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EXHIBIT 10.1
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AGREEMENT AND PLAN OF DISTRIBUTION
DATED AS OF SEPTEMBER , 1997
BETWEEN
ITT CORPORATION
AND
ITT DESTINATIONS, INC.
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.01. General.............................................................. 1
SECTION 1.02. References; Interpretation........................................... 8
ARTICLE II
PRELIMINARY TRANSACTIONS
SECTION 2.01. Internal Restructuring............................................... 8
SECTION 2.02. Dividends............................................................ 8
SECTION 2.03. The Rights........................................................... 8
SECTION 2.04. Transfer of Certain Businesses and Assets............................ 8
SECTION 2.05. Assumption of Liabilities............................................ 8
SECTION 2.06. Transfer of Certain Licenses and Permits............................. 9
SECTION 2.07. Transfer and Assumption Documentation................................ 9
SECTION 2.08. Intercompany Accounts................................................ 9
SECTION 2.09. Assignments and Transfers Not Effected Prior to the Distribution..... 9
ARTICLE III
THE DISTRIBUTION
SECTION 3.01. Directors and Employees.............................................. 10
SECTION 3.02. Mechanics of Distribution............................................ 10
SECTION 3.03. Timing of Distribution............................................... 10
ARTICLE IV
MUTUAL RELEASE
SECTION 4.01. Mutual Release, etc.................................................. 11
ARTICLE V
INDEMNIFICATION
SECTION 5.01. Indemnification by the Company....................................... 11
SECTION 5.02. Indemnification by Destinations...................................... 12
SECTION 5.03. Limitations on Indemnification Obligations........................... 12
SECTION 5.04. Procedures for Indemnification of Third Party Claims................. 12
SECTION 5.05. Indemnification Payments............................................. 14
SECTION 5.06. Other Adjustments.................................................... 14
SECTION 5.07. Survival of Indemnities.............................................. 14
ARTICLE VI
COVENANTS
SECTION 6.01. Provision of Corporate Records....................................... 14
SECTION 6.02. Access to Information................................................ 14
SECTION 6.03. Retention of Records................................................. 15
SECTION 6.04. Witness Services..................................................... 15
SECTION 6.05. Reimbursement........................................................ 15
SECTION 6.06. Confidentiality...................................................... 15
SECTION 6.07. Change of Corporate Name............................................. 16
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SECTION 6.08. Further Assurances................................................... 16
SECTION 6.09. Investment Banking Fee............................................... 16
ARTICLE VII
INSURANCE
SECTION 7.01. Policies and Rights Included Within Assets........................... 16
SECTION 7.02. Post-Distribution Time Claims........................................ 17
SECTION 7.03. Administration; Other Matters........................................ 17
SECTION 7.04. Agreement for Waiver of Conflict and Shared Defense.................. 18
SECTION 7.05. Cooperation.......................................................... 18
SECTION 7.06. Directors and Officers Liability Insurance........................... 18
ARTICLE VIII
CONDITIONS
SECTION 8.01. Conditions to Obligations of the Company............................. 19
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Modification or Amendment............................................ 20
SECTION 9.02. Termination.......................................................... 20
SECTION 9.03. Waiver; Remedies..................................................... 20
SECTION 9.04. Counterparts......................................................... 20
SECTION 9.05. GOVERNING LAW........................................................ 20
SECTION 9.06. Notices.............................................................. 20
SECTION 9.07. Entire Agreement..................................................... 21
SECTION 9.08. Certain Obligations.................................................. 21
SECTION 9.09. Assignment........................................................... 21
SECTION 9.10. Captions............................................................. 21
SECTION 9.11. Specific Performance................................................. 21
SECTION 9.12. Severability......................................................... 21
SECTION 9.13. Third Party Beneficiaries............................................ 22
SECTION 9.14. Fees and Expenses of Enforcement..................................... 22
SECTION 9.15. Expenses............................................................. 22
SECTION 9.16. Exhibits and Schedules............................................... 22
SECTION 9.17. Consent to Jurisdiction.............................................. 22
SECTION 9.18. Ancillary Agreements................................................. 22
SECTION 9.19. Survival of Agreements............................................... 22
SECTION 9.20. Successors and Assigns............................................... 22
Schedule 2.01(b) Miscellaneous Subsidiaries
Schedule 3.01(a) Directors of the Company
Schedule 5.02
Schedule 7.01(a) Company Policies
Exhibit A Employee Benefits Services and Liabilities Agreement
Exhibit B-1 Intellectual Property License and Assignment Agreement
Exhibit B-2 Trade Name and Service ▇▇▇▇ License Agreement
Exhibit C Tax Allocation Agreement
Exhibit D Educational Agreement and Plan of Distribution
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AGREEMENT AND PLAN OF DISTRIBUTION dated as of September , 1997,
between ITT CORPORATION, a Nevada corporation (the "Company"), and ITT
DESTINATIONS, INC., a Nevada corporation and a wholly owned subsidiary of
the Company ("Destinations").
W I T N E S S E T H:
WHEREAS the Board of Directors of the Company has approved this Agreement,
pursuant to which and subject to the terms of which (a) all the assets of the
Company, other than the Retained Assets (as hereinafter defined), will be
conveyed or otherwise transferred to Destinations and all the liabilities of the
Company, other than the Retained Liabilities (as hereinafter defined) and other
liabilities specified herein, will be assumed by Destinations and certain other
transactions will be consummated, all as set forth in Article II hereof (the
"Preliminary Transactions"), and (b) the Company will distribute all the issued
and outstanding shares of Common Stock, par value $.01 per share, of
Destinations ("Destinations Common Shares"), together with the associated Rights
(as hereinafter defined), to the holders of record of shares of Common Stock, no
par value per share, of the Company ("Company Common Stock"), other than shares
held in the treasury of the Company, on a share for share basis;
WHEREAS the purpose of the Preliminary Transactions and the Distribution is
to divest the Company of all businesses, operations and liabilities other than
the Retained Business, Retained Assets, Retained Liabilities, Educational
Business, Educational Assets and Educational Liabilities (each as hereinafter
defined) of the Company and its Subsidiaries (as hereinafter defined);
WHEREAS it is the intention of the parties to this Agreement that for
Federal income tax purposes the Distribution (as hereinafter defined) shall
qualify as a tax-free spin off under Section 355 of the Code; and
WHEREAS in order to effect the separation of ownership of the Company and
Destinations, this Agreement sets forth the principal corporate transactions
required to effect the Preliminary Transactions and the Distribution and sets
forth other agreements that will govern certain other matters following the
Distribution.
NOW, THEREFORE, in consideration of the premises, and of the covenants and
agreements set forth herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. General. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"1995 Distribution Agreements" shall mean the Distribution Agreement dated
as of November 1, 1995, among ITT Corporation, a Delaware corporation which has
been renamed "ITT Industries, Inc." ("Industries"), the Company and ITT Hartford
Group, Inc., a Delaware corporation which has been renamed "The Hartford
Financial Services Group, Inc." ("Hartford") and those certain intellectual
property agreements and other agreements entered into in connection with the
transactions contemplated by the foregoing Distribution Agreement, in each case,
as amended, supplemented or otherwise modified prior to the date hereof;
provided, however, that the 1995 Distribution Agreements shall not include the
Tax Allocation Agreement, dated as of November 1, 1995, among Industries,
Hartford and the Company, the Employee Benefit Services and Liability Agreement,
dated as of November 1, 1995, among Industries, Hartford and the Company or any
Liability or transaction contemplated thereby.
"Action" shall mean any action, suit, arbitration, inquiry, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency, body or commission or any arbitration tribunal.
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"Affiliate" shall mean, when used with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Person
specified.
"Agent" shall mean The Bank of New York, as transfer agent for the Company.
"Amendment" shall have the meaning set forth in Section 6.07(a).
"Ancillary Agreements" shall mean the Employee Benefits Services and
Liability Agreement, the Intellectual Property Agreements and the Tax Allocation
Agreement.
"Assets" shall mean any and all assets, properties and rights, whether
tangible or intangible, whether real, personal or mixed, whether fixed,
contingent or otherwise, and wherever located, including, without limitation,
the following:
(i) real property interests (including leases), land, plants,
buildings and improvements;
(ii) machinery, equipment, tooling, vehicles, furniture and fixtures,
leasehold improvements, repair parts, tools, plant, laboratory and office
equipment and other tangible personal property, together with any rights or
claims arising out of the breach of any express or implied warranty by the
manufacturers or sellers of any of such assets or any component part
thereof;
(iii) inventories, including raw materials, work-in-process, finished
goods, parts, accessories and supplies;
(iv) cash, bank accounts, notes, loans and accounts receivable
(whether current or not current), interests as beneficiary under letters of
credit, advances and performance and surety bonds;
(v) certificates of deposit, banker's acceptances, shares of stock,
bonds, debentures, evidences of indebtedness, certificates of interest or
participation in profit-sharing agreements, collateral-trust certificates,
preorganization certificates or subscriptions, transferable shares,
investment contracts, voting-trust certificates, puts, calls, straddles,
options, swaps, collars, caps and other securities or hedging arrangements
of any kind;
(vi) financial, accounting and operating data and records including,
without limitation, books, records, notes, sales and sales promotional
data, advertising materials, credit information, cost and pricing
information, customer and supplier lists, reference catalogs, payroll and
personnel records, minute books, stock ledgers, stock transfer records and
other similar property, rights and information;
(vii) patents, patent applications, trademarks, trademark applications
and registrations, trade names, service marks, service ▇▇▇▇ applications
and registrations, service names, copyrights and copyright applications and
registrations, commercial and technical information including engineering,
production and other designs, drawings, specifications, formulae,
technology, computer and electronic data processing programs and software,
inventions, processes, trade secrets, know-how, confidential information
and other proprietary property, rights and interest and all rights thereto;
(viii) agreements, leases, contracts, sale orders, purchase orders,
open bids and other commitments and all rights therein;
(ix) prepaid expenses, deposits and retentions held by third parties;
(x) claims, causes of action, chooses in action, rights under
insurance policies, rights under express or implied warranties, rights of
recovery, rights of set-off, rights of subrogation and all other rights of
any kind;
(xi) licenses, franchises, permits, authorizations and approvals; and
(xii) goodwill and going concern value.
"Assignee" shall have the meaning set forth in Section 2.09.
"Assignor" shall have the meaning set forth in Section 2.09.
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"Authorized Officer" shall mean the Chief Executive, the President, or any
Executive Vice President or Vice President of the Company.
"BellSouth" shall mean BellSouth Corporation, a Georgia corporation.
"BellSouth Agreement" shall mean the Stock Purchase Agreement dated as of
July 15, 1997, between BellSouth and the Company.
"Broadcasting" shall mean ITT Broadcasting Corp., a Delaware corporation
and a wholly owned subsidiary of the Company.
"Claims Administration" shall mean the processing of claims made under
Company Policies, including, without limitation, the reporting of losses or
claims to insurance carriers (including as a result of reports provided to
Destinations by the Company or Educational), management and defense of claims,
the settlement of claims (except to the extent settlement authority remains with
another party as contemplated by the second proviso to Section 7.03(a)) and
providing for appropriate releases upon settlement of claims.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
Treasury regulations promulgated thereunder, including any successor
legislation.
"Company" shall have the meaning set forth in the heading of this
Agreement.
"Company Common Stock" shall have the meaning set forth in the recitals to
this Agreement.
"Company Debt" shall mean all Liabilities of the Company and its
Subsidiaries under or arising from (i) the Credit Agreement dated as of
September , 1997, among ITT Promedia LLC CVA, a Belgian company and a wholly
owned Subsidiary of the Company ("Promedia"), The Chase Manhattan Bank, as
administrative agent, and the Lenders party thereto, (ii) the Credit Agreement
dated as of September , 1997, among ITT Publimedia B.V., a Dutch company and a
wholly owned Subsidiary of the Company ("Publimedia"), The Chase Manhattan Bank,
as administrative agent, and the Lenders party thereto, (iii) [the Senior
Secured Credit Agreement dated as of September , 1997, among the Company, The
Chase Manhattan Bank, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P., Chase Securities Inc.
and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P.], (iv) the DM million % Senior
Subordinated Notes due 2007 issued by Promedia, (v) the $ million % Senior
Subordinated Notes due 2007 issued by Promedia, (vi) the $ million %
Senior Subordinated Notes due 2007 issued by Publimedia and (vii) any debt
securities or other indebtedness issued in exchange for or replacement of, or
the proceeds of which are otherwise directly or indirectly used to repay, any of
the foregoing Liabilities, and any indenture, credit agreement, underwriting
agreement, purchase agreement, security agreement, credit support agreement or
other agreement or document related to any of the foregoing.
"Company Indemnitees" shall mean the Company, each Affiliate of the Company
after the Distribution Date, each of their respective directors, officers,
employees and agents and each of the heirs, executors, successors and assigns of
any of the foregoing.
"Company Policies" shall mean all Policies, current or past, which are or
at any time were maintained by or on behalf of or for the benefit or protection
of the Company or any of its predecessors, or current or past directors,
officers, employees or agents thereof, including, without limitation, the
Policies identified on Schedule 7.01(a) hereto.
"Conveyancing and Assumption Instruments" shall have the meaning set forth
in Section 2.07.
"Debt Tender Offer" shall mean the offer by the Company to purchase $2
billion aggregate principal amount of certain debt securities specified in, and
pursuant to, the Offer to Purchase dated August 11, 1997 and the related Letter
of Transmittal, as each may be amended from time to time.
"Destinations" shall have the meaning set forth in the heading of this
Agreement.
"Destinations Assets" shall mean (a) all the Assets of the Company and its
Subsidiaries, except for (i) the Retained Assets and (ii) the Educational Assets
and (b) the rights of Destinations and its Subsidiaries under this Agreement,
the Educational Distribution Agreement and the Ancillary Agreements.
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"Destinations Business" shall mean all the businesses, Assets and
operations heretofore, currently or hereafter conducted or owned by the Company
and its Subsidiaries and Affiliates, including all businesses, Assets,
operations or investments conducted or owned by the Company, its Subsidiaries or
Affiliates that have been sold or otherwise disposed of or discontinued except
for (i) the Retained Business and (ii) the Educational Business.
"Destinations Common Shares" shall have the meaning set forth in the
recitals to this Agreement.
"Destinations Indemnitees" shall mean Destinations, each Affiliate of
Destinations after the Distribution Date, each of their respective directors,
officers, employees and agents and each of the heirs, executors, successors and
assigns of any of the foregoing.
"Destinations Liabilities" shall mean, collectively, whenever arising
whether prior to, at or following the Distribution Time, all the Liabilities of
the Company, Destinations and Educational and their respective Subsidiaries or
Affiliates (including, without limitation, Liabilities of the Company under the
Educational Intercompany Agreements or arising primarily out of or relating
primarily to the management or conduct of the Destinations Business), except for
(i) the Retained Liabilities and (ii) the Educational Liabilities.
"Distribution" shall mean the distribution on the Distribution Date to
holders of record as of the Distribution Record Date of shares of Company Common
Stock, other than shares held in the treasury of the Company, of all the
Destinations Common Shares (together with the associated Rights) owned by the
Company on the basis of one Destinations Common Share for each outstanding share
of Company Common Stock.
"Distribution Date" shall mean such date as hereafter may be determined by
the Company's Board of Directors as the date as of which the Distribution shall
be effected.
"Distribution Record Date" shall mean such date as hereafter may be
determined by the Company's Board of Directors as the record date for the
Distribution.
"Distribution Time" shall mean 11:59 p.m., New York City time, on the
Distribution Date.
"Educational" shall mean ITT Educational Services, Inc., a Delaware
corporation and a Subsidiary of the Company.
"Educational Assets" shall mean (a) all the Assets of the Company and its
Subsidiaries relating primarily to, and used or held for use in, the Educational
Business (exclusive of the "ITT" name, ▇▇▇▇ and logo and any rights relating
thereto), including (i) the Assets included on the unaudited consolidated
balance sheet of Educational as of June 30, 1997, and any assets acquired by the
Company or any of its Subsidiaries relating primarily to the Educational
Business from July 1, 1997 and (ii) all the capital stock owned by the Company
of Educational and the rights of the Company in Subsidiaries of Educational and
(b) the rights of Educational and its Subsidiaries under the Educational
Distribution Agreement and the Ancillary Agreements.
"Educational Business" shall mean all the businesses, Assets (exclusive of
the "ITT" name, ▇▇▇▇ and logo and any rights relating thereto) and operations
heretofore, currently or hereafter conducted or owned by Educational and its
Subsidiaries, including all businesses, Assets, operations or investments
conducted by Educational or any of its Subsidiaries that have been sold or
otherwise disposed of or discontinued.
"Educational Distribution" shall mean the distribution by the Company to
its stockholders of shares of common stock of Educational pursuant to the
Educational Distribution Agreement.
"Educational Distribution Agreement" shall mean the Agreement and Plan of
Distribution among the Company, Educational and Destinations, substantially in
the form of Exhibit D hereto.
"Educational Intercompany Agreements" shall mean the (i) Registration
Rights Agreement, dated as of December 19, 1994, between Industries and
Educational, (ii) Tax Sharing Agreement, dated as of December 27, 1994, between
Industries and Educational, (iii) Intercompany Agreement, dated as of
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December 19, 1994, between Industries and Educational, (iv) Trade Name and
Service ▇▇▇▇ License Agreement, dated as of December 19, 1994, between
Industries and Educational, (v) Employee Benefits and Administrative Services
Agreement, dated as of December 19, 1994, between Industries and Educational and
(vi) Treasury Services and Credit Facilities Agreement, dated as of August 15,
1994, between Industries and Educational, the rights and obligations of
Industries under each of which have been assumed by the Company, each as amended
or supplemented or otherwise modified on or prior to the date hereof.
"Educational Liabilities" shall mean collectively, whenever arising,
whether prior to, at or following the Distribution Time, (i) all Liabilities of
Educational under the Educational Distribution Agreement and any of the
Ancillary Agreements and (ii) all the Liabilities of the Company, Destinations
or Educational, and any of their respective Subsidiaries or Affiliates, arising
primarily out of or relating primarily to the management or conduct of the
Educational Business; provided (i) that Liabilities of Educational or any of its
Subsidiaries under any agreement to which Educational or any of its Subsidiaries
is a party and (ii) Liabilities of the Company related to litigation arising
from or related to the Educational Business (including in connection with
▇▇▇▇▇▇▇▇, et al. v. ITT Educational Services, Inc. et al. and similar Actions)
shall be Educational Liabilities.
"Employee Benefits Services and Liability Agreement" shall mean the
Employee Benefits Services and Liability Agreement between the Company,
Destinations and Educational, substantially in the form of Exhibit A hereto.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Hilton Litigation" shall mean any actual, threatened or future Action that
has been or may be asserted by or against or otherwise affect the Company or
Destinations or any of their Subsidiaries or Affiliates arising out of or
related to the tender offer for shares of Company Common Stock commenced by HLT
Corporation, a subsidiary of Hilton Hotels Corporation ("Hilton"), on January
31, 1997, or any other business combination involving the Company or
Destinations proposed by Hilton, whether asserted by Hilton or by any other
party (including any shareholder of the Company in connection with any
derivative actions).
"Indemnifiable Losses" shall mean any and all losses (whether or not
arising from third party claims), liabilities, claims, damages, demands, costs
or expenses (including, without limitation, reasonable attorneys' and
accountants' fees and expenses and any and all out-of-pocket expenses)
whatsoever, including all losses, liabilities, claims, damages, demands, costs
or expenses reasonably incurred in investigating, preparing for or defending
against any Actions or potential Actions or in asserting, preserving or
enforcing any rights hereunder or under any Ancillary Agreement.
"Indemnifying Party" shall have the meaning set forth in Section 5.03.
"Indemnitee" shall have the meaning set forth in Section 5.03.
"Information" of a party shall mean any and all information that such party
or any of its Representatives furnish or have furnished to the receiving party
or any of its Representatives whether furnished orally or in writing or by any
other means or gathered by inspection and regardless of whether the same is
specifically marked or designated as "confidential" or "proprietary", together
with any and all notes, memoranda, analyses, compilations, studies or other
documents (whether in hard copy or electronic media) prepared by the receiving
party or any of its Representatives which contain or otherwise reflect such
Information, together with any and all copies, extracts or other reproductions
of any of the same; provided, however, that for the purposes hereof all
information relating to the Retained Business or the Retained Assets in the
possession of Destinations or any of its Subsidiaries at the Distribution Time
shall be deemed to have been furnished by the Company and all information
relating to ITTSC, Destinations, the Destinations Business or the Destinations
Assets in the possession of the Company at the Distribution Time shall be deemed
to have been furnished by Destinations; provided further, however, that the term
"Information" does not include information that:
(a) at the time of disclosure is generally available to and known by
the public (other than as a result of a violation of this Agreement,
directly or indirectly, by a party to this Agreement or any of its
Representatives);
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(b) is available to the receiving party on a non-confidential basis
from a source other than the providing party or its Representatives,
provided that such source is not known by the receiving party to be subject
to a confidentiality agreement regarding such information; or
(c) has been independently acquired or developed by the receiving
party without violation of any of the obligations of the receiving party or
its Representatives under this Agreement.
"Information Statement" shall mean the Information Statement to be sent to
the holders of shares of Company Common Stock in connection with the
Distribution, including any amendment or supplement thereto, which is included
as an exhibit to the registration statement on Form 10 filed by Destinations
under the Exchange Act.
"Insurance Administration" shall mean, with respect to each Company Policy,
the accounting for premiums, retrospectively-rated premiums, defense costs,
indemnity payments, deductibles and retentions, as appropriate, under the terms
and conditions of each such Company Policy, and the distribution of Insurance
Proceeds as contemplated by this Agreement.
"Insurance Proceeds" shall mean those monies (i) received by an insured
from an insurance carrier or (ii) paid by an insurance carrier on behalf of an
insured, in either case net of any applicable premium adjustment,
retrospectively-rated premium, deductible, retention, or cost of reserve paid or
held by or for the benefit of such insured.
"Insured Claims" shall mean those Liabilities that, individually or in the
aggregate, are covered within the terms and conditions of any Company Policy,
whether or not subject to deductibles, co-insurance, uncollectability or
retrospectively-rated premium adjustments, but only to the extent that such
Liabilities are within applicable Company Policy limits, including aggregates.
"Intellectual Property Agreements" shall mean the Intellectual Property
Assignment and License Agreement between Destinations and the Company,
substantially in the form of Exhibit B-1 hereto, and the Trade Name and Service
▇▇▇▇ License Agreement, between Destinations and World Directories,
substantially in the form of Exhibit B-2 hereto.
"Investment Agreement" shall mean the Investment Agreement, dated as of
July 15, 1977, between the Company and CDRV Acquisition, L.L.C., as the same may
be amended from time to time.
"ITTSC" shall mean ITT Sheraton Corporation, a Delaware corporation and a
wholly owned Subsidiary of the Company.
"Liabilities" shall mean any and all debts, liabilities and obligations,
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising, including, without
limitation, those debts, liabilities and obligations arising under any law,
rule, regulation, Action, threatened Action, order or consent decree of any
court, any governmental or other regulatory or administrative agency or
commission or any award of any arbitration tribunal, and those arising under any
contract, guarantee, commitment or undertaking.
"Name Fee" shall have the meaning set forth in Section 6.07(b).
"NGCL" shall mean Chapter 78, Private Corporations, of the Nevada Revised
Statutes.
"Nonassignable Contract" shall have the meaning set forth in Section 2.09.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Person" shall mean any natural person, corporation, business trust,
limited liability company, joint venture, association, company, partnership or
government, or any agency or political subdivision thereof.
"Policies" shall mean insurance policies and insurance contracts of any
kind (other than life and benefits policies or contracts), including, without
limitation, primary, excess and umbrella policies, commercial general liability
policies, fiduciary liability, automobile, aircraft, property and casualty,
workers' compensation and
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employee dishonesty insurance policies, bonds and self-insurance and captive
insurance company arrangements, together with the rights, benefits and
privileges thereunder.
"Preliminary Transactions" shall have the meaning set forth in the recitals
to this Agreement.
"Reincorporation Merger" shall have the meaning set forth in Section
2.01(a).
"Representatives" of either party shall mean such party's Affiliates,
directors, officers, partners, employees, agents or other representatives
(including attorneys, accountants and financial advisors).
"Retained Assets" shall mean (a) all the Assets of the Company and its
Subsidiaries relating primarily to, and used or held for use in, the Retained
Business (exclusive of the "ITT" name, ▇▇▇▇ and logo and any rights relating
thereto), including (i) the Assets included on the unaudited consolidated
balance sheet of World Directories as of June 30, 1997, and any assets acquired
by the Company or any of its Subsidiaries relating primarily to the Retained
Business from July 1, 1997, (ii) all the capital stock of World Directories and
the rights of the Company in Subsidiaries of World Directories and (iii) equity
interests owned by World Directories, directly or indirectly, in Persons that do
not constitute Subsidiaries and (b) the rights of the Company and its
Subsidiaries under this Agreement, the Educational Distribution Agreement, the
Investment Agreement and the Ancillary Agreements.
"Retained Business" shall mean all the businesses, Assets (exclusive of the
"ITT" name, ▇▇▇▇ and logo and any rights relating thereto) and operations
heretofore, currently or hereafter conducted or owned by World Directories and
its Subsidiaries and Persons in which it has an equity interest, including all
businesses, Assets, operations or investments conducted or owned by World
Directories or any of its Subsidiaries and Affiliates and Persons in which it
has an equity interest that have been sold or otherwise disposed of or
discontinued.
"Retained Liabilities" shall mean collectively, whenever arising, whether
prior to, at or following the Distribution Time, (i) all the Liabilities of the
Company and its Subsidiaries under this Agreement, the Educational Distribution
Agreement and any of the Ancillary Agreements, (ii) all the Liabilities of the
Company, Destinations or Educational and any of their respective Subsidiaries or
Affiliates arising primarily out of or relating primarily to the management or
conduct of the Retained Business and (iii) the Company Debt.
"Rights" shall mean the preferred stock purchase rights associated with the
Destinations Common Shares issued pursuant to the Rights Agreement.
"Rights Agreement" shall mean the Rights Agreement dated as of September
, 1997, between Destinations and The Bank of New York, as Rights Agent.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stockholders Meeting" shall have the meaning set forth in Section 6.07(a).
"Stock Tender Offer" shall mean the offer by the Company to purchase up to
30 million shares of Company Common Stock pursuant to the Offer to Purchase
dated July 17, 1997 and the related Letter of Transmittal, as each may be
amended from time to time.
"Subsidiary" shall mean any corporation, partnership, joint venture or
other entity of which another entity (i) 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 interests of such corporation, partnership, joint
venture or other entity shall or might have such voting power upon the
occurrence of any contingency) or (ii) is a general partner or an entity
performing similar functions (e.g., a trustee or managing member). For purposes
of this Agreement, ITT-Dow ▇▇▇▇▇ Television and its Subsidiaries shall be deemed
to be Subsidiaries of Destinations and the interest of World Directories in
Persons conducting business in South Africa, Japan and Portugal shall be deemed
to be a Subsidiary of the Company.
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"Tax" shall mean all Federal, state, local and foreign taxes and
assessments, including all interest, penalties and additions imposed with
respect to such amounts.
"Tax Allocation Agreement" shall mean the Tax Allocation Agreement between
Destinations, the Company and Educational, substantially in the form of Exhibit
C hereto, as and to the extent amended and restated as of the closing of the
transactions contemplated by the Investment Agreement.
"Third Party Claim" shall have the meaning set forth in Section 5.04.
"World Directories" shall mean ITT World Directories, Inc., a Delaware
corporation and a wholly owned Subsidiary of the Company.
SECTION 1.02. References; Interpretation. References to an "Exhibit" or
to a "Schedule" are, unless otherwise specified, to one of the Exhibits or
Schedules attached to this Agreement, and references to a "Section" or "Article"
are, unless otherwise specified, to one of the Sections and Articles of this
Agreement. Any time the word "including" is used herein it means "including
without limitation".
ARTICLE II
PRELIMINARY TRANSACTIONS
SECTION 2.01. Internal Restructuring. (a) Merger of ITTSC and
Destinations. Prior to the Distribution Time, the Company shall cause ITTSC to
merge with and into Destinations, with Destinations as the surviving corporation
(the "Reincorporation Merger"). In the Reincorporation Merger, all the shares of
common stock of ITTSC held by the Company shall be converted into, in the
aggregate, 80,000,000. All such Destinations Common Shares shall be owned
beneficially and of record by the Company.
(b) Certain Transfers. Following the Reincorporation Merger and prior to
the Distribution Time, the Company shall transfer or otherwise convey to
Destinations all its right, title and interest in and to all the shares of
capital stock or assets of (i) each of the Subsidiaries listed on Schedule
2.01(b), (ii) Sheraton on the Park Pty, Ltd. and (iii) Broadcasting.
SECTION 2.02. Dividends. (a) Stock Dividend. Prior to the Distribution
Time, Destinations shall issue to the Company as a stock dividend a number of
Destinations Common Shares that, when added to the number of Destinations Common
Shares received in the Reincorporation Merger and owned by the company at such
time, is sufficient to consummate the Distribution, as certified by the Agent.
(b) Cash Dividend. Prior to the Distribution Time, Destinations shall pay
to the Company as a cash dividend an amount determined by an Authorized Officer
of the Company to be sufficient, in combination with cash held by the Company,
to consummate the Stock Tender Offer and the Debt Tender Offer.
SECTION 2.03. The Rights. Prior to the Distribution Time, Destinations
and the Rights Agent shall execute the Rights Agreement and Destinations shall
issue one Right for each Destinations Common Share distributed in the
Distribution.
SECTION 2.04. Transfer of Certain Businesses and Assets. Effective as of
the Distribution Time and except as otherwise expressly provided in this
Agreement or any of the Ancillary Agreements, (i) the Company, on behalf of
itself and its Subsidiaries, hereby contributes, grants, conveys, assigns,
transfers and delivers to Destinations all the Company's and its Subsidiaries'
right, title and interest in and to (a) the business and legal entities and
other Assets that comprise the Destinations Business and (b) the Destinations
Assets and (ii) Destinations, on behalf of itself and its Subsidiaries, hereby
contributes, grants, conveys, assigns, transfers and delivers to the Company all
Destinations' and its Subsidiaries' right, title and interest in and to (x) the
business and legal entities and other Assets that comprise the Retained Business
and the Educational Business and (y) the Retained Assets and the Educational
Assets.
SECTION 2.05. Assumption of Liabilities. Effective as of the Distribution
Time and except as otherwise specifically provided in this Agreement, the
Educational Distribution Agreement or any of the Ancillary Agreements, (i)
Destinations hereby unconditionally assumes and undertakes to pay, perform and
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discharge when due in accordance with their terms, on behalf of itself and its
Subsidiaries, all the Destinations Liabilities and (ii) the Company hereby
retains, and Destinations and its Subsidiaries do not assume and will have no
liability hereunder with respect to, all the Retained Liabilities and the
Educational Liabilities.
SECTION 2.06. Transfer of Certain Licenses and Permits. (a) In
furtherance of the contribution, grant, conveyance, assignment, transfer and
delivery of the Destinations Assets and the Destinations Business and the
assumption of the Destinations Liabilities set forth in this Article II, at or
prior to the Distribution Time, all transferrable licenses, permits and
authorizations issued by governmental or regulatory entities which relate to the
Destinations Business but which are held in the name of the Company or any of
its Subsidiaries (other than Destinations, ITTSC or their respective
Subsidiaries), or any of their respective Representatives, or otherwise shall be
duly and validly transferred by the Company or such Subsidiary or Representative
to Destinations or the appropriate Subsidiary of Destinations.
(b) In furtherance of the contribution, grant, conveyance, assignment,
transfer and delivery of the Destinations Assets and the Destinations Business
and the assumption of the Destinations Liabilities set forth in this Article II,
at or prior to the Distribution Time, all transferrable licenses, permits and
authorizations issued by governmental or regulatory entities which relate to the
Retained Business or the Educational Business but which are held in the name of
Destinations or ITTSC or any of their respective Subsidiaries, or any of their
respective Representatives, or otherwise shall be duly and validly transferred
by Destinations or ITTSC or such Subsidiary or Representative to the Company or
the appropriate Subsidiary of the Company.
SECTION 2.07. Transfer and Assumption Documentation. In furtherance of
the contribution, grant, conveyance, assignment, transfer and delivery of the
Destinations Assets, the Destinations Business and the assumption of the
Destinations Liabilities set forth in this Article II, at or prior to the
Distribution Time, (i) the parties hereto shall execute and deliver, and cause
their respective Subsidiaries to execute and deliver, such deeds, bills of sale,
stock powers, certificates of title, assignments of leases and contracts and
other instruments of contribution, grant, conveyance, assignment, transfer and
delivery necessary to evidence such contribution, grant, conveyance, assignment,
transfer and delivery (collectively, the "Conveyancing Instruments") and (ii)
each party hereto or the appropriate Subsidiary of such party shall execute and
deliver such instruments of assumption (together with the Conveyancing
Instruments, the "Conveyancing and Assumption Instruments") as and to the extent
necessary to evidence such assumption.
SECTION 2.08. Intercompany Accounts. All intercompany receivables,
payables and loans (other than receivables, payables and loans otherwise
specifically provided for in any of the Ancillary Agreements or hereunder)
between Destinations, ITTSC or any of their respective Subsidiaries, on the one
hand, and the Company or any of its Subsidiaries (other than Destinations, ITTSC
or any of their respective Subsidiaries), on the other hand, including, without
limitation, in respect of any cash balances, any cash balances representing
deposited checks or drafts for which only a provisional credit has been allowed
or any cash held in any centralized cash management system, shall, as of the
Distribution Time, be settled or otherwise eliminated. Prior to or on the
Distribution Date, Destinations will pay to Educational, by wire transfer of
immediately available funds, an amount equal to the amount in the Cash Invested
With ITT account of ITT Educational as of the date of such payment, including
all accrued interest as of such payment date.
SECTION 2.09. Assignments and Transfers Not Effected Prior to the
Distribution. Anything contained herein to the contrary notwithstanding, (a)
this Agreement shall not constitute an agreement to assign any agreement,
contract, lease, license, sales order, purchase order, open bid or other
commitment if an assignment or attempted assignment of the same without the
consent of a third party would constitute a breach thereof or in any way impair
the rights of Destinations or the Company or any of their respective
Subsidiaries thereunder (any such item being referred to as a "Nonassignable
Contract") and (b) nothing herein shall be deemed to require the transfer of any
Assets or the assumption of any Liabilities which by their terms or operation of
law cannot be transferred. To the extent that any assignments or transfers
contemplated by this Article II shall not have been consummated at or prior to
the Distribution Time, the parties hereto and their respective Subsidiaries
shall cooperate and use reasonable best efforts to obtain any necessary consents
or approvals for the assignment of all Nonassignable Contracts and the transfer
of all Assets and Liabilities contemplated to be assigned or transferred
pursuant to this Article II and shall otherwise cooperate and use
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reasonable best efforts to effect any such assignments or transfers as promptly
following the Distribution Time as shall be practicable. In the event that any
consent required with respect to a Nonassignable Contract is not obtained or an
attempted assignment thereof would be ineffective or would impair either party's
rights under any such Nonassignable Contract, then the party obligated to assign
such Nonassignable Contract (the "Assignor") will promptly pay or cause to be
paid to the assignee thereof (the "Assignee"), when received, all monies
received by the Assignor with respect to any such Nonassignable Contract and in
consideration thereof the Assignee shall pay, perform and discharge on behalf of
the Assignor all the Assignor's debts, liabilities, obligations and commitments
thereunder in a timely manner and in accordance with the terms thereof. In the
event that any such transfer of Assets or Liabilities has not been consummated,
from and after the Distribution Time the party retaining such Asset or Liability
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. The parties hereto will take such other action as
may be reasonably requested by the Assignee or 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 Nonassignable Contract been assigned, or
such Asset or Liability been transferred, as contemplated hereby. As and when
any required consent to the assignment of a Nonassignable Contract is obtained
or any such Asset or Liability becomes transferable, such assignment or transfer
shall be effected forthwith. The parties agree that, as of the Distribution
Time, each party hereto shall be deemed to have acquired complete and sole
beneficial ownership over all Assets, together with all rights, powers and
privileges incident thereto, and shall be deemed to have assumed all
Liabilities, and all duties, obligations and responsibilities incident thereto,
which such party is entitled to acquire or required to assume pursuant to the
terms of this Agreement or any of the Ancillary Agreements.
ARTICLE III
THE DISTRIBUTION
SECTION 3.01. Directors and Employees. (a) Directors. Prior to the
Distribution Time, the Board of Directors of the Company and the Company shall
take all necessary action to cause the Board of Directors of the Company to be
constituted, effective as of the Distribution Time, by the individuals
identified on Schedule 3.01(a).
(b) Employees. Destinations shall cause all those individuals who will be
officers of Destinations immediately after the Distribution Time to resign,
effective as of the Distribution Time, from all positions with the Company in
which they serve.
SECTION 3.02. Mechanics of Distribution. (a) Delivery of Shares to
Agent. The Company shall deliver to the Agent the share certificates
representing all the Destinations Common Shares (and the associated Rights) held
by the Company following consummation of the transactions contemplated by
Sections 2.01, 2.02 and 2.03 and shall instruct the Agent to distribute such
Destinations Common Shares (and associated Rights) to holders of record of
shares of Company Common Stock on the Distribution Record Date upon notice from
the Company that the conditions to the obligation of the Company to consummate
the Distribution have been satisfied or waived and that the Agent is authorized
to proceed with the distribution of Destinations Common Shares (and associated
Rights). Immediately following the Distribution, the Company shall not own any
capital stock of Destinations.
(b) The Distribution shall be effected by the distribution to each holder
of record of Company Common Stock, as of the Distribution Record Date, of
certificates representing one Destinations Common Share (together with one
associated Right) for each share of Company Common Stock. The Company shall
instruct the Agent to distribute the Destinations Common Shares as promptly as
practicable after the Distribution Time.
SECTION 3.03. Timing of Distribution. The Board of Directors of the
Company shall, or shall authorize certain officers of the Company to, formally
declare the Distribution and shall authorize the
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Company to pay it at the Distribution Time, subject to the satisfaction or
waiver of the conditions set forth in Article VIII. The Distribution shall be
deemed to be effective upon notification by the Company to the Agent that the
conditions to the obligations of the Company to consummate the Distribution have
been satisfied or waived and that the Agent is authorized to proceed with the
distribution of Destinations Common Shares (and associated Rights).
ARTICLE IV
MUTUAL RELEASE
SECTION 4.01. Mutual Release, etc. Effective as of the Distribution Time
and except as otherwise specifically set forth in this Agreement or any of the
Ancillary Agreements, each of Destinations, on the one hand, and the Company, on
the other hand, on its own behalf and on behalf of each of its respective
Subsidiaries, releases and forever discharges the other and its Subsidiaries,
and its and their respective officers, directors, agents, Affiliates, record and
beneficial security holders (including, without limitation, trustees and
beneficiaries of trusts holding such securities), advisors and Representatives
(in their respective capacities as such) and their respective heirs, executors,
administrators, successors and assigns, of and from all debts, demands, actions,
causes of action, suits, accounts, covenants, contracts, agreements, damages,
claims and Liabilities whatsoever of every name and nature, both in law and in
equity, which the releasing party has or ever had, which arise out of or relate
to events, circumstances or actions taken by such other party, occurring or
failing to occur, or any conditions existing, on or prior to the Distribution
Time; provided, however, that the foregoing general release shall not apply to
(i) any Liabilities (including Liabilities with respect to indemnification)
assumed, transferred, assigned, allocated or arising under this Agreement, the
Educational Distribution Agreement or any of the Ancillary Agreements and shall
not affect any party's right to enforce this Agreement, the Educational
Distribution Agreement or any Ancillary Agreement in accordance with its terms
or (ii) any Liability the release of which would result in the release of any
Person other than a Person released pursuant to this Section 4.01 (provided that
the parties agree not to bring suit or permit any of their Subsidiaries to bring
suit against any Person with respect to any Liability to the extent such Person
would be released with respect to such Liabilities by this Section 4.01 but for
the proviso to this clause (ii)). Each party understands and agrees that, except
as otherwise specifically provided in this Agreement, the Educational
Distribution Agreement or the Ancillary Agreements, neither party is, in this
Agreement or the Ancillary Agreements or otherwise, representing or warranting
in any way as to the Assets, business or Liabilities transferred, assumed or
retained as contemplated hereby or as to any consents or approvals required in
connection with the consummation of the transactions contemplated by this
Agreement, the Educational Distribution Agreement or the Ancillary Agreements,
it being agreed and understood that each party shall take or keep all of its
Assets "as is" and that it shall bear the economic and legal risk that
conveyance of such Assets shall prove to be insufficient or that the title to
any Assets shall be other than good and marketable and free from encumbrances of
any nature whatsoever.
ARTICLE V
INDEMNIFICATION
SECTION 5.01. Indemnification by the Company. Except as otherwise
specifically set forth in any provision of this Agreement or of any Ancillary
Agreement, the Company shall indemnify, defend and hold harmless the
Destinations Indemnitees from and against, and pay or reimburse the Destinations
Indemnitees for, any and all Indemnifiable Losses, as incurred, of the
Destinations Indemnitees arising out of, relating to or resulting from (i) the
Retained Liabilities, the Retained Assets or the Retained Business, (ii) any
Conveyancing and Assumption Instrument delivered after the Distribution Time for
the benefit of Destinations or any of its Subsidiaries and (iii) the breach by
the Company or any of its Subsidiaries of any provision of this Agreement or of
any Ancillary Agreement, in each case, whether such Indemnifiable Losses relate
to or arise from events, occurrences, actions, omissions, facts or circumstances
occurring, existing or asserted at, before or after the Distribution Time.
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SECTION 5.02. Indemnification by Destinations. Except as otherwise
specifically set forth in any provision of this Agreement or of any Ancillary
Agreement, Destinations shall indemnify, defend and hold harmless the Company
Indemnitees from and against, and pay or reimburse the Company Indemnitees for,
any and all Indemnifiable Losses, as incurred, of the Company Indemnitees
arising out of, relating to or resulting from (i) the Destinations Liabilities,
the Destinations Assets or the Destinations Business, (ii) the breach by
Destinations or any of its Subsidiaries of any provision of this Agreement or of
any Ancillary Agreement, (iii) any Conveyancing and Assumption Instrument
delivered for the benefit of the Company or any of its Subsidiaries, (iv) the
1995 Distribution Agreements, (v) the Hilton Litigation, (vi) the BellSouth
Agreement (but only in respect of actions or omissions by the Company prior to
or at the Distribution Time), (vii) the Stock Tender Offer, (viii) the Debt
Tender Offer, (ix) any indebtedness of the Company in existence at the
Distribution Time (other than the Retained Liabilities and the Educational
Liabilities), (x) any transaction identified on Schedule 5.02 hereto, (xi) any
governmental or regulatory filing (including with the SEC and in respect of the
Company's gaming operations) made by the Company or any of its Subsidiaries
prior to the Distribution Time in connection with the Distribution, the
Educational Distribution, the Stock Tender Offer, the Debt Tender Offer, the
Hilton Litigation or any of the transactions identified on Schedule 5.02, (xii)
any agreement to which the Company is a party that is breached by any action of
the Company prior to the Distribution Time (including by the Distribution) and
(xiii) Liabilities of the Company under the Educational Intercompany Agreements,
in each case, whether such Indemnifiable Losses relate to or arise from events,
occurrences, actions, omissions, facts or circumstances occurring, existing or
asserted at, before or after the Distribution Time; provided, however, that
Destinations shall have no obligation to indemnify any of the Company
Indemnitees for any Indemnifiable Losses arising out of or resulting from (x)
the gross negligence or bad faith of the Company after the Distribution Time or
(y) the Company's failure to perform its obligations under any agreement in
accordance with the terms of such agreement after the Distribution Time.
SECTION 5.03. Limitations on Indemnification Obligations. (a) The amount
that any party (an "Indemnifying Party") is or may be required to pay to any
other Person (an "Indemnitee") pursuant to Section 5.01 or Section 5.02, as
applicable, shall be reduced (retroactively or prospectively) by any Insurance
Proceeds or other amounts actually recovered by or on behalf of such Indemnitee
in respect of the related Indemnifiable Loss. If an Indemnitee shall have
received the payment required by this Agreement from an Indemnifying Party in
respect of an Indemnifiable Loss and shall subsequently actually receive
Insurance Proceeds or other amounts in respect of such Indemnifiable Loss, then
such Indemnitee shall pay to such Indemnifying Party a sum equal to the amount
of such Insurance Proceeds or other amounts actually received, up to the
aggregate amount of any payments made by such Indemnifying Party pursuant to
this Agreement in respect of such Indemnifiable Loss.
(b) Destinations shall not have any liability under Section 5.02 for
Indemnifiable Losses unless the aggregate of all such Indemnifiable Losses for
which Destinations would, but for this Section 5.03(b), be liable under Section
5.02 exceeds on a cumulative pre-Tax basis an amount equal to $2.5 million;
provided, however, that this limitation shall not apply to Indemnifiable Losses
arising under clauses (iv) through (xiii) of Section 5.02.
SECTION 5.04. Procedures for Indemnification of Third Party Claims. If a
claim or demand is made against an Indemnitee by any person who is not a party,
or an Affiliate of a party, to this Agreement or any of the Ancillary Agreements
(a "Third Party Claim") as to which such Indemnitee is entitled to
indemnification pursuant to this Agreement, such Indemnitee shall notify the
Indemnifying Party in writing, and in reasonable detail, of the Third Party
Claim promptly (and in any event within 10 business days) after receipt by such
Indemnitee of written notice of the Third Party Claim; provided, however, that
failure to give such notification shall not affect the indemnification provided
hereunder except to the extent that the defense or conduct of such Third Party
Claim by the Indemnifying Party shall have been actually and materially
prejudiced as a result of such failure (except that the Indemnifying Party shall
not be liable for any expenses incurred during the period in which the
Indemnitee failed to give such notice); provided, however, in no event shall
such failure to notify the Indemnifying Party (i) constitute prejudice suffered
by the Indemnifying Party if it has otherwise received notice of the Third Party
Claim or (ii) relieve it from any liability or obligation that it may
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otherwise have to such Indemnitee. Thereafter, the Indemnitee shall deliver to
the Indemnifying Party, promptly (and in any event within 10 business days)
after the Indemnitee's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnitee relating to the Third Party
Claim.
If a Third Party Claim is made against an Indemnitee, the Indemnifying
Party shall be entitled to participate in the defense thereof and, if it so
chooses and acknowledges in writing its obligation to indemnify the Indemnitee
therefor, to assume the defense thereof with counsel selected by the
Indemnifying Party; provided that such counsel is not reasonably objected to by
the Indemnitee. Destinations shall assume the defense of any Third Party Claim
for which indemnification is available under clauses (iv) through (ix) and (xi)
through (xiii) of Section 5.02 with counsel selected by Destinations. Should the
Indemnifying Party so elect or be obligated to assume the defense of a Third
Party Claim, the Indemnifying Party shall not be liable to the Indemnitee for
legal or other expenses subsequently incurred by the Indemnitee in connection
with the defense thereof. If the Indemnifying Party assumes such defense, the
Indemnitee shall have the right to participate in the defense thereof and to
employ counsel, at its own expense, separate from the counsel employed by the
Indemnifying Party, it being understood that the Indemnifying Party shall have
full control of such defense. The Indemnifying Party shall be liable for the
reasonable fees and expenses of counsel employed by the Indemnitee for any
period during which the Indemnifying Party has failed to assume the defense
thereof.
If the Indemnifying Party so elects or is obligated to assume the defense
of any Third Party Claim, all of the Indemnitees shall cooperate with the
Indemnifying Party in the defense or prosecution thereof. Such cooperation shall
include the retention and (upon the Indemnifying Party's request) the provision
to the Indemnifying Party of records and information which are reasonably
relevant to such Third Party Claim and making employees available on a mutually
convenient basis to provide additional information regarding any material
provided hereunder.
Whether or not the Indemnifying Party shall have assumed the defense of a
Third Party Claim, in no event will the Indemnitee admit any liability with
respect to, or settle, compromise or discharge, such Third Party Claim without
the Indemnifying Party's prior written consent (which consent shall not be
unreasonably withheld); provided, however, that the Indemnitee shall have the
right to settle, compromise or discharge such Third Party Claim without the
consent of the Indemnifying Party if the Indemnitee releases in writing the
Indemnifying Party from its indemnification obligation hereunder with respect to
such Third Party Claim and such settlement, compromise or discharge would not
otherwise adversely affect the Indemnifying Party. If the Indemnifying Party
shall have assumed the defense of a Third Party Claim, the Indemnitee will agree
to any settlement, compromise or discharge of a Third Party Claim that the
Indemnifying Party may recommend and that by its terms does not obligate the
Indemnitee to pay any of the liability in connection with such Third Party
Claim, releases the Indemnitee completely and unconditionally in connection with
such Third Party Claim and does not provide for injunctive or other nonmonetary
relief effecting the Indemnitee.
Notwithstanding the foregoing, the Indemnifying Party shall not be entitled
to assume the defense of any Third Party Claim (and shall be liable for the
reasonable fees and expenses of counsel incurred by the Indemnitee in defending
such Third Party Claim) if the Third Party Claim seeks an order, injunction or
other equitable relief or relief for other than money damages against the
Indemnitee which the Indemnitee reasonably determines, after conferring with its
counsel, cannot be separated from any related claim for money damages. If such
equitable relief or other relief portion of the Third Party Claim can be so
separated from that for money damages, the Indemnifying Party shall be entitled
to assume the defense of the portion relating to money damages.
Notwithstanding the foregoing, the Indemnifying Party shall not be entitled
to assume the defense of any Third Party Claim (and shall be liable for the
reasonable fees and expenses of counsel incurred by the Indemnitee in defending
such Third Party Claim) if the Indemnitee determines in good faith, based on
written opinion of counsel, that the Indemnitee has available to it one or more
defenses or counterclaims that are inconsistent with one or more of those that
may be available to the Indemnifying Party in respect of such Third Party Claim.
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SECTION 5.05. Indemnification Payments. Indemnification required by this
Article V shall be made by periodic payments of the amount thereof during the
course of the investigation, preparation or defense, as and when bills are
received or loss, liability, claim, damage, cost or expense is incurred.
SECTION 5.06. Other Adjustments. (i) The amount of any Indemnifiable Loss
shall be (x) increased to take into account any net Tax cost actually incurred
by the Indemnitee arising from any payments received from the Indemnifying Party
(grossed up for such increase) and (y) reduced to take account of any net Tax
benefit actually realized by the Indemnitee arising from the incurrence or
payment of any such Indemnifiable Loss. In computing the amount of such Tax cost
or Tax benefit, the Indemnitee shall be deemed to recognize all other items of
income, gain, loss, deduction or credit before recognizing any item arising from
the receipt of any payment with respect to an Indemnifiable Loss or the
incurrence or payment of any Indemnifiable Loss.
(ii) In addition to any adjustments required pursuant to Section 5.03(a)
hereof or clause (i) of this Section 5.06, if the amount of any Indemnifiable
Loss shall, at any time subsequent to the payment required by this Agreement, be
reduced by recovery, settlement or otherwise, the amount of such reduction, less
any expenses incurred in connection therewith, shall promptly be repaid by the
Indemnitee to the Indemnifying Party, up to the aggregate amount of any payments
received from such Indemnifying Party pursuant to this Agreement in respect of
such Indemnifiable Loss.
SECTION 5.07. Survival of Indemnities. The obligations of the parties
under this Article V shall survive the sale or other transfer by either of them
of any Assets or businesses or the assignment by any of them of any Liabilities,
with respect to any Indemnifiable Loss of any Indemnitee related to such Assets,
businesses or Liabilities.
ARTICLE VI
COVENANTS
SECTION 6.01. Provision of Corporate Records. (a) Subject to Section
6.01(b), prior to or as promptly as practicable after the Distribution Time the
Company shall deliver to Destinations (at the expense of Destinations) copies of
(i) all minute books and other records of meetings of the Board of Directors,
committees of the Board of Directors, stockholders and security owners of the
Company and its predecessors and their respective Subsidiaries (other than
Subsidiaries engaged in the Directories Business or in the Educational
Business), (ii) all stockholder and security owner records of the Company and
its predecessors and their respective Subsidiaries (other than Subsidiaries
engaged in the Directories Business or in the Educational Business) and (iii)
all other corporate books and records of the Company and its predecessors and
their respective Subsidiaries (other than Subsidiaries engaged in the
Directories Business or in the Educational Business), including, in each case,
all agreements, litigation files and government filings, whether or not active.
From and after the Distribution Time, all such copies shall be the property of
Destinations.
(b) Prior to or as promptly as practicable after the Distribution Time,
Destinations shall deliver to the Company copies of, or, if in the possession of
the Company or any of its Subsidiaries (other than Destinations, ITTSC or any of
their respective Subsidiaries), the Company shall retain, all corporate books
and records and the relevant portions (or copies thereof) of all corporate books
and records relating directly and primarily to the Retained Assets, the Retained
Business, the Retained Liabilities, the Educational Assets, the Educational
Business or the Educational Liabilities, including, in each case, all
agreements, litigation files and government filings, whether or not active. From
and after the Distribution Time, all such books, records and other items or such
copies thereof shall be the property of the Company.
SECTION 6.02. Access to Information. From and after the Distribution Time
each party hereto shall afford to the other and its authorized accountants,
counsel and other designated representatives reasonable access and duplicating
rights (at such other party's expense) during normal business hours and upon
reasonable advance notice, subject to the confidentiality provisions hereof and
any additional appropriate restrictions for classified, privileged or
confidential Information, to all Information within the possession or control of
such party or to which it has access relating to the business, Assets or
Liabilities of such other party
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as they existed prior to the Distribution Time or relating to or arising in
connection with the relationship between the Retained Business or the
Educational Business, on the one hand, and the Destinations Business, on the
other hand, on or prior to the Distribution Time, insofar as such access is
reasonably required for a reasonable purpose. Without limiting the foregoing,
Information may be requested under this Section 6.02 for audit, accounting,
claims, litigation and Tax purposes, as well as for purposes of fulfilling
disclosure and reporting obligations.
SECTION 6.03. Retention of Records. Except as provided in this Agreement
or any of the Ancillary Agreements or as otherwise agreed in writing, if any
Information relating to the business, Assets or Liabilities of a party hereto,
as they existed prior to the Distribution Time or as they are transferred,
assumed or imposed pursuant to this Agreement, is retained by the other party,
the party retaining such Information shall, and shall cause its Subsidiaries to,
retain all such Information in such party's possession or under its control
until such Information is at least ten years old except that if, prior to the
expiration of such period, the party retaining such information wishes to
destroy or dispose of any such Information that is at least three years old,
prior to destroying or disposing of any of such Information, (a) such party
shall provide no less than 30 days' prior written notice to the other party,
specifying the Information proposed to be destroyed or disposed of and (b) if,
prior to the scheduled date for such destruction or disposal, the other party
requests in writing that any of the Information proposed to be destroyed or
disposed of be delivered to such other party, the party proposing to dispose of
or destroy such Information shall arrange for the delivery of the requested
Information to a location specified by, and at the expense of, the requesting
party.
SECTION 6.04. Witness Services. From and after the Distribution Time,
each of the parties hereto shall use commercially reasonable efforts to make
available to each other party hereto, upon reasonable written request, its and
its Subsidiaries' officers, directors, employees and agents as witnesses to the
extent that (i) such persons may reasonably be required in connection with the
prosecution, investigation or defense of any Action or threatened Action in
which the requesting party may from time to time be involved and (ii) there is
no conflict in the Action or threatened Action between the requesting party and
the other party.
SECTION 6.05. Reimbursement. Except to the extent otherwise contemplated
by any Ancillary Agreement, a party providing books and records, access to
Information or witness services to the other party under this Article VI shall
be entitled to receive from the recipient, upon the presentation of invoices
therefor, payments for such amounts, relating to supplies, disbursements and
other out-of-pocket expenses and direct and indirect costs of employees, as may
be reasonably incurred in providing such books and records, access to
Information or witness services.
SECTION 6.06. Confidentiality. (a) Each party hereto shall keep, and
shall cause its Representatives to keep, the other party's Information strictly
confidential and will disclose such Information only to such of its
Representatives who need to know such Information and who agree to be bound by
this Section 6.06 and not to disclose such Information to any other Person or
entity. Without the prior written consent of the other party, each party and its
Representatives shall not disclose the other party's Information to any Person
or entity except as may be required by law or judicial process or in connection
with the enforcement of its rights under this Agreement or any of the Ancillary
Agreements and, in each case, in accordance with this Section 6.06. Each party
agrees to be responsible for any breach of this confidentiality provision by any
of its Representatives.
(b) In the event that either party or any of its Representatives becomes
legally compelled (by deposition, interrogatory, request for documents,
subpoena, civil investigative demand or similar process), or determines that it
is necessary in connection with the enforcement of its rights under this
Agreement or any of the Ancillary Agreements, to disclose all or any part of the
other party's Information, the receiving party or its Representatives shall
promptly notify the other party of such compulsion or determination in writing,
and consult with and assist the other party in seeking a protective order or
request for other appropriate remedy. In the event that such protective order or
other remedy is not obtained or the other party waives compliance with the terms
hereof, such receiving party or its Representatives, as the case may be, shall
disclose only that portion of the Information which, in the opinion of the
receiving party's outside counsel, is legally required to be disclosed, and
shall exercise its reasonable best efforts to assure that confidential treatment
will be accorded
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such Information by the Persons or entities receiving such Information. The
providing party shall be given an opportunity to review the Information prior to
disclosure.
SECTION 6.07. Change of Corporate Name. (a) The Company agrees that at
the first meeting of its stockholders following the Distribution Date (the
"Stockholders Meeting") it shall submit a resolution to its stockholders for
their approval in accordance with the Company's Restated Articles of
Incorporation and Amended and Restated By-laws and the NGCL providing for the
adoption of an amendment to the Company's Restated Articles of Incorporation
(the "Amendment") to effect the change of the Company's corporate name from "ITT
Corporation" to "ITT Information Services, Inc." and, if the Amendment is
approved by stockholders, to duly and promptly file the Amendment and any other
certificates or documents necessary to effect such name change. The Company
agrees to prepare a proxy statement and solicit proxies in support of the
Amendment from its stockholders in accordance with the rules and regulations
under the Exchange Act.
(b) The Company agrees that if the Amendment is not adopted at the
Stockholders Meeting or the corporate name "ITT Corporation" is not changed to
"ITT Information Services, Inc.," the Company shall pay to Destinations an
amount equal to one-half of one percent (1/2 of 1%) of all gross revenues
generated by the Company from December 1, 1997 until the Amendment is duly
adopted and the Company changes its corporate name from "ITT Corporation" to
"ITT Information Services, Inc." (the "Name Fee"). The Name Fee shall be payable
on a monthly basis in arrears on the 20th day of the succeeding month. The
Company shall forward to Destinations, on or before the 20th day of each month,
true statements of all revenues generated by the Company during the preceding
month and shall pay, by wire transfer of immediately available funds to an
account specified by Destinations, the Name Fee payable in connection therewith.
The Company shall keep full, true and accurate books and records containing such
particulars as may be necessary for the purpose of calculating the Name Fee.
Destinations shall have the right to review all such books and records. In the
event that any subsequent adjustment shall be made to the Company's gross
revenues as reported in its audited financial statements, any Name Fee paid by
the Company to Destinations based upon such gross revenues shall be equitably
adjusted in accordance with such adjustment.
(c) Notwithstanding the foregoing, from and after the Distribution Time,
the Company agrees to conduct its business using the name ITT Information
Services, Inc. and shall use the name ITT Corporation only to the extent legally
required.
SECTION 6.08. Further Assurances. In case at any time after the
Distribution Time any further action is reasonably necessary or desirable to
carry out the purposes of this Agreement and the Ancillary Agreements, the
proper officers at such time of each party to this Agreement shall promptly take
all such action. Without limiting the foregoing, the Company and Destinations or
their respective Subsidiaries, as appropriate, shall use commercially reasonable
efforts to obtain all consents and approvals, to enter into all agreements and
to make all filings and applications that may be required or are reasonably
necessary for the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements, including, without limitation, all
applicable governmental and regulatory filings.
SECTION 6.09. Investment Banking Fee. Destinations agrees to pay to the
Company one-third of the fee ultimately paid by the Company to Deutsche ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ for services provided by such firm in connection with the investigation
of a proposed transaction between the Company and Seat S.p.A.; provided that
Destinations shall not be liable for more than an aggregate of $1 million under
this Section 6.09.
ARTICLE VII
INSURANCE
SECTION 7.01. Policies and Rights Included Within Assets. (a) The
Retained Assets shall include any and all rights of a named or named additional
insured party under each of the Company Policies set forth on Schedule 7.01(a)
hereto and all predecessor Policies thereto, subject to the terms of such
Policies and any limitations or obligations of the Company contemplated by this
Article VII or Schedule 7.01(a), specifically including rights of indemnity and
the right to be defended by or at the expense of the insurer, with respect to
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all claims, suits, actions, proceedings, injuries, losses, liabilities, damages
and expenses incurred or claimed to have been incurred prior to the Distribution
Time by any Person in or in connection with the conduct of the Retained Business
or the Educational Business or, to the extent any claim is made against the
Company or any of its Subsidiaries, the conduct of the Destinations Business,
and which claims, suits, actions, proceedings, injuries, losses, liabilities,
damages and expenses may arise out of an insured or insurable occurrence under
one or more of such Company Policies; provided, however, that nothing in this
clause shall be deemed to constitute (or to reflect) an assignment of such
Company Policies, or any of them, to the Company.
(b) The Destinations Assets shall include any and all rights of a named or
named additional insured party under each Policy where the Company is a named or
named additional insured party and all predecessor Policies thereto, subject to
the terms of such Policies and any limitations or obligations of Destinations
contemplated by this Article VII or Schedule 7.01(a), specifically including
rights of indemnity and the right to be defended by or at the expense of the
insurer, with respect to all claims, suits, actions, proceedings, injuries,
losses, liabilities, damages and expenses incurred or claimed to have been
incurred prior to the Distribution Time by any Person in or in connection with
the conduct of the Destinations Business or, to the extent any claim is made
against Destinations or any of its Subsidiaries, the conduct of the Retained
Business or the Educational Business, and which claims, suits, actions,
proceedings, injuries, losses, liabilities, damages and expenses may arise out
of an insured or insurable occurrence under either such Policy; provided,
however, that nothing in this clause shall be deemed to constitute (or to
reflect) an assignment of such Policies to Destinations.
SECTION 7.02. Post-Distribution Time Claims. If, subsequent to the
Distribution Time, any Person shall assert a claim against the Company or any of
its Subsidiaries (including, without limitation, where the Company or any of its
Subsidiaries is a joint defendant with other persons) with respect to any claim,
suit, action, proceeding, injury, loss, liability, damage or expense incurred or
claimed to have been incurred prior to the Distribution Time in or in connection
with the conduct of the Retained Business or the Educational Business or, to the
extent any claim is made against the Company or any of its Subsidiaries
(including, without limitation, where the Company or any of its Subsidiaries is
a joint defendant with other persons), the conduct of the Destinations Business,
and which claim, suit, action, proceeding, injury, loss, liability, damage or
expense may arise out of an insured or insurable occurrence under one or more of
the Company Policies, Destinations shall, at the time such claim is asserted, to
the extent any such Policy may require that Insurance Proceeds thereunder be
collected directly by the party against whom the Insured Claim is asserted, be
deemed to designate, without need of further documentation, the Company as the
agent and attorney-in-fact to assert and to collect any related Insurance
Proceeds under such Company Policy, and shall further be deemed to assign,
without need of further documentation, to the Company any and all rights of an
insured party under such Company Policy with respect to such asserted claim,
specifically including rights of indemnity and the right to be defended by or at
the expense of the insurer and the right to any applicable Insurance Proceeds
thereunder; provided, however, that nothing in this Section 7.02 shall be deemed
to constitute (or to reflect) an assignment of the Company Policies, or any of
them, to the Company; provided further, however, that, with respect to those
Company Policies set forth on Schedule 7.01(a) hereto for which the Company has
payment obligations as reflected on such Schedule, the Company and its
Subsidiaries shall only have the rights set forth under this Section 7.02 with
respect to such Company Policies if such payment obligations have been satisfied
by the Company at the relevant time as contemplated by Schedule 7.01(a).
SECTION 7.03. Administration; Other Matters. (a) Administration. Except
as otherwise provided in Section 7.02 hereof, from and after the Distribution
Time, Destinations shall be responsible for (i) Insurance Administration of the
Company Policies and (ii) Claims Administration under such Company Policies with
respect to the Destinations Liabilities, the Retained Liabilities and the
Educational Liabilities; provided that the retention of such responsibilities by
Destinations is in no way intended to limit, inhibit or preclude any right to
insurance coverage for any Insured Claim of a named insured under such Policies
as contemplated by the terms of this Agreement; and provided further that
Destinations' retention of the administrative responsibilities for the Company
Policies shall not relieve the party submitting any Insured Claim of the primary
responsibility for reporting such Insured Claim accurately, completely and in a
timely manner (it being understood that the Company shall report Insured Claims
to the relevant carrier through
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Destinations) or of such party's authority to settle (within the periods
specified in Schedule 7.01(a) in the cases of the Company Policies numbered 1, 3
and 4 on Schedule 7.01(a)) any such Insured Claim. Destinations may discharge
its administrative responsibilities under this Section 7.03 by contracting for
the provision of services by independent parties. Except as contemplated by
Schedule 7.01(a) hereto or this Agreement, each of the parties hereto shall
administer and pay any costs relating to defending its respective Insured Claims
under Company Policies to the extent such defense costs are not covered under
such Policies and shall be responsible for obtaining or reviewing the
appropriateness of releases upon settlement of its respective Insured Claims
under Company Policies. The disbursements, out-of-pocket expenses and direct and
indirect costs of employees or agents of Destinations relating to Claims
Administration and Insurance Administration contemplated by this Section 7.03(a)
shall be the responsibility of Destinations.
(b) Access to Specified Policies. Where Retained Liabilities are
specifically covered under the Company Policies set forth on Schedule 7.01(a)
hereto numbered 20, 21 and 22 for periods prior to the Distribution Time, or
under any such Company Policy covering claims made after the Distribution Time
with respect to an occurrence prior to the Distribution Time, then from and
after the Distribution Time, the Company may claim coverage for Insured Claims
under such Company Policy as and to the extent that such insurance is available
up to the full extent of the applicable limits of liability of such Company
Policy (and may receive any Insurance Proceeds with respect thereto as
contemplated by Section 7.02 or Section 7.03(d) hereof).
(c) Liability Limitation. Except as specifically contemplated by lettered
items under Schedule 7.01(a) or as specifically provided in this Agreement, the
Educational Distribution Agreement or any Ancillary Agreement, the Company and
Destinations shall not be liable to one another for claims not reimbursed by
insurers for any reason not within the control of the Company or Destinations,
as the case may be, including, without limitation, coinsurance provisions,
deductibles, quota share deductibles, exhaustion of aggregates, self-insured
retentions, bankruptcy or insolvency of an insurance carrier, Company Policy
limitations or restrictions, any coverage disputes, any failure to timely claim
by the Company or Destinations or any defect in such claim or its processing.
(d) Allocation of Insurance Proceeds. Except as otherwise provided in
Section 7.02, Insurance Proceeds received with respect to claims, costs and
expenses under the Company Policies shall be paid to Destinations in trust, and
Destinations shall thereafter administer the Company Policies by paying the
Insurance Proceeds, as appropriate, to the Company in accordance with this
Article VII. Payment of the allocable portions of indemnity costs of Insurance
Proceeds resulting from such Policies will be made by Destinations to the
appropriate party upon receipt from the insurance carrier. In the event that the
aggregate limits on any Company Policies are exceeded by the aggregate of
outstanding Insured Claims by the parties hereto, the parties shall agree on an
equitable allocation of Insurance Proceeds based upon their respective bona fide
claims (it being understood that the foregoing shall have no effect on the
obligation of any party under Article V or any Ancillary Agreement). The parties
agree to use commercially reasonable efforts to maximize available coverage
under those Company Policies applicable to it, and to take all commercially
reasonable steps to recover from all other responsible parties in respect of an
Insured Claim to the extent coverage limits under a Company Policy have been
exceeded or would be exceeded as a result of such Insured Claim.
SECTION 7.04. Agreement for Waiver of Conflict and Shared Defense. In the
event that Insured Claims of Destinations and the Company exist relating to the
same occurrence, the parties shall jointly defend and, to the extent it is
reasonable to do so, waive any conflict of interest necessary to the conduct of
the joint defense. Nothing in this Section 7.04 shall be construed to limit or
otherwise alter in any way the obligations of the parties to this Agreement,
including those created by this Agreement, by operation of law or otherwise.
SECTION 7.05. Cooperation. The parties agree to use commercially
reasonable efforts to cooperate with respect to the various insurance matters
contemplated by this Agreement (including, without limitation, in connection
with Policies where Destinations is a named or named additional insured party).
SECTION 7.06. Directors and Officers Liability Insurance. Destinations
agrees that, from and after the Distribution Time to the seventh anniversary of
the Distribution Date, it will maintain in full force and
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effect at its expense the Company Policies numbered 20 and 21 on Schedule
7.01(a) hereto (or, through the purchase of extended discovery, the full
benefits and coverage of such Company Policy) and shall not amend the terms of
such Policy in a manner adverse to any persons covered by such insurance. The
provisions of this Section 7.06 are intended for the benefit of, and shall be
enforceable by, each of the persons covered by the Company Policies numbered 20
and 21 on Schedule 7.01(a) hereto.
ARTICLE VIII
CONDITIONS
SECTION 8.01. Conditions to Obligations of the Company. The obligation of
the Company to consummate the Distribution hereunder shall be subject to the
satisfaction or waiver of each of the following conditions:
(a) All of the transactions contemplated by Article II hereof to occur
prior to the Distribution Time shall have been consummated.
(b) The Destinations Common Shares and the associated Rights to be
issued in the Distribution shall have been approved for listing on the
NYSE, subject only to official notice of issuance.
(c) All filings required to be made prior to the Distribution Time
with, and all consents, approvals and authorizations required to be
obtained prior to the Distribution Time from, any government or any court,
arbitral tribunal, administrative agency or commission or other regulatory
authority, agency or commission, governmental or otherwise, in connection
with the consummation of the Preliminary Transactions, the Distribution and
any other transaction contemplated hereby shall have been made or obtained,
except where the failure to make or obtain the same would not, individually
or in the aggregate, have a material adverse effect on the business,
properties, results of operations or financial condition of the Company,
ITTSC, Destinations or any of their respective Subsidiaries, or on the
ability of any thereof to consummate the transactions contemplated hereby,
or to perform its obligations under this Agreement or any of the Ancillary
Agreements to which it is or will be a party.
(d) Each of the Ancillary Agreements shall have been executed and
delivered by each of the parties thereto and shall be in full force and
effect in accordance with its terms.
(e) Each of the registration statements on Form 10 under the Exchange
Act and the registration statement on Form S-1 under the Securities Act
filed with the SEC by Destinations in connection with the Distribution
shall have become effective under the Exchange Act, no stop order
suspending the effectiveness thereof shall have been issued and no
proceedings for that purpose shall have been initiated by the SEC; and the
Information Statement shall have been or shall be simultaneously mailed to
holders of Destinations Common Stock in accordance with the rules,
regulations and policies of the SEC.
(f) No statute, rule or regulation or temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition shall be in
effect that prohibits consummation of the Preliminary Transactions or the
Distribution.
(g) All conditions to the Stock Tender Offer and the Debt Tender Offer
shall have been satisfied or waived by the Company, and the Stock Tender
Offer and the Debt Tender Offer shall have been consummated prior to or on
the Distribution Date.
(h) The Company shall have received from Cravath, Swaine & ▇▇▇▇▇,
counsel to the Company, an opinion in form and substance reasonably
satisfactory to the Company, stating that the Distribution and the
Educational Distribution will qualify as tax-free spin-offs under Section
355 of the Code and that an acquisition of the Company, Educational or
Destinations after the Distribution and the Educational Distribution by
Hilton should not adversely affect the tax-free status of the Distribution
and the Educational Distribution. In rendering such opinion, such counsel
shall be entitled to rely upon representations provided by the Company
contained in a certain representation letter.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Modification or Amendment. Subject to the terms of Section
9.02 hereof, this Agreement may not be modified or amended except by an
agreement in writing signed by the parties.
SECTION 9.02. Termination. This Agreement (including Article V and
Section 7.06 hereof) may be terminated and the Distribution may be amended,
modified or abandoned at any time prior to the Distribution Time by and in the
sole discretion of the Company without the approval of Destinations or any other
Person. In the event of such termination, no party hereto shall have any
liability of any kind to the other party. After the Distribution Time, this
Agreement may not be terminated except by an agreement in writing signed by the
parties; provided, however, that Article V and Section 7.06 shall not be
terminated or amended after the Distribution Time in respect of the third party
beneficiaries thereto without the consent of such persons.
SECTION 9.03. Waiver; Remedies. The conditions to the Company's
obligation to consummate the Distribution are for the sole benefit of the
Company and may be waived by the Company in whole or in part in its sole
discretion. No delay on the part of the Company or Destinations in exercising
any right, power or privilege hereunder will operate as a waiver thereof, nor
will any waiver on the part of either the Company or Destinations of any right,
power or privilege hereunder operate as a waiver of any other right, power or
privilege hereunder, nor will any single or partial exercise of any right, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder. Unless otherwise
provided, the rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies which the parties may otherwise have at law
or in equity.
SECTION 9.04. Counterparts. For the convenience of the parties, this
Agreement may be executed in any number of separate counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts
shall together constitute the same agreement.
SECTION 9.05. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.
SECTION 9.06. Notices. Any notice, request, instruction or other
communication to be given hereunder by any party to another shall be in writing
and shall be deemed to have been duly given (i) on the date of delivery if
delivered personally, or by telefacsimile, upon confirmation of receipt, (ii) on
the first business day following the date of dispatch if delivered by Federal
Express or other nationally reputable next-day courier service, or (iii) on the
third business day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid. All notices hereunder
shall be delivered as set forth below, or pursuant to such other instructions as
may be designated in writing by the party to receive such notice.
(a) If to Destinations:
ITT Destinations, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) if to the Company:
ITT World Directories, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 9.07. Entire Agreement. This Agreement, the Educational
Distribution Agreement and the Ancillary Agreements (including Exhibits, Annexes
and Schedules hereto and thereto) constitute the entire agreement, and supersede
all other prior agreements, understandings, representations and warranties, both
written and oral, between the parties, with respect to the subject matter hereof
and thereof.
SECTION 9.08. Certain Obligations. Whenever any Ancillary Agreement
requires any of the Subsidiaries of any party to take any action, this Agreement
will be deemed to include an undertaking on the part of such party to cause such
Subsidiary to take such action.
SECTION 9.09. Assignment. This Agreement shall be assignable in whole in
connection with a merger or consolidation or the sale of all or substantially
all the Assets of a party hereto so long as the resulting, surviving or
transferee entity assumes all the obligations of the relevant party hereto by
operation of law or pursuant to an agreement in form and substance reasonably
satisfactory to the other party. Otherwise, this Agreement shall not be
assignable, in whole or in part, directly or indirectly, by any party hereto
without the prior written consent of the other party, and any attempt to assign
any rights or obligations arising under this Agreement without such consent
shall be void.
SECTION 9.10. Captions. The Article, Section and paragraph captions
herein are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof.
SECTION 9.11. Specific Performance. In the event of any actual or
threatened default in, or breach of, any of the terms, conditions and provisions
of this Agreement or any of the Ancillary Agreements, the party or parties who
are or are to be thereby aggrieved shall have the right of specific performance
and injunctive relief giving effect to its or their rights under such agreement,
in addition to any and all other rights and remedies at law or in equity, and
all such rights and remedies shall be cumulative. The parties agree that the
remedies at law for any breach or threatened breach, including monetary damages,
are inadequate compensation for any loss and that any defense in any action for
specific performance that a remedy at law would be adequate is waived.
SECTION 9.12. Severability. If any provision of this Agreement or any of
the Ancillary Agreements or the application thereof to any person or
circumstance is determined by a court of competent jurisdiction to be invalid,
void or unenforceable, the remaining provisions thereof, or the application of
such provision to persons or circumstances other than those as to which it has
been held invalid or unenforceable, shall remain in full force and effect and
shall in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transactions contemplated thereby is not
affected in any manner adverse to any party. Upon any such determination, the
parties shall negotiate in good faith in an effort to agree upon a suitable and
equitable substitute provision to effect the original intent of the parties.
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SECTION 9.13. Third Party Beneficiaries. Except as provided in Article V
relating to Indemnitees and in Section 7.06 relating to directors and officers
liability insurance, this Agreement is solely for the benefit of the parties
hereto and their respective Subsidiaries and Affiliates and should not be deemed
to confer upon third parties any remedy, claim, liability, reimbursement, claim
of action or other right in excess of those existing without reference to this
Agreement.
SECTION 9.14. Fees and Expenses of Enforcement. A party in breach of this
Agreement shall, on demand, indemnify and hold harmless the other party hereto
for and against all reasonable out-of-pocket expenses, including, without
limitation, legal fees and expenses, incurred by such other party by reason of
the enforcement and protection of its rights under this Agreement. The payment
of such expenses is in addition to any other relief to which such other party
may be entitled hereunder or otherwise.
SECTION 9.15. Expenses. Except as otherwise set forth in this Agreement
or any Ancillary Agreement, all costs and expenses incurred on or prior to the
Distribution Time (whether or not paid on or prior to the Distribution Time) in
connection with the preparation, execution, delivery and implementation of this
Agreement and any Ancillary Agreement, the Information Statement and the
Distribution and the consummation of the transactions contemplated thereby shall
be charged to and paid by Destinations. Except as otherwise set forth in this
Agreement or any Ancillary Agreement, each party shall bear its own costs and
expenses incurred after the Distribution Time.
SECTION 9.16. Exhibits and Schedules. The Exhibits and Schedules to this
Agreement shall be construed with and as an integral part of this Agreement to
the same extent as if the same had been set forth verbatim herein.
SECTION 9.17. Consent to Jurisdiction. Each of the parties irrevocably
submits to the exclusive jurisdiction of (a) the Supreme Court of the State of
New York, New York County and (b) the United States District Court for the
Southern District of New York, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby.
Each of the parties agrees to commence any action, suit or proceeding relating
hereto either in the United States District Court for the Southern District of
New York or if such suit, action or other proceeding may not be brought in such
court for jurisdictional reasons, in the Supreme Court of the State of New York,
New York County. Each of the parties further agrees that service of any process,
summons, notice or document by U.S. registered mail to such party's respective
address set forth above shall be effective service of process for any action,
suit or proceeding in New York with respect to any matters to which it has
submitted to jurisdiction in this Section 9.17. Each of the parties irrevocably
and unconditionally waives any objection to the laying of venue of any action,
suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in (i) the Supreme Court of the State of New York, New York
County or (ii) the United States District Court for the Southern District of New
York, and hereby further irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
SECTION 9.18. Ancillary Agreements. This Agreement is not intended to
address, and should not be interpreted to address, the matters specifically and
expressly covered by the Ancillary Agreements.
SECTION 9.19. Survival of Agreements. Except as otherwise contemplated by
this Agreement, all covenants and agreements of the parties contained in this
Agreement shall survive the Distribution Time.
SECTION 9.20. Successors and Assigns. The provisions of this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and permitted assigns.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
ITT CORPORATION,
by
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Operating
Officer
ITT DESTINATIONS, INC.,
by
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President and
General Counsel
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EXHIBIT A
EMPLOYEE BENEFITS SERVICES AND LIABILITIES AGREEMENT
This EMPLOYEE BENEFITS SERVICES AND LIABILITIES AGREEMENT (the "Benefits
Agreement") dated as of , 1997 by and among ITT CORPORATION, a Nevada
corporation ("ITT"), and ITT Destinations, Inc., a Nevada corporation
("Destinations"), and ITT Educational Services, Inc., a Delaware corporation
("ESI") pursuant to the respective agreements and plans of distribution each
dated as of [ ], 1997 (the "Distribution Agreements") between ITT and
Destinations on the one hand (the "Destinations Distribution"), and ITT and ESI
on the other hand (the "ESI Distribution")(collectively, the "Distributions").
WHEREAS, the Board of Directors of ITT has determined that it is
appropriate and desirable to distribute to the holders of shares of common
stock, par value $1.00 per share, of ITT (the "ITT Common Stock") all of the
outstanding shares of common stock of Destinations (the "Destinations Common
Stock") and all of the outstanding shares of common stock of ESI held by ITT
(the "ESI Common Stock"); and
WHEREAS, each of ITT, ESI and Destinations has determined that it is
necessary and desirable to allocate and assign responsibility for certain
employee benefit liabilities in respect of the activities of the businesses of
such entities on and following the Distribution Dates (as defined herein).
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, ITT, ESI and Destinations agree as follows:
1. PURPOSE AND DEFINITIONS.
a. Purpose. The purpose of this Benefits Agreement is to set forth the
agreement of ITT, Destinations and ESI regarding the allocation and assignment
of the respective rights and obligations of ITT, Destinations and ESI before and
after the Distributions with respect to their current and former employees and
with respect to benefits and compensation matters pertaining thereto.
b. Definitions. In addition to the terms defined in the text hereof, as
used in this Benefits Agreement, the following terms shall have the following
meanings (applicable to both the singular and plural forms of the terms
defined):
Applicable Distribution Date: means (A) with respect to,
respectively, ITT and ITT Individuals and Destinations and Destinations
Individuals, the Destinations Distribution Date, and (B) with respect to
ESI and ESI Individuals, the Earlier Distribution Date.
Code: means the Internal Revenue Code of 1986, as amended.
Destinations Distribution Date: means the date as of which
Destinations Common Stock is distributed by ITT to shareholders of ITT.
Destinations Employee: means an individual who is employed (including
an individual who is not actively employed due to an approved disability,
lay-off with right of recall or an authorized leave of absence (or who is
receiving salary continuation severance payments)) by Destinations or any
of Destinations' subsidiaries immediately prior to the Destinations
Distribution. The term "Destinations Employee" will also include all
headquarters staff employees of ITT immediately prior to the Destinations
Distribution other than those whose names are set forth on Schedule A
hereto.
Destinations Former Employee: means a former headquarters staff
employee of ITT (other than an ITT Former Employee) or an employee of
Destinations or any of Destinations' subsidiaries whose employment
terminated prior to the Destinations Distribution.
Destinations Individual: means each Destinations Employee and
Destinations Former Employee.
Distribution Dates: means the Destinations Distribution Date and ESI
Distribution Date.
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Earlier Distribution Date: means the ESI Distribution Date or the
Destinations Distribution Date, whichever first occurs.
ERISA: means the Employee Retirement Income Security Act of 1974, as
amended.
ESI Distribution Date: means the date as of which ESI Common Stock is
distributed by ITT to shareholders of ITT.
ESI Employee: means an individual who is employed (including an
individual who is not actively employed due to an approved disability,
lay-off with right of recall or an authorized leave of absence (or who is
receiving salary continuation severance payments)) by ESI or any of ESI's
subsidiaries immediately prior to the ESI Distribution Date.
ESI Former Employee: means a former employee of ESI whose employment
with ESI terminated prior to the ESI Distribution Date.
ESI Individual: means each ESI Employee and ESI Former Employee.
ESI Stand-Alone Plan: means each benefit or compensation plan,
program, policy or arrangement maintained for the exclusive benefit of all
or some ESI Individuals including, but not limited to, those set forth on
Schedule B hereto.
ITT Employee: means an individual who is employed (including an
individual who is not actively employed due to an approved disability,
lay-off with right of recall or an authorized leave of absence (or who is
receiving salary continuation severance payments)) by WD or any of WD's
subsidiaries immediately prior to the Destinations Distribution. The term
"ITT Employee" will also include those headquarters staff employees of ITT
immediately prior to the Destinations Distribution whose principal duties
relate to WD and its subsidiaries and whose names are set forth on Schedule
A hereto.
ITT Former Employee: means a former employee of WD or its
subsidiaries whose employment with WD or any of WD's subsidiaries
terminated prior to the Destinations Distribution.
ITT Individual: means each ITT Employee and ITT Former Employee.
1995 Agreement: means the Employee Benefits Services and Liability
Agreement, dated as of November 1, 1995, among ITT Corporation, a Delaware
corporation ("Industries"), ITT Destinations, Inc., a Nevada corporation
(the predecessor to ITT), and ITT Hartford Group, Inc., a Delaware
corporation ("Hartford").
1995 Agreement Novation: means the amendment of the 1995 Agreement
pursuant to which the parties thereto agree that, upon the Destinations
Distribution, (i) Destinations will become the successor to ITT's rights
and obligations under the 1995 Agreement, (ii) with respect to its
obligations under Section 1 of the 1995 Agreement, Industries will continue
to credit future service of ITT Employees, ESI Employees and Destinations
Employees for vesting and eligibility purposes under the ITT Industries
Salaried Retirement Plan, (iii) Industries and Hartford will release ITT
and ESI from the guarantees and indemnities which would otherwise be
provided by ITT and ESI to Industries and Hartford under Section 3(c) of
the 1995 Agreement to the extent that either ITT and/or ESI would be deemed
a successor to ITT under the 1995 Agreement, and (iv) Industries will
indemnify Destinations for pension liabilities retained by Industries under
the 1995 Agreement with respect to ITT Individuals, ESI Individuals and
Destinations Individuals.
Retiree-Eligible: means (A) an ITT Individual or Destinations
Individual who, as of the Destinations Distribution Date, and (B) an ESI
Individual who, as of the ESI Distribution Date, would have satisfied the
eligibility requirements for post-retirement medical benefits under ITT's
medical plan for salaried retirees (the "Destinations -- Assumed Salaried
Retiree Medical Plan") if he or she were then to retire.
WD: means ITT World Directories, Inc., a Delaware corporation, and a
wholly-owned subsidiary of ITT.
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WD Stand-Alone Plan: means each benefit or compensation plan,
program, policy or arrangement maintained for the exclusive benefit of all
or some ITT Individuals (including, but not limited to, those plans,
programs, policies or arrangements set forth on Schedule C hereto).
2. EMPLOYEES. Effective as of the Applicable Distribution Date, (a) ITT
Employees shall remain employees of ITT or its subsidiaries and ESI Employees
shall remain employees of ESI, and (b) Destinations Employees shall remain or
become (as applicable) employees of Destinations or its subsidiaries. If the
Destinations Distribution Date occurs prior to the ESI Distribution Date, ESI
Employees and employees hired on or after the Destinations Distribution Date but
prior to the ESI Distribution Date shall remain employees of ESI. Nothing
contained in this Section 2 shall confer on any ITT Employee, any Destinations
Employee or any ESI Employee any right to continued employment, whether before
or after the Applicable Distribution Date.
3. GENERAL PRINCIPLES. Except as otherwise provided in this Benefits
Agreement, as of the Applicable Distribution Date:
a. Except as expressly provided herein, Destinations or its subsidiaries
will assume or maintain sponsorship of, and all liability under, all employee
benefit plans (as such term is defined in Section 3(3) of ERISA), and all other
plans, programs, policies and arrangements sponsored by ITT and its subsidiaries
(including all funding vehicles), which include (but are not limited to) those
set forth on Schedule D hereto. ITT will assume, or one of its subsidiaries will
retain, sponsorship of all WD Stand-Alone Plans and any plans, programs,
policies and arrangements of ITT and its subsidiaries (other than those set
forth on Schedule D hereto) that predominantly cover ITT Individuals. ESI will
retain or assume (as applicable) sponsorship of all ESI Stand-Alone Plans and
any plans, programs, policies and arrangements (other than those set forth on
Schedule D hereto), if any, that predominantly cover ESI Individuals.
b. Except as otherwise specifically provided herein, ITT, ESI and
Destinations each will have in effect, as of the Applicable Distribution Date,
benefit and compensation plans, programs, policies and arrangements for ITT
Individuals, ESI Individuals and Destinations Individuals, respectively, which
are comparable, in the aggregate, to those made available to such individuals
immediately prior to the Applicable Distribution Date.
c. ITT, Destinations and ESI each will be allocated liability for
employment-related claims regardless of when filed (including, but not limited
to, harassment and discrimination) based upon whether the claimant was at the
time the claim arose, respectively, an ITT Individual, Destinations Individual
or ESI Individual.
d. Except as specifically provided herein, as of the Applicable
Distribution Date, all benefit liabilities relating to (i) ITT Former Employees
which presently are ITT or WD liabilities will be retained by ITT, (ii) ESI
Former Employees which presently are ITT or ESI liabilities will be retained or
assumed by ESI, as applicable, and (iii) Destinations Former Employees which
presently are ITT liabilities will be assumed by Destinations.
e. Except to the extent recognition of past service credit would result in
a duplication of benefits, ITT, Destinations and ESI each will give past service
credit under its applicable benefit plans, programs, policies and arrangements
to participants therein to the extent their past service credit was recognized
under the comparable benefit plan, program, policy or arrangement of ITT or its
subsidiaries in which the individual participated immediately prior to the
Applicable Distribution Date.
f. Unless otherwise specifically provided herein, no provision of this
Benefits Agreement will be construed as requiring Destinations, ESI or ITT to
continue any plan, program, policy or arrangement for any period of time after
the Distributions.
g. Subject to the execution of the 1995 Agreement Novation, Destinations
will assume all of the rights and obligations of ITT under the 1995 Agreement.
ITT will use its reasonable best efforts prior to the Destinations Distribution
Date to cause the 1995 Agreement Novation to be executed by ITT, Industries and
Hartford and, if such 1995 Agreement Novation is not executed prior to the
Destinations Distribution Date, the parties hereto shall use their reasonable
best efforts to cause such 1995 Novation Agreement to be executed as soon as
practicable thereafter. If the 1995 Agreement Novation is not executed, ITT
(and, to the
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extent applicable, its subsidiaries following both of the Distributions) will
retain all of the rights and obligations of ITT under the 1995 Agreement, but as
between ITT and Destinations, Destinations shall indemnify and pay or reimburse
ITT for any and all losses, liabilities, claims, damages, demands, costs or
expenses (including without limitation, reasonable attorneys' fees and any and
all out-of-pocket expenses) incurred by ITT arising out of, by reason of, or
otherwise in connection with the 1995 Agreement. Destinations will have
subrogation rights from ITT against Industries and Hartford to the extent it
make any payments to ITT in accordance with this Section 3(g). ESI and ITT will
provide such information to Destinations as shall be reasonably necessary for
Destinations to exercise its rights and privileges and to satisfy its
obligations under the 1995 Agreement and/or the 1995 Agreement Novation.
h. Each party hereto will amend its respective plans, programs, policies
and arrangements (whether newly established, assumed or retained) to the extent
necessary to reflect the provisions of this Benefits Agreement.
i. Any ITT Employee, ESI Employee or Destinations Employee who continues in
employment with ITT, ESI or Destinations or any related subsidiaries following
the Applicable Distribution Date shall not be deemed to have terminated
employment solely as a result of the Destinations Distribution or ESI
Distribution, as applicable, for purposes of any benefit or compensation plan,
program, policy or arrangement maintained by ITT, ESI or Destinations.
4. PENSION PLANS -- QUALIFIED RETIREMENT PLAN AND EXCESS PENSION PLANS.
a. Qualified Pension Plans/Transfer of Assets and Liabilities.
i. Effective as of the Destinations Distribution Date, Destinations
will assume sponsorship of the ITT Corporation Salaried Retirement Plan
(the "Destinations-Assumed Retirement Plan") and its related trust (the
"Destinations-Assumed Retirement Plan Trust"). ITT Employees will cease to
accrue further benefits under the Destinations-Assumed Retirement Plan as
of the Destinations Distribution Date and ESI Employees will cease to
accrue further benefits under the Destinations-Assumed Retirement Plan as
of the Earlier Distribution Date. ITT will, before the Applicable
Distribution Date, provide any notices that may be required with respect to
such cessation under Section 204(h) of ERISA.
ii. Effective as of the Applicable Distribution Date, ITT and ESI each
will establish a new defined benefit plan intended to be tax-qualified
under Section 401(a) of the Code for the benefit of ITT Employees and ESI
Employees, respectively (the "ITT Retirement Plan" and the "ESI Retirement
Plan"). The ESI Retirement Plan will recognize all service for benefit
eligibility and vesting purposes rendered by such ESI Employees including
service prior to the Applicable Distribution Date (such service prior to
such Distribution Date to be as determined under the Destinations-Assumed
Retirement Plan as in effect on such Distribution Date). The ITT Retirement
Plan will (A) recognize all service for benefit eligibility, vesting and
benefit accrual purposes rendered by such ITT Employees prior to the
Destinations Distribution Date (such service prior to the Destinations
Distribution Date to be as determined under the Destinations-Assumed
Retirement Plan as in effect on the Destinations Distribution Date) and all
service for benefit eligibility and vesting purposes on and after the
Distribution Date and (B) provide an offset of any benefit payable with
respect to service recognized under a qualified defined benefit plan
maintained by Industries or Hartford (or one of their respective
subsidiaries) under the 1995 Agreement covering the same period of service.
iii. Upon receipt by ITT of a favorable determination letter from the
Internal Revenue Service to the effect that the ITT Retirement Plan meets
the requirements for qualification under Section 401(a) of the Code (or an
opinion of counsel for ITT to such effect in a form satisfactory to
Destinations), Destinations shall cause to be transferred from the
Destinations-Assumed Retirement Plan Trust to the trust established under
the ITT Retirement Plan assets having a fair market value equal to the
aggregate present value of the accrued benefit obligation attributable to
ITT Employees under the Destinations-Assumed Retirement Plan, calculated as
of the Destinations Distribution Date on a plan termination basis in
accordance with actuarial assumptions and procedures consistent with Code
sec. 414(l), plus interest from the Destinations Distribution Date to the
date of such transfer at the interest yield reflected
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in the three-month Treasury ▇▇▇▇ Auction average, as published in the
Federal Reserve Statistical Release H.15 for the last such auction
immediately prior to the Destinations Distribution Date, and reduced by
distributions to ITT Employees from the Destinations-Assumed Retirement
Plan during the period commencing on the Destinations Distribution Date and
ending on the date of such transfer. Such calculation shall be made by
Towers ▇▇▇▇▇▇, the enrolled actuary currently retained to value the
Destinations-Assumed Retirement Plan ("Pension Actuary"). Upon such
transfer of assets, the ITT Retirement Plan will assume the liabilities
related to the assets transferred to it.
iv. Destinations will retain all assets and accrued liabilities under
the Destinations-Assumed Retirement Plan attributable to (A) ESI
Individuals, (B) ITT Former Employees for benefits accrued prior to the
Earlier Distribution Date and (C) Destinations Individuals. Under the
Destinations-Assumed Retirement Plan, Destinations will (A) continue to
credit service (using the eligibility service definition set forth in the
Destinations-Assumed Retirement Plan as in effect on the Destinations
Distribution Date) of ESI Employees with ESI following the Destinations
Distribution Date solely for benefit eligibility and vesting purposes (but
not for benefit accrual purposes), and (B) not recognize any compensation
paid to ESI Employees on and after the Earlier Distribution Date.
Destinations will provide the benefits to ESI Individuals which had accrued
as of the Earlier Distribution Date under the Destinations-Assumed
Retirement Plan upon their retirement or other termination of employment
with ESI or its subsidiaries in accordance with the terms of the
Destinations-Assumed Retirement Plan.
b. Excess Pension Plans.
i. Except as provided below in this Section 4.b., effective as of the
Destinations Distribution Date, Destinations will assume all liabilities
accrued as of the Destinations Distribution Date under the ITT Corporation
Excess Pension Plan I-A, ITT Corporation Excess Pension Plan I-B and ITT
Corporation Excess Pension Plan II (the "Excess Pension Plans") and assets
under the grantor trust established with respect thereto by ITT with
Bankers Trust Company as trustee (the "Excess Pension Trust").
ii. Effective as of the Earlier Distribution Date, ESI will establish
a new excess pension plan and grantor trust. The new excess pension plan
established by ESI for ESI Employees shall recognize all service for
benefit eligibility, vesting and benefit accrual purposes rendered by such
ESI Employees including service prior to the Earlier Distribution Date
(such service prior to the Earlier Distribution Date to be as determined
under the Excess Pension Plans as in effect on the Earlier Distribution
Date). ITT may establish, as of the Destinations Distribution Date, a new
excess pension plan and grantor trust. The new excess pension plan, if any,
established by ITT for ITT Employees shall (A) recognize all service for
benefit eligibility, vesting and benefit accrual purposes rendered by such
ITT Employees including service prior to the Destinations Distribution Date
(such service prior to the Destinations Distribution Date to be as
determined under the Excess Pension Plans as in effect on the Destinations
Distribution Date) and (B) provide for an offset of any benefit payable
with respect to service recognized under the Destinations-Assumed Excess
Pension Plans covering the same period of service.
iii. Destinations will retain all assets and accrued liabilities under
the Excess Pension Plans attributable to Destinations Individuals. Subject
to the execution of the 1995 Agreement Novation, Destinations will retain
all assets and accrued liabilities under the Excess Pension Plans
attributable to ITT Individuals and will continue to credit service of ITT
Employees with ITT or its successors following the Destinations
Distribution Date solely for vesting purposes (but not for early retirement
benefit eligibility or benefit accrual purposes) under the Excess Pension
Plans. Destinations will provide the benefits to ITT Individuals which have
accrued as of the Destinations Distribution Date under the Excess Pension
Plans upon their retirement or other termination of employment with ITT or
its subsidiaries in accordance with the respective terms of the Excess
Pension Plans.
iv. As soon as practicable following the Earlier Distribution Date,
Destinations or ITT, as applicable (whichever entity is then sponsor of the
Excess Pension Plans), will cause to be transferred from the Excess Pension
Trusts to one or more grantor trusts to be established by ESI, assets on
behalf of ESI Individuals. The determination of the amount of assets to be
transferred in respect of such accrued benefit obligations shall be
performed by the Pension Actuary and shall be equal to the reserve set
forth
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on the books of ITT attributable to ESI Individuals as of the prior
year-end adjusted for accruals up to the Earlier Distribution Date.
v. Effective upon the transfer of assets from the Excess Pension
Trusts to the excess pension trust established by ESI, as described in
Section 4.b.iv. above, ESI will assume all liabilities accrued under the
Excess Pension Plans in respect of ESI Individuals. The transfer of assets
from the Excess Pension Plan Trust to a newly established plan and grantor
trust of ESI will be contingent upon waiver, to the extent deemed necessary
by ITT or Destinations, as applicable (whichever entity is then sponsor of
such plan) by ESI Individuals who are participants in the Excess Pension
Plans of their respective rights under the Excess Pension Plans and Excess
Pension Trust.
vi. If the 1995 Agreement Novation is not executed by December 31,
1997, the foregoing provisions of Section 4.b.iv. and 4.b.v. shall be
extended to also apply to ITT and ITT Individuals such that ITT will accept
a transfer of assets and liabilities from the Excess Pension Plans and
Excess Pension Trust attributable to ITT Individuals. If ITT files for
bankruptcy protection under chapter 7 of the United States Bankruptcy Code
(or any similar state bankruptcy law) at any time within five years
following the Destinations Distribution Date, Destinations will be
contingently liable for the benefits accrued under the Excess Pension Plans
by ITT Individuals from December 19, 1995, through the Destinations
Distribution Date (the "Interim Liabilities") to the extent that any
portion of the Interim Liabilities are not fully paid by ITT, Industries or
Hartford. Destinations will have subrogation rights against such parties to
the extent that it makes any payments to or in respect of ITT Individuals
as a result of such contingent liability.
5. SAVINGS PLAN.
a. Qualified 401(k) Plan.
i. Effective on the Destinations Distribution Date, Destinations will
assume sponsorship of the ITT 401(k) Retirement Savings Plan (the "401(k)
Plan") and related trust and will retain liability for benefits of
Destinations Individuals, ITT Former Employees and ESI Former Employees.
ii. Effective as of the Earlier Distribution Date, the 401(k) Plan
shall be converted by ITT or Destinations, as applicable (whichever entity
is then sponsor of such plan), into a multiple employer plan within the
meaning of Section 413(c) of the Code and such plan shall be maintained as
a multiple employer plan and shall accept contributions from ITT, ESI and
Destinations, and their respective employees, until such time as the
transfers described in Section 5.a.iv. hereof are effectuated, but in no
event later than December 31, 1997; it being understood that certain
limitations on the investment and reinvestment of employer securities may
be imposed by Bankers Trust Company, as trustee of the 401(k) Plan during
the period that the 401(k) Plan is maintained as a multiple employer plan.
iii. Effective no later than January 1, 1998, ITT and ESI each will
establish, or cause to be established, a new qualified 401(k) plan and
related trust to be sponsored, respectively, by ITT and ESI.
iv. Upon receipt by ITT and ESI of favorable determination letters
from the Internal Revenue Service to the effect that their respective newly
established plan meets the requirements for qualification under Section
401(a) of the Code (or an opinion of counsel for ITT and ESI, as
applicable, to such effect in a form satisfactory to Destinations),
Destinations will cause to be transferred to the trusts established under
the newly-established 401(k) plans sponsored by ITT and ESI, the respective
account balances (including any loans and qualified domestic relations
orders pertaining thereto) of ITT Employees and the ESI Employees, and will
cause to be transferred the funds related thereto to the trusts established
under such plans. Upon such transfer, ITT and ESI will assume the related
liabilities.
b. Excess Savings Plan.
i. Except as provided below in this Section 5.b, effective as of the
Destinations Distribution Date, Destinations will assume sponsorship of the
ITT Corporation Excess Savings Plan (the "Excess Savings Plan") and the
related grantor trust established with Bankers Trust Company as trustee
(the "Excess Savings Plan Trust").
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ii. Effective as of the Earlier Distribution Date, ESI will establish,
or cause to be established, a new excess savings plan ("ESI Excess Savings
Plan") and related grantor trust ("ESI Excess Savings Plan Trust") to be
sponsored by ESI. Effective as of the Destinations Distribution Date, ITT
may establish, or cause to be established, a new excess savings plan and
related grantor trust to be sponsored by ITT.
iii. Destinations will retain all assets and accrued liabilities under
the Excess Savings Plan attributable to Destinations Individuals and ITT
Individuals and the hypothetical accounts attributable to such individuals
will continue to be credited with interest in accordance with such plan.
Destinations will continue to credit service of ITT Employees with ITT or
its successors following the Destinations Distribution Date solely for
vesting purposes under the Excess Savings Plan. Destinations will pay the
value of the hypothetical accounts under the Excess Savings Plan, including
earnings thereon in accordance with the terms of such plan, to ITT
Individuals who, on or before the Destinations Distribution Date,
participated in the Excess Savings Plan upon their retirement or other
termination of employment with ITT or its subsidiaries in accordance with
the terms of such plan.
iv. As soon as practicable following the Earlier Distribution Date,
ITT or Destinations, as applicable (whichever entity is then sponsor of the
Excess Savings Plan), will cause to be transferred to the ESI Excess
Savings Plan Trust, assets equal to the hypothetical account balances of
ESI Individuals as determined by the recordkeeper of the Excess Savings
Plan as of the Earlier Distribution Date.
v. Effective upon the transfer of assets from the Excess Savings Plan
Trust to the ESI Excess Savings Plan Trust, as described in Section 5.b.iv.
above, ESI will assume all liabilities accrued under the Excess Savings
Plan in respect of ESI Individuals. The transfer of assets from the Excess
Savings Plan Trust to the ESI Excess Savings Plan and the ESI Excess
Savings Trust will be contingent upon waiver, to the extent deemed
necessary by ITT or Destinations, as applicable (whichever entity is then
sponsor of the Excess Savings Plan) by ESI Individuals who are participants
in the Excess Savings Plan of their respective rights under the Excess
Savings Plan and the Excess Savings Plan Trust.
6. DEFERRED COMPENSATION PLAN.
a. Effective as of the Destinations Distribution Date, Destinations will
assume sponsorship of, and, except as provided in Section 6.b. below, be solely
responsible for all liabilities under, the ITT Corporation Deferred Compensation
Plan (the "Deferred Compensation Plan").
b. Effective as of the Destinations Distribution Date, Destinations will
assume all company-owned life insurance policies which were purchased by ITT at
any time prior to the Destinations Distribution Date in order to finance the
obligations arising under the Deferred Compensation Plan. As of the Earlier
Distribution Date, ESI will assume liability for the obligation under the
Deferred Compensation Plan relating to ESI Employees and Destinations will
transfer assets (which could include cash through settlement of the inter-
company account) to ESI equal to this obligation.
7. MEDICAL AND LIFE INSURANCE PLANS.
a. Pre-Retirement Medical.
i. Effective as of the Destinations Distribution Date, Destinations
will assume sponsorship of all ITT medical (including dental) plans and
arrangements for Destinations Employees, ITT Employees and ESI Employees
(except WD Stand-Alone Plans and ESI Stand-Alone Plans) (the "ITT Health
Plans").
ii. ITT and ESI each will be required to establish medical plans and
arrangements, respectively, for ITT Employees and ESI Employees and their
eligible dependents, such plans to be in effect as of the Applicable
Distribution Date. To the extent permitted under any applicable indemnity,
health maintenance organization or stop-loss contracts, the newly
established ITT and ESI health plans will waive waiting periods,
pre-existing conditions to the extent waived or satisfied under the
applicable ITT Health Plan, and credit deductible/copayments satisfied by
ITT Employees and ESI Employees and their eligible dependents as of the
Applicable Distribution Date. If requested by ITT or ESI, Destinations will
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assist in the development of appropriate administrative procedures to be
implemented in connection with ITT's and ESI's newly established medical
plans and arrangements.
iii. Destinations will assume liability for all eligible claims and
expenses incurred prior to the respective required establishment dates set
forth in Section 7.a.ii. hereof by Destinations Individuals, ITT
Individuals and their respective eligible dependents under the ITT Health
Plans provided that such claims are timely filed in accordance with the
terms of the ITT Health Plans. Destinations will assume or retain
responsibility for continuation health coverage under ITT Health Plans
under ERISA Section 601 et. seq. with respect to ITT Former Employees and
their dependents. ITT shall retain responsibility for such continuation
coverage with respect to dependents of ITT Employees.
iv. ESI will be responsible for all claims and expenses under the ITT
Health Plans incurred by ESI Individuals whether prior to or on or
following the ESI Distribution Date. ESI shall assume responsibility for
continuation coverage under ERISA Section 601 et. seq. with respect to ESI
Individuals. As soon as possible after the ESI Distribution Date,
Destinations will settle up with ESI with respect to claims incurred prior
to the ESI Distribution Date in the manner normally used in connection with
such settlements with respect to ITT and ESI. For administrative purposes,
the end of the month preceding the ESI Distribution Date may be used in
lieu of the ESI Distribution Date in this Section 7.a.iv. As of the
Applicable Distribution Date, ITT will transfer to ESI the reserves set
forth on the books of ITT for medical benefits for disabled ESI
Individuals.
b. Post-Retirement Medical.
i. As of the Destinations Distribution Date, Destinations will assume
sponsorship of, and liability for, all post-retirement medical obligations
under the ITT Salaried Retiree Medical Plan for Destinations Individuals,
ITT Former Employees (except as provided in section 7.b.iii. below) and ESI
Former Employees unless such liabilities were allocated to a party, other
than ITT, under the 1995 Agreement.
ii. As of the Applicable Distribution Date, ITT will retain liability
for, and ESI will assume liability for, all future post-retirement medical
plan and arrangement obligations attributable to ITT Employees and ESI
Employees, respectively, including those ITT Employees and ESI Employees
who are Retiree-Eligible.
iii. It is expressly understood that the medical plan in effect for
ITT Individuals who are or were employed by WD or any of WD's subsidiaries
in Puerto Rico is a WD Stand-Alone Plan and thus ITT will retain liability
for all obligations thereunder, including to ITT Former Employees.
iv. If ITT files for bankruptcy protection under chapter 7 of the
United States Bankruptcy Code (or any similar state bankruptcy law) at any
time within five years following the Destinations Distribution Date and, as
a result thereof, ITT is unable to provide the post-retirement medical
benefits to ITT Employees who are Retiree-Eligible (and their eligible
dependents), then Destinations will be secondarily liable for providing
such post-retirement medical benefits for any such ITT Employee (and his or
her eligible dependents) provided that (A) Destinations is then providing
such post-retirement benefits to its retirees and (B) ITT has provided
continuous post-retirement medical benefits to its retirees comparable to
those provided by Destinations to its retirees from the date of the
Destinations Distribution Date through the date it has filed for bankruptcy
protection. For purposes hereof, Destinations' obligations shall not
pertain to any coverage required to be provided by any party, other than
ITT (then known as ITT Destinations, Inc.), to the 1995 Agreement. ITT, or
any successor thereto, will indemnify Destinations for any amount paid by
Destinations to or in respect of ITT Employees (and their eligible
dependents) under this Section 7.b.iv. As of the Applicable Distribution
Date, ITT will transfer to ESI the reserves set forth on the books of ITT
for medical benefits for disabled ESI Individuals.
v. If within five years of the Destinations Distribution Date, ITT
proves, to the reasonable satisfaction of Destinations, that as a result of
a reduction of employment in the number of ITT Employees, ITT is unable to
obtain or continue a group medical policy providing post-retirement medical
benefits to then retired ITT Employees who are Retiree-Eligible (and their
eligible dependents), Destinations will use its best efforts to include
such individuals under its group policy provided that the
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conditions in clauses (A) and (B) of Section 7.b.iv are satisfied except
that the date on which it is unable to obtain or continue a group policy
shall be substituted for the date on which it filed for bankruptcy
protection in clause (B).
c. Retiree Life.
i. As of the Destinations Distribution Date, Destinations will assume
liability for retiree life insurance coverage for Destinations Individuals
and ITT Former Employees and ITT will assume liability for such insurance
coverage for ITT Employees and, as of the Earlier Distribution Date, ESI
will assume liability for such insurance coverage for ESI Individuals,
respectively, who are not otherwise covered under the 1995 Agreement.
ii. As of the Destinations Distribution Date, Destinations will assume
sponsorship of the VEBA sponsored by ITT prior to the Destinations
Distribution Date (the "Destinations-Assumed VEBA").
iii. As soon as practicable following the Destinations Distribution
Date, Destinations will transfer an allocable share of the assets held
under the Destinations-Assumed VEBA attributable to retiree life benefits
of ITT Employees and of ESI Individuals to newly established VEBAs of ITT,
if any, and ESI, respectively, or to an insurance company that will be
providing such retiree life insurance benefits. Coopers & ▇▇▇▇▇▇▇ will in
good faith determine the allocable shares to be apportioned from the
Destinations-Assumed VEBA. Any determination by Coopers & ▇▇▇▇▇▇▇ will be
binding on the parties hereto (subject only to correction for mathematical
and other clerical errors).
8. LONG-TERM DISABILITY PLANS.
a. As of the Destinations Distribution Date, Destinations will assume
sponsorship of the ITT Salaried Employees Long-Term Disability Plan and, in
connection therewith, shall be responsible for long-term disability benefits
coverage for all Destinations Individuals not otherwise covered by ITT
Industries pursuant to the 1995 Agreement.
b. As of the Applicable Distribution Date, ITT and ESI will adopt long-term
disability plans covering eligible ITT Employees and ESI Employees who are not
otherwise covered by ITT Industries pursuant to the 1995 Agreement. ITT and ESI
each will be allocated a proportionate share of any assets under the VEBA
attributable thereto, including any assets (and any related liability) for
incurred but unreported claims and Destinations will transfer such amounts to
newly established VEBAs of ITT and ESI, respectively or to an insurance company
that will be providing such long-term disability coverage. Metropolitan Life
Insurance Company will determine, in good faith, the allocation of such assets
among Destinations, ITT and ESI and such determination based on such actuarial
factors as it deems appropriate, shall be binding on the parties hereto (subject
only to correction for mathematical and other clerical errors).
9. SPLIT-DOLLAR INSURANCE. Effective as of the Destinations Distribution Date,
Destinations will assume all obligations and funding arrangements under a
certain split dollar insurance arrangement for the benefit of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
originally dated on or about March 7, 1995 and assumed by ITT on March 26, 1997
(but effective as of December 19, 1995).
10. COMPANY-PAID DEATH BENEFITS. Effective as of the Destinations Distribution
Date, Destinations will assume all liability under the ITT Corporation Executive
Death Benefit Program (the "Death Benefit Program") and shall assume sponsorship
of the related grantor trust with Bankers Trust Company as trustee which was
funded to cover future premium payment obligations under the Death Benefit
Program.
11. DIRECTORS' BENEFITS.
a. Effective as of the Destinations Distribution Date, Destinations will
assume all liabilities and assets under the Retirement Benefit Plan for
Non-Management Directors of ITT Corporation.
b. Effective as of the Destinations Distribution Date, Destinations will
assume liability under the group life insurance program of ITT and the ITT Group
Accident Program.
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12. SEVERANCE. Effective upon the Applicable Distribution Date:
a. ITT, Destinations and ESI each will be liable for any severance pay and
benefits (including salary continuation) owing, as of the Applicable
Distribution Date, to ITT Individuals, Destinations Individuals and ESI
Individuals, respectively.
b. For a period of twenty-four months following the Applicable Distribution
Date, ITT, Destinations and ESI agree that they will each provide severance
benefits to ITT Employees, Destinations Employees and ESI Employees,
respectively, on a basis no less favorable than the standard severance (without
regard to any special severance paid in connection with ITT's 1997 restructuring
or in the event of a change in control) in effect on the date hereof. Nothing
herein shall be construed as limiting any individual's rights under any
applicable law or any existing severance plan, policy, program, arrangement or
employment contract (including, but not limited to, any special severance
benefits provided pursuant to ITT's 1997 restructuring) with ITT, Destinations
and ESI.
13. ANNUAL SERVICE RECOGNITION/BONUS AWARDS. ITT, Destinations and ESI will
each be responsible for providing any accrued annual service recognition awards
and bonus compensation to which individuals would otherwise be entitled in
respect of the 1997 calendar year and thereafter to persons who are their
respective employees immediately following the Applicable Distribution Date, and
will make appropriate adjustments to any currently outstanding awards and any
applicable performance criteria thereunder as deemed necessary to equitably
reflect the effect of the Distributions.
14. STOCK OPTIONS.
a. ITT stock options ("ITT Options") granted under the 1995 ITT Corporation
Incentive Stock Plan (the "ITT Stock Plan") which are held immediately prior to
the Destinations Distribution by Destinations Individuals, ITT Former Employees
and current and former directors of ITT will be assumed by Destinations under a
newly established stock option plan to be sponsored by Destinations and will be
converted into options to purchase Destinations stock ("Destinations Options").
b. ITT stock options granted under the ITT Stock Plan which are held by ESI
Individuals immediately prior to the ESI Distribution will be assumed by ESI and
converted into options to purchase ESI stock ("ESI Options").
c. ITT will retain the ITT Stock Plan and the obligations under that plan
with respect to stock options granted thereunder that are held by or in respect
of ITT Employees.
d. The number of Destinations Options and ESI Options into which such ITT
stock options will be converted and the number of ITT Options retained by ITT
Employees, and the respective exercise prices thereof, will be adjusted as
necessary to preserve the economic value of such options inherent in such
options immediately prior to the Destinations Distribution Date or ESI
Distribution Date, respectively, and any option grant in respect of Destinations
or ESI common stock held, respectively, by a Destinations Individual or an ESI
Individual will expressly provide that it is being granted in full satisfaction
of, and in substitution for, any and all ITT stock options outstanding at the
Applicable Distribution Date.
15. RESTRICTED STOCK.
a. ITT will retain the 1996 Restricted Stock Plan for Non-Employee
Directors (the "1996 Restricted Stock Plan"). All liability for restricted
shares of ITT Common Stock held by Destinations Individuals and by current and
former directors of ITT immediately prior to the Destinations Distribution Date
under the 1996 Restricted Stock Plan will be assumed by Destinations under its
newly established stock incentive plan (the "Destinations Restricted Stock
Plan").
b. Destinations will adjust the number of restricted shares of Destinations
Common Stock held by Destinations Individuals and by current and former
directors of ITT to preserve the economic value of such restricted shares
inherent in such restricted stock immediately prior to the Destinations
Distribution Date and any award of Destinations restricted common stock made in
respect thereof under the Destinations Restricted
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Stock Plan will expressly provide that it is being made in full satisfaction of,
and in substitution for, any and all shares of ITT restricted stock awards
outstanding under the 1996 Restricted Stock Plan at the Applicable Distribution
Date.
16. FOREIGN PLANS.
Subject to applicable local law requirements and to the extent practicable,
the respective rights and obligations of ITT, ESI and Destinations (and their
respective subsidiaries) with respect to plans maintained by ITT and its
subsidiaries immediately prior to the Applicable Distribution Date outside of
the United States will be treated in a manner consistent with the general
principles described in Section 3 of this Benefits Agreement; provided, however,
that nothing herein shall be construed so as to (A) modify the terms and
conditions of employment of any ITT Employee, ESI Employee or Destinations
Employee who is employed outside of the United States (a "Foreign Employee") or
(B) constitute an actual or constructive termination of any Foreign Employee's
employment with ITT, ESI, Destinations or any of their respective subsidiaries,
as applicable.
17. COOPERATION.
a. Destinations, ESI and ITT will cooperate in providing each other and
other necessary parties with such data as may be necessary to administer their
respective benefit plans in accordance with the terms of this Agreement, the
1995 Agreement and, if executed, the 1995 Agreement Novation.
b. ITT, ESI and Destinations agree to cooperate in completing all necessary
filings with the Internal Revenue Service, Department of Labor and Pension
Benefit Guaranty Corporation with respect to the matters provided herein and
will apprise the other parties hereto of any written or oral communication to or
from any such agency with respect thereto which may bear on such other parties'
interests hereunder.
18. NO THIRD PARTY BENEFICIARIES. Notwithstanding anything to the contrary
herein, this Benefits Agreement is solely for the benefit of ITT, ESI and
Destinations. There shall be no third party beneficiaries under this Benefits
Agreement, including, without limitation, any Destinations Individual, ESI
Individual or ITT Individual.
19. INCORPORATION BY REFERENCE. This Benefits Agreement is part of the
Distribution Agreements, and shall be incorporated by reference into the
Distribution Agreements as if set forth fully therein. Without limiting the
generality of the foregoing, the parties acknowledge and agree that all
provisions of the applicable Distribution Agreement relating to indemnities
shall be applicable with respect to the matters described herein as if such
terms were incorporated herein and a part hereof.
20. DISPUTE RESOLUTION. In the event of a controversy, dispute or claim
arising out of, in connection with, or in relation to the interpretation,
performance, nonperformance, validity or breach of this Benefits Agreement or
otherwise arising out of, or in any way related to this Agreement, including,
without limitation, any claim based on contract, tort, statute or constitution
(collectively, "Agreement Disputes"), the general counsels of the relevant
parties shall negotiate in good faith for a reasonable period of time to settle
such Agreement Dispute.
If after such reasonable period such general counsels are unable to settle
such Agreement Dispute (and in any event after 60 days have elapsed from the
time the relevant parties began such negotiations), such Agreement Dispute shall
be determined, at the request of any relevant party, by arbitration conducted in
New York City, before and in accordance with the then-existing Rules for
Commercial Arbitration of the American Arbitration Association (the "Rules"),
and any judgment or award rendered by the arbitrator shall be final, binding and
nonappealable (except upon grounds specified in 9 U.S.C. sec.10(a) as in effect
on the date hereof), and judgment may be entered by any state or Federal court
having jurisdiction thereof in accordance with Section 21(o) hereof. Unless the
arbitrator otherwise determines, the pre-trial discovery of the then-existing
Federal Rules of Civil Procedure and the then-existing Rules 46 and 47 of the
Civil Rules for the United States District Court for the Southern District of
New York shall apply to any arbitration hereunder. Any
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controversy concerning whether an Agreement Dispute is an arbitrable Agreement
Dispute, whether arbitration has been waived, whether an assignee of this
Benefits Agreement is bound to arbitrate, or as to the interpretation of
enforceability of this Section 20 shall be determined by the arbitrator. The
arbitrator shall be a retired or former judge of any United States District
Court or Court of Appeals or such other qualified person as the relevant parties
may agree to designate, provided such individual has had substantial
professional experience with regard to settling sophisticated commercial
disputes. The parties intend that the provisions to arbitrate set forth herein
be valid, enforceable and irrevocable. The designation of a situs or a governing
law for this Benefits Agreement or the arbitration shall not be deemed an
election to preclude application of the Federal Arbitration Act, if it would be
applicable. In his award the arbitrator shall allocate, in his discretion, among
the parties to the arbitration all costs of the arbitration, including, without
limitation, the fees and expenses of the arbitrator and reasonable attorneys'
fees, costs and expert witness expenses of the parties. The undersigned agree to
comply with any award made in any such arbitration proceedings that has become
final in accordance with the Rules and agree to the entry of a judgment in any
jurisdiction upon any award rendered in such proceedings becoming final under
the Rules. The arbitrator shall be entitled, if appropriate, to award any remedy
in such proceedings, including, without limitation, monetary damages, specific
performance and all other forms of legal and equitable relief; provided,
however, the arbitrator shall not be entitled to award punitive damages.
21. MISCELLANEOUS.
a. Complete Agreement; Construction. This Benefits Agreement, including
all Schedules attached hereto, shall constitute the entire agreement between the
parties with respect to the subject matter hereof and shall supersede all
previous negotiations, commitments and writings with respect to such subject
matter.
b. Supersession. In the event of any conflict between any of the terms of
this Benefits Agreement and the terms of either Distribution Agreement, the
terms of this Benefits Agreement will govern.
c. Counterparts. This Benefits Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other parties.
d. Survival of Agreements. Except as otherwise contemplated by this
Benefits Agreement, all covenants and agreements of the parties contained in
this Benefits Agreement shall survive the Destinations Distribution Date and ESI
Distribution Date.
e. Notices. All notices and other communications hereunder shall be in
writing and hand delivered or mailed by registered or certified mail (return
receipt requested) or sent by any means of electronic message transmission with
delivery confirmed (by voice or otherwise) to the parties at the following
addresses (or at such other addresses for a party as shall be specified by like
notice) and will be deemed given on the date on which such notice is received:
To ITT: 1330 Avenue of the Americas ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
To ESI: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ -- ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
Attn: General Counsel
To Destinations: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
f. Waivers. The failure of either party to require strict performance by
the other party of any provision in this Benefits Agreement will not waive or
diminish that party's right to demand strict performance thereafter of that or
any other provision thereof.
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g. Amendments. This Benefits Agreement may be amended and restated in its
entirety by Destinations in connection with the acquisition by CDRV Acquisition,
L.L.C., a Delaware limited liability company ("CDRV"), of shares of stock of ITT
pursuant to an Investment Agreement dated as of July 15, 1997 by and between ITT
and CDRV (the "Equity Investment") and prior to the Equity Investment without
the consent of ESI or ITT; provided, however, that if any amendment effected
thereby would have a materially adverse effect on ESI, then Destinations will
obtain the consent of ESI (which consent will not be unreasonably withheld) with
respect to such amendment; provided further that if the amendments effected
thereby would in the aggregate have a materially adverse effect on ITT, then
Destinations shall obtain the consent of ITT (which consent will not be
unreasonably withheld) with respect to such amendments.
h. Assignment. This Benefits Agreement shall be assignable in whole in
connection with a merger or consolidation or the sale of all or substantially
all the assets of a party hereto so long as the resulting, surviving or
transferee entity assumes all the obligations of the relevant party hereto by
operation of law or pursuant to an agreement in form and substance reasonably
satisfactory to the other parties to this Benefits Agreement. Otherwise this
Benefits Agreement shall not be assignable, in whole or in part, directly or
indirectly, by any party hereto without the prior written consent of the others,
and any attempt to assign any rights or obligations arising under this Agreement
without such consent shall be void.
i. Successors and Assigns. The provisions of this Benefits Agreement shall
be binding upon, inure to the benefit of and be enforceable by the parties and
their respective permitted successors and permitted assigns.
j. Termination. This Agreement may not be terminated except by an
agreement in writing signed by the parties hereto.
k. Subsidiaries. Each of the parties hereto shall cause to be performed,
and hereby guarantees the performance of, all actions, agreements and
obligations set forth herein to be performed by any subsidiary of such party or
by any entity that is contemplated to be a subsidiary of such party on and after
the respective Distributions.
l. Attorney Fees. Except as contemplated by the third to the last sentence
of Section 20 hereof, a party in breach of this Benefits Agreement shall, on
demand, indemnify and hold harmless the other parties hereto for and against all
out-of-pocket expenses, including, without limitation, legal fees, incurred by
such other party by reason of the enforcement and protection of its rights under
this Benefits Agreement. The payment of such expenses is in addition to any
other relief to which such party may be entitled hereunder or otherwise.
m. Titles and Headings. Titles and headings to sections herein are
inserted for the convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Benefits Agreement.
n. Specific Performance. Each of the parties hereto acknowledges that
there is no adequate remedy at law for failure by such parties to comply with
the provisions of this Benefits Agreement and that such failure would cause
immediate harm that would not be adequately compensable in damages, and
therefore agree that their agreements contained herein may be specifically
enforced without the requirement of posting a bond or other security, in
addition to all other remedies available to the parties hereto under this
Benefits Agreement.
o. Consent to Jurisdiction. Without limiting the provisions of Section 20
hereof, each of the parties irrevocably submits to the exclusive jurisdiction of
(a) the Supreme Court of the State of New York, New York County, and (b) the
United States District Court for the Southern District of New York, for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby. Each of the parties agrees to commence
any action, suit or proceeding relating hereto either in the United States
District Court for the Southern District of New York or if such suit, action or
other proceeding may not be brought in such court for jurisdictional reasons, in
the Supreme Court of the State of New York, New York County. Each of the parties
further agrees that service of any process, summons, notice or document by U.S.
registered mail to such party's respective address set forth above shall be
effective service of process for any action, suit or proceeding in New York with
respect to any matters to which it has submitted to jurisdiction in this Section
21(o). Each of the parties irrevocably and unconditionally waives any objection
to the laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions
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contemplated herein in (i) the Supreme Court of the State of New York, New York
County, or (ii) the United States District Court for the Southern District of
New York, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
p. Severability. In the event any one or more of the provisions contained
in this Benefits Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby. 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.
q. Effectiveness. This Agreement shall be effective as of the Destinations
Distribution Date, subject to the consummation of the Destinations Distribution.
22. OTHER ACTIONS. The parties hereto shall take such other and further
actions as may be necessary or appropriate to carry out this Benefits Agreement.
23. GOVERNING LAW. This Benefits Agreement and the legal relations between the
parties hereto shall be governed by and construed in accordance with the
internal laws of the State of New York and without regard to conflict of laws
principles.
IN WITNESS WHEREOF, the parties have caused this Benefits Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
ITT CORPORATION
By:
------------------------------------
Name:
Title:
ITT DESTINATIONS, INC.
By:
------------------------------------
Name:
Title:
EDUCATIONAL SERVICES, INC.
By:
------------------------------------
Name:
Title:
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EXHIBIT B-1
INTELLECTUAL PROPERTY LICENSE AND ASSIGNMENT AGREEMENT
INTELLECTUAL PROPERTY LICENSE AND ASSIGNMENT AGREEMENT ("IP Agreement")
dated as of September , 1997, between and among ITT CORPORATION, a Nevada
corporation ("ITT Corporation"), ITT DESTINATIONS INC., a Nevada corporation
("ITT Destinations"), ITT WORLD DIRECTORIES, INC., a Delaware corporation ("ITT
World Directories"), and ITT SHERATON CORPORATION, a Delaware corporation ("ITT
Sheraton") (collectively the "Parties").
RECITALS
WHEREAS, ITT Sheraton is the owner of the trade name "ITT" and of the
trademark and the service ▇▇▇▇ "ITT", and of all rights worldwide in such name
and marks and the goodwill associated therewith;
WHEREAS, ITT Sheraton is party to Trade Name and Trademark License
Agreements with the Hartford Financial Services Groups, Inc. (formerly ITT
Hartford Group, Inc.), (the "Hartford License Agreement") and with ITT
Manufacturing Enterprises, Inc. (the "Industries License Agreement"), both dated
November 1, 1995, concerning their continued right and license to use the ITT
Name and ITT Marks (as hereinafter defined);
WHEREAS, ITT Corporation is the owner of certain intellectual property and
the licensee of certain other intellectual property as more fully set forth in
the 1995 License Agreement (as hereinafter defined) and other Intellectual
Property (as hereinafter defined);
WHEREAS, ITT Corporation and ITT Destinations have entered into the
Agreement and Plan of Distribution dated as of September , 1997 (the
"Destinations Distribution Agreement") pursuant to which the holders of shares
of Common Stock of ITT Corporation at the close of business on the Record Date
(as defined in the Destinations Distribution Agreement) will receive all the
outstanding shares of Common Stock of ITT Destinations;
WHEREAS, ITT Corporation (as hereinafter defined) currently has the right
to use and desires to continue to have the right, after the Destinations
Distribution Date, to use "ITT" as part of its company name and trade name in
connection with conducting the Information Services Business (as hereinafter
defined);
WHEREAS, ITT Sheraton will be merged with and into ITT Destinations in
connection with the Destinations Distribution with ITT Destinations as the
surviving corporation (the "Sheraton Merger"):
WHEREAS, ITT Sheraton is willing to enter into this formal license
agreement with ITT Corporation to continue to use the ITT Name (as hereinafter
defined) after the Destinations Distribution Date in connection with conducting
the Information Services Business;
WHEREAS, ITT Corporation and its Subsidiaries currently have the right to
use, and ITT Destinations and its Subsidiaries desire to have the right to use
after the Destinations Distribution Date, certain intellectual property
allocated and licensed under the 1995 License Agreement and the other
intellectual property in connection with conducting the ITT Destinations
Business (as hereinafter defined);
WHEREAS, ITT Corporation is willing to assign to ITT Destinations certain
intellectual property rights and to enter into this formal license agreement
with ITT Destinations to exchange grants of certain rights and assignment and to
continue to use the intellectual property to conduct their respective businesses
as set forth herein; and
WHEREAS, capitalized terms used but not otherwise defined herein shall have
the same meanings assigned thereto in the Destinations Distribution Agreement.
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NOW, THEREFORE, in connection with and to carry out the Destination
Distribution and in consideration of the premises and mutual agreements and
covenants herein, the Parties hereto hereby agree as follows:
ARTICLE I. DEFINITIONS
Section 1.01. General. As used in this IP Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
(a) "Change in Control" shall mean as it relates to ITT Information
Services the occurrence of any one of the following events:
(i) a report on Schedule 13D shall be filed with the Securities and
Exchange Commission pursuant to Section 13(d) of the Securities Exchange
Act of 1934 (the "Act") disclosing that any person (within the meaning of
Section 13(d) of the Act) other than CDRV Acquisition L.L.C., ITT
Information Services or a Subsidiary of ITT Information Services or any
employee benefit plan sponsored by ITT Information Services or a Subsidiary
of ITT Information Services is the beneficial owner directly or indirectly
of twenty percent (20%) or more of the outstanding Common Stock of ITT
Information Services ;
(ii) any person (within the meaning of Section 13(d) of the Act) other
than CDRV Acquisition L.L.C., ITT Information Services or a Subsidiary of
ITT Information Services or any employee benefit plan sponsored by ITT
Information Services or a Subsidiary of ITT Information Services shall
purchase shares pursuant to a tender offer or exchange offer to acquire any
Common Stock of ITT Information Services (or securities convertible into
such Common Stock), for cash, securities or any other consideration,
provided that after consummation of the offer, the person in question is
the beneficial owner (as such term is defined in Rule 13d-3 under the Act)
directly or indirectly of twenty percent (20%) or more of the outstanding
Stock of ITT Information Services (calculated as provided in paragraph(d)
of Rule 13d-3 under the Act in the case of rights to acquire Common Stock);
(iii) the stockholders of ITT Information Services shall approve (a)
any consolidation or merger of ITT Information Services in which ITT
Information Services is not the continuing or surviving corporation or
pursuant to which shares of Common Stock of ITT Information Services would
be converted into cash, securities or other property, other than a merger
of ITT Information Services in which holders of Common Stock of ITT
Information Services immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger as immediately before, or (b) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of ITT Information
Services ; or
(iv) there shall have been a change in a majority of the members of
the Board of Directors of ITT Information Services within a 12-month period
unless (x) each new director joining such Board during such 12-month period
was nominated or elected by the vote of a majority of the directors then
still in office who were directors at the beginning of such 12-month
period, or (y) the election to such Board of each new director during such
12-month period was endorsed by a majority of such directors.
(v) ITT Information Services shall no longer own ITT World Directories
or any Information Services Subsidiary.
(b) "Closely Related Business" shall mean the business described in Exhibit
A hereto.
(c) "Destinations Distribution Agreement" shall mean the Agreement and Plan
of Distribution dated as of September , 1997 between ITT Corporation and ITT
Destinations.
(d) "Distribution Date" shall have the meaning set forth in the
Destinations Distribution Agreement.
(e) "Information Services Subsidiary" shall mean ITT Information Services,
ITT World Directories, or any of their Subsidiaries, provided that such
Subsidiary is engaged solely in the Information Services Business.
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(f) "Intellectual Property" shall mean inventions, invention disclosures,
patents, patent applications, computer programs (including source code, object
code and data), trademarks, copyrights, copyright registrations, copyright
registration applications, mask works, designs, technical information,
proprietary information, Trademarks, trade secrets, manufacturing processes,
formulas, algorithms, data, and all other kinds of intellectual property
protected or protectable under state, federal or foreign law (1) owned by or (2)
having a right to license a Party or its Subsidiaries as of the Distribution
Date, except the ITT Name and ITT Marks.
(g) "1995 License Agreement" shall mean the Intellectual Property License
Agreement dated November 1, 1995 between and among ITT Industries, ITT Sheraton
and ITT Hartford Group, Inc.
(h) "Information Services Business" shall mean the Retained Business as
defined in the Destinations Distribution Agreement, and, in addition, shall also
mean Closely Related Businesses described in Exhibit A hereto, provided that
Information Services Business does not include the ITT Industries Business or
the ITT Hartford Business as defined in the Hartford License Agreement and the
Industries License Agreement.
(i) "ITT Corporation" shall mean ITT Corporation, a Nevada corporation.
(j) "ITT Destinations" shall mean ITT Destinations, Inc., a Nevada
corporation.
(k) "ITT Destinations Business" shall mean all business not specifically
included within the Retained Business.
(l) "Distribution Time" shall have the meaning set forth in the
Destinations Distribution Agreement.
(m) "ITT Information Services" shall mean (a) ITT Corporation, a Nevada
corporation after the Destinations Distribution or (b) ITT Information Services,
Inc., after ITT Corporation changes its corporate name in accordance with
Section 6.07 of the Destinations Distribution Agreement and Section 2.02 of this
IP Agreement.
(n) "ITT Name" shall mean the worldwide rights to that portion of any
company and trade name consisting of the letters "ITT" and the goodwill
associated therewith.
(o) "ITT Marks" shall mean the worldwide rights to all trademarks and
service marks consisting of the letters "ITT", either alone or in combination
with other words, together with all registrations thereof and all applications
thereof now or hereafter filed or obtained, and the goodwill associated
therewith.
(p) "ITT Sheraton" shall mean, prior to the Sheraton Merger, ITT Sheraton,
and upon consummation of the Sheraton Merger, ITT Destinations, or any successor
to ITT Destinations.
(q) "Permitted Manner of Use" shall mean use of the ITT Name and the ITT
Marks in accordance with all legal requirements and also with ITT Sheraton's
policy and style standards as currently existing and as may be reasonably
amended from time to time by ITT Sheraton.
(r) "Phaseout Period" shall mean a period of three (3) months from the
termination of that portion of this IP Agreement relating to the ITT Name and
ITT Marks during which period all use of the ITT Name and ITT Marks by ITT
Information Services and its Subsidiaries, as the case may be, shall be phased
out in accordance with the provisions of this IP Agreement.
(s) "Retained Business" shall have the meaning set forth in the
Destinations Distribution Agreement.
(t) "Service ▇▇▇▇ License Agreement" shall mean the Trade Name and Service
▇▇▇▇ License Agreement that forms Exhibit B-2 of the Destinations Distribution
Agreement and executed contemporaneously with this IP Agreement.
(u) "Subsidiary" shall mean any corporation, partnership or other entity of
which another entity (i) 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 interests of such corporation, partnership or other entity
shall or might have such voting power upon the occurrence of any contingency) or
(ii) is a general partner or an entity performing similar functions (e.g.,
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a trustee or managing member). For purposes of this Agreement, ITT-Dow ▇▇▇▇▇
Television and its Subsidiaries shall be deemed to be Subsidiaries of ITT
Destinations.
(v) "Trademarks" shall mean and include trademarks, trade names, company
names, service marks, trade dress, the registrations thereof, the applications
therefor and the goodwill associated therewith, exclusive of the ITT Name and
ITT Marks.
(w) "ITT World Directories" shall mean ITT World Directories, Inc., a
Delaware corporation.
Any time the word "including" is used in this IP Agreement, it shall be
deemed to mean "including, without limitation".
ARTICLE II. ITT NAME LICENSE
Section 2.01. Grant of License to Use the ITT Name. ITT Sheraton hereby
grants to ITT Information Services, for the Term of this IP Agreement (as
defined in Section 8.02 hereof), a personal, non-assignable (except as otherwise
provided in this IP Agreement), non-transferable worldwide license to use in
accordance with the Permitted Manner of Use the ITT Name solely as part of the
corporate name "ITT Corporation" (subject to Sections 2.02 and 2.03 hereof) on a
non-exclusive basis, and solely as part of the corporate and/or company trade
name "ITT Information Services, Inc." on an exclusive basis; provided, however,
(i) that ITT Information Service remains a non-operating, holding company of
entities solely in the Information Services Business, and (ii) that any use of
the ITT Name and/or the ITT Marks by ITT Information Services and Information
Services Subsidiaries in connection with the operation of the Information
Services Business, or any other business as may be authorized shall be solely
under license from ITT World Directories pursuant to the terms of the Service
▇▇▇▇ License Agreement. ITT Sheraton during the Term of this IP Agreement will
not use, nor grant a license to any third party to use the trade name "ITT
Information Services", subject to all other provisions of this IP Agreement.
Except as specifically provided herein, ITT Information Services and Information
Services Subsidiaries shall not have the right to use "ITT Corporation" or any
name substantially identical thereto as a trade name, service ▇▇▇▇ or trademark.
Section 2.02. Change of Corporate Name. ITT Information Services will, at
the first meeting of its stockholders following the Distribution Date (the
"Stockholders Meeting"), submit a resolution to its stockholders for their
approval in accordance with ITT Information Services' Articles of Incorporation
and By-laws providing for the adoption of an amendment to ITT Information
Services' Articles of Incorporation (the "Amendment") to effect the change of
ITT Information Services' corporate name from "ITT Corporation" to "ITT
Information Services, Inc." and will, if the Amendment is approved by its
stockholders, duly and promptly file the Amendment and any other certificates or
documents necessary to effect such name change. ITT Information Services shall
prepare a proxy statement and solicit proxies in support of the Amendment from
its stockholders in accordance with the rules and regulations under the Exchange
Act.
Section 2.03. Payment on Failure to Change Name. ITT Information Services
will, if the Amendment is not adopted at the Stockholders Meeting or the
corporate name "ITT Corporation" is not changed to "ITT Information Services,
Inc.," pay to ITT Sheraton on a monthly basis from the date of the Stockholders
Meeting until the Amendment is adopted and it changes its corporate name from
"ITT Corporation" to "ITT Information Services, Inc." an amount equal to one
half of one percent ( 1/2 of 1%) of all gross revenues received by ITT
Information Services and the Information Services Subsidiaries during the
preceding calendar month (or such shorter period). ITT Information Services will
forward to ITT Sheraton, on or before the 20th day of each month, true
statements of all revenues received by it and the Information Services
Subsidiaries during the preceding month and the payment provided for in this
Section 2.03 (the "Name Fee"). ITT Information Services and the Information
Services Subsidiaries will keep full, true and accurate books of account
containing such particulars as may be necessary for the purpose of calculating
the Name Fee. ITT Sheraton will have the right to review all books and accounts
containing records of revenues which are subject to such payments. In the event
that any subsequent adjustment shall be made to ITT Information Services and the
Information Services Subsidiaries' gross revenues as reported in their audited
financial statements, then the Name Fee paid thereon based upon such gross
revenue shall be adjusted in accordance with such adjustment.
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Section 2.04. Prohibited Uses of ITT Name and ITT Marks. Neither ITT
Information Services, nor any Subsidiaries of ITT Information Services shall use
the ITT Name or the ITT Marks with or for any entity, outside the scope of the
Information Services Business.
Section 2.05. Reduction of Licenses. In the event ITT Information
Services and/or any Subsidiary of ITT Information Services shall abandon its use
of the ITT Name for all or a portion of the Information Services Business, then
the scope of the rights granted in Section 2.01 with respect to such abandoned
ITT Name shall be reduced by an amount equal to the scope of the Information
Services Business so abandoned. For purpose of this Section 2.05, abandonment
shall mean the failure of ITT Information Services or any Subsidiary of ITT
Information Services to use the ITT Name for a period of two (2) years in all or
such portion of the Information Services Business, any such period to commence
only after the Distribution Date.
Section 2.06. Quality Standards. In view of the status of the Parties
immediately prior to the Distribution Date as affiliated companies, each Party's
intimate knowledge with standards and procedures for assuring consistent
quality, ITT Sheraton's knowledge of the standards and procedures used by ITT
Information Services in the Retained Business, the integrity of the Retained
Business and its history of trouble-free goods and services, ITT Sheraton
recognizes the Retained Business current quality standards as acceptable
standards, and ITT Information Services and the Information Services
Subsidiaries agree to maintain such standards and procedures to assure the
consistent quality of its goods and services. ITT Information Services and the
Information Services Subsidiaries shall not materially lower such quality
standards without the prior written approval of ITT Sheraton.
Section 2.07. Inspections and Samples. Should ITT Sheraton have reason to
believe based on information available to it that the quality standards referred
to in Section 2.06 have not been maintained, at the request of ITT Sheraton, ITT
Information Services shall, and shall cause the Information Services
Subsidiaries to, permit a knowledgeable independent expert or consultant
retained by ITT Sheraton to have reasonable access to their premises and
personnel during normal working hours and shall furnish or permit inspection of,
at ITT Sheraton's request and without charge to ITT Sheraton or to such expert
or consultant, product samples, cartons, containers, packaging, wrapping and
service materials bearing or used in connection with the ITT Name and/or the ITT
Marks for the purpose of ensuring that ITT Information Services and the
Information Services Subsidiaries are complying with such quality standards. The
selection of the independent expert shall be subject to the approval of ITT
Information Services, which approval shall not be unreasonably delayed or
withheld. Any information obtained during such inspection and provided to ITT
Sheraton shall be limited to that which is necessary to ensure compliance with
such quality standards and shall be kept confidential by ITT Sheraton and its
Subsidiaries.
Section 2.08. Advertising, Packaging and Labels. ITT Information Services
shall, and shall cause the Information Services Subsidiaries to, furnish, at ITT
Sheraton's request and without charge, to ITT Sheraton or to its authorized
designee(s) samples of promotional and advertising material or the like to be
used in connection with any products or services offered by ITT Information
Services and any of its Subsidiaries and bearing or used in connection with the
ITT Name and ITT Marks.
Section 2.09. Third Party Rights. ITT Information Services acknowledges
that the rights granted by ITT Sheraton under Section 2.01 are subject to all
pre-existing third party rights, obligations, and restrictions as of the
Distribution Date.
Section 2.10. Rights to Enter Businesses. Nothing in this IP Agreement
shall preclude ITT Information Services, or any of its Subsidiaries or
affiliates, from operating in any business outside of the Information Services
Business provided the ITT Name or the ITT Marks are not used in such business.
ARTICLE III. INTELLECTUAL PROPERTY ASSIGNMENTS AND LICENSES
Section 3.01. Intellectual Property Under 1995 License Agreement.
(a) ITT Corporation hereby transfers and assigns, without charge to ITT
Destinations, and ITT Destinations hereby accepts such transfer and assignment,
effective as of the Distribution Time, all rights and obligations under the 1995
License Agreement, except that the Intellectual Property rights and obligations
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under the 1995 License Agreement primarily or exclusively used in the Retained
Business shall not be so transferred.
(b) ITT Corporation hereby transfers and assigns, without charge to ITT
World Directories, and ITT World Directories hereby accepts such transfer and
assignment, effective as of the Distribution Time, all rights and obligations
under the 1995 License Agreement primarily or exclusively used in the Retained
Business.
Section 3.02. Assignment of Intellectual Property
(a) ITT Corporation hereby transfers and assigns to ITT Destinations and
ITT Destinations hereby accepts such transfer and assignment of, effective as of
the Distribution Time, all right, title and interest in and to all Intellectual
Property owned or controlled by ITT Corporation except the Intellectual Property
primarily or exclusively used in the Retained Business.
(b) ITT Corporation hereby transfers and assigns, without charge to ITT
World Directories, and ITT World directories hereby accepts such transfer and
assignment, effective as of the Distribution Time, all right, title, and
interest in and to all Intellectual Property owned or controlled by ITT
Corporation that is primarily or exclusively used in the Retained Business.
Section 3.03. Third Party Rights. The rights transferred and assigned by
ITT Corporation under Sections 3.01 and 3.02 are subject to all pre-existing
third party rights, obligations and restrictions as of the Distribution Date.
Section 3.04. No Future Technical Obligations. Except as otherwise
specifically provided for in this IP Agreement or the Destinations Distribution
Agreement, the Parties shall not be obligated to the other to provide any
technical assistance, or to transfer any technical information or documentation
associated therewith.
ARTICLE IV. INDEMNIFICATION
Section 4.01. Defense of Infringement Claims. ITT Sheraton agrees to
indemnify, defend and hold harmless ITT Information Services and/or any
applicable Information Services Subsidiary and their respective employees,
officers, directors and agents from and against, and pay or reimburse them for,
any and all Indemnifiable Losses, which arise solely out of an assertion or
claim by a third party that the use of the ITT Name or ITT Marks by ITT
Information Services or any of the Information Services Subsidiaries pursuant to
the terms of this IP Agreement infringes the trade names or trademarks of such
third party. The costs associated with any such defense shall be borne equally
by ITT Sheraton and ITT Information Services. ITT Sheraton shall have no
obligation to indemnify ITT Information Services, or any Information Services
Subsidiary, or their respective employees, officers, directors, or agents for
any indemnifiable losses that relate to any use of the ITT Name or ITT Marks
that is not expressly permitted by this IP Agreement.
Section 4.02. Limitations on Indemnification Obligations. The amount that
any party (an "Indemnifying Party") is or may be required to pay to any other
person (an "Indemnitee") pursuant to Section 4.01, as applicable, shall be
reduced (retroactively or prospectively) by any Insurance Proceeds or other
amounts actually recovered by or on behalf of such Indemnitee in respect of the
related Indemnifiable Loss. If an Indemnitee shall have received the payment
required by this Agreement from an Indemnifying Party in respect of an
Indemnifiable Loss and shall subsequently actually receive Insurance Proceeds or
other amounts in respect of such Indemnifiable Loss, then such Indemnitee shall
pay to such Indemnifying Party a sum equal to the amount of such Insurance
Proceeds or other amounts actually received, up to the aggregate amount of any
payments received from such Indemnifying Party pursuant to this IP Agreement in
respect of such Indemnifiable Loss.
Section 4.03. Procedures for Indemnification. Any Indemnitee entitled to
indemnification pursuant to this IP Agreement shall notify the Indemnifying
Party in writing, and in reasonable detail, of the applicable Third Party Claim
promptly (and in any event within 10 business days) after receipt by such
Indemnitee of written notice of the Third Party Claim; provided, however, that
failure to give such notification shall not affect the indemnification provided
hereunder except to the extent the Indemnifying Party shall have been
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actually prejudiced as a result of such failure (except that the Indemnifying
Party shall not be liable for any expenses incurred during the period in which
the Indemnitee failed to give such notice). Thereafter, the Indemnitee shall
deliver to the Indemnifying Party, promptly (and in any event within 10 business
days) after the Indemnitee's receipt thereof, copies of all notices and
documents (including court papers) received by the Indemnitee relating to the
Third Party Claim.
If a Third Party Claim is made against an Indemnitee, the Indemnifying
Party shall be entitled to participate in the defense thereof and, if it so
chooses and acknowledges in writing its obligation to indemnify the Indemnitee
therefor, to assume the defense thereof with counsel selected by the
Indemnifying Party; provided that such counsel is not reasonably objected to by
the Indemnitee. Should the Indemnifying Party so elect to assume the defense of
a Third Party Claim, the Indemnifying Party shall not be liable to the
Indemnitee for legal or other expenses subsequently incurred by the Indemnitee
in connection with the defense thereof. If the Indemnifying Party assumes such
defense, the Indemnitee shall have the right to participate in the defense
thereof and to employ counsel, at its own expense, separate from the counsel
employed by the Indemnifying Party, it being understood that the Indemnifying
Party shall have full control of such defense. The Indemnifying Party shall be
liable for the fees and expenses of counsel employed by the Indemnitee for any
period during which the Indemnifying Party has failed to assume the defense
thereof (other than during the period prior to the time the Indemnitee shall
have given notice of the Third Party Claim as provided above).
If the Indemnifying Party so elects to assume the defense of any Third
Party Claim, all of the Indemnitees shall cooperate with the Indemnifying Party
in the defense or prosecution thereof. Such cooperation shall include the
retention and (upon the Indemnifying Party's request) the provision to the
Indemnifying Party of records and information which are reasonably relevant to
such Third Party Claim and making employees available on a mutually convenient
basis to provide additional information of any material provided hereunder.
Whether or not the Indemnifying Party shall have assumed the defense of a
Third Party Claim, in no event will the Indemnitee admit any liability with
respect to, or settle, compromise or discharge, such Third Party Claim without
the Indemnifying Party's prior written consent (which consent shall not be
unreasonably withheld); provided, however, that the Indemnitee shall have the
right to settle, compromise or discharge such Third Party Claim without the
consent of the Indemnifying Party if the Indemnitee releases in writing the
Indemnifying Party from its indemnification obligation hereunder with respect to
such Third Party Claim and such settlement, compromise or discharge would not
otherwise adversely affect the Indemnifying Party. If the Indemnifying Party
shall have assumed the defense of a Third Party Claim, the Indemnitee will agree
to any settlement, compromise or discharge of a Third Party Claim that the
Indemnifying Party may recommend and that by its terms obligates the
Indemnifying Party to pay the full amount of the liability in connection with
such Third Party Claim and releases the Indemnitee completely in connection with
such Third Party Claim.
Notwithstanding the foregoing, the Indemnifying Party shall not be entitled
to assume the defense of any Third Party Claim (and shall be liable for the fees
and expenses of counsel incurred by the Indemnitee in defending such Third Party
Claim) if the Third Party Claim seeks an order, injunction or other equitable
relief or relief for other than money damages against the Indemnitee which the
Indemnitee reasonably determines, after conferring with its counsel, cannot be
separated from any related Third Party Claim for money damages. If such
equitable relief or other relief portion of the Third Party Claim can be so
separated from that for money damages, the Indemnifying Party shall be entitled
to assume the defense of the portion relating to money damages.
Section 4.04. Other Adjustments.
(a) The amount of any Indemnifiable Loss shall be (x) increased to take
into account any net Tax cost actually incurred by the Indemnitee arising from
any payments received from the Indemnifying Party (grossed up for such increase)
and (y) reduced to take account of any net Tax benefit actually realized by the
Indemnitee arising from the incurrence or payment of any such Indemnifiable
Loss. In computing the amount of such Tax cost or Tax benefit, the Indemnitee
shall be deemed to recognize all other items of income, gain,
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loss, deduction or credit before recognizing any item arising from the receipt
of any payment with respect to an Indemnifiable Loss or the incurrence or
payment of any Indemnifiable Loss.
(b) In addition to any adjustments required pursuant to Section 4.02 hereof
or clause (i) of this Section 4.04, if the amount of any Indemnifiable Loss
shall, at any time subsequent to the payment required by this IP Agreement, be
reduced by recovery, settlement or otherwise, the amount of such reduction, less
any expenses incurred in connection therewith, shall promptly be repaid by the
Indemnitee to the Indemnifying Party, up to the aggregate amount of any payments
received from such Indemnifying Party pursuant to this IP Agreement in respect
of such Indemnifiable Loss.
ARTICLE V. UNDERTAKINGS
Section 5.01. Phase-Out. ITT Sheraton shall not grant a license to any
third party to use the ITT Name in the field of activity of the Retained
Business during the Term of this IP Agreement and any Phaseout Period after any
termination of this IP Agreement, except in the case of an abandonment as
specified in the last sentence of Section 2.05 herein.
Section 5.02. Absence of Interest in ITT Marks. ITT Information Services
acknowledges that nothing in this IP Agreement shall give it or any Information
Services Subsidiary any right, title or interest in the ITT Name apart from the
rights to use, and to sublicense the use, granted or to be granted hereunder,
and to retain any remuneration resulting therefrom, all such right, title and
interest, including but not limited to rights of registration, maintenance and
enforcement, being solely with ITT Sheraton. The ITT Name and the ITT Marks are
the sole property of ITT Sheraton, and any and all uses by ITT Information
Services of the ITT Name or of the ITT Marks shall inure to the benefit of ITT
Sheraton. In no event shall such use be deemed or construed to have created or
vested any right, title or interest whatsoever in and to ITT Information
Services. To the extent that any jurisdiction shall find for any reason as a
matter of law or otherwise that such use has vested in ITT Information Services
or any of its Subsidiaries any right, title or interest in or to the ITT Name or
the ITT Marks, ITT Information Services upon the request of ITT Sheraton, shall,
and shall cause any applicable Subsidiary of ITT Information Services to,
execute and deliver to ITT Sheraton, without charge, appropriate assignments to
vest such rights, title and interest in ITT Sheraton.
Section 5.03. ITT Name and ITT Marks Not Contested. ITT Information
Services agrees that neither it, nor any of its Subsidiaries, shall raise or
cause to be raised any questions concerning or objections to the validity of the
ITT Name or the ITT Marks in any jurisdiction, or to any registrations thereof
or applications therefor, or to the sole proprietary rights of ITT Sheraton
thereto, on any grounds whatsoever.
Section 5.04. Filing, Registration or Use of Names, Trademarks and Service
Marks. ITT Information Services agrees that neither it nor any of its
Subsidiaries shall:
(a) file, apply to register or register the ITT Name or the ITT Marks,
alone or in combination with any other word or device or symbol or any
name, ▇▇▇▇, term, script or device colorably similar thereto, except if,
as, when, and to the extent approved in writing in advance by ITT Sheraton
in specific instances;
(b) use the ITT Name in conjunction or in combination with any other
name, ▇▇▇▇, term, script or device whatever, except as specifically set
forth in Article II, or if, as and to the extent approved in writing in
advance by ITT Sheraton; or
(c) use the ITT Name in any jurisdiction, or any name, ▇▇▇▇, term,
script or device colorably similar thereto, except as specifically
permitted under this IP Agreement.
At the request of ITT Information Services, ITT Sheraton shall file
registration applications and maintain any such applications and registrations
issued thereon for the ITT Name and ITT Marks for activities within the ITT
Information Services Business. Any expenses incurred by, or on behalf of, ITT
Sheraton in connection with registering or maintaining registrations of the ITT
Name and ITT Marks for the Information Services Business shall be reimbursed by
ITT Information Services promptly upon receipt of written notice thereof.
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Section 5.05. Other ITT Sheraton Licenses. Subject to Section 2.01,
nothing in this IP Agreement shall be construed to limit the right of ITT
Sheraton to use, or to grant a license to any entity or person to use, the ITT
Name or the ITT Marks anywhere for any products or services, or in connection
with any activities outside the Retained Business even if such entity or person
competes with ITT Information Services or any of the Information Services
Subsidiaries, or its products or services are shipped, sold or offered in the
same channels of trade as those of ITT Information Services or any of the
Information Services Subsidiaries.
Section 5.06. Execution of Documents. At ITT Sheraton's request, ITT
Information Services and the Information Services Subsidiaries shall assist ITT
Sheraton in the procurement or maintenance of any filings or registrations for
the ITT Name in any jurisdiction by providing any information available from ITT
Information Services and the Information Services Subsidiaries and executing any
documents necessary therefor. The rights granted or to be granted hereunder to
ITT Information Services or any Information Services Subsidiary shall be
recorded in any jurisdiction where such recordation is required by statute or in
the sole discretion of ITT Sheraton is advisable, and ITT Information Services
and the Information Services Subsidiaries shall extend to ITT Sheraton their
full cooperation in filing and completing any such recordation.
Section 5.07. Intellectual Property Violations. To the extent that the
transfer of intellectual property rights and licenses under Article III herein
would violate or be prohibited by any agreement with a third party, and such
Intellectual Property is actually used by the grantee Party, then the granting
Party undertakes to use reasonable efforts to obtain the necessary consent(s)
from such third party so as to be permitted to make such grants.
Section 5.08. No Representation or Warranty. Each of the Parties hereto
understands and agrees that no party hereto is, in this IP Agreement or in any
other agreement or document contemplated by this IP Agreement or otherwise,
making any representation or warranty whatsoever. It is also agreed and
understood that any and all intellectual property assets either transferred or
licensed to or retained by the Parties, as the case may be, shall be "as is,
where is".
ARTICLE VI. INFRINGEMENT BY THIRD PARTIES
Section 6.01. Infringement by Third Parties. Upon discovery by ITT
Information Services or by any Subsidiary, Affiliate, or representative of ITT
Information Services, ITT Information Services shall notify ITT Sheraton of any
adverse uses confusingly similar or otherwise damaging to the ITT Name, but
shall take no other action of any kind with respect thereto except by the
express prior written authorization of ITT Sheraton. The determination of
whether or not legal action shall be taken in any case shall lie exclusively
with and at the sole discretion of ITT Sheraton, except that if such adverse use
is in the same field of activity as the Retained Business, ITT Information
Services may, by such notice, require that ITT Sheraton institute and reasonably
pursue legal action.
Section 6.02. Costs of Legal Action. In the event that ITT Sheraton is
required to institute legal action pursuant to the notice under Section 6.01,
the costs of any such legal action shall be borne by ITT Information Services.
In the event that ITT Sheraton is not so required, but decides to institute
legal action and such confusingly similar or otherwise damaging use is primarily
or exclusively within the field of activity of the Retained Business, the costs
of any such legal action shall be shared equally by ITT Information Services and
by ITT Sheraton. In all such circumstances, ITT Sheraton may bring suit in its
own name and in the name of ITT Information Services with choice of counsel and
control of the legal action by ITT Sheraton in close coordination and
consultation with ITT Information Services. All other legal actions for third
party infringements instituted by ITT Sheraton shall be at the expense and under
the control of ITT Sheraton. ITT Information Services shall cooperate with and
assist ITT Sheraton in any such suit by promptly providing any reasonably
requested documents in their possession, custody, or control, and by making
their personnel familiar with the facts available to ITT Sheraton and otherwise,
without charge. ITT Information Services agrees to reimburse ITT Sheraton for
all costs and expenses, as incurred, associated with any actions taken by ITT
Sheraton under this Article VI.
Section 6.03. Resolution of Legal Action. In the event that threatened or
actual legal action by ITT Sheraton for infringement of the ITT Name in the
field of the Information Services Business results in a
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settlement or resolution that provides damages or other monies to ITT Sheraton,
ITT Information Services or any of the Information Services Subsidiaries, such
monies shall first be used to reimburse ITT Sheraton for the costs of such legal
action. Any remaining damages or other monies after reimbursement of the
aforesaid costs and expenses shall be retained by ITT Sheraton, except that any
remaining damages assessed as lost profits of ITT Information Services or any
Information Services Subsidiary shall be paid to ITT Information Services and
any remaining damages assessed as royalties shall be shared equally by ITT
Information Services and ITT Sheraton.
ARTICLE VII. CHANGE OF CONTROL AND FAILURE TO MAKE PAYMENTS
Section 7.01. Change of Control. In the event that there is a Change of
Control, then the licenses granted to ITT Information Services to use the ITT
Name under Section 2.01 may be terminated by ITT Sheraton following ninety (90)
days advance notice by ITT Sheraton. The Strategic Investment in ITT Information
Services by CDRV Acquisition, L.L.C. ("CDRV") under the terms of the Investment
Agreement dated July 15, 1997 between ITT Corporation and CDRV shall not be
considered a Change in Control for purposes of this IP Agreement.
Section 7.02. Failure to Make Payments. In the event that ITT Information
Services fails to change its name and fails to make the payments provided for in
Section 2.03 hereof, then the licenses granted to ITT Information Services to
use the ITT Name under Section 2.01 may be terminated by ITT Sheraton.
ARTICLE VIII. TERM AND EFFECT OF TERMINATION
Section 8.01. Termination Prior to Distribution. This IP Agreement may be
terminated by ITT Corporation at any time prior to the Destinations Distribution
by and in the sole discretion of ITT Corporation without the approval of the
shareholders of any Party. In the event of such termination, no party shall have
any liability of any kind to any other party.
Section 8.02. Term. This IP Agreement shall be effective as of the
Distribution Time and shall continue to , except that the rights of
ITT Information Services and the Information Services Subsidiaries rights to use
the ITT Name may be terminated at any time pursuant to Sections 2.04, 7.01, 7.02
or 8.03 hereof or, unless sooner terminated pursuant to Section 8.01 hereof, by
giving written notice of an intent to terminate that portion of this IP
Agreement effective three (3) months thereafter (the effective date of such
notice, the "Termination Date").
Section 8.03. Termination By Breach. If ITT Information Services or any
Information Services Subsidiary shall fail, fully and faithfully to observe or
perform any of the terms of this IP Agreement, ITT Sheraton shall have the right
to terminate the rights to use the ITT Name granted pursuant to Section 2.01
hereof by giving notice in writing, and such notice of termination shall become
effective thirty (30) days thereafter unless ITT Information Services shall,
within such thirty (30) day period, completely remedy such failure and satisfy
ITT Sheraton that such violation has been remedied and will not occur again.
Section 8.04. Effect of Termination. Upon the termination of this IP
Agreement or the license grants to ITT Information Services, except in the case
of termination for abandonment pursuant to Section 2.05, ITT Information
Services and the Information Services Subsidiaries during the Phase-out Period
shall phase out all use of the ITT Name and the ITT Marks. By the end of the
Phase-out Period ITT Information Services and the Information Services
Subsidiaries shall fully discontinue all use of the ITT Name and ITT Marks. By
the end of the Phase-out Period, ITT Information Services will cease the use of
the ITT Name and ITT Marks and will eliminate the use of any other designation
indicating affiliation after the Termination Date provided, however, that ITT
Information Services shall be entitled to sell and use all inventories of
finished goods on hand as of the Termination Date, and provided, further that
with respect to stationery, checks, contracts, purchase orders, customer
agreements and other business forms which can result in a legal commitment of
ITT Sheraton, ITT Information Services will cease immediately after the
Termination Date any use of the designation "ITT" and any other designation
indicating affiliation after the Termination Date with ITT Destinations (by
stickering the ITT Information Services name over such designation or by such
other method as ITT Information Services shall select).
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Insofar as catalogues are concerned, placement on the covers thereof of a
prominent legend negating affiliation with ITT Destinations shall be deemed
compliance with the requirements of this Section with respect to catalogues on
hand as of the Termination Date which are used or distributed by ITT Information
Services for a period of one year following the Termination Date.
Following termination of this Agreement, ITT Information Services and the
Information Services Subsidiaries shall:
(a) continue, without any time limitation, to retain all obligations
of this Agreement, including its obligations under Sections 4.01, 5.02,
5.03, 5.04, 5.06, 9.10, and 9.16; and
(b) within thirty (30) days after the Termination Date, account to ITT
Sheraton and make any compensation payments as may be due or called for
under Section 2.03 hereof up to and including the Termination Date.
ARTICLE IX. MISCELLANEOUS
Section 9.01. Modification or Amendment. This IP Agreement may not be
modified or amended except by an agreement in writing signed by the parties.
Section 9.02. Waiver; Remedies. No delay on the part of ITT Information
Services or ITT Sheraton in exercising any right, power or privilege hereunder
will operate as a waiver thereof, nor will any waiver on the part of either ITT
Information Services or ITT Sheraton of any right, power or privilege hereunder
operate as a waiver of any other right, power or privilege hereunder, nor will
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder. Unless otherwise provided, the rights and
remedies herein provided are cumulative and are not exclusive of any rights or
remedies which the parties may otherwise have at law or in equity.
Section 9.03. Counterparts. For the convenience of the parties, this IP
Agreement may be executed in any number of separate counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts
shall together constitute the same agreement.
SECTION 9.04. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.
Section 9.05. Notices. Any notice, request, instruction or other
communication to be given hereunder by any party to another shall be in writing
and shall be deemed to have been duly given (i) on the date of delivery if
delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (ii) on the first business day following the date of dispatch if
delivered by Federal Express or other nationally reputable next-day courier
service, or (iii) on the third business day following the date of mailing if
delivered by registered or certified mail, return receipt requested, postage
prepaid. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice.
(a) If to ITT Destinations:
ITT Destinations, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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with copies to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to ITT Information Services:
ITT Information Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to ITT Sheraton:
ITT Sheraton Corporation
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telefacsimile:
with copies to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.06. Entire Agreement. This IP Agreement (including Exhibits,
Annexes and Schedules hereto) constitutes the entire agreement, and supersedes
all other prior agreements, understandings, representations and warranties, both
written and oral, among the parties, with respect to the subject matter hereof.
Notwithstanding any other provisions in this IP Agreement to the contrary, in
the event and to the extent that there shall be a conflict between the
provisions of this IP Agreement as it relates to the ITT Name and ITT Marks, and
the provisions of the Reorganization Agreements, this IP Agreement shall
control.
Section 9.07. Certain Obligations. Whenever this IP Agreement requires
any of the Subsidiaries of any party to take any action, this IP Agreement will
be deemed to include an undertaking on the part of such party to cause such
Subsidiary to take such action.
Section 9.08. Assignment.
(a) Except for the rights granted in Article II, and subject to Article
VII, this IP Agreement shall be assignable in whole in connection with a merger
or consolidation or the sale of all or substantially all the assets of a Party
hereto or in part in connection with a Party's sale or other divestiture of a
Subsidiary whose field of
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activity is within the scope of rights granted to such Party by this IP
Agreement. Otherwise this IP Agreement shall not be assignable, in whole or in
part, directly or indirectly, by any Party hereto without the prior written
consent of the others, and any attempt to assign any rights or obligations
arising under this IP Agreement without such consent shall be void.
(b) That portion of this IP Agreement granting rights to the ITT Name and
ITT Marks shall be assigned with the transfer by ITT Sheraton of the ownership
of the ITT Name and ITT Marks.
Section 9.09. Captions. The Article, Section and paragraph captions
herein are for convenience of reference only, do not constitute part of this IP
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof.
Section 9.10. Specific Performance. In the event of any actual or
threatened default in, or breach of, any of the terms, conditions and provisions
of this IP Agreement, the party or parties who are or are to be thereby
aggrieved shall have the right of specific performance and injunctive relief
giving effect to its or their rights under this IP Agreement, in addition to any
and all other rights and remedies at law or in equity, and all such rights and
remedies shall be cumulative. The parties agree that the remedies at law for any
breach or threatened breach, including monetary damages, are inadequate
compensation for any loss and that any defense in any action for specific
performance that a remedy at law would be adequate is waived. ITT Information
Services acknowledges that should ITT Information Services and/or the
Information Services Subsidiaries upon any termination in whole or in part of
this IP Agreement fail to cease use of the ITT Name or the ITT Marks, as
appropriate, in accordance with the provisions of Article VIII hereof, such
failure will result in immediate and irreparable injury to ITT Sheraton and ITT
Destinations and, in addition to any provable damages and the right to the costs
and expenses of any litigation, ITT Sheraton and/or ITT Destinations shall be
entitled to equitable relief by way of temporary and permanent restraining
orders and injunctions and such other further relief as any court with
jurisdiction may deem just and proper without the necessity of posting a bond.
Section 9.11. Severability. If any provision of this IP Agreement or the
application thereof to any person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, so long as the economic or legal
substance of the transactions contemplated thereby is not affected in any manner
adverse to any party. Upon any such determination, the Parties shall negotiate
in good faith in an effort to agree upon a suitable and equitable substitute
provision to effect the original intent of the Parties.
Section 9.12. Third Party Beneficiaries. Except as provided in Article IV
relating to Indemnitees, this IP Agreement is solely for the benefit of the
parties hereto and their respective Subsidiaries and Affiliates and should not
be deemed to confer upon third parties any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this IP Agreement.
Section 9.13. Fees and Expenses of Enforcement. A party in breach of this
IP Agreement shall, on demand, indemnify and hold harmless the other party
hereto for and against all out-of-pocket expenses, including, without
limitation, legal fees, incurred by such other party by reason of the
enforcement and protection of its rights under this Agreement. The payment of
such expenses is in addition to any other relief to which such other party may
be entitled hereunder or otherwise.
Section 9.14. Expenses. Except as otherwise set forth in this IP
Agreement, all costs and expenses incurred on or prior to the Distribution Time
(whether or not paid on or prior to the Distribution Time) in connection with
the preparation, execution, delivery and implementation of this IP Agreement and
the consummation of the transactions contemplated hereby shall be charged to and
paid by ITT Information Services. Except as otherwise set forth in this IP
Agreement, each party shall bear its own costs and expenses incurred after the
Distribution Time.
Section 9.15. Exhibits. The Exhibits to this IP Agreement shall be
construed with and as an integral part of this IP Agreement to the same extent
as if the same had been set forth verbatim herein.
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Section 9.16. Consent to Jurisdiction. Each of the Parties irrevocably
submits to the exclusive jurisdiction of (a) the Supreme Court of the State of
New York, New York County and (b) the United States District Court for the
Southern District of New York, for the purposes of any suit, action or other
proceeding arising out of this IP Agreement or any transaction contemplated
hereby. Each of the Parties agrees to commence any action, suit or proceeding
relating hereto either in the United States District Court for the Southern
District of New York or if such suit, action or other proceeding may not be
brought in such court for jurisdictional reasons, in the Supreme Court of the
State of New York, New York County. Each of the Parties further agrees that
service of any process, summons, notice or document by U.S. registered mail to
such Party's respective address set forth above shall be effective service of
process for any action, suit or proceeding in New York with respect to any
matters to which it has submitted to jurisdiction in this Section 9.16. Each of
the Parties irrevocably and unconditionally waives any objection to the laying
of venue of any action, suit or proceeding arising out of this IP Agreement or
the transactions contemplated hereby in (i) the Supreme Court of the State of
New York, New York County or (ii) the United States District Court for the
Southern District of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
Section 9.17. Other Agreements. This IP Agreement is not intended to
address, and should not be interpreted to address, the matters specifically and
expressly covered by the Distribution Agreement and the other Ancillary
Agreements.
Section 9.18. Survival of IP Agreements. Except as otherwise contemplated
by this IP Agreement, all covenants and agreements of the parties contained in
this IP Agreement shall survive the Distribution Time.
Section 9.19. Successors and Assigns. The provisions of this IP Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and permitted assigns.
Section 9.20. Further Assurances. In case at any time after the
Distribution Time any further action is reasonably necessary or desirable to
carry out the purposes of this IP Agreement, the proper officers at such time of
each party to this IP Agreement shall take all such action. Without limiting the
foregoing, ITT Information Services, ITT Sheraton and ITT Destinations or their
respective Subsidiaries, as appropriate, shall use commercially reasonable
efforts to obtain all consents and approvals, to enter into all agreements and
to make all filings and applications that may be required or are reasonably
necessary for the consummation of the transactions contemplated by this IP
Agreement, including, without limitation, all applicable governmental filings.
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IN WITNESS WHEREOF, the Parties have caused this IP Agreement to be duly
executed.
ITT CORPORATION
By
--------------------------------------
Name:
Title:
ITT DESTINATIONS, INC.
By
--------------------------------------
Name:
Title:
ITT SHERATON CORPORATION
By
--------------------------------------
Name:
Title:
ITT WORLD DIRECTORIES, INC.
By
--------------------------------------
Name:
Title:
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EXHIBIT B-2
TRADE NAME AND SERVICE ▇▇▇▇ LICENSE AGREEMENT
TRADE NAME AND SERVICE ▇▇▇▇ LICENSE AGREEMENT ("Service ▇▇▇▇ License
Agreement") dated as of September , 1997, between ITT SHERATON CORPORATION, a
Delaware corporation ("ITT Sheraton"), ITT CORPORATION, a Nevada corporation,
("ITT Corporation"), and ITT WORLD DIRECTORIES, INC, a Delaware corporation
("ITT World Directories") (collectively the "Parties").
RECITALS
WHEREAS, ITT Sheraton is the owner of the trade name "ITT" and of the
trademark and the service ▇▇▇▇ "ITT", and of all rights worldwide in such name
and marks and the goodwill associated therewith;
WHEREAS, ITT Sheraton is party to Trade Name and Trademark License
Agreements with The Hartford Financial Services Group, Inc. (formerly "ITT
Hartford Group, Inc.") (the "Hartford License Agreement") and with ITT
Manufacturing Enterprises, Inc. (the "Industries License Agreement"), both dated
November 1, 1995, concerning their continued right and license to use the ITT
Name and Marks (as hereinafter defined);
WHEREAS, ITT Corporation is the owner of certain intellectual property and
the licensee of certain other intellectual property as more fully set forth in
the 1995 License Agreement (as hereinafter defined) and other Intellectual
Property (as hereinafter defined);
WHEREAS, ITT Corporation and ITT Destinations, Inc., a Nevada corporation
("ITT Destinations") have entered into the Agreement and Plan of Distribution
dated as of September , 1997 (the "Destinations Distribution Agreement")
pursuant to which the holders of shares of Common Stock of ITT Corporation at
the close of business on the Record Date (as defined in the Destinations
Distribution Agreement) will receive all the outstanding shares of Common Stock
of ITT Destinations;
WHEREAS, ITT World Directories, a wholly owned subsidiary of ITT
Corporation will remain a Subsidiary of ITT Corporation following the
Destinations Distribution and owns all the Intellectual Property (exclusive of
the ITT Name and ITT Marks (as hereinafter defined)) used to operate the
Retained Business (as defined in the Destinations Distribution Agreement);
WHEREAS, ITT World Directories and the Information Services Subsidiaries
(as hereinafter defined) currently have the right to use and desire to continue
to have the right, after the Destinations Distribution Date, to use "ITT" as
part of their company names and trade names and as a trademark and service ▇▇▇▇
in connection with conducting the Information Services Business (as hereinafter
defined);
WHEREAS, ITT World Directories and the Information Services Subsidiaries
currently own or have the right and license to use the intellectual property
referred to in the 1995 License Agreement and the other Intellectual Property;
WHEREAS, ITT Sheraton will be merged with and into ITT Destinations in
connection with the Destinations Distribution with ITT Destinations as the
surviving corporation (the "Sheraton Merger");
WHEREAS, ITT Sheraton is willing to enter into this formal license
agreement with ITT World Directories, to continue to use the ITT Name and Marks
after the Destinations Distribution Date in connection with conducting the
Information Services Business;
WHEREAS, capitalized terms used but not otherwise defined herein shall have
the same meanings assigned thereto in the Destinations Distribution Agreement.
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NOW, THEREFORE, in connection with and to carry out the Destination
Distribution and in consideration of the premises and mutual agreements and
covenants herein, the Parties hereto hereby agree as follows:
ARTICLE I. DEFINITIONS
Section 1.01. General. As used in this Service ▇▇▇▇ License Agreement,
the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
(a) "Change in Control" as it relates to ITT Information Services shall
mean the occurrence of any one of the following events:
(i) a report on Schedule 13D shall be filed with the Securities and
Exchange Commission pursuant to Section 13(d) of the Securities Exchange
Act of 1934 (the "Act") disclosing that any person (within the meaning of
Section 13(d) of the Act) other than CDRV Acquisition L.L.C., ITT
Information Services or a Subsidiary of ITT Information Services or any
employee benefit plan sponsored by ITT Information Services or a Subsidiary
of ITT Information Services is the beneficial owner directly or indirectly
of twenty percent (20%) or more of the outstanding Common Stock of ITT
Information Services;
(ii) any person (within the meaning of Section 13(d) of the Act) other
than CDRV Acquisition L.L.C., ITT Information Services or a Subsidiary of
ITT Information Services or any employee benefit plan sponsored by ITT
Information Services or a Subsidiary of ITT Information Services shall
purchase shares pursuant to a tender offer or exchange offer to acquire any
Common Stock of ITT Information Services (or securities convertible into
such Common Stock), for cash, securities or any other consideration,
provided that after consummation of the offer, the person in question is
the beneficial owner (as such term is defined in Rule 13d-3 under the Act)
directly or indirectly of twenty percent (20%) or more of the outstanding
Stock of ITT Information Services (calculated as provided in paragraph (d)
of Rule 13d-3 under the Act in the case of rights to acquire Common Stock);
(iii) the stockholders of ITT Information Services shall approve
(a) any consolidation or merger of ITT Information Services in which ITT
Information Services is not the continuing or surviving corporation or
pursuant to which shares of Common Stock of ITT Information Services would
be converted into cash, securities or other property, other than a merger
of ITT Information Services in which holders of Common Stock of ITT
Information Services immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger as immediately before, or (b) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of ITT Information
Services; or
(iv) there shall have been a change in a majority of the members of
the Board of Directors of ITT Information Services within a 12-month period
unless (x) each new director joining such Board during such 12-month period
was nominated or elected by the vote of a majority of the directors then
still in office who were directors at the beginning of such 12-month
period, or (y) the election to such Board of each new director during such
12-month period was endorsed by a majority of such directors.
(v) ITT Information Services shall no longer own ITT World Directories
or any Information Services Subsidiary.
(b) "Affiliate" shall mean any direct or indirect affiliate of a Party in
which a Party owns at least 40% of such affiliate if the remaining ownership is
held by a single third party or at least 25% of such affiliate if the remaining
ownership is held by more than one third party and in which the Party, through
its control, can exercise a veto over major decisions of such affiliate.
(c) "Closely Related Business" shall mean the business described in Exhibit
B hereto.
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(d) "Destinations Distribution Agreement" shall mean the Agreement and Plan
of Distribution dated as of September , 1997 between ITT Corporation and ITT
Destinations.
(e) "Distribution Date" shall have the meaning set forth in the
Destinations Distribution Agreement.
(f) "Distribution Time" shall have the meaning set forth in the
Destinations Distribution Agreement.
(g) "Information Services Subsidiary" shall mean ITT Information Services,
ITT World Directories and their Subsidiaries, provided that such Subsidiary is
engaged solely in the Information Services Business and that ITT World
Directories grants a formal sublicense to such Subsidiary pursuant to Section
2.03 hereof.
(h) "Information Services Affiliate" shall mean an Affiliate of ITT
Information Services, provided such Affiliate is engaged solely in the
Information Services Business.
(i) "Intellectual Property" shall mean inventions, invention disclosures,
patents, patent applications, computer programs (including source code, object
code and data), trademarks, copyrights, copyright registrations, copyright
registration applications, mask works, designs, technical information,
proprietary information, Trademarks, trade secrets, manufacturing processes,
formulas, algorithms, data, and all other kinds of intellectual property
protected or protectable under state, federal or foreign law (1) owned by or (2)
having a right to license a Party or its Subsidiaries as of the Distribution
Date, except the ITT Name and ITT Marks.
(j) "Information Services Business" shall mean the Retained Business as
defined in the Destinations Distribution Agreement, and, in addition, shall also
mean Closely Related Businesses described in Exhibit B hereto, provided that
Information Services Business does not include the 1995 ITT Industries Business,
or the 1995 ITT Hartford Business.
(k) "IP Agreement" shall mean the Intellectual Property License and
Assignment Agreement that forms Exhibit B-1 of the Destinations Distribution
Agreement and executed contemporaneously with this Trademark and Service ▇▇▇▇
License Agreement.
(l) "ITT Corporation" shall mean ITT Corporation, a Nevada corporation.
(m) "ITT Destinations" shall mean a newly formed Nevada corporation.
(n) "ITT Destinations Business" shall mean all businesses not specifically
included within the Retained Business.
(o) "1995 ITT Destinations Business" shall mean the ITT Destinations
Business as defined in the Industries License Agreement.
(p) "1995 ITT Hartford Business" shall mean the ITT Hartford Business as
defined in the Hartford License Agreement.
(q) "1995 ITT Industries Business" shall mean the ITT Industries Business
defined in the Industries License Agreement.
(r) "ITT Information Services" shall mean (i) ITT Corporation, a Nevada
corporation after the Destinations Distribution or (ii) ITT Information
Services, Inc., after ITT Corporation changes its corporate name in accordance
with Section 6.07 of the Destinations Distribution Agreement and Section 2.02 of
this IP Agreement.
(s) "ITT Logo" shall mean the worldwide rights to the stylized "ITT"
trademark and service ▇▇▇▇ together with all registrations thereof and all
applications thereof now or hereafter filed or obtained, and the goodwill
associated therewith.
(t) "ITT Marks" shall mean the worldwide rights to (i) the ITT Logo; and
(ii) all other trademarks and service marks consisting of the letters "ITT",
together with all registrations thereof and all applications thereof now or
hereafter filed or obtained, and the goodwill associated therewith.
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59
(u) "ITT Name" shall mean the worldwide rights to that portion of any
company and trade name consisting of the letters "ITT" and the goodwill
associated therewith.
(v) "ITT Sheraton" shall mean, prior to the Sheraton Merger, ITT Sheraton,
and upon consummation of the Sheraton Merger, ITT Destinations, or any successor
to ITT Destinations.
(w) "ITT World Directories" shall mean ITT World Directories, Inc., a
Delaware corporation.
(x) "ITT World Directories Sublicensee" shall mean ITT Information
Services, and any Subsidiary of ITT Information Services in existence as of, or
acquired or formed after, the Distribution Date, provided that the business of
any such Subsidiary is solely within the field of the ITT Information Services
Business and that ITT World Directories grants a formal sublicense to such
Subsidiary pursuant to Section 2.03 hereof.
(y) "1995 License Agreement" shall mean the Intellectual Property License
Agreement dated November 1, 1995 between and among ITT Industries, Inc., ITT
Sheraton Corporation and ITT Hartford Group, Inc.
(z) "Permitted Manner of Use" shall mean use of the ITT Name and ITT Marks
in accordance with all legal requirements and also with ITT Sheraton's policy
and style standards as currently existing and as may be reasonably amended from
time to time by ITT Sheraton.
(aa) "Phaseout Period" shall mean a period of three (3) months from the
termination of that portion of this Service ▇▇▇▇ License Agreement relating to
the ITT Name and Marks during which period all use of the ITT Name and ITT Marks
by ITT Information Services, ITT World Directories and/or their Subsidiaries, as
the case may be, shall be phased out in accordance with the provisions of this
Service ▇▇▇▇ License Agreement.
(bb) "Retained Business" shall have the meaning set forth in the
Destinations Distribution Agreement.
(cc) "Retained Intellectual Property" shall mean the Intellectual Property
(i) owned by ITT World Directories and used in the Retained Business as of, or
immediately preceding, the Distribution Date, and (ii) transferred to ITT World
Directories pursuant to Article III of the IP Agreement.
(dd) "Subsidiary" shall mean any corporation, partnership or other entity
of which another entity (i) 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 interests of such corporation, partnership or other entity
shall or might have such voting power upon the occurrence of any contingency) or
(ii) is a general partner or an entity performing similar functions (e.g., a
trustee or managing member). For purposes of this Agreement, ITT-Dow ▇▇▇▇▇
Television and its Subsidiaries shall be deemed to be Subsidiaries of ITT
Destinations.
(ee) "Trademarks" shall mean and include trademarks, trade names, company
names, service marks, trade dress, the registrations thereof, the applications
therefor and the goodwill associated therewith, exclusive of the ITT Name and
ITT Marks.
Any time the word "including" is used in this Service ▇▇▇▇ License
Agreement, it shall be deemed to mean "including, without limitation".
ARTICLE II. ITT NAME AND ▇▇▇▇ LICENSES
Section 2.01. Grant of Licenses to Use the ITT Marks. ITT Sheraton hereby
grants to ITT World Directories, during the Term of this Service ▇▇▇▇ License
Agreement (as defined in Section 8.02 hereof), a personal, non-exclusive,
non-assignable (except as otherwise provided in this Service ▇▇▇▇ License
Agreement), non-transferable worldwide license to use, with the right to grant
sublicenses solely to Information Services Subsidiaries as provided for in
Section 2.03 hereof, to use the ITT Marks in accordance with the applicable
Permitted Manner of Use (i) on an exclusive basis for the Retained Business, and
(ii) on a non-exclusive basis for the Closely Related Business.
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Section 2.02. Grant of Licenses to Use the ITT Name. ITT Sheraton hereby
grants to ITT World Directories, for the Term of this Service ▇▇▇▇ License
Agreement, a personal, non-exclusive, non-assignable (except as otherwise
provided in this Service ▇▇▇▇ License Agreement), non-transferable worldwide
license to use, with the right to grant sublicenses solely to Information
Services Subsidiaries as provided for in Section 2.03 hereof to use, the ITT
Name solely as part of the company trade name "ITT World Directories, Inc." and
in the company names set forth in Exhibit A and in their trade or popular names
as of the Distribution Date in accordance with the Permitted Manner of Use
solely for use in the Information Services Business. ITT Sheraton during the
Term of this Service ▇▇▇▇ License Agreement will not use, nor grant a license to
any third party to use, these company names in the exact form listed in Exhibit
A annexed hereto subject to all other provisions of this Service ▇▇▇▇ License
Agreement. The form of using the ITT Name in the company and trade names as set
forth in Exhibit A annexed hereto is hereby approved for purposes of granting
the aforementioned sublicenses. ITT World Directories and Information Services
Subsidiaries shall not have the right to use "ITT Corporation" or any name or
▇▇▇▇ substantially identical thereto as a trade name, service ▇▇▇▇ or trademark.
The form of using the ITT Name in the company and trade names of an Information
Services Sublicensee which is acquired or formed after the Distribution Date
shall be subject to ITT Sheraton's approval, which approval shall not be
unreasonably withheld. Proposed company names and/or trade names will not be
approved if the company name and/or trade name proposed for use in conjunction
with the ITT Name is (i) objectionable from a legal standpoint, (ii) likely to
create confusion with a field of business within the scope of the 1995 ITT
Industries Business, the 1995 ITT Hartford Business, or the 1995 ITT
Destinations Business (exclusive of the Retained Business), or (iii) likely to
create confusion with a name used by Hartford Financial Services Group, Inc., or
ITT Industries, Inc.
Section 2.03. Sublicenses. Each sublicense granted by ITT World
Directories to an Information Services Subsidiary pursuant to Sections 2.01 and
2.02 shall:
(a) be in writing;
(b) specifically require such Information Services Subsidiary to agree
to comply with and observe the terms and conditions of this Service ▇▇▇▇
License Agreement; and
(c) require ITT World Directories and such Information Services
Subsidiary to acknowledge and agree that: (i) ITT World Directories is
guaranteeing to ITT Sheraton the Information Services Subsidiary's
performance of the terms and conditions in this Service ▇▇▇▇ License
Agreement; (ii) the rights granted to it under the sublicense are: (x)
personal, non-assignable, and non-transferable, (y) do not include the
right to grant sublicenses, and (z) may be restricted or terminated
pursuant to the terms of this Service ▇▇▇▇ License Agreement; and (iii) ITT
Sheraton and ITT Destinations are intended third party beneficiaries of
these commitments by such Information Services Subsidiary required under
this Section 2.03, and that such provisions may not be waived or amended
without the prior written consent of ITT Sheraton and ITT Destinations.
ITT World Directories shall cause each Information Services Subsidiary to
whom a sublicense is granted to comply with and observe the terms and conditions
of this Service ▇▇▇▇ License Agreement by executing an agreement in the form
annexed hereto as Exhibit C, which will then be forwarded to ITT Sheraton.
Section 2.04. Prohibited Uses of ITT Name and ITT Marks. Neither ITT
World Directories, nor any of the Information Services Subsidiaries shall use
the ITT Name or the ITT Marks for any product or service, or with or for any
entity, outside the scope of the Information Services Business.
Section 2.05. Reduction of Licenses. In the event ITT World Directories
and/or any Information Services Subsidiary shall abandon its use of the ITT Name
or the ITT Marks for all or a portion of the Information Services Business, then
the scope of the rights granted in Sections 2.01 and 2.02 with respect to such
abandoned ITT Name or ITT Marks shall be reduced by an amount equal to the scope
of the Information Services Business so abandoned. For purpose of this Section
2.05, abandonment shall mean the failure of ITT World Directories or any
Information Services Subsidiary to use the ITT Name or the ITT Marks for a
period of two (2) years all or such portion of the Information Services
Business, any such period to commence only after the Distribution Date.
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Section 2.06. Quality Standards. In view of the status of the Parties
immediately prior to the Distribution Date as affiliated companies, each Party's
intimate knowledge with standards and procedures for assuring consistent
quality, ITT Sheraton's knowledge of the standards and procedures used by ITT
World Directories in the Retained Business, the integrity of the Retained
Business and its history of trouble-free goods and services, ITT Sheraton
recognizes the Retained Business current quality standards as acceptable
standards, and ITT World Directories and the Information Services Subsidiaries
agree to maintain such standards and procedures to assure the consistent quality
of its goods and services. ITT World Directories and the Information Services
Subsidiaries shall not materially lower such quality standards without the prior
written approval of ITT Sheraton.
Section 2.07. Inspections and Samples. Should ITT Sheraton have reason to
believe based on information available to it that the quality standards referred
to in Section 2.06 have not been maintained, at the request of ITT Sheraton, ITT
World Directories shall, and shall cause the Information Services Subsidiaries
to, permit a knowledgeable independent expert or consultant retained by ITT
Sheraton to have reasonable access to their premises and personnel during normal
working hours and shall furnish or permit inspection of, at ITT Sheraton's
request and without charge to ITT Sheraton or to such expert or consultant,
product samples, cartons, containers, packaging, wrapping and service materials
bearing or used in connection with the ITT Name and/or the ITT Marks for the
purpose of ensuring that ITT World Directories and the Information Services
Subsidiaries are complying with such quality standards. The selection of the
independent expert shall be subject to the approval of ITT World Directories,
which approval shall not be unreasonably delayed or withheld. Any information
obtained during such inspection and provided to ITT Sheraton shall be limited to
that which is necessary to ensure compliance with such quality standards and
shall be kept confidential by ITT Sheraton and its Subsidiaries.
Section 2.08. Advertising, Packaging and Labels. ITT World Directories
shall, and shall cause the Information Services Subsidiaries to, furnish, at ITT
Sheraton's request and without charge, to ITT Sheraton or to its authorized
designee(s) samples of promotional and advertising material or the like to be
used in connection with any products or services offered by ITT World
Directories and the Information Services Subsidiaries and bearing or used in
connection with the ITT Name and ITT Marks.
Section 2.09. Third Party Rights. ITT World Directories acknowledges that
the rights granted by ITT Sheraton under Sections 2.01, 2.02 and 2.03 are
subject to all pre-existing third party rights, obligations, and restrictions as
of the Distribution Date.
Section 2.10. Rights to Enter Businesses. Nothing in this Service ▇▇▇▇
License Agreement shall preclude ITT World Directories, or any of its
Subsidiaries or affiliates, from operating in any business outside of the
Information Services Business provided neither the ITT Name nor the ITT Marks
are used in such business.
ARTICLE III. INTELLECTUAL PROPERTY LICENSES
Section 3.01. ITT Destinations Grant of Licenses. ITT Destinations, on
behalf of itself and its Subsidiaries, hereby grants effective as of the
Distribution Date to ITT World Directories, without the right to grant
sublicenses except to Information Services Subsidiaries and ITT Information
Services Affiliates, a non-assignable, worldwide, perpetual, paid-up,
royalty-free, license under Intellectual Property owned by or transferred to,
ITT Destinations or its Subsidiaries as of the Distribution Date to manufacture,
have manufactured, use, offer to sell and sell any and all methods, processes,
and products, and offer and provide any services (i) on an exclusive basis
within the field of the Retained Business, and (ii) a non-exclusive basis within
the field of the Closely Related Business. However, in no event shall such
license be interpreted to extent to include any of the fields of the 1995 ITT
Industries Business or the 1995 ITT Hartford Business.
Section 3.02. ITT World Directories Grant of Licenses. ITT World
Directories, on behalf of itself and the ITT Information Services Subsidiaries,
hereby grants effective as of the Distribution Date to ITT Destinations, without
the right to grant sublicenses except to Subsidiaries and Affiliates of ITT
Destinations, a non-assignable, worldwide, perpetual, paid-up, royalty-free,
non-exclusive license, under Intellectual Property owned by, or transferred to,
ITT World Directories or the ITT Information Services Subsidiaries, as of the
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Distribution Date to manufacture, use, offer to sell, and sell any and all
methods, processes, and products, and offer and provide any services within the
field of ITT Destinations Business.
Section 3.03. Retained Intellectual Property. Nothing in this Article III
shall be construed to restrict the right of ITT World Directories to use or
license (subject to Section 3.02) any retained Intellectual Property in any
field of business, except in the fields of the 1995 ITT Hartford Business, the
1995 ITT Industries Business, and the 1995 ITT Destinations Business (exclusive
of the Retained Business).
Section 3.04. Pre-Existing Rights. The rights granted by the Parties
under Sections 3.01 and 3.02 are subject to all pre-existing third party rights,
obligations and restrictions as of the Distribution Date.
Section 3.05. Disclaimer. Each of the Parties hereto understands and
agrees that, except as otherwise expressly provided, no party hereto is, in this
Service ▇▇▇▇ License Agreement or in any other agreement or document
contemplated by this Service ▇▇▇▇ License Agreement or otherwise, making any
representation or warranty whatsoever, including, without limitation, as to
title, value or legal sufficiency. It is also agreed and understood that any and
all assets either transferred or licensed to or retained or licensed by the
Parties, as the case may be, shall be "as is, where is".
Section 3.06. Third Party Rights. To the extent that the grants of
Intellectual Property rights and licenses under this Article III herein would
violate or be prohibited by any agreement with a third party, and such
Intellectual Property is actually used by the grantee Party, then the granting
Party undertakes to use reasonable efforts to obtain the necessary consent(s)
from such third party so as to be permitted to make such grants. However, each
Party hereto understands and agrees that no Party hereto is, in this Service
▇▇▇▇ License Agreement or in any other agreement or document contemplated by
this Service ▇▇▇▇ License Agreement or otherwise, representing or warranting in
any way that the obtaining of any consents or approvals, the execution and
delivery of any amendatory agreements and the making of any filings or
applications possible contemplated by this Service ▇▇▇▇ License Agreement will
satisfy the provisions of any and all applicable agreements or the requirements
of any or all applicable laws or judgments.
Section 3.07. Advice and Consultation. To the extent a Party or its
Subsidiaries shall require, advice and consultation in connection with their
respective businesses, then that advice and assistance shall be provided
pursuant to a separate agreement entered into by the Parties pursuant to terms
agreed to by the Parties and subject to reasonably available resources.
ARTICLE IV. INDEMNIFICATION
Section 4.01. Defense of Infringement Claims. ITT Sheraton agrees to
indemnify, defend and hold harmless ITT World Directories and/or any applicable
Information Services Subsidiary and their respective employees, officers,
directors and agents from and against, and pay or reimburse them for, any and
all Indemnifiable Losses, which arise solely out of an assertion or claim by a
third party that the use of the ITT Name or ITT Marks by ITT World Directories
or any of the Information Services Subsidiaries in the Retained Business
pursuant to the terms of this Service ▇▇▇▇ License Agreement infringes the trade
names or trademarks of such third party. The costs associated with any such
defense shall be borne equally by ITT Sheraton and ITT World Directories. ITT
Sheraton shall have no obligation to indemnify ITT World Directories, or any
Information Services Subsidiary, or their respective employees, officers,
directors, or agents for any indemnifiable losses that relate to any use of the
ITT Name or ITT Marks that is not expressly permitted by this Service ▇▇▇▇
License Agreement.
Section 4.02. Limitations on Indemnification Obligations. The amount that
any party (an "Indemnifying Party") is or may be required to pay to any other
person (an "Indemnitee") pursuant to Section 3.01, as applicable, shall be
reduced (retroactively or prospectively) by any Insurance Proceeds or other
amounts actually recovered by or on behalf of such Indemnitee in respect of the
related Indemnifiable Loss. If an Indemnitee shall have received the payment
required by this Agreement from an Indemnifying Party in respect of an
Indemnifiable Loss and shall subsequently actually receive Insurance Proceeds or
other amounts in respect of such Indemnifiable Loss, then such Indemnitee shall
pay to such Indemnifying Party a sum equal to the amount of such Insurance
Proceeds or other amounts actually received, up to the aggregate amount of
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any payments received from such Indemnifying Party pursuant to this Service ▇▇▇▇
License Agreement in respect of such Indemnifiable Loss.
Section 4.03. Procedures for Indemnification. Any Indemnitee entitled to
indemnification pursuant to this Service ▇▇▇▇ License Agreement shall notify the
Indemnifying Party in writing, and in reasonable detail, of the applicable Third
Party Claim promptly (and in any event within 10 business days) after receipt by
such Indemnitee of written notice of the Third Party Claim; provided, however,
that failure to give such notification shall not affect the indemnification
provided hereunder except to the extent the Indemnifying Party shall have been
actually prejudiced as a result of such failure (except that the Indemnifying
Party shall not be liable for any expenses incurred during the period in which
the Indemnitee failed to give such notice). Thereafter, the Indemnitee shall
deliver to the Indemnifying Party, promptly (and in any event within 10 business
days) after the Indemnitee's receipt thereof, copies of all notices and
documents (including court papers) received by the Indemnitee relating to the
Third Party Claim.
If a Third Party Claim is made against an Indemnitee, the Indemnifying
Party shall be entitled to participate in the defense thereof and, if it so
chooses and acknowledges in writing its obligation to indemnify the Indemnitee
therefor, to assume the defense thereof with counsel selected by the
Indemnifying Party; provided that such counsel is not reasonably objected to by
the Indemnitee. Should the Indemnifying Party so elect to assume the defense of
a Third Party Claim, the Indemnifying Party shall not be liable to the
Indemnitee for legal or other expenses subsequently incurred by the Indemnitee
in connection with the defense thereof. If the Indemnifying Party assumes such
defense, the Indemnitee shall have the right to participate in the defense
thereof and to employ counsel, at its own expense, separate from the counsel
employed by the Indemnifying Party, it being understood that the Indemnifying
Party shall have full control of such defense. The Indemnifying Party shall be
liable for the fees and expenses of counsel employed by the Indemnitee for any
period during which the Indemnifying Party has failed to assume the defense
thereof (other than during the period prior to the time the Indemnitee shall
have given notice of the Third Party Claim as provided above).
If the Indemnifying Party so elects to assume the defense of any Third
Party Claim, all of the Indemnitees shall cooperate with the Indemnifying Party
in the defense or prosecution thereof. Such cooperation shall include the
retention and (upon the Indemnifying Party's request) the provision to the
Indemnifying Party of records and information which are reasonably relevant to
such Third Party Claim and making employees available on a mutually convenient
basis to provide additional information of any material provided hereunder.
Whether or not the Indemnifying Party shall have assumed the defense of a
Third Party Claim, in no event will the Indemnitee admit any liability with
respect to, or settle, compromise or discharge, such Third Party Claim without
the Indemnifying Party's prior written consent (which consent shall not be
unreasonably withheld); provided, however, that the Indemnitee shall have the
right to settle, compromise or discharge such Third Party Claim without the
consent of the Indemnifying Party if the Indemnitee releases in writing the
Indemnifying Party from its indemnification obligation hereunder with respect to
such Third Party Claim and such settlement, compromise or discharge would not
otherwise adversely affect the Indemnifying Party. If the Indemnifying Party
shall have assumed the defense of a Third Party Claim, the Indemnitee will agree
to any settlement, compromise or discharge of a Third Party Claim that the
Indemnifying Party may recommend and that by its terms obligates the
Indemnifying Party to pay the full amount of the liability in connection with
such Third Party Claim and releases the Indemnitee completely in connection with
such Third Party Claim.
Notwithstanding the foregoing, the Indemnifying Party shall not be entitled
to assume the defense of any Third Party Claim (and shall be liable for the fees
and expenses of counsel incurred by the Indemnitee in defending such Third Party
Claim) if the Third Party Claim seeks an order, injunction or other equitable
relief or relief for other than money damages against the Indemnitee which the
Indemnitee reasonably determines, after conferring with its counsel, cannot be
separated from any related Third Party Claim for money damages. If such
equitable relief or other relief portion of the Third Party Claim can be so
separated from that for money damages, the Indemnifying Party shall be entitled
to assume the defense of the portion relating to money damages.
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Section 4.04. Other Adjustments.
(a) The amount of any Indemnifiable Loss shall be (x) increased to take
into account any net Tax cost actually incurred by the Indemnitee arising from
any payments received from the Indemnifying Party (grossed up for such increase)
and (y) reduced to take account of any net Tax benefit actually realized by the
Indemnitee arising from the incurrence or payment of any such Indemnifiable
Loss. In computing the amount of such Tax cost or Tax benefit, the Indemnitee
shall be deemed to recognize all other items of income, gain, loss, deduction or
credit before recognizing any item arising from the receipt of any payment with
respect to an Indemnifiable Loss or the incurrence or payment of any
Indemnifiable Loss.
(b) In addition to any adjustments required pursuant to Section 3.01 hereof
or clause (i) of this Section 4.04, if the amount of any Indemnifiable Loss
shall, at any time subsequent to the payment required by this Service ▇▇▇▇
License Agreement, be reduced by recovery, settlement or otherwise, the amount
of such reduction, less any expenses incurred in connection therewith, shall
promptly be repaid by the Indemnitee to the Indemnifying Party, up to the
aggregate amount of any payments received from such Indemnifying Party pursuant
to this Intellectual Property Agreement in respect of such Indemnifiable Loss.
ARTICLE V. UNDERTAKINGS
Section 5.01. Phase-Out. ITT Sheraton shall not grant a license to any
third party to use the ITT Name or the ITT Marks in the field of activity of the
Directories Business during any Phaseout Period after any termination of this
Service ▇▇▇▇ License Agreement, except in the case of an abandonment as
specified in the last sentence of Section 2.05 herein.
Section 5.02. Absence of Interest in ITT Marks. ITT World Directories
acknowledges that nothing in this Service ▇▇▇▇ License Agreement shall give it
or any Information Services Subsidiary any right, title or interest in the ITT
Name or the ITT Marks apart from the rights to use, and to sublicense the use,
granted or to be granted hereunder, and to retain any remuneration resulting
therefrom, all such right, title and interest, including but not limited to
rights of registration, maintenance and enforcement, being solely with ITT
Sheraton. The ITT Name and the ITT Marks are the sole property of ITT Sheraton,
and any and all uses by ITT World Directories of the ITT Name or of the ITT
Marks shall inure to the benefit of ITT Sheraton. In no event shall such use be
deemed or construed to have created or vested any right, title or interest
whatsoever in and to ITT World Directories. To the extent that any jurisdiction
shall find for any reason as a matter of law or otherwise that such use has
vested in ITT World Directories or any of its Subsidiaries any right, title or
interest in or to the ITT Name or the ITT Marks, ITT World Directories upon the
request of ITT Sheraton, shall, and shall cause any applicable Subsidiary of ITT
World Directories to, execute and deliver to ITT Sheraton, without charge,
appropriate assignments to vest such rights, title and interest in ITT Sheraton.
Section 5.03. ITT Name and ITT Marks Not Contested. ITT World Directories
agrees that neither it, nor any of the Information Services Subsidiaries, shall
raise or cause to be raised any questions concerning or objections to the
validity of the ITT Name or the ITT Marks in any jurisdiction, or to any
registrations thereof or applications therefor, or to the sole proprietary
rights of ITT Sheraton thereto, on any grounds whatsoever.
Section 5.04. Filing, Registration or Use of Names, Trademarks and Service
Marks. ITT World Directories agrees that neither it nor any of the Information
Services Subsidiaries shall:
(a) file, apply to register or register the ITT Name or the ITT Marks,
alone or in combination with any other word or device or symbol or any
name, ▇▇▇▇, term, script or device colorably similar thereto, except if,
as, when, and to the extent approved in writing in advance by ITT Sheraton
in specific instances;
(b) use the ITT Name or the ITT Marks in conjunction or in combination
with any other name, ▇▇▇▇, term, script or device whatever, except as
specifically set forth in Article II, or if, as and to the extent approved
in writing in advance by ITT Sheraton; or
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(c) use the ITT Name or the ITT Marks in any jurisdiction, or any
name, ▇▇▇▇, term, script or device colorably similar thereto, except as
specifically permitted under this Service ▇▇▇▇ License Agreement.
At the request of ITT World Directories, ITT Sheraton shall file
registration applications and maintain any such applications and registrations
issued thereon for the ITT Name and ITT Marks for activities within the ITT
Information Services Business. Any expenses incurred by, or on behalf of, ITT
Sheraton in connection with registering or maintaining registrations of the ITT
Name or the ITT Marks for the Information Services Business shall be reimbursed
by ITT World Directories promptly upon receipt of written notice thereof.
Section 5.05. Other ITT Sheraton Licenses. Subject to Section 2.02,
nothing in this Service ▇▇▇▇ License Agreement shall be construed to limit the
right of ITT Sheraton to use, or to grant a license to any entity or person to
use, the ITT Name or the ITT Marks anywhere for any products or services, or in
connection with any activities outside the Information Services Business even if
such entity or person competes with ITT World Directories or any of the
Information Services Subsidiaries, or its products or services are shipped, sold
or offered in the same channels of trade as those of ITT World Directories or
any of the Information Services Subsidiaries.
Section 5.06. Execution of Documents. At ITT Sheraton's request, ITT
World Directories and the Information Services Subsidiaries shall assist ITT
Sheraton in the procurement or maintenance of any filings or registrations for
the ITT Name or ITT Marks in any jurisdiction by providing any information
available from ITT World Directories and the Information Services Subsidiaries
and executing any documents necessary therefor. The rights granted or to be
granted hereunder to ITT World Directories or any Information Services
Subsidiary shall be recorded in any jurisdiction where such recordation is
required by statute or in the sole discretion of ITT Sheraton is advisable, and
ITT World Directories and the Information Services Subsidiaries shall extend to
ITT Sheraton their full cooperation in filing and completing any such
recordation.
Section 5.07. Intellectual Property Violations. To the extent that the
grants of intellectual property rights and licenses under Article II herein
would violate or be prohibited by any agreement with a third party, and such
Intellectual Property is actually used by the grantee Party, then the granting
Party undertakes to use reasonable efforts to obtain the necessary consent(s)
from such third party so as to be permitted to make such grants.
Section 5.08. No Representation or Warranty. Each of the Parties hereto
understands and agrees that no party hereto is, in this Service ▇▇▇▇ License
Agreement or in any other agreement or document contemplated by this Service
▇▇▇▇ License Agreement or otherwise, making any representation or warranty
whatsoever. It is also agreed and understood that any and all intellectual
property assets either transferred or licensed to or retained by the Parties, as
the case may be, shall be "as is, where is".
ARTICLE VI. INFRINGEMENT BY THIRD PARTIES
Section 6.01. Infringement by Third Parties. Upon discovery by ITT World
Directories or by any Information Services Subsidiary, ITT World Directories
shall notify ITT Sheraton of any adverse uses confusingly similar or otherwise
damaging to the ITT Name and/or ITT Marks, but shall take no other action of any
kind with respect thereto except by the express prior written authorization of
ITT Sheraton. The determination of whether or not legal action shall be taken in
any case shall lie exclusively with and at the sole discretion of ITT Sheraton,
except that if such adverse use is in the same field of activity as the Retained
Business, ITT World Directories may, by such notice, require that ITT Sheraton
institute and reasonably pursue legal action.
Section 6.02. Costs of Legal Action. In the event that ITT Sheraton is
required to institute legal action pursuant to the notice under Section 6.01,
the costs of any such legal action shall be borne by ITT World Directories. In
the event that ITT Sheraton is not so required, but decides to institute legal
action and such confusingly similar or otherwise damaging use is primarily or
exclusively within the field of activity of the ITT World Directories Business,
the costs of any such legal action shall be shared equally by ITT World
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Directories and by ITT Sheraton. In all such circumstances, ITT Sheraton may
bring suit in its own name and in the name of ITT World Directories or the ITT
World Directories Sublicensees, with choice of counsel and control of the legal
action by ITT Sheraton in close coordination and consultation with ITT World
Directories. All other legal actions for third party infringements instituted by
ITT Sheraton shall be at the expense and control of ITT Sheraton. ITT World
Directories and the ITT World Directories Sublicensees shall cooperate with and
assist ITT Sheraton in any such suit by promptly providing any reasonably
requested documents in their possession, custody, or control, and by making
their personnel familiar with the facts available to ITT Sheraton and otherwise,
without charge. ITT World Directories agrees to reimburse ITT Sheraton for all
costs and expenses, as incurred, associated with any actions taken by ITT
Sheraton under this Article VI.
Section 6.03. Resolution of Legal Action. In the event that threatened or
actual legal action by ITT Sheraton for infringement of the ITT Name or ITT ▇▇▇▇
in the field of the Information Services Business results in a settlement or
resolution that provides damages or other monies to ITT Sheraton, ITT World
Directories or any of the Information Services Subsidiaries, such monies shall
first be used to reimburse ITT Sheraton for the costs of such legal action. Any
remaining damages or other monies after reimbursement of the aforesaid costs and
expenses shall be retained by ITT Sheraton, except that any remaining damages
assessed as lost profits of ITT World Directories or any Information Services
Subsidiary shall be paid to ITT World Directories and any remaining damages
assessed as royalties shall be shared equally by ITT World Directories and ITT
Sheraton.
ARTICLE VII. CHANGE OF CONTROL
Section 7.01. Change of Control. In the event that there is a Change of
Control, then the licenses granted to ITT World Directories for the ITT Name and
the ITT ▇▇▇▇ under Sections 2.01, 2.02 and 2.03 may be terminated by ITT
Sheraton following ninety (90) days advance notice by ITT Sheraton. The
Strategic Investment in ITT Information Services by CDRV Acquisition, L.L.C.
under the terms of the Investment Agreement dated July 15, 1997 between ITT
Corporation and CDRV shall not be considered a Change in Control for purposes of
this IP Agreement.
Section 7.02. Failure to Make Payments. In the event that ITT Information
Services fails to change its name and fails to make the payments provided for in
the Trade Name License Agreement being executed simultaneously herewith, then
the licenses granted to ITT World Directories for the ITT Name and the ITT ▇▇▇▇
under Sections 2.01, 2.02 and 2.03 may be terminated by ITT Sheraton.
ARTICLE VIII. TERM AND EFFECT OF TERMINATION
Section 8.01. Termination Prior to Distribution. This Service ▇▇▇▇
License Agreement may be terminated by ITT Corporation at any time prior to the
Destinations Distribution by and in the sole discretion of ITT Corporation
without the approval of the shareholders of any Party. In the event of such
termination, no party shall have any liability of any kind to any other party.
Section 8.02. Term. This Service ▇▇▇▇ License Agreement shall be
effective as of the Distribution Time and shall continue , except
that the rights of ITT World Directories and the Information Services
Subsidiaries rights to use the ITT Name and ITT Marks may be terminated pursuant
to Sections 2.05, 7.01, 7.02 or 8.03 hereof or, unless sooner terminated
pursuant to Section 8.01 hereof, by giving written notice of an intent to
terminate that portion of this Service ▇▇▇▇ License Agreement effective three
(3) months thereafter (the effective date of such notice, the "Termination
Date").
Section 8.03. Termination By Breach. If ITT World Directories or any
Information Services Subsidiary shall fail fully and faithfully to observe or
perform any of the terms of this Service ▇▇▇▇ License Agreement, ITT Sheraton
shall have the right to terminate the rights to use the ITT Name and ITT Marks
granted pursuant to Sections 2.01 and 2.02 hereof by giving notice in writing,
and such notice of termination shall become effective thirty (30) days
thereafter unless ITT World Directories shall, within such thirty (30) day
period, completely remedy such failure and satisfy ITT Sheraton that such
violation has been remedied and will not occur again.
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Section 8.04. Effect of Termination. Upon the termination of this Service
▇▇▇▇ License Agreement or the license grants to ITT World Directories, except in
the case of termination for abandonment pursuant to Section 2.05, ITT World
Directories and the Information Services Subsidiaries during the Phaseout Period
shall phase out all use of the ITT Name and the ITT Marks. By the end of the
Phaseout Period ITT World Directories and the Directories Subsidiaries shall
fully discontinue all use of the ITT Marks and the ITT Name. By the end of the
Phase-out Period, ITT World Directories and the Information Services
Subsidiaries will cease the use of the ITT Name and ITT Marks and will eliminate
the use of any other designation indicating affiliation after the Termination
Date; provided, however, that ITT World Directories and ITT Information Services
Subsidiaries shall be entitled to sell and use all inventories of finished goods
on hand as of the Termination Date, and provided, further that with respect to
stationery, checks, contracts, purchase orders, customer agreements and other
business forms which can result in a legal commitment of ITT Destinations, ITT
World Directories and ITT Information Services Subsidiaries will cease
immediately after the Termination Date any use of the designation "ITT" and any
other designation indicating affiliation after the Termination Date with ITT
Destinations (by stickering the ITT World Directories name over such designation
or by such other method as ITT World Directories shall select).
Insofar as catalogues are concerned, placement on the covers thereof of a
prominent legend negating affiliation with ITT Destinations shall be deemed
compliance with the requirements of this Section with respect to catalogues on
hand as of the Termination Date which are used or distributed by ITT World
Directories for a period of one year following the Termination Date.
Following termination of this Agreement, ITT World Directories and the
Information Services Subsidiaries shall:
(a) continue, without any time limitation, to retain all obligations
of this Agreement, including its obligations under Sections 5.02, 5.03,
5.04, 5.06, 9.10, and 9.16; and
(b) within thirty (30) days after the Termination Date, account to ITT
Sheraton and make any compensation payments as may be due or called for
under Section hereof up to and including the Termination Date.
ARTICLE IX. MISCELLANEOUS
Section 9.01. Modification or Amendment. This Service ▇▇▇▇ License
Agreement may not be modified or amended except by an agreement in writing
signed by the parties.
Section 9.02. Waiver; Remedies. No delay on the part of ITT World
Directories or ITT Sheraton in exercising any right, power or privilege
hereunder will operate as a waiver thereof, nor will any waiver on the part of
either ITT World Directories or ITT Sheraton of any right, power or privilege
hereunder operate as a waiver of any other right, power or privilege hereunder,
nor will any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder. Unless otherwise provided, the rights
and remedies herein provided are cumulative and are not exclusive of any rights
or remedies which the parties may otherwise have at law or in equity.
Section 9.03. Counterparts. For the convenience of the parties, this
Service ▇▇▇▇ License Agreement may be executed in any number of separate
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
Section 9.04. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.
Section 9.05. Notices. Any notice, request, instruction or other
communication to be given hereunder by any party to another shall be in writing
and shall be deemed to have been duly given (i) on the date of delivery if
delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (ii) on the first
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business day following the date of dispatch if delivered by Federal Express or
other nationally reputable next-day courier service, or (iii) on the third
business day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid. All notices hereunder
shall be delivered as set forth below, or pursuant to such other instructions as
may be designated in writing by the party to receive such notice.
(a) If to ITT Destinations:
ITT Destinations, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to ITT World Directories :
ITT World Directories, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to ITT Sheraton:
ITT Sheraton Corporation
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telefacsimile:
with copies to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.06. Entire Agreement. This Service ▇▇▇▇ License Agreement
(including Exhibits, Annexes and Schedules hereto) constitutes the entire
agreement, and supersedes all other prior agreements, under-
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standings, representations and warranties, both written and oral, among the
parties, with respect to the subject matter hereof. Notwithstanding any other
provisions in this Service ▇▇▇▇ License Agreement to the contrary, in the event
and to the extent that there shall be a conflict between the provisions of this
Service ▇▇▇▇ License Agreement as it relates to the ITT Name and ITT Marks, and
the provisions of the Destinations Distribution Agreements, this Service ▇▇▇▇
License Agreement shall control.
Section 9.07. Certain Obligations. Whenever this Service ▇▇▇▇ License
Agreement requires any of the Subsidiaries of any party to take any action, this
Service ▇▇▇▇ License Agreement will be deemed to include an undertaking on the
part of such party to cause such Subsidiary to take such action.
Section 9.08. Assignment.
(a) Except for the rights granted in Article II, and subject to Article
VII, this IP Agreement shall be assignable in whole in connection with a merger
or consolidation or the sale of all or substantially all the assets of a Party
hereto or in part in connection with a Party's sale or other divestiture of a
Subsidiary whose field of activity is within the scope of rights granted to such
Party by this Service ▇▇▇▇ License Agreement. Otherwise this Service ▇▇▇▇
License Agreement shall not be assignable, in whole or in part, directly or
indirectly, by any Party hereto without the prior written consent of the others,
and any attempt to assign any rights or obligations arising under this Service
▇▇▇▇ License Agreement without such consent shall be void.
(b) That portion of this Service ▇▇▇▇ License Agreement granting rights to
the ITT Name and ITT Marks shall be assigned with the transfer by ITT Sheraton
of the ownership of the ITT Name and ITT Marks.
Section 9.09. Captions. The Article, Section and paragraph captions
herein are for convenience of reference only, do not constitute part of this
Service ▇▇▇▇ License Agreement and shall not be deemed to limit or otherwise
affect any of the provisions hereof.
Section 9.10. Specific Performance. In the event of any actual or
threatened default in, or breach of, any of the terms, conditions and provisions
of this Service ▇▇▇▇ License Agreement, the party or parties who are or are to
be thereby aggrieved shall have the right of specific performance and injunctive
relief giving effect to its or their rights under this Service ▇▇▇▇ License
Agreement, in addition to any and all other rights and remedies at law or in
equity, and all such rights and remedies shall be cumulative. The parties agree
that the remedies at law for any breach or threatened breach, including monetary
damages, are inadequate compensation for any loss and that any defense in any
action for specific performance that a remedy at law would be adequate is
waived. ITT World Directories acknowledges that should ITT World Directories
and/or the Information Services Subsidiaries upon any termination in whole or in
part of this Service ▇▇▇▇ License Agreement fail to cease use of the ITT Name or
the ITT Marks, as appropriate, in accordance with the provisions of Article VII
hereof, such failure will result in immediate and irreparable injury to ITT
Sheraton and ITT Destinations and, in addition to any provable damages and the
right to the costs and expenses of any litigation, ITT Sheraton and/or ITT
Destinations shall be entitled to equitable relief by way of temporary and
permanent restraining orders and injunctions and such other further relief as
any court with jurisdiction may deem just and proper without the necessity of
posting a bond.
Section 9.11. Severability. If any provision of this Service ▇▇▇▇ License
Agreement or the application thereof to any person or circumstance is determined
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, so long as the economic or legal
substance of the transactions contemplated thereby is not affected in any manner
adverse to any party. Upon any such determination, the Parties shall negotiate
in good faith in an effort to agree upon a suitable and equitable substitute
provision to effect the original intent of the Parties.
Section 9.12. Third Party Beneficiaries. Except as provided in Article V
relating to Indemnitees, this Service ▇▇▇▇ License Agreement is solely for the
benefit of the parties hereto and their respective Subsidiaries and Affiliates
and should not be deemed to confer upon third parties any remedy, claim,
liability, reimbursement, claim of action or other right in excess of those
existing without reference to this Service ▇▇▇▇ License Agreement.
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Section 9.13. Fees and Expenses of Enforcement. A party in breach of this
Service ▇▇▇▇ License Agreement shall, on demand, indemnify and hold harmless the
other party hereto for and against all out-of-pocket expenses, including,
without limitation, legal fees, incurred by such other party by reason of the
enforcement and protection of its rights under this Agreement. The payment of
such expenses is in addition to any other relief to which such other party may
be entitled hereunder or otherwise.
Section 9.14. Expenses. Except as otherwise set forth in this Service
▇▇▇▇ License Agreement, all costs and expenses incurred on or prior to the
Distribution Time (whether or not paid on or prior to the Distribution Time) in
connection with the preparation, execution, delivery and implementation of this
Service ▇▇▇▇ License Agreement and the consummation of the transactions
contemplated hereby shall be charged to and paid by ITT World Directories.
Except as otherwise set forth in this Service ▇▇▇▇ License Agreement, each party
shall bear its own costs and expenses incurred after the Distribution Time.
Section 9.15. Exhibits. The Exhibits to this Service ▇▇▇▇ License
Agreement shall be construed with and as an integral part of this Service ▇▇▇▇
License Agreement to the same extent as if the same had been set forth verbatim
herein.
Section 9.16. Consent to Jurisdiction. Each of the Parties irrevocably
submits to the exclusive jurisdiction of (a) the Supreme Court of the State of
New York, New York County and (b) the United States District Court for the
Southern District of New York, for the purposes of any suit, action or other
proceeding arising out of this Service ▇▇▇▇ License Agreement or any transaction
contemplated hereby. Each of the Parties agrees to commence any action, suit or
proceeding relating hereto either in the United States District Court for the
Southern District of New York or if such suit, action or other proceeding may
not be brought in such court for jurisdictional reasons, in the Supreme Court of
the State of New York, New York County. Each of the Parties further agrees that
service of any process, summons, notice or document by U.S. registered mail to
such Party's respective address set forth above shall be effective service of
process for any action, suit or proceeding in New York with respect to any
matters to which it has submitted to jurisdiction in this Section 8.16. Each of
the Parties irrevocably and unconditionally waives any objection to the laying
of venue of any action, suit or proceeding arising out of this Service ▇▇▇▇
License Agreement or the transactions contemplated hereby in (i) the Supreme
Court of the State of New York, New York County or (ii) the United States
District Court for the Southern District of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
Section 9.17. Other Agreements. This Service ▇▇▇▇ License Agreement is
not intended to address, and should not be interpreted to address, the matters
specifically and expressly covered by the Destinations Distribution Agreement
and the other Ancillary Agreements.
Section 9.18. Survival of Service ▇▇▇▇ License Agreements. Except as
otherwise contemplated by this Service ▇▇▇▇ License Agreement, all covenants and
agreements of the parties contained in this Service ▇▇▇▇ License Agreement shall
survive the Distribution Time.
Section 9.19. Successors and Assigns. The provisions of this Service ▇▇▇▇
License Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and permitted
assigns.
Section 9.20. Further Assurances. In case at any time after the
Distribution Time any further action is reasonably necessary or desirable to
carry out the purposes of this Service ▇▇▇▇ License Agreement, the proper
officers at such time of each party to this Service ▇▇▇▇ License Agreement shall
take all such action. Without limiting the foregoing, ITT World Directories ,
ITT Sheraton or their respective Subsidiaries, as appropriate, shall use
commercially reasonable efforts to obtain all consents and approvals, to enter
into all agreements and to make all filings and applications that may be
required or are reasonably necessary for the consummation of the transactions
contemplated by this Service ▇▇▇▇ License Agreement, including, without
limitation, all applicable governmental filings.
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IN WITNESS WHEREOF, the Parties have caused this Service ▇▇▇▇ License
Agreement to be duly executed.
ITT WORLD DIRECTORIES, INC.
By
------------------------------------
Name:
Title:
ITT SHERATON CORPORATION
By
------------------------------------
Name:
Title:
ITT CORPORATION
By
------------------------------------
Name:
Title:
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EXHIBIT C
TAX ALLOCATION AGREEMENT, dated as of September , 1997
("Agreement"), among ITT Corporation, a Nevada corporation ("ITT"), ITT
Destinations, Inc., a Nevada corporation ("Destinations"), and ITT
Educational Services, Inc., a Delaware corporation ("ESI"), ITT,
Destinations and ESI are hereinafter jointly referred to as the
"Companies".
WITNESSETH
WHEREAS, ITT is the common parent of an affiliated group of domestic
corporations, including Destinations and ESI, which has elected to file
consolidated Federal income Tax returns;
WHEREAS, ITT proposes to merge Sheraton Corp., a Delaware corporation and a
wholly owned subsidiary of ITT ("Sheraton"), with and into Destinations (the
"Merger");
WHEREAS, immediately after the Merger, ITT proposes to contribute to
Destinations all the shares of stock that it owns, directly or indirectly, of
Sheraton on the Park PTY, Ltd., an Australian corporation ("Sheraton
Australia"), other than shares of stock of Sheraton Australia that are already
owned, directly or indirectly, by Destinations (such contribution, the
"Australia Contribution");
WHEREAS, substantially contemporaneously with the Australia Contribution,
ITT proposes to contribute to Destinations all the shares of stock that it owns,
directly or indirectly, of the companies listed on Schedule A (collectively, the
"Contributed Companies") other than shares of stock of the Contributed Companies
that are already owned, directly or indirectly, by Destinations (such
contribution, the "General Contribution");
WHEREAS, immediately after the Australia Contribution, the General
Contribution and the WBIS Transfer, ITT proposes to distribute all the shares of
stock that it owns in each of ESI (the "ESI Distribution") and Destinations (the
"Destinations Distribution") to its shareholders (collectively, the
"Distributions") and, as a result of the Distributions, Destinations and ESI
will not be included in the consolidated Federal income Tax return of ITT for
the portion of the year following the Distributions or in future years;
WHEREAS, prior to the Distributions ITT will own 100% of each class of the
outstanding shares of stock of ITT World Directories, Inc., a Delaware
corporation ("WD"), and immediately after the Distributions will own no
significant assets other than such shares;
WHEREAS, ITT and Destinations have entered into an agreement, dated as of
September , 1997 (the "Destinations Distribution Agreement"), to, among other
things, allocate and assign responsibility for certain liabilities of the
present ITT and its former subsidiaries; and ITT, Destinations and ESI entered
into an agreement, dated as of September , 1997 (the "ESI Distribution
Agreement"), to, among other things, allocate and assign responsibility for
certain liabilities of the present ITT and its former subsidiaries; and
WHEREAS, pursuant to the Investment Agreement, dated as of July 15, 1997,
by and between ITT and CDRV Acquisition, L.L.C., a Delaware limited liability
company ("CDRV"), CDRV agreed to purchase from ITT, and ITT agreed to sell to
CDRV on the Closing Date newly issued shares of stock of ITT representing 32.9%
of the outstanding shares of stock of ITT as of the Closing Date and warrants to
purchase shares of stock of ITT representing an additional 13.7% of the
outstanding shares of stock of ITT as of the Closing Date (the "Investment
Agreement");
WHEREAS, the Companies desire to allocate the Tax burdens and benefits of
transactions which occurred on or prior to the Distribution Date, and to provide
for certain other Tax matters, including the assignment of responsibility for
the preparation and filing of Tax returns and the prosecution and defense of any
Tax controversies;
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NOW, THEREFORE, in consideration of the mutual agreements contained herein,
the Companies (each on its own behalf and on behalf of each of its subsidiaries
as of the Distribution Date) hereby agree as follows:
Section 1. Definitions. As used in this Agreement, the following
terms shall have the following meaning:
"Actually Realized" or "Actually Realizes" shall mean, for purposes of
determining the timing of any Taxes (or any related Tax cost or benefit)
relating to any payment, transaction, occurrence or event (including any
Tax refund), the time at which the amount of Taxes payable by such person
is increased above or reduced below, as the case may be, the amount of
Taxes that such person would be required to pay but for such payment,
transaction, occurrence or event.
"Agreement" shall mean this Amended and Restated Tax Allocation
Agreement.
"Allocable Federal Income Tax Liability" shall mean the Separate
Consolidated Federal Income Tax Liability, as adjusted to reflect (a) any
AMT (but only if there is a consolidated AMT) and (b) any Taxes for which
Destinations is obligated to indemnify the ESI Group and the ITT Group
pursuant to Section 10(c) of this Agreement.
"AMT" shall mean the alternative minimum tax imposed by Section 55 of
the Code.
"Australia Contribution" shall have the meaning assigned to such term
in the recitals to this Agreement.
"Closing" shall have the meaning assigned to such term in the
Investment Agreement.
"Closing Date" shall have the meaning assigned to such term in the
Investment Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or
any successor statute.
"Companies" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Consolidated Return" shall mean the consolidated federal income Tax
return of ITT for the period commencing on January 1, 1997 and including
the Destinations Group and the ESI Group through and including the
Distribution Date and including the ITT Group through and including
December 31, 1997.
"Contributed Companies" shall have the meaning assigned to such term
in the recitals to this Agreement.
"Controlled Return" shall mean (a) the Consolidated Return, (b) any
Prior Period Consolidated Return and (c) any combined tax returns with
respect to 1997 and all prior years.
"Destinations" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Destinations Distribution" shall have the meaning assigned to such
term in the recitals to this Agreement.
"Destinations Distribution Agreement" shall have the meaning assigned
to such term in the recitals to this Agreement.
"Destinations Group" shall mean Destinations and each Destinations
Subsidiary.
"Destinations Subsidiary" shall mean (a) all of the direct or indirect
subsidiaries of Destinations as of the Distribution Date that have joined
or are eligible to join the Consolidated Return or any Prior Period
Consolidated Return and (b) all other direct or indirect, former
subsidiaries of ITT (other than those included in the ITT Group or the ESI
Group) that have joined or are eligible to join the Consolidated Return or
any Prior Period Consolidated Return.
"Directories Business" shall mean publishing telephone -- alphabetical
and classified -- and specialized directories.
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"Distributing Tax Payee" shall have the meaning assigned to such term
in Section 10(a)(ii) of this Agreement.
"Distributing Tax Payor" shall have the meaning assigned to such term
in Section 10(a)(ii) of this Agreement.
"Distribution Date" shall mean the date on which the Distributions are
effective for U.S. Federal income Tax purposes.
"Distributions" shall have the meaning assigned to such term in the
recitals to this Agreement.
"Distribution Tax" shall have the meaning assigned to such term in
Section 10(a)(i) of this Agreement.
"Education Business" shall mean providing technical postsecondary
education programs, including associate, bachelor, master degree and
non-degree diploma programs.
"Equity Investment" shall mean the acquisition by CDRV of shares of
stock of ITT and warrants to purchase shares of stock of ITT pursuant to
the Investment Agreement.
"ESI" shall have the meaning assigned to such term in the preamble to
this Agreement.
"ESI Distribution" shall have the meaning assigned to such term in the
recitals to this Agreement.
"ESI Distribution Agreement" shall have the meaning assigned to such
term in the recitals to this Agreement.
"ESI Group" shall mean ESI and each ESI Subsidiary.
"ESI Subsidiary" shall mean (a) all the direct or indirect
subsidiaries of ESI as of the Distribution Date that have joined or are
eligible to join the Consolidated Return or any Prior Period Consolidated
Return and (b) all the direct or indirect, former subsidiaries of ITT (or
ITT Industries prior to the 1995 Spin-Off Date) that have ever been
primarily and directly engaged in the Education Business (other than ITT
Federal Services Corporation, a Delaware corporation) and that have joined
or are eligible to join the Consolidated Return or any Prior Period
Consolidated Return.
"ESI Tax Sharing Agreement" shall mean the Tax sharing agreement,
dated as of December 27, 1994, by and between ITT Industries and ESI.
"Final Determination" shall mean the final resolution of liability for
any Tax for any taxable period, including any related interest or
penalties, by or as a result of: (i) a final and unappealable decision,
judgment, decree or other order of a court of competent jurisdiction; (ii)
a closing agreement or accepted offer in compromise under Section 7121 or
7122 of the Code, or comparable agreement under the laws of other
jurisdictions, which resolves the entire Tax liability for any Tax period;
(iii) any allowance of a refund or credit in respect of an overpayment of
Tax, but only after the expiration of all periods during which such refund
may be recovered (including by way of offset) by the applicable Taxing
jurisdiction; or (iv) any other final disposition, including by reason of
the expiration of the applicable statute of limitations.
"FTC" shall mean the foreign tax credit pursuant to Section 27 of the
Code.
"General Contribution" shall have the meaning assigned to such term in
the recitals to this Agreement.
"Group" shall mean the ITT Group, the Destinations Group and/or the
ESI Group, as the context may require.
"Indemnifiable Amount" shall have the meaning assigned to such term in
Section 10(a)(ii) of this Agreement.
"Investment Agreement" shall have the meaning assigned to such term in
the recitals to this Agreement.
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"IRS" shall mean the U.S. Internal Revenue Service.
"ITT" shall have the meaning assigned to such term in the preamble to
this Agreement.
"ITT Group" shall mean ITT and each ITT Subsidiary.
"ITT Industries" shall mean ITT Industries, Inc., an Indiana
corporation (formerly ITT Corporation, a Delaware corporation).
"ITT Subsidiary" shall mean (a) WD and all the direct or indirect
subsidiaries of WD as of the Distribution Date that have joined or are
eligible to join the Consolidated Return or any Prior Period Consolidated
Return and (b) all the direct or indirect, former subsidiaries of ITT (or
ITT Industries prior to the 1995 Spin-Off Date) that have ever been
primarily and directly engaged in the Directories Business and that have
joined or are eligible to join the Consolidated Return or any Prior Period
Consolidated Return.
"ITT Tax Allocation Agreement" shall mean the Tax allocation
agreement, dated as of November 1, 1995, among ITT (then ITT Destinations,
a Nevada corporation), ITT Industries (then ITT Corporation, a Delaware
corporation) and The Hartford Financial Services Group, Inc., a Delaware
corporation (then ITT Hartford Group, Inc., a Delaware corporation).
"▇.▇. ▇▇▇▇▇ Tax Sharing Agreement" shall mean the Tax sharing
agreement, dated as of January 4, 1998, by and among WD, ITT Industries and
▇.▇. ▇▇▇▇▇, a wholly owned subsidiary of BellSouth, a Georgia corporation.
"Merger" shall have the meaning assigned to such term in the recitals
to this Agreement.
"1995 Spin-Off Date" shall mean December 19, 1995.
"1995 Spin-Off Tax Liability" shall mean any payment with respect to
Taxes which ITT is required to make under the ITT Tax Allocation Agreement,
after reduction for any payments that any of the other parties to that
agreement or any of their respective subsidiaries are required to make to
ITT pursuant to the terms of that agreement.
"Prime Rate" shall mean the "prime rate" charged by Citibank, N.A.,
New York, New York, as such rate shall be changed from time to time,
compounded daily on the basis of a year of 365/366 days and actual days
elapsed.
"Prior Period Consolidated Return" shall mean any consolidated Tax
return of (a) the present ITT Corporation, a Nevada corporation, filed, or
to be filed, for taxable years prior to the Consolidated Return year and
(b) the former ITT Corporation, a Delaware corporation (now ITT Industries,
Inc., an Indiana corporation), filed, or to be filed, for taxable years
prior to or including the 1995 Spin-Off Date.
"Separate Consolidated Federal Income Tax Liability" shall mean, with
respect to any year or portion thereof, the Tax liability which a Group
would have incurred if such Group, on a stand alone basis, had been an
affiliated group eligible to file a consolidated return for any portion of
such taxable year during which it is included in the Consolidated Return or
any Prior Period Consolidated Return and had filed a return for such
period, computed without regard to AMT; provided, however, that in
computing the Tax liability of the ITT Group, any Tax Item attributable to
ITT and arising prior to the Distribution Date (determined as if there were
a closing of the books as of such date) shall not be taken into account and
shall be treated as a Tax Item of the Destinations Group; provided further
that any credits of WD and its subsidiaries shall be treated as utilized at
the earlier of the time such credits are utilized (a) in the Consolidated
Return or any Prior Period Consolidated Return or (b) in the computation of
the Separate Consolidated Federal Income Tax Liability of the ITT Group.
"Spin-Off Tax Payee" shall have the meaning assigned to such term in
Section 10(b)(ii) of this Agreement.
"Spin-Off Tax Payor" shall have the meaning assigned to such term in
Section 10(b)(ii) of this Agreement.
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"Tax" or "Taxes" shall mean all forms of taxation, whenever created or
imposed, and whether of the United States or elsewhere, and whether imposed
by a local, municipal, governmental, state, foreign, federal or other body,
and without limiting the generality of the foregoing, shall include income,
sales, use, ad valorem, gross receipts, license, value added, franchise,
transfer, recording, withholding, payroll, wage withholding, employment,
excise, occupation, unemployment insurance, social security, business
license, business organization stamp, environmental, premium and property
taxes, together with any related interest, penalties and additions to any
such tax, or additional amounts imposed by any Taxing Authority (domestic
or foreign) upon the Destinations Group, the ITT Group, the ESI Group or
any of their respective members or divisions or branches or affiliates.
"Tax Administrator" shall mean ▇▇▇▇▇ ▇. ▇▇▇▇▇, the Director of Taxes
of Destinations, or such other person as Destinations shall appoint with
the consent of each of ITT and ESI, which consent shall not be unreasonably
withheld or delayed.
"Taxing Authority" shall mean any governmental or quasi-governmental
body exercising any Taxing authority or Tax regulatory authority.
"Tax CPA" shall mean a firm of internationally recognized certified
public accountants selected by Destinations with the consent of the other
Companies, which consent shall not be unreasonably withheld or delayed, and
employed by (and at the expense of) Destinations to prepare and sign the
Consolidated Return and any amendment of the Consolidated Return or any
Prior Period Consolidated Return. The initial Tax CPA shall be ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP.
"Tax Credits" shall include all credits against Tax pursuant to
Subtitle A, Chapter 1, Part IV of the Code.
"Tax Item" shall mean any net operating loss, net capital loss,
deduction or credit (including, but not limited to, any FTC).
"WD" shall have the meaning assigned to such term in the recitals to
this Agreement.
Section 2. Tax Returns to be Filed. (a) Consolidated and Prior Period
Consolidated Returns. (i) Each of the Companies will join, and will cause each
of their respective subsidiaries to join, in the Consolidated Return to the
extent each is eligible to join in such return under the provisions of the Code
and the regulations thereunder. The Tax Administrator will cause the
Consolidated Return to be timely prepared and filed, and will timely prepare and
file any consents and requests for extension of time within which to file the
Consolidated Return or any related information or similar returns. The Tax
Administrator shall make the Consolidated Return available to the Chief
Financial Officers of ITT and ESI for their review prior to filing and shall
furnish them a copy of the return promptly after it is filed.
(ii) ITT and ESI agree that each will cause their respective Chief
Financial Officers to furnish to the Tax Administrator on a timely basis such
information, schedules, analyses and any other items as may be necessary to
prepare the Consolidated Return. Such information, schedules, analyses and other
items will be prepared in a manner consistent with existing practice and in
accordance with the work plan and schedule to be agreed upon among the Tax
Administrator and the Chief Financial Officers of each of ITT and ESI, acting
reasonably, as soon as practicable after the Distribution Date.
(iii) The Companies hereby agree to execute and deliver all documentation
reasonably required (including powers of attorney, if requested) to enable the
Tax Administrator to timely file, and to take all actions necessary or
incidental to the filing of, the Consolidated Return (including, without
limitation, the execution of Treasury Form 1122), or any amendment of the
Consolidated Return or any Prior Period Consolidated Return. The Tax
Administrator shall decide in his sole discretion whether to file an amended
return, and no consent of any Company shall be required for the filing of any
such amended return whether pursuant to Section 905(c) of the Code or otherwise.
ITT agrees that an officer of ITT will timely sign the Consolidated Return (and
any Prior Period Consolidated Return which has not been filed as of the
Distribution Date) and any amendment of the Consolidated Return and any Prior
Period Consolidated Return after (i) receiving a written certification from the
Tax Administrator that the Tax Administrator has reviewed
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such return in consultation with the Tax CPA and that it is in order for filing,
(ii) such officer has reviewed such return and (iii) any reasonable questions
raised by such officer in reviewing such return have been resolved
satisfactorily.
(iv) Taxes with respect to the Consolidated Return or any Prior Period
Consolidated Return shall be paid or caused to be paid by Destinations, which
shall act as agent of the ITT Group and the ESI Group in all Tax matters having
to do with the Consolidated Return or any Prior Period Consolidated Return.
(b) Combined State Tax Returns. The Tax Administrator will cause any
combined state tax returns with respect to 1997 or any prior Tax year and any
amendment of any such returns to be timely prepared, filed and paid, utilizing
procedures substantially similar to those provided in Section 2(a) of this
Agreement with respect to the Consolidated Return and Prior Period Consolidated
Returns.
(c) Other Tax Returns. The Companies and their respective subsidiaries
shall timely prepare and file Tax returns (other than Controlled Returns) in
those jurisdictions in which they are required to do so in a manner consistent
with past practice. Taxes for any return filed by one of the Companies pursuant
to this Section 2(c) shall be paid or caused to be paid by the party responsible
under this Section 2(c) for filing such return. The Tax Administrator shall have
the right to approve any Tax returns filed pursuant to this Section 2(c) prior
to such filing if Destinations could be liable for Taxes due with respect to any
such Tax returns under principles analogous to Treasury regulation sec.
1.1502-6.
Section 3. Consolidated Return Computations of Tax and Payments. (a) On
or before December 14, 1997, the ITT Group and the ESI Group each agree to make
payments to Destinations equal to the excess of their estimated Consolidated
Return year Separate Consolidated Federal Income Tax Liability (as reasonably
determined by the Tax Administrator) over their prior payments, including any
payments with respect to estimated Taxes for the Consolidated Return year, and
Destinations agrees to make payments to the ITT Group and the ESI Group equal to
the excess of their respective prior payments with respect to estimated Taxes
for the Consolidated Return year over each of their estimated Consolidated
Return year Separate Consolidated Federal Income Tax Liability (as reasonably
determined by the Tax Administrator).
(b) On or before March 14, 1998, an interim Tax settlement payment shall be
made to or by Destinations by or to the ITT Group and the ESI Group, as the case
may be, equal to the difference between the Separate Consolidated Federal Income
Tax Liability and the net amounts previously paid with respect to estimated
Taxes for the Consolidated Return year.
(c) Based on computations to be prepared by the affected Group and approved
by the Tax Administrator, an adjusting payment equal to the difference between
the Allocable Federal Income Tax Liability and the net amounts previously paid
with respect to estimated Taxes for the Consolidated Return year, including
payments pursuant to Sections 3(a) and (b) of this Agreement, shall be made to
or by Destinations by or to the ITT Group and the ESI Group, as the case may be,
on or before October 15, 1998 based on the Consolidated Return as filed. Each of
the ITT Group and the ESI Group shall increase their liability for such
adjusting payment by the amount of any AMT credit carryforward allocated to them
under the consolidated return regulations which exceeds the AMT calculated on a
separate consolidated basis.
Section 4. Special Rules. (a) If the Consolidated Return or any Prior
Period Consolidated Return Tax liability (including any interest relating
thereto) exceeds or is less than the total of the three Groups' Allocable
Federal Income Tax Liability (including any interest relating thereto), the cost
or benefit of any net difference shall be allocated to Destinations; provided,
that AMT in an amount equal to any AMT credit carryforward from the Consolidated
Return allocated to a Group shall be charged to and paid by such Group.
(b) Each of the Companies agrees that, unless it obtains consent of the Tax
Administrator, all members of its Group will waive the carryback of any net
operating loss from a Tax period beginning on or after the Distribution Date to
the Consolidated Return or Prior Period Consolidated Return.
Section 5. Tax Benefit Transfer Leases. (a) In computing any ESI payment
to Destinations under this Agreement, ESI and its subsidiaries will determine
their Tax liability as if their Tax benefit transfer leases were not in effect.
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(b) Destinations will indemnify ESI if it is required to make any
termination payments or other payments, including interest and penalties,
resulting from any failure to perform under a Tax benefit transfer lease.
(c) Destinations agrees to continue to provide assistance to ESI in
connection with its Tax benefit transfer leases.
Section 6. Dispute Resolution. In the event of a disagreement between the
Tax Administrator and the ESI Group and/or the ITT Group, all computations or
recomputations of Federal or state and local income and franchise Tax liability,
and all computations or recomputations of any amount or any payment (including,
but not limited to, computations of the amount of the Tax liability, any loss or
credit or deduction, Federal statutory Tax rate change for a year, utilization
of carryback items, interest, penalties, and adjustments) and all determinations
of the amount of payments or repayments, or determinations of any other nature
necessary to carry out the terms of this Agreement will be reviewed by a
mutually satisfactory third party, with the costs of such review being shared
equally by such disputing parties. If any disagreement remains after any such
review, including any disagreement as to the construction, applicability or
binding nature of this Agreement, that disagreement shall be resolved by an
arbitrator with the cost of such arbitration being shared equally by such
disputing parties; provided that such arbitrator shall be a retired or former
judge of the United States Tax Court or such other qualified person as the
relevant parties may agree to designate; provided that, in the event that the
relevant parties agree to designate a qualified person (other than a retired or
former judge of the United States Tax Court), such other qualified person shall
have had substantial experience with regard to settling complex Tax disputes.
The decision of the arbitrator shall be binding on the parties.
Section 7. Survival of Terms. The provisions of this Agreement shall
survive the Distribution Date and remain in full force until all periods of
limitations, including any extension or waiver periods, as well as the ten-year
statute of limitations with respect to FTC redeterminations, for the
Consolidated Return year and any Prior Period Consolidated Return years have
expired and no further carrybacks to such periods are possible. At that time all
remaining payments required under this Agreement shall become immediately due
and payable.
Section 8. Parties to Cooperate. Each of the Companies and their
subsidiaries shall cooperate fully and to the extent reasonably requested by the
other party in connection with the preparation and filing of any return or the
conduct of any audit, dispute, proceeding, suit or action concerning any issues
or any other matter contemplated hereunder. Such cooperation shall include,
without limitation, (i) the retention and provision on demand of books, records,
documentation or other information relating to any Tax matter until the later of
(x) the expiration of the applicable statute of limitation (giving effect to any
extension, waiver, or mitigation thereof) and (y) in the event any claim has
been made under this Agreement for which such information is relevant, until a
Final Determination with respect to such claim, (ii) the provision of additional
information with respect to and explanation of Tax practices (elections,
accounting methods, conventions and principles of taxation) and material
provided under clause (i) of this Section 8; (iii) the execution of any document
that may be necessary or reasonably helpful in connection with the filing of any
Tax return by any member of one of the Groups, or in connection with any audit,
proceeding, suit or action addressed in the preceding sentence; and (iv) the use
by each of the Companies of its reasonable efforts to obtain any documentation
from a governmental authority or a third party that may be necessary or helpful
in connection with the foregoing. Each of the Companies shall make its employees
and facilities available on a mutually convenient basis to facilitate such
cooperation and shall retain as permanent records all documentation necessary to
enable it to determine any obligation under this Agreement. The records
described above will be made available to representatives of any of the
Companies within a reasonable time upon request and may be photocopied on an as
needed basis.
Section 9. Notices. Any notices, payments or other communications
required by this Agreement shall be sent to the attention of the Chief Financial
Officer of the appropriate Company, with a copy to the Tax Administrator.
Section 10. Indemnification. (a) Pre-Distribution & Distribution
Taxes. (i) Destinations Indemnification. Except as otherwise provided in
Section 10(a)(ii) of this Agreement, Destinations shall be liable for
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and shall indemnify, defend and hold the ESI Group and the ITT Group harmless
from and against any Tax liability (except for any payments which ITT makes with
respect to the cost of any additional Taxes paid by ITT shareholders receiving
Destinations and ESI stock in the Distributions, whether or not ITT is legally
obligated to make such payments) that results from, or arises in connection
with, the application of Section 355(d) and/or 355(e) of the Code to the ESI
Distribution and/or the Destinations Distribution or the General Contribution,
Merger, ESI Distribution and/or Destinations Distribution failing to qualify
under Code Sections 368(a)(1)(D), 368(a)(1)(F) and/or 355, by reason of Code
Section 367(e)(1) or otherwise (any such Tax liability, a "Distribution Tax").
(ii) ESI and ITT Indemnification. If ESI or ITT (or any of their
respective subsidiaries) takes or omits any action (including, but not limited
to, a breach of any representation, statement or covenant set forth in Section
13 of this Agreement) on or after the Distribution Date (but after the
Distributions), or if any stock and/or assets of ESI or ITT (or any of their
respective subsidiaries) is acquired and/or disposed of on or after the
Distribution Date (but after the Distributions), and such action, omission,
acquisition or disposition materially contributes to a Final Determination that
the General Contribution, Merger, ESI Distribution and/or Destinations
Distribution results in the recognition of gain to any of the Companies (whether
by reason of the application of Section 355(e) or 355(d) of the Code or by
virtue of the General Contribution, Merger, ESI Distribution and/or Destinations
Distribution failing to qualify under Sections 368(a)(1)(D), 368(a)(1)(F) and/or
355, by reason of Section 367(e)(1) or otherwise) (a Company that takes or omits
any such action, or the stock and/or assets of which is so acquired or disposed
of, a "Distributing Tax Payor"), then such Distributing Tax Payor shall be
liable for and shall indemnify, defend and hold each Company that is not a
Distributing Tax Payor (each such Company, a "Distributing Tax Payee") harmless
from and against any resulting Tax liability that would not otherwise have been
incurred by each such Distributing Tax Payee (including interest and penalties)
except for any resulting payments which each such Distributing Tax Payee makes
to or for ITT shareholders with respect to the cost of additional shareholder
Taxes, whether or not each such Distributing Tax Payee is legally obligated to
make such payments)(such resulting Tax liability, an "Indemnifiable Amount"). If
there is more than one Distributing Tax Payor, then each such Distributing Tax
Payor shall be liable for and shall indemnify, defend and hold a Distributing
Tax Payee harmless from and against an Indemnifiable Amount in proportion to the
relative aggregate fair market values (as reasonably determined by the Tax
Administrator) of the stock of such Distributing Tax Payors outstanding
immediately after the Distributions.
(b) 1995 Spin-Off Tax Liabilities. (i) Except as otherwise provided in
Section 10(b)(ii), 10(b)(iii) or 12(a) of this Agreement, Destinations shall be
liable for and shall indemnify, defend and hold the ESI Group and the ITT Group
harmless from and against any 1995 Spin-Off Tax Liability.
(ii) If ESI or ITT (or any of their respective subsidiaries) takes or omits
any action on or after the Distribution Date (but after the Distributions) which
materially contributes to the incurrence of a 1995 Spin-Off Tax Liability (any
such Company, a "Spin-Off Tax Payor"), then such Spin-Off Tax Payor shall be
liable for and shall indemnify, defend and hold each Company that is not a
Spin-Off Tax Payor (each such Company, a "Spin-Off Tax Payee") harmless from and
against any resulting 1995 Spin-Off Tax Liability (including interest and
penalties). If there is more than one Spin-Off Tax Payor, then each such
Spin-Off Tax Payor shall be liable for and shall indemnify, defend and hold a
Spin-Off Tax Payee harmless from and against any resulting 1995 Spin-Off Tax
Liability in proportion to the relative aggregate fair market values (as
reasonably determined by the Tax Administrator) of the stock of such Spin-Off
Tax Payors outstanding immediately after the Distributions.
(iii) The ESI Group shall be liable for and shall indemnify, defend and
hold the Destinations Group and the ITT Group harmless from and against any 1995
Spin-Off Tax Liability to the extent that such liability is allocated to ESI (or
any of its subsidiaries) under the ESI Tax Sharing Agreement.
(c) Treas. Reg. 1.1502-6 and 1.1502-77. Destinations shall be liable for
and shall indemnify, defend and hold the ITT and ESI Groups harmless from and
against any Federal or state income or franchise Taxes for the Consolidated
Return or any Prior Period Consolidated Return for which the ITT Group or the
ESI
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Group may be liable solely as a result of the operation of Treasury Regulation
Sections 1.1502-6 and 1.1502-77 or any state counterpart statute or regulation.
(d) Intercompany Sales and Distributions. Subject to Section 10(a) of this
Agreement, Destinations shall be liable for and shall indemnify, defend and hold
the ITT and ESI Groups harmless from and against any Taxes which are triggered
in the Consolidated Return and which relate to the intercompany sale or
distribution of stock of a subsidiary or of other property by one Group to
another Group (but not those which relate to the intercompany sale or
distribution of assets within a Group).
(e) Loan Agreements and Offering Memoranda. If actions taken on or before
the Distribution Date cause, or the ESI Distribution and/or the Destinations
Distribution causes, any of the Companies to be liable under the Tax indemnities
contained in the covenants, loan agreements or offering memoranda of any debt
instruments which remain outstanding at the Distribution Date, Destinations
shall be liable for and shall indemnify, defend and hold the ITT and ESI Groups
harmless from and against any cost of any such Tax indemnity.
(f) Gain Recognition Agreement. If ITT (or any of its subsidiaries) takes
or omits to take any action (including, but not limited to, a breach of any
representation, statement or covenant set forth in Section 13(a)(iii) of this
Agreement) on or after the Distribution Date (but after the Distributions), and
any liability for Taxes with respect to any gain recognition agreement entered
into by ITT, ITT Industries or any member of either of their respective
affiliated groups pursuant to Section 367 of the Code with respect to
transactions occurring prior to the Distribution Date arises in connection with
or is otherwise attributable to such action or omission, then the ITT Group
shall be liable for and shall indemnify, defend and hold the ESI Group and the
Destinations Group harmless from and against any such liability for Taxes.
Section 11. Tax Deficiencies and Claims. (a) Except as otherwise provided
in Section 11(b), the Tax Administrator shall control all audits, examinations
and proceedings with respect to Taxes with respect to any Controlled Returns.
The Tax Administrator shall have overall responsibility for obtaining and
coordinating all responses in connection with any such proceedings with respect
to any Controlled Returns. To the extent that any such audit affects one of the
Groups, such Group shall prepare and submit such responses in a manner
consistent with prior practice; provided, however that the Tax Administrator
shall have the right to approve all such responses prior to their submission.
Adjustments affecting solely the taxable income, loss or deductions of, or Tax
credits generated by, any Group may be agreed upon or settled only upon approval
of the that Group, which approval shall not be unreasonably withheld or delayed.
(b) ESI and ITT Claims. Any proposed or actual income Tax deficiencies or
refund claims with respect to the Consolidated Return or any Prior Period
Consolidated Return which arise from the business activities of either the ITT
Group or the ESI Group, and do not otherwise affect any Controlled Return, may
be defended or prosecuted by the ITT Group or the ESI Group, as the case may be,
at its own cost and expense and with counsel and accountants of its own
selection. The Tax Administrator may participate in any such prosecution or
defense at Destinations' cost and expense (in either event such cost or expense
is not to include the amount of any payment of any Tax claim, interest or
penalties, or of any compromise settlement or other disposition thereof). The
ITT Group or the ESI Group, as the case may be, may control the proceedings, but
it may not compromise or settle any such deficiency of Tax or any refund claim
without the prior written consent of the Tax Administrator, which consent shall
not be unreasonably withheld. Notwithstanding the foregoing, neither the ITT
Group nor the ESI Group, as the case may be, shall have a right to an extension
of the statute of limitations beyond the time reasonably necessary to complete
review at the Appeals Division of the IRS or to any waiver of any other
procedural safeguard without the prior written consent of the Tax Administrator.
The limitation expressed in the preceding sentence applies, but is not limited
to, the filing of a petition with the United States Tax Court. If the ITT Group
or the ESI Group, as the case may be, defends or prosecutes an action, it shall
keep the Tax Administrator informed of matters relating to such defense or
prosecution.
(c) Cost of Advisors. In connection with the defense of any audit of any
Controlled Return, except with regard to claims described in Section 11(b) of
this Agreement, the Tax Administrator may retain advisors and charge the
reasonable cost of their services to the appropriate Group or Groups.
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Section 12. Payment of Deficiencies and Refunds. (a) The Allocable
Federal Income Tax Liability and any other Tax liability of the ESI Group and
the ITT Group with respect to any Controlled Returns shall be adjusted in
computations to be prepared by the ESI Group or the ITT Group, as the case may
be, and approved by the Tax Administrator with respect to changes in the taxable
income, loss, deduction or Tax credits of the ESI Group or the ITT Group, as the
case may be:
(i) in each instance when payments are to be made to, or refunds are
received from, the relevant Taxing authority;
(ii) when no payment is to be made or refund is to be received due to
offsetting adjustments, upon filing of an amended return, completion of an
audit and an appellate review by the relevant Taxing authority; and
(iii) to reflect the results of any Final Determination.
ESI and ITT agree to pay to Destinations additional amounts (plus penalties
and additions to Tax, if any) equal to any increases in the Allocable Federal
Income Tax Liability (or any other Tax liability with respect to a Controlled
Return) of the ESI Group or the ITT Group resulting from any such changes, and
Destinations agrees to pay to ESI and ITT amounts equal to any decreases in the
Allocable Federal Income Tax Liability (or any other Tax liability with respect
to a Controlled Return) of the ESI Group or the ITT Group resulting from any
such changes, in each case together with any interest relating thereto. For
purposes of this Agreement, unless specifically provided otherwise, interest
shall be computed at the Federal statutory rate used, pursuant to Section
6621(a) of the Code, by the IRS in computing the interest payable to or by it on
the net balance due to or from the IRS. Any interest under Section 6621(c) of
the Code shall be charged to the Group whose separate deficiency gave rise to
such interest. If the separate deficiencies of more than one Group gave rise to
such interest, then such interest shall be allocated between or among such
Groups. Penalties levied in respect of any Controlled Return shall be charged to
the Group whose separate computations gave rise to such penalty.
(b) Amounts payable to or from Destinations from or to ESI or ITT under
Section 12(a) of this Agreement shall be paid upon written request therefor
approved by the Tax Administrator, together with interest thereon from the
original due date or such other date as may be appropriate under the
circumstances. Any amounts due to or from Destinations from or to ESI or ITT
under Section 12(a) of this Agreement as a result of a payment to a Taxing
authority or the receipt of a refund shall be paid within five working days
after such payment or receipt, together with appropriate interest thereon. If no
payment is to be made or refund is to be received due to offsetting items among
the various Groups, then Tax and interest (computed at the IRS overpayment
rates) shall be paid within 30 calendar days after the completion of each of the
audit and appellate review of the Tax period in question and a Final
Determination. After expiration of the five day period (or, if applicable, 30
day period) any amounts unpaid shall bear interest computed from the date of
payment or receipt (or, if applicable, completion or Final Determination) at the
Prime Rate.
(c) No payment relating to a change in Allocable Federal Income Tax
Liability shall be made by or to any Group with respect to the IRS audit of the
Consolidated Return or a Prior Period Consolidated Return until the audit has
been completed with respect to all Groups, unless such advance payment has been
approved by the Tax Administrator.
Section 13. Certain Post-Distribution Actions. (a)(i) ITT shall comply
with and otherwise not take any action inconsistent with any representation or
statement made, or to be made, by or on behalf of any member of the ITT Group in
connection with this Agreement or to ITT's outside Tax counsel in connection
with such firm's rendering an opinion to ITT, Destinations and ESI as to certain
Tax aspects of the General Contribution, Merger and Distributions.
(ii) Until two years after the Distribution Date, ITT will maintain its
status as a company engaged in the active conduct of a trade or business, as
defined in Section 355(b) of the Code.
(iii) ITT shall timely file all notices required to be filed with respect
to gain recognition agreements entered into by ITT, ITT Industries or any member
of either of their respective affiliated groups pursuant to
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Section 367 of the Code with respect to transactions occurring prior to the
Distribution Date. In addition, not later than March 1 following the end of each
taxable year, ITT shall furnish to the Tax Administrator and to the Director of
Taxes of ITT Industries a letter stating that (A) none of the companies nor the
assets of the companies that are subject to a gain recognition agreement
described in the preceding sentence have been sold or otherwise disposed of
during the period set forth in the relevant gain recognition agreement (taking
into account any extensions) and (B) none of those companies has entered into
any other transaction that would trigger any of those gain recognition
agreements.
(b)(i) Destinations shall comply with and otherwise not take action
inconsistent with each representation and statement made, or to be made, by or
on behalf of any member of the Destinations Group in connection with this
Agreement or to ITT's outside Tax counsel in connection with such firm's
rendering an opinion to ITT, Destinations and ESI as to certain Tax aspects of
the General Contribution, Merger and Distributions.
(ii) Until two years after the Distribution Date, Destinations will
maintain its status as a company engaged in the active conduct of a trade or
business, as defined in Section 355(b) of the Code.
(c)(i) ESI shall comply with and otherwise not take action inconsistent
with each representation and statement made, or to be made, by or on behalf of
any member of the ESI Group in connection with this Agreement or to ITT's
outside Tax counsel in connection with such firm's rendering an opinion to ITT,
Destinations and ESI as to certain Tax aspects of the General Contribution,
Merger and Distributions.
(ii) Until two years after the Distribution Date, ESI will maintain its
status as a company engaged in the active conduct of a trade or business, as
defined in Section 355(b) of the Code.
(d) If any of the Companies or any of their respective subsidiaries takes
any action within two years of the Distribution Date that, if such action had
been taken on the date of any of the General Contribution, the Merger, the ESI
Distribution or the Destinations Distribution, would have been inconsistent with
any of the representations or statements made, or to be made, by or on behalf of
any such Company or subsidiary in connection with this Agreement or to ITT's
outside Tax counsel in connection with such firm's rendering an opinion to ITT,
Destinations and ESI as to certain Tax aspects of the General Contribution, the
Merger, the ESI Distribution or the Destinations Distribution, and such action
or omission materially contributes to a Final Determination that the General
Contribution, Merger, ESI Distribution and/or Destinations Distribution, as the
case may be, results in the recognition of gain to any of the Companies (a
Company which takes any such action, a "Breaching Company"), such Breaching
Company shall be treated for purposes of this Agreement as having actually
violated any such representation or statement.
Section 14. Rights under the ITT Tax Allocation Agreement. ITT hereby
appoints the Tax Administrator as its attorney-in-fact for purposes of
exercising any rights (other than any rights to repayment from the other parties
(including any of their respective subsidiaries) to that agreement) that ITT or
the Director of Taxes of ITT might otherwise have pursuant to the terms of the
ITT Tax Allocation Agreement.
Section 15. Choice of Law; Successors and Assigns. This Agreement shall
be governed and construed in accordance with the laws of the State of New York
applicable to contracts executed in and to be performed in that state. This
Agreement shall be binding on the successors and assignees of the Companies.
Section 16. Entire Agreement. This Agreement contains the entire
agreement among the Companies with respect to the subject matter hereof and
supersedes all prior written Tax sharing or Tax allocation agreements,
memoranda, negotiations and oral understandings, if any, and may not be amended,
supplemented or discharged except by performance or by an instrument in writing
signed by all of the Companies.
Section 17. Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but
which together shall constitute one and the same instrument.
SECTION 18. Amendments. This Agreement may be amended and restated in its
entirety by Destinations in connection with the Equity Investment and prior to
the Equity Investment without the consent of ESI or ITT; provided, however, that
if any amendment effected thereby would have a materially adverse
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effect on ESI, then Destinations shall obtain the consent of ESI (which consent
shall not be unreasonably withheld) with respect to such amendment; provided
further that if the amendments effected thereby would in the aggregate have a
materially adverse effect on ITT, then Destinations shall obtain the consent of
ITT (which consent shall not be unreasonably withheld) with respect to such
amendments.
SECTION 19. Effectiveness. This Agreement shall be effective as of the
Distribution Date and upon becoming effective shall replace and supersede the
▇.▇. ▇▇▇▇▇ Tax Sharing Agreement, which thereafter shall have no further force
or effect.
IN WITNESS WHEREOF, the Companies have duly executed this Agreement as of
the date first above written.
ITT CORPORATION,
by
------------------------------------
Name:
Title:
[Seal]
Attest:
ITT DESTINATIONS, INC.,
by
------------------------------------
Name:
Title:
[Seal]
Attest:
EDUCATIONAL SERVICES, INC.,
by
------------------------------------
Name:
Title:
[Seal]
Attest:
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EXHIBIT D
================================================================================
AGREEMENT AND PLAN OF DISTRIBUTION
DATED AS OF SEPTEMBER , 1997
AMONG
ITT CORPORATION,
ITT EDUCATIONAL SERVICES, INC.
AND
ITT DESTINATIONS, INC.
================================================================================
85
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS
SECTION 1.01. General............................................................... 1
SECTION 1.02. References; Interpretation............................................ 7
ARTICLE II
CERTAIN TRANSACTIONS
SECTION 2.01. Transfer of Certain Businesses and Assets............................. 7
SECTION 2.02. Assumption of Liabilities............................................. 7
SECTION 2.03. Transfer of Certain Licenses and Permits.............................. 7
SECTION 2.04. Transfer and Assumption Documentation................................. 8
SECTION 2.05. Intercompany Accounts................................................. 8
SECTION 2.06. Assignments and Transfers Not Effected Prior to the Distribution...... 8
SECTION 2.07. Educational Intercompany Agreements................................... 9
ARTICLE III
THE DISTRIBUTION
SECTION 3.01. Mechanics of Distribution............................................. 9
SECTION 3.02. Fractional Shares..................................................... 9
SECTION 3.03. Timing of Distribution................................................ 9
ARTICLE IV
MUTUAL RELEASE
SECTION 4.01. Mutual Release, etc. ................................................. 10
ARTICLE V
INDEMNIFICATION
SECTION 5.01. Indemnification by the Company........................................ 10
SECTION 5.02. Indemnification by Educational........................................ 10
SECTION 5.03. Limitations on Indemnification Obligations............................ 11
SECTION 5.04. Procedures for Indemnification of Third Party Claims.................. 11
SECTION 5.05. Indemnification Payments.............................................. 12
SECTION 5.06. Other Adjustments..................................................... 12
SECTION 5.07. Survival of Indemnities............................................... 12
ARTICLE VI
COVENANTS
SECTION 6.01. Provision of Corporate Records........................................ 12
SECTION 6.02. Access to Information................................................. 13
SECTION 6.03. Retention of Records.................................................. 13
SECTION 6.04. Witness Services...................................................... 13
SECTION 6.05. Reimbursement......................................................... 13
SECTION 6.06. Confidentiality....................................................... 14
SECTION 6.07. Further Assurances.................................................... 14
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ARTICLE VII
INSURANCE
SECTION 7.01. Policies and Rights Included Within Assets............................ 14
SECTION 7.02. Post-Distribution Time Claims......................................... 14
SECTION 7.03. Administration; Other Matters......................................... 15
SECTION 7.04. Agreement for Waiver of Conflict and Shared Defense................... 16
SECTION 7.05. Cooperation........................................................... 16
SECTION 7.06. Directors and Officers Liability Insurance............................ 16
ARTICLE VIII
CONDITIONS
SECTION 8.01. Conditions to Obligations of the Company.............................. 16
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Modification or Amendment............................................. 17
SECTION 9.02. Termination........................................................... 17
SECTION 9.03. Waiver; Remedies...................................................... 17
SECTION 9.04. Counterparts.......................................................... 17
SECTION 9.05. GOVERNING LAW......................................................... 18
SECTION 9.06. Notices............................................................... 18
SECTION 9.07. Entire Agreement...................................................... 19
SECTION 9.08. Certain Obligations................................................... 19
SECTION 9.09. Assignment............................................................ 19
SECTION 9.10. Captions.............................................................. 19
SECTION 9.11. Specific Performance.................................................. 19
SECTION 9.12. Severability.......................................................... 19
SECTION 9.13. Third Party Beneficiaries............................................. 19
SECTION 9.14. Fees and Expenses of Enforcement...................................... 19
SECTION 9.15. Expenses.............................................................. 20
SECTION 9.16. Exhibits and Schedules................................................ 20
SECTION 9.17. Consent to Jurisdiction............................................... 20
SECTION 9.18. Ancillary Agreements.................................................. 20
SECTION 9.19. Survival of Agreements................................................ 20
SECTION 9.20. Successors and Assigns................................................ 20
Schedule 7.01(a) Company Policies
Exhibit A Employee Benefits Services and Liability Agreement
Exhibit C Tax Allocation Agreement
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AGREEMENT AND PLAN OF DISTRIBUTION dated as of September , 1997,
between ITT CORPORATION, a Nevada corporation (the "Company"), ITT
EDUCATIONAL SERVICES, INC., a Delaware corporation ("Educational"), and ITT
DESTINATIONS, INC., a Nevada corporation ("Destinations").
W I T N E S E T H:
WHEREAS the Board of Directors of the Company has approved this Agreement,
pursuant to which and subject to the terms of which the Company will distribute
all the issued and outstanding shares of Common Stock, par value $.01 per share,
of Educational ("Educational Common Shares") owned by the Company, to the
holders of record of shares of Common Stock, no par value per share, of the
Company ("Company Common Stock"), other than shares held in the treasury of the
Company;
WHEREAS the purpose of the Distribution is to divest the Company of all
businesses, operations and assets other than the Retained Business, Retained
Assets and Retained Liabilities (each as hereinafter defined) of the Company and
its Subsidiaries (as hereinafter defined);
WHEREAS it is the intention of the parties to this Agreement that for
Federal income tax purposes the Distribution shall qualify as a tax-free spinoff
under Section 355 of the Code (as hereinafter defined); and
WHEREAS in order to effect the separation of ownership of the Company and
Educational, this Agreement sets forth the principal corporate transactions
required to effect the Distribution and sets forth other agreements that will
govern certain other matters following the Distribution.
NOW, THEREFORE, in consideration of the premises, and of the covenants and
agreements set forth herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. General. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Action" shall mean any action, suit, arbitration, inquiry, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency, body or commission or any arbitration tribunal.
"Affiliate" shall mean, when used with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Person
specified.
"Agent" shall mean The Bank of New York, as transfer agent for the Company.
"Ancillary Agreements" shall mean the Employee Benefits Services and
Liability Agreement and the Tax Allocation Agreement.
"Assets" shall mean any and all assets, properties and rights, whether
tangible or intangible, whether real, personal or mixed, whether fixed,
contingent or otherwise, and wherever located, including, without limitation,
the following:
(i) real property interests (including leases), land, plants,
buildings and improvements;
(ii) machinery, equipment, tooling, vehicles, furniture and fixtures,
leasehold improvements, repair parts, tools, plant, laboratory and office
equipment and other tangible personal property, together with any rights or
claims arising out of the breach of any express or implied warranty by the
manufacturers or sellers of any of such assets or any component part
thereof;
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(iii) inventories, including raw materials, work-in-process, finished
goods, parts, accessories and supplies;
(iv) cash, bank accounts, notes, loans and accounts receivable
(whether current or not current), interests as beneficiary under letters of
credit, advances and performance and surety bonds;
(v) certificates of deposit, banker's acceptances, shares of stock,
bonds, debentures, evidences of indebtedness, certificates of interest or
participation in profit-sharing agreements, collateral-trust certificates,
preorganization certificates or subscriptions, transferable shares,
investment contracts, votingtrust certificates, puts, calls, straddles,
options, swaps, collars, caps and other securities or hedging arrangements
of any kind;
(vi) financial, accounting and operating data and records including,
without limitation, books, records, notes, sales and sales promotional
data, advertising materials, credit information, cost and pricing
information, customer and supplier lists, reference catalogs, payroll and
personnel records, minute books, stock ledgers, stock transfer records and
other similar property, rights and information;
(vii) patents, patent applications, trademarks, trademark applications
and registrations, trade names, service marks, service ▇▇▇▇ applications
and registrations, service names, copyrights and copyright applications and
registrations, commercial and technical information including engineering,
production and other designs, drawings, specifications, formulae,
technology, computer and electronic data processing programs and software,
inventions, processes, trade secrets, know-how, confidential information
and other proprietary property, rights and interest and all rights thereto;
(viii) agreements, leases, contracts, sale orders, purchase orders,
open bids and other commitments and all rights therein;
(ix) prepaid expenses, deposits and retentions held by third parties;
(x) claims, causes of action, choses in action, rights under insurance
policies, rights under express or implied warranties, rights of recovery,
rights of set-off, rights of subrogation and all other rights of any kind;
(xi) licenses, franchises, permits, authorizations and approvals; and
(xii) goodwill and going concern value.
"Assignee" shall have the meaning set forth in Section 2.06.
"Assignor" shall have the meaning set forth in Section 2.06.
"Claims Administration" shall mean the processing of claims made under
Company Policies, including, without limitation, the reporting of losses or
claims to insurance carriers (including as a result of reports provided to
Destinations by the Company or Educational), management and defense of claims,
the settlement of claims (except to the extent settlement authority remains with
another party as contemplated by the second proviso to Section 7.03(a)) and
providing for appropriate releases upon settlement of claims.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
Treasury regulations promulgated thereunder, including any successor
legislation.
"Company" shall have the meaning set forth in the heading of this
Agreement.
"Company Common Stock" shall have the meaning set forth in the recitals to
this Agreement.
"Company Debt" shall mean all Liabilities of the Company and its
Subsidiaries under or arising from (i) the Credit Agreement dated as of
September , 1997, among ITT Promedia LLC CVA, a Belgian company and a wholly
owned Subsidiary of the Company ("Promedia"), The Chase Manhattan Bank, as
administrative agent, and the Lenders party thereto, (ii) the Credit Agreement
dated as of September , 1997, among ITT Publimedia B.V., a Dutch company and a
wholly owned Subsidiary of the Company ("Publimedia"), The Chase Manhattan Bank,
as administrative agent, and the Lenders party thereto, (iii) [the Senior
Secured Credit Agreement dated as of September , 1997, among the Company, The
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Chase Manhattan Bank, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P., Chase Securities Inc.
and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P.], (iv) the DM million %
Senior Subordinated Notes due 2007 issued by Promedia, (v) the $
million % Senior Subordinated Notes due 2007 issued by Promedia, (vi) the
$ million % Senior Subordinated Notes due 2007 issued by Publimedia
and (vii) any debt securities or other indebtedness issued in exchange for or
replacement of, or the proceeds of which are otherwise directly or indirectly
used to repay, any of the foregoing Liabilities, and any indenture, credit
agreement, underwriting agreement, purchase agreement, security agreement,
credit support agreement or other agreement or document related to any of the
foregoing.
"Company Indemnitees" shall mean the Company, each Affiliate of the Company
after the Distribution Date, each of their respective directors, officers,
employees and agents and each of the heirs, executors, successors and assigns of
any of the foregoing.
"Company Policies" shall mean all Policies, current or past, which are or
at any time were maintained by or on behalf of or for the benefit or protection
of the Company or any of its predecessors, or current or past directors,
officers, employees or agents thereof, including, without limitation, the
Policies identified on Schedule 7.01(a) hereto.
"Conveyancing and Assumption Instruments" shall have the meaning set forth
in Section 2.04.
"Destinations" shall have the meaning set forth in the heading to this
Agreement.
"Destinations Assets" shall mean (a) all the Assets of the Company and its
Subsidiaries, except for (i) the Retained Assets and (ii) the Educational Assets
and (b) the rights of Destinations and its Subsidiaries under this Agreement,
the Destinations Distribution Agreement and the Ancillary Agreements.
"Destinations Business" shall mean all the businesses, Assets and
operations heretofore, currently or hereafter conducted or owned by the Company
and its Subsidiaries and Affiliates, including all businesses, Assets,
operations or investments conducted or owned by the Company and its Subsidiaries
and Affiliates that have been sold or otherwise disposed of or discontinued
except for (i) the Retained Business and (ii) the Educational Business.
"Destinations Distribution" shall mean the distribution by the Company to
holders of record of Company Common Stock of all the shares of the common stock,
par value $.01 per share, of Destinations, as provided in the Destinations
Distribution Agreement.
"Destinations Distribution Agreement" shall mean the Agreement and Plan of
Distribution dated as of September , 1997, between the Company and
Destinations.
"Destinations Indemnitees" shall mean Destinations, each Affiliate of
Destinations after the Distribution Date, each of their respective directors,
officers, employees and agents and each of the heirs, executors, successors and
assigns of any of the foregoing.
"Destinations Liabilities" shall mean, collectively, whenever arising
whether prior to, at or following the Distribution Time, all the Liabilities of
the Company, Destinations and Educational and their respective Subsidiaries or
Affiliates (including, without limitation, Liabilities of the Company under the
Educational Intercompany Agreements or arising primarily out of or relating
primarily to the management or conduct of the Destinations Business), except for
(i) the Retained Liabilities and (ii) the Educational Liabilities.
"Distribution" shall mean the distribution on the Distribution Date to
holders of record as of the Distribution Record Date of shares of Company Common
Stock, other than shares held in the treasury of the Company, of all the
Educational Common Shares (together with the associated Rights) owned by the
Company on the basis of of an Educational Common Share for each
outstanding share of Company Common Stock.
"Distribution Date" shall mean such date as hereafter may be determined by
the Company's Board of Directors as the date as of which the Distribution shall
be effected.
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"Distribution Fraction" shall mean a fraction the numerator of which is the
number of Educational Common Shares owned by the Company as of the Distribution
Record Date and the denominator of which is the number of shares of Company
Common Stock outstanding (excluding any shares of Company Common Stock held in
the Company's treasury) as of the Distribution Record Date.
"Distribution Record Date" shall mean such date as hereafter may be
determined by the Company's Board of Directors as the record date for the
Distribution.
"Distribution Time" shall mean 11:59 p.m., New York City time, on the
Distribution Date.
"Educational" shall have the meaning set forth in the heading of this
Agreement.
"Educational Assets" shall mean (a) all the Assets of the Company and its
Subsidiaries relating primarily to, and used or held for use in, the Educational
Business (exclusive of the "ITT" name, ▇▇▇▇ and logo and any rights relating
thereto), including (i) the Assets included on the unaudited consolidated
balance sheet of Educational as of June 30, 1997, and any assets acquired by the
Company or any of its Subsidiaries relating primarily to the Educational
Business from July 1, 1997 and (ii) all the capital stock owned by the Company
of Educational and the rights of the Company in Subsidiaries of Educational and
(b) the rights of Educational and its Subsidiaries under this Agreement, the
Destinations Distribution Agreement and the Ancillary Agreements.
"Educational Business" shall mean all the businesses, Assets (exclusive of
the "ITT" name, ▇▇▇▇ and logo and any rights relating thereto) and operations
heretofore, currently or hereafter conducted or owned by Educational and its
Subsidiaries, including all businesses, Assets, operations or investments
conducted or owned by Educational or any of its Subsidiaries that have been sold
or otherwise disposed of or discontinued prior to the Distribution Time.
"Educational Common Shares" shall have the meaning set forth in the
recitals to this Agreement.
"Educational Indemnitees" shall mean Educational, each Affiliate of
Educational after the Distribution, each of their respective directors,
officers, employees and agents and each of the heirs, executors, successors and
assigns of any of the foregoing.
"Educational Intercompany Agreements" shall mean the (i) Registration
Rights Agreement, dated as of December 19, 1994, between ITT Corporation, a
Delaware corporation which has been renamed "ITT Industries, Inc."
("Industries") and Educational, (ii) Tax Sharing Agreement, dated as of December
27, 1994, between Industries and Educational, (iii) Intercompany Agreement,
dated as of December 19, 1994, between Industries and Educational, (iv) Trade
Name and Service ▇▇▇▇ License Agreement, dated as of December 19, 1994, between
Industries and Educational, (v) Employee Benefits and Administrative Services
Agreement, dated as of December 19, 1994, between Industries and Educational and
(vi) Treasury Services and Credit Facilities Agreement, dated as of August 15,
1994, between Industries and Educational, the rights and obligations of
Industries under each of which have been assumed by the Company, each as amended
or supplemented or otherwise modified on or prior to the date hereof.
"Educational Liabilities" shall mean collectively, whenever arising,
whether prior to, at or following the Distribution Time, (i) all Liabilities of
Educational under this Agreement and any of the Ancillary Agreements and (ii)
all the Liabilities of the Company, Destinations or Educational, and any of
their respective Subsidiaries and Affiliates, arising primarily out of or
relating primarily to the management or conduct of the Educational Business;
provided that (i) Liabilities of Educational or any of its Subsidiaries under
any agreement to which Educational or any of its Subsidiaries is a party and
(ii) Liabilities of the Company related to litigation arising from or related to
the Educational Business (including in connection with ▇▇▇▇▇▇▇▇, et al. v. ITT
Educational Services, Inc., et al. and similar Actions) shall be Educational
Liabilities.
"Employee Benefits Services and Liability Agreement" shall mean the
Employee Benefits Services and Liability Agreement between the Company,
Destinations and Educational, substantially in the form of Exhibit A hereto.
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"Indemnifiable Losses" shall mean any and all losses (whether or not
arising from third party claims), liabilities, claims, damages, demands, costs
or expenses (including, without limitation, reasonable attorneys' and
accountants' fees and expenses and any and all out-of-pocket expenses)
whatsoever, including all losses, liabilities, claims, damages, demands, costs
or expenses reasonably incurred in investigating, preparing for or defending
against any Actions or potential Actions or in asserting, preserving or
enforcing any rights hereunder or under any Ancillary Agreement.
"Indemnifying Party" shall have the meaning set forth in Section 5.03.
"Indemnitee" shall have the meaning set forth in Section 5.03.
"Information" of a party shall mean any and all information that such party
or any of its Representatives furnish or have furnished to the receiving party
or any of its Representatives whether furnished orally or in writing or by any
other means or gathered by inspection and regardless of whether the same is
specifically marked or designated as "confidential" or "proprietary", together
with any and all notes, memoranda, analyses, compilations, studies or other
documents (whether in hard copy or electronic media) prepared by the receiving
party or any of its Representatives which contain or otherwise reflect such
Information, together with any and all copies, extracts or other reproductions
of any of the same; provided, however, that for the purposes hereof all
information relating to the Retained Business or the Retained Assets in the
possession of Educational or any of its Subsidiaries at the Distribution Time
shall be deemed to have been furnished by the Company and all information
relating to Educational, the Educational Business or the Educational Assets in
the possession of the Company at the Distribution Time shall be deemed to have
been furnished by Educational; provided further, however, that the term
"Information" does not include information that:
(a) at the time of disclosure is generally available to and known by
the public (other than as a result of a violation of this Agreement,
directly or indirectly, by a party to this Agreement or any of its
Representatives);
(b) is available to the receiving party on a non-confidential basis
from a source other than the providing party or its Representatives,
provided that such source is not known by the receiving party to be subject
to a confidentiality agreement regarding such information; or
(c) has been independently acquired or developed by the receiving
party without violation of any of the obligations of the receiving party or
its Representatives under this Agreement.
"Information Statement" shall mean the Information Statement to be sent to
the holders of shares of Company Common Stock in connection with the
Distribution, including any amendment or supplement thereto.
"Insurance Administration" shall mean, with respect to each Company Policy,
the accounting for premiums, retrospectively-rated premiums, defense costs,
indemnity payments, deductibles and retentions, as appropriate, under the terms
and conditions of each such Company Policy, and the distribution of Insurance
Proceeds as contemplated by this Agreement.
"Insurance Proceeds" shall mean those monies (i) received by an insured
from an insurance carrier or (ii) paid by an insurance carrier on behalf of an
insured, in either case net of any applicable premium adjustment,
retrospectively-rated premium, deductible, retention, or cost of reserve paid or
held by or for the benefit of such insured.
"Insured Claims" shall mean those Liabilities that, individually or in the
aggregate, are covered within the terms and conditions of any Company Policy,
whether or not subject to deductibles, co-insurance, uncollectability or
retrospectively-rated premium adjustments, but only to the extent that such
Liabilities are within applicable Company Policy limits, including aggregates.
"Investment Agreement" shall mean the Investment Agreement, dated as of
July 15, 1997, between the Company and CDRV Acquisition, L.L.C., as the same may
be amended from time to time.
"Liabilities" shall mean any and all debts, liabilities and obligations,
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising, including,
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without limitation, those debts, liabilities and obligations arising under any
law, rule, regulation, Action, threatened Action, order or consent decree of any
court, any governmental or other regulatory or administrative agency or
commission or any award of any arbitration tribunal, and those arising under any
contract, guarantee, commitment or undertaking.
"Nonassignable Contract" shall have the meaning set forth in Section 2.06.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Person" shall mean any natural person, corporation, business trust,
limited liability company, joint venture, association, company, partnership or
government, or any agency or political subdivision thereof.
"Policies" shall mean insurance policies and insurance contracts of any
kind (other than life and benefits policies or contracts), including, without
limitation, primary, excess and umbrella policies, commercial general liability
policies, fiduciary liability, automobile, aircraft, property and casualty,
workers' compensation and employee dishonesty insurance policies, bonds and
self-insurance and captive insurance company arrangements, together with the
rights, benefits and privileges thereunder.
"Representatives" of either party shall mean such party's Affiliates,
directors, officers, partners, employees, agents or other representatives
(including attorneys, accountants and financial advisors).
"Retained Assets" shall mean (a) all the Assets of the Company and its
Subsidiaries relating primarily to, and used or held for use in, the Retained
Business (exclusive of the "ITT" name, ▇▇▇▇ and logo and any rights relating
thereto), including (i) the Assets included on the unaudited consolidated
balance sheet of World Directories as of June 30, 1997, and any assets acquired
by the Company or any of its Subsidiaries relating primarily to the Retained
Business from July 1, 1997, (ii) all the capital stock of World Directories and
the rights of the Company in Subsidiaries of World Directories and (iii) equity
interests owned by World Directories, directly or indirectly, in Persons that do
not constitute Subsidiaries and (b) the rights of the Company and its
Subsidiaries under this Agreement, the Destinations Distribution Agreement, the
Investment Agreement and the Ancillary Agreements.
"Retained Business" shall mean all the businesses, Assets (exclusive of the
"ITT" name, ▇▇▇▇ and logo and any rights relating thereto) and operations
heretofore, currently or hereafter conducted or owned by World Directories and
its Subsidiaries and Persons in which it has an equity interest, including all
businesses, Assets, operations or investments conducted or owned by World
Directories or any of its Subsidiaries and Persons in which it has an equity
interest that have been sold or otherwise disposed of or discontinued.
"Retained Liabilities" shall mean collectively, whenever arising, whether
prior to, at or following the Distribution Time, (i) all the Liabilities of the
Company and its Subsidiaries under this Agreement, the Destinations Distribution
Agreement and any of the Ancillary Agreements, (ii) all the Liabilities of the
parties hereto and any of their respective Subsidiaries or Affiliates arising
primarily out of or relating primarily to the management or conduct of the
Retained Business and (iii) the Company Debt.
"SEC" shall mean the Securities and Exchange Commission.
"Subsidiary" shall mean any corporation, partnership or other entity of
which another entity (i) 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 interests of such corporation, partnership, joint venture
or other entity shall or might have such voting power upon the occurrence of any
contingency) or (ii) is a general partner or an entity performing similar
functions (e.g., a trustee or managing member). For purposes of this Agreement,
ITT-Dow ▇▇▇▇▇ Television and its Subsidiaries shall be deemed to be Subsidiaries
of Destinations and the interests of World Directories in Persons conducting
business in South Africa, Japan and Portugal shall be deemed to be a Subsidiary
of the Company.
"Tax" shall mean all Federal, state, local and foreign taxes and
assessments, including all interest, penalties and additions imposed with
respect to such amounts.
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"Tax Allocation Agreement" shall mean the Tax Allocation Agreement between
Destinations, the Company and Educational, substantially in the form of Exhibit
C hereto, as and to the extent amended and restated as of the closing of the
transactions contemplated by the Investment Agreement.
"Third Party Claim" shall have the meaning set forth in Section 5.04.
"World Directories" shall mean ITT World Directories, Inc., a Delaware
corporation and a wholly owned Subsidiary of the Company.
SECTION 1.02. References; Interpretation. References to an "Exhibit" or
to a "Schedule" are, unless otherwise specified, to one of the Exhibits or
Schedules attached to this Agreement, and references to a "Section" or "Article"
are, unless otherwise specified, to one of the Sections and Articles of this
Agreement. Any time the word "including" is used herein it means "including
without limitation".
ARTICLE II
CERTAIN TRANSACTIONS
SECTION 2.01. Transfer of Certain Businesses and Assets. Effective as of
the Distribution Time and except as otherwise expressly provided in this
Agreement or any of the Ancillary Agreements, (i) the Company, on behalf of
itself and its Subsidiaries, hereby contributes, grants, conveys, assigns,
transfers and delivers to Educational all of the Company's and its Subsidiaries'
right, title and interest in and to (a) the business and legal entities and
other Assets that comprise the Educational Business (other than the Educational
Common Shares) and (b) the Educational Assets, (other than the Educational
Common Shares), (ii) Educational, on behalf of itself and its Subsidiaries,
hereby contributes, grants, conveys, assigns, transfers and delivers to the
Company all of Educational's and its Subsidiaries' right, title and interest in
and to (a) the business and legal entities and other Assets that comprise the
Retained Business and (b) the Retained Assets and (iii) Educational, on behalf
of itself and its Subsidiaries, hereby contributes, grants, conveys, assigns,
transfers and delivers to Destinations all of Educational's and its Subsidiaries
right, title and interest in and to (a) the business and legal entities and
other Assets that comprise the Destinations Business and (b) the Destinations
Assets.
SECTION 2.02. Assumption of Liabilities. Effective as of the Distribution
Time and except as otherwise specifically provided in this Agreement or any of
the Ancillary Agreements, (i) Educational hereby unconditionally assumes and
undertakes to pay, perform and discharge when due in accordance with their
terms, on behalf of itself and its Subsidiaries, all the Educational Liabilities
and (ii) each of the Company and Destinations hereby retains, and Educational
and its Subsidiaries do not assume and will have no liability hereunder with
respect to, all the Retained Liabilities and the Destinations Liabilities,
respectively.
SECTION 2.03. Transfer of Certain Licenses and Permits. (a) In
furtherance of the contribution, grant, conveyance, assignment, transfer and
delivery of the Educational Assets and the Educational Business and the
assumption of the Educational Liabilities set forth in this Article II, at or
prior to the Distribution Time, all transferrable licenses, permits and
authorizations issued by governmental or regulatory entities which relate to the
Educational Business but which are held in the name of the Company or any of its
Subsidiaries (other than Educational or its Subsidiaries), or any of their
respective Representatives, or otherwise shall be duly and validly transferred
by the Company or such Subsidiary or Representative to Educational or the
appropriate Subsidiary of Educational.
(b) In furtherance of the contribution, grant, conveyance, assignment,
transfer and delivery of the Educational Assets and the Educational Business and
the assumption of the Educational Liabilities set forth in this Article II, at
or prior to the Distribution Time, (i) all transferrable licenses, permits and
authorizations issued by governmental or regulatory entities which relate to the
Retained Business but which are held in the name of Educational or any of its
Subsidiaries, or any of their respective Representatives, or otherwise shall be
duly and validly transferred by Educational or such Subsidiary or Representative
to the Company or the appropriate Subsidiary of the Company and (ii) all
transferrable licenses, permits and authorizations issued by governmental or
regulatory entities which relate to the Destinations Business but which are held
in the name
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of Educational or any of its Subsidiaries, or any of their respective
Representatives, or otherwise shall be duly and validly transferred by
Educational or such Subsidiary or Representative to Destinations or the
appropriate Subsidiary of Destinations.
SECTION 2.04. Transfer and Assumption Documentation. In furtherance of
the contribution, grant, conveyance, assignment, transfer, delivery and
assumption of the Assets and Liabilities set forth in this Article II, at or
prior to the Distribution Time, (i) the parties hereto shall execute and
deliver, and cause their respective Subsidiaries to execute and deliver, such
deeds, bills of sale, stock powers, certificates of title, assignments of leases
and contracts and other instruments of contribution, grant, conveyance,
assignment, transfer and delivery necessary to evidence such contribution,
grant, conveyance, assignment, transfer and delivery (collectively, the
"Conveyancing Instruments") and (ii) each party hereto or the appropriate
Subsidiary of such party shall execute and deliver such instruments of
assumption (together with the Conveyancing Instruments, the "Conveyancing and
Assumption Instruments") as and to the extent necessary to evidence such
assumption.
SECTION 2.05. Intercompany Accounts. All intercompany receivables,
payables and loans (other than receivables, payables and loans otherwise
specifically provided for in any of the Ancillary Agreements or hereunder)
between any party hereto or any of its Subsidiaries, on the one hand, and any
other party hereto or any of its Subsidiaries, on the other hand, including,
without limitation, in respect of any cash balances, any cash balances
representing deposited checks or drafts for which only a provisional credit has
been allowed or any cash held in any centralized cash management system, shall,
as of the Distribution Time, be settled or otherwise eliminated. Prior to or on
the Distribution Date, Destinations will pay to Educational, by wire transfer of
immediately available funds, an amount equal to the amount in the Cash Invested
With ITT account as of the date of such payment, including all accrued interest
as of such payment date.
SECTION 2.06. Assignments and Transfers Not Effected Prior to the
Distribution. Anything contained herein to the contrary notwithstanding, (a)
this Agreement shall not constitute an agreement to assign any agreement,
contract, lease, license, sales order, purchase order, open bid or other
commitment if an assignment or attempted assignment of the same without the
consent of a third party would constitute a breach thereof or in any way impair
the rights of Educational, the Company or Destinations or any of their
respective Subsidiaries thereunder (any such item being referred to as a
"Nonassignable Contract") and (b) nothing herein shall be deemed to require the
transfer of any Assets or the assumption of any Liabilities which by their terms
or operation of law cannot be transferred. To the extent that any assignments or
transfers contemplated by this Article II shall not have been consummated at or
prior to the Distribution Time, the parties hereto and their respective
Subsidiaries shall cooperate and use reasonable best efforts to obtain any
necessary consents or approvals for the assignment of all Nonassignable
Contracts and the transfer of all Assets and Liabilities contemplated to be
assigned or transferred pursuant to this Article II and shall otherwise
cooperate and use reasonable best efforts to effect any such assignments or
transfers as promptly following the Distribution Time as shall be practicable.
In the event that any consent required with respect to a Nonassignable Contract
is not obtained or an attempted assignment thereof would be ineffective or would
impair either party's rights under any such Nonassignable Contract, then the
party obligated to assign such Nonassignable Contract (the "Assignor") will
promptly pay or cause to be paid to the assignee thereof (the "Assignee"), when
received, all monies received by the Assignor with respect to any such
Nonassignable Contract and in consideration thereof the Assignee shall pay,
perform and discharge on behalf of the Assignor all the Assignor's debts,
liabilities, obligations and commitments thereunder in a timely manner and in
accordance with the terms thereof. In the event that any such transfer of Assets
or Liabilities has not been consummated, from and after the Distribution Time
the party retaining such Asset or Liability 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. The parties
hereto will take such other action as may be reasonably requested by the
Assignee or 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 Nonassignable Contract been assigned, or such Asset or Liability been
transferred, as contemplated hereby. As and when any required consent to the
assignment of a Nonassignable Contract is
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obtained or any such Asset or Liability becomes transferable, such assignment or
transfer shall be effected forthwith. The parties agree that, as of the
Distribution Time, each party hereto shall be deemed to have acquired complete
and sole beneficial ownership over all Assets, together with all rights, powers
and privileges incident thereto, and shall be deemed to have assumed all
Liabilities, and all duties, obligations and responsibilities incident thereto,
which such party is entitled to acquire or required to assume pursuant to the
terms of this Agreement or any of the Ancillary Agreements.
SECTION 2.07. Educational Intercompany Agreements. Effective as of the
Distribution Time, each of the Educational Intercompany Agreements (other than
the Trade Name and Service ▇▇▇▇ License Agreement) shall become null and void
and of no further force or effect; provided, however, that the Trade Name and
Service ▇▇▇▇ License Agreement shall stay in full force in accordance with its
terms.
ARTICLE III
THE DISTRIBUTION
SECTION 3.01. Mechanics of Distribution. (a) Delivery of Shares to Agent.
The Company shall deliver to the Agent the share certificates representing all
the Educational Common Shares held by the Company and shall instruct the Agent
to distribute such Educational Common Shares to holders of record of shares of
Company Common Stock on the Distribution Record Date upon notice from the
Company that the conditions to the obligation of the Company to consummate the
Distribution have been satisfied or waived and that the Agent is authorized to
proceed with the distribution of Educational Common Shares. Immediately
following the Distribution, the Company shall not own any capital stock of
Educational.
(b) Subject to Section 3.02, the Distribution shall be effected by the
distribution to each holder of record of Company Common Stock, as of the
Distribution Record Date, of certificates representing, in the aggregate, the
Distribution Fraction of an Educational Common Share for each share of Company
Common Stock (rounded down to the nearest whole Educational Common Share) and
cash in lieu of fractional Educational Common Shares as provided in Section
3.02. The Company shall instruct the Agent to distribute the Educational Common
Shares and cash in lieu of fractional shares as promptly as practicable after
the Distribution Time.
SECTION 3.02. Fractional Shares. No certificate or scrip representing
fractional Educational Common Shares shall be issued as part of the Distribution
and in lieu of receiving fractional Educational Common Shares, each holder of
Company Common Stock who would otherwise be entitled to receive a fractional
Educational Common Share pursuant to the Distribution will receive cash for such
fractional share computed as described below. The Company shall instruct the
Agent to determine the number of whole Educational Common Shares and fractional
Educational Common Shares allocable to each holder of record of Company Common
Stock as of the Distribution Record Date, to aggregate all such fractional
Educational Common Shares into whole shares and sell the whole shares obtained
thereby in the open market at then prevailing prices on behalf of holders who
otherwise would be entitled to receive fractional share interests and to
distribute to each such holder such holder's ratable share of the total net
proceeds of such sale.
SECTION 3.03. Timing of Distribution. The Board of Directors of the
Company shall, or shall authorize certain officers of the Company to, formally
declare the Distribution and shall authorize the Company to pay it at the
Distribution Time, subject to the satisfaction or waiver of the conditions set
forth in Article VIII. The Distribution shall be deemed to be effective upon
notification by the Company to the Agent that the conditions to the obligations
of the Company to consummate the Distribution have been satisfied or waived and
that the Agent is authorized to proceed with the distribution of Educational
Common Shares and cash in lieu of fractional shares.
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ARTICLE IV
MUTUAL RELEASE
SECTION 4.01. Mutual Release, etc. Effective as of the Distribution Time
and except as otherwise specifically set forth in this Agreement or any of the
Ancillary Agreements, each of Educational, the Company and Destinations, on its
own behalf and on behalf of each of its respective Subsidiaries, releases and
forever discharges the others and its Subsidiaries, and its and their respective
officers, directors, agents, Affiliates, record and beneficial security holders
(including, without limitation, trustees and beneficiaries of trusts holding
such securities), advisors and Representatives (in their respective capacities
as such) and their respective heirs, executors, administrators, successors and
assigns, of and from all debts, demands, actions, causes of action, suits,
accounts, covenants, contracts, agreements, damages, claims and Liabilities
whatsoever of every name and nature, both in law and in equity, which the
releasing party has or ever had, which arise out of or relate to events,
circumstances or actions taken by such other party, occurring or failing to
occur, or any conditions existing, on or prior to the Distribution Time;
provided, however, that the foregoing general release shall not apply to (i) any
Liabilities (including Liabilities with respect to indemnification) assumed,
transferred, assigned, allocated or arising under this Agreement, the
Destinations Distribution Agreement or any of the Ancillary Agreements and shall
not affect any party's right to enforce this Agreement, the Destinations
Distribution Agreement or any Ancillary Agreement in accordance with its terms
or (ii) any Liability the release of which would result in the release of any
Person other than a Person released pursuant to this Section 4.01 (provided that
the parties agree not to bring suit or permit any of their Subsidiaries to bring
suit against any Person with respect to any Liability to the extent such Person
would be released with respect to such Liabilities by this Section 4.01 but for
the proviso to this clause (ii)). Each party understands and agrees that, except
as otherwise specifically provided in this Agreement, the Destinations
Distribution Agreement or the Ancillary Agreements, neither party is, in this
Agreement or the Ancillary Agreements or otherwise, representing or warranting
in any way as to the Assets, business or Liabilities transferred, assumed or
retained as contemplated hereby or as to any consents or approvals required in
connection with the consummation of the transactions contemplated by this
Agreement, the Destinations Distribution Agreement or the Ancillary Agreements,
it being agreed and understood that each party shall take or keep all of its
Assets "as is" and that it shall bear the economic and legal risk that
conveyance of such Assets shall prove to be insufficient or that the title to
any Assets shall be other than good and marketable and free from encumbrances of
any nature whatsoever.
ARTICLE V
INDEMNIFICATION
SECTION 5.01. Indemnification by the Company. Except as otherwise
specifically set forth in any provision of this Agreement or of any Ancillary
Agreement, the Company shall indemnify, defend and hold harmless the Educational
Indemnitees from and against, and pay or reimburse the Educational Indemnitees
for, any and all Indemnifiable Losses, as incurred, of the Educational
Indemnitees arising out of, relating to or resulting from (i) the Retained
Liabilities, the Retained Assets or the Retained Business, (ii) any Conveyancing
and Assumption Instrument delivered for the benefit of Educational or any of its
Subsidiaries or (iii) the breach by the Company or any of its Subsidiaries of
any provision of this Agreement or of any Ancillary Agreement, in each case,
whether such Indemnifiable Losses relate to or arise from events, occurrences,
actions, omissions, facts or circumstances occurring, existing or asserted at,
before or after the Distribution Time.
SECTION 5.02. Indemnification by Educational. Except as otherwise
specifically set forth in any provision of this Agreement or of any Ancillary
Agreement, Educational shall indemnify, defend and hold harmless the Company
Indemnitees from and against, and pay or reimburse the Company Indemnitees and
the Destinations Indemnitees for, any and all Indemnifiable Losses, as incurred,
of the Company Indemnitees or the Destinations Indemnitees arising out of or
resulting from (i) the Educational Liabilities, the Educational Assets or the
Educational Business, (ii) any Conveyancing and Assumption Instrument delivered
for the benefit of the Company or Destinations or any of their Subsidiaries or
(iii) the breach by Educational
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or any of its Subsidiaries of any provision of this Agreement or of any
Ancillary Agreement, in each case, whether such Indemnifiable Losses relate to
or arise from events, occurrences, actions, omissions, facts or circumstances
occurring, existing or asserted at, before or after the Distribution Time.
SECTION 5.03. Limitations on Indemnification Obligations. The amount that
any party (an "Indemnifying Party") is or may be required to pay to any other
Person (an "Indemnitee") pursuant to Section 5.01 or Section 5.02, as
applicable, shall be reduced (retroactively or prospectively) by any Insurance
Proceeds or other amounts actually recovered by or on behalf of such Indemnitee
in respect of the related Indemnifiable Loss. If an Indemnitee shall have
received the payment required by this Agreement from an Indemnifying Party in
respect of an Indemnifiable Loss and shall subsequently actually receive
Insurance Proceeds or other amounts in respect of such Indemnifiable Loss, then
such Indemnitee shall pay to such Indemnifying Party a sum equal to the amount
of such Insurance Proceeds or other amounts actually received, up to the
aggregate amount of any payments made by such Indemnifying Party pursuant to
this Agreement in respect of such Indemnifiable Loss.
SECTION 5.04. Procedures for Indemnification of Third Party Claims. If a
claim or demand is made against an Indemnitee by any Person who is not a party,
or an Affiliate of a party, to this Agreement or any of the Ancillary Agreements
(a "Third Party Claim") as to which such Indemnitee is entitled to
indemnification pursuant to this Agreement, such Indemnitee shall notify the
Indemnifying Party in writing, and in reasonable detail, of the Third Party
Claim promptly (and in any event within 10 business days) after receipt by such
Indemnitee of written notice of the Third Party Claim; provided, however, that
failure to give such notification shall not affect the indemnification provided
hereunder except to the extent that the defense or conduct of such Third Party
Claim by the Indemnifying Party shall have been actually and materially
prejudiced as a result of such failure (except that the Indemnifying Party shall
not be liable for any expenses incurred during the period in which the
Indemnitee failed to give such notice); provided, however, in no event shall
such failure to notify the Indemnifying Party (i) constitute prejudice suffered
by the Indemnifying Party if it has otherwise received notice of the Third Party
Claim or (ii) relieve it from any liability or obligation that it may otherwise
have to such Indemnitee. Thereafter, the Indemnitee shall deliver to the
Indemnifying Party, promptly (and in any event within 10 business days) after
the Indemnitee's receipt thereof, copies of all notices and documents (including
court papers) received by the Indemnitee relating to the Third Party Claim.
If a Third Party Claim is made against an Indemnitee, the Indemnifying
Party shall be entitled to participate in the defense thereof and, if it so
chooses and acknowledges in writing its obligation to indemnify the Indemnitee
therefor, to assume the defense thereof with counsel selected by the
Indemnifying Party; provided that such counsel is not reasonably objected to by
the Indemnitee. Should the Indemnifying Party so elect to assume the defense of
a Third Party Claim, the Indemnifying Party shall not be liable to the
Indemnitee for legal or other expenses subsequently incurred by the Indemnitee
in connection with the defense thereof. If the Indemnifying Party assumes such
defense, the Indemnitee shall have the right to participate in the defense
thereof and to employ counsel, at its own expense, separate from the counsel
employed by the Indemnifying Party, it being understood that the Indemnifying
Party shall have full control of such defense. The Indemnifying Party shall be
liable for the fees and expenses of counsel employed by the Indemnitee for any
period during which the Indemnifying Party has failed to assume the defense
thereof.
If the Indemnifying Party so elects to assume the defense of any Third
Party Claim, all of the Indemnitees shall cooperate with the Indemnifying Party
in the defense or prosecution thereof. Such cooperation shall include the
retention and (upon the Indemnifying Party's request) the provision to the
Indemnifying Party of records and information which are reasonably relevant to
such Third Party Claim and making employees available on a mutually convenient
basis to provide additional information regarding any material provided
hereunder.
Whether or not the Indemnifying Party shall have assumed the defense of a
Third Party Claim, in no event will the Indemnitee admit any liability with
respect to, or settle, compromise or discharge, such Third Party Claim without
the Indemnifying Party's prior written consent (which consent shall not be
unreasonably withheld); provided, however, that the Indemnitee shall have the
right to settle, compromise or discharge such Third Party Claim without the
consent of the Indemnifying Party if the Indemnitee releases in writing the
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Indemnifying Party from its indemnification obligation hereunder with respect to
such Third Party Claim and such settlement, compromise or discharge would not
otherwise adversely affect the Indemnifying Party. If the Indemnifying Party
shall have assumed the defense of a Third Party Claim, the Indemnitee will agree
to any settlement, compromise or discharge of a Third Party Claim that the
Indemnifying Party may recommend and that by its terms does not obligate the
Indemnitee to pay any of the liability in connection with such Third Party Claim
and releases the Indemnitee completely and unconditionally in connection with
such Third Party Claim and does not provide for injunctive or other nonmonetary
relief affecting the Indemnitee.
Notwithstanding the foregoing, the Indemnifying Party shall not be entitled
to assume the defense of any Third Party Claim (and shall be liable for the
reasonable fees and expenses of counsel incurred by the Indemnitee in defending
such Third Party Claim) if the Third Party Claim seeks an order, injunction or
other equitable relief or relief for other than money damages against the
Indemnitee which the Indemnitee reasonably determines, after conferring with its
counsel, cannot be separated from any related claim for money damages. If such
equitable relief or other relief portion of the Third Party Claim can be so
separated from that for money damages, the Indemnifying Party shall be entitled
to assume the defense of the portion relating to money damages.
Notwithstanding the foregoing, the Indemnifying Party shall not be entitled
to assume the defense of any Third Party Claim (and shall be liable for the
reasonable fees and expenses of counsel incurred by the Indemnitee in defending
such Third Party Claim) if the Indemnitee determines in good faith, based on
written opinion of counsel, that the Indemnitee has available to it one or more
defenses or counterclaims that are inconsistent with one or more of those that
may be available to the Indemnifying Party in respect of such Third Party Claim.
SECTION 5.05. Indemnification Payments. Indemnification required by this
Article V shall be made by periodic payments of the amount thereof during the
course of the investigation, preparation or defense, as and when bills are
received or loss, liability, claim, damage, cost or expense is incurred.
SECTION 5.06. Other Adjustments. (i) The amount of any Indemnifiable Loss
shall be (x) increased to take into account any net Tax cost actually incurred
by the Indemnitee arising from any payments received from the Indemnifying Party
(grossed up for such increase) and (y) reduced to take account of any net Tax
benefit actually realized by the Indemnitee arising from the incurrence or
payment of any such Indemnifiable Loss. In computing the amount of such Tax cost
or Tax benefit, the Indemnitee shall be deemed to recognize all other items of
income, gain, loss, deduction or credit before recognizing any item arising from
the receipt of any payment with respect to an Indemnifiable Loss or the
incurrence or payment of any Indemnifiable Loss.
(ii) In addition to any adjustments required pursuant to Section 5.03
hereof or clause (i) of this Section 5.06, if the amount of any Indemnifiable
Loss shall, at any time subsequent to the payment required by this Agreement, be
reduced by recovery, settlement or otherwise, the amount of such reduction, less
any expenses incurred in connection therewith, shall promptly be repaid by the
Indemnitee to the Indemnifying Party, up to the aggregate amount of any payments
received from such Indemnifying Party pursuant to this Agreement in respect of
such Indemnifiable Loss.
SECTION 5.07. Survival of Indemnities. The obligations of the parties
under this Article V shall survive the sale or other transfer by any of them of
any Assets or businesses or the assignment by any of them of any Liabilities,
with respect to any Indemnifiable Loss of any Indemnitee related to such Assets,
businesses or Liabilities.
ARTICLE VI
COVENANTS
SECTION 6.01. Provision of Corporate Records. (a) Subject to Section
6.01(b), prior to or as promptly as practicable after the Distribution Time, the
Company shall deliver to Educational (at the expense of Educational) copies of
all corporate books and records in the possession of the Company and its
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Subsidiaries (other than Educational and its Subsidiaries) relating directly and
primarily to the Educational Assets, the Educational Business or the Educational
Liabilities, including, in each case, all agreements, litigation files and
government filings, whether or not active. From and after the Distribution Time,
all such copies shall be the property of Educational.
(b) Prior to or as promptly as practicable after the Distribution Time,
Educational shall deliver to the Company copies of all corporate books and
records in the possession of Educational and its Subsidiaries relating directly
and primarily to the Retained Assets, the Retained Business or the Retained
Liabilities, including, in each case, all agreements, litigation files and
government filings, whether or not active. From and after the Distribution Time,
all such books, records and other items or such copies thereof shall be the
property of the Company.
(c) Prior to or as promptly as practicable after the Distribution Time,
Educational shall deliver to Destinations copies of all corporate books and
records in the possession of Educational and its Subsidiaries relating directly
and primarily to the Destinations Assets, the Destinations Business or the
Destinations Liabilities, including, in each case, all agreements, litigation
files and government filings, whether or not active. From and after the
Distribution Time, all such books, records and other items or such copies
thereof shall be the property of Destinations.
SECTION 6.02. Access to Information. From and after the Distribution Time
each party hereto shall afford to each other party and its respective authorized
accountants, counsel and other designated representatives reasonable access and
duplicating rights (at such other party's expense) during normal business hours
and upon reasonable advance notice, subject to the confidentiality provisions
hereof and any additional appropriate restrictions for classified, privileged or
confidential information, to all Information within the possession or control of
such party or to which it has access relating to the business, Assets or
Liabilities of such other party as they existed prior to the Distribution Time,
insofar as such access is reasonably required for a reasonable purpose. Without
limiting the foregoing, information may be requested under this Section 6.02 for
audit, accounting, claims, litigation and Tax purposes, as well as for purposes
of fulfilling disclosure and reporting obligations.
SECTION 6.03. Retention of Records. Except as provided in this Agreement
or any of the Ancillary Agreements or as otherwise agreed in writing, if any
information relating to the business, Assets or Liabilities of a party hereto,
as they existed prior to the Distribution Time or as they are transferred,
assumed or imposed pursuant to this Agreement, is retained by one of the other
parties, the party retaining such information shall, and shall cause its
Subsidiaries to, retain all such information in such party's possession or under
its control until such information is at least ten years old except that if,
prior to the expiration of such period, the party retaining such information
wishes to destroy or dispose of any such information that is at least three
years old, prior to destroying or disposing of any of such information, (a) such
party shall provide no less than 30 days' prior written notice to the other
party, specifying the information proposed to be destroyed or disposed of and
(b) if, prior to the scheduled date for such destruction or disposal, the other
party requests in writing that any of the information proposed to be destroyed
or disposed of be delivered to such other party, the party proposing to dispose
of or destroy such information shall arrange for the delivery of the requested
information to a location specified by, and at the expense of, the requesting
party.
SECTION 6.04. Witness Services. From and after the Distribution Time,
each of the parties hereto shall use commercially reasonable efforts to make
available to each other party hereto, upon reasonable written request, its and
its Subsidiaries' officers, directors, employees and agents as witnesses to the
extent that (i) such persons may reasonably be required in connection with the
prosecution, investigation or defense of any Action or threatened Action in
which the requesting party may from time to time be involved and (ii) there is
no conflict in the Action or threatened Action between the requesting party and
the other party.
SECTION 6.05. Reimbursement. Except to the extent otherwise contemplated
by any Ancillary Agreement, a party providing books and records, access to
Information or witness services to the other party under this Article VI shall
be entitled to receive from the recipient, upon the presentation of invoices
therefor, payments for such amounts, relating to supplies, disbursements and
other out-of-pocket expenses and direct
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and indirect costs of employees, as may be reasonably incurred in providing such
books and records, access to Information or witness services.
SECTION 6.06. Confidentiality. (a) Each party hereto shall keep, and
shall cause its Representatives to keep, the other party's Information strictly
confidential and will disclose such Information only to such of its
Representatives who need to know such Information and who agree to be bound by
this Section 6.06 and not to disclose such Information to any other Person or
entity. Without the prior written consent of the other party, each party and its
Representatives shall not disclose the other party's Information to any Person
or entity except as may be required by law or judicial process or in connection
with the enforcement of its rights under this Agreement or any of the Ancillary
Agreements and, in each case, in accordance with this Section 6.06. Each party
agrees to be responsible for any breach of this confidentiality provision by any
of its Representatives.
(b) In the event that any party hereto or any of its Representatives
becomes legally compelled (by deposition, interrogatory, request for documents,
subpoena, civil investigative demand or similar process), or determines that it
is necessary in connection with the enforcement of its rights under this
Agreement or any of the Ancillary Agreements, to disclose all or any part of
another party's Information, the receiving party or its Representatives shall
promptly notify the other party of such compulsion or determination in writing,
and consult with and assist the other party in seeking a protective order or
request for other appropriate remedy. In the event that such protective order or
other remedy is not obtained or the other party waives compliance with the terms
hereof, such receiving party or its Representatives, as the case may be, shall
disclose only that portion of the Information which, in the opinion of the
receiving party's outside counsel, is legally required to be disclosed, and
shall exercise its reasonable best efforts to assure that confidential treatment
will be accorded such Information by the Persons or entities receiving such
Information. The providing party shall be given an opportunity to review the
Information prior to disclosure.
SECTION 6.07. Further Assurances. In case at any time after the
Distribution Time any further action is reasonably necessary or desirable to
carry out the purposes of this Agreement and the Ancillary Agreements, the
proper officers at such time of each party to this Agreement shall promptly take
all such action. Without limiting the foregoing, the Company, Destinations and
Educational or their respective Subsidiaries, as appropriate, shall use
commercially reasonable efforts to obtain all consents and approvals, to enter
into all agreements and to make all filings and applications that may be
required or are reasonably necessary for the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements, including, without
limitation, all applicable governmental and regulatory filings.
ARTICLE VII
INSURANCE
SECTION 7.01. Policies and Rights Included Within Assets. The Educational
Assets shall include any and all rights of a named or named additional insured
party under each of the Company Policies set forth on Schedule 7.01(a) hereto
and all predecessor Policies thereto, subject to the terms of such Policies and
any limitations or obligations of Educational contemplated by this Article VII
or Schedule 7.01(a), specifically including rights of indemnity and the right to
be defended by or at the expense of the insurer, with respect to all claims,
suits, actions, proceedings, injuries, losses, liabilities, damages and expenses
incurred or claimed to have been incurred prior to the Distribution Time by any
Person in or in connection with the conduct of the Educational Business or, to
the extent any claim is made against Educational or any of its Subsidiaries, the
conduct of the Retained Business or the Destinations Business, and which claims,
suits, actions, proceedings, injuries, losses, liabilities, damages and expenses
may arise out of an insured or insurable occurrence under one or more of such
Company Policies; provided, however, that nothing in this clause shall be deemed
to constitute (or to reflect) an assignment of such Company Policies, or any of
them, to Educational.
SECTION 7.02. Post-Distribution Time Claims. If, subsequent to the
Distribution Time, any Person shall assert a claim against Educational or any of
its Subsidiaries (including, without limitation, where Educational or any of its
Subsidiaries is a joint defendant with other persons) with respect to any claim,
suit,
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action, proceeding, injury, loss, liability, damage or expense incurred or
claimed to have been incurred prior to the Distribution Time in or in connection
with the conduct of the Educational Business or, to the extent any claim is made
against Educational or any of its Subsidiaries (including, without limitation,
where Educational or any of its Subsidiaries is a joint defendant with other
persons), the conduct of the Retained Business or the Destinations Business, and
which claim, suit, action, proceeding, injury, loss, liability, damage or
expense may arise out of an insured or insurable occurrence under one or more of
the Company Policies, Destinations shall, at the time such claim is asserted, to
the extent any such Policy may require that Insurance Proceeds thereunder be
collected directly by the party against whom the Insured Claim is asserted, be
deemed to designate, without need of further documentation, Educational as the
agent and attorney-in-fact to assert and to collect any related Insurance
Proceeds under such Company Policy, and shall further be deemed to assign,
without need of further documentation, to Educational any and all rights of an
insured party under such Company Policy with respect to such asserted claim,
specifically including rights of indemnity and the right to be defended by or at
the expense of the insurer and the right to any applicable Insurance Proceeds
thereunder; provided, however, that nothing in this Section 7.02 shall be deemed
to constitute (or to reflect) an assignment of the Company Policies, or any of
them, to Educational; provided further, however, that, with respect to those
Company Policies set forth on Schedule 7.01(a) hereto for which Educational has
payment obligations as reflected on such Schedule, Educational and its
Subsidiaries shall only have the rights set forth under this Section 7.02 with
respect to such Company Policies if such payment obligations have been satisfied
by Educational at the relevant time as contemplated by Schedule 7.01(a).
SECTION 7.03. Administration; Other Matters. (a) Administration. Except
as otherwise provided in Section 7.02 hereof, from and after the Distribution
Time, Destinations shall be responsible for (i) Insurance Administration of the
Company Policies and (ii) Claims Administration under such Company Policies with
respect to the Destinations Liabilities, the Retained Liabilities and the
Educational Liabilities; provided that the retention of such responsibilities by
Destinations is in no way intended to limit, inhibit or preclude any right to
insurance coverage for any Insured Claim of a named insured under such Policies
as contemplated by the terms of this Agreement; and provided further that
Destinations' retention of the administrative responsibilities for the Company
Policies shall not relieve the party submitting any Insured Claim of the primary
responsibility for reporting such Insured Claim accurately, completely and in a
timely manner (it being understood that Educational shall report Insured Claims
to the relevant carrier through Destinations) or of such party's authority to
settle (within the periods specified in Schedule 7.01(a) in the cases of the
Company Policies numbered 1, 3 and 4 on Schedule 7.01(a)) any such Insured
Claim. Destinations may discharge its administrative responsibilities under this
Section 7.03 by contracting for the provision of services by independent
parties. Except as contemplated by Schedule 7.01(a) hereto or this Agreement,
each of the parties hereto shall administer and pay any costs relating to
defending its respective Insured Claims under Company Policies to the extent
such defense costs are not covered under such Policies and shall be responsible
for obtaining or reviewing the appropriateness of releases upon settlement of
its respective Insured Claims under Company Policies. The disbursements,
out-of-pocket expenses and direct and indirect costs of employees or agents of
Destinations relating to Claims Administration and Insurance Administration
contemplated by this Section 7.03(a) shall be the responsibility of
Destinations.
(b) Access to Specified Policies. Where Liabilities are specifically
covered under the Company Policies set forth on Schedule 7.01(a) hereto numbered
20, 21 and 22 for periods prior to the Distribution Time, or under any such
Company Policy covering claims made after the Distribution Time with respect to
an occurrence prior to the Distribution Time, then from and after the
Distribution Time, Educational may claim coverage for Insured Claims under such
Company Policy as and to the extent that such insurance is available up to the
full extent of the applicable limits of liability of such Company Policy (and
may receive any Insurance Proceeds with respect thereto as contemplated by
Section 7.02 or Section 7.03(d) hereof).
(c) Liability Limitation. Except as specifically contemplated by lettered
items under Schedule 7.01(a) or as specifically provided in this Agreement or
any Ancillary Agreement, Educational, the Company and Destinations shall not be
liable to one another for claims not reimbursed by insurers for any reason not
within the control of Educational, the Company or Destinations, as the case may
be, including, without limitation, coinsurance provisions, deductibles, quota
share deductibles, exhaustion of aggregates, self-
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insured retentions, bankruptcy or insolvency of an insurance carrier, Company
Policy limitations or restrictions, any coverage disputes, any failure to timely
claim by Educational, the Company or Destinations or any defect in such claim or
its processing.
(d) Allocation of Insurance Proceeds. Except as otherwise provided in
Section 7.02, Insurance Proceeds received with respect to claims, costs and
expenses under the Company Policies shall be paid to Destinations in trust, and
Destinations shall thereafter administer the Company Policies by paying the
Insurance Proceeds, as appropriate, to Educational in accordance with this
Article VII. Payment of the allocable portions of indemnity costs of Insurance
Proceeds resulting from such Policies will be made by Destinations to the
appropriate party upon receipt from the insurance carrier. In the event that the
aggregate limits on any Company Policies are exceeded by the aggregate of
outstanding Insured Claims by the parties hereto, the parties shall agree on an
equitable allocation of Insurance Proceeds based upon their respective bona fide
claims (it being understood that the foregoing shall have no effect on the
obligation of any party under Article V or any Ancillary Agreement). The parties
agree to use commercially reasonable efforts to maximize available coverage
under those Company Policies applicable to it, and to take all commercially
reasonable steps to recover from all other responsible parties in respect of an
Insured Claim to the extent coverage limits under a Company Policy have been
exceeded or would be exceeded as a result of such Insured Claim.
SECTION 7.04. Agreement for Waiver of Conflict and Shared Defense. In the
event that Insured Claims of Educational, Destinations and/or the Company exist
relating to the same occurrence, the parties shall jointly defend and, to the
extent it is reasonable to do so, waive any conflict of interest necessary to
the conduct of the joint defense. Nothing in this Section 7.04 shall be
construed to limit or otherwise alter in any way the obligations of the parties
to this Agreement, including those created by this Agreement, by operation of
law or otherwise.
SECTION 7.05. Cooperation. The parties agree to use commercially
reasonable efforts to cooperate with respect to the various insurance matters
contemplated by this Agreement (including, without limitation, in connection
with Policies where Destinations, the Company or Educational is a named or named
additional insured party).
SECTION 7.06. Directors and Officers Liability Insurance. Destinations
agrees that, from and after the Distribution Time to the seventh anniversary of
the Distribution Date, it will maintain in full force and effect at its expense
the Company Policies numbered 20 and 21 on Schedule 7.01(a) hereto (or, through
the purchase of extended discovery, the full benefits and coverage of such
Company Policy) and shall not amend the terms of such Policy in a manner adverse
to any persons covered by such insurance. The provisions of this Section 7.06
are intended for the benefit of, and shall be enforceable by, each of the
persons covered by the Company Policies numbered 20 and 21 on Schedule 7.01(a)
hereto.
ARTICLE VIII
CONDITIONS
SECTION 8.01. Conditions to Obligations of the Company. The obligation of
the Company to consummate the Distribution hereunder shall be subject to the
satisfaction or waiver of each of the following conditions:
(a) All of the transactions contemplated by Article II hereof to occur
prior to the Distribution Time shall have been consummated.
(b) The Educational Common Shares and the associated Rights to be
issued in the Distribution shall have been approved for listing on the
NYSE, subject only to official notice of issuance.
(c) All filings required to be made prior to the Distribution Time
with, and all consents, approvals and authorizations required to be
obtained prior to the Distribution Time from, any government or any court,
arbitral tribunal, administrative agency or commission or other regulatory
authority, agency or commission, governmental or otherwise, in connection
with the consummation of the Distribution and
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any other transaction contemplated hereby shall have been made or obtained,
except where the failure to make or obtain the same would not, individually
or in the aggregate, have a material adverse effect on the business,
properties, results of operations or financial condition of the Company,
Educational or any of their respective Subsidiaries, or on the ability of
any thereof to consummate the transactions contemplated hereby, or to
perform its obligations under this Agreement or any of the Ancillary
Agreements to which it is or will be a party.
(d) Each of the Ancillary Agreements shall have been executed and
delivered by each of the parties thereto and shall be in full force and
effect in accordance with its terms.
(e) The Information Statement shall have been or shall be
simultaneously mailed to holders of Company Common Stock in accordance with
the rules, regulations and policies of the SEC.
(f) No statute, rule or regulation or temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition shall be in
effect that prohibits consummation of the Distribution.
(g) All conditions to the Destinations Distribution shall have been
satisfied or waived by the Company and the Destinations Distribution shall
have been, or simultaneously with the Distribution shall be, consummated.
(h) The Company shall have received from Cravath, Swaine & ▇▇▇▇▇,
counsel to the Company, an opinion in form and substance reasonably
satisfactory to the Company, stating that the Distribution and the
Destinations Distribution will qualify as tax-free spin-offs under Section
355 of the Code and that an acquisition of the Company, Educational or
Destinations after the Distribution and the Destinations Distribution by
Hilton Hotels Corporation should not adversely affect the tax-free status
of the Distribution and the Destinations Distribution. In rendering such
opinion, such counsel shall be entitled to rely upon representations
provided by the Company contained in a certain representation letter.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Modification or Amendment. Subject to the terms of Section
9.02 hereof, this Agreement may not be modified or amended except by an
agreement in writing signed by the parties.
SECTION 9.02. Termination. This Agreement (including Article V) may be
terminated and the Distribution may be amended, modified or abandoned at any
time prior to the consummation of the Destinations Distribution by and in the
sole discretion of the Company without the approval of Educational or any other
Person. In the event of such termination, no party hereto shall have any
liability of any kind to the other party. After the consummation of the
Destination Distribution, this Agreement may not be terminated except by an
agreement in writing signed by each of the parties; provided, however, that, if
such termination is after the Distribution Time, Article V shall not be
terminated or amended after the Distribution Time in respect of the third party
beneficiaries thereto without the consent of such persons.
SECTION 9.03. Waiver; Remedies. No delay on the part of the Company,
Destinations or Educational in exercising any right, power or privilege
hereunder will operate as a waiver thereof, nor will any waiver on the part of
the Company, Destinations or Educational of any right, power or privilege
hereunder operate as a waiver of any other right, power or privilege hereunder,
nor will any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder. Unless otherwise provided, the rights
and remedies herein provided are cumulative and are not exclusive of any rights
or remedies which the parties may otherwise have at law or in equity.
SECTION 9.04. Counterparts. For the convenience of the parties, this
Agreement may be executed in any number of separate counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts
shall together constitute the same agreement.
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SECTION 9.05. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.
SECTION 9.06. Notices. Any notice, request, instruction or other
communication to be given hereunder by any party to another shall be in writing
and shall be deemed to have been duly given (i) on the date of delivery if
delivered personally, or by telefacsimile, upon confirmation of receipt, (ii) on
the first business day following the date of dispatch if delivered by Federal
Express or other nationally reputable next-day courier service, or (iii) on the
third business day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid. All notices hereunder
shall be delivered as set forth below, or pursuant to such other instructions as
may be designated in writing by the party to receive such notice.
(a) If to Educational:
ITT Educational Services, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ Drive
P.O. Box 50466
Indianapolis, IN 46250-0466
Attention: General Counsel
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company:
ITT World Directories, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to Destinations:
ITT Destinations, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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with copies to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 9.07. Entire Agreement. This Agreement and the Ancillary
Agreements and, as between the Company and Destinations, the Destinations
Distribution Agreement (including Exhibits, Annexes and Schedules hereto and
thereto) constitute the entire agreement, and supersede all other prior
agreements, understandings, representations and warranties, both written and
oral, among the parties, with respect to the subject matter hereof and thereof.
SECTION 9.08. Certain Obligations. Whenever any Ancillary Agreement
requires any of the Subsidiaries of any party to take any action, this Agreement
will be deemed to include an undertaking on the part of such party to cause such
Subsidiary to take such action.
SECTION 9.09. Assignment. This Agreement shall be assignable in whole in
connection with a merger or consolidation or the sale of all or substantially
all the Assets of a party hereto so long as the resulting, surviving or
transferee entity assumes all the obligations of the relevant party hereto by
operation of law or pursuant to an agreement in form and substance reasonably
satisfactory to the other party. Otherwise, this Agreement shall not be
assignable, in whole or in part, directly or indirectly, by any party hereto
without the prior written consent of the other party, and any attempt to assign
any rights or obligations arising under this Agreement without such consent
shall be void.
SECTION 9.10. Captions. The Article, Section and paragraph captions
herein are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof.
SECTION 9.11. Specific Performance. In the event of any actual or
threatened default in, or breach of, any of the terms, conditions and provisions
of this Agreement or any of the Ancillary Agreements, the party or parties who
are or are to be thereby aggrieved shall have the right of specific performance
and injunctive relief giving effect to its or their rights under such agreement,
in addition to any and all other rights and remedies at law or in equity, and
all such rights and remedies shall be cumulative. The parties agree that the
remedies at law for any breach or threatened breach, including monetary damages,
are inadequate compensation for any loss and that any defense in any action for
specific performance that a remedy at law would be adequate is waived.
SECTION 9.12. Severability. If any provision of this Agreement or any of
the Ancillary Agreements or the application thereof to any person or
circumstance is determined by a court of competent jurisdiction to be invalid,
void or unenforceable, the remaining provisions thereof, or the application of
such provision to persons or circumstances other than those as to which it has
been held invalid or unenforceable, shall remain in full force and effect and
shall in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transactions contemplated thereby is not
affected in any manner adverse to any party. Upon any such determination, the
parties shall negotiate in good faith in an effort to agree upon a suitable and
equitable substitute provision to effect the original intent of the parties.
SECTION 9.13. Third Party Beneficiaries. Except as provided in Article V
relating to Indemnitees, this Agreement is solely for the benefit of the parties
hereto and their respective Subsidiaries and Affiliates and should not be deemed
to confer upon third parties any remedy, claim, liability, reimbursement, claim
of action or other right in excess of those existing without reference to this
Agreement.
SECTION 9.14. Fees and Expenses of Enforcement. A party in breach of this
Agreement shall, on demand, indemnify and hold harmless the other party hereto
for and against all reasonable out-of-pocket expenses, including, without
limitation, legal fees and expenses, incurred by such other party by reason of
the
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enforcement and protection of its rights under this Agreement. The payment of
such expenses is in addition to any other relief to which such other party may
be entitled hereunder or otherwise.
SECTION 9.15. Expenses. Except as otherwise set forth in this Agreement,
any Ancillary Agreement or in the Destinations Distribution Agreement, all costs
and expenses incurred on or prior to the Distribution Time (whether or not paid
on or prior to the Distribution Time) in connection with the preparation,
execution, delivery and implementation of this Agreement and any Ancillary
Agreement, the Information Statement and the Distribution and the consummation
of the transactions contemplated thereby shall be charged to and paid by the
party incurring such expense. Except as otherwise set forth in this Agreement or
any Ancillary Agreement, each party shall bear its own costs and expenses
incurred after the Distribution Time.
SECTION 9.16. Exhibits and Schedules. The Exhibits and Schedules to this
Agreement shall be construed with and as an integral part of this Agreement to
the same extent as if the same had been set forth verbatim herein.
SECTION 9.17. Consent to Jurisdiction. Each of the parties irrevocably
submits to the exclusive jurisdiction of (a) the Supreme Court of the State of
New York, New York County and (b) the United States District Court for the
Southern District of New York, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby.
Each of the parties agrees to commence any action, suit or proceeding relating
hereto either in the United States District Court for the Southern District of
New York or if such suit, action or other proceeding may not be brought in such
court for jurisdictional reasons, in the Supreme Court of the State of New York,
New York County. Each of the parties further agrees that service of any process,
summons, notice or document by U.S. registered mail to such party's respective
address set forth above shall be effective service of process for any action,
suit or proceeding in New York with respect to any matters to which it has
submitted to jurisdiction in this Section 9.17. Each of the parties irrevocably
and unconditionally waives any objection to the laying of venue of any action,
suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in (i) the Supreme Court of the State of New York, New York
County or (ii) the United States District Court for the Southern District of New
York, and hereby further irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
SECTION 9.18. Ancillary Agreements. This Agreement is not intended to
address, and should not be interpreted to address, the matters specifically and
expressly covered by the Ancillary Agreements.
SECTION 9.19. Survival of Agreements. Except as otherwise contemplated by
this Agreement, all covenants and agreements of the parties contained in this
Agreement shall survive the Distribution Time.
SECTION 9.20. Successors and Assigns. The provisions of this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
and their respective permitted successors and permitted assigns.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
ITT CORPORATION,
by
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief
Operating Officer
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ITT EDUCATIONAL SERVICES, INC.,
by
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President, Chairman and
Chief Executive Officer
ITT DESTINATIONS, INC.,
by
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
and General Counsel
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