreement substantially in the form attached hereto as Exhibit C (the
"Transition Services Agreement").
5.1.6 Stock Certificates. Seller shall have delivered to Buyer one or more
certificates representing the Company Stock, duly endorsed (or accompanied by
duly executed stock powers) for transfer to Buyer.
5.1.7 Certificate Regarding Satisfaction of Conditions. Seller shall have
delivered to Buyer a certificate of the Seller, dated the Closing Date,
certifying that all of the conditions precedent to the obligations of Seller
hereunder have been waived by Seller or satisfied.
5.1.8 Good Standing Certificate. Seller shall have delivered to Buyer a good
standing certificate for the Company, dated not more than five Business Days
prior to the Closing Date, as issued by the Secretary of State of Delaware.
5.2 Conditions Precedent to Obligations of Seller. The obligation of Seller to
sell the Company Stock is subject to the fulfillment or satisfaction, prior to
or at the Closing, of each of the following conditions precedent, which may be
waived in writing in whole or in part by Seller:
5.2.1 Representations and Warranties True as of Closing. The representations and
warranties of Buyer contained herein shall be true and correct on the Closing
Date as though made on the Closing Date (without regard to any materiality or
Material Adverse Circumstance qualifiers set forth therein), except to the
extent such representations and warranties by their terms speak as of an earlier
date, in which case they shall be true and correct as of such earlier date
(without regard to any materiality or Material Adverse Circumstance qualifiers
set forth therein), except to the extent that the failure of such
representations and warranties to be true and correct would not, individually or
in the aggregate, have a material adverse effect on Buyer's ability to
consummate the transactions contemplated by this Agreement and the other
Transaction Documents.
5.2.2 Compliance with this Agreement. Buyer shall have performed and complied in
all material respects (or shall have cured any material nonperformance or
noncompliance) with all agreements and conditions required by this Agreement to
be performed or complied with by it prior to or at the Closing.
5.2.3 Closing Certificate. Buyer shall have delivered to Seller a certificate,
dated the Closing Date, certifying that the conditions specified in Section
5.2.1 and 5.2.2 have been satisfied.
5.2.4 Intellectual Property Agreement. Buyer shall have delivered to Seller the
Intellectual Property Agreement, duly executed by Buyer.
5.2.5 Purchase Price. Buyer shall have paid the Purchase Price to Seller in
accordance with Section 2.2.
5.2.6 Certificate Regarding Satisfaction of Conditions. Buyer shall have
delivered to Seller a certificate of Buyer, dated the Closing Date, certifying
that all of the conditions precedent to the obligations of Buyer hereunder have
been waived by Buyer or satisfied.
5.2.7 Good Standing Certificate. Buyer shall have delivered to Seller a good
standing certificate for Buyer, dated as of a date not more than five Business
Days prior to the Closing Date, as issued by the Secretary of State of the State
of Delaware.
5.3 Conditions Precedent to the Obligations of Buyer and Seller. The obligations
of Buyer and Seller to consummate the purchase and sale of the Company Stock are
subject to the fulfillment or satisfaction, prior to or at the Closing, of each
of the following conditions precedent, which may be waived in writing in whole
or in part by Buyer and Seller.
5.3.1 No Governmental Orders or Legal Proceedings. No Law or Governmental Order
shall have been enacted, entered, issued, promulgated or enforced by any
Governmental Authority that prohibits or enjoins the transfer of the Company
Stock. No Action shall be pending by any Governmental Authority having
jurisdiction over Seller or the Company or any material portion of the Acquired
Business that seeks to prohibit or enjoin the consummation of the transactions
contemplated hereby.
5.3.2 Approvals; HSR Act. All Approvals required by applicable Law to be
obtained from any Governmental Authority to effect the transfer of the Company
Stock that are identified on Disclosure Schedule 5.3.2 shall have been received
or obtained on or prior to the Closing Date, and any applicable waiting period
under the HSR Act shall have expired or been terminated.
Article 6
INDEMNIFICATION
6.1 Indemnification Obligation of Seller. From and after the Closing, Seller
agrees to indemnify and hold harmless Buyer, its Affiliates, the Company and
their respective directors, managers, officers, agents, employees, successors
and assigns (each, a "Buyer Indemnitee" and collectively, the "Buyer
Indemnitees") from and against any and all Losses based upon or arising from:
(a) any inaccuracy in, or breach of, as of the Closing Date any of the
representations or warranties made by Seller in Section 3.1 of this Agreement,
the Contribution Agreement or the Intellectual Property Agreement, as if such
representations and warranties were made on and as of the Closing Date after
giving effect to any supplement to the Disclosure Schedules made in accordance
with Section 3.3(a);
(b) subject to Section 4.1.6, a breach by Seller of any covenant of Seller
contained in this Agreement, the Contribution Agreement or the Intellectual
Property Agreement, that requires performance by Seller at or after the Closing;
(c) any Assumed Liabilities; or
(d) any other matter as to which Seller in other provisions of this Agreement
(including Section 4.3.4) has expressly agreed to retain liability or to
indemnify Buyer.
The provisions of this Section 6.1 do not limit any rights that Seller
may have against any Buyer Indemnitee that was a director, officer, employee,
Affiliate or agent of the Company prior to the Closing resulting from, based
upon or arising from actions or omissions of any such Person prior to the
Closing, and no indemnification will be available under this Section 6.1 for any
such Person as a result of any such actions or omissions.
6.2 Indemnification Obligation of Buyer. From and after the Closing, Buyer
agrees to, and to cause the Company to, indemnify and hold harmless Seller, its
Affiliates and their respective directors, managers, officers, agents,
employees, partners, successors and assigns (each, a "Seller Indemnitee" and
collectively, the "Seller Indemnitees") from and against any and all Losses
based upon or arising from:
(a) any inaccuracy in, or breach of, as of the Closing Date any of the
representations or warranties made by Buyer in Section 3.2 of this Agreement,
the Contribution Agreement or the Intellectual Property Agreement, as if such
representations and warranties were made on and as of the Closing Date;
(b) a breach by Buyer or the Company of any covenant of Buyer or the Company
contained in this Agreement, the Contribution Agreement or the Intellectual
Property Agreement, that requires performance by Buyer or the Company at or
after the Closing;
(c) any Actions relating to the conduct of the Company or the Acquired Business
on or after the Closing Date;
(d) any Retained Liabilities; or
(e) any other matter as to which Buyer in other provisions of this Agreement
(including Section 4.3.4) has expressly agreed to retain liability or to
indemnify Seller.
6.3 Survival. All representations and warranties made by the parties in this
Agreement shall survive until the expiration of 18 months after the Closing
Date, except that (a) the representations and warranties in Sections 3.1.1,
3.1.2, 3.1.15, 3.2.1, 3.2.5, 3.2.6 and 3.2.8 shall survive indefinitely, (b) the
representations or warranties contained in Section 3.1.9 shall survive until 60
days after the expiration of the applicable statute of limitations and (c) the
representations or warranties contained in Section 3.1.10 shall survive until
the expiration of 36 months after the Closing Date. This Article 6 shall survive
the Closing and shall remain in effect (i) with respect to Sections 6.1(a) and
6.2(a), so long as the relevant representations and warranties survive, (ii)
with respect to Sections 6.1(b) and 6.2(b), so long as the applicable covenant
survives and (iii) with respect to Sections 6.1(c), 6.1(d), 6.2(c), 6.2(d) and
6.2(e), indefinitely. Any claim by a party for indemnification under this
Article 6 must be made by notice to the party from whom indemnification is
sought within the applicable survival period, and any matter as to which a claim
has been asserted by timely notice that is pending or unresolved at the end of
the applicable survival period shall continue to be covered by this Article 6
notwithstanding any applicable statute of limitations (which the parties hereby
waive) until such matter is finally terminated or otherwise resolved by the
parties under this Agreement or by a court of competent jurisdiction and any
amounts payable hereunder are finally determined and paid.
6.4 Limitations on Claims for Certain Losses. Anything to the contrary contained
herein notwithstanding, Seller shall not be required to indemnify any Person
under Section 6.1(a) or Section 6.1(b) with respect to any individual claim or
series of related claims unless the amount of Losses (not otherwise indemnified)
resulting therefrom exceeds fifteen thousand dollars ($15,000) (the "Included
Claims") and the aggregate amount of Included Claims for which indemnity would
otherwise be payable by Seller exceeds two percent (2%) of the Purchase Price
(the "Deductible"), and in such event Seller shall be liable only for the amount
in excess of the Deductible. The aggregate liability of Seller pursuant to
Sections 6.1(a) and 6.1(b) shall not exceed an amount equal to ten percent (10%)
of the Purchase Price (the "Cap"). Notwithstanding anything to the contrary
contained herein or otherwise, the limitations set forth in this Section 6.4
shall not apply to (a) fraud by Seller in the sale of the Company to Buyer and
(b) any Losses based upon or arising from (i) any inaccuracy in, or breach of,
as of the Closing Date, any of the representations or warranties made by Seller
in Section 3.1.9 of this Agreement and (ii) a breach by Seller of any covenant
of Seller or the Company contained in Section 4.3.4 of this Agreement. In no
event shall a breach of a representation or warranty, in and of itself, be
deemed to constitute an intent by Seller to defraud Buyer in connection with the
sale of the Company.
6.5 Indemnification Procedure as to Third-Party Claims
(a) Notice of Third Party Claims. Any party seeking indemnification (the
"Indemnitee") of any Loss or potential Loss arising from a claim asserted by a
third party (a "Claim") shall give written notice to the party from whom
indemnification is sought (the "Indemnitor") promptly after the Indemnitee's
receipt of an assertion of liability from the third party, and in any event
within ten (10) Business Days of such assertion; provided that no delay on the
part of the Indemnitee in notifying the Indemnitor shall relieve the Indemnitor
from any obligation hereunder unless, and then solely to the extent that, the
Indemnitor is prejudiced thereby.
(b) Defense. The Indemnitor may, at its option, control the defense of any Claim
for which indemnification is sought. If (i) the Indemnitor does not assume such
defense or notifies the Indemnitee within 30 days after the date notice is
provided pursuant to Section 6.5(a) that the Indemnitor does not assume such
defense or (ii) having assumed such defense but failed to contest such Claim in
good faith, the Indemnitor does not cure such failure within 30 days after
receiving written notice thereof from the Indemnitee, the Indemnitee may control
the defense of such Claim. In all cases, the party without the right to control
the defense of the Claim may retain counsel of its choice at its own expense and
may participate in the defense of such Claim. Notwithstanding the foregoing
sentence, if the Indemnitor assumes control of such defense and the Indemnitee
reasonably concludes, based on advice from counsel, that the Indemnitor and the
Indemnitee have conflicting interests with respect to such action, suit,
proceeding or claim, the reasonable fees and expenses of counsel to the
Indemnitee solely in connection therewith shall be considered Losses for
purposes of this Agreement; provided, however, that in no event shall the
Indemnitor be responsible for the fees and expenses of more than one counsel for
all Indemnitees.
(c) Settlement Limitations. Notwithstanding anything in this Section 6.5 to the
contrary, neither the Indemnitor nor the Indemnitee shall, without the written
consent of the other party, settle or compromise any Claim for which
indemnification is sought or permit a default judgment or consent to entry of
any judgment. If a settlement offer solely for money damages is made by the
applicable third party claimant, and the Indemnitor notifies the Indemnitee in
writing of the Indemnitor's willingness to accept the settlement offer and pay
the amount called for by such offer without reservation of any rights or
defenses against the Indemnitee, the Indemnitee may decline to accept the
settlement offer and may continue to contest such claim, free of any
participation by the Indemnitor, and the amount of any ultimate liability with
respect to such Claim that the Indemnitor has an obligation to pay hereunder
shall be limited to the lesser of (i) the amount of the settlement offer that
the Indemnitee declined to accept plus the Losses of the Indemnitee relating to
such Claim through the date of its rejection of the settlement offer or (ii) the
aggregate Losses of the Indemnitee with respect to such Claim.
6.6 Payment
(a) Upon a determination of liability in respect of Article 6 of this Agreement,
the appropriate Indemnitor shall pay the Indemnitee the amount so determined
(subject to the limitations of Section 6.4) within 10 Business Days after the
date of determination (such 10th Business Day, the "Due Date"). If there should
be a dispute as to the amount or manner of determination of any indemnity
obligation owed under this Agreement, the Indemnitor shall nevertheless pay when
due such portion, if any, of the obligation as shall not be subject to dispute.
(b) If all or part of any indemnification obligation under this Agreement is not
paid when due, then the Indemnitor shall pay the Indemnitee interest on the
unpaid amount of the obligation for each day from the Due Date until payment in
full, payable on demand, at the Prime Rate plus 2% on the Due Date.
6.7 Adjustment for Insurance. For purposes of this Article 6, all Losses shall
be measured net of any amounts actually recovered (after deducting related costs
and expenses) by the Indemnitee for the Losses for which an indemnification
payment is payable, under any insurance policy, warranty or indemnity from any
third party. Each Indemnitee shall use its Commercially Reasonable Efforts to
collect any amounts available under any such insurance policy, warranty or
indemnity.
6.8 Exclusive Remedies. The remedies provided for in this Article 6 shall
constitute the sole and exclusive remedy for any claims made for breach of this
Agreement, the Intellectual Property Agreement or the Contribution Agreement or
in connection with the transactions contemplated hereby or thereby, except for
claims for equitable remedies (including injunctive relief) arising out of any
breach of the Nondisclosure Agreement, the Intellectual Property Agreement,
Section 4.2.4, Section 4.3.2, Section 8.3 or Article 7. Each party hereby waives
any provision of Law to the extent that it would limit or restrict the agreement
contained in this Section 6.8.
6.9 Treatment of Indemnity Payments. Buyer and Seller agree that any indemnity
payments made pursuant to this Article 6 and any payments with respect to Taxes
under Section 4.3.4 will be treated by the parties as an adjustment to the
Purchase Price. Notwithstanding anything to the contrary contained herein, Buyer
shall not be indemnified or reimbursed for any Tax consequences arising from the
receipt or accrual of an indemnity payment hereunder, including any consequences
arising from any adjustment to the basis of any assets of the Company resulting
from an adjustment to the Purchase Price hereunder or any additional Taxes
resulting from any such basis adjustment.
6.10 Matters Known Prior to Closing. Notwithstanding anything to the contrary
contained in this Agreement, if the Closing occurs, (a) no claim for
indemnification may be asserted under Section 6.1 with respect to any matter
discovered by or known to Buyer or its representatives, advisors or agents on or
before the Closing Date, and (b) no claim for indemnification may be asserted
under Section 6.2 with respect to any matter discovered by or known to Seller or
its representatives, advisors or agents on or before the Closing Date.
6.11 Subrogation. If, after the making of any indemnification payment, the
amount of the Losses to which such payment relates is reduced by recovery,
settlement, insurance coverage or otherwise, or pursuant to any claim, recovery,
settlement or payment by or against any other Person, the amount of such
reduction (less any costs, expenses, premiums or Taxes incurred in connection
therewith) will promptly be repaid by the Indemnitee to the Indemnitor. Upon
making any indemnification payment, the Indemnitor will, to the extent of such
indemnification payment, be subrogated to all rights of the Indemnitee against
any third party that is not an Affiliate of the Indemnitee in respect of the
Losses to which the indemnification payment relates; provided that (a) the
Indemnitor shall then be in compliance with its obligations under this Agreement
in respect of such Losses, and (b) until the Indemnitee recovers full payment of
its Losses, all claims of the Indemnitor against any such third party on account
of said indemnification payment will be subordinated in right of payment to the
Indemnitee's rights against such third party. Without limiting the generality or
effect of any other provision of this Article 6, each such Indemnitee and
Indemnitor will duly execute upon request all instruments reasonably necessary
to evidence and perfect the above-described subrogation and subordination
rights.
Article 7
EMPLOYEE MATTERS
7.1 Transferred Employees
7.1.1 Identification of Transferred Employees.
(a) Disclosure Schedule 7.1.1(a) identifies each active Employee as of the date
of this Agreement (other than retained Employees identified in Disclosure
Schedule 7.1.1(b)), together with the Employee's title or job position, service,
compensation, employment status, and such other information as is required to be
provided by this Article 7 with respect to such Employee. Disclosure Schedule
7.1.1(a) shall be updated by Seller on or before the Closing Date to identify
individuals who become active Employees after the date of this Agreement (and
who are not identified on an updated Disclosure Schedule 7.1.1(b)) and to remove
those individuals who cease to be active Employees prior to the Closing (without
regard to the reason or circumstance for such termination of active Employee
status). Except as provided in Section 7.1.4, in hiring new Employees and
terminating Employees after the date of this Agreement, Seller and the Company
shall follow their usual and ordinary course of business in accordance with past
practice. For purposes of this Section, the term "active Employees" shall
include all full-time and part-time employees; employees on workers'
compensation, military leave, maternity leave, leave under the Family and
Medical Leave Act of 1993, or short-term disability; and employees on other
approved leaves of absence with a legal or contractual right to reinstatement.
(b) Disclosure Schedule 7.1.1(b) identifies those Employees as of the date of
this Agreement who will be retained by Seller or any Affiliate of Seller (other
than the Company) and who shall not in any event be considered "Transferred
Employees" for purposes of this Agreement. Disclosure Schedule 7.1.1(b) may be
updated by Seller prior to the Closing Date to identify additional retained
Employees who are employed after the date of this Agreement. Buyer shall have no
liability with respect to the active Employees listed in Disclosure Schedule
7.1.1(b).
7.1.2 Employment of Transferred Employees. If any Employee is employed by Seller
or its Affiliate (other than the Company) immediately prior to the Closing Date,
such Employee shall be transferred or deemed transferred to the Company as of
the Closing Date to allow Buyer to assume the employment obligations described
below. Buyer shall cause all Employees listed in Disclosure Schedule 7.1.1(a) as
of the Closing Date (hereinafter collectively referred to as "Transferred
Employees") to remain employed by (or remain the responsibility of, as
applicable) the Company and its Subsidiaries as of the Closing Date in the same
or comparable positions, and with at least the same base pay and comparable
total compensation (taking into account base pay, bonuses, and other incentive
compensation) as was in effect immediately prior to the Closing Date.
(a) Except as provided in Section 7.1.2(d), this Section 7.1.2 shall not limit
Buyer's ability to change a Transferred Employee's position, compensation or
benefits for performance-related or similar business reasons or require Buyer to
continue the employment of a Transferred Employee for any particular period of
time after the Closing; provided that (i) Buyer shall bear all liability for any
such termination of employment or modification of terms and conditions of
employment following the Closing Date with respect to employees of Buyer,
including Transferred Employees and (ii) Buyer shall not discriminate against
Transferred Employees in relation to similarly situated Buyer employees by
reason of their status as Transferred Employees.
(b) Buyer shall not be required to assume liability for any retention agreements
between the Company and any of the Transferred Employees, and Seller shall
retain liability for all obligations under any such retention agreements.
(c) On and after the Closing Date, Buyer shall cause the Company and its
Affiliates to recognize the service of each Transferred Employee for Seller, the
Company and their Affiliates before the Closing Date for all employment-related
purposes other than defined benefit plan benefit accrual service. Disclosure
Schedule 7.1.1(a) shall list such service of each Transferred Employee.
(d) Seller shall assume the obligation to pay to Transferred Employees a
pro-rated portion of any bonuses that would have been payable to the Transferred
Employees with respect to the calendar year in which the Closing Date occurs had
the Transferred Employees remained employees of Seller or one of its Affiliates,
in accordance with the provisions of the Seller policy, plan, arrangement,
program, practice or agreement under which the bonus would have been paid. Such
pro-rated portion shall be equal to the total bonus payable for such year
multiplied by a fraction, the numerator of which is the number of calendar days
elapsed in the calendar year of the Closing from the beginning of such year to
the Closing Date and the denominator of which is 365. For the remaining portion
of such year Buyer agrees that the Transferred Employees will receive bonuses
that are comparable to those received by Buyer's employees that perform similar
duties, without regard to any service eligibility requirements, and that comply
with Buyer's obligation under Section 7.1.2 to provide comparable total
compensation to each Transferred Employee.
7.1.3 No Duplicate Benefits. Transferred Employees shall not accrue benefits
under any Seller Plans or Foreign Plans after the Closing Date. Nothing in this
Agreement shall cause duplicate benefits to be paid or provided to or with
respect to a Transferred Employee under any employee benefit policies, plans,
arrangements, programs, practices, or agreements. References herein to a benefit
with respect to a Transferred Employee shall include, where applicable, benefits
with respect to any eligible dependents and beneficiaries of such Transferred
Employee under the same employee benefit policy, plan, arrangement, program,
practice or agreement.
7.1.4 Employees on LTD. Any individual who would be a "Transferred Employee" but
for being on long-term disability shall be offered a comparable position by the
Company and shall be treated as a Transferred Employee in the event he or she is
medically released to resume employment within 12 months after the Closing Date.
Neither Buyer nor, after the Closing Date, the Company shall have any liability
with respect to such an individual who is not medically released to resume
employment within 12 months after the Closing Date. Employees on long-term
disability shall be identified in Disclosure Schedule 7.1.1(a).
7.2 Employee Benefits
7.2.1 Defined Benefit Plans.
(a) As of the date of this Agreement, Seller or its Affiliates have adopted the
following single-employer defined benefit pension plan maintained in the United
States: the Verizon Management Pension Plan (the "Seller Pension Plan").
(b) Effective immediately after the Closing Date, the Transferred Employees who
were eligible to participate immediately prior to the Closing in the Seller
Pension Plan will be eligible to participate under a tax-qualified defined
benefit pension plan established or maintained by Buyer or its Affiliates to the
same extent (if any) as similarly-situated employees of Buyer and its
Affiliates; provided that such Transferred Employees shall not be credited with
prior service with Seller and its Affiliates for benefit accrual purposes under
such Buyer pension plan. No assets or liabilities will be transferred in
connection with this Agreement from the Seller Pension Plan to Buyer or its
Affiliates or any employee benefit plan of Buyer or its Affiliates.
7.2.2 Savings Plans.
(a) As of the date of this Agreement, Seller or its Affiliates have adopted and
made contributions with respect to the Transferred Employees to one or more
qualified retirement savings plans (collectively referred to as the "Seller
Savings Plan(s)"). Except as provided in subsection 7.2.2(c), Transferred
Employees shall not be entitled to make contributions to or to benefit from
matching or other contributions under the Seller Savings Plan(s) on and after
the Closing Date. Seller shall take all necessary and legally permissible
actions in order to cause the Seller Savings Plan(s) to distribute the account
balances thereunder for each Transferred Employee who participated in Seller
Savings Plan(s) as soon as practicable following the Closing Date, subject to
the consent of such Transferred Employee, where required, including, subject to
applicable Law, the distribution of cash and any notes representing plan loans
to participants.
(b) Buyer shall take all action necessary and appropriate to ensure that, as of
the Closing Date, Buyer or one of its Affiliates maintains one or more qualified
retirement savings plans (hereinafter referred to in the aggregate as the "Buyer
Savings Plan(s)") that will accept rollover contributions, including any notes
representing plan loans to participants, from each Transferred Employee who
receives a distribution from the Seller Savings Plan(s), who elects such a
rollover form of distribution, and who is employed by the Buyer (or any of its
Affiliates) at the time of such distribution. Buyer agrees to permit all
Transferred Employees to participate in the applicable Buyer Savings Plan(s) or
any other qualified defined contribution plans maintained by Buyer on the same
terms and conditions as similarly situated Buyer employees, taking into account
prior service in accordance with Section 7.1.2(c).
(c) Seller shall make all required matching contributions with respect to the
Transferred Employees' contributions to the Seller Savings Plan(s) that are (i)
eligible to be matched and (ii) made before the Closing Date. Such matching
contributions shall be made not later than the date on which all other matching
contributions are made to the Seller Savings Plan(s) with respect to
contributions made at the same time as the Transferred Employees' contributions.
(d) Seller and Buyer agree to provide each other with such records and
information as may be necessary or appropriate to carry out their respective
obligations under this Section 7.2.2 including, in connection with any transfer
of notes representing plan loans to participants, the provision to Buyer of
amortization schedules and any other documents relating thereto.
7.2.3 Welfare Plans.
(a) Buyer shall take all action necessary and appropriate to ensure that, as of
the Closing Date, Buyer or one of its Affiliates maintains or adopts one or more
employee welfare benefit plans, including medical, health, dental, flexible
spending account, accident, life, short-term disability, and long-term
disability plans for the benefit of the Transferred Employees (the "Buyer
Welfare Plans"). The Buyer Welfare Plans shall provide as of the Closing Date
pre-retirement benefits to Transferred Employees (and their dependents and
beneficiaries) that, in the aggregate, are comparable to the pre-retirement
benefits to which they were entitled under the employee welfare benefit plans
maintained by Seller or its Affiliates on the Closing Date (hereinafter referred
to collectively as the "Seller Welfare Plans"). Any restrictions on coverage for
pre-existing conditions or requirements for evidence of insurability under the
Buyer Welfare Plans shall be waived for Transferred Employees, and Transferred
Employees shall receive credit under the Buyer Welfare Plans for co-payments and
payments under a deductible limit made by them and for out-of-pocket maximums
applicable to them during the plan year in which the Closing occurs in
accordance with the corresponding Seller Welfare Plans. As soon as practicable
after the Closing Date, Seller shall deliver to Buyer a list of each Transferred
Employee's co-payment amounts and payments credited to deductible and
out-of-pocket limits under the Seller Welfare Plans.
(b) Seller, Buyer, their respective Affiliates, and the Seller Welfare Plans and
the Buyer Welfare Plans shall assist and cooperate with each other in the
disposition of claims made under the Seller Welfare Plans and the Buyer Welfare
Plans, and in providing each other with any records, documents, or other
information within its control or to which it has access that is reasonably
requested by any other as necessary or appropriate to the disposition,
settlement, or defense of such claims.
(c) Except as provided in Section 7.2.3(d) below, nothing in this Agreement
shall require Seller or its Affiliates to transfer assets or reserves with
respect to the Seller Welfare Plans to Buyer or its Affiliates or the Buyer
Welfare Plans (including any assets or reserves relating to retiree welfare
benefits).
(d) Seller will make available to Buyer, not less than five (5) calendar days
prior to the Closing Date, a list of Transferred Employees who are participating
in or have participated in the Verizon Flexible Reimbursement Plan (the "FRP"),
together with the elections made prior to the Closing Date with respect to such
accounts through the Closing Date.
(i) Buyer shall take all actions necessary and legally permissible to ensure
that as of the Closing Date, it includes the Transferred Employees who are
participating in the FRP as of the Closing Date, in the benefit plan of Buyer
that constitutes a Code Section 125 plan and any flexible spending arrangements
thereunder ("Buyer's FSA"). Buyer shall further take all actions necessary and
legally permissible to amend Buyer's FSA to provide that (A) the Transferred
Employees who elected to participate in the FRP shall become participants in
Buyer's FSA as of the beginning of the FRP's plan year and at the level of
coverage provided under the FRP, except that any Transferred Employees who
continue participation in the FRP after the Closing Date as provided in
paragraph 7.2.3(d)(ii) below shall not be covered by Buyer's FSA for that year;
(B) the Transferred Employees salary reduction elections shall be taken into
account for the remainder of Buyer's FSA plan year as if made under Buyer's FSA;
(C) Buyer's FSA shall reimburse medical expenses incurred by the Transferred
Employees at any time during the FRP's plan year (including claims incurred
prior to the Closing Date but unpaid prior to the Closing Date), up to the
amount of the Transferred Employee's election and reduced by amounts previously
reimbursed by the FRP.
(ii) Seller shall take all actions necessary and legally permissible to amend
the FRP to provide that the Transferred Employees shall cease to be eligible for
reimbursements from the FRP as of the Closing Date, except to the extent that
any Transferred Employee elects continuation of coverage under the FRP as
permitted by COBRA.
(iii) As soon as practicable following the Closing Date, Seller shall transfer
to Buyer and Buyer agrees to accept, those amounts which represent the debit and
credit balances under the FRP of the Transferred Employees who are to become
covered by Buyer's FSA and the transfer of such amounts shall take into account
on a net basis employees' payroll deductions and claims paid through the Closing
Date.
(e) Transferred Employees whose employment is involuntarily terminated (other
than for cause) by the Company, Buyer and their respective Affiliates within
twelve (12) months after the Closing Date (the "Severance Maintenance Period")
shall be eligible for benefits under a Company severance or separation pay
policy or plan that provides a severance benefit of at least two weeks of pay
(including cash incentives and bonuses) for each year of service (credited with
Buyer, Seller, and their respective Affiliates), subject to a maximum benefit of
35 weeks of pay (including cash incentives and bonuses) and to a minimum
severance benefit of 26 weeks of pay (including cash incentives and bonuses) for
those Transferred Employees listed in Disclosure Schedule 7.2.3(e). Subject to
the foregoing, such benefits may be provided in the manner and under the plan or
policy designated by Buyer in its discretion. Except as specifically provided
otherwise in the relevant Seller severance pay plan, each Transferred Employee
listed in Disclosure Schedule 7.1.1(a) shall be treated as not having suffered a
period of unemployment and shall not be entitled to severance benefits from
Seller or any of its Affiliates under any Plan or Foreign Plan.
(f) With respect to any benefits to which any Transferred Employee, any former
Employee, or their spouses, former spouses, or other qualifying beneficiaries
may be entitled under COBRA by reason of qualifying events occurring on or prior
to the date immediately preceding the Closing Date, Seller shall provide such
benefits to any such Transferred Employee and former Employees and their
spouses, former spouses and other qualifying beneficiaries from and after the
Closing Date through the remaining period of required coverage.
7.2.4 Income Deferral Plan. Seller will retain any liability associated with
amounts due to Transferred Employees pursuant to the "Income Deferral Plan" as
described on Disclosure Schedule 3.1.10(a). From and after the Closing Date,
Transferred Employees will no longer have the right to participate in such Plan
except with respect to amounts deferred prior to the Closing Date.
7.3 Vacation. On or after the Closing Date, Buyer and its Affiliates shall allow
Transferred Employees to receive paid time off for any unused current-year
vacation time (including personal days) accrued prior to the Closing Date and
not otherwise paid by the Company and its Subsidiaries in accordance with
applicable Law. Except as required otherwise by applicable Law, Seller and its
Affiliates shall have no liability to Transferred Employees for the vacation
payments described in the immediately preceding sentence. Seller or its
Affiliates shall pay Transferred Employees any banked vacation as soon as
practicable after the Closing Date. Disclosure Schedule 7.1.1(a) shall list the
accrued but unused current-year vacation pay (including personal days), as of
the Closing Date, of each Transferred Employee for the calendar year in which
the Closing Date occurs.
7.4 Employee Rights
7.4.1 No Third Party Beneficiaries. Nothing expressed or implied in this Article
7 shall confer upon any employee of Seller or its Affiliates, or Buyer or its
Affiliates, or upon any legal representative of such employee, any rights or
remedies, including any right to employment or continued employment for any
specified period, of any nature or kind whatsoever under or by reason of this
Agreement. Nothing in this Agreement, express or implied, shall create a third
party beneficiary relationship or otherwise confer any benefit, entitlement, or
right upon any person or entity other than the parties hereto. Nothing in this
Agreement shall cause Buyer or its Affiliates or Seller or its Affiliates to
have any obligation to provide employment or any employee benefits to any
individual who is not a Transferred Employee.
7.4.2 Plan Terms Controlling. Nothing in this Agreement shall be deemed to
confer upon any person (or any beneficiary thereof) any rights under or with
respect to any plan, program, or arrangement described in or contemplated by
this Article 7, and each person (and any beneficiary thereof) shall be entitled
to look only to the express terms of any such plan, program, or arrangement for
his or her rights thereunder.
7.5 WARN Act Requirements. Prior to the Closing Date, Seller shall be
responsible with respect to the Transferred Employees and their beneficiaries
for compliance with WARN and any other similar, applicable Law, including any
requirement to provide for and discharge any and all notifications, benefits,
and liabilities to the Transferred Employees and Government Authorities that
might be imposed with respect to any period prior to the Closing Date. On and
after the Closing Date, Buyer and the Company shall be responsible with respect
to Transferred Employees and their beneficiaries for compliance with WARN and
any other similar, applicable Law, including any requirement to provide for and
discharge any and all notifications, benefits, and liabilities to Transferred
Employees and Government Authorities that might be imposed as a result of the
consummation of the transactions contemplated by this Agreement or otherwise.
7.6 Successors and Assigns. In the event Buyer or any of its successors and
assigns (a) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity in such consolidation or
merger or (b) transfers all or substantially all of its assets to any Person,
then, and in each case, proper provision shall be made so that such successors
and assigns of Buyer honor the obligations of Buyer and its Affiliates set forth
in this Article 7. In the event Buyer outsources any of the Transferred
Employees during the Severance Maintenance Period, and such employees are not
paid a severance benefit in accordance with Section 7.2.3(e) then, and in each
case, proper provision shall be made so that the outsourcing vendor maintains a
severance pay plan or policy that provides a severance benefit for each
Transferred Employee who is involuntarily terminated by the outsourcing vendor
during the Severance Maintenance Period, which benefit is the same as the
severance benefits that would otherwise have been provided to such employees in
accordance with Section 7.2.3(e). For purposes of this Section 7.6, a
Transferred Employee shall be considered to have been outsourced if the employee
is hired by the outsourcing vendor pursuant to or in connection with an
agreement entered into between Buyer or any of its Affiliates and the
outsourcing vendor whereby the outsourcing vendor will provide services to or
for the Buyer or any of its Affiliates.
7.7 Assistance. Seller and Buyer agree to cooperate fully with respect to the
actions necessary to affect the transactions contemplated in this Article 7,
including the provision of records (including payroll records) and information
as each may reasonably request from the other.
Article 8
MISCELLANEOUS
8.1 Termination
(a) Anything herein or elsewhere to the contrary notwithstanding, this Agreement
may be terminated at any time before the Closing only as follows:
(i) by mutual written consent of Seller and Buyer;
(ii) by Buyer upon written notice to Seller if any event occurs or condition
exists that would render impossible despite the use of Commercially Reasonable
Efforts the satisfaction of one or more conditions to the obligations of Buyer
to purchase the Company Stock as set forth in Article 5 (including Section 5.3),
if the failure of such condition to be satisfied is not caused by a breach of
this Agreement by Buyer;
(iii) by Seller upon written notice to Buyer if any event occurs or condition
exists that would render impossible despite the use of Commercially Reasonable
Efforts the satisfaction of one or more conditions to the obligation of Seller
to sell the Company Stock as set forth in Article 5 (including Section 5.3), if
the failure of such condition to be satisfied is not caused by a breach of this
Agreement by Seller; or
(iv) by Buyer or Seller, upon written notice given to the other, if the Closing
shall not have taken place on or before 11:59 p.m. New York, New York time on
the date that is 120 calendar days after the date of this Agreement; provided
that the right to terminate this Agreement under this Section 8.1(a)(iv) shall
not be available to any party whose failure to comply with any of its covenants
under this Agreement has been the cause of or resulted in the failure of the
Closing to occur on or before such date.
(b) In the event that this Agreement is terminated pursuant to Section 8.1(a),
all future obligations of the parties under this Agreement shall terminate
without further liability of any party to another; provided that the obligations
of the parties contained in Section 4.3.2, this Section 8.1(b), Section 8.11 and
the Nondisclosure Agreement shall survive any such termination. In the event of
a termination under this Section 8.1, no party shall have any liability under
this Agreement for the failure of any representation or warranty made by such
party hereunder to be true and correct.
8.2 Further Assurances. Each of Buyer and Seller will use Commercially
Reasonable Efforts to cause all conditions to its and the other parties'
obligations hereunder to be timely satisfied and to perform and fulfill all
obligations on its part to be performed and fulfilled under this Agreement, to
the end that the transactions contemplated by this Agreement shall be effected
substantially in accordance with its terms as soon as reasonably practicable.
Each of Buyer and Seller shall execute and deliver both before and after the
Closing such further certificates, agreements and other documents and take such
other actions as the other party may reasonably request to consummate or
implement the transactions contemplated hereby or to evidence such events or
matters. With respect to the securing of any requisite Approvals after Closing,
the parties shall timely and promptly make all filings which may be required for
the securing of such Approvals. In furtherance and not in limitation of the
foregoing, each of Buyer and Seller shall use Commercially Reasonable Efforts to
file notification and report forms and similar applications with any applicable
Governmental Authority whose Approvals may be required following the Closing
Date. Buyer and Seller shall cooperate and use Commercially Reasonable Efforts
to respond to any requests for information by any Governmental Authority in
connection with such post-Closing Approvals.
8.3 Non-Solicitation
8.3.1 Non-Solicitation by Seller. For a period of 12 months following the
Closing Date neither Seller nor any wholly-owned Subsidiary of Verizon shall,
directly or indirectly, solicit (with the exception of any general solicitation
of employment through any general advertising medium in the ordinary course of
business) for employment as an employee or consultant any Transferred Employee
unless such employee's employment is or has been terminated by the Company and
its Affiliates.
8.3.2 Non-Solicitation by Buyer. For a period of 12 months following the Closing
Date none of Buyer, the Company or any Affiliate of either shall, directly or
indirectly, solicit (with the exception of any general solicitation of
employment through any general advertising medium in the ordinary course of
business) for employment as an employee or consultant any individual who was an
employee of Seller or its Affiliates (including the Company) at any time during
the three-month period ending on the Closing Date other than a Transferred
Employee, unless such employee's employment is or has been terminated by Seller
and its Affiliates. 8.4 Contents of Agreement; Amendments. This Agreement and
the Schedules (including the Disclosure Schedules) and Exhibits hereto, which
are incorporated herein by reference, and the other Transaction Documents (a)
constitute the entire agreement between the parties pertaining to the subject
matter hereof and (b) supersede all prior agreements and understandings of the
parties in connection therewith, except for the Nondisclosure Agreement, which
remains in full force and effect. Except as provided in Section 3.3(a), this
Agreement and the Schedules (including the Disclosure Schedules) and Exhibits
hereto shall not be amended or modified except by written instrument duly
executed by each of the parties hereto.
8.5 Assignment and Binding Effect. Neither this Agreement nor any rights or
obligations under it are assignable or delegable by Buyer or Seller without the
prior written consent of the other party. Any purported assignment in violation
of this Section shall be void.
8.6 Waiver. No waiver of any term or provision of this Agreement shall be
effective unless in writing, signed by the party against whom enforcement of the
same is sought. The grant of a waiver in one instance does not constitute a
continuing waiver in all similar instances. No party's failure to exercise, and
no party's delay in exercising, any right, remedy, power or privilege hereunder
shall operate as a waiver thereof.
8.7 Notices. Any notice, request, demand, waiver, consent, approval or other
communication which is required or permitted hereunder shall be in writing and
shall be deemed given only if delivered personally or sent by registered or
certified mail or by Federal Express or other overnight mail service, postage
prepaid, or by facsimile, with written confirmation to follow, as follows:
If to Seller, to:
Verizon Data Services Inc.
c/o Verizon Communications Inc.
1717 Arch Street, 29th Floor
Philadelphia, PA 19103
Attention: Stephen Smith
Facsimile: (215) 557-7249
With a required copy to (which shall not itself constitute notice):
Verizon Communications Inc.
1717 Arch Street, 32nd Floor
Philadelphia, PA 19103
Attention: Philip R. Marx, Esq.
Facsimile: (215) 963-9195
With an additional required copy to (which shall not itself constitute
notice):
O'Melveny & Myers LLP
Times Square Tower
7 Times Square
New York, NY 10036
Attention: Gregory P. Patti, Esq.
Facsimile: (212) 326-2061
If to Buyer, to:
Infocrossing, Inc.
2 Christie Heights Street
Leonia, NJ 07605
Attention: Zach Lonstein
Facsimile: (201) 840-7126
With a required copy to (which shall not itself constitute notice):
Brian Cave LLP
1290 Avenue of the Americas
New York, NY 10104
Attention: Eric L. Cohen
Facsimile Number: (212) 541-1432
or to such other address or facsimile numbers as the addressee may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, demand, waiver, consent, approval or other communication will be deemed
to have been given as of the date so delivered or, if such date is not a
Business Day, on the next Business Day.
8.8 APPLICABLE LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. THIS
AGREEMENT AND THE LEGAL RELATIONS BETWEEN THE PARTIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE AND WITHOUT REGARD TO CONFLICTS OF
LAW DOCTRINES (OTHER THAN NEW YORK GENERAL OBLIGATIONS LAW, SECTION 5-1401).
EACH OF THE PARTIES HERETO (A) CONSENTS TO SUBMIT ITSELF TO THE PERSONAL
JURISDICTION OF ANY FEDERAL COURT LOCATED IN THE BOROUGH OF MANHATTAN, STATE OF
NEW YORK OR ANY NEW YORK STATE COURT IN MANHATTAN IN CONNECTION WITH ANY DISPUTE
THAT ARISES OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT, (B) AGREES THAT IT WILL NOT ATTEMPT TO DENY OR DEFEAT SUCH
PERSONAL JURISDICTION BY MOTION OR OTHER REQUEST FOR LEAVE FROM ANY SUCH COURT
AND (C) AGREES THAT IT WILL NOT BRING ANY ACTION RELATING TO THIS AGREEMENT OR
ANY OTHER TRANSACTION DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY IN ANY COURT OTHER THAN A FEDERAL COURT SITTING IN THE BOROUGH OF
MANHATTAN, STATE OF NEW YORK OR A NEW YORK STATE COURT IN MANHATTAN. THE PARTIES
IRREVOCABLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO
THIS AGREEMENT OR ANY OTHER AGREEMENT ENTERED INTO IN CONNECTION THEREWITH AND
FOR ANY COUNTERCLAIM WITH RESPECT THERETO.
8.9 No Benefit to Others. The representations, warranties, covenants and
agreements contained in this Agreement are for the sole benefit of the parties
hereto and, in the case of Article 6 hereof, the other indemnified parties, and
their respective heirs, executors, administrators, legal representatives,
successors and permitted assigns, and they shall not be construed as conferring
any rights on any other Persons.
8.10 No Punitive Damages. Notwithstanding anything to the contrary contained
herein, no party (or its Affiliates) shall, in any event, be liable to the other
party (or its Affiliates) for any consequential, special or punitive damages,
including loss of future revenue or income or loss of business reputation or
opportunity, arising from or relating to the breach or alleged breach of this
Agreement or any other Transaction Document, except to the extent such damages
are recovered by a third party and such recovery is an indemnifiable Loss.
8.11 Expenses. Seller and Buyer shall each pay their own expenses incident to
the evaluation of the Company and the Acquired Business and the negotiation,
preparation and performance of this Agreement and the other Transaction
Documents and the transactions contemplated hereby and thereby, including the
fees, expenses and disbursements of their respective investment bankers, counsel
and accountants. The expenses of the Company incurred prior to the Closing Date
for accountants and legal counsel in connection with the negotiation,
preparation and performance of this Agreement and the other Transaction
Documents shall be paid by Seller.
8.12 Headings. All section headings contained in this Agreement are for
convenience of reference only, do not form a part of this Agreement and shall
not affect in any way the meaning or interpretation of this Agreement.
8.13 Severability. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provisions in any
other jurisdiction.
8.14 Counterparts. This Agreement may be executed in any number of counterparts,
and any party hereto may execute any such counterpart, each of which when
executed and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument.
This Agreement shall become binding when one or more counterparts taken together
shall have been executed and delivered by all of the parties. It shall not be
necessary in making proof of this Agreement or any counterpart hereof to produce
or account for any of the other counterparts.
* * *
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first written above.
VERIZON DATA SERVICES INC.
By: /s/ LAWRENCE T. BABBIO, JR.
---------------------------------
Name: Lawrence T. Babbio, Jr.
Title: Vice Chairman & President
INFOCROSSING, INC.
By: /s/ ZACH LONSTEIN
---------------------------------
Name: Zach Lonstein
Title: Chairman & CEO
EXHIBIT A
CONTRIBUTION, ASSIGNMENT AND ASSUMPTION AGREEMENT
This CONTRIBUTION, ASSIGNMENT AND ASSUMPTION AGREEMENT (this
"Agreement") is entered into as of __________ __, 2004, by and between Verizon
Information Technologies Inc., a Delaware corporation (the "Company"), and
Verizon Information Technologies LLC, a Delaware limited liability company (the
"Spin-Off Subsidiary").
R E C I T A L S
WHEREAS, the Company is engaged in the business of providing
customers in the healthcare industry with information technology outsourcing
services, healthcare transaction processing services, HIPAA consulting and
implementation services, payer application solutions and Medicaid fiscal agent
services (the "Acquired Business").
WHEREAS, the Company is also engaged in the businesses of (i)
providing data center outsourcing services, application hosting services,
enterprise communications solutions, enterprise help desk services and managed
network services and (ii) providing OSS and BSS telecommunications software
products, including provisioning and activation, billing and mediation,
workforce management and network security applications (collectively and
together with any other ongoing business activity that is not exclusively a part
of or included only in the Acquired Business, the "Retained Businesses").
WHEREAS, all the Company's outstanding common stock, no par
value (the "Company Stock"), is owned by Verizon Data Services Inc., a Delaware
corporation ("Seller").
WHEREAS, Seller and Infocrossing, Inc., a Delaware corporation
("Buyer"), have entered into that certain Purchase and Sale Agreement dated as
of September 1, 2004 (the "Purchase and Sale Agreement"), pursuant to which
Buyer has agreed to purchase the Company Stock from Seller, and Seller has
agreed to sell the Company Stock to Buyer.
WHEREAS, pursuant to Section 2.4(a) of the Purchase and Sale
Agreement, which provides that Seller will cause the Company to organize a
limited liability company prior to the closing of the purchase and sale of the
Company Stock, the Company organized the Spin-Off Subsidiary under the Delaware
Limited Liability Company Act on ___________ ___, 2004.
WHEREAS, Section 2.4(b) of the Purchase and Sale Agreement
provides that, prior to the closing of the purchase and sale of the Company
Stock, Seller will cause (i) the Company and the Spin-Off Subsidiary to enter
into this Agreement, (ii) the Company to contribute to the Spin-Off Subsidiary
all of its right, title and interest in and to all of the Contributed Assets
pursuant to this Agreement and (iii) the Spin-Off Subsidiary to assume all of
the Assumed Liabilities pursuant to this Agreement.
A G R E E M E N T
NOW THEREFORE, in consideration of the foregoing and the
mutual covenants, agreements, terms and conditions contained herein, the parties
hereto do hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions. Capitalized terms used herein without
definition shall have the meanings assigned thereto in the Purchase and Sale
Agreement.
1.2 Other Definitional Provisions.
(a) The words "hereof," "herein" and "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and Section, Schedule and Exhibit
references are to this Agreement unless otherwise specified.
(b) Unless the context otherwise requires, the words "include," "includes" and
"including" and words of similar import when used in this Agreement shall be
deemed to be followed by the phrase "without limitation."
(c) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.
(d) The words "writing," "written" and comparable terms refer to printing,
typing, lithography and other means of reproducing words in a visible form.
(e) Any instrument or Law defined or referred to herein means such instrument or
Law as from time to time amended, modified or supplemented, including (in the
case of instruments) by waiver or consent and (in the case of any Law) by
succession of comparable successor Laws and includes (in the case of
instruments) references to all attachments thereto and instruments incorporated
therein. Any term defined herein by reference to any instrument or Law has such
meaning whether or not such instrument or Law is in effect.
(f) References to a Person are, unless the context otherwise requires, also to
its successors and assigns.
(g) The words "shall" and "will" have equal force and effect.
(h) All accounting terms not otherwise defined herein have the meaning assigned
under generally accepted accounting principles in the United States which have
effective dates on or prior to the date of the applicable or related financial
statement.
ARTICLE II
CONTRIBUTION, ASSIGNMENT AND ASSUMPTION
2.1 Transfer of Assets. The Company hereby contributes, assigns, transfers,
conveys and delivers to the Spin-Off Subsidiary and its successors and assigns
all of its right, title and interest in and to the following (the "Contributed
Assets"):
(a) all cash, cash equivalents and short-term investments of the Company as of
the Closing;
(b) all accounts receivable, notes receivable and other intercompany loans
(including any accrued interest thereon) payable to the Company by Verizon or
any of its Affiliates (other than the Company);
(c) all accounts receivable and notes receivable of the Company arising from any
of the Retained Businesses;
(d) all prepaid expenses and other current assets of the Company arising from
any of the Retained Businesses;
(e) all real property that is not used solely in the Acquired Business,
including the real property listed on Schedule 2.1(e) (the "Real Property"), and
all buildings, structures, fixtures, improvements and appurtenances located on
or attached to such real property;
(f) the items of tangible personal property listed on Schedule 2.1(f) and all
other machinery, equipment, tools, apparatus, furniture and fixtures, materials,
supplies, motor vehicles, computer hardware, office equipment and other items of
tangible personal property of every kind owned, leased or used by the Company in
connection with any of the Retained Businesses (wherever located and whether or
not carried on the Company's books), in each case together with any express or
implied warranty by the manufacturers, sellers or lessors of any item or
component part thereof and all maintenance records and other documents relating
thereto;
(g) all Intellectual Property and other intangible rights and property of every
kind owned by, licensed to (including Third Party Intellectual Property) or used
by the Company and relating to (i) any of the Retained Businesses (whether or
not carried on the Company's books and whether or not used in or relating to the
Acquired Business) or (ii) any of the Verizon Marks, in each case with all
records, other documents, goodwill, rights of enforcement and rights to collect
damages, at any time, relating thereto;
(h) the Contracts listed on Schedule 2.1(h) and any other Contracts to which the
Company is a party that relate to any of the Retained Businesses;
(i) all of the Company's books and records relating to any of the Retained
Businesses, any Retained Business Employees, any Contributed Assets or any
Assumed Liabilities;
(j) all insurance benefits, including rights and proceeds, arising from or
relating to the Contributed Assets or the Assumed Liabilities;
(k) all claims of the Company against third parties relating to the Contributed
Assets, whether choate or inchoate, known or unknown, past, present or future,
contingent or non-contingent;
(l) all Verizon Marks, including any other trademark, service mark or indication
of origin confusingly similar thereto, and any domain name or registration
therefor that includes any Verizon Mark or anything similar to the foregoing;
(m) all other assets, properties, rights, goodwill, privileges and claims of
every kind and nature, real, personal and mixed, tangible and intangible,
including Intellectual Property, absolute or contingent, wherever located, to
the extent that any of the foregoing are not used by the Company solely in
connection with the Acquired Business; and
(n) all other assets, properties, rights, goodwill, privileges and claims of
every kind and nature, real, personal and mixed, tangible and intangible,
including Intellectual Property, absolute or contingent, wherever located, used,
exclusively or nonexclusively, by Seller or any of its Affiliates (other than
the Company) or any of the Retained Businessses for the purpose of providing,
directly or indirectly, good and/or services to the Company for the Acquired
Business.
Notwithstanding anything herein to the contrary, if any
Contract or other right included in the Contributed Assets is not capable of
being assigned or transferred to the Spin-Off Subsidiary on the date hereof as a
result of a failure to obtain a required Approval or consent of any Person,
neither this Agreement nor any instrument delivered pursuant to this Agreement
will constitute an assignment, transfer or sublease thereof. With respect to
each such Contract or other right that cannot be so assigned on the date hereof,
the Company shall (i) from and after the date hereof, promptly assign each such
Contract or other right to the Spin-Off Subsidiary if and when such Contract or
other right may be assigned, (ii) from and after the date hereof until the
assignment of such Contract or other right pursuant to clause (i), (x) provide
the Spin-Off Subsidiary with all of the rights and benefits of such Contract or
other right accruing after the Closing Date to the extent that the Company may
provide the Spin-Off Subsidiary with such rights and benefits without violating
applicable Law or the Contract, (y) use commercially reasonable efforts (at the
sole cost and expense of the Spin-off Subsidiary) to create any arrangement
designed to provide such rights and benefits to the Spin-Off Subsidiary,
including subcontracting, sublicensing or subleasing to the Spin-Off Subsidiary,
and (z) enforce, at the request of the Spin-Off Subsidiary and for the account
of, and the sole cost and expense of, the Spin-Off Subsidiary, any and all
rights of the Company arising under any such Contract or other right. While the
Spin-Off Subsidiary receives the rights and benefits of such Contract or other
right, the Spin-Off Subsidiary agrees to perform at its sole expense all of the
obligations of the Company to be performed under such Contract or other right
after the date hereof related to any of the Retained Businesses and the Spin-Off
Subsidiary shall hold the Company harmless from any Losses arising out of or
relating to the Spin-Off Subsidiary's performance or non-performance of any such
obligations after the Closing Date.
2.2 Assets Not Transferred. None of the Company's assets, properties, rights,
goodwill, privileges and claims other than those included in the Contributed
Assets pursuant to Section 2.1 above (the "Retained Assets") are subject to the
contribution, assignment, transfer, conveyance and delivery contemplated
hereunder, and the Retained Assets shall remain the property of the Company or,
in the case of Third Party Intellectual Property, of the owner of such Third
Party Intellectual Property, subject to the rights and licenses, if any,
expressly retained by the Company.
2.3 Assumption of Certain Liabilities. The Spin-Off Subsidiary hereby assumes
and agrees to pay, perform and discharge when due, only the following
liabilities and obligations of the Company (the "Assumed Liabilities"):
(a) all accounts payable, notes payable and other intercompany loans (including
accrued interest thereon) payable by the Company to Verizon or any of its
Affiliates (other than the Company);
(b) all obligations of the Company with respect to guarantees or other
extensions of credit support made by Verizon or any of its Affiliates (other
than the Company) to or for the benefit of the Company;
(c) all accounts payable and other current liabilities of the Company arising
solely from any of the Retained Businesses;
(d) all obligations of the Company arising under Contracts included in the
Contributed Assets;
(e) all liabilities of the Company under Plans and Foreign Plans or relating to
payroll, in each case solely with respect to Retained Business Employees; and
(f) all other liabilities and obligations of the Company arising from any of the
Retained Businesses.
2.4 Non-Assumption of Liabilities. Except for liabilities and obligations
specifically assumed pursuant to and identified in Section 2.3 above, the
Spin-Off Subsidiary does not assume, does not take subject to and is not liable
for any liabilities or obligations of any kind or nature, whether absolute,
contingent, accrued, known or unknown, of the Company (the "Retained
Liabilities").
2.5 Conveyances at the Closing.
(a) Deliveries by the Company. Concurrently with its execution of this
Agreement, the Company shall deliver or cause to be delivered to the Spin-Off
Subsidiary (i) a bill of sale and assignment substantially in the form of
Exhibit A hereto (the "Bill of Sale") duly executed by the Company, conveying to
the Spin-Off Subsidiary valid title to all assets that are a part of the
Contributed Assets other than Contributed Assets conveyed pursuant to the Lease
Assignments, free and clear of all Liens; (ii) lease assignments, fully executed
by the Company or one of its Affiliates in recordable form, assigning to the
Spin-Off Subsidiary leasehold title to any leased real property included in the
Contributed Assets (the "Lease Assignments"); and (iii) documentation to
effectuate assignment of Contracts described in Section 2.1(h) or rights in
other Contributed Assets (including rights and licenses in Third Party
Intellectual Property included in the Contributed Assets).
(b) Deliveries by the Spin-Off Subsidiary. Concurrently with its execution of
this Agreement, the Spin-Off Subsidiary shall deliver or cause to be delivered
to the Company an assumption agreement substantially in the form of Exhibit B
annexed hereto (the "Assumption Agreement").
ARTICLE III
MISCELLANEOUS
3.1 Further Assurances. Each of the Company and the Spin-Off Subsidiary shall
execute and deliver after the date hereof such further certificates, agreements
and other documents and take such other actions as the other party may
reasonably request to consummate or implement the transactions contemplated
hereby or to evidence such events or matters.
3.2 Contents of Agreement; Amendments. This Agreement and the Schedules and
Exhibits hereto, which are incorporated herein by reference, and the other
Transaction Documents (a) constitute the entire agreement between the parties
pertaining to the subject matter hereof and (b) supersede all prior agreements
and understandings of the parties in connection therewith, except for the
Confidentiality Agreement, which remains in full force and effect. This
Agreement and the Schedules and Exhibits hereto shall not be amended or modified
except by written instrument duly executed by each of the parties hereto.
3.3 Assignment and Binding Effect. Neither this Agreement nor any rights or
obligations under it are assignable or delegable by the Company or the Spin-Off
Subsidiary without the prior written consent of the other party; provided,
however, the Contributed Assets may be sold, assigned encumbered or otherwise
transferred by the Spin-Off Subsidiary without the Company's prior written
consent and without in any way accounting to the Company. Any purported
assignment in violation of this Section shall be void.
3.4 Waiver. No waiver of any term or provision of this Agreement shall be
effective unless in writing, signed by the party against whom enforcement of the
same is sought. The grant of a waiver in one instance does not constitute a
continuing waiver in all similar instances. No party's failure to exercise, and
no party's delay in exercising, any right, remedy, power or privilege hereunder
shall operate as a waiver thereof.
3.5 Notices. Any notice, request, demand, waiver, consent, approval or other
communication which is required or permitted hereunder shall be in writing and
shall be deemed given only if delivered personally or sent by registered or
certified mail or by Federal Express or other overnight mail service, postage
prepaid, or by facsimile, with written confirmation to follow, as follows:
If to the Spin-Off Subsidiary, to:
Verizon Information Technologies LLC
c/o Verizon Communications Inc.
1717 Arch Street, 29th Floor
Philadelphia, PA 19103
Attention: Stephen Smith
Facsimile: (215) 557-7249
With a required copy to (which shall not itself constitute notice):
Verizon Communications Inc.
1717 Arch Street, 32nd Floor
Philadelphia, PA 19103
Attention: Philip R. Marx, Esq.
Facsimile: (215) 963-9195
With an additional required copy to (which shall not itself constitute
notice):
O'Melveny & Myers LLP
Times Square Tower
7 Times Square
New York, NY 10036
Attention: Gregory P. Patti, Esq.
Facsimile: (212) 326-2061
If to the Company, to:
=========================
-------------------------
Attention: ________________
Facsimile: (___) ___-____
With a required copy to (which shall not itself constitute notice):
====================
--------------------
Attention: ___________
Facsimile Number: (___) ___-________
or to such other address or facsimile numbers as the addressee may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, demand, waiver, consent, approval or other communication will be deemed
to have been given as of the date so delivered or, if such date is not a
Business Day, on the next Business Day.
3.6 APPLICABLE LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. THIS
AGREEMENT AND THE LEGAL RELATIONS BETWEEN THE PARTIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE AND WITHOUT REGARD TO CONFLICTS OF
LAW DOCTRINES (OTHER THAN NEW YORK GENERAL OBLIGATIONS LAW, SECTION 5-1401).
EACH OF THE PARTIES HERETO (A) CONSENTS TO SUBMIT ITSELF TO THE PERSONAL
JURISDICTION OF ANY FEDERAL COURT LOCATED IN THE BOROUGH OF MANHATTAN, STATE OF
NEW YORK OR ANY NEW YORK STATE COURT IN MANHATTAN IN CONNECTION WITH ANY DISPUTE
THAT ARISES OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT, (B) AGREES THAT IT WILL NOT ATTEMPT TO DENY OR DEFEAT SUCH
PERSONAL JURISDICTION BY MOTION OR OTHER REQUEST FOR LEAVE FROM ANY SUCH COURT
AND (C) AGREES THAT IT WILL NOT BRING ANY ACTION RELATING TO THIS AGREEMENT OR
ANY OTHER TRANSACTION DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY IN ANY COURT OTHER THAN A FEDERAL COURT SITTING IN THE BOROUGH OF
MANHATTAN, STATE OF NEW YORK OR A NEW YORK STATE COURT IN MANHATTAN. THE PARTIES
IRREVOCABLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO
THIS AGREEMENT OR ANY OTHER AGREEMENT ENTERED INTO IN CONNECTION THEREWITH AND
FOR ANY COUNTERCLAIM WITH RESPECT THERETO.
3.7 No Benefit to Others. This Agreement is for the sole benefit of the parties
hereto and their respective heirs, executors, administrators, legal
representatives, successors and permitted assigns, and it shall not be construed
as conferring any rights on any other Persons.
3.8 Headings. All section headings contained in this Agreement are for
convenience of reference only, do not form a part of this Agreement and shall
not affect in any way the meaning or interpretation of this Agreement.
3.9 Severability. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provisions in any
other jurisdiction.
3.10 Counterparts. This Agreement may be executed in any number of counterparts,
and any party hereto may execute any such counterpart, each of which when
executed and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument.
This Agreement shall become binding when one or more counterparts taken together
shall have been executed and delivered by all of the parties. It shall not be
necessary in making proof of this Agreement or any counterpart hereof to produce
or account for any of the other counterparts.
* * * * *
IN WITNESS WHEREOF, the parties hereto duly executed this Agreement as of
the date first above written.
VERIZON INFORMATION TECHNOLOGIES INC.
By:________________________________
Name:
Title:
VERIZON INFORMATION TECHNOLOGIES LLC
By:________________________________
Name:
Title:
SCHEDULE 2.1(e)
REAL PROPERTY
The real property referred to as the "Riverside Building," located at 12470
Telecom Drive, Temple Terrace, FL 33637.
SCHEDULE 2.1(f)
TANGIBLE PERSONAL PROPERTY
See attachment.
SCHEDULE 2.1(h)
CONTRACTS
Schedule 2.1(h) is on file separately with O'Melveny & Myers LLP.
Exh. A-2
NY1:1516428.4
Exh. A-1
NY1:1516428.4
EXHIBIT A
BILL OF SALE
THIS BILL OF SALE (this "Bill of Sale"), dated as of
[_________ __], 2004 is entered into by Verizon Information Technologies Inc., a
Delaware corporation (the "Company"), and Verizon Information Technologies LLC,
a Delaware limited liability company (the "Spin-Off Subsidiary").
WHEREAS, the Company and the Spin-Off Subsidiary have entered
into that certain Contribution, Assignment and Assumption Agreement dated as of
[__________ __], 2004 by and between the Company and the Spin-Off Subsidiary
(the "Contribution Agreement"; capitalized terms used and not otherwise defined
herein shall have the meanings given to them in the Contribution Agreement);
WHEREAS, in connection with the transactions contemplated by
the Contribution Agreement, the Company has agreed to transfer the Contributed
Assets to the Spin-Off Subsidiary; and
WHEREAS, this Bill of Sale is intended to effect the transfer
of certain property of the Company (the "Company's Property") consisting of all
the Contributed Assets other than the Real Property.
NOW, THEREFORE, in consideration of the above premises and for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
Section 1. Transfer. The Company hereby irrevocably and
unconditionally contributes, assigns, conveys, transfers and delivers to the
Spin-Off Subsidiary (collectively, the "Transfer") all of the Company's
Property, subject to the terms and conditions set forth herein.
Section 2. Further Assurances. The Company hereby agrees to
take any and all additional actions and to execute, acknowledge and deliver any
and all documents that the Spin-Off Subsidiary may reasonably request to effect
the intent and purposes of the Transfer and the transactions contemplated
hereby.
Section 3. Amendment and Modification; Waiver. This Bill of
Sale shall not be amended or modified except by written instrument duly executed
by each of the parties hereto. No waiver of any term or provision of this Bill
of Sale shall be effective unless in writing, signed by the party against whom
enforcement of the same is sought. The grant of a waiver in one instance does
not constitute a continuing waiver in all similar instances. No party's failure
to exercise, and no party's delay in exercising, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof.
Section 4. No Benefit to Others. The representations,
warranties, covenants and agreements contained in this Bill of Sale are for the
sole benefit of the parties hereto and their respective successors and permitted
assigns, and they shall not be construed as conferring any rights on any other
Persons.
Section 5. GOVERNING LAW. THIS BILL OF SALE AND THE LEGAL
RELATIONS BETWEEN THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN SUCH STATE AND WITHOUT REGARD TO CONFLICTS OF LAW DOCTRINES (OTHER
THAN NEW YORK GENERAL OBLIGATIONS LAW, SECTION 5-1401).
Section 6. Headings. All section headings contained in this
Bill of Sale are for convenience of reference only, do not form a part of this
Bill of Sale and shall not affect in any way the meaning or interpretation of
this Bill of Sale.
Section 7. Relation to Contribution Agreement. This Bill of
Sale is subject in all respects to, and shall not be deemed in any way to
supersede, the terms and conditions of the Contribution Agreement.
Section 8. Counterparts. This Bill of Sale may be executed in
any number of counterparts, and any party hereto may execute any such
counterpart, each of which when executed and delivered shall be deemed to be an
original and all of which counterparts taken together shall constitute but one
and the same instrument. This Bill of Sale shall become binding when one or more
counterparts taken together shall have been executed and delivered by all of the
parties. It shall not be necessary in making proof of this Bill of Sale or any
counterpart hereof to produce or account for any of the other counterparts.
* * * * *
IN WITNESS WHEREOF, the parties have executed this Bill of Sale as of the
date first above written.
VERIZON INFORMATION TECHNOLOGIES INC.
By:________________________________
Name:
Title:
VERIZON INFORMATION TECHNOLOGIES LLC
By:________________________________
Name:
Title:
d EXHIBIT B
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT (this "Assumption Agreement") is
entered into as of [_________ __], 2004 by and between Verizon Information
Technologies Inc., a Delaware corporation (the "Company"), and Verizon
Information Technologies LLC, a Delaware limited liability company (the
"Spin-Off Subsidiary").
WHEREAS, the Company and the Spin-Off Subsidiary have entered
into that certain Contribution, Assignment and Assumption Agreement dated as of
[_________ __], 2004 by and between the Company and the Spin-Off Subsidiary (the
"Contribution Agreement;" capitalized terms used and not otherwise defined
herein shall have the meanings given to them in the Contribution Agreement); and
WHEREAS, in connection with the transactions contemplated by
the Contribution Agreement, the Company has agreed to assume the Assumed
Liabilities.
NOW, THEREFORE, in consideration of the above premises and for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
Section 1. Assumption. Subject to the terms and conditions of
the Contribution Agreement, the Spin-Off Subsidiary hereby assumes and agrees to
pay, observe, perform and discharge all of the Assumed Liabilities. The Spin-Off
Subsidiary assumes no debt, liability or obligation of the Company other than
such Assumed Liabilities.
Section 2. Further Assurances. The Spin-Off Subsidiary hereby
agrees to take any and all additional actions and to execute, acknowledge and
deliver any and all documents that the Company may reasonably request to effect
the transactions contemplated hereby.
Section 3. Amendment and Modification; Waiver. This Assumption
Agreement shall not be amended or modified except by written instrument duly
executed by each of the parties hereto. No waiver of any term or provision of
this Assumption Agreement shall be effective unless in writing, signed by the
party against whom enforcement of the same is sought. The grant of a waiver in
one instance does not constitute a continuing waiver in all similar instances.
No party's failure to exercise, and no party's delay in exercising, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof.
Section 4. No Benefit to Others. The representations,
warranties, covenants and agreements contained in this Agreement are for the
sole benefit of the parties hereto and their respective successors and permitted
assigns, and they shall not be construed as conferring any rights on any other
Persons.
Section 5. GOVERNING LAW. THIS ASSUMPTION AGREEMENT AND THE
LEGAL RELATIONS BETWEEN THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND PERFORMED IN SUCH STATE AND WITHOUT REGARD TO CONFLICTS OF LAW DOCTRINES
(OTHER THAN NEW YORK GENERAL OBLIGATIONS LAW, SECTION 5-1401).
Section 6. Headings. All section headings contained in this
Assumption Agreement are for convenience of reference only, do not form a part
of this Assumption Agreement and shall not affect in any way the meaning or
interpretation of this Assumption Agreement.
Section 7. Relation to Agreement. This Assumption
Agreement is subject in all respects to, and shall not be deemed in any way to
supersede, the terms and conditions of the Agreement.
Section 8. Counterparts. This Assumption Agreement may be
executed in any number of counterparts, and any party hereto may execute any
such counterpart, each of which when executed and delivered shall be deemed to
be an original and all of which counterparts taken together shall constitute but
one and the same instrument. This Assumption Agreement shall become binding when
one or more counterparts taken together shall have been executed and delivered
by all of the parties. It shall not be necessary in making proof of this
Assumption Agreement or any counterpart hereof to produce or account for any of
the other counterparts.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this
Assumption Agreement as of the date first above written.
VERIZON INFORMATION TECHNOLOGIES INC.
By:________________________________
Name:
Title:
VERIZON INFORMATION TECHNOLOGIES LLC
By:________________________________
Name:
Title:
EXHIBIT B
INTELLECTUAL PROPERTY AGREEMENT
between
Verizon Data Services Inc.,
Infocrossing Inc.
and
Verizon Information Technologies Inc.
----------------------------------
September [o], 2004
INTELLECTUAL PROPERTY AGREEMENT
This INTELLECTUAL PROPERTY AGREEMENT (the "Intellectual Property
Agreement"), effective as of September [o], 2004 (the "Effective Date"), is
between VERIZON DATA SERVICES INC., a Delaware corporation ("Seller") on behalf
of itself and its U.S. Affiliates (hereinafter defined), INFOCROSSING, INC., a
Delaware corporation ("Buyer"), and VERIZON INFORMATION TECHNOLOGIES INC., a
Delaware corporation (the "Company"). (Seller, Buyer and the Company being
hereinafter referred to individually as a "Party" and collectively as the
"Parties".)
WHEREAS, the Company is engaged in the business of providing customers
in the healthcare industry with information technology outsourcing services,
healthcare transaction processing services, Health Insurance Portability and
Accountability Act ("HIPPA") consulting and implementation services, payer
application solutions and Medicaid fiscal agent services (the "Acquired
Business").
WHEREAS, the Company is also engaged in the businesses of (i) providing
data center outsourcing services, application hosting services, enterprise
communications solutions, enterprise help desk services and managed network
services; and (ii) providing OSS and BSS telecommunications software products,
including provisioning and activation, billing and mediation, workforce
management and network security applications, (collectively and together with
any other ongoing business activity that is not exclusively a part of or
included only in the Acquired Business, the "Retained Businesses").
WHEREAS, Seller owns all the Company's outstanding common stock, no par
value (the "Company Stock").
WHEREAS, Seller and Buyer have entered into that certain Purchase and
Sale Agreement dated as of September 1, 2004 (the "Agreement"), pursuant to
which Buyer has agreed to purchase the Company Stock from Seller, and Seller has
agreed to sell the Company Stock to Buyer.
WHEREAS, at the Closing, Seller is willing to convey or cause its U.S.
Affiliates to convey to the Company (i) a nonexclusive license to Licensed
Intellectual Property (as hereinafter defined) and (ii) a nonexclusive limited
license to use Verizon Marks pursuant to Section 4.2.4 of the Purchase and Sale
Agreement, and the Company is willing to convey to Seller and its Affiliates (y)
a nonexclusive license to certain Company Intellectual Property (as hereinafter
defined) and (z) an undivided joint ownership interest to the Proprietary
Business Information (as hereinafter defined).
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I - DEFINITIONS
1.1 Definitions.
Capitalized terms used but not defined herein have the meanings assigned to them
in the Agreement (as defined below). Other capitalized terms, as used herein,
have the meanings set forth below or in the body of this Intellectual Property
Agreement.
(a) "ACQUIRED BUSINESS" has the meaning set forth in the Recitals.
(b) "AFFILIATE" is defined in the Agreement.
(c) "AGREEMENT" is defined in the Recitals.
(d) "BUSINESS NON-STATUTORY INTELLECTUAL PROPERTY" means the
Non-Statutory Intellectual Property which is used by the
Company in the Acquired Business as of the Closing Date and is
owned by Seller or its U.S. Affiliates (other than Company) as
of the Closing Date, after giving effect to the Contribution
Agreement.
(e) "BUSINESS STATUTORY INTELLECTUAL PROPERTY" means the Statutory
Intellectual Property, excluding Verizon Marks, which is used
by Company in the Acquired Business as of the Closing Date and
is owned by Seller or its U.S. Affiliates (other than Company)
as of the Closing Date, after giving effect to the
Contribution Agreement.
(f) "CLOSING" and "CLOSING DATE" are defined in the Agreement.
(g) "COMPANY" is defined in the Preamble of this Intellectual
Property Agreement.
(h) "COMPANY INTELLECTUAL PROPERTY" means all Statutory
Intellectual Property and Non-Statutory Intellectual property
owned by Company as of the Closing Date, after giving effect
to the Contribution Agreement.
(i) "CONTRIBUTION AGREEMENT" is defined in the Agreement.
(j) "INTELLECTUAL PROPERTY" means all Statutory Intellectual
Property and Non-Statutory Intellectual Property.
(k) "INTELLECTUAL PROPERTY AGREEMENT" is defined in the
introductory paragraph hereto.
(l) "LICENSED FIELD OF USE" means the Acquired Business as
conducted by the Company as of the Closing Date.
(m) "LICENSED INTELLECTUAL PROPERTY" means Business Non-Statutory
Intellectual Property and Business Statutory Intellectual
Property (other than Proprietary Business Information) that
exist as of the Closing Date. For the avoidance of confusion,
Licensed Intellectual Property shall not include any:
1. patents or patent applications claiming a filing date on or
after the Closing Date;
2. copyrights in copyrightable subject matter having a
creation date on or after the Closing Date;
3. applications for domain name registrations claiming a
filing date on or after the Closing Date;
4. Trademarks, including Verizon Marks, but excluding
Trademarks, if any, included in Company Intellectual
Property;
5. Intellectual Property developed or acquired by Seller
or any of its Affiliates on or after the Closing
Date;
6. any software, including software used by Seller or
its Affiliates in the provision of transition
services pursuant to any service agreement between
Company and Seller or its Affiliates; and
7. other Intellectual Property owned by or licensed to
Seller or any Affiliate of Seller at any time.
At no time shall Buyer or Company have an ownership interest
in Licensed Intellectual Property, but such Licensed
Intellectual Property shall be licensed to Company pursuant to
this Intellectual Property Agreement.
(n) "NON-STATUTORY INTELLECTUAL PROPERTY" means all
unpatented inventions (whether or not patentable), trade
secrets, know-how and proprietary information, including but
not limited to (in whatever form or medium and to the extent
not Statutory Intellectual Property), discoveries, ideas,
compositions, formulas, computer programs (including source
and object codes), computer software documentation,
database, drawings, designs, plans, proposals,
specifications, photographs, samples, models, processes,
procedures, data, information, manuals, reports, financial,
marketing and business data, and pricing and cost
information, correspondence and notes, and any rights or
licenses in the foregoing which may be granted without the
payment of compensation or other consideration to or any
consent of any Person.
(o) "PERSON" is defined in the Agreement.
(p) "PROPRIETARY BUSINESS INFORMATION" means any and all
non-technical, non-public information that is Non-Statutory
Intellectual Property and owned by Company as of the Closing,
after giving effect to Contribution Agreement, which is used
solely in the Acquired Business as of the Closing Date;
provided, however, that Proprietary Business Information shall
not include any such information which is in the possession of
or used by Seller or any of its Affiliates (other than
Company).
(q) "STATUTORY INTELLECTUAL PROPERTY" means all (i) United States
and foreign patents and patent applications of any kind, (ii)
United States and foreign works of authorship, mask-works,
copyrights, and copyright and mask work registrations and
applications for registration, (iii) Trademarks, and (iv) any
rights or licenses in the foregoing.
(r) "SUBSIDIARIES" is defined in the Agreement.
(s) "THIRD PARTY INTELLECTUAL PROPERTY" means any and all
Intellectual Property owned by any Person, other than Seller,
U.S. Affiliates of Seller or the Company, without regard as to
whether Seller or the Company has any rights therein or the
right to assign such rights to the Company or the Buyer.
(t) "TRADEMARKS" means trademarks, tradenames, applications for
trademark registration, service marks, applications for
service mark registration, domain names, registrations and
applications for registrations pertaining thereto, Internet
addresses and other network addresses or identifiers, and all
goodwill associated therewith.
(u) "U.S. AFFILIATE" means any wholly-owned subsidiary, if any, of
Seller that is incorporated in and operates solely in the
United States, but specifically excluding Telecomunicaciones
de Puerto Rico, Inc., Verizon Airfone Inc. and any
subsidiaries of the foregoing.
(v) "VERIZON MARKS" means all Trademarks owned by Seller or its
Affiliates (other than Trademarks included in Company
Intellectual Property), after giving effect to the
Contribution Agreement, at any time, or licensed to Seller or
an Affiliate of Seller (other than Company) by any Person, and
any derivations of the foregoing.
ARTICLE 2 - GRANT OF LICENSES AND RIGHTS
2.1 Subject to previously granted rights and licenses, if any, the Company
hereby grants and conveys to Seller and its Affiliates:
(a) a personal, royalty-free, fully paid-up, irrevocable,
nonexclusive license under Company Intellectual Property
(other than Proprietary Business Information and Trademarks
included therein) to make, have made, sell, have sold, offer
for sale, have offered for sale, import, have imported,
license, have licensed, use, have used, reproduce, distribute,
perform, display and prepare derivative works of such Company
Intellectual Property in products and services provided by or
on behalf of Seller and its Affiliates and to practice any
method or process in the provision and use of such products
and services; and
(b) an undivided joint ownership interest in and to the right,
title and interest of Company to the Proprietary Business
Information. The joint ownership interest of Company on the
one hand, and Seller and its Affiliates on the other hand,
includes, but is not limited to, the unrestricted right to
use, reproduce, copy, modify, improve, create derivative
works, enhance, transfer, assign, otherwise convey and to
exercise any and all rights relating to such Proprietary
Business Information without the obligation to account to the
other therefor, except and to the extent set forth in Article
5, or to seek the consent of the other with respect thereto.
2.2 Seller, on behalf of itself and its U.S. Affiliates, hereby grants,
effective as of the Closing, but after the consummation of the assignment
contemplated by the Contribution Agreement and Section 2.1 above, the following
rights and licenses:
(a) Subject to previously granted rights and licenses, if any,
Seller hereby grants to Company a personal, royalty-free,
fully paid-up, irrevocable (except and to the extent set
forth in Article 6 below), nonexclusive and nontransferable
(except as permitted pursuant to Section 7.1 below) license,
subject to the provisions of Section 5.1 of this
Intellectual Property Agreement, to use the Licensed
Intellectual Property solely in the provision of goods and
services in the Licensed Field of Use and in the practice of
any methods associated with the provision of such goods and
services in the Licensed Field of Use. The foregoing license
granted to Company does not include the right: (x) to
disclose the Licensed Intellectual Property to any Person
(other than to contractors of Company in support of the
Licensed Field of Use), (y) to grant sublicenses to any
Person (other than to contractors of Company in support of
the Licensed Field of Use, or (z) to assign such license
other than to permitted successors and assigns of Company in
the Acquired Business. The foregoing license to Company
shall not extend to any modifications, improvements,
enhancements, additions or derivations of the Acquired
Business after the Closing Date that are outside of the
Licensed Field of Use.
2.3 Except for the limited phase-out license granted to the Company pursuant to
Section 4.2.4 of the Agreement, no rights or licenses, express or implied, are
granted to the Company under any Verizon Marks.
2.4 From time to time after the date of this Intellectual Property Agreement, as
and when requested by a Party hereto, the other Party will execute and deliver,
or cause to be executed and delivered, any documents as may be reasonably
necessary or appropriate to effectuate the intent of this Intellectual Property
Agreement.
ARTICLE 3 - TAXES
3.1 The provisions of Section 4.3.4 of the Agreement shall be applicable
and shall govern the responsibility of the Parties for all Taxes (as
defined in the Agreement) imposed by any Governmental Authority (as
defined in the Agreement) with respect to the transactions contemplated
by or taken in connection with this Agreement.
ARTICLE 4 - DISCLAIMER, LIMITED WARRANTY, LIMITATION OF
LIABILITY AND INDEMNIFICATION
4.1 Without limiting any of the representations and warranties provided in the
Agreement, nothing contained in this Intellectual Property Agreement shall be
construed as:
(a) requiring the securing or maintaining in force by Seller of
any Intellectual Property, including Proprietary Business
Information, Licensed Intellectual Property or Verizon Marks;
(b) a warranty or representation by Seller or its Affiliates as to
the validity or scope of any Intellectual Property, including
Proprietary Business Information, Licensed Intellectual
Property, Company Intellectual Property or Verizon Marks;
(c) a warranty or representation by Seller or its Affiliates that
any provisioning of goods and services by the Company or the
use of Proprietary Business Information, Licensed Intellectual
Property, Company Intellectual Property or Verizon Marks, in
whole or in part, will be free from infringement of any
Intellectual Property, other than the Licensed Intellectual
Property, but only to the extent to which licenses or rights
are granted to Company pursuant to this Intellectual Property
Agreement;
(d) an agreement by Seller or its Affiliates to bring, prosecute
or participate in actions or suits against third parties for
infringement of any Intellectual Property, including
Proprietary Business Information, Licensed Intellectual
Property or Verizon Marks;
(e) conferring any right to Buyer or the Company to use, in
advertising, publicity or otherwise, any Trademarks (except
the Trademarks included in Company Intellectual Property and
the Verizon Marks, but only to the extent expressly provided
in Section 4.2.4 of the Agreement);
(f) conferring by implication, estoppel or otherwise any license
or other right upon Buyer or the Company under any other
Intellectual Property; or
(g) an obligation upon Seller or its Affiliates to make any
determination as to the applicability of any Intellectual
Property to any product or service.
4.2 Seller warrants that it has the right to grant the licenses and rights
granted herein and to enter into this Intellectual Property Agreement.
4.3 EXCEPT FOR THE EXPRESS WARRANTIES OF SECTION 4.2 OF THIS INTELLECTUAL
PROPERTY AGREEMENT AND THE EXPRESS REPRESENTATIONS AND WARRANTIES OF
ARTICLE 3 OF THE AGREEMENT, THERE ARE NO OTHER WARRANTIES, EITHER
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE
(EVEN IF SELLER HAS BEEN MADE AWARE OF SUCH PURPOSE) AND ANY WARRANTY
AGAINST INFRINGEMENT OF INTELLECTUAL PROPERTY.
4.4 EXCEPT FOR BREACHES OF SECTION 5.1 OR SECTION 5.2 BELOW, IN NO EVENT
SHALL THE SELLER OR ITS AFFILIATES ON THE ONE HAND, OR BUYER AND
COMPANY ON THE OTHER HAND, BE LIABLE TO THE OTHER FOR ANY INDIRECT
DAMAGES, INCLUDING ANY LOST PROFITS, OR OTHER INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES ARISING OUT OF OR RELATED TO THIS INTELLECTUAL
PROPERTY AGREEMENT, INCLUDING, BUT NOT LIMITED TO, THE PROPRIETARY
BUSINESS INFORMATION, THE COMPANY STATUTORY INTELLECTUAL PROPERTY AND
THE LICENSED INTELLECTUAL PROPERTY OR ANY PORTION OF THE FOREGOING,
EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
ARTICLE 5 - CONFIDENTIALITY
5.1 Buyer and Company agree:
(a) to maintain the confidential nature, if any, of, and not
disclose to any third party (other than the Company and its
contractors who are bound by obligations of confidentiality)
any non-public Licensed Intellectual Property, and
(b) to treat non-public Proprietary Business Information in
the same manner (but in no event using less than a reasonable
degree of care) as the Company treats other similarly
sensitive proprietary information owned by the Company.
5.2 Seller and its U.S. Affiliates agree to treat non-public Proprietary
Business Information in the same manner (but in no event using less
than a reasonable degree of care) as Seller and its U.S. Affiliates
treat other similarly sensitive proprietary information owned by
Seller or its U.S. Affiliates.
5.3 The Licensed Intellectual Property and the Verizon Marks shall remain
the sole and exclusive property of Seller or its U.S. Affiliates (other
than Company), subject to the limited rights and licenses expressly
granted to Company pursuant to this Intellectual Property Agreement.
ARTICLE 6 - TERMINATION/CANCELLATION
6.1 The term of this Intellectual Property Agreement shall commence on the
Closing Date, and shall continue at all times thereafter, except and to
the extent expressly provided in Section 4.2.4 of the Agreement, unless
terminated/cancelled earlier by either Party as provided in this
Article 6.
6.2 No waiver of any breach of, or default under, this Intellectual
Property Agreement shall constitute a waiver of any other breach of, or
default under, this Intellectual Property Agreement, and no waiver
shall be effective unless made in writing and signed by an authorized
representative of the Party waiving the breach or default.
6.3 If Buyer or the Company voluntarily files for bankruptcy or makes an
assignment for the benefit of its creditors, or an involuntary
assignment or bankruptcy petition is made or filed against Buyer or the
Company, Seller may immediately terminate this Intellectual Property
Agreement and the licenses granted to the Company herein.
6.4 In the event of any material breach of Section 4.2.4 of the Agreement
related to the Verizon Marks by Buyer or the Company which is not cured
within ten (10) days of written notice to Buyer by Seller, Seller shall
have the right to terminate/cancel any and all rights and licenses
granted to the Company under Verizon Marks; the foregoing being in
addition to any other rights and remedies available to Seller.
6.5 In the event of any material breach of any provision of this
Intellectual Property Agreement related to Licensed Intellectual
Property by Buyer or the Company which is not cured within ten (10)
days of written notice to Buyer by Seller, Seller shall have the right
to terminate/cancel the rights and licenses granted to the Company
under Licensed Intellectual Property. The foregoing shall be in
addition to any other rights and remedies available to Seller.
ARTICLE 7 - GENERAL PROVISIONS
7.1 Notwithstanding anything to the contrary, Company may, upon prior
notice to Seller: (i) assign, without the consent of Seller, any of its
rights and obligations hereunder to any Affiliate or Subsidiary of the
Company that is actually conducting the Acquired Business of the
Company in the Licensed Field of Use, or (ii) assign, without the
consent of Seller, any of its rights and obligations hereunder to a
third party in connection with a sale of all or substantially all of
the Acquired Business of the Company in the Licensed Field of Use
(whether by merger, consolidation, sale of assets, sale or exchange of
stock or otherwise), provided that such third party agrees in writing
to be bound by the terms and conditions of this Intellectual Property
Agreement. The foregoing shall not apply to Company Intellectual
Property or Proprietary Business Information which may be assigned and
conveyed to any third party by Company without restriction, other than
for the rights and licenses granted herein to Seller and its
Affiliates.
7.2 Except and to the extent expressly provided herein, the provisions of
Article 8 (Miscellaneous) of the Agreement shall apply to this
Intellectual Property Agreement and such provisions are expressly
incorporated herein; provided, however, in the event of conflict
between the provisions of this Intellectual Property Agreement and the
Agreement, the provisions of this Intellectual Property Agreement shall
take precedence.
[SIGNATURE PAGE FOLLOWS]
In Witness Whereof, each of the Parties has caused this Intellectual
Property Agreement to be executed in duplicate originals by its duly authorized
representatives on the respective dates entered below.
VERIZON DATA SERVICES INC
By: ________________________________
Name: _____________________________
Title: _______________________________
Date: _______________________________
INFOCROSSING, INC.
By: ________________________________
Name: ______________________________
Title: _______________________________
Date: _______________________________
VERIZON INFORMATION TECHNOLOGIES INC.
By: _________________________________
Name: _______________________________
Title: _______________________________
Date: ________________________________
EXHIBIT C
AGREEMENT FOR TRANSITION SERVICES
This Agreement for Transition Services is made this ___ day of _______________,
2004 by and between [________________________], formerly known as Verizon
Information Technologies Inc., a Delaware corporation with offices at
[______________________] ("Company"), and Verizon Information Technologies, LLC,
a Delaware limited liability company with offices at One East Telecom Parkway,
Post Office Box 290152, Temple Terrace, Florida 33687 ("Service Provider").
WHEREAS, as of the date first set forth above, Verizon Data Services, Inc.
("Seller") owns all of the outstanding common stock, no par value, of Company
(the "Company Interest");
WHEREAS, Seller and Infocrossing, Inc. ("Buyer") are parties to that certain
Purchase and Sale Agreement dated as of September 1, 2004 ("Sale Agreement");
WHEREAS, pursuant to the Sale Agreement, and subject to certain conditions
precedent, Seller will sell the Company Interest to Buyer; and
WHEREAS, following the closing of such sale ("Closing"), Company shall purchase
from Service Provider, and Service Provider shall provide to Company, certain
data processing services as set forth herein for a period of time as specified
herein.
NOW, THEREFORE, in consideration of the mutual terms and conditions of this
Agreement, the parties agree as follows:
1. DEFINITIONS.
"AFFILIATE" OR "AFFILIATE" shall mean, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. The term "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as applied
to any Person, means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of such person, whether
through the ownership of voting securities or other ownership interest, by
contract or otherwise.
"COMPANY PROPRIETARY DATA" shall mean any and all technical and non-technical,
non-public information owned by Company that is used in or required for use in
the business of Company, including financial, marketing and business data,
information and reports, pricing and cost information, correspondence and notes.
"CUSTOMER" shall mean each party set forth in a Statement of Work.
"CUSTOMER DATA" shall mean all information, whether or not Confidential
Information, entered in software or equipment by or on behalf of Customer and
information derived from such information, including as stored in or processed
through the equipment or software, including without limitation all data and
information submitted to Service Provider by Customer.
"CUSTOMER DEVELOPED SOFTWARE" shall mean any system and/or application software
developed by or for Customer or Company, which is used by Service Provider to
provide the Services covered in this Agreement and maintained by Customer.
"CUSTOMER PROPRIETARY DATA" shall mean any and all technical and non-technical,
non-public information owned by Customer that is used in or required for use in
the business of Customer, including financial, marketing and business data,
information and reports, pricing and cost information, correspondence and notes.
"CUSTOMER SOFTWARE" shall mean any Customer-Developed Software and Customer
Third Party Software provided by Customer to Service Provider to perform the
Services herein.
"CUSTOMER THIRD-PARTY SOFTWARE" shall mean system and/or application software
licensed by a third party to Customer or Company, which is used and maintained
by Service Provider to provide the Services covered in this Agreement.
"DISASTER" shall mean a catastrophic occurrence or force majeure event,
including natural disasters, intentionally malicious acts, civil disorders,
labor disputes or disruptions and government seizures and similar actions, at a
Service Provider data center which causes Service Provider to be unable to
provide the Services herein.
"HARDWARE" shall mean the central processing unit(s) and peripheral equipment
installed in a Verizon facility, owned and utilized by Service Provider to
provide the Services, including the telecommunications equipment at the
demarcation point at Verizon's facility. The term Hardware shall not include
terminals, controllers, or telecommunications equipment at Customer's site(s),
or the actual circuits required to enable Customer to access and utilize Service
Provider's Services, which terminals, controllers, telecommunications equipment
and circuits are provided by Customer and are Customer's responsibility.
"INTELLECTUAL PROPERTY RIGHT(S)" shall mean any and all worldwide rights
existing now or in the future under patent law, copyright law, industrial rights
design law, semiconductor chip and mask work protection law, moral rights law,
trade secret law, and any and all similar proprietary rights, however
denominated, and any and all renewals, extensions and restorations thereof, now
or hereafter in force and effect.
"MODIFICATION" shall mean a mutually agreed to change to this Agreement or any
of the Exhibits hereto, utilizing the process set forth in Section 23.
"PERSON" shall mean an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture or other entity or enterprise of whatever nature.
"REQUIRED CONSENTS" shall mean all consents, approvals, authorizations, notices,
requests, and acknowledgments that are necessary to grant Service Provider the
necessary rights of access to and use of software, information and/or data to
provide the Services contemplated hereunder.
"SERVICE PROVIDER DEVELOPED SOFTWARE" shall mean any system and/or application
software developed by or for Verizon Communication Inc. or any of its
Affiliates, which is used by Service Provider to provide the Services covered in
this Agreement.
"SERVICE PROVIDER THIRD PARTY SOFTWARE" shall mean any third party software used
to provide the Services that is provided under license to Service Provider.
"TIME AND MATERIALS" shall mean Service Provider's then-current hourly labor
rates for certain job categories. Annual increases for the hourly rates, as of
the Effective Date shall not exceed the greater of five percent (5%) or the
annual percentage change (related to the twelve (12) month period preceding such
increase) in the Average Hourly Earnings for Computer Programming Services (1987
SIC Code 7371), as published by the Bureau of Labor Statistics, U.S. Department
of Labor (or such other relevant index if this index is discontinued).
"TOOLS" shall mean any software development aids, know how, methodologies,
processes, technologies or algorithms developed and/or used by Service Provider
or any of its affiliate in providing the Services and based upon trade secrets
or proprietary information of Service Provider or any of its affiliates or
otherwise owned or licensed by Service Provider or any of its affiliates.
"VIRUS" shall mean any: (i) program code, programming instruction or set of
instructions intentionally constructed by third parties having the capability to
damage, interfere with or otherwise adversely affect computer programs, data
files, operations, telecommunications or Services; or (ii) other code typically
designed to be a virus.
2. SERVICES.
2.1 SERVICES. The individual services to be provided under this Agreement,
including, without limitation, computing and help desk services ("Services"),
are set out in statements of work ("Statements of Work"), which may be modified
from time to time by a Modification, that are attached as Exhibit A designated
as Exhibit A-1, Exhibit A-2, etc... and made part of this Agreement (this
agreement and all attached Statements of Work are collectively referred to as
the "Agreement"). If there is any conflict or inconsistency between the terms
and conditions of a Statement of Work and the terms and conditions of this
Agreement (excluding for this purpose the Statements of Work), the terms and
conditions of the Statement of Work shall control.
2.2 STATEMENTS OF WORK - GENERALLY. Each Statement of Work shall: (i) describe
the Services to be performed; (ii) specify the payments to be made under the
Statement of Work, or, if applicable, the basis on which such payments shall be
computed; and (iii) specify any other terms and conditions appropriate to the
Services to be performed and the obligations of the parties.
2.3 BACKUP AND RESTORE, ARCHIVING AND DISASTER RECOVERY. As part of the
computing Services provided under this Agreement, Service Provider will perform:
(i) periodic backup and archiving of Customer Data; (ii) purging and archiving
of Customer Data; and (iii) general recovery of Customer Data resident on the
Hardware. If required, Service Provider shall restore Customer's data files
using the most current backup tape. Company acknowledges and understands that in
the event of a restoration, Customer Data entered by Customer between the date
and time of backup and the date and time of restoration will be lost and
Customer will be solely responsible for restoring the lost Customer Data and
data files. If agreed to by the parties, and upon payment of the applicable
Fees, Service Provider agrees to provide Disaster Recovery in accordance with
the applicable provisions of any Statement of Work.
2.4 SERVICE LEVELS. Service level measurements and objectives will be identified
in a separate Service Level Agreement (SLA) between the parties which shall be
referenced in each Statement of Work. Some of the items which may be included as
part of the SLA include system availability, problem notification, and network
response time.
2.5 PERFORMANCE. Service Provider shall devote such time, effort and resources
to the performance of Services as it deems commercially reasonably necessary to
accomplish the tasks specified in any Statement of Work. Service Provider may
call upon the expertise and/or assistance of its affiliates, subcontractors or
consultants in the performance of such Services.
3. THIRD PARTY SOFTWARE.
3.1 CUSTOMER SOFTWARE. Service Provider agrees that Company may use the Hardware
to operate and run Customer-Developed Software and/or Customer Third-Party
Software; provided however, that Company shall be solely responsible for, or
ensures that Customer will be responsible for, obtaining and maintaining all
licenses necessary for such use of such software and Company shall pay all costs
related to obtaining the Required Consents needed by Service Provider to host
such software for Customer's benefit. Company shall, or ensure that Customer
shall, be solely responsible for all licenses, maintenance, and other fees due
and payable for such Customer Third-Party Software. Service Provider shall make
any such Customer-Developed Software and/or Customer Third-Party Software
available only to Customer.
3.2 SERVICE PROVIDER THIRD-PARTY SOFTWARE PROVIDED. Service Provider will use
certain Service Provider Third-Party Software to provide the Services hereunder.
Service Provider shall be responsible for obtaining all licenses and maintenance
necessary for use of such software for Company for the Customer's benefit.
Service Provider may, upon reasonable notice and at no cost to Company, make
changes to the Third-Party Software being used by Service Provider to provide
the Services, provided that any such change will not substantially impair
Company's ability to obtain the Services for its Customer(s) hereunder. In the
event, the Company, upon receipt of such notice, advises Service Provider that
it requires continuation of the original Third-Party Software, Company will be
responsible for costs incurred by Service Provider to continue such use. In the
event the Company requests Service provider, in writing to replace one of
Service Provider Third-Party Software products with software requested by
Company on behalf of its Customer, Company shall be responsible for any
associated costs incurred by Service Provider to use such substitute software to
provide the Services hereunder.
3.3 SERVICE PROVIDER DEVELOPED SOFTWARE. Service Provider may use certain
Service Provider -Developed Software and Tools to provide the Services
hereunder. Service Provider shall be responsible for the maintenance necessary
for use of such software for Company for the Customer's benefit.
4. SOFTWARE MAINTENANCE.
4.1 SOFTWARE. Company represents and warrants that all Customer Software is at
current release levels, or as otherwise agreed as reflected in each Statement of
Work. Any costs to upgrade the Customer Software to release or version levels
other than those listed in each Statement of Work shall be the sole
responsibility of Company.
4.2 THIRD-PARTY SERVICE CONTRACTS. The Parties shall mutually determine whether
to assign to Service Provider third party service contracts relating to
maintenance support for transferred Customer Third Party Software. Any
assignment of such contracts will be for operational purposes only. All
administrative or financial responsibility for such third party service
contracts will be the sole responsibility of Company.
5. REQUIRED CONSENTS.
The Parties shall cooperate with each other in seeking any and all required
consents. Company shall be responsible for resolving any issues or disputes with
third parties in obtaining Required Consents necessary for Service Provider to
provide the Services herein and shall pay any and all costs associated with
obtaining Required Consents. To the extent consent is obtained for Service
Provider to manage and utilize the Customer Third Party Software or third party
service contracts, Company shall, or cause Customer to, continue to exercise
termination, extension, and other rights thereunder and will remain solely
obligated for all costs associated with the Customer Third Party Software or
third party service contract unless otherwise agreed to by the Parties in
writing. If a Required Consent is not obtained, then, unless and until such
required consent is obtained, Service Provider shall work with Company to
determine and adopt such alternative approaches as are necessary and sufficient
to provide the Services without such Required Consents.
6. COMPUTING OPERATIONS.
6.1 CUSTOMER ACCESS TO SERVICE PROVIDER'S NETWORK OR FACILITY. If either party
is given access, whether on-site or through remote facilities, to any computer
or electronic data storage system of the other party in order to accomplish the
Services called for in this Agreement, the party that receives such access shall
limit such access and use solely to perform Services within the scope of this
Agreement and shall not access or attempt to access any computer system,
electronic file, software or other electronic services other than those
specifically required to accomplish the Services required under this Agreement.
Under no circumstances shall either party's personnel access any networks or
facilities of the other party for the purpose of accessing other external
networks, nor shall any such capabilities for such access be published or made
known via any medium, as for example and not by way of limitation, posting on
bulletin boards or E-mail. Any such use or publication shall be a material
breach of this Agreement. Neither party shall use back doors, data capture
routines, games, viruses, worms, or Trojan horses and any intentional
introduction of such into the other party's data networks shall be deemed a
material breach of this Agreement. The party receiving access shall limit such
access to those of its employees whom the other party has authorized in writing
to have such access in connection with this Agreement or the applicable
Statement of Work, and shall strictly follow all security rules and procedures
for use of the providing party's electronic resources. All user identification
numbers and passwords and any information obtained as a result of access to and
use of a party's computer and electronic data storage systems shall be deemed to
be, and shall be treated as, Confidential Information under applicable
provisions of this Agreement. Each party agrees to cooperate with the other in
the investigation of any apparent unauthorized access to a party's computer or
electronic data storage systems. Service Provider shall have the right to
immediately take any reasonable action to protect itself against the improper
act, including without limitation, the right to temporarily restrict access or
at Service Provider's sole discretion, the right to temporarily suspend the
affected Services until the problem has been resolved, without being held in
breach of contract or breach of any service level. Company shall ensure that all
Company personnel, Customer personnel, or their agents, accessing Service
Provider's systems are aware of their responsibilities and restrictions
referenced in this Section 6.
6.2 CUSTOMER PROPRIETARY DATA AVAILABILITY. During the term of this Agreement,
Service Provider will not destroy any Customer Data (unless otherwise permitted
under this Agreement), without the prior express written consent of Company.
However, Company and Customer understand and agree that at any time after
delivery of the storage media, or after the sixty-first (61st) day following
termination of the Services, Service Provider's standard file purge procedures
will automatically erase all storage media, including back-up storage media,
which contain Customer Software or Customer Data.
6.3 FILE SECURITY AND SAFEGUARDING CUSTOMER DATA. Notwithstanding any other
provision of this Agreement, Service Provider will make all Customer Data
available to Customer and its authorized agents. Service Provider will establish
and maintain safeguards against the destruction, loss, or alteration of Customer
Data in the possession of Service Provider that are no less rigorous than those
maintained by Service Provider with respect to its own similar data. Service
Provider will provide security and back-up and recovery services as specified in
Section 2.3 to protect the Customer Data. Company will, at its own expense, have
the right to establish backup security for Customer Data and to keep backup data
and data files at a non-Verizon location.
6.4 USER LOGON IDENTIFICATION ASSIGNMENT. If necessary to provide the Services
under this Agreement, Service Provider will assign Logon Identification names(s)
("IDs") in accordance with Service Provider's User Logon Identification
Assignment procedures then in effect. Company shall, and ensure that Customer
shall, be responsible for the security and control of all IDs assigned to it and
shall restrict the use of such assigned IDs to access of Customer's programs and
data. Service Provider agrees not to disclose Customer's IDs to any third party
without the advance written consent of Company. Service Provider shall have no
liability for Company's or Customer's disclosure of IDs assigned by it to third
parties.
6.5 OPERATIONAL/PROCEDURAL CHANGES. Service Provider may, upon reasonable notice
to Company, designate and make changes in rules, regulations and/or procedures
of security, operation, teleprocessing protocols, accessibility periods,
Customer identification procedures, type of terminal equipment, type and
location of system and service equipment, system programming languages, Service
Provider Third Party Software, and designation of the particular Verizon data
center serving the Customer at any particular address, provided that any such
proposed change will not substantially impair Company's ability to obtain
Services hereunder.
7. CONCEPT/PRODUCT OWNERSHIP.
7.1 COMPANY. Service Provider agrees that, as between Service Provider and
Company, the concepts, information, and materials and Customer Software
developed and/or provided by Company prior to commencement of and independent of
the Services provided under this Agreement, or owned by a third-party customer
or supplier of Company and furnished to Service Provider by Company under this
Agreement, shall remain the property of Company or such third-party, Customer or
supplier.
7.2 SERVICE PROVIDER. Company agrees that, as between Service Provider and
Company, the Service Provider Developed Software and the concepts, information,
materials and Tools developed and/or provided by Service Provider prior to
commencement of and independent of work under this Agreement, or owned by a
third-party customer or supplier of Service Provider and furnished to Company by
Service Provider under this Agreement, shall remain the property of Service
Provider or such third-party customer or supplier. Company agrees that, except
as to Customer Proprietary Data or Company Proprietary Data provided to Service
Provider or any derivative works of Company based solely on information and
materials developed by Company prior to and independently of this Agreement,
Customer Proprietary Data, or Company Proprietary Data, all concepts,
information and materials created, conceived or developed as a result of the
Services provided by Service Provider under this Agreement, shall be and remain
the property of Service Provider, and Company shall not disclose any such
concept, information and materials to any third party without the prior written
consent of Service Provider.
7.3 PROPRIETARY MARKINGS. Neither party shall remove or destroy any proprietary
marking or proprietary legends placed upon or contained within any materials or
documentation provided to it by the other party.
8. COMPENSATION AND BILLING.
8.1 PREPAYMENT.
(a) On the Effective Date, Company shall pay Service Provider the amount of
Service Provider's good faith estimate of the aggregate cost to provide all
Services for the first two (2) months of the term hereof (the "Initial Payment")
as specified in the Statements of Work. Within thirty (30) business days after
the end of each month of the initial two (2) month period, Service Provider
shall calculate and provide Company the actual cost of providing the Services,
by Service for that month ("Monthly Actual Amount"). The combined Monthly Actual
Amounts for the two (2) months of the period is the Period Actual Amount
("Period Actual Amount"). If the Period Actual Amount exceeds the Initial
Payment paid by Company, then Company shall promptly pay the difference to
Service Provider. If the Period Actual Amount is less than the Initial Payment
paid by Company, then Service Provider shall credit the difference to Company,
to be applied against amounts due in the succeeding month, or if there are no
payments due and payable thereafter, Service Provider shall promptly pay the
amount of such excess to Company. If Company disputes owing any amount in good
faith, it shall immediately notify Service Provider in writing giving the
reasons for the dispute and the provisions of Section 25 shall apply.
(b) On or prior to the commencement of each successive two (2) month period
thereafter, Company shall pay in advance an amount equal to two times the
average of the Monthly Actual Amounts of the prior period. Within thirty (30)
business days after the end of each two month period, Service Provider shall
calculate the Period Actual Amount for that period. If the Period Actual Amount
exceeds the amount which was paid in advance by Company for that period, then
Company shall promptly pay the difference to Service Provider. If the Period
Actual Amount is less than the amount which was paid in advance by Company, then
Service Provider shall promptly credit the difference to Company, to be applied
against amounts due in the succeeding period, or if there are no payments due
and payable thereafter, Service Provider shall promptly pay the amount of such
excess to Company. If Company disputes owing any amount in good faith, it shall
immediately notify Service Provider in writing giving the reasons for the
dispute and the provision of Section 25 shall apply.
(c) On or prior to the commencement of the final one (1) month period of any
Renewal Term or the final two (2) month period of the Initial Term or any
Renewal Term, as applicable, Company shall pay in advance an amount equal to
either, (i) for the final one (1) month period of a Renewal Term (because the
Company has not elected a subsequent Renewal Term such that the last month of
the Renewal Term and the first month of a subsequent Renewal Term would comprise
a two (2) month period), the Monthly Actual Amount of the first month of that
Renewal Term; or (ii) for the final two (2) month period of the Initial Term or
the final two (2) month period of a Renewal Term (because the last month of the
prior Renewal Term and the first month of that Renewal Term has formed a two (2)
month period), the Period Actual Amount for the prior two (2) month period.
Under the situation presented in subsection (i) above, within thirty (30)
business days after the end of the Renewal Term, Service Provider shall
calculate the Monthly Actual Amount. If the Monthly Actual Amount exceeds the
amount which was paid in advance by Company for that period, then Company shall
promptly pay the difference to Service Provider. If the Monthly Actual Amount is
less than the amount that was paid in advance by Company, then Service Provider
shall promptly pay the difference to Company. If Company disputes owing any
amount in good faith, it shall immediately notify Service Provider in writing
giving the reasons for the dispute.
Under the situation presented in subsection (ii) above, within thirty (30)
business days after the end of the Initial Term or the Renewal Term, as
applicable, Service Provider shall calculate the Period Actual Amount, If the
Period Actual Amount exceeds the amount which was paid in advance by Company for
that period, then Company shall promptly pay the difference to Service Provider.
If the Period Actual Amount is less than the amount that was paid in advance by
Company, then Service Provider shall promptly pay the difference to Company. If
Company disputes owing any amount in good faith, it shall immediately notify
Service Provider in writing giving the reasons for the dispute.
8.2 TAXES. In addition to the charges for Services, Company shall pay Service
Provider any sales, use, privilege, gross revenue, excise, or any other tax
(except income and franchise taxes), as well as any assessments or duties with
respect to the Services lawfully levied by a duly constituted governmental
authority. If Company determines that any Service is exempt from a tax, Company
shall provide Service Provider with a properly completed exemption certificate
for each jurisdiction for which Company is claiming an exemption, before Service
Provider will exclude the respective tax from amounts charged. Company will not
deduct any tax amount from remittances until a properly completed exemption
certificate, for all jurisdictions for which Company is claiming an exemption,
has been provided to Service Provider.
8.3 EXPENSE REIMBURSEMENT. Company shall reimburse Service Provider for
reasonable expenses for travel, meals, lodging, postage, courier charges,
copying, and any other out-of-pocket costs or expenses incurred by Service
Provider in the performance of its obligations under this Agreement, including,
without limitation, any third-party costs or charges identified in a Statement
of Work. Except as set forth in a Statement of Work, there shall be no mark-up
of such expense charges.
8.4 RECORDS. Service Provider shall maintain complete and accurate records in a
form consistent with applicable law and generally accepted accounting practices.
Service Provider, upon thirty (30) days prior written notice from Company shall
make available to Company, Service Provider's usage data that was used to
compute its invoices to Company pertaining solely to this Agreement for
inspection and audit. Company and its authorized agents, subject to obligations
of confidentiality as set forth in this Agreement, shall have access to such
records during normal business hours during the term of this Agreement. Access
to the records shall be made at the location where such records are normally
maintained.
8.5 LATE FEES. Any amounts that are past due that are not subject to a good
faith dispute or that are subject to a good faith dispute that is resolved in
favor of Service Provider shall bear interest at a rate of 1.5% per month.
9. TERM.
This Agreement and the Statements of Work hereto are effective as of the Closing
("Effective Date") and, unless terminated under Section 26 of this Agreement,
shall continue for a period of six (6) months thereafter ("Initial Term") and
automatically renew for successive periods of three (3) months (each, a "Renewal
Term") unless either party shall have given the other party no fewer that thirty
(30) days written notice of termination prior to the end of the Initial Term or
any Renewal Term (together, the Initial Term and any Renewal Terms shall be
referred to as the "Term").
10. TELECOMMUNICATIONS NETWORK.
Service Provider and Customer shall be responsible for the telecommunications
network and any network hardware/software to the extent specified in a Statement
of Work.
11. CONFIDENTIAL INFORMATION.
11.1 CONFIDENTIALITY. In the course of requesting and performing Services
pursuant to this Agreement, each party may receive or acquire from the other,
or, in the case of Service Provider, its affiliates, information or data
pertaining to specifications, drawings, sketches, models, samples, computer
programs, methods, concepts, know-how, techniques, processes, and other
technical or business information that the other party desires to protect
against unauthorized use or further disclosure. Unless otherwise expressly set
forth in a Statement of Work, for purposes of this Agreement, "Confidential
Information" shall mean: (i) any information in written, other tangible or
electronic form which is labeled by the disclosing party as "confidential",
"proprietary" or with a legend of similar import; (ii) software in any form
(including related documentation), whether or not labeled in accordance with the
preceding; (iii) Services provided pursuant to this Agreement, with the
ownership of and proprietary interest therein being defined in the applicable
Statement of Work; or (iv) information orally disclosed to the recipient party
or received by the recipient party through observation and identified by the
disclosing party as confidential at the time of such disclosure. Each party
shall remain the exclusive owner of its Confidential Information.
11.2 USE OF CONFIDENTIAL INFORMATION. The Confidential Information of the
disclosing party may be used by the receiving party only for the performance or
use of the Services that Service Provider is providing to Company pursuant to
this Agreement and any other use is strictly prohibited. Further, Confidential
Information may only be disclosed to those employees, subcontractors or agents
of the receiving party who have a need to know about the Confidential
Information in order to perform or use Services pursuant to this Agreement.
Company acknowledges that it is a competitor of the Service Provider and agrees
that it will not provide any Confidential Information to any person in the
Company's organization that does not need to know the Confidential Information
in order to use the Services, including, without limitation, any marketing,
sales or proposal management persons. Further, Company agrees that the
employees, subcontractors and agents that have a need to know such Confidential
Information in order to use the Service shall not in any way use the
Confidential Information in order to improve the data processing services that
the Company offers to third-parties (other than the Customers defined hereunder)
so that it may improve its ability to directly compete with the Service
Provider.
Except and to the extent set forth in Section 11.3, the receiving party agrees
that it will not disclose Confidential Information of the other party to any
other person, entity, or the public other than employees, subcontractors or
agents that have a need to know about the Confidential Information in order to
perform or use Services pursuant to this Agreement without the prior written
consent of the disclosing party. However, such Confidential Information may be
disclosed by the receiving party without the necessity of prior written consent,
to the receiving party's subcontractors or consultants who require access to
such Confidential Information to perform or use the Services under this
Agreement, provided such persons have entered into written agreements which
contain obligations of nondisclosure and nonuse no less restrictive than set
forth in this Section. It is agreed that such written agreements shall be
enforceable by the disclosing party.
11.3 EXCEPTIONS. The obligations in Section 11.2 shall not apply to that portion
of any information received from the disclosing party which is: (i) lawfully in
the receiving party's possession, with no restriction on use or disclosure,
prior to its acquisition from the disclosing party; (ii) received in good faith
by the receiving party, with no restrictions on use or disclosure, from a third
party not subject to any confidential obligation to the disclosing party; (iii)
now or later becomes publicly known through no breach of confidential obligation
by the receiving party; (iv) released by the disclosing party to any other
person, firm or entity (including governmental agencies or bureaus) without
restriction on use or disclosure; or (v) independently developed by or for the
receiving party without any reliance on or use of Confidential Information of
the disclosing party.
11.4 DISCLOSURE AND NOTIFICATION. If a receiving party receives a request to
disclose any Confidential Information of the disclosing party (whether pursuant
to a subpoena, an order issued by a court or other governmental authority of
competent jurisdiction or otherwise) and, on advice of legal counsel, determines
that disclosure is required under applicable law, the receiving party agrees
that, prior to disclosing any Confidential Information of the disclosing party,
it shall (i) notify the disclosing party of the existence and terms of such
request or advice, (ii) cooperate with the disclosing party in taking legally
available steps to resist or narrow any such request or to otherwise eliminate
the need for such disclosure at the disclosing party's sole expense, if
requested to do so by the disclosing party, and (iii) if disclosure is required,
it shall be the sole obligation of the disclosing party to use its commercially
reasonable efforts to obtain a protective order or other reliable assurance that
confidential treatment shall be afforded to such portion of the Confidential
Information of the disclosing party as is required to be disclosed.
11.5 CONTINUING OBLIGATION. The obligation of non-disclosure and non-use with
respect to Confidential Information of the disclosing party shall survive
termination of this Agreement and shall continue for a period of two (2) years
thereafter; provided, however, if any applicable law, rule, regulation or court
order requires that information be kept confidential for a longer period of
time, the receiving party will continue to keep such information confidential in
accordance with such law, rule, regulation or court order.
12. RELATIONSHIP OF PARTIES.
12.1 INDEPENDENT CONTRACTORS. In providing any Services pursuant to this
Agreement, Service Provider and its affiliates are independent contractors and
not agents or representatives of Company. Persons furnished by the respective
parties shall be solely the employees or agents of such parties, respectively,
and shall be under the sole and exclusive direction and control of such parties.
They shall not be considered employees of the other party or parties for any
purpose. Each party shall also be responsible, respectively, for payment of
taxes, including federal, state, and municipal taxes, chargeable or assessed
with respect to its employees or agents, such as social security, unemployment,
worker's compensation, disability insurance and federal and state income tax
withholding.
12.2 NO PERFORMANCE. Neither party undertakes by this Agreement or any Statement
of Work to conduct the business or operations of the other party. Nothing
contained in this Agreement or any Statement of Work is intended to give rise to
a partnership or joint venture between the parties or to impose upon the parties
any of the duties or responsibilities of partners or joint venturers.
13. INDEMNIFICATION.
13.1 GENERAL. To the fullest extent permitted by law, Company shall defend,
indemnify and hold harmless Service Provider and its affiliates, officers,
agents and employees from any and all amounts payable under any judgment,
verdict, court order or settlement (and associated reasonable fees and
disbursements of counsel) arising from or related to any third party claims,
including without limitation, claims for injury, sickness, disease or death of
any person or damage to any real or personal property or assets to the extent
arising from the indemnitor's (either directly or through its officers, agents,
subcontractors or representatives) acts or omissions in connection with the
provision of Services hereunder, except to the extent that any damages resulting
from such claims are determined in a final judgment by a court with competent
jurisdiction to be caused by the gross negligence or willful misconduct of
Service Provider.
13.2 DEFENSE. Subject to the limitations and procedures set forth below, Service
Provider agrees to defend Company against any action to the extent that such
action is based upon a claim that the Tools, the Service Provider Developed
Software or the use by Company of the Services provided pursuant to this
Agreement (i) infringes a United States copyright, (ii) infringes a United
States patent or (iii) constitutes an unlawful disclosure, use or
misappropriation of another party's trade secret and not as the result of any
prohibited use or transfer by Company. Service Provider shall bear the expense
of such defense and pay any losses finally awarded by a court of competent
jurisdiction that are directly attributable to such claim.
13.3 CONTRIBUTORY INFRINGEMENT. Service Provider shall not be liable to Company
for claims of indirect or contributory infringement. Further, Service Provider
shall have no liability to Company if (i) the claim of infringement is based
upon the use of the Tools, the Service Provider Developed Software or the
Services provided by Service Provider hereunder in connection or in combination
with equipment, devices, data or software not supplied by Service Provider, and
such infringement would not have occurred but for such use, (ii) such Tools,
Service Provider Developed Software or Services are used outside of the scope of
the rights and licenses granted to Company; (iii) the Tools, Service Provider
Developed Software or Services are modified by or for Company (including by
Service Provider at Company's direction or instructions), and such infringement
would not have occurred but for such modification; (iv) Company uses any of the
Services in the practice of a patented process and there would be no
infringement in the absence of such practice, or (v) the claim of infringement
arises out of Service Provider's compliance with written directions provided by
Company and such infringement would not have occurred but for such compliance.
For all of the foregoing exclusions, Company shall defend and indemnify Service
Provider for any infringement claims to the extent set forth in Section 13.5.
13.4 MITIGATION. If the Tools, the Service provider Developed Software or the
Services become the subject of an infringement claim, or in Service Provider's
opinion, is likely to become the subject of such a claim, then, in addition to
defending the claim and paying any damages and attorneys' fees as required
above, Service Provider may, at its option and in its sole discretion, and at
its own cost and expense: (i) replace or modify any such Tool, Service Provider
Developed Software or Services to make them non-infringing or cure any claimed
misuse of any third party trade secret; (ii) procure for Company the right to
continue using such Tool, Service Provider Developed Software or Services
pursuant to this Agreement; or if neither (i) nor (ii) are possible at a
commercially reasonable cost, (iii) terminate the Statement of Work (to the
extent it has not yet been completed) and terminate Company's right to use the
same and refund a pro-rata portion of the amount actually paid to Service
Provider for the Services.
13.5 CONDITIONS. The indemnification obligations set forth in this Section shall
not apply unless the indemnified party: (i) notifies the other promptly in
writing of any matters in respect of which the indemnity may apply and of which
the notifying party has knowledge, in order to allow the indemnitor the
opportunity to investigate and defend the matter; provided, however, that the
failure to so notify shall only relieve the indemnitor of its obligations under
this Section if and to the extent that the indemnitor is prejudiced thereby; and
(ii) gives the other party full control of the response thereto and the defense
thereof, including any agreement relating to the settlement thereof. However, if
the indemnitor fails to promptly assume the defense of the claim, the party
entitled to indemnification may assume the defense at the indemnitor's cost and
expense. The indemnitor shall not be responsible for any settlement or
compromise made without its prior written consent, unless the indemnitee has
tendered notice and the indemnitor has then refused to assume and defend the
claim and it is later determined that the indemnitor was obligated to assume and
defend the claim. The indemnitee agrees to cooperate in good faith with the
indemnitor at the request and expense of the indemnitor.
14. INTELLECTUAL PROPERTY INDEMNIFICATION.
14.1 CUSTOMER-DEVELOPED SOFTWARE. During the term of this Agreement, Company
shall indemnify and hold Service Provider harmless against any and all damages,
costs, or liabilities, including reasonable attorney's fees, incurred as a
result of any claim that Customer-Developed Software infringes any Intellectual
Property Right of a third party, provided that: a) Service Provider shall give
Company prompt written notice of any actual or threatened claim; and, b) Service
Provider shall cooperate with Company's reasonable requests in the defense or
settlement of a claim; and, Company shall have sole control of the defense of
the claim; and, d) the claim does not arise out of Service Provider's
unauthorized use of the Customer-Developed Software.
14.2 REMEDY. If an infringement of any Intellectual Property Right of a third
party occurs, or in Company's judgment is likely to occur, then Company shall,
in its discretion and at its sole cost, either: a) modify or ensure that
Customer modifies, the Customer-Developed Software so that it becomes
non-infringing; or, b) procure the right of Company to continue using the
infringing Customer-Developed Software; or, c) cease using the
Customer-Developed Software.
14.3 CUSTOMER THIRD-PARTY SOFTWARE. During the term of this Agreement, Customer
and Company shall indemnify and hold Service Provider harmless against any and
all damages, costs, or liabilities, including reasonable attorney's fees,
incurred as a result of any infringement, misuse, or misappropriation by Company
and Customer, or by Service Provider with the assistance of Customer or in
privity with Company, of any Intellectual Property Right of any third party with
respect to Customer Third- Party Software utilized pursuant to this Agreement.
15. LIMITATION OF LIABILITY.
15.1 GENERAL. Service Provider and its affiliates' liability arising out of or
relating to this Agreement, including without limitation on account of
performance or nonperformance of obligations hereunder, regardless of the form
of the cause of action, whether in contract, tort (including without limitation
negligence), statute or otherwise, shall in no event exceed the price to be paid
to Service Provider for the completed Statement of Work from which such
liability arises. In no event shall Service Provider be liable to Company for
any claim hereunder, other than claims resulting from Service Provider's gross
negligence or willful misconduct in the performance of the Services, and then
only in amounts that do not, in the aggregate, exceed the amount set forth in
the preceding sentence.
15.2 LIMITATION. EXCEPT FOR BREACHES RELATED TO CONFIDENTIAL INFORMATION OR
DAMAGES ARISING OUT OF INDEMNIFICATION OBLIGATIONS, NEITHER PARTY SHALL BE
LIABLE TO THE OTHER FOR ANY INDIRECT, INCIDENTAL, PUNITIVE, EXEMPLARY, SPECIAL
OR CONSEQUENTIAL DAMAGE OR LOST PROFITS OF ANY KIND WHATSOEVER, EVEN IF A PARTY
OR ITS AFFILIATES HAVE BEEN APPRISED OF THE LIKELIHOOD OF SUCH DAMAGES
OCCURRING.
16. ASSIGNMENT AND SUBCONTRACTING.
16.1 ASSIGNMENT. Neither this Agreement nor any rights or obligations hereunder
shall be assignable by either of the parties hereto; provided that the (i)
Service Provider may assign or delegate all or any portion of its obligations to
perform Services under this Agreement to one or more of its affiliates, and (ii)
either party may assign this Agreement (together with all Statements of Work)
and its obligations hereunder to a successor of such party by way of merger,
consolidation or the acquisition of all or substantially all of the business and
assets of the assigning party relating to this Agreement.
16.2 SUBCONTRACTING. Service Provider may use subcontractors to perform the
Services under this Agreement as specified in Section 2.5. Service Provider
shall be responsible for the fulfillment of its obligations hereunder,
notwithstanding the performance of such obligations by its subcontractors.
17. COMPLIANCE WITH LAWS.
Each party shall comply with the provisions of all applicable federal, state,
and local laws, ordinances, regulations and codes (including procurement of
required permits or certificates) in fulfillment of its obligations under this
Agreement. The Confidential Information of each party may be subject to U.S.
export and foreign transactions control regulations. Each party undertakes that
it will not export, nor cause nor permit to be exported, the other party's
Confidential Information out of the United States of America without such other
party's prior written consent and without compliance with applicable law and
regulation. Each party agrees to comply with all applicable laws and regulations
relating to the exportation of technical information, as they currently exist
and as they may be amended from time to time.
18. PLANT WORK RULES AND RIGHT OF ACCESS.
18.1 COMPLIANCE. Employees, subcontractors, and agents of the parties, while on
the premises of the other, shall comply with all facility rules, regulations and
reasonable Company standards for security, including (when required by U.S.
government regulations) submission of satisfactory clearance from U.S.
Department of Defense and other federal authorities concerned.
18.2 ACCESS. In the event either party ("requesting party") requires access to
the other party's premises in connection with the subject matter of this
Agreement, such requesting party will request access to the other party's
premises and the other party may decide, in its sole discretion, whether it will
allow the requesting party access to its premises. If the other party decides to
allow the requesting party access to its premises, then it shall, at no charge
to the requesting party, permit the requesting party reasonable access to its
premises, coordinated through each party's respective designated representative.
While on the premises of the other party, each party will observe the security
and safety rules and guidelines of the other party. Neither party shall require
waivers or releases of claims for bodily injury or personal property loss or
damage from the other party's employee(s).
19. COMPANY RESPONSIBILITIES.
Company agrees to perform in a timely fashion those tasks, and to provide the
personnel, facilities and accurate information as agreed by the parties and set
forth in the applicable Statement of Work. Company further agrees to use its
commercially reasonable efforts to cooperate with Service Provider in its
performance of this Agreement, to not unreasonably withhold its consent to any
matter for which consent is required or requested.
20. PERMITS.
Unless otherwise specifically provided for in this Agreement, Service Provider
shall obtain and keep in full force and effect, at its expense, any permits,
licenses, consents, approvals and authorizations ("Permits") necessary for and
incident to the performance and completion of the Services. Notwithstanding the
foregoing, Company shall obtain and keep in full force and effect, at its
expense, any Permits related to its facilities and the conduct of its business.
21. PUBLICITY.
The parties agree to submit to one another, for prior written approval, all
advertising, sales promotion, press releases and other publicity matters
relating to the Services performed pursuant to this Agreement, when its
respective name or mark is mentioned or language from which the connection of
said name or mark may be inferred or implied. The parties further agree not to
publish or use such advertising, sales promotions, press releases, or publicity
matters without such prior written approval. Any approval required under this
Section shall not be unreasonably withheld or delayed by either party.
22. INSURANCE.
(a) During the term of this Agreement, each party shall obtain and
maintain the following insurance: (i) Commercial General Liability including
coverage for (a) premises/operations, (b) independent contractors, (c)
products/completed operations, (d) personal and advertising injury, (e)
contractual liability, and (f) explosion, collapse and underground hazards, with
combined single limit of not less than $1,000,000.00 each occurrence or its
equivalent; (ii) Worker's Compensation in amounts required by applicable law and
Employer's Liability with a limit of at least $1,000,000.00 each accident; and
(iii) Automobile Liability including coverage for owned/leased, non-owned or
hired automobiles with combined single limit of not less than $1,000,000.00 each
accident.
(b) Both parties expressly acknowledge that a party shall be deemed to
be in compliance with the provisions of this Section if it maintains an approved
self-insurance program providing for a retention of up to $1,000,000.00. If
either party provides any of the foregoing coverage on a claims made basis, such
policy or policies shall be for at least a three (3) year extended reporting or
discovery period.
(c) Unless otherwise agreed, all insurance policies shall be obtained
and maintained with companies rated A- or better by Best's Key Rating Guide and
each party shall, upon request, provide the other Party with an insurance
certificate confirming compliance with the requirements of this Article.
(d) Company and Service Provider shall each obtain from the insurance
companies providing the coverage required by this Agreement, the permission of
such insurers to allow such party to waive all rights of subrogation and such
party does hereby waive all rights of said insurance companies to subrogation
against the other party, its affiliates, subsidiaries, assignees, officers,
directors and employees.
(e) In the event either party fails to maintain the required insurance
coverage and a claim is made or suffered, such party shall indemnify and hold
harmless the other Party from any and all claims for which the required
insurance would have provided coverage.
23. MODIFICATION.
23.1 PROCEDURE. Modifications to this Agreement, or any Exhibit thereto, may be
requested at any time by either Company or Service Provider. All such requested
changes will be made in writing through a Change Request form. Designated
representatives of Company and Service Provider will jointly review the Change
Request to determine whether the Modification will materially affect the price,
schedule or terms of the Agreement.
(a) If, as a result of the joint review, it is determined that the
Modification does not materially affect the price, schedule or terms of the
Agreement, then the designated representative for the Party receiving the Change
Request will initiate a written acceptance or rejection of the Change Request
within fifteen (15) working days after receipt of the Change Request.
(b) If, as a result of the joint review, it is determined that the
Modification does materially affect the price, schedule or terms of the
Agreement, then Service Provider shall submit a proposal to Company which shall
include a description of the Modification and the time and charges required to
provide the requested Modification. Upon receipt of Service Provider's proposal,
Company shall have a period of ten (10) calendar days in which to (i) provide
Service Provider with written acceptance of the proposal, or (ii) provide
Service Provider with written notice to disregard such Change Request. If the
proposal has been accepted, a Supplement to this Agreement will be prepared and
executed by the Parties. Neither Party shall be under any obligation to proceed
with any requested modification prior to execution of an Agreement Supplement.
If Company provides Service Provider with a notice to disregard the Change
Request after Service Provider has prepared an Agreement Supplement, then
Service Provider reserves the right to charge Company for its costs associated
with the proposal effort, including any preliminary specifications or study
requirements.
23.2 INFORMAL DIRECTION. The issuance of information, advice, approvals or
instructions by either Service Provider's or Company's technical personnel or
other representatives shall be deemed expressions of personal opinion only and
shall not affect Service Provider's and Company's rights and obligations
hereunder unless the same is in writing, signed by authorized representatives of
both parties, and expressly states that it constitutes a change.
23.3 SPECIAL SERVICES, CONVERSION, INTERFACING, RETROFITTING. Company shall
notify Service Provider in writing of its request for Service Provider to
provide consulting or professional services (including any preliminary
specifications or study requirements), any conversion, interfacing, and
retrofitting services or to develop customized software, all of which are
outside the scope of this Agreement. Service Provider, upon receipt of such
request for new services from Company, will prepare and submit a proposal for
the new services to Company. New services may be priced on a fixed price or on a
Time and Materials basis at Service Provider's then current hourly rates. Upon
acceptance by Company, the new services will be set forth in a mutually agreed
upon modification to the Agreement between Service Provider and Company.
24. FORCE MAJEURE.
If performance of any Services under this Agreement is prevented, restricted or
interfered with by reason of acts of God, wars, revolution, civil commotion,
acts of public enemy, embargo, acts of government in its sovereign capacity,
labor difficulties, including without limitation, strikes, slowdowns, picketing
or boycotts, communication line failures, power failures, or any other
circumstances beyond the reasonable control and not involving any fault or gross
negligence of Service Provider, Service Provider, upon giving prompt notice to
Company, shall be excused from such performance on a day-to-day basis during the
continuance of such prevention, restriction, or interference, provided, however,
that Service Provider shall use its commercially reasonable efforts to avoid or
remove such causes of nonperformance and shall proceed immediately with the
performance of its obligations under this Agreement whenever such causes are
removed or cease, provided further however, that in no event shall any of the
foregoing result in an extension of the term of this Agreement. Any amounts
pre-paid for such periods of non-performance shall be credited or refunded to
Company.
If a force majeure condition continues to prevent Service Provider from
performing for more than thirty (30) consecutive days, Company may terminate the
applicable Statement of Work effective on written notice to Service Provider.
25. DISPUTE RESOLUTION.
25.1 GENERAL. Except as provided in Section 25.4 below, any controversy or claim
arising out of or relating to this Agreement, or the breach thereof, shall
attempt to be settled first, by good faith efforts of the parties to reach
mutual agreement, and second, if mutual agreement is not reached to resolve the
dispute, by final, binding arbitration as set out in Section 25.3 below. Any
amounts contested in good faith may be withheld and paid upon final resolution
of the dispute, if then due.
25.2 INITIAL RESOLUTION. A party that wishes to initiate the dispute resolution
process shall send written notice to the other party with a summary of the
controversy and a request to initiate these dispute resolution procedures. Each
party shall appoint a knowledgeable, responsible representative from the company
who has the authority to settle the dispute, to meet and negotiate in good faith
to resolve the dispute. The discussions shall be left to the discretion of the
representatives, who may utilize other alternative dispute resolution procedures
such as mediation to assist in the negotiations. Discussions and correspondence
among the representatives for purposes of these negotiations shall be treated as
Confidential Information developed for purposes of settlement, shall be exempt
from discovery and production, and shall not be admissible in the arbitration
described above or in any lawsuit pursuant to Rule 408 of the Federal Rules of
Evidence. Documents identified in or provided with such communications, which
are not prepared for purposes of the negotiations, are not so exempted and may,
if otherwise admissible, be admitted in evidence in the arbitration or lawsuit.
The parties agree to pursue resolution under this subsection for a minimum of
thirty (30) days before requesting arbitration.
25.3 ARBITRATION. If the dispute is not resolved under the preceding subsection
within thirty (30) days of the initial written notice, either party may demand
arbitration by sending written notice to the other party. The parties shall
promptly submit the dispute to the American Arbitration Association for
resolution by a single neutral arbitrator acceptable to both parties, as
selected under the rules of the American Arbitration Association. The dispute
shall then be administered according to the American Arbitration Association's
Commercial Arbitration Rules, with the following modifications: (i) the
arbitration shall be held in a location mutually acceptable to the parties, and
if the parties do not agree, the location shall be New York, New York; (ii) the
arbitrator shall be licensed to practice law; (iii) the arbitrator shall conduct
the arbitration as if it were a bench trial and shall use, apply and enforce the
Federal Rules of Evidence and Federal Rules of Civil Procedure; (iv) except for
breaches related to Confidential Information the arbitrator shall have no power
or authority to make any award that provides for consequential, punitive or
exemplary damages; (v) the arbitrator shall control the scheduling so that the
hearing is completed no later than thirty (30) days after the date of the demand
for arbitration; and (vi) the arbitrator's decision shall be given within five
(5) days thereafter in summary form that states the award, without written
decision, which shall follow the plain meaning of this Agreement, the relevant
documents, and the intent of the parties. The determination of the arbitrator
shall be final and shall be binding upon the parties thereto. Judgment on the
award rendered by the arbitrator may be entered in any court having jurisdiction
over the parties. Each party to the dispute shall bear its own expenses arising
out of the arbitration, except that the expenses of the facilities to conduct
the arbitration and the fees of the arbitrator shall be shared equally by the
parties.
25.4 INJUNCTIVE RELIEF. The foregoing notwithstanding, with respect to the
rights and obligations under Section 11 only, each party shall have the right to
seek injunctive relief in an applicable court of law or equity independent of
any resolution of the dispute in accordance with the foregoing.
26. TERMINATION.
26.1 TERMINATION FOR BREACH. Either party may terminate or cancel this Agreement
or a Statement of Work, for a material breach or default of any of the terms,
conditions or covenants of this Agreement by the other, provided that such
termination or cancellation may be made only following the expiration of a
thirty (30) day period ("Cure Period") during which the breaching party has
failed to cure such breach after having been given written notice thereof. In
such event, the non-breaching party may terminate by giving ten (10) days
written notice of termination, after the expiration of the Cure Period. With
respect to Company, a material breach shall include, without limitation, (i)
Company's failure to make any payment due to Service Provider hereunder that is
not disputed in good faith (ii) Company's failure to provide information as
required hereunder, or (iii) Company's failure, as determined by Service
Provider in its sole discretion, to cooperate as required hereunder.
26.2 RETURN OF MATERIALS. Upon termination of this Agreement, each party shall
promptly return to the other party, or at the option of the owner, certify the
destruction of, all data, programs and materials of the other held in connection
with the performance of the Agreement. Service Provider shall not be responsible
for the retention of the Customer Software or Customer Data for a period in
excess of sixty (60) days following the effective date of such termination.
Within such period, the Company must make arrangements with Service Provider for
the transfer of such Customer Software or Customer Data to the Company's
designated data center. The Company will be responsible for supplying necessary
media and pay shipping costs. The Company understands and agrees that at any
time on or after the sixty-first (61st) day following termination, Service
Provider will implement its standard file purge procedures, erasing all tapes,
including back-up tapes, containing the Customer files and Customer Data. The
Company hereby releases Service Provider from any and all liabilities in
connection with the erasure or destruction of Customer Data and information
which the Customer or the Company has stored on Service Provider's computers in
excess of sixty (60) days following the effective date of termination. The
Company is solely responsible for maintaining a procedure for the reconstruction
of lost data, programs and procedures for purposes of re-entry and back-up of
Customer Data. The parties expressly acknowledge that at all times hereunder
and, upon the termination of this Agreement, as between the parties, the
Customer Data is and shall be the sole property of the Company.
26.3 TRANSITION SERVICES. Upon expiration or termination of this Agreement, so
long as the Company makes payment in accordance with this Section 26.3, Service
Provider shall, if requested by the Company, perform the following transition
services:
(i) prepare and submit a detailed transition plan, which includes the
overall strategy, schedule, itemization of turnover services, staffing plan, and
tasks required to complete the turnover;
(ii) transfer the Customer Data (archived and current) to the Company;
(iii) prepare and submit a final report summarizing the turnover tasks
results and verifying the completion of turnover responsibilities; and
(iv) attend scheduled status meetings as the parties may mutually
schedule.
The Company shall pay Service Provider for the transition services delineated
above at the professional services hourly rate of $125.00 per hour. The Company
agrees that Service Provider shall invoice the Company for transition services
monthly in arrears at the end of each calendar month and the Company shall make
payment for the transition services performed for that calendar month pursuant
to this invoice within seven (7) business days from receipt of this invoice or
Service Provider will have no obligation to continue to perform the transition
services in any subsequent calendar month. In each invoice for transition
services, the Company shall designate the number of hours that the transition
services were performed for a calendar month and the total amount due to the
Service Provider based upon the professional services hourly rate set forth
herein.
Except as expressly stated herein, the Company acknowledges and agrees that the
Service Provider shall be under no obligation to provide transition services to
the Company except as specifically requested in writing by the Company and
agreed to in writing by the Service Provider and the Company.
27. NOTICE.
Any written notice either party may give the other concerning the subject matter
of this Agreement shall be in writing and given or made by means that obtain a
written acknowledgment of receipt to the applicable company representative at
the addresses shown below, which may be changed by written notice:
To Company: _________________
=================
Attention: _____________
Facsimile: _____________
To Service Provider: Verizon Information Technologies, LLC
c/o Verizon Communications Inc.
1717 Arch Street, 29th Floor
Philadelphia, PA 19103
Attention: Stephen Smith
Facsimile: (215) 557-7249
With Copies To: ________________________
========================
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Facsimile: ________________
Philip R. Marx, Esq.
1717 Arch Street, 32nd Floor
Philadelphia, PA 19103
Facsimile: (215) 963-9195
Notice shall be deemed to have been given or made when actually received, as
evidenced by written acknowledgment of receipt.
28. WAIVER OF TERMS AND CONDITIONS.
Failure to enforce any of the terms or conditions of this Agreement shall not
constitute a waiver of any such terms or conditions, or of any other terms or
conditions.
29. SEVERABILITY.
Where any provision of this Agreement is declared invalid, illegal, void or
unenforceable, or any changes or modifications are required by regulatory or
judicial action, and any such invalid, illegal, void or unenforceable provision,
or such change or modification, substantially affects any material obligation of
a party hereto, the remaining provisions of this Agreement shall remain in
effect and the parties shall mutually agree upon a course of action with respect
to such invalid provision or such change or modification to the end that the
purposes of this Agreement are carried out.
30. SURVIVAL OF OBLIGATIONS.
The provisions in the Agreement relating to Confidentiality, Indemnification,
Dispute Resolution, Termination, Compensation and Billing, Limitation of
Liability, and Insurance shall survive any termination, cancellation or
expiration of this Agreement.
31. APPLICABLE LAW.
This Agreement, and the rights and obligations contained in it, shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to any conflicts of law principles that would require the
application of the laws of any other jurisdiction.
32. NO UNREASONABLE DELAY OR WITHHOLDING.
Where agreement, approval, acceptance, consent or similar action by a party is
required, such action shall not be unreasonably delayed or withheld.
33. WARRANTY.
33.1 MUTUAL WARRANTIES. Each party represents and warrants that: (i) it has the
full right and authority to enter into, execute and deliver this Agreement; (ii)
it has taken all requisite corporate action to approve the execution, delivery
and performance of this Agreement; (iii) this Agreement constitutes a legal,
valid and binding obligation enforceable against such party in accordance with
its terms, subject to bankruptcy, creditors' rights and general equitable
principles; and (iv) its execution of and performance under this Agreement shall
not violate any applicable existing regulations, rules, statutes or court orders
of any local, state or federal government agency, court or body.
33.2 SERVICE PROVIDER WARRANTY. Service Provider warrants and covenants
throughout its term that it will perform the Services hereunder using qualified
and competent personnel and in accordance with the same standards of care, skill
and diligence as Service Provider performs such Services for third parties and
with the same standards of care, skill and diligence as Service Provider
performed such Services for Customers prior to the execution of this Agreement,
and that it will perform the Services in accordance with the specifications
contained in the Statements of Work.
33.3 LIMIT. EXCEPT AS SET FORTH IN THIS SECTION 33, NEITHER PARTY MAKES ANY
OTHER WARRANTY, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR
PARTICULAR PURPOSE, AND ALL SUCH WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.
34. NON-SOLICITATION.
For a period of 12 months following the expiration or the termination of this
Agreement, the Company agrees that neither it nor any of its affiliates shall,
directly or indirectly, take steps to actively recruit or solicit for hire as an
employee (or engagement as an independent contractor) any individual who was an
employee (or independent contractor) of Service Provider or any of its
affiliates that was introduced to, or came into contact with, the Company or any
of its affiliates or any of their personnel at any time during the Service
Provider's performance of the Services under this Agreement resulting in the
actual hiring or engagement of such person, unless such person's employment or
engagement with the Service Provider or its affiliates is or has been terminated
by the Service Provider or its affiliates.
35. ENTIRE AGREEMENT.
This Agreement represents the entire understanding between the parties with the
respect to its provisions and cancels and supercedes all prior agreements or
understandings, whether written or oral, with respect to the subject matter.
This Agreement may only be modified or amended by an instrument in writing
signed by duly authorized representatives of the parties. This Agreement shall
be deemed to include all Exhibits, Addenda and Statements of Work issued
hereunder.
36. RULES OF INTERPRETATION.
Headings in this Agreement are for convenience of reference only and shall not
affect the interpretation or construction hereof. Unless otherwise specified,
(i) the terms "hereof", "herein" and similar terms refer to this Agreement as a
whole and (ii) references herein to "Sections" refer to parts or sections of
this Agreement.
NY1:1532404.1
IN WITNESS WHEREOF, the parties hereto have executed this Agreement through
their authorized representatives.
[______________________________] VERIZON INFORMATION TECHNOLOGIES, LLC
By: By:
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Name: ________________________ Name:
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Title: _______________________ Title:
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Date: Date:
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