1
DISTRIBUTION AGREEMENT
between
▇▇▇▇▇▇ SCIENTIFIC INTERNATIONAL INC.
and
PROCURENET, INC.
dated as of
March 29, 1999
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
ARTICLE II
PRE-SPINOFF TRANSACTIONS;
CERTAIN COVENANTS
Section 2.01. Corporate Restructuring Transactions ................ 8
Section 2.02. Certificate of Incorporation and Bylaws of ProcureNet 9
Section 2.03. Election of Directors ............................... 9
Section 2.04. Appointment of Officers ............................. 9
Section 2.05. Certain Provisions Relating to Assigned Agreements .. 9
Section 2.06. Consents ............................................ 10
Section 2.07. State Securities Laws ............................... 10
Section 2.08. Employees ........................................... 10
Section 2.09. Ancillary Agreements ................................ 11
ARTICLE III
THE SPINOFF
Section 3.01. The Spinoff ......................................... 11
Section 3.02. Spinoff Procedures; Deferral of Record Date
and Spinoff Date .................................... 11
Section 3.03. Notice to NYSE ...................................... 12
Section 3.04. Mailing of Information Statement .................... 12
Section 3.05. Distribution of ProcureNet Stock .................... 12
Section 3.06. Conditions to the Spinoff ........................... 12
Section 3.07. Actions to Be Taken Immediately After the Spinoff ... 14
ARTICLE IV
COVENANTS
Section 4.01. Further Assurances .................................. 14
Section 4.02. Assumption and Satisfaction of Liabilities .......... 14
Section 4.03. Property Received ................................... 14
Section 4.04. Transfers Not Effected Prior to the Spinoff;
Transfers Deemed Effective as of the Spinoff Date.... 14
Section 4.05. No Representations or Warranties .................... 15
Section 4.06. Removal of Certain Guarantees ....................... 16
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Section 4.07. Public Announcements ................................ 16
Section 4.08. Termination of Intercompany Agreements .............. 16
ARTICLE V
ACCESS TO INFORMATION
Section 5.01. Access to Books and Records ......................... 17
Section 5.02. Reimbursement ....................................... 17
Section 5.03. Confidentiality ..................................... 17
Section 5.04. Witness Services .................................... 18
Section 5.05. Retention of Books and Records ...................... 18
Section 5.06. Privileged Matters .................................. 19
ARTICLE VI
INSURANCE
Section 6.01. General ............................................. 20
Section 6.02. Treatment of Reserves ............................... 20
Section 6.03. Uninsured Retentions; Claims Management ............. 20
Section 6.04. Directors' and Officers' Insurance .................. 21
ARTICLE VII
INDEMNIFICATION
Section 7.01. Indemnification by ProcureNet ....................... 21
Section 7.02. Procedures for Indemnification ...................... 21
Section 7.03. Adjustments for Insurance Proceeds .................. 22
Section 7.04. Contribution ........................................ 23
Section 7.05. Remedies Cumulative ................................. 23
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Termination ......................................... 23
Section 8.02. Expenses ............................................ 23
Section 8.03. Notices ............................................. 24
Section 8.04. Governing Law ....................................... 24
Section 8.05. Choice of Forum ..................................... 24
Section 8.06. Amendments; Waivers, etc. ........................... 25
Section 8.07. Assignment .......................................... 25
Section 8.08. Third Party Beneficiaries ........................... 25
Section 8.09. Severability ........................................ 25
Section 8.10. Section Headings .................................... 25
Section 8.11. Integration ......................................... 26
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Page
Section 8.12. Counterparts ........................................ 26
Section 8.13. Coordination with Tax Sharing Agreement ............. 26
SCHEDULES
Schedule I ProcureNet Assets
Schedule II ProcureNet Liabilities
EXHIBITS
EXHIBIT A Borrower Security Agreement
EXHIBIT B Chase Equity Agreement
EXHIBIT C Credit Agreement
EXHIBIT D Employee Benefits Agreement
EXHIBIT E ▇▇▇▇▇▇ Warrant
EXHIBIT F Guarantee Agreement
EXHIBIT G Guarantor Security Agreement
EXHIBIT H Intellectual Property Agreement
EXHIBIT I Intercompany Note
EXHIBIT J Investors' Agreement
EXHIBIT K Pledge Agreement
EXHIBIT L SCS Note
EXHIBIT M Tax Sharing Agreement
EXHIBIT N Transitional Services Agreement
EXHIBIT O Warrant Agreement
EXHIBIT P Amended and Restated Certificate of Incorporation of
ProcureNet, Inc.
EXHIBIT Q Amended and Restated Bylaws of ProcureNet, Inc.
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DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT, dated as of March 29, 1999, between
▇▇▇▇▇▇ SCIENTIFIC INTERNATIONAL INC., a Delaware corporation ("▇▇▇▇▇▇"), and
PROCURENET, INC., a Delaware corporation ("ProcureNet").
RECITALS
A. The Board of Directors of ▇▇▇▇▇▇ has deemed it appropriate and
advisable to separate ▇▇▇▇▇▇'▇ procurement outsourcing services and supply chain
management technology businesses by (a) having such businesses be owned by
ProcureNet and (b) afterwards, distributing as a dividend to holders of stock of
▇▇▇▇▇▇ all of the stock of ProcureNet.
B. Following such separation and distribution, ▇▇▇▇▇▇ will not own
any stock of ProcureNet.
C. The parties hereto desire to set forth the terms and conditions of
such separation and distribution, including the principal corporate transactions
required to effect the foregoing.
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
The following terms, as used herein, have the following meanings:
"Agreement" means this Distribution Agreement, as it may be amended,
supplemented or restated from time to time, together with all Exhibits
and Schedules hereto.
"Ancillary Agreements" means the Borrower Security Agreement, Chase
Equity Agreement, the Credit Agreement, the Employee Benefits Agreement,
the ▇▇▇▇▇▇ Warrant, the Guarantee Agreement, the Guarantor Security
Agreement, the Intellectual Property Agreement, the Investors' Agreement,
the Pledge Agreement, the Notes, the Subleases, the Tax Sharing Agreement,
the Transitional Services Agreement, the Warrant Agreement, and all other
agreements and instruments contemplated by Section 2.09.
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"Books and Records" means all books, records, manuals, agreements,
financial data, customer and supplier lists, price lists, correspondence,
distribution lists, supplier lists, production data, sales and promotional
materials and records, purchasing materials and records, personnel
records, manufacturing and quality control records and procedures, blue
prints, research and development files, litigation files, computer files,
microfiche, tape recordings and other materials (in any form or medium).
"Borrower Security Agreement" means the security agreement, dated as
of March 19, 1999, between SPS and ▇▇▇▇▇▇, attached hereto as Exhibit A,
as the same may be amended, supplemented or restated from time to time.
"Chase Equity Agreement" means the agreement to be entered into
between Chase Equity Associates, L.P. and ProcureNet, substantially in the
form of Exhibit B, as the same may be amended, supplemented or restated
from time to time.
"Consents" has the meaning set forth in Section 2.06.
"Corporate Restructuring Transactions" means the transactions to be
undertaken prior to the Spinoff to separate the ProcureNet Business from
the ▇▇▇▇▇▇ Business, as contemplated by Section 2.01.
"Credit Agreement" means the $8 million credit agreement, dated as of
March 19, 1999, between SPS as borrower and ▇▇▇▇▇▇ as lender, attached
hereto as Exhibit C, as the same may be amended, supplemented or restated
from time to time.
"DGCL" means the Delaware General Corporation Law, in effect from
time to time.
"Distribution Agent" means ChaseMellon Shareholder Services, L.L.C.,
or such other trust company or bank designated by ▇▇▇▇▇▇, to act as the
agent responsible for the distribution of the ProcureNet Common Stock and
the ProcureNet Series B Non-Voting Common Stock to the Holders in the
Spinoff.
"ECD" means the business known as ▇▇▇▇▇▇'▇ Electronic Commerce
Division, consisting of the assets and Liabilities listed in Annex A to
Schedule I.
"Employee Benefits Agreement" means the Employee Benefits Agreement
to be entered into between ProcureNet and ▇▇▇▇▇▇, substantially in the
form of Exhibit D, as the same may be amended, supplemented or restated
from time to time.
"Exchange Act" means the Securities Exchange Act of 1934, in effect
from time to time.
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"▇▇▇▇▇▇" has the meaning set forth in the Introduction.
"▇▇▇▇▇▇ Business" means all of the business, operations and
activities of ▇▇▇▇▇▇ and its Subsidiaries, except for the ProcureNet
Business, as of the Spinoff Date.
"▇▇▇▇▇▇ Common Stock" means shares of common stock, par value $0.01
per share, of ▇▇▇▇▇▇.
"▇▇▇▇▇▇ Group" means ▇▇▇▇▇▇ and its Subsidiaries immediately after
the Spinoff.
"▇▇▇▇▇▇ Indemnitees" means ▇▇▇▇▇▇ and the other members of the ▇▇▇▇▇▇
Group and each of their respective past, present and future directors,
officers, employees and agents.
"▇▇▇▇▇▇ Non-Voting Common Stock" means the shares of non-voting
common stock, par value $0.01 per share, of ▇▇▇▇▇▇ established pursuant to
the Certificate of Designation, dated January 20, 1998.
"▇▇▇▇▇▇ Series B Non-Voting Common Stock" means the shares of Series
B non-voting common stock, par value $0.01 per share, of ▇▇▇▇▇▇,
established pursuant to the Certificate of Designation, dated on or about
March 29, 1999.
"▇▇▇▇▇▇ Uninsured Retention" means, with respect to any claim under
the Primary Casualty Program relating to ▇▇▇▇▇▇ Group Liability, any and
all amounts which, under the operation of the Primary Casualty Program,
the insured party or beneficiary shall be obligated to contribute (by
means of the application of a deductible or payment under a reimbursement
obligation, indemnity agreement, large loss rating agreement or other
similar instrument) in respect of such claim to the appropriate insurance
carrier or to a Person entitled to reimbursement or indemnity under
contractual or other arrangements; provided that, for purposes of
determining the amount of any ▇▇▇▇▇▇ Uninsured Retention, the benefits of
application of any maximum premium limits, stop-loss aggregates,
reimbursement or indemnity limits (or other provisions under the Primary
Casualty Program which would have the effect of aggregating deductibles of
self-insured retentions or limiting the indemnification or reimbursement
amounts) shall be allocated appropriately to reduce the uninsured
retentions of the ProcureNet Group and/or the ▇▇▇▇▇▇ Group.
"▇▇▇▇▇▇ Warrant" means the warrant issued by ProcureNet to ▇▇▇▇▇▇,
dated as of March 19, 1999, attached hereto as Exhibit E, as the same may
be amended, supplemented or restated from time to time.
"Governmental Authority" means any government, any political
subdivision, any governmental agency, bureau, department, board or
commission, any court or
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tribunal or any other governmental instrumentality, whether federal, state
or local, domestic or foreign.
"Group" means the ProcureNet Group or the ▇▇▇▇▇▇ Group.
"Guarantee Agreement" means the guarantee agreement, dated as of
March 19, 1999, between ProcureNet, SCS, SSI and ▇▇▇▇▇▇, attached hereto
as Exhibit F, as the same may be amended, supplemented or restated from
time to time.
"Guaranteed ▇▇▇▇▇▇ Liabilities" has the meaning set forth in Section
4.06(a).
"Guaranteed ProcureNet Liabilities" has the meaning set forth in
Section 4.06(a).
"Guarantor Security Agreement" means the security agreement, dated as
of March 19, 1999 between ProcureNet, SCS, SSI and ▇▇▇▇▇▇, attached hereto
as Exhibit G, as the same may be amended, supplemented or restated from
time to time.
"Holders" means the holders of record, as of the Record Date, of
▇▇▇▇▇▇ Common Stock, ▇▇▇▇▇▇ Non-Voting Common Stock and/or ▇▇▇▇▇▇ Series B
Non-Voting Common Stock.
"Indemnification Notice" has the meaning set forth in Section 7.02.
"Indemnified Party" means any Person that is seeking indemnification
or payment from ProcureNet pursuant to Section 7.01.
"Information Statement" means the information statement to be sent to
the Holders relating to ProcureNet and the Spinoff.
"Intellectual Property Agreement" means the Software License
Agreement to be entered into between ProcureNet and ▇▇▇▇▇▇, substantially
in the form of Exhibit H, as the same may be amended, supplemented or
restated from time to time.
"Intercompany Note" means the $5 million note, dated as of December
31, 1998, issued by SPS to ▇▇▇▇▇▇, attached hereto as Exhibit I, as the
same may be amended, supplemented or restated from time to time.
"Investors' Agreement" means the Investors' Agreement to be entered
into among ProcureNet and the other parties listed therein, substantially
in the form of Exhibit J, as the same may be amended, supplemented or
restated from time to time.
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"Law" means all laws, statutes and ordinances and all regulations,
rules, orders, decrees and other pronouncements of Governmental
Authorities.
"Liabilities" means any debt, liability, obligation, responsibility,
loss, damage (compensatory, punitive or other), fine, penalty, or
sanction, whether absolute, contingent or otherwise.
"Losses" means, with respect to any Person, any and all losses,
liabilities, penalties, claims, damages, demands, costs and expenses
(including reasonable attorneys' and accountants' fees and expenses) that
are assessed or imposed upon, or incurred or suffered by, such Person,
including reasonable attorneys' fees and expenses incurred in enforcing any
judgment, order, proclamation or other decision of any Governmental
Authority or arbitration tribunal. Notwithstanding the foregoing, "Losses"
of a Person shall exclude punitive and consequential damages incurred or
suffered by such Person but shall include amounts paid or required to be
paid by such Person as punitive or consequential damages to another Person.
"Notes" means the Intercompany Note and the SCS Note.
"NYSE" means the New York Stock Exchange.
"Person" means an individual, corporation, trust, joint venture,
association, partnership or other entity, or any governmental or political
subdivision or an agency or instrumentality thereof.
"Pledge Agreement" means the pledge agreement, dated as of March 19,
1999, between SPS, ProcureNet and ▇▇▇▇▇▇, attached hereto as Exhibit K, as
the same may be amended, supplemented or restated from time to time.
"Primary Casualty Program" means, collectively, the series of
programs pursuant to which various insurance carriers have provided and
are providing insurance coverage to ▇▇▇▇▇▇ Entities with respect to known
or unknown claims relating to workers' compensation, automobile liability,
general liability, products liability and umbrella liabilities. ▇▇▇▇▇▇
Entities shall consist of ▇▇▇▇▇▇; Subsidiaries of ▇▇▇▇▇▇; all Persons,
businesses and facilities acquired by ▇▇▇▇▇▇ or its Subsidiaries; and all
Persons, businesses and facilities sold or otherwise divested by ▇▇▇▇▇▇
and its Subsidiaries, including all discontinued or abandoned businesses
or facilities.
"Privilege" has the meaning set forth in Section 5.06(a).
"Privileged Information" has the meaning set forth in Section
5.06(a).
"ProcureNet" has the meaning set forth in the Introduction.
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"ProcureNet Assets" means the assets, properties and rights set forth
on Schedule I.
"ProcureNet Business" means the business, operations and activities
of the procurement outsourcing services and supply chain management
technology businesses of ▇▇▇▇▇▇ and its Subsidiaries as of the Spinoff
Date, as described in the Information Statement.
"ProcureNet Common Stock" means shares of common stock, par value
$0.01 per share, of ProcureNet.
"ProcureNet Group" means ProcureNet and its Subsidiaries immediately
after the Spinoff.
"ProcureNet Liabilities" means the Liabilities set forth on Schedule
II.
"ProcureNet Series A Non-Voting Common Stock" means shares of Series
A non-voting common stock, par value $0.01 per share, of ProcureNet.
"ProcureNet Series B Non-Voting Common Stock" means shares of Series
B non-voting common stock, par value $0.01 per share, of ProcureNet.
"ProcureNet Uninsured Retention" means, with respect to any claim
under the Primary Casualty Program relating to a ProcureNet Liability, any
and all amounts which, under the operation of the Primary Casualty
Program, the insured party shall be obligated to contribute (by means of
the application of a deductible or payment under a reimbursement
obligation, indemnity agreement, large loss rating agreement or other
similar instrument) in respect of such claim to the appropriate insurance
carrier or to a Person entitled to reimbursement or indemnity under
contractual or other arrangements; provided that, for purposes of
determining the amount of any ProcureNet Uninsured Retention, the benefits
of application of any maximum premium limits, stop-loss aggregates,
reimbursement or indemnity limits (or other provisions under the Primary
Casualty Program which would have the effect of aggregating deductibles of
self-insured retentions or limiting the indemnification or reimbursement
amounts) shall be allocated appropriately to reduce the uninsured
retentions of the ProcureNet Group and/or the ▇▇▇▇▇▇ Group).
"Record Date" means the close of business on the date established by
the Board of Directors of ▇▇▇▇▇▇ for the purpose of determining the
holders of record of ▇▇▇▇▇▇ Common Stock, ▇▇▇▇▇▇ Non-Voting Common Stock
and ▇▇▇▇▇▇ Series B Non-Voting Common Stock entitled to receive ProcureNet
Common Stock and ProcureNet Series
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B Non-Voting Common Stock in the Spinoff. Subject to Section 3.02, the
Board of Directors of ▇▇▇▇▇▇ has established March 30, 1999 as the Record
Date.
"SCS" means Structured Computer Systems, Inc., a Connecticut
corporation.
"SCS Note" means the $9 million note payable to ▇▇▇▇▇▇, originally
issued by ProcureNet on January 14, 1999, and subsequently assumed by SPS
in connection with the Corporate Restructuring Transactions, which note
was issued in connection with the purchase of SCS and is attached hereto
as Exhibit L, as the same may be amended, supplemented or restated from
time to time.
"Spinoff" means the distribution of the ProcureNet Common Stock and
the ProcureNet Series B Non-Voting Common Stock to the Holders, as
contemplated by this Agreement and more fully described in the Information
Statement.
"Spinoff Date" means such date established by the Board of Directors
of ▇▇▇▇▇▇ as the date on which the Spinoff shall be effected. Subject to
Section 3.02, the Board of Directors of ▇▇▇▇▇▇ has established April 15,
1999 as the Spinoff Date.
"SPS" means Strategic Procurement Services, Inc., a Delaware
corporation.
"SSI" means SourceSys, Inc., a Delaware corporation.
"Subleases" means (a) the subleases to be executed by ▇▇▇▇▇▇ and
ProcureNet relating to properties located at: (i) ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; (ii) ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇; and (iii) ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇; and (b) subleases to be executed by ProcureNet and other parties
relating to properties located at: (i) ▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇; and (ii) ▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and
(iii) ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇-▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇.
"Subsidiary" means any corporation, partnership, limited liability
company, joint venture or other entity (i) in which another Person owns,
directly or indirectly, ownership interests sufficient to elect a majority
of the Board of Directors (or Persons performing similar functions)
(irrespective of whether at the time any other class or classes of
ownership interest of such corporation, partnership, limited liability
company, joint venture or other entity shall or might have such voting
power upon the occurrence of any contingency) or (ii) of which another
Person is a general partner or an entity performing similar functions
(e.g., a trustee or managing member).
"Tax" or "Taxes" means any federal, state, local, foreign or other
income, alternative, minimum, accumulated earnings, personal holding
company, franchise,
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capital stock, net worth, capital, profits, windfall profits, gross
receipts, value added, sales (including, but not limited to, bulk sales),
use, goods and services, excise, customs duties, transfer, conveyance,
mortgage, registration, stamp, documentary, recording, premium, severance,
environmental (including, but not limited to, taxes under section 59A of
the Code), real property, personal property, ad valorem, intangibles,
rent, occupancy, license, utilities, occupational, employment,
unemployment insurance, social security, disability, workers'
compensation, payroll, health care, withholding, estimated or other
similar tax, duty or other governmental charge or assessment or
deficiencies thereof, including, but not limited to, all interest and
penalties thereon and additions thereto whether disputed or not.
"Tax Sharing Agreement" means the Tax Sharing Agreement to be entered
into between ProcureNet and ▇▇▇▇▇▇, substantially in the form of Exhibit
M, as the same may be amended, supplemented or restated from time to time.
"Transitional Services Agreement" means the Transitional Services
Agreement to be entered into between ProcureNet and ▇▇▇▇▇▇, substantially
in the form of Exhibit N, as the same may be amended, supplemented or
restated from time to time.
"Warrant Agreement" means the Common Stock Warrant Acquisition
Agreement to be entered into among ProcureNet and the other parties listed
therein, substantially in the form of Exhibit O, as the same may be
amended, supplemented or restated from time to time.
ARTICLE II
PRE-SPINOFF TRANSACTIONS;
CERTAIN COVENANTS
Section 2.01. Corporate Restructuring Transactions. (a) On or prior
to the Spinoff Date (but in all events prior to the Spinoff), each of the
parties shall, and each shall cause other members of its Group to, take such
actions as are necessary or desirable so that the ProcureNet Business (including
all ProcureNet Assets and ProcureNet Liabilities) shall be owned or held,
directly or indirectly, by ProcureNet. Without limiting the generality of the
forgoing, in order to effect the foregoing separation, the parties shall, and
each shall cause other members of its Group to, effect and consummate the
following distributions, contributions, transfers and other transactions and
such other distributions, transfers, contributions and other transactions as the
parties agree upon:
(i) ▇▇▇▇▇▇ Scientific Company L.L.C., a Delaware limited liability
company, shall distribute all assets and Liabilities of ECD to ▇▇▇▇▇▇.
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(ii) ▇▇▇▇▇▇ shall contribute to ProcureNet (x) all assets and
Liabilities of ECD and (y) 73.15% of the capital stock of SSI.
(iii)ProcureNet shall contribute to SPS (w) the assets and
Liabilities of ECD, (x) 73.15% of the capital stock of SSI, (y) all of the
capital stock of SCS and (z) the SCS Note.
(b) As of the Spinoff Date, the ProcureNet Group shall be deemed to
have acquired (or, as applicable, retained) complete and sole beneficial
ownership over all of the ProcureNet Assets, together with all rights, powers
and privileges incident thereto, and shall be deemed to have assumed in
accordance with this Agreement all of the ProcureNet Liabilities, and all
duties, obligations and responsibilities incident thereto.
Section 2.02. Certificate of Incorporation and Bylaws of ProcureNet.
On or prior to the Spinoff Date (but in all events prior to the Spinoff),
ProcureNet and ▇▇▇▇▇▇ shall each take all necessary actions to amend and restate
the certificate of incorporation and bylaws of ProcureNet so that, as of the
Spinoff Date, the certificate of incorporation and bylaws of ProcureNet will be
substantially in the forms set forth in Exhibits P and Q, respectively.
Section 2.03. Election of Directors. On or prior to the Spinoff Date,
ProcureNet and ▇▇▇▇▇▇ shall take all necessary action so that as of the Spinoff
Date the composition of the Board of Directors of ProcureNet shall be as set
forth in the Information Statement.
Section 2.04. Appointment of Officers. On or prior to the Spinoff
Date, ProcureNet and ▇▇▇▇▇▇ shall take all necessary actions so that, as of the
Spinoff Date, ProcureNet will have the executive officers set forth in the
Information Statement.
Section 2.05. Certain Provisions Relating to Assigned Agreements. (a)
Subject to the provisions of Section 2.05(c), any agreement, commitment or
understanding to which any member of the ProcureNet Group or the ▇▇▇▇▇▇ Group is
a party that inures to the benefit of both the ProcureNet Business and the
▇▇▇▇▇▇ Business shall be assigned in part, at the expense and risk of the
assignee, on or prior to the Spinoff Date or as soon as reasonably practicable
thereafter, so that each party (or other members of such party's Group) shall be
entitled to the rights and benefits inuring to its business under such
agreement, commitment or understanding, except as otherwise specifically
contemplated by any Ancillary Agreement.
(b) The assignee of any agreement, commitment or understanding
assigned, in whole or in part, under this Agreement (an "Assignee") shall, as a
condition to such assignment, assume and agree to pay, perform, and fully
discharge all obligations of the assignor under such agreement, commitment or
understanding (whether such obligations arose or were incurred prior to, on or
subsequent to the Spinoff Date and irrespective of
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whether such obligations have been asserted as of the Spinoff Date) or, in the
case of a partial assignment under Section 2.05(a), such Assignee's related
portion of such obligations as determined in accordance with the terms of the
relevant agreement, where determinable on the face thereof, and otherwise as
determined in accordance with the practice of the parties prior to the Spinoff.
Furthermore, the Assignee shall use its reasonable efforts to cause the assignor
of such agreement, commitment or understanding to be released from its
obligations under the assigned agreement, commitment or understanding (or in
the case of partial assignment Section 2.05(a), to the extent such agreement,
commitment or understanding is assigned).
(c) Notwithstanding anything in this Agreement to the contrary, this
Agreement shall not constitute an agreement to assign any agreement, commitment
or understanding in whole or in part, or any rights thereunder if the agreement
to assign or attempt to assign, without the consent of a third party, would
constitute a breach thereof or in any way adversely affect the rights of the
Assignee thereof until such consent is obtained. If an attempted assignment
thereof would be ineffective or would adversely affect the rights of any party
hereto so that the Assignee would not, in fact, receive all such rights, the
parties hereto will cooperate with each other to effect any arrangement designed
reasonably to provide for the Assignee the benefits of, and to permit the
Assignee to assume liabilities under, any such agreement, commitment or
understanding.
Section 2.06. Consents. The parties hereto shall use their best
efforts to obtain all consents and approvals of other Persons (including
consents and approvals of, and filings with and notices to, any Governmental
Authority) required to consummate the Spinoff, the Corporate Restructuring
Transactions and the other transactions contemplated by this Agreement or any
Ancillary Agreement (the "Consents").
Section 2.07. State Securities Laws. Prior to the Spinoff Date, the
parties shall take all such action as may be necessary or desirable under the
securities laws of states of the United States or of other jurisdictions in
order to effect the Spinoff, including to permit the distribution of the
ProcureNet Common Stock in the Spinoff and the continuance of sales and
dealings therein.
Section 2.08. Employees. Except as otherwise specifically
contemplated by any Ancillary Agreement or agreed upon by the parties, (i)
▇▇▇▇▇▇ shall, and shall cause other members of the ▇▇▇▇▇▇ Group to, use all
reasonable efforts to cause the employees engaged in the ProcureNet Business but
employed by members of the ▇▇▇▇▇▇ Group to make available their employment
services to the ProcureNet Group as of the Spinoff Date, and (ii) members of the
ProcureNet Group shall offer employment to such employees, as of the Spinoff
Date, at wage or salary levels and with employee benefits that are in the
aggregate substantially equivalent to and not less favorable to such employees
than those currently provided to such employees prior to the Spinoff Date.
Notwithstanding the above, any employee not otherwise specifically designated as
an
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employee of the ProcureNet Group that provides services to both the ▇▇▇▇▇▇ Group
and the ProcureNet Group shall remain an employee of the ▇▇▇▇▇▇ Group as of the
Spinoff Date.
Section 2.09. Ancillary Agreements. (a) On or prior to the Spinoff
Date, each of the parties shall, and (where applicable) shall cause other
members of its Group to, execute and deliver, the Employee Benefits Agreement,
the Intellectual Property Agreement, the Subleases, the Tax Sharing Agreement
and the Transitional Services Agreement.
(b) On or prior to the Spinoff Date, each of the parties shall, and
(where applicable) shall cause other members of its Group to, execute and
deliver such other agreements and instruments as are necessary or appropriate to
effect and consummate the Corporate Restructuring Transactions, the transfer of
the ProcureNet Assets to members of the ProcureNet Group and the assumption of
ProcureNet Liabilities by members of the ProcureNet Group.
ARTICLE III
THE SPINOFF
Section 3.01. The Spinoff. Upon the terms and subject to the
conditions of this Agreement, ProcureNet and ▇▇▇▇▇▇ shall effect and consummate
the Spinoff in accordance with this Agreement and as described in the
Information Statement.
Section 3.02. Spinoff Procedures; Deferral of Record Date and Spinoff
Date. ▇▇▇▇▇▇'▇ Board of Directors may (in its sole discretion and subject to and
in accordance with the provisions of the Exchange Act and the rules and
regulations promulgated therein, rules of the NYSE and provisions of the DGCL)
abandon the Spinoff, change the Record Date and the Spinoff Date and amend or
modify the terms and conditions of the Spinoff and any procedures relating to
the Spinoff (including the procedures set forth in this Agreement). Without
limiting the generality of the foregoing, if all the conditions precedent to the
Spinoff set forth in this Agreement have not theretofore been fulfilled or
waived, or ▇▇▇▇▇▇ does not reasonably anticipate that they will be fulfilled or
waived, on or prior to the date established as the Spinoff Date, ▇▇▇▇▇▇ may, by
resolution of its Board of Directors (or a committee thereof, so authorized),
defer the Spinoff Date to a later date. If ▇▇▇▇▇▇'▇ Board of Directors (or a
committee thereof, so authorized) so defers the Spinoff Date after the public
announcement of the Spinoff Date, if required by the rules of the NYSE, ▇▇▇▇▇▇
shall promptly thereafter issue a public announcement regarding such deferment
and shall take such other actions as may be deemed necessary or desirable with
respect to the dissemination of such information.
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Section 3.03. Notice to NYSE. ▇▇▇▇▇▇ shall, to the extent possible,
give the NYSE not less than ten days advance notice of the Record Date in
compliance with Rule 10b-17 under the Exchange Act.
Section 3.04. Mailing of Information Statement. As soon as
practicable after ▇▇▇▇▇▇'▇ Board of Directors has determined the Record Date,
ProcureNet and ▇▇▇▇▇▇ shall mail or otherwise disseminate the Information
Statement to the Holders.
Section 3.05. Distribution of ProcureNet Stock. (a) Upon the terms
and subject to the conditions of this Agreement, on or before the Spinoff Date
but effective immediately following the close of business on the Spinoff Date,
▇▇▇▇▇▇ shall:
(i) deliver to the Distribution Agent, for the benefit of the Holders
of ▇▇▇▇▇▇ Common Stock and ▇▇▇▇▇▇ Non-Voting Common Stock, the share
certificate or share certificates representing the ProcureNet Common
Stock;
(ii) deliver to the Distribution Agent, for the benefit of the
Holders of ▇▇▇▇▇▇ Series B Non-Voting Common Stock, the share certificate
or share certificates representing the ProcureNet Series B Non-Voting
Common Stock.
(iii) instruct the Distribution Agent to distribute promptly to each
Holder (A) one share of ProcureNet Common Stock for (x) every one share of
▇▇▇▇▇▇ Common Stock held by such Holder on the Record Date and (y) every
one share of ▇▇▇▇▇▇ NonVoting Common Stock held by such Holder on the
Record Date; and (B) one share of ProcureNet Series B Non-Voting Common
Stock for every one share of ▇▇▇▇▇▇ Series B Non-Voting Common Stock held
by such Holder on the Record Date.
(b) ProcureNet shall provide, or cause to be provided, to the
Distribution Agent sufficient certificates representing ProcureNet Common Stock
and ProcureNet Series B Non-Voting Common Stock in such denominations as the
Distribution Agent may request in order to effect the Spinoff. All shares of
ProcureNet Common Stock and ProcureNet Series B Non-Voting Common Stock issued
pursuant to the Spinoff shall be validly issued, fully paid and nonassessable
and free of any preemptive (or similar) rights.
Section 3.06. Conditions to the Spinoff. The consummation of the
Spinoff shall be subject to the fulfillment, or waiver by ProcureNet and ▇▇▇▇▇▇,
on or prior to the Spinoff Date, of each of the following conditions:
(a) No Litigation. No action or proceeding shall be pending by any
Person on the Spinoff Date before any Governmental Authority to restrain,
enjoin or otherwise prevent the consummation of the Spinoff or the other
transactions contemplated by
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this Agreement or any Ancillary Agreement or to recover any material
damages or to obtain other material relief as a result of the Spinoff.
(b) No Prohibitions. No Law shall be enacted, issued, promulgated or
proposed (whether temporary, preliminary or pending) that would restrict,
prevent or prohibit consummation of the Spinoff or the other transactions
contemplated by this Agreement or any Ancillary Agreement or would have a
material adverse effect on the condition (financial or otherwise),
properties, business, results of operations or prospects of the ProcureNet
Group or the ▇▇▇▇▇▇ Group.
(c) Consents from Governmental Authorities. The parties shall have
obtained all required Consents, the failure of which to obtain would, in
the opinion of ▇▇▇▇▇▇, have a material adverse effect on the condition
(financial or otherwise), properties, business, results of operations or
prospects of the ProcureNet Group or the ▇▇▇▇▇▇ Group, and such Consents
shall be in full force and effect.
(d) Section 170 of DGCL. The Board of Directors of ▇▇▇▇▇▇ shall have
received a report of an independent appraiser, in form and substance
reasonably satisfactory to the Board of Directors of ▇▇▇▇▇▇, confirming
that ▇▇▇▇▇▇'▇ surplus is sufficient to permit, without violation of
Section 170 of the DGCL, the distribution of the stock of ProcureNet.
(e) Indenture. ▇▇▇▇▇▇ shall have received a report of an independent
appraiser, in form and substance reasonably satisfactory to the Board of
Directors of ▇▇▇▇▇▇, regarding the amount of the dividend to be
distributed in the Spinoff in order for ▇▇▇▇▇▇ to confirm that the Spinoff
will not result in a breach of Section 4.4 of the Indenture, dated as of
January 21, 1998, between ▇▇▇▇▇▇ and State Street Bank and Trust Company
(as trustee), for ▇▇▇▇▇▇'▇ 9% Senior Subordinated Notes due 2008.
(f) Amendment to ▇▇▇▇▇▇ Credit Agreement. ▇▇▇▇▇▇ shall have obtained
all required amendments and consents to the Credit Agreement dated as of
January 21, 1998 (as previously amended), among ▇▇▇▇▇▇, The Chase
Manhattan Bank (as administrative agent) and the other parties listed
therein, to permit the Corporate Restructuring Transactions, the Spinoff
and the other transactions contemplated by this Agreement and the
Ancillary Agreements, in form and substance reasonably satisfactory to the
Board of Directors of ▇▇▇▇▇▇.
(g) Mailing of Information Statement. The Information Statement shall
have been mailed or otherwise disseminated to the Holders.
(h) Certain Ancillary Agreements. Each of the parties thereto shall
have executed and delivered the Chase Equity Agreement, the Investors'
Agreement and the Warrant Agreement.
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(i) Covenants. Each of the parties shall have performed and complied
in all material respects with all agreements and covenants required by
this Agreement to be performed on or prior to the Spinoff Date.
Section 3.07. Actions to Be Taken Immediately After the Spinoff.
Promptly after the Spinoff, ProcureNet shall (i) convert the shares of
ProcureNet Common Stock that Chase Equity Associates, L.P. receives in the
Spinoff into shares of ProcureNet Series A Non-Voting Common Stock in accordance
with the Chase Equity Agreement; and (ii) issue the warrants pursuant to the
Warrant Agreement.
ARTICLE IV
COVENANTS
Section 4.01. Further Assurances. Each of the parties shall use all
reasonable efforts to (i) execute and deliver such instruments and documents as
the other party may reasonably request in order to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements, and (ii) take or
cause to be taken all actions, and do or cause to be done all other things,
necessary or desirable to consummate the transactions contemplated by this
Agreement and the Ancillary Agreements.
Section 4.02. Assumption and Satisfaction of Liabilities. Except as
otherwise specifically contemplated by any Ancillary Agreement, from and after
the Spinoff Date, ProcureNet shall, and shall cause other members of the
ProcureNet Group to, assume, pay, perform and discharge all ProcureNet
Liabilities in accordance with their terms as and when they become due and
otherwise in accordance with the practice of the parties prior to the Spinoff.
Section 4.03. Property Received. Except as otherwise specifically
contemplated by any Ancillary Agreement, from and after the Spinoff Date, each
of ProcureNet and ▇▇▇▇▇▇ shall, and shall cause other members of its Group to,
promptly transfer to the appropriate member of the other's Group (as directed by
ProcureNet or ▇▇▇▇▇▇, as the case may be) any property received that is an asset
of the other. Except as otherwise specifically contemplated by any Ancillary
Agreement, if a party or a member of such party's Group receives any funds upon
the payment of accounts receivable that belong to the other Group, such party
shall or shall cause to be transferred to the appropriate member of the other's
Group (as directed by ProcureNet or ▇▇▇▇▇▇, as the case may be) such funds by
wire transfer not more than 30 days after receipt thereof.
Section 4.04. Transfers Not Effected Prior to the Spinoff; Transfers
Deemed Effective as of the Spinoff Date. To the extent that any transfers
contemplated by Article II are not consummated prior to the Spinoff, the parties
shall cooperate (and shall
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cause other members of their Group to cooperate) to effect such transfers as
promptly as practicable following the Spinoff. Nothing herein shall be deemed to
require the transfer of any assets or the assumption of any Liabilities
(including any authorizations, approvals or consents of, or licenses granted by,
any Governmental Authority) which by their terms or operation of Law cannot be
transferred or assumed; provided that the parties shall cooperate (and shall
cause the other members of their Group to cooperate) to seek to obtain any
necessary consents or approvals for the transfer of all assets and Liabilities
contemplated to be transferred pursuant to this Article II. If any such transfer
of assets or Liabilities has not been consummated, after the Spinoff Date the
party retaining such asset or Liability (or, as applicable, other members of
such party's Group) shall hold such asset in trust for the use and benefit of
the party entitled thereto (at the expense of the party entitled thereto) or
retain such Liability for the account of the party by whom such Liability is to
be assumed pursuant hereto, as the case may be, and take such other action as
may be reasonably requested by the party to whom such asset is to be transferred
or by whom such Liability is to be assumed, as the case may be, in order to
place such party, insofar as is reasonably possible, in the same position as
would have existed had such asset or Liability been transferred or assumed as
contemplated hereby. As and when any such asset or Liability becomes
transferable or assumable, such transfer shall be effected forthwith.
Section 4.05. No Representations or Warranties. (a) Each of the
parties understands and agrees that no party hereto is (whether in this
Agreement, in any Ancillary Agreement or otherwise) making any representation
or warranty, express, implied or otherwise, including any representation or
warranty as to (i) the assets, businesses or liabilities retained, transferred
or assumed, (ii) any consents, authorizations or approvals of third parties
(including Governmental Authorities) required for the transfer or assumption by
such party of any asset or Liability, (iii) the value of any asset or freedom of
any asset from any lien, claim, equity, encumbrance or other security interest
or adverse claim, (iv) the absence of any defenses or right of set off or
freedom from counterclaim with respect to any claim or asset, or (v) the legal
sufficiency to convey title to any asset.
(b) Each party hereto understands and agrees that there are no
representations or warranties, express, implied or otherwise, as to the
merchantability or fitness of any of the assets either transferred to or
retained by the ProcureNet Group pursuant to this Agreement or any Ancillary
Agreement, and all such assets so transferred or retained shall be transferred
or retained on an "AS IS, WHERE IS" basis, and the member of the ProcureNet
Group to whom any such assets are transferred, or who retains assets, shall bear
the economic and legal risk that any conveyances of such assets shall prove to
be insufficient or that the title of such party or any other member of the
ProcureNet Group to any such assets shall be other than good and marketable and
free and clear of any lien, claim, encumbrance or other security interest or
adverse claim.
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Section 4.06. Removal of Certain Guarantees. (a) ProcureNet shall use
all reasonable efforts (excluding payment of money) to obtain, as promptly as
practicable after the Spinoff Date, the release of members of the ▇▇▇▇▇▇ Group
from their obligations regarding the ProcureNet Liabilities on which any member
of the ▇▇▇▇▇▇ Group is an obligor by reason of any guarantee of obligations for
borrowed money, including obligations evidenced by bonds, debentures or other
similar instruments and obligations under acceptance, letter of credit or
similar facilities (the "Guaranteed ProcureNet Liabilities"). ▇▇▇▇▇▇ shall use
all reasonable efforts (excluding the payment of money) to obtain, as promptly
as practicable after the Spinoff Date, the release of members of the ProcureNet
Group from their obligations with respect to any Liabilities of ▇▇▇▇▇▇ on which
any member of the ProcureNet Group is an obligor by reason of any guarantee of
obligations for borrowed money, including obligations evidenced by bonds,
debentures or other similar instruments and obligations under acceptance, letter
of credit or similar facilities (the "Guaranteed ▇▇▇▇▇▇ Liabilities").
(b) No member of the ProcureNet Group or ▇▇▇▇▇▇ Group shall extend
the term of any Guaranteed ▇▇▇▇▇▇ Liabilities or Guaranteed ProcureNet
Liabilities, as the case may be, or modify any such guaranteed liability in any
way that would increase the liability guaranteed thereunder unless the guarantee
of ▇▇▇▇▇▇ or ProcureNet or of the member of such Group, as the case may be, is
released as to any extended or released liability of obligations under such
guaranteed liabilities or the other party otherwise consents in writing. If a
member of the ProcureNet Group or the ▇▇▇▇▇▇ Group is required to pay, as
guarantor, any Guaranteed ▇▇▇▇▇▇ Liabilities or Guaranteed ProcureNet
Liabilities, as the case may be, such Person (as the case may be) will be
entitled to all the rights of the payee in any property of the other party
pledged as security for such guaranteed liabilities.
Section 4.07. Public Announcements. ProcureNet and ▇▇▇▇▇▇ shall
cooperate and consult with each other before issuing any press release or
otherwise making any public statement or announcement regarding the Spinoff and
the transactions contemplated hereby, and shall not issue any such press
release or otherwise make any such public statement or announcement without the
prior consent of the other party, which shall not be unreasonably withheld;
provided that a party may, without the prior consent of any other party, issue
such press release or otherwise make such public statement or announcement as
may be required by Law or the rules of the NYSE if it has used all reasonable
efforts to consult with such other party and to obtain its consent but has been
unable to do so in a timely manner.
Section 4.08. Termination of Intercompany Agreements. Effective as of
the consummation of the Spinoff, all agreements between any member of the
ProcureNet Group, on the one hand, and any member of the ▇▇▇▇▇▇ Group, on the
other hand, shall be deemed terminated, except for this Agreement and the
Ancillary Agreements and except as otherwise specifically contemplated by this
Agreement or any Ancillary Agreement.
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ARTICLE V
ACCESS TO INFORMATION
Section 5.01. Access to Books and Records. Except to the extent
otherwise specifically contemplated by this Article V or any Ancillary
Agreement, from and after the Spinoff Date, each of ProcureNet and ▇▇▇▇▇▇ shall
(and shall cause other members of its Group to) afford to each other party and
its authorized accountants, counsel and other designated representatives
reasonable access and duplicating rights (all such duplicating costs to be borne
by the requesting party) during normal business hours, subject to appropriate
restrictions for classified, privileged or confidential information, to the
Books and Records of such party and each other member of such party's Group
relating to periods prior to the Spinoff Date, but only to the extent such Books
and Records relate to the requesting party's business and affairs.
Section 5.02. Reimbursement. Except to the extent otherwise
specifically contemplated by this Agreement or any Ancillary Agreement, a party
providing Books and Records to any other party (or such party's representatives)
under this Article V shall be entitled to reimbursement from such other party,
upon the presentation of invoices therefor, for all costs and expenses
reasonably incurred in providing such Books and Records.
Section 5.03. Confidentiality. (a) Each of the ProcureNet Group and
the ▇▇▇▇▇▇ Group shall not (and shall cause its advisors and other
representatives not to) use or permit the use of, and shall hold (and shall
cause its advisors and other representatives to hold), in strict confidence, all
information concerning the other Group in its possession, custody or control to
the extent such information relates to the periods prior to the Spinoff Date,
relates to any Ancillary Agreement, or is obtained in the course of performing
services for the other Group pursuant to any Ancillary Agreement. Neither the
ProcureNet Group nor the ▇▇▇▇▇▇ Group shall (and each shall cause its advisors
and other representatives not to) otherwise release or disclose such information
to any other Person, without the prior written consent of the other Group,
unless compelled to disclose such information by judicial or administrative
process or unless such disclosure is required by Law and such Group has used
commercially reasonable efforts to consult with the other affected party or
parties prior to such disclosure.
(b) To the extent that a party hereto is compelled by judicial or
administrative process to disclose such information under circumstances in which
any evidentiary privilege would be available, such party agrees to assert such
privilege in good faith prior to making such disclosure. Each of the parties
shall consult with each relevant other party in connection with any such
judicial or administrative process, including in determining whether any
privilege is available, and shall not object to each such relevant
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party and its counsel participating in any hearing or other proceeding
(including any appeal of an initial order to disclose) in respect of such
disclosure and assertion of privilege.
(c) Notwithstanding anything in this Section 5.03 to the contrary, no
party shall be prohibited from using or permitting the use of, or required to
hold in confidence, any information to the extent that (i) such information has
been or is in the public domain through no fault of such party, (ii) such
information is, after the Spinoff Date, lawfully acquired from other sources by
such party, or (iii) this Agreement or any Ancillary Agreement permits the use
or disclosure of such information by such party.
Section 5.04. Witness Services. At all times from and after the
Spinoff Date, each of ProcureNet and ▇▇▇▇▇▇ shall use its reasonable efforts to
make available to the other party's Group, upon reasonable written request, the
officers, directors, employees and agents of members of its Group for fact
finding, consultation or interviews and as witnesses to the extent that (i) such
persons may reasonably be required in connection with the prosecution or defense
of any action in which the requesting party or any member of its Group may from
time to time be involved, and (ii) there is no conflict in the action between
the requesting party or any member of its respective Group and the party to
which a request is made pursuant to this Section 5.04 or any member of such
party's Group. Except as otherwise agreed, a party providing witness services to
any other party under this Section 5.04 shall be entitled to reimbursement from
the recipient of such services, upon the presentation of invoices therefor, for
reasonable costs and expenses incurred in connection with providing such witness
services (including travel expenses and attorneys' fees and expenses for such
witnesses, but not salary expenses). For purposes of this Section 5.04, "action"
means any action, suit, arbitration, inquiry, proceeding or investigation by or
before any Governmental Authority or any arbitration tribunal.
Section 5.05. Retention of Books and Records. Except when a longer
period is required by Law or is specifically contemplated elsewhere in this
Agreement or by any Ancillary Agreement, each party shall, and shall cause the
other members of its Group to, retain until the seventh anniversary of the
Spinoff Date, all material information (including all material Books and
Records) relating to the other Group and the other Group's operations and
businesses prior to the Spinoff Date; provided that all material information
(including all material Books and Records) relating to Tax matters shall be
retained until the tenth anniversary of the Spinoff Date. Notwithstanding the
foregoing, prior to the termination of such periods any party hereto may offer,
and after the termination of such periods each party hereto shall offer, in
writing to deliver to the other parties all or a portion of such information as
it relates to members of the offering party's Group and, if such offer is
accepted in writing within 90 days after receipt thereof, the offering party
shall promptly arrange for the delivery of such information (or copies thereof)
to each accepting party (at the expense of such accepting party). If such offer
is
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not so accepted, the offered information may be destroyed or otherwise disposed
of by the offering party at any time thereafter.
Section 5.06. Privileged Matters. (a) Each party shall, and shall
cause the other members of its Group to, use its reasonable efforts to maintain,
preserve, protect and assert all privileges including all privileges arising
under or relating to the attorney-client relationship (including the
attorney-client and attorney work product privileges), that relate directly or
indirectly to any member of any other Group for any period prior to the Spinoff
Date ("Privilege" or "Privileges"). Each party shall use its reasonable efforts
not to waive, or permit the other members of its Group to waive, any such
Privilege that could be asserted under applicable Law without the prior written
consent of the other parties. With respect to each party, the rights and
obligations created by this Section 5.06 shall apply to all information as to
which a member of its Group did assert or, but for the Spinoff, would have been
entitled to assert the protection of a Privilege ("Privileged Information"),
including any and all information that (i) was generated or received prior to
the Spinoff Date but which, after the Spinoff, is in the possession of a member
of the other Group, or (ii) is generated or received after the Spinoff Date but
refers to or relates to Privileged Information that was generated or received
prior to the Spinoff Date.
(b) Upon receipt by a party or any member of its Group of any
subpoena, discovery or other request that arguably calls for the production or
disclosure of Privileged Information, or if a party or any member of its Group
obtains knowledge that any current or former employee of such party or any
member of its Group has received any subpoena, discovery or other request which
arguably calls for the production or disclosure of Privileged Information, such
party shall promptly notify the other parties of the existence of the request
and shall provide the other parties a reasonable opportunity to review the
information and to assert any rights it may have under this Section 5.06 or
otherwise to prevent the production or disclosure of Privileged Information. No
party shall, or shall permit any member of its Group to, produce or disclose any
information arguably covered by a Privilege under this Section 5.06 unless (i)
each other party has provided its express written consent to such production or
disclosure, or (ii) a court of competent jurisdiction has entered an order which
is not then appealable or a final, nonappealable order finding that the
information is not entitled to protection under any applicable privilege (it
being understood that the parties not providing their consent to the production
or disclosure of such information shall bear the costs and expenses incident to
such court proceedings).
(c) The parties understand and agree that the transfer of any Books
and Records or other information between members of the ProcureNet Group, on the
one hand, and members of the ▇▇▇▇▇▇ Group, on the other hand, including pursuant
to any Ancillary Agreement, shall be made in reliance on the agreements of
ProcureNet and ▇▇▇▇▇▇, as set forth in Section 5.03 and this Section 5.06, to
maintain the confidentiality of Privileged Information and to assert and
maintain all applicable Privileges. The Books and Records
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being transferred pursuant to this Agreement or any Ancillary Agreement, the
access to information being granted pursuant to Section 5.01 or any Ancillary
Agreement, the agreement to provide witnesses and individuals pursuant to
Section 5.04 and the transfer of Privileged Information to any party pursuant to
this Agreement shall not be deemed a waiver of any Privilege that has been or
may be asserted under this Section 5.06 or otherwise.
ARTICLE VI
INSURANCE
Section 6.01. General. Except as otherwise agreed by the parties, all
policies of liability, fire, workers' compensation and other forms of insurance
insuring the ProcureNet Assets and ProcureNet Business shall be maintained by
▇▇▇▇▇▇ until the Spinoff Date, unless ProcureNet shall have earlier obtained
appropriate coverage. ▇▇▇▇▇▇ shall, if so requested by ProcureNet, use
reasonable efforts to assist ProcureNet in obtaining such insurance coverages in
such amounts as are agreed upon by the parties. Following the Spinoff Date, each
of the parties shall cooperate with and assist the other party in the prevention
of conflicts or gaps in insurance coverage and/or collection of proceeds.
Section 6.02. Treatment of Reserves. On or before the Spinoff Date,
▇▇▇▇▇▇ shall transfer to ProcureNet all reserves for ProcureNet Liabilities
relating to ProcureNet Uninsured Retentions. ProcureNet and ▇▇▇▇▇▇ shall
cooperate and take all such actions as may be necessary in connection with the
allocation of uninsured retentions.
Section 6.03. Uninsured Retentions; Claims Management. (a) ProcureNet
shall be responsible for payment of all ProcureNet Liabilities (including, if
required, for the negotiation and posting of any bond or collateral guaranteeing
payment to insurance carriers or Persons with indemnification or reimbursement
obligations) relating to ProcureNet Uninsured Retentions. Within 60 days
following receipt from ▇▇▇▇▇▇ or an insurance carrier (in which case ProcureNet
shall promptly notify ▇▇▇▇▇▇ of such receipt) of an invoice with supporting
documentation evidencing payment of such ProcureNet Liabilities by ▇▇▇▇▇▇ or
such insurance carrier, ProcureNet shall reimburse ▇▇▇▇▇▇ or such insurance
carrier for such payment.
(b) ▇▇▇▇▇▇ shall have claims' management responsibility and
settlement authority, in accordance with established claim procedures with
applicable insurance carriers, for all claims to the extent such claims relate
to any Liability of ▇▇▇▇▇▇; provided that if any such claim involves ProcureNet
Uninsured Retentions ▇▇▇▇▇▇ may settle such claim only with the prior agreement
of ProcureNet (which agreement shall not be unreasonably withheld). In
connection with such claims' management, ProcureNet shall
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cooperate with ▇▇▇▇▇▇ and provide to ▇▇▇▇▇▇ any applicable insurance information
in ProcureNet's possession required for ▇▇▇▇▇▇ to present claims for payment to
the appropriate insurance carrier or carriers.
(c) ProcureNet shall have claims' management responsibility and
settlement authority, in accordance with established claims procedures with
applicable insurance carriers, for all claims to the extent such claims relate
to ProcureNet Liabilities; provided that if any such claim involves ▇▇▇▇▇▇
Uninsured Retentions ProcureNet may settle such claim only with the prior
agreement of ▇▇▇▇▇▇ (which agreement shall not be unreasonably withheld). In
connection with such claims' management, ▇▇▇▇▇▇ shall cooperate with ProcureNet
and provide to ProcureNet any applicable insurance information in ▇▇▇▇▇▇'▇
possession required for ProcureNet to present claims for payment to the
appropriate insurance carrier or carriers.
(d) On or promptly following the Spinoff Date, members of the ▇▇▇▇▇▇
Group shall turn over to ProcureNet all of their files on insured claims
relating to ProcureNet Liabilities.
Section 6.04. Directors' and Officers' Insurance. ProcureNet shall
use its best efforts to procure and maintain directors' and officers' liability
insurance coverage at least equal to ▇▇▇▇▇▇'▇ current directors' and officers'
liability insurance coverage for the directors and officers of the ProcureNet
Group at the Spinoff Date for such persons' acts as directors or officers of
members of the ProcureNet Group for periods on and after the Spinoff Date.
ARTICLE VII
INDEMNIFICATION
Section 7.01. Indemnification by ProcureNet. Except and to the extent
otherwise specifically contemplated by any Ancillary Agreement, ProcureNet
shall indemnify, defend and hold harmless the ▇▇▇▇▇▇ Indemnitees from and
against any and all Losses of the ▇▇▇▇▇▇ Indemnitees arising out of, by reason
of or otherwise in connection with (i) any ProcureNet Liability, or (ii) any
breach by any member of the ProcureNet Group of any provision of this Agreement
or any Ancillary Agreement.
Section 7.02. Procedures for Indemnification. (a) As promptly as
practicable after receipt by an Indemnified Party of notice of any Loss in
respect of which ProcureNet may be liable under this Article VII, the
Indemnified Party shall give notice thereof (the "Indemnification Notice") to
ProcureNet. The Indemnification Notice shall state the reason for the
indemnification claim and (if known) the amount or estimate of the amount that
may be due under this Article VII, and shall provide relevant
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documentary or other evidence regarding such claim and the proposed
indemnification amount. The failure of any Indemnified Party to give such notice
shall not relieve ProcureNet of its indemnification obligations under this
Article VII, except to the extent such failure results in a lack of actual
notice to ProcureNet and ProcureNet is materially prejudiced as a result of
failure to receive such notice. Within 60 days of receipt of an Indemnification
Notice in accordance with this Section 7.02(a), ProcureNet shall deliver to the
Indemnified Party a notice of its acceptance of or disagreement with such
indemnification claim.
(b) In the case of any claim asserted by a third party (including any
Governmental Authority), the Indemnified Party shall (i) notify ProcureNet of
such claim within 30 days of receipt of such claim (but at least 15 days prior
to the expiration of the period during which the defendant may assert its
defense, if such period expires earlier), it being understood that the failure
to give such notice shall not relieve ProcureNet of its indemnification
obligations under this Article VII, except to the extent such failure results in
a lack of actual notice to ProcureNet and ProcureNet is materially prejudiced as
a result of failure to receive such notice, and (ii) permit ProcureNet, at its
option and expense, to take over and assume the defense of any such claim by
counsel satisfactory to the Indemnified Party and to settle or otherwise dispose
of the same; provided that if ProcureNet does so take over and assume the
defense, (x) the Indemnified Party may at its discretion at all times
participate, at its own expense, in such defense by counsel of its own choice,
and (y) ProcureNet shall, at all times and to the maximum extent possible, keep
the Indemnified Party informed of the status of such claim and the proceedings
related thereto; provided, further, that ProcureNet shall not be entitled to
assume the defense of any such third-party claim (and shall be liable for
reasonable fees and expenses of counsel to the Indemnified Party for defending
such claim) if, in the Indemnified Party's reasonable judgment, a conflict of
interest exists between the Indemnified Party and ProcureNet in respect of such
claim. ProcureNet shall not, in defense of any such claim, except with the prior
written consent of the Indemnified Party, enter into any settlement that does
not include, as an unconditional term thereof, the giving by the claimant or
plaintiff in question to the Indemnified Party and all other ▇▇▇▇▇▇ Indemnitees
a release of all liabilities in respect of such claims. If ProcureNet does not
accept the defense of any claim within 30 days of delivery of the notice, the
Indemnified Party shall have the right to defend against any such claim by
counsel of its own choice and shall be entitled to settle or agree to pay in
full such claim or demand; provided that if an Indemnified Party does so take
over and assume the defense, the Indemnified Party shall, at all times and to
the maximum extent possible, keep ProcureNet informed of the status of such
claim and the proceedings related thereto.
Section 7.03. Adjustments for Insurance Proceeds. If Losses by an
Indemnified Party are covered by an insurance policy or by an indemnification or
reimbursement obligation of another Person, the Indemnified Party shall use
commercially reasonable efforts to collect insurance or indemnity or
reimbursement payments with respect thereto.
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If the Indemnified Party recovers such insurance proceeds or indemnity or
reimbursement payments prior to being indemnified and held harmless by
ProcureNet with respect to such Losses, the payment made by ProcureNet with
respect to such Losses shall be reduced by the net amount of insurance proceeds
or indemnity or reimbursement payments received by the Indemnified Party, less
reasonable attorneys' fees and other expenses incurred in connection with such
recovery. If the Indemnified Party recovers such insurance proceeds or indemnity
or reimbursement payments after being indemnified and held harmless by
ProcureNet with respect to such Losses, the Indemnified Party shall pay to
ProcureNet the net amount of insurance proceeds or indemnity or reimbursement
payments (less reasonable attorney's fees and other expenses incurred in
connection with such recovery) received by the Indemnified Party.
Section 7.04. Contribution. To the extent that any indemnification
provided for under Section 7.01 is unavailable to an Indemnified Party or is
insufficient in respect of any Losses of such Indemnified Party, then ProcureNet
in lieu of indemnifying such Indemnified Party thereunder, 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 Losses in such proportion
as is appropriate to reflect the relative fault of ProcureNet on the one hand
and the Indemnified Party on the other hand in connection with the action,
inaction, statement or omission or alleged action, inaction, statement or
omission that resulted in such Losses as well as any other relevant equitable
considerations.
Section 7.05. Remedies Cumulative. The remedies provided in this
Article VII shall be cumulative and shall not preclude assertion by any
Indemnified Party of any other rights or the seeking of any and all other
remedies against ProcureNet.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Termination. This Agreement may be abandoned at any
time prior to the Spinoff by and in the sole discretion of ▇▇▇▇▇▇ without the
approval of ProcureNet. In the event of such termination, no party shall have
any liability of any kind to the other party or any other Person. After the
Spinoff Date, this Agreement may be terminated only by the written agreement of
each of the parties hereto.
Section 8.02. Expenses. Except as specifically contemplated elsewhere
in this Agreement or by any Ancillary Agreement, ▇▇▇▇▇▇ shall bear and pay all
fees, costs and expenses incurred in connection with the Spinoff and the
consummation of the transactions contemplated hereby.
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Section 8.03. Notices. All notices, consents, requests, instructions,
approvals and other communications provided for in this Agreement shall be in
writing and shall be deemed validly given upon personal delivery or one day
after being sent by overnight courier service or by telecopy (so long as for
notices or other communications sent by telecopy, the transmitting telecopy
machine records electronic confirmation of the due transmission of the notice),
at the following address or telecopy number, or at such other address or
telecopy number as a party may designate to the other parties:
If to ProcureNet, to:
▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: 973-575-5467
Attention: Corporate Secretary
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Corporate Secretary
If to ▇▇▇▇▇▇, to:
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: General Counsel
Section 8.04. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the conflicts of laws provisions thereof.
Section 8.05. Choice of Forum. Each of the parties hereby irrevocably
submits to the exclusive jurisdiction of the courts of the State of New
Hampshire and the Federal courts of the United States of America located in the
State of New Hampshire solely in respect of the interpretation and enforcement
of the provisions of this Agreement and of the documents referred to in this
Agreement, and in respect of the transactions contemplated hereby and thereby,
and hereby waives, and agrees not to assert, as a defense in any action, suit,
or proceeding for the interpretation or enforcement hereof or of any such
document, that it is not subject thereto or that such action, suit, or
proceeding may not be brought or is not maintainable in said courts or that the
venue thereof may not be appro-
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priate or that this Agreement or any such document may not be enforced in or by
such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and determined in such a
court. Each of the parties hereby consents to and grants any such court
jurisdiction over the person of such parties and over the subject matter of any
such dispute and agrees that mailing of process or other papers in connection
with any such action or proceeding in the manner provided in Section 8.03 in
such other manner as may be permitted by law, shall be valid and sufficient
service thereof.
Section 8.06. Amendments; Waivers, etc. (a) Subject to Section 3.02,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by an instrument in writing, signed by the party against
which enforcement of such amendment, discharge, waiver or termination is sought.
(b) No failure or delay by any party in exercising any right, power
or privilege under this Agreement shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies provided herein shall be cumulative and not exclusive of any rights or
remedies provided by law.
Section 8.07. Assignment. This Agreement shall not be assignable or
otherwise transferable by a party without the prior consent of the other
parties, and any attempt to so assign or otherwise transfer this Agreement
without such consent shall be void and of no effect. This Agreement shall be
binding upon the respective successors and assigns of the parties hereto.
Section 8.08. Third Party Beneficiaries. Except as provided in
Article VII hereof (relating to ▇▇▇▇▇▇ Indemnitees), nothing in this Agreement
shall be construed as giving any Person, other than the parties hereto and their
successors and permitted assigns, any right, remedy or claim under or in respect
of this Agreement or any provision hereof.
Section 8.09. Severability. If any provision of this Agreement is
held to be invalid or unenforceable for any reason, it shall be adjusted rather
than voided, if possible, in order to achieve the intent of the parties hereto
to the maximum extent possible. In any event, the invalidity or unenforceability
of any provision of this Agreement in any jurisdiction shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of this Agreement, including that
pro vision, in any other jurisdiction.
Section 8.10. Section Headings. The article and section headings of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
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Section 8.11. Integration. This Agreement, including the Schedules
and Exhibits hereto, and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement of the parties and
supersede any and all prior agreements, arrangements and understandings relating
to the subject matters hereof and thereof.
Section 8.12. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original and all of
which shall together constitute one and the same instrument.
Section 8.13. Coordination with Tax Sharing Agreement. To the extent
that there is any inconsistency between the terms of this Agreement and the Tax
Sharing Agreement as to any Tax matter, the terms of the Tax Sharing Agreement
shall prevail.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
▇▇▇▇▇▇ SCIENTIFIC INTERNATIONAL INC.
By
----------------------------------
Name:
Title:
PROCURENET, INC.
By
----------------------------------
Name:
Title:
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Schedule I
to
Distribution Agreement
PROCURENET ASSETS
A. All of the capital stock of each of SPS and SCS and 73.15% of the capital
stock of SSI.
B. The assets of ECD as listed in Annex A to this Schedule I.
C. Rights under the agreements listed in Annex B to this Schedule I.
D. The assets reflected on the audited balance sheet of the ProcureNet
Business as at December 31, 1998 (other than the assets disposed of in the
ordinary course of business).
E. Assets acquired by ▇▇▇▇▇▇ or its Subsidiaries from December 31, 1998 to
the close of business on the Spinoff Date that are of a type or nature
that would have resulted in such assets being included as an asset on the
audited balance sheet of the ProcureNet Business as at December 31, 1998
had such assets been acquired on or prior to December 31, 1998, determined
on a basis consistent with the determination of assets included on the
audited balance sheet of the ProcureNet Business as at December 31, 1998.
F. All of the assets, properties and rights expressly allocated to members of
the ProcureNet Group under this Agreement or any of the Ancillary
Agreements.
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Schedule II
to
Distribution Agreement
PROCURENET LIABILITIES
A. The Liabilities reflected on the audited balance sheet of the ProcureNet
Business as at December 31, 1998, including the notes thereto.
B. The Liabilities incurred in the conduct or operation of the ProcureNet
Business or the ownership or use of the ProcureNet Assets, whether arising
before, at or after the Spinoff.
C. The Liabilities of ECD as listed in Annex A to Schedule I.
D. The Liabilities of ▇▇▇▇▇▇ with respect to the purchase of SSI including
▇▇▇▇▇▇'▇ Liabilities under the Stockholders Agreement, dated as of June
10, 1998, by and among ▇▇▇▇▇▇ and the parties identified therein.
E. Obligations and commitments under the agreements listed in Annex B to
Schedule I.
F. The Liabilities arising under or in connection with the Information
Statement.
G. Liabilities of ProcureNet or any of its Subsidiaries arising under this
Agreement or any of the Ancillary Agreements.
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