Separation and Distribution Agreement
by and among
▇▇▇▇▇ Interactive Corporation,
Brighton Communications Corporation
The ▇▇▇▇▇▇ Group, Inc.
and
▇▇▇▇▇▇ Group Holding Co.
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Effective as of
January 18, 2002
1
330495-4
SEPARATION AND DISTRIBUTION AGREEMENT
This Separation and Distribution Agreement (this "Agreement") is entered
into as of January 18, 2002, by and among ▇▇▇▇▇ Interactive Corporation, a
Delaware corporation ("Interactive"), Brighton Communications Corporation, a
Delaware corporation ("Brighton"), The ▇▇▇▇▇▇ Group, Inc., a Delaware
corporation ("▇▇▇▇▇▇"), and ▇▇▇▇▇▇ Group Holding Co., a Delaware corporation
("Holding" and with Interactive, Brighton and ▇▇▇▇▇▇, the "Parties").
RECITALS
WHEREAS, Interactive is a diversified holding company with subsidiaries
primarily engaged in multimedia and transportation services; and
WHEREAS, Interactive's involvement in transportation services is through
Brighton, a wholly-owned subsidiary that holds the securities of ▇▇▇▇▇▇, a
publicly traded corporation specializing in outsourced transportation services;
and
WHEREAS, the securities of ▇▇▇▇▇▇ held by Brighton are identified on
Exhibit A hereto (the "▇▇▇▇▇▇ Group Securities"); and
WHEREAS, each of the Boards of Directors of Interactive and Brighton have
determined that it is in their best interests for Brighton to contribute the
▇▇▇▇▇▇ Group Securities and the sum of $500,000 to the capital of Holding solely
in exchange (the "Exchange") for an aggregate of 3,055,345 shares of Holding's
Common Stock, $.01 par value (the "Holding Shares"), for Brighton to distribute
the 3,055,345 Holding Shares to Interactive (the "Brighton Distribution") and
for Interactive to distribute 2,820,051 of the Holding Shares pro rata to its
stockholders on the basis of one Holding Share for each share of Interactive
common stock outstanding (the "Distribution"); and
WHEREAS, the Parties intend for each of the Exchange, the Brighton
Distribution and the Distribution to qualify as tax-free transactions pursuant
to the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the Parties desire to set forth herein the principal corporate
transactions to be effected in connection with the Exchange, the Brighton
Distribution and the Distribution and certain other matters relating to the
relationship and respective rights and obligations of the Parties following the
Distribution.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the Parties agree as follows:
EXCHANGE AND BRIGHTON DISTRIBUTION
Exchange. Upon the terms and subject to the conditions set forth herein,
not later than three days prior to the Distribution Date (as hereinafter
defined), Brighton and Holding shall effect the Exchange.
Brighton Distribution. Upon the terms and subject to the conditions set
forth herein, not later than one day prior to the Distribution Date, Brighton
shall make the Brighton Distribution to Interactive.
THE DISTRIBUTION AND CASCADE SHARES
The Distribution.
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Subject to Sections 2.1(d) and 3.1, on or prior to the Distribution Date,
Interactive shall deliver 2,820,051 Holding Shares to American Stock Transfer &
Trust Co. (the "Distribution Agent") and shall instruct the Distribution Agent
to distribute such Holding Shares on the Distribution Date pro rata to each
holder of record of Interactive common stock as of December 18, 2001 (the
"Record Date").
Subject to Sections 2.1(d) and 3.1, on the Distribution Date, each
Interactive stockholder as of the Record Date (or such holder's designated
transferee or transferees), shall be entitled to receive, in the form of a
dividend, one Holding Share for each share of common stock of Interactive held
by such holder on the Record Date.
Interactive and Holding shall provide the Distribution Agent with all
necessary documents or information to complete the Distribution pursuant to the
terms set forth herein.
Interactive shall, in its sole and absolute discretion, determine the date
of the Distribution (the "Distribution Date") and all terms of the Distribution,
and the timing of and conditions to the Distribution. In addition, Interactive
may at any time and from time to time until the completion of the Distribution,
modify or change the terms of the Distribution, including, without limitation,
by accelerating or delaying the timing of all or part of the Distribution.
Cascade Shares. Subsequent to the Distribution Date, Interactive shall hold
the 235,294 Holding Shares not subject to the Distribution as escrow agent for
Cascade Investment LLC ("Cascade"), the holder of an outstanding convertible
promissory note made by Interactive (the "Interactive Note"). If Cascade
converts all or any portion of the principal amount of the Interactive Note
prior to December 10, 2004, Interactive shall transfer to Cascade a pro rata
portion of the 235,294 Holding Shares depending upon how much of the principal
amount of the Interactive Note is converted. Should Cascade fail to convert any
or all of the Interactive Note prior to December 10, 2004, ownership of any
Holding Shares then remaining in escrow shall be retained by Interactive.
CONDITIONS PRECEDENT TO THE DISTRIBUTION
Conditions Precedent to the Distribution. The Distribution shall be
conditioned on the satisfaction of the following conditions:
Holding shall have filed a registration statement with the Securities and
Exchange Commission (the "Commission") on Form S-1 (the "Registration
Statement"), and such amendments or supplements thereto as may be necessary in
order to cause the same to become and remain effective, in order to register the
Holding Shares under the Securities Act of 1933, as amended;
(a) The Registration Statement shall have been declared effective by the
Commission and there shall be no stop-order in effect with respect
thereto;
(b) The Exchange and the Brighton Distribution shall have occurred;
(c) Not later than the Distribution Date, Holding shall have prepared and
mailed to Interactive's common stockholders, such information
concerning Holding and the Distribution and such other matters as
Interactive determines upon advice of counsel are necessary or
required by law;
(d) All required actions and filings with regard to state securities and
blue sky laws of the United States (and any comparable laws under any
foreign jurisdictions) shall have been taken by Holding, and, where
applicable, have become effective or been accepted, or Holding shall
have been advised by counsel that any such action or filing not
effective or accepted shall not be required;
(e) Interactive shall have obtained an opinion letter from its independent
auditors to the effect that the Distribution will qualify as a tax
free transaction under the Code, and no gain or loss will be
recognized by (and no amount will otherwise be included in the income
of) the stockholders of Interactive upon their receipt of Holding
Shares in the Distribution;
(f) Any material governmental approvals and consents necessary to
consummate the Distribution shall have been obtained and be in full
force and effect;
(g) No other events or developments shall have occurred subsequent to the
date hereof that, in the judgment of the Board of Directors of
Interactive, would result in the Distribution having a material
adverse effect on Interactive or on Interactive's stockholders;
(h) No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition shall
be in effect so as to prevent the consummation of the Brighton
Distribution, the Exchange or the Distribution or any other
transactions contemplated by this Agreement;
(i) Such other actions as the Parties may, based upon the advice of
counsel, reasonably request to be taken prior to the Distribution in
order to assure the successful completion of the Distribution shall
have been taken; and
(j) This Agreement shall not have been terminated.
COVENANTS AND OTHER MATTERS
Cooperation. The Parties shall cooperate with each other and take all
actions necessary or desirable to consummate the
Distribution as contemplated herein.
Further Acts. Each of the Parties shall, at the request of another Party,
execute or cause to be executed such other agreements, instruments or documents
as may be necessary or desirable in order to effect the purposes of this
Agreement.
Agreement for Exchange of Information.
(k) Each of the Parties shall provide, or cause to be provided, to each
other, at any time before or after the Distribution Date, as soon as
reasonably practicable after written request therefor, any Information
(hereinafter defined) in the possession or under the control of such
Party that the requesting Party reasonably needs (i) to comply with
reporting, disclosure, filing or other requirements imposed on the
requesting Party (including under applicable securities laws) by a
governmental authority having jurisdiction over the requesting Party,
(ii) for use in any other judicial, regulatory, administrative or
other proceeding or in order to satisfy audit, accounting, claims,
regulatory, litigation or other similar requirements, (iii) to comply
with its obligations under this Agreement or (iv) in connection with
the ongoing businesses of the Parties, as the case may be; provided,
however, that in the event any of the Parties determines that any such
provision of Information could be commercially detrimental, violate
any law or agreement, or waive any attorney-client privilege, the
Parties shall take all reasonable measures to permit the compliance
with such obligations in a manner that avoids any such harm or
consequence. "Information" means information, whether or not
patentable of copyrightable, in written, oral, electronic or other
tangible or intangible forms, stored in any medium, including studies,
reports, records, books, contracts, instruments, surveys, discoveries,
ideas, concepts, know-how, techniques, designs, specifications,
drawings, blueprints, diagrams, models, prototypes, samples, flow
charts, data, computer data, disks, diskettes, tapes, computer
programs or other software, marketing plans, customer names,
communications by or to attorneys (including attorney-client
privileged communications), memos and other materials prepared by
attorneys or under their direction (including attorney work product),
and other technical, financial, employee or business information or
data.
(l) After the Distribution Date, (i) the Parties each shall maintain, at
their own cost and expense, adequate systems and controls for their
businesses to the extent necessary to enable them to satisfy their
reporting, accounting, audit and other obligations, and (ii) the
Parties shall provide each other, or cause to be provided, all
financial and other data and information as may be requested or
determined necessary in order to prepare any financial statements,
reports or filings with a governmental authority.
(m) To facilitate the possible exchange of Information pursuant to this
Section 4.3 and other provisions of this Agreement, Holding, ▇▇▇▇▇▇
and Brighton shall use their reasonable best efforts to retain all
Information in their respective possession or control on the
Distribution Date substantially in accordance with the policies of
Interactive as then in effect. However, at any time after the
Distribution Date, Holding, ▇▇▇▇▇▇ or Brighton may amend their
respective record retention policies.
(n) None of the Parties may destroy any Information in existence on the
Separation Date that falls under the categories listed in Section
4.3(a) without first using its reasonable best efforts to notify the
other Parties of the proposed destruction and giving such Parties the
opportunity to take possession of such Information prior to
destruction.
(o) Absent gross negligence or willful misconduct, the Parties shall not
be liable to each other should any Information exchanged or provided
pursuant to this Section 4.3 be found to be inaccurate. The Parties
shall not be liable to each other should any Information be destroyed
or lost following reasonable best efforts to comply with the
provisions of Section 4.3(d).
(p) The rights and obligations granted under this Section 4.3 are subject
to any specific limitations, qualifications or additional provisions
on the sharing, exchange or confidential treatment of Information as
set forth in this Agreement.
Auditors and Audits; Annual and Quarterly Statements and Accounting. ▇▇▇▇▇▇
and Holding agree that, for so long as either party is required, in the
accordance with United States generally accepted accounting principles, to
consolidate the other party's results of operations and financial position:
Without Holding's prior written consent (which shall not be unreasonably
withheld), ▇▇▇▇▇▇ shall not select a different accounting firm from that used by
Holding to serve as its independent certified public accountants ("Holding's
Auditors") for purposes of providing an opinion on its consolidated financial
statements.
(q) ▇▇▇▇▇▇ shall provide Holding, on a timely basis, all Information that
Holding reasonably requires to meet its schedule for the preparation,
printing, filing, and public dissemination of Holding's annual and
quarterly financial statements. Without limiting the generality of the
foregoing, ▇▇▇▇▇▇ shall provide all required financial Information
with respect to ▇▇▇▇▇▇ to Holding's Auditors in a sufficient and
reasonable time and in sufficient detail to permit Holding's Auditors
to take all steps and perform all reviews necessary with respect to
financial Information to be included or contained in Holding's annual
and quarterly financial statements. Similarly, Holding shall provide
▇▇▇▇▇▇, on a timely basis, all financial Information that ▇▇▇▇▇▇
reasonably requires to meet its schedule for the preparation,
printing, filing, and public dissemination of ▇▇▇▇▇▇'▇ annual and
quarterly financial statements. Without limiting the generality of the
foregoing, Holding shall provide all required financial Information
with respect to Holding to ▇▇▇▇▇▇'▇ auditors in a sufficient and
reasonable time and in sufficient detail to permit ▇▇▇▇▇▇'▇ auditors
to take all steps and perform all reviews necessary with respect to
Information to be included or contained in ▇▇▇▇▇▇'▇ annual and
quarterly financial statements.
(r) ▇▇▇▇▇▇ shall give Holding, and Holding shall give ▇▇▇▇▇▇, as much
prior notice as reasonably practical of any proposed determination of,
or any significant changes in, its accounting estimates or accounting
principles from those in effect on the Distribution Date.
(s) Nothing in Sections 4.3 or 4.4 shall require any Party to violate any
agreement with any third party regarding confidential and proprietary
information relating to that third party or its business; provided,
however, that in the event that any Party is required under Sections
4.3 or 4.4 to disclose any such Information, such Party shall use its
reasonable best efforts to seek to obtain such third party's consent
to disclose such information.
Payment of Expenses. All third party costs and expenses in connection with
the Exchange, the Brighton Distribution and the Distribution shall be borne by
Interactive. The Parties shall each be responsible for their own internal fees,
costs and expenses incurred in connection with the Exchange, the Brighton
Distribution and the Distribution.
Section 1.2. Governmental Approvals. To the extent that the Distribution
requires any governmental approvals, the Parties shall use their reasonable best
efforts to obtain any such approvals.
No Representation or Warranty by Brighton. Brighton does not, in this
Agreement or any other agreement, instrument or document contemplated by this
Agreement, make any representation as to, warranty of or covenant with respect
to:
(a) the value of any asset or thing of value to be transferred to Holding
or Interactive; or
(b) the legal sufficiency of any assignment, document or instrument
delivered hereunder to convey title to any asset or thing of value
upon its execution, delivery and filing.
Intercompany Accounts. Interactive hereby transfers to Holding all accounts
on its books and records, whether reflecting a credit or a debit, relating to
transactions between ▇▇▇▇▇▇ and it.
Competitive Matters. No Party shall have any duty to refrain directly or
indirectly from (a) engaging in the same or similar activities or lines of
business as any other Party; or (b) doing business with any potential or actual
supplier or customer of any other Party. No Party shall solicit or recruit,
without the express written consent of any other Party, any employee of such
other Party for a period of one year following the Distribution Date.
Administrative Services. Interactive and ▇▇▇▇▇▇ shall provide such
Administrative Services (as hereinafter defined) as Holding may from time to
time reasonably request and as the Party to whom the request is made has the
capacity to provide. All Administrative Services shall be billed to Holding at
the cost thereof to Interactive or ▇▇▇▇▇▇, as the case may be. Actual
out-of-pocket expenses incurred to third parties in connection with the
Administrative Services shall be paid directly by Holding or reimbursed to
Interactive or ▇▇▇▇▇▇, if previously paid by Interactive or ▇▇▇▇▇▇. For the
purposes hereof, Administrative Services shall include without limitation
clerical, word processing and secretarial services, accounting and bookkeeping
services, record keeping and filing services, insurance services, facilities and
custodial services, legal and paralegal services, telecommunications and
internet services, postal and delivery services.
Tax Matters. Prior to the Exchange, Interactive, Brighton and Holding, on
the one hand and ▇▇▇▇▇▇, on the other hand, filed separate Federal, state and
other tax returns, and neither filer had any obligation to the other on account
of taxes that might be due and owing to any taxing authority. Nothing in this
Agreement shall create any such obligation, whether in respect of periods ending
before or after the Exchange, except that from and after the Exchange, Holding
and ▇▇▇▇▇▇ shall file consolidated tax returns and shall allocate tax
liabilities between them, all as shall be more fully provided in a tax matters
agreement to be entered into between them subsequent to the date hereof.
ASSIGNMENT OF CERTAIN SERVICES AGREEMENT
Assignment. Interactive hereby assigns to Holding all of its right, title
and interest in and to that Certain Services Agreement made as of January 1,
1995 (the "Certain Services Agreement") by and between ▇▇▇▇▇ Corporation and
▇▇▇▇▇▇, previously assigned by ▇▇▇▇▇ Corporation to Interactive. Holding hereby
accepts such assignment and agrees to perform all of the duties and
responsibilities of Interactive thereunder, subject to the terms and conditions
thereof.
Consent. ▇▇▇▇▇▇ hereby consents to the foregoing assignment and assumption.
INDEMNIFICATION
Release of Existing Claims. 1. Except as provided in Section 6.1(c),
effective as of the Distribution Date, the Interactive Companies (as hereinafter
defined) do hereby, for themselves, their respective Affiliates, other than the
▇▇▇▇▇▇ Companies, successors and assigns, and all Persons (as hereinafter
defined) who at any time prior to the date hereof have been stockholders,
directors, officers, agents or employees of the Interactive Companies (in each
case, in their respective capacities as such), remise, release and forever
discharge each of the ▇▇▇▇▇▇ Companies, their respective Affiliates (other than
the Interactive Companies), successors and assigns, and all prior, current or
future stockholders, directors, officers, agents or employees of the ▇▇▇▇▇▇
Companies (in each case, in their respective capacities as such), and their
respective heirs, executors, administrators, successors and assigns, from any
and all Liabilities whatsoever, whether at law or in equity (including any right
of contribution), whether arising under any contract or agreement, by operation
of law or otherwise, existing or arising from all acts and events occurring or
failing to occur or alleged to have occurred or to have failed to occur and all
conditions existing or alleged to have existed on or before the Distribution
Date between the Interactive Companies and the ▇▇▇▇▇▇ Companies (including any
contractual arrangements or arrangements existing or alleged to exist between
them on or before the Distribution Date).
Except as provided in Section 6.1(c), effective as of the date hereof, the
▇▇▇▇▇▇ Companies do hereby, for themselves and their respective Affiliates
(other than the Interactive Companies), successors and assigns, and all Persons
who at any time prior to the date hereof have been stockholders, directors,
officers, agents or employees of the ▇▇▇▇▇▇ Companies (in each case, in their
respective capacities as such), remise, release and forever discharge the
Interactive Companies, their respective Affiliates (other than the ▇▇▇▇▇▇
Companies), successors and assigns, and all prior, current or future
stockholders, directors, officers, agents or employees of the Interactive
Companies (in each case, in their respective capacities as such), and their
respective heirs, executors, administrators, successors and assigns, from any
and all Liabilities whatsoever, whether at law or in equity (including any right
of contribution), whether arising under any contract or agreement, by operation
of law or otherwise, existing or arising from all acts and events occurring or
failing to occur or alleged to have occurred or to have failed to occur and all
conditions existing or alleged to have existed on or before the Distribution
Date between the ▇▇▇▇▇▇ Companies and the Interactive Companies (including any
contractual arrangements or arrangements existing or alleged to exist between
them on or before the date hereof).
Nothing contained in Section 6.1(a) or (b) shall impair any right of any
Person to enforce this Agreement. Nothing contained in Section 6.1(a) or (b)
shall release any Person from: any Liability, contingent or otherwise, assumed,
transferred, assigned or allocated under this Agreement; or any Liability that
the parties may have with respect to indemnification or contribution pursuant to
this Agreement, including any Liability for claims brought against the parties
by third Persons, which Liability shall be governed by the provisions of this
Article VI and Article VII.
Indemnification by the Interactive Companies. Except as provided in Section 6.5
or elsewhere in this Agreement, the Interactive Companies shall indemnify,
defend and hold harmless the ▇▇▇▇▇▇ Companies and each of their respective
directors, officers and employees (in each case, in their respective capacities
as such), and each of the heirs, executors, successors and assigns of any of the
foregoing (collectively, the "▇▇▇▇▇▇ Indemnitees"), from and against any and all
Liabilities of the ▇▇▇▇▇▇ Indemnitees relating to, arising out of or resulting
from any of the following items (without duplication):
the failure of the Interactive Companies or any other Person to pay,
perform or otherwise promptly discharge any Liabilities of the Interactive
Companies in accordance with their respective terms, whether prior to or after
the Distribution Date;
any breach by the Interactive Companies or either of them of this
Agreement; and
any Liabilities relating to or arising out of the Exchange, the Brighton
Distribution or the Distribution.
Indemnification by ▇▇▇▇▇▇. Except as otherwise provided in Section 6.5,
▇▇▇▇▇▇ shall indemnify, defend and hold harmless Holding, the Interactive
Companies and each of their respective directors, officers and employees (in
each case, in their respective capacities as such), and each of the heirs,
executors, successors and assigns of any of the foregoing, from and against any
and all Liabilities of Holding, the Interactive Companies and such persons
relating to, arising out of or resulting from any of the following items
(without duplication):
the failure of ▇▇▇▇▇▇ or any other Person to pay, perform or otherwise
promptly discharge any Liabilities of ▇▇▇▇▇▇, whether prior to or after the
Distribution Date, including without limitation those relating to, arising out
of or resulting from the action described under the caption "Business - Legal
Proceedings" in the Registration Statement and any and all other actions arising
out of the subject matter thereof; and
any breach by ▇▇▇▇▇▇ of this Agreement.
Indemnification by Holding. Except as otherwise provided in Section 6.5,
Holding shall indemnify, defend and hold harmless ▇▇▇▇▇▇ and the Interactive
Companies and each of their respective directors, officers and employees (in
each case, in their respective capacities as such), and each of the heirs,
executors, successors and assigns of any of the foregoing, from and against any
and all Liabilities of ▇▇▇▇▇▇, the Interactive Companies and such persons
relating to, arising out of or resulting from any of the following items
(without duplication):
the failure of Holding or any other Person to pay, perform or otherwise
promptly discharge any Liabilities of Holding, whether prior to or after the
Distribution Date; and
any breach by Holding of this Agreement.
Indemnification Obligations Net of Insurance Proceeds and other Amounts. 1.
The Parties intend that any Liability subject to indemnification or
reimbursement pursuant to this Article VI will be net of Insurance Proceeds (as
hereinafter defined) that actually reduce the amount of the Liability.
Accordingly, the amount which any party (an "Indemnifying Party") is required to
pay to any Person entitled to indemnification hereunder (an "Indemnitee") will
be reduced by any Insurance Proceeds theretofore actually recovered by or on
behalf of the Indemnitee in reduction of the related Liability. If an Indemnitee
receives a payment (an "Indemnity Payment") required by this Agreement from an
Indemnifying Party in respect of any Liability and subsequently receives
Insurance Proceeds, then the Indemnitee will pay to the Indemnifying Party an
amount equal to the excess of the Indemnity Payment received over the amount of
the Indemnity Payment that would have been due if the Insurance Proceeds had
been received, realized or recovered before the Indemnity Payment was made.
An insurer that would otherwise be obligated to pay any claim shall not be
relieved of the responsibility with respect thereto or, solely by virtue of the
indemnification provisions hereof, have any subrogation rights with respect
thereto, it being expressly understood and agreed that no insurer or any other
third party shall be entitled to a "windfall" (i.e., a benefit they would not be
entitled to receive in the absence of the indemnification provisions) by virtue
of the indemnification provisions hereof. Nothing contained in this Agreement
shall obligate any Party to seek to collect or recover any Insurance Proceeds.
Procedures for Indemnification of Third Party Claims. 1. If an Indemnitee
shall receive notice or otherwise learn of the assertion by a Person, including
any Governmental Authority, who is not a Party to this Agreement of any claim or
of the commencement by any such Person of any Action (as hereinafter defined)
(in either case, a "Third Party Claim") with respect to which an Indemnifying
Party may be obligated to provide indemnification to such Indemnitee pursuant to
Section 6.2, 6.3 or 6.4, or any other Section of this Agreement, such Indemnitee
shall give such Indemnifying Party written notice thereof within 20 days after
becoming aware of such Third Party Claim. Any such notice shall describe the
Third Party Claim in reasonable detail. Notwithstanding the foregoing, the
failure of any Indemnitee or other Person to give notice as provided in this
Section 6.6(a) shall not relieve the related Indemnifying Party of its
obligations under this Article VI, except to the extent that such Indemnifying
Party is actually prejudiced by such failure to give notice.
An Indemnifying Party may elect to defend (and, unless the Indemnifying
Party has specified any reservations or exceptions, to seek to settle or
compromise), at such Indemnifying Party's own expense and by such Indemnifying
Party's own counsel, any Third Party Claim. Within 30 days after the receipt of
notice from an Indemnitee in accordance with Section 6.6(a) (or sooner, if the
nature of such Third Party Claim so requires), the Indemnifying Party shall
notify the Indemnitee of its election whether the Indemnifying Party will assume
responsibility for defending such Third Party Claim, which election shall
specify any reservations or exceptions. After notice from an Indemnifying Party
to an Indemnitee of its election to assume the defense of a Third Party Claim,
such Indemnitee shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise, or settlement thereof,
but the fees and expenses of such counsel shall be the expense of such
Indemnitee except as set forth in the next sentence. In the event that the
Indemnifying Party has elected to assume the defense of the Third Party Claim
but has specified, and continues to assert, any reservations or exceptions in
such notice, then, in any such case, the reasonable fees and expenses of one
separate counsel for all Indemnitees shall be borne by the Indemnifying Party.
If an Indemnifying Party elects not to assume responsibility for defending
a Third Party Claim, or fails to notify an Indemnitee of its election as
provided in Section 6.6(b), such Indemnitee may defend such Third Party Claim at
the cost and expense of the Indemnifying Party.
Unless the Indemnifying Party has failed to assume the defense of the Third
Party Claim in accordance with the terms of this Agreement, no Indemnitee may
settle or compromise any Third Party Claim without the consent of the
Indemnifying Party, which consent shall not be unreasonably withheld.
No Indemnifying Party shall consent to entry of any judgment
or enter into any settlement of the Third Party Claim without the consent of the
Indemnitee if the effect thereof is to permit any injunction, declaratory
judgment, other order or other nonmonetary relief to be entered, directly or
indirectly, against any Indemnitee.
Additional Matters. 1. Any claim on account of a Liability that does not
result from a Third Party Claim shall be asserted by written notice given by the
Indemnitee to the related Indemnifying Party. Such Indemnifying Party shall have
a period of 30 days after the receipt of such notice within which to respond
thereto. If such Indemnifying Party does not respond within such 30-day period,
such Indemnifying Party shall be deemed to have refused to accept responsibility
to make payment. If such Indemnifying Party does not respond within such 30-day
period or rejects such claim in whole or in part, such Indemnitee shall be free
to pursue such remedies as may be available to such party as contemplated by
this Agreement.
In the event of payment by or on behalf of any Indemnifying Party to any
Indemnitee in connection with any Third Party Claim, such Indemnifying Party
shall be subrogated to and shall stand in the place of such Indemnitee as to any
events or circumstances in respect of which such Indemnitee may have any right,
defense or claim relating to such Third Party Claim against any claimant or
plaintiff asserting such Third Party Claim or against any other person. Such
Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner,
and at the cost and expense (including allocated costs of in-house counsel and
other personnel) of such Indemnifying Party, in prosecuting any subrogated
right, defense or claim.
In the event of an Action in which the Indemnifying Party is not a named
defendant, if the Indemnifying Party shall so request, the parties shall
endeavor to substitute the Indemnifying Party for the named defendant if at all
practicable. If such substitution or addition cannot be achieved for any reason
or is not requested, the named defendant shall allow the Indemnifying Party to
manage the Action as set forth in this Section and the Indemnifying Party shall
fully indemnify the named defendant against all costs of defending the Action
(including court costs, sanctions imposed by a court, attorneys' fees, experts'
fees and all other external expenses), the costs of any judgment or settlement,
and the cost of any interest or penalties relating to any judgment or
settlement.
Remedies Cumulative. The remedies provided in this Article VI shall be
cumulative and, subject to the provisions of Section 8.3, shall not preclude
assertion by any Indemnitee of any other rights or the seeking of any and all
other remedies against any Indemnifying Party.
Survival of Indemnities. The rights and obligations of each of the Parties
and their respective Indemnitees under this Article VI shall survive the
Distribution and the sale or other transfer by any Party of any assets or
businesses or the assignment by it of any Liabilities.
Unavailability of Indemnity. If the indemnification provided for in this
Article VI is held by a court of competent jurisdiction to be unavailable to an
Indemnitee with respect to any Liabilities referred to herein, the Indemnifying
Party, in lieu of indemnifying such Indemnitee hereunder, agrees to contribute
to the amount paid or payable by such Indemnitee as a result of such Liability
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on one hand and of the Indemnitee on the other in connection
with the event that resulted in such Liability, as well as any other relevant
equitable considerations.
CERTAIN DEFINED TERMS
Defined Terms. For the purposes of this Agreement, the following
capitalized terms shall have the following meanings:
"Action" means any demand, action, suit, countersuit, arbitration, inquiry,
proceeding or investigation by or before any federal, state, local, foreign or
international Governmental Authority or any arbitration or mediation tribunal.
"Affiliate" of any Person means a Person that controls, is controlled by,
or is under common control with such Person. As used herein, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such entity, whether through
ownership of voting securities or other interests, by contract or otherwise.
"Governmental Authority" means any federal, state, local,
foreign or international court, government, department, commission, board,
bureau, agency, official or other regulatory, administrative or governmental
authority.
"Insurance Proceeds" means those monies:
received by an insured from an insurance carrier; or
paid by an insurance carrier on behalf of the insured;
in any such case net of any applicable premium adjustments (including reserves
and retrospectively rated premium adjustments) and net of any costs or expenses
incurred in the collection thereof.
"Interactive Companies" means Interactive and Brighton.
"Liabilities" means any and all losses, claims, charges, debts, demands,
actions, causes of action, suits, damages, obligations, payments, costs and
expenses, sums of money, accounts, reckonings, bonds, specialties, indemnities
and similar obligations, exonerations, covenants, contracts, controversies,
agreements, promises, doings, omissions, variances, guarantees, make whole
agreements and similar obligations, and other liabilities, including all
contractual obligations, whether absolute or contingent, matured or unmatured,
liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever
arising, and including those arising under any law, rule, regulation, Action,
threatened or contemplated Action (including the costs and expenses of demands,
assessments, judgments, settlements and compromises relating thereto and
attorneys' fees and any and all costs and expenses (including allocated costs of
in-house counsel and other personnel), whatsoever reasonably incurred in
investigating, preparing or defending against any such Actions or threatened or
contemplated Actions), order or consent decree of any Governmental Authority or
any award of any arbitrator or mediator of any kind, and those arising under any
contract, commitment or undertaking, including those arising under this
Agreement, in each case, whether or not recorded or reflected or required to be
recorded or reflected on the books and records or financial statements of any
Person.
"▇▇▇▇▇▇ Companies" means ▇▇▇▇▇▇ and Holding.
"Person" means an individual, a general or limited partnership, a
corporation, a trust, a joint venture, an unincorporated organization, a limited
liability entity, any other entity and any Governmental Authority.
MISCELLANEOUS
Entire Agreement. This Agreement constitutes the entire agreement between
the Parties with respect to the subject matter hereof and shall supersede all
prior written and oral and all contemporaneous oral agreements and
understandings with respect to the subject matter hereof.
Section 1.3. Governing Law. This Agreement shall be construed in accordance
with and all disputes hereunder shall be governed by the laws of the State of
New York, except that body of law relating to choice of laws.
Dispute Resolution.
If a dispute, controversy or claim (a "Dispute") arises between any two or
more of the Parties relating to the interpretation or performance of this
Agreement, or the grounds for the termination hereof, appropriate
representatives of each Party who shall have the authority to resolve the matter
shall meet to attempt in good faith to negotiate a resolution of the Dispute
prior to pursuing other available remedies. If the representatives of such
Parties are unable to resolve the Dispute and either party wishes to pursue its
rights relating to such Dispute, then the Dispute will be mediated by a mutually
acceptable mediator appointed pursuant to the mediation rules of JAMS/Endispute
within 30 days after written notice by one Party to the other demanding
non-binding mediation. Neither party may unreasonably withhold consent to the
selection of a mediator or the location of the mediation. Both Parties shall
share the costs of the mediation equally, except that each Party shall bear its
own costs and expenses, including attorney's fees, witness fees, travel
expenses, and preparation costs. The Parties may also agree to replace mediation
with some other form of non-binding or binding ADR.
Any Dispute that the Parties cannot resolve through mediation within 60
days after one Party's demand for non-binding mediation, unless otherwise
mutually agreed, shall be submitted to final and binding arbitration under the
then current Commercial Arbitration Rules of the American Arbitration
Association ("AAA"), by three arbitrators in New York, New York. Such
arbitrators shall be selected by the mutual agreement of the Parties or, failing
such agreement, shall be selected according to the aforesaid AAA rules. The
arbitrators shall be instructed to prepare and deliver a written, reasoned
opinion stating their decision within 30 days after the completion of the
arbitration. The prevailing party in such arbitration shall be entitled to
expenses, including costs and reasonable attorneys' and other professional fees,
incurred in connection with the arbitration (but excluding any costs and fees
associated with prior negotiation or mediation). The decision of the arbitrator
shall be final and non-appealable, absent fraud or manifest error, and may be
enforced in any court of competent jurisdiction. The use of any ADR procedures
will not be construed under the doctrine of laches, waiver or estoppel to
adversely affect the rights of either party.
Any Dispute regarding the following is not required to be negotiated,
mediated or arbitrated prior to seeking relief from a court of competent
jurisdiction: breach of any obligation of confidentiality; or any other claim
where interim relief from the court is sought to prevent serious and irreparable
injury to one of the Parties or to others. However, the Parties to the Dispute
shall make a good faith effort to negotiate and mediate such Dispute, according
to the above procedures, while such court action is pending.
Unless otherwise agreed in writing, the Parties will continue to provide
service and honor all other commitments under this Agreement during the course
of dispute resolution pursuant to the provisions of this Section 8.3 with
respect to all matters not subject to such dispute, controversy or claim.
Section 1.4. Termination. This Agreement may be terminated and the
Distribution abandoned at any time prior to the Distribution
Date by and in the sole discretion of Interactive. In the event of
termination pursuant to this Section 8.4, none of the Parties shall be liable to
each other.
Section 1.5. Notices. Notices, offers, requests or other communications
required or permitted to be given by any of the Parties ------- pursuant to the
terms of this Agreement shall be given in writing to the respective party at the
following addresses:
if to Interactive:
▇▇▇▇▇ Interactive Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to Brighton:
Brighton Communications Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to ▇▇▇▇▇▇:
The ▇▇▇▇▇▇ Group, Inc.
▇▇▇▇ ▇▇▇ ▇.▇. ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to Holding:
▇▇▇▇▇▇ Group Holding Co.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the party to whom notice is given may have
previously furnished to the other Parties in writing as provided herein. Any
notice involving breach shall be sent by hand delivery, recognized overnight
courier or, within the United States, via certified mail, return receipt
requested. All other notices may also be sent by fax or first class mail. All
notices shall be deemed to have been given and received on the earlier of actual
delivery or five days after the date of postmark.
Limitation on Liability. In no event shall any Party be liable to any
other Party for any special, consequential, indirect, incidental or punitive
damages or lost profits, however caused and on any theory of liability arising
in any way out of this Agreement; provided, however, that the foregoing
limitation shall not limit a Party's indemnification obligations pursuant to
Article VI hereof.
Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original but all of which shall constitute
one and the same agreement.
Section 1.6. Binding Effect; Assignment. This Agreement shall inure to the
benefit of and be binding upon the Parties, their respective legal
representatives and their successors. None of the Parties may assign this
Agreement or any rights or obligations hereunder, without the prior written
consent of the other Parties.
Section 1.7. Severability. If any term or other provision of this Agreement
is determined by a court, administrative agency or arbitrator to be invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby are not affected in any manner materially
adverse to any of the Parties. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the Parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the Parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the fullest extent
possible.
Section 1.8. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay by any of the Parties to exercise any right hereunder shall
impair such right or be construed to be a waiver of, or acquiescence in, any
breach of any representation, warranty or agreement herein, nor shall any single
or partial exercise of any such right preclude other or further exercise thereof
or of any other right. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
Section 1.9. Amendment. No change or amendment may be made to this
Agreement except by an instrument in writing signed on behalf of each of the
Parties.
Section 1.10. Authority. Each of the Parties represents to the other that
(a) it has the corporate or other requisite power and authority to execute,
deliver and perform this Agreement, (b) the execution, delivery and performance
of this Agreement by it have been duly authorized by all necessary corporate or
other actions, (c) it has duly and validly executed and delivered this
Agreement, and (d) this Agreement is a legal, valid and binding obligation,
enforceable against it in accordance with its terms subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equity principles.
Section 1.11. Interpretation. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
[The remainder of this page is intentionally left blank]
WHEREFORE, the Parties have signed this Separation and Distribution
Agreement effective as of the date first set forth above.
▇▇▇▇▇ INTERACTIVE CORPORATION
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
BRIGHTON COMMUNICATIONS CORPORATION
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
THE ▇▇▇▇▇▇ GROUP, INC.
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
Finance and Administration
▇▇▇▇▇▇ GROUP HOLDING CO.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
▇▇▇▇▇▇ Group Securities
161,100 shares of the Class A Common Stock of ▇▇▇▇▇▇
warrants to purchase 161,100 shares of
Class A Common Stock of ▇▇▇▇▇▇
2,200,000 shares of the Class B Common Stock of ▇▇▇▇▇▇
warrants to purchase 2,200,000 shares of
Class B Common Stock of ▇▇▇▇▇▇
