Exhibit 10.1
TRANSITION SERVICES AGREEMENT
TRANSITION SERVICES AGREEMENT dated as of October 25, 1996 (this
"Agreement") by and between X. X. Xxxxxxxxx & Sons Company, a Delaware
corporation ("X.X. Xxxxxxxxx"), and Donnelley Enterprise Solutions Incorporated,
a Delaware corporation (the "Company").
W I T N E S S E T H
WHEREAS, X.X. Xxxxxxxxx is currently the owner of all outstanding shares of
common stock of the Company;
WHEREAS, the Company intends to make a public offering (the "Offering") of
shares of its common stock in a transaction that, upon closing of the Offering
(the "Closing Date"), will result in X.X. Xxxxxxxxx owning less than a majority
of the outstanding shares of common stock of the Company;
WHEREAS, X.X. Xxxxxxxxx has heretofore provided certain services to the
Company, and the Company desires that X.X. Xxxxxxxxx continue to provide certain
services to the Company for a period of time following the Closing Date;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
Section 1. Definitions. The following terms have the meanings specified or
referred to in this Section 1 and shall be equally applicable to the singular
and plural forms.
"Affiliate" means, with respect to either the Company or X.X. Xxxxxxxxx,
any individual, corporation, partnership, joint venture, limited liability
company, association, joint-stock company, trust or unincorporated organization
which directly or indirectly controls, is controlled by or is under common
control with the Company or X.X. Xxxxxxxxx, respectively. For the purposes of
this Agreement, the Company and its subsidiaries shall not be considered
Affiliates of X.X. Xxxxxxxxx and X.X. Xxxxxxxxx and its subsidiaries shall not
be considered Affiliates of the Company.
"Business" means the business of the Company and its subsidiaries as
conducted immediately prior to the Closing Date.
"Cash Management Services" means those Services set forth under the heading
"Cash Management/Banking" in Exhibit 1 hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expenses" has the meaning set forth in Section 11(a).
"Indemnifying Party" means a person who is obligated under this Agreement
to provide indemnification.
"Indemnitee" means a person who may seek indemnification under this
Agreement.
"Losses" has the meaning set forth in Section 11(a).
"Other Agreements" means the Tax Allocation and Indemnification Agreement
dated the date hereof between X.X. Xxxxxxxxx and the Company and the Benefit
Administration Services Agreement dated the date hereof between X.X. Xxxxxxxxx
and the Company.
"Other Company Indemnified Parties" shall mean and include (i) the
Company's Affiliates, (ii) the respective directors, officers, agents and
employees of and counsel to the Company and its Affiliates, (iii) each other
person, if any, controlling the Company or any of its Affiliates (other than
X.X. Xxxxxxxxx) and (iv) the successors, assigns, heirs and personal
representatives of any of the foregoing.
"Other X.X. Xxxxxxxxx Indemnified Parties" shall mean and include (i) X.X.
Xxxxxxxxx'x Affiliates, (ii) the respective directors, officers, agents and
employees of and counsel to X.X. Xxxxxxxxx and its Affiliates, (iii) each other
person, if any, controlling X.X. Xxxxxxxxx or any of its Affiliates and (iv) the
successors, assigns, heirs and personal representatives of any of the foregoing.
"person" means an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization or a government or any
department or agency thereof.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax Services" means those Services set forth under the heading "Taxes" in
Exhibit 1 hereto.
-2-
"Transition Period" means (i) for all Services other than Tax Services and
Cash Management Services the period commencing on the Closing Date and ending on
December 31, 1997, (ii) for Tax Services the period commencing on the Closing
Date and ending on January 31, 1998 and (iii) for Cash Management Services the
period commencing on the Closing Date and ending on March 31, 1997; unless the
Transition Period is extended as provided in Section 13(a).
Section 2. Performance of Services by X.X. Xxxxxxxxx. (a) Subject to the
terms and conditions set forth herein, from the Closing Date hereof until the
end of the Transition Period, X.X. Xxxxxxxxx shall provide and cause to be
provided to the Company and its subsidiaries, with respect to the Business, the
services described in Exhibit 1 hereto (the "Services"). Notwithstanding the
foregoing, at any time after the Closing Date, the Company may terminate from
time to time any category or categories of Services listed in Exhibit 1 by
identifying which category or categories of Services it elects to terminate by
written notice to X.X. Xxxxxxxxx received by X.X. Xxxxxxxxx at least 30 days
prior to the effective date of any such termination.
(b) Unless otherwise expressly agreed to in writing by the parties hereto,
the Services will be provided to the Company and its subsidiaries at a level and
in a manner consistent with the level at which such Services are currently
provided by X.X. Xxxxxxxxx and its subsidiaries in connection with the operation
of the Business. Notwithstanding the foregoing, X.X. Xxxxxxxxx shall have no
obligation to provide or cause to be provided any particular Service if X.X.
Xxxxxxxxx reasonably determines that (i) due to any change in circumstances or
new developments affecting the Business after the date hereof, the provision of
all or any portion of such Service would unreasonably interfere with the conduct
of X.X. Xxxxxxxxx'x or any of its Affiliates' business activities or (ii) the
provision of the Services would cause X.X. Xxxxxxxxx or any of its Affiliates to
be in violation of any software license or other similar agreement under which
X.X. Xxxxxxxxx or any of its Affiliates is a party or otherwise bound. X.X.
Xxxxxxxxx and the Company shall cooperate in planning the scope and timing of
the Services provided by X.X. Xxxxxxxxx under this Agreement so as to lessen or
eliminate any such interference or violation, and X.X. Xxxxxxxxx shall notify
the Company of any determination that it has made pursuant to the preceding
sentence and cooperate with the Company and its subsidiaries, to lessen
disruption that might occur to the Company by reason of X.X. Xxxxxxxxx'x not
providing a particular Service following such determination. Neither X.X.
Xxxxxxxxx nor any of its Affiliates will be obligated to provide any services to
the Company and its subsidiaries (including, without limitation, the providing
of any financing or credit facility or
-3-
the making of any guaranties), except to the extent described in this Section 2
or as provided in the Other Agreements.
(c) The Services shall be provided hereunder on an as needed basis in a
manner consistent with past practice; provided, that with respect to Services
not performed in the daily operations of the Business in the ordinary course
consistent with past practice, the Company shall specifically request such
services in writing. The Services shall be provided hereunder in a time frame
consistent with X.X. Xxxxxxxxx'x past practice and such that the Services
respond to new developments in a timely manner, consistent with X.X. Xxxxxxxxx'x
past practice. X.X. Xxxxxxxxx and its Affiliates may reasonably supplement,
modify, substitute or otherwise alter the Services from time to time in a manner
consistent with supplements, modifications, substitutions or alterations made
with respect to similar services provided or otherwise made available by X.X.
Xxxxxxxxx to its operating divisions or subsidiaries, so long as X.X. Xxxxxxxxx
provides the Company with reasonable advance notice of such modifications,
substitutions or alterations, to enable the Company to obtain replacement
services therefor. X.X. Xxxxxxxxx and its Affiliates shall include the Company
and its affected subsidiaries in planning the scope and timing of any such
supplement, modifica tion, substitution or alteration of Services so as to
lessen, to the extent practicable, the interference or disruption that might
occur by reason thereof.
(d) The Company and X.X. Xxxxxxxxx acknowledge and agree that the scope and
duration of the Services may vary throughout the term of this Agreement,
provided, that the level at which any Services are provided hereunder shall not
increase materially except in accordance with Section 3(c). At any time, and
from time to time, during the term of this Agreement, the Company may, by
providing written notice to X.X. Xxxxxxxxx, elect to reduce the scope and
duration of the any of the Services; provided, that except upon termination as
provided in the last sentence of Section 2(a), the fees referenced in Section
3(a) will not be adjusted as the result of such a reduction to Services.
Section 3. Payment for Services. (a) The fee to be paid by the Company to
X.X. Xxxxxxxxx for each of the Services provided hereunder shall be the amount
listed in Exhibit 1 for each category; provided, that in the event the Company
terminates any group of Services listed in Exhibit 1, the fee for such Services
shall no longer be payable following the effective date of such termination. The
Company shall also pay to X.X. Xxxxxxxxx any and all reasonable out-of-pocket
costs and expenses of X.X. Xxxxxxxxx incurred for the services of outside
advisers and consultants provided in connection with the Services provided
hereunder consistent with past practice, provided that, except as
-4-
contemplated in Exhibit 1, X.X. Xxxxxxxxx will not engage any such advisor or
consultant without prior approval of the Company.
(b) X.X. Xxxxxxxxx shall on a monthly basis submit to the Company for
payment its billing invoice setting forth the amount of fees for Services
rendered as described in subsection (a) above not theretofore paid by the
Company. Payment by the Company to X.X. Xxxxxxxxx in respect of any such invoice
shall be made within 15 days after the date of receipt of such invoice; provided
that as long as the Services being provided by X.X. Xxxxxxxxx include those
described on Exhibit 1 under Accounts Payable, the Company shall be deemed in
compliance with this sentence if it has authorized X.X. Xxxxxxxxx to make such
payment within such 15 day period and funds sufficient to make such payment are
in the Company's accounts from which such payments are made.
(c) The Company acknowledges that time is of the essence with respect to
all payments under this Section and agrees to pay interest on the balance of any
amount payable hereunder unpaid when due at an annual rate of 15% from the date
an invoice with respect to which such payment obligation related was received by
the Company until the date of payment.
(d) In the event that the Company and its subsidiaries so expand their
operations during the Transition Period through the acquisition of new
businesses or companies, or growth in the Company's business materially
exceeding budgeted growth, that the services required by the Company and its
subsidiaries with respect to the Business exceed the scope or extent of the
Services provided hereunder, then X.X. Xxxxxxxxx shall consider providing such
extra services, and to the extent X.X. Xxxxxxxxx agrees to provide such
services, X.X. Xxxxxxxxx and the Company shall negotiate in good faith an
adjustment to the fees payable pursuant to Section 3(a) which is proportionate
to the increase in the scope and extent of Services provided hereunder.
Section 4. Staffing Plans. Neither the Company nor any of its Affiliates
shall be precluded from obtaining any of the Services from providers other than
X.X. Xxxxxxxxx; provided that the Company has given X.X. Xxxxxxxxx not less than
30 days prior written notice of the discontinuance of such Services; and
provided that, except upon termination as set forth in the last sentence of
Section 2(a), the fees referenced in Section 3(a) will not be adjusted as the
result of Services being provided by third party providers. The Company shall
use reasonable efforts to keep X.X. Xxxxxxxxx generally informed of its plans in
this regard in order for X.X. Xxxxxxxxx to make any appropriate adjustments in
X.X. Xxxxxxxxx'x staffing and hiring plans.
Section 5. Disclaimer. Neither X.X. Xxxxxxxxx nor any of its Affiliates
makes any representation or warranty, express
-5-
or implied, as to whether the Services to be provided hereunder are sufficient
for the operation of the Business on or after the Closing Date, and neither X.X.
Xxxxxxxxx nor any of its Affiliates nor any employees of X. X. Xxxxxxxxx or any
of its Affiliates shall have any liability to the Company or its Affiliates for
the Services provided hereunder except to the extent caused by the gross
negligence or willful misconduct of X.X. Xxxxxxxxx, its employees, agents,
assigns or Affiliates.
Section 6. Confidentiality. X.X. Xxxxxxxxx agrees to hold, and to use
reasonable efforts commensurate with the nature of the information being
furnished to cause its employees, agents, Affiliates and representatives to
hold, in strict confidence all information (whether written or oral) concerning
the Company and its Affiliates which is in the possession of X.X. Xxxxxxxxx or
its employees, agents, Affiliates or representatives as of the date hereof or is
hereafter furnished to or obtained by X.X. Xxxxxxxxx or its employees, agents,
Affiliates or representatives in the course of providing the Services
contemplated hereby to the Company and its Affiliates and which, in any case, is
marked "Confidential" (except to the extent that such information has been (A)
in the public domain through no fault of X.X. Xxxxxxxxx or (B) lawfully acquired
by X.X. Xxxxxxxxx from sources other than the Company and its Affiliates), and
X.X. Xxxxxxxxx shall not disclose or release any such confidential information
to any person, except its employees, representatives and agents who have a need
to know such information in connection with X.X. Xxxxxxxxx'x performance
hereunder, unless (i) such disclosure or release is compelled by the judicial or
administrative process, (ii) in the opinion of counsel to X.X. Xxxxxxxxx, such
disclosure or release is necessary in light of other requirements of law or the
requirements of any governmental entity including, without limitation,
disclosure requirements under the Securities Act of 1934, as amended, or (iii)
in the opinion of X.X. Xxxxxxxxx, such disclosure and release is appropriate and
customary for the proper administration of X.X. Xxxxxxxxx'x and its Affiliates'
responsibilities and duties in respect of matters of foreign, federal, state or
local taxation.
Section 7. Guaranties. The Company acknowledges that X.X. Xxxxxxxxx has
heretofore delivered, and may prior to the Closing Date deliver, guaranties of
payment or performance of certain obligations of the Company or one of its
Affiliates (the "Guaranteed Obligations"). X.X. Xxxxxxxxx agrees to maintain all
of the guaranties that it delivered with respect to the Guaranteed Obligations
prior to the Closing Date but only to the extent provided in the guaranties of
the Guaranteed Obligations delivered prior to the Closing Date. The Company
agrees not to amend or modify the terms of any agreement or instrument that
evidences a Guaranteed Obligation in such a manner that increases the potential
liability of X.X. Xxxxxxxxx without the written
-6-
consent of X.X. Xxxxxxxxx, which consent may be withheld in the sole discretion
of X.X. Xxxxxxxxx.
Section 8. Non-Solicitation of Employees. (a) For a period of one year
following the Closing Date, neither X.X. Xxxxxxxxx nor any of its Affiliates
will, without the prior written approval of the Company, directly or indirectly
solicit, induce or attempt to persuade any person who is an employee of the
Company or any of its subsidiaries on the date hereof or at any time hereafter
to terminate his or her employment with the Company or such subsidiary of the
Company, except X.X. Xxxxxxxxx or any of its Affiliates may hire employees who
respond to general advertisements or who otherwise make initial contact with
them.
(b) For a period of one year following the Closing Date, neither the
Company nor any of its Affiliates will, without the prior written approval of
X.X. Xxxxxxxxx, directly or indirectly solicit, induce or attempt to persuade
any person who is an employee of X.X. Xxxxxxxxx or any of its subsidiaries on
the date hereof or at any time hereafter to terminate his or her employment with
X.X. Xxxxxxxxx or such subsidiary of X.X. Xxxxxxxxx, except the Company or any
of its Affiliates may hire employees who respond to general advertisements or
who otherwise make initial contact with them.
Section 9. Use of Real Estate. (a) As of the date hereof, the Company is
using office space in the facilities leased by X.X. Xxxxxxxxx that are listed in
Exhibit 2 hereto (the "Shared Facilities"). X.X. Xxxxxxxxx agrees to permit the
Company to continue to use the portion of each Shared Facility used by the
Company as of the date hereof (including common areas) until the date set forth
for each Shared Facility under the heading "Expiration Date" in Exhibit 2. In
consideration for such agreement, the Company agrees to pay to X.X. Xxxxxxxxx
(1) in the case of the Shared Facility in Dallas (i) for each month until the
earlier of (a) if the Company ceases to use such Shared Facility on or before
December 6, 1996, December 31, 1996, (b) 30 days after the date upon which the
Company ceases to use such Shared Facility or (c) the date set forth for such
Shared Facility under the heading "Expiration Date" in Exhibit 2, an amount (the
"Company's Base Rent") equal to the product of (A) the amount payable by X.X.
Xxxxxxxxx as monthly rent for such Shared Facility (including taxes, utilities
and other additional rent required under the particular lease), as adjusted from
time to time, times (B) a fraction, the numerator of which is the number set
forth in Exhibit 2 under the heading "RSF (Company)" for such Shared Facility
and the denominator of which is the total square footage of such Shared Facility
and (ii) for each three-month period or portion thereof that the Company is
obligated under the Agreement to pay the Company's Base Rent, an amount in
respect of the cost of operating such Shared Facility,
-7-
including, but not limited to, telephone, reception, utility and cafeteria
services (the "Services Amount"), equal to the product of (A) the total amount
payable by X.X. Xxxxxxxxx for those services used by the Company at such a
Shared Facility, times (B) a fraction, the numerator of which is the average
number of employees of the Company using space at such Shared Facility during
such three-month period or portion thereof and the denominator of which is the
average total number of persons using space at such Shared Facility during such
three-month period or portion thereof; and (2) in the case of the Shared
Facility in New York, the amount of $17,467 per month (the "New York Rent").
(b) X.X. Xxxxxxxxx shall (i) on a monthly basis submit to the Company for
payment its billing invoice setting forth the Company's Base Rent and the New
York Rent not theretofore paid by the Company and (ii) on a quarterly basis
submit to the Company for payment its billing invoice setting forth the Services
Amount not theretofore paid by the Company. Payment by the Company to X.X.
Xxxxxxxxx in respect of any such invoice shall be made within 15 days after the
date of such invoice; provided that as long as the Services being provided by
X.X. Xxxxxxxxx include those described on Exhibit 1 under Accounts Payable, the
Company shall be deemed in compliance with this sentence if it has authorized
X.X. Xxxxxxxxx to make such payment within such 15 day period and funds
sufficient to make such payment are in the Company's accounts from which such
payments are made.
(c) The Company acknowledges that time is of the essence with respect to
all payments under this Section and agrees to pay interest on the balance of any
amount payable hereunder unpaid when due at an annual rate of 15% from the date
an invoice with respect to which such payment obligation related was received by
the Company until the date of payment.
Section 10. Financial and Other Information. (a) Equity Accounting Period.
The Company agrees that, during any period in which X.X. Xxxxxxxxx owns at least
20% of the voting power of the capital stock of the Company then outstanding or
20% of the capital stock of the Company then outstanding, or in which X.X.
Xxxxxxxxx is required to account for its investment in the Company under the
equity method of accounting (determined in accordance with generally accepted
accounting principles consistently applied):
(i) Maintenance of Books and Records. The Company shall, and shall cause
each of its consolidated subsidiaries to, maintain a system of internal
accounting controls that shall provide reasonable assurance that: (1) the
Company's and such subsidiaries' books, records and accounts fairly reflect
transactions and dispositions of assets, and (2) the specific objectives of
accounting control are achieved.
-8-
(ii) Monthly Financial Information. As soon as practicable, but in any
event within five business days after the end of each month in each fiscal year
of the Company, the Company shall deliver to X.X. Xxxxxxxxx its pre- and after-
tax net income for the month and the year to date period for the Company and its
subsidiaries.
(iii) Unaudited Quarterly Financial Statements. As soon as practicable, but
in any event within 35 days after the end of each of the first three fiscal
quarters in each fiscal year of the Company, the Company shall deliver to X.X.
Xxxxxxxxx drafts of (1) the consolidated financial statements of the Company and
its subsidiaries (and notes thereto) for such periods and for the period from
the beginning of the current fiscal year to the end of such quarter, setting
forth in each case in comparative form for each such fiscal quarter of the
Company the consolidated figures (and notes thereto) for the corresponding
quarter and periods of the previous fiscal year and all in reasonable detail and
prepared in accordance with Article 10 of Regulation S-X of the General Rules
and Regulations under the Securities Act ("Regulation S-X"), and (2) a
discussion and analysis by management of the Company's and it subsidiaries'
financial condition and results of operations for such fiscal period, including,
without limitation, an explanation of any material adverse change, all in
reasonable detail and prepared in accordance with Item 303(b) of Regulation S-K
of the General Rules and Regulations under the Securities Act ("Regulation S-
K"). The foregoing requirement may be satisfied by the delivery of a draft
Quarterly Report on Form 10-Q. The information set forth in (1) and (2) above is
herein referred to as the "Quarterly Financial Statements." The Company shall
deliver to X.X. Xxxxxxxxx all revisions to such drafts as soon as any such
revisions are prepared or made. No later than two business days prior to the
date the Company publicly files the Quarterly Financial Statements with the SEC
or otherwise, the Company shall deliver to X.X. Xxxxxxxxx the final form of the
Quarterly Financial Statements to be filed with the SEC.
(iv) Audited Annual Financial Information. As soon as is practicable, but
in any event within 60 days after the end of each fiscal year of the Company,
the Company shall deliver to X.X. Xxxxxxxxx drafts of (1) the consolidated
financial statements of the Company (and notes thereto) for such year, setting
forth in comparative form the consolidated figures (and notes thereto) for the
previous fiscal year and all in reasonable detail and prepared in accordance
with Regulation S-X and (2) a discussion and analysis by management of the
Company's and its subsidiaries' financial condition and results of operations
for such year, including, without limitation, an explanation of any material
adverse change, all in reasonable detail and prepared in accordance with item
303(a) of Regulation S-K. The foregoing requirement may be satisfied by the
delivery of a draft Annual
-9-
Report on Form 10-K. The information set forth in (1) and (2) above is herein
referred to as the "Annual Financial Statement." The Company shall deliver to
X.X. Xxxxxxxxx all revisions to such drafts as soon as any such revisions are
prepared or made. The Company shall deliver to X.X. Xxxxxxxxx, within 90 days
after the end of each fiscal year of the Company, the final form of the Annual
Financial Statements accompanied by a report thereon by the Company's
independent certified public accountants.
(v) Public Information and SEC Reports. Except as more particularly
described in paragraphs (iii) and (iv) above, the Company and each of its
subsidiaries that files information with the SEC shall deliver to X.X. Xxxxxxxxx
(to the attention of its Corporate Secretary) as soon as substantially final
drafts are prepared all reports, notices and proxy and information statements to
be sent or made available by the Company or any of its subsidiaries to their
securityholders and all regular, periodic and other reports filed under Section
13, 14 and 15 of the Exchange Act (including Reports on Forms 10-K, 10-Q and 8-K
and Annual Reports to Shareholders), and all registration statements and
prospectuses to be filed by the Company or any of its subsidiaries with the SEC
or any securities exchange pursuant to the listed company manual (or similar
requirements) of such exchange (collectively, the "Company Public Documents"),
and, as soon as practicable, but in no event later than one business day prior
to the date the same are printed, sent or filed, whichever is earliest, final
copies of all Company Public Documents.
No later than immediately prior to issuance, the Company shall deliver to
X.X. Xxxxxxxxx copies of all press releases and other statements to be made
available by the Company or any of its subsidiaries to the public relating to
information concerning material developments in the business, properties,
results of operations, financial condition or prospects of the Company or any of
its subsidiaries. Unless otherwise required by law, rule or regulation, no
report, registration, information or proxy statement, prospectus or other
document that refers, or contains information with respect, to X.X. Xxxxxxxxx
shall be filed with the SEC or otherwise made public by the Company or any of
its subsidiaries without notice to and the consent (written or oral) of X.X.
Xxxxxxxxx with respect to those portions of such document that contain
information with respect to X.X. Xxxxxxxxx, which consent will not be
unreasonably withheld, delayed or conditioned, provided, however, that the
Company need not obtain the consent of X.X. Xxxxxxxxx for descriptions of
intercompany agreements between itself and X.X. Xxxxxxxxx to the extent that
such descriptions are substantially identical to the descriptions contained in
the registration statement relating to the Offering.
(vi) Earnings Releases. X.X. Xxxxxxxxx agrees that, unless required by law,
rule or regulation or unless the Company shall have consented thereto, X.X.
Xxxxxxxxx shall not release
-10-
any financial information of the Company (other than the quarterly and annual
financial reports described below) or any of its subsidiaries under any
circumstances and X.X. Xxxxxxxxx shall not release to the general public any
quarterly or annual financial information of the Company or any of its
subsidiaries (the "Company Information") delivered to X.X. Xxxxxxxxx pursuant to
this Section 10 prior to the time that the Company publicly releases financial
information of the Company for the relevant period. The Company and X.X.
Xxxxxxxxx shall consult on the timing of their annual and quarterly earnings
releases and shall give each other an opportunity to review the information
therein relating to the Company and its subsidiaries and to comment thereon,
unless otherwise prohibited by law, rule or regulation. In the event that X.X.
Xxxxxxxxx is required by law to publicly release such Company Information prior
to the public release of X.X. Xxxxxxxxx'x financial information, X.X. Xxxxxxxxx
shall give the Company notice of such release of Company Information as soon as
practicable but in no event later than immediately prior to such release of
Company Information.
(vii) X.X. Xxxxxxxxx Public Filings. The Company shall cooperate fully with
X.X. Xxxxxxxxx to the extent reasonably requested by X.X. Xxxxxxxxx in the
preparation of X.X. Xxxxxxxxx'x public earnings releases, quarterly reports on
Form 10-Q, Annual Reports to Shareholders, Annual Reports on Form 10-K, any
Current Reports on Form 8-K and any other proxy, information and registration
statements, reports, notices, prospectuses and any other filings made by X.X.
Xxxxxxxxx with the SEC, any national securities exchange or otherwise made
publicly available (collectively, "X.X. Xxxxxxxxx Public Filings"). The Company
agrees to provide to X.X. Xxxxxxxxx such information concerning the Company as
X.X. Xxxxxxxxx reasonably requests in writing in connection with any such X.X.
Xxxxxxxxx Public Filings. Following request by X.X. Xxxxxxxxx, such information
concerning the Company shall be provided by the Company in a timely manner to
enable X.X. Xxxxxxxxx to prepare, print and release such X.X. Xxxxxxxxx Public
Filings on such date as X.X. Xxxxxxxxx shall have determined and notified the
Company thereof. If and to the extent reasonably requested in advance by X.X.
Xxxxxxxxx, the Company shall review all drafts of such X.X. Xxxxxxxxx Public
Filings prior to any printing or public release thereof, and certify (through an
appropriate executive officer) that the information relating to the Company in
such X.X. Xxxxxxxxx Public Filing is accurate in all material respects. X.X.
Xxxxxxxxx shall reimburse the Company for any and all out-of-pocket costs and
expenses of outside advisors incurred by the Company in connection with such
review and providing such certificate.
(viii) Coordination of Auditors' Opinions. For so long as each party hereto
maintains its fiscal year end as it exists on the date hereof, the Company shall
use its reasonable
-11-
efforts to enable its independent certified public accountants (the "Company's
Auditors") to complete their audit such that they will date their opinion on the
Company's audited annual financial statements (the "Company Annual Financial
Statements") (1) within 31 days of the end of the Company's fiscal year or (2)
within five business days of the date that X.X. Xxxxxxxxx'x independent
certified public accountants ("X.X. Xxxxxxxxx'x Auditors") date their opinion on
X.X. Xxxxxxxxx'x audited annual financial statements (together with X.X.
Xxxxxxxxx'x Annual Report to Shareholders, the "X.X. Xxxxxxxxx Annual
Statements"), whichever is earlier, and to enable X.X. Xxxxxxxxx to meet its
timetable for the printing, filing and public dissemination of the X.X.
Xxxxxxxxx Statements.
(ix) Cooperation in Preparation of X.X. Xxxxxxxxx Annual Statements. The
Company shall provide to X.X. Xxxxxxxxx on a timely basis all information that
X.X. Xxxxxxxxx reasonably needs to meet its schedule for the preparation,
printing, filing and public dissemination of the X.X. Xxxxxxxxx Annual
Statements. In this respect, the Company shall provide all required financial
information with respect to the Company and its consolidated subsidiaries to the
Company's Auditors in a sufficient and reasonable time and in reasonably
sufficient detail to permit the Company's Auditors to take all steps and perform
all review necessary to provide sufficient assistance to X.X. Xxxxxxxxx'x
Auditors with respect to information to be included or contained in the X.X.
Xxxxxxxxx Annual Statements, such assistance to X.X. Xxxxxxxxx'x Auditors to be
in conformity with current and past practices.
(x) Access to Personnel and Working Papers. The Company shall authorize the
Company's Auditors to make available to X.X. Xxxxxxxxx'x Auditors, at X.X.
Xxxxxxxxx'x expense, both the personnel who performed or are performing the
annual audit of the Company and work papers related to the annual audit of the
Company, in all cases within a reasonable time after the Company's Auditors'
opinion date, so that X.X. Xxxxxxxxx'x Auditors are able to perform the
procedures they consider reasonably necessary to take responsibility for the
work of the Company's Auditors as it relates to X.X. Xxxxxxxxx'x Auditors'
report on X.X. Xxxxxxxxx'x statements, all within sufficient time to enable X.X.
Xxxxxxxxx to meet its timetable for the printing, filing and public
dissemination of the X.X. Xxxxxxxxx Annual Statements.
(xi) Use of Information. X.X. Xxxxxxxxx hereby acknowledges that it is
aware that the United States securities laws prohibit any person who has
material, non-public information concerning a company from purchasing or selling
securities of that company or from communicating such information to any other
person under circumstances in which it is reasonably foreseeable that such
person is likely to purchase or sell such securities.
-12-
(b) Ten Percent Period. The Company agrees that, during any period in which
X.X. Xxxxxxxxx holds at least 10% but less than 20% of the voting power of the
capital stock of the Company then outstanding, the Company shall furnish to X.X.
Xxxxxxxxx as soon as publicly available, copies of all financial statements,
reports, notices and proxy statements sent by the Company in a general mailing
to all its shareholders, of all reports on Forms 10-K, 10-Q and 8-K and of all
final prospectuses filed pursuant to Rule 424 under the Securities Act.
Section 11. Indemnification. (a) The Company hereby agrees to indemnify and
hold harmless X.X. Xxxxxxxxx and each of the Other X.X. Xxxxxxxxx Indemnified
Parties, to the fullest extent lawful, from and against any and all losses,
claims, damages or liabilities (collectively, "Losses") and reasonable expenses
(including all fees and expenses of X.X. Xxxxxxxxx'x and each of the Other
Indemnified Parties' counsel, investigators, expert witnesses, accountants and
other professionals, reasonable travel and other out-of-pocket expenses)
incurred at the Company's request or otherwise incurred in connection with the
investigation of any pending or threatened claims or preparation for any pending
or threatened litigation or other proceedings or the renegotiation of any
license agreements relating to Data Center Services, (collectively, "Expenses")
arising out of or relating to (i) the provision of the Services hereunder by
X.X. Xxxxxxxxx or any of the Other X.X. Xxxxxxxxx Indemnified Parties; (ii) any
Guaranteed Obligation, (iii) the use by the Company of the Shared Facilities;
(iv) the provision of Data Center Services to the Company pursuant to the Data
Agreement (as defined in Exhibit 1 hereto) or (v) contracts relating to the
operations of the Company to which XX Xxxxxxxxx is a party; provided, however,
that the Company shall have no obligation to indemnify and hold harmless X.X.
Xxxxxxxxx or any of the Other X.X. Xxxxxxxxx Indemnified Parties (A) under
clauses (i) and (iii) above in respect of Losses or Expenses which are finally
judicially determined to have resulted primarily from the gross negligence or
willful misconduct of X.X. Xxxxxxxxx or any of the Other X.X. Xxxxxxxxx
Indemnified Parties in providing any Services hereunder or (B) under clause (iv)
above in respect of Expenses relating to the Computer Associates Agreements (as
defined in Exhibit 1 hereto) to the extent that the aggregate amount of such
Expenses exceeds $38,000.
(b) X.X. Xxxxxxxxx hereby agrees to indemnify and hold harmless the Company
and each of the Other Company Indemnified Parties, to the fullest extent lawful,
from and against any and all Losses and Expenses arising out of or relating to
(i) the provision of the Services hereunder by X.X. Xxxxxxxxx or any of the
Other X.X. Xxxxxxxxx Indemnified Parties which Losses and/or Expenses are
judicially determined to have resulted primarily from the gross negligence or
willful misconduct of X.X. Xxxxxxxxx
-13-
or any of the Other X.X. Xxxxxxxxx Indemnified Parties; (ii) the use by X.X.
Xxxxxxxxx or any of the Other X.X. Xxxxxxxxx Indemnified Parties of the Shared
Facilities; (iii) the provision of Data Center Services to the Company pursuant
to the Data Agreement which Losses and/or Expenses are judicially determined to
have resulted primarily from the gross negligence or willful misconduct of X.X.
Xxxxxxxxx or any of the Other X.X. Xxxxxxxxx Indemnified Parties; or (iv)
Expenses relating to the Computer Associates Agreements to the extent that the
aggregate amount of such Expenses exceeds $38,000.
(c) If any Indemnitee receives notice of the assertion of any third-party
claim with respect to which an Indemnifying Party is obligated under this
Agreement to provide indemnification, such Indemnitee shall give such
Indemnifying Party notice thereof promptly after becoming aware of such third-
party claim; provided, however, that the failure of any Indemnitee to give
notice as provided in this Section 11(c) shall not relieve any Indemnifying
Party of its obligations under this Section 11, except to the extent that such
Indemnifying Party is actually prejudiced by such failure to give notice. Such
notice shall describe such third-party claim in reasonable detail.
(d) An Indemnifying Party, at such Indemnifying Party's own expense and
through counsel chosen by such Indemnifying Party (which counsel shall be
reasonably satisfactory to the Indemnitee), may elect to defend any third-party
claim. If an Indemnifying Party elects to defend a third-party claim, then,
within ten business days after receiving notice of such third-party claim (or
sooner, if the nature of such third-party claim so requires), such Indemnifying
Party shall notify the Indemnitee of its intent to do so, and such Indemnitee
shall cooperate in the defense of such third-party claim. Such Indemnifying
Party shall pay such Indemnitee's reasonable out-of-pocket expenses incurred in
connection with such cooperation. After notice from an Indemnifying Party to an
Indemnitee of its election to assume the defense of a third-party claim, such
Indemnifying Party shall not be liable to such Indemnitee under this Section 11
for any legal or other expenses subsequently incurred by such Indemnitee in
connection with the defense thereof other than those expenses referred to in the
preceding sentence; provided, however, that such Indemnitee shall have the right
to employ one law firm as counsel to represent such Indemnitee (which firm shall
be reasonably acceptable to the Indemnifying Party) if, in such Indemnitee's
reasonable judgment, either a conflict of interest between such Indemnitee and
such Indemnifying Party exists in respect to such claim or there may be defenses
available to such Indemnitee which are different from or in addition to those
available to such Indemnifying Party, and in that event (I) the reasonable fees
and expenses of such separate counsel shall be paid by such Indemnifying Party
(it being understood, however, that the Indemnifying Party shall not
-14-
be liable for the expenses of more than one separate counsel with respect to any
third-party claim, (even if against multiple Indemnitees)) and (II) each of such
Indemnifying Party and such Indemnitee shall have the right to conduct its own
defense in respect of such claim. If an Indemnifying Party elects not to defend
against a third-party claim, or fails to notify an Indemnitee of its election as
provided in this Section 11(c) within the period of ten business days described
above, such Indemnitee may defend, compromise and settle such third-party claim;
provided, however, that no such Indemnitee may compromise or settle any such
third-party claim without the prior written consent of the Indemnifying Party,
which consent shall not be withheld unreasonably. Notwithstanding the foregoing,
the Indemnifying Party shall not, without the prior written consent of the
Indemnitee, (i) settle or compromise any third-party claim or consent to the
entry of any judgment which does not include as an unconditional term thereof
the delivery by the claimant or plaintiff to the Indemnitee of a written release
from all liability in respect of such third-party claim or (ii) settle or
compromise any third-party claim in any manner that may adversely affect the
Indemnitee.
(e) If for any reason the foregoing indemnification is unavailable to an
Indemnified Party under (a) or (b) above or is insufficient to hold it or them
harmless, then the Indemnifying Party shall contribute to the amount paid or
payable by the Indemnitee(s) as a result of such Loss and Expense in such
proportion as is appropriate to reflect not only the relative benefits received
by the Indemnifying Party, on the one hand, and the Indemnitee(s) on the other
hand, but also the relative fault of the Indemnifying Party and the
Indemnitee(s), as well as any relevant equitable considerations.
(f) The reimbursement, indemnity and contribution obligations of the
parties hereunder shall be in addition to any liability which the parties may
otherwise have.
(g) The Company shall provide to X.X. Xxxxxxxxx a Certificate of Insurance
evidencing coverage for comprehensive general liability, including contractual
liability, in an amount of at least $2 million per occurrence for bodily injury
and property damage naming X.X. Xxxxxxxxx as an additional insured. The Company
agrees to keep such insurance in full force and effect for as long as the
Company is using any Shared Facility.
Section 12. Set-Off. Notwithstanding anything herein to the contrary,
including, without limitation, any indemnification provided for under Section 11
hereof, X.X. Xxxxxxxxx and the Company shall each have the right to set-off, at
any time and from time to time, against any amount owing by the other in
connection with any cause, matter or thing arising under or in connection with
(i) any provision of this Agreement
-15-
or (ii) any provision of any of the Other Agreements, any amount from time to
time owing by X.X. Xxxxxxxxx to the Company, or by the Company to X.X.
Xxxxxxxxx, as the case may be, in connection with any cause, matter or thing
arising under or in connection with (y) any provision of this Agreement or (z)
any provision of any Other Agreement.
Section 13. Extension of Transition Period; Termination. (a) In the event
that the Company desires to negotiate with X.X. Xxxxxxxxx for the continuance of
any Services beyond the end of the Transition Period, the Company shall notify
X.X. Xxxxxxxxx of such desire not later than 45 days prior to the termination of
such Service. Neither X.X. Xxxxxxxxx nor any of its Affiliates shall be
obligated to provide Services on behalf of the Company following the expiration
of this Agreement except to the extent the Company and X.X. Xxxxxxxxx have
executed and delivered an extension of this Agreement or a separate agreement
which provides the terms and conditions of the performance of such Services.
Notwithstanding the foregoing, the Company may extend the Transition Period as
it relates to Tax Services for one year, provided that the Company requests such
renewal in writing not later than November 1, 1997 and X.X. Xxxxxxxxx does not
reject such request within 15 days of receipt thereof. In the event that the
Company extends the Transition Period as it relates to Tax Services as provided
in the preceding sentence, the fee to be paid by the Company to X.X. Xxxxxxxxx
for such Tax Services shall be that set forth for the "Renewal Period" in
Exhibit 1.
(b) This Agreement shall terminate with respect to the Services upon the
expiration of the Transition Period, unless earlier terminated pursuant to this
Section. Anything contained in this Agreement to the contrary notwithstanding,
this Agreement may be terminated at any time:
(i) by the mutual consent of the Company and X.X. Xxxxxxxxx;
(ii) by the Company in the event of any material breach or default by
X.X. Xxxxxxxxx of any of X.X. Xxxxxxxxx'x agreements, representations, or
warranties contained herein and the failure of X.X. Xxxxxxxxx to cure such
breach or default within ten (10) business days after receipt of written
notice from the Company requesting such breach or default to be cured;
(iii) by X.X. Xxxxxxxxx in the event of any material breach or default
by the Company of any of the Company's agreements, representations, or
warranties contained herein and the failure of the Company to cure such
breach or default within ten (10) business days after receipt of
-16-
notice from X.X. Xxxxxxxxx requesting such breach or default to be cured;
or
(iv) by the Company, in the event of the occurrence of a force majeure
event described in Section 25; provided that the Company shall not be
permitted to terminate this Agreement with respect to a Shared Facility
prior to the expiration date with respect to such facility set forth in
Exhibit 2 unless X.X. Xxxxxxxxx has the right and elects to terminate the
lease agreement pertaining to such Shared Facility on account of such force
majeure event.
Section 14. Access to Information.
(a) Provision of Corporate Records. As promptly as practicable after the
Closing Date, X.X. Xxxxxxxxx shall use reasonable efforts to accommodate the
Company with respect to the delivery to the Company of all corporate books and
records of the Company in the possession of X.X. Xxxxxxxxx and originals or
copies of all corporate books and records of X.X. Xxxxxxxxx in the possession of
X.X. Xxxxxxxxx primarily relating to the Business or the assets or liabilities
of the Company, including in each case copies of all active agreements, active
litigation files and government filings.
(b) Access to Information. From and after the Closing Date, each of X.X.
Xxxxxxxxx and the Company shall afford to the other, and shall cause their
respective employees, agents and Affiliates to so afford, reasonable access and
duplicating rights during normal business hours to all information within such
party's possession relating to such other party's businesses, assets or
liabilities, insofar as such access is reasonably required by such other party.
Without limiting the foregoing, information may be requested under this Section
14(b) for audit, accounting, claims, litigation and tax purposes, as well as for
purposes of fulfilling disclosure and reporting obligations.
(c) Retention of Records. Except as otherwise required by law or agreed in
writing, each of X.X. Xxxxxxxxx and the Company shall use reasonable efforts to
accommodate the other with respect to retention and provision of copies of any
significant information in such party's possession or under its control relating
to the business, assets or liabilities of the other party.
Section 15. Certain Agreements and Indemnities to Survive Termination of
Agreement. The provisions of Sections 5, 6, 8, 10, 11 and 14 hereof shall
survive any termination of this Agreement.
Section 16. Assignment; Right of X.X. Xxxxxxxxx to Assign to Subsidiaries.
This Agreement and all the provisions
-17-
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assignable or
transferable by either party (except by operation of law in connection with a
merger involving, or sale of substantially all of the assets of, such party)
without the prior written consent of the other party hereto; provided, however,
that X.X. Xxxxxxxxx, at all times, without regard to the foregoing requirement
to obtain the prior written consent of the Company, may assign any or all of its
rights, duties, responsibilities and obligation hereunder to one or more of its
Affiliates provided that X.X. Xxxxxxxxx guarantees the performance of such
Affiliate.
Section 17. Complete Agreement; Construction. This Agreement and the
Exhibit 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 (it being understood, however, that the Other Agreements set forth
certain additional understandings between X.X. Xxxxxxxxx and the Company
regarding their relationship after the Closing Date).
Section 18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois, without regard
to the principles of conflicts of laws thereof.
Section 19. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed given or delivered
when delivered personally or when sent by registered or certified mail or by
private courier addressed as follows:
to X.X. Xxxxxxxxx:
X.X. Xxxxxxxxx & Sons Company
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Legal Department
to the Company:
Donnelley Enterprise Solutions Incorporated
000 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
Section 20. Amendments. This Agreement may not be modified or amended
except by an agreement in writing signed by the parties.
-18-
Section 21. Waivers. The failure of any party hereto at any time to require
strict performance by the other party hereto of any provision hereof shall not
waive or diminish such party's right to demand strict performance thereafter of
that or any other provision hereof.
Section 22. No Third Party Beneficiaries. Except for the provisions of
Sections 5 and 11 hereof, this Agreement is solely for the benefit of the
parties and does not 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 23. Titles and Headings. Titles and headings to sections herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 24. Partial Invalidity. Wherever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating
the remainder of such invalid, illegal or unenforceable provision or provisions
or any other provisions hereof, unless such a construction would be
unreasonable.
Section 25. Force Majeure. X.X. Xxxxxxxxx shall be excused from performance
hereunder for any period and to the extent that it is prevented from performing
any services pursuant hereto, in whole or in part, as a result of delays caused
by the other party or an act of God, war, civil disturbance, court order, labor
dispute or other cause beyond its reasonable control and such nonperformance
shall not be a default hereunder or a ground for termination hereof. In the
event that X.X. Xxxxxxxxx is excused from performance hereunder pursuant to this
Section, then X.X. Xxxxxxxxx shall take all reasonable actions to resume
performance of its obligations hereunder as soon as feasible; provided, however,
that nothing in this Section will be construed to require the settlement of any
strike, walkout or other labor dispute on terms which, in the reasonable
judgment of X.X. Xxxxxxxxx, are contrary to its interest. It is understood that
the settlement of a strike, walkout or other labor dispute will be entirely
within the discretion of X.X. Xxxxxxxxx. In the event that X.X. Xxxxxxxxx is
excused from performance hereunder with respect to any Service for any period
pursuant to this Section, then the fees to be paid by the Company for such
Service hereunder shall be reduced to reflect such reduction for such period.
-19-
Section 26. Relationship of Parties; X.X. Xxxxxxxxx Employees. (a) Nothing
herein contained shall be deemed or construed by the Company or X.X. Xxxxxxxxx
or for any other party as creating the relationship of principal and agent or of
a partnership or joint venture among the parties hereto.
(b) All employees and representatives of X.X. Xxxxxxxxx providing Services
hereunder to the Company and its subsidiaries during the term of this Agreement
shall be deemed for purposes of all compensation and employee benefits to be
employees or representatives solely of X.X. Xxxxxxxxx or its Affiliates and not
to be employees or representatives of the Company or any of its Affiliates or to
be independent contractors thereof. In performing their respective duties
hereunder, all such employees and representatives of X.X. Xxxxxxxxx or its
Affiliates shall be under the direction, control and supervision of X.X.
Xxxxxxxxx (and not of the Company or its Affiliates) and X.X. Xxxxxxxxx shall
have the sole right to exercise all authority with respect to the employment
(including termination of employment), assignment and compensation of such
employees and representatives.
Section 27. Execution in Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be considered an original
instrument, but all of which shall be considered one and the same agreement, and
shall become binding when one or more counterparts have been signed by the each
of the parties hereto and delivered to each of X.X. Xxxxxxxxx and the Company.
* * * * * * * * *
-20-
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
X.X. XXXXXXXXX & SONS COMPANY
By: /s/ W. Xx Xxxxx
-------------------------
Name: W. Xx Xxxxx
Title: Executive Vice President
DONNELLEY ENTERPRISE
SOLUTIONS INCORPORATED
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman, President and
Chief Executive Officer
-21-
