Member Distribution Agreement for KPMG Consulting Non-Qualified Employees - KPMG Consulting LLC, KPMG Consulting Inc. and KPMG LLP
MEMBER DISTRIBUTION AGREEMENT
By and Among
KPMG CONSULTING, LLC,
KPMG CONSULTING, INC.,
KPMG LLP
and
THE INDIVIDUAL LISTED ON
THE SIGNATURE PAGE HERETO
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
Section 1.1. Definitions..................................................2
Section 1.2. Rules of Construction........................................5
ARTICLE II
DIVESTITURES RELATED TO AUDITOR INDEPENDENCE
Section 2.1. Independence Requirement.....................................6
Section 2.2. Separation Prior to the IPO..................................7
Section 2.3. Covenants....................................................7
ARTICLE III
AGREEMENT TO WITHDRAW
Section 3.1. Withdrawal...................................................7
Section 3.2. Consequences of Withdrawal...................................7
Section 3.3. Severance....................................................8
Section 3.4. Release......................................................8
Section 3.5. Policies and Procedures......................................9
ARTICLE IV
POWER OF ATTORNEY
Section 4.1. Power of Attorney...........................................10
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1. Non-Competition.............................................10
Section 5.2. Non-Solicitation of Personnel...............................12
Section 5.3. Application.................................................12
Section 5.4. Remedy for Breach...........................................13
Section 5.5. Proprietary Information.....................................14
Section 5.6. Inventions..................................................15
Section 5.7. Termination.................................................17
Section 5.8. Waiver......................................................18
Section 5.9. No Employment Agreement.....................................18
ARTICLE VI
ARBITRATION
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Section 6.1. Arbitration.................................................18
Section 6.2. Reimbursement...............................................19
ARTICLE VII
MISCELLANEOUS
Section 7.1. Survival....................................................19
Section 7.2. Entire Agreement............................................19
Section 7.3. Choice of Law...............................................20
Section 7.4. Amendment; Waiver...........................................20
Section 7.5. Severability................................................20
Section 7.6. Counterparts; Signatures....................................20
Section 7.7. Beneficiaries...............................................21
Section 7.8. Notices.....................................................21
Section 7.9. Schedules...................................................22
Section 7.10. Assignability...............................................22
Section 7.11. Specific Performance........................................22
Section 7.12. Legal Counsel...............................................22
Schedules
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Schedule 5.1 - Competitors
Schedule 5.6 - California Code
ii
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MEMBER DISTRIBUTION AGREEMENT
MEMBER DISTRIBUTION AGREEMENT (this "Agreement"), effective as of the
Effective Date (as hereinafter defined), by and among KPMG Consulting, Inc., a
Delaware corporation ("Consulting, Inc."), KPMG Consulting, LLC, a Delaware
limited liability company ("LLC" and collectively with Consulting, Inc.,
"Consulting"), KPMG LLP, a Delaware limited liability partnership ("KPMG") and
the individual named on the signature page hereto (the "Employee").
W I T N E S S E T H
WHEREAS, the Board of Directors of KPMG has determined that it would
be advisable and in the best interests of KPMG and its principals and partners
for KPMG to separate its Consulting Business (as hereinafter defined) from its
other businesses so that from and after the Effective Date the Consulting
Business will be held indirectly by Consulting, Inc. through its Subsidiaries
(the "Separation") and in connection therewith for Consulting, Inc. to sell
shares of its common stock, par value $.01 per share (the "Consulting Common
Stock"), or its preferred stock to one or more strategic investors (the "Private
Placement");
WHEREAS, KPMG has agreed to contribute, and cause to be contributed to
LLC, (i) certain of the operating assets, properties and liabilities related to
the Consulting Business held by KPMG and certain Subsidiaries of KPMG, (ii) the
partners, principals and employees of KPMG related to the Consulting Business,
including the Employee and (iii) all of the issued and outstanding shares of
capital stock and other equity interests owned by KPMG in certain of KPMG's
Subsidiaries and other entities in and through which the Consulting Business is
conducted (the "Contribution");
WHEREAS, in connection with the Contribution, (i) Consulting or one or
more of its Subsidiaries will assume certain liabilities and obligations arising
out of or relating to the Consulting Business, (ii) LLC will issue Membership
Units (as hereinafter defined) of LLC to KPMG and to certain partners and
principals of KPMG other than the Employee; and (iii) KPMG will make a
memorandum entry on the partner account of certain partners and principals of
KPMG, including the Employee;
WHEREAS, each partner and principal of KPMG who receives Membership
Units will exchange each such Membership Unit for one share of Consulting Common
Stock, and KPMG has agreed to exchange all Membership Units held by it (except
approximately one-half of one percent of the total outstanding Membership Units)
for Consulting Common Stock and one or more notes issued by Consulting (the
"Exchange");
WHEREAS, the Employee was, prior to the Separation and Exchange, a
partner or principal of KPMG and, concurrent with the Contribution, Separation
and Exchange, will become an employee of Consulting; and
WHEREAS, the Employee, KPMG, LLC and Consulting, Inc. have determined
that it is in the mutual best interests of each of them to set forth certain
agreements and understandings among them.
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NOW, THEREFORE, in consideration of the mutual undertakings contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Employee, KPMG, Consulting
Inc. and LLC agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
SECTION 1.1. Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below.
"AFFILIATE" means any Person controlling, controlled by, or under
direct or indirect common control with a Party hereto, it being understood that
KPMG International, KPMG Americas and other KPMG International member (either
directly or indirectly as a subsidiary of a member), licensee or sublicensee
firms are not Affiliates of the Parties hereto. It is further understood that,
for the purpose of this definition, after the Separation, Consulting and its
Subsidiaries shall not be deemed Affiliates of KPMG. For the purpose of this
definition, the term "control" means the power to direct the management of an
entity, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"AGREEMENT" has the meaning specified in the Preamble.
"ANNUAL COMPENSATION" for any given fiscal year consists of the
Employee's total compensation, including all base compensation, incentive
compensation and any other compensation reported or to be reported on an IRS
Form W-2 (or an IRS Form K-1, as the case may be) paid or payable by Consulting
(or KPMG, or any Subsidiary of Consulting with which the Employee becomes
employed or otherwise associated and receives reportable compensation) as the
case may be) for such fiscal year.
"AUDITOR INDEPENDENCE RULES" means the auditor independence rules, as
defined or interpreted by the American Institute of Certified Public
Accountants, the Securities and Exchange Commission, the ISB, the state boards
of accountancy and any other regulatory authority exercising competent
jurisdiction over KPMG, as the same may be amended from time to time.
"CHIEF EXECUTIVE OFFICER" means the Chief Executive Officer or
Co-Chief Executive Officer of Consulting, Inc.
"CISCO" has the meaning specified in Section 5.1.
"CISCO ALLIANCE" has the meaning specified in Section 5.1.
"CLIENT" means any individual, person, firm or other entity that is a
client of Consulting or any of its Subsidiaries at the time, in each case, the
Employee seeks to solicit or perform services for such client as a former
employee of Consulting or any of its Subsidiaries or was a client of Consulting
or any of its Subsidiaries (or, prior to the Separation, a client of KPMG)
within twelve (12) months prior to such time and with respect to whom, the
Employee:
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(i) performed Consulting Services on behalf of Consulting or any of its
Subsidiaries (or, prior to the Separation, KPMG), or (ii) had substantial
contact or acquired or had access to Proprietary Information or other
substantial information as a result of or in connection with the Employee's
employment with Consulting or any of its Subsidiaries (or, prior to the
Separation, as a result of or in connection with the Employee's association with
KPMG) each at any time during the two (2) year period preceding the date on
which the Employee's employment with Consulting or any of its Subsidiaries
terminates for any or no reason.
"CONSULTING" has the meaning specified in the Preamble (except as
otherwise specifically defined in particular provisions of this Agreement).
"CONSULTING BUSINESS" means, for purposes of this Agreement only, the
management and information technology consulting business as conducted by
Consulting or any of its Subsidiaries from time to time.
"CONSULTING, INC." has the meaning specified in the Preamble.
"CONSULTING COMMON STOCK" has the meaning specified in the Recitals.
"CONSULTING SERVICES" means the Consulting Business services provided
by (a) Consulting or (b) any Subsidiary of Consulting with which the Employee
becomes employed or otherwise associated, either (i) as of the date hereof, (ii)
during the Employee's employment with Consulting and (iii) as of any date on
which the Employee's employment with Consulting terminates for any or no reason.
"CONTRIBUTION" has the meaning specified in the Recitals.
"DISPUTES" has the meaning specified in Section 6.1.
"EFFECTIVE DATE" means the close of business on the date on which the
closing of the Separation, Contribution and Exchange occur.
"EFFECTIVE TIME" means the time on the Effective Date at which the
closing of the Separation shall occur.
"EXCHANGE" has the meaning specified in the Recitals.
"EXPIRATION DATE" means the first date which is the later of (i) one
year from the Effective Date and (ii) a date after the consummation of an IPO on
which KPMG and its partners, principals and former partners and principals may,
pursuant to any Lock-Up Agreement signed in connection with the IPO, sell shares
of Consulting Common Stock.
"INDEPENDENCE CONFLICT" has the meaning specified in Section 2.1.
"INVOLUNTARY TRANSFER" means any Transfer pursuant to the laws of
descent, inheritance, bankruptcy or insolvency, as a result of the dissolution
of marriage, due to the execution of a lien or other judgment or other transfer
by operation of law.
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"ISB" means the Independence Standards Board.
"IPO" means an initial public offering of Consulting Common Stock
pursuant to an effective registration statement under the Securities Act.
"KPMG" has the meaning specified in the Preamble.
"KPMG PARTNERSHIP AGREEMENT" means the Partnership Agreement of KPMG
as currently in force or as may be amended from time to time.
"KPMG PLANS AND POLICIES" has the meaning specified in Section 3.5(b).
"MEMBERSHIP UNITS" means Membership Units in LLC representing an
equity interest of a member in the LLC.
"NOTIFICATION" means all notices permitted or required to be given to
any Person hereunder.
"PARTY" means KPMG, Consulting, Inc., LLC or the Employee.
"PERSON" shall mean an individual, corporation, partnership, limited
liability company, unincorporated syndicate, unincorporated organization,
entity, trust, trustee, executor, administrator or other legal representative,
governmental authority or agency, or any group of Persons acting in concert.
"PRIVATE PLACEMENT" has the meaning specified in the recitals.
"PROPRIETARY INFORMATION" means all information or material disclosed
to or known by the Employee as a consequence of the Employee's employment or
engagement by Consulting, any of its Subsidiaries or KPMG, including, without
limitation, third party information that Consulting, any of its Subsidiaries or
KPMG treats as confidential and any information disclosed to or developed by the
Employee or embodied in or relating to the Works. Proprietary Information
includes, but is not limited to, the following types of information and other
information of a similar nature (whether or not reduced to writing):
discoveries, ideas, inventions, concepts, software in various states of
development and related documentation, designs, drawings, specifications,
techniques, methodologies, models, data, source code, object code,
documentation, diagrams, flow charts, research, development, processes, training
materials, templates, procedures, "know-how," tools, client identities, client
accounts, web design needs, client advertising needs and history, client
reports, client proposals, product information and reports, accounts, billing
methods, pricing, data, sources of supply, business methods, production or
merchandising systems or plans, marketing, sales and business strategies and
plans, finances, operations, and information regarding employees.
Notwithstanding the foregoing, information publicly known that is generally
employed by the trade at or after the time Employee first learns of such
information (other than as a result of the Employee's breach of this Agreement),
shall not be deemed part of the Proprietary Information.
"PROSPECTIVE CLIENT" means any individual, person, firm or other
entity that is not a Client but with respect to whom, the Employee: (i)
conducted, prepared or submitted, or
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assisted in conducting, preparing or submitting, any proposal or client
development or marketing efforts on behalf of Consulting, any of its
Subsidiaries or, prior to the Separation, KPMG, or (ii) had substantial contact
or acquired or had access to Proprietary Information or other substantial
information as a result of or in connection with the Employee's employment with
Consulting or any of its Subsidiaries (or, prior to the Separation, as a result
of or in connection with the Employee's association with KPMG) each at any time
during the one (1) year period preceding the date on which the Employee's
employment with Consulting or any of its Subsidiaries terminates for any or no
reason.
"RELEASED PARTIES" means (i) KPMG and its past, present, and future
parents, divisions, subsidiaries, partnerships, affiliates, benefit plans and
other related entities (whether or not such entities are wholly owned); (ii) the
past, present, and future owners, trustees, fiduciaries, administrators,
shareholders, directors, officers, partners, principals, members, agents,
representatives, employees, and attorneys of each entity listed in (i); and
(iii) the predecessors, successors, and assigns of each entity listed in (i) and
(ii).
"RESTRICTED FIRMS" has the meaning specified in Section 5.1(a)(i).
"SEPARATION" has the meaning specified in the Recitals.
"SUBSIDIARY" means, when used with reference to any Party, any
corporation, partnership, limited liability company, or other entity, a majority
of the outstanding voting power of which is owned directly or indirectly by such
Party, provided, however, that for purposes of this definition, after the
Separation, neither Consulting nor any of its Subsidiaries (including any
Subsidiaries transferred pursuant to the Separation) shall be deemed
Subsidiaries of KPMG.
"WORKS" means (i) any inventions, trade secrets, ideas or original
works of authorship that the Employee conceives, develops, discovers or makes in
whole or in part during the Employee's employment or engagement by Consulting or
any of its Subsidiaries, or which the Employee conceived, developed, discovered
or made in whole or in part during the Employee's relationship with KPMG which
relate to the business of Consulting or any of its Subsidiaries or Consulting's
or any of its Subsidiaries' actual or demonstrably anticipated research or
development, (ii) any inventions, trade secrets, ideas or original works of
authorship that the Employee conceives, develops, discovers or makes in whole or
in part during or after the Employee's employment or engagement by Consulting or
any of its Subsidiaries, or conceived, developed, discovered or made in whole or
in part during Employee's relationship with KPMG, either of which are made
through the use of any of Consulting's, any of its Subsidiaries' or KPMG's
equipment, facilities, supplies, trade secrets or time, or which result from any
work the Employee performs or performed for Consulting, any of its Subsidiaries
or KPMG, and (iii) any part or aspect of any of the foregoing.
SECTION 1.2. RULES OF CONSTRUCTION.
(a) In this Agreement, unless a clear contrary intention appears:
(i) the singular number includes the plural number and vice
versa;
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(ii) a reference to any Person includes such Person's
successors and assigns but, if applicable, only if such successors and
assigns are permitted by this Agreement;
(iii) a reference to any gender includes the other gender;
(iv) a reference to any Section or Schedule means such Section
of this Agreement or Schedule to this Agreement, as the case may be, and
references in any Section or definition to any clause means such clause of
such Section or definition;
(v) "herein," "hereunder," "hereof, " "hereto" and words of
similar import shall be deemed references to this Agreement as a whole and
not to any particular Section or other provision hereof or thereof;
(vi) "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding such
term;
(vii) relative to the determination of any period of time,
"from" means "from and including," "to" means "to but excluding" and
"through" means "through and including";
(viii) accounting terms used herein shall have the meanings
historically attributed to them by KPMG and its Subsidiaries prior to the
Separation;
(ix) in the event of any conflict between the provisions of the
body of this Agreement and the Schedules hereto, the provisions of the body
of this Agreement shall control; and
(x) the headings contained in this Agreement have been
inserted for convenience of reference only and are not to be used in
construing this Agreement.
(b) The Schedules to this Agreement may be amended prior to the
Effective Date upon the mutual consent of the Parties.
(c) Any rule of construction or interpretation otherwise requiring
this Agreement to be construed or interpreted against either Party shall not
apply to any construction or interpretation hereof.
ARTICLE II
DIVESTITURES RELATED TO
AUDITOR INDEPENDENCE
SECTION 2.1. INDEPENDENCE REQUIREMENT. The Employee acknowledges that
Consulting is, and for an indefinite period of time after the Separation may
continue to be, subject to the Auditor Independence Rules. The Employee agrees
to abide at all times (including after any termination of employment with
Consulting) by the Auditor Independence Rules applicable to KPMG and to take any
and all action requested by the Board of Directors of
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KPMG in connection with such Auditor Independence Rules. The Employee agrees and
understands that the breach of the covenant in the immediately preceding
sentence may impair the independence of KPMG (an "Independence Conflict").
SECTION 2.2. SEPARATION PRIOR TO THE IPO. In the event the Employee
terminates his or her employment with Consulting for any reason or no reason
(including, without limitation, voluntary resignation by the Employee or
termination at the request of Consulting) prior to the IPO and accepts new
employment which, in the sole judgment of KPMG, causes an Independence Conflict
at any time by virtue of the memorandum entry in the Employee's partner account
of KPMG, the Employee agrees and acknowledges that the memorandum entry in the
Employee's partner account shall be immediately extinguished and forfeited
without any compensation therefor and without any further act on the part of
KPMG, Consulting or the Employee.
SECTION 2.3. COVENANTS.
(a) The Employee covenants and agrees not to take any action directly
or indirectly intended to or having the effect of eliminating the Independence
Conflict contemplated by Section 2.2 by having an entity with which the Employee
is subsequently affiliated resign any existing audit relationship with KPMG.
(b) In the event the Employee breaches the covenant set forth in
Section 2.3, the Employee agrees and acknowledges that, notwithstanding the lack
of an Independence Conflict, the memorandum entry in the Employee's partner
account of KPMG shall be immediately extinguished and forfeited without any
compensation therefor and without any further act on the part of KPMG,
Consulting or the Employee.
ARTICLE III
AGREEMENT TO WITHDRAW
SECTION 3.1. WITHDRAWAL. The Employee agrees that, effective as of the
Effective Date, this Agreement will serve as written notice pursuant to Section
10.1 of the KPMG Partnership Agreement of the Employee's voluntary withdrawal
from KPMG. The Employee acknowledges that pursuant to the Separation Agreement,
KPMG has agreed to waive the enforcement of the requirement pursuant to Section
10.1 of the KPMG Partnership Agreement that the Employee provide notice one
hundred eighty (180) days prior to the effectiveness of such resignation and
consequently that such withdrawal will be effective immediately as of the
Effective Date; provided that (i) the Employee commences employment with
Consulting or any of its Subsidiaries and (ii) the Employee complies with the
Employee's obligations hereunder, including, but not limited to, those set forth
in Section 5.7.
SECTION 3.2. CONSEQUENCES OF WITHDRAWAL.
(a) The Employee acknowledges that upon such withdrawal, (i) the
Employee will forfeit his or her right to vote on matters affecting KPMG; (ii)
KPMG will terminate with respect to the Employee; (iii) the Employee will no
longer be a partner or principal of KPMG; and (iv) except as specifically
provided in the KPMG Partnership Agreement or in the By-Laws
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of KPMG, the Employee will not be entitled to any further rights under the KPMG
Partnership Agreement or By-Laws.
(b) Notwithstanding any provision herein to the contrary, the
Employee shall receive the distributions provided for in Section 11 of the KPMG
Partnership Agreement.
(c) The Employee further acknowledges that KPMG has agreed, pursuant
to Section 6.12 of the Separation Agreement, to waive a breach of Section 12 of
the KPMG Partnership Agreement in the event that, and only to the extent that,
(i) such breach is also a breach of the covenants of the Employee set forth in
Article V of this Agreement and (ii) Consulting or any of its Subsidiaries
pursues its remedies under Article V of this Agreement.
SECTION 3.3. SEVERANCE. The Employee agrees and acknowledges that the
Employee is not entitled to any severance payments from KPMG, Consulting or
otherwise in connection with the Employee's withdrawal from KPMG or acceptance
of employment with Consulting or any Subsidiary of Consulting, under any
provision of the KPMG Partnership Agreement, common law, contract or otherwise.
SECTION 3.4. RELEASE.
(a) The Employee and anyone else claiming by or through the Employee
agree not to sue and further agree to release KPMG and the other Released
Parties with respect to any and all claims, whether currently known or unknown,
that the Employee now has, has ever had, or may ever have, against KPMG or any
of the other Released Parties arising from or related to the Employee's
association with KPMG, compensation, benefits, other terms and conditions of
association with KPMG, or the termination of such association, including,
without limitation, any such claims that were or could have been asserted by the
Employee or on the Employee's behalf: (x) in any federal, state, or local court,
commission, or agency; (y) under any common law theory; or (z) under any
employment, contract, tort, federal, state, or local law, regulation, ordinance,
constitution or executive order.
Notwithstanding the foregoing, nothing herein shall affect: (I) any
rights to indemnification that the Employee may have under the KPMG Partnership
Agreement, the KPMG Bylaws, or otherwise, or (II) any vested rights that the
Employee may have under the Retirement Allowance Plan (as amended), under the
Supplemental Retirement Allowance Plan (as amended), or under any other plan or
policy providing retirement benefits to the Employee. The Employee represents
and warrants that: the Employee is the sole owner of the actual or alleged
claims, demands, rights, causes of action, and other matters that are released
in Sections 3.4(a) and (b); the same have not been transferred or assigned or
caused to be transferred or assigned to any other person, firm, corporation or
other legal entity; and the Employee has the full right and power to grant,
execute, and deliver the releases, undertakings, and agreements contained in
this Agreement.
(b) In the event that the Employee is or has been associated with
KPMG in the State of California, the Employee has read and understands the
following language contained in Section 1542 of the California Civil Code:
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A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.
Having reviewed this provision, the Employee nevertheless hereby voluntarily
waives any and all rights under this statutory provision and releases KPMG and
each of the other Released Parties with respect to any and all unknown or
unsuspected claims arising from or related to the Employee's association with
KPMG, compensation, benefits, other terms and conditions of association with
KPMG, or the termination of such association, including, without limitation, all
such claims that were or could have been asserted by the Employee or on the
Employee's behalf: (x) in any federal, state, or local court, commission, or
agency; (y) under any common law theory; or (z) under any employment, contract,
tort, federal, state or local law, regulation, ordinance, constitution or
executive order.
SECTION 3.5. POLICIES AND PROCEDURES.
(a) The Employee acknowledges, understands and agrees that, effective
upon the date of the Separation, the Employee shall be covered by and shall be
eligible to participate in such employee benefit and other plans, policies and
procedures of Consulting and its Subsidiaries (including without limitation all
plans, policies and procedures concerning or relating to retirement benefits,
medical and dental coverage, and life insurance) as Consulting and its
Subsidiaries may make available generally to their employees (collectively,
"Consulting Plans and Policies"), subject to all terms and conditions of such
Consulting Plans and Policies (as in effect or amended from time to time).
Consulting and its Subsidiaries reserve the right in their sole discretion to
alter, suspend, amend or discontinue any and all Consulting Plans and Policies,
in whole or in part, at any time for any or no reason with or without notice.
(b) The Employee acknowledges, understands and agrees that, except as
provided below in this Section, any and all benefit and other plans, policies
and procedures of KPMG and its Subsidiaries (including without limitation all
plans, policies and procedures concerning or relating to retirement benefits,
medical and dental coverage, and life insurance) (collectively, "KPMG Plans and
Policies") that applied to the Employee during the Employee's association with
KPMG shall no longer apply to the Employee effective upon the Effective Date,
provided that any KPMG Plans and Policies that by their terms provide for
continued application to the Employee after the termination of the Employee's
association with KPMG shall continue to apply to the Employee in accordance with
the terms and conditions of such KPMG Plans and Policies (as in effect or
amended from time to time), and provided further that the Employee's
participation (if any) in and rights (if any) under any KPMG Plans and Policies
concerning retirement, medical or other benefits shall be determined in
accordance with the terms and conditions of such KPMG Plans and Policies. KPMG
reserves the right in its sole discretion to alter, suspend, amend, or
discontinue any and all KPMG Plans and Policies, in whole or in part, at any
time for any or no reason with or without notice.
(c) Notwithstanding anything to the contrary in the foregoing, and
except as provided in Section 3.2(c), nothing in this Section 3.5 shall or shall
be construed to restrict, limit or otherwise affect any rights that Consulting
or KPMG or their Affiliates may have or any obligations that the Employee may
have under any provision of the KPMG Partnership
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Agreement, the By-Laws of KPMG or otherwise, it being understood and agreed that
the provisions of the KPMG Partnership Agreement and the By-Laws of KPMG (as in
effect or amended from time to time) shall continue in full force and effect in
accordance with their terms.
ARTICLE IV
POWER OF ATTORNEY
SECTION 4.1. POWER OF ATTORNEY. The Employee hereby appoints the Chief
Executive Officer as the Employee's attorney-in-fact for the purpose of
executing, swearing to, acknowledging and delivering any and all certificates,
agreements, documents and other instruments as may be necessary, appropriate or
advisable in the sole judgment of such Chief Executive Officer in furtherance of
the Separation, the Contribution, the making of the memorandum entry, the IPO
and compliance with the Auditor Independence Rules including, but not limited
to, the agreements and instruments contemplated by Article II. This power of
attorney is irrevocable and coupled with an interest. On the request of the
Chief Executive Officer, the Employee shall confirm his or her grant of this
power of attorney or any use thereof by the Chief Executive Officer and shall
execute, swear to, acknowledge and deliver any such certificate, agreement,
document or other instrument related thereto. The Employee hereby grants unto
such attorney-in-fact full power of substitution, delegation and revocation.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. NON-COMPETITION. The Employee acknowledges, understands
and agrees that the extraordinary transactions contemplated by the Separation,
the Private Placement, the associated alliance (the "Cisco Alliance") of
Consulting with Cisco Systems, Inc. ("Cisco"), and the anticipated IPO present
KPMG, Consulting (which term shall include throughout the remainder of this
Article V, except to the extent specifically provided otherwise herein, the
Subsidiaries of Consulting with which the Employee becomes employed or otherwise
associated) and the Employee with a unique and unprecedented opportunity to
receive significant financial benefits and value that will materially and
substantially benefit KPMG, Consulting, the Employee, and the other employees of
Consulting, which benefits and value include, without limitation, the
enhancement of Consulting's overall competitive position and the establishment
of a significant compensation structure. The Employee further acknowledges,
understands and agrees that the full realization of these enhanced benefits and
value critically depends on continued cooperation and mutual reliance among the
Employee and the other employees of Consulting in pursuit of Consulting's
competitive objectives following the Separation, the Private Placement, the
Cisco Alliance and the anticipated IPO, including after the end of the
Employee's association with Consulting. The Employee further acknowledges,
understands and agrees that, during the Employee's employment and as a result of
the Separation, the Employee will have access to and will develop relationships
with clients and employees and other agents of Consulting, and that Consulting's
relationships with its clients, employees and other agents are extremely
valuable assets in which Consulting will continue to invest substantial time,
effort and expense. Accordingly, the Employee acknowledges, understands and
agrees that the Employee bears an enhanced duty of the utmost loyalty to
Consulting and to the other employees of
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Consulting who stand to receive benefits and value from the Separation, the
Private Placement, the Cisco Alliance and the anticipated IPO (each of whom is
assuming an identical duty that will inure to the Employee's benefit), which
duty includes, without limitation, a responsibility to act only in furtherance
of, and not contrary to, Consulting's business objectives upon which the
Separation, the Private Placement, the Cisco Alliance and the anticipated IPO
are premised. In furtherance of these objectives and this enhanced duty, the
Employee also agrees to undertake the obligations in this Article V which the
Employee acknowledges are reasonably designed to protect the legitimate business
interests of Consulting and the benefits, value and opportunity accruing to
Consulting, the Employee, and Consulting's other employees as a result of the
Separation, the Private Placement, the Cisco Alliance and the anticipated IPO,
without unreasonably or unnecessarily restricting the Employee's remunerative
opportunities should the Employee leave Consulting:
(a) Except in furtherance of the Employee's services for Consulting,
the Employee shall not, during the Employee's employment with Consulting and
thereafter until the later of (i) five (5) years after the Effective Date or
(ii) one (1) year after the date on which the Employee's employment with
Consulting terminates for any or no reason (including, without limitation,
voluntary resignation by the Employee or termination at the request of
Consulting), directly or indirectly:
(i) Become employed or retained to perform services involving
Consulting Services by, or perform services in any other capacity (whether
as a sole proprietor, owner, employer, partner, principal, investor, joint
venturer, shareholder, associate, employee, member, consultant, or
otherwise) involving Consulting Services for, or on behalf of, any of the
entities set forth in Schedule 5.1 to this Agreement or any of the
affiliates, related entities, successors or assigns of any of them
(collectively, "Restricted Firms") anywhere in the world where the
Restricted Firms do business at the time the Employee seeks to perform
Consulting Services; or
(ii) Engage or assist any other individual, person, firm or other
entity in engaging in the performance of Consulting Services (whether as a
sole proprietor, owner, employer, partner, principal, investor, joint
venturer, shareholder, associate, employee, member, consultant, or
otherwise) in association with (I) any other principal, officer or manager
of Consulting (or other individuals with comparable levels of seniority),
or (II) any individual who was a principal, officer or manager of
Consulting (or other individuals with comparable levels of seniority) or a
partner, principal or manager of KPMG within the twelve (12) month period
preceding the date of termination of the Employee's employment with
Consulting or the twelve (12) month period preceding the date on which the
Employee seeks to perform Consulting Services with such an individual,
whichever is later, anywhere in the world where Consulting does business at
the time the Employee seeks to perform Consulting Services.
Notwithstanding the foregoing, with respect to the equity of any of
the Restricted Firms which is or becomes publicly traded, the Employee's
ownership as a passive investor of less than 1% of the outstanding publicly
traded capital stock of a Restricted Firm shall not be deemed a violation of the
foregoing clauses (i) or (ii).
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(b) Except in furtherance of the Employee's services for Consulting,
the Employee shall not, during the Employee's employment with Consulting and
thereafter until the later of (i) five (5) years after the Effective Date or
(ii) two (2) years after the date on which the Employee's employment with
Consulting terminates for any or no reason (including, without limitation,
voluntary resignation by the Employee or termination at the request of
Consulting), directly or indirectly (whether as a sole proprietor, owner,
employer, partner, principal, investor, joint venturer, shareholder, associate,
employee, member, consultant, or otherwise): (i) perform or provide or assist
any other individual, person, firm or other entity in performing or providing
Consulting Services for any Client or Prospective Client; or (ii) solicit or
assist any other individual, person, firm or other entity in soliciting any
Client or Prospective Client for the purpose of performing or providing any
Consulting Services.
(c) Notwithstanding the foregoing, in the event that the Employee's
employment with Consulting terminates for any or no reason and the Employee does
not engage in or perform services of any kind involving Consulting Services
(whether individually, for or in association with any of the Restricted Firms,
or for or in association with any other individual, person, firm or other
entity) during the one (1) year period following the date on which the
Employee's employment with Consulting terminates, and the Employee represents
and warrants to the satisfaction of Consulting, Inc. or LLC in a writing
directed to Consulting, Inc.'s or LLC's General Counsel at the conclusion of
such one (1) year period that the Employee has not engaged in or performed any
such services in any such capacity, Consulting, Inc. or LLC shall, after receipt
and review of such representation and warranty to determine its sufficiency,
release the Employee in writing from the continuing obligations, if any, that
the Employee may have under Section 5.1(a).
SECTION 5.2. NON-SOLICITATION OF PERSONNEL. Except in furtherance of
the Employee's services for Consulting, the Employee shall not, during the
Employee's employment with Consulting and thereafter until the later of (i) five
(5) years after the Effective Date or (ii) two (2) years after the date on which
the Employee's employment with Consulting terminates for any or no reason
(including, without limitation, voluntary resignation by the Employee or
termination at the request of Consulting), directly or indirectly (whether as a
sole proprietor, owner, employer, partner, investor, principal, joint venturer,
shareholder, associate, employee, member, consultant, or otherwise) solicit,
employ or retain, or assist any other individual, person, firm or other entity
in soliciting, employing or retaining, any employee or other agent of Consulting
(including, without limitation, any former employee or other agent who separated
from Consulting (or, prior to the Separation, any partner, principal or employee
of KPMG) within a twelve (12) month period before or after the date on which the
undersigned Employee's employment with Consulting terminates) to perform
Consulting Services for or on behalf of, or in affiliation in any manner with,
the Employee or any individual, person, firm or other entity with which the
Employee is or becomes employed, retained or otherwise associated.
SECTION 5.3. APPLICATION. In applying this Article V, the wishes or
preferences of a Client or Prospective Client as to who shall perform its
Consulting Services, or the fact that the Client or Prospective Client may also
be a client of a third party with whom the Employee is or becomes associated,
shall neither be relevant nor admissible as evidence in any dispute arising
under this Article V.
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SECTION 5.4. REMEDY FOR BREACH. In addition to and without in any way
limiting any remedies at law or in equity that may be available to Consulting
for any breach of this Agreement (including, without limitation, any remedies
under Section 6.1(e) or 7.11 of this Agreement), and without in any way
precluding or being construed to preclude Consulting from making a showing of
irreparable injury or any other element that may be necessary to secure
injunctive relief, the Employee agrees to undertake the following obligations
and accept the following consequences in the event that the Employee breaches
Sections 5.1 or 5.2:
(a) In the event that, during the five (5) year period following the
Effective Date, the Employee breaches Section 5.1(a), the Employee shall pay
Consulting, Inc. (it being understood and agreed that the Employee shall deliver
any amounts payable pursuant to this Section 5.4 to Consulting, Inc. and not to
any of its Subsidiaries, and it being further understood that Consulting, Inc.
shall take responsibility for apportioning any amounts paid hereunder among
itself, LLC and their respective Subsidiaries as may be appropriate under the
circumstances) an amount in cash equal to one hundred percent (100%) of the
average Annual Compensation paid or payable to the Employee by Consulting over
the course of the two completed fiscal years of Consulting immediately preceding
the Consulting fiscal year in which the Employee's breach occurs, provided that:
(i) Solely for the purpose of this Section 5.4(a), any period of
time during which the Employee was associated with KPMG, and any amounts
paid or to be paid by KPMG (whether as base compensation, incentive
compensation or other compensation) during such period, shall be deemed to
be included in determining the fiscal years during which the Employee was
employed by Consulting and the amount of the Annual Compensation paid or
payable by Consulting to the Employee for such fiscal years; and
(ii) In the event that the Employee has been employed by
Consulting (including, for purposes of this calculation, any period during
which the Employee was associated with KPMG) for less than two (2) full
fiscal years at the time of the Employee's breach, the Employee shall pay
Consulting an amount in cash equal to one hundred percent (100%) of the
Annual Compensation paid or payable to the Employee by Consulting
(including, for this purpose, KPMG) during the most recent completed full
fiscal year during which the Employee was employed by Consulting
(including, for this purpose, KPMG).
(b) Any and all payments made pursuant to Section 5.4(a) shall be
made ratably in quarterly installments over the twenty-four (24) month period
following such breach. The Employee acknowledges, understands and agrees that
Consulting will suffer damages as a result of the Employee's breach of Section
5.1(a) that are difficult to calculate and that the payment required by this
Section 5.4 is a reasonable forecast of the damages likely to result from such
breach. In particular, the Employee acknowledges, understands and agrees that
the Employee's Annual Compensation with Consulting and with KPMG is based on the
Employee's value to Consulting, that the Annual Compensation reflects, among
other things, the Employee's efforts at developing and maintaining client
relationships and the Employee's success in participation in the management of
Consulting's affairs and that the payment obligation set forth above reasonably
approximates the value that Consulting will lose in the event that the Employee
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breaches Section 5.1(a), and also reasonably compensates Consulting for the
damages that it will suffer as a result of the Employee's breach of the duty of
loyalty pursuant to Section 5.1.
(c) In the event of a breach of Section 5.1(b), the Employee shall,
in addition to and without limiting any payments required under Section 5.4(a)
or 5.4(d), pay to Consulting, Inc. an amount in cash equal to fifty percent
(50%) of the gross fees and other amounts paid or payable during the three (3)
year period following such breach to the Employee, or to any other individual,
person, firm or other entity with which the Employee is or becomes directly or
indirectly employed, retained or otherwise associated at the time of any breach,
by any Client or Prospective Client that was solicited or provided with services
in violation of Section 5.1(b). Payments to Consulting, Inc. pursuant to this
Section 5.4(c) shall be due within thirty (30) days after any payment of fees or
other amounts is made by the Client or Prospective Client. The Employee
acknowledges, understands and agrees that Consulting will suffer damages as a
result of the Employee's breach of Section 5.1(b) that are difficult to
calculate, and that the payment required by this Section 5.4 (c) is a reasonable
forecast of the damages likely to result from such breach.
(d) In the event of a breach of Section 5.2, the Employee shall, in
addition to and without limiting any payments required under Section 5.4(a) or
Section 5.4(c), pay to Consulting, Inc. an amount in cash equal to one hundred
percent (100%) of the compensation (including, without limitation, base salary,
any other base pay and incentive compensation) paid or payable by Consulting
(which includes, for purposes of this calculation, any such compensation paid or
payable by KPMG during the relevant twelve (12) month period described in this
Section 5.4(d)) to the solicited, employed or retained employee or other agent
during:
(i) The twelve (12) month period preceding the breaching
Employee's breach of Section 5.2; or
(ii) In the case of a solicited, employed or retained employee or
agent who neither was a current employee or agent of Consulting nor was
associated with KPMG at the time of the Employee's breach, the twelve (12)
month period preceding the later of the employee's or agent's (I)
termination from employment with Consulting for any or no reason, or (II)
separation from KPMG for any or no reason.
Payments to Consulting, Inc. pursuant to this Section 5.4(d) shall be made
ratably in quarterly installments over the twenty-four (24) month period
following such breach. The Employee acknowledges, understands and agrees that
Consulting will suffer damages as a result of the Employee's breach of Section
5.2 that are difficult to calculate, and that the payment required by this
Section 5.4(d) is a reasonable forecast of the damages likely to result from
such breach.
(e) The Employee acknowledges, understands and agrees that the
payment obligations and other provisions set forth in this Section 5.4 are not,
and are not intended to be, a penalty of any kind.
SECTION 5.5. PROPRIETARY INFORMATION.
(a) The Employee acknowledges, understands and agrees that the
successful marketing, development and rendering of Consulting's professional
services and products
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require substantial time and expense. Such efforts generate for Consulting
valuable and proprietary information and materials that give Consulting a
business advantage over others who do not have such information.
(b) The Employee will, both during the Employee's work for Consulting
and thereafter, hold in confidence and not directly or indirectly reveal,
report, publish, disclose or transfer any of the Proprietary Information to any
person or entity, or utilize any of the Proprietary Information for any purpose,
except in the course of the Employee's work for Consulting for Consulting's sole
benefit. In addition, the Employee will not remove, reproduce, summarize or copy
any Proprietary Information except as expressly required by Consulting to enable
the Employee to perform the Employee's duties, and the Employee will return
immediately to Consulting all Proprietary Information in the Employee's
possession or control, including duplicates, when the Employee leaves his or her
employment or whenever Consulting may otherwise require that such Proprietary
Information be returned.
(c) The Employee will not knowingly use for the benefit of, or
disclose to any person employed by, Consulting confidential information of any
of the Employee's former employers or of any other third party or otherwise
knowingly infringe any proprietary right of any third party. The Employee
represents and warrants that no contract, agreement or other obligation between
or among the Employee and any third party will interfere in any manner with the
Employee's complete performance of the Employee's duties to Consulting or with
the Employee's compliance with the terms and conditions hereof.
(d) The Employee understands that this Article V is effective as of
the commencement of the Employee's employment with Consulting (or relationship
with KPMG, as the case may be) or, if earlier, the date the Employee first
acquired knowledge of any Proprietary Information.
SECTION 5.6. INVENTIONS.
(a) All Works shall belong exclusively to Consulting whether or not
fixed in a tangible medium of expression. Without limiting the foregoing, to the
maximum extent permitted under applicable law, all Works shall be deemed to be
"works made for hire" under the United States Copyright Act, and Consulting
shall be deemed to be the author thereof.
(b) If and to the extent any Works are determined not to constitute
"works made for hire," or if any rights in the Works do not accrue to Consulting
as a work made for hire, the Employee hereby irrevocably assigns and transfers
to Consulting to the maximum extent permitted by law all right, title and
interest in the Works, including all copyrights, patents, trade secret rights,
and other proprietary rights in or relating to the Works. Without limiting the
foregoing, the Employee hereby irrevocably assigns and transfers to Consulting
all economic rights to the Works, including the rights to reproduce,
manufacture, use, adapt, modify, publish, distribute, sublicense, publicly
perform and communicate, translate, lease, import and otherwise exploit the
Works.
(c) The Employee shall have no right to exercise any economic rights
to the Works. Without limiting the foregoing, the Employee will not have the
right to and will not
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reproduce, adapt, modify, publish, distribute, sublicense, publicly perform or
communicate, translate, lease, import or otherwise exploit the Works, except as
expressly authorized by Consulting.
(d) The Employee expressly acknowledges and agrees that the Employee
wishes to remain anonymous and not to have the Employee's name or any pseudonym
used in connection with the Works.
(e) The Employee hereby approves any and all modifications, uses,
publications and other exploitation of the Works that Consulting or any
successor or transferee thereof may elect to make, and the Employee expressly
agrees that no such modifications, uses, publications or exploitations will or
may cause harm to the Employee's honor or reputation. The Employee agrees that
no modification, use or publication of the Works by Consulting or any successor
or transferee thereof will be deemed to constitute a distortion or mutilation of
the Works.
(f) Consulting shall have the unrestricted right to transfer and
convey any or all of Consulting's rights in or relating to the Works to any
person or entity.
(g) This Agreement shall be construed in accordance with the
provisions of Section 2870 of the California Labor Code (the text of which is
included in Schedule 5.6) relating to inventions made by an employee.
Accordingly, this Agreement is not intended and shall not be interpreted to
assign to or invest in Consulting any of the Employee's rights in any inventions
developed entirely on the Employee's own time without using Consulting's
equipment, supplies, facilities, or trade secret information, except for those
inventions that either relate at the time of conception or reduction to practice
of the inventions to the Consulting Business or the actual or demonstrably
anticipated research or development of Consulting, or result from any work the
Employee performed for Consulting.
(h) Employee shall keep and maintain adequate and current written
records of all inventions, original works of authorship, trade secrets or other
Works in which rights vest in or are assigned to Consulting hereunder. The
records will be in the form of notes, sketches, drawings, and any other format
that may be specified by Consulting. The records will be available to and remain
the sole property of Consulting at all times.
(i) Employee shall provide any assistance reasonably requested by
Consulting to obtain United States or foreign letters patent and copyright
registrations covering inventions, original works of authorship and other Works
belonging or assigned hereunder to Consulting. Employee shall execute any
transfers of ownership of letters patent or assignments of copyrights or other
proprietary rights transferred or assigned hereunder (including short form
assignments intended for recording with the U.S. Copyright Office, the U.S.
Patent and Trademark Office, or any other entity). Employee's obligations under
this Section shall survive any termination or expiration of this Agreement in
perpetuity, provided that Consulting shall compensate Employee at a reasonable
rate for time actually spent performing such obligations at Consulting's request
after such termination or expiration. If Consulting is unable for any reason
whatsoever, including Employee's mental or physical incapacity, to secure
Employee's signature to apply for or to pursue any application for any United
States or foreign letters patent or copyright
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registrations or on any document transferring or assigning any patent, copyright
or other proprietary right that Employee is obligated hereunder to transfer or
assign, Employee hereby irrevocably designates and appoints Consulting and its
duly authorized officers and agents as Employee's agent and attorney in fact, to
act for and on its behalf and in its stead to execute and file any such
applications and documents and to do all other lawfully permitted acts to
further the prosecution and issuance of letters patent or copyright
registrations or transfers or assignments thereof or of any other proprietary
rights with the same legal force and effect as if executed by Employee. This
appointment is coupled with an interest in and to the inventions, works of
authorship, trade secrets and other Works to which any proprietary rights may
apply and shall survive Employee's death or disability.
(j) Throughout this Section 5.6, the term Consulting shall mean (i)
Consulting, Inc. for any period of time during which the Employee is employed by
Consulting, Inc., (ii) LLC for any period of time during which the Employee is
employed by LLC and (iii) any Subsidiary of Consulting, Inc. or LLC for any
period of time during which the Employee is employed by such Subsidiary.
SECTION 5.7. TERMINATION.
(a) The Employee may voluntarily terminate the Employee's employment
with Consulting upon one hundred eighty (180) days' prior written notice unless
such notice shall be waived in writing by the Chief Executive Officer. In the
event that the Employee breaches this Section 5.7(a) prior to the later of (i)
the date which is eighteen (18) months after the Effective Date or (ii) the date
which is twelve (12) months after the consummation of an IPO, the Employee shall
pay Consulting, Inc. (it being understood and agreed that the Employee shall
deliver any amounts payable pursuant to this Section 5.7(a) to Consulting, Inc.
and not to any of its Subsidiaries, and it being further understood that
Consulting, Inc. shall take responsibility for apportioning any amounts paid
hereunder among itself, LLC and their respective Subsidiaries as may be
appropriate under the circumstances) an amount in cash equal to fifty percent
(50%) of the average Annual Compensation paid or payable on an annualized basis
to the Employee by Consulting over the course of the completed fiscal year of
Consulting immediately preceding the Consulting fiscal year in which the
Employee's breach occurs. Solely for the purpose of this Section 5.7(a), any
period of time during which the Employee was associated with KPMG, and any
amounts paid or to be paid by KPMG (whether as base compensation, incentive
compensation or other compensation) during such period, shall be deemed to be
included in determining the fiscal years during which the Employee was employed
by Consulting and the amount of the Annual Compensation paid or payable by
Consulting to the Employee for such fiscal years. The amount payable hereunder
shall be in addition to and without in any way limiting any remedies at law or
in equity that may be available to Consulting for any breach of this Agreement
(including, without limitation, any remedies under Section 6.1(e) or 7.11 of
this Agreement), and without in any way precluding or being construed to
preclude Consulting from making a showing of irreparable injury or any other
element that may be necessary to secure injunctive relief. Any and all payments
made pursuant to this Section 5.7(a) shall be made ratably in quarterly
installments over the twenty-four (24) month period following such breach.
(b) The Employee agrees to provide all assistance requested by
Consulting, whether before, upon, or after the termination of the Employee's
employment with Consulting
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for any or no reason (including voluntary resignation by the Employee or
termination at the request of Consulting), in transitioning the Employee's
duties, responsibilities and client and other Consulting relationships to other
Consulting personnel in connection with any such termination of the Employee's
employment with Consulting.
SECTION 5.8. WAIVER.
(a) The Chief Executive Officer may, in his or her sole discretion,
waive any of the provisions of Sections 5.1 through 5.7.
(b) Notwithstanding Section 5.8(a), and except as provided in Section
3.2(c), no provision herein shall or shall be construed to restrict, limit or
otherwise affect any rights that Consulting or KPMG or their Affiliates may have
or any obligations that the Employee may have under any provision of the KPMG
Partnership Agreement, the By-Laws of KPMG or otherwise, it being understood and
agreed that the provisions of the KPMG Partnership Agreement and the By-Laws of
KPMG (as in effect or amended from time to time) shall continue in full force
and effect in accordance with their terms.
SECTION 5.9. NO EMPLOYMENT AGREEMENT. The Employee understands that
this Agreement is not intended to and shall not be construed to constitute an
express or implicit employment contract for any purpose, including for a
specific duration of time. The Employee acknowledges and understands that,
unless Consulting and the Employee otherwise clearly and expressly agree in
writing, the Employee is employed at will, which means that either the Employee
or Consulting may terminate the employment relationship at any time, for any
reason or for no reason, with or without notice, except for such notice as
required of the Employee pursuant to Section 5.7.
ARTICLE VI
ARBITRATION
SECTION 6.1. ARBITRATION.
(a) To the extent permitted by law, all claims or disputes arising
out of or relating to the construction, meaning or effect of any provision of
this Agreement, to the Employee's employment relationship with Consulting (which
term shall include for purposes of this entire Article VI, the Subsidiaries of
Consulting), or to the termination of this Agreement or cessation of such
employment relationship:
(i) that the Employee may have against or with Consulting, any
of its Affiliates, partnerships, other related entities, successors, or
permitted assigns, or any director, officer, trustee, fiduciary,
administrator, employee, owner, shareholder, partner, principal, member,
attorney, agent, or representative of any of the foregoing entities; or
(ii) that Consulting may have against or with the Employee
(collectively, "Disputes"), shall be submitted for resolution by arbitration in
accordance with the procedures set forth in this Section 6.1. Disputes subject
to arbitration hereunder include, but are
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not limited to, claims by the Employee for employment discrimination,
harassment, retaliation, wrongful termination, or other violations under Title
VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act,
the Americans With Disabilities Act, the Family and Medical Leave Act, or the
Employee Retirement Income Security Act, under any other federal, state, or
local law, regulation, ordinance, executive order, or constitution, or under
common law. All arbitrations hereunder shall be held in the State of Virginia or
the State of New York at the election of Consulting.
(b) Arbitrations shall take place before a panel of three arbitrators
(the "Arbitration Panel"), which shall consist of one person selected by each of
the two sides to the Dispute and the third person to be jointly selected by the
two arbitrators previously selected.
(c) The Arbitration Panel shall have no authority to amend or modify
the terms of this Agreement (except pursuant to Section 7.5) or to award
punitive or exemplary damages.
(d) Judgment on any award rendered pursuant to this Section 6.1 may
be entered in the courts of the State of Virginia or the State of New York, at
the election of Consulting or in any other court having jurisdiction, or
application may be made to such court for a judicial recognition of the award or
an order of enforcement thereof, as the case may be.
(e) Notwithstanding anything in this Section 6.1 to the contrary,
Consulting may seek provisional relief, including, but not limited to, temporary
restraining orders and preliminary injunctions, from a court of competent
jurisdiction in aid of the arbitration, to prevent any award from being rendered
ineffectual, to protect Consulting's Proprietary Information or Works or for any
other purpose in the interests of Consulting. Seeking any such relief shall not
be deemed a waiver of Consulting's right to compel arbitration. The courts of
the State of Virginia or the State of New York, at the election of Consulting,
as well as any other court of competent jurisdiction, shall have jurisdiction
over any proceeding relating to arbitrations under this Section 9.1.
SECTION 6.2. REIMBURSEMENT. The Employee agrees to reimburse
Consulting upon demand for any and all costs, expenses and other amounts
(including, without limitation, attorneys' fees and court costs) incurred by
Consulting in enforcing any of its rights under this Agreement (except to the
extent inconsistent with the enforcement of Section 6.1).
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. SURVIVAL. The provisions of this Agreement shall remain
in full force and effect in accordance with their terms notwithstanding any
termination of the Employee's employment with Consulting or any of its
Subsidiaries for any or no reason or any dissolution or liquidation of LLC.
SECTION 7.2. ENTIRE AGREEMENT. This Agreement and the Schedules hereto
constitute the only agreements between the Parties with respect to the subject
matter hereof,
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there being no prior written or oral promises or representations not
incorporated herein or therein.
SECTION 7.3. CHOICE OF LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York and
the federal laws of the United States of America applicable therein, as though
all acts and omissions related hereto occurred in New York. Any lawsuit arising
from or related to this Agreement may be brought, to the extent any such lawsuit
is permitted pursuant to Article VI, in any state court in the State of Virginia
or in the State of New York, at the election of Consulting, and in the United
States District Courts located in the State of Virginia or the Borough of
Manhattan, New York, New York, at the election of Consulting. To the extent
permissible by law, the Parties hereby consent to the jurisdiction and venue of
such courts. Notwithstanding anything to the contrary in the foregoing, nothing
in this Section 7.3 shall prevent any Party or any of such Party's Affiliates
from bringing a lawsuit, to the extent any such lawsuit is permitted pursuant to
Article VI, in any other federal or state court of full and competent
jurisdiction. Each Party hereby waives, releases and agrees not to assert, and
agrees to cause its Affiliates to waive, release and not assert, any rights such
Party or its Affiliates may have under any foreign law or regulation that would
be inconsistent with the terms of this Agreement as governed by New York law.
SECTION 7.4. AMENDMENT; WAIVER. No amendment or modification of the
terms of this Agreement shall be binding on any Party unless reduced to writing
and signed by an authorized representative of the Party to be bound. The waiver
by any Party of any particular default by any other Party shall not affect or
impair the rights of the Party so waiving with respect to any subsequent default
of the same or a different kind; nor shall any delay or omission by any Party to
exercise any right arising from any default by any other Party affect or impair
any rights which the nondefaulting Party may have with respect to the same or
any future default.
SECTION 7.5. SEVERABILITY. If any provision of this Agreement
including, without limitation, any provision of Article V, is held invalid or
unenforceable for any reason, the invalidity shall not affect the validity of
the remaining provisions of this Agreement, and the parties shall substitute for
the invalid provision a valid provision which most closely approximates the
intent and economic effect of the invalid provision. Without limiting the
generality of the foregoing, if any provision of this Agreement shall be
determined, under applicable law, to be overly broad in duration, geographical
coverage or substantive scope, or otherwise unreasonable or unenforceable such
provision shall be deemed narrowed to the broadest term permitted by applicable
law and shall be enforced as so narrowed.
SECTION 7.6. COUNTERPARTS; SIGNATURES.
(a) For convenience of the parties, this Agreement may be executed in
one or more counterparts, each of which shall be deemed an original for all
purposes.
(b) Each Party hereto acknowledges that it and each other Party
hereto may execute this Agreement, and any other agreement, certificate or
document contemplated herein or therein or related hereto by facsimile, stamp or
mechanical signature. Each Party hereto expressly adopts and confirms each such
facsimile, stamp or mechanical signature made in its
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respective name as if it were a manual signature, agrees that it will not assert
that any such signature is not adequate to bind such Party to the same extent as
if it were signed manually and agrees that at the reasonable request of any
other Party hereto at any time it will as promptly as reasonably practicable
cause this Agreement, and any other agreement, certificate or document
contemplated herein or therein or related hereto to be manually executed (any
such execution to be as of the date of the initial date thereof).
SECTION 7.7. BENEFICIARIES. This Agreement is solely for the benefit
of the Parties and their respective Affiliates, successors and permitted assigns
and shall not confer upon any other Person any remedy, claim, liability,
reimbursement or other right in addition to those existing without reference to
this Agreement.
SECTION 7.8. NOTICES. All notices which any Party may be required or
desire to give to another Party shall be in writing and shall be given by
personal service, telecopy, registered mail or certified mail (or its
equivalent), or overnight courier to the other parties at their respective
address or telecopy telephone number set forth below. Mailed notices and notices
by overnight courier shall be deemed to be given upon actual receipt by the
Party to be notified. Notices delivered by telecopy shall also be confirmed in
writing by the sending Party by overnight courier and shall be deemed to be
given upon actual receipt of the overnight courier package by the Parties to be
notified.
If to Consulting, Inc.:
KPMG Consulting, Inc.
Three Chestnut Ridge Road
Montvale, New Jersey 07645
Attention: Chief Financial Officer
Facsimile: (201) 307-7227
If to LLC:
KPMG Consulting, LLC
Three Chestnut Ridge Road
Montvale, New Jersey 07645
Attention: Chief Financial Officer
Facsimile: (201) 307-7227
If to KPMG:
KPMG LLP
Three Chestnut Ridge Road
Montvale, New Jersey 07645
Attention: Chief Financial Officer
Facsimile: (201) 307-7227
If to the Employee, to the address listed on the records of Consulting. A Party
may change its address or addresses set forth above by giving the other parties
notice of such change in accordance with the provisions of this Section 7.8.
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SECTION 7.9. SCHEDULES. All Schedules referred to herein are intended
to be and hereby are specifically made a part of this Agreement.
SECTION 7.10. ASSIGNABILITY. This Agreement shall be binding upon and
inure to the benefit of the Parties hereto, respectively, and their respective
Affiliates, successors and permitted assigns; provided, however, that the
Employee may not assign its rights or delegate its obligations under this
Agreement without the express prior written consent of the other parties hereto.
Without limiting the foregoing, the rights of LLC hereunder may be assigned in
whole or in part to Consulting, Inc. or KPMG or their respective Subsidiaries,
the rights of Consulting, Inc. hereunder may be assigned in whole or in part to
LLC or KPMG or their respective Subsidiaries, and the rights of KPMG hereunder
may be assigned in whole or in part to LLC, Consulting, Inc. or their respective
Subsidiaries, each without the consent of the Employee.
SECTION 7.11. SPECIFIC PERFORMANCE. In the event of any actual or
threatened default in, or breach of, any of the terms, conditions and provisions
of this Agreement, the Party or Parties or their respective Affiliates who are
or are to be thereby aggrieved shall have the right to specific performance and
injunctive or other equitable relief of its rights under this Agreement, in
addition to any and all other rights and remedies at law or in equity, and all
such rights and remedies shall be cumulative. The Parties agree that the
remedies at law for any breach or threatened breach, including, without
limitation, monetary damages, are inadequate compensation for any loss and that
any defense in any action for specific performance that a remedy at law would be
adequate is waived. Any requirements for the securing or posting of any bond
with such remedy are waived.
SECTION 7.12. LEGAL COUNSEL. The Employee acknowledges, represents and
warrants to Consulting that the Employee has received a copy of this Agreement,
that the Employee has read and understood this Agreement, that the Employee has
had the opportunity to seek the advice of legal counsel before signing this
Agreement and that the Employee has either sought such counsel or has
voluntarily decided not to do so.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed as of and deemed effective as of the Effective Date.
KPMG CONSULTING, LLC
By:
-----------------------------------
Name:
Title:
KPMG CONSULTING, INC.
By:
-----------------------------------
Name:
Title:
KPMG LLP
By:
-----------------------------------
Name:
Its:
[Employee Name]
--------------------------------------
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ADDENDUM:
1. The following provision will be added as new Section 5.7(c):
(e) Notwithstanding anything to the contrary in Sections 5.1(a)(i)
or 5.4(a):
(i) Solely in the event that Consulting terminates the
Employee's employment for any reason other than Cause (as that term is
defined in Section 5.7(c)(ii) below) or for no reason (but not if
Consulting terminates the Employee's employment for Cause or if the
Employee resigns from the Employee's employment with Consulting), the
Employee shall be released from the restrictions set forth in Section
5.1(a)(i) and may engage in the conduct described therein, and the
Employee also shall be released from the Employee's obligation under
Section 5.4(a) to make the payment to Consulting, Inc. described
therein in the event that the Employee breaches Section 5.1(a)(i),
provided, however, that:
(I) Nothing in this Section 5.7(c) shall or shall be
construed to restrict, limit, otherwise affect, or release the
Employee from, any obligations under any provision of this
Agreement except to the extent specifically set forth in this
Section 5.7(c) (it being understood, without in any way
limiting the generality of the foregoing provisions of this
Section 5.7(c)(i)(I)), that nothing in this Section 5.7(c)
shall or shall be construed to restrict, limit or otherwise
affect Section 5.9 or the right of Consulting to terminate the
Employee's employment with Consulting for any reason other
than Cause or for no reason); and
(II) If Consulting terminates the Employee's
employment for Cause or if the Employee resigns from the
Employee's employment with Consulting, the provisions of
Section 5.7(c) shall not apply and the provisions of Section
5.1(a)(i) and Section 5.4(a) shall continue to apply with full
force and effect to the Employee in accordance with their
terms and without any restriction, limitation or other
modification pursuant to Section 5.7(c).
(ii) "Cause", as used in Section 5.7(c), means any of the
following conduct by the Employee: (I) embezzlement, misappropriation
of corporate funds, or other material acts of dishonesty; (II)
commission or conviction of any felony, or of any misdemeanor involving
moral turpitude, or entry of a plea of guilty or nolo contendere to any
such felony or misdemeanor; (III) engagement in any activity that the
Employee knows or should know will or could harm the business or
reputation of Consulting or any of its Affiliates; (IV) material
failure to adhere to Consulting's corporate codes, policies or
procedures, as in effect or amended from time to time; (V) continued
failure to meet applicable performance standards as determined by
Consulting over two consecutive performance review periods; (VI) a
breach or threatened breach of any provision of Article V (subject to
any applicable provisions of this Section 5.7(c)), or a material breach
of any other provision of this Agreement if such material breach is not
cured to the satisfaction of Consulting within a reasonable period
after Consulting provides the Employee with notice of such material
breach (provided that no such notice and cure period shall be required
to the extent that such material breach is not susceptible to a
<PAGE> 28
cure); or (VII) violation of any statutory, contractual, or common law
duty or obligation to Consulting or any of its Affiliates, including
without limitation the duty of loyalty.
2. The following phrase shall be added to the end of the current Section
5.1(a)(i) prior to the word "or":
provided, however, that it shall not be a violation of this Section
5.1(a)(i) for an Employee to become an owner, partner, principal,
investor, joint venturer, shareholder, associate, employee or member of
an entity (other than a Restricted Firm) which has a business
relationship with a Restricted Firm if the Employee does not, directly
or indirectly, provide Consulting Services to a Client or Prospective
Client in conjunction with a Restricted Firm.
2