EXHIBIT 2.13
Indemnification and Insurance Matters Agreement
between
Hewlett-Packard Company
and
Agilent Technologies, Inc.
______________, 1999
TABLE OF CONTENTS
Page
----
ARTICLE I. MUTUAL RELEASES; INDEMNIFICATION............................................................................ 1
Section 1.1. Release of Pre-Closing Claims...................................................................... 1
Section 1.2. Indemnification by Agilent......................................................................... 2
Section 1.3. Indemnification by HP.............................................................................. 2
Section 1.4. Indemnification With Respect to Environmental Actions and Conditions............................... 3
Section 1.5. Procedures for Defense, Settlement and Indemnification of Third Party Claims....................... 4
Section 1.6. Agilent Contingent Liabilities In Excess of $50 Million............................................ 6
Section 1.7. Additional Matters................................................................................. 7
Section 1.8. Survival of Indemnities............................................................................ 7
Section 1.9. Alleged Infringement or Misappropriation against HP for Products Ordered from the Agilent Business. 7
Section 1.10. Claims of Alleged Infringement or Misappropriation against Agilent for Products from HP Business... 8
Section 1.11. Reimbursement For Certain Losses and Liabilities Not Covered By HP's Insurance Policies............ 9
ARTICLE II. INSURANCE MATTERS.......................................................................................... 10
Section 2.1. Agilent Insurance Coverage During the Transition Period............................................ 10
Section 2.2. Cooperation and Agreement Not to Release Carriers.................................................. 11
Section 2.3. Agilent Insurance Coverage After the Insurance Transition Period................................... 11
Section 2.4. Responsibilities for Self-insured Obligations...................................................... 11
Section 2.5. Procedures With Respect to Insured Agilent Liabilities............................................. 11
Section 2.6. Insufficient Limits of Liability for HP Liabilities and Agilent Liabilities........................ 12
Section 2.7. Cooperation........................................................................................ 13
Section 2.8. No Assignment or Waiver............................................................................ 13
Section 2.9. No Liability....................................................................................... 13
Section 2.10. No Restrictions.................................................................................... 13
Section 2.11. Further Agreements................................................................................. 13
Section 2.12. Agreement Regarding Insurance Covering Environmental Actions....................................... 14
Section 2.13. Matters Governed by Employee Matters Agreement..................................................... 14
ARTICLE III. MISCELLANEOUS............................................................................................. 14
Section 3.1. Entire Agreement................................................................................... 14
Section 3.2. Governing Law...................................................................................... 14
Section 3.3. Notices............................................................................................ 14
Section 3.4. Parties in Interest................................................................................ 15
Section 3.5. Other Agreements Evidencing Indemnification Obligations............................................ 15
Section 3.6. Counterparts....................................................................................... 15
Section 3.7. Assignment......................................................................................... 15
Section 3.8. Severability....................................................................................... 15
Section 3.9. Failure or Indulgence Not Waiver................................................................... 15
-i-
TABLE OF CONTENTS
(continued)
Page
----
Section 3.10. Amendment............................................ 16
Section 3.11. Authority............................................ 16
Section 3.12. Interpretation....................................... 16
ARTICLE IV. DEFINITIONS.................................................. 16
Section 4.1. Action............................................... 16
Section 4.2. Affiliated Company................................... 16
Section 4.3. Agilent Business..................................... 16
Section 4.4. Agilent Contingent Liability......................... 17
Section 4.5. Agilent Contracts.................................... 17
Section 4.6. Agilent Covered Parties.............................. 17
Section 4.7. Agilent Facilities................................... 17
Section 4.8. Agilent Group........................................ 17
Section 4.9. Agilent Indemnitees.................................. 17
Section 4.10. Agilent Liabilities.................................. 18
Section 4.11. Agilent Schedule 1 Facilities........................ 18
Section 4.12. Agilent Schedule 2 Facilities........................ 18
Section 4.13. Assets............................................... 18
Section 4.14. Assignment Agreement................................. 18
Section 4.15. Change of Control.................................... 18
Section 4.16. Claims Committee..................................... 19
Section 4.17. Commingled Claims.................................... 19
Section 4.18. Coverage Amount...................................... 19
Section 4.19. Employee Matters Agreement........................... 19
Section 4.20. Environmental Actions................................ 19
Section 4.21. Environmental Conditions............................. 19
Section 4.22. Environmental Laws................................... 19
Section 4.23. Excess Portion....................................... 20
Section 4.24. Hazardous Materials.................................. 20
Section 4.25. HP Business.......................................... 20
Section 4.26. HP Facilities........................................ 20
Section 4.27. HP Group............................................. 20
Section 4.28. HP Indemnitees....................................... 20
Section 4.29. Indemnitee........................................... 20
Section 4.30. Insurance Policies................................... 20
Section 4.31. Insurance Proceeds................................... 20
Section 4.32. Insurance Transition Period.......................... 20
Section 4.33. Insured Agilent Liability............................ 20
Section 4.34. IPO Liabilities...................................... 21
Section 4.35. IPO Registration Statement........................... 21
-ii-
TABLE OF CONTENTS
(continued)
Page
----
Section 4.36. Liabilities........................................ 21
Section 4.37. Non-US Plan........................................ 21
Section 4.38. Person............................................. 21
Section 4.39. Pre-Separation Third Party Site Liabilities........ 21
Section 4.40. Prime Rate......................................... 21
Section 4.41. Related Agilent Contingent Liabilities............. 21
Section 4.42. Release............................................ 21
Section 4.43. Separation......................................... 22
Section 4.44. Separation Agreement............................... 22
Section 4.45. Separation Date.................................... 22
Section 4.46. Shared Agilent Percentage.......................... 22
Section 4.47. Shared HP Percentage............................... 22
Section 4.48. Shared Percentage.................................. 22
Section 4.49. Subsidiary......................................... 22
Section 4.50. Tax Sharing Agreement.............................. 22
Section 4.51. Taxes.............................................. 22
Section 4.52. Third Party Claim.................................. 22
-iii-
INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT
This Indemnification and Insurance Matters Agreement (this "Agreement") is
entered into on _________, 1999 between Hewlett-Packard Company, a Delaware
corporation ("HP"), and Agilent Technologies, Inc., a Delaware corporation
("Agilent"). Capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to such terms in the Article IV below.
RECITALS
WHEREAS, HP and its Subsidiaries have transferred or will transfer to
Agilent and its Subsidiaries effective as of the Separation Date, substantially
all of the assets of the Agilent Business in accordance with the Master
Separation and Distribution Agreement dated as of August 12, 1999 between the
parties (the "Separation Agreement").
WHEREAS, the parties desire to set forth certain agreements regarding
indemnification and insurance.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:
ARTICLE I.
MUTUAL RELEASES; INDEMNIFICATION
SECTION 1.1. Release of Pre-Closing Claims.
(a) Agilent Release. Except as provided in Section 1.1(c), effective as of
the Separation Date, Agilent does hereby, for itself and as agent for each
member of the Agilent Group, remise, release and forever discharge the HP
Indemnitees from any and all Liabilities whatsoever, whether at law or in equity
(including any right of contribution), whether arising under any contract or
agreement, by operation of law or otherwise, existing or arising from any acts
or events occurring or failing to occur or alleged to have occurred or to have
failed to occur or any conditions existing or alleged to have existed on or
before the Separation Date, including in connection with the transactions and
all other activities to implement any of the Separation, the IPO and the
Distribution.
(b) HP Release. Except as provided in Section 1.1(c), effective as of the
Separation Date, HP does hereby, for itself and as agent for each member of the
HP Group, remise, release and forever discharge the Agilent Indemnitees from any
and all Liabilities whatsoever, whether at law or in equity (including any right
of contribution), whether arising under any contract or agreement, by operation
of law or otherwise, existing or arising from any acts or events occurring or
failing to occur or alleged to have occurred or to have failed to occur or any
conditions existing or alleged to have existed on or before the Separation Date,
including in connection with the transactions and all other activities to
implement any of the Separation, the IPO and the Distribution.
(c) No Impairment. Nothing contained in Section 1.1(a) or (b) shall impair
any right of any Person to enforce the Separation Agreement or any Ancillary
Agreement (including this Agreement), in each case in accordance with its terms.
(d) No Actions as to Released Claims. Agilent agrees, for itself and as
agent for each member of the Agilent Group, not to make any claim or demand, or
commence any Action asserting any claim or demand, including any claim of
contribution or any indemnification, against HP or any member of the HP Group,
or any other Person released pursuant to Section 1.1(a), with respect to any
Liabilities released pursuant to Section 1.1(a). HP agrees, for itself and as
agent for each member of the HP Group, not to make any claim or demand, or
commence any Action asserting any claim or demand, including any claim of
contribution or any indemnification, against Agilent or any member of the
Agilent Group, or any other Person released pursuant to Section 1.1(b), with
respect to any Liabilities released pursuant to Section 1.1(b).
(e) Further Instruments. At any time, at the request of any other party,
each party shall cause each member of its respective Group to execute and
deliver releases reflecting the provisions hereof.
SECTION 1.2. Indemnification by Agilent. Except as otherwise provided in
this Agreement, Agilent shall, for itself and as agent for each member of the
Agilent Group, indemnify, defend (or, where applicable, pay the defense costs
for) and hold harmless the HP Indemnitees from and against any and all
Liabilities that any third party seeks to impose upon the HP Indemnitees, or
which are imposed upon the HP Indemnitees, and that relate to, arise out of or
result from any of the following items (without duplication):
(i) the Agilent Business, any Agilent Liability or any Agilent
Contract;
(ii) any breach by Agilent or any member of the Agilent Group of the
Separation Agreement or any of the Ancillary Agreements (including this
Agreement); and
(iii) any IPO Liabilities in excess of the Shared HP Percentage.
In the event that any member of the Agilent Group makes a payment to the HP
Indemnitees hereunder, and any of the HP Indemnitees subsequently diminishes the
Liability on account of which such payment was made, either directly or through
a third-party recovery, HP will promptly repay (or will procure an HP Indemnitee
to promptly repay) such member of the Agilent Group the amount by which the
payment made by such member of the Agilent Group exceeds the actual cost of the
associated indemnified Liability. This Section 1.2 shall not apply to any
Liability indemnified under Section 1.4.
SECTION 1.3. Indemnification by HP. Except as otherwise provided in this
Agreement, HP shall, for itself and as agent for each member of the HP Group,
indemnify, defend (or, where applicable, pay the defense costs for) and hold
harmless the Agilent Indemnitees from and against any and all Liabilities that
any third party seeks to impose upon the Agilent Indemnitees, or which
-2-
are imposed upon the Agilent Indemnitees, and that relate to, arise out of or
result from any of the following items (without duplication):
(i) the HP Business or any Liability of the HP Group other than the
Agilent Liabilities;
(ii) any breach by HP or any member of the HP Group of the
Separation Agreement or any of the Ancillary Agreements (including this
Agreement); and
(iii) any IPO Liabilities in excess of the Shared Agilent Percentage.
In the event that any member of the HP Group makes a payment to the Agilent
Indemnitees hereunder, and any of the Agilent Indemnitees subsequently
diminishes the Liability on account of which such payment was made, either
directly or through a third-party recovery, Agilent will promptly repay (or will
procure an Agilent Indemnitee to promptly repay) such member of the HP Group the
amount by which the payment made by such member of the HP Group exceeds the
actual cost of the indemnified Liability. This Section 1.3 shall not apply to
any Liability indemnified under Section 1.4.
SECTION 1.4. Indemnification With Respect to Environmental Actions and
Conditions.
(a) Indemnification by Agilent. Agilent shall, for itself and as agent for
each member of the Agilent Group, indemnify, defend and hold harmless the HP
Indemnitees from and against any and all Environmental Actions relating to,
arising out of or resulting from any of the following items:
(i) Except as arising out of the operations of the HP Group on and
after the Separation Date, Environmental Conditions (x) arising out of
operations occurring on and after the Separation Date at any of the Agilent
Schedule 2 Facilities, or (y) on any of the Agilent Schedule 2 Facilities
arising from an event causing contamination that first occurs on or after the
Separation Date (including any Release of Hazardous Materials occurring after
the Separation Date that migrates to any of the Agilent Schedule 2 Facilities);
and
(ii) Except as arising out of the operations of the HP Group on and
after the Separation Date or as a result of a Release from any HP Facilities,
Environmental Conditions on, under, about or arising out of operations occurring
at any time, whether before or after the Separation Date, at any of the Agilent
Schedule 1 Facilities (including any Release of Hazardous Materials occurring
after the Separation Date that migrates at any time to any of the Agilent
Schedule 1 Facilities);
(b) Indemnification by HP. HP shall, for itself and as agent for each
member of the HP Group, indemnify, defend and hold harmless the Agilent
Indemnitees from and against any and all Environmental Actions relating to,
arising out of or resulting from any of the following items:
-3-
(i) Environmental Conditions (x) existing on, under, about or in
the vicinity of any of the Agilent Schedule 2 Facilities prior to the Separation
Date (including any Release of Hazardous Materials occurring prior to the
Separation Date which migrates to any of the Agilent Schedule 2 Facilities after
the Separation Date), or (y) arising out of operations occurring on or before
the Separation Date at any of the Agilent Schedule 2 Facilities;
(ii) Except as arising out of the operations of the Agilent Group
on and after the Separation Date, Environmental Conditions on, under, about or
arising out of operations occurring at any time, whether before or after the
Separation Date, at any of the HP Facilities; and
(iii) Pre-Separation Third Party Site Liabilities.
(c) Agreement Regarding Payments to Indemnitee. In the event an
Indemnifying Party makes any payment to or on behalf of an Indemnitee with
respect to an Environmental Action for which the Indemnifying Party is obligated
to indemnify under this Section 1.4, and the Indemnitee subsequently receives
any payment from a third party on account of the same financial obligation
covered by the payment made by the Indemnifying Party for that Environmental
Action or otherwise diminishes the financial obligation, the Indemnitee will
promptly pay the Indemnifying Party the amount by which the payment made by the
Indemnifying Party, exceeds the actual cost of the financial obligation.
SECTION 1.5. Procedures for Defense, Settlement and Indemnification of
Third Party Claims.
(a) Notice of Claims. If an HP Indemnitee or an Agilent Indemnitee (as
applicable) (an "Indemnitee") shall receive notice or otherwise learn of the
assertion by a Person (including any Governmental Authority) who is not a member
of the HP Group or the Agilent Group of any claim or of the commencement by any
such Person of any Action (collectively, a "Third Party Claim") with respect to
which a party (an "Indemnifying Party") may be obligated to provide
indemnification to such Indemnitee pursuant to Section 1.2, 1.3 or 1.4, or any
other section of the Separation Agreement or any Ancillary Agreement (including
this Agreement), HP and Agilent (as applicable) will ensure that such Indemnitee
shall give such Indemnifying Party written notice thereof within 30 days after
becoming aware of such Third Party Claim. Any such notice shall describe the
Third Party Claim in reasonable detail. Notwithstanding the foregoing, the delay
or failure of any Indemnitee or other Person to give notice as provided in this
Section 1.5(a) shall not relieve the related Indemnifying Party of its
obligations under this Article I, except to the extent that such Indemnifying
Party is actually and substantially prejudiced by such delay or failure to give
notice.
(b) Claims Involving Commingled Products or Employees. If a Third Party
Claim (including a claim relating to the Year 2000 problem) involves (i) a
commingled product with components supplied by both the Agilent Business and the
HP Business, (ii) an employee, consultant or contractor that was employed by
both the Agilent Business and the HP Business or (iii) any similar claims
involving both the Agilent Business and the HP Business (collectively,
"Commingled
-4-
Claims"), the Claims Committee shall have the power to resolve whether and to
the extent any Commingled Claim is an Agilent Contingent Liability.
(c) Claims Committee. Any of the parties may refer any dispute regarding
the provisions of this Article I to the Claims Committee for resolution. All
determinations of the Claims Committee, if unanimous, shall be binding on all of
the parties and their respective successors and assigns. The Claims Committee
shall reach a resolution that minimizes expenses for all parties and seeks to
avoid hiring multiple counsel. In determining whether a Commingled Claim is an
Agilent Contingent Liability, the Claims Committee shall consider whether the
event, act or omission giving rise the Liability relates primarily to the
Agilent Business. In the event a Liability arises from both an event, act or
omission relating primarily to the Agilent Business and an event, act or
omission relating primarily to the HP Business, the Claims Committee shall
apportion the Liability in accordance with relative fault, and it may re-
apportion the Liability as it learns of additional facts bearing on that
assessment. In the event that the Claims Committee cannot reach a unanimous
determination as to the nature, status or handling of any such claims within 30
days after such referral (unless the Claims Committee unanimously agrees to a
longer time period), the issue will be submitted for resolution pursuant to the
procedures set forth in the dispute resolution provisions contained in Section
5.9 of the Separation Agreement.
(d) Defense of Commingled Claims. With respect to Commingled Claims, the
party whose business sold the product, who last employed the employee or whose
business is primarily related to the event, act or omission giving rise to the
potential Liability shall manage the defense of, and may seek to settle or
compromise, any such Commingled Claims. If the party managing the defense of
such Commingled Claim is an Indemnitee with respect thereto, the costs and
expenses of such defense shall be borne by the Indemnifying Party to the extent
of the indemnity provided in the Separation Agreement, this Agreement or any
Ancillary Agreement.
(e) Defense of Claims Involving IPO Liabilities. HP shall manage the
defense of, and may seek to settle or compromise, any Third Party Claim
involving IPO Liabilities, and the costs and expenses thereof shall be included
in the calculation of the amount of the indemnification obligations pursuant to
Section 1.2(iii) and Section 1.3(iii) of this Agreement.
(f) Defense By Indemnifying Party. Other than in the case of a Commingled
Claim or a Third Party Claim involving IPO Liabilities, an Indemnifying Party
will manage the defense of and (unless the Indemnifying Party has specified any
reservations or exceptions to the obligation to manage the defense or to
indemnify that have been referred to, but not resolved by, the Claims Committee)
may settle or compromise any Third Party Claim. Within 30 days after the receipt
of notice from an Indemnitee in accordance with Section 1.5(a) (or sooner, if
the nature of such Third Party Claim so requires), the Indemnifying Party shall
notify the Indemnitee that the Indemnifying Party will assume responsibility for
managing the defense of such Third Party Claim, which notice shall specify any
reservations or exceptions.
(g) Defense By Indemnitee. If an Indemnifying Party fails to assume
responsibility for managing the defense of a Third Party Claim, or fails to
notify an Indemnitee that it will assume responsibility as provided in Section
1.5(f), such Indemnitee may manage the defense of such Third
-5-
Party Claim; provided, however, that the Indemnifying Party shall reimburse all
such costs and expenses in the event it is ultimately determined, in accordance
with the procedures governing the Claims Committee, that the Indemnifying Party
is obligated to indemnify the Indemnitee with respect to such Third Party Claim.
(h) No Settlement By Indemnitee Without Consent. Unless the Indemnifying
Party has failed to manage the defense of the Third Party Claim in accordance
with the terms of this Agreement, no Indemnitee may settle or compromise any
Third Party Claim without the consent of the Indemnifying Party.
(i) No Consent to Certain Judgments or Settlements Without Consent.
Notwithstanding Section 1.5(f) above, no party shall consent to entry of any
judgment or enter into any settlement of a Third Party Claim without the consent
of the other party (such consent not to be unreasonably withheld) if the effect
of such judgment or settlement is to (A) permit any injunction, declaratory
judgment, other order or other nonmonetary relief to be entered, directly or
indirectly, against the other party or (B) affect the other party in a material
fashion due to the allocation of Liabilities and related indemnities set forth
in the Separation Agreement, this Agreement or any other Ancillary Agreement.
SECTION 1.6. Agilent Contingent Liabilities In Excess of $50 Million.
(a) Excess Portions. Notwithstanding anything to the contrary in this
Agreement or the Assignment Agreement, if the aggregate amount paid by the
Agilent Group, less any related Insurance Proceeds and any other amounts
recovered (including by way of set off) from third parties unaffiliated with HP,
in respect of any single Agilent Contingent Liability or any Related Agilent
Contingent Liabilities is in excess of $50 million, arising from written demands
made or suits or similar proceedings filed within four years following the
Separation Date that demand or seek monetary damages, services or non-monetary
relief, Agilent shall be entitled to reimbursement from HP for the Shared HP
Percentage of the Excess Portion.
(b) Insurance Proceeds. In the event that after any payment is made by HP
to Agilent in accordance with the allocation set forth in Section 1.6(a), any
member of the Agilent Group receives any Insurance Proceeds or obtains any other
amounts that, in any such case, would reduce the amount paid by the Agilent
Group in respect of the applicable Agilent Contingent Liability or Liabilities,
Agilent will promptly notify HP of the receipt of such Insurance Proceeds or
otherwise and will promptly reimburse HP for the amount of any payment that
Agilent would not have been entitled to receive if it had received such
Insurance Proceeds on or prior to the date it received a payment pursuant to
this Section.
(c) Notice of Agilent Contingent Liabilities Involving an Excess Portion.
Agilent agrees to use its reasonable commercial efforts to advise HP if it
becomes aware of one or more Agilent Contingent Liabilities that may, in the
aggregate, result in payments of $50 million or more; provided, however, that no
delay or failure to give any such notice shall relieve HP of any obligation
pursuant to this Agreement unless it is actually and substantially prejudiced as
a result of such delay or failure.
-6-
(d) Termination Upon Assignment or Change of Control. Notwithstanding
anything to the contrary in this Agreement or any other Ancillary Agreement, the
right to receive reimbursement under this Section 1.6 may not be assigned or
delegated by Agilent and shall terminate upon a Change of Control of Agilent
(other than as a result of the Distribution).
SECTION 1.7. Additional Matters.
(a) Cooperation in Defense and Settlement. With respect to any Third Party
Claim that implicates both Agilent and HP in a material fashion due to the
allocation of Liabilities, responsibilities for management of defense and
related indemnities set forth in the Separation Agreement, this Agreement or any
of the Ancillary Agreements, the parties agree to cooperate fully and maintain a
joint defense (in a manner that will preserve the attorney-client privilege with
respect thereto) so as to minimize such Liabilities and defense costs associated
therewith. The party that is not responsible for managing the defense of such
Third Party Claims shall, upon reasonable request, be consulted with respect to
significant matters relating thereto and may, if necessary or helpful, associate
counsel to assist in the defense of such claims.
(b) Substitution. In the event of an Action in which the Indemnifying
Party is not a named defendant, if either the Indemnitee or the Indemnifying
Party shall so request, the parties shall endeavor to substitute the
Indemnifying Party for the named defendant. If such substitution or addition
cannot be achieved for any reason or is not requested, the rights and
obligations of the parties regarding indemnification and the management of the
defense of claims as set forth in this Article I shall not be altered.
(c) Subrogation. In the event of payment by or on behalf of any
Indemnifying Party to or on behalf of any Indemnitee in connection with any
Third Party Claim, such Indemnifying Party shall be subrogated to and shall
stand in the place of such Indemnitee, in whole or in part based upon whether
the Indemnifying Party has paid all or only part of the Indemnitee's Liability,
as to any events or circumstances in respect of which such Indemnitee may have
any right, defense or claim relating to such Third Party Claim against any
claimant or plaintiff asserting such Third Party Claim or against any other
person. Such Indemnitee shall cooperate with such Indemnifying Party in a
reasonable manner, and at the cost and expense of such Indemnifying Party, in
prosecuting any subrogated right, defense or claim.
(d) Not Applicable to Taxes. This Agreement shall not apply to Taxes
(which are covered by the Tax Sharing Agreement).
SECTION 1.8. Survival of Indemnities. Subject to Section 1.6(d) and
Section 3.7, the rights and obligations of the members of the HP Group and the
Agilent Group under this Article I shall survive the sale or other transfer by
any party of any Assets or businesses or the assignment by it of any Liabilities
or the sale by any member of the HP Group or the Agilent Group of the capital
stock or other equity interests of any Subsidiary to any Person.
SECTION 1.9. Alleged Infringement or Misappropriation against HP for
Products Ordered from the Agilent Business.
-7-
(a) Definitions. As used in this Section 1.9, the following terms have the
following meanings. "Agilent Product" means any product of the Agilent Business
that was or is furnished by the Agilent Business prior to the Separation Date or
(to the extent that there is no separate agreement between the purchaser and
seller governing the purchase and sale of such product) on or after the
Separation Date. "Eligible Buyer" means any member of the HP Group, HP
Subcontractors and other third parties mutually agreed to in writing by the
parties who purchase Agilent Products from the Agilent Business. "HP
Subcontractors" means third party entities which perform contract work for any
member of the HP Group and which acquire Agilent Products from the Agilent
Business. HP Subcontractors are independent contractors of a member of the HP
Group, and are not legally related to any member of the HP Group as agent,
employee, partner, joint venture or other manner.
(b) Obligation. Agilent shall manage the defense of any third party claim,
suit, or proceeding brought against any member of the HP Group, any Eligible
Buyer, or their customers insofar as it is based on a claim that any Agilent
Product constitutes an infringement of any third party's patent, copyright,
trademark, trade name, or unauthorized trade secret use; provided that (i)
Agilent is notified promptly in writing of such claim and is supplied with
information and assistance as reasonably necessary, and (ii) Agilent is given
sole control to handle the defense or settlement of any such claim, suit or
proceeding. Agilent agrees to pay all damages and costs awarded therein against
HP, any Eligible Buyer, or their customers.
(c) Enjoined Products. In case any Agilent Product or any part thereof in
such suit is held to constitute an infringement for which Agilent is liable and
its use is enjoined, Agilent shall, at its own expense and at its option, either
(i) procure for HP, the Eligible Buyers and their customers the right to
continue to use the Agilent Product, or (ii) if applicable, replace the Agilent
Product with a noninfringing Agilent Product of equivalent function and
performance, or modify it so it becomes noninfringing without detracting from
function or performance; provided, however, that if any of the foregoing
alternatives are not reasonably possible, then (iii) accept return of the
Agilent Product and refund to HP or the Eligible Buyer, as applicable, the price
paid for the infringing Agilent Product less a reasonable sum for past use.
(d) Exceptions. Notwithstanding the foregoing, Agilent shall have no
responsibility for claims arising from (i) modifications of the Agilent Product
made by HP or any Eligible Buyer if such claim would not have arisen but for
such modifications, or (ii) combination or use of the Agilent Product with
products not supplied by Agilent if such claim would not have arisen but for
such combination or use, or (iii) Agilent's compliance with HP's designs or
specifications, or (iv) Agilent Product use prohibited by specifications or
related application notes.
SECTION 1.10. Claims of Alleged Infringement or Misappropriation against
Agilent for Products from HP Business.
(a) Definitions. As used in this Section 1.10, the following terms have
the following meanings. "HP Product" means any product of the HP Business that
was or is furnished by the HP Business prior to the Separation Date or (to the
extent that there is no separate agreement between the purchaser and seller
governing the purchase and sale of such product) on or after the Separation
-8-
Date. "Eligible Buyer" means any member of the Agilent Group, Agilent
Subcontractors and other third parties mutually agreed to in writing by the
parties who purchase HP Products from the HP Business. "Agilent Subcontractors"
means third party entities which perform contract work for any member of the
Agilent Group and which acquire HP Products from the HP Business. Agilent
Subcontractors are independent contractors of a member of the Agilent Group, and
are not legally related to any member of the Agilent Group as agent, employee,
partner, joint venture or other manner.
(b) Obligation. HP shall manage the defense of any third party claim,
suit, or proceeding brought against any member of the Agilent Group, any
Eligible Buyer, or their customers insofar as it is based on a claim that any HP
Product constitutes an infringement of any third party's patent, copyright,
trademark, trade name, or unauthorized trade secret use; provided that (i) HP is
notified promptly in writing of such claim and is supplied with information and
assistance as reasonably necessary, and (ii) HP is given sole control to handle
the defense or settlement of any such claim, suit or proceeding. HP agrees to
pay all damages and costs awarded therein against Agilent, any Eligible Buyer,
or their customers.
(c) Enjoined Products. In case any HP Product or any part thereof in such
suit is held to constitute an infringement for which HP is liable and its use is
enjoined, HP shall, at its own expense and at its option, either (i) procure for
Agilent, the Eligible Buyers and their customers the right to continue to use
the HP Product, or (ii) if applicable, replace the HP Product with a
noninfringing HP Product of equivalent function and performance, or modify it so
it becomes noninfringing without detracting from function or performance;
provided, however, that if any of the foregoing alternatives are not reasonably
possible, then (iii) accept return of the HP Product and refund to Agilent or
the Eligible Buyer, as applicable, the price paid for the infringing HP Product
less a reasonable sum for past use.
(d) Exceptions. Notwithstanding the foregoing, HP shall have no
responsibility for claims arising from (i) modifications of the HP Product made
by Agilent or any Eligible Buyer if such claim would not have arisen but for
such modifications, or (ii) combination or use of the HP Product with products
not supplied by HP if such claim would not have arisen but for such combination
or use, or (iii) HP's compliance with Agilent's designs or specifications, or
(iv) HP Product use prohibited by specifications or related application notes.
SECTION 1.11. Reimbursement For Certain Losses and Liabilities Not Covered
By HP's Insurance Policies. Except as set forth in Section 1.2(iii) and Section
1.3(iii), notwithstanding anything to the contrary in this Agreement or the
Assignment Agreement, if:
(a) the Agilent Group suffers one or more losses of real property,
personal property or business interruption resulting therefrom arising from an
earthquake occurring between the Separation Date and Distribution Date; or
(b) the Agilent Group suffers one or more first-party property losses
between the Separation Date and the Distribution Date of a type that is covered
by HP's Insurance Policies or that is covered by standard form insurance
policies in use at the time; or
-9-
(c) events, acts or omissions occur between the Separation Date and the
Distribution Date that give rise to one or more Third Party Claims that result
in an Agilent Liability (including the costs of defending against such claims)
of a type that is covered by HP's Insurance Policies or that is covered by
standard form insurance policies in use at the time, but only to the extent that
suits or similar proceedings are filed or written demands are made in connection
with such Third Party Claims within four years following the Distribution Date
that seek or demand monetary damages, services or non-monetary relief; or
(d) Releases first occur between the Separation Date and the Distribution
Date that give rise to one or more Environmental Actions that result in an
Agilent Liability (including the costs of defending against such Environmental
Actions), but only to the extent that suits or similar proceedings are filed,
orders or decrees are issued, written notice that such Environmental Action will
be commenced is received by Agilent or HP, or written demands are made in
connection with such Environmental Actions within four years following the
Distribution Date that seek or demand monetary damages, services or non-monetary
relief; and
(e) the aggregate amount of Agilent's loss and Liabilities described in
clauses (a), (b), (c) and (d), exclusive of amounts covered by HP's Insurance
Policies or other insurance policies that provide coverage to Agilent, exceeds
$20 million,
then HP shall reimburse Agilent to the extent that the aggregate amount of
Agilent's loss and Liabilities described in clauses (a), (b), (c) and (d),
exclusive of amounts covered by HP's Insurance Policies or other insurance
policies that provide coverage to Agilent, exceeds $20 million, exceeds $20
million.
(f) Interpretation. In the case of any Agilent Liability a portion of
which arises out of events, acts or omissions occurring prior to the Separation
Date and a portion of which arises out of events, acts or omissions occurring
on or after the Separation Date but prior to the Distribution Date, only that
portion that arises out of events, acts or omissions occurring on or after the
Separation Date and prior to the Distribution Date shall be subject to this
Section 1.11. In the case of any Agilent Liability a portion of which arises out
of events, acts or omissions occurring prior to the Distribution Date and a
portion of which arises out of events, acts or omissions occurring on or after
the Distribution Date, only that portion that arises out of events, acts or
omissions occurring prior to the Distribution Date shall be subject to this
Section 1.11. For purposes of the foregoing, an Agilent Liability shall be
deemed to have arisen out of events, acts or omission occurring on or after the
Separation Date and before the Distribution Date if all the elements necessary
for the assertion of a claim with respect to such Agilent Liability shall have
occurred on or prior to Distribution Date, such that the claim, were it asserted
in an Action on or after the Separation Date but prior to the Distribution Date,
would not be dismissed by a court on ripeness or similar grounds. For purposes
of clarification of the foregoing, the parties agree that no Agilent Liability
relating to, arising out of or resulting from any obligation of any Person to
perform the executory portion of any contract or agreement existing as of the
Distribution Date, or to satisfy any obligation accrued under any Plan (as
defined in the Employee Matters Agreement) as of the Separation Date, shall be
subject to this Section 1.11. For purposes of determining whether a claim
relating to the Year 2000 problem is subject to this Section 1.11, claims
relating to products shipped on or after the Separation Date but prior to the
Distribution Date shall be deemed to have arisen during such period. This
Section 1.11(f) shall not apply to any Agilent Liability covered by Section
1.11(d).
ARTICLE II.
INSURANCE MATTERS
SECTION 2.1. Agilent Insurance Coverage During the Transition Period.
(a) Maintain Comparable Insurance. Throughout the period beginning on the
Separation Date and ending on the Distribution Date (i.e., the "Insurance
Transition Period"), HP shall, subject to insurance market conditions and other
factors beyond its control, maintain policies of insurance, including for the
benefit of Agilent or any of its Subsidiaries, directors, officers, employees or
other covered parties (collectively, the "Agilent Covered Parties") which are
comparable to those maintained generally by HP; provided, however, that if HP
determines that (i) the amount or scope of such coverage will be reduced to a
level materially inferior to the level of coverage in existence immediately
prior to the Insurance Transition Period or (ii) the retention or deductible
level applicable to such coverage, if any, will be increased to a level
materially greater than the levels in existence immediately prior to the
Insurance Transition Period, HP shall give Agilent notice of such determination
as promptly as practicable. Upon notice of such determination, Agilent shall be
entitled to no less than 60 days to evaluate its options regarding continuance
of coverage hereunder and may cancel its interest in all or any portion of such
coverage as of any day within such 60 day period. Except as provided below,
during the Insurance Transition Period, such
-10-
policies of insurance shall cover Agilent Covered Parties for liabilities and
losses insured prior to the Distribution Date.
(b) Reimbursement for Premiums. Agilent shall promptly pay or reimburse
HP, as the case may be, for premium expenses, and Agilent Covered Parties shall
promptly pay or reimburse HP for any costs and expenses which HP may incur in
connection with the insurance coverages maintained pursuant to this Section 2.1,
including but not limited to any subsequent premium adjustments. All payments
and reimbursements by Agilent and Agilent Covered Parties to HP shall be made
within fifteen (15) days after Agilent's receipt of an invoice from HP.
SECTION 2.2. Cooperation and Agreement Not to Release Carriers. Each of
HP and Agilent will share such information as is reasonably necessary in order
to permit the other to manage and conduct its insurance matters in an orderly
fashion. Each of HP and Agilent, at the request of the other, shall cooperate
with and use commercially reasonable efforts to assist the other in recoveries
for claims made under any insurance policy for the benefit of any insured party,
and neither HP nor Agilent, nor any of their Subsidiaries, shall take any action
which would intentionally jeopardize or otherwise interfere with either party's
ability to collect any proceeds payable pursuant to any insurance policy. Except
as otherwise contemplated by the Separation Agreement, this Agreement or any
Ancillary Agreement, after the Separation Date, neither HP nor Agilent shall
(and shall ensure that no member of their respective Groups shall), without the
consent of the other, provide any insurance carrier with a release, or amend,
modify or waive any rights under any such policy or agreement, if such release,
amendment, modification or waiver would adversely affect any rights or potential
rights of any member of the other Group thereunder. However, nothing in this
Section 2.2 shall (A) preclude any member of any Group from presenting any claim
or from exhausting any policy limit, (B) require any member of any Group to pay
any premium or other amount or to incur any Liability, (C) require any member of
any Group to renew, extend or continue any policy in force or (D) except as
otherwise provided in Section 2.12, apply to HP in connection with rights to
coverage for Environmental Actions under Insurance Policies in effect prior to
the Separation Date.
SECTION 2.3. Agilent Insurance Coverage After the Insurance Transition
Period. From and after expiration of the Insurance Transition Period, Agilent,
and Agilent alone, shall be responsible for obtaining and maintaining insurance
programs for its risk of loss and such insurance arrangements shall be separate
and apart from HP's insurance programs. Notwithstanding the foregoing, HP, upon
the request of Agilent, shall use all commercially reasonable efforts to assist
Agilent in the transition to its own separate insurance programs from and after
the Insurance Transition Period, and shall provide Agilent with any information
that is in the possession of HP and is reasonably available and necessary to
either obtain insurance coverages for Agilent or to assist Agilent in preventing
unintended self-insurance, in whatever form.
SECTION 2.4. Responsibilities for Self-insured Obligations. Agilent will
reimburse HP for all amounts necessary to exhaust or otherwise satisfy all
applicable self-insured retentions, amounts for fronted policies, deductibles
and retrospective premium adjustments and similar amounts not covered by
Insurance Policies in connection with Agilent Liabilities and Insured Agilent
Liabilities.
SECTION 2.5. Procedures With Respect to Insured Agilent Liabilities.
-11-
(a) Reimbursement. Agilent will reimburse HP for all amounts incurred to
pursue insurance recoveries from Insurance Policies for Insured Agilent
Liabilities.
(b) Management of Claims. The defense of claims, suits or actions giving
rise to potential or actual Insured Agilent Liabilities will be managed (in
conjunction with HP's insurers, as appropriate) by the party that would have had
responsibility for managing such claims, suits or actions had such Insured
Agilent Liabilities been Agilent Liabilities.
Section 2.6. Insufficient Limits Of Liability For Hp Liabilities And
Agilent Liabilities
(a) Insufficient Limits of Liability. In the event that there are
insufficient limits of liability available under HP's Insurance Policies in
effect prior to the Distribution Date to cover the Liabilities of HP and/or
Agilent that would otherwise be covered by such Insurance Policies, then to the
extent that other insurance is not available to HP and/or Agilent for such
Liabilities an adjustment will be made in accordance with the following
procedures:
(i) Each party will be allocated an amount equal to their Shared
Percentage of the lesser of (A) the available limits of liability available
under HP's Insurance Policies in effect prior to the Distribution Date net of
uncollectible amounts attributable to insurer insolvencies, and (B) the proceeds
received from HP's Insurance Policies if the Liabilities are the subject of
disputed coverage claims and, following consultation with each other, HP and/or
Agilent agree to accept less than full policy limits from HP's and Agilent's
insurers (the "Coverage Amount").
(ii) A party who receives more than its share of the Coverage Amount
(the "Overallocated Party") agrees to reimburse the other party (the
"Underallocated Party") to the extent that the Liabilities of the Underallocated
Party that would have been covered under such Insurance Policies (subject to the
limitations of Section 2.12) is less than the Underallocated Party's share of
the Coverage Amount.
(iii) This Section 2.6(a) shall terminate three years following the
Distribution Date; provided, however, that either party may extend the three
year period applicable to these provisions by up to five additional two-year
periods, or as otherwise shall be agreed to in order to accomplish the
allocation objective set forth above and in order to have access to any
available coverage under the Insurance Policies.
(b) Illustrations. The following illustrations are intended to provide
guidance concerning how this Section is intended to apply to claims implicating
insurance policies issued prior to the Distribution Date. The effects of Section
1.11 are not considered in these illustrations.
(i) Illustration No. 1. Ten separate claims are brought arising from
ten separate "occurrences," each resulting in an Agilent Liability of $10
million. The self-insured retention is $10 million "per occurrence." Result:
This Section is inapplicable. Agilent may pursue self-insurance, to the extent
it is permitted to do so by law, subject to reimbursement of HP under Section
2.4 of this Agreement.
-12-
(ii) Illustration No. 2. Ten separate claims are brought arising from
ten separate "occurrences," each resulting in an Agilent Liability of $40
million, for a total of $400 million. Fifteen separate claims are brought
arising from fifteen separate "occurrences," each resulting in an HP Liability
of $40 million, for a total of $600 million. The limits of liability in the
Insurance Policies applicable to the claims is $200 million. The self-insured
retention is $10 million "per occurrence." Therefore, Agilent and HP each incur
the first $10 million "per occurrence," leaving a remaining liability (after the
payment of self-insured retentions) of $30 million "per occurrence," or $300
million in the aggregate for Agilent and $450 million in the aggregate for HP.
The Agilent Liabilities are incurred prior to the HP Liabilities, and paid for
by HP's Insurance Policies in effect prior to the Distribution Date, which are
exhausted by these payments. This leaves Agilent with an additional liability of
$100 million (plus its self-insured retentions of $100 million). Result: The
$200 million limit is split 82/18: $164 million is allocated to HP and $36
million is allocated to Agilent. Agilent should pay HP $164 million, HP's share
of the Coverage Amount.
(iii) Illustration No. 3. Same as Illustration No. 2, except that HP's
claims ($200 million) were paid for by HP's Insurance Policies in effect prior
to the Distribution Date, which are exhausted by these payments. This leaves
Agilent with a liability of $300 million (plus its self-insured retentions of
$100 million). HP should pay Agilent $36 million.
Section 2.7. Cooperation . HP and Agilent will cooperate with each other
in all respects, and they shall execute any additional documents which are
reasonably necessary, to effectuate the provisions of this Article II.
Section 2.8. No Assignment Or Waiver . This Agreement shall not be
considered as an attempted assignment of any policy of insurance or as a
contract of insurance and shall not be construed to waive any right or remedy of
any member of the HP Group in respect of any Insurance Policy or any other
contract or policy of insurance.
Section 2.9. No Liability . Agilent does hereby, for itself and as agent
for each other member of the Agilent Group, agree that no member of the HP Group
or any HP Indemnitee shall have any Liability whatsoever as a result of the
insurance policies and practices of HP and its Subsidiaries as in effect at any
time prior to the Distribution Date, including as a result of the level or scope
of any such insurance, the creditworthiness of any insurance carrier, the terms
and conditions of any policy, the adequacy or timeliness of any notice to any
insurance carrier with respect to any claim or potential claim or otherwise.
Section 2.10. No Restrictions . Nothing in this Agreement shall be deemed
to restrict any member of the Agilent Group from acquiring at its own expense
any other insurance policy in respect of any Liabilities or covering any period.
Section 2.11. Further Agreements. The Parties acknowledge that they
intend to allocate financial obligations without violating any laws regarding
insurance, self-insurance or other financial responsibility. If it is determined
that any action undertake pursuant to the Separation Agreement, this Agreement
or any Ancillary Agreement is violative of any insurance, self-insurance or
related financial responsibility law or regulation, the parties agree to work
together to do whatever is
-13-
necessary to comply with such law or regulation while trying to accomplish, as
much as possible, the allocation of financial obligations as intended in the
Separation Agreement, this Agreement and any Ancillary Agreement.
Section 2.12. Agreement Regarding Insurance Covering Environmental Actions
Notwithstanding anything to the contrary in this Agreement (including Article II
hereof), the Separation Agreement or any Ancillary Agreement:
(a) Except as set forth in Section 2.12(b), Agilent shall not make any
claim against, or be entitled to any proceeds from, any primary, umbrella or
excess general liability policy in effect prior to the Separation Date for any
Environmental Actions;
(b) In the event that a claim arises out of an Environmental Action in
connection with an Agilent Schedule 1 Facility and the claim could be covered
under any primary, umbrella or excess general liability policy in effect prior
to the Separation Date, and provided that at the time the claim is made HP has
not fully and finally released or agreed to release (at HP's sole discretion)
the insurance carrier with respect to coverage applicable to that claim under
such policy, Agilent shall be permitted to submit the claim to HP for submission
to the relevant insurance carrier, HP shall control all negotiations on the
claim and the policy with the insurance carrier and Agilent shall be entitled to
an equitable apportionment of any proceeds received by HP from the policy.
Section 2.13. Matters Governed By Employee Matters Agreement. This Article
II shall not apply to any insurance policies that are the subject of the
Employee Matters Agreement.
ARTICLE III.
MISCELLANEOUS
Section 3.1. Entire Agreement. This Agreement, the Master Separation
Agreement, the other Ancillary Agreements and the Exhibits and Schedules
attached hereto and thereto, constitutes the entire agreement between the
parties with respect to the subject matter hereof and shall supersede all prior
written and oral and all contemporaneous oral agreements and understandings with
respect to the subject matter hereof.
Section 3.2. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware as to all matters
regardless of the laws that might otherwise govern under principles of conflicts
of laws applicable thereto.
Section 3.3. Notices. Any notice, demand, offer, request or other
communication required or permitted to be given by either party pursuant to the
terms of this Agreement shall be in writing and shall be deemed effectively
given the earlier of (i) when received, (ii) when delivered personally, (iii)
one (1) business day after being delivered by facsimile (with receipt of
appropriate confirmation), (iv) one (1) business day after being deposited with
an overnight courier service or (v) four (4) days after being deposited in the
U.S. mail, First Class with postage prepaid, and
-14-
addressed to the attention of the party's General Counsel at the address of its
principal executive office or such other address as a party may request by
notifying the other in writing.
Section 3.4. Parties In Interest. This Agreement, including the Schedules
and Exhibits hereto, and the other documents referred to herein, shall be
binding upon HP, HP's Subsidiaries, Agilent and Agilent's Subsidiaries and inure
solely to the benefit of the Agilent Indemnitees and the HP Indemnitees and
their respective permitted assigns, and nothing in this Agreement, express or
implied, is intended to confer upon any other Person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
Section 3.5. Other Agreements Evidencing Indemnification Obligations. HP
hereby agrees to execute, for the benefit of any Agilent Indemnitee, such
documents as may be reasonably requested by such Agilent Indemnitee, evidencing
HP's agreement that the indemnification obligations of HP set forth in this
Agreement inure to the benefit of and are enforceable by such Agilent
Indemnitee. Agilent hereby agrees to execute, for the benefit of any HP
Indemnitee, such documents as may be reasonably requested by such HP Indemnitee,
evidencing Agilent's agreement that the indemnification obligations of Agilent
set forth in this Agreement inure to the benefit of and are enforceable by such
HP Indemnitee.
Section 3.6. Counterparts. This Agreement, including the Schedules and
Exhibits hereto, and the other documents referred to herein, may be executed in
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
Section 3.7. Assignment. The rights and obligations in this Agreement may
not be assigned or delegated by any party hereto, in whole or in part, without
the express prior written consent of the other party hereto.
Section 3.8. Severability. If any term or other provision of this
Agreement or the Schedules or Exhibits attached hereto is determined by a
nonappealable decision by a court, administrative agency or arbitrator to be
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the fullest extent
possible.
Section 3.9. Failure Or Indulgence Not Waiver. No failure or delay on the
part of either party hereto in the exercise of any right hereunder shall impair
such right or be construed to be a waiver of, or acquiescence in, any breach of
any representation, warranty or agreement herein, nor shall any single or
partial exercise of any such right preclude other or further exercise thereof or
of any other right.
-15-
Section 3.10. Amendment. No change or amendment will be made to this
Agreement except by an instrument in writing signed on behalf of each of the
parties to this Agreement.
Section 3.11. Authority. Each of the parties hereto represents to the
other that (a) it has the corporate or other requisite power and authority to
execute, deliver and perform this Agreement, (b) the execution, delivery and
performance of this Agreement by it have been duly authorized by all necessary
corporate or other action, (c) it has duly and validly executed and delivered
this Agreement, and (d) this Agreement is a legal, valid and binding obligation,
enforceable against it in accordance with its terms subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equity principles.
Section 3.12. Interpretation. The headings contained in this Agreement, in
any Exhibit or Schedule hereto and in the table or contents to this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized term used in any Schedule or
Exhibit but not otherwise defined therein, shall have the meaning assigned to
such term in this Agreement. When a reference is made in this Agreement to an
Article or a Section, Exhibit or Schedule, such reference shall be to an Article
or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated.
ARTICLE IV.
DEFINITIONS
Section 4.1. Action. "Action" means any demand, action, suit, countersuit,
arbitration, inquiry, proceeding or investigation by or before any federal,
state, local, foreign or international governmental authority or any arbitration
or mediation tribunal.
Section 4.2. Affiliated Company. "Affiliated Company" means, with respect
to HP, any entity in which HP holds a 50% or less ownership interest that is
listed on Schedule 7.1(a) to the Separation Agreement and, with respect to
Agilent, any entity in which Agilent holds a 50% or less ownership interest and
that is listed on Schedule 7.1(b) to the Separation Agreement. Schedules 7.1(a)
and 7.1(b) may be amended from time to time after the date hereof upon mutual
written consent of the parties.
Section 4.3. Agilent Business. "Agilent Business" means (a) the business
and operations of the business entities of HP currently known under the
following names, as described in the IPO Registration Statement and as such
business and operations will continue following the Separation Date: (i) the
Test and Measurement Organization, (ii) the Semiconductor Products Group, (iii)
the Chemical Analysis Group, (iv) the Healthcare Solutions Group and (v) the
portion of HP Labs and infrastructure organizations related to these businesses
and (b) except as otherwise expressly provided herein, any terminated, divested
or discontinued businesses or operations that at the time of termination,
divestiture or discontinuation primarily related to the Agilent Business as then
conducted.
-16-
Section 4.4. Agilent Contingent Liability. "Agilent Contingent Liability"
means any Liability, other than Liabilities for Taxes (which are governed by the
Tax Sharing Agreement), of a member of the HP Group or the Agilent Group that
primarily relates to the Agilent Business, whenever arising, to any Person other
than a member of the HP Group or the Agilent Group, if and to the extent that
(i) such Liability arises out of the events, acts or omissions occurring as of
the Separation Date and (ii) the existence or scope of the obligation of a
member of the HP Group or the Agilent Group as of the Separation Date with
respect to such Liability was not acknowledged, fixed or determined in any
material respect, due to a dispute or other uncertainty as of the Separation
Date or as a result of the failure of such Liability to have been discovered or
asserted as of the Separation Date (it being understood that the existence of a
litigation or other reserve with respect to any Liability shall not be
sufficient for such Liability to be considered acknowledged, fixed or
determined). In the case of any Liability a portion of which arises out of
events, acts or omissions occurring prior to the Separation Date and a portion
of which arises out of events, acts or omissions occurring on or after the
Separation Date, only that portion that arises out of events, acts or omissions
occurring prior to the Separation Date shall be considered an Agilent Contingent
Liability. For purposes of the foregoing, a Liability shall be deemed to have
arisen out of events, acts or omissions occurring prior to the Separation Date
if all the elements necessary for the assertion of a claim with respect to such
Liability shall have occurred on or prior to the Separation Date, such that the
claim, were it asserted in an Action on or prior to the Separation Date, would
not be dismissed by a court on ripeness or similar grounds. For purposes of
clarification of the foregoing, the parties agree that no Liability relating to,
arising out of or resulting from any obligation of any Person to perform the
executory portion of any contract or agreement existing as of the Separation
Date, or to satisfy any obligation accrued under any Plan (as defined in the
Employee Matters Agreement) as of the Separation Date, shall be deemed to be an
Agilent Contingent Liability. For purposes of determining whether a claim
relating to the Year 2000 problem is an Agilent Contingent Liability, claims
relating to products shipped prior to the Separation Date shall be deemed to
have arisen prior to the Separation Date.
Section 4.5. Agilent Contracts. "Agilent Contracts" has the meaning set
forth in Section 4.8 of the Assignment Agreement.
Section 4.6. Agilent Covered Parties. "Agilent Covered Parties" shall have
the meaning set forth in Section 2.1(a) of this Agreement.
Section 4.7. Agilent Facilities. "Agilent Facilities" means the total of
the Agilent Schedule 1 Facilities and the Agilent Schedule 2 Facilities.
Section 4.8. Agilent Group. "Agilent Group" means Agilent, each Subsidiary
and Affiliated Company of Agilent immediately after the Separation Date or that
is contemplated to be a Subsidiary or Affiliated Company of Agilent pursuant to
the Non-US Plan and each Person that becomes a Subsidiary or Affiliate Company
of Agilent after the Separation Date.
Section 4.9. Agilent Indemnitees. "Agilent Indemnitees" means Agilent,
each member of the Agilent Group and each of their respective directors,
officers and employees.
-17-
Section 4.10. Agilent Liabilities. "Agilent Liabilities" has the meaning
set forth in Section 1.3 of the Assignment Agreement.
Section 4.11. Agilent Schedule 1 Facilities. "Agilent Schedule 1
Facilities" means the real property, groundwater, surface water and improvements
on those properties listed on the Owned and Leased Properties Spreadsheet (as
defined in the Real Estate Matters Agreement) excluding the Agilent Schedule 2
Facilities. In the event that, prior to the Separation Date, any property listed
on the Owned and Leased Properties Spreadsheet dated July 20, 1999 is
transferred to a third party (excluding any member of the HP Group or the
Agilent Group), HP and Agilent shall mutually agree, for the purposes of the
indemnification obligations set forth in Section 1.4 of this Agreement, whether
such property shall be considered an Agilent Schedule 1 Facility or an HP
Facility.
Section 4.12. Agilent Schedule 2 Facilities. "Agilent Schedule 2
Facilities" means the real property, groundwater, surface water and improvements
thereon which shall be owned or occupied by a member of the Agilent Group on and
after the Separation Date and which are identified on a disclosure letter
entitled "The Agilent Schedule 2 Facilities," which disclosure letter shall be
delivered to Agilent by HP on the Separation Date.
Section 4.13. Assets. "Assets" has the meaning set forth in Section 4.14 of
the Assignment Agreement.
Section 4.14. Assignment Agreement. "Assignment Agreement" means the
General Assignment and Assumption Agreement attached as Exhibit C to the
Separation Agreement.
Section 4.15. Change of Control. "Change of Control" with respect to any
Person means the occurrence of any of the following events:
(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of such Person representing 50% or more of the total
voting power represented by such Person's then outstanding voting securities; or
(ii) A change in the composition of the Board of Directors of
such Person occurring within a two-year period as a result of which fewer than a
majority of the directors are "Incumbent Directors." "Incumbent Directors" shall
mean directors who either (A) are directors of such Person as of the date
hereof, or (B) are elected, or nominated for election, to the Board of Directors
with the affirmative votes (either by a specific vote or by approval of the
proxy statement of such Person in which such person is named as a nominee for
election as a director without objection to such nomination) of at least three-
quarters of the Incumbent Directors at the time of such election or nomination
(but shall not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to the election
of directors of such Person); or
-18-
(iii) The consummation of (A) a merger or consolidation of such
Person with any other corporation, other than a merger or consolidation which
would result in the voting securities of such Person outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or the entity
that controls such surviving entity) at least fifty percent (50%) of the total
voting power represented by the voting securities of such Person, such surviving
entity or the entity that controls such Person or such surviving entity
outstanding immediately after such merger or consolidation, or (B) the sale or
disposition by such Person of all or substantially all such Person's assets; or
(iv) The shareholders of such Person approve a plan of complete
liquidation of such Person.
Section 4.16. Claims Committee. "Claims Committee" means a committee
composed of (i) either the General Counsel or Associate General Counsel of HP
and (i) either the General Counsel or Associate General Counsel of Agilent.
Section 4.17. Commingled Claims. "Commingled Claims" has the meaning set
forth in Section 1.5(b) of this Agreement.
Section 4.18. Coverage Amount. "Coverage Amount" has the meaning set forth
in Section 2.6(a) of this Agreement.
Section 4.19. Employee Matters Agreement. "Employee Matters Agreement"
means the Employee Matters Agreement attached as Exhibit E to the Separation
Agreement.
Section 4.20. Environmental Actions. "Environmental Actions" means any
notice, claim, act, cause of action, order, decree or investigation by any third
party (including, without limitation, any Governmental Authority) alleging
potential liability (including potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, damage to
flora or fauna caused by Environmental Conditions, real property damages,
personal injuries or penalties) arising out of, based on or resulting from the
Release of any Hazardous Materials. "Environmental Actions" shall not include
any personal injury claim made by any employee of the Agilent Group or the HP
Group arising during the course or scope of the employment of such employee for
the HP Group or for the Agilent Group.
Section 4.21. Environmental Conditions. "Environmental Conditions" means
the presence in the environment, including the soil, groundwater, surface water
or ambient air, of any Hazardous Material at a level which requires
investigation or remediation (including, without limitation, investigation,
study, health or risk assessment, monitoring, removal, treatment or transport)
under any Environmental Laws.
Section 4.22. Environmental Laws. "Environmental Laws" means all laws and
regulations of any Governmental Authority with jurisdiction that relate to the
protection of the environment (including ambient air, surface water, ground
water, land surface or subsurface strata) including laws and regulations
relating to the Release of Hazardous Materials, or otherwise relating
-19-
to the treatment, storage, disposal, transport or handling of Hazardous
Materials, or to the exposure of any individual to a Release of Hazardous
Materials.
Section 4.23. Excess Portion. "Excess Portion" means that portion, if any,
of the aggregate amount actually paid by Agilent (together with any members of
the Agilent Group), in respect of any single Agilent Contingent Liability or any
Related Agilent Contingent Liabilities that is in excess of $50 million.
Section 4.24. Hazardous Materials. "Hazardous Materials" means chemicals,
pollutants, contaminants, wastes, toxic substances, radioactive and biological
materials, hazardous substances, petroleum and petroleum products or any
fraction thereof.
Section 4.25. HP Business. "HP Business" means any business of HP other
than the Agilent Business.
Section 4.26. HP Facilities. "HP Facilities" means all of the real property
and improvements thereon owned or occupied at any time on or before the
Separation Date by HP, whether for the HP Business or the Agilent Business,
excluding the Agilent Facilities.
Section 4.27. HP Group. "HP Group" means HP, each Subsidiary and Affiliated
Company of HP (other than any member of the Agilent Group) immediately after the
Separation Date, after giving effect to the Non-US Plan and each Person that
becomes a Subsidiary or Affiliate Company of HP after the Separation Date.
Section 4.28. HP Indemnitees. "HP Indemnitees" means HP, each member of the
HP Group and each of their respective directors, officers and employees.
Section 4.29. Indemnitee. "Indemnitee" has the meaning set forth in Section
1.5(a) hereof.
Section 4.30. Insurance Policies. "Insurance Policies" means insurance
policies pursuant to which a Person makes a true risk transfer to an insurer.
Section 4.31. Insurance Proceeds. "Insurance Proceeds" means those monies:
(a) received by an insured from an insurance carrier; or
(b) paid by an insurance carrier on behalf of the insured;
from Insurance Policies.
Section 4.32. Insurance Transition Period. "Insurance Transition Period"
has the meaning set forth in Section 2.1 of this Agreement.
Section 4.33. Insured Agilent Liability. "Insured Agilent Liability" means
any Agilent Liability to the extent that (i) it is covered under the terms of
HP's Insurance Policies in effect prior
-20-
to the Distribution Date and (ii) Agilent is not a named insured under, or
otherwise entitled to the benefits of, such Insurance Policies.
Section 4.34. IPO Liabilities. "IPO Liabilities" means any Liabilities of
the Agilent Group or the HP Group relating to, arising out of or resulting from
any untrue statement or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, with respect to all
information contained in any IPO Registration Statement or any preliminary,
final or supplemental prospectus forming a part of a IPO Registration Statement.
Section 4.35. IPO Registration Statement. "IPO Registration Statement"
means the registration statement on Form S-1 pursuant to the Securities Act to
be filed with the SEC registering the shares of common stock of Agilent to be
issued in the IPO, together with all amendments thereto.
Section 4.36. Liabilities. "Liabilities" has the meaning set forth in the
Assignment Agreement.
Section 4.37. Non-US Plan. "Non-US Plan" means the plan of reorganization
described in Exhibit M of the Separation Agreement.
Section 4.38. Person. "Person" means an individual, a partnership, a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization and a governmental
entity or any department, agency or political subdivision thereof.
Section 4.39. Pre-Separation Third Party Site Liabilities. "Pre-Separation
Third Party Site Liabilities" means any and all Environmental Actions arising
out of Hazardous Materials found on, under or about any landfill any waste
storage, transfer or recycling site and resulting from or arising out of
Hazardous Materials stored, treated, recycled disposed or otherwise handled at
such site prior to the Separation Date (whether for the operation of the Agilent
Business or for the operation of any past or presently (as of the date hereof)
existing HP Business as operated on or before the Separation Date).
Section 4.40. Prime Rate. "Prime Rate" means the prime rate as published in
the Wall Street Journal on the date of determination.
Section 4.41. Related Agilent Contingent Liabilities. "Related Agilent
Contingent Liabilities" means any set or group of Agilent Contingent Liabilities
arising from any single Action (including any group of Actions that are
consolidated as a single Action and any Action or Actions certified as a class
action) or any Action that is brought or threatened to be brought as a class
action and that is settled.
Section 4.42. Release. "Release" means any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor environment, including, without
limitation, the movement of Hazardous Materials through ambient air, soil,
surface water, groundwater, wetlands, land or subsurface strata.
-21-
Section 4.43. Separation. "Separation" means the transfer and contribution
from HP to Agilent, and Agilent's receipt and assumption of, directly or
indirectly, substantially all of the Assets and Liabilities currently associated
with the Agilent Business and the stock, investments or similar interests
currently held by HP in subsidiaries and other entities that conduct such
business.
Section 4.44. Separation Agreement. "Separation Agreement" means the Master
Separation and Distribution Agreement dated as of August 12, 1999, of which this
is an Exhibit thereto.
Section 4.45. Separation Date. "Separation Date" means 12:01 a.m., Pacific
Time, November 1, 1999, or such date as may be fixed by the Board of Directors
of HP.
Section 4.46. Shared Agilent Percentage. "Shared Agilent Percentage" means
18%.
Section 4.47. Shared HP Percentage. "Shared HP Percentage" means 82%.
Section 4.48. Shared Percentage. "Shared Percentage" means the Shared
Agilent Percentage or the Shared HP Percentage, as the case may be.
Section 4.49. Subsidiary. "Subsidiary" means with respect to any specified
Person, any corporation, any limited liability company, any partnership or other
legal entity of which such Person or its Subsidiaries owns, directly or
indirectly, more than 50% of the stock or other equity interest entitled to vote
on the election of the members of the board of directors or similar governing
body. Unless context otherwise requires, reference to HP and its Subsidiaries
shall not include the subsidiaries of HP that will be transferred to Agilent
after giving effect to the Separation, including the actions taken pursuant to
the Non-US Plan.
Section 4.50. Tax Sharing Agreement. "Tax Sharing Agreement" means the Tax
Sharing Agreement, attached as Exhibit F to the Separation Agreement.
Section 4.51. Taxes. "Taxes" has the meaning set forth in the Tax Sharing
Agreement.
Section 4.52. Third Party Claim. "Third Party Claim" has the meaning set
forth in Section 1.5(a) of this Agreement.
[SIGNATURES ON FOLLOWING PAGE]
-22-
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized on the day and
year first above written.
HEWLETT PACKARD COMPANY
By:________________________________
Name:
Title: President and Chief Executive
Officer
AGILENT TECHNOLOGIES, INC.
By:________________________________
Name:
Title: President and Chief Executive
Officer
-23-