SEPARATION AND DISTRIBUTION AGREEMENT by and between IDT CORPORATION And CTM MEDIA HOLDINGS, INC. Dated as of [____ __,] 2009
Exhibit
2.1
by and
between
IDT
CORPORATION
And
Dated as
of [____ __,] 2009
This
SEPARATION AND DISTRIBUTION AGREEMENT (this “Agreement”), dated as
of [___ __], 2009, by and between IDT Corporation, a Delaware corporation
(“IDT”), and
CTM Media Holdings, Inc., a Delaware corporation (“CTM”; and together
with IDT, the “Parties”, and each
individually, a “Party”).
RECITALS
WHEREAS,
on or prior to the Distribution Date and effective as of the Effective Time, all
of the outstanding stock of (i) CTM Media Group, Inc., a New York corporation
(“CTM Media”),
(ii) Beltway Acquisition Corporation d/b/a WMET, a Delaware corporation (“Beltway”), (iii) IDT
Local Media, Inc., a Delaware corporation (“Local Media”) and
(iv) IDT Internet Mobile Group, Inc., a Delaware corporation, which holds all of
IDT’s interests in IDW (“IIMG”; and together
with CTM, Beltway and Local Media, the “Transferred
Subsidiaries”) will be contributed by IDT to CTM.
WHEREAS,
the Board of Directors of IDT has determined that it is in the best interests of
IDT and its stockholders to (a) effect a split (the “Stock Split”) of the
then outstanding shares of CTM Common Stock into the number and class of shares
necessary to effect the Distribution, and (b) thereafter make a distribution
(the “Distribution”) to the
holders of IDT Common Stock of all of the outstanding shares of CTM Common Stock
at the rate of (i) one (1) share of CTM Class A common stock for every three (3)
shares of IDT common stock, (ii) one (1) share of CTM Class B common stock for
every three (3) shares of IDT Class B common stock, and (iii) one (1) share of
CTM Class C common stock for every three (3) shares of IDT Class A common stock,
each outstanding as of the Record Date; and
WHEREAS,
the Parties have determined that it is necessary and desirable to set forth the
principal corporate transactions required to effect the Distribution and to set
forth other agreements that will govern certain other matters following the
Distribution.
NOW,
THEREFORE, in consideration of the foregoing premises and the mutual agreements
and covenants contained in this Agreement and other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:
ARTICLE
I
DEFINITIONS
Section
1.01. Definitions. As used
herein, the following terms have the following meaning:
“Action” means any
claim, suit, arbitration, inquiry, proceeding, or investigation by or before any
court, governmental or other regulatory or administrative agency or commission
or any other tribunal.
“Affiliate” means,
when used with respect to a specified Person, a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with such specified Person. For the purposes of this
definition, “control”, when used with respect to any specified Person, shall
mean the possession, directly or indirectly, 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 interests, by contract or
otherwise.
1
“Amended Financial
Report” is defined in Section
4.05(b).
“Ancillary Agreements”
means all of the written agreements, instruments, understandings, assignments
and other arrangements (other than this Agreement) entered into in connection
with the transactions contemplated hereby, including, but not limited to, the
Tax Separation Agreement and Master Services Agreement.
“Assets” means all
properties, rights, contracts, leases and claims, of every kind and description,
wherever located, whether tangible or intangible, and whether real, personal or
mixed.
“Audited Party” is
defined in Section
4.05(a)(ii).
“Benefit Plan” means, with
respect to an entity, each plan, program, arrangement, agreement or commitment
that is an employment, change in control/severance, consulting, non-competition
or deferred compensation agreement, or an executive compensation, incentive
bonus or other bonus, employee pension, profit-sharing, savings, retirement,
supplemental retirement, stock option, stock purchase, stock appreciation
rights, restricted stock, other equity-based compensation, severance pay, salary
continuation, life, health, hospitalization, sick leave, vacation pay,
disability or accident insurance plan, corporate-owned or key-man life insurance
or other benefit plan, program,
arrangement, agreement or commitment, including any “employee benefit plan” (as defined in
Section 3(3) of ERISA), sponsored or maintained by such entity (or to which
such entity contributes or is required to contribute).
“Beltway” is defined
in the recitals to this Agreement.
“Code” means the
Internal Revenue Code of 1986, as amended.
“Commission” means the
United States Securities and Exchange Commission.
“Confidential
Information” means all business or operational information concerning a
Party and/or its subsidiaries (the disclosing party) (including (i) earnings
reports and forecasts, (ii) macro-economic reports and forecasts, (iii) business
and strategic plans, (iv) general market evaluations and surveys, (v) litigation
presentations and risk assessments, (vi) budgets, (vii) financing and
credit-related information, (viii) specifications, ideas and concepts for
products and services, (ix) quality assurance policies, procedures and
specifications, (x) customer information, (xi) Software, (xii) training
materials and information, and (xiii) all other know-how, methodology,
procedures, techniques and trade secrets related to design, development and
operational processes) which, prior to or following the Effective Time, has been
disclosed by the disclosing party to the other Party or its subsidiaries (the
receiving party), in written, oral (including by recording), electronic, or
visual form to, or otherwise has come into the possession of, the other (except
to the extent that such information can be shown to have been (i) in the public
domain through no action of the receiving party, (ii) lawfully acquired from
other sources by the receiving party or (iii) independently developed
by the receiving party; provided, however, in the case
of clause (ii) that, to the receiving party’s knowledge, such sources did not
provide such information in breach of any confidentiality
obligations).
2
“CTM” is defined in
the Preamble to this Agreement.
“CTM Accounts” is
defined in Section
4.01(a).
“CTM Action” means any
current or future Action relating primarily to the CTM Business in which one or
more members of the IDT Group is a defendant or the party against whom a claim
or investigation is directed, but excluding any Joint Action.
“CTM Articles” means
the certificate of incorporation of CTM in the form filed as an exhibit to the
Form 10 at the time it becomes effective.
“CTM Business” means
the business comprised of the CTM Media, IDW, Local Media and WMET businesses
and other entities included in the CTM Group.
“CTM Business Balance
Sheet” means the consolidated balance sheet of CTM as of April 30, 2009,
as set forth in the Information Statement.
“CTM Bylaws” means the
bylaws of CTM in the form filed as an exhibit to the Form 10 at the time it
becomes effective.
“CTM Common Stock”
means the outstanding shares of (i) Class A common stock, $0.01 par value per
share, (ii) Class B common stock, $0.01 par value per share, and (iii) Class C
common stock, $0.01 par value per share, of CTM.
“CTM Group” means CTM
and its subsidiaries, affiliates, joint ventures and partnerships, excluding any
member of the IDT Group.
“CTM Group Employee”
means an active employee or an employee on vacation or on approved leave of
absence (including maternity, paternity, family, sick leave, salary
continuation, qualified military service under the Uniformed Services Employment
and Reemployment Rights Act of 1994, and leave under the Family Medical Leave
Act and other approved leaves) who, after the Effective Time, is employed by or
will be employed by any member of the CTM Group.
“CTM Indemnitee” is
defined in Section
6.02.
“CTM Liabilities”
means:
(i) the
Liabilities listed or described on Schedule 1.01(c) and
any and all Liabilities that are expressly contemplated by this Agreement, the
Tax Separation Agreement or any other Ancillary Agreement as Liabilities to be
retained, assumed or retired by any member of the CTM Group;
(ii) any
and all Liabilities of IDT, CTM, or any of their respective Affiliates,
primarily relating to, arising out of or resulting from the operation or conduct
of the CTM Business or any other business, or the ownership or use of the Assets
of the CTM Group, as conducted at any time on or after the Effective Time
(including any Liability relating to, arising out of or resulting from any act
or failure to act by any director, officer, employee, agent or representative of
IDT, CTM, or any of their respective Affiliates (whether or not such act or
failure to act is or was within such Person’s authority));
3
(iii) except
as otherwise expressly provided in this Agreement or any Ancillary Agreement,
Liabilities set forth on the CTM Business Balance Sheet;
(iv) any
and all Liabilities to the extent relating to, arising out of or resulting from
any termination, sale, discontinuance or divesture of any entity, business, real
property, or Asset formerly and primarily owned or managed by, or associated
with any member of the CTM Group or the CTM Business which occurs after the
Effective Time, or arising out of such entity, business, real property, or
Asset.
(v) any
and all Liabilities, including those Liabilities listed on Schedule 1.01(d),
relating to, arising out of or resulting from any Indebtedness (including debt
securities and asset-backed debt) of any member of the CTM Group (whether
incurred prior to, on or after the Effective Time);
(vi) any
and all Liabilities which IDT becomes liable for, or may incur or be compelled
to pay by reason of any actions, whether of omission or commission, that may be
committed by CTM or any of its directors, officers, agents, or affiliates in
connection with CTM’s use of the ▇▇▇▇ or any products and services developed,
created, published, distributed, sold, licensed, or advertised by CTM,
irrespective of whether any prior approvals shall have been given by IDT with
respect thereto; and
(vii) any
and all Liabilities relating to, resulting from, or arising out of any Action
that is primarily related to the operation of the CTM Business following the
Effective Time, including any CTM Action.
Notwithstanding
the foregoing, the CTM Liabilities shall in any event not include:
(A) any
Liabilities that (i) are expressly contemplated by this Agreement or any
Ancillary Agreement as Liabilities to be retained or assumed by any member of
the IDT Group or (ii) are set forth on Schedule 1.01(a)
(collectively, the “Retained
Liabilities”); and
(B) any
Liabilities related or attributable to, or arising in connection with, Taxes or
Tax returns relating to periods prior to the Effective Time.
FOR THE
AVOIDANCE OF DOUBT, NO LIABILITY SHALL BE A CTM LIABILITY SOLELY AS A RESULT OF
CTM OR ANY OTHER MEMBER OF THE CTM GROUP BEING NAMED AS PARTY TO, OR IN, ANY
ACTION.
“CTM Media” is defined
in the recitals to this Agreement.
4
“CTM Stock Plan” means
the CTM Media Holdings, Inc. 2009 Stock Option and Incentive Plan.
“CTM 401(k) Plan” is
defined in Section
7.02(a).
“Disputes” is defined
in Section
11.15(a).
“Distribution” is
defined in the recitals to this Agreement.
“Distribution Agent”
means American Stock Transfer & Trust Company, in its capacity as agent for
IDT in connection with the Distribution.
“Distribution Date”
means the date upon which the Distribution shall be effective, as determined by
the Board of Directors of IDT, or such committee of such Board of Directors as
shall be designated by the Board of Directors of IDT.
“Effective Time” means
11:59 p.m., New York City time, on the Distribution Date.
“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder.
“Exchange Act” means
the Securities Exchange Act of 1934, as amended.
“Force Majeure” means,
with respect to a Party, an event beyond the reasonable control of such Party
(or any Person acting on its behalf), which by its nature could not have been
foreseen by such Party (or such Person), or, if it could have been foreseen, was
unavoidable, and includes acts of G-d, storms, floods, earthquakes, hurricanes,
riots, pandemics, fires, sabotage, strikes, lockouts, civil commotion or civil
unrest, interference by civil or military authorities, acts of war (declared or
undeclared) or armed hostilities or other national or international calamity or
one or more acts of terrorism.
“Form 10” means the
registration statement on Form 10 filed by CTM with the Commission to effect the
registration of the CTM Class A common stock and CTM Class B common stock
pursuant to the Exchange Act, as such registration statement may be amended from
time to time.
“Governmental Entity”
means any nation or government, any state, municipality or other political
subdivision thereof and any entity, body, agency, commission, department, board,
bureau or court, whether domestic, foreign or multinational, exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any official thereof.
“Group” means the IDT
Group or the CTM Group, as the context so requires.
“IDT” is defined in
the Preamble to this Agreement.
“IDT Accounts” is
defined in Section
4.01(a).
“IDT Business” means
the business now or formerly conducted by IDT and its present and former
subsidiaries, joint ventures and partnerships, other than the CTM
Business.
5
“IDT Common Stock”
means the outstanding shares of (i) common stock, $0.01 par value per share,
(ii) Class A common stock, $0.01 par value per share, and (iii) Class B common
stock, $0.01 par value per share, of IDT.
“IDT Group” means IDT
and its subsidiaries, affiliates, joint ventures and partnerships, excluding any
member of the CTM Group.
“IDT Group Employee”
means an active employee or an employee on vacation or on approved leave of
absence (including maternity, paternity, family, sick leave, salary
continuation, qualified military service under the Uniformed Services Employment
and Reemployment Rights Act of 1994, and leave under the Family Medical Leave
Act and other approved leaves) who, after the Effective Time, is employed by or
will be employed by any member of the IDT Group.
“IDT Indemnitees” is
defined in Section
6.01.
“IDT Liabilities”
means, other than those Liabilities which are designated as CTM Liabilities
hereunder, (i) Liabilities of any member of the IDT Group under this Agreement,
the Tax Separation Agreement or any Ancillary Agreement or otherwise and (ii)
any Liabilities of any member of the CTM Group arising, or related to the
period, prior to the Effective Time.
FOR THE
AVOIDANCE OF DOUBT, NO LIABILITY SHALL BE AN IDT LIABILITY SOLELY AS A RESULT OF
IDT OR ANY OTHER MEMBER OF THE IDT GROUP BEING NAMED AS PARTY TO, OR IN, ANY
ACTION.
“IDT Welfare Plans”
means the health and welfare plans maintained by the IDT Group set forth on
Schedule
7.03.
“IDW” means Idea and
Design Works, LLC d/b/a IDW Publishing, a California limited liability company
and subsidiary of IIMG.
“Indebtedness” means
(i) any indebtedness for borrowed money or the deferred purchase price of
property as evidenced by a note, bonds or other instruments, (ii) obligations as
lessee under capital leases, (iii) obligations secured by any mortgage, pledge,
security interest, encumbrance, lien or charge of any kind existing on any asset
owned or held by any Person, whether or not such Person has assumed or becomes
liable for the obligations secured thereby, (iv) any obligation under any
interest rate swap agreement, (v) accounts payable, (vi) reimbursement
obligations with respect to surety and performance bonds or letters of credit,
and (vii) obligations under direct or indirect guarantees of (including
obligations, contingent or otherwise, to assure a creditor against loss in
respect of) indebtedness or obligations of the kinds referred to in clauses (i),
(ii), (iii), (iv), (v) and (vi) above.
“IIMG” is defined in
the recitals to this Agreement.
“Indemnifiable Loss”
means any and all damage, loss, liability, and expense (including, without
limitation, reasonable expenses of investigation and reasonable attorneys’ fees
and expenses) in connection with any and all Actions or threatened
Actions.
6
“Indemnified Party” is
defined in Section
6.06.
“Indemnifying Party”
is defined in Section
6.06.
“Indemnity Payment” is
defined in Section
6.05(a).
“Information” means
information, whether or not patentable or copyrightable, in written, oral,
electronic or other tangible or intangible forms, stored in any medium,
including studies, reports, records, books, contracts, instruments, surveys,
discoveries, ideas, concepts, know-how, techniques, designs, specifications,
drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data,
computer data, disks, diskettes, tapes, computer programs or other software,
marketing plans, customer names, communications by or to attorneys (including
attorney-client privileged communications), memos and other materials prepared
by attorneys or under their direction (including attorney work product),
communications and materials otherwise related to or made or prepared in
connection with or in preparation for any legal proceeding, and other technical,
financial, employee or business information or data.
“Information
Statement” means the information statement required by the Commission to
be sent to each holder of IDT Common Stock in connection with the Distribution,
and prepared in accordance with the Exchange Act.
“Insurance Proceeds”
means those monies (i) received by an insured from an unaffiliated third-party
insurer under any Third Party Policy, or (ii) paid by such third-party insurer
on behalf of an insured under any Third Party Policy, in either case net of any
applicable premium adjustment, retrospectively-rated premium, deductible,
self-insured retentions, or cost of reserve paid or held by or for the benefit
of such insured.
“Intercompany
Accounts” means any receivable, payable or loan between any member of the
IDT Group, on the one hand, and any member of the CTM Group, on the other hand,
that exists prior to the Effective Time and is reflected in the Records of the
relevant members of the IDT Group and the CTM Group, except for any such
receivable, payable or loan that arise pursuant to this Agreement or any
Ancillary Agreement.
“Joint Action” means
any current or future Action with respect to which it is unclear at the onset of
such Action whether Liabilities will arise primarily in connection with the CTM
Business or the IDT Business, including any of the Actions listed on Schedule
5.01(e).
“Law” means any United
States or non-United States federal, national, supranational, state, provincial,
local or similar statute, law, ordinance, regulation, rule, code, order,
requirement or rule of law (including common law).
“Liabilities” means
any and all claims, debts, liabilities and obligations, absolute or contingent,
matured or not matured, liquidated or unliquidated, accrued or unaccrued, known
or unknown, whenever arising, including all costs and expenses relating thereto,
and including, without limitation, those debts, liabilities and obligations
arising under this Agreement or any Ancillary Agreement, any law, rule,
regulation, action, order or consent decree of any Governmental Entity or any
award of any arbitrator of any kind, and those arising under any contract,
commitment or undertaking.
7
“License” is defined
in Section
4.04(d).
“▇▇▇▇” is defined in
Section
4.04(d).
“Master Services
Agreement” means the Master Services Agreement, dated as of the date
hereof, entered into by and between IDT and CTM, substantially in the form of
Exhibit A
hereto.
“Materials” is defined
in Section
4.04(d)(iv).
“Other Party’s
Auditors” is defined in Section
4.05(a)(ii).
“Other Party Marks” is
defined in Section
4.04(a).
“Party” is defined in
the Preamble to this Agreement.
“Person” means any
natural person, firm, individual, corporation, business trust, joint venture,
association, company, limited liability company, partnership or other
organization or entity, whether incorporated or unincorporated, or any
Governmental Entity.
“Policies” means
insurance policies and insurance agreements or arrangements of any kind (other
than life and benefits policies, agreements or arrangements), including primary,
excess and umbrella policies, comprehensive general liability policies, director
and officer liability, fiduciary liability, automobile, aircraft, property and
casualty, business interruption, workers’ compensation and employee dishonesty
insurance policies, bonds and self-insurance company arrangements, together with
the rights, benefits and privileges thereunder.
“Record Date” means
the date designated by or under the authority of IDT’s Board of Directors as the
record date for determining the stockholders of IDT entitled to receive the
Distribution.
“Record Holder” means
the Party or its agent in possession or control of the Shared Record for storage
or archival purposes. Each Party shall be deemed to be the Record Holder for any
Shared Record that is possessed or controlled by a member of such Party’s
respective Group.
“Records” means any
Information, agreements, documents, books, records or files.
“Retained Liabilities”
is defined in this Section 1.01 as set
forth in the definition of “CTM Liabilities.”
“Shared Record(s)”
means those Records set forth on Schedule 10.02, as
amended from time to time by written agreement of the Parties.
“Software” means all
computer programs (whether in source code, object code, or other form),
algorithms, databases, compilations and data, and technology supporting the
foregoing, and all documentation, including flowcharts and other logic and
design diagrams, technical, functional and other specifications, and user and
training materials related to any of the foregoing.
8
“Spinoff” means the
transaction in which CTM will be separated from IDT and become a
separately-traded public company.
“Stock Split” is
defined in the recitals to this Agreement.
“Tax(es)” means all
taxes, charges, duties, fees, levies, or other assessments, including income,
gross receipts, excise, property, sales, transfer, ad valorem, profits, windfall
profits, use, license, payroll, franchise, value-added, production, severance,
withholding, payroll, employment, social security, and other taxes, however
denominated, imposed by any Governmental Entity, whether disputed or not, and
includes any estimated taxes, interest, penalties or additions to tax that are
payable or may become payable in respect thereof.
“Tax Separation
Agreement” means the Tax Separation Agreement, dated as of the date
hereof, entered into by and between IDT and CTM, substantially in the form of
Exhibit B
hereto.
“Third Party Claim”
means a claim or demand made against an IDT Indemnitee or a CTM Indemnitee by
any Person who is not a Party or an Affiliate of a Party as to which such IDT
Indemnitee or CTM Indemnitee, as applicable, is or may be entitled to
indemnification pursuant to this Agreement.
“Third Party CTM
Policies” means all Policies, whether or not in force on the Effective
Time, issued by unaffiliated third-party insurers to IDT, CTM, or any of their
respective Affiliates that cover risks that relate to the CTM
Business.
“Third Party Proceeds”
is defined in Section
6.05(a).
“Trademarks” means all
United States and foreign trademarks, service marks, corporate names, trade
names, domain names, logos, slogans, designs, trade dress and other similar
identifiers of source or origin, whether registered or unregistered, together
with the goodwill connected with the use of and symbolized by any of the
foregoing.
“Transferred
Subsidiaries” is defined in the recitals to this Agreement.
“Transferring Party”
is defined in Section
11.05(a).
“WMET” means the
WMET-AM radio station in the Washington, D.C. metropolitan area.
ARTICLE
II
REORGANIZATION
Section
2.01. Reorganization. On or
prior to the Distribution Date and effective as of the Effective Time, IDT shall
transfer and assign to CTM all of the outstanding stock of the Transferred
Subsidiaries then held by IDT.
9
Section
2.02. Limitation of
Liability.
(a) Except
as provided in Section
9.01 or as set forth in subsection (b) below, (i) neither Party nor any
member of such Party’s Group shall have any Liability to any other Party or any
member of such other Party’s Group based upon, arising out of or resulting from
any agreement, arrangement, course of dealing or understanding existing on or
prior to the Effective Time (other than this Agreement or any Ancillary
Agreement or any agreement entered into in connection herewith or therewith in
order to consummate the transactions contemplated hereby or thereby), and (ii)
each Party hereby terminates, and shall cause all
members in its Group to terminate, any and all agreements, arrangements, course
of dealings or understandings between it or any members in its Group and the
other Party, or any members of its Group, effective as of the Effective Time
(other than this Agreement or any Ancillary Agreement or any agreement entered
into in connection herewith or in order to consummate the transactions
contemplated hereby or thereby), unless such agreement, arrangement, course of
dealing or understanding is set forth in any Ancillary Agreement or on Schedule 2.02(b). Any
Liability, whether or not in writing, which is not reflected in any Ancillary
Agreement or on Schedule 2.02(b), is hereby irrevocably cancelled, released and
waived effective as of the Effective Time. All such terminated agreements,
arrangements, courses of dealing and understandings (including any provision
thereof which purports to survive termination) shall no longer be of any further
force or effect after the Effective Time.
(b) The
provisions of Section
2.02(a) shall not apply to any of the following agreements, arrangements,
course of dealings or understandings (or to any of the provisions thereof),
other than those agreements, arrangements, course of dealings or understandings
set forth on Schedule
2.02(b):
(i) any
agreement or arrangement to which any Person other than the Parties and their
respective Affiliates is a Party; and
(ii) any
agreements, arrangements, commitments or understandings to which any
non-wholly-owned subsidiary or non-wholly-owned Affiliate of IDT or CTM is a
Party.
ARTICLE
III
THE
DISTRIBUTION
Section
3.01. Cooperation
Prior to the Distribution.
(a) IDT
and CTM shall prepare, and IDT shall mail to the holders of IDT Common Stock,
the Information Statement, which shall set forth appropriate disclosure
concerning CTM, the Distribution and any other appropriate matters. IDT and CTM
shall also prepare, and CTM shall file with the Commission, the Form 10, which
shall include the Information Statement. IDT and CTM shall use commercially
reasonable efforts to cause the Form 10 to become effective under the Exchange
Act.
10
(b) IDT
shall, as the sole stockholder of CTM, approve and adopt the CTM employee
benefit plans listed on Schedule
3.01(c).
Section
3.02. Conditions
Precedent to the Distribution. In no event shall the Distribution occur
unless the following conditions shall have been satisfied (or waived, other than
clause (iii) which shall not be waivable):
(i) the
Commission has declared the Form 10 effective under the Exchange Act and no stop
order relating to the Form 10 is in effect;
(ii) no
action, proceeding or investigation shall have been instituted or threatened
before any court or administrative body to restrain, enjoin or otherwise prevent
the consummation of the Spinoff, and no restraining order or injunction issued
by any court of competent jurisdiction shall be in effect restraining the
consummation of the Spinoff;
(iii) the
receipt by IDT of the opinion by ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLC as to the
satisfaction of certain required qualifying conditions for the application of
Section 355 of the Code to the Spinoff; and
(iv) the
IDT Board of Directors shall not have determined to abandon or modify the
Spinoff.
Section
3.03. The
Distribution. On or before the Distribution Date, subject to satisfaction
or waiver of the conditions set forth in this Agreement, IDT shall (a) effect a
stock split of the outstanding shares of CTM Common Stock so that the number and
class of such shares that are outstanding shall equal the amount necessary to
effect the distribution described in this Section 3.03, and (b)
deliver to the Distribution Agent a certificate or certificates representing all
of the then outstanding shares of CTM Common Stock held by the IDT Group,
endorsed in blank, and shall instruct the Distribution Agent to distribute to
each holder of record of IDT Common Stock on the Record Date (i) one (1) share
of CTM Class A common stock for every three (3) shares of IDT common stock, (ii)
one (1) share of CTM Class B common stock for every three (3) shares of IDT
Class B common stock, and (iii) one (1) share of CTM Class C common stock for
every three (3) shares of IDT Class A common stock, each outstanding as of the
Record Date, by crediting the holder’s brokerage account. CTM agrees to provide
all certificates for shares of CTM Common Stock that the Distribution Agent
shall require in order to effect the Distribution, including physical
certificated for shares of Class C common stock of CTM and for those holders of
Class A common stock and Class B common stock of CTM who request physical
certificates.
ARTICLE
IV
COVENANTS
Section
4.01. Bank
Accounts.
(a) The
Parties agree to take, or cause the respective members of their respective
Groups to take, at the Effective Time (or such earlier time as the Parties may
agree), all actions necessary to amend all agreements or arrangements governing
each bank and brokerage account owned by CTM or any other member of the CTM
Group (the “CTM
Accounts”), including all CTM Accounts listed or described on Schedule 4.01(a), so
that such CTM Accounts, if currently linked (whether by automatic withdrawal,
automatic deposit, or any other authorization to transfer funds from or to,
hereinafter “linked”) to any bank or brokerage account owned by IDT or any other
member of the IDT Group (the “IDT Accounts”) are
de-linked from the IDT Accounts. From and after the Effective Time, no current
or former employee of any member of the IDT Group shall have any authority to
access, control or sign in connection with any CTM Account other than those who
will be authorized CTM employees.
11
(b) The
Parties agree to take, or cause the respective members of their respective
Groups to take, at the Effective Time (or such earlier time as the Parties may
agree), all actions necessary to amend all agreements or arrangements governing
the IDT Accounts so that such IDT Accounts, if currently linked to a CTM
Account, are de-linked from the CTM Accounts. From and after the Effective Time,
no current or former employee of any member of the CTM Group shall have any
authority to access, control or sign in connection with any IDT Account other
than those who will be authorized IDT employees.
(c) With
respect to any outstanding checks issued by IDT, CTM, or any of their respective
subsidiaries prior to the Effective Time, such outstanding checks shall be
honored following the Effective Time by the entity or Group owning the account
on which the check is drawn.
(d) As
between the two Parties (and the members of their respective Groups) all
payments and reimbursements received after the Effective Time by any Party (or
member of its Group) that relate to a business, Asset or Liability of another
Party (or member of its Group), shall be held by such Party in trust for the use
and benefit of the Party entitled thereto (at the expense of the Party entitled
thereto) and, promptly upon receipt by such Party of any such payment or
reimbursement, such Party shall pay over, or shall cause the applicable member
of its Group to pay over to the other Party the amount of such payment or
reimbursement without right of set-off.
Section
4.02. Insurance.
(a) Following
the cessation of any member of the CTM Group’s coverage under a Third Party CTM
Policy, if (i) an occurrence for which coverage is available under any such
Third Party CTM Policy happens prior to the Effective Time and (ii) a claim
arising therefrom has been or is eventually asserted against CTM or any other
member of the CTM Group (including any officer, director, employee or agent
thereof), so long as such claim is reported by CTM to the carrier (with a copy
to IDT), in accordance with the reporting provision of the applicable policy,
then IDT will, or will cause the members of the IDT Group that are insured
thereunder to, (A) continue to provide CTM and any other member of the CTM Group
with access to and coverage under the applicable Third Party CTM Policies and
(B) reasonably cooperate with CTM and take commercially reasonable actions as
may be necessary or advisable to assist CTM in submitting such claims under the
applicable Third Party CTM Policies, provided that CTM shall be responsible for
its portion of any deductibles or self-insured retentions or co-payments legally
due and owing relating to such claims. For the avoidance of doubt, if an
occurrence for which coverage is available under any such Third Party CTM Policy
happens after the Effective Time (and is not attributable and related to an
occurrence which occurred prior to the Effective Time), or a claim arising from
an occurrence prior to the Effective Time is not reported by CTM to IDT on or
before the date when such occurrence must be reported to the carrier under the
applicable Third Party CTM Policy, then, other than as provided herein, no
payment for any damages, costs of defense, or other sums with respect to such
claim shall be available to CTM under such Third Party CTM
Policies.
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(b) With
respect to all Third Party CTM Policies, CTM agrees and covenants (on behalf of
itself and each other member of the CTM Group, and each other Affiliate of CTM)
(i) not to make any claim or assert any rights against IDT and any other member
of the IDT Group, or the unaffiliated third-party insurers of such Third Party
CTM Policies, except as expressly provided under this Section 4.02, and
(ii) to otherwise reasonably cooperate with IDT and take commercially reasonable
actions as may be necessary or advisable to assist IDT in fulfilling its
obligations under the applicable Third Party CTM Policies as set forth in this
Section
4.02.
Section
4.03. No Hire; No
Solicit.
(a) Subject
to subsection (b) below, none of IDT or CTM or any member of their respective
Groups will from the Effective Time through and including the 18-month
anniversary of the Effective Time, without the prior written consent of the
other Party, either directly or indirectly, on their own behalf or in the
service or on behalf of others, (i) solicit, aid, induce or encourage any
individual who is an employee of a member of the other Party’s Group to leave
his or her employment, or (ii) hire any individual who, at the time of
solicitation, is an employee of a member of the other Party’s
Group.
(b) Nothing
in this Section
4.03 shall be deemed to prohibit any solicitation of any employee or
employment of any employee of one Party or its Group who (i) responded to a
solicitation directed at the public in general through advertisement or similar
means not targeted specifically at such employee, the Party or member of the
Party’s Group employing such employee, (ii) was referred to such Party’s Human
Resources department by search firms, employment agencies or other similar
entities provided that such entities have not been specifically instructed by
such Party, a member of such Party’s Group or their representatives to solicit
the employee, or (iii) was terminated by the other Party or a member of the
other Party’s Group prior to such solicitation.
Section
4.04. Legal Names and
Signage.
(a) Except
as otherwise specifically provided in any Ancillary Agreement or in paragraph
(d) below, each Party shall exercise commercially reasonable efforts to cease
(and cause all of the other members of its Group to cease), as soon as
reasonably practicable after the Distribution Date, but in any event within six
(6) months thereafter: (i) making any use of any names or Trademarks that
include (A) any of the Trademarks of the other Party or such other Party’s
subsidiaries or Affiliates (including, in the case of CTM, “IDT Corporation” or
any other name or Trademark containing the word “IDT”) and (B) any names or
Trademarks related thereto including any names or Trademarks confusingly similar
thereto or dilutive thereof (with respect to each Party, such Trademarks of the
other Party or any of such other Party’s subsidiaries or Affiliates, the “Other Party Marks”),
and (ii) holding themselves out as having any affiliation with the other Party
or such other Party’s subsidiaries or Affiliates; provided, however, that the
foregoing shall not prohibit any Party or any member of a Party’s Group from (1)
stating in any advertising or any other communication that it is formerly an IDT
affiliate, (2) making use of any Other Party ▇▇▇▇ in a manner that would
constitute “fair use” under applicable Law if any unaffiliated third party made
such use or would otherwise be legally permissible for any unaffiliated third
party without the consent of the Party owning such Other Party ▇▇▇▇ or (3) as
may be required in any regulatory filing or submission or as may otherwise be
required by law.
13
In
furtherance of the foregoing, other than with respect to the License, as soon as
practicable, but in no event later than six (6) months following the Effective
Time, each Party shall (and cause all of the other members of its Group to)
remove, strike over or otherwise obliterate all Other Party Marks from all of
such Party’s and its subsidiaries’ and Affiliates’ assets and other materials,
including any vehicles, business cards, schedules, stationery, packaging
materials, displays, signs, promotional materials, manuals, forms, websites,
email, computer software and other materials and systems. Any use by any Party
or any of such Party’s Subsidiaries or Affiliates of any of the Other Party
Marks as permitted in this Section 4.04 is
subject to their compliance with all quality control and related requirements
and guidelines in effect for the Other Party Marks as of the Effective
Time.
(b) Other
than with respect to the License, notwithstanding the foregoing requirements of
Section
4.04(a), if any Party or any member of such Party’s Group exercised good
faith efforts to comply with Section 4.04(a) but
is unable, due to regulatory or other circumstance beyond its reasonable
control, to effect a legal name change or other change in compliance with
applicable Law such that an Other Party ▇▇▇▇ remains in such Party’s or its
Group member’s legal name, then such Party or its relevant Group member will not
be deemed to be in breach hereof as long as it continues to exercise good faith
efforts to effectuate such name change and does effectuate such name change
within nine (9) months after the Effective Time, and, in such circumstances,
such Party or Group member may continue to include in its assets and other
materials references to the Other Party ▇▇▇▇ that is in such Party’s or Group
member’s legal name which includes references to “IDT” as applicable, but only
to the extent necessary to identify such Party or Group member and only until
such Party’s or Group member’s legal name can be changed to remove and eliminate
such references.
(c) Notwithstanding
the foregoing requirements of Section 4.04(a), CTM
shall not be required to change any name including the word “IDT” in any
third-party contract or license, or in property records with respect to real or
personal property, if an effort to change the name is commercially unreasonable;
provided, however, that (i) CTM
on a prospective basis from and after the Effective Time shall change the name
in any new or amended third-party contract or license or property record and
(ii) CTM shall not advertise or make public any continued use of the “IDT” name
permitted by this Section
4.04(c).
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(d)
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License.
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(i) IDT
hereby grants to CTM the limited, revocable, non-exclusive, non-transferable and
non-sublicensable (except to a wholly-owned subsidiary of CTM), worldwide,
royalty-free right and license (the “License”) to use the
“IDT” trademark in text form (with U.S. trademark registration number 2118811)
and in logo form (with U.S. trademark registration number 2075108 as set forth
on Exhibit C
attached hereto) (collectively, the “▇▇▇▇”) during the
term specified in clause (iii) below and exclusively in conjunction with the
names “IDT Local Media” and “IDT Local Pull”. Any use by CTM of the ▇▇▇▇ not
expressly provided for in this Agreement is prohibited without the prior written
consent of IDT, and all such uses are reserved to IDT.
14
(ii) Whenever
CTM uses the ▇▇▇▇, CTM shall attribute such ▇▇▇▇ by using the “®” symbol. Such
symbol shall be used immediately following the ▇▇▇▇ in all prominent uses of the
▇▇▇▇, including the first use in body copy or text of, for example, marketing
material, and press releases. In addition, CTM shall use, at the bottom of text
that appears on any marketing materials, the following trademark legend: “IDT is
the registered trademark of IDT Corporation in the United States and other
countries, and is used under license.”
(iii) Term. The License
shall commence on the Effective Time and, unless terminated as hereinafter
provided, shall continue for six (6) months, following which CTM shall have an
option to renew the License for an additional (six) months; provided that CTM
must provide IDT with notice of such renewal within ten (10) days following such
initial six (6) period or such renewal right shall be forfeited by CTM.
Following such second six (6) month period, the License may be renewed only by
mutual agreement of IDT and CTM.
(iv) Trademark
Usage.
(A) In
using the ▇▇▇▇, CTM shall not (i) do anything that might reasonably be expected
to harm the reputation or goodwill of IDT or the ▇▇▇▇; (ii) take any action
inconsistent with IDT’s ownership of the ▇▇▇▇; (iii) challenge IDT’s rights or
interests in the ▇▇▇▇, or attempt to register the ▇▇▇▇ or any ▇▇▇▇ or logo
substantially similar thereto; or (iv) incorporate the ▇▇▇▇, except as otherwise
expressly permitted herein, in any of CTM’s trademarks, service marks, logos,
trade names, internet addresses, domain names or any other designations of
origin. All goodwill that derives from CTM’s use of the ▇▇▇▇ inures solely to
IDT’s benefit.
(B) If
at any time CTM acquires, other than the License granted hereunder, any rights
in, or trademark registrations or applications for, the ▇▇▇▇ or similar
trademarks, by operation of law or otherwise, CTM (at its own cost) shall
immediately assign such rights, registrations or applications to IDT, along with
any and all associated goodwill.
(C) CTM
agrees to cooperate with IDT and take, at IDT’s expense, reasonable actions
required to vest and secure in IDT the ownership rights and appurtenant
interests as provided in this paragraph (d), and shall assist IDT to the extent
necessary to protect and maintain the ▇▇▇▇ worldwide, including, but not limited
to, (i) giving prompt notice to IDT of any actual or potential infringement of
the ▇▇▇▇ known to it, and (ii) cooperating with IDT in the preparation,
execution or recording of any documents necessary to register or otherwise
protect the ▇▇▇▇, including, but not limited to, recording this Agreement with
the appropriate authorities of any country.
(D) In
its sole discretion, IDT may commence, prosecute or defend any action or claim
concerning the ▇▇▇▇, in the name of IDT or CTM, or join CTM as a party thereto
at (unless the action involves misconduct by CTM) the cost of IDT. IDT shall
give CTM reasonable prior notice of any such action. IDT shall have the right to
control any such litigation, and CTM shall reasonably cooperate with IDT in any
such litigation at (unless the action involves misconduct by CTM) IDT’s cost.
CTM shall not commence any action regarding the ▇▇▇▇ (except the defense of any
suit or threatened action, if IDT fails to so defend such action within a
reasonable time of its becoming aware thereof) without IDT’s prior written
consent, which IDT may withhold in its sole discretion.
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(iv) Quality Standards.
CTM shall furnish to IDT prior to any use that was not earlier approved, for the
approval of IDT’s legal department, copies of any such uses of the ▇▇▇▇,
including copies of formats of all advertising and promotional material on which
the ▇▇▇▇ appears and products on which the ▇▇▇▇ will appear (the “Materials”); provided, that in the
event IDT does not respond to CTM’s request for approval within seven (7) days
after such request, such approval shall be deemed to have been granted by IDT.
IDT shall have the right to approve or disapprove any or all Materials and IDT’s
approval shall not be unreasonably withheld or delayed. CTM’s use of the ▇▇▇▇
shall at all times be in compliance with IDT’s trademark guidelines as in effect
from time to time if and as any updates thereto hereafter have previously been
provided to CTM.
(v) No Liability. Except
as otherwise provided herein, in no event shall IDT be liable for any damages,
whether direct, indirect, incidental, special, consequential or punitive
(including, without limitation loss of profits, revenue, business, data or other
economic advantage), regardless of the theory of liability, arising from or
relating to CTM’s use of the ▇▇▇▇, or termination of the License (with respect
to a termination by IDT, in accordance with its terms), even if IDT has been
advised of the possibility of such damages.
(vi) Termination.
(a) IDT
shall have the right to terminate the License (i) effective immediately upon
CTM’s receipt of written notice if CTM sells or otherwise disposes of
substantially all of its business or assets to an unaffiliated third party or
parties, or if control or ownership of CTM is in any manner transferred to an
unaffiliated third party or parties, or (ii) if CTM defaults in the performance
or observance of any of the material terms or conditions of this Agreement or
any Ancillary Agreement and such default is not remedied within fifteen (15)
calendar days after receipt of written notice specifying the nature of the
default.
(b) Either
Party shall have the right to terminate the License by written notice to the
party affected by such occurrence, if any of the following events occur: (1)
insolvency or the making by a Party of an assignment for the benefit of
creditors; (2) the filing by or against a Party of, or the entry of an order for
relief against a Party in, any voluntary or good faith involuntary proceeding
under any bankruptcy, insolvency, reorganization, or receivership law, or an
admission seeking relief as therein allowed, which filing or order shall not
have been vacated within sixty (60) calendar days from the entry thereof; (3)
the appointment of a receiver for all or a substantial portion of such party’s
property and such appointment shall not be discharged or vacated within sixty
(60) calendar days of the date thereof; or (4) the assumption of custody,
attachment, or sequestration by a court of competent jurisdiction of all or a
significant portion of such party’s property. No assignee for the benefit of
creditors, receiver, liquidator, trustee in bankruptcy, sheriff, or any other
officer of the court or official charged with taking over custody of the assets
or business of a Party shall have any right to continue performance of the
License, and the License may not be assigned by operation of law.
16
(c) CTM
shall have the right to terminate this Agreement by written notice to IDT at any
time and without cause and without liability of any kind whatsoever, except for
its indemnification obligations hereunder.
(d) The
exercise of any right of termination under this clause (vii) shall not affect
any rights which have accrued prior to termination, and shall be without
prejudice to any other legal or equitable remedies to which the terminating
party may be entitled by reason of such rights.
(vii) Effects of and Procedure on
Termination. Upon the termination of the License, all rights
of CTM under the License shall terminate and automatically revert to IDT, and
CTM shall immediately discontinue the use of the ▇▇▇▇ and thereafter shall no
longer use or have the right to use the ▇▇▇▇ or any variation or simulation
thereof, or any word or ▇▇▇▇ similar thereto, or to (directly or indirectly)
develop, create, market, distribute, sell, license or sublicense, or advertise
any products using the ▇▇▇▇. CTM acknowledges that CTM’s failure to cease the
use of the ▇▇▇▇ upon termination of the License, as required herein, may result
in immediate and irreparable damage to IDT. CTM acknowledges and admits that
there may not be adequate remedy at law for such failure, and agrees that in the
event of such failure, IDT shall be entitled to equitable relief by way of
temporary and permanent injunction and such other and further relief as any
court with jurisdiction may deem just and proper.
Section
4.05. Auditors and
Audits; Annual and Quarterly Financial Statements and
Accounting.
(a) Each
Party agrees to the following:
(i) Annual Financial
Statements. For the period ending one hundred and twenty (120) days
following the Effective Time and in any event solely with respect to the
preparation and audit of each of the Party’s financial statements for any of the
years ended July 31, 2009, 2008 and 2007, each Party shall provide to the other
Party on a timely basis all information reasonably required (A) to meet its
schedule for the preparation, printing, filing, and public dissemination of its
annual financial statements, (B) to the extent applicable to such Party, for
management’s assessment of the effectiveness of its disclosure controls and
procedures and its internal control over financial reporting in accordance with
all applicable provisions of Regulation S-K, including, without limitation,
Items 307 and 308 of Regulation S-K, and (C) to the extent applicable to such
Party, for its auditor’s audit of its internal control over financial reporting
and management’s assessment thereof in accordance with Section 404 of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the Commission’s and Public Company Accounting
Oversight Board’s rules and auditing standards thereunder (such assessments and
audit being referred to as the “Internal Control Audit and Management
Assessments”). Without limiting the generality of the foregoing, each Party will
provide all required financial and other Information with respect to itself and
its subsidiaries to its auditors in a sufficient and reasonable time and in
sufficient detail to permit its auditors to take all steps and perform all
reviews necessary to provide sufficient assistance to the other Party’s auditors
with respect to information to be included or contained in the other Party’s
annual financial statements and to permit the other Party’s auditors and
management to complete the Internal Control Audit and Management
Assessments.
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(ii) Access to Personnel and
Records. With respect to the fiscal year 2009, and any future fiscal year
of each of IDT and CTM, each Party (the “Audited Party”) shall
authorize its auditors, and use commercially reasonable efforts to cause its
auditors, to make available to the other Party’s auditors (the “Other Party’s
Auditors”), at the sole cost and expense of the other Party, both the
personnel who performed or are performing the annual audits of the Audited Party
and work papers related to the annual audits of the Audited Party, in all cases
within a reasonable time prior to such Other Audited Party’s auditors’ opinion
date, so that the Other Party’s Auditors are able to perform the procedures they
consider necessary to take responsibility for, or otherwise to review to the
extent deemed required, the work of the Audited Party’s auditors as it relates
to the Other Party’s Auditors’ report on or review of such other Party’s
financial statements, all within sufficient time to enable such other Party to
meet its timetable for the printing, filing and public dissemination of its
annual or interim financial statements. In such an event, the Audited
Party shall make available to the Other Party’s Auditors and management its
personnel and Records, at the sole cost and expense of the other Party, in a
reasonable time prior to the Other Party’s Auditors’ opinion or review date and
the other Party’s management’s assessment date so that the Other Party’s
Auditors and the other Party’s management are able to prepare its annual or
interim financial statements or to perform the procedures they consider
necessary to conduct the Internal Control Audit and Management
Assessments.
(b) In
the event a Party (the first party) restates any of its financial statements
that include its audited or unaudited financial statements with respect to any
balance sheet date or period of operation between August 1, 2006 and July 31,
2009, the first party will deliver to the other Party (the second party) a
substantially final draft, as soon as the same is prepared, of any report to be
filed by the first party with the Commission that includes such
restated audited or unaudited financial statements (the “Amended Financial
Report”); provided, however, that the
first party may continue to revise its Amended Financial Report prior to its
filing thereof with the Commission, which changes will be delivered to the
second party as soon as reasonably practicable; provided, further, however, that the
first party’s financial personnel will actively consult with the second party’s
financial personnel regarding any changes which the first party may consider
making to its Amended Financial Report and related disclosures prior to the
anticipated filing of such report with the Commission, with particular focus on
any changes which would have an effect upon the second party’s financial
statements or related disclosures. Each Party will reasonably
cooperate with, and permit and make any necessary employees available to, the
other Party, in connection with the other Party’s preparation of any Amended
Financial Reports.
(c) If
any Party or member of its respective Group is required, pursuant to Rule 3-09
of Regulation S-X or otherwise, to include in its Exchange Act filings audited
financial statements or other information of the other Party or member of the
other Party’s Group, the other Party shall use commercially reasonable efforts
(i) to provide such audited financial statements or other information, and (ii)
to cause its outside auditors to consent to the inclusion of such audited
financial statements or other information in the Party’s Exchange Act
filings.
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(d) Nothing
in this Section
4.05 shall require any Party to violate any agreement with any third
party regarding the confidentiality of confidential and proprietary information
relating to that third party or its business; provided, however, that in the
event that a Party is required under this Section 4.05 to
disclose any such information, such Party shall use commercially reasonable
efforts to seek to obtain such third party’s consent to the disclosure of such
information.
Section
4.06. No Restrictions
on Post-Closing Competitive Activities; Corporate
Opportunities. Except as expressly provided herein or in any
of the Ancillary Agreements, it is the explicit intent of each of the Parties
that this Agreement shall not include any non-competition or other similar
restrictive arrangements with respect to the range of business activities that
may be conducted by the Parties. Accordingly, each of the Parties acknowledges
and agrees that nothing set forth in this Agreement shall be construed to create
any explicit or implied restriction or other limitation on (i) the ability of
the other Party or any member of its Group to engage in any business or other
activity that competes with the business of such Party or any member of its
Group, or (ii) the ability of the other Party or any member of its Group to
engage in any specific line of business or engage in any business activity in
any specific geographic area.
Section
4.07. Right of
Offset.
(a) To
the extent IDT or any other member of the IDT Group has the right to receive any
amounts hereunder, including under the provisions of Article VI, or under
any Ancillary Agreement or under any other arrangement between any member of the
IDT Group and CTM or any other member of the CTM Group, then following notice of
such proposed offset IDT may satisfy such amounts out of and shall have a right
of off-set against any amounts then currently due to CTM or any other member of
the CTM Group from IDT or any other member of the IDT Group hereunder or
thereunder.
(b) To
the extent CTM or any other member of the CTM Group has the right to receive any
amounts hereunder, including under the provisions of Article VI, or under
any Ancillary Agreement or under any other arrangement between any member of the
CTM Group and IDT or any other member of the IDT Group, then following notice of
such proposed offset CTM may satisfy such amounts out of and shall have a right
of off-set against any amounts then currently due to IDT or any other member of
the IDT Group from CTM or any other member of the CTM Group hereunder or
thereunder.
ARTICLE
V
LITIGATION
MATTERS
Section
5.01. Litigation
cooperation.
(a) Each
of IDT and CTM agrees that at all times from and after the Effective Time, if an
Action currently exists or is commenced by a third-party with respect to which a
Party (or any member of such Party’s Group) is a named defendant but such Action
is otherwise not a Liability allocated to such named Party under this Agreement
or any Ancillary Agreement, then the other Party shall use commercially
reasonable efforts to cause such named but not liable defendant to be removed
from such Action and such defendant shall not be required to make any payments
or contribution in connection therewith.
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(b) IDT
and CTM shall each use commercially reasonable efforts to make available to the
other, upon written request, its officers, directors, employees and agents, and
the officers, directors, employees and agents of any member of its Group, as
witnesses to the extent that such individuals may reasonably be required in
connection with any legal, administrative or other proceedings in which the
requesting Party or a member of its Group may be involved. The
requesting Party shall bear all out-of-pocket expenses in connection
therewith. On and after the Effective Time, in connection with any
matter contemplated by this Section 5.01(b), the
Parties will maintain any attorney-client privilege or work product immunity of
any member of any Group as required by this Agreement or any Ancillary
Agreement.
ARTICLE
VI
INDEMNIFICATION
Section
6.01. CTM
Indemnification of the IDT Group.
On and
after the Distribution Date, CTM shall indemnify, defend and hold harmless each
member of the IDT Group, and each of their respective directors, officers,
employees and agents (the “IDT Indemnitees”)
from and against any and all Indemnifiable Losses incurred or suffered by any of
the IDT Indemnitees and arising out of, or due to, (a) the failure of CTM or any
member of the CTM Group to pay, perform or otherwise discharge, any of the CTM
Liabilities, and (b) any breach by CTM or any member of the CTM Group of this
Agreement.
Section
6.02. IDT
Indemnification of CTM Group.
On and
after the Distribution Date, IDT shall indemnify, defend and hold harmless each
member of the CTM Group and each of their respective directors, officers,
employees and agents (the “CTM Indemnitees”)
from and against any and all Indemnifiable Losses incurred or suffered by any of
the CTM Indemnitees and arising out of, or due to, (a) the failure of IDT or any
member of the IDT Group to pay, perform or otherwise discharge, any of the IDT
Liabilities, and (b) any breach by IDT or any member of the IDT Group of this
Agreement.
Section
6.03. Contribution.
In
circumstances in which the indemnity agreements provided for in Sections 6.01 and
6.02 are
unavailable or insufficient, for any reason, to hold harmless an Indemnified
Party in respect of any Indemnifiable Losses arising thereunder, each
Indemnifying Party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such Indemnifiable Losses, in proportion to the relative fault of the
Indemnifying Party or Parties on the one hand and the Indemnified Party or
Parties on the other in connection with the statements or omissions or alleged
statements or omissions that resulted in such Indemnifiable Losses, as well as
any other relevant equitable considerations. The relative fault of
the parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by CTM or IDT,
the Parties’ relative intents, knowledge, access to information and opportunity
to correct or prevent such statement or omission, and any other equitable
considerations appropriate in the circumstances.
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Section
6.04. Insurance and
Third Party Obligations. No insurer or any other third party shall be, by
virtue of the foregoing indemnification provisions, (a) entitled to a benefit it
would not be entitled to receive in the absence of such provisions, (b) relieved
of the responsibility to pay any claims to which it is obligated, or (c)
entitled to any subrogation rights with respect to any obligation
hereunder.
Section
6.05. Indemnification
Obligations Net of Insurance Proceeds and Other Amounts on a Net Tax Benefit
Basis.
(a) Any
Liability subject to indemnification or contribution pursuant to this Article VI, will (i)
be net of Insurance Proceeds that actually reduce the amount of the Liability,
(ii) be net of any proceeds received by an Indemnified Party from any third
party for indemnification for such Liability that actually reduce the amount of
the Liability (“Third
Party Proceeds”), (iii) be reduced by any Tax benefit actually realized
by the Indemnified Party (calculated on a with and without basis) arising from
the incurrence or payment of any such Liability and (iv) be increased by any Tax
detriment actually incurred by the Indemnified Party (calculated on a with and
without basis) as a result of the receipt or accrual of the Indemnity Payment in
respect of such Liability. Accordingly, the amount which any Indemnifying Party
is required to pay pursuant to this Article VI to any
Indemnified Party will be reduced by any Insurance Proceeds, Tax benefits
actually realized or Third Party Proceeds theretofore actually recovered by or
on behalf of the Indemnified Party in respect of the related Liability, and
shall be increased by any Tax detriments actually incurred. If an Indemnified
Party receives a payment required by this Agreement from an Indemnifying Party
in respect of any Liability (an “Indemnity Payment”) and
subsequently receives Insurance Proceeds or Third Party Proceeds, then the
Indemnified Party will pay to the Indemnifying Party an amount equal to the
excess of the Indemnity Payment received over the amount of the Indemnity
Payment that would have been due if the Insurance Proceeds or Third Party
Proceeds had been received, realized or recovered before the Indemnity Payment
was made.
If a Tax
benefit or Tax detriment is actually realized or incurred after the payment of
any Indemnity Payment hereunder, the Indemnified or Indemnifying Party, as the
case may be, shall pay to the other the amount of any such Tax benefit or Tax
detriment when actually realized or incurred. Adjustments will made if any such
Tax benefits are disallowed or such Tax detriments are not ultimately
incurred
(b) An
insurer who would otherwise be obligated to pay any claim shall not be relieved
of the responsibility with respect thereto or, solely by virtue of the
indemnification and contribution provisions hereof, have any subrogation rights
with respect thereto. The Indemnified Party shall use commercially reasonable
efforts to seek to collect or recover any third-party Insurance Proceeds and any
Third Party Proceeds to which the Indemnified Party is entitled in connection
with any Liability for which the Indemnified Party seeks contribution or
indemnification pursuant to this Article VI; provided that the
Indemnified Party’s inability to collect or recover any such Insurance Proceeds
or Third Party Proceeds shall not limit the Indemnifying Party’s obligations
hereunder.
21
Section
6.06. Notice and
Payment of Claims.
If any
IDT or CTM Indemnitee (the “Indemnified Party”)
determines that it is or may be entitled to indemnification by a Party (the
“Indemnifying
Party”) under this Article VI (other
than in connection with any Action or claim subject to Section 6.07), the
Indemnified Party shall deliver to the Indemnifying Party a written notice
specifying, to the extent reasonably practicable, the basis for its claim for
indemnification and the amount for which the Indemnified Party reasonably
believes it is entitled to be indemnified. After the Indemnifying Party shall
have been notified of the amount for which the Indemnified Party seeks
indemnification, the Indemnifying Party shall, within thirty (30) days after
receipt of such notice, pay the Indemnified Party such amount in cash or other
immediately available funds (or reach agreement with the Indemnified Party as to
a mutually agreeable alternative payment schedule) unless the Indemnifying Party
objects to the claim for indemnification or the amount thereof. If the
Indemnifying Party does not give the Indemnified Party written notice objecting
to such claim and setting forth the grounds therefor within the same thirty (30)
day period, the Indemnifying Party shall be deemed to have acknowledged its
liability for such claim and the Indemnified Party may exercise any and all of
its rights under applicable law to collect such amount.
Section
6.07. Notice and
Defense of Third Party Claims.
Promptly
following the earlier of (a) receipt of notice of the commencement by a third
party of any Action against or otherwise involving any Indemnified Party or (b)
receipt of information from a third party alleging the existence of a claim
against an Indemnified Party, in either case, with respect to which
indemnification may be sought pursuant to this Agreement (a “Third Party Claim”),
the Indemnified Party shall give the Indemnifying Party written notice thereof.
The failure of the Indemnified Party to give notice as provided in this Section 6.07 shall
not relieve the Indemnifying Party of its obligations under this Agreement,
except to the extent that the Indemnifying Party is materially prejudiced by
such failure to give notice. Within thirty (30) days after receipt of such
notice, the Indemnifying Party shall, by giving written notice thereof to the
Indemnified Party, (a) acknowledge, as between the parties hereto, liability
for, and at its option elect to assume the defense of such Third Party Claim at
its sole cost and expense or (b) object to the claim of indemnification set
forth in the notice delivered by the Indemnified Party pursuant to the first
sentence of this Section 6.07 setting
forth the grounds therefor; provided that if the
Indemnifying Party does not within the same thirty (30) day period give the
Indemnified Party written notice acknowledging liability or objecting to such
claim and setting forth the grounds therefor, the Indemnifying Party shall be
deemed to have acknowledged, as between the parties hereto, its liability to the
Indemnified Party for such Third Party Claim. Any contest of a Third Party Claim
as to which the Indemnifying Party has elected to assume the defense shall be
conducted by attorneys employed by the Indemnifying Party and reasonably
satisfactory to the Indemnified Party; provided that the
Indemnified Party shall have the right to participate in such proceedings and to
be represented by attorneys of its own choosing at the Indemnified Party’s sole
cost and expense. If the Indemnifying Party assumes the defense of a Third Party
Claim, the Indemnifying Party may settle or compromise the claim without the
prior written consent of the Indemnified Party if such settlement or compromise
is solely for monetary damages for which the Indemnifying Party shall be
responsible for; in all other events, the Indemnifying Party may not agree to
any settlement or compromise without the prior written consent of the
Indemnified Party, which consent shall not be unreasonably withheld or
delayed. If the Indemnifying Party does not assume the defense of a
Third Party Claim for which it has acknowledged liability for indemnification
under Article
VI, the Indemnified Party may require the Indemnifying Party to reimburse
it on a current basis for its reasonable expenses of investigation, reasonable
attorney’s fees and reasonable out-of-pocket expenses incurred in defending
against such Third Party Claim, and the Indemnifying Party shall be bound by the
result obtained with respect thereto by the Indemnified Party; provided that the
Indemnifying Party shall not be liable for any settlement effected without its
consent, which consent shall not be unreasonably withheld or
delayed.
22
The
Indemnifying Party shall pay to the Indemnified Party in cash the amount for
which the Indemnified Party is entitled to be indemnified (if any) within 15
days after the final resolution of such Third Party Claim (whether by the final
nonappealable judgment of a court of competent jurisdiction or otherwise), or,
in the case of any Third Party Claim as to which the Indemnifying Party has not
acknowledged liability, within 15 days after such Indemnifying Party’s objection
has been resolved by settlement, compromise or the final nonappealable judgment
of a court of competent jurisdiction.
ARTICLE
VII
EMPLOYEE
MATTERS
Section
7.01. General
Principles.
(a) On
or before the Distribution Date, IDT shall transfer, or caused to be
transferred, the CTM Group Employees to the CTM Group.
(b) CTM Group Employee
Participation in IDT Benefit Plans. Except
as otherwise expressly provided for in this Agreement or as otherwise expressly
agreed to in writing between the Parties, effective as of the Effective Time (i)
CTM Media and each member of the CTM Group shall cease to be a Participating
Company in any IDT Benefit Plan, and (ii) each CTM Group Employee and any other
CTM Group service provider (including any individual who is an independent
contractor, consultant, leased employee, on-call worker, or non-payroll worker
of any member of the CTM Group or in any other employment, non-employment, or
retainer arrangement, or relationship with any member of the CTM Group) shall
cease to actively participate in, be covered by, accrue benefits under, be
eligible to contribute to or have any rights as an active participant under any
IDT Benefit Plan (except to the extent of obligations that accrued on or before
the Effective Time, including benefits that are not otherwise addressed
herein or to the extent such participation
relates solely to services provided to the IDT Group by an IDT Group Employee or
IDT Group service provider ), and IDT and CTM shall take all necessary
action to effectuate each such cessation.
Section
7.02. IDT 401(k)
Plan and CTM 401(k) Plan.
(a) Establishment of the CTM
401(k) Plan. As soon as reasonably possible , CTM shall, or
shall cause one of its Affiliates to, establish a defined contribution plan and
trust for the benefit of the CTM Group Employees (the “ CTM 401(k) Plan ”),
which initially shall include a provision allowing for the acceptance of
rollovers and participant investment direction. CTM shall be responsible for
taking all necessary, reasonable and appropriate action to establish, maintain
and administer the CTM 401(k) Plan so that it is qualified under Section 401(a)
of the Code and meets the requirements of Section 401(k) of the Code and that
the related trust thereunder is tax-exempt under Section 501(a) of the Code. CTM
(acting directly or through its Affiliates) shall be responsible for any and all
Liabilities (including Liability for funding) and other obligations with respect
to the CTM 401(k) Plan. IDT shall have no funding obligations with respect to
the CTM 401(k) Plan.
23
(b) Vesting and Distribution of
CTM Group Employees’ Account Balances. As of the Effective Time, CTM
Group Employees participating in the IDT 401(k) Plan shall become vested in
their entire account balances under the IDT 401(k) Plan. As of the Effective
Time, members of the CTM Group shall cease to be participating companies in the
IDT 401(k) Plan, each CTM Group Employee shall cease to accrue any benefits
under the IDT 401(k) Plan, and each CTM Group Employee shall be treated as
having incurred a severance from employment under the IDT 401(k) Plan as of the
Effective Time, making each CTM Group Employee eligible for a distribution under
the IDT 401(k) Plan of his or her entire account balance. As soon as reasonably
practicable, CTM shall permit CTM Group Employees to elect a direct rollover of
cash from the IDT 401(k) Plan into the CTM 401(k) Plan.
Section 7.03.
Health and Welfare
Plans. Effective no later than January 1, 2010, CTM shall
adopt, for the benefit of eligible CTM Group employees, CTM Welfare Plans in
form and substance substantially similar to the IDT Welfare Plans maintained as
of the day immediately prior to the Distribution Date. Eligible CTM Group
Employees shall be eligible to continue participating under the IDT Welfare
Plans as provided under the terms of the Master Services Agreement until the
earlier of (i) the effective date of the CTM Welfare Plans and (ii) December 31,
2009.
Section
7.04. Service Recognition.
CTM shall give each CTM Participant full credit for purposes of eligibility,
vesting, determination of level of benefits, and, to the extent applicable,
benefit accruals under any CTM Benefit Plan, respectively, for such CTM Participant’s service with any
member of the IDT Group to the same extent such service was recognized by the
applicable IDT Benefit Plans; provided, that such
service shall not be recognized to the extent that such recognition would result
in the duplication of benefits.
Section 7.05.
Approval by IDT as
Sole Stockholder. On or prior to the Distribution Date, CTM shall have
adopted the CTM Stock Plan, which shall permit the issuance of equity based
awards that have material terms and conditions substantially similar to those
awards that may be issued under the IDT Stock Plan. The CTM Stock Plan shall be
approved prior to the Distribution Date by IDT as the sole stockholder of
CTM.
ARTICLE
VIII
TAX
MATTERS
Section
8.01. Tax Separation
Agreement. All matters relating to Taxes shall be governed exclusively by
the Tax Separation Agreement, except as may be expressly stated herein. In the
event of any inconsistency with respect to such matters between the Tax
Separation Agreement and this Agreement or any Ancillary Agreement, the Tax
Separation Agreement shall govern to the extent of the
inconsistency.
ARTICLE
IX
ACCOUNTING
MATTERS
Section
9.01. Intercompany
Accounts. Each Intercompany Account outstanding immediately
prior to the Effective Time, in any general ledger account of IDT, CTM or any of
their respective Affiliates, shall be satisfied and/or settled by the relevant
members of the IDT Group and the CTM Group no later than the Effective Time by
capitalization of the entire balance of the amounts payable or receivable
to/from the respective entities.
24
ARTICLE
X
INFORMATION;
SEPARATION OF DATA
Section
10.01. Provision of
Corporate Records. As soon as practicable following the Effective Time,
IDT and CTM shall each arrange for the provision to the other of a copy of
existing Records in its possession significantly relating to the other Party or
its business and affairs or to any other entity that is part of such other
Party’s respective Group or to the business and affairs of such other entity;
provided that
each Party may redact such information that it deems reasonably necessary to
protect its interests prior to the delivery of a copy such Records.
Section
10.02. Access to
Information. From and after the Effective Time, IDT and CTM shall each
afford the other and its accountants, counsel and other designated
representatives reasonable access (including using commercially reasonable
efforts to give access to Persons possessing information) and duplicating
rights, upon prior reasonable notice during normal business hours, to all
Records in its possession relating to the business and affairs of the other
Party or a member of its Group (other than data and information subject to an
attorney/client or other privilege), including, but not limited to, the Shared
Records, insofar as such access is reasonably required by the other including,
without limitation, for audit, accounting, regulatory and litigation purposes;
provided that
each Party may redact such information that it deems reasonably necessary to
protect its interests prior to granting access or duplicating rights to such
other Party.
Section
10.03. Retention of
Records. Except as otherwise required by law or agreed to in writing,
each Party shall, and shall cause the members of its Group to, retain all
information relating to the other Party’s business and affairs in accordance
with the past practice of such Party. Notwithstanding the foregoing, either
Party may destroy or otherwise dispose of any information at any time in
accordance with the corporate record retention policy maintained by such Party
with respect to its own records. Notwithstanding anything herein to the
contrary, the Parties agree that in the event of a conflict or inconsistency
between the provisions of this Section 10.03 or
Section 10.02
and the provisions of Section 3.6 of the Tax Separation Agreement, then the
provisions of such Section 3.6 of the Tax Separation Agreement shall prevail to
the extent of such conflict or inconsistency.
Section
10.04. Confidentiality.
(a) Notwithstanding
any termination of this Agreement, the Parties (the receiving party) shall hold,
and shall cause each of the members of their Group to hold, and
shall cause each of their respective officers, employees, agents,
consultants and advisors to hold, in strict confidence, and not to disclose or
release or use, without the prior written consent of the other Party (the
disclosing party), any and all Confidential Information of the disclosing party;
provided, that
the receiving party may disclose, or may permit disclosure of, Confidential
Information of the disclosing party (i) to its auditors, attorneys, financial
advisors, bankers and other appropriate consultants and advisors who have a need
to know such information for the receiving party’s auditing and other
non-commercial purposes and are informed of their obligation to, and agree to,
hold such information confidential to the same extent as is applicable to the
receiving party and in respect of whose failure to comply with such obligations,
the receiving party will be responsible,
25
(ii) if
the receiving party or any member of its Group are required or compelled to
disclose any such Confidential Information by judicial or administrative process
or by other requirements of Law or stock exchange rule, or (iii) as reasonably
necessary in order to permit the receiving party to prepare and disclose its
financial statements under the applicable requirements of Law or stock exchange
rule, or other disclosures required under applicable Law or stock exchange rule;
provided, further, that the
receiving party (and members of its Group as necessary) may use, or may permit
use of, Confidential Information of the disclosing party in connection with the
receiving party performing its obligations, or exercising its rights, under this
Agreement or any Ancillary Agreement. Notwithstanding the foregoing,
in the event that any demand or request for disclosure of Confidential
Information is made pursuant to clause (iii) above, the receiving party, to the
extent not prohibited by any applicable Laws, shall promptly notify the
disclosing party of the existence of such request or demand and shall provide
the other a reasonable opportunity to seek an appropriate protective order or
other remedy, which the receiving party will cooperate in
obtaining. In the event that such appropriate protective order or
other remedy is not obtained, the receiving party shall furnish only that
portion of the Confidential Information that is legally required to be disclosed
and shall take commercially reasonable steps, at the sole cost and expense of
the disclosing party, to ensure that confidential treatment is accorded such
information.
(b) Notwithstanding
anything to the contrary set forth herein, (i) the Parties shall be deemed to
have satisfied their obligations hereunder with respect to Confidential
Information if they exercise the same degree of care (but no less than a
reasonable degree of care) as they take to preserve confidentiality for their
own similar information and (ii) confidentiality obligations provided for in any
agreement between each Party or members of its Group and their respective
employees shall remain in full force and effect. Notwithstanding anything to the
contrary set forth herein, Confidential Information of any Party in the
possession of and used by any other Party as of the Effective Time may continue
to be used by such Party in possession of the Confidential Information in and
only in the operation of the IDT Business or the CTM Business, as the case may
be; provided,
such Confidential Information may be used only so long as the Confidential
Information is maintained in confidence and not disclosed in violation of this
Section
10.04(a). Such continued right to use may not be transferred (directly or
indirectly) to any third party without the prior written consent of the
applicable Party, except pursuant to Section
11.05(b).
(c) Each
Party acknowledges that it and the other members of its Group may have in their
possession confidential or proprietary information of third parties that was
received under confidentiality or non-disclosure agreements with such third
party prior to the Effective Time. Such Party will hold, and will cause the
other members of its Group and their respective representatives to hold, in
strict confidence the confidential and proprietary information of third parties
to which they or any other member of their respective Groups has access, in
accordance with the terms of any agreements entered into prior to the Effective
Time between one or more members of the such Party’s Group (whether acting
through, on behalf of, or in connection with, the separated businesses) and such
third parties.
(d) Upon
the written request of a Party, the other Party shall promptly (i) deliver to
such requesting Party all original Confidential Information (whether written or
electronic) concerning such requesting Party and/or members of its Group, and
(ii) if specifically requested by such requesting Party, destroy any copies of
such Confidential Information (including any extracts there from). Upon the
written request of such requesting Party, the other Party shall cause one of its
duly authorized officers to certify in writing to such requesting Party that the
requirements of the preceding sentence have been satisfied in full.
26
Section
10.05. Privileged
Matters.
(a) The
Parties recognize that legal and other professional services that have been and
will be provided prior to the Effective Time have been and will be rendered for
the collective benefit of each of the members of the IDT Group and the CTM
Group, and that each of the members of the IDT Group and the CTM Group should be
deemed to be the client with respect to such pre-separation services for the
purposes of asserting all privileges which may be asserted under applicable
Law.
(b) The
Parties recognize that legal and other professional services will be provided
following the Effective Time which will be rendered solely for the benefit of
IDT or CTM, as the case may be. With respect to such post-separation services,
the Parties agree as follows:
(i) IDT
shall be entitled, in perpetuity, to control the assertion or waiver of all
privileges in connection with privileged information which relates solely to the
IDT Business, whether or not the privileged information is in the possession of
or under the control of IDT or CTM. IDT shall also be entitled, in perpetuity,
to control the assertion or waiver of all privileges in connection with
privileged information that relates solely to the subject matter of any claims
constituting IDT Liabilities, now pending or which may be asserted in the
future, in any lawsuits or other proceedings initiated against or by IDT,
whether or not the privileged information is in the possession of or under the
control of IDT or CTM; and
(ii) CTM
shall be entitled, in perpetuity, to control the assertion or waiver of all
privileges in connection with privileged information which relates solely to the
CTM Business, whether or not the privileged information is in the possession of
or under the control of IDT or CTM. CTM shall also be entitled, in perpetuity,
to control the assertion or waiver of all privileges in connection with
privileged information that relates solely to the subject matter of any claims
constituting CTM Liabilities, now pending or which may be asserted in the
future, in any lawsuits or other proceedings initiated against or by CTM,
whether or not the privileged information is in the possession of or under the
control of IDT or CTM.
(c) The
Parties agree that they shall have a shared privilege, with equal right to
assert or waive, subject to the restrictions in this Section 10.05, with
respect to all privileges not allocated pursuant to the terms of Section 10.05(b). All
privileges relating to any claims, proceedings, litigation, disputes, or other
matters which involve both IDT and CTM in respect of which both Parties retain
any responsibility or Liability under this Agreement shall be subject to a
shared privilege among them.
(d) No
Party may waive any privilege which could be asserted under any applicable Law,
and in which any other Party has a shared privilege, without the consent of the
other Party, which shall not be unreasonably withheld or delayed or as provided
in subsections (e) or (f) below. Consent shall be in writing, or shall be deemed
to be granted unless written objection is made within twenty (20) days after
notice upon the other Party requesting such consent. Each Party shall use its
reasonable best efforts to preserve any privilege held by the other Party if
that privilege is a shared privilege or has been allocated to the other Party
pursuant to Section
10.05(b).
27
(e) In
the event of any litigation or dispute between or among any of the Parties, or
any members of their respective Groups, either such Party may waive a privilege
in which the other Party or member of such other Party’s Group has a shared
privilege, without obtaining the consent of the other Party; provided, that such
waiver of a shared privilege shall be effective only as to the use of
information with respect to the litigation or dispute between the relevant
Parties and/or the applicable members of their respective Groups, and shall not
operate as a waiver of the shared privilege with respect to third
parties.
(f) If
a dispute arises between the Parties or members of their Group regarding whether
a privilege should be waived to protect or advance the interest of either Party,
each Party agrees that it shall negotiate in good faith, shall endeavor to
minimize any prejudice to the rights of the other Party, and shall not
unreasonably withhold consent to any request for waiver by the other Party. Each
Party specifically agrees that it will not withhold consent to waiver for any
purpose except to protect its own legitimate interests.
(g) Upon
receipt by either Party or by any member of its Group of any subpoena, discovery
or other request which arguably calls for the production or disclosure of
information subject to a shared privilege or as to which the other Party has the
sole right hereunder to assert a privilege, or if either Party obtains knowledge
that any of its or any member of its Group’s current or former directors,
officers, agents or employees have received any subpoena, discovery or other
requests which arguably calls for the production or disclosure of such
privileged information, such Party shall promptly notify the other Party of the
existence of the request and shall provide the other Party a reasonable
opportunity to review the information and to assert any rights it or they may
have under this Section 10.05 or
otherwise to prevent the production or disclosure of such privileged
information.
(h) The
transfer of all Information pursuant to this Agreement is made in reliance on
the agreement of IDT and CTM as set forth in Section 10.04 and
this Section
10.05, to maintain the confidentiality of privileged information and to
assert and maintain all applicable privileges. Nothing provided for herein or in
any Ancillary Agreement shall be deemed a waiver of any privilege that has been
or may be asserted under this Agreement or otherwise.
Section
10.06. Ownership of
Information. Any Information owned by one Party or any member of its
Group that is provided to a requesting Party pursuant to Article VI, this
Article X, or
Article XI
shall be deemed to remain the property of the providing party. Unless
specifically set forth herein, nothing contained in this Agreement shall be
construed as granting or conferring rights of license or otherwise in any such
information.
Section
10.07. Separation of
Data. CTM acknowledges and agrees that IDT may, after the Effective Time,
delete or cause to be deleted any Information which does not relate to the CTM
Business which is contained in, stored in or accessible through any Software
provided to CTM by IDT. The foregoing will not be deemed to be a violation of
any provision of this Agreement. The provisions of Section 10.04 apply
to CTM’s use of any such Information prior to its deletion.
28
ARTICLE
XI
MISCELLANEOUS
Section
11.01. Expenses. Except as
set forth on Schedule
11.01(a) or as specifically provided in this Agreement or any Ancillary
Agreement, IDT shall pay (a) all costs and expenses incurred in connection with
the spin-off and the transactions contemplated by this Agreement (including,
without limitation, the costs and expenses set forth on Schedule 11.01(b),
transfer taxes and the fees and expenses of the Distribution Agent and of all
counsel, accountants and financial and other advisors), (b) all costs and
expenses incurred in connection with the preparation, execution, delivery and
implementation of this Agreement and the Ancillary Agreements and (c) all legal,
filing, accounting, printing, and other expenses in connection with the
preparation, printing and filing of the Form 10 and the Information
Statement.
Section
11.02. Notices.
All notices and communications under this Agreement shall be in writing and
shall be deemed to have been given (a) when received, if such notice or
communication is delivered by facsimile, hand delivery or overnight courier, and
(b) three (3) business days after mailing if such notice or communication is
sent by United States registered or certified mail, return receipt requested,
first class postage prepaid. All notices and communications, to be effective,
must be properly addressed to the Party to whom the same is directed at its
address as follows:
If
to IDT, to:
IDT Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
Attention:
▇▇▇▇ ▇▇▇▇▇▇▇
With
copies to:
IDT Corporation
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
Attention:
Legal Department
If
to CTM, to:
CTM Media Group, Inc.
▇▇ ▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
Attention:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Either
Party may, by written notice delivered to the other Party in accordance with
this Section
11.02, change the address to which delivery of any notice shall
thereafter be made.
29
Section
11.03. Amendment and
Waiver. This Agreement may not be altered or amended, nor may any rights
hereunder be waived, except by an instrument in writing executed by the Party or
Parties to be charged with such amendment or waiver. No waiver of any terms,
provision or condition of or failure to exercise or delay in exercising any
rights or remedies under this Agreement, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any such term,
provision, condition, right or remedy or as a waiver of any other term,
provision or condition of this Agreement.
Section
11.04. Entire
Agreement. This Agreement, together with the Ancillary Agreements,
constitutes the entire understanding of the Parties with respect to the subject
matter hereof, superseding all negotiations, prior discussions and prior
agreements and understandings relating to such subject matter. To the extent
that the provisions of this Agreement are inconsistent with the provisions of
any Ancillary Agreement with respect to the subject matter thereof, the
provisions of such Ancillary Agreement shall prevail to the extent of the
inconsistency.
Section
11.05. Consolidation,
Merger, Etc.; Parties in Interest; Termination.
(a) Neither
Party (referred to in this Section 11.05(a) as a
“Transferring
Party”) shall consolidate with or merge into any other entity or convey,
transfer or lease all or any substantial portion of its Assets to any entity,
unless, in each case, the other party to such transaction expressly assumes, by
a written agreement, executed and delivered to the other Party, in form
reasonably satisfactory to such other Party, all of the Liabilities of the
Transferring Party under this Agreement and the Ancillary Agreements and the due
and punctual performance or observance of every agreement, obligation and
covenant of this Agreement and Ancillary Agreements on the part of the
Transferring Party to be performed or observed.
(b) Neither
of the Parties may assign its rights or delegate any of its duties under this
Agreement without the prior written consent of the other Party. This Agreement
shall be binding upon, and shall inure to the benefit of, the Parties and their
respective successors and permitted assigns. Nothing contained in this
Agreement, express or implied, is intended to confer any benefits, rights or
remedies upon any Person other than members of the IDT Group and the CTM Group
and the IDT Indemnitees and CTM Indemnitees under Article VI
hereof.
(c) This
Agreement (including Article VI hereof)
may be terminated and the Distribution may be amended, modified or abandoned at
any time prior to the Distribution by and in the sole discretion of IDT without
the approval of CTM or the stockholders of IDT. In the event of such
termination, neither Party shall have any liability of any kind arising from
such termination to the other Party or any other Person. After the Distribution,
this Agreement may not be terminated except by an agreement in writing signed by
the Parties; provided, however, that Article VI shall not
be terminated or amended after the Distribution in respect of any IDT Indemnitee
or CTM Indemnitee without the consent of such Person.
30
Section
11.06. Further
Assurances and Consents. In addition to the actions specifically provided
for elsewhere in this Agreement, each of the Parties will use commercially
reasonable efforts to (a) execute and deliver such further instruments and
documents and take such other actions as the other Party may reasonably request
in order to effectuate the purposes of this Agreement and to carry out the terms
hereof and (b) take, or cause to be taken, all actions, and do, or cause to be
done, all things, reasonably necessary, proper or advisable under applicable
laws, regulations and agreements or otherwise to consummate and make effective
the transactions contemplated by this Agreement, including, without limitation,
using commercially reasonable efforts to obtain any consents and approvals, make
any filings and applications and remove any liens, claims, equity or other
encumbrance on an Asset of the other Party necessary or desirable in order to
consummate the transactions contemplated by this Agreement; provided that no
Party shall be obligated to pay any consideration therefor (except for filing
fees and other similar charges) to any third party from whom such consents,
approvals and amendments are requested or to take any action or omit to take any
action if the taking of or the omission to take such action would be
unreasonably burdensome to the Party or its Group or the business
thereof.
Section
11.07. Severability. In the
event that any one or more of the provisions contained in this Agreement should
be held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired thereby, and the Parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions, the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable
provisions.
Section
11.08. Governing Law;
Jurisdiction. This Agreement shall be construed in accordance with, and
governed by, the laws of the State of New Jersey, without regard to the
conflicts of law rules of such state. Each of the Parties (a) consents to submit
itself to the personal jurisdiction of the courts of the State of New Jersey or
any federal court with subject matter jurisdiction located in the District of
New Jersey (and any appeals court therefrom) in the event any dispute arises out
of this Agreement or any Ancillary Agreement or any transaction contemplated
hereby or thereby, (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 Ancillary Agreement or any transaction contemplated hereby or thereby in any
court other than such courts.
Section
11.09. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original instrument, but all of which together shall constitute but
one and the same Agreement.
Section
11.10. Third Party
Beneficiaries. Except as provided in Article VI and except
as specifically provided in any Ancillary Agreement, this Agreement is solely
for the benefit of the Parties and should not be deemed to confer upon third
parties any remedy, claim, liability, reimbursement, cause of action or other
right in excess of those existing without reference to this
Agreement.
Section
11.11. Specific
Performance. The Parties agree that irreparable damage would occur in the
event that the provisions of this Agreement were not performed in accordance
with their specific terms. Accordingly, it is hereby agreed that the Parties
shall be entitled to provisional or temporary injunctive relief in accordance
therewith in any court of the United States, this being in addition to any other
remedy or relief to which they may be entitled.
31
Section
11.12. Limitations of
Liability. Notwithstanding anything in this Agreement to the contrary, no
Indemnifying Party shall be liable to an Indemnified Party for any special,
indirect, incidental, punitive, consequential, exemplary, statutorily-enhanced
or similar damages in excess of compensatory damages (provided that any such
liability with respect to a Third Party Claim shall be considered direct
damages) arising in connection with the transactions contemplated by this
Agreement or the Ancillary Agreements.
Section
11.13. Force
Majeure. No Party (or any Person acting on its behalf) shall have any
liability or responsibility for failure to fulfill any obligation (other than a
payment obligation) under this Agreement or, unless otherwise expressly provided
therein, any Ancillary Agreement, so long as and to the extent to which the
fulfillment of such obligation is prevented, frustrated, hindered or delayed as
a consequence of circumstances of Force Majeure. A Party claiming the benefit of
this provision shall, as soon as reasonably practicable after the occurrence of
any such event: (a) notify the other Party of the nature and extent of any such
Force Majeure condition, and (b) use due diligence to remove any such causes in
its control and resume performance under this Agreement as soon as reasonably
practicable.
Section
11.14. Construction. The
Parties have participated jointly in the negotiation and drafting of this
Agreement. This Agreement shall be construed without regard to any presumption
or rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
Section
11.15. Disputes.
The
Parties shall use good faith efforts to resolve any disputes arising out of this
Agreement within fifteen (15) days of receipt of a Party’s written notice of a
dispute. All disputes under this Agreement shall be referred to the Chief
Financial Officer or his/her designee of each of IDT and CTM. The
executives shall meet as required for the purpose of resolving any pending
dispute referred to them under this Agreement and shall consider the disputes in
the order such disputes are brought before them. In the event that
such executives are unable to resolve a dispute within thirty (30) business days
(or such longer period as the executives may mutually determine), they shall
submit the matter to binding arbitration according to the rules of the American
Arbitration Association for commercial disputes. The arbitration shall be
conducted by one arbitrator, expert in matters relating to commercial law,
mutually selected by the Parties. If the Parties fail to mutually agree upon one
arbitrator within ten (10) days of submission of the dispute to arbitration, one
will be appointed in accordance with the commercial rules and practices of the
American Arbitration Association. Any award, order or judgment
pursuant to such arbitration shall be deemed final and binding and may be
enforced in any court of competent jurisdiction. The Parties agree that the
arbitrator shall only have the power and authority to make awards and issue
orders as expressly permitted herein and shall not, in any event, make any award
that provides for punitive damages. The schedule and rules for the arbitration
proceedings shall be as set by the arbitrator and the arbitration proceedings
shall be held in Newark, New Jersey. Each Party shall bear its own costs of
participating in the arbitration proceedings, but shall share the costs of the
arbitrator.
[Signatures
appear on following page.]
32
IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the day and year first above written.
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By:
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Name:
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Title:
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CEO
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IDT
CORPORATION
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By:
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Name:
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▇▇▇▇▇▇▇
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Title:
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CFO
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33
EXHIBIT
A
[Master
Services Agreement]
EXHIBIT
B
[Tax
Separation Agreement]
EXHIBIT
C
IDT TEXT
AND LOGO
Text form
U.S. trademark, registration number 2118811
IDT
Logo form
U.S. trademark, registration number 2075108
SCHEDULE 7.03 - IDT WELFARE
PLANS
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IDT Medical
Plan
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IDT Dental
Plan
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IDT Flexible Spending
Accounts
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